Gar Alperovitz on Reforming the Corporation for a New Economy
Interview conducted by the Capital Institute.
- You make very clear distinctions between large- versus smaller-scale companies when you talk about how the corporate form needs to be rehauled in an increasingly resource-constrained world.
There is a great difference between large-scale multinationals and small- and medium-size enterprises. My father owned a small manufacturing company in the Midwest. I come out of that tradition. Those small companies are not the problem.
The first problem with the big multinationals is they are beholden to Wall Street. If they stop expanding and their revenues don’t go up they get killed by the Street. But that does not work for a society that has to reduce resource throughput and limit consumption. Second, they accumulate political power and are able to manage the system because they can lobby. Third, and this is something few people want to discuss, they are disruptive of community because they move wherever they can get cheaper labor. So objectively I don’t think they can achieve the goals that people genuinely care about as they are currently structured and as they currently operate.
I agree with E.F. Schumacher that for certain industry sectors there is no way around some sort of public participation. Consider what might have happened if the government and the UAW had used the stock they owned in General Motors because of the bailout to reorganize the company along full or joint worker-ownership lines—and if the new General Motors product line were linked to a plan to develop the nation's mass transit and rail system? Since mass transit is a sector that is certain to expand, there is every reason to plan its taxpayer-financed growth and integrate it with new, community-stabilizing ownership strategies.
We may ultimately have to face long-term public ownership in certain industries and in other cases they have to be broken up. Now which industries, from a technological standpoint, have to remain big is a question for researchers that has not been answered. For now we are saying decentralize as much as you can and then with what is left we have to figure out what we can do about it.
- You take the view that our county will have to decentralize decision-making within this century if we are to preserve our democracy. Can you explain why?
The US Census Bureau estimates that the population of this country could reach 1.1 billion people by the end of the century. If you want participatory democracy with 1.1 billion people (or even 700 million!) you are going to have to move to more regional, decentralized decision-making. The federal government will simply not be able to manage things as time goes on. Within a smaller country you can manage economic policy in different ways than you can in a huge country like our own. You can drop Germany into Montana. When I was working in the Senate I drafted legislation that became law in the mid-1960s to establish regional commissions for regional planning.
- Can you talk more about why it is critical for us to stabilize “throwaway” cities like Cleveland if we are to nurture democracy and address climate change in a meaningful way?
If we are interested in democracy with a big "D" we know the units below it have to operate democratically. And you can’t have democracy at the lower levels if you undermine community.
Right now we treat our cities as disposable. Big companies come in, cut a deal, then move out and leave cities behind and take the jobs with them. They leave behind houses, roads, schools, everything a community needs is left and decay sets in. Then you have to build it all up somewhere else.
This cycle is destabilizing and is extremely carbon costly in the first layer of reality. You also can’t do serious planning for reducing a carbon footprint unless there is stability in a community. You can’t get the right density and transportation planning and do the recycling if there is too much instability.
No one is talking about this; it is the elephant in the room. People talk about sustainable communities but they forget that communities are undermined every day by these economic forces. You need major economic policy changes and institutional changes to reverse this trend and the environmental movement has not thought about it seriously.
In microcosm the Evergreen model establishes principles that are important in this regard. It creates a significantly stable market through anchor institutions. That principle of substantially stabilizing parts of the market is one key way to do it.
- Do you think it is possible for policymakers to enable these kinds of huge structural changes?
Not at the moment. At the current time I think public officials can be of a lot of help in supporting efforts like the Evergreen model. There are pockets of Federal money that could be mined now for these smaller experiments. People inside government like the model and there is bipartisan interest in it. But they are not yet prepared to tackle the big policy issues required for the major structural changes. The whole idea is we are into a 20- or 30-year period of change and what is interesting is the groundwork is being laid for economic and societal transformation in these experiments like Evergreen. There is a parallel here to the progressive era before the New Deal where new principles were being explored on the state and national level.
- How optimistic are you that these systemic changes will eventually take place?
We are in an interesting time economically—we are not in collapse but we are in the midst of a kind of slow decay where we can develop experiments and innovate—Evergreen is an example of that. People know that there is something wrong and they are saying it out loud and meaning it. And there is even something in the Tea Party that is instructive, although it takes a libertarian form, that there is a problem on how decisions are made by big government and big corporations.
So, yes, I am moderately optimistic. I went to the University of Wisconsin during the Joe McCarthy era when they shot anything that moved politically. If you would have asked if any real change was possible in Wisconsin in the late 1950s I would have said no, but then the '60s exploded. The Arab Spring and the feminism movement were also unexpected but these discontinuities are historically regular." (http://www.capitalinstitute.org/conversation/braintrust/gar-alperovitz)