Successful cities need more small business, and less big capital.

By: Pierre Herman

Cities need more socialism. That is, they need capital that is social, acting for the community, by the community.

We tend to overlook the role of small businesses when talking about healthy cities, preferring to focus on urban design and the role of things like bike-sharing and the like. But thriving, small independent businesses are one of the keys to making our cities great places to live, not to mention being sustainable environmentally, economically and socially speaking. And as actors in the economic redistribution game, they ensure that capital stays within the community of those who produced it.

So why are we laying out the welcome mat to big capital?

This phenomenon of seeing small business culture wither while large conglomerates take over our shops, restaurants and services is frightening from a sustainability point of view and it must be stopped.

Many cities in developed economies are seeing small business culture collapse, London, England being a case in point. Large swaths of commercial areas all over the city are being (and have for some time already been) overtaken by chain stores and chain restaurants, and the phenomenon is not restricted to the capital, but extends to all but the tiniest of villages in the entire United Kingdom.

Large big-box stores on the edge of cities are sucking the life out of city centres too, and with the business goes good-paying jobs, livelihoods, and personal fulfillment.

In Seattle, Washington (USA) the local government just this year enacted the highest minimum wage in the country, at $15/hr. The problem is the fact that wages are being suppressed more and more by chains and big capital that favours efficiency and productivity over a living-wage. But what we don’t need is to convince big capital to pay more. We need to make room for small business to flourish once again.

These large conglomerates and their chains, which push efficiency and productivity, as well as shareholder gains, well over the health and well-being of individuals and communities, have wrestled away from us control over a once important source of employment and livelihood. In its place, we get low-paying jobs that offer little in the way of personal or professional fulfillment, at least not the way owning one’s own small business can offer.

The higher quality of life they offer is also a direct result of profits staying in the community, as opposed to being siphoned off to an offshore bank or shareholder’s pockets. This is something now called the multiplier effect of small business. One study in the US found that on average, 48 percent of each purchase at local independent businesses was recirculated locally, compared to less than 14 percent of purchases at chain stores.

Small businesses also tend to make decisions that are much more responsible in terms of the environment, the well-being of their employees, ethical purchasing, as well as buying products that are locally made.

Photo Credit: Oh Barcelona (Flickr)

Photo Credit: Oh Barcelona (Flickr)

An excellent example of a healthy thriving neighbourhood where small business is king is Grácia in Barcelona. This is what other neighbourhoods around the world should have as their benchmark: a dense, low-rise district with a web of mostly pedestrianized (or one-lane only) streets, broken up by large open-air squares and a large predominance of locally owned small businesses. The density offers an immediate market to the shops and services below, while the maximum 3 or 4 story buildings lends a human scale to the neighbourhood that cannot be replicated with 20 or 30 story condominium complexes. A majority of residents in the neighbourhood don’t own a car.

The local businesses here are also characterized by something unique: their small size. Big capital, even medium capital if you will, where the pressure to start growing and accumulating at the expense of workers and the environment, just to please shareholders with other priorities, is glaringly absent.

Photo credit: Oh Barcelona (Flickr)

Photo credit: Oh Barcelona (Flickr)

There are local designers and clothing boutiques, art and artisan shops, small restaurants and bars, specialty food shops, small cinemas, stationery stores, hardware and electronic shops, dance studios and language schools, book shops and cafés, wine shops and bakeries, and a large number of them geared towards sustainable living. Most endearing are the quirky shops you’d never think could survive, like the ones selling one-off, hand-made paper gifts, or upcycled “junk”, but they do.

No, the owners of these businesses may not be rich. They may even struggle at times. And they certainly aren’t doing shareholders in another country or big capital any favours. But as we know we can’t all be millionaires without completely bludgeoning the Earth. We need to live within reason, yet happily, and somewhat fulfilled. And small business is the way to provide that quality of life while redistributing wealth within the community, and help people capitalize on their talents and skills all while building life in the community.

Grácia may be chaotic at times, but that lack of over-the-top planning and zoning laws which have sucked the exuberance out of many cities in US or the UK, is precisely what allows creativity to flourish, something so important to small business creation.

Cities need to believe in individuals again. And we need to start promoting small business creation by creating spaces where small, individually owned business can flourish. Not high-rent shopping centres, but neighbourhoods like Grácia. If we need to tear down and build again to make it possible, let’s do it. But just don’t sell it off to the highest-bidding big capital conglomerate – just think what they would do with it.

Photo credit: Paulie (Flickr)

Photo credit: Paulie (Flickr)


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This entry was posted on June 11, 2014 by in Economy, Ideas & Issues.

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