California Free Press

The Gig Economy: OK If the Profits Went to the Giggers

by John Lawrence from the San Diego Free Press

The Gig Economy is Not a Bad Idea If ...

There's nothing inherently wrong with the idea of working a job here and a job there according to the worker's convenience and other activities. The problem is that the profits go to some centralized corporation rather than being spread out among all the giggers in proportion to their participation in the system. If Uber or Lyft were a co-op, the profits would go to all the worker/owners instead of a handful of investors. Then the gig economy would offer not only a technique for working at one's convenience and fitting into one's schedule whether that schedule might be educational or child care or surfing or whatever. In other words making up one's own work schedule so it fits into your life is not a bad thing as long as the enterprise is co-operatively owned and provides not only convenience but worker protections.

It used to be only musicians comprised the "gig" economy. But there have always been self-employed people that worked gig to gig. Self-employed are the only really free people in the sense that they don't have to take orders from any boss, from any employer. If they want to take time off, the only person they need to consult is themselves. Especially if they have a large customer base, no single person or entity controls them. If they don't like a particular customer they can tell them to take a hike and vice versa. The power in the economy is equally distributed. This is the only really free market as far as workers are concerned. You don't have to kiss the boss's ass. And you can retire or not retire when you want to rather than when your boss tells you to. Did I mention that you can't be laid off, let go, downsized or outsourced?

Computer Technology Takes Self-Employment to the Next Level

Today computer technology takes self-employment to the next level, but it does not necessarily empower the worker in the gig economy. Uber has opened one door, but there are many other doors to be opened. Shift scheduling software for nurses has been in use for a few years. This technology can not only track each participant's schedule, but integrate those schedules so that necessary work is covered and everyone gets a fair shake. That means that no one is always scheduled for the night shift. Scheduling software then takes on a primary role in covering worker participation in such a way as the job or jobs get done. With Uber and Lyft there is no scheduling software per se. Everyone just works whenever they want so that at times there may be an oversupply of available drivers, and at other times there may be none available. Their software just tracks who has worked where and at what times as well as how many fares they've driven and for what amounts. They also set the price depending on demand, so-called dynamic pricing.

It's OK to price gouge the customer if demand is high, and multiple drivers are incentivized to drop what they're doing and pick up some fares. Similarly, when demand is low, the price comes down and customers are incentivized to hire an Uber even though there may be none available because drivers are disincentivized. Adjusting consumer and driver demand is a problem that supposedly Uber is in the process of solving. Supply and demand maladjustments are part and parcel of capitalism. They're a problem that capitalists seek to profit from rather than solve.

In The ‘gig economy’ is coming. What will it mean for work? author Arun Sundararajan writes:

... providers don’t have to commit to full days of work. You can pick up your kids from school (and then switch to being an Uber driver). In the gig economy, the lines between personal and professional become increasingly blurred.

There’s certainly something empowering about being your own boss. With the right mindset, you can achieve a better work-life balance. But there’s also something empowering about a steady pay cheque, fixed work hours and company-provided benefits. It’s harder to plan your life longer term when you don’t know how much money you’re going to be making next year.

On the other hand, starting a new business has generally been an all-or-nothing proposition, requiring a significant appetite for risk. There are benefits to dipping your toes into the entrepreneurial waters by experimenting with a few gigs on the side. Perhaps this lowering of barriers to entrepreneurship will spur innovation across the economy.

Economist Thomas Piketty tells us that the main driver of sustained economic inequality over the past two centuries has been the concentration of wealth-producing “capital” in the hands of a few. This seems less likely if the economy is powered by millions of micro-entrepreneurs who own their businesses, rather than a small number of giant corporations.

But the latest generation of specialised labour platforms also raises the spectre of greater social inequality. We’ve now got apps through which providers will park your car (Luxe), buy and deliver your groceries (Instacart), and get you your drinks (Drizly). There’s a risk we might devolve into a society in which the on-demand many end up serving the privileged few.

In many countries, key slices of the social safety net are tied to full-time employment with a company or the government. Although the broader socioeconomic effects of the gig economy are as yet unclear, it is clear we must rethink the provision of our safety net, decoupling it from salaried jobs and making it more readily available to independent workers.

Shift Selection Software Allows Employees to Set Their Own Schedules

But there is another way of looking at the situation if Uber or something like Uber were to be a co-op instead of a corporation whose main concern was profits. What if prices for the consumer were held constant and drivers were incentivized to meet demand whatever that demand might be? With a co-op undesirable shifts might command a higher hourly paycheck and popular shifts might be paid at a lower hourly rate, but all would share in the profits commensurate with their total hours of work or participation. Software is smart enough to figure all this out. We don't have to hold on to the model of the 40 hour workweek for a corporate employer.

Worker protections ideally would be offered not by individual employers, but by society at large meaning the government. Universal health care would preempt workers' compensation insurance which would be moot. Family leave and vacations and whatever else is thought to be fair and desirable would presumably be offered in a co-op since it wouldn't be at odds with company profits which after all would be distributed among the workers according to some formula, but could be doubly guaranteed by society-at-large as well. There would be no conflict between workers and owners because the workers would be the owners so unions would be unnecessary. Call me a dreamer.

Politonomics is a methodology for deciding how to distribute work and compensation for work in such a way that maximizes worker satisfaction. The idea is not to maximize profits for shareholders or corporate CEOs and other executives, but how to maximize worker satisfaction which includes compensation for hours worked, worker protections and a share of the profits. The worker/owners would have democratic participation in decision making such as workers in German corporations have.

There is a clear legal basis in Germany for the workplace representation of employees in all but the very smallest companies. Under the Works Constitution Act, first passed in 1952 and subsequently amended, most recently in 2001, a works council can be set up in all private sector workplaces with at least five employees. (There is a system of staff councils in the public sector which have a broadly similar structure.)

 

We have to look no farther than the Ocean Beach People's Organic Food Market to find an example of a worker owned co-op. As they say on their website:

Simply put, a cooperative is a special form of business owned and managed by the people who provide and/or use the goods and services that the business provides. They pool resources to satisfy a common need and provide these goods and services as economically and efficiently as possible. A co-op is owned by the people who use it.

As locally owned businesses, co-ops are committed to the people they serve and the communities they live in. Owners can have a voice in what is available for purchase, as well as in the overall organization of their particular co-op. Owners get the most buying power for their money, and the money stays in the community, contributing to its economic strength.

Like other cooperatives, Ocean Beach People's Organic Food Co-op operates according to the seven Cooperative Business Principles.

A champion of co-ops Gar Alperovitz said:

My interest began back in 1977, when a big steel company, Youngstown Sheet and Tube, went out of business. Five thousand people in Youngstown, Ohio, lost their jobs in one day, which was disastrous. Layoffs of that size are common today—especially when multinational corporations shift capital around—but in 1977 that was front-page, national news. It was a big, big deal.

But the community leaders and steel workers in Youngstown decided that they didn’t have to go down without a fight. They got together and built a coalition to buy the steel mill back and run it themselves, under worker-community ownership. They began organizing locally and statewide, and soon the Carter administration agreed to provide funds to hire experts who could help them with the mill’s technical designs.

New Models for Ownership and Employment

We have to think in terms of new models for ownership and for employment. Increasing economic inequality demands a solution. Co-ops are that solution. The old model of workers in competition with owners which gave rise to the union movement is or should be passe, and in its place should be a model in which workers are owners, unions are unnecessary and worker protections are guaranteed by the co-op itself and by society in general. The gig economy could be a good thing in terms of work schedule convenience and integration of work with other life enhancing and/or demanding activities.

Child care and elder care can be integrated into one's work schedule and time off is at the worker's scheduling disposal instead of being mandated as holidays or weekends or vacation by the corporate owners. Many workers would choose to take vacations when roads are less crowded than they are on mandated holidays. Today there is nothing sacrosanct about not working on Sunday or holidays as there used to be. The 40 hour work week should be a thing of the past with workers working as many hours as they choose on whatever days they choose without being exploited. Workers can set their own schedules and decide when their vacations should be instead of having to ask the permission of their bosses. And they wouldn't have to worry about their jobs being shipped to China.

Redefining the American Dream

by John Lawrence

The American Dream is the ideological underpinning of the middle class. Now that the middle class is disappearing, it no longer makes sense as historically defined. Thom Hartmann (Rebooting the American Dream) and Hedrick Smith (Who Stole the American Dream) have defined the American Dream as a good job at good wages plus benefits. They bemoan the fact that this has pretty much gone by the wayside in today's world. Well, it's time to get over it because the conditions that gave rise to middle class prosperity in America from 1945 to 1980 are not coming back.

The era in which the economic rewards from rising productivity were widely shared between workers and owners is over. Those good jobs resulted from the fact that unions put pressure on corporations. Private sector union membership reached a peak of about 35 percent of the labor force in the 1950s. Today union membership, especially in the private sector, has fallen off to less than 10%. The decline of the middle class mirrors the decline in union membership. Today in a globalized economy, corporations employ workers wherever in the world they can get them for cheapest.

During the heyday of the middle class, it was possible to own a house, a car, eat out once a week, take a vacation once a year, send a child to college without going into debt, have health care and a pension that would pay out monthly benefits for life - all in a one job family in which the wife could stay home with the children and make pies and cakes. Then Reagan was elected President in 1980 and the War on the Middle Class began. Taxes that had been progressive during the middle class era became regressive. Instead of the transfer of tax money from rich to poor, the opposite started to occur. According to Thom Hartmann this was the single biggest factor in impoverishing the middle class.

When we had heavily regulated and taxed capitalism in the post-war era, the largest employer in America was General Motors, and they paid working people what would be, in today's dollars, about $50 an hour with benefits. Reagan began deregulating and cutting taxes on capitalism in 1981, and today, with more classical "raw capitalism," what we call "Reaganomics," or "supply side economics," our nation's largest employer is WalMart and they pay around $10 an hour.

This is how quickly capitalism reorients itself when the brakes of regulation and taxes are removed - this huge change was done in less than 35 years.

The deunionization of America, a globalized work force and regressive taxation have all combined to decrease the middle class and undermine the American Dream. There is no use trying to get the conditions back that supported that dream. It ain't going to happen. However, it is possible to develop a new Weltanschauung or world view that doesn't have anything to do with trying to recreate the conditions that led to middle class prosperity in the past. This involves letting go of many of the assumptions that were productive in the past but today are completely dysfunctional.

One of these assumptions is that, if we prepare ourselves as students for a job, some benign employer will hire us. Under this assumption it's the employer's job to provide jobs for us, the employees. I call this employee consciousness wherein most people aspire to be employees, to work for somebody else. Today most employers have no responsibility whatsoever to their employees. Employees are hired "at will" which means they can get rid of you for no reason at all. So rather than get laid off at the age of 50 because some whippersnapper can do a better job than you can at half your pay rate, you're better off being self-employed from the start of your career. Create your own job. It'll be harder at first, but, as the years go by, you'll be much better off especially if you gear yourself from the very beginning to be your own boss and not delegate the job of bossing you to someone else.

Another assumption is that a college education is essential to a middle class lifestyle. No longer true. Today a college education is just a precursor to a lifetime of debt. Instead of starting off life debt free which was the case for most college students from World War II until Reagan's election, college students today start off life with a debt equal to a first mortgage. Better to start a career just out of high school and not waste four years in college for what amounts to a worthless piece of paper.

There are many jobs that can be done with just training acquired either at high school or during the high school years that end up paying more than those that require a college degree and which can be easily outsourced. Think local service type jobs rather than jobs with national or global pretensions. Plumbers, electricians and many other service jobs are more remunerative in the long run than jobs for which you need a college degree, and, instead of being laid off at the age of 50, you will have an asset - your business - which is salable at the age of 50.

The only good non-self-employed jobs are unionized jobs in the public sector. For instance New York City sanitation workers make around $90,000 a year. Becoming a garbage man is the most coveted job in the city. Over 90,000 people applied last year for the job of carting away NYC's garbage, but they only hire about 500 a year. It's actually harder to become a sanitation worker in New York City than it is to get into Harvard. Starting salary is about $34,000, but with overtime it averages about $47,000 the first year. After 5.5 years the salary jumps to an average of $89,000. This compares with an average salary for New York teachers which is $68,000.

Since sanitation workers also operate New York City's snow plows, there is ample opportunity for overtime pay. They also get 10% more for night shifts, double time for Sundays, 25 vacation days a year and unlimited sick leave. Sanitation workers in NYC have a very good health care plan and excellent pension benefits. And it's all because they have a very strong union. You can retire in 20 years. 71% of all government workers in New York state are unionized. That's the difference that unionization has made, and it explains the lack of wage growth in the deunionized private sector.

For those unwilling or unable to be self-employed or unable to win the lottery to become a NYC sanitation worker, consider a two year associate's degree from a community college which by the way President Obama wants to be free. Good luck with that. If wishes were horses, then beggars would ride. There's a wave of people with two year degrees in applied science earning as much or more in their first year after graduation than four year college graduates. According to collegemeasures.org, these two year degrees from a technical college are worth more in the job market than bachelor's degrees. In Texas the earnings difference between 2-year technical college graduates vs those with a bachelor's degree was on average $11,000. In Virginia it was $2000 and in Colorado it was $7000.

In Colorado the community college tuition is about $3600 per year, but the median wage for graduates in their first year of employment is $53,000, a significant cost/benefit advantage over four year colleges. Red Rock Community College near Denver has a water quality management program which almost guarantees graduates a good job since the City of Denver needs 1800 water quality workers in the next few years.

That portion of the American Dream that promised a lifetime pension after working for 30 years has been totally vitiated. The defined benefit pension which promised a fixed monthly amount for life has been replaced by the defined contribution pension or 401(k) in which the employee funds and manages his own retirement account. This might as well be called the undefined benefit pseudo pension as there is no guarantee that the amount of money in your account on retirement will last a lifetime. So what good is it if you find at the age of 85 that you've run out of money. We'll be seeing a lot of 85 year olds reduced to living on the streets since corporations have pulled the rug out from under the defined benefit plans. Now the employee, not the corporation, takes all the risk in the stock market.

401(k)s are do-it-yourself pensions. You invest your own money in the stock market in the hopes that your expertise in managing your portfolio will result in an adequate pension. Unfortunately, most employees have little expertise in that area. Hedrick Smith writes:

[The advent of 401(k)s] was a monumental transformation for the American middle class. "When the 401(k)s came in, there was a sea change, a huge shift in who was paying for retirement,"observed Brooks Hamilton. "In the old system, employers put up most of the money - 89%. The employees contributed 11%. Those figures are from the Department of Labor. Fast-forward to the 401(k) system and today, employees are paying more than half - 51% - and the companies, 49%. So there was a huge shift in costs from employers to employees - hundreds of billions of dollars."

The average employee has far less in his or her 401(k) than what will be needed over a lifetime especially if he or she lives into their 90s which is becoming increasingly common. The typical nest egg of those in their 60s with a 401(k) who are nearing retirement is around $79,000 according to The Center for Retirement Research at Boston College. This is far less than required to live a middle class lifestyle for the average life span.

Hedrick Smith sums up:

Retirement specialists like Brooks Hamilton and Alice Munnell question whether, in this turbulent economy, the task of financing retirement is too fraught with risk and too complicated for most average Americans, especially the millions who are gun-shy about financial markets.

So one of the advantages of employeehood, a secure retirement, has been taken away. Rather than live off a fixed sum of money at retirement, you need to do what the rich do: live on the return from your investment not the investment itself. It's up to you to acquire your own wealth from which to pay yourself a monthly stipend from the return on that wealth. That's the only way it will last as long as you need it. If you have a fixed pot of money like that which the 401(k) provides and you live off of it, you will be consuming your own seed capital. On the other hand if you own a rental which pays you $1000 a month in rent, that goes on in perpetuity and you can will that asset to your heirs. In other words you will never run out of money. Most of those depending on 401(k)s have the middle class mindset that you live off your life savings. This mindset and assumption needs to be changed. They will run out of money at some point unless they die quickly after retirement.

It is better to acquire property development skills like carpentry, plumbing, electrical etc in high school so that you can add value to a piece of property and rent it out thus acquiring a life time cash flow. You can't add value to a stock portfolio and it is subject to the vagaries of the market including bubbles and subsequent crashes. That's where self-employment in the building trades is invaluable. You can build wealth by adding value. And all the learning tools are readily available in the library or on the internet. The ancillary benefit of learning one or more trades is that you can build wealth on the side in addition to earning a living.

Thom Hartmann and Hedrick Smith are good analysts but their solutions amount to wanting the Federal government to bring back the good old days by creating good jobs at good wages. Yeah, it would be nice to have the Federal government put up $2 trillion to repair or rebuild infrastructure. It's just not going to happen. The Federal government and a lot of state governments have been captured by rich billionaires and corporations that have more economic power than most countries and they don't want it to happen. It would be nice to tax the rich and transfer money to the poor. It's not going to happen. So despite the imprecations of Bernie Sanders, Elizabeth Warren and other voices crying out in the wilderness, their solutions are just pipe dreams.

Wishing does not make it so. We're in a totally different environment than the one after World War II when veterans could go to college and buy houses with veterans' benefits. Today most jobs are being reduced to Wal-Mart type service jobs. But you can still make good money in a service job providing it's a self-employed service job and you're servicing the local economy.

Forget about STEM (Science, Technology, Engineering, Math) jobs. A few short years after graduating from college, skills in those areas will be obsolete and corporations will let you go because you will be deadwood. They want recent college graduates. Cutting edge skill sets don't benefit America as some would suggest. They only benefit American corporations which have absolutely no loyalty to their employees or in fact to America. They are doing everything they can including moving their headquarters out of the US to avoid paying taxes. Instead of being concerned about global competition and America's winning, be concerned about the local economy and contributing to it while at the same time earning a living and creating wealth for yourself. If an enterprise requires a number of workers to make it viable, form it as a cooperative and share the profits.

 

 

 

 

The Alaska Permanent Fund: Socialism in a Republican State

by John Lawrence from the San Diego Free Press

Alaska is a land of rugged individualists - Republicans all the way. However, a little known fact is that Alaska taxes the oil and gas corporations operating there and distributes the proceeds on an annual basis equally among every man, woman and child living in the state. The biggest farce of all is that Tea Party touter, Governor Sarah Palin, slapped an excess profits tax on the state's oil companies in 2008, the year she ran for vice-President alongside John McCain, so that every person in Alaska received a dividend of $3269 that year. That was a pretty good haul for a family of four: $13,076. For Palin's family - husband Todd, sons Track and Trig and daughters Bristol, Willow and Piper - it came to an even better haul - $22,883!

Let me be clear. I am totally in favor of institutions like the Alaska Permanent Fund and think they should be extended to the entire US which would guarantee every American citizen a basic income which would come from things we all own in common like oil and mineral deposits, the electromagnetic spectrum and the air we breathe. But someone like Palin, who presided over a plan that taxed corporations and distributed the proceeds to each citizen of Alaska while at the same time taking humungus speaking fees to egg on the Tea Party with anti-tax, anti-socialist and free market rhetoric, is nothing but a super hypocrite, someone beyond the pale - in.

Jay Hammond, the Governor of Alaska from 1974 to 1982 is the father of Alaska's Permanent Fund. He conceived and then persuaded voters and legislators in a state of rugged individualists to adopt the world's first dividend paying fund of the sort that American forefather Thomas Paine envisioned. Paine in his pamphlet Agrarian Justice proposed a guaranteed basic income, a precursor of Social Security. Although supposedly ideologically opposed to such a plan, Alaskans approved it and it has proved to be a big success and very popular despite the state' s supposed rugged individualistic ethic. They thought it was a pretty good idea to get a check for over $1000. in the mail every year or, as is done today, a direct deposit wired into their bank account.

Since 1980 the fund has grown from $900 million in assets to over $44 billion today. It has paid yearly dividends to Alaskans that have regularly exceeded $1000. As Hammond conceived it, it enabled Alaskans to benefit from the many natural resources they owned in common rather than let private corporations, who are in the business of exploiting those resources, be the only beneficiaries.

The dividends from Alaska's fund have stimulated the economy from the bottom up rather than from the top down and have virtually eliminated poverty within the state. Alaska is economically one of the most equal states in the union.

But Palin is such a hypocrite. When asked by Sean Hannity about the inconsistency of her actions as Governor and her rhetoric as the queen bee of the Tea Party, Palin said "What we're doing up there is returning a share of resource development dollars back to the people who own the resources. Our constitution mandates that as you develop resources, it's to be for the maximum benefit of the people, not the corporations, not the government, but the people of Alaska." Very well, but then why all the rhetoric that extolls private over public interests and lowering as opposed to raising taxes on corporations?

Contrast this with what Palin told a Tea Party crowd on September 4, 2011: "So, to make America the most attractive and competitive place to do business, to set up shop here and hire people here, to attract capital from all over the globe that will lead to an explosion of growth, instead of chasing industry offshore, I propose to eliminate all federal corporate income tax." I suppose this doesn't include the Alaska Permanent Fund user's fee because it is not strictly speaking a tax. It's a user's fee! The fees charged the oil and gas corporations operating in Alaska are owed to the owners of the resource who happen to be the citizens of Alaska. This defies those like Tea Party activists who would privatize everything. But Palin would privatize everything as long as it was not her ox that was being gored!

Palin's rhetoric extolling the free market economy and lowering taxes on corporations flies in the face of the reality in her own state of Alaska. Her mouth is disconnected from her reality on the ground. The fact of the matter is that Alaska's reality should be extended to all citizens of the US who are the true owners of America's resources. There should be a permanent fund which collects monies owed to the American people and distributes them to every man, woman and child. Right now public resources rightfully owned by the American people are being privatized and profited from by large corporations feeding an ever increasing inequality. Royalties from the extraction industries are not anywhere near as high as they should be. They should go into a people's fund. Norway imposes a 50% tax on oil extraction which is put into its sovereign wealth fund which provides pensions and benefits for the Norwegian people. Of course, fossil fuel resources should be left in the ground in order to forestall global warming but that's a subject for another day.

The disconnect between right wing rhetoric and left wing reality is seen not only in Alaska but in Kentucky where the Kentucky version of Obamacare known as Kynect is hugely popular for what it accomplishes for the citizens of Kentucky. But on the rhetorical level Kentuckians all hate Obamacare. Mention Obamacare and they will lapse into a dither of denunciation. It is pretty pathetic that people will get so worked up over a name while loving a service provided as long as you call it by a different name.

As Peter Barnes points out in his book, With Liberty and Dividends for All, nothing is realized for the benefit of the people from the electromagnetic spectrum which is given away free to corporations. Nothing is realized for the co-owners of the system (us) that protects intellectual property and supports the financial system. A financial transaction tax (or user's fee if you prefer) could partially fund a dividend for the American people. Money creation, supposedly the province of the Congress, has been delegated to private banks who do it by the process of fractional reserve banking and for their own private profit. It should be done by the representatives of the American people, as specified in the Constitution, with the profits going to the American people via a sovereign wealth fund instead of to the private banks.

Co-ops and other forms of common ownership by worker/owners should make a portion of profits directly payable to worker/owners instead of holding the profits or spending them in common for them. This spreads the wealth rather than holding it in trust. A public bank could distribute its profits as dividends to the public that owned it instead of all the profits from banking going to Wall Street.

Rich people live off of dividends paid to them in one form or other from their accumulated wealth. Public wealth is owned by the citizens of the US collectively. To receive a dividend from their co-owned wealth would tend to ameliorate the growing inequality of wealth ownership in the US and supplement middle class incomes. Every citizen should be in a position of deriving at least a part of their income from co-owned wealth, especially since income from jobs is going downhill due to automation and outsourcing. It would eliminate poverty, provide a basic income guarantee, stimulate the economic system from the bottom up and restore the middle class.

The Co-op Movement - Democratizing the Ownership of Wealth One Step at a Time

by John Lawrence

It has finally dawned on the American consciousness that wealth is being concentrated among fewer and fewer people. In fact just 400 Americans own more wealth than the bottom 180 million taken together. Thomas Piketty in his ground breaking book, "Capital in the Twenty-First Century", shows the dynamic behind this dramatic rise in wealth among the upper echelon of society while everyone else, in particular the middle class, is being left in the dust.

It wasn't supposed to happen this way. Labor saving devices and later computers and automation were supposed to create a virtually utopian society in which everyone could work less and have an ever increasing standard of living. Instead, we have created a dystopian society where the fact that there is less need for workers means that unemployment is much more widespread. Instead of wealth being ubiquitous, unemployment is. The goal should have been widespread or democratized wealth resulting in less of a need for individual labor because each individual or family would be able to derive much of their income from their wealth in the form of a Return on Investment (ROI) just like the "wealthy" do.

When I was a kid, I read a comic book story about the ideal family situation. In many ways the author had it right. Labor saving devices (computers and robots had not been invented yet) did all the household work. A dispenser on the wall coughed up several thousand dollars every month. There was no need for work at all. The only hitch was that the family was not allowed to go out of the house. Ouch. But were it not for that caveat, this story, projected into the future, was the idea of how future generations would live - basically the way the wealthy have always lived. With the internet, money can easily be spent and packages delivered without ever leaving the house although the author could not have even envisioned that scenario. If wealth were democratized instead of concentrated among a very small group of people, everyone would indeed be living that lifestyle today - working only a few hours per week and deriving most if not all of their income from accumulated wealth.

So what is the solution to this dystopia we have created? Some call for a revolution, a top down radical change at the national level, that will filter down to all levels of society. It was tried at least once and it didn't work. The Soviet Union was an acknowledged failure, and the French revolution ended up in Napoleon's dictatorship - hardly a Republic. Alternatively, others are calling for the step by step, bottom up creation of a society in which organizations and enterprises are owned cooperatively, in which everyone is a worker/owner. The surprising thing is that this is being done in the present tense and is a movement which is well under way although the mass media would never tell you about it. Why? Because it is threatening to the ossified status quo that just wants to continue amassing wealth for themselves, and they have a well oiled (pun intended) system for doing so. They do not want a society composed of worker/owners; they want a society composed of consumers of their well established product lines.

Consumption is 70% of GDP. Every politician wants this figure to go up when, for envronmental reasons, it needs to come down. Fossil fuels need to be left in the ground if we are to escape the worst effects of global warming. Increasing GDP under the present system means increasing greenhouse gasses due to increasing energy demands. Decreasing GDP - and concomitant energy demands - means giving up trillions of dollars of coal, oil and gas investments that the extractive industries have already made and foregoing revenues and stock values that they are counting on. This is something Wall Street would frown on, and the energy companies would likely be sued by their investors.

The co-op movement has the advantage of not requiring a top down revolution and is the most promising way for democratizing the ownership of wealth because it doesn't require any laws to be changed. It doesn't require any lobbying; it doesn't require any violence except maybe to the bank accounts of Wall Street and the fossil fuel industry. It represents a progressive systemic change in society that is well under way. That's important because the US political system has been characterized as being in gridlock. That's a very charitable description indeed because in actuality it's not in gridlock; it's in dysfunction. The fact that the US is completely dysfunctional on a national level makes a strategy of localization all the more important. What is needed is an economy that is built on the local level one enterprise at a time by and for local citizens.

The way the economy works now is that large international corporations take money out of the local economy and concentrate it in the bank accounts of a few wealthy people. For instance, consider Wal-Mart. The Walton family heirs collectively are the richest single family in the US. Profits from local Wal-Mart stores do not go back into the local communty. Instead they are siphoned off from the local communities in which Wal-Marts are located and sent to Bentonville, Arkansas, Wal-Mart corporate headquarters, and from there they go into the pockets of the Walton family heirs who invest them on Wall Street. They don't spend them in the local economy or indeed in any economy because they've got so much money, they can't spend it all. Instead, it just piles up as stagnant investments in the financialized economy. A co-op would not send the profits out of the local community but instead they would go into the pockets of the worker/owners of the enterprise who would spend them in the local community with the result that money would be circulated locally instead of being siponed off in one shot and ending up in the pockets of a few of the aforementioned 400 richest individuals in America.

The same applies to other international corporations that have replicated themselves throughout the US and indeed throughout the world. They have replaced the local Mom and Pop stores which were locally owned and from which profits circulated among local enterprises many times instead of going to Wall Street in one fell swoop. The co-op movement represents a shift back to local rather than international corporate ownership and a movement away from the concentration of wealth to a more democratized distribution of wealth.

There is no reason why a local co-op could not provide the same services as does a Wal-Mart or a Home Depot or a Walgreen's or a Fry's electronics, companies which have metastasized themselves worldwide resulting in a concentration instead of a localization of wealth, for after all, all they are doing is buying products wholesale and selling them retail. It's not rocket science. It just takes an ability to unload trucks and stock store shelves. Computers do the rest including even checkout!

There are many examples of successful co-ops already in existence.There are a number of worker owned businesses in the state of Ohio, for example. In 1977 a very large steel mill in Youngstown was closed down resulting in 5000 workers losing their jobs. Long story short: the workers and the community got together and put the steel mill back into operation as a worker owned enterprise. There is a support system for the establishment of worker owned businesses at Kent State University called the Ohio Employee Ownership Center. They provide assistance to workers who want to own their own factories and stores and other businesses. Many successful businessmen, aided by favorable tax benefits, now sell their businesses to their former employees when they retire. 

Gar Alperovitz reports in his book, "What Then Must We Do?" the following information:

As time has passed, new priorities and another set of alliances have begun to develop. Now, all of the linked worker-owned companies are very, very green by design. For instance the Evergreen Cooperative Laundry [part of Evergreen Cooperatives, a group of worker-owned businesses launched by Cleveland’s largest foundations and anchor institutions] operates out of a LEED Gold-certified building and uses (and has to heat) around one-third the amount of water that other commercial laundrys use and heat. Evergeen Energy Solutions is poised to install twice as much solar capacity in the coming period than currently exists in the entire state of Ohio. And Green City Grocers Cooperative - a three-and-a-quarter acre hydroponic greenhouse (the largest in any American city) - currently produces some three million heads of lettuce a year along with hundreds of thousands of pounds of herbs. (Two new cooperative businesses are scheduled to come online each year as the building processes continue.) Then there is Organic Valley, the $500 million leader in the organic dairy industry, which is also a cooperative of family farms.

It should be obvious that worker owned co-ops are very involved in the communities in which they operate unlike international corporations whose only allegiance is to the bottom line. In fact they can be sued by their investors if they should have the audacity to deviate from the bottom line and try to do some good in local communities.

Co-ops come in many different organizational forms from credit unions with very little democratic participation to forms in which worker owners are directly involved in decision making. For example, there is the B corporation, legal in California but not in every state, which allows the corporation to not be totally addicted to pursuing the bottom line. These corporations are allowed by law to be do gooders in the communities in which they operate. Patagonia Corporation, the outdoor apparel and sporting equipment retailer, is an example

More than 130 million Americans - 40% of the population - are members of one or another form of cooperative. Some of these are agricultural and electrical co-ops dating back to the New Deal in the 1930s. The outdoor recreational company, REI, is a co-op as is hardware purveyor ACE Hardware. In Madison, Wisconsin there is a worker owned cab company, Union Cab, with over 200 worker/owners and annual revenues of over $7 million. I could go on and will in another article.

In San Diego there is the Market Creek Plaza, a $23.5 million cultural and commercial project anchored by a shopping center. The initial public offering was limited to neighborhood residents who are accumulating wealth as the share price goes up. A total of 415 investors representing 600 residents and other non-profit and for-profit organizations purchased shares at the outset. A new neighborhood foundation owns another 20% of the shopping center thereby providing a funding stream for future community wealth-building efforts. The Jacobs Foundation which initiated the project intends to exit in 2018 with ownership to be split among community residents and the neighborhood foundation.

There is also The Village at Market Creek. From their website:

The Village at Market Creek was given Gold status because it demonstrates what can happen when residents own the vision and are involved in the decision making process from the beginning. The Diamond Neighborhoods of southeastern San Diego are among the most culturally-diverse communities in the nation. Located just minutes from San Diego's thriving downtown area, these neighborhoods have endured decades of disinvestment. Once defined by widespread blight, this community is undergoing a resident-led renaissance.

As the result of a unique partnership between neighborhood residents, the Jacobs Center for Neighborhood Innovation (JCNI), and a large network of local and national investors, these abandoned sites are being transformed into a thriving commercial, residential, and cultural center known as The Village at Market Creek.

Good things are happening in San Diego, around the country and indeed around the world. The Mondragon Corporation, the grandaddy of all co-ops located in Spain's Basque Country, has over 80,000 owner employees, annual revenues of over $14 billion euros, assets of $35.8 billion and operates 257 businesses and co-operatives worldwide. More on Mondragon here.

So the co-op movement is a step by step approach to build economic democracy and widely distributed wealth ownership from the ground up. It is a movement well under way and expect to see a lot more reported here in future editions of the San Diego Free Press.

Organized Labor, Public Banks and the Grassroots: Keys to a Worker-Owned Economy

by Matt Stannard

Occupy.com/ News Report

 

Published: Sunday 4 May 2014

 

Worker-owned cooperatives build economic democracy, but how do we build more worker-owned cooperatives? Here are three valuable allies to help us get there.

Before his death in February, Jackson Mississippi Mayor Chokwe Lumumba was helping his constituents chart an economic plan whose main component was worker-owned cooperatives. In her recent article about Lumumba and cooperatives, Laura Flanders cites Collective Courage author Jessica Gordon Nembhard’s point that African-American leaders from Marcus Garvey to W.E.B. DuBois were proponents of cooperatives. DuBois, Garvey and Lumumba understood that worker democracy was necessary for economic sovereignty and community solidarity.

For Richard Wolff, whose most recent book is Democracy at Work: A Cure for Capitalism, this time-honored form is also the key to arenewed movement for economic democracy. For Wolff, a synergy of labor and the left around worker-owned cooperatives promises to be an “unapologetically anticapitalist” strategy, challenging “the essence of the capitalist organization of production—the employer-employee relationship” and reshaping it in an egalitarian fashion.

And it’s a cause more and more people on the economic periphery – and their allies in economic justice movements – are taking up. More workers are taking the plunge, too, from solar energy co-ops that provide infrastructure for renewable energy, to the 25 worker cooperatives in Queens, including the newly formed Pa’lante Green Cleaning. Here, people committed to a new economy are practicing and preaching to, as Wolff puts it, “take over the enterprise,” bypass Wall Street and economic oligarchy, and build new economic structures either in defiance of, or alongside, old ones.

In this process of consciousness-building and actual implementation, proponents of worker-owned cooperatives can build solidarity with three potential allies. To some extent, these bridges have already been built, but the movement must step up its focus on each. The movement for worker-owned cooperatives needs organized labor’s insistence on the identity and interests of workers as workers; it needs public banking’s ability to democratize the financial (and not merely the economic) public sphere; and it needs an army of bright, creative humans left out in the cold by the capitalist economy to truly populate the new economy and make it a mass movement.

For momentum to pick up on worker ownership, supporters need to:

1. Keep working with organized labor

Workers have won some important battles since 2008. These upsurges – “working-class mini-revolts” as Jeremy Brecher recently called them – include uprisings in Wisconsin, immigrant rights demonstrations, the struggle for public education in Chicago, “strikes of retail, fast food, and other low-wage workers,” the Occupy movement, and other demonstrations of solidarity where bosses and cops were, to varying degrees, pushed back on their heels.

In another article, Amien Essif lists the winning of contracts for Californian carwashers, Walmart workers winning raises, and Seatac workers securing $15.00 wages in Washington State. Unionizing as an option for exploited college athletes suggests that the path of worker solidarity may be expandable to spheres where the exploitation of labor has previously been kept opaque.

I asked Richard Wolff whether these recent victories suggested anything significant about the position of labor in capitalism, or in the search for alternatives to capitalism. His take was mixed. The victories, he said, do little to alter “the defensive decline that remains organized labor's basic social position.” Wolff pointed out that his own group, Democracy at Work, “is in discussions with certain unions about implementing [a worker cooperative] strategy.” But what remains, he added, is to overcome unions’ “anxiety about collective action among its own members, let alone with others.”

Overcoming that hesitation is vital. When unions play by the rules of corporate capitalism, they start every negotiation from a position of structural weakness. Capital is mobile and can always move somewhere else. While internationalization of the economic justice struggle would solve that weakness, the process is too long-term and tied up with the endless complications of geopolitics and capital-influenced policymaking.

Worker cooperatives were an important part of early union struggles, particularly when labor was losing the battles. Union activists would champion worker-owned cooperatives in response to defeats for labor in conventional industrial workplaces. In the late 1800s, cooperatives in New York, from Troy to Brooklyn, thrived.

A hundred years later, cooperatives like Collective Copies and Maryland Brush Company similarly formed in the wake of labor defeats or business closures. John Clay mentions several historical instances of unions and worker cooperatives synergizing, from 1870s Knights of Labor campaigns to efforts by New York home care cooperatives in the 1980s and beyond.

Overtures and initial partnerships have characterized the relationship between cooperatives and unions for the last several years, certainly through the recession. United Steelworkers initiated discussions with the Mondragon Cooperatives in 2009, while the American Federation of State, County and Municipal Employees (AFSCME) facilitates discussions about cooperatives as alternatives to privatization, and organizations in Detroit, Cleveland, Cincinnati and elsewhere launch union cooperatives regularly.

Barriers in attitude still exist. Union rank-and-file may be skeptical of the seemingly unconventional economic and cultural values of cooperative supporters, and workers in cooperatives may believe they don’t need unions since they have a voice in running their own enterprises.

But overcoming those barriers is mutually beneficial. As John Clay points out, union partnership adds financial resources and community support, increased worker benefits, and an ally when the cooperative model is under attack by retrograde capitalists. And proponents of cooperatives need union leadership to check what one activist has called “the inherent capitalist tendency of individual cooperative businesses” through sustained worker solidarity – which will link workers across various cooperatives.

This may even address some, though probably not all, of the criticism from the sectarian left that cooperatives have to play on a market-capitalist field. In any case, it’s the key for a truly working class path away from the dominance of big capital in our economic relationships, and there is presently no alternative to joint efforts by unions and proponents of cooperatives to build new forms of workplace organization.

2. Invite the public finance movement to fund the new economy

The second natural allies of worker-owned cooperatives are the emergent leading voices calling for public banking, postal banking, and radical reform of America’s financial institutions. Public banking is not just the newest sexy call to action across several political lines. It’s also an enduring idea that can energize myriad economic justice projects. We already know it works,in Germany, Costa Rica and, of course, North Dakota.

Over the past year, the public banking movement's list of endorsers has grown exponentially. Economist Richard Wolff and journalistsMatt Taibbi and Chris Hedges are on board. And activists signing onto the Detroit Statement, published by the Public Banking Institute last month, include Wolff and Hedges along with Margaret Flowers, Gar Alperovitz, Kevin Zeese, Norman Solomon, the Metro-Detroit Chapter of the Coalition of Labor Union Women, Detroiters Resisting Emergency Management, and dozens of other individuals and organizations. A town meeting initiative in Vermont revealed overwhelming support for public banking, and more than 20 other states are advancing similar proposals.

Public banks need to be part of the equation because they can finance egalitarian projects. Worker-owned cooperatives need to emerge where private sector businesses and public services have failed to deliver to communities. But that can’t happen when worker enterprises – unlikely to be populated by deep-pocketed investors or workers full of personal wealth – lack credit for start-up costs, occasional losses and rough patches, or equipment upgrades.

Big banks aren’t even lending to conventional small businesses, so there is little reason to suspect they’ll extend credit to worker-owned cooperatives. And the cooperatives wouldn’t want the big banks’ credit, with their devastating interest rates, even if they could get it. Just as they kill municipalities, big banks kill small businesses. Public finance, on the other hand, is a natural ally of the worker-owned cooperative. Public banks can give much-needed credit to cooperatives, even structuring their charters to uniquely serve democratically-run businesses, or partnering with municipalities to sustain networks of cooperative businesses.

Banks themselves can be worker-owned cooperatives. That’s why organizations like the Center for Workplace Democracy and theNew Economy Working Group are beginning to include public banking on their discussion agendas. This movement must continue to grow, because sustainable sources of financing are integral to the creation and maintenance of sustainable workplace democracies.

3. Organize the restless to build a mass movement

The third set of critical allies of worker-owned cooperatives are those who have the potential to run them, and run them well: millions of smart, well-educated workers whose dreams have been put on hold through student debt and the contracting capitalist economy. Worker-owned cooperatives can put people to work, building sustainable businesses full of worker-owners who think outside of the box. The cooperative movement can thus create an entirely new culture of work, and with it, sustainable employment practices – flexibility that doesn't penalize the worker, but enhances the opportunity for worker self-management and collective collaboration, and the synthesis of workplace and community space.

Of the millions of Americans who will benefit from this security and creative space, most have been pushed into low-wage jobs, chaotic self-employment, or higher wage jobs helping exploit other workers. According to a report released this week by the National Employment Law Project, low-wage job creation has outstripped growth in better jobs throughout the current “recovery,” with educators and government workers experiencing disproportionate job loss, and private sector absorption of those jobs forcing wages down for everyone.

While “professional” job growth accounted for 9.4% of private sector growth, that's lower than in past recoveries. Wages remain low for educators and health professionals. And above all, there are 35 million people out of work in the United States today in an economy that simply cannot expand enough to accommodate more than a small fraction of that reserve army in the best-case scenario.

Activists and organizers of a new economic paradigm should see each and every one of those people as potential co-creators of a new economic democracy. They should look for opportunities to publicize the benefits of local, sustainable, low-cost worker-run enterprises, encourage communities to fund multiple new businesses and lobby municipalities with empty downtowns to open storefront public-private worker-owned partnership firms. Unions, which have lately learned how to start organizing everybody, and economic justice advocates need to reach out to the unemployed and underemployed “indentured educated class”, a source of untapped energy and creativity in the building of a new economy.

In Bolivia, workers have been authorized since October of 2013 to establish “social enterprises” in businesses that go bankrupt or are abandoned by bosses. Hundreds of workplaces have similarly been taken over in Argentina. More recently, workers in Greece took over a factory. American workers joined this movement when Republic Windows and Doors was taken over in 2012 by laid-off workers in Chicago.

These struggles can transform communities and spur further takeover efforts. Worker-owned cooperatives, long a theoretical model of economic revolution, can also become a rallying cry, winning over millions of adherents who have the drive and work ethic to make a sustainable economy work, but lack the resources promised to them by mainstream economics.

Face-to-face organizing and grassroots agitation is necessary to build mass consciousness about worker democracy. Although groups like the U.S. Federation of Worker Cooperatives and the American Sustainable Business Council occasionally gain the ears of elected officials (mostly in the Democratic Party), history demonstrates that conventional political support for alternative economic arrangements is fickle and inconsistent. What is needed, as Wolff reminds us, is a radical transformation from profit-driven business models to “macro-level goals” like economic planning, social welfare and income equality. Since we know that worker cooperatives, public finance and community building all work where they are allowed to work, we have living examples to offer the millions of potential recruits currently marginalized by corporate capitalism.

Comments:

TonyP

While the article makes several good points I wonder why recognition of the Industrial Workers of the World, IWW was left out? Here was a union who's idea was to benefit ALL, not just those in the union. Occupy took a lot of their ideas from them. I guess there's just some things that are too big to talk about. But another MAJOR factor in co-op's really taking off is single payer healthcare. And I believe that's the major reason capital has fought so hard against it. Look how many times many of us have stayed in a stupid crappy low paying job because it had benefits? A really good movie to watch about when capital takes off thinking they'll be able to collapse the economy and then come back and buy it all back for pennies on the dollar is "The Take" about the economic collapse of Argentina. And when workers decided to occupy and restart their old plants. It was hard because there was no public banks and no model for co-ops, but it can be done. There are historic models in Germany and Japan where corp's used small shops as co-op's to make parts or sub assemblies to great effect. But you can't use the capitalistic model because it's inefficient, ineffective and completely undemocratic. And that's hard for a lot of people who have been raised and propagandized by this model. And only because it was strictly controlled in the 50's and early 60's did it work. Roosevelt had it right, tax the corp's at 92% and keep them out of politics and the whole nation can prosper, not just the 1%.  But of course you never hear that from the right because they got in the 70's with the help of the Powell memo that they needed to invest in "think tanks" and media to change everybody's memory of what really happened so they could blame the victims for their greed. 

Matt Stannard is editor of politicalcontext.org and Director of Media and Communications at the Public Banking Institute.

Comments:

ari9999

Great article. Thank you!

1. Worker co-ops, including (and especially) startups, face unique and vexing challenges when seeking capital. Conventional investment and lending are built around a conventional concept: one or a handful of owners, with everyone else being non-owner employees. How do you make a conventional loan to a business when there's no one person responsible — when instead everyone in the business is equally responsible? That's why worker co-ops are a round, equitable peg trying to fit in a very, very square hole.

Enter public banking. Its mission is focused on the public interest. Flexible, innovative, experimental solutions might be possible with public banking that would be out of the question — both for business and regulatory reasons — with conventional private banking.

Thus we can all help open up potential new ways to capitalize worker co-ops, an urgent need, by:

a) demanding loud and long that states and cities establish their own banks in the public interest, and

b) clamoring for states and cities to give preferential treatment to worker co-ops, just as they commonly do for businesses owned by women, minorities, and sometimes veterans and people with disabilities.

2. States and cities can amplify their impact by collaborating with regional and local groups — like Austin's great advocacy, education and support nonprofit, Cooperation Texas — to inform and empower people interested in starting worker co-ops.

3. If Congress ever got a collective brain transplant and (gasp) began acting in the public interest, it could enact a law allowing the US Postal Service to offer financial services — an awesome idea proposed by the USPS inspector general and supported by Elizabeth Warren and other leaders. As part of that law, provision could be made for modest experimentation with capitalizing worker co-ops.

 

pitch1934

What you need is a worker owned political party, a Labor Party.

 

Farid Khavari

Matt: You need to do some homework before you write an article: http://publicbanking.wordpress...

Matt: To help you with your homework, read this article: http://www.uncoveredpolitics.c...

What the World Needs Now? - More Cooperation or More Competition?

by John Lawrence

When I was a graduate student at UCSD in the midst of the anti-war movement, protesting the war in Vietnam, I went to the library and pondered what would make the world a better place, what could I do to contribute something that might make war less likely and peace time activity more likely. I concluded that more cooperation was needed. More ways to resolve conflicts big and small. For example, democratic voting systems resolve conflicts in such a way that solutions are found that are acceptable to all parties for the most part. I took it for granted that institutions that provided for more cooperation and less competition were more desirable. I thought that this was what the Enlightenment was all about. My heroes were the Enlightenment superstars: Jeremy Bentham, John Stuart Mill, Rousseau, Diderot, Voltaire, John Locke.

As I sat there and went through the stacks, I discovered another field and another set of superstars. Social choice has a long history going back to the French Enlightenment philosophers, the Marquis de Condorcet and Jean-Charles de Borda, and even further back than that. One of the 19th century superstars in this field was none other than the Rev. C. L. Dodgson otherwise known as Lewis Carroll, the author of Alice in Wonderland. These guys came up with voting systems which are essential to democracy and are essential to the whole notion of cooperation and conflict resolution. The most recent work in this field was by Kenneth Arrow who published a book Social Choice and Individual Values in the 1950s which attempted to generalize conflict resolution in society in both the political and economic spheres. Arrow concluded that this was impossible and came up with his famous Impossibility Theorem which was a generalization using sophisticated mathematics of the paradox of voting that was known to Condorcet hundreds of years ago. Therefore, Arrow concluded democracy was impossible and any economic system other than capitalism was impossible too. Hmmm, I thought, this is obviously a cop-out because some political and economic systems are more desirable than others and Arrow has done nothing except to throw cold water on any framework that could consider these. I took it as my self-assigned task to prove that Arrow was wrong, that social choice is possible. My work can be found on the website Social Choice and Beyond.

My latest work is "Politonomics: A Meta-Theory Encompassing Political and Economic Decision Making." This is from the Abstract:

In “Social Choice and Individual Values,” Kenneth Arrow said , “In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political’ decisions, and the market mechanism, typically used to make ‘economic’ decisions.” This paper resolves that dichotomy by developing a meta-theory from which can be derived methods for both political and economic decision making. This theory overcomes Arrow’s Impossibility Theorem in which he postulates that social choice is impossible and compensates for strategic voting, an undesirable aspect of decision making according to Gibbard and Satterthwaite. Thus the politonomics meta-theory spawns both political and economic systems which are indeed possible and which cannot be gamed. In a typical voting system the outcome of an election among several candidates results in one realized outcome – the winner of the election - which applies to all voters. In a typical economic system, a consumer may choose among a variety of possible baskets of consumer items and work programs with the result that multiple realized outcomes are possible with a unique or quasi-unique outcome for each worker/consumer. As the number of possible realized outcomes of a political-economic decision making process increases, the process becomes more economic and less political in nature and vice versa. We show that as the number of possible realized outcomes increases, voter/consumer/worker satisfaction or utility increases both individually and collectively.

I never considered, as I sat there pondering, that there would be people who would argue that what the world needed was not more cooperation but more competition, but, as I sit here today, I realize that the whole conservative right wing is in favor of just that. They want not more cooperation in either the political or economic realm but more competition believing that only winners should prevail and human progress is only possible when you give free reign to those among us who are the most talented, intelligent and ambitious. They believe that competition will result in the strongest among us winning just as Nietzsche believed that a good war hallows every cause. Their ethic is that the naturally gifted elite should prevail, and they are not concerned about what happens to the rest of us or of who is trampled in the process. This is also the philosophy of Ayn Rand as espoused in her novels Atlas Shrugged and The Fountainhead.

The debate today about increasing inequality in the world has to do with the prevalent conservative belief that only the strong should survive and be promoted and that freedom should preclude equality as a value. The rich should get more tax breaks because they are the true instigators of human progress and should be catered to at every turn. Perhaps a few crumbs will trickle down to the rest of us. This kind of thinking is counter to the Enlightenment and is fast returning us to a neo-Dark Age. No more is human progress to be measured in reduction of poverty and extension of basic services like health care to everyone. It is to be measured in terms of the great advances to human civilization like iPads, iPods and iPhones. People who are capable of coming up with these advances should be cut every break and none of the billions of dollars they make should be transferred by government to the least of these among us like the homeless, the poverty-stricken and the destitute because, well, they are the least among us, not the best among us who should be given every break.

Nevertheless, I remain in the camp of those who think that more cooperation in the political and economic spheres will do more for human progress than more competititon. I also have spent about 40 years in my spare time trying to prove that Arrow was wrong, that social choice is not impossible and that democracy in both the political and economic spheres is not only possible but desirable. This has a lot to do with voting systems, democratic institutions and constitutions but also with cooperative economic systems in which freedom is seen not as the freedom to make money at other people's expense (the losers in the competitive struggle) but the freedom to work as much or as little as one chooses and in accordance with one's preferences as much as possible. Freedom from work is for many people just as desirable a goal as the freedom to make billions of dollars, and wealthy people who don't have to work would be the first to tell you that. Economic democracy in my view is more desirable than cutthroat capitalism, and can be practiced not only at the national level, but at the enterprise level in the form of co-ops like the Mondragon Corporation.

Marx's famous definition of the "good society" was "from each according to his ability, to each according to his needs." This of course was perverted in defining communism as a society where all the wealth created by those who had a lot of talent and ability as well as a strong work ethic combined with those who had not so much in those categories would be thrown into a pot and then divided up in equal portions and handed out by the government. Such need not be the case in achieving the "good society." The "needs" part is pretty basic and could probably be accomplished with abouit 10% of the wealth that exists in the world today. Most people can provide for their own needs - no transfer necessary. There are some who cannot and to transfer a small part of the wealth of the wealthy to provide for their basic needs seems to me to be no more than humane. That still leaves the vast amount of wealth in the hands of the wealthy. In other words if you total up how much it would cost to provide for all the basic needs of everyone in the world and tote up how much wealth there exists in the world, it would take a fraction of all that wealth to provide the basic needs for everyone who cannot provide for their basic needs themselves who turn out to be mainly children, seniors and handicapped (whether physically or mentally) people.

A recent documentary by German TV station Deutsche Welle pointed out that half the world's production of food is wasted because super markets only want perfect vegetables and ones with slight blemishes are thrown out even though they are perfectly edible. Shelves need to be fully stocked with bread right up till closing hours even though any bread left over at the end of day will be thrown out as "day old." All the food that is thrown out by advanced nations is enough to feed all the world's hungry three times over although no governments or other institutions, much less the supermarkets themselves, seem to be interested in organizing that effort. This is what I mean by the fact that the basic needs of all the world's people could be satisfied without subtracting much if anything from the world's wealthy although a lot of them would admit they do not need incomes of millions of dollars a day like the Fortune 400 billionaires have.

Another documentary noted that Finnish school children have the highest test scores in the world despite the fact that they have one of the world's shortest school days with 15 minutes intermissions between classes during which time they are encouraged to go outdoors and play. All grades have large amounts of music, art and self-defined projects. They don't teach to the test. They are concerned with the development of each student as an overall human being not just as some super competitive cog in a nationally competitive machine. The Chinese on the other hand have the opposite approach demanding that children learn by rote methods and extra hours in school and at study. The Finnish schools are all public and everyone is accepted into every class. There are no advanced classes or tracking of students into lesser classes if they are not among the elite intellectually. Everyone is thrown in together; yet they have the best outcomes of any country in the world on standardized international tests. Egalitariansim seems to gain the best results.

An egalitarian ethic in which the concern is for the development of the whole human being rather than a promotion of just those who have superior abilities in accordance with a competitive ethic seems to me to be the most humanitarian way to treat both children and adults. The 1948 Universal Declaration of Human Rights already provides for most of the "from each according to their abilities, to each according to their needs" ethic. It calls for free health care which most advanced socierties, with the exception of the United States, already provide. It calls for free education and other public institutions and covers most basic human needs including food and shelter.

Here are Articles 25 and 26:

Article 25.

• (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
• (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

Article 26.

• (1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.
• (2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.
• (3) Parents have a prior right to choose the kind of education that shall be given to their children.

All the basic needs of everyone on the planet could be provided for without subtracting much of the wealth of the rich since most people can provide for at least their basic needs without any transfer of wealth whatsover being necessary. Interestingly, the US among other nations does provide food security for the poor through its food stamps program. And of course seniors are provided for through Medicare, Medicaid and Social Security, programs which conservative free marketers are anxious to change or eliminate.

I am with the Enlightenment thinkers especially the English utilitarians like Jeremy Bentham and John Stuart Mill who thought about the happiness of society as a whole and concluded that everyone counted, not only the ones with exceptional talent, ability and other admirable qualities. A society should be judged by how it treats "the least of these my brethren" which is the core and essence of Jesus' teachings but, sad to say, not the core and essence of Christianity as it exists in the world today. Perhaps we should start thinking about an alternative constitution for the US which has the world's oldest constitution (236 years old!) while being the world's youngest advanced nation. Other societies including most European societies while being older than the US have newer constitutions. As far-sighted as the Founding Fathers were, a new and updated constitution incorporating not only political but also economic rights along the lines of the UN Declaration of Human Rights would do much to right the wrongs and shortcomings of present day America and the world.

Cooperatives Over Corporations

Published on Wednesday, February 22, 2012 by Creators.com

by Jim Hightower

We're being told by today's High Priests of Conventional Wisdom that everyone and everything in our economic cosmos necessarily revolves around one dazzling star: the corporation.

This heavenly institution, the HPCW explain, has such financial and political mass that it is the optimal force for organizing and directing our society's economic affairs, including the terms of employment and production. While other forces are in play (workers, consumers, the environment, communities and so forth), they are subordinate to the superior gravitational pull of the corporate order. Profits, executive equanimity and a healthy Wall Street pulse rate are naturally the economy's foremost concerns.

How nice. For the wealthy few. Not nice for the rest of us, though. We're presently seeing the effect of this enthronement of self-serving corporate elites. Millions of Americans are out of work, underemployed and tumbling from the middle class down toward poverty. Yet excessively paid and pampered CEOs (recently rebranded as "job creators" by fawning GOP politicians) are idly sitting on some $2 trillion in cash, refusing to put that enormous pile of money to work on job creation.

The Powers That Be keep us tethered to this unjust system of plutocratic rule only by constantly ballyhooing it as a divine perpetual wealth machine that showers manna on America. Any tampering with the hierarchical control of the finely tuned machinery of trickle-down corporate capitalism, they warn, will cause a collapse and crush American prosperity.

Ha! Prosperity for whom? The corporate order itself has come crashing down on the prosperity of America's workaday majority — and the people are no longer fooled about the system's "divinity." From the Wisconsin rebellion to the outing of the Koch brothers' efforts to impose their plutocratic regime on us, from the Occupy movement to the spreading grassroots campaign to get corporate cash out of our elections, we commoners have finally peeked behind the curtain to see the fraud being perpetrated by the wizards of wealth inequality.

Yet, tightly clutching their wealth, the wizards retort that the only alternative is the hellish horror of government control, screeching "socialist" at all critics to scare off any real change.

But wait. The choices for our country's rising forces of economic and political democracy are not limited to corporate or government control. There's another, much better way of organizing America's economic strength: The Cooperative Way.

Cooperatives can (and do) provide a deeply democratic, locally controlled, highly productive, efficient percolate up capitalism.

Co-ops are wholly in step with the values, character, spirit and history of the American people.

While socialism has been cast by the corporatists as a destroyer of our sainted free-enterprise system, the cooperative approach is not an -ism at all, but a democratic structure that literally frees the enterprise of the great majority of Americans — which is why the co-op movement is fast spreading throughout our country.

While it's rarely mentioned by the conventional media, completely missing in the political discourse, not considered by economic planners and chambers of commerce and not known by most of the public, there are 30,000 cooperatives in America (with 73,000 places of business). A 2009 survey by the University of Wisconsin's Center for Cooperatives (www.uwcc.wisc.edu) found that these energetic enterprises have 130 million members, registering $653 billion in sales and employing more than 2 million people.

There are several types of co-ops, including those owned by workers (there are 11,000 of these, with 13 million worker-owners). Also, there are cooperatives owned by consumers, producers, local businesses, artists and communities, as well as hybrids of those categories. They function in every sector of our economy — manufacturing, health care, transportation, banking, farming and food, media, massage, child care, funeral services, interpreting and translating services, advertising, home building, high tech, engineering, energy ... and even a strip club in San Francisco.

Co-op businesses do everything that a corporation can do, but with a democratic structure, an equitable sharing of income and a commitment to the common good of the community and future generations.

You might be surprised to learn that such national brand names as ACE Hardware, Best Western Hotels, Organic Valley, REI and True Value Hardware are organized as co-ops, rather than as corporations. The strength of the movement, however, is in the limitless number of local cooperatives flowering all across the country. From Union Cab of Madison (http://www.unioncab.com/) to KOOP Radio in Austin (http://www.koop.org/), from Evergreen Cooperatives in Cleveland (www.evergreencoop.com) to Circle Pines Center in Michigan (www.circlepinescenter.org), citizen co-ops are highly prized for their unique personalities, human scale, democratic values and community focus.

Cooperatives are a big, structural reform that ordinary Americans can implement right where they live, giving small groups a pragmatic and effective way to push back against the arrogance and avarice of the centralized, hierarchical corporate model. Not only do co-ops work economically, they also make people important again, offering real democratic participation and putting some "unity" back in "community."

© 2012 Creators.com

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

Worker-Owners of America, Unite!

By GAR ALPEROVITZ

Published: December 14, 2011 by the New York Times

College Park, Md.

THE Occupy Wall Street protests have come and mostly gone, and whether they continue to have an impact or not, they have brought an astounding fact to the public’s attention: a mere 1 percent of Americans own just under half of the country’s financial assets and other investments. America, it would seem, is less equitable than ever, thanks to our no-holds-barred capitalist system.

But at another level, something different has been quietly brewing in recent decades: more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing.

Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions.

And worker-owned companies make a difference. In Cleveland, for instance, an integrated group of worker-owned companies, supported in part by the purchasing power of large hospitals and universities, has taken the lead in local solar-panel installation, “green” institutional laundry services and a commercial hydroponic greenhouse capable of producing more than three million heads of lettuce a year.

Local and state governments are likewise changing the nature of American capitalism. Almost half the states manage venture capital efforts, taking partial ownership in new businesses. Calpers, California’s public pension authority, helps finance local development projects; in Alaska, state oil revenues provide each resident with dividends from public investment strategies as a matter of right; in Alabama, public pension investing has long focused on state economic development.

Moreover, this year some 14 states began to consider legislation to create public banks similar to the longstanding Bank of North Dakota; 15 more began to consider some form of single-payer or public-option health care plan.

Some of these developments, like rural co-ops and credit unions, have their origins in the New Deal era; some go back even further, to the Grange movement of the 1880s. The most widespread form of worker ownership stems from 1970s legislation that provided tax benefits to owners of small businesses who sold to their employees when they retired. Reagan-era domestic-spending cuts spurred nonprofits to form social enterprises that used profits to help finance their missions.

Recently, growing economic pain has provided a further catalyst. The Cleveland cooperatives are an answer to urban decay that traditional job training, small-business and other development strategies simply do not touch. They also build on a 30-year history of Ohio employee-ownership experiments traceable to the collapse of the steel industry in the 1970s and ’80s.

Further policy changes are likely. In Indiana, the Republican state treasurer, Richard Mourdock, is using state deposits to lower interest costs to employee-owned companies, a precedent others states could easily follow. Senator Sherrod Brown, Democrat of Ohio, is developing legislation to support worker-owned strategies like that of Cleveland in other cities. And several policy analysts have proposed expanding existing government “set aside” procurement programs for small businesses to include co-ops and other democratized enterprises.

If such cooperative efforts continue to increase in number, scale and sophistication, they may suggest the outlines, however tentative, of something very different from both traditional, corporate-dominated capitalism and traditional socialism.

It’s easy to overestimate the possibilities of a new system. These efforts are minor compared with the power of Wall Street banks and the other giants of the American economy. On the other hand, it is precisely these institutions that have created enormous economic problems and fueled public anger.

During the populist and progressive eras, a decades-long buildup of public anger led to major policy shifts, many of which simply took existing ideas from local and state efforts to the national stage. Furthermore, we have already seen how, in moments of crisis, the nationalization of auto giants like General Motors and Chrysler can suddenly become a reality. When the next financial breakdown occurs, huge injections of public money may well lead to de facto takeovers of major banks.

And while the American public has long supported the capitalist model, that, too, may be changing. In 2009 a Rasmussen poll reported that Americans under 30 years old were “essentially evenly divided” as to whether they preferred “capitalism” or “socialism.”

A long era of economic stagnation could well lead to a profound national debate about an America that is dominated neither by giant corporations nor by socialist bureaucrats. It would be a fitting next direction for a troubled nation that has long styled itself as of, by and for the people.

Gar Alperovitz, a professor of political economy at the University of Maryland and a founder of the Democracy Collaborative, is the author of “America Beyond Capitalism.”

A Quest for Hybrid Companies That Profit, but Can Tap Charity

By STEPHANIE STROM

Published: October 12, 2011 by the New York Times

A new type of company intended to put social goals ahead of making profits is taking root around the country, as more states adopt laws to bridge the divide between nonprofits and businesses.

California is the latest state to adopt a statute permitting what is called flexible-purpose corporations, new companies that are part social benefit and part low-profit entities. The companies are now allowed under laws in more than a dozen states and two Indian tribes.

States like New York and Massachusetts are weighing comparable legislation — sometimes also known as low-profit limited liability or benefit corporations — and efforts are afoot to get federal legislation passed that would lower hurdles to the creation of such companies, including a quiet push to get preferential tax treatment for them.

Many of the companies adopting the new structures provide services to nonprofits or are food purveyors that, for example, might employ the disabled. Perhaps the best known is MOO Milk of Vermont, a group of small dairy farmers.

Unlike a straight nonprofit group, these businesses can tap into conventional capital markets as well as philanthropy.

And unlike a for-profit corporation, the structure allows investors to emphasize the social mission over making money, and to be supported by money from foundations.

“Directors of many companies want to do the right thing, but they’re so busy looking at how not to get sued for failing to maximize profits that they don’t think more aspirationally about creating a great company that helps the planet and people and also makes money,” said R. Todd Johnson, a lawyer who is among the leaders of the movement to get states to create new legal structures.

Not surprisingly, the trend concerns some executives in charge of charities, who fear increased competition for philanthropic dollars fueled by the enthusiasm for the new formats among foundations, many of which have been lobbying hard for new laws to foster this type of business.

Many corporate lawyers and regulators also are wary. The California Department of Corporation and the business law section of the corporations committee of the state bar association opposed the law, as have similar organizations in other states. They argue that the new structure holds an inherent conflict of interest and that it will lower standards of fiduciary duty.

“There’s a marketing job that’s being done that somehow these are special,” said William Callison, a lawyer in Colorado whose opposition helped defeat efforts to pass the hybrid incorporation law in his state. “I think they’re anything but special.”

But proponents, like Jed Emerson, a pioneer in developing what he calls “blended value investing,” contend that many of the new organizations do not fit neatly into what have been the accepted models. “Over the last 10 to 20 years, there’s been a host of organization managers and financial investors saying the traditional approach to investing in this bifurcated framework of for-profit and nonprofit doesn’t capture what they’re really trying to achieve,” Mr. Emerson said. “Alternative structures like this allow investors and entrepreneurs to pursue social and environmental impact together with various levels of financial performance.”

One such company, ardentCause, was about to become a traditional limited liability company, or L.L.C., when Michigan began allowing businesses to incorporate as low-profit, limited liability companies, or L3C’s.

The company, founded by three veterans of the automotive industry, develops database software to help nonprofits manage and share information. “It was perfect for us because we believe businesses and nonprofits alike should run sustainably and profitably, but the main motive for us was the mission,” Rosemary Bayer, ardentCause’s chief executive, said of the L3C structure.

Its first product was introduced last fall with support from the First Step Fund, a pool of venture capital drawn from Detroit foundations as part of a broader effort to reinvigorate the city’s economy. Ms. Baer said ardentCause was currently negotiating with another foundation for investment.

Critics like Mr. Callison wonder why a new category of businesses is necessary at all, given that foundations can make investments in standard forms of business. A foundation may, for example, offer a business a loan at a below-market interest rate to spur it to build a factory in an economically blighted neighborhood.

Also, more and more companies are incorporating socially beneficial activities into their core business strategies without abandoning their primary goal of making profits. Hewson Baltzell, who oversees product development for MSCI, a data and research firm known for its global indexes, said that while the number of financial investors deploying what were known as “environmental, social and governance” screens to assess investments, “most investors are still not into the double-bottom line.”

“Do you need it? No, not necessarily,” Mr. Baltzell said. “The argument for it is probably that when push comes to shove over certain issues, if a social mission was baked into the bylaws, it would be legitimate for a board to allow, in certain cases, that mission to trump shareholder value.”

But charities seeking ways to reduce their reliance on donated dollars are increasingly developing programs that could be mistaken for businesses, and for them, such a structure solves a number of headaches. It gives them access to the capital markets, allows them to pay higher compensation levels and provides potential exit strategies, all unavailable to nonprofits.

“It expands the tool kit social enterprises can use to scale and increase the good they do,” said Matt Bannick, managing partner of the Omidyar Network, the organization managing the eBay founder Pierre Omidyar’s commercial and nonprofit investments, which pushed for the new California law.

One of the nonprofits it has supported, Global Integrity, is likely to spin off a project called Foglamp, which it started, into a flexible-purpose company. Foglamp has a worldwide network of 1,200 people that provide research, for example, on a country’s political stability. Hedge funds, institutional investors and global companies pay market rates for the information.

Nathaniel Heller, Global Integrity’s managing director, said that on at least two occasions recently, it had to turn away venture capitalists wanting to invest in Foglamp. “As a nonprofit, we have no equity to offer them,” Mr. Heller said.

That means, he said, that Foglamp can only grow “arithmetically, not geometrically.” He added, “As a nonprofit, we don’t have extra cash sitting around that would allow us to hire five more employees for Foglamp.”

Frontline SMS took another route and organized as a community interest company, or C.I.C.’s, the British corporate designation that has inspired many of the new hybrid in corporation laws passed in the United States. C.I.C.’s are required to have a social purpose like health care and their assets are locked, limiting what can be distributed to shareholders, employees and others.

Frontline was spun out of Kiwanja.net, a California nonprofit whose mission is to develop technology to help nonprofit groups deliver services. “The value proposition is inherently defined in terms of social benefit,” said Sean Martin McDonald, executive director of Frontline. “That reduces a lot of concerns you might normally have from traditional financial investors by making it clear that your mission is primarily social, not primarily about making profits.”

Occupy Wall Street Ends Capitalism's Alibi

Published on Tuesday, October 4, 2011 by The Guardian/UK

This protest pinpoints how dysfunctional our economic system is: we must refashion it for human needs, not corporate aims

 

by Richard Wolff

Occupy Wall Street has already weathered the usual early storms. The kept media ignored the protest, but that failed to end it. The partisans of inequality mocked it, but that failed to end it. The police servants of the status quo over-reacted and that failed to end it – indeed, it fueled the fire. And millions looking on said, "Wow!" And now, ever more people are organizing local, parallel demonstrations – from Boston to San Francisco and many places between.

Let me urge the occupiers to ignore the usual carping that besets powerful social movements in their earliest phases. Yes, you could be better organized, your demands more focused, your priorities clearer. All true, but in this moment, mostly irrelevant. Here is the key: if we want a mass and deep-rooted social movement of the left to re-emerge and transform the United States, we must welcome the many different streams, needs, desires, goals, energies and enthusiasms that inspire and sustain social movements. Now is the time to invite, welcome and gather them, in all their profusion and confusion.

It is long overdue in the US for us to have a genuine conversation and struggle over our current economic system. Capitalism has gotten a free pass for far too long. (photo: pfarnac1)

The next step – and we are not there yet – will be to fashion the program and the organization to realize it. It's fine to talk about that now, to propose, debate and argue. But it is foolish and self-defeating to compromise achieving inclusive growth – now within our reach – for the sake of program and organization. The history of the US left is littered with such programs and organizations without a mass movement behind them or at their core.

So permit me, in the spirit of honoring and contributing something to this historic movement, to propose yet another dimension, another item to add to your agenda for social change. To achieve the goals of this renewed movement, we must finally change the organization of production that sustains and reproduces inequality and injustice. We need to replace the failed structure of our corporate enterprises that now deliver profits to so few, pollute the environment we all depend on, and corrupt our political system.

We need to end stock markets and boards of directors. The capacity to produce the goods and services we need should belong to everyone – just like the air, water, healthcare, education and security on which we likewise depend. We need to bring democracy to our enterprises. The workers within and the communities around enterprises can and should collectively shape how work is organized, what gets produced, and how we make use of the fruits of our collective efforts.

If we believe democracy is the best way to govern our residential communities, then it likewise deserves to govern our workplaces. Democracy at work is a goal that can help build this movement.

We all know that moving in this direction will elicit the screams of "socialism" from the usual predictable corners. The tired rhetoric lives on long after the cold war that orchestrated it fades out of memory. The audience for that rhetoric is fast fading, too. It is long overdue in the US for us to have a genuine conversation and struggle over our current economic system. Capitalism has gotten a free pass for far too long.

We take pride in questioning, challenging, criticizing and debating our health, education, military, transportation and other basic social institutions. We argue whether their current structures and functioning serve our needs. We work our way to changing them so they perform better. And so it should be.

Yet, for decades now, we have failed to similarly question, challenge, criticize and debate our economic system: capitalism. Because a taboo protected capitalism, cheerleading and celebrating it became obligatory. Criticism and questions got banished as heresy, disloyalty or worse. Behind the protective taboo, capitalism degenerated into the ineffective, unequal, crisis-ridden social disaster we all now bear.

Capitalism is the problem – and the joblessness, homelessness, insecurity, and austerity it now imposes everywhere are the costs we bear. We have the people, the skills and the tools to produce the goods and services needed for a just society to prosper. We just need to reorganize our producing units differently, to go beyond a capitalist economic system that no longer serves our needs.

Humanity learned to do without kings and emperors and slave masters. We found our way to a democratic alternative, however partial and unfinished the democratic project remains. We can now take the next step to realize that democratic project. We can bring democracy to our enterprises – by transforming them into cooperatives owned, operated and governed by democratic assemblies composed of all who work in them and all the residents of the communities who are interdependent with them.

Let me conclude by offering a slogan: "The US can do better than corporate capitalism." Let that be an idea and a debate that this renewed movement can engage. Doing so would give an immense gift to the US and the world. It would break through the taboo, finally subjecting capitalism to the critiques and debates it has evaded for far too long – and at far too great a cost to all of us.

• Richard Wolff is participating in a day-long teach-in at the Occupy Wall Street protest in Zuccotti Park, New York on Tuesday 4 October. This article is based on remarks he will be addressing there at 6pm local time

© Guardian News and Media Limited 2011

Richard D Wolff is professor of economics emeritus at the University of Massachusetts, Amherst, where he taught economics from 1973 to 2008. He is currently a visiting professor in the graduate program in international affairs of the New School University, New York City. Richard also teaches classes regularly at the Brecht Forum in Manhattan. His most recent book is Capitalism Hits the Fan: The Global Economic Meltdown and What to Do About It (2009). A full archive of Richard's work, including videos and podcasts, can be found on his site

more Richard Wolff

Food Bank Asks People to 'Step Up'

A model that looks a lot like Costco except the food and clothing are virtually free! Just $50 a month and some labor participation in the warehouse, and they offer free classes too!. These folks in Portland deserve a lot of credit. Here's their website. Following is a news clip that NBC ran on them.

Visit msnbc.com for breaking news, world news, and news about the economy

 

CAPITALISM’S CREATIVE DESTRUCTION OF A CIVIL SOCIETY … The Rights of Money vs. Living Persons

MARGINALIZING WORKERS, WAGES, COMMUNITIES,   ENVIRONMENTAL CONCERNS WHILE CONCENTRATING  INCOME  AND WEALTH IN THE HANDS OF THE FEW

By: Frank Thomas

At a time when the global economy is separating ever larger international firms from public accountability and the public’s interests; at a time when economic globalization is systematically creating a sea of poverty and race to the bottom for middle-class Americans; at a time when corporations are bidding down wages and taxes under the threat of moving elsewhere, outsourcing and automating away jobs at will, closing down plants and trashing any responsibilities to productive, loyal employees and communities; at a time when the Paul Ryans are orchestrating the coup de grãce of unions, the sell-off of government assets, the elimination of jobs for teachers, firemen, policemen, and social workers – the main unresolved questions facing all Americans are less about political ideologies than about life’s values vs. financial values, about  the concentration of economic power in mega global corporations, now society’s most powerful citizens … whose sole mission is maximizing  shareholder wealth and  often, as Robert Hinkley has noted, “at the expense of the environment, human rights, the communities in which they operate, or the dignity of their employees.”

As far back as 1996, David Korten of the Harvard Business School with unusual foresight gave his verdict on the then existing (and now populist Tea Party) libertarian doctrinaire harangue that an unregulated free-market economy equates with democracy. His verdict on what the free market and the unfettered self-interests of multinational corporations are doing was smack on the point, “We are suffering from a threefold human crisis: the deepening of poverty, social disintegration, and environmental destruction.”

 

Following  excerpts are from his writings and 1996 essay entitled,  “The Rights of Money versus The Rights of Living Persons”   His observations have an unnerving relevance to the Fiscal-Economic QUAGMIRE we are in today after 30 years of laissez-faire capitalism (Parts I, II and III of my writing on this subject) … which in its worst form is taking our nation toward plutocracy and away from egalitarianism and democracy.  In the spirit of John Lawrence’ s blog to  explore deeply – with eyes and mind open – our  nation’s structural problems and solutions to same, here is David Korten’s  provocative, prescient plea for a reawakened civil society and for reclaiming the economic spaces in our society in favor of the small and the locally accountable. Written 15 years ago, Korten’s out-of-the-box thinking reminds me of some words once said by LeRoy Greason, former President of my Alma Mater, Bowdoin College in Maine, who just passed away:

“We are seldom absolutely right. Even when most alive and living beyond ourselves, we had best walk humbly with our gods.” 

 “THE RIGHTS OF MONEY VERSUS THE RIGHTS OF LIVING PERSONS,”  by David Korten, November 1996

Proponents of market liberalism claim the free market is the essential foundation of political democracy – a guarantor of the rights of people against the abuse of state power. They neglect, however, the important ways in which the unfettered market tends to function as a profoundly undemocratic institution.Political democracy vests rights in the living person, one person, one vote. By contrast, the market recognizes only money – one dollar, one vote. It gives no voice to the penniless (or those hit by bad times), and when not balanced by constraining political forces can become an instrument of oppression by which the wealthy monopolize society’s resources, leaving the less fortunate without land, jobs, technology, (training) or other means of livelihood. Only when wealth is equally (I prefer word, equitably) distributed can the market be considered democratic in any meaningful sense.                                        

World markets are now dominated by global-mega corporations – among the most undemocratic and unaccountable of human institutions. By its nature, the corporation creates a legal concentration of power (and highly paid lobbyist network) while shielding those who wield that power from accountability for the consequences of its use. Many mega-corporations command more economic power (including advertising budgets that rival education budgets) than do the majority of states, and they dominate the political processes of nearly all states. Their growing unaccountable power poses a serious threat to the basic economic and political rights of people everywhere.

The time has come to re-examine some of our most basic assumptions about the nature of democracy, human rights, and the institution of the corporation. The survival of our political freedoms depends on recognizing that economic rights are an essential foundation of political democracy. Consider, for example, two of the most fundamental of all human rights – the right to a means of living (literally the right to live) and the right to participate in making the decisions that affect our lives.

The Right of Access to a Means of living:  The earth’s (rapidly declining) life-sustaining resources are a common heritage of all life. All people are born with an inalienable right to a sufficient share of these resources to create a secure and fulfilling life for themselves and their families. They have a corresponding responsibility to share and steward these resources to the benefit of all persons and other living things.

Since the most basic requirements of living depend on the products of the earth, there is a fundamental – though often neglected – connection between livelihood rights and property rights. English philosopher John Locke set forth a moral justification for property rights in The Second Treatise of Government published in 1689. Locke argued that where unused land is abundant, a man has a right to appropriate for his private and exclusive use the land which he tills to produce for his basic subsistence needs. It is through the application of his labor to make the land produce that he acquires this private right. Locke stressed that given the condition of abundance, such appropriation in no way deprived others of similar opportunity. Locke was clear that the rightful claim to a property right followed only from the application of one’s personal labor. Furthermore, this claim legitimately extended only to such property as required to meet one’s material needs – suggesting that a property is virtually synonymous with a livelihood right.

Locke, however, went beyond this relatively unassailable moral argument to seek justification for actions of those who accumulate property far beyond their personal needs. Presuming that property rights are most likely to be accumulated by clever and industrious persons who seek to realize their full productive potential, Locke argued that the result of this accumulation would be to maximize the wealth of society and thereby the well-being of all. It is essentially the same argument that economists make to this day in defense of inequality based on the assumption that the surpluses created through investments of the wealthy in a growing economy will be widely distributed through society in the form of high-paying jobs and well-funded public services (the  lying “trickle-down” economic con-game played on ordinary Americans the last 30 years).

It is noteworthy that the moral defense of inequality in Locke’s thesis and the work of (many) modern economists rests on two inadequately examined assumptions :  (1) natural wealth is abundant relative to need; and (2)  the benefits of an overall increase in economic activity are widely shared even when wealth is distributed unequally.

Unfortunately, on a global basis, for several billion people who find their livelihoods increasingly at risk, neither premise is valid in our present world. To the contrary, the poor are being excluded from access to land, technology is eliminating jobs quicker than it is creating new ones, and public services are being systematically dismantled – all to increase the riches of those whose wealth already exceeds any conceivable need. In short, property rights are being used routinely to justify the exclusion of those without property from access to a decent means of living.

As suggested by Locke’s argument, the rightful purpose of a property right is to protect a person’s right of access to a means of livelihood or to secure for the individual a just reward for entrepreneurial initiatives that create a better life for all. A property right loses its legitimacy when its exercise by those who have more than they need denies others of their rightful means of a livelihood or otherwise diminishes their opportunities for a full and meaningful life. The livelihood rights of the many come before the property rights of the few. Recognition in our laws and public culture of this limitation of property rights is fundamental to the market’s socially efficient function.

The Right to Participate in Decisions That Affect One’s Life and Community :  Born with reason, conscience, and the capacity for intelligent choice, all people have the inalienable right – indeed the obligation – to use these gifts to participate actively in the decisions that affect their lives and communities.

In the economic realm, the exercise of the right of participation extends far beyond choosing among those products the market finds it profitable to offer us. It includes the right to participate in setting standards and priorities for the economic affairs of our communities, the uses to which our local resources will be put, and the conditions under which we will engage in external trade and invite the participation of others in our domestic economies.

This right is under attack by the world’s mega-corporations that seek to establish their own right to move across the planet without restriction to extract resources; exploit unorganized and unprotected labor; evade taxes and environmental regulations, and health safety; monopolize indigenous knowledge and genetic materials without regard to the human and environmental consequences. Their weapons of choice are international (and national) agreements on trade and investment that take precedence over the rules and regulations established by people and their  governments to govern local commerce.

Negotiated in secret and implemented without full public discussion and democratic assent, these agreements are systematically eroding the democratic rights of people to regulate their own local and national economies, and to set rules for commerce consistent with their own values and judgments regarding their personal and community needs. The interests of money and the fictitious legal persona of the corporation are thus placed ahead of the interests of living persons and their communities – all in the name of market freedom.

An unregulated market invariably encourages the externalization of costs because the resulting public costs (resource giveaways, low wage labor, tax breaks, lax environmental regulations) become private gains. This happens, for example, when a chemical corporation dumps wastes (or a natural gas driller pumps huge quantities of chemicals into the ground destroying water supplies) without adequate treatment, thus passing the resulting costs of air, water, and soil pollution to the community in the form of health care costs, genetic deformities, lost working days, a need to buy bottled water, and the cost of cleaning up the contamination.

It is useful to recall that Adam Smith, the intellectual patron saint of free-marketeers, favored a market comprised exclusively of small buyers and sellers. Smith considered the corporation to be an instrument for monopolizing markets and saw no place for such institutions in a properly functioning competitive market economy. By his reckoning, the corporation is an anti-market institution. Smith opposed any form of economic concentration and would be outraged by claims that he advocates that the market turns unrestrained greed into socially optimal outcomes. Smith’s focus was on self-interest of small business entrepreneurs, small farmers, and artisans trying to get the best price for their products to provide for themselves and their families. For him, greed is a high-paid corporate executive firing 10,000 employees and then rewarding himself with a multi-million dollar bonus for having saved the company so much money. In short, Smith believed the efficient market is composed of small, owner-managed enterprises located in the communities where the owners reside (my note: This is precisely the democratic modus operandi of the exciting trend to community, regional, state-wide, worker-manager owned cooperatives).

A corporation comes into being only through the public act of the government that issues the corporate charter. The creation of a corporation is thus a public, not a private, act. And its only justification is to serve a public purpose. Whatever privileges or authority the corporation may enjoy are derived from the authority of government, which is itself derived from the will of the people. It therefore follows that the corporation is rightfully subject to the will of the people and to whatever laws people freely choose to establish governing its function.

It is the proper function of the corporation to implement the laws that people establish through their governments, not to participate in their creation. Indeed, it is essential to the integrity of democratic governance that corporations be barred from political participation of any kind on the theory that political rights reside in real people. (my note: This position by Korten in 1996 is a far cry from present-day reality reflected in Supreme Court’s recent one vote majority decision in Citizens United case ruling that spending money to influence elections by corporations is a form of constitutionally protected free speech under the 1^st Amendment).

The idea that corporations should enjoy the rights of flesh and blood persons – including the right of free speech – grew out of the U.S. Supreme Court decision in 1886 that designated corporations as legal persons entitled to all the rights and protections afforded by the Bill of Rights of the U.S. Constitution. Significantly, the U.S. Constitution makes no reference to corporations. It was a decision without legal or moral foundation made by a corrupted court system. (my note: By the beginning of the 20^th century, corporations had become sovereign as persons under the law and had turned people into consumers, or workers, or whatever the corporation of the moment chose to define humans as).

Markets are important institutions and they have an essential place in any democratic society – functioning within a framework of democratically determined rules and public safeguards. There is nothing democratic, however, about an unregulated market that responds exclusively to the needs of the wealthy and subordinates human rights and interests. In the end, only an active and politically engaged citizenry can assure the protection of our human rights from the arbitrary use of power by either states or corporations (my note: For example, the recent moves by some states to privatize publically-owned government assets and eliminate collective bargaining rights of unions).

Institutional power and legitimacy flow from the will of the people, and when any institution usurps our natural rights, it is the right of the people to restructure, replace, or eliminate, that institution.

SUMMARY

At a time when abundant resources critical to all life are being rapidly depleted and falling commodity prices have become a thing of the past, we are being warned that our traditional, desperate free-for-all  focus on 4% or higher GDP growth rates is no longer sustainable. This requires a paradigm shift to policies aimed at achieving the conditions where market-driven capitalism can function in a more equitable democratic fashion in the public interest. This also means we cannot sustainably consume at 70% of GDP with zero Savings, explosively high Trade Deficits and related consumer and federal Debt … a formula we’ve perfected that will inevitably bring  the next crisis of all crises.

We need to fundamentally rethink our social-economic model … as someone said “do a little fate-of-the world scale thinking.” But I’m afraid we will continue to tinker with things broken in our unstable social-economic system. We seem Hell Bent on remaining captive to divisive ideology where the best and brightest ideas are sacrificed to inflexible dogma and the greedy pursuit of political power.                                            

I support David Korten’s thesis that corporations owe as much to the public as they do to shareholders. They owe something to workers,  communities and the natural environment in which they operate.  This calls for a far more civil society founded upon the values of equity, cooperation, openness, active citizen participation, consensus-oriented decision making and responsibility to the whole society.

In a 2000 essay, David Korten further wisely contrasted the values/benefits inherent in an uncivil purely capitalistic society where the sole defining purpose is making money and people are treated as expendible commodities -- vs. a more humanistic civil society where inclusivity, equity, shared sacrifice and shared gain are the dominate cultural values: 

“We might thus expect the economy to be comprised primarily of local enterprises and to vest in each individual a share in the ownership of the productive assets on which their livelihood depends (i.e., cooperatives, small enterprises). The civil society is radically self-organizing and predominately cooperative in the manner of all healthy living systems, and seeks to maximize the opportunity for each individual to fully and freely develop and express their creative potential in service to the whole life. (my note: Actually this was the American Dream that has become a middle-class Nightmare). Thus, a civil society differs on every dimension from the capitalist economy in which we currently live.

In the pure capitalist economy, money is the defining value and the primary mediator of relationships among persons and institutions. The whole of public life is dominated by national and global financial markets (and shareholder interests) that value life only for its liquidation price. The wages of working people are suppressed to increase the returns to those elite few who already command vast financial holdings.

Dominant corporations buy politicians and control public discourse to create a grossly distorted one dollar, one vote democracy. Spiritually impoverished and pressed into a struggle for survival, those deprived of both political voice and a (decent) adequate means of livelihood become increasingly indebted to the system that demands they devote ever more of their life energies to its imperatives. Ideals of equity are out the window and individual freedom becomes largely illusory.”

A Cooperative Economy: The Time Is Now

Published on Friday, August 26, 2011 by Green for All Blog

by Carmen Llanes

I am impressed by the amount of knowledge in our communities. There are countless skills among those who are currently unemployed and underemployed and those who have been laid off during this recession.

In more and more businesses, the tasks and responsibilities are being piled up on smaller staffs and overworked employees, many of whom find themselves increasingly fed up with top-down management that doesn't appreciate them.

In fact, much of our recession can be attributed to the lack of input from workers and small businesses. Our economy has been at the mercy of too few hands over the last several decades. Now many folks are using whatever skill they have to get by in a world with fewer local jobs and many, many underemployed people.

Why should so much talent go to waste?

This is a perfect time for a cooperative economy. Considering the disproportionate struggles faced by women and people of color during a recession, the cooperative economy presents an opportunity for all people, to leverage more power by making themselves the bosses, sharing ownership, and taking a collective approach to good management. Many people have already been let down by a top-down corporate or non-profit model in a recession-ridden society. Now is the time to rebuild the system, and build a society founded on justice, dignity, and respect for people and the planet.

Finding Opportunity in Crisis: Inspiration From the Road Ahead

I was really inspired by the power of community in supporting local economies through a recession when I first visited Detroit in 2008 and again in 2010 for the US Social Forum. There is much more than a depressed economy in Detroit. There are pockets of vibrant community. There is food growing. There are queer-owned, women-owned, cooperatively run businesses getting together. And while there may be great stretches of empty blocks, between them, there are farmers markets, and neighbors who talk to each other. There are older communities and advocates working alongside young and aspiring activists and entrepreneurs. This is what I think of when I hear Detroiters refer to "opportunity in crisis."

Austin is doing far better, financially at least, than Detroit. But when it comes to competition in a cutthroat time of depressed profit and wages, women, immigrants, and people of color are getting the raw end of the deal left and right. Many in the city feel underemployment, under appreciation or both.

In this sense we are primed for an alternative. And the good news is, while any big, social or economic grassroots movement is a "marathon", so to speak, we are witnessing big change over the last couple of years. Austin has already birthed more than one worker-owned cooperative business in recent years. Black Star Co-Op Pub & Brewery opened doors in the summer of 2010, with a large banner outside that reads "Community-Owned Beer." A consumer cooperative (owned by the community it serves) and also a worker-coop (run by its employees), Black Star is attracting a full house of business seven days a week. And the byproducts their brewery produces? They make great dog biscuits! Sold at the pub and at farmers markets and stores around town—green and delicious products for people and their pets.

Red Rabbit Cooperative BakeryRed Rabbit Cooperative Bakery has launched this year and is making donuts with local and organic ingredients. Their donuts also happen to be vegan, but the target audience includes meat and dairy eaters, since anyone can enjoy a good donut. The founding women of Red Rabbit used to work at a major grocery store chain bakery. They decided to take their skill set elsewhere, and make decisions collectively, so as to be truly appreciated as workers and owners. They started using all-natural, vegan, locally and organically derived ingredients, and using sustainable, environmentally friendly practices to create delicious donuts now being distributed all around town. Their demand is growing, and they are in the process of opening their own storefront, a green, worker-owned bakeshop.

One of the most beautiful things about building the movement for worker-owned businesses is that cooperatives, on principle, work to support each other. While Red Rabbit started small, with donuts, they are expanding to breads and other goods, and now sell sandwich loaves to Black Star Co-op Pub & Brewery as the Pub's menu expands. Black Star also collaborates with Third Coast Workers for Cooperation, an organization helping to develop green, worker-owned business and educating the community about the cooperative movement. Black Star helps the organization out in fundraising initiatives, so that TCWC can continue to offer free and low-cost assistance to emerging worker coops. All three organizations strive to make every element of the work green, local, and sustainable. And economically, a local support system offers more sustainability than the disconnected, global, corporate alternative. Much like the cradle-to-cradle ideology protects our natural resources, keeping our money in a cyclical change of hands that stays in our community and promotes justice and sustainability, is the way we will change the world, one town at a time.

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The most exciting thing about discussing this work right now, is that more folks are realizing that this model can apply to their situations. Again, skilled people, underemployed, who know these businesses, are the perfect candidates to get together and organize their collective skills into local, economic power. It could be a valet company, a restaurant, a bike rental business, a car body shop, a construction team, insulation team, house-cleaning cooperative. The possibilities are endless, and in a town like Austin where the service industry employs a huge sector of our population, the possibilities stand to be lucrative.

Without getting too carried away, we must dare to dream up a new reality. Reviewing the disappointments of national news can only get us so far, but if we can immerse ourselves into transforming local business, then we can address movement building from a much more inclusive and meaningful place. When our communities are empowered by belonging to a movement that they see is growing with success, then we will be even more ready to plunge into the national dialogue. But this time, we will be empowered by our own local successes.

Carmen Llanes is a Green For All Fellow Candidate.

On International Day of Cooperatives: Tagore and the Idea of Cooperation

Published on Saturday, July 2, 2011 by The Hindu (India)

An idea worth revisiting on the International Day of Cooperatives, which this year falls on July 2

by Ananya Mukherjee-Reed

“Today, economic power has been captured by a small minority. But it has acquired this power only by accumulating the productive power of others. Their capital is simply the accumulated labor of a millions of working people, in a monetized form. It is this productive power that is the real capital, and it is this power that latently resides in every worker ...” — Samabayaniti/The Co-operative Principles, 1928.

In a compelling set of essays written between 1915 and 1940, Rabindranath Tagore articulated a social vision where exploitation would give way to a just, humane, collectively owned economy. At the core of his thought was the cooperative principle. This is an idea worth revisiting on the International Day of Cooperatives, which this year falls on July 2, and even more so during the lead-up to 2012, which is the United Nations International Year of Cooperatives.

Rabindranath TagoreWhy cooperatives again? Have they not been tried — and have failed? Well, so have big banks and large corporations. Yet they continue undiminished. The reason they do so with such impunity is that alternatives are hard to come by. With the financial crisis on the one hand, and the (predictable) collapse of the system of microcredit on the other, the need to identify alternative forms of ownership is greater than ever before.

In India, the experience with the century-old cooperative movement has been mixed. There are some stunning successes: Amul, for one. There are others, too, where cooperatives have proved transformational for the marginalized. The problems are also well-known: abuse, politicization, excessive dependence on the state, and so on. But these are mere symptoms. The real disease lies elsewhere. There is little understanding, much less acceptance, of the cooperative principle and its potential. It is yet to enter the core of our social vision, leave alone public policy. Those spaces are dominated, ever more aggressively, by the competitive principle, the scepter of ‘efficiency' and private gain. This is why India can emerge as one of the top wealth-generators even as 93 per cent of its working citizens toil in the informal sector. That 93 per cent contributes almost half of India's fast-growing GDP. But it has no say over the way that growth is generated — or any voice to claim a fairer distribution of the wealth it produces. The same goes for the majority that survives on the agrarian economy.

Written some eight decades ago, Tagore's thoughts stemmed from these concerns: the growing concentration of economic power and the destruction of rural India. He wrote: “Today our villages are half-dead. If we imagine we can just/ continue to live, that would be a mistake. The dying can pull/ the living only towards death.” (from The Neglected Villages, 1934).

He was deeply skeptical about the solutions proposed by the elite — such as charity or moral enlightenment of the wealthy. These were like putting out “a raging fire by blowing at it,” he wrote. Instead, he sought an ethical model of production.

What would that entail? Tagore's vision went far beyond notions like ‘social responsibility' that are in vogue today. To him, ethical production required that resources (such as land and capital) are collectively owned by producers themselves. This would ensure that the produce is also collectively owned, and that all producers have a say in determining their share of value in the product of their work.

The typical small farmer, indebted and impoverished, was much in need of such a structure. “Imagine if all of our small farmers farmed their land collectively, stored their produce in a common facility and sold them through a common mechanism...” Only then can we prevent profiteering; only then can the farmer recoup the legitimate value of her labor, wrote Tagore.

Without such mechanisms, the farmer would never be able to effectively exercise the right to his land, even if he held the title. Structural conditions would make him powerless. Under these circumstances, giving the small farmer the legal right to land was no more than giving him ‘the right to commit suicide.'

Indeed, in the cooperative principle, Tagore saw the possibility of challenging power, of altering power relations. Ordinary people, whose work constituted what was ‘the real capital,' could only do so if they collectively owned that ‘capital.' Many economists may well reject this as the misplaced idealism of an ill-informed poet. But it will resonate readily with the struggles for producer-ownership in the world today, such as Via Campesina. As the clout of agri-business grows, food inflation rises, and informal work becomes the norm, challenging dominant structures of ownership. And power is the central challenge of these movements.

In India, no amount of tinkering can make growth ‘inclusive,' unless people have a say in how that growth is driven. Take the case of cotton textiles, a boom sector that has seen much growth. But has it really benefited those who have produced that growth? The cotton growers, for instance — the largest single group within the 200,000 farmers who have taken their own lives in the past decade? Or the millions of women who work the long shifts in export factories? Even worse, the drive for profits constantly pits the growers and workers against one another. When, at the peak of the cotton crisis, cotton farmers received price support from the government, export sector workers were threatened with job losses because cotton had become ‘too expensive.' (Ironically, the worst off among the cotton growers did not even benefit from price support.) As long as prices are globally determined, we are told, not much can be done to save those at the bottom. Yet, the past few months have seen global prices hit a big high — and the government sharply restricted cotton exports to favor the textile lobby. This crippled the growers.

This brings us right back to the question of ownership. When global prices fluctuate, who decides how the gains and losses are to be shared? Certainly not the majority of workers and small farmers. But more important, global prices do not operate by magic. They reflect the same concentration of ownership and economic power. Indeed, several movements today urge consumers to use their purchasing power to counter such power. But consumer movements cannot succeed unless the productive economy is differently organized, differently owned.

Can that happen? Yes, if several conditions are in place. First, the competitive principle must be properly applied. Every institution, from schools to universities to hospitals, is increasingly being judged according to that principle, and forced to forgo its social priorities. At the same time, banks and corporations remain blatantly non-competitive, operating like cabals with little discipline or accountability. Second, among the main points of criticism of cooperatives in India has been their need for state resources. But our corporations have also been heavily subsidized by state resources. While they flourish, cooperatives flounder. Why? Corporations enjoy state support with no interference; cooperatives do not. State support has come with levels of bureaucratic control that are incompatible with a truly autonomous, member-driven movement. Third, cooperatives cannot survive in isolated sectors. Systematic linkages between sectors and across countries are necessary if we are to harness the full political, social, economic power of the cooperative principle.

Here is a story from Peru. From its mountains comes a special brand of coffee called Cafe Femenino, produced by cooperatives of very poor indigenous women. It grew out of the women's struggle to claim their share of the value they produce. As growers of organic Fair Trade coffee they earn a premium over and above the market price. Before Cafe Femenino, the women had no access to this premium, no say in its use. Now they use it to educate their daughters who would otherwise not go to school; more than that they raise awareness against the tremendous gender violence in their communities.

There is more. In Canada, Cafe Femenino is distributed also by a workers' cooperative, creating as a result an entire coffee chain of cooperatives. Finally, as a mark of recognition of the global character of gender violence, Cafe Femenino is distributed free to shelters for abused women in Canada. The Femenino experiment has spread to six countries in Latin America and grows by the day. In India too, various experiments with women's collective enterprises have long been under way, but do not receive the attention they deserve.

As Tagore had foreseen it, the cooperative principle enables the most marginalized people to mobilize their most abundant resource: their productive power and their solidarity. ‘Development projects' or paternalistic policy models for ‘empowering the poor' cannot achieve this.

The choice is not between textbook theories. The lessons of everyday life have been stark, more so since 2008. The choice is between two different worlds: one driven by hyper-profit and mass distress, the other holding out the promise of shared prosperity and well-being.

© 2011 Ananya Mukherjee-Reed

Ananya Mukherjee-Reed is Professor and Chair, Department of Political Science at York University in Toronto. [email protected]

more Ananya Mukherjee-Reed

The US Does Not Need Workers; It Needs Consumers

by John Lawrence

Why is unemployment so high? Simply put it's because corporations and businesses can produce a surfeit of consumer goods without the need for additional human labor. Since 125,000 new faces enter the work force every month, there should be new jobs created for these people if they are to make a living since most people, but not all, make their living through work. Some, however, the rentier class, make their living from stocks, rent, dividends and interest, but not very many. But the American and even the world - since we're in a global economy - production machine doesn't need additional workers; it needs more consumers. Everything can be produced with a diminishing number of workers. Why? Consider automation, robotization, computerization. In short today machines do most of the work. You only have to watch one of those shows on the Science Channel to appreciate this: "How Stuff is Made." You see that most industrial processes have been completely automated.

Back in the old days production was very labor intensive. Stuff was made by hand. Machines were very primitive or non-existent depending how far you go back. The land was tilled and crops planted by hand whereas today huge tractors and automated farm machinery mean that one man can do the work that was done by hundreds a hundred years ago. What little labor is needed in today's world can easily be outsourced to wherever labor is cheapest. We have gone from an economy which was very labor intensive, one that required a lot of hands for the production of goods, to one that requires very little labor to keep the machines and robots humming. And the process of mechanizing and automating production processes continues. Robots are getting ever smarter.

So where does that leave the average person who is trying to make a living? Not in a very good position with the current economic model. It essentially leaves him or her in the position of a serf begging for a job and competing with thousands of others for work. The serfs were even better off because at least their labor was needed. Today's industrial reserve army is not really needed by the capitalists and corporatists who control the economy. That means two things: 1) the value of labor is depreciated because so much of it is available and unneeded and 2) there is a growing percentage of the population that must either be sustained by some form of welfare or unemployment compensation or cast to the wolves to beg, borrow and steal.

What is needed is a new economic paradigm which recognizes that very little labor is needed and machines can do most of the work. What would that new economic model look like? There would need to be a much larger leisure class than now exists. The wealthy are very few in number as a percentage of the population as a whole. They don't have to work because they have a steady stream of income which represents a return on their assets. Ownership of real estate produces a return in the form of rent. Ownership of stock produces a return in the form of dividends. Interest income is at an all time low because interest rates are so low, but when they go up again, people will be able to make a living if they have enough money in money market, CD and savings accounts. Unfortunately the distribution of wealth is way out of whack. Those in a position of being able to make a living off of so-called unearned income are very few. Those in the position that their only recourse is to make a living from their labor are the vast majority. What is needed is to turn this situation around so that the vast majority can make a living off of return on assets and only a small minority, whose labor is actually necessary for the functioning of society, will be necessary to make money from work. Or the work could be spread around so that everyone might work a few hours a week and make their living mainly on the return on assets or acquired wealth and a small portion of their living off their labor.

This is effectively what advanced societies (not including the US) have done. A large portion of the wealth of the society is held publicly. This does not preclude the private acquisition of wealth, but insures that the distribution of wealth is not as skewed as it is in the US. This makes it possible for the less fortunate, the less able and the unemployed to make a living as a return on public wealth. The fortunate do not need public assistance, but the unfortunate do. Public wealth can provide for free health care, free education and free unemployment compensation among other things. By taxing the rich, money is redistributed to the poor so that the processes of production and consumption can continue. Or public wealth in the form of natural resources can be sold and the profits divided evenly among the people. Many countries use their oil assets as a form of public wealth. Otherwise, all the money ends up in the hands of the wealthy and production stops because the vast majority of people have no money to consume. When money is redistributed or recycled from rich to poor, the production and consumption processes can hum merrily along. So taking money from the rich in the form of taxation and redistributing it to the poor is very important for the healthy functioning of society especially in advanced societies where most of the work is done by robots and human labor is increasingly unnecessary.

So all this banter about the rich being job creators is a bunch of hooey. The rich are not job creators; they are robot acquirerers and job destroyers. They make capital investments of a nonhuman variety because they are more efficient in the production process than are humans. For one thing machines can whiz and hum 24 hours a day. Humans need their rest. Safety standards for machines are more lax than they are for humans. Maintenance is simpler. Machines don't get sick or disgruntled. All in all if a capitalist can replace a human with a machine, he will do it. Capital investment in machines is more desirable than an investment in human capital.

So what does that say about the value of education? Essentially a college education is of diminishing value. Sure some will chase the fantasy of more and more education in order to better compete for fewer and fewer jobs. In the long run the student loan debt required to obtain a credentialization in some field will not be worth it. Since more and more people will be left to their own devices instead of hired, the sensible thing is to prepare for a life of self-employment. Instead of preparing to participate in the global economy with its attendant risks of outsourcing and downsizing, prepare to participate in the local economy in a job from which you cannot be fired and which cannot be outsourced. A college education prepares one mainly to be a servant of a corporation. It shows that one was docile and compliant enough to follow years and years of instruction, sit in classrooms and take tests successfully. It shows the employer that a potential hiree has the requisite qualities of docility and compliability to make a good employee, one who won't make waves or criticize the corporation, one who will adopt the ethos and become enculturated in corporate values, one who, in other words, will sell his soul to the corporation.

Another way to fight back against the job destroyers (not creators) is to form cooperative work enterprises such as the Mondragon corporation which is wholly employee owned. The employee, in addition to acquiring a paycheck, acquires a share of the profits as well. So the worker becomes an owner and makes part of his living from a return on assets just like the wealthy do. Wealth, therefore, is more widely distributed and can be further distributed by reducing the work week, hiring more employees and distributing wealth even more widely.

In an age in which there is a diminishing need for human labor and most work in the production process is done increasingly by machines, the rational thing to do is to distribute the necessary work more widely (i.e. reduce unemployment), reduce the work week and create a situation where each individual makes a portion of their living off of acquired public wealth. In Norway, for instance, the old age pension system is entirely funded by profits from a publicly owned asset: oil. These profits then are invested conservatively so they will be available to future generations.

 

The Mondragon Cooperative: A Blueprint for America?

In the Shadow of the Dragon

Monday 24 January 2011, from truthout

by: Thom Hartmann, Berrett-Koehler Publishers | Serialized Book

(Image: Berrett-Koehler Publishers; Edited: to)

The motivating force of the theory of a democratic way of life is still a belief that as individuals we live cooperatively, and, to the best of our ability, serve the community in which we live, and that our own success, to be real, must contribute.

- Eleanor Roosevelt 

There was a dragon here hundreds of years ago, here in the Basque country in northern Spain, a place steeped in tradition, a hilly expanse between the mountains and the sea. Local lore has it that the Basque language, the only European one with no known root language, is a remnant from the time of Atlantis, which may have vanished into the Atlantic Ocean not far from here eons ago.

Standing on a hillside overlooking an early autumn valley, Louise and I were amazed by the simple beauty of the mountain of the dragon, its gray and balding peak towering above the town like an ancient ziggurat. This is Mondragon, a small town named after the dragon of the mountain, the dragon probably being, a local resident told us, a particularly brutal lord or local king who exercised the Rite of the First Night, a dreaded ritual when fair maidens were whisked away on their wedding night.

The Rite of the First Night was said to have been common across Europe throughout the Dark and Middle Ages, although it was probably far less common than modern folklore suggests. When a young woman was married, she was required to spend the night of her wedding with—and lose her virginity to—the local lord or king.

Oddly enough, all across Europe one still finds remote communities where most of the people have similar large noses or red hair or big ears and so on—all descendants of some ancient lord who fathered the first children of innumerable families. European society was patriarchal and hierarchal, and because the king lived in distant Toledo, his defilement role was filled by the local lord. The sheer horror of his men coming to take away the new bride became the legend of the dragon.

Now here is the ultimate irony: right here in this valley, in the shadow of the dragon, has grown a business enterprise that—in virtually every way imaginable—is the antithesis of a dragon.

And for all of us in the United States, this business enterprise represents a model that can be transformative and sow the seeds of a new kind of business entity that is, at its heart, more equitable, more fair, and more just—and therefore more truly American— than the predatory multinational corporations that are now typical of twenty-first-century America.

Cooperation and Corporation

The Mondragon Cooperative is neither hierarchical nor patriarchal. There’s no king or lord. The corporation is owned by its employees. The most highly paid person earns less than six times the most poorly paid person. Decisions are made by workers on the front lines and then communicated up to the “managers” for implementation.

And this is no flaky, hippy-dippy communelike experiment. It is the world’s largest federation of cooperatives, employing more than 90,000 people in more than 250 companies that focus on four areas: retail, finance, industry, and knowledge. In 2008, Mondragon’s revenue was €16.8 billion ($24.2 billion). All—every last euro cent—of the profits are distributed in one of three ways: reinvested in the business, given to worthy local charities, or paid as dividends to Mondragon’s worker-owners.

What Mondragon has shown, by its sheer size, scope, and success, is a new economic model that avoids the pitfalls of both modern capitalism and old-fashioned communism.

“Capitalism” has its deficiencies, whether institutions are for- profit (think Goldman Sachs, where stocks are sold to investors or the public) or not-for-profit (think Red Cross, where the CEO earns $500,000 per year and the “stock” is controlled by a board of directors).

Similarly, “communism” has its problems because the state owns the business, employees are simply agents of the state, and nothing works because nobody is accountable to anybody and there’s no incentive to do better.

Most importantly, both capitalism and communism are top- down hierarchies that stifle human ingenuity.

But Mondragon is the world’s largest example of a third way: worker-owned cooperatives that foster enterprise as well as equity. Unlike the top-down nature of capitalism and communism, Mondragon has flipped that pyramid upside down.

That flipping is apparent when one visits any of the Mondragon businesses. Louise and I were on the factory floor of an absolutely spotless washing-machine manufacturing facility of the Mondragon Cooperative in 2009 when we witnessed the true cooperative nature of the enterprise. Like all Mondragon businesses, this state-of-the-art industrial facility, converting sheets of raw metal into finished washing machines for sale all around the world, is run by its employees.

As we stood watching, a group of about a dozen workers assembled electronics on a U-shaped assembly line. A “manager” walked up and asked for everyone’s attention. Our translator shared with us the essence of the conversation: next Thursday there was going to be a schedule change, the result of some local event.

At first it sounded like a typical manager telling his employees what was what. “Thursday our systems will change, and we’ll have to produce a different number of units,” he said. The workers nodded.

Then came the bombshell: “How do you all think we should do this?” he asked.
A conversation ensued, and it dawned on me that the workers were not arguing or fighting or complaining; they were offering concrete suggestions. With each suggestion others would point out its strengths or weakness or offer their own.
The “manager” was facilitating the conversation and taking notes. Within 10 minutes some sort of a consensus was achieved, and the workers told the “manager” how they’d handle Thursday’s change. He thanked them and left, his job now to communicate up to the cooperative’s administrators how the assembly line would adjust itself to Thursday’s changes.

This was about as far from the Rite of the First Night as it’s possible to imagine. In Mondragon, in the shadow of the ancient—and now dead—dragon, the descendents of the serfs have taken charge. The result is one of the most successful—and equitable—business models in the world.

And it’s not just the business pyramid that has been upended; there’s a sociocultural element at Mondragon that is just as transformational to its local cultures as is the idea of workers owning and running their own businesses.

Mondragon University was the first institution started here by Don José Maria Arizmendiarrieta, the priest who began in the 1940s what has now grown to become the worldwide Mondragon organization. Investing in education—building knowledge—is like building a factory. Through Mondragon University they’re investing in humans just as much as the factories are investing in the business infrastructure of the towns where Mondragon works. That investment in educating and training students at a university with strong links to the cooperatives is evident in the fact that almost all students find work within weeks of graduation. Mondragon’s practice of placing people over profits clearly produces results that benefit all.

Embrace the Cooperative Movement

Published on Tuesday, October 26, 2010 by the Austin American-Statesman (Texas)

by Carlos Perez de Alejo

In the midst of mounting economic insecurity, fueled by widespread unemployment, foreclosures and budget cuts, many are seeking alternative models to business as usual. From community gardens to bartering networks, grassroots efforts are sprouting up across the country. One pillar of the trend is an international institution with over 160 years of experience in local, sustainable economic development: a cooperative.

Since the mid-1800s, cooperatives have promoted a people-centered model that sets them apart from conventional businesses. Unlike traditional corporations, which are owned and controlled by outside shareholders, cooperatives are businesses owned and democratically controlled by their members — the people who use their services or buy their goods.

Co-ops exist in a variety of forms in countless industries across the U.S. and around the world. United on the basis of member-ownership and democratic control — generally following the decision-making principle of "one-member, one-vote" — co-ops have a range of ownership structures. In whatever form they take, however, surveys repeatedly demonstrate that consumers rate co-ops as more trustworthy than investor-owned corporations.

In the U.S. alone, the model has been embraced by more than 130 million members, served by over 29,000 cooperatives operating in nearly all sectors of the economy.

Cooperatives play a vital role in local economic development, helping people improve their lives through jobs and access to goods and services. The demonstrated benefits have sparked growing interest in the cooperative movement worldwide.

In light of the economic crisis, many people have embraced worker cooperatives as an effective pathway out of poverty. Owned and controlled by the people who work in the business, worker co-ops have an impressive track record of providing stable jobs with asset-building potential, higher wages, a deeper connection to the local community and an array of personal and professional development opportunities.

Worker cooperatives often operate on the basis of a "triple bottom line," measuring success not simply by the money they earn, but by the well-being of their workers; their sustainability as a business; and their contribution to the community and the environment. Cooperatives have served as a foundation for growth of the green economy, where worker-owned businesses operate primarily in labor-intensive sectors such as recycling, solar installation, landscaping, green cleaning and deconstruction.

In Austin, Third Coast Workers for Cooperation, a cooperative development center dedicated to building worker-owned green businesses with low-income communities, is working with a group of low-income women to establish Yo Mamas Catering Co-op, a worker-owned catering business.

"We wanted jobs that would provide a good living for ourselves and our families," says Sylvia Barrios of Yo Mamas. "We've spent a lot of time working for other people. ... Now we want more control over our lives and we think Austin is ready for more worker-run businesses."

Indeed, Austin has its share of notable worker-run businesses: Ecology Action, a recycling center in downtown; Tribe Creative Agency, an advertising agency focused on the "Common Good"; and the Black Star Co-op, a worker-managed, consumer-owned brew pub.

As one of the more noteworthy cities for socially and environmentally responsible local businesses, Austin is ripe for more growth in the cooperative sector. Socially and environmentally responsible practices are not just a trend within cooperatives — it's just how they work. That's the cooperative difference.

© 2010 Statesman

Perez de Alejo is co-director of the Austin-based Third Coast Workers for Cooperation.

The Rise of the New Power Co-Op Movement

by Brendan Smith

Oysterman and Labor Network for Sustainability Co-Founder

Posted: September 28, 2010 10:43 AM on Huffington Post

[Drafted with Jeremy Brecher]

Breakdown at Copenhagen. Climate legislation stalled. EPA regulation of greenhouse gasses threatened. Is climate protection dead?

Maybe not. Climate protection has gone local. Political leaders may fiddle while the world burns, but grassroots groups around the country are organizing to cut greenhouse gas emissions and build a greener future for their communities. Block by block and using every tool at their disposal, groups are fighting to green schools and workplaces; setting up networks of green job training centers; installing solar water heaters in low income communities; and halting new coal-fired power plants with both political and direct action.

One of the least known but most promising examples of this "localization" of climate politics is the greening of utility co-ops to create affordable and renewable energy, green jobs, and regional green development. These efforts may well represent the beginning of a "New Power Co-Op Movement" that can help jump start the shift to a new green economy.

Electric co-ops are owned by their customers, who are called "members" due to their dual role as customer/owner. Their primary mission is to provide access to electricity at affordable prices for every potential member in their service area.

Electric co-ops were created as one of President Franklin Roosevelt's New Deal programs in order to promote rural development. The first electric co-op was born in 1934 in the back of a furniture store in Corinth, Mississippi. Within a few years, it had thousands of counterparts across the nation.

Today, America's 930 electric cooperatives are the sole source of electricity for 42 million people in 47 states -- nearly 12 percent of the nation's population. They control $100 billion in assets and $31 billion in member equity.

What Matters in Kansas

In western Kansas, rural communities, farms, and businesses get their electricity from Midwest Energy, the electric co-op based in Hays, Kansas. The co-op has pioneered an energy conservation strategy known as "on-bill financing." It has developed a program called How$mart that provides money for energy efficiency improvements such as insulation, air sealing, and new heating and cooling systems for residential and small business consumers. Co-op members -- whether owners or tenants -- don't have to put up any money "up-front." Instead, they repay the funds through energy savings on their monthly power bills.

Members start with an energy audit to determine potential savings. The co-op develops an individualized conservation plan. Members choose a contractor. If the member moves or sells the property, the deal passes to the next customer at that location.

The program started with a pilot in four rural counties in the summer of 2008; it then spread through rural Western Kansas. A year later it had invested $1 million in more than two hundred rural homes and businesses. It is estimated that customers will save over 400,000 kilowatt-hours per year, enough to power forty homes. That will put 13,000 fewer tons of carbon dioxide into the environment over the next twenty years. The Environmental Defense Fund recently recognized How$mart as one of America's best energy innovations.

"New Power" in Kentucky

For decades residents of eastern Kentucky have been fighting Big Coal's destruction of their majestic environment and cherished way of life by coal extraction. Much of that fight is led by the statewide citizens organization Kentuckians For The Commonwealth. KFTC has deep roots in the state's impoverished mountain communities where coal is mined; many of its leaders are former coal miners. While it has engaged in direct action against mountaintop removal, it recognizes that such action is not enough. Kentuckians desperately need a new strategy for economic development, energy, and jobs. KFTC is now promoting a plan for "New Power" that would make eastern Kentucky's electric cooperatives the pivot for such a strategy.

East Kentucky Power Cooperative (EKPC) is a cooperative that is owned by 16 local electric distribution coops. EKPC generates and sells power to these co-ops, which serve half a million members in 87 counties. EKPC is proposing to build a new 278-megawatt coal-burning power plant in central Kentucky along the Kentucky River at an estimated cost of nearly one billion dollars.

The Smith plant would only increase the dependence of Kentucky on coal for its energy supply and thereby increase the pressures for mountaintop removal. The struggle against the Smith plant has led KFTC to accompany its fight to save the mountains with a search for a "New Power" alternative.

With the help of KFTC, co-op members are now proposing that the co-ops not waste their funds on the Smith coal plant, but instead invest in an alternative plan to meet the power needs of their members through energy-saving and renewable energy programs. These local energy needs will be met by a combination of energy efficiency and weatherization initiatives paid through on-bill financing, along with local renewable energy, such as small-scale hydroelectric plants and rooftop solar hot water heaters. The New Power plan would cost less than the Smith Plant while meeting the same energy demand.

Such a plan would not only provide for eastern Kentucky's energy needs in a way that would protect the local environment and the global climate, it would also provide far more and better jobs. According to EKPC itself, the Smith plant will create only 700 temporary jobs at the peak of construction and 60 permanent jobs. Yet, according to the Ochs Center for Metropolitan Studies,an energy plan based on efficiency and renewables will create nearly 4,600 direct jobs over the same period it would take to build the Smith Plant. Members of local communities could be trained and hired for these green energy jobs.

The New Power plan would also significantly lower the utility bills of co-op members (some co-op members in eastern Kentucky spend more than 50% of income on energy). The estimated cost of electricity from the alternative plan is 17% less than the Smith coal-burning plant. Money saved could be invested in affordable housing, environmental restoration, healthcare, and other job-creating activities. (For more on KFTC's alternative program read: "A Cooperative Approach to Renewing East Kentucky".)

Co-op members in Kentucky are weighing the trade-off. According to Rachel Harrod, whose stepmother ran for a local co-op board this summer:

I believe there's an alternative that will be better for the environment, less costly to co-op members, and far more beneficial economically. The jobs generated by a clean energy portfolio would be a welcome boost to our local economy. I can't tell you how significant this would be to an area that has lost much of its agricultural base in recent years.

 

In addition to saving co-op members from paying for dirty power, a New Power program in eastern Kentucky could kick-start a broader agenda for transitioning Appalachia to the new green economy. Co-ops already have the key infrastructure in place. And instead of being controlled by for-profit investor utilities, the new facilities will literally be owned by eastern Kentucky -- the co-op owners, not distant stakeholders. These economic benefits will stay in Kentucky and reverberate through the region.

Greening Economic Democracy

Rural electric co-ops were once a model for economic democracy. David Lilienthal, a founding director of the Tennessee Valley Authority, described an electric coop annual meeting in the 1940s:

Throughout a whole day as many as 2,000 farmers and their wives and children discussed the financial and operating reports made to them by their [co-op] superintendent and board of trustees, and later while we ate a barbecue lunch watched new uses of electricity demonstrated.

 

He added,

These membership "town meetings" are not simply business sessions. They have an emotional overtone, a spiritual meaning to people who were so long denied the benefits of modern energy.

 

But many electric coops have become distant from such town meeting democracy. In eastern Kentucky, for example, elections to coop boards are rarely contested, with many of the officers serving for decades. Policies are often controlled by coal and other energy companies; as a result, Kentucky's rural electrical cooperatives are more than 90 percent dependent on coal. That makes rural Kentuckians vulnerable to rising fuel prices and coal depletion.

Building the new green economy will require the revival of democracy -- at every level. That's why co-op members, with the help of KFTC, have begun challenging the entrenched leadership of local co-op boards. This year, KFTC members Dallas Ratliff and Tona Barkley ran for the board of the Owen Electrical Cooperative. In her campaign materials Barkley says:

As a board member, I will strive to make the co-op more open and democratic. I'll also promote a stronger approach to helping members improve the energy efficiency of their homes and businesses and a more aggressive approach to transitioning into more renewable sources of energy -- to protect members from rising energy costs, to protect our health, and to create local jobs.

Like Tona, hundreds of KFTC members throughout the state see a clear link between new democratic power and new clean energy power.

Such a program could be a model for the 400 rural electrical co-ops with 40 million members nationwide. And that could be a significant contribution to a new strategy for protecting the global climate -- from below.

Globalism Sheds American Jobs: Go Local Instead

John,

This is a quick follow-up commentary to you excellent thoughts about the structural job destruction spiral we are caught in by indifferent, giant  quasi-monopolistic enterprises. On the positive side, there are some emerging signs of a promising sea change of more local communities choosing for nurturing independent businesses and locally produced goods as an Escape from Big Corporate uniformity and concentrated power ... as a better way to self-control and stimulate worker happiness and job growth. People's priorities and attitudes, for example, appear to be slowly shifting to food co-operatives, to neighborhood green grocers and local hardware stores, to opening their own drug stores rather working for a chain for minimum wages and neglible benefits.

The 1950s uprising of the extraordinarily successful Spanish Mondragon Cooperative Movement is now arriving to America's shores. This new grass roots economy movement -- tied to community and small-scale businesses under a disciplined policy of mutual employer-employee loyalty and shared ownership -- offers a truly exciting countervailing power against the privileges of global conglomerates. Decades of softening anti-monopoly enforcement has exploded corporate bigness and a business culture of concentrating power, evaporating local businesses and jobs for the sole benefit of management bonuses and shareholder returns ... ultimately undermining our democracy with big corporate money influence on community elected representatives.

The conservative right consistently forgets that Americans have always had a gut suspicion and deep dislike of corporate economic concentration. Even Thomas Jefferson proposed making "freedom from monopolies in commerce" an article in the Bill of Rights. He did not succeed. But over the past 200 years courts have given the corporate form enormous powers such as the rights of citizens, unlimited liability, and unlimited life. (Ed. note: See recent Supreme Court decision on Citizens United which gives corporations even more power.) The result? A handful of global corporations, mega-retailers, giant insurance and financial institutions dominate all sectors of society. They suck out all the breathing air of local businesses, eradicating smaller competition, local suppliers, and jobs. They systematically destroy the relationships that tie small businesses and a community together. We end up erecting a singly-driven monoculture and economy with the goal to Export wealth and jobs, thereby relegating more and more of the working community to an insecure minimum wage/benefit status. This curse of bigness is also fostering an increasingly unhappy and alienated populace throughout America ... people generally feeling more and more at the job, product/service choice and quality mercy of unresponsive, destructive corporate behavior.

As a nation, we should be encouraging aggressively a new economic mission of reconnecting capital with community and region.  A new economic mission that recognizes that mega-banks, for example, that are TOO BIG TO FAIL are also TOO BIG TO EXIST, so well put by one writer. Huge financial instutions, exerting corrosively concentrated power, must be broken up into much smaller, more competitive units that (like the Mondragon co-operative banks and firms which are based on solidarity) respond better to unique regional conditions and needs. The new economic mission should be to encourage many more small locally owned businesses which are a catalyst for social-civic activities and engaging community/regional interactions ...  in sharp contrast to communities saturated with boringly standard chain mega-stores/shopping malls/big box stores all designed to generate quick consumption, little conversation, and community cohesiveness. In this regard, I've read that my home state of Maine (somewhat like San Francisco, I believe) has a policy that prohibits large stores being built that do not meet rigid criteria of environmental and economic benefits including enlivening a citizenry sense of civic and community togetherness, of diverse architectural harmony,  where local store owners know their customers who chat with acquaintances in stores and along sidewalks.

Much more money needs to be productively redirected to rebuilding local communities, to stimulate existing and startup businesses, to nurture local/regional enterprises like the neighborhood stores, locally owned food markets, independent restaurants, small-scale farms, a green industrial bank, etc. As one fellow Mainer remarked: " Money is a human invention and the rules that control its dynamic are also a human invention. The capital rules in place today favor mobility over community, speculation over productive investment in people and small enterprises, volatility over permanence, where the  monopoly corporate aim is extraction of wealth rather than creation of wealth."  

And where the concomitant goal of corporate bigness is to achieve this extraction of wealth with rock bottom wages and a minimum of workers who are trapped in a race to the bottom .... whereby lower-middle class wealth or what remains of it is diverted to ruling class elites.

Regards,

Frank Thomas
The Netherlands

P.S. : Constanze Woelfle, an American accountant based in the Netherlands, recently noted in a study the following ratios of U.S. CEO pay to that of average manufacturing and middle-class working employees:

471 to 1 in the U.S.
24:1 in the UK
15:1 in France
13:1 in Sweden
12:1 in the Netherlands

This warped U.S. income disparity and cynically greedy diversion of income from workers to upper management echelons and investors are symptomatic of and a contributing factor to our egregious culture of job destruction. 

Best,
Frank

 

European Capitalism Superior to American Capitalism?

How Europe Avoided an Economic Crisis that is Anywhere Near as Bad as Ours

By Richard Clark (about the author)  

Published by OpEdNews.com, May 1, 2010 at 08:16:21

What follows is a synopsis of an article by Steven Hill that recently appeared in The Nation -- http://www.thenation.com/doc/20100510/hill. That article was adapted from Hill's eyeopening recently published book, Europe's Promise: Why the European Way Is the Best Hope in an Insecure Age. (http://www.europespromise.org/).

Contrary to what rightwing American critics would have us believe, Europe has the largest economy in the world, producing nearly a third of the world's GDP. Indeed, its economy is almost as large as those of the United States and China combined. Europe has more Fortune 500 companies than the United States and China put together, and Europe had a higher per capita growth rate from 1998 to 2008 than the United States. Long denigrated by US pundits as the land of high unemployment, the EU currently even has a slightly lower unemployment rate than the United States. Indeed, the World Economic Forum in 2008-09 ranked Denmark, Sweden, Finland, Germany and the Netherlands among the top ten most competitive economies in the world. They are also ranked at or near the top of most lists for quality of life, health care and social benefits. That's not a coincidence, since the participation of workers on all corporate boards of directors allows for both economic vibrancy and more egalitarian social policy. And while the United States also ranks high in competitiveness, it is near the bottom among most-developed countries in health care, social benefits and quality of life.

Sweden, Germany and other European countries are proof that you can have it all -- but only if you have the right institutions to facilitate both a powerful economic engine and the supportive institutions and benefits to harness that engine and keep employees and families healthy and productive. These distinctly European advances may be the most important innovations in the world economy since the invention of the modern corporation, since they encourage free enterprise combined with economic democracy and worker consultation that does not unduly burden entrepreneurship and commerce. The advances allow businesses to be both competitive and socially responsible.

In effect, Europe has reinvented the corporation. Yet the latest critiques of capitalism by leading authors like Naomi Klein, Noam Chomsky and the producers of the popular film The Corporation tend to view all corporations and all capitalisms as the same. American progressives, while searching for effective responses to globalization, appear to be mostly unaware of these intriguing European inventions. Movements to revoke the charters of offensive corporations, while having gut-level appeal, have failed to recognize that European corporations are fundamentally different animals from their "disaster capitalism" US counterparts.

Now, a year and a half after an economic earthquake shook the world, new economic models are beginning to find traction in America. Alternatives to Wall Street capitalism, the epicenter of the temblor, are suddenly getting a new hearing in the United States, whether it's Paul Volcker calling for reinstatement of Glass-Steagall regulation of the banking sector, the United Steelworkers announcing an alliance with the Mondragon cooperatives in Spain to develop manufacturing cooperatives in the United States, or Cleveland-based efforts to establish worker-owned co-ops in distressed communities [see Alperovitz, Howard and Williamson, "The Cleveland Model," March 1, in The Nation].

If Americans want to learn about cooperatives, Europe is a great place to start.Those co-ops produce an estimated 12% of the GDP of the European Union and involve, directly or indirectly, at least 60% of the population. Besides the Mondragon co-ops in Spain, in which 256 companies employ 100,000 people in industry, retail, finance and education, there's also Coop Italia, which operates the largest supermarket chain in Italy, employing 56,000 with more than 6 million members; housing co-ops like Poland's TUW; and the Co-operative Group in Britain, which is the world's largest consumer-owned business, with 4.5 million members.

In Europe, practices unfamiliar to Americans, such as co-determination, supervisory boards and works councils, have been crucial in helping to harness capitalism's tremendous wealth-creating capacity so that its prosperity is broadly shared.

Co-determination has several features, one of which allows workers to elect representatives to corporate boards of directors known as supervisory boards. Supervisory boards then oversee company managers, who handle day-to-day operations. In Germany, the world's second-largest exporter and fourth-largest national economy, fully half of the boards of directors of the largest corporations -- Siemens, BMW, Daimler, Deutsche Telekom and others -- are elected by workers. In Sweden, one-third of a company's directors are worker-elected. To understand the significance of this, imagine if Wal-Mart were legally required to allow its workers to elect a third to half of its board, who would then oversee the CEO. Imagine how much that would change Wal-Mart's behavior toward its workers and supply chain. It's hard for Americans even to conceive of such a notion; indeed, when I ask Americans at my lectures how many of them have heard of worker-elected supervisory boards, usually no hands go up. Yet most European nations employ some version of this as a regular feature of their economy.

Co-determination means that elected worker directors should sit side by side as equal decision-makers with stockholder representatives, supervising management, is a little-known yet unprecedented extension of democratic principle into the corporate sphere.

Research shows that employee representation on corporate supervisory boards, contrary to fears that it would cause tension or render decision-making too cumbersome, has actually fostered cooperation between management and workers. This, in turn, has benefited the businesses as well as the workers. Workers have input, even into important decisions, so companies are less plagued by labor strife and internal schisms. And workers are well compensated, with high salaries and the most generous social support systems in the world.

One study of Swedish businesses found that two-thirds of executives viewed co-determination as "very" or "rather" positive, because it contributed to a positive climate, made board decisions "deeply rooted among the employees" and facilitated implementation of "tough decisions." Eight of ten chairmen were satisfied with the arrangement and felt it was not important to reduce worker representation. An EU directive establishing a continent-wide framework for board-level employee representation went into effect in October 2004, firmly rooting supervisory boards in Europe's economic culture.

The other pillar of co-determination is known as works councils, which are just what the name implies -- elected councils at businesses, through which employees gain significant input into working conditions. Works councils, which are separate from labor unions but often populated by trade unionists, have real clout. They enjoy veto power over certain management decisions pertaining to treatment of employees, such as redeployment and dismissal. They also have "co-decision rights" to meet with management to discuss the firm's finances, work and holiday schedules, work organization and other procedures. In addition, they benefit from "consultation rights" in planning the introduction of new technologies and in mergers and layoffs, as well as in obtaining information useful in contract negotiations, such as profit and wage data. In some nations, including Germany, Sweden and France, works councils have acquired even more rights and greater influence.

German law stipulates that factory-wide workers' assemblies must be held at least four times a year, at which a management representative must report on the plant and the business. The head of the works council also reports, and workers use these assemblies to promote their views and, if necessary, criticize company decisions in front of management.

In 1994 the EU issued a pioneering directive on works councils, stipulating that every multinational with at least 1,000 workers, and at least 150 workers in two or more EU nations, must negotiate agreements with works councils. Other nations have supplemented that directive by requiring councils in every workplace. Studies by Princeton's Jonas Pontusson and others have concluded that works councils contribute to efficiency by improving communication, which in turn improves the quality of decisions and legitimizes decisions in the eyes of workers. The studies also found that works councils are associated with lower absenteeism, more worker training, better handling of grievances and smoother implementation of health and safety standards. It turns out that when workers are given a degree of consultation, it makes them more satisfied and more productive.

In Germany works councils and supervisory boards can take substantial credit for the fact that, while the US unemployment rate has more than doubled during this economic crisis, Germany's has barely increased. That's because Chancellor Angela Merkel was heavily influenced by works councils and labor unions, and by the culture of consultation in general, to adopt a policy called Kurzarbeit, or "short-time work," in which, instead of laying off millions, employees agreed to spread the pain by working shorter weeks. Most of the lost wages have been made up from a special fund squirreled away during more prosperous times. As a result, more Germans have money in their pockets, and communities and households haven't been decimated by layoffs like they have been in the United States. (Despite the advantages, when Larry Summers, one of Barack Obama's closest economic advisers, was asked why the president didn't pursue short-time work to stem the economic bleeding, he dismissed the idea, saying the White House wanted to create new jobs, not preserve old ones.) But of course there's absolutely no reason why we couldn't do both!

Co-determination has proved crucial to Europe's economic success and its broadly distributed wealth. The practical effect of co-determination is that corporate managers and executives must confer extensively with employees and unions about a range of issues, even about the future direction of the company. Co-determination reflects European "socialized capitalism," with its communitarian values, long-term strategic vision and emphasis on manufacturing, much the way huge executive bonuses, quarterly earnings and a bloated financial sector reflect America's Wall Street capitalism. Socialized capitalism has both produced and benefited from the culture of consultation, which has also contributed to the creation of cooperatives and resulted in a vibrant small-business sector that produces two-thirds of European jobs, compared with only half of US jobs.

Take action -- click here to contact your local newspaper or congress people:
Let's follow the European example

Europe's Answer to Wall Street

By Steven Hill

This article appeared in the May 10, 2010 edition of The Nation.

April 21, 2010

This article is adapted from Steven Hill's recently published Europe's Promise: Why the European Way Is the Best Hope in an Insecure Age (EuropesPromise.org).

KAREN CALDICOTT

A year and a half after an economic earthquake shook the world, the so-called experts are still trying to figure out what happened and how to move forward. In the shadows of that confusion, new economic models are beginning to find traction. Alternatives to Wall Street capitalism, the epicenter of the temblor, are suddenly getting a new hearing in the United States, whether it's Paul Volcker calling for reinstatement of Glass-Steagall regulation of the banking sector, the United Steelworkers announcing an alliance with the Mondragon cooperatives in Spain to develop manufacturing cooperatives in the United States, or Cleveland-based efforts to establish worker-owned co-ops in distressed communities [see Alperovitz, Howard and Williamson, "The Cleveland Model," March 1].

But the brightest spots in the postcollapse landscape are in Europe, which long ago advanced a degree of economic democracy that has proved its mettle in this crisis and therefore deserves closer inspection. If Americans want to learn about cooperatives, Europe is a great place to start. They produce an estimated 12 percent of the GDP of the European Union and involve, directly or indirectly, at least 60 percent of the population. Besides the Mondragon co-ops in Spain, in which 256 companies employ 100,000 people in industry, retail, finance and education, there's also Coop Italia, which operates the largest supermarket chain in Italy, employing 56,000 with more than 6 million members; housing co-ops like Poland's TUW; and the Co-operative Group in Britain, which is the world's largest consumer-owned business, with 4.5 million members.

However, most cooperatives are generally small-scale and thus unlikely anytime soon to replace the most important economic institution in modern mass economies, which is the corporation. The corporation, even with all its considerable warts, is the greatest wealth generator that humans have ever created, but its success raises the questions: Who gets to control that wealth? Whose pockets should the wealth flow into?

To answer those questions, Europe, led by Germany, has evolved over several decades one of its greatest contributions to the global economy. Practices unfamiliar to Americans, such as co-determination, supervisory boards and works councils, have been crucial in helping to harness capitalism's tremendous wealth-creating capacity so that its prosperity is broadly shared.

Co-determination has several features, one of which allows workers to elect representatives to corporate boards of directors known as supervisory boards. Supervisory boards then oversee company managers, who handle day-to-day operations. In Germany, the world's second-largest exporter and fourth-largest national economy, fully half of the boards of directors of the largest corporations--Siemens, BMW, Daimler, Deutsche Telekom and others--are elected by workers. In Sweden, one-third of a company's directors are worker-elected. To understand the significance of this, imagine if Wal-Mart were legally required to allow its workers to elect a third to half of its board, who would then oversee the CEO. Imagine how much that would change Wal-Mart's behavior toward its workers and supply chain. It's hard for Americans even to conceive of such a notion; indeed, when I ask Americans at my lectures how many of them have heard of worker-elected supervisory boards, usually no hands go up. Yet most European nations employ some version of this as a regular feature of their economy.

The impact has been impressive. Klas Levinson, a researcher for the former National Institute for Working Life in Sweden, is one of the world's experts on co-determination. I met with Levinson at the institute's Stockholm headquarters, a sleek glass structure with the air of a university campus. "Co-determination is Europe's little secret advantage," he told me. "The idea that elected worker directors should sit side by side as equal decision-makers with stockholder representatives, supervising management, is a little-known yet unprecedented extension of democratic principle into the corporate sphere."

Levinson's research shows that employee representation on corporate supervisory boards, contrary to fears that it would cause tension or render decision-making too cumbersome, has actually fostered cooperation between management and workers. This, in turn, has benefited the businesses as well as the workers. Workers have input, even into important decisions, so companies are less plagued by labor strife and internal schisms. And workers are well compensated, with high salaries and the most generous social support systems in the world.

One of Levinson's studies of Swedish businesses found that two-thirds of executives viewed co-determination as "very" or "rather" positive, because it contributed to a positive climate, made board decisions "deeply rooted among the employees" and facilitated implementation of "tough decisions." Eight of ten chairmen were satisfied with the arrangement and felt it was not important to reduce worker representation. An EU directive establishing a continentwide framework for board-level employee representation went into effect in October 2004, firmly rooting supervisory boards in Europe's economic culture.

The other pillar of co-determination is known as works councils, which are just what the name implies--elected councils at businesses, through which employees gain significant input into working conditions. Works councils, which are separate from labor unions but often populated by trade unionists, have real clout. They enjoy veto power over certain management decisions pertaining to treatment of employees, such as redeployment and dismissal. They also have "co-decision rights" to meet with management to discuss the firm's finances, work and holiday schedules, work organization and other procedures. In addition, they benefit from "consultation rights" in planning the introduction of new technologies and in mergers and layoffs, as well as in obtaining information useful in contract negotiations, such as profit and wage data. In some nations, including Germany, Sweden and France, works councils have acquired even more rights and greater influence.

In France the food manufacturer Danone agreed with its works councils to specific rules on job cuts, including consideration of union proposals to avoid layoffs and worker transfers. The Polish union Solidarity has said that the inclusion of Central and Eastern European worker representatives in works councils is "the most effective and sometimes nearly the only way" for them to obtain information on multinational companies' operations. German law stipulates that factorywide workers' assemblies must be held at least four times a year, at which a management representative must report on the plant and the business. The head of the works council also reports, and workers use these assemblies to promote their views and, if necessary, criticize company decisions in front of management.

In 1994 the EU issued a pioneering directive on works councils, stipulating that every multinational with at least 1,000 workers, and at least 150 workers in two or more EU nations, must negotiate agreements with works councils. Other nations have supplemented that directive by requiring councils in every workplace. Studies by Princeton's Jonas Pontusson and others have concluded that works councils contribute to efficiency by improving communication, which in turn improves the quality of decisions and legitimizes decisions in the eyes of workers. The studies also found that works councils are associated with lower absenteeism, more worker training, better handling of grievances and smoother implementation of health and safety standards. It turns out that when workers are given a degree of consultation, it makes them more satisfied and more productive.

In Germany works councils and supervisory boards can take substantial credit for the fact that, while the US unemployment rate has more than doubled during this economic crisis, Germany's has barely increased. That's because Chancellor Angela Merkel was heavily influenced by works councils and labor unions, and by the culture of consultation in general, to adopt a policy called Kurzarbeit, or "short-time work," in which, instead of laying off millions, employees agreed to spread the pain by working shorter weeks. Most of the lost wages have been made up from a special fund squirreled away during more prosperous times. As a result, more Germans have money in their pockets, and communities and households haven't been decimated by layoffs like they have been in the United States. (Despite the advantages, when Larry Summers, one of Barack Obama's closest economic advisers, was asked why the president didn't pursue short-time work to stem the economic bleeding, he dismissed the idea, saying the White House wanted to create new jobs, not preserve old ones.)

Co-determination has proved crucial to Europe's economic success and its broadly distributed wealth. "The practical effect of co-determination," says Levinson, "is that corporate managers and executives must confer extensively with employees and unions about a range of issues, even about the future direction of the company." Co-determination reflects European "social capitalism," with its communitarian values, long-term strategic vision and emphasis on manufacturing, much the way huge executive bonuses, quarterly earnings and a bloated financial sector reflect America's Wall Street capitalism. Social capitalism has both produced and benefited from the culture of consultation, which has also contributed to the creation of cooperatives and resulted in a vibrant small-business sector that produces two-thirds of European jobs, compared with only half of US jobs.

Interestingly, the conquering US powers in World War II can take some credit for co-determination. After the war a group of prominent German economists, led by future chancellor Ludwig Erhard, Walter Eucken and others, proposed what they called the "social market economy" in the belief that the market should serve broader social goals. And it was conservative Christian Democrats, not the leftish Social Democrats, who introduced this idea. The Allied powers encouraged this line of thinking, since it decentralized economic power, shifting it away from the German industrialists who had supported the Nazi war effort. In effect, US planners "punished" postwar Germany with economic democracy as a way of handicapping concentrated wealth and power, helping to birth the most democratic corporate governance structure the world had ever seen.

In the decades after Germany's launch of social capitalism, co-determination spread throughout Europe; it has been adopted in most of the new EU member states from Central and Eastern Europe. Sixty years after its genesis, co-determination is a core element of the European economy, and it distinguishes Europe's social capitalism from America's Wall Street capitalism.

Critics allege that co-determination hurts competitiveness, but the success of the European economy and of its many global businesses belies this criticism. Contrary to the US media stereotype that "old man" Europe is chronically plagued by a weak, sclerotic economy, Europe has the largest economy in the world, producing nearly a third of the world's GDP. Indeed, its economy is almost as large as those of the United States and China combined. Europe has more Fortune 500 companies than the United States and China together, and Europe had a higher per capita growth rate from 1998 to 2008 than the United States. Long denigrated by US pundits as the land of high unemployment, the EU currently even has a slightly lower unemployment rate than the United States. Indeed, the World Economic Forum in 2008-09 ranked Denmark, Sweden, Finland, Germany and the Netherlands--all of which employ some degree of co-determination--among the top ten most competitive economies in the world. They are also ranked at or near the top of most lists for quality of life, healthcare and social benefits. That's not a coincidence, since co-determination allows for both economic vibrancy and more egalitarian social policy. And while the United States also ranks high in competitiveness, it is near the bottom among most-developed countries in healthcare, social benefits and quality of life.

Sweden, Germany and other European countries are proof that you can have it all--but only if you have the right institutions to facilitate both a powerful economic engine and the supportive institutions and benefits to harness that engine and keep employees and families healthy and productive. These distinctly European advances may be the most important innovations in the world economy since the invention of the modern corporation, since they encourage free enterprise combined with economic democracy and worker consultation that does not unduly burden entrepreneurship and commerce. The advances allow businesses to be both competitive and socially responsible.

In effect, Europe has reinvented the corporation. Yet the latest critiques of capitalism by leading authors like Naomi Klein, Noam Chomsky and the producers of the popular film The Corporation tend to view all corporations and all capitalisms as the same. American progressives, while searching for effective responses to globalization, appear to be mostly unaware of these intriguing European inventions. Movements to revoke the charters of offensive corporations, while having gut-level appeal, have failed to recognize that European corporations are fundamentally different animals from their "disaster capitalism" US counterparts. When I asked a leading globalization critic from the Economic Policy Institute his opinion of co-determination and works councils, he replied dismissively, "Bah, those just lead to company unions," a demonstrably false claim.

Of course, the American right rejects co-determination as socialism incarnate, ignoring its potential to renew capitalism and support real family values. While the United States does not have a strong history of economic democracy, we do have a recurring pattern of responding to economic crisis by extending stakeholder rights as well as New Deal-type supports. This has resulted in employee stock-option plans, a small but vigorous co-op movement and stakeholder laws passed by an unusual labor-business coalition in Pennsylvania as a shield against corporate raiders, and other reforms. The Steelworkers alliance with the Mondragon cooperatives is another encouraging sign. These are some of the American threads of consultation and economic democracy that can be used to fashion a progressive response to the stunning failure of Wall Street capitalism. There is nothing magical or culturally determined about Europe's use of co-determination. All it takes to start the ball rolling here is a legislator, a governor or a president willing to introduce such a law. What would be the argument against it--that the CEOs who nearly destroyed the American economy and then came back for a government bailout know best? That's a debate any progressive leader should relish.

About Steven Hill:

 

Steven Hill is director of the Political Reform Program of the New America Foundation and author, most recently, of Europe's Promise: Why the European Way is the Best Hope in an Insecure Age. more...

Evergreen Cooperatives Forge an Innovative Path toward High-Quality Green Jobs

Published on Saturday, April 17, 2010 by Apollo News Service

by Andrea Buffa

How can we make sure green jobs are good jobs? One approach to this much discussed question is to make green jobs union jobs, which typically offer higher wages and better benefits than non-union jobs. Another is to require that contractors who receive public funding for green projects pay their workers family supporting wages and provide health insurance. In Cleveland, Ohio, a new and different path is being forged toward high-quality, green jobs-through worker-owned cooperatives, where the workers are not only being paid well, but also can accumulate wealth for themselves and their communities as partial owners of profitable green businesses.

The idea for the Evergreen Cooperative Initiative came out of a partnership between the Cleveland Foundation and several local hospitals and universities that are situated in the Greater University Circle area of Cleveland, a one-square mile area surrounded by neighborhoods where the unemployment rate is 20-25 percent and 30 percent of the residents are living in poverty. (Photo credit: Janet Century)

"If you can link wealth building and ownership opportunities to the creation of green jobs, then you maximize benefits to workers and you stabilize communities," said Ted Howard, founding executive director of The Democracy Collaborative at the University of Maryland and one of the architects of Cleveland's groundbreaking Evergreen Cooperative Initiative.

The idea for the Evergreen Cooperative Initiative came out of a partnership between the Cleveland Foundation and several local hospitals and universities that are situated in the Greater University Circle area of Cleveland, a one-square mile area surrounded by neighborhoods where the unemployment rate is 20-25 percent and 30 percent of the residents are living in poverty. These groups realized that they could leverage the $3 billion that local "anchor institutions" like University Hospitals, the Cleveland Clinic and Case Western Reserve University spend on goods and services every year to generate significant economic development for the 43,000 people who live in the surrounding neighborhoods.

As Howard described it, the plan was to secure procurement agreements from the anchor institutions, then to build up new small businesses that could provide the anchors with goods and services. The businesses would be worker-owned cooperatives, so that their wealth would accumulate in the local community rather than being distributed out to shareholders; and they would be green, which would make doing business with them especially appealing to big institutions trying to reduce their carbon footprints.

While appealing, the proposal was also complex in several respects. The Initiative partners spent significant time and money interviewing the anchor institutions about what goods and services they would be interested in purchasing from the new cooperatives; determining which types of businesses would be profitable; developing business plans for the businesses with the most potential for profitability; and securing financing to get the businesses off the ground.

Luckily, the groups that were developing the Evergreen Cooperative Initiative had a successful role model to turn to for inspiration as they went through various stages of project development: the Mondragon Corporation of Spain. Mondragon is the world's largest industrial workers cooperative with annual sales of more than $21.7 billion. Key leaders and partners in the Evergreen Cooperative Initiative as well as allies such as Cleveland's economic development director have visited Mondragon twice and are planning a third visit. Mondragon has also attracted the attention of the United Steelworkers, which announced in October 2009 that it plans to collaborate with Mondragon to establish manufacturing cooperatives in the U.S. and Canada.

"What's really impressive about the Mondragon Corporation is that 50 years ago that region was poorer than Cleveland-it had lower education rates and a really high unemployment rate," said Lillian Kuri, program director for architecture, urban design and sustainable development at the Cleveland Foundation. "By creating this network of cooperatives-they now have more than 100 co-ops and 120,000 employee owners-they really stabilized this region of Spain. It's built on innovation, it's built on democratic principles, and it's built on real market forces. It's sustainable."

First Cooperatives Offer Laundry and Solar Panel Installation Services

The first two Evergreen Cooperative businesses, Evergreen Cooperative Laundry and Ohio Cooperative Solar, opened their doors in October 2009.

Evergreen Cooperative Laundry is the greenest commercial-scale healthcare bed linen laundry facility in Ohio. It currently has nine employees but plans to increase its workforce to 50 when operating at full capacity and processing 10 million pounds of linen every year. Its customers include Judson Retirement and McGregor Homes, two large nursing homes in the local area. James Anderson, Evergreen Cooperative Laundry's CEO, says the company uses less water to clean linens than traditional laundries do (.8 gallons of water per pound of laundry compared to three gallons of water per pound), less energy to heat the water in the washers, less energy to heat the air in the dryers, and much less energy in the ironing process. The laundry facility is housed in a building that is applying for LEED Silver certification.

Anderson was initially skeptical that a green laundry could be profitable, but now other partners in the Evergreen Cooperative Initiative refer to him as a "tree hugger." "From a business perspective, clearly, being green is a difference maker," Anderson said. "While we paid some extra for the processes, the pay back is quick enough that it is not going to be an issue in terms of profitability...very early on I came to realize, after some initial skepticism, that we can do this [be a green business] and not pay the premium I initially thought it was going to require."

In terms of the worker cooperative model, Anderson was never skeptical about its potential to help the businesses become highly successful and profitable. Due to his 20 years of experience working at employee-owned firms in the steel industry, Anderson knew that companies following this model tend to have lower turnover, lower absenteeism and higher productivity than firms in the same industry that are not fully owned and managed by their employees.

The other Evergreen Cooperative to go online in October 2009 was Ohio Cooperative Solar. Originally conceived of as a company that would install solar panels on the anchor institutions' rooftops, the company also added weatherization work to its portfolio to make sure the jobs it created would provide year-round employment. Ohio Cooperative Solar has 14 employees and had already become profitable only five months after its launch. The company has weatherized 62 houses in low-income communities through Cleveland's Home Weatherization Assistance Program, and its first solar panel installation job is underway at the Cleveland Clinic. In May, it will install solar panels on the rooftops of the University Hospitals and Case Western Reserve, and it has been contracted to install panels on the city hall building and library in the nearby city of Euclid.

Ohio Cooperative Solar signs Power Purchase Agreements (PPAs) with the businesses on whose rooftops it installs solar panels. Under the PPAs, Ohio Cooperative Solar owns the solar panels and has long-term (15-year) access to the rooftops where the panels are installed. Ohio Cooperative Solar sells the businesses all of the renewable energy that is produced on their rooftops for a fixed rate of 12 cents per kilowatt hour. The businesses then get credit on their electricity bills for the power they're getting from the sun instead of from the grid.

Ohio Cooperative Solar also gets paid by the local utility company when it produces energy that can help the utility meet its renewable energy goal under the state's Renewable Portfolio Standard (RPS). Ohio's RPS calls for utilities to source at least 12.5 percent of their energy from renewable sources by 2025, and there is a solar carve-out requiring that .5 percent of utilities' energy comes from solar energy sources.

A third Evergreen Cooperative business, Green City Growers, is set to launch in 2010. It will be a large-scale, food production hydroponic greenhouse that will grow some four million heads of lettuce per year, as well as 300,000 pounds of herbs like basil. The idea is for the business to grow food locally that can be sold to the anchor institutions and other businesses rather than importing it from out-of-state. According to Kuri of the Cleveland Foundation, growing food in greenhouses in states with cold winters like Ohio can be expensive, but the Evergreen Cooperative Initiative plans to keep costs-and greenhouse gas emissions-down through the use of advanced energy sources like wind and geothermal as well as the use of LED lighting made specifically for greenhouses.

Pathways out of Poverty and Into Worker Ownership

The Evergreen Cooperative Initiative businesses' employees are recruited from economically distressed neighborhoods surrounding Cleveland's University Circle, and many of them have barriers to employment such as lack of a driver's license, previous incarceration, and little job experience. "They come to us with very little in terms of prior skills," said Steven Kiel, president of Ohio Cooperative Solar. "We try to find folks who have some sort of construction or deconstruction background, but we're also taking folks without skills and training them on the job. Some have had previous classroom training in green academies, but maybe there's been some time since they received that training. We provide on-site supervision for them to get the skills to do weather stripping, caulking, the blower door test, etc. We think the best learning environment is the working environment."

Evergreen Cooperative Laundry recruits its workers through a community nonprofit called Towards Employment, which offers an intensive four-week class to prepare trainees for the most challenging situations they might encounter on the job. After they've successfully completed the course, trainees qualify to apply for a job at the Evergreen Cooperative Laundry.

Workers at the laundry and the solar cooperative are considered temporary employees for their first six months. After six months, if they've proven that they have an interest in and aptitude for the work, they are invited to buy an employee share of the company and become a worker-owner. Since most employees don't have the $3,000 that it costs to buy an employee share in the company, the businesses give each employee who's going to become a worker-owner a raise to bring his/her pay up to a living wage and then deduct $.50 per hour for three years until the $3,000 is paid off. Once the companies become profitable, the profits will be distributed among the employee owners and accrue in their ownership accounts.

"It's a great place to work and it isn't just a job," said Anderson of the Evergreen Cooperative Laundry. "At a minimum, you get paid a living wage, you get benefits, and you accumulate capital as a member of the cooperative, so that over eight years you will accumulate about $65,000 in your account. On the employee involvement side of the business, you will be involved in purchasing committees, marketing committees, electing members of the board and so on, so there are financial rewards and employee engagement rewards."

Kiel of Ohio Cooperative Solar says one of the most exciting things he has experienced as part of the Evergreen Cooperative Initiative is seeing the positive effect of worker ownership on people who have generally had negative prior experiences with employment. "What this is offering them is a different employment experience where they get to vote, they have a say in what the business does and what policies it develops. I'm beginning to see-six months into it-that this sense of pride coming from this sense of ownership manifests itself in different ways. It's really interesting to watch brand new people speak up and say, our uniforms need to be clean, and we need to turn off our cell phones at work."

In April 2010, the businesses will start offering no-cost health insurance to their employees, a policy that was implemented after interviews with prospective employees who said they wouldn't be able to take advantage of health insurance that had high co-pays and deductibles.

Next Steps: Scaling Up and Inspiring Others to Adopt the Model

While some might rest on their laurels after having created two new employee-owned green businesses, the groups involved with the Evergreen Cooperative Initiative are striving for more. "The next piece of work for us is, how do you scale this up so you can have a significant impact? Although launching three or four businesses is exciting, the unemployment rate in our target area is 25 percent, and we had over 500 applicants for a position we didn't even advertise," said Kuri of the Cleveland Foundation.

"In a neighborhood of 43,000 people, we really need to create thousands of jobs to reach a tipping point," added Howard of The Democracy Collaborative.

Toward that end, the goal of the Evergreen Cooperative Initiative is to catalyze the creation of up to ten new for-profit, worker-owned cooperatives over the next three to five years that will employ approximately 500 residents. Eventually, the Evergreen partners hope to go way beyond 500 jobs toward a number closer to 5,000. They also want to provide career ladders for employees by allowing them to advance into higher-level positions at other cooperatives that are part of the network.

A significant challenge will be finding financing for the new businesses. The Cleveland Foundation and other Evergreen Cooperative Initiative institutional partners have made grants totaling $5 million toward a revolving loan fund, the Evergreen Cooperative Development Fund, which will provide low-interest, long-term financing to start up cooperative businesses. The businesses have also tapped state and local funding mechanisms including the New Markets Tax Credit Program, the HUD Section 108 Loan Guarantee Program, federal renewable energy tax credits and the Ohio Advanced Energy Fund among others.

Kuri says it was a struggle to raise capital for the first two businesses (more than $3 million was raised for the solar company and $5.7 million for the laundry) but that policy reforms could make financing much easier. For example, the New Markets Tax Credit program could be modified to make it easier to apply the program to job-creation projects rather than just to the real estate projects it currently serves. The Small Business Administration could start making loans to small businesses that are cooperatives. Federal renewable energy tax credits could be extended for more years and the Advanced Energy Program could be expanded. Modifications like these would also make it easier for other cities to duplicate the Cleveland model.

"Our fundamental commitment is to make a significant difference in the lives of the people here in Cleveland," Howard said. "But we also think there are broader national implications to what we're doing. Anchor institutions all around the country are trying to become more green, and our proposition to the institutions here in Cleveland is: do business with a worker-owned company, and you will be able to reduce your carbon more than with any competitor. There are 4,000 to 5,000 universities around the country that are major economic engines in their areas. By leveraging the purchasing and investments of these institutions, virtually any city in America could create new, local jobs and business opportunities for its citizens."

Copyright © 2008 Apollo Alliance

The Future Commonwealth Part II

by John Lawrence

We have previously blogged about Albert Chavannes' writing on utopia called The Future Commonwealth, and how his ideas about the funding of government have been implemented by many societies today particularly in their establishment of Sovereign Wealth Funds. On the other hand, the US only funds itself by taxes and the issuance of debt. On this topic Chavannes, writing in the nineteenth century, was prescient.

Chavannes' other main idea was the widespread use of apprenticeships erstablished not by private enterprise but by the government. However, Chavannes was not a complete socialist maintaining that there is a proper balance between public and private enterprise:

"By making our Commonwealth a cooperative business concern, we have made it rich and placed its citizens above want. Yet we have retained sufficient fields of activity for private enterprises. By our system of public apprenticeship we are training our youths to useful occupations. It brings all classes together, and is the measure that will have the most far-reaching effects."

Now this idea of publicly sponsored apprenticeships is worth considering especially in light of the present day high unemployment rate and job downsizing and offshoring. The government reponse to high unemployment is extended unemployment insurance benefits. In other words, rather than requiring any actual work from the unemployed, the government basically pays them to search for non-existent jobs. It wasn't always so. In the Great Depression FDR established the Civilian Conservation Corps and the Works Progress Administration. These programs provided immediate work for numerous people and resulted in considerable improvements to US infrastructure including the environment.

Contrast this with today's response to high unemployment which results in no on the job training or useful public works being constructed. On the one hand you pay people to search for nonexistent jobs in the private sector. On the other you provide jobs with what amounts to apprenticeships (another name for on the job training), put the same amount of money into the economy which will have a multiplier effect, and get useful constructive results manifested in return. It is all well and good to encourage people to go to college, but there is a large segment of the population such as ex-felons and homeless people who are virtually unemployable, and government programs to employ these people are needed. The unemployment rate today among male African-Americans is about 20%. Unless a societal effort is made to employ these people directly and immediately with on the job training and without raising the bar by requiring a college education, many will either wind up homeless or in jail.

Chavannes is acutely aware of the criticism that public enterprise is less efficient than private enterprise. He compares the US to his version of utopia:

"Well, my dear Sir," Mr. Wilton replied, "probably there is a foundation for the opinion you express, although it may be fostered by those who have a direct interest in preventing the government from extending its operations.

"But there is a fundamental difference between your government and ours. Yours is a Republic, established to maintain civil and political rights. Ours is a Commonwealth, organized to secure those rights, and besides, to manage public business for public benefit. Our welfare is intimately connected with the pecuniary success of the Commonwealth, and we are all interested in its proper management. On that account the people never surrender the law-making power to their delegates, but exercise a constant supervision over all their actions. and if they fail to properly conduct the business committed to their case, they are quickly called to account for their mismanagement."

This contrast between a Republic and a Commonwealth is worth noting for its resemblance to the state of world affairs today. Conservatives in the US argue that the US is a Republic not a Commonwealth or a Democracy and as such should not be concerned with the welfare of its people except to maintain civil order and to fight wars. Progressives, on the other hand, maintain that social programs such as education and health care should be rights not privileges as they are in much of the rest of the developed world. Most other advanced societies such as Europe, Brazil, China and India are in fact Commonwealths not Republics because they not only provide for the economic welfare of their people but they act as state capitalists raising money by various means and depositing it in their Sovereign Wealth Funds. Monies are then used for various social welfare programs. The crucial points here are that in these modern day Commonwealths money is raised by means other than taxation and money is expended for the purposes of public welfare. This has been called state capitalism.

The problem with the US is that it lowers taxes, has no other means to raise money since it gives away its natural resources to private corporations, and, therefore, goes increasingly into debt. A recent piece on NBC described how billions of dollars of gold are mined from public lands by private corporations while not one penny goes into the public treasury.

This land is owned by the taxpayers of America, but the profit is totally in the hands of private interests. Contrast this with Norway where 50% of the monies realized from their natural resource of oil goes into the public Treasury while the other 50% goes to private interests. There is a 50-50 split between public and private.

Chavannes talks about government having a Business department similar to Japan's Ministry of International Trade and Industry (MITI). I have blogged about the need for the US to establish such a cabinet level Department, but the US seems committed to running huge trade deficits with the rest of the world only adding to its immense national debt, and it takes a hands off policy to the establishment of any enterprise which might in any way compete with private enterprise. As a result and particularly because the US will not enforce the Sherman Antitrust Act, corporations in the US, as is the case with the health insurance corporations, are virtual monopolies which can raise prices with impunity.

Chavanees goes on:

"We have added to out government a Business department, independent of the Political and the Judiciary, which has entire charge of the business of the commonwealth, and is responsible to the people alone for the result of their labor. Through this department we co-ordinate the productive power of the whole people, and constitute ourselves into a cooperative association.

"We, the people, thus become a business firm, and hire a certain number of men to manage the work for us. We recognize that there must be stability, and on that account the Managers and Advisers are elected for indefinite terms, and are retained in place so long as the people are satisfied with their services. [much like in China!] But should dissatisfaction arise, specific charges must be laid before the Advisers, and if they are sustained, a new election is ordered which is the final verdict pronounced by the people. [unlike in China!]"

Chavannes goes on to say that there are oversight and supervisory Boards whose duties are to provide checks and balances over the whole public business enterprise. He also states that these business functions can occur at the local government level as well as the national level.

Finally, Chavannes deals with some of the inevitable criticism that his utopia will evoke:

"'I am surprised,' I said to him, 'that some of your energetic men do not crowd to the wall their less ambitious neighbors.'

"'I believe,' he answered, 'that if you were to remain here some time, you would understand it better. It is naturaL that in your country [the US] you should strive for wealth, for wealth is not only comfort, it is power. Under your system everything is for sale. Suppose I should bestir myself to accumulate a fortune, what should I do with it? All our most valuable property is in the hands of the Commonwealth. We have little inducement to increase our wealth beyond what will secure us a comfortable existence.'"

This is as opposed to the US where immense wealth translates into control of the political process through lobbying, TV advertising and campaign contributions.

Chavannes continues:

"I expressed my fear that this stifling of private ambition might result unfavorably to the general prosperity.

"'We have found out here that there are other things worth living for besides the acquisition of money. Our men have as much brain, and are just as enterprising as yours, but, unable to concoct schemes by which they can exploit their weaker neighbors for their own benefit, they have to place their intelligence and their activity at the disposal of the Commonwealth to be used for the people's benefit. Yours is the freebooter system, ours is the organized army of labor.'

"Still it seemed to me that all this government control could not be maintained without a serious loss of personal freedom. I asked him whether he was not compelled to order his goods from certain stores, and give them a price arbitrarily fixed by the Government.

"'Not at all,' he answered. 'Our wholesale trade is perfectly free, and the prices are regulated by the law of supply and demand as in all countries. It is true that we have some regulations here that do not exist in other countries, but they are for the protection of the whole people. ...'"

Chavannes goes on to say that while profits have not been abolished, speculation has. But he says, "All that we ask is that [public laws] should tend to accomplish the desired end with the least infringement of individual freedom."

Chavannes is clearly proposing a mixed society, not purely socialistic or capitalistic. He is proposing that the Government or Commonwealth be concerned about regulating private enterprise as it does in many parts of the world today. Arguably deregulation and non-enforcement of existing laws has led to the Great Recession of 2008 in the US and the egregious excesses of some US corporations especially banks. While other countries regulate  and seek to optimize trade and industry in their own self interest, the US continues to pursue its free trade policies which benefit transnational corporations to the detriment of the public Treasury and the accumulation of national debt. While other countries enrich their Sovereign Wealth Funds, the US continues to lower taxes, give away its natural resources to private corporations and not pursue other means to accumulate public wealth. This leads to increased national debt. Before Ronald Reagan entered office in 1980, the US was the world's largest creditor nation, imported raw materials and exported manufactured goods. Now after 30 years of Reagan initiated policies of lowered taxes and free trade, the US is the world's largest debtor nation with the bulk of its debt owed to foreign countries, exports raw materials and imports manufactured goods. Increasingly, it is becoming a Third World nation with its top 1% owning 95% of the wealth and the middle class fast becoming the redundant poor.

The Future Commonwealth

by John Lawrence

I stumbled on a book a long time ago at a used book store with the title, "The Quest for Utopia," by Glen Negley and J. Max Patrick, copyright 1952. The subtitle was "An Anthology of Imaginary Societies." It is basically a collection of wrtings by nineteenth century utopists describing societies which they believe might exist some time in the future. A lot of these descriptions are fanciful and based on notions which, in my opinion, are pretty far-fetched like the notion that all human beings are basically good people and that they will all behave properly given the right conditions. I don't believe that any society predicated on the fact that good behavior will somehow be universally achieved is realistic.

Other utopias, however, are not only realistic but contain germs of ideas which could be manifested in reality. Some of these ideas have in fact already been implemented. Such a one is "The Future Commonwealth" by Albert Chavannes (1836-1903), a Swiss immigrant to the US. Chavannes became a successful businessman and devoted his last years to writing. In 1894 he established a lumber company in Knoxville, Tennessee of which his grandson became owner. The grandson, Edward Chavannes, also became Mayor of Knoxville. Albert wrote "The Future Commonwealth" in 1892. What is interesting about this tract is not that it is an all encompassing description of a society which could be implemented in toto, but that it contains many good ideas which could be implemented in any society and some that have already been implemented in certain societies.

Chavannes was in the tradition of the English utilitarians and believed that whatever promoted the general welfare would also promote personal happiness. Contrast this with the current prevailing notion in the US today that whatever promotes individual freedom promotes the general welfare - just the opposite. Chavannes writes, "We consider the distribution of products the most important question, and that its correct solution offers the best prospect of increasing human happiness. The rich have more than they can enjoy, while the poor have less. We made our new Commonwealth the great Capitalist, and thus prevented the undue accumulation of wealth in private hands.

"There is the whole secret of it. Cooperation on a large scale, not practised by a few, for the advantage of a few, as it exists among you, but carried by the Commonwealth, for the advantage of the whole population, for the rich as well as for the poor, for the women as well as for the men."

Chavannes goes on to say that his utopia is not "simply a Socialistic settlement, where the state controls everything" and is not antithetical to the "free and independent citizens " of the US. He reassures the reader that his utopia has not abridged personal freedom.

"We ... have entrusted the Commonwealth with the accumulation and use of a portion of our capital for the benefit of the people, while you only entrust your government with the spending of such capital as you raise by unequal taxation, or by borrowing from the wealthy class, thus increasing the burdens of the producers by compelling them to pay interest on the money your government spends."

Here Chavannes has put his finger on the difference between the US model and the models of many other countries of the world. The US government is run on debt or taxation instead of on the principle of capital generation and accumulation. Other countries such as Norway, for example, have Sovereign Wealth Funds which generate capital which is then distributed to the people in the form of old age pensions. Norway's government takes 50% of the monies derived from its natural resources, oil, for example, and uses it on behalf of its citizens to offset taxes and to supply social benefits such as social security. The US gives away its natural resources to private corporations which then accrue all the profits for themselves. The US then has to borrow money from other nations' Sovereign Wealth Funds and has become the world's largest debtor nation. The only way the US can pay its own way is to raise taxes which it has an aversion to doing. So while other countries accumulate wealth which not only provides for social programs but is also used to offset taxes, the US neither accumulates wealth as a nation nor raises taxes thereby going increasingly into debt.

Tom Friedman on Meet the Press, Sunday March 14 contrasted the efficiency of the Chinese government with the American:

Tom Friedman thinks Democracy is becoming a hindrance.

The media is wringing it’s hands over the political climate. It’s always sunny when Democrats get their way. The forecast is for stormy weather. All this opposition and people in the street, it’s not a good thing.

Tom Friedman was on Meet the Press today with Tom Brokaw and David Brooks. He thinks we’d be better off if we were more like the Chinese government.

Brokaw: Tom, are we at a kind of turning point in America in terms of being able to make this a functioning country again or are we dysfunctional?

Friedman: This is what worries me that I’ve been saying for a while there is only one thing worse than one party autocracy, the Chinese form of government, and that’s one party democracy. In china if the leadership can get around to an enlightened decision, it can order it from the top down. Here, when you have one party democracy, one party ruling, basically and the other party basically saying “no”, every solution is suboptimal. When your chief competitor can produce optimal and you can only produce suboptimal! Because what happens whether it’s health care or the energy bill, votes 1 through 50 cost a lot; votes 50 to 59 cost you a fortune and 60, his name is Ben Nelson. By the time you made those compromises you wind up with the description out of the health care bill, which is this Rube Goldberg contraption, I hope it passes but I can’t tell you I think it’s optimal.

It’s so much easier to get things done when there’s no opposition, no one to say “no”. Of course to achieve that you have to round up and imprison or kill dissidents and impose censorship. As long as something optimal comes out of it once in awhile, say universal health care, it’s well worth it or so the thinking goes in some circles. History is well acquainted with optimal solutions from unopposed governments.

So even Tom Friedman, the arch proponent of globalism, thinks the Chinese model is winning out over the American model, and he didn't even mention the fact that China has a Sovereign Wealth Fund that is accumulating monies as the American government pays interest on its debt owed largely to China.

Chavannes had the difference between the "socialist" economies of western Europe and the laissez-faire capitalism of the US pegged. On the one hand the socialist governments are in the business of accumulating monies which can then offset both taxes and social programs. On the other the US government is in the business of beggaring itself because it gives away profitable revenue sources to private interests.

Chavannes goes on:

"Whatever costs money to maintain, as the streets and the parks, the police and the fire departmen, etc., is placed in the hands of the government, and the people are taxed for its support, while those enterprises which offer oppoprtunities to make money, as the supply of light and water, the life and fire insurance companies, are allowed to fall into the hands of corporations and individuals. We are so far Socialists as to keep in the possession of the people many valuable privileges which you give away to men who use them for private benefit."

Chavannes goes on to outline the various profitable enterprises that the government controls , but makes clear that there is still plenty of room for private enterprise to flourish. The point here is that not only is the government well funded in order to provide the things that private enterprise won't like maintaining and improving infrastructure, but does so without taxing the people so low taxes,  improved infrastructure and social benefits go hand in hand.

Chavannes also makes a major point about apprenticeship programs in his utopia which is a subject we will go into on a future post.

'The Cleveland Model': Democracy, Community, and Economic Vision

Published on Monday, February 15, 2010 by The Nation

New Models for A New Economy: Large-Scale Worker Cooperatives

by Gar Alperovitz, Ted Howard & Thad Williamson

Something important is happening in Cleveland: a new model of large-scale worker- and community-benefiting enterprises is beginning to build serious momentum in one of the cities most dramatically impacted by the nation's decaying economy. The Evergreen Cooperative Laundry (ECL)--a worker-owned, industrial-size, thoroughly "green" operation--opened its doors late last fall in Glenville, a neighborhood with a median income hovering around $18,000. It's the first of ten major enterprises in the works in Cleveland, where the poverty rate is more than 30 percent and the population has declined from 900,000 to less than 450,000 since 1950.

Image: Tim Robinson

"The only way this business will take off is if people are fully vested in the idea of the company," says work supervisor and former Time-Warner Cable employee Medrick Addison. "If you're not interested in giving it everything you have, then this isn't the place you should be." Addison, who also has a record, is excited about the prospects: "I never thought I could become an owner of a major corporation. Maybe through Evergreen things that I always thought would be out of reach for me might become possible."

These are not your traditional small-scale co-ops. The Evergreen model draws heavily on the experience of the Mondragon Cooperative Corporation in the Basque Country of Spain, the world's most successful large-scale cooperative effort (now employing 100,000 workers in an integrated network of more than 120 high-tech, industrial, service, construction, financial and other largely cooperatively owned businesses).

The Evergreen Cooperative Laundry, the flagship of the Cleveland effort, aims to take advantage of the expanding demand for laundry services from the healthcare industry, which is 16 percent of GDP and growing. After a six-month initial "probationary" period, employees begin to buy into the company through payroll deductions of 50 cents an hour over three years (for a total of $3,000). Employee-owners are likely to build up a $65,000 equity stake in the business over eight to nine years--a substantial amount of money in one of the hardest-hit urban neighborhoods in the nation.

Thoroughly green in all its operations, ECL will have the smallest carbon footprint of any industrial-scale laundry in northeast Ohio, and probably the entire state: most industrial-scale laundries use three gallons of water per pound of laundry (the measure common in industrial-scale systems); ECL will use just eight-tenths of a gallon to do the same job. A second green employee-owned enterprise also opened this fall as part of the Evergreen effort. Ohio Cooperative Solar (OCS) is undertaking large-scale installations of solar panels on the roofs of the city's largest nonprofit health, education and municipal buildings. In the next three years it expects to have 100 employee-owners working to meet Ohio's mandated solar requirements. OCS is also becoming a leader in Cleveland's weatherization program, thereby ensuring year-round employment. Another cooperative in development ($10 million in federal loans and grants already in hand) is Green City Growers, which will build and operate a year-round hydroponic food production greenhouse in the midst of urban Cleveland. The 230,000-square-foot greenhouse--larger than the average Wal-Mart superstore--will be producing more than 3 million heads of fresh lettuce and nearly a million pounds of (highly profitable) basil and other herbs a year, and will almost certainly become the largest urban food-producing greenhouse in the country.

A fourth co-op, the community-based newspaper Neighborhood Voice, is also slated to begin operations this year. Organizers project that an initial complex of ten companies will generate roughly 500 jobs over the next five years. The co-op businesses are focusing on the local market in general and the specific procurement needs of "anchor institutions," the large hospitals and universities that are well established in the area and provide a partially guaranteed market. Discussions are under way with the "anchors" to identify additional opportunities for the next generation of community-based businesses. Evergreen Business Services has been launched to support the growing network by providing back-office services, management expertise and turn-around skills should a co-op get into trouble down the road.

Significant resources are being committed to this effort by the Cleveland Foundation and other local foundations, banks and the municipal government. The Evergreen Cooperative Development Fund, currently capitalized by $5 million in grants, expects to raise another $10-$12 million--which in turn will leverage up to an additional $40 million in investment funds. Indeed, this may well be a conservative estimate. The fund invested $750,000 in the Evergreen Cooperative Laundry, which was then used to access an additional $5 million in financing, a ratio of almost seven to one. An important aspect of the plan is that each of the Evergreen co-operatives is obligated to pay 10 percent of its pre-tax profits back into the fund to help seed the development of new jobs through additional co-ops. Thus, each business has a commitment to its workers (through living-wage jobs, affordable health benefits and asset accumulation) and to the general community (by creating businesses that can provide stability to neighborhoods).

The overall strategy is not only to go green but to design and position all the worker-owned co-ops as the greenest firms within their sectors. This is important in itself, but even more crucial is that the new green companies are aiming for a competitive advantage in getting the business of hospitals and other anchor institutions trying to shrink their carbon footprint. Far fewer green-collar jobs have been identified nationwide than had been hoped; and there is a danger that people are being trained and certified for work that doesn't exist. The Evergreen strategy represents another approach--first build the green business and jobs and then recruit and train the workforce for these new positions (and give them an ownership stake to boot).

Strikingly, the project has substantial backing, not only from progressives but from a number of important members of the local business community as well. Co-ops in general, and those in which people work hard for what they get in particular, cut across ideological lines--especially at the local level, where practicality, not rhetoric, is what counts in distressed communities. There is also a great deal of national buzz among activists and community-development specialists about "the Cleveland model." Potential applications of the model are being considered in Atlanta, Baltimore, Pittsburgh, Detroit and a number of other cities around Ohio.

What's especially promising about the Cleveland model is that it could be applied in hard-hit industries and working-class communities around the nation. The model takes us beyond both traditional capitalism and traditional socialism. The key link is between national sectors of expanding public activity and procurement, on the one hand, and a new local economic entity, on the other, that "democratizes" ownership and is deeply anchored in the community. In the case of healthcare the link is also to a sector in which some implicit or explicit form of "national planning"--the movement toward universal healthcare--will all but certainly increase public influence and concern with how funds are used.

Whereas the Cleveland effort is targeted at very low-income, largely minority communities, the same principles could easily be applied in cities like Detroit and aimed at black and white workers displaced by the economic crisis and the massive planning failures of the nation's main auto companies. Late in October, in fact, the Mondragon Corporation and the million-plus-member United Steelworkers union announced an alliance to develop Mondragon-type manufacturing cooperatives in the United States and Canada. Says USW's Rob Witherell: "We are seeking the right opportunities to make it work, probably in manufacturing markets that we both understand."

Consider what might happen if the government and the UAW used the stock they own in General Motors because of the bailout to reorganize the company along full or joint worker-ownership lines--and if the new General Motors product line were linked to a plan to develop the nation's mass transit and rail system. Since mass transit is a sector that is certain to expand, there is every reason to plan its taxpayer-financed growth and integrate it with new community-stabilizing ownership strategies. The same is true of high-speed rail. Moreover, there are currently no US-owned companies producing subway cars (although some foreign-owned firms assemble subway cars in the United States). Nor do any American-owned companies build the kind of equipment needed for high-speed rail.

In 2007 public authorities nationwide bought roughly 600 new rail and subway cars along with roughly 15,000 buses and smaller "paratransit" vehicles. Total current capital outlays on vehicles alone amount to $3.8 billion; total annual investment outlays (vehicles plus stations and other infrastructure) are $14.5 billion. The Department of Transportation estimates that a $48 billion investment in transit capital projects could generate 1.3 million new green jobs in the next two years alone. There are also strong reasons to expedite the retirement of aging buses and replace them with more efficient energy-saving vehicles with better amenities such as bike racks and GPS systems--the procurement of which would, in turn, create more jobs.

President Obama has endorsed a strategy for making high-speed rail a priority in the United States. In a January 28 appearance in Florida he announced support for rail expansion in thirteen corridors across the nation based on an $8 billion "down payment" for investments in high-speed rail included in last year's stimulus package. The administration plans an additional $5 billion in spending over the next five years. Interest at the state level is also strong; in November 2008 voters in California approved a $10 billion bond to build high-speed rail.

Even more dramatic possibilities for a new industry organized on new principles are suggested by experts concerned with the impact of likely future oil shortages. Canadian scholars Richard Gilbert and Anthony Perl, projecting dramatic increases in the cost of all petroleum-based transportation, have proposed building 25,000 kilometers (about 15,000 miles) of track devoted to high-speed rail by 2025. Along with incremental upgrades of existing rail lines to facilitate increased and faster service, they estimate total investment costs at $2 trillion (roughly $140 billion each year for fifteen years).

All of this raises the prospect of an expanding economic sector--one that will inevitably be dominated by public funds and public planning. In the absence of an effort to create a national capacity to produce mass-transit vehicles and high-speed-rail equipment, the United States in general, and California and other regions in particular, will likely end up awarding contracts for production to other countries. The French firm Alstom, for example, is likely to benefit enormously from US contracts. The logic of building a new economic sector on new principles becomes even more obvious when you consider that by 2050 another 130 million people are projected to be living in the United States; by 2100 the Census Bureau's high estimate is more than 1 billion. Providing infrastructure and transportation for this expanding population will generate a long list of required equipment and materials that a restructured group of vehicle production companies could help produce--and, at the same time, help create new forms of ownership that anchor the economies of the local communities involved.

As reflection on transportation issues and the current ownership structure of General Motors suggests, the principles implicit in the nascent Cleveland effort point to the possibility of an important new strategic approach. It is one in which economic policy related to activities heavily financed by the public is used to create, and give stability to, enterprises that are more democratically owned, and to target jobs to communities in distress. The model does not, of course, rely only on public funds; as in Cleveland it serves a private market and hence faces the "discipline" of the market.

We are clearly only on the threshold of developing a sophisticated near-term national policy approach like that suggested for transportation--to say nothing of the fully developed principles of a systemic alternative. The Cleveland experiment is in its infancy, with many miles to go and undoubtedly many mistakes to make, learn from and correct. On the other hand, as New Deal scholars regularly point out, historically the development of models and experiments at the local and state levels provided many of the principles upon which national policy drew when the moment of decision arrived. It is not too early to get serious about the Clevelands of the world and the possible implications they may have for one day moving an economically decaying nation toward a new economic vision.

© 2010 The Nation

More Cooperatives, Fewer Corporations - Better for Workers, Better for the Economy

To jumpstart US job market, turn workers into owners

Many Americans build wealth through their home. Why not through work?

By Melissa Hoover and Beadsie Woo / January 11, 2010, Published by Christian Science Monitor

Seldom do the United Steelworkers, the United Nations, and film director Michael Moore express the same idea at the same time. But all have, in their own way, promoted the benefits of cooperative businesses in recent months.

The Steelworkers Union, North America’s largest industrial union, has signed an agreement with a 100,000-member European co-op to help workers here gain an ownership stake in their workplace.

Just last month, the UN declared 2012 the International Year of Cooperatives. It’s urging governments worldwide to collaborate with the co-op movement to reduce poverty and create more productive societies.

And Michael Moore sent a valentine to the co-op movement in his latest film, “Capitalism: A Love Story.” As a form of economic democracy, he said in an interview, co-ops are “the patriotic thing to do.”

In hard times like these, the co-op model makes sense. After all, public confidence in corporations, banks, and the larger financial system is at low ebb, while unemployment is at its highest level in 25 years. Homeownership, historically a reliable way to build equity, has been rocked by foreclosures. People are looking for other ways to do business and save money.

Turning workers into investors isn’t new. We’re all familiar with dot-com employees whose vested stock options turned them into overnight millionaires. And Employee Stock Ownership Plans have long allowed workers to invest in their companies. But worker-owned co-ops are unique because employees own 100 percent of the business, so they have a voice in how it’s run.

Many people think of co-ops as the hippie-dippy grocery store that sells organic goods. In fact, a 2009 study by the University of Wisconsin Center for Cooperatives found more than 29,000 cooperatives in the US, which make $500 billion in annual revenue, support 83,000 people, and pay $25 billion in wages and benefits. They include national firms such as credit unions, and local businesses such as the Alvarado Street Bakery in Petaluma, Calif., or the Evergreen Cooperative Laundry in Cleveland.

Cleaning ladies in the San Francisco area and home-care workers in New York have banded to pool resources as worker-owners of profitable enterprises. White-collar workers are getting involved, too: One of the most successful cooperatives is Isthmus Engineering, a Wisconsin firm where engineers bought the company from its owner.

For low-wage workers, owning a business cooperatively can play a particularly important role in helping them climb out of poverty and build savings. Cooperative Home Care Associates in New York’s South Bronx, for instance, lets its 1,600 members save money toward a $1,000 stake in the co-op, entitling them to annual dividends. The business offers them affordable health insurance, retirement plans, and other benefits.

In America, most families build wealth by buying homes, investing in businesses, or putting money into employer-sponsored retirement accounts. The federal government subsidizes this wealth-building to the tune of $367 billion a year. But most low-income families don’t have the money to buy a house or start a business. And they don’t have jobs that come with 401(k) plans. Many of those who stretched to buy a house this decade have lost their homes or their equity.

It was mass unemployment and widespread poverty in Spain’s Basque region that spurred the creation of the Mondragon co-op in the 1950s. Today it’s the region’s economic engine, with more than 100,000 workers. At Mondragon, workers make the investment and the decisions. They share the profits and the risk. The Steelworkers say the co-op structure empowers workers and makes business more accountable. It envisions converting an existing site or starting new ventures, a natural extension of the union’s role in giving workers a voice with owners. Except this time, the workers would also be the owners.

There is plenty America can do to help cooperative businesses flourish. The Small Business Administration could make clear that it guarantees loans to worker co-ops. Congress could set aside money for an urban co-op development initiative as it does now for rural cooperatives. State and local governments could provide tax breaks and loans to co-ops that create new jobs. They could also fund an employee-ownership bank to support these ventures. Charitable groups, too, could help develop and expand the co-op model as a strategic approach to creating jobs and building assets for working families.

A model based on human values rather than the unbridled pursuit of profit might be just what we need to create jobs, rebuild wealth, and support our communities. Keep your eye on co-ops.

Melissa Hoover is executive director of the US Federation of Worker Cooperatives. Lillian “Beadsie” Woo is a senior associate at the Annie E. Casey Foundation in Baltimore.

Cooperatives Replacing Corporations as Job Producers

The Growth of Citizen Co-Ops Is a Positive Development As Corporations Fail Us in Every Way

By Sena Christian, AlterNet. Posted January 5, 2010.

As economic hardship threatens communities, there is one bright light in the fog -- cooperatives -- which already serve 4 in 10 Americans and are growing strong.

During Andrew McLeod's 10-day visit to the Basque Country of northern Spain, he met a 34-year-old man named Aitor Garro, who makes aluminum car components. For the last 13 years, this man has worked at Fagor Ederlan, a division of the Mondragon Cooperative Corporation, which is the world's largest system of worker-owned businesses. Mondragon's 100 global businesses employ 120,000 people and produce sales exceeding $20 billion annually. Garro grew up knowing only this system, as both his parents also worked in co-ops. "It was interesting to watch his perception of co-ops," McLeod said. "He took them for granted. It was like water to a fish."

McLeod, a California-based cooperative development specialist, spent the past year and a half traveling around the world and throughout the United States to learn about the valuable role cooperative systems can play during economic hard times. His travels took him to the Trentino region of northern Italy, the Pacific Northwest, the U.S. Rust Belt and Spain.

Worldwide, roughly 750,000 cooperatives serve 730 million members, according to the National Cooperative Business Association. Here in this country, some 72,000 co-op establishments operate, providing more than 2 million jobs and serving 120 million members--that's four in 10 Americans. These establishments exist in energy, childcare, food distribution, health care, insurance, agriculture, telecommunications and other industries. But co-op advocates want growth, and they say the time is now, as wealth concentration has reached dangerous levels, large investment banks have crumbled and unemployment affects 10 percent of the American population.

"A lot of cities are seeing that traditional economic- and job-development strategies have hit a dead end," said Ted Howard, executive director of the Democracy Collaborative. 

Cooperatives offer a potential solution: Through shared ownership and democratic control, co-ops distribute wealth, create jobs and keep control in the local community by allowing people to make the decisions that impact them, instead of leaving those choices to parasite investors who can sell a stock and walk away. Co-ops--whether they be of the worker, consumer, producer or purchasing variety--create a more equitable formation for society that brings decision-making and resource-sharing down to everyone, and investment earnings are not limited to a small group of people.

"Our firm belief is that cooperatives are the best business model for economic and social progress," said Adam Schwartz, vice president of NCBA. "Because of the structure--owned by workers--it's a fair model and treats people in a way that allows them to thrive while balancing the needs of their community."

In the fall of 2008, McLeod visited Trentino, Italy, which has at least 545 co-ops serving the region. Here, McLeod learned that 90 percent of the towns in the province have a food co-op as their only grocery store, and credit unions comprise the majority of the financial industry. This system--started by a Catholic priest in 1890--impressed him. 

But his visit to Basque Country left a deeper impact. This mountainous region runs between Spain and France along the Atlantic coast, and houses a couple of large cities and many small towns tucked within the valleys. Mondragon formed in 1956 and has since become a transnational-cooperative system that includes Spain's second-largest retail chain, with 2,400 stores, one of the country's largest banks, and medical and educational institutions.

"In contrast to this country, where small rural communities face the loss of industrial jobs, they're seeing growth," McLeod said. "It's night and day."  Workers earn an average income nearly 40 percent higher than the rest of Europe, McLeod said, and the system survived Spain's economic recession in the 1980s without laying off members. Profits are pulled together in this integrated system and made available to help support new, or struggling, cooperatives. Top executives can only earn six times the starting base wage of workers, and the chief-executive officer can only earn nine times the wage.

"Mondragon is the mother ship of what a thriving cooperative can be," said NCBA's Schwartz. 

For all Mondragon's successes, the cooperative has experienced criticism for how, in some cases, its co-ops have crowded out local businesses, and for its expansion into other countries with non-cooperative subsidiaries. 

"They're grappling with that," McLeod said. "First and foremost, they're business people. Their goal is to survive and be profitable for members."  In parts of Spain where co-ops thrive, McLeod observed no visible signs of extravagant wealth or harsh poverty: no big cars, no mansions, no homeless people begging for money. 

Mondragon's brilliance, say its advocates, lies in its ability to reproduce. And this reproduction is now occurring in the United States.
 
On an October day, McLeod flew from Bilbao, Spain to Cincinnati, where he spent three weeks traveling the Rust Belt, weaving from Pittsburgh to Cleveland and Akron, Ohio, then to Ann Arbor, Mich. and Detroit. Incidentally, McLeod's first day in Pittsburgh coincided with the United Steelworkers' announcement that it will create a worker-cooperative partnership with Mondragon.

Next, in Cleveland, McLeod learned about the Evergreen Cooperative Laundry, a 100 percent worker-owned cooperative established by the Greater University Circle Institute at the Cleveland Foundation. The nine employees (owners) wash hospital linen at a facility equipped to handle 12 million pounds of industrial laundry. When the co-op becomes fully operational, it will employ 50 people. The foundation also launched Ohio Cooperative Solar, a solar and weatherization company, which will eventually produce between 50 and 100 jobs. Both businesses dedicate 10 percent of their pre-tax profit to a fund to build a broader co-op network.

About five years ago, the Cleveland Foundation began an initiative with large anchor institutions--the Cleveland Clinic, University Hospitals, Case Western Reserve University--in University Circle, an economically devastated neighborhood in one of America's poorest cities. The 43,000 people who live there earn a median income of $18,500. Yet, the area's three anchor institutions spend $3 billion annually on food, janitorial, laundry and other services. The goal of the initiative: channel the purchasing power of these institutions back into the community. 

"Lots of jobs have left Cleveland and companies have gone offshore," said Howard of the Democracy Collaborative, who assisted with the initiative. "[The anchor institutions] aren't going anywhere. They are very large economic engines, purchasing billions of dollars worth of services and employing tens of thousands of people." 

Initially, the Evergreen project was an attempt to break down barriers between anchor institutions and the neighborhoods in which they reside, and create jobs locally. But there was a problem: People were so poor, jobs alone weren't enough, so planners began to think about worker-cooperatives as a way for employees to earn a salary, gain medical benefits and develop equity in the company. 

"It's not only about jobs for local residents. It's about wealth building," Howard said. "One of the strengths of the cooperative structure is that ownership of the company is broadly held; when 50 people own their business in their own neighborhood where they live, they're not going to send those jobs somewhere else." 

In 2010, the project will launch Green City Growers Cooperative, a 5.3-acre greenhouse located in the heart of the city, which will employ 50 people. The food produced will supply anchor institutions, markets, grocery stores and wholesale distributors. 

After learning about Evergreen Cooperatives, McLeod left Cleveland and arrived in Detroit, a once-bustling city whose formal economy has grounded to a halt.

"It's kind of post-apocalyptic," McLeod said.

Not to mention, the city is a vast food desert. In 2007, the last two major grocery stores in Detroit shut their doors. Now, residents buy food from nearby convenience stores or drive several miles outside city limits for the closest supermarkets. The Detroit Community Grocery Store Coalition recently formed to create cooperative grocery stores within the city. This collaboration between 80 churches, consumers and workers will reinvest a portion of store profits into the creation of more grocery stores, and eventually meet Detroit's food needs. For Detroit, the development of co-ops is about survival. 

"Cooperatives are a fairer way of going about providing goods and services in good times and tough economic times," Schwartz said, adding that they address the triple bottom line of profits, and the impact on the environment and local community. "With a cooperative, you can make money and serve your community. You can be proud of what you do."