Strategies for local development
COOPERATIVE LOCAL INVESTMENT FUNDS

Several problems

By imposing the free movement of capital and investment, capitalist globalization reduces the capacity of the State and of local communities to control the levers of their economy. The capitalist bulldozer works against the collective ownership and control of the means of production.

The current economic system accentuates tendencies towards an excessive concentration of capital and of financial instruments. The world economy pushes national economies to specialize in certain sectors. The lack of economic diversity increases the vulnerability of many local economies.

At the moment, too much of the pension fund capital held by Canadians is invested abroad. This represents an important and concrete capital outflow. Rather than kneeling before foreign investors, cap in hand, the Canadian government should instead seek to mobilize the capital of Canadians internally.

At the same time, we note an important lack of capital destined to alternative projects at the local level. For instance, many resource regions need to develop new enterprises in secondary processing of resources. Similarly, many projects proposed by cooperatives or social economy organizations remain on the shelf due to limited access to venture capital.

Some solutions

During a first mandate, we will create Cooperative Local Investment Funds (CLIF) in all parts of the country. These Investment Funds will be controlled by local actors and will have the mandate to create employment and favour local development, in a spirit of empowerment, and will invest particularly in small and medium sized firms (SMEs), cooperatives and social economy organizations. Thus:

• A minimal percentage (say 15% of assets) must be invested in cooperatives or social economy organizations;
• A minimal percentage (say 15% of assets) must be invested in SMEs or micro-enterprise;
• A maximal percentage (say 20% of assets) must be invested in large firms.

Let us also note that a minimal percentage (around 30%) of assets must be held as Canadian Savings Bonds: the financing of the public debt will thereby become a government contribution to the local funds (even while reducing the debt held by foreigners).

We will create, at the federal level, a clear legislative framework concerning the recognition of the Local Cooperative Investment Funds. The federal government will be in charge of formally creating these funds in all parts of the country, even while progressively transferring the control of these Funds to local communities. A transition period of between one and three years should be sufficient for passing the torch. The federal government will provide continued support, particularly in terms of training.

We will undertake vast consultations with actors involved in community economic development in order to arrive at a consensus on the modes of functioning. As well, we will adopt a very strict code of ethics in order to ensure that the boards of directors of the Cooperative Local Investment Funds are democratic, transparent and accountable to their community. Consultations will be conducted on the issue of specifying the composition of these boards of directors.

Financing for these Funds will come from three sources:

• Permitting individuals to invest in their local fund in the form of an RRSP, providing the same tax advantages as labour-sponsored funds;
• Imposing a special tax on the profits of Canadian companies, which would be transferred to various local funds;
• Permitting companies to contribute directly to the Funds, and recognizing this contribution as a contribution to the community in their social balance sheet.

In the long term, the objective is to ensure that these Funds control a significant percentage of the countryıs total investment (say 10 to 15% in 20 years time).