by Gar Alperovitz / December 14, 2011
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.
They’re owning this cooperation
by Lee Romney / November 28, 2011
Where a hot dog stand now is the main lunchtime option for city workers in this distressed Bay Area town, soon they’ll be able to choose from steel-cut oatmeal, goat cheese empanadas and white bean and kale stew, prepared in a mobile cafe. Its owners will share in the decision-making — and any profits. Richmond Solar has trained needy residents to work as green-energy installers and now aims to transform some into bosses by forming a worker-owned cooperative. The city’s first bicycle shop has opened with similar dreams: Young men who have volunteered to learn the repair trade soon may be elevated to co-owners. “I’m just gonna ride it out with everyone to get where we need to go,” Mercedes Burnell, 19, said as he prepared to replace a crankshaft and pedals at Richmond SPOKES.
The flurry of democratic enterprise has been guided by Mayor Gayle McLaughlin, a former schoolteacher who visited Mondragon, Spain, and recognized a possible path out of the poverty and unemployment that plague her city. The Basque hill town is dominated by Mondragon Corp., a web of cooperatives that employ 83,000 workers and together represent Spain’s seventh-largest business. Co-op clusters based on Mondragon’s model have emerged in Cleveland and the Bronx, N.Y., among other cities. Richmond, with a 16% unemployment rate, hopes to follow suit. The city’s industrial roots date back more than a century, when it was home to the Santa Fe Railroad terminus and a Standard Oil refinery. World War II shipyards swelled the population to nearly its current 103,000. But Richmond has struggled since and is regularly listed among the nation’s 25 most dangerous cities. Since August, Bay Area co-op veteran Terry Baird — a burly man with a gray beard and a penchant for South African freedom songs — has been on the city payroll, helping to piece together cooperative ventures in Richmond’s economically barren pockets.
Mondragon Corp. was created in 1956 and fine-tuned over half a century, McLaughlin said, “but you have to start somewhere. One of the prerequisites of starting a co-op is need, and that is something that we have in Richmond.” Demand matters too. Baird aims to start small, with food and service co-ops such as a plumber’s collective that won’t require hefty upfront investment. Then the city hopes to bring government and other big employers on board, setting up ventures to meet their buying needs. McLaughlin, a Green Party member who’s been mayor since 2006, visited Mondragon last year and was dazzled by the scale of the worker-driven enterprises. “My understanding of co-ops from the 1960s and 1970s was that they were small and interesting,” said McLaughlin, who was immediately sold on the idea of replicating the formula in Richmond. The Mondragon story began with a Catholic priest. In 1943, Father Jose Maria Arizmendiarrieta — who had narrowly escaped death by firing squad during the Spanish Civil War — started a technical school for working-class boys. By 1956, graduates had helped form the first cooperative to make kerosene stoves. A cooperative bank followed in 1959. The corporation, which reported a $242-million profit last year, now includes 255 industrial, retail and financial cooperatives, with others focusing on education and research. Manufacturing co-ops churn out metal-cutting tools, washing machines and bicycles. A retail co-op runs Spain’s third-largest grocery chain. A Mondragon construction venture built Bilbao’s Guggenheim Museum. About 85% of the corporation’s employees are co-op members. But the original edict of one-worker/one vote remains, through an elected general assembly with representatives from each cooperative. Recently, the assembly voted to cut everyone’s pay rather than risk layoffs at any one co-op. The compensation of the highest-paid worker is capped at seven times that of the lowest. Some of the corporation’s overall profits go toward offsetting losses at any individual enterprise. Workers also receive a share in the corporation, based on their contributions, every year, with more money flowing into interest-bearing accounts disbursed at retirement.
The U.S. has a history of cooperative movements, beginning with enterprises organized in the late 19th century by the Knights of Labor and highlighted by the burst of food co-ops and consumer buying clubs of the 1960s. Recent years have seen a resurgence. “It’s less counterculture utopian,” said Melissa Hoover, executive director of the San Francisco-based U.S. Federation of Worker Owned Cooperatives, “and more engaged with people in the economy.” Some of the growth is sector-based: Green-cleaning ventures launched by immigrant women, for example, are common. But philanthropists and community developers increasingly have focused their attention on the co-op model as a way to revitalize urban areas. No city experiment has made more of a splash than Cleveland’s. With support from universities and medical centers that border the downtown area targeted for development, the Cleveland Foundation — a donor-based organization dedicated to bettering the city — has channeled millions of dollars into the Mondragon-inspired Evergreen Cooperatives. A solar panel installation-and-weatherization company and a green commercial laundry are up and running with a combined 50 worker-owners, said Lillian Kuri, program director of the Cleveland Foundation. An urban farming co-op is scheduled to open in the spring. In addition to providing financing for co-op ventures, Evergreen Cooperatives makes services such as child care available to the workers and provides no-cost healthcare. Ted Howard, an architect of Cleveland’s experiment and founder of the University of Maryland’s Democracy Collaborative, said worker-ownership is supplanting other forms of inner-city revival. “When you’re hiring people even in a decent job that pays a living wage — if they … have no retirement account, no rainy day savings — a job alone is not enough,” Howard said.
In addition to offering the chance to share in profits, worker-owned companies are rooted in the community and won’t “pack up and move,” he said. The co-op model has found interest among government officials in Washington D.C., Amarillo, Texas, and Atlanta, Howard said, but Richmond stands alone in hiring a coordinator. “I don’t know any city in America that’s done that,” he said. Enter Baird, a Richmond resident who in 1997 helped found the worker-owned Arizmendi Bakery cooperative in Oakland. The Arizmendi Assn. of Cooperatives now includes six Bay Area bakeries. All workers earn the same pay rate. Profits are distributed at year’s end in proportion to hours worked. Though he may be a co-op evangelist, Baird knows the model won’t work without a product or service consumers will pay for, a decent location and a group of people who are able to work together. During a recent tour of Richmond, Baird pointed out candidates for cooperative ventures: A vacant 5,000-square-foot building is under consideration for a handyman’s cooperative. A faded onetime coin laundry near a city park could become a bakery or restaurant. Then there’s the weedy lot that one woman hopes to transform into a cooperative garden and farm stand. In the heart of the old downtown sits Richmond SPOKES. Brian Drayton, once a junior zookeeper in Baltimore, spent years developing youth programs for a range of nonprofits, stressing art and environmental sustainability. When he opened the community space and “bike lounge” as a nonprofit last month, young men from the neighborhood poured in to find out what he was doing. Then they rolled up their sleeves and helped lay gleaming wood flooring. As a local artist covered the walls in vivid murals, they stuck around to learn the bike trade. Baird has been meeting with a group of five or so men to discuss a worker-owned collective.
Richmond Solar Executive Director Michelle McGeoy has secured funds for her co-op from, among others, Chevron (formerly Standard Oil and now the city’s largest employer) and the California Endowment — a private foundation that seeks to promote healthy communities. The company has set an initial target of having 10 worker-owners by next spring. Then there’s the Liberty Ship Cafe, whose seven owners were drawn together while taking a class on developing cooperatives at the Richmond library. The California Endowment has helped fund this project as well. On Dec. 1, the collective will start selling its breakfast and lunch fare at a farmers market near the civic center. The plan is to begin deliveries to government office workers soon after. Julio Chavez, 40, studied communications in his native Guatemala before coming to the U.S. and working as an electrician. In recent months, he has joined the other Liberty Ship Cafe partners in testing recipes for sancocho — a traditional Latin American soup — and other delicacies in a rented church kitchen. “It’s a difficult time, so one has to do different things, to search for options,” Chavez said. Challenges remain. While Mondragon is united by its Basque culture, Baird noted, Richmond is fragmented by race and class and shadowed by chronic violence. On top of the usual cost of business, cooperatives require training — not just in job-specific skills but on how to manage a business and make sure everyone’s voice is heard. “The real thing that can take a [cooperative] business down,” Hoover said, “is a group that’s not prepared to make decisions together.” On a recent rainy day, the Liberty Ship Cafe workers met to discuss just that. Concetta Abraham, a 76-year-old native of Italy, provides much of the group’s cooking magic. While tasting her savory pozole, the collective determined how long each member should be allowed to speak on agenda items and discussed the importance of not interrupting one another. “We’re from different countries, different cultures and are different ages,” said 68-year-old Carlos Ruiller, who was born in Peru. “There’s a period where we’ll have to suffer and adapt. But I’m hopeful. We’re all equals starting out — like soldiers.”
AMY GOODMAN: Alperovitz finds that 130 million Americans are members of some kind of cooperative, and 13 million Americans work in an employee-owned company. He says the U.S. may be heading toward something very different from both corporate-dominated capitalism and from traditional socialism. Gar Alperovitz is a professor of political economy at the University of Maryland. His op-ed is called “Worker-Owners of America, Unite!” It’s out today in the New York Times. A new edition of his book, America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty, and Our Democracy, has also just been published. So, what’s the evidence for this, Gar?
GAR ALPEROVITZ: Well, it’s piling up right beneath the surface, that the press, the normal press, hasn’t been covering. You know, 130 million people, that’s 40 percent of United States, involved in credit unions, co-ops all over the country, that don’t get any publicity. And roughly 13 million people, in one kind or another, have worker-owned companies—again, five or six million more people than are involved in labor unions. And several states are attempting to set up state banks, like the existing Bank of North Dakota. A number of cities are trying to set up city banks. San Francisco and Portland are the latest ones on the list. So, if you look deeper, you find wonderful experiments going on. One really interesting one in Cleveland, where there’s a group of cooperatively owned businesses by—in the community that are building a hydroponic land kind of greenhouse, producing three to five million heads of lettuce a year, a gigantic laundry—all this worker-owned. And again, the press hasn’t been covering it, but there—it gives you a sense of what could happen if the Occupy movement gets serious about simply building on what’s already out there.
JUAN GONZALEZ: But in terms of a critical mass for the economy, are we talking about here cooperatives that have a significant share of the economic activity in the country, or are we talking largely about very small co-ops that, while they may involve a lot of people, don’t really have that much impact on the overall economy of the country?
GAR ALPEROVITZ: Well, that’s the interesting thing. Of course most of this is still much smaller than the giant corporations—I mean, the ones that got us into trouble and the ones that got nationalized, as in GM and Chrysler and the big banks. And at some point, we’re going to have to go to that level. But what’s happening, and I think because of the pain levels, we’re seeing these things grow over time simply because the pain is growing. And the ones I mentioned in Cleveland are not small. We’ve got a laundry—an industrial-scale laundry going on there, owned by the workers in that community, that’s probably the most ecologically advanced in the country. This large greenhouse that’s developing, three to five million heads of lettuce. These are not your little corner stores. So I see a trend of expanding possibility, building step by step on what’s already out there. We’ve learned a lot in the last several decades. And I think it’s going to grow over time because of the pain levels. That’s what the evidence suggests.
AMY GOODMAN: Talk more about the banks and the credit unions, the state banks that are developing.
GAR ALPEROVITZ: Well, we’ve had, since the beginning part of the century in North Dakota, a state-owned bank, highly successful. The press doesn’t cover it. But it’s a bank that exists just like other banks, but it doesn’t speculate. It doesn’t use money to do what the Wall Street banks are doing. And as I say, there are about 14 states that have introduced legislation to reproduce that, help finance small business, on the one hand, but co-ops and worker-owned firms, and most of this with a real green edge to it, ecologically developed. And in these city banks, the same thing, trying to focus—for instance, in San Francisco, there’s about $2 billion in state—in city money, that’s taxpayer money. Instead of putting it in the Bank of America, the proposal is put it in a city bank or a city credit union and then use that to finance development in the city. And I think that direction, using those public monies, and not simply to finance corporations or speculation, but doing it in a way that builds up this already developing knowledge and base of worker-owned companies, community-owned developments, neighborhood developments, co-ops, that form of development, the way to think about it is the—you know, the two to three decades before the Progressive Era and the Populist Era really made a big national impact. There was a developmental process, step by step, at the state level. Take the women’s right to vote, the same thing: step by step, state by state by state, building up over three to four to five decades. But I think the pain level is so high, it’s going to be quicker this time. So I take this local development process very seriously. And I think it can lead to national change, as the New Deal did at one point when the pain levels really struck. You know, at the other—
JUAN GONZALEZ: You also talk—
GAR ALPEROVITZ: At the other—go ahead.
JUAN GONZALEZ: If I can, you also talk about the changing attitudes, especially among young Americans, toward concepts like capitalism and socialism. Could you talk about that, as well?
GAR ALPEROVITZ: Yeah, there was a Rasmussen poll—now, we’re talking about a fairly conservative polling group—in 2009. People under 30, they found, were equally disposed as to whether capitalism or socialism was a better system. And now that’s a big change. We’re past the time in the Cold War when anyone who mentioned anything like a worker-owned company or cooperative or public-owned enterprise was written out of court. Lots of younger people are looking at what will work in the midst of a failing economy, where the large corporations are falling day by day and the speculators on Wall Street are speculating away the money. I think we’re seeing a change in attitude, both increasing doubts about what’s now going on in the economy, deep doubts, very deep doubts—thanks to Occupation, it’s crystallized—but this other trend of saying, “What do you want? Where are we going?” in some ways to democratize the economy in a very American way, something very—you can explain to your neighbors, this is—this makes sense, in these cities that I’ve been talking about. You get a whole larger coalition of people understanding there’s a hell of a lot of pain here, we can develop something here that moves us in a direction of democratizing local economies and beyond.
AMY GOODMAN: Finally, Gar Alperovitz, the name of your book, America Beyond Capitalism. Do you think that’s possible in this country?
GAR ALPEROVITZ: Well, I’m a—you know, I’m a historian and a political economist. Changes of major kinds, if you look at decade-by-decade development, fundamental systemic change is as common as grass in world history. A lot of pain. But I think an America beyond capitalism is a real possibility. Again, if you stand back, the way the civil rights folks did—my heroes are the civil rights leaders in the 1930s and ’40s, the ones who laid the basis for the big change that came in the ’60s, and I think that’s the way to understand what’s going on at the grassroots level and the sort of things that Occupation has been teaching us. Get in there now and begin to develop that base and that foundation for the transformation.