Editorial

share this segment by right‑clicking icon to copy linkWhat Needs Disrupting Today

One sign of a social transformation is a change in the words we use to describe the new reality. Sometimes the new words are part of an effort to demystify the forces which need transforming.

A few examples:

Disruption: the term formerly suggested a rapid campaign, usually mounted by a platform business, to aggressively outcompete and even bankrupt other companies in a specific sector. The concept was related to economist Joseph Schumpeter’s famous “law of creative destruction” whereby the loss of certain businesses from the marketplace was offset by our gains in knowledge and in innovations from their failures. The fates of disrupted and displaced workers — thousands of taxi drivers, journalists, local merchants, etc. — were usually considered an “externality.” Schumpeter’s law spared no one, given the premium it put on innovation, consumption, convenience, and growth for the sake of growth.

Today the most important thing we can disrupt is the conventional thinking about business creation, investment, and equity. To disrupt ideas grounded in capital supremacy, for example, requires new concepts like capital reciprocity. Such ideas are not welcome in many quarters, since they threaten to disrupt the world of the disrupters.

Restructuring: a term associated with bankruptcies, swapping out new for old management, and the 1980s go-go trend of “down-sizing.” Historically, private equity firms have been the shock troops of this highly profitable technique in search of “efficiency” and “innovation” — at all costs.

The new restructuring we need means: 1) a different kind of leadership which values diversity and minimizes hierarchy; 2) a different kind of governance which increases the number of people making decisions; 3) a different kind of ownership which means a wider distribution of equity.

Due diligence: the phrase equates to “do your homework first” for asset managers who have a legal obligation to scour all available information on companies before investing.

But how about the diligence investors need to show in educating their social awareness by going beyond the numbers to the larger context of community?

This kind of diligence includes asking questions such as, How was the capital I’m investing originally accumulated? Is my investing addressing any of the prior harms which may have been done? What should be the personal impact of my impact investing? (It might also include attending community-focused webinars such as this one from NPQ.) 

share this segment by right‑clicking icon to copy linkBuilding Worker-Centered Platform Ridesharing

A Conversation with The Drivers Cooperative’s Erik Forman

Erik Forman is co-founder of The Drivers Cooperative, the first driver-owned rideshare platform cooperative in the U.S., as well as People’s Choice Communications, the world’s first worker-owned ISP, launched by striking cable technicians. Before turning toward cooperative development as a strategy for system change, Forman was active in the labor movement for over fifteen years, leading unionization campaigns in the fast food industry and conducting organizing trainings and workshops across the world.

Books

share this segment by right‑clicking icon to copy linkMorgan Simon’s Close Look at Impact Investment

For more than two decades, Morgan Simon has worked at the intersection of social justice and social finance — i.e., the space where something new has emerged in the last decade in response to the perceived failures of both charity and finance. That new thing is called impact investing and Simon has a number of striking things to tell us about its relation to financial activism and social investing.

“Impact investment [a concept first popularized by the Rockefeller Foundation in 2007 — ed.] is an attempt to align money with values. . . . Rather than playing with the $46 billion that constitutes the annual spending of philanthropy, we can leverage the $196 trillion that circulates in the global economy every day for social justice.”

The quote is from Real Impact, a book Simon wrote in 2017 about her two decades of experience building four different organizations (mostly recently, Transform Finance), all of them aiming to influence how and where the billions now earmarked for impact investing are deployed. (The latest estimates of the size of the impact investing sector are around $715 billion.)

Her book raises — and deals with expertly — questions about the role of impact investment in creating social change. Is this strategy flawed either because it doesn’t make enough money — or because it seeks to make money at all. As Simon shows, impact investments have been able to outperform the market with lower levels of volatility.

As for those who ask whether investment is too implicated in the history of capitalism and exploitation to be useful in human liberation, Simon acknowledges that the origins of modern trade finance were designed to serve the business of slavery and that “given its historical legacy it needs exceptional guidance to succeed in not propagating injustice.”

Simon’s goals changed, as she notes, from “fighting poverty” to trying “to enhance community autonomy — and specifically economic autonomy — both domestically and globally.” She came to see her task as answering the question, How do we replace historically stolen resources within communities in a way that enhances autonomy? The answer, using the tools of investment, was in aligning the community and the investor around the common goals of sustainability and long-term self-sufficiency.

Along the way, Simon and her collaborators came up with three dramatically unconventional (because justice-grounded) principles for a new kind of investing. These tenets are elaborated upon in her book and now incorporated in the work of Transform Finance:

• Engage communities in design, governance, and ownership.
• Add more value than you extract.
• Fairly balance risk and return between investors, entrepreneurs, and communities.

Simon, now a founding partner with the Candide Group, has played an important role in changing the skewed incentives and unbalanced stakeholder mix in this sector. In addition to financial diligence, now impact diligence is part of the investment process. Rather than placing a singular focus on job creation, she and her colleagues — mindful of the three principles above — emphasize the link between employment and the ability to acquire assets in order to overcome intergenerational poverty.