Dismantling Agriculture, Rebuilding Anew

California’s worsening water situation is changing the face of agriculture. Much of the San Joaquin Valley is already being fallowed for this year due to acute water shortages. There is also the growing prospect that the state’s growing population, diminishing snowpack (still less than 1/3 of normal after a near-average March) and literally collapsing soil (subsiding up to a foot a year as salt levels increase toward the point that nothing can grow) herald permanent changes that will lead to permanent abandonment of some farmland.

In some areas water shortages and related issues are already forcing the retirement of farmland in of one of the world’s great agricultural zones. This apparently inevitable contraction can happen in one of two ways: through disorganized competition or organized cooperation.

In the competitive scenario, increased cost and scarcity of irrigation water may force farmers out of business in a haphazard way that concentrates what little wealth remains in the region and worsens the already dramatic economic displacement underway.

But perhaps the mutual roots of irrigation may provide a pathway for organized retreat. Think of it as consulting blueprints in order to carefully dismantle a structure for reconstruction into a new system, rather than simply bringing in the market’s wrecking ball to shatter the system at its weakest points (where lack of water rights or excessive debt shut down production of land whether or not it makes sense to do so).

Some blend of these approaches is likely, but it seems that if left to its own devices, the invisible hand of the market is going to mostly just shatter a weakened agricultural system and leave us with a vast debris field.

So where to start? Where are the natural joints at which we might start to disassemble this creaky old barn before it collapses under its own weight?

Go West

As I have read the news about California’s historic drought, I’ve noticed that the name “Westlands” keeps popping up. I became curious, and I think I may have found a starting point – the eaves of the barn roof, if you will. Westland Water District is a public entity (not a co-op), but it is at heart an old mutual irrigation scheme, of the sort that is dominant throughout the West. Positive collaboration to move beyond farming is already underway even as Westlands members struggle to preserve their agrarian ways of life.

Despite the individualist mythology of the Frontier, development of irrigation in the western United States was highly collectivized. The western system is much different than the chaotic and individualistic system that spread from Europe into the eastern United States, where streams flowing throughout the growing season were quite common and water rights basically came with the land.

Water mutualism were pioneered by the Mormons, who recognized that the eastern “riparian” system would only allow irrigation of the miniscule bit of land with year-round surface water. Groundwater extraction through wells was often unreliable and prone to pollution with salts as well as poisonous minerals like selenium and arsenic – a problem that generally grew worse over time.

By collectivizing water access to divert year-round surface water through aqueducts, arable land was expanded out across the valley floors. So snowmelt from the mountains provided adequate irrigation to grow food for the booming civilization centered around Salt Lake City. It worked and it was copied.

This larger economic system was destroyed at the close of the 19th Century, but irrigation mutuals, cooperatives and districts proved quite adaptable on their own and spread like wildfire across a dry land. Westlands Water District was created in 1952, and now provides water for roughly 600 farmers on 600,000 acres. The district also provides an organizational structure, which is interesting for reasons that I’ll discuss in a moment.

Where is Westlands?

Understanding Westlands’ location is crucial to grasping its problems and opportunities. The district sits in Fresno County, on relatively high ground on the western side of the San Joaquin Valley. A quick glance at a map suggests that it would be a rather unremarkable spot in the middle reaches of the valley’s namesake river.

In fact, Westlands is only marginally in the San Joaquin watershed, perched on high land between that watershed and the Tulare Basin. To the east of its southern portion, the Kings River actually splits and flows both north into the San Joaquin and south through a number of distributaries.

From the southern end of Westlands, water flows (when there is enough rain) into the Tulare Basin, which was once the largest lake west of the Mississippi River before water diversion dried it up. This lake was a major source of fish and turtles during the 19th Century and was large enough to serve as a military floatplane base as late as World War II.

Westlands Water District has very poor drainage. Whatever rainfall makes it past Big Sur and the Diablo Mountain Range to this naturally dry rainshadow tends to soak into the ground rather than running into a creek and eventually a river. This is fine with rainwater, which is relatively pure.

On the other hand, irrigation water sometimes comes from mineral-rich wells and usually receives added contamination from pesticides and fertilizers. So its evaporation leads to increasingly toxic and saline soils. Salinization is a problem for irrigated agriculture everywhere, but the San Joaquin Valley appears to present an unusually acute case.

It’s important for us to remember that agriculture in this part of the world has been a relatively short experiment. And this experiment appears to be leading toward a conclusion that it wasn’t such a great idea to farm there. So how do we extricate ourselves?

Sharing the Burden

Westlands is a sort of high point in the overarching structure – the barn – in its size and location as well as the urgency of its problems. And is therefore worth consideration as a point to begin the disassembly and reconstruction of San Joaquin agriculture.

Westlands’ own “History” page acknowledges that something has to give: “Westlands also faces significant drainage problems. Approximately one third of the district does not drain properly. As a result, salt present in the water imported from the Delta accumulates in the soil.”

Westlands blames this problem on the Federal government’s failure to provide drainage since the closure of the San Luis Drain, which was shut down in 1986 after its outflow proved devastating to birds in the Kesterton Reservoir, into which it drained.

It’s hard to see how a new drainage scheme will work without some sort of water treatment, but Westlands has a point: Its members were led to believe that drainage would be provided. So they made decisions and investments based on the assumption of drainage.

And at the same time, drainage cannot be provided without some dramatic changes. It’s been nearly 30 years now, and it’s time to admit that the San Luis Drain ain’t coming back in its old form. There would be simply too much clamor from those downstream.

Yes, Westlands is only a small portion of the overall problem, but – fairly or unfairly – its reliance on a hypothetical drain creates for it a higher bar than other farmers whose runoff may be just as toxic but can flow freely into a self-draining river.

These dramatic challenges – common throughout the valley but aggravated by Westlands’ history and expectations surrounding the drainage issue – demand some sort of collective response. So it is hypothetically possible that Westlands might provide a structure for either conversion to farming practices that produce much less runoff, and especially less-toxic runoff. And to some extent, Westlands could conceivably provide a structure for buying out some of its members with less-suitable land.

It is obvious that a group of struggling farmers on land that was always marginal cannot bear the cost by themselves during a multi-year drought. Fortunately, there is ample precedent for government assistance to farmers to not plant. These subsidies are sometimes controversial, but it seems that if there were ever a time to use government assistance, it is in this sort of large-scale transition where individual acts are overwhelmed by market forces. Rather than simply easing the current pain, funds might be used to develop a new reality.

Westlands has already recognized that its current route is unsustainable. To their credit, members are already retiring tens of thousand so acres of farmland.

But more interesting, Westlands is also exploring the creation of a solar farm project within the district. I don’t see any evidence that the new organization is using a cooperative structure to develop the solar facilities, but there is at least an element of collective problem solving that echoes the original organizing of the district by the current members’ grandparents.

Allow me to think ahead a bit:

What if solar developments provide the means for compensating those farmers whose fields are closest to forced retirement? What if Westlands is able to develop a structure through which its members can gain temporary subsidy as they manage an organized contraction – perhaps even developing a structure for subdividing those fields most suitable for dry farming, while also moving toward more sustainable practices that produce less-toxic runoff that could be further treated before it is sent down a reopened San Luis Drain? What if Westlands is able to serve as a pilot project for how irrigation districts can move into a new field of production?

I am just scratching the surface here, but it seems like Westlands is going to be a key location in the growing water struggles in this state. I’m glad to see that they are engaged in some shared problem-solving and hope that we might be able to all learn from their experience as we struggle to change California’s troubled relationship with water.

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An hour of writing

I’m going to re-launch an old habit that I think was a good one: I shall write every morning, and post it immediately more often than not (i.e. at least 4 days per week). I hope that this discipline will help me get through a backlog of drafts and some gnarly writer’s block.

To start, I’m limiting myself to one hour per day. So today, Monday the 7th, this gets posted at 10:45 and then I move on to my next task. I need to keep this short and sweet, and not attempt too much in a given day. I’ve got no editors and not even any time to let pieces sit and stew (at least, not any longer than they have already).

Here’s an overview of the writing that I have to do:

Fact: If nothing else I should post something along the lines of the “newses” I cranked out most days while I was at NCBA; then, I pointed toward a few key developments gleaned from the strangely-unhelpful nature of search engine queries about “co-ops” or “cooperatives” or even “credit unions.” But some feature reporting needs to happen too.

Fiction: Yes, fiction. I’ve had a mashup of near-future utopia and dystopia hounding me for a few years now. I need to post some of these drafts to start a conversation about this world I’m envisioning, to explore plausible ideas of how we might get through this uncomfortable phase of history that we are entering.

Faith: I hope we might find comfort in stories from our great traditions. These often contain elements of justice and struggle that resonate powerfully with our current situation. Some of them involve a personified God figure, others are less father-like in their concept of the divine. I hope and pray that I can help point out their universal relevance.

Each of these themes will be in a specific online location (or locations). I’ll occasionally link from one to the other, as well as from Facebook and other more public places. But for now this is going to be sort of low-key, public but not promoted.

I want to have at least a few people expecting me to write. Ideally, I’d like for you to comment from time to time, either by email or – better yet! – on the blog’s comments section. Your comments will help guide my work and give me encouragement to bust through this writer’s block.

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Thoughts on Government and Drought

I have to get this out of my system:

Recent events have frustrated me to the point that I have to take a detour from trying to articulate what we should do to solve our common problems, and rule out what we should not do: That is, we should not expect much help from the federal or state governments, which are structurally unable to deal with the crisis at hand.

The Meddling Feds

House Minority Leader Nancy Pelosi recently appeared on the Daily Show. Even I was uncomfortable witnessing how enslaved she was to party talking points. It was like watching a robot programmed to say “all systems normal” over and over and over again while some cheesy spaceship movie set sparks and collapses around it. Jon Stewart tried to cut through the bullshit, but it was ultimately impossible.

Pelosi could not admit the obvious: Government has been captured by the dark forces of money. Political systems have degraded to the point that we must rely more on economic systems, which tend to be tyrannical even if good-intentioned. Our best hope now is that Jeff Bezos will somehow outspend the Koch brothers. That was the unpleasant truth revealed by Stewart’s insistent questioning and Pelosi’s non-answers.

We no longer live in a democratic system. We are allowed only to choose between two captive parties. Once candidates are elected through either party they must spend their energy fundraising or maneuvering toward a cushy private sector job lobbying their successors. And whatever laws they pass meanwhile are squeezed by the influence industry, which makes sure that anything threatening in the intent of a law is neutralized in its actual effects.

The Obama Administration has shown how little is possible at the federal level. Rather than deal with the looming economic and ecological crises that are pushing us ever closer to unrest, Obama is fixated on secrecy and control. It seems that the government would probably rather send up drones to keep us in line, instead of satellites to better understand the changes that are happening in the atmosphere.

Sure, the Republicans are worse. They are divorced from reality. They respond to California’s drought with ridiculous “solutions” that will destroy what’s left of the environment and keep the water flowing until it is gone.

But what’s the alternative? Senator Diane Feinstein keeps making noises about some proposal that she’s scheming (which, she reassures us, won’t be “mind-blowing”). It’s all very hush-hush and apparently involves talking to water districts and government agencies but not the Sierra Club.

Feinstein’s plan seems to be based on the assumption that this week’s rains will continue; she describes her idea as based on the status quo but with a “better way” to move water. Unfortunately, forecasts suggest that the dry weather will probably return next week, and in any case this welcome downpour will only modestly change our situation – as one great image (from a government agency, I admit!) shows, this is more than a drop in the bucket, but still only a coffee cup.

Rather than finding a “better” way to move water, we need to reduce our need to move water. We’ll see what Feinstein eventually proposes (and what, if anything, becomes law), but there’s no reason to think that it will threaten the unholy alliance of banking and real estate interests. I’m ready for my mind to not be blown.

State of Hegemony

California’s officials are not much better. The state’s water problems have been badly worsened by officals’ decision to keep shipping water south over the past year despite dwindling supplies. Now we are faced with a darkly laughable situation: Southern California has plenty of Northern California’s water in its reservoirs while Northern California faces a threat of severe water shortages in a few months. The State Water Project’s announcement of zero deliveries this year is too little and too late.

Southern California simply does not have the resources to support even a fraction of its current human population, even in “normal” rainy season. Somebody has to move.

That hard truth (which cannot be spoken) is the main driver of everything crazy about California water politics, including Governor Jerry Brown’s plan to build a pair of 30-mile long, 33-foot diameter tunnels under what’s left of one of the world’s great wetlands – the Sacramento-San Joaquin River Delta.

This tunnel is worth a closer look because it debunks the notion that Democrats are going to save us. California is utterly controlled by the Democratic Party, which has two-thirds supermajorities in both houses of the state legislature, as well as dominance of the executive branch.

The Congressional GOP’s awful scheme to kill the Delta won’t work without the help of the governor’s foolish tunnel project. Simply reducing flow into the Delta would increase salinity as brackish water from the San Francisco Bay intrudes; eventually salt would reach the intake from which Northern California’s lifeblood is sucked, severing the whole unsustainable system.

But the proposed tunnels would move the main water intake upstream from the Delta, onto the Sacramento River with its more consistent flows. I suppose that this might help the Delta under “normal” circumstances by drawing water from a place with higher flow rather than the current backwater, but it would mean that Southern California would no longer face the natural limits of keeping the Delta marginally alive.

So there you have it, loyal Democrats. Your obstructionist rivals have been vanquished and what do we get from your hegemony? A massive boondoggle that (if completed) will allow for even deeper looting of a fragile ecosystem so the South can continue its pillage of the North. The Southern majority in our legislature wouldn’t have it any other way.

With or Without You

Perhaps there is some role for government in the inevitable depopulation of Southern California. I’m an anarchist at heart, but I’m also open to hearing about ways that federal and state agencies might facilitate that process – ideally not involving forced relocations or corporate subsidies.

Ironically enough, there is a potential relocation test-run underway in the San Joaquin Valley – an agricultural zone that now faces a huge crisis as perhaps more than 100,000 people are displaced by collapsing rural economies because the water that might have sustained them this year is now feeding golf courses in Anaheim. What would it look like to have an organized population transfer, rather than just letting communities collapse and hoping that those set adrift can figure out where to go and what to do when they get there? I think we need to figure it out.

The entire American West shows every sign of shifting (back) to a climate that is much drier than what we think of as normal, so people are just simply going to have to leave (or dramatically change our behaviors), sooner or later. Of course, the same is true of Northern California if not to the same extent.

I know this is wishful thinking, but governments should at least stop encouraging and subsidizing the suicidal increase in population of a land that could only support a small fraction of its nearly 40 million people even in the wettest years. An immediate and permanent end to suburban expansion is the first step. Yes, this will drive up real estate prices and eliminate jobs, but we have to do it anyway. The status quo will lead to unrest if we wait for Nature to really force our hand.

But governments won’t even take this baby step and we must stop waiting for them. Our public officials are too deeply entangled in the interests of banks that want more houses built, oil interests that are pushing for water-intensive fracking, and even just the simple bureaucratic survival instinct that keeps programs going after they outlive whatever useful purpose they once had. The economy is showing signs of another looming crisis, so I can’t imagine that any politicians will entertain proposals that will be needed to create a future California with fewer jobs and fewer workers.

So what on earth do we do? This drought keeps stumping me. How do we get beyond acts of individual conservation that only peck away at less than a tenth of our water consumption (80 percent goes to agriculture, the other tenth to industry)? How might we make the deeper behavioral changes needed to exist in this land sustainably?

I don’t know. Maybe it isn’t possible.

But tune in next time, when I try to figure out some community-based models for how to adjust to life in a drier world. Got any ideas? Please send them my way.

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“Historic” Weather

This week’s much-anticipated storm was a dud. Many parts of the state got no measurable rain. On the bright side, there does seem to be some significant (but modest) improvement in the Sierra snowpack, although it is still only 15 percent of average – a record low.

The term “historic” gets bandied about every time there is record-setting weather. But there are also weather events – like this drought perhaps – that really are historic in the sense that they change the history of the people in a given area.

Consider the ancient Pueblo peoples whose advanced civilization collapsed in one of the West’s occasional megadroughts, illustrated by the archaeological traces of their retreat into the more remote, more-defensible (and presumably better-watered) canyons. These ancient people’s more familiar name “Anasazi” is from another language (because their own history ended in their drought), but their story is made relevant by Jared Diamond in his book Collapse: How Societies Choose to Fail or Succeed.

Despite the dire title of his book, Diamond also looks at societies that make the changes needed to avoid collapse. So we should look to ways that we might make lemonade out of our lemons: This drought can be the point at which we start taking climate change seriously.

The historical nature of the drought is all too real for the 17 communities already expected to run out of water this spring. Urban California is still a ways from that, but there are two main ways that I see a truly historic shift underway on the statewide level. First, climate change seems to be undermining the computer models used to forecast weather; this will confront us with more uncertainty about even short-term forecasts. Second, we face a much broader threat of fires than before, both geographically and seasonally.

Model Failure

The most optimistic forecast I see at the moment says only that the root of the drought, that persistent high-pressure ridge, will regenerate but “not be as intense, increasing the odds that a low pressure system will be able to break the ridge by mid-February and bring more rain to the state.”

Of course, even that optimism assumes the hypothetical future existence of a low-pressure system heading in the right direction with enough energy to break through the hopefully weakened ridge, which is not supported by our experiences this winter.

I’ve been keeping an eye on weather blogs lately, and one that has particularly impressed me is Weather West. It is written by a PhD candidate named Daniel Swain, who first named California’s weather nemesis the “Ridiculously Resilient Ridge.” Unlike many other weather sites, Weather West has a nice, respectful atmosphere in the comments; I highly recommend it as a way to gain a basic familiarity with what’s happening to our weather – particularly the constant change in forecasts that is chronicled in the comments section.

It’s hard to say what rain will actually fall this year. But the weather seems to have shifted to where the old computer models don’t work as reliably as before. They keep making assumptions that are no longer true – for example: the high-pressure ridge off our coast will break down after a week or two. Rain has been occasionally forecast during the last two months, only to fade as the supposed arrival drew near. This cycle seems to be underway yet again.

Meanwhile, the state Department of Water Resources has just announced that unless the rains come it will cut State Water Project deliveries to zero for the first time ever – including to urban areas.

The End of “Fire Season”

This week’s rain was better than nothing, but only brought enough moisture to germinate some seeds and give us a nice reassuring coat of green on the hills. All those little plants that sprout will last for a few days or weeks, and then most of them will die. They evolved for a rainy season, and not just a little rain every couple of months, which seems to be our new normal this year.

Whatever green shoots sprout this month will probably grow a bit, struggle, die and then dry out, leaving us with a bit more tinder to get the fires started this summer – or maybe this spring.

Fires this year are going to be interesting. Heck, we might see fires every month depending on the winds, which seem to come up with less and less warning these days.

They had fires up in Oregon in January. And now Norway is experiencing its largest fire (of any month) since World War II, with 139 buildings already destroyed; this follows on the heels of another fire that burned 40 structures.

Another blogger that I’ve been reading lately is robertscribbler, whose recent post describes the Norway fire as “historic.” But is that fire in particular really historic? If Oslo burned it would unquestionably be a major turning point in the history of Norway, but I doubt that any single rural wildfire can truly wear that label.

I’m not even sure that “historic” fits a huge and memorable rash of fires like California’s 2008 outbreak, which peaked with close to 3,000 fires burning a and thick smoke choking the state for weeks. Those fires were historically remarkable, but were they historic? Did they result in profound and long-lasting changes to land use or fire suppression? It doesn’t seem like it.

By the standard I’m suggesting, the recent fires we’ve seen in California are historic despite their relatively mild destruction. These winter blazes undermine the very concept of “fire season” in California. We can no longer say that fire season started early or ended late if fires burn through the winter. Fires can happen at any time and in any place. (Oregon and Norway! In January!)

California’s wildfire response is a seasonal system and it is not clear that perpetual readiness can be maintained. Certainly some fire crews can be idled in the winter and spring, but if this drought is as historic as it seems to be, we’ll need to have at least some crews and equipment ready to go year-round, year after year. This raises a variety of issues, which I’m not qualified to do more than raise as questions:

How will year-round readiness be budgeted in a time of diminished government funding? When will equipment be maintained if some of it must be ready at all times? How will a year-round threat of fires affect the lives of firefighters who must leave their homes and families for periods no longer confined to the summer and fall?

All this suggests that some dramatic changes are needed.

What to Do?

Unpredictable but generally dry weather creates a serious problem for planning how to deal with fires. And I think this problem will demand more grassroots participation in dealing with fires.

Conventional wisdom is that wildfires are best left to professionals, and that a last stand on the roof with a garden hose should be discouraged. But perhaps we need to find a third way between the professionalized firefighters and the garden hose approach. This will help provide a quicker response when fires are still small and relatively easy to contain – particularly during times when professional fire crews are idled (during what’s left of the winter) or overwhelmed (during the summer and fall).

I am reminded of Benjamin Franklin’s early cooperative organizing, back in 1752. The Philadelphia Contributionship was a collective response to fire threats; it is the nation’s oldest insurer of property and membership benefits originally included protection by organized fire crews. 

I’m also inspired by some of the survivors of the 2003 Cedar Fire near San Diego. This group has rebuilt together with a collective spirit, which among other benefits helped them respond to a later fire.

Thinking about historic weather – events that really change our history – is unpleasant business. But think we must. And we must be careful not to think that the current severity of drought is the worst that history can send our way.

It’s not possible to predict how the drought will unfold. Maybe we are at the start of a decades-long megadrought. Maybe next year we’ll get flooded out and our water crisis will be postponed. But in any case, California doesn’t get enough rain for 40 million people in a “normal” year.  Before long we’ll be back in this same position, scrambling to save water and put out brush fires without the systemic changes we need to make.

Rather than simply hoping that it rains and our difficult choices can be postponed, we should embrace this opportunity to take a hard look at our civilization’s choices, and seek to make the next chapter of our history better than the last.


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Deer in the Headlights

Yesterday the Bay Area saw a feeble weather front move through from the south. It offered little but a faint wave of fluffy clouds that dissipated as the sun set. It felt like the skies were teasing us. I was filled with dread.

This morning I started writing this post in a café with its front door propped open. It was 10 in the morning, January 21, a month after the winter solstice and what should be the coldest time of year. I finished this writing outside at sunset, wearing a light sweater (open in the front!) despite sitting in deep shade.

It was just the top half of a French door open this morning and I was a little bit chilly, but still: Here in Oakland we had yet another day of sun and temperatures approaching 70 degrees. The forecast calls for nothing but warm sun through the end of January.

Weather is not the usual topic of this blog, but in the last few weeks I’ve come to realize that it is perhaps the central factor driving the need for community-based solutions where I live. This has nationwide consequences – global even – considering California’s outsized role in food production.

Meanwhile the East reels from another round of Arctic weather, which is directly related to California’s pleasantly terrifying winter as well as the remarkable warmth and moisture plaguing Alaska (foretold here more than a year ago): The jet stream now goes north with its Pacific moisture, drops it in Canada, cools off and then returns to the U.S. This great atmospheric current is now interacting with an Arctic Ocean that has lost about 80 percent of its historical ice cover, creating a literally steaming weather generator where before there was nothing but ice. We seem to have entered an entirely different weather pattern than anything seen since before Europeans first arrived on these distant coastlands.

Frankly, if you don’t believe that the climate is changing I’m not interested in convincing you. Average temperatures are rising. But even without that wild card we are entering uncharted territory for demographic reasons. Precipitation and snowfall are about half the levels of the previous historic drought of record (1976-77), with a state population nearly double what it was at that time. Put another way, by the end of this month the Sierra Nevada have a snowpack more typical of late October. The snowpack is utterly central to California water management and is it basically missing.

This is not a matter of the wet season arriving late or being less wet than usual; we face the prospect of a year without the rain and snow that make California a marginally habitable place. We face a day of reckoning about whether it was really a good idea to cram nearly 40 million souls onto this lovely but precarious land.

Even if this isn’t permanent, if we are only facing a few dry decades like the 1450s through early 1480s, we are still facing catastrophe. Even if we are only facing another 1580, when tree ring data indicate river flows around 8 percent of normal, we are still in deep shit. Low flow showerheads are no match for this drought, and we’re going to need to rearrange some basic systems. This is the looming truth of climate change.

We are all just deer in the headlights. Some little part of us is screaming: “Run! Change! Do something! If it’s yellow let it mellow!”

But we are mostly just frozen in place.

I know that I’ve been frozen. That’s why I’ve been so sparse with my writing lately; fear and hopelessness is a powerful writer’s block. I got a bit riled up by the recent  “system problem” discussion, and I see this post as intimately related to that: Any planning or collaboration we do must be based upon certain assumptions, and it seems to me that California’s usual assumptions – on climate as well as economics and social stability, which are dependent upon climate – must be reexamined.

It is time for us to move.

Of course, the deer analogy isn’t quite perfect. We, like the deer, have a serious and immediate problem that demands movement. While the deer has two obvious good options, it is unclear where safe ground lies. But it sure ain’t safe where we now stand.

This drought is the real thing. It is going to lead to some dramatic changes,  including conflicts between north and south, suburban and city, urban and rural, industrial and agricultural, upland and valley floor. Even if it does start raining normally for the rest of the winter and spring, we face a period of profound social and ecological tension. Disastrous weather is no longer a future event with an obvious start, like a hurricane or flood. A weather disaster at least as serious as the Dust Bowl is unfolding now. So what are we going to do?

I’ll admit that I’m not yet sure of even the outlines of how to deal with the sort of scarcity that is upon us. I’m not aware of any farmer cooperatives that have fundamentally transformed the need for water; I imagine that co-ops provide some utility for training farmers to use water more efficiently, and cooperative extension programs through state land grant universities also have played a great role. And of course the entire system of irrigation prevalent in the West is based on a foundation of Mormon mutualism.

My experience and current setting is primarily urban, so that’s where I feel called to the struggle. But I welcome any input and ideas from those with insights on rural cooperative water solutions.

One particularly alarming element of the drought is the likely effect on food supply and prices, as well as on employment. People who have previously relied on farming income are quickly realizing that they need to find other work.  Farm town economies may collapse, driving more people into our cities in search of work.

It’s not hard to see how this may cause social tension as urban areas tighten the screws on water conservation. Picture already-crowded homes trying to absorb additional relatives and friends while facing expectations that they’ll reduce household water use by 20 percent or more. Penalties for “overuse” of water may lead to impoverished households being unable to pay penalties, which could lead to their water being turned off.

General water outages may even become a factor in some urban areas, leading to drops in population and economic activity. And we should not forget that industry is a major water user, consuming amounts that are comparable to household use.

We need to start thinking about general community organizing for an unfolding disaster in the present.  It’s going to bring up some legal and social issues that I don’t believe are clear, with an urgency that will make resolution very difficult.

We’ll need to address such issues as whether outdoor household use limits apply to food production. I believe food should be favored over lawns, but that preference brings up challenging issues of its own: Is it really more important to allow homeowners to soften the impact of shocks in produce prices and availability, as opposed to providing apartment-dwellers (who might not have safe park access) with a little patch of green lawn where their children can play?

The real action is going to start in the realm of governments and courts, as a whole range of water rights conflicts play out on a scale never seen before. I suspect that they’ll work it out, but it isn’t hard to see how more affluent communities will come out on top in the same way that they did during West Virginia’s recent water crisis. It’s worth noting that inadequate official water distribution there has been complemented by a mutual-aid system called WV Clean Water Hub. At some point, we may find it necessary to bring in water from outside areas that have gone dry.

Most places are unlikely to literally run out of water, but it could happen. Willits, Santa Cruz and some suburbs of Sacramento have few water options and may see their primary surface water sources dry up this year; Willits has only about a three month supply, which would mean they could run out as soon as the start of the usual dry season.

In summary – for now – we are entering some uncharted territory. And considering the precarious nature of our economic, political and social systems, we may be in for a rough ride; many an empire has been brought down by drought. It’s time to start taking this water crisis very seriously. As it tends to do, California is leading the way – will it be to a new and more sustainable way of managing water and other resources, or into a downward spiral of scarcity and conflict?

Government will have its role, as will individual water conservation. Typically, these two forces can meet in the middle and mitigate the worst effects of a drought. But I have a feeling that this crisis also demands something cooperative to bridge a substantial gap. I look forward to searching for answers.

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Confronting the “System Problem” Cooperatively

Guest post: Len Krimerman of the Grassroots Economic Organizing Collective has launched the next phase of the discussion on systemic issues raised by Gar Alperovitz and Thomas Hanna.

First and foremost, three cheers to Gar, Thomas, and Andrew for a fine start to this uniquely important cooperative conversation. Rarely has the exchange of words and ideas left me with such a well-spring of hope. Not only did this dialogue provide us with thoughtful, nuanced, and provocative reflections, but its process – the careful arguments and caring responses – was, for me, exemplary.

How best to continue? My first and strongest inclination is to recommend that this “system problem” thread be amplified over many weeks, and then carried into the May 2014 US Federation of Worker Cooperative Conference in Chicago. In that setting, and in celebration of the Federation’s Tenth Anniversary, worker owners from all over the USA, and elsewhere, will gather, and, in my view, they are precisely the ones “cooperative planning” should be waiting for.

Substantively, I would agree with Gar and Thomas on the need for “participatory planning”, as well as with Andrew’s principle that “planning must be centered in the cooperative movement”. It is, however, not yet clear to me just what each of these includes, and what they exclude. Let me offer three concrete, somewhat controversial and possibly enlightening cases of “planning” for consideration as models, and then ask whether they are, or could be, acceptable as “participatory” and/or as “centered within the co-op movement”.

CASE 1: Whose Voices Need to be Heard?

This story took place in the UK, during the mid-‘70s, when an old London plant within the Lucas Aerospace complex discovered that its owners had decided to close it down. Joining with a number of affected unions, they hit upon an unusual strategy, which they called the Alternative Corporate Plan. Its main and most novel feature was a process involving the entire workforce in identifying and assessing “alternative products” which their skills and the plant’s technology would be able to make and sell. The criteria for “alternative” were simple: not military aerospace (Lucas’ main product), and serving a socially useful purpose or unfilled need. As one worker put it: “Why can we not use the skills and abilities that we’ve got to meet the interests of the community as a whole? Why can we not produce socially useful products which will help human beings rather than maim them?”

To cut short this good story, 150(!) such products were designed by the workers and their consultants, from hybrid road-rail vehicles to kidney dialysis machines, and from heat pumps to a hob-cart for children with spina bifida. (For the whole campaign, see Mike Cooley’s Architect or Bee, or his acceptance speech for a Right Livelihood Award in 1981. Mike was a prime mover in developing the “Lucas Plan”.)

My question, then, is this: how do “cooperatively centered” and “participatory” planning view this sort of “alternative socially useful planning”; do they encourage and support it for cooperative enterprises? If not, should they? Mike Cooley would certainly think so:

It’s frequently asked of me, ‘Do you really think that ordinary people can deal with these problems’? I personally have never met an ordinary person in my life. All the people I meet are extraordinary. They’ve got all kinds of skills, abilities and talents and never are those talents used or developed or encouraged. What we’ve got to remember, as we’re driven down this linear road of technology, is that the future is not out there someplace as America was out there before Columbus went to discover it. The future hasn’t got predetermined shapes and forms. The future has yet got to be built by people like you and I, and we do have real choices. It can be a future in which we are not threatened with mass annihilation through nuclear weapons or ravaged with hunger. It could really be a world in which we treasure all our people equally and get science and technology to serve people rather than the other way round. In a word, we could begin to perform the modern miracle, we could help to make the blind see, the lame walk, and we could feed the hungry.

CASE 2: Movements that Move Together

Last October, Linda Hogan and Terry Daniels, architects of Hour World and time banking initiatives across the USA, came to my very rural town in eastern Connecticut, to celebrate the first year anniversary of our Windham Hour Exchange. They had just offered a webinar on Time Banks and Transition: Movements Moving Togetherand spoke to our group about their project of cross-sector collaboration – convening cooperatives, transition towns, community visioning and planning organizations, shareable and solidarity networks…and many moreLinda and Terry’s apt mantra is: “We don’t need another Movement, we need the movements to move together.

Not long after that, I attended a “new economy” conference in the very urban North End of Hartford, where previously isolated groups focused solely on co-housing, or Food not Bombs, or permaculture, environmental resilience, moneyless currencies, cooperatives, and many other social enterprises, started to plan and organize together for the various local regions in Connecticut they represented.

Should cooperatives, or the co-op movement, join this sort of cross-organizational bridge building, and begin to plan together with allied groups outside the co-op family?

Intriguingly, the Emilia Romagna cooperative network in northern Italy – at 15,000, the world’s largest regional co-op network, accounting for 40% of their region’s GDP – is linked in many collaborative ways to social enterprises and flexible manufacturing networks that often are not cooperatively owned or managed.

CASE 3: Colluding With Government? (To Rebuild Jackson, Mississippi’s Economy)

This May 2-4, Jackson, Mississippi will host “Jackson Rising”, yet another “New Economy” conference – but with a big difference. This time, the mid-sized city and its newly elected “radical” mayor, Chokwe Lumumba, are fully on board and ready to collaborate – to “address the growing crises of economic collapse, social inequality and environmental degradation….[through] new forms of ownership and wealth creation models that fully include the vast majority of the population.”

This collaborative planning initiative is based on two goals common to the conference organizers and the Mayor’s office: “first, to start building the city of the future today through the inclusion of cooperatives and other forms of wealth creation based on the principles of solidarity, participatory democracy, and economic and social equity; and second, to diversify and grow the economy of Jackson [as] a model center of cooperative and business development in the country.”

Jackson Rising’s sponsors and endorsers include organizations with a history of involvement in cooperative development. Have they stretched the notions of cooperatively-centered, or participatory, planning too far, in too partisan a direction, by joining forces with the Mayor and his political cohorts? Or, is this city-based strategy sufficiently “cooperative centered”, even though its main partner is an elected, and controversial, official?

I have not focused on these three cases to offer counter-examples or to disagree in any way with either Andrew or Thomas and Gar. Instead, my aim has been to use detailed examples to explore further the meaning and limits of what they – and I – might consider desirable forms of planning. Each of the cases, I believe, can be shown to both protect and enhance cooperative autonomy, while providing resources to strengthen and grow an increasingly contentious, no longer marginal, cooperative economy. If so, perhaps they can help overcome the “system problem” while throwing some light on both “participatory planning” and “planning centered in the cooperative movement”.

Perhaps, but I’m eager to see how others will respond to these reflections of mine, and, as well, to my suggestion that we bring this entire theme to the worker cooperative gathering in Chicago, this coming May.

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Planning Must Be Centered in the Cooperative Movement

A continuing conversation with Thomas M. Hanna of the Democracy Collaborative, cross posted at www.geo.coop.

As part of an ongoing dialogue prompted by the bankruptcy of a key Mondragon cooperative Thomas Hanna has argued that, “In order for cooperatives and cooperative networks to truly transform from small individual projects to system-wide outcome-changing institutional structures, reliance on markets alone may not be sufficient.”

Hanna suggested that my cautious approach to collaborating with government in planning entails a “narrower concept of the role of cooperatives than many people, including co-op practitioners, envision.” He goes on to ask “are we content with a political-economic system dominated by large corporate institutions and marked by increasingly negative social, environmental, and political outcomes that also retains an ethical, but ultimately marginal cooperative sector?”

I agree that co-ops are hindered by an economic system that throws many obstacles before our worthwhile economic models. Our success is likely to be painfully slow in the face of great urgency presented by the global crisis wrought by capitalism. However, I believe we must move carefully lest we find ourselves at a dead end.

A cooperative movement focused on public policy-driven planning may ultimately be less transformative and less effective than one that steps back and does some deep planning of its own before joining forces with a system of government in which legislators and administrations obey wealthy corporate donors and regulators are captive to the industries they are meant to police. Certainly co-ops should meanwhile engage with government on some essential tactical projects (e.g. tax issues); however, we must avoid strategic entanglement – being unable to part ways with processes that no longer meet the needs of co-ops and their members.

We should look for lessons where co-ops have either worked closely with government or broken out of the margins without waiting for it – the Basque Country is one of these places, along with the United Kingdom and Italy. We ought to study these regional histories to see if we can discern any patterns, while remaining aware that each is a different context than our own. A quick survey shows little correlation between state-based planning and economic transformation.

We should recall that Mondragon’s internal social security system, Lagun-Aro EPSV – which has played a huge role in efforts to mitigate the economic devastation felt by the former employees of Fagor Electrodomesticos – was created after the Spanish government declared that Mondragon workers were not employees and therefore ineligible for public social security. Lagun Aro’s success, although modest, comes because the co-ops were unwilling to let the national or Basque regional governments’ priorities take precedence.

And Britain’s experience actually suggests an inverse relationship between political processes and economic transformation: The birthplace of modern cooperation has evolved a robust movement with complex relationships to various entities within the political world. This has led to some dramatic unintended consequences.

The Co-operative Group lost control of its subsidiary bank this fall after the collapse of an ambitious acquisition of 632 retail branches of Lloyds Banking Group. This was the direct result of government planning to address the systemic problem of banking industry concentration by forcing the breakup of Lloyds as a condition of its bailout. This attempted merger followed another – with a troubled mutual called Britannia – that was more organic in its origins but seems nonetheless to have involved some degree of regulatory breakdown related to political parties seeing co-ops as a useful tool to meet their ends. The government favored a co-op solution to a dysfunctional banking system, which sounded like a good thing but ended disastrously with the bank snatched by US private equity vultures.

And as the Co-operative Group struggles with the economic aftermath of this catastrophic adventure in economic planning, it has become a political football kicked between the government and opposition. Regulators are obviously facing questions, but scrutiny is also directed at a Co-operative Party that exists within Labour. British cooperators in general are forced into a defensive posture by the ongoing banking scandal.

On the other hand, a positive story can be found in education. Although privatization has its drawbacks, UK cooperators have developed a good model despite having an unreliable partner in government. As Co-operative College principal Mervyn Wilson recently wrote,

the astonishing growth in co-operative schools has been achieved without funding or other support from the government. Growth happened despite a challenging policy environment and the pressure placed on those schools needing support to be taken over by sponsor academy chains, with no recognition of the power of co-operative models in transforming achievement.

So we have better results (so far!) in the case where the state’s role is minimized, despite being in a field of work where most progressives would argue against market-based solutions. And deep soul-searching is prompted by the case where they joined government’s tinkering with the market.

Nevertheless, co-ops are not the solution to every problem. As Hanna rightly points out, US healthcare reform is a case where market-based solutions are no match for deep systemic problems. In such cases, co-ops should steer clear. (I suspected as much way back in July of 2009, when a cooperative solution was first considered as a part of the reform.)

None of this means that planning with governments is inherently wrong or dangerous; such planning is widespread and probably inevitable. However, co-ops must approach any planning done with larger and more powerful partners cautiously. Planning may be a nice ideal, but successful planning depends upon a stable basis for such planning as well as trust of planning partners. Neither of these conditions exists when it comes to most government bodies, which are generally much larger and more powerful than cooperatives while also motivated by entirely different values than member benefit.

So what should we do?

There are opportunities to engage government without losing cooperative autonomy, illustrated by Italy’s Law 59/1992 requiring that co-ops contribute 3 percent of profits to co-op development funds run by co-op federations. This seems to me an acceptable risk because the funds are from co-ops and held by co-ops. The threat of co-optation is also mitigated by the strength of the cooperative movement there relative to the weakness of the state, which rarely goes more than a year or two without a new government.

Until US co-ops have the organized critical mass to hold our own in political discussions, we would best steer clear of government-centered planning and focus our efforts on building organizational capacity and inter-sector coherence.

On the other hand, the rapidly unfolding economic and ecological crises we face do not afford us the time to build a new world in a leisurely fashion. This is admittedly a frustrating situation, and Hanna is right to warn that systemic problems demand bigger and more robust structure than those currently offered by co-ops. We face a time that challenges our patience, but nevertheless we must remain patient and avoid any moves that commit us to partnerships that may not benefit our movement in the long run.

My examples above are admittedly selective, and certainly there are many examples of economic planning gone right. I hope the issues I’ve raised will assist cooperators in thinking about how best to engage the state. I hope others are inspired to chime in and thank Grassroots Economic Organizing (GEO) for hosting the conversation.

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Cooperative Movement Should Embrace Discussion of Systemic Issues

A guest post from Thomas M. Hanna of the Democracy Collaborative

The following is part of an ongoing dialogue prompted by the collapse of Fagor Electrodomésticos, a large industrial cooperative at the core of Mondragon, a prominent model of worker ownership centered in Spain’s Basque Country.

Andrew McLeod recently wrote an excellent and thoughtful response to my article (with Gar Alperovitz) on Mondragón and issues of systemic design. In an effort to continue the constructive dialogue around this important topic, I offer this rejoinder.[1]

Modern cooperative forms have a long history dating back hundreds of years. They are both a critical component of present day economies around the globe as well as a form of economic organization that offers great hope and promise for a future of greater equality, democracy, and community. I share McLeod’s heartfelt desire to see cooperatives succeed and proliferate. Increasingly, cooperatives—and worker-ownership and/or self-management more generally—are being considered as the fundamental building blocks of a larger systemic alternative to both the failed state socialist and failing corporate capitalist political-economic models.

For those who envision a much larger role for cooperatives in the economy, as well as for anyone interested in systemic change, a key question is why worker cooperatives sectors have remained relatively small and insignificant (both politically and economically) in advanced capitalist economies? For example, despite a long history, the U.S Federation of Worker Cooperatives estimates that there are just 350 such cooperatives in the United States employing around 5,000 people. Because of its size (around 80,000 workers), the Mondragón network has long been held up as proof that production cooperatives can, in fact, reach scales of economic significance. However, even including Mondragón, estimates are that Spain only has worker cooperative employment of around 300,000—amounting to a little over 1.3 percent of the active labor force. Similarly, in the Emilia Romagna region of Italy—another area where worker cooperative networks have reached some degree of scale and sophistication—worker cooperative employment is only around 6 percent of the labor force. Moreover, even taking into account the employment generated from other cooperative forms (such as consumer or social coops) these percentages remain very low in most advanced countries.

One possible explanation, suggested in the original article, is that by operating within a globalized corporate capitalist-dominated market system, worker cooperatives are exposed to a number of pressures that limit their ability to increase their scale and systemic influence. This can be seen not only with the circumstances concerning the failure of Fagor Electrodomésticos (and the more general problems Mondragón has experienced in recent years, including the steady reduction of jobs from over 100,000 in 2007 to 80,000 in 2012), but also with other events in worker cooperative sectors over the years. One classic example is that of the failure of many of the plywood cooperatives in the Pacific Northwest which, at one point in the 1970s, accounted for more than 10 percent of the nation’s total plywood production. But, by the mid-1980s, many had collapsed. According to one study: “Some were apparently casualties of the market…” A somewhat related problem, the report reveals, is that when worker cooperatives operating in market systems are successful, their members can often be tempted to de-mutualize and sell to private capitalist competitors.

McLeod maintains that “[c]o-ops have tended to succeed in market environments…” While this is undoubtedly true in many cases, I would suggest that history demonstrates that there are limits to that success. In order for cooperatives and cooperative networks to truly transform from small individual projects to system-wide outcome-changing institutional structures, reliance on markets alone may not be sufficient. McLeod, I believe, would agree with this statement as he identifies a clear need for certain degrees of economic planning—both in conjunction with areas of large-scale “crises,” such as climate change, and also with regards to government incentives for conversions of businesses to worker-ownership.  Moreover, the Cleveland project, which he lauds as “an extremely important example,” is in reality a semi-planned model. It is consciously designed to use the purchasing power of large non-profit “anchor” institutions that receive millions in local, state, and federal government funds to create a sheltered market for the establishment and expansion of a network of community-based worker cooperatives.

Despite often being associated with the discredited “central planning” mechanism of the former Soviet Union, economic planning is actually relatively conventional and uncontroversial in contemporary economies—both within traditional capitalist firms and at various levels of governance. In the words of University of Cambridge economist Ha-Joon Chang: “Capitalist economies are in large part planned. Governments in capitalist economies practice planning too…More importantly, modern capitalist economies are made up or large, hierarchical corporations that plan their activities in great detail, even across national borders.” (Chang, 23 Things They Don’t Tell You About Capitalism, pp. 199-200) Moreover, in recent years experiments with highly democratic forms of planning (often called participatory budgeting) have been gathering momentum in communities around the world. All of this is to simply say that economic planning as a concept is well-within the traditional economic paradigm that cooperatives currently also occupy. As mentioned in the original article, how a democratic “planning system” could be developed, and what forms it may take (including its relationship to markets and the state), is still a wide-open question. But a question that proponents of cooperatives should, I believe, embrace rather than fear.

McLeod uses the example of the plight of healthcare “CO-OPs” during the recent trials of the Affordable Care Act to demonstrate why cooperatives should be wary of engaging with “government planning.” However, he acknowledges both that healthcare CO-OP’s “are not even cooperatives,” and that they were envisioned as “market-based solutions.” I would therefore contend that many of the tribulations he describes as being suffered by these entities are actually a result of an attempt to apply a market approach to a problem (healthcare) that is arguably best addressed through some form of planned single payer system, as is the case in most other advanced industrial economies, rather than any consequence of the actual cooperative movement becoming too involved with a failed state planning effort.

McLeod’s primary concern is that by explicitly supporting the concept of economic planning, the cooperative movement is opening itself to both cooptation by the state and political attack from ideologically opposed factions. “[I]t is important,” McLeod concludes, “for co-ops to maintain our collective identity as autonomous entities relatively free of political entanglement, representing people of all viewpoints.” These are undoubtedly valid concerns, but I believe that they reflect a narrower concept of the role of cooperatives than many people, including co-op practitioners, envision. The question thus becomes, are we content with a political-economic system dominated by large corporate institutions and marked by increasingly negative social, environmental, and political outcomes that also retains an ethical, but ultimately marginal cooperative sector? Or do we ultimately envision an entire political-economy based on cooperative values and cooperative institutions? If it is the latter, this will undoubtedly require a discussion of how cooperatives interact with and fit into a larger system of markets, planning, and the state. Ultimately, it will also require taking certain “political” risks in furtherance of a more just, equitable, and cooperative world.


[1] Thomas M. Hanna is a Senior Research Associate at the Democracy Collaborative at the University of Maryland. You can connect with him on twitter @ThomasMHanna or facebook. The views expressed here do not necessarily reflect those of his original co-author Gar Alperovitz.

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Cooperative Movement Should Engage Government Cautiously

This post has also been published by Grassroots Economic Organizing, which is developing a collection of writings from various authors to be posted at www.geo.coop.

Cooperatives have much to learn from this autumn’s collapse of Fagor Electrodomésticos – the original co-op of Mondragon, the Basque model of worker ownership that encompasses more than 110 cooperative enterprises, 80,000 workers and $35 billion in assets. And a key question is whether models such as Mondragon are adequate to address the world’s interwoven economic, ecological and social crisis.

Gar Alperovitz and Thomas Hanna of the Democracy Collaborative recently asked “whether trusting in open market competition is a sufficient answer to the problem of longer-term systemic design.” They concluded that the demise of Fagor shows the limits of cooperative “projects” or “elements” within an economy designed for global capitalism. And although they don’t explicitly say so in this piece, the authors’ choice of an illustration that addresses population density (citing earlier work) strongly suggests a need for economic planning done with and by governments; this would be consistent with Alperovitz’s recent book What Then Must We Do?

However, such an approach raises serious issues around cooperative identity, particularly as a movement based on autonomous and independent entities. Co-ops lose something of their essence when embedded in efforts to plan markets into submission. It is important for those engaged in cooperative organizing to be very clear what we are talking about with regard to economic planning; this will help us avoid potential pitfalls.

Mondragon – or Fagor – may be merely a project or element at a global level, but it is also a system in its own right. Efforts to wind up Fagor also show the strength of Mondragon’s internal systems, which (as I wrote previously) are adjusting well to a major shock by transferring many idled workers to other co-ops and providing early retirement for others. The Basque regional government stood ready to assist with a three  €3 million credit line, Mondragon ultimately declined the offer.

I don’t assume that the authors are calling for socialist-style economic planning, as Alperovitz generally distances himself from that label along with “free-market” capitalism. And the Democracy Collaborative has been a leader in the efforts to create important models in which local anchor institutions (e.g. hospitals and schools) provide support for development of worker and community ownership. The Democracy Collaborative’s work supporting the creation of the Evergreen Co-ops with the Cleveland Foundation is an extremely important example.

Certainly systemic planning is needed to address crises, like climate change, through proactive efforts to change population density. Governments will inevitably be involved in such planning and it would be foolish to exclude co-ops. We must also recall that truly free markets are a myth designed to obfuscate the fact that orderly markets only function with a certain level of government infrastructure and enforcement.

However, the conclusion that we need systemic planning will have serious implications for the cooperative movement’s political neutrality in the United States.

Current events illustrate the potential unintended consequences of subordinating market-based cooperative organizing into economic planning: A mostly-ignored element of President Obama’s healthcare reform threatens huge political costs that seem likely to make cooperatives less viable as an implement of public planning while causing substantial internal damage to the movement.

The so-called “CO-OPs” are not cooperatives, but rather “Consumer Operated and Oriented Plans.” They were launched as a compromise intended to address Republican opposition to a government-run “public plan.” Like the public plan, cooperatives were seen as market-based solutions, providing a white-hat competitor to improve prices and choices available to consumers.

The “co-op plan” seemed like a useful attempt to repeat a hugely-successful government planning effort from the last century: In the 1930’s, investor-owned utilities were avoiding less-profitable rural areas, leaving them literally in the dark as city-dwellers enjoyed the benefits of light and power. The creation of hundreds of co-ops through the federal Rural Electrification Administration transformed the countryside and built a powerful and inspiring model that includes its own systems of development and finance.

Unfortunately healthcare CO-OPs now seem to provide the worst of both worlds: Changes were made to the statutes defining the CO-OPs and many are now in crisis as a result of the disastrous launch of Healthcare.gov – on which they are unusually dependent due to a statutory ban on using federal funds for advertising. They are tiny fish struggling in a large and turbulent pond, operational in fewer than half of the states. And although they are associating the co-op brand with a massive and controversial reform that is under attack from the right and the left, they are not even cooperatives!

The CO-OPs are also being excluded from and even harmed by Obama’s attempts to salvage the reform. The executive order allowing for extension of existing plans worsened an already challenging situation during the CO-OPs’ key start-up period. Such an extension of existing policies represents a significant reduction in their potential field of membership since everyone who keeps their old plan is also someone no longer interested in a new CO-OP plan.

The CO-OPs’ loans are still coming due despite these obstacles, while the media in some states are already discussing costs to taxpayers if they fail. The CO-OPs are also coming under indirect attack from Republicans, who raise valid concerns even as they attempt to score political points, worrying that these quasi-cooperatives might be “another Solyndra,” referring to the infamous solar company that failed despite government loan guarantees aimed at supporting alternative energy production.

Cooperatives are frequently made to answer collectively for a specific co-op’s shortcomings. As an “alternative” business form, co-ops are subject to an unreasonably high standard, so that a single failure like that of Fagor allegedly shows the shortcoming of the entire model. So if these “CO-OPs” go belly-up, we can expect it to be portrayed as more evidence that co-ops don’t work.

Co-ops have tended to succeed in market environments, and it is worth continuing to pursue market-based solutions wherever possible while finding ways to encourage business forms. One such example is the tax benefits already provided for business owners who sell at least 30% of their companies employees through ESOPs.

Governments are an unavoidable part of economic planning, but it is important for co-ops to maintain our collective identity as autonomous entities relatively free of political entanglement, representing people of all viewpoints.

And co-ops should beware of the impact of planning on long-term goals: For example, what would be the political narratives if the US were to launch into a wholesale remaking of land-use to achieve more sustainable development in ways that benefit worker/community-owned enterprises making transit equipment? It is not hard to see how our polarized political environment would yield attacks on this as “socialism.”

Such narratives can – and should – be countered, but we should also be proactive in thinking how planning efforts involving co-ops will be seen by the public, while limiting the conflict of interest that might come if (specific) co-ops stand to benefit. Working with government is important and can have good results – as with electrification – but it also risks political disasters that may ultimately make it more difficult to address the systemic problems at hand.

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Lessons From the Co-op Crises

October was Co-op Month, which is usually supposed to highlight the benefits of cooperative economics but this year featured a large-scale PR nightmare in the form of three serious setbacks for the global co-op movement:

So what might these stories together teach us?

We need to have co-ops supported by cooperative systems, not much unlike the way that organisms require organic systems. Each of these crises illustrates the cooperative model’s strength in some way, and we should not forget that a great many other enterprises have already failed in the aftermath of a global financial crisis.

My enrollment in MMCCU during the fall of 2008 coincided with onset of the crisis. My earliest memories of the program were of lively discussions of current events, which often meshed neatly with our course material. I also saw first hand the transformative impact of the program: More than one of my cohort “got religion” and we all were deeply inspired by organization like the Co-operative Group, Mondragon and Raiffeisenbanks. We looked forward to seeing how cooperatives would step up during a massive-scale market failure.

Our movement is certainly sadder and wiser after the past month’s developments. And I imagine that I’m not the only one wrestling with discouragement over the severity of the problems illustrated, wondering why cooperatives can’t even hold on to the gains we’ve made. However, recent events seem to affirm what I took as MMCCU’s core lesson: Co-ops are collectively a movement and we will sink or swim, collectively.

The brightest spot I see is ironically in the bankruptcy of Fagor Electrodomésticos (which I shall refer to here simply as “Fagor” despite the existence of several other Mondragon co-ops sharing that name). Although I know that the local impact is devastating, the Mondragon Cooperative Corporation’s decision to let Fagor fail without further support (300 million euros were provided in previous salvage efforts) appears to vindicate MCC’s cellular method of organizing new co-ops when one becomes too large (hence several “Fagor” co-ops as well as 100 others).

One fascinating sub-story is that Edessa – a Fagor product line – launched a spirited attempt to break away from the bankruptcy, arguing that it could be a viable business if freed from the foundering mother co-op; the provincial government was interested enough to extent a 3 million euro credit guarantee. For a time the idea seemed to have traction and the bankruptcy declaration was delayed while the provincial government offered a line of credit to save the Edessa plant. In the end, Edessa will apparently be included in the bankruptcy being filed this week, but the fact that there was some degree of worker-driven consideration that Edessa might split from Fagor suggests a multi-level autonomy within Mondragon’s constituent cooperatives. This deserves further study.

The more I look at this, the more it seems like a painful but also beautiful illustration of the brilliance of Mondragon’s decentralism. As pointed out in an Oct. 31 statement:

This is an association of independent, self-managed cooperatives that have furnished themselves with a series of mutual support mechanisms. The Corporation protects the interests of all its member cooperatives, although the responsibility for their business management lies entirely with each one individually.

This means that the circumstances affecting Fagor have no bearing on the other cooperatives within the Corporation because it is not a business holding, but rather an association of independent, self-managing companies.

Regardless of claims that might be made about Fagor’s supposed inability to let go of members (the basis of the “no layoffs for members” narrative that can make the Mondragon model so appealing), this co-op made a valiant effort to protect its members until the market forced its hand. Fagor was in a difficult line of business: It grew along with a massive real estate bubble in Spain and globally, and when that bubble collapsed Fagor found itself, in the words of the statement above, “no longer respond(ing) to market needs.”

Some reporting has suggested this weakens the overall case for co-ops, claiming for example that Mondragon “was thought to be flexible enough to adjust to Spain’s economic crisis” (in the past tense) as though closing down a flagship enterprise while finding employment for many of its workers isn’t a sign of flexibility.

Still, we should not assume that the vaunted Mondragon model will get through this unscathed. As UK co-op blogger Andrew Bibby points out,

the decision was seen as a bitter blow by Fagor’s workers. One local commentator wrote that “the wounds which have opened between the Mondragón Corporation and Fagor Electrodomésticos following the emergence of a crisis without precedents are going to be very difficult to heal.”

Despite the apparent stability of MCC as a whole, it appears that some elements of the Basque government were interested in an increased state role, perhaps an “intervention” or “conversion.” However, the presidency was more interested in a supporting role rather than serving as the “locomotive.” Presumably there are a lot of opinions about the proper role of government among the Basques, much in the way folks in the US hotly debated what to do with General Motors. However, the Fagor situation is different because GM didn’t have a larger system of support to fall back on.

To the provincial government’s credit, it offered assistance contingent upon MCC’s decision to salvage Fagor. And to MCC’s credit, they made their decision based on what they see as market realities.

In the end, there was no government bailout to prevent the bankruptcy of Fagor. But that was not due to external political realities so much as the decisions made by the cooperative system at multiple levels, for better or worse: MCC decided not to risk further losses by drawing a line under funds already given to Fagor. Fagor then decided to declare bankruptcy and include Edessa in the bankruptcy filing, despite Edessa’s spirited attempt to break free by means of public funding from the province.

I’m oversimplifying, of course. Each of these decisions was surely made by some combination of management and governance, under significant pressure from governments and creditors. The decisions were most likely also influenced by workers exerting pressure via both internal co-op processes and repeated direct action in the streets surrounding Fagor facilities and MCC headquarters.

Likewise, the Co-operative Group and Rabobank both agreed to the terms of their respective situations, presumably through elected governance structures. These co-ops may have been under a good deal of duress but nevertheless they did make decisions leading up to today (and leading into the future). And in the Co-operative Bank’s case, small bondholders could still sink the deal through a series of votes on the terms.

However, a rather different picture emerges from the collapse of the Co-operative Bank, which seems at least partly the result of dysfunctional relations with the government in a country whose political landscape includes a “Co-operative Party” embedded in Labour, and a general interest in co-ops from all major parties.

Second-guessing bank regulators is above my pay grade and I’m certainly no expert on British politics. But I can’t help noticing a spate of media coverage about the apparently serious breakdowns in oversight of the Co-op/Britannia merger that laid the groundwork for the bank’s collapse: There appears to be a variety of regulatory issues/problems, quite possibly aggravated by the government and opposition both having a vested interest in the project. Suffice to say the bank’s problems are related to its entanglement with a nexus of government and the banking crisis, as well as its tremendous size and rapid growth.

Rather than relying on cooperative systems dedicated to the needs of members, there seems to have been misplaced trust that government would take care of things. And now the government is investigating its own activities while the co-op itself embarks on a “root and branch review” of what went wrong with its own governance, including (ominously) the possibility of bringing in new leadership from outside the cooperative movement; already the Group’s chair has resigned effective immediately despite only having six months left of his term. This all was triggered by a sordid scandal that broke over the weekend as former bank chair Rev. Paul Flowers was caught on video buying drugs. This is simply too much weight to put on the misbehavior of one individual, and I think it further supports decentralism of the sort displayed in Mondragon.

I’m also seeing accusations that Dutch regulators failed in their oversight of Rabobank, contributing to a situation in which traders were allowed to go astray, under the influence of a corrupt industry in which they saw themselves as merely not the biggest crooks. This is a far cry from the idealized image of a bank that is a federated co-op formed to meet the financing needs of farmers.

While both Fagor and the Co-operative Bank have turned out to be too tightly tethered to the speculative global economy (while Rabobank is also ensnared in the culture of global banking) it currently looks like MCC is making the kinds of decisions needed to weather the storm.

This show is not over, and I’m not predicting that MCC won’t experience further setbacks as they face their greatest challenge so far. But the Basque cooperators are at least showing that they can make hard decisions when it really comes down to it, even if that means cutting some massive losses.

A key question to keep in mind is as we watch these stories unfold is this: To what extent has the existence of a cooperative system contributed to the overall success of the model? And if early indications that cooperative support systems are outperforming government support systems, what does that suggest about our way forward?

There are certainly still many developments to come, and we should all be watching them closely. Even if these distinguished cooperatives do hit rough patches from time to time, we have much to learn from their experiences.

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