CHAPTER 33
Shifting Local Capital into the Foodshed
Innovation and progress are nearly impossible in an undercapitalized industry.
—FOOD COMMONS 2.0
The restorative economy, says Charles Eisenstein, is nothing less than a facet of an all-encompassing spiritual transformation in our fundamental relationship with the world.170 The core principles of restorative economics, says Woody Tasch, include carrying capacity, cultural and biological diversity, sense of place, care of the commons, and nonviolence. Localization and democratization of capital begins to reverse the dominant economic paradigm of extraction and consumption, empowering local citizens to direct the flow of capital into a regional food system.
The slow money approach, pioneered by Tasch, initiates new forms of local investment based on the assumption that the best way to begin building a restorative economy is to invest locally in sustainable, small-scale food and farming enterprises. Now a robust national movement supporting an emerging industry, slow money investments are helping to enhance food security, food safety, and food access; improve nutrition and health; promote cultural, ecological, and economic diversity; and accelerate the transition to an economy based on preservation and restoration.
Slow money is an essential strategy, but it is just a beginning. We don’t know if it can scale sufficiently to have much impact. Since mid-2010, through Slow Money national gatherings, regional events, and local activities, more than $45 million has been invested in some 450 small food enterprises around the United States. Twenty-four local Slow Money chapters and thirteen investment clubs have formed. Slow Money events have attracted thousands of people from forty-six states and seven countries. Slow Money investing has also begun in Nova Scotia, Switzerland, France, and Belgium.
I’ve already discussed the reality that localizing the food supply requires moving significant amounts of capital into the local food economy. While slow money and community capital efforts promoted by BALLE and Michael Shuman are important, the reality is that these strategies do not yet come close to the scale of investment necessary to achieve food localization beyond a few percentage points.
What needs to happen? I have become convinced that until we successfully position food localization as the most important and most urgent social cause of our time, it will not attract sufficient capital to get the job done. Why? All too often, local food is seen as a lifestyle choice, an optional way for people to improve their lives. Whole Foods appeals to this set of values, offering a luxury grocery store for upscale consumers where a mere smattering of local food is displayed at premium prices.
Despite the best efforts of slow-money evangelists, social-impact investors do not yet perceive food localization as social entrepreneurship. Much education is needed here. Social-impact investing usually focuses on nonprofits and social enterprises serving disadvantaged or low-income communities in the United States and developing countries. While these efforts must be supported and expanded, they will not result in the kind of economic scale needed to create resilient and self-reliant regional food systems. Given the fragility of the global food chain, all of us are food insecure—not just the economically disenfranchised.
In the high-risk and low-return environment of local food production, where businesses are forced to compete with an industrial food system that externalizes many costs, attracting traditional investors is difficult. Slow money is beginning to open the door here, but it is unlikely to persuade accredited investors to abandon financial return for social return on investment. Tasch wants to awaken investors’ biophilia—their innate love for life—a worthy cause. But it might be more effective to target individuals who don’t think of themselves as investors and awaken in them the realization that they can support a great social cause by shifting small amounts of capital into local food and farming enterprises. This could be revolutionary.
I am convinced that this kind of grassroots approach to capital is where we need to start. It is difficult, and we have almost nothing in the way of precedent to follow. We are essentially starting from scratch.
Among other things, we’re up against two intimately related problems. First, we’re living in a consumer economy. Seventy percent of the GDP is based on consumer spending. This is no accident, of course. In 1955, economist Victor Lebow wrote in the Journal of Retailing: “Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction and our ego satisfaction in consumption. We need things consumed, burned up, worn out, replaced and discarded at an ever-increasing rate.”
We have come to define ourselves as consumers. Whole industries have been created to provide products for us to consume. Consumerism creates enormous business opportunity, and this is just as true in food as it is anywhere else. In fact, it’s useful to remember here that food is the largest industry in the world. It’s killing us, literally, but lots of people are making a lot of money from it. It’s one more industry dedicated to making and selling us things that we don’t really need, things that are ultimately bad for us and bad for our environment—and our economy, apparently.
There is a class of people who have arisen in our consumer economy called investors. They don’t actually produce anything. They invest their money to make more money so they can invest more money and make even more money. In other words, they have become consumers of money—consumers on steroids. Consumerism produces investorism. Investorism is investing money in money itself.
I think of a cartoon making the rounds on the internet in recent years of some post-apocalypse survivors huddled around a fire in a cave. One of them, dressed in a tattered suit, says, “Yes, the planet got destroyed. But for a beautiful moment in time, we created a lot of value for our shareholders.”
It’s a strange idea of value, but it’s pervasive in our culture.
Investors usually want exit strategies. Exit from what? Exit from engagement? What if there’s no exit? What if we do not want an exit?
SHIFTING PARADIGMS
One of the great tragedies of our modern culture is that somehow we have all become consumers. We even call ourselves consumers, as if that was our very identity. How did this happen?
The fundamental problem is that “our society is nutrient deficient in the vitamins of purpose, meaning, and value.”171 What is the growing distance between consumers and the source of their food? I’m not talking about food miles, but psychological and spiritual and cultural miles. What is the distance between investors and where their money is being invested? Again, it’s a psychological and spiritual and cultural distance.
Why is there a growing tendency to hide how food is produced? Our food supply has been engineered for the profitability and power of the corporations. They create artificial needs. To achieve their goal, they need us to be consumers.
If we come to realize that our food supply has essentially been colonized by big agribusiness, and if we discover that our thinking about food has been colonized, and if we learn that the proliferation of GMOs is an extension of this colonization, then we have work to do.
If we come to realize that our economy has essentially been colonized by the financial industry (by a commerce of extraction and consumption), and if we discover that our thinking about money has been colonized, and if we learn that the destruction of our environment is an extension of this colonization, then we have work to do.
We have ceded control of our food supply to forces we do not know and who do not care about our well-being. We have ceded how we think about food to media and advertising (and the USDA). So we must begin by decolonizing the way we think about food; we must become conscious about our food. This is essentially a spiritual act, and it’s going to take some work to root out colonization in our minds and attitudes.
We have ceded control of our economy to forces we do not know and who do not care about our well-being or the well-being of the planet. We have ceded how we think about money to media and advertising (and the government). So we must begin by decolonizing the way we think about money; we must become conscious about our money. This is essentially a spiritual act, and it’s going to take some work to root out colonization in our minds and attitudes.
Next, we must begin radically altering the ways we feed ourselves, with the goal of food sovereignty and food security. We must become independent from foreign powers and distant corporations. The only way this can be accomplished (or at least begun) is by localizing our food supply to the greatest degree possible.
Next, we must begin radically altering the ways we make and use our money, with the goal of sovereignty and freedom. We must become independent from foreign powers and distant corporations. The only way this can be accomplished (or at least begun) is by localizing our money to the greatest degree possible.
This is perhaps a radical theme, but it seems important, in that it names a fundamental dynamic that is almost completely unconscious in our society. Even Woody Tasch referred to it in his keynote speech at the Slow Money National Gathering in Colorado in 2013: “The grip of buy low–sell high has never been stronger. Television ads show infants in their cribs trading stock on their iPads. This is cute and funny, up to a point, but up to another point, it is a horrible testimony to the colonization of every aspect of culture by the trading mentality.”
The consumer culture has given rise to the investor culture. They are intimately related. Consumerism produces investorism; consuming goods leads to consuming money itself. And the whole thing is based on an economy of extraction and consumption of earth’s most precious resources.
The idea that money itself should earn money is nothing less than usury. It is, as James Howard Kunstler says, a kind of Las Vegas mentality, the idea that we should get something for nothing, that we could get lucky, strike it rich.
All this economic activity is devoid of any sense of meaning, purpose, or value. It is empty, totally disconnected from life. It is life destroying, even undermining that which gives rise to life. It recognizes no reality other than the physical and temporal, and it is amoral at best, immoral at worst.
We need to remember that the economic and financial system that has dominated our culture is dependent on exponential growth, and it is therefore profoundly unsustainable. As Eisenstein says, the end of the Age of Usury is near, the end of the Age of Separation.
Slow money and locavesting are signs of an emerging new economy that includes our understanding of the purpose of life, humanity’s role on the planet, and the relationship of the individual to the human and natural community.
When we ask people to invest in food and farming enterprises—even with slow money—they usually want to know what the return will be on their investment. Insidiously, for all the goodness represented by many of our slow-money entrepreneurs, the conversation always seems to turn around money and how much can be made (by the entrepreneurs and their investors).
Local food businesses are forced to compete with a globalized, industrialized system that externalizes much of the cost of production and heavily subsidizes producers. Meanwhile, our local food producers operate without subsidies and without access to crop insurance, and most of them are having a tough time making a living.
This makes local food and farming enterprises high-risk operations. From the perspective of investors, they are not good investments. These are long-term, low- to no-return investments with no liquidity and no exit. But that’s the kind of money that is most needed. Is it philanthropy? If it is, should it be tax deductible? Ironically, because local food is about business, it’s not attractive to traditional philanthropists either.
There is a special class of investor to whom the idea of low-return to no-return investments is not completely foreign, and that is the social-impact investor. They like to put money in the hands of entrepreneurs who are bringing about social change.
But social-impact investors have not quite caught on to the idea of investing in local food and farming enterprises. They don’t see local food as an important social cause. This is instructive. Given what we know about the awesome destructiveness of the global food chain (and its extreme fragility), food localization is certainly one of the most important and most urgent social causes on the planet. There is no better way to improve human health (and reduce health costs), reduce greenhouse-gas emissions, sequester carbon in the soil, and rebuild local economies.
But this is virtually invisible to social-impact investors. Perhaps they assume that local farmers and food entrepreneurs are just businesses looking to make money or that food localization doesn’t qualify as a social-impact investment. There’s a huge gulf in understanding here.
So restorative economics is hard. I’m increasingly convinced that the marriage between consumerism and investorism is one of our greatest obstacles. It’s pernicious.
Woody Tasch has said that he wants to awaken the biophilia of investors. Is that really possible? These days, I’m more interested in awakening the sleeping giant that lives within ordinary citizens—people who don’t think of themselves as investors and who don’t want to be consumers. They want to be involved. They want to be engaged. They want to help. (As you may know, securities regulations are skewed to regulate these folks out of the flow of capital. There are many hurdles that keep them out of the slow-money game.)
Some of these ordinary citizens are attracted to Slow Money investment clubs, and that’s important. It’s real engagement. But it’s going to take a lot more than Slow Money investment clubs. (I sometimes fear we derailed them the moment we called them investment clubs.)
It’s going to take more than any level of crowdfunding we’ve seen for any kind of company. It’s going to take a revolutionary movement and hundreds of billions of dollars. And it’s probably going to take a series of good disasters to kick our butts into gear.
I don’t think it’s going to be enough to try to slow down fast money (if that was even possible). We’re going to need to liberate and redirect money that’s currently going nowhere, and we have to do it soon (it’s ironic how often we hear the phrase “we need slow money, fast!”).
We’re going to need to find the ways to inspire hundreds of thousands of people across the country to do the unthinkable and invest themselves—along with a bit of their money—in localizing our food supply and rebuilding our local economies. Can you think of something more important to do with your money, whether you invest it or gift it? What’s at stake here is nothing less than the future of life on this planet. In the future, we may all be asked, “Where was your money when it all came to a peak and crashed?”
I think we’re going to have to learn how to mobilize huge amounts of money. We need to unleash the greatest transfer of wealth that human history has ever seen. How do we do this?
How are revolutions funded? How are wars funded?
How do we capitalize the localization of our food supply?
How do we quickly mobilize hundreds of millions in capital in Colorado? How do we manage how that money is put to work? Can we do all that in time to make enough of a difference? Is it possible for all this to happen in a truly organic, emergent manner?
These are the kinds of questions that keep me awake at night.
In the summer of 2012, a new liquor store opened up in Boulder, Hazel’s Beverage World. It started with $7.1 million in capital, raised from forty investors, thirty-nine of whom lived in Boulder. Those forty investors are going to do very well with their investment. And a lot of citizens are going to consume a lot of alcoholic beverages bought at a nice discount. Redirecting that amount of local money into the local food economy could be a game changer.
Revolutions are not funded by institutions, because revolutions run counter to institutional norms. Revolutions are certainly not funded by governments or banks. Instead, they are funded by individuals, people who know that the revolution must happen at any cost and are willing to risk whatever resources or talents they can to it—for the potential social return on investment.
For many of us, the slow-money perspective came as a revelation, and it moved us deeply. Suddenly we began to see how the local food revolution could be funded, supported at the most local level, by shifting local money into what is increasingly the most urgent and most important priority for our communities.
For instance, producing the kind of revolutionary publication we’re building—Local Food Shift magazine—calls for revolutionary investors, people who feel that it must happen. For us, it is community-supported publishing. That’s why we launched a Barnraiser crowdfunding campaign to help get our first edition off the ground, and why we’re emphasizing membership. It’s why the Slow Money investment club in Denver, Local Matters Investments, was one of our earliest investors.
This is why the Slow Money investment clubs are so important, because they represent individuals together directly risking small amounts of capital to fund the local food revolution. This, by the way, is also why investment forms like CSAs are so powerful. They go outside the dominant system to directly support those who are growing this revolution from the ground up.
This is not to say that there aren’t significant business and financial opportunities in the local food industry. But if these are not connected with the emerging centers of aliveness in our foodshed and developed with the intention of supporting the local food revolution, then they too will ultimately undermine it.
So we need not just impact investors or social philanthropists, but revolutionary investors—and we need tens of thousands of them. We need co-conspirators in this, fellow revolutionaries.
Slow Money investment clubs and crowdfunding campaigns represent just some of the ways revolutions get funded—by people with passion and vision, willing to muster great courage and take extraordinary risks, willing to invest in deep relationships in service to a greater purpose.