October 17, 2013
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…)
September 17, 2013
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.
June 20, 2013
WASHINGTON, June 20, 2013 /PRNewswire-USNewswire/ – The chief Congressional champion for the national cooperative movement, Congressman Chaka Fattah (D-PA), has introduced H.R. 2437, the Creating Jobs Through Cooperatives Act.
The legislation authorizes $25 million per year through 2017 to create the National Cooperative Development Program within the US Department of Housing and Urban Development. This program will provide assistance in a number of ways including:
- awarding grants to nonprofit organizations, colleges and universities for technical assistance to cooperatives or groups seeking to form co-ops;
- providing guidance, best practices and technical assistance to communities seeking to establish cooperatives;
- creating a revolving loan fund to provide seed capital to groups attempting to form cooperatives; and
- provide funding to train providers with technical assistance and support existing professional development for organizations engaged in cooperative development.
Read the whole press release at PR Newswire.
June 19, 2013
Federal Reserve policymakers have generally relied on tweaking interest rates as a strategy for jump staring the economy. But in a country where wages adjusted for inflation have been stuck in place for almost a decade, some scholars think the economy needs a more aggressive overhaul.
Gar Alperovitz is a political economist and historian. His new book, called “What Then Must We Do: Straight Talk About the Next American Revolution”, details systemic changes for the economy. He says co-ops are key to the nation’s recovery.
“Most people don’t realize that changing the ownership of wealth means one person, one vote. That’s what a co-op is. 130 million Americans are already members of co-ops — they are all over the country and people just don’t notice them,” he says. “It’s a different very American, down-home way to begin looking at democratizing ownership, starting at the bottom and working up from the grassroots.”
Listen to the whole interview with Alperovitz at Marketplace.
May 28, 2013
An edited version of this blog post ran as an op-ed in the Toledo Blade on May 25, 2013.
Earlier this month, the Obama Administration announced the national roll-out of the “Industrial Commons” strategy through the National Network for Manufacturing Innovation (NNMI) initiative to leverage the power of regional manufacturing clusters designed to invigorate American manufacturing, innovation and exports. Next month, June, will feature three related events, all hosted by the University of Toledo (UT), and designed to place Northwest Ohio and the Toledo metropolitan region clearly in the center ring.
On June 5th, the Council of Development Finance Agencies‘ (CDFA) national financing roundtable (2013 Ohio Energy Efficiency and Building Retrofit Workshop) will bring investors from around the country to focus on the Solar “Industrial Commons” anchored at the Photovoltaic Innovation Center (PVIC) on the UT campus. On June 20th, the Council on Competitiveness will meet and the following day, June 21st, will feature the Clean Energy Manufacturing Initiative to showcase the U.S. Department of Energy’s technology resources while concurrently seeking inputs to maximize nationwide impact starting in Toledo. (more…)
April 25, 2013
Labor-cooperative partnerships may herald a new strategy for labor–if they can get off the ground.
BY REBECCA BURNS
What has 18 owners, no bosses and high hopes for fostering workplace democracy in America? New Era Windows LLC, a worker-owned cooperative formed last year by members of United Electrical Workers (UE) Local 1110.
After occupying their factory to save their jobs—twice—workers at a closing Chicago windows plant decided last year to try a new tack: running the business themselves. They purchased equipment from their former bosses and are now setting up a new factory they believe will create good jobs in the city’s depressed economy.
New Era is one of a growing number of union-backed cooperatives nationwide that could herald a new strategy for labor. In his survey of existing cooperatives, economist Gar Alperovitz has calculated that the number of workers in partly or wholly employee-owned companies now exceeds those who belong to private-sector unions—a statistic that speaks both to the perilous state of the labor movement and the promise of reviving it through new structures.
In the case of New Era, the decision to form a cooperative was the result of a long battle with management. In 2008, upon being told that their factory would be closed and they would be fired immediately without severance pay, workers staged a six-day occupation of the Republic Windows and Doors factory and emerged victorious. Their stand, coming at the height of the financial crisis, was celebrated nationwide. It also emboldened them to occupy once again in February 2012, when new owner Serious Energy announced that it, too, would be closing the plant. The workers’ journey from occupiers to owners was paved in part by UE’s tradition of militancy, which some progressives hoped would inspire other unions fighting mass layoffs.
The labor movement at large hasn’t reprised the 1930s-era tactic of occupying factories in order to regain a foothold in existing workplaces. But a growing number of unions, led by the United Steelworkers (USW), are exploring creation of new worker-owned cooperatives as a strategy for contending with the offshoring of U.S. jobs. Like the workers who formed New Era Windows, USW began experimenting with cooperatives partly out of necessity—as job losses mounted amidst the financial crisis, “there seemed to be an opening to consider how we might create a better model, because everything was falling apart,” says Rob Witherell, USW’s cooperative strategist. USW decided to partner with Mondragon, Spain’s famous group of cooperatives, to create a template for union co-ops.
Now, USW is helping launch several pilot projects, including a green laundry in Pittsburgh that could replace some of the 100-plus jobs lost when an industrial laundry in the area closed several years ago. Members of United Food and Commercial Workers are currently employed in an urban farming cooperative in Cincinnati, with more projects planned under the behest of the Cincinnati Union Cooperative Initiative.
Read the whole article from In These Times.
Learn more about the union co-op model from the United Steelworkers.
April 2, 2013
How Government Encourages Broad-Based Inclusive Capitalism
By David Madland and Karla Walter
American companies use a variety of financial incentives, from broad-based profit sharing and stock options to worker cooperatives and employee stock ownership plans, to reward their employees with a portion of the wealth those workers help generate. This kind of compensation goes well beyond simply paying wages or providing individual incentives, but rather involves granting workers ownership stakes in the company or a share of its profits based on workers’ collective performance—a concept we describe as inclusive capitalism.
Inclusive capitalism, when partnered with democratic workplace practices, has a proven record of helping workers and businesses alike in a myriad of ways. Additionally, it is an economic philosophy that can draw bipartisan support. Yet policy to advance inclusive capitalism has not been part of the national dialogue for quite some time.
The purpose of this report is to change this dynamic and jump-start a policy conversation aimed at promoting inclusive capitalism. While we do not advocate for specific policy changes in this report, our hope is that it will spark dialogue among policymakers and advocates about how inclusive capitalism can help address some of the most fundamental problems facing our economy; what government can do to encourage employers to use it more; and how to ensure that inclusive capitalism is done right so workers can enjoy the upsides of broad-based sharing and having an increased say on the job without being exposed to undue risk.
Inclusive capitalism is by no means a new or rare phenomenon in the United States. Companies and workers have practiced inclusive capitalism since the founding of our nation. Today almost half of U.S. workers receive some sort of inclusive capitalism compensation—though in most firms its use is quite limited.
Companies practicing broad-based inclusive capitalism range from unionized American steel manufacturers and air carriers to leading technology firms to growing, socially minded companies. The United States Steel Corporation, for example, pays quarterly cash profit-sharing payments to its unionized workforce, while a significant portion of Southwest Airlines’ stock is owned by its employees.3 Likewise, the high-tech firm Intel Corporation rewards its employees with both cash profit sharing and broad-based stock ownership through restricted stock and stock options. And then there are the socially minded companies such as the tea and coffee purveyor Equal Exchange and the beer maker New Belgium Brewing that are both employee-owned, the former through a worker cooperative and the other through an employee stock ownership plan.
Read more and download the report from the Center for American Progress.
March 31, 2013
“Think about it this way. We’re killing people in foreign lands in order to extract 200-million-year-old sunlight. Then we burn it . . . in order to boil water to create steam to drive a turbine to generate electricity. We frack our own backyards and pollute our rivers, or we blow up our mountaintops just miles from our nation’s capital for an hour of electricity, when we could just take what’s falling free from the sky.”
– Sungevity founder, Danny Kennedy –
From “The Secret to Solar Power,” (New York Times, August 9, 2012), by Jeff Himmelman
Subconsciously but in good conscience, Danny Kennedy has framed a solar version of the new “Judo Economy” paradigm. In his “Judo Economy” energy framework, massive amounts of naturally incoming energy are reflected and redirected without impacting and hollowing out the earth’s layered crust, breaking up shale formations, absorbing and contaminating fresh water supplies, or inciting earthquake and volcanic instability. Naturally occurring momentum is deployed as a positive force to society’s advantage as opposed to boxing with the inevitable and unmovable, absorbing one crushing body blow after another. (more…)
March 6, 2013
MAPA Group has two initiatives in the NRDC E2 2102 report:
First, Isofoton North America, a project that MAPA Group designed and is leading featured on page nine (9). Jon Bisher, City Manager of Napoleon and Chairman of AMP, and Rick Stansley from University of Toledo, partnered with Isofoton North America and NRDC on this report.
Second, on page eleven (11), the Energetx, Holland-Michigan write-up represents another MAPA Group project. (more…)
November 26, 2012
Join us on December 17th in Washington, D.C. for a screening of Shift Change: Putting Democracy to Work. The documentary, by veteran award-winning filmmakers Melissa Young and Mark Dworkin, tells the little known stories of employee owned businesses that compete successfully in today’s economy while providing secure, dignified jobs in democratic workplaces.
With the long decline in US manufacturing and today’s economic crisis, millions have been thrown out of work, and many are losing their homes. The usual economic solutions are not working, so some citizens and public officials are ready to think outside of the box to reinvent our failing economy in order to restore long-term community stability and a more egalitarian way of life. (more…)