The aftermath of the 2008 financial crisis is full of lessons about what not to do in the face of the ongoing pandemic. Some policy lessons seem to have caught on (like why we need to send money directly to struggling people), while others have been quickly forgotten (like why we need to stop propping up the inflated financial sector). Last time around, Black Americans lost half their wealth within a few years, further enabling the impunity of police violence and exacerbating the fragility of Black life. As Michelle Alexander recently wrote, “We cannot achieve racial justice and create a secure and thriving democracy without also transforming our economic systems.” African Americans from W.E.B. Du Bois to the leaders of the Movement for Black Lives have pointed to a vital strategy for this transformation: community ownership.
Before Covid-19 came around, US stock prices and unemployment rates had recovered since 2008. But what that recovery left behind was a simmering crisis of ownership. Corporate mergers and acquisitions accelerated after the crisis and the subsequent bailout, and single-family housing—the hallmark of widely dispersed property ownership—emerged as a field for corporate speculation, siphoning wealth from the working and middle class. Corporate profits skyrocketed; wages did not. Black homeownership, in particular, plummeted at record rates. Now, small business is next in line for the consolidation treatment, with millions of those cultural and economic bulwarks on the verge of a shutdown or a fire sale. Amazon and its ilk, meanwhile, are ready and willing to take their place.
They say we are headed toward a depression, so I have been thinking a lot lately about the last one.
In the 1930s, my grandfather and his siblings were growing up as the children of immigrant tenant farmers in Colorado. Their homes had no electricity. The power companies of the time didn’t see fit to invest in most of rural America; not until the 1936 Rural Electrification Act did communities like his have the means to change that—with public financing for locally owned cooperative electric companies. Even today, the area where my grandfather grew up gets its power from a co-op.
The New Deal was a deal with the devil in certain ways—secured at the cost of excluding women and nonwhite Americans from key benefits of its programs. But several of the period’s most enduring legacies hinged on turning regular people into owners of the assets they helped make valuable. The electric co-ops that still power much of rural America were part of the New Deal project, along with the federal infrastructure for member-owned credit unions and the 30-year mortgage. Ironically, the New Deal drew lessons from grassroots experiments that marginalized Americans of many backgrounds had been using to survive, and it scaled them up with public investment. As political economist Jessica Gordon Nembhard illustrates in her book Collective Courage, Black fraternal societies prefigured the social safety net, generated “Black Wall Street” commercial districts like the one destroyed in the 1921 Tulsa massacre, and supported human rights struggles.
This kind of broad-based, participant ownership makes a lot of sense—then and now. When people have a real stake in a business or local infrastructure, they will want to protect it, sacrifice for it, and make it thrive. Owners hold greater leverage over issues their communities face, from education to policing. So what forms of ownership could confront the crisis we’re now facing?
In the current phase of the Covid-19 struggle, what’s needed is relief.
Lots of us have been ordering takeout from local restaurants that we know are struggling. That’s something, but what if we could do more—beyond gift cards and GoFundMe? Imagine if contributing to a local business also meant becoming a co-owner in it—a partner in its future, alongside the people running it. A little-known trick called a direct public offering enables businesses to sell shares to their customers and local community members who believe in them; it is now also possible to do this kind of “equity crowdfunding” on a national scale. Using these tools can be cumbersome and expensive, but that could change.
The SEC has already begun easing barriers to equity crowdfunding in response to the crisis. Until the feds do more, the Boston Ujima Project, Native Women Lead, and other groups in communities of color are doing it themselves, harnessing their communities’ capital so they can collectively determine their own outcomes. Greater community control over local economies can help to stave off the predators that—as we learned during the 2008 crisis—start to circle the most marginalized populations when disaster strikes. Co-ownership can also encourage neighbors to start buying at local businesses again, even when it might be easier to stay home and order from Amazon.
Enabling employees to co-own their workplaces could have similar effects—inviting workers into a full partnership in the challenges and sacrifices that the current moment may require. Studies suggest that transitioning to full or partial employee ownership improves workers’ productivity and resilience. And it just so happens that, back in 2018, President Trump (whether knowingly or not) signed a historic, bipartisan employee-ownership law originally introduced by Kirsten Gillibrand, the Main Street Employee Ownership Act. Now would be an excellent time for his Small Business Administration to actually implement it. In the meantime, groups including the Main Street Phoenix Project and the Democracy Collaborative are finding ways to help deliver troubled businesses into the hands of their workers.
Whether we eliminate Covid-19 or learn to live with it, the time for relief will turn into a time for recovery. We need to act now if we want that recovery to steer us toward a fairer economy than the one that has made this crisis so painful. Laying the groundwork for a new ownership explosion can help.
A shortcoming of America’s past programs for widespread ownership is how piecemeal they have been. Down the road from me, on the south end of Denver, there’s a $130 billion cooperative bank for farmer co-ops, CoBank. Thanks to generations of farmer organizing, federal policy helped create its forerunners during the New Deal—but if your co-op isn’t rural, CoBank can’t help you. In recent years I have been working with a new generation of entrepreneurs trying to build the participant-owned startups of the future—for online platforms, for gig workers, for cleaning and care work. This hasn’t been easy; the New Deal–era frameworks for farmer co-ops and credit unions don’t apply to these new challenges. The coming recovery can take those narrow success stories and spread them across the economy to green energy, local food systems, and user-owned online platforms. This can also be the start of the reparations for slavery, Native genocide, and other forms of mass deprivation that we so obviously need. The promised “40 acres and a mule” for former slaves never came, but their descendants should have the right to co-own the economy they have done so much to build.
With the help of a federal loan guarantee, or a secondary market akin to the mortgage system, policy could encourage lending to groups of people with a common mission—whether they are neighbors who want a local grocery store, workers who want to buy out a retiring owner, or a rural community waiting in vain for the telecom industry to bring them broadband. It could help communities finance green energy and cost-saving retrofits. Groups of small businesses could band together in co-ops for joint purchasing and services. Tenants in a building could offer their landlord an early retirement, while a tech start-up’s users could take their data back, and pay back the founders, with an “exit to community” that matures into shared ownership rather than aiming for corporate acquisition. Such programs should serve everyone but prioritize people who have had the least access to the wealth that comes from ownership.
Some people seem to be longing to go back to where we were pre-Covid. We could try, I suppose. But the old regime was standing on a shaky foundation, as we learned from the uprisings and supply chain failures that emerged as soon as there was a crack. A “silver tsunami” of owner retirements was already threatening as many small businesses as the virus now does. Pre-Covid, the economy already needed the transformation Alexander calls for; now we need it fast. As the investor class cowers behind its bailouts, communities need the tools to get their economies going on their own terms.