Municipal Development Bank

A Transitional Demand – Contribution to the Reimagining Society Project – hosted by ZCommunications

Published on Zcommunications, by Howie Hawkins, August 05, 2009.

Vision and Transition: At the general level of a socialist vision, I think we have broad agreement that we want a participatory democracy of political and economic institutions that empower ordinary people to meet their needs without exploitation or oppression in an ecologically sustainable manner …

… Creative Public Enterprise:

What all this means for cities like Syracuse is that its citizens are going to have to do it themselves. The city government needs to be the lead developer. 

It needs to take a much more direct role in developing local businesses. It will take creative public enterprise—a municipal development bank, public power, municipal broadband—to provide the economic infrastructure and services for the development of new community-owned enterprises whose ownership structures anchor them, and the wealth they create, to our community, unlike the absentee-owned corporations that abandoned Syracuse.

By community-owned enterprises, we include a number of ownership forms, both public and private, including:

  • Owner-Operated small businesses
  • Community Corporations where voting shares are restricted to residents (like the Green Bay Packers, a big NFL franchise anchored to a small city by its ownership structure).
  • A city-owned Community Investment Trust where economic assistance such as tax breaks are converted to voting shares in a conventional corporation
  • Public Enterprises, like city-owned power and broadband services and the trash collection operation of the Department of Public Works;
  • Worker and Consumer Cooperatives, including credit unions.

The development department of the Municipal Development Bank would be staffed with business planners and engineers who would identify market opportunities, conduct feasibility studies, develop prototypes, and incubate new businesses. It would plan businesses that meet community identified needs, arrange financing, hire and train the initial workers and management, and advise them as they got up and running. As the business generated revenues and its workers became capable of self-management, the business would pay off financing from the bank and that money would return to the bank for financing other businesses. While particularly suitable for worker co-ops, this same process could be used to set up owner-operated small businesses, public enterprises, and community corporations.

The bank could start immediately developing the retail outlets Syracuse needs in its neighborhood business districts, perhaps starting with the longstanding need for grocery stores which have abandoned the city in all but three of its more than 30 neighborhoods. The Municipal Bank’s development department could plan such businesses, arrange the financing, hire the initial workforce and management, and advise it as it began operations. When it was up and running, it could be sold to the workers co-op, or perhaps as a worker and consumer hybrid co-op since consumers would want have say in the products it carried. The business planners might find that it would make business sense to develop a citywide network of neighborhood stores with shared purchasing and warehousing instead of independent groceries neighborhood by neighborhood.

The bank would also play a key role in developing sophisticated green agricultural and manufacturing enterprises, one of the two manufacturing sectors (besides defense related firms) where a cluster of firms and university research institutes already exists in the area focused on renewable energy, environmental services, indoor air quality, and other environmental engineering.

Learning from the Mondragon Model … (full long text).

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