Community-Based Businesses Help Tame Market Economy Excesses

Capitalism is an amoral economic system. An amoral economic system or “the free market” cannot guide human beings and their behavior. On the contrary, the market must actively be guided and tamed in order to ensure that it benefits communities. Supporting community-based and community-oriented businesses is one important way to achieve this end.

For many people, the sight of vacant storefronts elicits assumptions about economic distress. In New York City, currently empty urban commercial spaces often come with dirty front sidewalks, graffiti, homeless squatters, drug dealing, prostitution, and street hustlers. Yet anyone who would associate these images with an economic recession or depression would be wrong in the current case of New York City.

By most economic measures, New York is doing well economically. The country’s most populous city is the business capital of the world, according to the latest Global Financial Centres Index ranking. The latest fourth quarter 2018 data from Cushman & Wakefield provide a summary of the generally rosy economic picture in New York, including the city’s increased employment, record tourism, and retail sales growth. Why, then, are some New Yorkers’ neighborhoods blighted with unsightly vacant storefronts?

Vacant Storefronts

Reliable official data on vacant storefronts are scant, although many New Yorkers have likely been pondering the reasons for these ubiquitous empty properties over the last several years. One website named “Vacant New York” provides an interactive map, based on real estate data and first-hand observations, of some of the many vacancies dotting Manhattan. Data from Cushman & Wakefield show considerable availability in some Manhattan central commercial areas, with availability as high as 32.8 percent in the Herald Square area. Elevated availability levels do not necessarily mean that a space is currently vacant, but they do reveal that there are changes in tenancy afoot. High commercial rental turnover means that businesses are not tethered to communities. These central commercial areas, however, are not the main concern here, for New York City does not consist solely of these highly trafficked business centers and tourist meccas. New York is a massive city with a land area of over 300 square miles spread over five boroughs. New York, home to over 8.6 million citizens, is a city of neighborhoods. If for rural Americans their towns are their community centers, for New Yorkers, their community centers are their neighborhoods.

The New York Times published an exposé of empty storefronts in Manhattan and Brooklyn, and an Atlantic piece also highlighted the circumstances. An earlier New Yorker piece blamed the phenomenon on “high-rent blight.” Small-scale surveys can also provide some data. For instance, in 2017, a mayoral candidate’s volunteers found 145 vacancies across 114 blocks in Manhattan. Another survey by a member of city council found that 12 percent of stores on the Upper West Side were unoccupied. In a photo exposé of a rapidly changing New York, one publication counted 31 empty storefronts on a four-block section of Canal Street in Manhattan. Although most of the available data and reporting on vacancies focus on main commercial areas of Manhattan, the problem can be found in neighborhoods in all five boroughs, especially in neighborhoods where “gentrifying” new residents have raised residential and retail rents to astronomical levels. The issue is a city-wide problem, which makes it unfortunate that there exist virtually no data on vacancies in the four boroughs outside of Manhattan.

There is a confluence of many, several of them related, potential reasons for the situation, but here are four of them:

First, rents are so high that only the largest commercial enterprises can afford to establish outposts. Second, with rents rising so quickly, landlords are making the strategic decision to keep commercial storefronts vacant, hoping to sign tenants to lease the spaces at the highest rates possible and relying on generous federal real estate tax deductions on losses of rental and business income in the meantime. Third, because real estate values have been rising so quickly, purchasing and holding a property and doing nothing with it may make financial investment sense for some. A sitting property in a place like New York City rises in considerable value by the very day. Fourth, sizable numbers of American shoppers have moved to purchasing many types of items from Internet giants that offer lower prices and whose models are more in accord with people’s digitally immersed lives. This essay will focus on the first two reasons.

Struggles in the More Mature Stages of Capitalism

The first potential reason for the vacant New York City storefronts is that rents for space have risen so high that only the largest businesses can afford them. This scenario eliminates small businesses, and individuals who might have been able to participate at another juncture now become forced to work for the few companies that can afford the rent. New York rents in many communities have risen so high that small businesses are unable to enter the market, and this fact will remain even if there are small decreases in rent based on temporary market fluctuations. As a result of this situation, the larger conglomerates become even larger, squeezing out smaller companies. Intimate community-based businesses, which are instrumental to the flourishing of communities, are no longer able to compete. For those companies that are publicly held, shareholders demand greater profit every year, year over year. Thus companies grow larger and larger, seeking untapped markets anywhere they can find them. Unlike many small businesses, these corporations have little connection to the communities in which they do business.

As a nearly decade-long employee of a teacher’s supply store in Brooklyn said in a New York Times profile, she “prides herself on knowing her regular customers on a first-name basis.” (The difference in this profiled case versus the case for others—and why the store is able to remain in existence—is that the proprietor of the store owns, rather than rents, the two-story building in which it is located.) As the owner of another business in Brooklyn told a local newspaper, the store she took over from her late father “means everything, my livelihood, my childhood, all my memories, my first kiss, all here.” Not only were the owner and her family part of the community, the community has considered the store to be a neighborhood gathering place.

The second potential reason for vacant storefronts in an economically thriving city is that landlords are holding out for even higher rents. These landlords are making a strategic decision: lose some months’ rent, but wait and perhaps sign a tenant for a multi-year lease at an even higher amount (while taking advantage of tax deductions). Others feel financial pressure to secure certain levels of rents. Others are speculators. The landlords are making decisions based on what is good for them—what will bring them more profits—regardless of what effects vacant storefronts may have on neighborhoods, or of how ever-rising rents may push more and more businesses out of play. In this scenario, only personal interest and money have a seat at the table, not people, or at least not beyond their function simply as customers and consumers of goods and services. Only the good of one man matters, not the common good of communities. When a business owner is part of a community, however, he cares about more than just profit.

Behind all of the likely contributing factors for the vacant storefronts in New York there are few, if any, proper connections between businesses and communities. The West is currently experiencing some of the effects of more mature capitalism, which is characterized by globalism, standardization, atomization in the making of economic decisions, considerable individualism, less commitment to communities, corporate monopolization, increasing technical automation, and commercialization, among others. For the purposes of this essay, the concern is the impact of this economy for communities. The dominating corporate behemoths in the present age have little affection for communities and, as a result, seek only profit without taking into account moral considerations or communities’ genuine flourishing beyond what their people can do for a business’ bottom line. Likewise, the people have little connection to these businesses, for their motive behind purchasing or not purchasing is based on personal economic decisions as well. In short, each party does only what is best for itself and does not consider the other in decision-making.

In this scenario, businesses and people have little connections to one another beyond the maximization solely of one’s own good. When business owners have personal connections to, and are intimate parts of, the communities they serve, and, likewise, people are invested in their community businesses, communities are afforded greater tools and ability to flourish. When to business owners human beings are more than simply customers, and communities are more than just a faceless place in which to maximize profit, the achievement of human flourishing in these communities is more possible.

The Purpose of Economic Systems

Capitalism in the West has had many good effects, particularly when it comes to raising standards of living. Just as those on the economic right need to acknowledge capitalism’s negative effects, those on the economic left must acknowledge the system’s positive ones. Constructive dialogue on the best system for human beings cannot take place if each side is simply defending their favored conclusion.

A perfect system does not exist. Many might argue that even the best-possible system has not yet been discovered. The result is that many are left to critique the systems that are in place. Prior to his ascension to the papacy as Benedict XVI, Joseph Cardinal Ratzinger illustrated in one essay that he gave allegiance neither to capitalism nor socialism. He might not have trumpeted a particular economic ideology, but Ratzinger did declare wariness toward what he considered to be an “astounding presupposition” in the “deterministic” nature of “The market’s inner logic… namely, that the natural laws of the market are in essence good… and necessarily work for the good…” In others words, capitalism is not inherently a good system.

Indeed, capitalism is an amoral economic system. An amoral economic system or “the free market” cannot guide human beings and their behavior. Man, using his reason, must actively guide and tame the market in order to ensure that it benefits men and their communities. That which needs taming requires quotidian guidance.

Capitalism is not an end but rather it is an imperfect means. As such, the system must not be defended blindly. The one who, like Aristotle, sees human flourishing as the proper end for rational man will boast about the economic system’s positive effects while truthfully acknowledging its negative effects and attempting to ameliorate them so far as possible. One does not need to be “pro-capitalism” or “anti-capitalism” in order to support a positive effect or to denounce a negative effect of the economic system. Those who love truth must reject ideological attachments to particular economic systems, proclaiming that an economic system is good only when its effects are good for people and their communities.

Community-Based Businesses 

One component of the free market that has good effects are community-based businesses owned and operated by proprietors only running that one establishment and who themselves live in the community they serve. These businesses care about those in the community and, in turn, the people care about these businesses. The health of a community is inextricably attached to the health of the business and vice versa. These businesses do not shutter en masse, leaving vacant storefronts in their wake because another community elsewhere offers greater profit. For these businesses, they are of one community.

The small, community-based, and community-oriented businesses also provide proper checks upon the passions that lead men to hurt one another and their communities. Community-based and community-oriented businesses assist in taming the excesses of capitalism. When business owners are intimate with, and directly responsible to, their customers (who double as their neighbors), they are less likely to succumb to the passions enflamed by capitalism. By contrast, New York’s vacant storefronts represent a state in which businesses have no genuine connections to communities beyond profit maximization. Business has ceased being one with the community in this scenario.

The advanced maturation of capitalism will come to a head, as all bad things must. In the meantime, the negative effects can be ameliorated in one’s own circles. Although certainly not a panacea, one way to achieve this end is by supporting community-based and community-oriented businesses operated by those who live in the community.

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