Post growth people-centered local economies

The term People-Centered Economic Development derives from the work of Carl R Rogers and his advocacy for a person-centered approach to therapy. Given access to the necessary resources, he believed, people could resolve their own problems flourish and grow.

People-Centered economics is therefore about inserting these ideas into business and economics. Each community needs access to information resources (hyperlocal networks) and resources for creation of community funding enterprises for profit, with profits to be applied to social needs in addition to private wealth creation (social business)

The core concept is a Community Funding Enterprise (CFE), a business which uses its profit to stimulate a given local economy, as described in a 1996 white paper. In this paper, it was reasoned that by creating money based on imaginary numbers, real human beings had been disenfranchised, considered disposable..The way forward would depend on changing the way we do business and sharing information.

“Top-notch education is leaving the confines of physical campus and four walls. A student in remote Zaire, given an Internet connection, can become a Duke-educated Master of Business Administration, while remaining mostly in his or her home village to the village’s benefit. The prospect of such decentralized localization of education and economic activity allows a great deal of autonomy, freedom and self-determinism in the village’s own character and identity. It need not be a risk to cultural heritage and integrity to benefit economically; the means by which such benefit will occur, how local citizens can have food, shelter, health care, and a basic sustaining human standard of existence can be determined at the local village level and then communicated at the regional, national, and global level simultaneously at virtually no cost via the Internet and a web site. It is this basic level of human sustenance, coupled with self-sustaining enterprise to provide this basic level of support, that I refer to as sustainable development — which is just another way of saying “people-centered” economic development.”

 

The CFE distributes no dividends to shareholders, investing instead in stimulating the local economy by investing at least 50% of surplus revenue in a CDFI retaining the remainder for scaling operations.

Creating an enterprise for community funding will work for enriching a community just as well as it will work for enriching a few people. The profit motive remains intact. The enterprise is sustainable as long as it makes a profit, just as with any other business. The main limitation is the time it will take to grow enough to provide the money needed by the community. A credit union or bank, by comparison, can make sufficient money for a community available more quickly. These can be funded immediately with sufficient money to service entrepreneurs in a community. In turn, businesses and jobs are created quickly, reducing the overall financial needs of the community. The limitation of a bank or credit union is making enough money in the process of lending money to sustain itself. This money is made by charging interest rates, which must be high for micro loans. It requires much more time, work and therefore cost to lend one million dollars among a thousand different people than lending the same amount to one person, for example. As a result, the interest rates for micro loans need to be high in order to cover the operating costs of making these loans. Even with high interest rates – up to 35% in the present case – it remains difficult to earn sufficient profits to be able to make loans across a wide region  where potential borrowers are spread out in remote areas across the region. The cost of outreach, training and multiple visits in that process can exceed 35% interest ultimately earned on micro-loans to remote areas.

By combining a community-funding enterprise (CFE) with a micro-credit union, the limitations inherent in each one is greatly diminished. The CFE provides sufficient funding to ensure the operating costs of the credit union, reducing the risk that the credit union will have any need to use its capital to sustain itself. The credit union immediately makes available sufficient loan money to match the needs of the community, thereby eliminating the time needed for the CFE to generate the same amounts of money. Additionally, CFE profits over and above what is needed to help with the operating costs of the credit union can be put directly into the credit union. Over time, the amount of money used to originally fund the creation of the CFE is offset by CFE contributions to the credit union. The credit union is increased so that larger amounts of money become available either to make larger loans or to service more borrowers. Together, the CFE and credit union create an enterprise where the original funding not only remains but also increases with time. They complement and balance each other by addressing the economic goals both have in common and offsetting each other’s limitations.

First deployed in Russia, it was used to source an experimental development initiative for USAID in the wake of Russia’s economic and currency collapse of 1998. This became know as the Tomsk Regional Initiative, a project which left behind a flourishing community development bank and thousands of micro enterprises..

In a people-centered local economy, we move way from the 21st century form of economics based on production, profit maximisation and scarcity toward local economies which are sharing and people-centered. The focus is on people, particularly those in greatest need. An economics for humanity

For example, local food and energy production with distributed local manufacturing.

The fundamental policy guide for P-CED is the International Bill of Human Rights.  IBHR is comprised of Universal Declaration of Human Rights; International Covenant of Civil and Politial Rights, and International Covenant of Economic, Social and Cultural Rights.

People-Centered Economic Development is a partner in the Charter for Compassion.

“Substitute personal greed with compassion, and the balance sheets will still work out just fine. Profit/loss statements take on a whole new dimension and meaning. Greed and capitalism are not one and the same thing. “Social” capitalism, social enterprise, is perfectly doable. This is the most effective sustainable strategy available for alleviating widespread human suffering stemming from poverty and all that comes with it — up to and including terrorism.”

Terry Hallman – founder, P-CED  (1952-2011)

See also the Forward Foundation on Comparing Business Development Paradigms

P2P foundation People-Centered Economic Development

History of People-Centered Economic Development

You, me, we, ethics and People-Centered Economics

Capitalism is an insufficient economic model

Creating Shared Value in Ukraine

Every Child Deserves a Loving Family Home

Putting Love and Compassion into business