Written by Barry Lipscomb, the New Economy Architect at Reconsider in Ypsilanti, Michigan.
When the subject of capital is brought up people tend to think of financial resources. While financial capital is an essential element of any strategy for economic development and growth, it is also important to consider a broader definition of community capital.
This broader view of community capital is the combination of natural and human capital to create built capital through exchange capital mechanisms. Natural capital is all the rich resources of the natural environment. It is the living capital of a community’s eco-system and includes all the resources of nature whether utilized directly in the local economy or simply for their aesthetic and recreational value.
Human capital is all the ways in which people in the community and their interactions create value in the economy. This includes the unique experience of the people in a community, their intelligence and how they are networked together. It also includes the cultural and historical context of a community as well as the beliefs and values of its people.
Built capital includes all man-made materials and technology that has lasting and continued value in a community. It is the infrastructure, institutions and entrepreneurial output created in the local economy with its human and natural capital.
Each of these forms of capital would stand largely in isolation without some means to exchange value between them. This exchange capital is most often financial but increasingly in recent years entrepreneurs, businesses and individuals in a community are finding ways to connect and exchange their products and services without money. This includes the powerful and emerging tools of sharing resources and bartering to exchange products and services rather than cash.
Viewed in this more expansive way, community capital is what makes a community unique – with the natural, human and built capital specific to its location. In this way, community capital is the foundation of value in place-making by creating a unique and specific sense of place articulated through the various forms of community capital.
When a community develops this expanded view of capital it gains greater awareness of all its resources and how they fit together in the local economy. This awareness provides the ability to more deliberately utilize the capital in a community, opening the possibilities for renewed economic growth. While financial capital is growing increasingly scarce, particularly in the public sector, there is a wealth of both natural and built capital and almost limitless human capital in a community. A strategy to identify, assess and deploy all forms of capital in a community is an integral component of an emerging new economy.
A New Economy
This emerging new economy has five key elements that are important to community and economic development. These are:
- Deeply connected with our selves – starts with the best of who we are as individuals and how we can bring that to our community in a way that creates value for everyone.
- Based in community – this deep connection with our selves is then extended out in the community to decentralize and re-localize the economy in a way that creates a strong sense of place and community.
- Sustainable and sustaining – greater connection with place, based in community, provides the mandate for creating a sustainable existence for the community and its people.
- Generative – with the capacity for originating new ideas and solutions.
- An entire eco-system view – considering all stakeholders and the various forms of capital as an inter-related system that functions optimally when considered as a whole.
These elements of a new economy combined with the expanded view of community capital along with the emergence of local investing (where people invest in their local economy, aligned with their values and often in businesses striving to make some positive contribution to the community); creates the real possibility for a sustainable economic future.
Barry Lipscomb is the New Economy Architect at Reconsider in Ypsilanti, Michigan – Reconsider serves as a center for thought leadership, catalyzing the new impact economy eco-system in the Great Lakes region. Follow their work and engage with them at www.timetoreconsider.com or email email@example.com.