Copenhagen and cooperatives

The much anticipated climate change summit has mostly failed. There is still some overtime haggling over how to spin the failure, but it is clear that there won’t be a substantive and binding agreement that rises to the severity of the problem we really do face.

The breakdown was apparently due to revolt against an undemocratic and manipulative process that is business-as-usual in international decision-making (like the IMF, WTO, etc). Indeed, the atmosphere inside and outside the convention center mirrors the WTO rebellion of exactly a decade ago. Through formal and informal means, the “haves” tried to control the conversation and effectively dictate outcomes to the “have nots.”  The result has been an embarrassing train wreck of a summit, in which heads of state were kept meeting until 2am before handing things off to their underlings for a further five hours of misery.

The Brazilian president said it well: “To submit heads of state to certain kinds of discussion like the one we had last night – I haven’t seen such a meeting in a long time.”

Now nobody knows what is happening, but they are planning another all-nighter before visas start expiring on Saturday. Some leaders are already leaving.

Now what?

Not surprisingly, I believe that cooperatives are a key part of how the world should respond to our leaders’ collective failure. Copenhagen’s collapse is due to a fundamental flaw in our economic system: Growth is considered normal and contraction is considered bad. But contraction is as much a part of nature as expansion, and sooner or later we’ll be reminded that we are still subject to nature’s rules. What goes up must come down, and co-ops are the best way I know to humanely negotiate an economic downshift.

I can totally understand why nobody wants to make do with less than their parents’ generation, but at some point that becomes inevitable. I just spent a weekend reading “The End of Oil” by Paul Roberts. It was published in 2004 so it is full of price spike warnings that are now quaint: $2 gallons! $40 barrels! For months at a time! (My goodness, what a crackpot predicting such dire and outlandish…oh, wait, it’s already worse than that.)

More recently, the International Energy Agency predicted a global peak in 2020. As The Economist notes,

Coming from the band of geologists and former oil-industry hands who believe that the world is facing an imminent shortage of oil, this would be unremarkable. But coming from the IEA, the source of closely watched annual predictions about world energy markets, it is a new and striking claim.

Roberts acknowledges what The Economist points out, that nobody really knows when global oil and gas production will peak and begin their irreversible decline. But whenever they do, we’d better be ready or it will make Copenhagen look like a PTA meeting. And since most producers (both nations and corporations) have been consistently failing to replace lost production for years now, it seems we should assume that the peak oil pessimists are right. So we all need to work on our own personal action plans (and I don’t mean guns, gold and beef jerky).

Another book that I’ve heard is useful but haven’t read yet is “$20 per Gallon” by Christopher Steiner – it takes peak oil seriously, but also looks at some of the positive changes that it might bring. On the really pessimistic side of things is “Long Emergency” by James Howard Kunstler (who also has quite a blog). Take your pick, but if you haven’t yet read about peak oil, you’ve got your homework.

Roberts analyzes the strengths and weaknesses of replacement technologies like solar, wind, and hydrogen. He repeatedly raises an issue that is will be central in the wake of the Copenhagen fiasco: The introduction and spread of essential technologies will depend largely on when they become economically competitive, and we’d better hope that happens while we still have enough petroleum to make the transition.

Unfortunately, capitalist business need profit, and a recurring theme in Roberts’ analysis is that replacement fuels are all moving toward profitability with excruciating slowness while peak oil approaches with alarming speed. And everything I’ve read about peak oil suggests that whenever it happens, that will be too late to start figuring out what to do; changing fuels is going to be the most difficult and complicated task ever undertaken by humanity, so if we want to put new wings on our jumbo jet in mid-fight, we should start before we run out of fuel.

The key contribution that co-ops can make is that they can operate at the break-even point rather than needing enough profit to attract outside investors. What needs to happen now is some sort of massive consumer co-op of people who are committed to buying new technologies as soon as they can possibly be created. These would need to be teamed up with worker co-ops of employees at, for example, the many auto plants that are now shutting down.

It might not be possible to start this with an automotive product, and if Kunstler is right even “green” cars are a distraction from what really needs to happen. In any case we should look for intermediate business models to keep these suppliers running until a new cooperative car can be designed and launched.

For example, a company that now makes car windows could produce a different sort of curved and tinted glass – parabolic mirrors for solar collection. Factories producing pumps, frames, and motors could be adapted to the other components needed to create a commercial version of smallish but powerful solar arrays, to be deployed as as backup power (or water heating) in small rural communities or apartment buildings. Eventually these firms could expand back into the auto industry, perhaps creating a hydrogen car before it is profitable. The co-op solar arrays could also be used to produce hydrogen at a locally-based network of fueling stations, which could be tied to car-sharing cooperatives, along the lines of ZipCar (which is not a co-op and has failed to spread beyond a handful of profitable locations). The cars could also be designed for small-scale sharing, with features like multi-user odometers (to help divvy up costs by use) and snap-in trunk dividers.

This is an extraordinarily complex undertaking that I’m suggesting, and maybe even impossible. But at this point I’m not sure what other options we have. The old ways of thinking are not going to get us out of the mess that they created. And if we are creating a whole new sustainable energy economy, it might as well be based on an economic structure that is sustainable. If we keep concentrating wealth, it will make petroleum even less affordable for most people while pushing alternative fuels further out of reach.

Cooperation is fast becoming a matter of survival. Our governments can’t do it, so it’s up to us now.

Permanently higher unemployment (!)

I read a lot of economic news, and it’s not every day I come across an article as startling and unnerving as this report that the “natural” rate of unemployment may have increased from 5% to 7%. That’s the word from “Nobel Prize winner Edmund Phelps and Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian.” I don’t know if they are right, but it seems like they could be. They certainly know a thing or two about economics.

This topic always gets me riled up because deep down I don’t believe that there’s anything natural about a system that actively prevents more than one in 20 people from working (and then blames people who need public assistance for high taxes). I’m not really qualified to prove this, but it seems pretty logical that the real problem is that a large stock of unemployed people are needed to keep wages unnaturally low. In a natural system, markets would be allowed to function without the Federal Reserve’s active meddling to keep people out of work so their capitalist buddies can have lower labor expenses.

Of course, unemployment has not always been subject to this supposedly natural minimum. Here’s an interesting chart that overlays the unemployment rate with a variety of political and economic events. It doesn’t really look like there is a correlation between minimum wage increases and unemployment, and umeployment used to be well below five percent. Decide for yourself.

If it is actually true that the “natural” rate of unemployment is a moving target to be raised as high as needed to keep the dividends flowing, we’ve got even bigger problems than I suspected. In any case, there is a fundamental problem here: capitalism sees labor (people) as servants to capital (money).

It seems like there could be an analogy to a car that has had a (very small) hole punched in its engine. Maybe the car can still run, but it needs more fuel to get the same amount of power. Alas, that means more heat in the system, which potentially puts more stress on the various pipes and potentially enlarges the hole.

What happens next time there is a financial crisis? Does the “natural” rate jump to ten percent? (or maybe only nine?) Or do we have a real blowout and wind up on the side of the road?

Of course it is not certain that the definition of “full employment” has really changed by two percent. The article presents this as a minority view, and a 40% jump (5% x 1.40 = 7%) in anything would be really dramatic. But even if the change is only a fraction of what Phelps and el-Erian describe (say, an increase to 5.2%), that is still hundreds of thousands of people who are going to be excluded from working and trying to get money flowing in their communities.

What would happen if we looked at investors as the inflationary force, rather than blaming people who are actually making and doing things for their income?

We might wind up with a system like the Mondragon cooperatives in the Basque Country of Spain, which are owned and democratically controlled by their workers. These co-ops managed to get through a long and brutal recession during the ’80s and ’90s without laying off members. A recent article even claims that the local unemployment rate was as low as one percent while Spain’s rate spiked to 27 percent. (if anyone knows the source of this figure, please say so – I’m a bit suspicious of its accuracy).

Even if this number is only referring to the valley where the co-ops started – and now comprise 60 percent of the workforce – it’s still worth exploring. It might not be possible to achieve this level of employment throughout the economy, but that doesn’t make this any less desirable as a local goal.

There is already a lot of interest in creating sustainable local economies, and it seems like “sustainable” should include the opportunity for as many people to work as possible, as well as loss of wealth to outsiders who already have surplus wealth to invest. Any time a system has a leak that isn’t somehow compensated, it is by definition unsustainable

My intent is not to beat up on folks who are just trying to retire and see the stock market as their best option. That’s part of the myth of investment -they might be the next Warren Buffett or George Soros, but almost certainly will not. Those micro-investors have no control over the firms in which they invest, and can only hope that decisions are made to reflect their interests. Instead, I’m talking about those like Buffett and Soros who have real control, and who create their own economic weather. They might be brilliant and friendly and philanthropic and good, but they still have way too much money.

I’m also not saying that there is no room for passive investors to make a buck here and there. The problem is that investors have apparently  overrun the system, and are exerting an inflationary pressure that is keeping millions of people out of work. This wealth should be distributed based on physical contribution to production by people who are really invested in the firm. We should be talking about a “natural” rate of investment, above which an overabundance of hungry investors drive inflation.

As I said, I can’t prove this is so, but it seems like a reasonable explanation for what is happening. We had a basically jobless recovery since the last recession in 2001, and nobody seems to be seriously predicting we will approach full employment anytime soon. Unless we find ways to dramatically reshape ownership, we’re going to see a lot less good work for the foreseeable future.

RIP John Logue

I’ve just gotten news that John Logue, longtime director of the Ohio Employee Ownership Center, has passed on. He was a shining star of the cooperative movement, and laid the groundwork for the groundbreaking Evergreen Cooperatives of Cleveland. I am glad that I got a chance to meet him while he was here, most recently on my trip to the Rust Belt. Thanks for all your work, John.

Wendy Patton, a former student, has written a fine tribute, which I’ll reproduce here:

Tribute to A Great Ohioan:

Dr. John Logue of Kent State University

The epicenter of global economic change in America has been in the Midwest. To those of us with roots in Ohio, this economic cataclysm has been the challenge of our time in personal and public ways.

Great people are attracted to great challenges.  Dr. John Logue of Kent State University is a shining example of this kind of greatness.  Arriving in Kent in the mid-seventies from Texas -  by way of Princeton and Europe -  Dr. Logue’s credentials, charm, optimism and moxie could have taken him anywhere to teach and work.  He chose northeastern Ohio.  His life’s work has addressed our challenges. 

John was diagnosed with a particularly virulent cancer on December 6 and was gone by December 9.  He touched so many of us in a personal way that the e-mail list serves cannot possibly reach everyone.   It is a measure of his contribution to the community that it takes an editorial to reach all who need to know.

Long-time Director of the Ohio Employee Ownership Center and professor of political science, John burned the midnight oil with workers trying to buy their closing plant.  He worked with the same intensity, the same mix of pressure, charm, counsel and insight, as he taught their sons and daughters at Kent State University. He made his students stretch:  he taught us to travel, to interview, to observe and to participate.  He made us write for publication and he got our work published.  He took us with him into the plant; he forced us to be equal, to speak, to testify.  We became journalists, labor leaders, civil servants, political scientists, marketing directors, business owners.  We were better for having studied with him. 

He taught the parents of his students on the shop floors of industrial plants.  His life’s work with employee ownership touched Ohioans affected by plant closure from communities across the state. He made them stretch – to explore options, to learn business strategies and finance, to lead, to cooperate, to facilitate.  His work was beyond the social safety net.  He worked with displaced workers as investors.  They became investors.   From the closure of the steel mills through the departure of DHL from Wilmington, for the past 25 years the reaction to economic disaster in Ohio has been:  “Call John Logue!” In the face of difficulty, he gave us a sensible course of action.   He is uniquely optimistic, uniquely American – but his optimism is born of faith in us, faith in our ability to stretch and to succeed.

In the last two years, John’s work moved to employee ownership in the community through Cleveland’s new cooperative green venture, the Evergreen Laundry.  He brought the same expectation of high achievement to the workers and investors in the new enterprise.  His vision of a cooperative and egalitarian workplace is the right vision for our future.  Not only has it been embraced by hundreds of Ohio companies and cooperatives and thousands of workers, but major institutions – the United Steelworkers, for example – are moving to a model of economic progress based on employee ownership, worker participation and investment in community.

Great challenges bring hardship and yield progress.  John Logue has provided steady, sure, insightful and lasting progress in our economic storm.  We are grateful for his contribution.

by Wendy Patton,  former student and OEOC colleague, and most importantly, close friend.

 The following information comes courtesy of Dan Bell.

 Part of John’s legacy is the Ohio Employee Ownership Center (OEOC) [www.oeockent.org] is an economic development program funded in part by the State of Ohio Department of Development.  Since 1987 we have worked with roughly 485 companies and employee groups employing 93,000 workers; of those, 71 firms employing 14,000 workers have implemented partial or complete employee ownership.  We know from analysis of IRS form 5500 filings that these 71 companies have created about $300 million in equity for their employee owners.  We also serve a network of 70 employee-owned companies on an ongoing basis with training on ownership and participation.  These companies employ 15,000, mostly in northeastern Ohio, and generate more than $2.4 billion in sales.

A message board has been set up for those who would like to share their thoughts or stories about John, or read what others have to say.  

http://johnlogue.blogspot.com/

Two calls for jobs

The job market is a little less dismal today. The jobless rate apparently decreased to 10 percent. That is a modest step forward, although I’m not aware of anyone predicting a quick return to the mis-named “full employment” (which is actually the “natural” rate of unemployment, somewhere around five percent). Below this rate, workers start asking for more and inflation kicks in. High unemployment creates downward pressure on wages (an expense to be minimized) and is therefore good for business. Keep in mind that the stock market has been doing just fine while six unemployed persons chase each available job.

The Wall Street Journal said it best (perhaps sarcastically): “Only 11,000 lost jobs! Praise heaven.” Indeed the editorial blatantly concludes that we should avoid any government jobs program and let the market do its magical thing.

Whatever the case, a drop in unemployment is good news for the average person. So how do we get more of it? I want to take a look at a couple of approaches (not counting the market idea, which is pretty self-explanatory). First, using government policy to boost the job market. Second, the grassroots cooperative job creation that tends to happen on its own when people get hungry enough.

This weekend, Nobel laureate economist Paul Krugman called for an urgent jobs-creation program. He notes that the Fed is forecasting unemployment to remain above eight percent until sometime in 2012, and calls for an urgent government program based on creation of public-sector jobs and incentives for hiring.

Happily for Krugman, this week President Obama hosted a jobs summit. He divided participants into six topical working groups, including “small business” and “strengthening Main Street.” Participants were intended to “span the spectrum” to provide “fresh perspectives and new ideas.” I haven’t found any sign that co-ops were at the table, or that the concept was even discussed. If anyone has seen this (or a participant list) please let us know with a comment. I really hope I’m wrong here, but it seems like they left out a major perspective.

And that brings me to the other approach, which requires a little trip back in history. During the depths of the Great Depression, hundreds of thousands of people formed a wide variety of mutual-aid systems. These often used barter, and were often organized along cooperative lines. This was a continuation from previous economic crises, as John Curl has chronicled in his mind-blowing book For All the People. (Read this; you’ll never look at our supposedly individualist history and culture in the same way again.)

Oddly, this laid the foundation for a different approach to government intervention. It was never fully tried, and parts of it might be worth examining again.

Upton Sinclair latched onto mutual aid and created a radical movement for the 1934 California gubernatorial election. It was called EPIC – “End Poverty in California.” The detailed platform is available, ironically at the Social Security web site. (with the note that it “may not reflect current policies or procedures” Really?) A key part of the plan was for the government to build on the great successes of the mutual aid cooperatives. The state would rent (not seize) unused factories and turn them over to worker cooperatives and “production for use” rather than for profit and speculation. EPIC also planned huge “land colonies” that would get people back to growing their own food.

Essentially it would be a massive publicly-supported barter system, modeled after a smaller plan that was already underway in Ohio. Sinclair had apparently done the math, and it would have been cheaper than continuing to provide people with public assistance. And more importantly, it might have gotten around the problem we once again face: creating new jobs is not profitable for capitalist business. Of course, we should wonder what happened to the “Ohio Plan.”

EPIC is really wild stuff and I’m really not sure what I think of it. However, the idea apparently had legs and did fairly well on election day. First, Sinclair won the Democratic primary with more votes than the other six candidates combined. Then, despite intense red-scare tactics, no support from his party, and Roosevelt’s last-minute decision not to endorse the plan as he said he would, Sinclair still managed to take more than a third of the vote, while keeping the incumbent from winning a majority.

What would have happened if EPIC had been enacted? One thing is certain, California – and probably the nation – would look dramatically different today.

Systemic joblessness is a critical flaw of capitalism. I’m not aware of anyone who has even theorized a way out of it. But I’ve got a growing suspicion that if we can reduce the need to keep investors fat and happy, there will be less of a need to keep wages low and therefore less of a need for unemployment. We might not be able to eliminate joblessness or recessions, but hopefully we can minimize their frequency and intensity.

I don’t think that “production for use” should originate from the government. But as long as the government is messing around with all aspects of the economy, it seems like this is something worth trying. A little funding for a pilot project could go a long way.

Regardless of the government’s involvement, cooperatives seem to be catching on. Nancy Folbre at the NY Times Economix blog seems to be all riled up about co-ops. The model is now spreading like wildfire throughout the Midwest.

Even if the economy perks right up and gets back to where only five percent of people are systemically unemployed, we need something new. There are no quick fixes, no magic bullets, and no guarantees that we’ll be able to build a cooperative economy to supplement or replace the capitalist one. But if we really want to try “new ideas” we at least owe ourselves a read of the EPIC Plan and a serious consideration of mutalist approaches.

Health co-ops: not dead yet!

Last summer I got sucked into a raging blog debate on whether healthcare cooperatives are a suitable solution to our national health care crisis. It was a pretty stressful period and I must admit that I was relieved when the whole thing subsided: As the various Senate bills were mashed together, the public plan apparently came out on top, meaning (I thought) that cooperatives were no longer set to be the focal point of a huge and messy national experiment about how to fix a possibly unfixable problem. Then the various bills were combined into an enormous pile of legislation that no mortal can hope to understand. Meanwhile, I got distracted by travel and lost track of this particular issue.

Just for kicks, this weekend I decided to scan HR 3590, the 2,074-page $848 billion Senate bill that just made it to the floor for debate and (probably) further expansion. I thought maybe there might be some remnant of the co-op plan. There is obviously a lot of other stuff tucked away, so why not co-ops? Sure enough: 13 matches. Still, that’s only about one hit per sixty pages of text. No reason to get excited.

But there, on p. 168, I found Sec. 1322. “FEDERAL PROGRAM TO ASSIST ESTABLISHMENT AND OPERATION OF NONPROFIT, MEMBER-RUN HEALTH INSURANCE ISSUERS.”

A whole section? Curious.

As I started looking deeper, I discovered what appears to be the Finance Committee’s old “CO-OP” plan slapped onto the main bill alongside a public plan. I first thought that this might just be a backup for states that decide to “opt out” of the public plan, but I really don’t think that’s the case here. For starters, check out subsection (b)(2)(A)(iii) (on p. 169), which states that the Secretary shall

ensure that there is sufficient funding to establish at least 1 qualified nonprofit health insurance issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so.

So how much funding are we talking about here?

There are hereby appropriated, out of any funds in the Treasury not otherwise appropriated, $6,000,000,000 to carry out this section. (from p. 179).

Yikes. That’s the same number the Finance Committee was using last summer.

Still, not wanting to get all wound up over nothing, I reasoned that this is just a remnant that was pasted in as part of the usual congressional horse-trading. Even if it survives the Senate debate, it is sure to be eliminated during the process of reconciliation. After all, the House has never seriously been considering this approach. Right?

Right?!?

Just in case, I decided to take a look at HR 3962, the bill already passed by the House of Representatives November 7th.

And I’ll be darned if Sec. 310 isn’t titled “HEALTH INSURANCE COOPERATIVES.”

And it gets right down to business, in Subsec.(a): (pp 212-213)

Not later than 6 months after the date of the enactment of this Act, the Commissioner, in consultation with the Secretary of the Treasury, shall establish a Consumer Operated and Oriented Plan program (in this section referred to as the ‘‘CO–OP program’’) under which the Commissioner may make grants and loans for the establishment and initial operation of not-for-profit, member–run health insurance cooperatives.

So I started looking for a dollar figure, and found that subsec. (b)(7) lays it all right out there:

There is authorized to be appropriated $5,000,000,000 for the period of fiscal years 2010 through 2014 to provide for grants and loans under this subsection.

Sweet baby Elvis!

Not only does the House bill launch the funding in just over ten months from now, but it clearly avoids one of the major complications of the Senate version, which uses a sneaky acronym (Consumer Operated and Oriented Plan) to blur the definition of cooperatives. The House uses the same label for the program, but is very clear that it is talking about cooperatives (in contrast, the Senate incorporates cooperative elements of democratic control and return of profits to members, but avoids true cooperative ownership).

It looks like the House bill is a significant step toward a co-op development plan that is likely to have generally positive results without blurring the definition of cooperatives. I don’t fully understand what this all means, but it seems to mean that cooperatives are back in play.

I’m still skeptical that government should be so deeply involved in co-op development, which is normally a process that tends to succeed when flows from grassroots discernment of a shared need. Don’t get me wrong. I still think that a “CO-OP” plan (however defined) would be less bad than a public plan, which would create another bureaucracy constantly subject to political struggles over abortion and the definition of family, and under constant threat of privatization.

And now that Sen. Lieberman has apparently drawn the line with his opposition to a public plan, just about anything is possible.

Whatever we might think of the “CO-OP” plan, it seems that the cooperative movement needs to start figuring out how we will respond to five or six billion dollars shoved in our general direction. To an extent this will be many local decisions, but if cooperative development is going to generally succeed at solving our healthcare crisis, it must be met by a high degree of coordination so that all the different state-based efforts will be able to learn from and support each other.

Our success will depend on our ability to cooperate.

Something important is happening in Cleveland

Guest blogger!

I recently received an e-mail from Ted Howard, Executive Director of the Democracy Collaborative. This bulletin from Community Wealth is a good overview of what’s going on in Cleveland, so I’ll just reproduce it whole cloth. During my recent encounter with Cleveland and the Ohio Employee Ownership Center, Howard’s name kept coming up as someone who was instrumental in laying the groundwork for this game-changing development in the economic life of one of our poorest cities.

Ted, thanks for your work, for the update, and for the offer to spread what is rapidly becoming known as “the Cleveland Model.” I hope you get lots of offers, and I will be honored to help if you get overloaded.

Dear Colleagues,

“Something important is happening in Cleveland.” That was the theme of the community event that inaugurated the opening of the Evergreen Cooperative Laundry on October 21st – a worker-owned commercial-scale “green” business based in the Glenville neighborhood, one of the most severely disinvested areas in Cleveland.

More than 300 participants – including leaders of the city’s major anchor institutions, business, and government representatives, and community development practitioners and neighborhood residents – heard Mayor Frank Jackson call the laundry, “a model for how we can put our people back to work and rebuild our community.”

The Evergreen Laundry is the first in a network of worker cooperatives that is being launched in the city. Next up: Ohio Cooperative Solar and Green City Growers. For more background on the Evergreen Cooperative Initiative:

• View the 5-minute Evergreen video and meet the worker owners of the Evergreen Cooperative Laundry.
• Read the article that appeared on the front page of the business section of the Cleveland Plain Dealer
• Learn more about the Evergreen Initiative through The Cleveland Foundation’s newest publication.
• Listen to this six-minute radio broadcast by journalist Daniel Denvir.

For the past two years, The Democracy Collaborative has been privileged to work with our partners in Ohio – including The Cleveland Foundation, ShoreBank Enterprise Cleveland, Towards Employment, and the Ohio Employee Ownership Center at Kent State University – to develop and implement a community wealth building strategy. All of us are committed to making the Evergreen Cooperative Initiative a pioneering and innovative model of job creation, wealth building, and sustainability.

We look forward to continuing to update you in the coming months and years. If you would like to explore how the Evergreen strategy might be adapted to your community’s needs, please feel free to be in communication with us.

As always, we have added dozens of new links, articles, reports, and other materials to the site. Look for this symbol *NEW* to find the most recent additions. And don’t forget to view our regularly updated C-W Blog.

More on Mondragon

One of my big personal shortcomings is ambition. Last month, I went to visit the legendary Mondragon cooperatives in the Basque Country (Spain). I planned write eloquent posts on a different important topic every day, so all my readers would have a clear understanding of what is going on there, and what it means for the struggle to find a replacement for our failing capitalist economy.

As it turned out, I don’t even grasp those things myself. I came back with more questions than I had before the trip. Trying to understand Mondragon is like trying to understand Belgium or something; really you can only begin to do it by living there for a year or three.

Don’t get me wrong – I still learned a lot, and still plan to share that as much as possible in future posts here and in other publications. I believe that our prospects of continued civilization on this planet are directly linked to our ability to find new ways of living together, with models like Mondragon playing a key part in our discussion.

It was a disillusioning trip. I don’t mean that as a criticism, and if anything, the Mondragon model seems more real and applicable than ever before. Basques are great people (except for those who aren’t) but they are just people.

One lost illusion is that Mondragon is some sort of utopia that cannot be reproduced. The Basques have certainly faced unusual circumstances, but I no longer believe that they are somehow unique in their ability to cooperate and run ethical businesses. Mondragon may be uniquely Basque, but many of its lessons can be applied everywhere that people identify as members of some sort of community (that is, everywhere).

Mondragon is also imperfect, and those imperfections must not be ignored. On the one hand, the flaws of Mondragon affirm that the Basques are not a magical people whose feats of cooperation can never be matched. On the other hand, if we paint a picture of Mondragon as utopia, sooner or later we’ll find that it is not. More importantly, the world will find that it is not, and may be tempted to dismiss us as the latest batch of idealists willing to overlook the very real flaws of our idols.

Having said all that, I’m making my notes available for those who want lots and lots of detail.

A couple of disclaimers: First, it was an overwhelming flood of information (nearly 10,000 words is my feeble attempt to capture 10 days of input). Second, my handwriting is not the greatest and I’m not the best notetaker in the world. Third, I typed these up roughly a month after I took them, so in some cases I wasn’t able to decipher whatever I wrote. So please do not quote me on any of this (and yes, I know this is the internet). This is for entertainment purposes only, and should not be taken as any sort of reliable factual account of details. Enjoy, but check your own facts.

Capitalism: a movie review

As Capitalism: A Love Story approaches its conclusion, filmmaker Michael Moore makes a pretty bold pronouncement: “Capitalism is evil, and you can’t regulate evil. You have to eradicate it.”

Ooh! Fighting words!

Unfortunately, they’re the sort of  fighting words that are largely bluster, without ever really landing a punch.

This is not to say that Moore doesn’t make some good points about the immorality of capitalism. He interviews several religious leaders (including the bishop of Detroit) who condemn capitalism with varying levels of vigor. He commandeers some footage from an old Jesus movie (starring blue-eyed capitalist Viking Jesus) and humourously re-dubs it so Jesus has a free market ideology and declines to heal someone’s “pre-existing condition.”

Moore also paints a really grim picture of what was going on behind the scenes as last fall’s $700 billion Grand Unification Bailout was being debated, defeated, and rammed through anyway. Moore has members of Congress coming right out and describing said ramming as an effective coup d’etat committed by the dark forces of Goldman Sachs. There was even footage from the House floor calling for fired workers to squat their workplaces (a la Argentina, 2002 and Republic Windows & Doors, 2008).

Best of all, Moore avoided my usual pet peeve for the social critic documentary, which is to overwhelm viewers with negativity and leave us with a sense of hopelessness and despair. (Food Inc. was a prime example of this problem.) Moore actually showed some tangible alternatives to capitalist business: Alvarado Street Bakery and Isthmus Engineering are both democratically organized, worker-owned cooperatives. They represent a real live alternative to capitalism. I would have loved for him to look at more systemic challenges like Mondragon, but I suppose I’ll never be satisfied until I make my own danged movie.

It was hard not to watch the film without a clear sense that something is deeply, seriously, tragically wrong with our economy.  When the president-elect supports workers seizing their workplace, and the Sherriff of Wayne County (Detroit) declares that he’s not going to evict any more foreclosures, it seems obvious that something is very wrong with capitalism.

But what is capitalism?

Moore doesn’t clearly define his foe. I’m not sure how he would define it, since he didn’t really tell us when he had the obvious opportunity. He paints a pretty clear picture of what he thinks are the negative effects of capitalism but stops short of  outlining the cause itself. His apparent interest in worker ownership suggests that he is more inclined toward libertarian forms of socialism.

Alas, he can’t resist the temptation to make fun of people’s very real fears of socialism, flashing pictures of Stalin and Mao. By his use of those models of socialist organizing, Moore reinforced the myth that state socialism is the only alternative to capitalism. His cooperative examples are solitary and function within the market economy only by collaboration with capitalist firms and financial structures. Alvarado and Isthmus are great micro-alternatives, but they are not macro-alternatives.

To build an alternative without  resorting to a command economy, we have to separate out capitalist exploitation from the market mechanism itself. Co-op systems like Mondragon have found ways to work within the market while making a fundamental change in how it is used: Rather than the capitalist model in which capital is sovereign and served by labor, we can create new systems in which capital is a tool used by labor to meet peoples’ needs.

Capitalism is ultimately based on giving power and profit to those who already have capital. That is, wealth tends to attract more wealth. This process continues inevitably until it is either reversed by taxation or reset by revolution. I am personally not attracted to either of those solutions, and think that it would be far better for us to organize our economies based on cooperative principles of one vote per person, and allocation of profit based on use. That would be a natural extension of U.S. democratic values from the political to the economic sphere, and would reduce the need for regulation and active redistribution of wealth by government.

Ultimately, the movie is a lost opportunity. Because Moore didn’t clarify what he meant by capitalism, he appears to attack the very mechanism of the market. That might have been his intent, but his focus on cooperatives suggests otherwise.

Capitalism is a fierce and serious opponent, and it calls to mind a saying that roughly states, “if you strike the king, make sure he doesn’t get up.” In this context, I guess that means Moore needed to have a really clear replacement for capitalism before he tears it down. If we try to reject capitalism without an effective Plan B, we might wind up with a train wreck like state socialism turned out to be.

Moore is a gifted propagandist, but by failing to define what he condemns, he missed a huge opportunity to provide a real alternative. His latest contribution is a good, inspiring movie that preaches to the choir and admittedly got me all riled up. However, it probably won’t seriously challenge many beliefs, and if we are going to seriously challenge capitalism, we need to present an alternative that is realistic and clear.

Make your own jobs

Two Federal Reserve regional presidents have separately offered a grim prognosis  in the wake of last week’s rise in national unemployment to 10.2 percent (over 12 percent in Sacramento). More than six people are chasing every available job. It seems that unemployment is likely to remain high for several years, and is not done rising.

Rather than wait for job creation to become profitable again (which will take a while), we must create our own jobs through development of worker-owned enterprises. One of the beautiful things about  such cooperatives is that they can operate in that grey area between breaking-even and lucrative. They might not be attractive to people who just want to make a buck in the stock market (or venture capital or whatever). But when people need jobs – and we do, badly - worker ownership is attractive enough.

An excellent example of this can be found in the wake of Argentina’s financial collapse (2001-2), which prompted thousands of workers to simply take over their workplaces after the owners walked away. Many of these are still operative, even in cases when the owners decided that they want the place after all. The Take is a fascinating movie depicting the struggle to reopen one factory, and its web site provides a good introduction to this very important movement.

Of course, the trick question in all this is where do unemployed workers get the money needed to invest in their own workplace? It is one thing to occupy an abandoned plant during a full economic collapse, but in “normal” times significant investment is necessary.

In the Basque Country, the Mondragon cooperatives created their own fund by pooling resources. Each worker-owner’s retirement fund was available for additional co-op development. Contrast that to here (and elsewhere in Spain), where most investment is tied up in publicly-traded enterprises that sometimes use that money to move production overseas. In some cases, workers are paying to destroy their own jobs.

An investment fund is a big part of the plan announced in last month’s agreement between the United Steelworkers union and Mondragon Internacional. It is also part of the plan for the Evergreen Cooperatives initiative of Cleveland. And it has long been the plan for the Arizmendi Association of cooperative bakeries in California.

This is a good start, but we need a lot more money to create the jobs needed to get unemployment back down to the “natural” rate of five percent. Organizations like union pension funds would be a great source for this needed capital, and they would also benefit their members by investing in cooperative development.

There seems to be a groundswell of interest in cooperative economics coming from several unions. United Food & Commercial Workers is involved with the Detroit Community Grocery Store Coalition.  The executive board of the Maine AFL-CIO is now discussing a resolution on worker cooperatives from their recent conference. And of course, there are some other intriguing developments popping up that I’m not at liberty to publish on the internet (but stay tuned for a future interview).

Clearly something is going on with unions, and hopefully it will help stop and reverse their long decline in membership and influence. There is a bit of a paradigm shift from fighting with management to appointing it, but we should remember that the Knights of Labor used cooperatives as a key part of their struggle in the late 19th Century.

Even those unions that aren’t ready to commit to their own (Steelworkers-style) co-op development initiative should at least be looking for ways to support this approach, possibly by investing in each other’s cooperatives.

There might be less profit up front, but isn’t that a worthwhile cost for building an economy that works?

Building New Detroit

I’ve finally reached the last stop on my monthlong journey. This afternoon I head to the airport for one last trip back home to Sacramento. On the one hand, I can’t wait to be home. On the other, Something very interesting has begun in Detroit, and I would love to stay and learn more about it. Visiting Detroit is essential to anyone who wants to really understand what is happening to industry and cities in the U.S. It is an extreme case, which casts light on what other cities face if they don’t address the continued concentration of wealth in the hands of investors.

I first visited Detroit in 1994, and was blown away by what seemed like a post-apocalyptic scene; the usual signs of urban decay were everywhere, but on a scale and intensity I’d never seen. In addition to the usual boarded-up buildings and vacant lots, there were deeper signs of collapse. Broad boulevards had very little traffic. Many buildings were standing burned but still open months later; some were partially or completely collapsed. On many blocks there were more vacant lots than houses. In one such area an artist had created the Heidelberg Project, a surreal art installation using scavenged objects – and an attraction to tourists from around the world. Most shocking to me, there were some huge abandoned buildings like the Michigan Central terminal, a 16-story high rise that sits on what was once one of the nation’s major transportation hubs.

Detroit is different now. It feels like the rate of collapse has slowed. There is more vacant land (whole blocks now returning to a forested state), and not as many half-collapsed buildings. Michigan Central is still there, despite the city council’s decision last spring to demolish it and bill the owner. So is Heidelberg, despite two city attempts to bulldoze it. The 38-story Book Tower, one of Detroit’s ten tallest buildings, was abandoned this year. There are a few pockets of near-normalcy, like that around Wayne State University. But even there, the streets and sidewalks are a wreck and the library stairs have mostly been blocked off to lessen the expense of snow removal. You have to spend a while here to see the scope of the depopulation and devastation, but a cheap substitute can be found in online maps, with which you can spend a while roaming around, getting a sense for how much vacant land exists, perhaps using this as a starting point.

More and more, Detroit is summed up by a phrase I’ve heard several times here: “blank canvas.”

In most places, we can still believe that the capitalist economy works, that the recession is over and good times will soon return. But in Detroit, it has quite obviously failed. That failure has prompted more and more people to consider new ideas and launch innovative projects. I was honored to speak last night at the Boggs Center, where I met with a group of people who are interested in figuring out what to do with Detroit now that the global economy no longer wants it.

Here’s a a sampling of projects underway in Detroit, some of which had people in attendance.

Hope District is a grassroots attempt to bring back one of Detroit’s struggling neighborhoods (and I use struggling as a compliment here, as it is a sign of life). They seek to “create jobs and housing for everyone.” They are working on revitalizing and cleaning the urban landscape, making pocket parks with scavenged materials and painting murals everywhere. They have also created Club Technology; this facility includes commercial kitchen, meeting space, a computer lab and other amenities.

Urban farming is huge here, with hundreds of community gardens springing up. Most of these are not part of the cash economy, but grow food to give away in neighborhoods where formal economic activity has essentially ceased. Urban Farming has about 60 gardens going in the city, and dozens more from Los Angeles to New York. The Capuchin’s Earthworks Farm has 21 separate plots in a few square blocks, growing food for their soup kitchen. The Detroit Black Community Food Security Network has created a 2-acre farm called D-Town on what was once a city nursery in a public park.

Another project has potentially huge impact seeks to bring groceries back to the city. From what I hear, there are no longer ANY major grocery chains in the city of Detroit, and most neighborhoods have only limited access to food. Dollar stores and convenience stores are primary suppliers to many Detroiters. So along comes a model that I’ve been hoping would develop for a while now – I’m not surprised it started here. The Detroit Community Grocery Store Coalition involves 80 churches, working with the United Food and Commercial Workers, seeking to create community based grocery stores. I’ll write more when I know more, but it seems that they are considering three kinds of membership, for consumers, workers and supporting organizations.

So lets give it up for Detroit. They’ve got big problems, but they’ve got a lot of spirit and energy to tackle those problems. With any luck Detroit will continue to crank out models for how we all can address the serious and growing failures of the global economy. And if we pay attention to what is happening here, we won’t have to wait for economic collapse to start building our own new cities.