Sep 24, 2020 Sean Campbell
This is part two of a five-part series on what can be done to create a better economy amongst loss and beyond it, at the 6 month mark of COVID-19. Read part one here.
N o group is more responsible for the systematic extraction of resiliency from our economy than the professional investment industry. Private equity firms, hedge funds, and other professional investors have been pressuring companies to deliver financial returns above all else for decades, justifying their practices by pointing to a fiduciary duty to maximize returns. However, we’ve seen during this pandemic that extracting resilience from your economy is like eating your own seed corn — it may create an illusion of prosperity, but that illusion evaporates eventually, and inevitably.
So, how do we invest for both growth and resilience?
One approach is to make sure that investments create shared growth — generative business activity that benefits everyone, rather than extracting resources from workers and communities and redistributing them to owners. Sharing the benefits of growth creates broad increases in wealth and security, which increases economic resilience — and creating investment frameworks that value and prioritize shared growth is a key part of the new ways of thinking about business and investment that we need so desperately.
In order to make sure that investment is based on shared growth, we need to give more people a say in how capital is invested. Devolving investment decision-making power to a broader set of stakeholders creates a check on extractive investments that only benefit a small elite. It also helps bring more values and considerations into the investment process.
Common Future network leaders are at the forefront of developing and implementing new models for community control of capital—PUSH Buffalo is building a community-controlled business and real estate portfolio in West Buffalo, NY (and canceled rent for all their tenants at the beginning of the pandemic). Creative investment and loan funds such as the Boston Impact Initiative and Boston Ujima Project are making community governance the core of their investment decision-making process. Community-led and community-rooted organizations like MORTAR, Native Women Lead, and Social Impact Strategies Group are developing ways to bring capital to entrepreneurs in their communities on their terms.
These experiments, among others, will point us toward new models of capital allocation that can process different points of view and interests, without which resiliency is impossible.