Preston used to be the hub of industry in England for a significant period. However, when the major companies in the city opted to shift their production to countries with lower wages, the economy suffered a severe downturn, leading Preston into a profound crisis. Nevertheless, the residents of Preston refused to be disheartened and joined forces to revive their economy. Instead of relying on multinational corporations and meager wages, they embraced local production and collaborative decision-making. As a result of adopting the “communal prosperity” approach, Preston is currently experiencing a thriving resurgence.

Preston was the economic engine of England for a long time. In the city in the northwestern county of Lancashire, the textile industry boomed in the 19th century. Products from Preston were exported all over the world, and the city grew rapidly. The boom did not last forever, however. After the Second World War, large parts of English industry migrated to low-wage countries. The economy crumbled and with it the city. Just a few years ago, Preston was considered one of the poorest areas in England.

community wealth building.Community Wealth Building.

Community Wealth Building: Business for the People, Not the Corporations

But what is community wealth building? Broadly speaking, it’s an approach that shapes the economy to serve local people, not managers in corporate headquarters or investors in tax swamps. Preston achieves this primarily through four principles:

  • Working with what’s there
  • Producing and buying locally
  • creating good working conditions
  • Shaping the economy

Preston’s “Communal Prosperity”: Working with what’s there

Preston was aware that there would be no external savior to assist the city. If the people of Preston desired to improve their situation, they would need to address it on their own. Therefore, the initial action was to examine the current structure of the city’s economy.

While many businesses had left Preston, there were also institutions that were still in town and would remain. These included the local university, a housing cooperative, the pension fund, the town hospital, and the local government. These institutions were called anchor institutions because they were firmly anchored in the city and would not leave.

The anchor institutions allocate significant funds each year. The hospital requires daily supplies of fresh food and laundry services, the housing cooperative relies on materials and personnel for house maintenance, and the local administration requires stationery and furniture. The list of expenses is extensive. The city government examined these expenditures and discovered that these institutions rarely made purchases in Preston. Merely around 5 percent of the spending occurred within their own town, while the remaining funds were directed to various locations across the country and the globe.

Produce locally, buy locally

In order to enhance Preston’s economy through the “communal Prosperity” idea, it was necessary to convince these anchor institutions to increase their expenditure within the city. Given their vested interest in the city’s success, all institutions were willing to make more local purchases. As a result, local businesses experienced a surge in orders, enabling them to hire additional staff. Consequently, more individuals secured employment and had increased disposable income, which further stimulated the local economy.

New businesses were established to meet the growing demand from anchor institutions when existing ones were unable to do so. Preston University provided assistance to these start-ups using its expertise.

Anchor institutions are an important factor in Preston's communal prosperity model.
By having anchor institutions, such as local government, buy more from their own city, more jobs could be created in Preston. (Foto: pixabay/PaulCosmin)

Co-determining the economy

There was also a plan for when new companies were founded. What should not happen is that all the profits end up in the boss’s pocket and the workers have no say. The people of Preston should decide for themselves how they want to shape the economy of their city and also reap the fruits of their own labour. The solution to this: cooperatives!

The university provided assistance to the residents of Preston in establishing cooperatives, giving them the power to decide on work processes and the allocation of profits. This initiative aimed to enhance co-determination within the city and ensure that the generated profits benefit the workers directly instead of being deposited in tax havens owned by investors. Additionally, the cooperatives had a favorable impact by preventing job outsourcing to countries with lower wages, as the workers have control over their company’s policies.

A wage you can live on

The concept of “communal prosperity” was significant to the residents of Preston as it emphasized the importance of individuals being able to sustain themselves on their wages. It seemed pointless to work in a cooperative or one of the anchor institutions if the income earned was insufficient for a decent living. Consequently, many local institutions, businesses, and cooperatives opted to pay wages that exceeded the minimum requirement, ensuring that individuals could live comfortably. As a result, with increased disposable income, people were able to spend more, leading to further growth in the local economy.

Simultaneously, a significant amount of funds were allocated towards ensuring the city’s workers received a quality education. The university within the city played a crucial role in offering guidance and instruction, while other influential establishments like the local government and housing cooperative also increased their investments in enhancing the education and skill development of the local labor force.

Preston’s “Communal Prosperity” Model as a model for success

Preston’s four principles worked strongly together. Anchor institutions looked to their purchasing not only to ensure that local production took place, but also that companies paid their workers well and gave them a say. While not everything could be produced and sourced locally, the percentage of anchor institutions’ spending in their own cities increased sharply. When the Community Wealth Building project started in 2012, it was 5 percent. In 2016, it was more than three times that, at 18 percent!

Preston had seen other improvements as well during the period of 2014 to 2017.unemploymentThe city experienced a 50% reduction. With a rate of 3.1%, it was lower than the average rate of 4.6% across the state. The city’s economic progress was so impressive that it surpassed the capital city, London, in terms of quality of life and became the most promising city in the country.

Preston's communal prosperity model is inspired by Mondragón.
Mondragón is the largest cooperative in the world. For Preston and Cleveland, Mondragón is a source of inspiration. Mondragón workers built the roof of the famous Guggenheim Museum in Bilbao, for example.(Foto: Unsplash/Jorge Fernández Salas)

The concept of social business is a worldwide phenomenon.

Preston’s achievements have generated excitement and inspired others to follow suit. Currently, there are 20 additional cities and communities that have adopted the Community Wealth Building strategy. It is important to note that this approach did not emerge suddenly, but rather has its origins in the United States, specifically in Cleveland, a former industrial hub. Like Preston, Cleveland experienced the relocation of industrial companies to countries with lower wages, leading to a stagnant economy and a deteriorating city. However, through the implementation of a regional economic plan and the establishment of cooperatives, Cleveland successfully revitalized its economy.

Cleveland, in turn, got its inspiration from the small Basque town of MondragónDuring the Spanish Civil War, the local economy in that area was greatly damaged. However, a left-wing priest named José María Arizmendiarrieta took charge and established a technical college and multiple cooperatives in the small town. Presently, Mondragón stands as the largest cooperative globally, operating in 31 countries and employing more than 80,000 individuals. The entire federation of cooperatives is managed and owned democratically by the workers.