What Then Must We Do

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* Book: What Then Must We Do? Gar Alperovitz.

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"argues that a new system, one that is not corporate capitalism and not state socialism but something new entirely, could “democratize the ownership of wealth, strengthen communities in diverse ways, and be governed by policies and institutions sophisticated enough to manage a large-scale, powerful economy.” [1]


Description

Gar Alperovitz:

"The title is What Then Must We Do?, a phrase taken from Tolstoy. I suggest that traditional liberalism, traditional conservatism and traditional radicalism are now at a dead end. We are in a strange form of crisis which will neither end in societal collapse (as in the Marxist model) nor success (as in the liberal model) nor in some conservative model. Instead we’re caught in a never-never land of sustained stagnation and decay—which I argue is a very unusual societal context, being neither reform nor collapse. I think we’ve been in this context for some time now.

Amidst the pain, this situation has one advantage. Since we don’t appear to be headed toward dramatic change in any direction, we do appear to have time to think. And thus all these new initiatives we’ve been discussing here—a whole rich, new debate has started up in this country.

Moreover, as I argue in the book, we are potentially in the pre-history of truly fundamental change, beyond traditional corporate capitalism, beyond state socialism. So all this experimentation is very important and it could be laying the foundations of something for the long-term.

If America is, as it’s sometimes called, a laboratory of democracy, then some of these principles, even at a small stage in local “laboratories,” can eventually be applied at other levels. This is the kind of important groundwork that was done prior to the New Deal, prior to women getting the vote, prior to the Progressive Era itself." (http://solidarityhall.org/gar-alperovitz-interview/)


Interview

This interview of Gar Alperovitz is conducted by Elias Crim of Solidarity Hall:

"* To begin with, tell us about the Democracy Collaborative’s focus on community wealth-building. How can that be done?

We also use the term community-sustaining economy—and we’re interested in forms that build democracy, community and equity. In smaller companies, we know that worker ownership is a useful device. Indeed, we are strong supporters of worker coops and worker-owned companies in general. In large firms, worker ownership in some industries might produce different equity results. That is, the larger community has a stake in the impact of their operations. And we’ve been interested in how you can blend these different interests most successfully.

The problem with pure worker ownership of large industries is that the worker/owners are under the same market pressures as any other company. They are therefore as likely to pollute the environment, for example, if they’re under competitive pressures to do so, as the next guys. So that means the worker-owned company’s interests are somewhat different from that of its surrounding community—which includes elderly people, young people, all those who happen to be out of the workforce. After all, half the society at any one time is not part of that worker ownership.

So we think it’s critical, to use economists’ language, to begin to internalize the externalities through structures that reflect the broader community’s interests, rather than putting workers’ interests at odds with them. The Evergreen Cooperatives in Cleveland, for example, is a key initiative that reflects this worker-community model, and which we helped design.


* Back during the Occupy protests a year or so ago, you published a NY Times op-ed on the quiet revolution in worker ownership that has been growing in recent years and yet has been little noticed.

Well, to start with, the national media doesn’t cover much at the local level—they don’t have the resources any more to do so and that’s getting worse, not better. So it’s not surprising that people don’t know about this development.

But part of what’s driving these experiments—in worker ownership, cooperatives, and other hybrid forms– is the fact that so much economic failure is occurring: an historical process is behind this. So there are now ten million Americans who are worker-owners at their companies—about three million more than there are members of private sector unions, in fact.

Some 130 million people now belong to a co-op or credit union. Neighborhood owned corporations number between four and five thousand. There are several thousand social enterprises, increasing numbers of B Corporations, growing numbers of city- or neighborhood-owned land trusts.

These new forms are often following functional lines. So that neighborhood ownership makes more sense for housing, for example.

Take the concept of municipal ownership which was favored when appropriate in its earlier days by the Chicago school of economics. There are around 2,000 municipally owned utilities around the country, with several new municipalizations in recent years.

There’s also the Cleveland model, which is being applied in other cities—again, largely and simply because the other business models are failing before everyone’s eyes, just as are traditional liberalism and traditional conservatism.

And more importantly, I think, people are now beginning to ask, where does this all lead to in our larger political-economic system?


  • You argue in your most recent book that reform is not enough. We need to change the very structure of wealth-holding institutions—by creating more public banks, for example. Is that happening?

Yes, the idea of public banking is making strides and is going to make more. And again, it’s because of the failures. The so-called Dodd-Frank Wall Street Reform Act has been in effect for some time now. But instead of controlling the behavior of the big banks, they’ve only gotten bigger and are taking even bigger risks. The numbers here are quite extraordinary.

We want a model that begins with decentralization and the principles of community and with the recognition that creating local community requires stability. That means people anchored in a place where they can flourish, rather than being forced to move, as was the case with millions of residents of Detroit or Youngstown. Cleveland was once 900,000 in population; it’s now less than 400,000. How can you have democracy when people are totally uncertain about their economic future? So stability is required.

With regard to the financial system, you notice the big banks distanced themselves from local communities a long time ago. They’ve likewise gone in for dangerous levels of speculation, claiming that they’re more efficient thereby. This claim, even if it were true internally, is contradicted by the fact that they are extraordinarily wasteful in terms of the larger system problem here. They are capable of creating tens of trillions of dollars of losses when they fail.

In the earlier days of the Chicago School of economics, which I have considerable respect for because of its rigor and integrity in that period, they faced the fact that many big banks and indeed corporations were not supportive of communities. These economists—I’m speaking here of Henry Simons, Milton Friedman’s teacher and others—wrote important reports calling for nationalization in certain cases, on the principle that some firms could not be regulated. This group understood regulatory capture very well, realizing further that even if you broke these institutions up, they would simply find a way to regroup and be back at the same game again.


...

  • You’ve spoken and written about the importance of regionalism in regenerating our communities. Tell us a bit more about why this regional angle of approach matters.

There’s a great body of work on this subject, going back to the beginnings of the twentieth century and particularly around the 1930s. And the argument here is quite simple. Just consider the sheer size of this country, compared with the other developed nations in the Western world. It surprises people to learn that you could tuck Germany into the state of Montana or fit France comfortably within the state of Texas. The difference in scale is one of the reasons European politics are in a sense so much easier.

We, on the other hand, have some 315 million people spread out over 3.5 million square miles. We are headed toward 500 million people and thus the argument for decentralizing. If most states are too small and the continent itself is too large, what’s left –if democracy is to flourish–is the intermediate unit, the region.

I don’t know if you know the work of Alberto Alesina, an economist at Harvard who co-authored a book called The Size of Nations. He and his colleagues have been looking at the economic effects of scale, a topic which has not received much attention for decades. I wrote an op-ed piece for the New York Times several years ago on the possibility of California leading the way toward this kind of devolution and I explained why I thought it had to happen: as the only way to avoid the mounting inefficiencies, political and economical, which occur when states become too large. So I see recent developments tending to confirm regionalism from converging angles." (http://solidarityhall.org/gar-alperovitz-interview/)



Review

By Willie Osterweil :

"The book’s premises are solid and hard to disagree with: that traditional politics, both in terms of voting, labor disputes, and more basic styles of activism—methods that brought most of the progress in the United States through the 20th century—will not work as much as we need them to moving forward. Both regulatory capture and corruption of the government, combined with a neo-liberal consensus about globalization, lower wages and smashing the labor movement, mean that the tried and true methods of progressive change in this country no longer work. But something’s got to give.

For taking on such heavy material, Alperovitz keeps his tone light, simple and chatty. This style often sacrifices nuance, but it also makes his more radical proposals seem eminently reasonable. For Alperovitz, the way forward can be traced through the movement towards democracy (defined as decision making control over our lives, our cities and our workplaces, not just voting). For him, then, the most promising things that have emerged in the last decades are cooperatives, worker owned business and ESOPs, B-corporations and land trusts, etc., along with certain forms of local government ownership and management, such as public banks, sustainability planning, and direct municipal and state investment strategies.

He gives a wealth of different examples of these small-d democratic projects, and for anyone interested in the solidarity economy in America, the early chapters are an excellent resource on a number of different projects. He goes through example after example of powerful new models of worker control and, more importantly for him, worker ownership of companies.

Alperovitz points out that worker-controlled businesses do better, are more competitive and more efficient than traditional hierarchical companies at doing the same job. As things get worse, he argues, companies will look to these examples and build on them, using them as templates for action. His favorite example is what he calls the “Cleveland Model”, based on a series of cooperatives and government programs in Cleveland which show a way that public policy and worker control could democratize local economies. The cumulative effect of all these examples is to make them seem not radical, but normal.

Which is exactly Alperovitz’s intention, and his hope, because he believes that, slowly and over time, democratically controlled and owned workplaces, along with more economically responsible local governments, could become the norm. This is ultimately his answer to the title’s question.

Alperovitz lays out four tactics which he believes, when combined together into a long-term strategy, could lay the groundwork for a stronger and more democratic economy. The tactics he describes are: “Evolutionary reconstruction”, which is the widespread development of more democratic economic forms like coops, land trusts and social enterprises; “Checkerboard municipal and state development”, which involves the development of public banks, utilities, land ownership, etc.; “Crisis transformations”, which he describes as crisis driven initiatives to break the power of banks and reform the health industry; and “Big crisis transformations” which would involve the nationalization of major companies (as, he points out, we briefly saw with AIG and GM).

While I agree that all these things together would produce broader social justice and a more democratic society, I’m not sure about the feasibility of the last two points on his roadmap. There’s no reason to believe that crisis will produce progressive policy—as he himself points out, the history of major economic crisis in Europe is also the history of authoritarianism—and this analysis also seems to miss the point that Alperovitz has made earlier: that the big corporations have effectively captured the federal government. If they have done so, how will the government successfully oppose their will and nationalize? Why will Obamacare give way to single payer healthcare? If traditional politics wont work, why will “crisis” make this happen?

He’s no teleologist, he doesn’t argue that the world he describes will necessarily come about, not by any stretch. And he doesn’t say that the insufficiency of traditional politics means people should stop practicing them, in fact he says the opposite. But he also doesn’t describe the sort of social force that will make these changes possible, nor what role the reader could have in making these changes. While he argues that the age of leftist counter-power (on the part of social movements or labor) in large-scale policy-making is over, and I tend to agree, he fails to name what exactly will make the government of the rich for the rich change its tune. He says that as things get worse the government will have to try new policies, and it might, but there’s also no reason to expect that the government won't just continue to bail out the rich at the expense of an increasingly immiserated population.

These are all direly important questions, because Alperovitz’ strategy asks us to take a long view—this process will take decades. But what of the people suffering now, the millions in prisons, the millions out of work more and less permanently? It’s a big gamble to make on governmental good will. What Then Must We Do? features a thorough diagnosis of the problems facing the American economy, and is an excellent primer on the powerful ways that democratic ownership and management are changing businesses and government in real ways across the country. If it fails to fully answer its own question, it at least gives a powerful and serious look at alternative ways to imagine our society. In the end, we will need many more people imagining a new society if we hope to build one—to that goal, this book might just be a catalyst." (http://www.shareable.net/blog/a-new-book-offers-a-new-american-revolution?)