Our dominant models for economic development are failing us. The extractive economy, as Ted Howard and Marjorie Kelly of the Democracy Collaborative call it in their forthcoming book The Making of the Democratic Economy, is “designed to benefit the wealthy, to enable the financial elite to extract maximum gain for themselves in every possible way, everywhere on the globe, heedless of collateral damage created for workers, communities, and the environment.”

We know what the collateral damage is: precarious work, high inequality, climate change, contamination of traditional Indigenous territories and displacement of the most vulnerable, outmigration from rural communities, rising cost of living in urban communities…

We also know that there are other economies than the ‘extractive economy’ and, similarly, other ways of approaching economic development. Some of these may be new but many (most) of them have been around for a long time. At the Canadian CED Network, we tend to talk about the Social Economy and Community Economic Development (CED), but there are many names given to these different (and not so different) types of economies and economic development approaches. These terminologies reflect the diversity of the communities at the centre of this work. And not only should communities be central to economic development, they should be at the core of social innovation.

“People have always come together to solve unique problems. Cultivating and stewarding strong relationships and scaling innovation requires Elder’s and young people. Intergenerational collaboration contributes to and drives social change.” Victor Beausoleil of SETSI (Social Economy Through Social Inclusion) shared this with me the other day and I think it covers so much. Problems are not typically solved by one person – they’re solved when people work together. If the goal of social innovation is social change, it’s not enough to just create a product or a service. Whatever the project is, it needs to be embedded in community so that there is shared ownership and direction.

Innovation often gets conflated with invention, but in reality, most innovations build upon existing technology, knowledge and models by finding new practical applications. CED necessitates innovation because every community is different, with specific needs, assets, and issues to address and opportunities to seize. As a result, what works in Montréal won’t work the same way in Calgary or in Rankin Inlet – each community has to find their own way, inspired by what has worked elsewhere and emboldened by the unique vision of its members. In this way, communities are leading innovation, by thinking creatively about how to adapt and improvise upon the previous work of others and how to involve those who have historically been left out of economic development decision-making and ownership structures.

A new partnership group that is exploring how to creatively shift the power imbalances within our economic and political systems is the Power Lab. Currently led by people working to make sure historically excluded and equity-seeking communities are involved in the decision-making process for public infrastructure development projects, this innovation lab “is a space for experimenting, stretching, and developing skills to realize a shared vision of an economy that works for everyone.”

In rural communities across Canada, innovators can turn to Community Futures Development Corporations (CFDCs) for support. More than just providing small business loans (not to downplay the importance of this financial service), CFDCs provide leadership on strategic community planning and support for the development and implementation of local initiatives.

Social finance is also currently a hot topic of conversation in the innovation landscape, especially with the Government of Canada’s announced $800M Social Finance Fund. Credit unions like Vancity, Assiniboine and Alterna Savings have long held commitments to community investment and continue to look for new and creative ways to address local needs. A new and innovative support system for rural and urban economic and business development is Community Impact Investment organizations. Often using the co-operative model, these organizations effectively bridge the gap between local investors and local ventures in need of financing.

With all of this increased interest in social innovation and social finance, however, we must be careful to not fall into old traps. “Who are the individuals that are pushing for social finance and what is the agenda and intentions behind this?” asks Victor Beausoleil. “My concern is the means shaping the ends. Those with power need to align themselves with those who don’t because those that feel it most usually have the most at stake and usually their voices are never heard. The most innovative models are developed when your back is against the wall, so inclusion, diversity, equity and access, is not just the right thing to do it is also a prudent approach to social innovation and social finance.”

The wellbeing of all people through this century will require a fundamental departure from the extractive economy. Fortunately, community-led innovation is flourishing and offers a wide range of alternatives. How would you like to build your community economy?

Matthew Thompson has been working with the Canadian CED Network since 2007 and is currently the Director of Engagement. The Canadian CED Network is a values-based, non-profit organization committed to strengthening the social, economic, and environmental conditions of Canadian communities. We have several hundred members throughout Canada working at the grassroots level in rural, urban, Indigenous and northern communities. We engage a broad and inclusive range of community interests in common efforts to influence policy, create stronger and fairer local economies, tackle poverty and homelessness, and invest in sustainable communities.