Rethinking Wealth and Ownership

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Excerpted by Marjorie Kelley from “Keeping Wealth Local: Shared Ownership and Wealth Control for Rural Communities

A New Approach to Assets

While shared ownership and community wealth control designs can create financial wealth, their aim is to serve a broader Triple Bottom Line: economic gain, social return, and ecological stewardship. A simple concept lies at the root of this approach: There are many more kinds of wealth than financial wealth. When old-growth forests are clear-cut, mountain tops removed to mine coal, and fishing stocks depleted by over-fishing, there may be temporary income streams enjoyed, but precious assets are left damaged. Fishing stocks, coal, and forests are assets that can be termed natural capital.  It is only when one knows what kinds of assets, or wealth, are available – or could be available if restored – that the appropriate ownership design can be chosen.

A key step is for developers to aid rural communities in grasping the vital distinction between income and assets. Income is a flow of money that might stop or start – like the income from a job that is lost when a company shuts down and leaves town, or the income that runs out when fishing stocks are exhausted. Assets are enduring stocks of value that create a stable flow of income over the long term. An interest-bearing Certificate of Deposit is an asset that is a source of income. A forest, left standing, might be an asset producing long-term income from the sale of carbon sequestration services.

Those who own and control assets are less subject to the whims of others and more in control of their own economic destiny than those dependent solely on income from external sources. Assets create an ability to plan for the future: to pursue an education, purchase a home, or start a business. They increase social status and social connectedness, and enhance the life chances of offspring. Research shows that even a small amount of assets makes a vital contribution to the well-being of low-income families. Scholar Michael Sherraden calls assets “hope in concrete form.”

In the United States, it is estimated that 26 percent of Americans are asset poor. That’s twice the rate of income poverty, which is 13 percent. When most Americans think of the poor, they think of the urban poor in the inner city. The rural poor are often forgotten, living in distressed areas most Americans never think about or see, in the Mississippi Delta, Appalachia, the colonias along the border in Texas, and other isolated areas. Yet some 20 to 50 percent of the U.S. population is rural (depending on the definition used). And 8 million rural Americans are poor. In a recent study, the Carsey Institute at the University of New Hampshire found that half the rural poor are segregated in high-poverty areas. On average, rural areas have lower per capital income, fewer educated citizens, and slower population growth.

Local Ownership and Shared Ownership

Many theorists have identified local ownership as a key part of community well-being.  W.R. Goldschmidt, in his classic 1947 work As You Sow, argued that communities with small-scale, local ownership – as contrasted with large, absentee-owned firms – showed a variety of benefits, including more schools, parks, and civic organizations, improved infrastructure, and a more stable population. Locally owned firms may also be more conscious of their impact on the local environment. An Environmental Protection Agency study found that absentee-owned chemical plants released three times the toxins of those whose ownership was locally rooted.

Local ownership is vital. And it’s not the whole story. Local ownership by elites, for example, is different from widely distributed local ownership. Local ownership can also be lost over time, as owners retire and sell their enterprises to those outside the community.  Done right, shared ownership has the potential to overcome such problems.

In a study of six local buyout cases in Canada’s forest sector, researcher Jeji Varghese and colleagues wrote, “Missing from the comparative work of absentee versus local ownership is a careful analysis of the features of local ownership that lead to more socially desirable outcomes.” [Emphasis added.] They found that when enterprise ownership and governance was inclusive – embracing employees, managers, and community members – there was a greater likelihood the enterprise would remain committed to benefiting the local community.

This is a key point. When enterprises build concern for the community into their ownership structure – through shared ownership, management, and control – those enterprises are more likely to benefit the local community over the long term. With shared ownership, enterprises can stay locally committed over the long term.

If “good” ownership is generally thought of as small and local, shared ownership adds a critical nuance. Shared ownership is about institutionalizing a fundamentally different way of conceiving of economic activity. Traditional economics is about individuals. But as Herman Daly and John Cobb Jr. write in For the Common Good, “True economics concerns itself with the long-term welfare of the whole community.” This requires a different conception of the economic person, which they term “person-in-community.” They suggest economics needs a broad rethinking on the basis of economics for community.

Shared ownership is part of this rethinking. It’s about reconceptualizing the nature of assets and ownership, so assets are no longer the property of isolated individuals, but are part of the inseparable linkages between individuals, the community, and the ecosystem.

Shared ownership can also be a form of risk management for communities. When the ownership or management of assets is pooled, the risk to individual households is lessened. By sharing ownership, communities can also open up new value propositions, as with MinWind, where community members acting together have been able to accomplish things that none could have accomplished alone.