capitalism

Breaking Good

In today’s economically class-cleaved America, ideological resistance continues unabated to the deployment of government as a force for good especially in contentious change scenarios such as solving growing wealth and opportunity divides and the future of organized Labor (to name just two). Too often, progress is facilitated mainly through the prism of trickle-down tax code set asides to inspire transformational behavior which doesn’t materialize to the desired extent.

This disconnect between theory and practice leaves out working class populations most needing more direct inclusion to uplift the starkly narrowing middle class consumer base that is threatening the end of commonly understood consumption-driven capitalism. As a result, there may be a small opening for policy innovation starting with the tax code (“Changing the tax code could help curb inequality,” Lawrence Summers, The Washington Post). (more…)

Rebuilding the Yellow Brick Road

A new worker-ownership evolution-revolution featuring more virtuous capitalism communities of practice is demonstrating that doing well can realistically and profitably be based on doing good. This brave new economic world is emerging from green-shoot, “made in America” antidotes to structural unemployment and income inequality, sprouting ubiquitously among increasing absentee-owner-plagued urban and rural geographies. Hybrid home, land, and workplace sovereignty-recuperation models through local equity enterprises are building a “new green economy” equation, where labor seeks to operate in a permanent seller’s market as does domestic energy sourcing with renewables and distributed generation serving as means to better, more sustaining, stakeholder-centric ends.

Societal benefits from this approach are inclusive and sustaining. Comparative labor advantages are sourced locally, stakeholders equate to shareholders, and profits recycle to the businesses and communities that produce them. Local labor regains its natural place-based sovereignty in regards to its relationship with local and exterritorial capital which, while necessary and hopefully sufficient, is subordinated to the needs of the working class people and communities it finances instead of the reverse. Under this approach, solidarity as a founding American immigrant-inspiring and hosting community principle so closely aligned with freedom and daily liberties is reborn, rewired, and reused. (more…)

Supporters of workers cooperatives flesh out plans for Reading | Reading Eagle

By Don Spatz

Reading,PA —  Reading could get its first workers cooperative next year in its push to foster an alternative business model that competes with Wall Street.
The co-op would be an employee-owned firm composed mostly of apprentices being trained in building demolition, deconstruction (razing all or some of a building, but reusing its parts) and weatherization, said Lawrence P. Murin, special assistant to Mayor Vaughn D. Spencer.

The city would not create any cooperatives on its own, but would foster them as part of its economic development plan, Murin told an audience of 30 people last week at Alvernia University.

He said the city gives several million dollars a year to private firms and nonprofits.

“We believe we have the ability to direct some of that to co-ops,” he said.

The meeting was called to update the community on what co-op progress has been made; rescreen the video “Shift Change: Putting Democracy to Work,” shown at the panel’s February meeting; and tout the virtues of building local cooperatives.

“Why Reading? The answer is that we have a mayor and an administration that recognizes the old ways don’t work,” Murin said.
He said the city’s industrial and tax base has dwindled for 40 years because the city has used tens of millions of dollars to lure businesses here, but they’re gone as soon as the incentives are gone.

That’s because under the Wall Street model, capital is sovereign and labor is a commodity, totally opposite the co-op model where job creation comes first and profits second, said Michael A. Peck, the moderator and the North American delegate for the Mondragon Cooperative based in Spain.
“Nobody here is saying capitalism is wrong,” Peck said. “We’re saying that predatory capitalism is wrong, and virtuous capitalism is good.”

Read the full article via The Reading Eagle.

Public/Private Sector Ownership Proposal (P2SOP)

A new socio-political populist movement is sweeping America in reaction to the 2008 financial tsunami of deregulated, greed-based causes and massive wealth transfer effects or receipts to the financial one-percent. Based purely on the numbers seen to date, this movement is and will be composed of rising and current Millennials and the “Net Generation” or “Generation Edge”, immigrants and minorities, plus any white person with a progressive conscience. Converging as a new coalition of the socially and technologically willing, these voters (unless effectively wholesale disenfranchised) will provide a national elections cycle majority for decades as America becomes a majority minority country even though some geographical revisionist and recidivist pockets will persist (such as the Mason Dixon healthcare divide) based on political gerrymandering and subtext political culture.

Represented in numerous cross-pollinating private and nonprofit sector organizations across the country, this movement reacts to no-way-out diminishing expectations and desperation. Practitioners are studying and forming various hybrid, virtuous cycle, cooperative and collaborative capitalism models that honor individual initiative in the context of broad-based and transparent stakeholder ownership centered in “local living economies.” (more…)

Corporate & Capitalist Transition & Transformation Models

Paper submitted by Michael Peck (Mondragon USA), Steve Dubb (The Democracy Collaborative, University of Maryland), and Rob Witherell (United Steelworkers Union) for the “Corporations in a Great Transition: Visions, Models, and Pathways for Transformation” event hosted by the Tellus Institute & MIT Sloan School of Management, in Boston on October 31st & November 1st, 2013.

Capitalism at a Crossroads

Although the theme of this roundtable is “Corporations in a Great Transition,” the authors would argue that corporations, especially those in the financial sector, mostly have not transitioned at all. Instead, the increasing wealth inequality and diminishing social mobility experienced by the United States reflects a capitalist system protecting shareholder-centric relics of past century technology and socioeconomic realities rather than the empowered stakeholder movements we see and in which we participate. In this anachronistic context, shareholder value is measured more on perception and popularity than on actual long-term performance and real wealth creation. Meanwhile, share ownership for the vast majority of people means little more than legalized gambling with an account balance.

  • Case in point: Apple’s market capitalization recently increased by $10 billion overnight simply because of a report the CEO had dinner with a prominent investor.

Alarmingly, the traditional capitalism concept of building value over the sustainable long term has been tossed aside and replaced with maximizing short term profits at the great expense of anything sustainable, starting with the basic right of people to “life, liberty, and the pursuit of happiness.”

  • Case in point: A major pharmaceutical company recently announced it would lay off thousands of its employees and abandon a number of research and development projects to focus on higher profit margin drugs because their profit margin wasn’t perceived to be high enough.
  • Case in point: Vulture capital firms scoop up undervalued, but profitable companies either to doctor their income statements so the acquired business can be resold at a higher price, or suck out as much cash from continuing operations as possible until the carcass of plant, property and equipment can be sold off for a few dollars more.

In these cases, the cure is visibly worse than the disease for those left disenfranchised and behind. Jobs are eliminated and shipped to whichever place can offer the lowest poverty wages for workers coupled with the least restrictions on safety and environmental conditions. This is because global labor arbitraging has become the predatory capitalist market mechanism instrument of choice. We have replaced “slavery based on race and color” with a new form of slavery based on lack of ownership, viable options and means. (more…)

How to Democratize the US Economy | The Nation

A long-term plan to renovate the American dream begins at the local level and scales up.

This article is adapted from Gar Alperovitz’s What Then Must We Do? (Chelsea Green).

by Gar Alperovitz

Everyone knows the United States faces enormous challenges: unemployment, poverty, global warming, environmental decay—to say nothing of whole cities that have essentially been thrown away. We know the economic system is dominated by powerful corporate institutions. And we know the political system is dominated by those same institutions. Elections occur and major fiscal debates ensue, but most of the problems are only marginally affected (and often in ways that increase the burdens).

The issue is not simply that our situation is worrisome. It is that the nation’s most pressing problems are built into the structure of the system. They are not unique to the current economic slump or the result of partisan bickering, something passing in the night that will go away when we elect forward-looking leaders and pressure them to move in a different direction.

Not only has the economy been stagnating for a long time, but for the average family, things have been bad for a very long time. Real wages for 80 percent of workers have not gone up more than a trivial amount for at least three decades. At the same time, income for the top 1 percent has jumped from roughly 10 percent of all income to more than 20 percent. A recent estimate is that a mere 400 individuals in the United States own more wealth than the bottom 180 million Americans taken together.

Unfortunately, what we call traditional politics no longer has much capacity to alter most of the negative trends. To be clear: I think projects, organizing, demonstrations and related efforts are important. But deep down, most people sense—rightly, in my view—that unless we develop a more powerful long-term strategy, those efforts aren’t going to make much of a dent.

In 2007, people got excited about federal legislation raising the minimum wage from $5.15 to $7.25 an hour. This was obviously good, but the long-term negative trend continued nonetheless. The minimum wage, adjusted for inflation, was more than $2 higher in 1968. Clearly, when great victories don’t even get us back to where we were more than forty years ago, we need to pay close attention. I support such efforts, but it appears unlikely that strategies aimed at reviving the politics that produced the New Deal and Great Society programs are going to alter the big trends, even if those strategies are intensified by movement building—especially given the decline of labor unions, the power base of traditional progressive politics.

There is, however, a little-noticed twist to this otherwise bleak narrative. Deepening economic and social pain are producing the kinds of conditions from which various new forms of democratization—of ownership, wealth and institutions—are beginning to emerge. The challenge is to develop a broad strategy that not only ends the downward spiral but also gives rise to something different: steadily changing who actually owns the system, beginning at the bottom and working up.

* * *

Consider the evolutionary change developing in that rustiest of Rust Belt states, Ohio. On one unhappy day in September 1977, 5,000 steelworkers lost their jobs, their livelihoods and their futures when Youngstown Sheet and Tube closed down. Such large-scale layoffs were not common in the United States up to that point. The story made the front page of newspapers and led television news across the country. The workers called it Black Monday, and I remember all too well reports of desperate men committing suicide after concluding they could no longer support their families.

A young steelworker named Gerald Dickey had a different idea: Why couldn’t the workers run the facility themselves? Dickey and a group of activist friends teamed up with an ecumenical coalition in Youngstown to demand that the mill be put back to work under worker-community ownership. After a huge organizing effort, they got support from Washington—including the Carter administration, which agreed to allocate $100 million in loan guarantees.

When the administration reneged after the midterm elections of 1978, the plan fell apart. But the story did not end there. And what happened next is of even greater significance.

The inspiring example of the workers and religious leaders—and the sophisticated educational and political work they did to spread the word—had lasting impact. They knew they were up against some of the most powerful corporate (and union) players in the country. They were fully aware they might lose the battle. They also knew they had discovered an important idea with great promise. Accordingly, they made it their business to educate the public, the press and politicians in the state and around the country about what they were trying to do, and why.

The idea took root in Ohio, and over time the practices and strategies of worker-owned businesses grew more sophisticated and innovative. Today, the state is home to half a million worker-owners, and the support system for building such businesses is one of the most advanced in the nation. The simple idea that workers can and should own their businesses is now conventional in many parts of the state, not only among workers but also businessmen, many of whom (aided by certain tax benefits) sell their businesses to their employees when they retire.

The current goal is not simply worker ownership, but worker ownership linked to a community-building strategy. In Cleveland, a group of worker-owned companies are connected through a community-building nonprofit corporation and a revolving fund designed to help such businesses thrive. Part of the design involves getting hospitals and universities in the area (like the Cleveland Clinic, Case Western Reserve University and University Hospitals) to purchase supplies, goods and services from these companies. Everything in the network is green by design. One of the cooperatives, for example, is an industrial-scale laundry that uses two-thirds less energy and water than conventional ones.

Similar networks are developing in many other cities, and big unions are lending their support as well. Working with the Mondragon Corporation in the Basque region of Spain—an exemplary integrated model involving numerous cooperatives and more than 80,000 people—the United Steelworkers, whose national leadership once opposed the Youngstown effort, has announced a campaign to help build “union co-op” worker-owned companies here. The Service Employees International Union, the Steelworkers and Mondragon are involved with a worker-owned laundry in Pittsburgh. SEIU has also joined in a groundbreaking partnership with the largest worker cooperative in the United States: New York City’s Cooperative Home Care Associates, which provides home services to the elderly, disabled and chronically ill.

Visit The Nation to read the full article.

Time to Make Job Creation a Team Sport | Huffington Post

By Frank Islam and Ed Crego

The American jobs machine is broken. To fix this, we need to bring more cooperation to capitalism and make it a team sport.

In our previous two blogs we looked at the condition of labor and workers in the United States and recommended worker cooperatives as a means to address that condition. In our final blog in this series, we explore why this is an essential action at this point in time and what cooperatives of all types can bring to the table.

America has always prided itself on rugged individualism and the benefits of the free market system — as well it should for the contributions that many individual entrepreneurs and capitalism have made to advance the American dream over the past half century or so. Times have changed.

Now, we live in an era when self-centered individuals and extreme capitalism are extracting rather than adding value for society. As a result, the American dream is at risk for the vast majority of workers.

Stagnant wages, high unemployment and increasing income inequality have been the standard bill of fare for workers since the end of the Great Recession and the beginning of the ever-so sluggish recovery…

“It used to be,” as Jia Lynn Yang points out in a masterful article for The Washington Post, “a given that the interest of corporations and communities such as Endicott (birthplace of IBM) were closely aligned. But no more. Across the United States as companies continue posting record profits, workers face high unemployment and stagnant wages.

Driving this change is a deep-seated belief that took hold in corporate America a few decades ago and has come to define today’s economy — that a company’s primary purpose is to maximize shareholder value.”

Ms. Yang examines this transformation in detail in her article and traces its origin to Milton Friedman and the “Chicago school” of free market economists. We don’t know if the University of Chicago economists deserve the credit — or blame — for this change.

We do know that it used to be that workers bled IBM blue, John Deere green, or International Harvester red. Today, workers are “free agents” and disposable — they just bleed.

The question becomes what do you do to stop the bleeding? We don’t expect most large corporations to grow a conscience. We know that many small businesses can’t get loans or credit. We know that government at all levels is shedding jobs rather than creating them.

So, we need to turn elsewhere. One of the primary answers, as we proposed in our previous post, is for workers to take matters in their own hands by forming worker cooperatives and becoming business owners. In that post, we featured the Mondragon Corporation from Spain, the world’s largest industrial, worker-owned and run cooperative with more than 80,000 employees world-wide and revenue in excess of $14 billion euros.

Cooperatives may sound like an un-American or unrealistic proposal or solution. Nothing could be further from the truth. They are as American as mom and apple pie…

Read the entire article via The Huffington Post.

Mondragon and National Cooperative Bank Partner in Growing Domestic Worker-Owned Cooperatives

For Release: Wednesday, September 4, 2013

Laboral Kutxa (the Mondragon Bank) and National Cooperative Bank (NCB) to Partner in Growing Domestic Worker-Owned Cooperatives 

NCB & Laboral Kutxa Form Precedent-Setting USA Collaboration

Memorandum of Understanding Signed on Wednesday, September 4th, 2013

The world’s largest industrial, worker-owned and run cooperative, Mondragon, founded in the Basque region of Spain over fifty-five years ago and winner of the 2013 Financial Times “Boldness in Business” award has agreed through its cooperative bank, Laboral Kutxa, to partner and build cooperative stakeholder businesses in local living economies throughout America with the U.S.-based National Cooperative Bank headquartered in Washington, D.C.

For the first time in their respective operating histories, both Mondragon’s Laboral Kutxa and National Cooperative Bank (NCB) will collaborate to support each other’s banking customers including subsidiaries of cooperatives operating in the United States belonging to the Mondragon Group. Predicated on similar “doing well by doing good” principles, social responsibility values, and a growing understanding that cooperative markets extend beyond borders, both entities pledge to support each other’s customers with regard to charges, payments, financial services, online banking systems, and other commercial banking practices.

National Cooperative Bank fulfills its singular mandate to strengthen America’s cooperatives, their members and other socially responsible organizations through the delivery of social impact banking products and services.  NCB’s customers are cooperatives such as grocery wholesaler co-ops, food co-ops, purchasing co-ops, credit unions and housing co-ops who share in the spirit of joining and working cooperatively to meet personal, social, and business needs.  Headquartered in Washington, DC, NCB has offices in Alaska, California, New York, Ohio and Virginia.

Laboral Kutxa of Mondragon, the financial cooperative arm of the Mondragon Group, is a cooperative bank fielding 450 branches with over 1,300,000 customers.  Mondragon is the world’s largest worker-owned industrial cooperative but also the top Basque region industrial group, ranked tenth in Spain with 80,000 personnel, a presence in 70 countries, and expanding operations across the U.S. and North America.

The NCBLaboral Kutxa Memorandum of Understanding frames the general terms and conditions for the cooperation between both parties, based on subjecting each future transaction to a specific contract with market-driven competitive performance goals.  This partnership intends to exchange best practices and experiences in social and solidarity-oriented high impact lending and to support international initiatives for the accelerated development and promotion of the global cooperative sector.

This agreement represents Mondragon’s first international financial sector agreement but second precedent-setting U.S. collaboration during the past four years.  Announced in late October, 2009, with an extensively researched structural template provided in March, 2012, North America’s leading manufacturing union, the United Steelworkers, and Mondragon International agreed to develop a hybrid union co-op model that is currently adopted by multiple U.S. unions and underway in over ten U.S. cities with projects ranging from an organic sustainable farm to a commercial laundry to energy efficiency. To buttress this initiative,  Mondragon International USA has partnered with the Ohio Employee Ownership Center (OEOC) and The City University of New York (CUNY) School of Law’s Community Economic Development (CED) Clinic to create reusable union-coop business templates and communities of practice with the Cincinnati Union Cooperative Initiative (CUCI) illustrating the leading metropolitan success story to date.

Both Mondragon’s partnership with National Cooperative Bank through the Mondragon Bank, Laboral Kutxa, and its union-coop model collaboration with the United Steelworkers reflect the ten basic principles that Mondragon co-operatives have put into practice during the past fifty-five plus years (open admission, democratic organization, sovereignty of labor, instrumental and subordinate nature of capital, participation in management, wage solidarity, inter-cooperation, and education).  Fully compatible with the UN Principles for Responsible Investment, the National Cooperative BankLaboral Kutxa partnership intends to promote investments and businesses essential for revitalizing local productive economies and renewing community prosperity.

In the U.S. alone, member-owned organizations account for $3 trillion in assets, $500 billion in revenue, and more than one million jobs.  Specifically, the United States fields 29,000 cooperatives holding 350 million co-op memberships and consisting of 900 rural electric coops with 42 million clients in 47 states, two million farmer-members in 3000 farmer-owned cooperatives who provide over 250 thousand jobs and annual wages of $8 billion, 250 purchasing coops offering group buying and sharing to more than 50,000 independent businesses, 7500 credit unions providing financial services to nearly 90 million members, and circa 8000 housing coops providing one million homes.  Mondragon’s recent annual sales in North America have reached the $250 million level.

About National Cooperative Bank (NCBwww.ncb.coop): NCB fulfills its singular mandate to strengthen America’s cooperatives, their members and other socially responsible organizations through the delivery of social impact banking products and services.  NCB’s customers are cooperatives such as grocery wholesaler co-ops, food co-ops, purchasing co-ops, credit unions and housing co-ops who share in the spirit of joining and working cooperatively to meet personal, social, and business needs.  In 2012, NCB provided nearly $1.4 billion in loans to cooperative and community organizations across the United States of which $232 million served low-moderate income communities.  Headquartered in Washington, DC, the Bank has offices in Alaska, California, New York, Ohio and Virginia.  Recent transactions include a $30 million first mortgage to Amalgamated Housing Cooperative in New York City’s Bronx Borough, the oldest limited equity housing cooperative in the United States, and a $4.7 million term loan to Wheatsville Food Co-op in Austin, Texas, with 12,000 consumer-owners.  Chartered by the 95th U.S. Congress in 1978, NCB was privatized in 1981 as a member-owned financial institution. Since then, NCB has been structured as a financial cooperative and all capital stock has been owned by borrowers or entities eligible to borrow from NCB.

About Laboral Kutxa (www.laboralkutxa.com): Laboral Kutxa, created in 1959 currently fields 450 branches with over 1,300,000 customers whose deposits ($24 billion in 2012) and loans ($20 billion in 2012) contribute to the bank’s total assets of $31 billion (2012) and $70 million in profits (Q2/2013).  Laboral Kutxa is the financial cooperative arm of the Mondragon Group (“Humanity At Work” through Cooperation, Participation, Social Responsibility and Innovation) with 2,235 worker-owners.   Mondragon is the world’s largest worker-owned industrial cooperative but also the top Basque region industrial group, ranked tenth in Spain with 80,000 personnel, a presence in 70 countries, and winner of the 2013 Financial Times “Boldness in Business” award. Mondragon’s more than fifty-five year old mission is to generate wealth for society through business development and job creation under the “one worker, one vote” cooperative framework where labor is sovereign and capital, while essential, is subordinate to sustainable job creation. As the second largest credit cooperative in both the Basque region and Spain but ranking first in customer satisfaction and service quality, Laboral Kutxa is one of the three founding pillars of the Mondragon Group’s domestic and global unparalleled growth and success as defined by Mondragon principles.  Under the Mondragon framework, Laboral Kutxa’s workers are partners and therefore have a share in the ownership and the distribution of profits while also participating in management and management decisions.”

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Media Contact: Mondragon International USA/Michael A. Peck, mpeck@mapagroup.net, TEL (202) 412-2499 or National Cooperative Bank/Mary Alex Blantonmblanton@ncb.coop, TEL (703) 302-8876  

The Alternative American Dream: Inclusive Capitalism | PBS NewsHour

By Chris Mackin

In this 1987 MacNeil/Lehrer NewsHour report, Paul Solman reported on workers’ attempt to buyout the General Dynamics shipyard in Quincy, Massachusetts, and spoke with Chris Mackin, a leader in the worker ownership movement.

Paul Solman: Worker ownership: When I joined the labor force in 1970, it was the dream of many an “alternative” business, including ones I worked for. Egalitarianism. Justice. Capitalism for all. A Boston weekly newspaper of which I was the editor, “The Real Paper,” was in fact entirely owned by its staff.

Chris Mackin, of the consulting firm Ownership Associates, has been a key figure in the worker ownership movement for almost as long as I’ve been a journalist. He first showed up in a NewsHour story of mine in 1987. He was advising a worker buyout of a shipyard in Quincy, Massachusetts, about which we were reporting.

When I ran into him recently, I asked him to tell me what has happened to the worker ownership dream. Here’s his report.

Chris Mackin: In the classic 1967 film “The Graduate,” Dustin Hoffman gets a single word of advice about the secrets of prosperity: “Plastics.” Almost 50 years later, as economic inequality gallops, compounds and then gallops some more, we need a similarly pithy intervention to address matters of economic fairness.

One candidate that may be equal to that task is a homely sounding economic noun that separates the wealthy from the rest of us. “Assets” are a seemingly magical set of resources that work for anyone who owns them. In conversations about economic fairness, “assets” are a resource that has largely remained outside the policy tent. President Obama has recently raised expectations about how economic policy might attack the problem of inequality. But he likely won’t get that far unless he too is ready to step outside that tent.

Accounting textbooks teach us that there are different categories of assets, both tangible (e.g., land, buildings, housing, corporate stock, minerals) and intangible (e.g., patents, goodwill, copyrights). Wealthy people own lots of these assets. So many that they often forgo that more pedestrian instrument that makes possible the accumulation of income, the paycheck.

Unwealthy people own few, if any, assets. Theirs is wage-dependent, income based universe. They live from paycheck to paycheck. If assets are the key discriminant that sustains the wealthy, why is it that the most commonly invoked solutions to economic inequality tend to focus on income enhancing measures such as minimum wage campaigns, payroll tax credits and job training? That’s not where the real money is. One could be forgiven for suspecting a plot. If the general problem of economic inequality could be likened to an overly deep bowl of soup that should be more fairly consumed, income-based solutions attack the challenge with forks. We need spoons, asset spoons. Let’s examine a few.

View/read the entire piece via PBS NewsHour.

The Reading Revolution

The debate over who lost Detroit and how to fix it rages on while Politico reports in “Break-up-the-big-banks fever hits the states” that legislators from “at least 18 states have introduced resolutions this year calling on Congress to split up banking giants by putting back in place a wall between commercial banking, taking deposits and making loans, and investment banking, the world of traders and deal-makers.” It turns out that quarantining the banksters and salvaging our cities have a lot in common in an America that currently ranks below Zimbabwe in global income inequality and social mobility.

The key issue facing America’s liposucked cities is how to monetize assets without giving up public sector control. (more…)

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