The Economic Revolution Is Already Happening -- It's Just Not on Wall St.

By Maria Armoudian, AlterNet. Posted October 7, 2009.

America is in the midst of a new revolution. But this revolution is quiet, incremental, nonviolent and traveling beneath the mainstream media's radar.

The new American revolution challenges the current notions of dog-eat-dog capitalism -- through the building of a parallel economic system that shares, co-operates, empowers and benefits fellow workers and community members.

Over the past few decades, thousands of alternatives to the standard, top-down corporate model have sprouted up -- worker-owned companies and co-operatives, neighborhood corporations and trusts, community-owned technology centers and municipally owned enterprises.

In fact, today, involvement in these alternative models of business outnumber union membership as the means by which private-sector workers and community members are taking their economics into their own hands. The story is revealed in the 4-year-old book, America Beyond Capitalism, written by University of Maryland political science professor Gar Alperovitz.

Maria Armoudian: How big is this economic movement in the United States?

Gar Alperovitz: It's a huge development. But the president doesn't cover it, and the press, on the surface, is not aware of it.

At the grassroots level, there is a lot of activity that is changing the ownership of wealth and making it benefit neighborhoods, workers, cities and communities, at large. There are 11,000 worker-owned companies in the United States, and more people involved in them than are members of unions in the private sector. There are also 120 million Americans who are members of co-operatives -- a huge number, about a third of the population.

About 20 percent or 22 percent of our energy is done under public utilities of one kind or another. There are another 4,000 or 5,000 neighborhood corporations, in which neighborhoods own productive wealth to benefit the neighborhood. Much of that is related to housing and land development, but also stores, businesses and factories.

One estimate is that there are 4,500 of these. One, called Newark New Communities, does several million dollars a year in business and pours profits back into helping service the neighborhood -- health care and nutrition, education and jobs. So when you really begin to take the lid off of what is emerging in society, there are many forms of decentralized public ownership, social ownership or democratized wealth.

MA: Are there also new developments on the municipal level?

GA: Yes, because of fiscal crises, many cities, even under Republican mayors, are putting cities into enterprises. It was once called municipal socialism, but Republicans call it the "enterprising city," and it includes development of [municipally owned] cable television, Internet services, land and hotels.

Many cities are capturing methane from garbage areas and using it to produce electricity, create jobs and make money. They're dealing with greenhouse gases as an enterprise.

On a larger, regional scale, the Tennessee Valley Authority is a gigantic, ecological operation that controls the river systems and is an energy system. On the state level, Alaska derives a great deal of money from its energy resources, oil. It captures the profits and pays dividends to every Alaskan as a right. In the year 2000, every person in Alaska, as a legal right, received $2,000 [through this process]. So a family of five [together receive] $10,000.

MA: Worker-owned cooperative seem to be the most progressive and democratic models. They're usually nonprofit with profit circulating back to workers and communities, and they practice democracy in the workplace -- one person, one vote. How would you compare this model with other models?

GA: The one-person-one-vote worker co-operatives in the United States are the most democratic, advanced and ideal. But they number at about 500 maximum, maybe 1,000. These co-ops are on the cutting edge of the democratization process and where the learning will be taking place for the rest of the movements. People are experimenting with full democracy and full equality.

Of course, many co-ops are not that kind -- they don't have equal pay and have other differentials. And most of the [for-profit] worker-owned companies in the United States are employee stock-ownership plans, or ESOPs. In many cases, they are not democratic, and have a long way to go.

But as workers get more ownership, they demand more control. And as they participate more, they gain productivity and profits. So a key question is: How do we begin to democratize what is already owned? That is the likely trend.

MA: How might the American models compare to the giant cooperative in the Basque region of Spain -- Mondragon?

GA: Mondragon has over 100,000 workers in a very complicated group of 100 or more integrated co-ops. They pay back loans to a central fund and then build more co-ops in an integrated fashion. In 90 percent of them, the ratios of pay from top to bottom are 4 to 1. In others, it's 9 to 1. Compare that with American corporations, which are 200 or 300 to 1.

These co-ops are highly productive and state of the art with advanced technology, not your corner kind of tiny co-op. In the city of Cleveland, some groups are creating a large-scale Mondragon-type of cooperative. It will include a worker-owned laundry, with high-tech, green advanced technology, a solar-installation cooperative company, a land trust with a large-scale industrial-scale greenhouse and solar and geothermal heating.

They're going online over the next year and will produce 2,000-3,000 heads of lettuce each day. It's linked to the public purchasing of hospitals and universities, which provide some of the contracts for food and laundry. The model makes green jobs and green ownership and shows that worker ownership is practical.

MA: There are advocates who believe that building these types of cooperatives are the single most important form of activism that people can do. Do you agree?

GA: Ultimately there needs to be systemic change. But it is very important, and it's one thing that can be contributed. At this point, two central principles are developing in these "schools of democracy" -- they are changing who gets to own and benefit from capital, and they are changing the participatory process.

And in addition to cooperatives, neighborhood corporations and organizations, cities and land trusts, state pension funds are being used in [socially responsible] ways. These are very American means of decentralizing ownership of productive wealth -- as well as some central forms. We see a picture emerging of an America that is beyond capitalism. These [activities] give us a possible model.

If we build on what we are already doing, make it part of a political program and develop it, we could create something that is far better than what we now have and better than traditional socialist models.

It's time for people working in these sectors of cooperatives, worker ownership, land trusts, neighborhood corporations to begin calling meetings, share what they've learned and establish networks. In many cases they don't do this. People in the specific communities don't even know how much is going on.

Other interesting things are happening in Virginia, the District of Columbia and Maryland where, like in the '60s, people are meeting, reading, thinking and taking action from that. They are staging "action book clubs," where they read a political book and discuss, "What can we do in the direction of building something for the long haul?"

So if you don't like capitalism or state socialism, what do you want? What is your vision, your knowledge and theory? It's time for us to do that again.

MA: Do you have a sense of how this economic movement is impacting our current political and economic system?

GA: It's like what happened with the New Deal and the civil rights movement. A good [part] of the New Deal [began] as experiments of the '20s and '10s. But when the time was right, they became national.

Similarly, in the civil rights movement, the real heroes were those who laid the groundwork in the 1930s and '40s for what came next. That's what is happening at the grassroots level, economically. The most important things pertain to ownership of capital, wealth and assets.

Today, the top 1 percent owns almost 50 percent of the investment capital. The alternative state socialist idea was that the government should own it, but that had real problems with bureaucracy, centralization of power and so forth.

There is another alternative, which is what is emerging now. They are old historic ideas. But just over the last 30 years, these 11,000 companies that are substantially owned by workers have [emerged] from ground zero.

MA: So this movement has increased at a pretty rapid pace since the 1970s?

GA: Yes, amazing, and no coverage of it. Almost at the same pace at which the negatives have gone down, you're seeing the rise of these kinds of companies. They have many trial-and-error-related problems, but on the whole, they're moving towards greater ownership and democratization. They are very good for communities and workers. Because they are owned by the workers, they do not get up and run to get cheaper labor sources, so they keep jobs in local communities.

MA: Some of these employee-owned companies have not performed well -- financially or for their employees. United Airlines was one example of pretty dismal results. How are the others doing?

GA: It's important to know that United is a case study in what you shouldn't do. It was done in the midst of a strike in a very large corporation. That's not the best place to do worker ownership.

Most of the ones that work well are under 1,000 employees. United has numerous reasons why it failed, really, without worker ownership. On balance, the worker-ownership companies, particularly when there's good training, are more profitable; they have higher productivity; better pensions and better working conditions.

So on almost every indicator they are unquestionably equal or better than comparable firms of the same kind in the same field. It's not surprising, because people who have a stake in what they're doing tend to do better at it.

MA: In the face of globalization, how do these alternatives hold up?

GA: I think the globalization argument has been trumpeted in the press. They talk about manufacturing jobs being stolen, etc. That is true. But it is also the case that 90 percent of the American workforce is not involved in manufacturing, and over the next 15 years it'll be 5 percent. That's the trend.

What's really happening is within cities. This is a service economy and a trade, retail and wholesale economy -- that's the real action. It has gone from 40 percent of employment within cities to 50 percent and now closer to 60 percent. There are a lot of things people can do with that.

So the bogeyman of globalization is something we can challenge with stopping the so-called free-trade policies. But there's also a lot that can be done locally and not be put off by the fact that the press concentrates on these scare stories.

MA: You have been somewhat dismissive about the left's emphasis on messaging, ostensibly suggesting that what makes change are serious ideas and a coherent and powerful understanding of what makes sense. Can you elaborate on that?

GA: I don't disagree with better language, political rhetoric and framing. But that's often used as a substitute for programs that are out of date or for not thinking through alternatives.

So if a central issue is how to change the economy's organization, that's not a matter of framing. It's a matter of building up a vision and organizing a long-term strategy.

The framing argument can be positive, but it can also stand in the way of people rolling up their sleeves and getting down to work for the long haul.

MA: Are the alternative models being taught in the business schools yet? If not, how can people learn alternatives to the dominant corporate models?

GA: They aren't being taught yet, although in Cleveland, one of the business schools is beginning to design a course.

We are seeing business schools working on "social enterprise," which is another form of democratized wealth ownership, in this case, usually a nonprofit corporation making money for a public service.

For instance, in Seattle, there is Pioneer Services, which began as a drug-rehabilitation nonprofit. It began training people who had gone through the rehabilitation program, then produced some businesses so they can do their training on the job. They began making money in the businesses to finance their whole program.

I think they're a scale of about $60 million now. It went from 1 percent profits and 99 percent grants to almost 99 percent profits, used for public purposes.

This is now being developed in other parts of the country. Some of the business schools, Harvard and Yale, are teaching these principles in business school, and I think we're going to see them begin moving into the co-op area as more experience develops on the ground.

For people who are interested in doing this, www.community-wealth.org is a tool. There are people who are doing it and help others. That's a major change historically, upon which I think we can really build.

See more stories tagged with: new deal, coops, cooperatives, tennessee valley authorit, community wealth

Maria Armoudian is a Commissioner at the City of Los Angeles and Producer and On-Air Host at KPFK radio station. Her site is Armoudian.com.

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