Book of the Day: What Then Must We Do

“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.”

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

Gar Alperovitz explains:

“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.”

Excerpts from a interview 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.”

2 Comments Book of the Day: What Then Must We Do

  1. AvatarMatthew Slater

    It is certainly the book of my day: I just finished reading it this morning!
    The eponymous ‘we’ is as in ‘We, the people’. The book charts a range of grass roots approaches to reclaiming the means of production, many of them already working within USA.
    However I was disappointed because Alperowitz seemed to think that politics had somehow taken a wrong turn and and he completely ignored the the ruling elite, its power, its methods, its intentions.

  2. AvatarJeff Mowatt

    Tolstoy was part of my personal inspiration.

    “Good consists not in the giving of money, it consists in the loving intercourse of men. This alone is needed. Whatever may be the outcome of this, any thing will be better than the present state of things. Then let the final act of our enumerators and directors be to distribute a hundred twenty-kopek pieces to those who have no food; and this will be not a little, not so much because the hungry will have food, because the directors and enumerators will conduct themselves in a humane manner towards a hundred poor people. How are we to compute the possible results which will accrue to the balance of public morality from the fact that, instead of the sentiments of irritation, anger, and envy which we arouse by reckoning the hungry, we shall awaken in a hundred instances a sentiment of good, which will be communicated to a second and a third, and an endless wave which will thus be set in motion and flow between men? And this is a great deal.”

    http://www.p-ced.com/1/node/38

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