Scotland just showed us how to keep wealth in local communities.

A new Scottish law will quietly shift how wealth circulates – and who actually benefits from economic growth.

In February, something happened in Scotland that the mainstream media barely covered. To be honest, I’m not sure if they covered it at all – probably because this news is a direct threat to the billionaires that own our media.

Here’s what happened: The Scottish Parliament passed a transformative new law that will attempt to fundamentally change who the economy works for. And if it succeeds, the law could provide a blueprint for countries around the world to move beyond extractive capitalism and toward something better.

What is it, and how does it work?

The basic idea behind the newly-passed Community Wealth Building Bill is that most of the wealth created within modern shareholder capitalism is extracted out of local communities and into the hands of outside investors and multinational corporations. This is a fundamental problem with the current economic system, because foreign corporations have little to no stake in whether a local community thrives or falls apart. If you’re wondering why it feels like your local infrastructure is falling apart while the stock market continues to go up, well… this is why.

The new Scottish law is designed – through a series of economic levers, which I’ll explain below – to redirect wealth from foreign corporations to local communities.

Perhaps our favorite section of the new Scottish law.

The overall framework of this legislation is set up to require local officials to reduce economic and wealth inequality. To make this possible, local governments are now required to set up a variety of economic incentives that are proven to keep wealth in local communities, such as:

• Ensuring local government contracts to go local businesses

• Transitioning land and energy production from private to public ownership

• Bringing vacant land back into use in a way that benefits local communities

• Supporting the development of co-operatives, employee-owned businesses, and social enterprises

• Directing funding toward local climate resilience and mitigation efforts

Taken together, these policies are a way for the Scottish government to put their finger on the scales of the economy, providing advantages to businesses that build wealth locally – and improving their ability to compete with businesses that run on a more traditional, extractive corporate model.

Has this worked before?

Yes – but as far as we can tell, it’s only been tested locally so far in Western countries.

The clearest recent example is Preston, England. After the 2008 financial crisis, Preston looked like a lot of post-industrial cities: abandoned by big businesses, with residents starved of economic opportunity. Preston was generating wealth; the city’s top four institutions alone were spending £750 million a year. The problem: only 5% of that wealth stayed in Preston.

St Walburge’s Church in Preston, England

Starting in 2013, Preston partnered with those institutions to redirect procurement back into the local economy. By shifting where those institutions spent their money – choosing local suppliers, supporting local co-ops, hiring locally – the city returned £70 million to the community, invested an additional £200 million into the broader county, and helped create 4,500 jobs. To add to these economic impacts, a peer-reviewed Lancet study found that the program was associated with a 9% improvement in life satisfaction and a 2% decline in depression.

What Preston showed is that when you change how an economy is organized – who it employs, who it buys from, how wealth circulates – the impacts go beyond economic indicators. They extend into material improvements of the conditions that shape people’s everyday lives: their wages, their job security, their mental health, their sense of having a stake in the place they live.

Why Scotland’s national law is a big step forward

Preston showed this could work at the city level. Scotland is now doing it nationally. That’s a meaningful difference in scale – and if it works, the argument for other countries to follow along becomes much harder to dismiss.

Data from 18 advanced economies over the last 50 years shows consistently that wealth is accumulating – but only at the top. The widening wealth gap is a feature, not a bug, of a thriving economy that’s structured to channel gains upward. Scotland’s bill is a direct response to that structural reality. Instead of waiting for trickle-down economics to kick in – which is a hoax to begin with (see clip below from our recent podcast episode with Dr. Butch Ware) – this community wealth building legislation mandates that economic activity benefits the people generating it.

This might not seem radical, given that worker-owned cooperatives, community land trusts, and public banking have long track records in countries around the world. What’s new is codifying advantages to these approaches into national law.

The broader movement – and what could go wrong

This step forward didn’t happen out of nowhere. Organizations like The Democracy Collaborative and the Wellbeing Economy Alliance have been promoting the adoption of community wealth building (CWB) legislation for years. Our hope is that Scotland’s new law can provide a valuable case study that adds momentum to the movement.

As Jessica Friday noted in her post about this, some stakeholders flagged concerns during the Scottish legislative process:

Resourcing gaps: Public bodies would be expected to deliver new approaches without clear implementation support or funding.

Centralisation risk: Guidance could undermine local self-determination, contradicting CWB’s core premise.

Vague accountability: “Due regard” standard lacks clear metrics for whether bodies actually comply.

Which is to say, it’s not guaranteed that this goes well – but if it does, other countries will have an example to follow. Regardless, as the movement builds momentum, it’s clear that Scotland won’t be the last domino. It’ll be worth watching what happens there over the next few years, and how it informs similar legislation elsewhere.

What you can do to be a part of it

In many parts of the world (like the US 🙃), community wealth building may seem out of reach. But much of the needed infrastructure already exists in most places.

If you want to get more involved, here are some ideas to start with:

• Starting, joining or supporting a worker cooperative in your area

• Looking into community land trusts as a more equitable alternative to the private real estate market

• Banking with a local credit union or public bank instead of a big commercial bank

• Supporting local businesses over international corporations as much as possible

None of these aren’t sufficient on their own to transition away from extractive capitalism. But they can all be notes in a chorus of voices that are calling for – and implementing – better systems in their local communities. More people participating in the CWB movement now will make future laws easier to pass – and that’s something to get excited about.

Here’s to a better future,

Michael

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Thumbnail image via Trey Tracey Travel.