Several weeks ago, the author was asked to present his research in front of a leading economic policy organization. Here’s what he said: 

I’ve taught history for more than 20 years: at CUNY, at NYU, and right now at Bard College’s Prison Initiative. Whenever I start a history class, I put this quote on the board: “Those who control the present control the past. Those who control the past control the future.”

Right now, those who benefit from the present-day system—particularly the real estate and finance lobby—are selling a particular story about the past. They argue that progressive policy “drives out investment,” and that this is the road to a repeat of the 1970s fiscal crisis. That story about the past is being told in order to control the future, to invalidate reform before it has a chance to work. I’ve studied these arguments going back 150 years. And what the history actually shows is nearly the opposite of what they claim.

Every time New York City has anchored its economic strategy to attracting and retaining large, wealthy enterprises, those efforts have ended in fiscal crisis—in the 1870s, the 1930s, and again in the 1970s. The social costs those strategies generate—displacement, infrastructure strain, public health burdens from pollution and overwork, rising public safety costs—have consistently left the city’s economy weaker, less affordable, and less just.

But there’s more to the story. Between the 1870s and the 1970s, a wide range of New Yorkers—tenant organizers, labor republicans, municipal socialists, Progressive Era reformers—mobilized against these strategies and generated bold alternatives: public utilities that returned revenue to the city rather than subsidizing private monopolies; land-value taxation that captured speculative gains rather than rewarding them; cooperative housing (the Amalgamated Houses, Co-Op City) that anchored working-class communities; community-oriented businesses and worker cooperatives that made the city more fiscally self-reliant rather than hostage to corporate goodwill. These weren’t fringe ideas; they were politically powerful responses to fiscal crisis, generated by people who understood the city’s finances from the ground up. Together, they expanded what I call our “fiscal imagination”: our capacity to think broadly about how a community meets its economic needs.

Every time New York City has anchored its economic strategy to attracting and retaining large, wealthy enterprises, those efforts have ended in fiscal crisis—in the 1870s, the 1930s, and again in the 1970s.

We are at a similar inflection point today. There is a growing solidarity economy in this city, and a growing number of institutions—from the Bronx Economic Development Corporation to the New Economy Coalition—advocating for it. What that movement needs, and what public leadership can provide, is a set of policies that move these frameworks from the margins to the mainstream and help deliver an affordable and just city for everyone.

The lesson repeats across each era. In the 1870s, New York’s first great period of corporate consolidation produced a fiscal crisis that was met, in time, with new public and cooperative institutions. In the 1930s, the collapse of speculative real estate and finance again forced the city to build public alternatives—public housing, public utilities, public authorities. In the 1970s, decades of corporate subsidy and disinvestment culminated in the fiscal crisis that reshaped the city’s politics for a generation. Each time, the pattern was the same: growth strategies built around concentrated private wealth generated real social costs, and each time, New Yorkers responded by building institutions that met needs more directly and more democratically.

What this shows is that economic development strategies built primarily around attracting and retaining large enterprises are not sufficient—and can be actively dangerous—for a city’s economic health. They generate large and expensive social costs that drain public budgets, make cities less affordable, and strengthen the very actors who resist reform.

Fortunately, we have alternatives. As New York’s history shows, a local economy is strongest when economic activity is locally rooted, ownership is widely shared, and growth is generated from the bottom up. As Jane Jacobs put it, “Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”

And right now, there is a renaissance of this kind of economic activity underway in cities across the country. We’re seeing inclusive and democratic enterprises that create good jobs. We’re seeing locally rooted financial institutions—community development credit unions—that direct capital toward the local economy rather than distant shareholders. We’re seeing communities take back control of land, mobilizing property to build real wealth, stop displacement, and create lasting affordable housing.

Two forms this housing takes in New York City are Housing Development Fund Corporations (HDFCs) and Mitchell-Lama cooperatives. There are roughly 1,200 HDFC co-ops, comprising around 25,000 units citywide, most created in the 1970s and 1980s by low-income communities of color fighting disinvestment and abandonment in their own neighborhoods. Mitchell-Lama cooperative housing, created in 1954 to address deteriorating housing conditions, government disinvestment, and white flight, today comprises roughly 60,000 units across 86 developments—one of the largest bodies of limited-equity housing anywhere in the U.S. Community Development Credit Unions, meanwhile, are member-owned financial institutions with a specific mission of serving low- and moderate-income communities that otherwise lack access to safe financial services.

A growing number of New York organizations—the Bronx Economic Development Corporation among them—are championing this kind of community wealth-building strategy as a way of strengthening their economic base. Local government can help by channeling grassroots energy already on the ground: investing its own purchasing power locally, partnering with anchor institutions to help grow community enterprises, and using its public platform to advance new-economy narratives that help catalyze the movement. New York has already begun doing this—through the Worker Cooperative Business Development Initiative, the country’s first state-run CDFI fund, and city-backed expansions of community land trusts. These are excellent starts. But more is possible.\

Four High-Leverage Steps

1. Build locally rooted finance through public banking and credit unions. New York City’s public dollars are still deposited in large commercial banks that invest them in financial instruments and real estate nationally, rather than in the local economy. A public bank—or a formal public partnership with CDFIs and community credit unions—would redirect that capital toward community lending: small business development, affordable housing construction, worker cooperative formation, and neighborhood commercial stabilization.

2.  Align city investment with community-led economic strategies. The Bronx Comprehensive Economic Development Strategy (CEDS) calls for community land trusts, shared-ownership models, worker cooperative development in the care sector, and what it terms “asset-based development and economic democracy.” These are the same strategies that produced the Amalgamated Houses, Co-Op City, and Cooperative Home Care Associates—the largest worker cooperative in the U.S., based in the Bronx, which has provided stable, unionized employment to home care workers, predominantly immigrant women of color, for decades. City government has an opportunity to align investment, technical assistance, land-use planning, and policy support behind this community-generated strategy. Organizations like the New Economy Coalition already have the relationships and the frameworks; what they need is government alignment and resources.

3. Mobilize anchor institution procurement. New York City’s hospitals, universities, cultural institutions, and public employers spend billions annually on goods and services—most of which leaks to national and multinational suppliers. Redirecting institutional purchasing toward local businesses, cooperatives, and minority- and women-owned enterprises is among the highest-leverage tools available to any city government. The Bronx CEDS specifically calls for anchor institution procurement reform as a cornerstone of borough-wide economic development, and the city’s existing relationships with anchor institutions could move this forward without new legislation or major new spending.

4. Account for social costs in development decisions. New York City evaluates proposed development projects primarily by projected tax revenue and job creation, a framework that captures benefits while systematically ignoring long-term costs. A social costs accounting protocol, applied to major economic development decisions, would give policymakers a fuller picture of fiscal consequences and a documented basis for preferring higher-road alternatives. This could include a leakage analysis of the city’s economic sectors—identifying where residents and businesses are purchasing goods and services from companies owned outside the city, and what those losses mean in terms of lost wages, taxes, and fiscal fragility. Sectors with the highest leakage are the strongest candidates for building up local equivalents.

Together, these four strategies would move New York toward an economy that builds up wealth rather than extracts it.

I want to close with one more historical example. The last time a strong social-democratic administration held City Hall before the 1970s fiscal crisis, it tried to finance a progressive agenda on top of a regressive economy. Mayor Robert Wagner Jr. built substantial public housing and supported an expanding welfare state, while also backing large-scale hotel and commercial development by developers like William Zeckendorf.

By neglecting the underlying economic structure, Wagner’s administration ultimately strengthened the very actors who would help take control of the city once the fiscal crisis hit. What followed was a diminishment of the city’s social welfare commitments alongside a continuation of the corporate welfare state—the same corporate welfare state that has shaped the debates we’re still having today.

We can’t afford to repeat that pattern. New York has, at various points in its history, had the movement and the public will to build a more democratic economy. What history will judge is whether that will was matched by structural reform—whether the moment was used to address the economic roots of inequality, not just its social symptoms. That’s the work in front of us now: building a city, and an economy, worthy of its citizens.

The author’s Substack, The Economy of Community, can be found here.

Featured image via City University of New York.