The Community Economic Development Movement: Law, Business, and the New Social Policy.

• Author: Torres, Gerald
• Position: Book Review

THE COMMUNITY ECONOMIC DEVELOPMENT MOVEMENT: LAW, BUSINESS, AND THE NEW SOCIAL POLICY. By William H. Simon. ** Durham: Duke University Press, 2001. 230 pp. + viii.

INTRODUCTION I. POLICY AND THE POOR: THE INTELLECTUAL ROOTS OF THE CED MOVEMENT II. THE EVOLUTION OF THE COMMUNITY ECONOMIC DEVELOPMENT MOVEMENT A. The Logic of CED B. The Logic of the CED Movement and the Capacity for Change CONCLUSION Law reflects, but in no sense determines the moral worth of a society. (1) But if lawyers want to play a role in creating good laws, they must step out of their law libraries into the extralegal sector, which is the only source of the information they need to build a truly legitimate formal legal system. (2) INTRODUCTION

One of the promises candidate Bill Clinton made in 1992 was to end welfare as we know it. What he had in mind was probably not what was contained in the welfare reform bill that led to the resignation of his old friend Peter Edelman from his position as Assistant Secretary for Planning and Evaluation of the Department of Health and Human Services. (3) The unraveling of the social safety net that began under President Reagan, while leaving many of the most vulnerable to the mercies of a changing social contract, also sparked a movement of community economic self help. Working with lawyers, activists, churches, corporations, and cooperatives, communities began to build new models of public/private initiatives that would reduce dependency on the vagaries of policy fights in Washington. In fits and starts, working out of the tradition of poverty programs that emerged from Johnson's Great Society initiatives, the Community Economic Development (CED) Movement challenged the limitations and abuses that those programs spawned and began the efforts of fundamental reform. They began without a theory, but their efforts produced a collection of practices that revealed a theoretical structure born of necessity and pragmatism.

It is this history of institutional innovation that Professor Simon chronicles in his new book, The Community Economic Development Movement: Law, Business, and the New Social Policy. (4) Professor Simon surveys a number of specific cases and teases out of their successes and failures a theory of institutional innovation that is critical for the kind of community empowerment upon which poverty elimination depends. He also demonstrates that there is not a single model that guarantees success even though there are common elements within the different models without which success would largely be impossible. Perhaps most importantly, even though the community actions that he surveys are all working from within a dominant federal regulatory model, there is a strong dose of local knowledge that tempers generalizations. Thus the common elements that Professor Simon identifies will all take on the particular coloration of the communities from which they emerge. The politics will reflect both the cultures of the communities and the forms of resistance that have emerged through their work. Simon is clear that resistance is essential to the structure of local efforts and part of the design of CED organizations is a changed form of engagement with the conventional local political institutions and their players.

1. POLICY AND THE POOR: THE INTELLECTUAL ROOTS OF THE CED MOVEMENT

   Professor Simon's study is written against a background of theoretical ferment that grew out of changing attitudes towards poverty and the poor as well as a critical scholarship that detailed the limitations of existing policy. (5) Two of the most interesting commentators who are also most illuminating of the CED work that Professor Simon documents are Michael Sherraden and Hernando de Soto. The insight out of which their work grows is that economic interventions on behalf of the poor can only be transformative if the interventions directly link the poor to the creation of the material conditions that determine their social, economic, and political life. Income policies for the poor are insufficient to secure this linkage. Production and asset accumulation are the linchpins, yet if these two elements are to be connected to the creation of a decent democratic life, then, as my colleague Willy Forbath has said in conversation, "need, needs a theory." Simon shows how the CED Movement begins to provide this theory through the practice of numerous community organizations. But first, Sherraden and de Soto.

   In 1991, Michael Sherraden, a professor of social work at Washington University in St. Louis, published an important book on welfare reform entitled Assets and the Poor: A New American Welfare Policy. (6) In this book Professor Sherraden argued that welfare policy had reached a dead end because it was conceptually rooted in the idea of income maintenance for the poor rather than asset accumulation. (7) Of course, the theoretical focus on consumption and income distribution reflects the extent to which our economy as a whole is weighted toward consumption. By shifting from consumption to production, however, Sherraden argues that we would not only change the idea of welfare, but that we could also change the patterns through which the poor (and perhaps, especially, the working poor) engaged the private economy and the public sphere. It is in these changes that restructuring our understanding of poverty and its causes holds the most potential for dramatic social change.

   Yet, in some ways, the story of antipoverty policy that Sherraden tells is a little like the story of the drunk searching for his keys in the glow of the street lamp. It is not that he lost them there, but it is the only place he can see. One reason there has been a focus on income disparities and income maintenance is because we have much better data on income than we do on assets. From the perspective of public accountability, it makes sense to focus on those things that we can measure, but, according to Sherraden, relying principally on that data to make systemic changes to the structure of poverty has about as much chance for success as the drunk has of finding his keys. Instead, looking at the data we do have about asset distribution tells us something about how wealth is generated and how it is passed on across generations. The intergenerational impact of poverty and the inability of conventional income-based welfare policy to break that intergenerational cycle is perhaps its most pernicious characteristic. (8) This long-term intergenerational impact of conventional policies eats away at the democratic institutions that permit liberal democratic capitalism to survive.

   What happens when you change focus from income to assets? The first thing you notice is that assets, rather than just measuring tangible wealth, are themselves a source of income and stability. Thus turning attention to assets leads to inquiries into the relative distribution of sources of income. (9) What Sherraden finds is that for most people in the United States labor is the major source of income. Yet when the data is disaggregated into socioeconomic classes it reveals that as one moves up the economic pyramid assets become an ever larger source of income, easily eclipsing labor as one moves closer to the top. (10) The conclusion for Sherraden is that if policy design is aimed at permanently getting people both out of poverty and out of dependence on transfer payments, it has to aim at changing the mix of income sources so that people, especially working people, are not just "two paychecks from poverty." (11) Like Simon and the actors in the communities he analyzes, Sherraden recognizes that poverty policy must aim to convert the dependence on low-paying labor and transfer payments into a capacity to accumulate assets and to deploy them in the service of economic independence. The first change, aside from attention to the processes of asset accumulation, is to eliminate the legal and social impediments to that accumulation. (12)

   Hernando de Soto makes a similar if more global and scathing critique. He argues that it is not merely a matter of asset accumulation; the poor already have many more assets than is commonly appreciated. (13) For example, according to de Soto;

   In Haiti, untitled rural and urban real estate holdings are together worth some $5.2 billion. To put that sum in...