Category - Economic Democracy

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

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

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 second proposal. I invite commentary and analysis.

2. Raise the Minimum Wage – I think it would be a good idea to raise the minimum wage to $10.00 per hour. It is currently $5.85 per hour.($8.00 in Massachusetts.) I would also shorten the workweek to 35 hours to give people more free time for recreation and education.

Raising the minimum wage would put a lot more money into circulation and would stimulate the economy. Most of the people who would benefit from this new policy would spend their money on goods and services that they presently do without. For all of these people, it would mean more money above the subsistence wage that they are presently earning. These people are the working poor. They are for the most part the invisible poor. Visible or not they are a reality in the current American economy.
The economist Holly Sklar is a widely published op-ed columnist and author. She is co-author of “Raise The Floor: Wages and Policies That Work For All Of Us,” which Barbara Ehrenreich calls, “A commanding work and powerful tool for the living wage movement.” She is a contributor to numerous high school and college text anthologies and is a frequent guest on talk radio.
She tells us,

“The number of Americans in poverty is a group so large it would take the combined populations of Louisiana, Mississippi, Alabama and Texas, plus Arkansas to match it. That’s according to the Census Bureau’s latest count of 37 million people below the poverty line.
Millions more Americans can’t afford adequate health care, housing, child care, food, transportation and other basic expenses above the official poverty thresholds, which are set too low. The poverty threshold for a single person under age 65 was just $9,827 in 2004. For a two-adult, two-child family, it was just $19,157.
By contrast, the Economic Policy Institute’s Basic Family Budget Calculator says the national median basic needs budget (including taxes and tax credits) for a two-parent, two-child family was $39,984 in 2004. It was $38,136 in New Orleans and $33,636 in Biloxi, Mississippi.
America is becoming a downwardly mobile society instead of an upwardly mobile society. Median household income fell for the fifth year in a row to $44,389 in 2004 — down from $46,129 in 1999, adjusting for inflation.”

Under my proposal, if the principal wage-earner was paid $10.00 an hour for a 35 hour work week, their family income would be $17,500.00. This would not eliminate poverty, but would put a floor under it. With family assistance for the working poor, in the form of tax credits or income credits, we could effectively insure that no family lived in poverty.
A higher minimum wage also helps protect the wages of workers in the higher brackets. It also promotes a greater sense of community, in that it eliminates the resentment that gross inequality in income and wealth promotes. This resentment contributes to criminal and anti-social activity.
The minimum wage would have to be indexed to inflation to protect it. To promote skilled labor, a minimum wage policy would have to include free education. By making education available to all, with free tuition, room and board, etc. we would remove a number of people from the work force and at the same time invest in future job growth for highly skilled graduates. Over time these skilled workers would pay back the system by paying their just share of taxation.
The current system will not move toward this direction unless we build a social and political movement that works to bring it into being. The current economic elite is aware of how fragile their social position is. That is why they spend so much money for lobbyists and political bribes (aka “contributions) to keep the current unjust system in place. A disciplined political organization of working people and their allies could easily overcome this. It really is just a matter of, “keeping your eyes on the prize,” as they used to say in the civil rights movement.
One thing is certain, if we do not try to build a progressive movement, then we will not have a progressive movement. If we try, we might fail. But a rational and realistic effort, very probably would succeed.
The alternative is the misery and injustice that we see around us today. To maintain that outcome, we need to do nothing.

A Modest Proposal: Ten Steps to a Democratic Economy

by John J. Fitzgerald

I propose Ten Steps to a Democratic Economy. Starting with this column, I would like to explain and defend my proposals. I invite commentary and analysis.

1. The Right to a Job – Every person should be guaranteed a job. If the private sector cannot help them, then a public sector job should be available. This could include working on a mass transit system to replace the interstate highway system. Maintenance of public parks, fully staffing public schools and public hospitals could be other areas of employment. We should also publicly fund an alternative energy policy to end our dependence on foreign oil. The model to follow here would be Sweden.
- - - - -
Every person who is not significantly handicapped should be able to work for a living. I define a decent job as one that pays at least $10.00 per hour, for a 7 hour day, 5 days a week, with decent working conditions, health care and Social Security coverage. If the current market can not supply those jobs, then the government should. This program would be similar to what Franklin Roosevelt’s New Deal meant in the 1930’s, except it would not wait for an economic depression to get it started. I would like to see this expand and contract as the situation required. For example, maintenance of public parks and recreation areas would be an ongoing effort. Maintenance of public buildings, schools and hospitals which are historically neglected because of budget concerns would be fully funded, thereby creating a supply job market that will always be present to match demand. Creating a mass transit system would require a huge workforce just as the interstate highway system of the 1950’s and 1960’s did. Converting from an automobile based transportation system would ease global warming and end our dependence on oil from the Middle East. Converting from petroleum and natural gas to wind power, solar and increased hydro would also require new construction and manufacturing jobs.
Shortening the work week to 35 hours will also create more jobs. It would increase leisure time and thus would promote jobs in that sector. We would also have to make over-time illegal. One should be able to survive and flourish on the income generated by one job. The goal is to create more jobs. The whole idea is to get away from a profit making system to an economy that puts people first. Another name for this is democratic socialism.
To attain this goal we need to start discussing it as a goal. Some people are already close to doing this. This past month, [December, 2006] AFL-CIO President John Sweeney outlined his federation’s vision for stopping what he called, “the senseless slaughter” of good American jobs.
In a speech to the National Press Club, Sweeney described how America’s workers have struggled over the past 25 years as “a perfect storm of outsourcing, off shoring, tax evasion, layoffs, work speedups, wage cuts, health care cuts, pension cuts, shifting risks, bashing unions and short-changing communities”
has swept across the economic landscape.
Sweeney talked about some of the immediate actions Congress and President George W. Bush can take to stop the erosion of good jobs in
America, including:
• Guaranteeing America’s workers the freedom to form unions and
bargain for a better life.
• Giving workers the same protections as corporate interests in
our trade policy.
• Making it illegal for companies to buy or sell products made
in sweatshop conditions.
• Repealing tax laws that encourage companies to send jobs
overseas.
• Passing universal health care coverage.
• Telling corporate America to rejoin our national community by
investing more in workers and less in their executives.
• Doubling the money we spend on education and job training.
• Raising the minimum wage.

Sweeney is making proposals within the context of a corporate-capitalist-labor union system. I think we need to move beyond this approach and for that we will need to get involved with political parties and political campaigns. A good start might be found in a progressive movement within the Democratic Party.

A friend just sent this to me. It’s an English folk poem, circa 1764, so he says.

They hang the man and flog the woman
That steal the goose from off the common,
But let the greater villain loose
That steals the common from the goose.

The Law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine.

The poor and wretched don’t escape
If they conspire the law to break;
This must be so but they endure
Those who conspire to make the law.

The law locks up the man or woman
Who steals the goose from off the common’
And geese will still a common lack
Till they go and steal it back.

In last month’s New York Review of Books, Freeman Dyson leads off with an essay on “Our Biotech Future“. He predicts that biotechnology will, in this new century, become relatively cheap and widespread in a similar way to the cheapening and spreading of physics-based and computer technology over the past several decades.

It has become part of the accepted wisdom to say that the twentieth century was the century of physics and the twenty-first century will be the century of biology. Two facts about the coming century are agreed on by almost everyone. Biology is now bigger than physics, as measured by the size of budgets, by the size of the workforce, or by the output of major discoveries; and biology is likely to remain the biggest part of science through the twenty-first century. Biology is also more important than physics, as measured by its economic consequences, by its ethical implications, or by its effects on human welfare.

[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.

As summer rolls around, there’s been a spike in interest in the American vacation deficit.

David Moberg, writing in the excellent progressive bi-weekly In These Times, surveys the field in “What Vacation Days?” Since we’re interested in policy, here’s the punch line,

Why do workers in other rich countries have more paid time off? Mainly because laws demand employers provide it. The European Union requires its members to set a minimum standard of four weeks paid vacation (covering part-time workers as well). Finland and France require six weeks paid vacation, plus additional paid holidays. Most countries require workers to take the time off and employers to give them vacation at convenient times. Some governments even require employers to pay bonuses so workers can afford to do more than sit at home on vacation. On top of that, unions in Europe and other rich industrialized countries—whose contracts cover up to 90 percent of the workforce—typically negotiate additional time off. Meanwhile, the standard workweek is slightly shorter in many European countries, and workers retire earlier with better public pensions.

For the heavy quantitative lifting, Moberg cites a survey of comparative vacation legislation, “No-Vacation Nation” recently published by CEPR (May 2007). The summary is here and the full report is here.

This report reviewed international vacation and holiday laws and found that the United States is the only advanced economy that does not guarantee its workers any paid vacation or holidays. As a result, 1 in 4 U.S. workers do not receive any paid vacation or paid holidays. The lack of paid vacation and paid holidays in the U.S. is particularly acute for lower-wage and part-time workers, and for employees of small businesses.

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

The CBC reports

Alberta carbon dioxide pipeline could cost $5B
Last Updated: Thursday, March 15, 2007 | 12:19 PM MT
CBC News

A plan to pipe carbon dioxide from Alberta’s oilsands and store it underground could cost as much as $5 billion, says Alberta’s environment minister.

The province wants to capture carbon dioxide and send it through a 400-kilometre pipeline. Intergovernmental Affairs Minister Guy Boutilier said earlier this month that the pipeline would cost $1.5 billion and the carbon dioxide would be used to help get more oil out of low-producing wells.

He was pushing for the federal government and industry to split the cost of the project.

But Environment Minister Rob Renner suggested Wednesday it could cost much more.

“The number of $1.5 billion has been floated,” Renner said. “I suspect that the number — all costs included — will be significantly higher than that.

“I’ve seen estimates as high as $5 billion by the time it has taken into account the cost to industry to implement the [carbon] capture facilities.”

[cont’d]

Wow. Just a thought here, and ignoring that the carbon dioxide would be sequestered (for how long and how securely?) in an effort to bring yet more fossil fuel to the surface so it can be burned and converted to carbon dioxide, most of which won’t be captured but will add to the greenhouse mix; so my thought is, just how much energy conservation technology could be implemented with $5 billion (even if it is Canadian dollars), or even the lower estimate of $1.5 billion? I’d definitely bet a dollar that it’d be enough to cancel out way more CO2 emissions than the pipeline would help sequester (and I repeat, for how long, and how securely?).

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.