Ownership, Full Employment, & Community Economic Stability

[Dan Clore]

News & Views for Anarchists & Activists:
http://groups.yahoo.com/group/smygo

http://www.commondreams.org/view/2013/01/23-4
Wednesday, January 23, 2013 by Back to Full Employment
Ownership, Full Employment and Community Economic Stability
by Gar Alperovitz

The great British economist the late Joan Robinson once observed that
the only thing worse than being exploited by capitalism is not being
exploited by capitalism. This truth is felt acutely by anyone who is
unemployed and looking for work. As the pain of the economic crisis
continues and millions struggle to find employment there is an obvious
imperative to create jobs—any jobs. But we shouldn’t stop there. In Back
to Full Employment, Robert Pollin makes the essential point that “a
workable definition of full employment should refer to an abundance of
decent jobs.” Poor jobs that keep workers minimally employed but leave
them in precarious circumstances and unable to participate fully in
civic and political life are better than no jobs at all. But in terms of
public policy we can and should aim higher—especially as decent jobs not
only benefit the workers that hold them but also the communities in
which they live. Absent a stable economic base, community itself is
compromised.

Cleveland, home of the Evergreen Cooperatives, is also called the Green
City on a Blue Lake for all of it’s innovative approaches to
sustainability and economic development. (Photograph:
Evergreencooperatives.com) Three elements of the instability challenge
lend critical perspective to the issue. The first can be seen in the
long-term results of the decline of manufacturing industry in the rust
belt. We have in fact been quite literally “throwing away” entire
cities—cities like Cleveland, Detroit and St. Louis. Since 1950,
Cleveland and St. Louis have each lost half a million people, drops of
more than 50 and 60 percent respectively; in Detroit, the fall in
numbers has topped a million, more than 60 percent. The uncontrolled
corporate decision-making that results in the elimination of jobs in one
community—leaving behind empty houses, half-empty schools, roads,
hospitals, public buildings, and so forth—implicitly requires that they
be rebuilt in a different location. Quite apart from the human costs
involved, the process is extremely costly in terms of capital and also
of carbon content—and at a time when EPA studies show that greenhouse
gas emissions caused by human activity in the United States are still
moving in the wrong direction (having jumped by over 3 percent between
2009 and 2010 alone).

A second aspect relates to democracy. Substantial local economic
stability is clearly necessary if democratic decision-making is a
priority. A local population tossed hither and yon by uncontrolled
economic forces is unable to exercise any serious interest in the
long-term health of the community. To the extent local budgets are put
under severe stress by instability, local community decision-making (as
political scientist Paul E. Peterson has shown) is so financially
constrained as to make a mockery of democratic process. This becomes
still more problematic if we recognize—as theorists from Alexis de
Tocqueville and John Stuart Mill to Benjamin Barber, Jane Mansbridge,
and Stephen Elkin have argued—that an authentic experience of local
democratic practice is also absolutely essential for there to be genuine
national democratic practice.

Thirdly, and straightforwardly, it will be impossible to do serious
local “sustainability planning”—mass transit, high-density housing, and
so forth—that reduces a community’s carbon footprint if such planning is
disrupted and destabilized by economic turmoil.

So yes, we need jobs. And yes, we need good jobs. But we also need an
approach to good jobs that will allow us to grapple with the challenges
indicated above while at the same time begin tackling the grotesque
maldistribution of wealth in this country—a distribution that has
reached literally medieval proportions. The top 400 individuals now
control as much wealth as the bottom 180 million Americans taken together.

How to go about all this? As we—hopefully—begin to adopt smarter public
policies aimed at reaching full employment, we should maximize the
impact of these policies by choosing strategies likely to economically
stabilize our cities and regions. A decent job should be understood as
one which not only pays well, but which is anchored in a community, and
which in turn anchors a worker and participant in the civic life of that
community. If the culprit behind economic destabilization, and its
catastrophic effects in terms of employment, is capital mobility, the
solution will require increasing the proportion of capital held by
actors with a long-term commitment to a given locality or region.

The problem, however, is that major footloose corporations are not only
able but willing to jump from one city to another as they chase
“incentives”—and mayors and governors waste taxpayer dollars in endless
bidding wars. This raises the question of alternative ownership forms
(something Pollin also began to take up in a 2012 article in the
Cambridge Journal of Regions, Economy and Society). By rooting ownership
broadly in the community, jobs stay put. And jobs that stay put create
more jobs, through the multiplier effect of money circulating within a
community as well as by expanding the tax base of cash-strapped local
governments.

Worker and community ownership—whether through employee stock ownership
plans or more egalitarian or community strategies—are forms of ownership
relevant to thinking about jobs, job creation, and local economic
stability. Crucially, community or cooperative ownership of jobs appears
all but certain to yield more stable long-term employment than
traditional corporate strategies, and is thus more valuable as part of a
package of policies aimed at full employment. Companies owned by people
who live in the community rarely if ever get up and move.

Traditional employers also have an incentive to keep labor costs low and
will use workers only for as long as they are needed on a particular
job. A number of community enterprises now aim to maximize employment
over the long term. Instead of treating employees as disposable, such
employers seek ways to find new work for their workforce or share
existing work. (The BBC recently provided a striking example of this in
their coverage of the resilience of the Basque country’s Mondragón
cooperatives. In the regions where Mondragón has a significant presence,
the unemployment rate is around half that of the rest of Spain.)

Worker ownership works in the US, as well. It’s not often realized that
there are over 10 million Americans who work at jobs they also own—more
than are members of unions in the private sector. In Cleveland an
innovative complex of worker owned cooperatives, linked through a
revolving fund and a non-profit corporation—and in part supported by
procurement from non-profit hospitals and universities—has become a
model for several other community efforts. A large part of this recent
boom in worker ownership is due to federal policy; specifically,
legislation that created substantial tax advantages for business owners
who sell their ownership stake to their workers.

Another example of how smart policy has been used to cost-effectively
support a worker-ownership job retention strategy can be found in the
Ohio Employee Ownership Center (OEOC). The OEOC has used a relatively
modest amount of state and federal funding (less than $1 million
annually) to facilitate worker takeovers of firms whose owners are
retiring or that are threatened with closure. Such firms, owned by
workers, are city (and tax base) stabilizers: they do not get up and
move. The OEOC has created enormous economic returns—retaining jobs at a
cost of less than $800 per job and helping stabilize thousands of jobs
in Ohio cities. This is in sharp contrast to traditional economic
subsidies aimed at job retention, which cost far more, deliver less, and
often lead to a destructive—and destabilizing—subsidy arms-race between
different cities and states.

How might we begin, on a national level, to build a strategy to mobilize
worker and community ownership as a means of reaching full employment?
One policy intervention that could go a long way intersects with another
of Robert Pollin’s concerns in Back to Full Employment. He notes that
while successive rounds of economic stimulus have kept interest rates
low, they have not always succeeded in making credit available to small
businesses. Small worker owned businesses could benefit from policies
that specifically expanded their access to credit. (In addition to the
general reticence around lending Pollin highlights, these kinds of
projects, especially cooperatives, have to deal with lending
institutions that are often unfamiliar with or even hostile to
democratized enterprises.)

Legislation has also been proposed that would start to modestly address
this problem: Chaka Fattah’s National Cooperative Act or Bernie Sanders’
United States Employee Ownership Bank Act. But there are also existing
programs that could be expanded: the Small Business Administration, for
example, is running a very interesting initiative, the Intermediary
Lending Pilot Program, which leverages existing local and regional
community-oriented nonprofits to decentralize the loan-making process.
One of the intermediaries here is the Cooperative Fund of New England,
which is using the funds made available to the program to fund
cooperatives; we can imagine, with adequate support, similar local
cooperative funding initiatives across the country.

In short, if we’re serious about full employment, and about creating and
preserving decent jobs, we shouldn’t limit ourselves to traditional
conceptions of the kinds of companies that create jobs. Indeed, by
leveraging worker and community ownership strategically, we’re not just
embracing a potentially transformative strategy to democratize wealth in
the long term, we’re picking potentially one of the most effective
strategies available to support a long-term process of job creation that
could lead us back both to full employment and community stability. At
the same time, we can also help develop concrete ways to begin the long,
hard task of democratizing the ownership of wealth in the United States.

Gar Alperovitz is the Lionel R. Bauman Professor of Political Economy at
the University of Maryland and co-founder of the Democracy
Collaborative. Among his most recent books are America Beyond Capitalism
and (with Lew Daly) Unjust Deserts: How the Rich Are Taking Our Common
Inheritance and Why We Should Take It Back.



--
Dan Clore

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"From the point of view of the defense of our society,
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