Category - Social/Solidarity Economy

by Emily Kawano, CPE Exec. Dir.

In a remarkable and historic move, the United Steel Workers union (USW) and Mondragon International^[1] announced that they would be working together to establish Mondragon manufacturing cooperatives in the U.S. and Canada.^[2] The Mondragon Cooperative Corporation (MCC) is the world’s largest industrial workers cooperative, located in the Basque region of Spain. It employs almost 100,000 workers in 260 cooperative enterprises that include manufacturing, a university, research and development, social security mutual, and retail shops. In 2008, MCC reached annual sales of more than 16 billion euros and is ranked as the top Basque business group, the seventh largest in Spain.

Inspiration

In the cooperative world, Mondragon, despite criticism of the compromises that it has made in the face of globalization, is still the gold standard of success and has inspired many other cooperative initiatives in other countries. In the U.S., for example, Cleveland’s $5.8 million Evergreen Laundry Cooperative start-up, the first in a network of local worker cooperatives, was inspired by the visit of a Cleveland delegation to Mondragon. The development of this cooperative network is envisioned as a way of creating jobs and revitalizing depressed neighborhoods of Cleveland.

In Chicago, the Austin Polytechnic Academy (APA), a public high school, follows in the footsteps of Mondragon. The first industrial cooperative of MCC was started fifty years ago by five graduates of a technical training school under the guidance of a visionary local priest, Father José Mar&iacutea Arizmendi, who continued to play a central role in the development of Mondragon until his death in 1976. Austin Polytech prepares its students, almost all of whom are from low-to-moderate income families in an African-American neighborhood, for jobs in Chicago’s high skilled industrial sector, and even more importantly, to become worker owners. Towards this end, they have brought in speakers from the Emilia-Romagna region of Italy, another hotbed of successful cooperatives, and a group of APA students are currently on a study tour in Mondragon.

In the Bay Area, the Arizmendi Association of Cooperatives takes its name from Mondragon’s visionary. It is a worker-owned network that provides assistance to new bakeries that are interested in following their successful cooperative business model. There are currently three Arizmendi Bakeries in addition to the original worker-owned Cheeseboard that provided the model and technical assistance for the Arizmendi Association.

New Frontier

It is clear that Mondragon is a source of inspiration for many other initiatives to build economic democracy. The collaboration with the United Steelworkers raises the potential to a whole new sphere of possibilities.

The USW-Mondragon collaboration grew out of a USW ‘green industrial revolution’ project that created a partnership with Gamesa, a Spanish wind turbine firm, to establish production in Pennsylvania by refitting shuttered steel plants. Gamesa is based near Mondragon and it wasn’t long before one thing led to another and the USW-Mondragon connection was made. Discussions and meetings followed over the course of the following year and culminated in this historic agreement to create worker cooperatives in the manufacturing sector, either through worker buy-outs or new start-ups. Other aims include integrating collective bargaining with the cooperative model and exploring co-investing through the USW backed Quebec Solidarity Fund and Mondragon’s Eroski Foundation.

The United Steelworkers (USW) is the largest industrial union in North America, representing 1.2 million members in a diverse range of industries. In a time where labor unions and worker cooperatives have drifted far away from their common roots—when worker cooperatives were seen by some unions as a way to eliminate the class struggle between owner and worker—it is enormously significant for a union of this weight and history to reforge those alliances. It is a signal to the labor union movement as well as the wider public that cooperatives are part of the solution, not some alien phenomenon from a parallel universe. USW spokesman, Rob Witherell said that the collaboration was not a hard sell. Most of their members had been unfamiliar with the concept of worker coops, but once it was explained, they easily ‘got it’ and were very interested. He believes that there is a great potential to expand this project, citing the Blue-Green Alliance, which was launched by the USW and the Sierra Club in 2006 and now numbers 8 million members, as an example of how these initiatives can catch fire.

We continue to see rising unemployment, stagnant wages, cuts in benefits, deteriorating workplace conditions and the hollowing out of our manufacturing sector. This announcement breathes hope of reviving our manufacturing base and rebuilding communities that have been devastated plant closings. Rising oil and transportation prices, combined with the falling dollar are creating the conditions for a manufacturing renaissance in the U.S.^[3] Imagine if this renaissance could be infused with, as USW President Leo Gerard said, “Mondragon’s cooperative model with ‘one worker, one vote’ ownership as a means to re-empower workers and make business accountable to Main Street instead of Wall Street.”

And when workers own and run the factories they work in, they’re not likely close up shop at the first sign of stress—in over fifty years of operation, Mondragon has only seen three of its cooperative enterprises fail. Imagine.

Notes:

1. Mondragon website: http://www.mondragon-corporation.com/language/en-US/ENG.aspx
2. The full text of the agreement is available at http://assets.usw.org/Releases/agree_usw_mondragon.pdf
3. “Can the U.S. Bring Jobs Back from China?” BusinessWeek, 6/19/08 http://www.businessweek.com/magazine/content/08_26/b4090038429655_page_3.htm

If you have ever asked yourself…

What’s the Economy For, Anyway?
What should a well-functioning economy do?
What’s behind lower wages and longer working hours?
Should we, ordinary folk have any say in running our own economy?
How do we build a more just and sustainable economy?

…then this course is for you!

What’s The Economy For, Anyway? The Case for a Solidarity Economy and Social Wealth
An Online Course offered by the Center for Popular Economics
Summer Session I (June 2 - July 10, 2008)
Course Fee: $900 for THREE Univ. of Massachusetts Credits or $400 for non-credit students.
40-60 Professional Development Points (in MA) or 3.6 Continuing Education Credits (outside MA) available.
Limited scholarships available for non-credit students.

The Center for Popular Economics, in collaboration with the Forum on Social Wealth and the Political Economy Research Institute at Univ. of Massachusetts, Amherst is offering a special topics 3-credit online course (Econ 197) this Summer. The course runs from Monday, June 2nd till Thursday July 10th. No background in Economics is required. The course is suited for students as well as activists and community members who want to learn more about the economy. Please see attached flyer and course outline or visit http://www.populareconomics.org/WTEF_Online_Course.html. An overview of the course is presented below. For more details contact Amit Basole at abasole@gmail.com or Emily Kawano at emily@populareconomics.org.

Overview: “The Economy” is often portrayed in the media and by politicians as a force of nature that we must adapt to or perish. But we, the ordinary people make our economy tick. Shouldn’t we have a say in how it is run and to what purpose? This online course raises the questions: what purpose do we want our economy to fulfill? Is it fulfilling this purpose today? If not, what can we do about it? What resources do we have available in order to effect our changes?

The course is comprised of three main parts. Part One takes a look at the performance of the current economic model, known to economists as “Neoliberalism.” Although our economic model has allowed unprecedented accumulation of wealth by a few, for the majority of us it has meant falling or stagnant wages, longer work hours, rising healthcare costs, and deterioration of our natural and social environment. We start with a look at the historical roots of neoliberalism and then try to understand the economics behind it.

In Part Two, we start talking about how some of the things that we saw going wrong in Part One can be set right. In the midst of growing inequality and corporate power, many grassroots economic alternatives have been springing up throughout the U.S. as well as the rest of the world. This is the new “Solidarity Economy.” Grounded in principles of economic democracy, social solidarity, cooperation, egalitarianism, and sustainability, this is an alternative to the Neoliberal vision of the economy. In this part of the course we will look at some examples of such alternatives as well as understand the economics behind them.

Building alternatives requires resources. But part of the neoliberal agenda is the diverting of economic resources into fewer and fewer hands. Where will the resources for alternatives come from? In Part Three we talk about a vast store of assets that communities everywhere possess and on which they can draw for constructing alternatives. This store, which we call “social wealth” consists of our cultural and ecological commons and our capacity to work for those we care about. We will also look at how the economics of the care economy or the cultural commons differs from the economics of corporations.

Too bad all unions aren’t this bad-ass. But when a union is bad-ass it can make a real difference, and, as DHinMI at DailyKos says, this is “An Example of Why Authoritarians Fear Labor Unions.”

Because they stand up to power:

A Chinese ship carrying arms destined for Zimbabwe was last night forced to turn back after South African unions refused to unload it, claiming that to do so would be “grossly irresponsible”, South African media reported…

…

A Modest Proposal: Ten Steps to a Democratic Economy

In my initial installment of this series, I proposed, “Ten Steps to a Democratic Economy.” With this column, I would like to explain and defend my third proposal. I invite commentary and analysis.

3. Reform the Money System – The money supply system is directly under the control of the Federal Reserve. This agency has 14-year terms. They need to be placed under congressional control, not Presidential control. I recommend that their terms be limited to 4 years and they should be checked by Congressional fiscal policy. High interest rates currently only benefit banks and financial institutions.

The Federal Reserve, usually called, ”The Fed,” is the central banking system of the United States. The Federal Reserve System is composed of a central Board of Governors in Washington, D.C., and twelve regional Federal Reserve Banks located in major cities throughout the nation, and a number of member banks. The Federal Reserve Act created the Federal Reserve System in 1913. The board and its chairman are appointed by the President of the United States and approved by the Senate.

The money supply available at any given time in our economy is a product of the interest rates that are set by the Federal Reserve. As it raises or lowers the interest rate it charges to member banks, it increases or decreases the amount of money available to the economy. Higher interest rates slow the economy and lower interest rates speed it up. This means that the economy is producing goods and services and thereby creating jobs in a “slow” manner or in a “faster” manner.

I am not an expert in economics, but I know that high interest rates hurt low-income people and benefit wealthy people. Low interest rates help low-income people, but do not hurt wealthy people. The wealthy have a surplus and they profit from whatever the amount of the interest that it earns. Their complaint would be that they are not being rewarded “enough” for their thrift and/or miserly behavior. People who have surplus money can, of course, give it away, but most wealthy people prefer to “rent” it out. The money you pay in interest on a loan is in effect the rent for that loan. The wealthy are the creditors and the poor are the debtors. Those who lend are the creditors and those who borrow are the debtors. (One problem with this scenario is that truly destitute, impoverished people are hardly ever loaned money. They are considered poor risks.)

When a bank grants someone a loan, most people feel happy. This is understandable but they should not feel happier than the bank. The bank is now getting a 6% return on its money, when earlier it was only getting 2%. This is how banks make money for themselves. They take it in at one window and loan it out (part of it) at the other window.

Low interest rates stimulate purchasing of goods and services. With low interest rates it is easier to borrow money to buy a car, a refrigerator or a house. This means that more people will exercise that purchase option and the economy will move along. This tends to create a bit of inflation.

Wealthy people do not like inflation. It means that their wealth does not buy as much as it used to buy. Large financial institutions feel the same way. They like to have the Federal Reserve under the control of people who are not elected by the citizens, or at least at a distance from the people. The President appoints Federal Reserve Board members. Their terms in office are for 14 years and the Senate confirms them. The House plays no role. The Senate is the more conservative of the two legislative branches. Senators have 6-year terms. There are two per state regardless of population.

Recently, after Hurricane Katrina, hit the Gulf Coast, a number of people felt that the Federal Reserve should have lowered interest rates to make goods and services available to those afflicted. It did not do so. It was focused on the anti-inflationary policy that it had been following. This is an example of monetary policy interfering with fiscal policy. Tax cuts meant that the government would have to borrow to cover the costs of the hurricane and aftermath.

Fiscal policy refers to the ability to raise revenue by way of taxes and to spend money on needed projects. In a phrase, fiscal policy refers to revenue and expenditure policy. With a democratic fiscal policy, we could collect more money from the affluent and provide more services to the poor. Tax the rich and help the poor.

It is for this reason that conservatives fear and loathe democracy. Conservatives fear that a majority would probably want to spend more money on schools, health care and environmental protection, instead of prisons, police and the military. Since the wealthy people would see an increase in their federal income taxes, if this happened, they generally oppose giving Congress strong fiscal tools, and instead rely on monetary policy to adjust the economy.

A more democratic society would give us better economic policies. Better economic policies would put people before profits.

A better world is possible.

References:

Economic Report of the People. Boston: South End Press, 1986.
(Center for Popular Economics, Amherst, Massachusetts)

http://en.wikipedia.org/wiki/Federal_Reserve

Paul Krugman’s latest column asserts that Senator Clinton should be the clear favorite for those in favor of universal health care.

The principal policy division between Hillary Clinton and Barack Obama involves health care. It’s a division that can seem technical and obscure — and I’ve read many assertions that only the most wonkish care about the fine print of their proposals.

But as I’ve tried to explain in previous columns, there really is a big difference between the candidates’ approaches. And new research, just released, confirms what I’ve been saying: the difference between the plans could well be the difference between achieving universal health coverage — a key progressive goal — and falling far short.

Specifically, new estimates say that a plan resembling Mrs. Clinton’s would cover almost twice as many of those now uninsured as a plan resembling Mr. Obama’s — at only slightly higher cost.

[cont’d]

On the other hand, and mucking up the analysis of what’ll happen if Clinton is elected versus Obama (assuming one of them is indeed elected over the Republican candidate), is the idea I’ve seen advocated that Obama on the November ballot will better help in the election of lots more Democrats to the US House and Senate. The idea being that Clinton is more divisive, so even if she wins, there will be fewer middle-ground and moderate-Republican voters who will feel enthusiastic about the Dems in general, and so less likely to vote for other Dems on the ticket. But Obama is seemingly more unifying and uplifting of a character, and so good vibes for him will rub off on other Dems on the ticket. And if that’s true, then ironically Obama would have a Congress to work with that would be more amenable to a strong health care initiative, whereas Clinton would have a harder fight on her hand because the Congress she faced wouldn’t be as friendly to progressive causes. (Examples of this sort of analysis from The Nation and DailyKos.)

And is Krugman right that those opposed to universal health care will actually and successfully be able to kill an attempt by Obama to expand his policy vision by turning his primary campaign words against him? It seems plausible that he could change his vision and that, if this occurs during a honeymoon first 100 days following a landslide victory, brush aside those sorts of attacks without too much trouble. Maybe I’m being too optimistic. It’s just that I find myself reasonably convinced by the “Obama brings with him a stronger Congress than Clinton” arguments and so have been finding myself moving towards supporting him for that reason. (I’m in Vermont and our primary isn’t until March 6.)

Onward!

[Update] It’s all pretty frustrating, this not being able to predict the future. I say that because I agree with something else that Krugman has said (though I can’t recall where to link to it at the moment) that establishing a viable universal health care system is enormously important, both for the wellbeing of the country in general, and for a left/progressive movement as well. It’d be like a new New Deal–it would provide a kind of shared benefit that tens-, hundreds of millions of people would feel and appreciate. They’d not only be better off, they’d know that it was the left that got them better off. Large numbers of people who felt that there was no useful difference between the Republicans and the Democrats would learn that in fact there is. (And even if you think there isn’t currently, the establishment of universal health care would in itself be the fact of difference.) Large numbers of people who think government is just a big joke would learn that government can indeed do some things–some very, very important things–right, do them better than the alternatives. A decent universal health care system, alongside a carbon cap-and-dividend system, would breathe vibrant new life into a progressive political movement. We’d gain a generation or more of new loyalty and energy.

And we need that loyalty and energy. There’s lots to be done, from avoiding the worst of global warming to eliminating poverty, from ending the Iraq war to rebuilding crumbling schools and other infrastructure. These things are big jobs and expensive. To do them right means having the backing of the majority of the people. To get that backing, the people have to feel–to know–that “we’re all in it together” is more than empty rhetoric. Universal health care is the achievable reality that makes that rhetoric tangible. It’s a policy of solidarity that makes each next step a little easier to achieve. It’s why I’ve been quipping (mostly to myself) for a while now that “universal health care is an environmental issue.” If we can provide universal health care that makes it one heck of a lot easier to convince people that we all have to face restrictions on energy consumption (and so consumption in general). We have to face both the restrictions and the benefits (of health care, of a healthy environment, etc.) together.

And so if in fact that’s all true, then boy oh boy will it be disappointing if Obama (or Clinton) is elected president–especially if he (or she) is backed by a newly enlarged Democratic majority in Congress–and yet fails to seize the opportunity. Boy oh boy, very disappointing.

[The following is a guest post emailed in to the Center for Popular Economics by a reader of CPE’s newsletter]

by Ben Leet

I am a retired school teacher who has done research on the U.S. economy partly for personal reasons and also because I had been teaching at a school in a poverty neighborhood in Oakland. There were many murders, crimes and depressing events in the neighborhood where I taught. Children brought in bullets that had passed through their walls, or one described a murder that happened in his back yard. Those were the worst examples, but violence was not uncommon. Bad economics, I concluded, contributed to poor student performance, poor behavior, and stunted emotional development. Here are the salient facts I’ve uncovered that point to a society mired in inequality.

Here are the problems we face:

The other night I attended a presentation by Peter Barnes at Vermont Law School. He was talking about different possible policies Congress might pursue to address global warming. Barnes is a persuasive advocate for a specific form of cap-and-trade on greenhouse gases, wherein the limited permits for emitting greenhouse gases are auctioned off and the revenue that comes in from the auction is then distributed on an equal per-person basis to everyone in the country. More on that in a moment (or see Jonathan Alter’s nail-on-the-head article in Newsweek).

I’d heard about Barnes proposal before–in fact, Nancy Folbre, James Heintz, and I used it as the basis for a bit of the Field Guide to the US Economy. What I hadn’t realized was that there is currently legislation working its way through Congress that would implement a different variation of cap-and-trade on greenhouse gases. The leading version is Joe Lieberman’s S.280 in the Senate and the near-identical bill fostered by John Olver, H.R.620, in the House. (Part of my ignorance stems from the recent birth of my daughter Susannah. I haven’t been keeping up with the news very much.) (But she sure is cute!)

“Wow,” you might be thinking, “Congress might actually pass a bill that deals seriously with global warming. Will miracles never cease?” Well, um, don’t get too excited just yet.

July 27, 2007

Announcing the launch of the U.S. Solidarity Economy Network (SEN-US)

We are excited to announce the launch of the U.S. Solidarity Economy Network. The decision to launch was taken at the end of a series of meetings that were held at the U.S. Social Forum. The time is ripe for this initiative, given the explosive growth of the solidarity economy and representative networks virtually everywhere else in the world. In the U.S., not only is there no such network to support existing solidarity economy practices and policies, but the term and framework is practically unknown.

What, then, is the solidarity economy?

· The Solidarity Economy offers an alternative economic framework to that of neoliberal globalization - one that is grounded in solidarity and cooperation, rather than the pursuit of narrow, individual self-interest.

· It promotes social and economic democracy, equity in all dimensions (e.g. race, class, gender…) and sustainability.

· It is pluralist and organic in its approach, allowing for different forms and strategies in different contexts, and is open to continual change driven from the bottom up whether in civil society or the marketplace.

What does a solidarity economy look like? Here are just a few examples:

· cooperatives – worker, producer, consumer, housing, financial
· local exchange systems, complementary currencies
· fair trade & solidarity finance
· social enterprises
· ‘high road’ locally owned businesses
· reclaim the commons movement
· social investment funds, worker controlled pension funds and credit unions
· land trusts
· co-housing, eco-villages
· consumer supported agriculture
· green technology and ecological production
· open source movement (e.g. Linux, wikipedia, YouTube)
· unpaid care labor & volunteer labor
· participatory budgeting
· collective kitchens in Latin America, tontines – collective health programs in Africa

· community-based services in France, social cooperatives in Italy

Why a solidarity economy network?

There are serious cracks in the dominant neoliberal economic model and there is a historic opening to create and push for a new framework for social and economic development. The solidarity economy builds on the grassroots innovations of people, moved by desperation, practicality, values, or vision, who are building economic alternatives to provide jobs, food, housing, social services, healthier communities and money, as well as advancing economic democracy and more just economic policies. Taken together, they offer stepping stones toward a new way of organizing our economy. Creating a network to foster a common sense of identity and purpose has been powerful in other countries. To take one example, in Canada, the social solidarity economy network has forged a comprehensive national policy framework and has leveraged $132 million in government funding for investment, capacity building, research and training.

What are the aims of the SEN?

We have yet to hammer out a mission statement, but here are some preliminary ideas:

· To develop a structure and vision that can promote a common identity and agenda among the currently isolated elements of the solidarity economy.

· To contribute to new theories of economic development informed by the dynamism and innovative practices within the solidarity economy.

· To raise the visibility, legitimacy and public support for solidarity economy practices,

· To link up with regional and international solidarity economy networks such as NANSE and RIPESS.

· To promote public policies and leverage resources for the support of the solidarity economy.

· To facilitate research on the benefits of the solidarity economy, best practices, opportunities for synergistic cooperation, and the development of training and technical support resources.

· To build the movement for transformative social and economic justice.

Next steps

The SEN Coordinating Committee is in the process of:

1) Mission statement and structure: we are developing a provisional mission statement and structure proposal which will be circulated for wider discussion.

2) Membership: We anticipate putting out an invitation to organizations and individuals to join in approximately a month’s time.

3) Development: We are exploring funding opportunities. The Center for Popular Economics will provide fiscal sponsorship as well as staffing, provisional upon funding in the start-up stage of the network formation.

4) Action plan and timeline: as we build a broad representative coordinating committee and membership we will prioritize our objectives and seek resources to achieve them.

5) Resource development: collect and publish a book of the presentations in the Economic Alternatives & the Social/Solidarity Economy track at the U.S. Social Forum. Develop a SEN-US website.

We hope that you find this initiative as exciting and inspiring as we do. Join us in building the Solidarity Economy Network. Spread the word, and sign on to the SEN listserve to keep up with developments. Send a message to: ssecaucus-subscribe@lists.riseup.net

On behalf of the SEN Coordinating Committee,

Emily Kawano, Center for Popular Economics
Phone: (413) 545-0743 e-mail: emily@populareconomics.org

SEN Coordinating Committee
Jessica Gordon-Nembhard, Grassroots Economic Organizing
Melissa Hoover, U.S. Federation of Worker Cooperatives
Emily Kawano, Center for Popular Economics
Julie Matthaei, Guramylay
Ethan Miller, Grassroots Economic Organizing (GEO)
Michael Menser, Amer. Fed. of Teachers, CUNY
Heather Schoonover, Institute for Agriculture and Trade Policy
Dan Swinney, Center for Labor and Community Research

[See part one]
Jonathan Teller-Elsberg, CPE Staff Economist

It’s worth remembering that commons already exist, lots of them, in various places and parts of the world’s economies. Most often, however, they are informal arrangements—holdovers from before the rise of modern market capitalism. In general, commons are not recognized formally by governments as a type of property arrangement deserving protection, the way conventional private property is legally protected.

It is this lack of protection that enables the famous “tragedy of the commons.” Barnes argues that, contrary to the standard perception, commons aren’t undermined by internal tragedies—they are victims of infringement from the outside. Marx described the enclosure of common land into private land as “the primitive accumulation of capital”; today, Barnes is primarily concerned with the ability of corporations to horn in on remaining commons as they seek new resources to exploit for private gain. A recent example is with the digital TV broadcast spectrum, with an estimated value of $70 billion but which the U.S. government gave away for free in 1996 to media conglomerates, even though the airwaves are supposed to be the shared property of all Americans.

The main finding of Peter Lindert’s intriguing 2003 paper, “Why the welfare state looks like a free lunch” (a warm-up for his 2004 book Growing Public: Social Spending and Economic Growth since the Eighteenth Century is that generous social democratic welfare states, with a variety of universalist and means-tested safety net and family support programs, grow just as robustly as stingy laissez-faire states. Here’s the key summary from the abstract:

There is no clear net GDP cost of high tax-based social spending on GDP, despite a tradition of assuming that such costs are large.

The finding should obviously be plastered on bumper stickers, refrigerator magnets, and dorm-room walls and played continuously on a loudspeaker outside the Chamber of Commerce, Club for Growth, Council on Competitiveness, etc. The welfare state doesn’t just look like a free lunch, it is a free lunch, at least from the standpoint of national aggregates.

Class conflict may mean that it’s hard for us to order that free lunch in the U.S. anytime soon, but the barrier between us and the free lunch doesn’t come in the obvious way.

Jonathan Teller-Elsberg, CPE Staff Economist

A few weeks ago, CPE Staff Economist Jerry Friedman wrote an Econ-Atrocity reviewing Bill McKibben’s new book, Deep Economy. Though he says McKibben “has written a clear attack on much of what ails us,” Friedman nonetheless criticizes McKibben for approaching the environmental and social problems of the day from an individualist perspective. For all that McKibben wants to promote and revive “community,” he has the attitude (says Friedman) of a “personal Salvationist . . . [who thinks that] the enemy [is] ourselves: we use too much, waste too much, want too much; and the only salvation for the environment is to change our preferences, use less, recycle more, and choose to live simply.” What McKibben misunderstands or ignores, Friedman argues, is the power of social institutions to drive behavior, regardless of the desires and seemingly free choices of individuals.

I think that Friedman will find solace in Peter Barnes’ recent book, Capitalism 3.0: A Guide to Reclaiming the Commons, since Barnes’ approach is definitively institutional. The problem, according to Barnes, is that the structure of the economy and society leave too much power in the hands of corporate capitalism. Even if all the CEOs and boards of directors and politicians were replaced with kind-hearted souls like McKibben, we would still face pretty much the same issues of environmental decay, economic inequality, and other social ills—the logic of capitalism and the legal structure of private property rights force the leaders of corporations to do what they currently do. He learned this from personal experience as co-owner and manager of several business ventures, most famously Working Assets (a telephone and credit card company that donates one percent of gross revenues to progressive charitable organizations). “I’d tested the system for twenty years, pushing it toward multiple bottom lines [that consider social and environmental impacts in addition to profit concerns] as far as I possibly could. I’d dealt with executives and investors who truly cared about nature, employees, and communities. Yet in the end, I’d come to see that all these well-intentioned people, even as their numbers grew, couldn’t shake the larger system loose from its dominant bottom line of profit.” (Ironically, Bill McKibben is quoted on the front cover of Capitalism 3.0 helping to promote Barnes’ book.)

A recent article in Psychological Science describes experiments aimed at understanding the psychology of accepting, or not, social inequalities. (If the abstract seems a bit abstract, try this slightly more reader-friendly summary from Science.)

The gist: people who accept justifications for inequality experience less emotional stress when confronted by evidence of the inequality. The more a person believes that there are good reasons for inequality, the less emotional stress they’ll have. (Stress in the form of moral outrage, existential guilt, and support for changing things to help out the disadvantaged.) So acceptance looks to be a self-protection mechanism. Also, showing people stories, propaganda, what-have-you, that feeds ideas of justification (for example, “rags-to-riches” stories) increases their acceptance of the justifications, and so decreases their emotional reaction to evidence of inequality.

As the authors abstract, “system-justifying ideology appears to undercut the [urge to bring about] redistribution of social and economic resources by alleviating moral outrage.”

I guess this helps explain why people are likely to accept that “this is the best of all possible worlds.” Giving a rat’s ass that the world ain’t so great is hard to do. It’s stressful. That’s why those of us who think otherwise have got to help each other keep our spirits up. More potlucks!

Two weeks ago, after complaining to my daughter about how much I would dislike it, I bought Bill McKibben’s Deep Economy (New York, Henry Holt: 2007) from my local Amherst book store. Already familiar with his ideas from his various other writings (including The End of Nature; Staying Human in an Engineered Age; and various New Yorker articles), I suspected that his new book would be well written, an effective attack on much that ails us as a society, and would miss the point. It is this last that led me to threaten to throw the book against the wall in frustration. And that frustration led me to write this note. (Actually, it was my wife who wanted me to write this so that I would stop ranting to her.)

What could be wrong with a book that criticizes the Bush Administration, big oil, Cargill, Monsanto, and the Economics profession (among many many other villains)? Especially when the author has such good heroes: including farmers’ markets, urban gardens, organic farmers, Heifer International, and the Indian state of Kerala. Among economists, environmentalists like Herman Daly and Bob Costanza get most of the Kudos but a few, like Amartya Sen, make friendly cameo appearances. Individualism is bad; society is productive; and I agree that would all be better off, and the world a lot better off, if we listened to Bill McKibben.

The problem I have is that McKibben not only reads orthodox economists but believes them. For him, the economy is a social system that efficiently translates individual wishes into products; changing economic outcomes, therefore, requires two things: first we must change the technology we use; and, second, we must change individual wishes rather than reorganize the economy. For McKibben, both of these problems go back to the origins of modern economic growth in the British Industrial Revolution of the 18th century. Industrialization, and the economic growth that came after, is, first of all, the product of engineering and better technology: “[I]n 1712, something new finally happened. A British inventor named Thomas Newcomen developed the first practical steam engine” (p. 5). As a result of this technology, “Every action of a modern life burns fossil fuel” (p. 15) and “[t]he link between environmental destruction and wealth is deep and long-standing. Clearly, getting rich means getting dirty” (p. 21). In a nutshell, here is McKibben’s take on the world: we have the wrong technology, we use a technology that relies too heavily on fossil fuels, and this links economic growth with environmental degradation in a way that insures that economic growth will hurt the world.

Thus far, McKibben’s critique would be familiar to readers of Amory Lovins (cited in the book) and others. This argument may be simply stated as follows: “We’re in trouble because we, accidentally, chose the wrong technology and now we need to step back and change.” But McKibben makes a broader social critique than this by adding a second element to our social malady, also dating back to the beginning of the modern era, and also an accident. Until 500 years ago, McKibben argues, individuals were embedded in communities “as a small part of the Great Chain of Being” (p. 95). “The story of the last five hundred years,” he adds, “is the story of continual emancipation” (p. 95). He recognizes that many factors dissolved this ordered world, but, a good Weberian, he highlights one: Protestantism. Like fossil fuel-powered economic growth, individualism was at first a good thing; emancipatory, it gave space for individual expression and initiative. But it has gone too far and now “we’ve been overliberated” (p. 128).

There is so much here that is familiar, and so much that rings true and even comfortable, that I expect McKibben’s book will sell well. But, I fear that he is telling us what we want to hear rather than what we need. For starters, he is wrong about the British Industrial Revolution. Rather than steam engines, the signal change there was the creation of factories, almost always operating without steam power, where employers, “capitalists,” were able to regulate the work hours of their workers. Rather than an engineering problem, the Industrial Revolution was a solution to a social problem, the problem that people, workers, did not want to work as long or as hard as their bosses wanted. Factory production allowed capitalists to increase their profits by forcing their wage workers to labor harder or else be fired (and denied access to the means of production).

Instead of seeing the economy as a system that uses technology to transmute individual wishes into economic outputs, it is a system of profit creation, producing surplus value rather than use value. This explains many of the accidents and mysteries McKibben identifies, the odd mistakes and errors in judgement, that have led to our current malaise. We subsidize the burning of fossil fuels because of the political influence of fuel and automobile companies looking to profit. Our agricultural research emphasizes large-scale, oil-intensive technologies because these favor agribusiness profits. State policy promotes extensive housing development because these projects favor corporate profits in real-estate, construction, furniture, and transportation. State policy favors private consumption of marketable commodities rather than communal use of public goods not just to raise the Gross Domestic Product but because corporations profit from private consumption. By contrast, state policy neglects, even discourages, much that enhances welfare and makes life better for people because corporations have not figured out a way to squeeze a profit from them. Home production, community building, and the development of social capital are all shunned not only because they do not enrich any section of corporate America, but because the strengthening of communities risks promoting democratic forces who would restrict corporate profit-making in the name of popular welfare.

Yes, McKibben is absolutely right that we use the wrong technologies and we value individual action over communal interests. But the problem is not in the technology, nor in any excessive desire for liberty and personal autonomy. Nor is it in our desire for economic growth where we provide the opportunity for a better life for everyone. The problem is that we grow in the wrong way because that is more profitable for the corporations who dominate our social policy.

So what is to be done? Blaming technology and individualism, McKibben urges us to change our thoughts and revise our expectations of the world with the promise that this will save the planet and even may eventually make us better off. Like the Garrisonian abolitionists of the 19th century, he would rely on “moral suasion”; after we change our behavior and rebuild our communities “then our politics will start to change as well” (p. 175). If we see capitalism and capitalist control of state policy as the root of our environmental and social maladies then we should reverse this ordering. Instead of personal change opening the door to political action, we need political action that will end the subsidization of environmental and community destruction so that we can save our planet and rebuild our communities.

Gerald Friedman
Professor of Economics
University of Massachusetts at Amherst
gfriedma@econs.umass.edu

Over at the Boston Review, Michael Piore and Andrew Schrank’s recent article (“Trading Up: An embryonic model for easing the human costs of free markets”) on labor in Latin America offers a spot of good news. They’ve been studying labor inspections throughout the region, from the Dominican Republic to Mexico to Brazil and Chile, and say they’ve found “an emergent model for reconciling market and social forces.”

by Emily Kawano, CPE staff economist

TINA is dead – let us rejoice. In the early 1980s British Prime Minister Margaret Thatcher famously declared, “There Is No Alternative” meaning that there is no alternative to capitalism. In the following years it certainly seemed that the capitalist juggernaut was on a roll. By the 1990s, Communism in the Soviet bloc had fallen and neo-liberalism, a particularly pro-corporate and anti-government brand of capitalism, had been enthroned throughout most of the world, enforced by the International Monetary Fund (IMF), the World Bank and the World Trade Organization. TINA ruled, unchallenged by clear evidence that a viable alternative existed.

And yet, the steady encroachment of neo-liberalism, accompanied by growing inequality and immiseration for many throughout the world, may have seeded TINA’s demise. The critique of neo-liberalism has been well honed by the ever-growing global justice movement that has focused a spotlight on the failure of the neo-liberal model in terms of growth, equity and sustainability. In Brazil, Venezuela, Chile, Argentina, Uruguay and Bolivia left-leaning governments have been swept to power under the banner of anti-neo-liberalism. The World Social Forum, the largest and most significant gathering of social movements in the world, is united by an opposition to neo-liberalism and a belief that ‘Another World is Possible.’

At the same time, many people and communities, moved by desperation, practicality, values, or vision, have become involved in concrete economic alternatives. A sample includes:

• Cooperatives, which are businesses that are owned and run by the workers, consumers or members, are seeing new life. According to the International Cooperative Alliance, co-operatives provide over 100 million jobs around the world– 20% more than multinational enterprises.
• Co-housing promotes a sense of community involvement and responsibility. Housing is private, but there are communal spaces and buildings, including for example, a common dining area, kitchen, childcare space, meeting rooms, and recreation space. Real estate speculation on the housing is prohibited and land is held in common.
• Local currency, in which people and businesses use locally printed money, aims to stimulate and support the local economy by keeping money circulating in the local economy rather than ‘leaking’ outside.
• Community supported agriculture supports local farmers by creating dependable demand for their produce. People pay for a seasonal or yearly subscription, which entitles them to a share of whatever is produced. In the U.S., 25,000 people participate in more than 500 CSA projects across the country, while in Japan, where it has been around since the 1960s, 5,000,000 families participate in CSA.
• Participatory budgeting serves to democratize the process of governmental budgeting by giving local residents an official say in where public money should go. The most prominent example of Participatory Budgeting has been in Porto Alegre, Brazil where communities have been involved in city budgeting since 1989. The model has spread to cities in Canada, India, Ireland, Uganda and South Africa.
• The squatters movement works to take over abandoned or unused land or structures and then secure permanent rights to the property; improve the quality of housing, sanitation, and access to clean water; and empower the poor to come up with their own solutions. Given that nearly half the population of cities in Asia, Africa and Latin America are squatters living in illegal settlements, the challenge and need for this work is very great.

Do these examples offer a serious challenge to neo-liberal capitalism? The potential is there, but particularly in the U.S., this potential will remain unrealized unless there is greater coherency among the various strands and a connection with the larger social movements. Otherwise these practices run the risk of remaining worthy but isolated endeavors, struggling for their individual survival, and cloaked in invisibility.

Shedding the cloak of invisibility is an important step in the development of greater coherency as well as legitimizing the importance of economic alternatives. For example, the European Union (EU) has officially recognized the social economy which includes significant segments of the alternative economy such as:

• Cooperatives: housing, credit unions, coop banks, producer & consumer coops.
• Social enterprises: businesses that put social aims at the core of their operation. There are many forms of social enterprises, including: enterprises that seek to create employment for marginalized populations such as people with disabilities, or community businesses that contribute a percentage of profits to a community fund and include community members on the board.
• Mutuals: non-profits that exist for the benefit of their members, providing services such as insurance, mortgage and savings plans.

The EU has recognized the value and importance of the social economy both as a significant sector of the economy as well as its role in fulfilling social needs. EU governments are required to earmark a percentage of their budgets to promote the social economy.

Ultimately, it will take this kind of policy, financial and institutional support to develop the many inspiring economic alternatives into a viable economic system grounded in economic justice and sustainability. TINA is dead. The task now is to realize the transformative potential of the many alternatives that are already a reality.

Sources:
- International Cooperative Alliance, Statistics, http://www.coop.org/coop/statistics.html
- Co-housing, http://www.cohousing.org/default.aspx
- “The Potential of Local Currency,” Susan Meeker-Lowry, Z Magazine, July/Aug 1995, http://www.zmag.org/ZMag/articles/july95lowry.htm
- Community Supported Agriculture, http://www.nal.usda.gov/afsic/csa/
- Participatory budgeting resources, http://www.participatorybudgeting.org/resources.htm
- Squatters movement, http://www.sdinet.org/home.htm
- EU Social Economy, http://ec.europa.eu/enterprise/entrepreneurship/coop/index.htm

© 2006 Center for Popular Economics
Econ-Atrocities are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.

By Thomas Masterson, CPE Staff Economist

The Basic Income Guarantee (BIG) is just what it sounds like: a guaranteed basic level of income. Most proposals suggest that it be distributed to every adult citizen without regard to income or wealth. BIG would replace all of the social programs currently in place that attempt to reduce or eliminate poverty, such as welfare, unemployment insurance, and Medicaid, with a monthly payment sufficient to lift an individual out of poverty.

Interestingly, this proposal is drawing support from the right as well as the left (leftists have long supported versions of this proposal). Even Charles Murray (think “The Bell Curve”) likes it: he has written a book about it in which he seems to say that he thought it up, calling it “The Plan.” By eliminating the need to monitor for fraud and abuse of the system, BIG would actually be cheaper than our current system of multiple benefits and eligibility criteria. BIG would also get rid of the disincentive to work built into the welfare system–often working for pay leads to a decrease in benefits, making work a less attractive option. And, by allowing people to decide on their own what to use the money for (though Murray’s plan calls for $3,000 of his $10,000 annual grant to be spent for health insurance), BIG would increase efficiency. Lefties like it because it frees people from dependence on employers and gives them more bargaining power to demand good working conditions and better pay.

By Jonathan Elsberg, CPE Staff Economist

The voters of South Dakota have recently upheld one of the least known but most progressive set of laws in the land. Along with eight other Midwestern states, South Dakota restricts corporations’ ability to own or operate farms. In the case of South Dakota, this restriction was first legislated in 1974 (Title 47, Chapter 9A) and beefed up in 1998 through an amendment to the State Constitution (Article XVII, Sections 21-24), which boldly states that “No corporation or syndicate may acquire, or otherwise obtain an interest, whether legal, beneficial, or otherwise, in any real estate used for farming in this state, or engage in farming.”

Corporate interests attempted to water-down these restrictions with their proposed Amendment A. However, Amendment A was defeated in the June primary elections, meaning that South Dakota’s restrictions on corporate farming will remain intact for the time being.

This is good news for the family farmers of South Dakota, and the rural communities to which they belong. The number of family farms in the state has held steady since 1999, while in the rest of the country family farm have been in the decline. Representatives from the Stand Firm! Coalition (which opposed Amendment A) attribute at least part of this family farm maintenance to the restrictions on corporations. The principle of defending family farming from corporations was recognized by the state’s legislature when it past the 1974 Family Farm Act, which stated that “The Legislature of the State of South Dakota recognizes the importance of the family farm to the economic and moral stability of the state, and the Legislature recognizes that the existence of the family farm is threatened by conglomerates…and is jeopardized by downward vertical integration in farming.”

This idea is not merely theoretical or anecdotal. Researchers Dr. Rick Welsh and Dr. Thomas Lyson recently analyzed Census of Agriculture and Economic Census data to see if corporate farming restrictions have beneficial effects on the states that use them. They found that, in general, states with such laws suffered lower poverty and unemployment and had more farms realizing cash gains in their agriculture-based counties. Additionally, they found that the stronger the restrictions on corporate farming, the better (in general) the outcome for the communities involved.

Unfortunately, South Dakota’s anti-corporate farming laws are not in the free and clear just yet. Recently, U.S. District Judge Charles Kornmann ruled that the existing anti-corporate amendment to the state’s Constitution does not meet the requirements of the United States Constitution’s commerce clause. This ruling is being appealed to the U.S. Circuit Court, but if upheld, it will require South Dakotans to reformulate their laws in a way that protects family farms - as they have repeatedly shown they wish to do - while passing constitutional muster.

It should be noted that Judge Kornmann did not take issue with the right of South Dakota to restrict corporate agriculture. While ruling that that the anti-corporate statutes generally serve “a legitimate [i.e., constitutional] local purpose,” his judgment did find flaw with right-of-way access for utilities and with compliance with the Federal Americans with Disabilities Act. However, South Dakota law states that if any part of a statute is found unconstitutional, the entire statute is nullified. It was into this legal limbo that pro-corporate interests injected Amendment A. If needed, the existing anti-corporate statutes can easily be modified so that they comply with Judge Kornmann’s findings and also continue to protect family farmers and their communities.

Sources and additional information:

Center for Rural Affairs, “Amendment A Fails in South Dakota,” in the July 2002 issue of the CFRA Newsletter.

For additional information on corporate farming issues, see the CFRA’s “Corporate Farming and Market Access” page: www.cfra.org/issues/corporate.htm.

Fritz Herrick, “People victorious over agribusiness in South Dakota,” Madison, Wisconsin Independent Media Center, 6 June 2002 http://madison.indymedia.org:8081/front.php3?article_id=5312.

Argus (South Dakota) Leader editorial, “Amendment A defeat a step backward for S.D.,” 5 July 2002: www.southdakotaelections.com/Story.cfm?Type=Editorials&ID=291 .

Dr. Rick Welsh and Dr. Thomas A. Lyson’s article, “Anti-Corporate Farming Laws, the ‘Goldschmidt Hypothesis’ and Rural Community Welfare,” is available from the website of Nebraska’s “Friends of the Constitution” at www.i300.org/what’s_new.htm#anti_corp.

The full text of Title 47, Chapter 9A of the South Dakota Codified Statues can be read at http://legis.state.sd.us/statutes/Index.cfm?FuseAction=DisplayStatute&FindType=Statute&txtStatute=47-9A

The full text of Article XVII, Sections 21-24 of the South Dakota Constitution can be read at http://legis.state.sd.us/statutes/Index.cfm?FuseAction=DisplayStatute&FindType=Statute&txtStatute=0N-17

The full text of the proposed and rejected Amendment A can be read at www.state.sd.us/sos/2002/2002bqprimary.htm.

If you have access to the Lexis-Nexis online database, you can read Judge Kornmann’s decision. Click “Legal Research” –> “Federal Case Law” –> enter “south dakota farm bureau” into the Keyword box and change the Court drop-list to “District Courts,” then click the “Search” button. Judge Kornmann’s ruling is the first case returned: “S.D. Farm Bureau v. Hazeltine,” filed 17 May 2002.

(c) 2002 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.