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Anti-Capitalist Meetup: Post Occupy Analysis by Diane Gee

3:55 pm in Uncategorized by Anti-Capitalist Meetup

AUTHOR’S NOTE: This essay is in part a reply to AoT’s “No, you don’t want another OWS”- I agree we don’t need another, but not entirely with the author’s reasoning why…)

People who were involved with Occupy Wall Street have an understandable emotional attachment to what they experienced within the movement. In fact, for many in this age of electronica and isolation, it was their first experience in ground level activism and social work. People cooperated, they exchanged food, medical services and felt unity. By sheer numbers, they managed to enter the concept of the one percent versus the rest of us into the National dialogue. That cannot be underrated.

In any discussion of what is next, we have to look with an unemotional, analytical eye at whether or not Occupy was or was not a success.

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AoT: “The problem is that the things that made OWS successful are exactly the things people are calling to change.”

Occupy Wall Street did come up with an official statement from its onset, a litany of valid complaints – with the disclaimer that the complaints were not all-inclusive.

What it did not do, is offer any solutions, any demands, any formula for what to prioritize and how to change it. You cannot change generic drugs, student debt and make everyone a vegan at the same time. Hell, you cannot even get people to agree on meat consumption in any group.

I will, for clarity’s sake provide the list and a comment on each, but if you are time constrained, scroll past it with the observation that not ONE of these complaints were addressed, and not ONE of things changed for the 99% in any way:

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No, you don’t want another Occupy Wall Street

3:48 pm in Uncategorized by Anti-Capitalist Meetup

Anonymous masked protester at an Occupy event

Calls for a “new” Occupy seem to miss the point of OWS.

by AoT

There’s been a common theme lately of calling for a new OWS. I would be overjoyed if all of these calls were in fact calls for a new OWS. But they aren’t. I want to make clear that this isn’t necessarily an attack on people making these calls. They make them for different reasons, and those reasons are often reasons I agree with. But, they are in fact calls for a completely different movement, one that bears little if any resemblance to OWS. I’m going to go through the common refrains of what “the movement” needs and my responses to them.

Let me say first that I think that people really mean that they want another successful and visible social movement when they say they want another OWS they really . I’m completely on board with that, I want another movement with the energy of Occupy. The problem is that the things that made OWS successful are exactly the things people are calling to change.

1) Occupy just needs to occupy the voting booth

There’s a lot wrong with this one. I’ll start with the base assumption that the people involved in Occupy didn’t vote. The majority of people who participated in Occupy voted. I’d bet that the majority voted for candidates that most progressives would agree with. Worse than that though is the idea that there were enough occupiers to actually swing an election. There were about ten thousand of us across the country at the height of everything. It seems hopelessly naive to think that ten thousand people across the country could affect change by voting alone. They couldn’t.

So what exactly is it that occupying the voting booth is suppose to mean? It clearly can’t mean just going out and voting, because that’s already happening for the most part. The other side of that is going out and campaigning for candidates and causes. Of course, this is a democratic website, so it’s not surprising that people would be advocating for voting in the right candidates, presumably candidates from the Democratic Party. Of course, this is never followed up with the actual candidates to be voted or campaigned for, and when it is they’re the same old dems that are already in office or are “electable.” Or the quixotic quest for a primary that will get attacked every time as being a progressive purity quest.

But really, what we’re talking about here is business as usual. Calls for OWS to be another wing of the Democratic Party. We’re talking about OWS as doing the *exact* same thing as MoveOn or OFA. Literally the exact same thing in regards to voting.

2) Occupy needs leaders

This one is fun because it’s always terribly unspecific. Occupy “needs leaders” but no one can point to the actual leaders that occupy should follow. There just needs to be a leader there, leading and stuff. Of course, not only can people not point to actual leaders, they can’t explain how we should chose a leader. Paradoxically, folks like Trotskyists or Maoists are brought up constantly as an example of what not to do, despite the fact that they are the leaders out there offering to lead. The irony here of course is that Occupy was constantly criticized for not having goals and specifics, and yet the people who are calling for leaders are just as vague. They “want leaders.”

And all that is leaving behind the practical aspects of the issue. What happens with to a leader once they’re there? How do you maintain accountability while keeping people following them? Because based on my experience you have a choice of one of the two. Otherwise you dump the best leaders because they’ve got some horrible flaws, just like all your heroes have terrible flaws.

3) We need demands

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Anti-Capitalist Meetup: What the H*ll Is Crowdfunding? And Why is it Causing So Much Controversy? by Geminijen

1:00 pm in Uncategorized by Anti-Capitalist Meetup

Today, instead of presenting a diary written by one of our regular or guest members, we are presenting an excerpt from a paper on “Crowdfunding” by Minsun Ji and Tony Robinson. Crowdfunding is the term used for raising money over the internet. In most cases, a political candidate or charity solicits donations to fund their organization. Recently it has also been used to solicit donations for socially responsible businesses (usually cooperative start-ups). And since Obama’s JOBS (Jumpstart Our Business Startups) Act, it has been used to solicit not just donations but equity investment funds for cooperative start-ups by exempting these ventures from Security and Exchange regulations.
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It is this last feature which has led to all the brouhaha. On one side, are anarchists, libertarians, the cooperative movement and silicone valley free traders, supporting Crowdfunding as democratizing the investment process so that the 99% can develop capital which has previously been controlled by — well, the big capitalists–or the 1% ; on the other side are the unions, most Marxists and some liberal democrats who see the crowdfunding provisions in the JOBS Act as a plot by Wall Street to avoid SEC regulations in the Dodd-Frank Act and that will, once again, allow for speculation, fraud and destabilization of the economy at the expense of the 99%.

The political compromise in the JOBS Act was to establish regulations to limit the size of the investment (both in terms of a $1 million cap and no more that 10% of an investor’s income), exclude the investment of pension funds, exclude investors from decision making rights, etc. The authors of the paper excerpted below also note that so far there has been very little fraud in crowdfunding due to its emphasis on smaller, more socially responsible ventures. (They failed to note, however, that most of this fraud free history was when crowdfunding still consisted of donations, not profit making equity — also, does anyone remember the 1984 Saving and Loan scandal after government regulations had been decimated under Regan, where Wall Street types stole billions from the small Banks set up to help the “little guy”?).

Personally, when I first heard about crowdfunding, my reaction was pretty much like most class conscious workers and Marxists — I was afraid, not only of individual investors and small businesses being duped, but that the whole thing was a Wall street scam which could cause the whole economy to go under due to speculative financial “bubbles.” (And I wrote as much in a diary in this very venue).

On the other hand, in a paper on a hybrid union- cooperative model from the United Steelworkers (“An Emerging Solidarity:Worker Cooperatives, Unions,and the New Union Co-op Model,February 1, 2013), Rob Witherall does not totally discount the idea of crowdfunding as one of many methods to develop capital investment for coops — as long as it controlled and regulated by the union. At this point, my own position(and that in Ji’s and Witherall’s papers) place crowdfunding in the context of a global economy where changes in technology, capital mobility and the end of centralized industrial manufacturing has resulted in the growth of the informal workforce (both here and abroad) that has greatly damaged traditional union organizing solutions. This has led us to explore if we can use new possibilities to our advantage in a changing world. And whether these possibilities will take us toward or further away from a true anti-capitalist future. So here is a full discussion, presented primarily from the pro-crowdfunding point of view since this is the view, as anti-capitalists, that we don’t often hear. Let the argument begin.

“Crowdfunding the Future of Union-Coop Collaboration” by Minsun Ji,
Josef Korbel School of International Studies, University of Denver,
Tony Robinson, Department of Political Science, University of Colorado Denver,, February 2, 2013:

In 2012, United States union leaders and the worker cooperative community split ways over President Obama’s “Jumpstart Our Business Startups (JOBS) Act,” which significantly liberalized regulations on small business equity financing, including “crowdfunding” practices. Both the AFL-CIO and SEIU took vigorous stands against the JOBS Act, claiming that by diminishing government oversight over small business crowdfunding, the JOBS Act promoted corruption and destabilizing investment bubbles.

Major American labor leaders condemned the bill, claiming that the “cynically named JOBS Act” would weaken government SEC regulations and expose workers and small investors to fraud and financial disaster (Elk, 2012). AFL-CIO president Trumka said he was “personally outraged,” with the bill. “This is a vote against investors in the real economy and for Wall Street speculators. When the next bubble bursts, Americans will know who to blame” (Kapur, 2012).

Even as U.S. labor leaders criticized the JOBS act and its crowdfunding centerpiece, other progressive leaders—and in particular leaders within the workers’ cooperative movement–celebrated the act as ushering in a new era of democratic, decentralized capital investment (Fink, 2012; Mann, 2011). Progressive champion of economic localism, Michael Shuman (2009), has long lauded crowdfunding for taking investment decisions out of the hands of an elite circle of SEC accredited investors and giving them to millions of small-scale, local investors. The 2012 Conference of the Federation of Worker Owned Cooperatives hailed crowdfunding as ushering in a “new era of innovation” ( Kassan and Long (2012) summarized the enthusiasm for crowdfunding among many supporters of an alternative economy: “While crowd funding alone isn’t a silver bullet, it does play an important role in revitalizing the entrepreneurial small business sector of the economy. Its simplicity and ingenuity is American capitalism in its finest form.”

This paper explores the crowdfunding revolution celebrated by the JOBS Act, and examines reasons for the striking disagreement between labor unions and the coop community regarding the JOBS Act. We argue that instead of resisting crowdfunding, labor unions should embrace it as a democratic financing tool that can support union-friendly worker owned cooperatives in growing a progressive economy. We also explore how the owners of worker coops should consider union membership, for both pragmatic and political reasons, as union connections can help finance and strength worker cooperatives, even as they can help keep the worker owned cooperative movement grounded in political transformation, rather than just pursuing economic growth.

The Crowdfunding Revolution and the JOBS Act. … Taking advantage of the democratization of information and connectivity afforded by social media, crowdfunding appeals in the last decade have raised millions of dollars in donations to support thousands of small-scale initiatives. Crowdfunding—the mobilization of small scale donations or investments from a crowd of individuals—has funded activities ranging from indie band tours across America ($60,000 raised by the UK rock band Marillion), the production of independent movies (The Age of Stupid film project raised £1.5 million British Pounds), and social purpose ventures (the Tesla Museum project raised $1.4 million). In 2011, there were over 500,000 crowdfunding appeals made over the internet through crowdfunding portals like Kiva, Kickstarter and IndieGoGo, which ultimately attracted millions of small donors who gave over a billion dollars to small businesses nationwide (Best, Nice and Jones, 2012: 25; Drake, 2012).

The new JOBS act promises to dramatically grow these numbers. Until the JOBS Act, all crowdfunding transactions were required to be donations to small businesses, rather than equity investments. Under U.S. Securities law, it was illegal for average people to give their support to a small or local business with the expectation of economic return. This is because prior to the crowdfunding law, all companies (even the smallest) were prohibited from offering equity to the general public without full registration with the SEC and adherence to all SEC rules, which is costly and complicated. Furthermore, only SEC accredited investors (less than 2% of the population [Shuman, 2009]) were allowed to directly purchase those equity securities, substantially limiting the kinds of companies allowed to offer their stock publicly and the pool of people who were allowed to invest in those companies. … But rules changed after the JOBS ACT.

The 2012 JOBS Act amended federal securities law to benefit small and emerging businesses by easing rules on public offerings by small businesses and by broadening the base of people allowed to buy equity in those companies. In signing the law, President Obama was responding to a groundswell of pressure from innovative venture capitalists, small businesses locked out of traditional venture capital circles, and progressive economic thinkers who all supported crowdfunding liberalization as a way to decentralize capital formation, foster innovative businesses and social enterprises, and encourage small business florescence (Best, Nice and Jones, 2012; Bradford, 2012; Sustainable Economy Law Center, 2012). The idea united liberal economists with free-market conservatives, and the JOBS Act sailed through Congress with historic speed, passing in mere months with solid bipartisan support.

Perhaps the most dramatic reform was Title III of the JOBS Act, which created a new exemption from federal securities law for “crowdfunded” securities offerings. This exemption is meant to substantially democratize investment into small businesses, by making it possible for small businesses to raise money through small investments from a large number of people, even without filing an array of financial and registration documents with the SEC under traditional securities law. Furthermore, small-scale investors in the company do not need to be SEC accredited (Bradford, 2012; Vidra, 2012). Anyone in the public who is attracted to a small entrepreneur’s internet crowdfunding appeal can invest in the company, joining with a crowd of other small donors in mobilizing what can be huge cash infusions into the business. In 2012, for example, Pebble Watches raised more than $10 million dollars in less than 30 days from 69,000 small web donors (Heesan, 2013).

The JOBS act dramatically democratized the capital financing landscape. Small companies with unique business models now have an alternative source of “venture capital,” which has historically been controlled by a small circle of traditional profit-seeking investors. These small companies can now turn to “community finance” circles—crowds of small scale donors contacted across the internet and who are more likely than accredited Wall Street investors to support small, local businesses with a “social purpose” (Lehner, 2013). In this way, crowdfunding “stands to revolutionize small businesses and entrepreneurial capital raising by permitting any individual to invest in private companies over the internet with limited regulatory hurdles” (Fink, 2012: 4).

By decentralizing processes of capital formation, crowdfunding undermines the power of traditional capital investors, transfers the social web’s model of informal cooperation to the world of investment, “and leads to democratization and transparency in finance” (Rothler, 2011: 5; see also Best, Nice and Jones, 2012: 3).

There are, of course, restrictions meant to direct crowdfunding to small businesses and to balance the desire for freely flowing, decentralized capital investment with the need to minimize investor risk and the dangers of financial chicanery or ineptitude by either businesses or investors. For example:
• A business can sell no more than $1 million of securities in the aggregate to all investors;
• No single crowdfund investor can purchase more than $2,000 of securities, or 5% of the investor’s annual income or net worth (10% for investors with annual income or net worth exceeding $100,000);
• The transactions must be conducted through a registered funding portal or broker who must adhere to rules meant to insure investor knowledge of the risks involved.
[Editor's Note: Further important restrictions prohibit investment of any pension funds and do not allow investors any decision making power over the business/coop]

With these basic regulations, supporters hail the Act as ushering in an era where average people will have the ability to support local business or social purpose business ventures, and where businesses can turn to sources of capital beyond the Wall Street moguls who prioritize high profit rates over such concerns as local embeddedness, social purpose, or fair labor practices (Elk, 2012). In so doing, the JOBS Act represents a democratization of capital formation—a radical “disruption of the finance supply chain and distribution mechanism” that has been previously controlled by a tiny percentage of accredited institutional investors (Drake, 2012). Scott Purcell, President of the Crowdfunding platform Arctic Island, argues that the Crowdfunding allowances of the JOBS act “will completely transform capital formation for small businesses, [enabling] small businesses to get the capital they need.” (cited in Drake, 2012)

The scale of democratic capital that could be unleashed through crowdfunding is immense. Even before the JOBS act, when crowdfunding could only be through donations without any equity return, $750 million was given through 532,000 American crowdfunding campaigns (Best, Nice and Jones, 2012: 25). Industry consultants are now predicting equity crowdfunding to grow to somewhere between $4 and $6 billion by 2015 (Price 2012; Best, Nice and Jones, 2012; Fink , 2012). Analysts predict a global trillion dollar crowdfunding market in the years to come, and the Word Bank is partnering with groups like Crowdfund Capital Advisors to explore crowdfunding’s potential benefits in developing countries (Lawton and Marom, 2012).

As Kassan and Long (2012) describe the future of the United States:

“The vast majority of the American public, the 99 percent of us who
are ‘unaccredited’ investors, will soon have the opportunity to keep
their money local. The half of our economy made up of small, independent
businesses will now have access to capital that previously could only go to
giant public companies. Americans have $30 trillion dollars invested in
securities — imagine if even 10 percent of that went from Wall Street to Main
Street. What could $3 trillion dollars do in our communities?”

Labor and the JOBS Act

Why did labor leaders resist the 2012 JOBS Act? It comes down to labor’s enduring concern with the dangers of deregulated capital. In the wake of the 2008 financial crisis, labor leaders and a many economists found it dangerous that the government was once again on a bi-partisan path to financial deregulation. Simon Johnson, the former chief IMF economist, called the bill “a colossal mistake of historic proportions,” that “would gut investor protection in the United States” under the cloak of creating jobs (Johnson, 2012). William Galvin, Secretary of the Commonwealth for Massachusetts, expressed similar concerns:

“As regulators we must be vigilant that the exemption will not
become a tool for financial fraud and abuse…Unscrupulous penny stock
promoters have used misrepresentations to market obscure and low-value
stocks to individuals, often through pump and dump schemes. These kinds
of fraud operators have not gone away…In this segment of the market,
company information may be limited or simply false, and investors typically
lack investment sophistication and are often insufficiently cautious (Sullivan
and Ma, 2012).”

In the AFL-CIO’s statement opposing the Act, labor leaders argued that the Act deregulated Wall Street, weakened the regulatory ability of the SEC, and allowed companies to sell stock “without complying with key corporate governance reforms in the recently passed Dodd-Frank Act” (Elk, 2012). Small, untested companies would now be allowed to circulate all sorts of promotional claims, without producing the audited financial documents now required by the SEC (Moberg, 2012).

AFL-CIO president Richard Trumka said he was outraged by the act, which would do nothing but “re-inflate a stock market bubble” (Kapur, 4). Critics found particular animus for the “crowdfunding” exemption in the bill, with the IMF former chief economist Johnson calling it “perhaps the worst part of the bill,” allowing companies to solicit small investors with little government oversight (Johnson, 2012). Moberg (2012) explained specific labor union concerns as follows:

“For at least two reasons, unions have a stake in how the financial markets work. They are interested in protecting investments that provide retirement security for their members and other workers. And they have seen how deregulated financial markets have disastrous effects on workers. They encourage financial speculation and engineering that worsens inequality and often destroys jobs (witness the merger and takeover craze), exploits the vulnerable (witness the predatory lending during the last decade), and creates bubbles [...] all at the expense of the real economy and the majority of working people.”

Though such concerns are understandable, there is substantial evidence that fears of a crowdfunded “stock market bubble” destroying the wealth of millions of small investors are overstated. First, the reality is that the JOBS Act maintains a healthy set of regulations on both the issuers of crowdfunding appeals and those who invest in them. Issuers must file disclosure documents with the SEC detailing the names and addresses of business owners, providing prior year’s tax returns, outlining the business plan and governance structure, describing the intended use of crowdfunding proceeds, and setting targets for the offering (with regular progress updates). Offerings can only occur through registered brokers or funding portals, which must show due diligence to insure that companies listing on the portal are legitimate and that investors are aware of the risks of investing. In fact, some economists find that the regulations remain too excessive for the kind of small-scale investment contemplated under the Act (Bradford, 2012).

Second, the Act limits funding appeals to no more than $1 million in a 12 month period, and restricts any individual donor from giving the greater of $2,000 or 5% of their annual income/net worth (10% of income or net worth if the individual is worth more than $100,000). These restrictions substantially limit the damage that can occur from bad investments and financial fraud, and hardly suggest that a massively inflated stock market bubble such as the pre-2008 market would be likely.

Third, the crowdfunding marketplace has been remarkably fraud free for years. Though billions of dollars have been donated through crowdfunding portals over the last decade, there has not been a single case of prosecuted fraud involving crowdfunding (Fink, 2012). The absence of fraud and investor disaster is due to several factors, including the small scale of crowd-funded investments (most people invest less than they do in lottery tickets during the year [Forbes]). Additionally, the “transparency and social networking dynamics of crowdfunding have been excellent at keeping fraud near zero” (Lawton and Marom, 2012) as crowdfunding typically involves thousands of small investors tracking the businesses they are investing in and sharing information across the web. Furthermore, the kinds of social ventures that take the crowdfunding route are inherently less likely to engage in the kind of profit-seeking fraud that characterized the moguls of finance preceding the 2008 meltdown.

“The trustworthiness of social entrepreneurs is regarded to be much higher due to the primacy of the social aim, and the thus the costs of fraudulent risk should be reduced in theory,” Lehner (2013) explains. “We see early empirical claims for this based on the traditional non-profit literature” (see, for example, Haugh, 2006 and Laratta, 2010)…..

Unions and Cooperatives Face the Informal Economy.It is well established that the rise of an increasingly informal and flexible global economy, populated by non-standard and casual workers, has resulted in shrinking union density in the United States and elsewhere. Temporary work is a rapidly growing sector of the U.S. economy, and the explosion of non-standard and casual workers across the globe has led to the new concept of a global “precariat” (precarious/informal workers, who are unlinked from dependable job prospects), which is increasingly replacing the large factory based “proletariat”– once the backbone of union organizing campaigns (Standing, 2011; Davis, 2006).

A related development is the decline of manufacturing and the rise of service-sector employment: 85% of today’s U.S. economy is service-sector work (Curl, 2010), which is typically more informal and precarious than the manufacturing employment of old.

These trends of an increasingly informal service economy help account for dramatically shrinking private sector union density in America (falling from 24.6% in 1973 to 6.9% in 2010), simply because informal workers are much more difficult to organize and because employers can flee unionized sites for non-unionized locales of more exploitable workers (Schmacher 2000, 2).

While formal unions have found their strength eroding in the new global order, decentralized workers cooperatives have grown rapidly, as their organizational model matches the decentralized and fluid dynamics of today’s global world. “Today, increased technology, globalization of labor markets and the mobility of capital has ended the reign of large centralized factories. The new casual and decentralized labor force has decimated the major strength of trade unions’ power—a large, unified labor force. Unions have been forced to look at the creation of unionized worker-coops, not just as a fall back during depressions, but as the new order of the day” (Geminijen 2012).

As union strength declines globally, worker cooperatives are growing. In 2010, the International Cooperative Alliance represented co-operatives with over one billion members, in 180 countries (including cooperatives of all sorts, not just worker coops). In some countries, like Spain and Italy, workers cooperatives have grown to constitute a sizable share of the national economy. Some studies have found that worker coops have proved more resilient than mainstream businesses after the 2008 crisis, creating more post-recession jobs in many countries than has the traditional business sector (CICOPA, 2012) .

In the United States as well, the trend of economic informalization has been coupled with expanding worker owned cooperatives, especially within the service sector (i.e., cleaning, food catering, moving assistance, landscaping, child care), and with an especially notable growth of immigrant worker own cooperatives (Ji and Robinson, 2012). In New York City and the Bay Area, worker cooperative networks are rapidly growing. In Cleveland, city, university and business leaders have united behind the innovative “Evergreen Initiative,” a well-funded plan to build an expanding network of worker cooperatives across the city (Alperovitz, et. al.2010; Johnsen, 2010).

Still, the economic scale and impact of worker cooperatives remains very small overall—especially in the United States. Even as workers cooperatives blossom across the globe, with a model of decentralized, small-scale employee ownership that responds well to the growth of the precariat in the increasingly informal global economy, these small businesses still lack mass numbers, organizational power, and—most importantly—adequate access to capital resources (California Financial Opportunity Roundtable, 2012).

Non-traditional small enterprises like a local worker cooperative face tremendous difficulties raising adequate capital (Bauer-Leeb and Lundquist. 2012; Lehner, 2013; Schwienbacher and Larralde, 2010). For one, the typical “social purpose” goals of worker cooperatives are often seen by investors as undermining financial returns. Furthermore, the unfamiliar corporate governance and legal structures of workers cooperatives can dissuade traditional investors (Artz and Kim, 2011: 47). There is also a deep cultural distance between the social entrepreneur and the traditional wall street investor, who speak fundamentally different languages (“social purpose investing” versus business/managerial excellence) (Lehner, 2013: 2-4; Ridley-Duff and Bull, 2011). These obstacles help explain why a 2003 bank of England study found that “social entrepreneurs indeed have a hard time accessing traditional debt finance,” and why the business plans of small social entrepreneurs are rejected 98% of the time by traditional venture capitalists (Lehner, 2013: 4).

With their decentralized and flexible business model, worker owned cooperatives are a good match for today’s globalizing informal economy—yet they lack adequate capital to fully exploit their potential. Unions have deep wells of intellectual capital, financial resources and organizational might, and yet their membership and power is shrinking as they face new economic realities. Both coops and unions, therefore, can benefit greatly from partnership and collaboration. But in a country like the United States, with little history of deep union-coop collaboration, the question remains: how to do it? The JOBS Act offers one answer to that question, because the “relatively new form of informal financing” (Hemer, 2011) that it has set free—crowdfunding—presents unique opportunities to bring labor and coops together around a flexible and decentralizing funding strategy that well matches today’s underlying economic trends.

Union-Coop Collaboration: A Crowdfunding Solution.

The SEC has not yet fully written the new investment regulations that will guide the implementation of the JOBS Act’s crowdfunding regime. But as those rules are announced, workers cooperatives will be able to directly market the social vision of their business through internet platforms, attracting crowds of small investors. In preparation of the new rules, Websites like “The Crowdfunding Cooperative” are emerging with a goal to “massively scale” cooperatives, “making it easy to manage community share issues and find coops to invest in” ( .

For these reasons, the 2012 National Worker Cooperative Conference called crowdfunding a revolutionary “new era of innovation” for worker coop financing . Reflecting on the favorably changing landscape of worker cooperative financing, Melissa Hoover (Director of the U.S. Federation of Worker Cooperatives) concluded that “there are some substantive things happening in the past year that feel different. There was the International Year of the Cooperative, more media attention, more academic inquiries, enough lawyers to start a [workers coop] legal professionals group, interest from sustainable business and socially responsible business people, crowdfunding tools starting to be used for worker cooperatives, and first calls from outside investors wanting to develop funding vehicles for worker cooperatives.”

Unions can be part of this crowdfunding revolution. There is already a history of financing collaboration between unions and coops, as unions have sometimes helped finance worker buyout of companies. But most union-facilitated worker buyouts in the last several decades have resulted in only nominal worker ownership and governance of a company— as in the case of most Employee Stock Ownership Plans (ESOP) that do not give workers democratic control of management and which do not always result in workers have majority ownership of all the stock (Bell 2006; Olsen, 1982; Hochner et., al. 1988) . Through the creative embrace of crowdfunding, unions can go beyond ESOPS and help finance actual worker-owned and worker-managed cooperatives. We are seeing movement in this direction already.
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Republic Windows.

In 2012 the United Electrical, Radio and Machine Workers of America (UE) successfully executed a buyout campaign to turn one of their unionized workplaces into worker owned cooperative. This coop campaign had been pursued since 2008, when 250 workers from the Republic Windows manufacturing company in Chicago occupied the factory to demand unpaid wages, and then occupied again in 2012 in order to prevent a second owner from shutting down the factory (Kunichoff, 2012).

The largest obstacle to the success of the worker buyout of Republic Windows, and the same obstacle that has undermined so many other worker cooperatives, was inadequate access to start-up finance capital. The Bank of America, which owned most of the debt at Republic Windows, refused to consider financing a worker cooperative buyout. In the absence of traditional capital to finance the worker owned cooperative—known as New Era Windows– the Electrical Union Local 1111 played a critical role in solidifying community support, developing worker leadership and negotiating with a bank for financing (Flanders, 2012). But additional funding was needed. In the end, to fully fund their vision of a worker coop, Republic Windows workers turned to a grassroots microcredit organization, Working World, which helped finance the worker buyout with no-interest loan money. This loan money came from a small scale capital loan fund for locally based worker cooperatives, that was seeded by community crowdfunded donations (Gonzales, 2012; see also

Though such examples are promising, the fact is that these kinds of union-facilitated cooperative start-ups have been quite rare, and typically involve very limited capital. Part of the reason is that before the JOBS act, U.S. securities law meant that community supporters wishing to crowdfund such businesses as New Era Windows had to donate their money without hope of financial return. But after the JOBS act, community supporters can now choose to actually buy an equity investment in social purpose companies. It is predictable that even more community crowdfunding dollars will flow into businesses like New Era Windows , since there is now a possibility of receiving a return on one’s social investment.

In this new environment, labor unions could choose to embrace crowdfunding, and deepen their connection to the workers cooperative movement by developing strategies to catalyze the investment dollars of individual union members into community-sensitive, socially responsible worker cooperatives, as now allowed by law. For their part, workers cooperatives could self-consciously “earn” union support by building business models in accordance with union friendly practices, becoming community members of local unions, and involving their worker-owners in broader political causes than the economic success of their cooperative.

To be clear, unions would not be allowed under the JOBS act to channel their pension fund investment dollars or any other institutional investment fund into crowdfunded worker cooperatives—simply because the JOBS Act targets individual donors and frees them to make small investments in non-SEC registered businesses. Nor would union leadership be able to offer specific investment advice to their members, urging them to invest in any specific crowdfunded business, as such formal investment advice remains illegal under the JOBS act, except when done by accredited brokers, promoting SEC registered companies. But, there are several ways that unions might use the new Crowdfunding law to build on the latent support that their members might have for worker cooperatives, and to bring the efforts of unions and coops closer together. We lay out some possibilities below.

[…]Certify Unionized Crowd Fund Advisors. The National Crowdfunding Association has launched a Certified Crowdfund Advisor (Best, Nice and Jones, 2012) certification program. As described on the CCA website, The CCA certificate “identifies the holder as being an expert in crowdfunding and thus professionally able to help everyone from small business owners to investors regarding how to participate in crowdfunding” ( Dedicating union dollars to helping members of union locals and state labor federations achieve such certificate would facilitate the educational strategy discussed above, while providing authoritative and specialized investment education to union members interested in building up worker cooperatives.

Establish a Union-Sponsored Crowdfund Portal. Unions have been successful at mobilizing social purpose spending by their members when they have self-consciously created the “environmental conditions” to catalyze such actions (Zhullo, 208). In the field of crowdfunding, one of those environmental conditions could be to establish a union-sponsored crowdfund portal that facilitates investment in worker cooperatives that share union values of worker empowerment and broader social justice. Such crowdfunding investment portals are necessary because under the JOBS act, crowdfund investors and businesses cannot connect directly. Rather, to better insure the validity of businesses seeking crowdfunds and the knowledge level of potential investors, these two parties must connect through an independent “middleman” portal—a web-based platform that must insure that the businesses on their site meet minimum standards outlined in the law and that small investors using the portal are educated into the risks and opportunities of investing. Many of these crowdfunding platforms already exist, such as IndieGoGo, Kiva, and Kickstarter. Furthermore, many of these extant portals have a specific angle—such as portals that focus on green businesses (Green Unite), arts related businesses (New Jelly), local agricultural initiatives (Three Revolutions), innovative product designers (Christie Street) or on projects friendly to lesbian, gay, bisexual and transgendered individuals (FundPride). There are also several emerging portals already dedicated to cooperative financing, such as and the crowdfunding co-operative.
Along those lines, a union collaborative could come together to launch a crowdfund portal that features only worker-owned cooperatives that share union-friendly business practices and values. In providing information about businesses featured on the union crowdfunding portal, the portal could publish metrics to rate businesses on a “social purpose” scale, using such tools as the Social Return on Investment (SROI) method, as standardized by the SROI network (; see also Lehner, 2013). Union members (who arguably are more willing to accept lower rates of return in favor of “social investment” goals [Quarter, et. al., 2001]) could be directed to this portal to facilitate their investments into union-friendly worker cooperatives.

Such a portal would have important legal restrictions on its communications with users. Under the law, crowdfunding portals cannot offer investment advice or recommendations, but it as of yet unclear how the SEC will interpret this principle in terms of what kinds of information portals can and cannot share with their visitors. Clearly portals cannot advise investment in any specific company, but it seems likely the SEC will allow them to act as a kind of educational clearinghouse, focusing all their offerings only on one kind of business (worker cooperatives) and sharing information such as which businesses are union organized and where businesses might be rated on the SROI scale.

n.b. Cartoons come from The Scoop Shovel, the official Organ of the
Manitoba Co-operative Dairies, Manitoba Egg and Poultry Pool, Manitoba Co-operative Livestock Producers at

Anti-Capitalist Meetup: Working Class Self-Activity, Part II: The Soul & Spirit of Marxism by LeGauchiste

4:28 pm in Uncategorized by Anti-Capitalist Meetup

As I wrote a week-and-a-half ago (, the concept of self-activity was introduced to me by my first intellectual mentor, labor historian George P. Rawick, a lifelong left activist who edited The American Slave: A Composite Autobiography, a definitive, 41-volume collection of oral history interviews with former slaves taken during the 1930s under the auspices of the WPA. In his book on slavery, From Sundown to Sunup: The World the Slaves Made, Rawick emphasized the self-activity of American slaves, which he defined as that which exploited people do in coping with and resisting the conditions of their exploitation. He was especially interested in their strategies to (1) undermine the system of exploitation (e.g., tool-breaking) and (2) assert their human dignity in the face of a system that denies it (e.g., slave family life).

As my study of Marxian socialism has progressed, I’ve come to understand that self-activity is central to the humanist core of Marx’s thinking, and that it represents nothing less than the active, creative aspect of humanity. Creative human activity, aka work or labor, is how we express our deepest selves and how we ensure our survival, but under capitalism labor becomes an activity alien to ourselves, directed and controlled by another, something that degrades us rather than exalting us.

Marx’s concept of man is rooted in Hegel’s Idealist philosophy. Hegel starts with the proposition that appearance and essence are not the same, and that the purpose of dialectics is to grasp the relations between the two, or in other words, between essence and existence.

How to do that? Unlike René Descartes, who wrote “cogito ergo sum” and thus embraced a proto-positivistic conception of thought-grounded identity, for Hegel, essence is realized not in passive contemplation, but through a subject’s active process of existence: “facio ergo sum” (I act therefore I am). (I’ve no idea if Hegel ever wrote that, but he could have.)

However, Hegel’s system is inherently abstract, as the Subject that actively unfolds its essence is the “Idea,” and its dialectical processes take place in the realm of the intellect, then to be expressed in the material world. Thus “Freedom” realizes itself through successive stages of history, but Hegel was not especially interested in the actual struggles of real people for freedom, and was politically quite conservative, supporting the Prussian state and its established Lutheran church.

Nevertheless, Hegel’s Idealist conception of “self-activity” formed the basis of Marx’s materialist dialectic and in particular his understanding of self-activity of the working class. It is not the purpose of this essay to explore Marx’s materialist dialectics in detail, nor to explore how he developed them out of Hegel’s Idealist system.

As a materialist, Marx took his subject to be humanity, i.e., human beings as intelligent mammals actively engaged in producing and reproducing the conditions of their survival: food, shelter, defense, child-raising. The activities in which humanity engages itself Marx called “labor,” synonymous with “life activity.”

“For labor, life activity, productive life itself, appears to man in the first place merely as a means of satisfying a need – the need to maintain physical existence. Yet the productive life is the life of the species. It is life-engendering life. The whole character of a species, its species-character, is contained in the character of its life activity; and free, conscious activity is man’s species-character. Life itself appears only as a means to life.

The animal is immediately one with its life activity. It does not distinguish itself from it. It is its life activity. Man makes his life activity itself the object of his will and of his consciousness. He has conscious life activity. It is not a determination with which he directly merges. Conscious life activity distinguishes man immediately from animal life activity. It is just because of this that he is a species-being. Or it is only because he is a species-being that he is a conscious being, i.e., that his own life is an object for him. Only because of that is his activity free activity.”

Marx, Economic and Philosophical Manuscripts, “Estranged Labour” (1844).

Nor was this mere philosophical flourish of the young Marx. He wrote very similarly in 1867:

“Labour is, in the first place, a process in which both man and Nature participate, and in which man of his own accord starts, regulates, and controls the material re-actions between himself and Nature. He opposes himself to Nature as one of her own forces, setting in motion arms and legs, head and hands, the natural forces of his body, in order to appropriate Nature’s productions in a form adapted to his own wants. By thus acting on the external world and changing it, he at the same time changes his own nature. He develops his slumbering powers and compels them to act in obedience to his sway. We are not now dealing with those primitive instinctive forms of labour that remind us of the mere animal. An immeasurable interval of time separates the state of things in which a man brings his labour-power to market for sale as a commodity, from that state in which human labour was still in its first instinctive stage. We pre-suppose labour in a form that stamps it as exclusively human. A spider conducts operations that resemble those of a weaver, and a bee puts to shame many an architect in the construction of her cells. But what distinguishes the worst architect from the best of bees is this, that the architect raises his structure in imagination before he erects it in reality. At the end of every labour-process, we get a result that already existed in the imagination of the labourer at its commencement. He not only effects a change of form in the material on which he works, but he also realises a purpose of his own that gives the law to his modus operandi, and to which he must subordinate his will. And this subordination is no mere momentary act. Besides the exertion of the bodily organs, the process demands that, during the whole operation, the workman’s will be steadily in consonance with his purpose. This means close attention.”

Marx, Capital, vol. I, ch. 7, 1867.

Because under capitalism the labor process yields a wage to the worker but the product belongs exclusively and totally to capital, the latter also holds authority over the details of the production process. Whereas the pre-capitalist artisan or small farmer owned his own means of production (tools, raw materials, land, animals) he also controlled them and the labor process. Over several centuries prior to the last one, capital gradually took ever greater control over production itself, but even at the beginning, the initial development of the division of labor under manufacture, the alienated character of labor under capitalism became clear, and precipitated much of the labor activism from then on.

“This fact expresses merely that the object which labor produces – labor’s product – confronts it as something alien, as a power independent of the producer. The product of labor is labor which has been embodied in an object, which has become material: it is the objectification of labor. Labor’s realization is its objectification. Under these economic conditions this realization of labor appears as loss of realization for the workers; objectification as loss of the object and bondage to it; appropriation as estrangement, as alienation.

So much does the labor’s realization appear as loss of realization that the worker loses realization to the point of starving to death. So much does objectification appear as loss of the object that the worker is robbed of the objects most necessary not only for his life but for his work. Indeed, labor itself becomes an object which he can obtain only with the greatest effort and with the most irregular interruptions. So much does the appropriation of the object appear as estrangement that the more objects the worker produces the less he can possess and the more he falls under the sway of his product, capital.

All these consequences are implied in the statement that the worker is related to the product of labor as to an alien object. For on this premise it is clear that the more the worker spends himself, the more powerful becomes the alien world of objects which he creates over and against himself, the poorer he himself – his inner world – becomes, the less belongs to him as his own. … The worker puts his life into the object; but now his life no longer belongs to him but to the object. … The alienation of the worker in his product means not only that his labor becomes an object, an external existence, but that it exists outside him, independently, as something alien to him, and that it becomes a power on its own confronting him. It means that the life which he has conferred on the object confronts him as something hostile and alien.”

Marx, E&PM, 1844.

Alienated activity is thus the opposite of self-activity.

The same dynamic applies to political activity, for human beings engage in politics, understood broadly as power relations throughout a social formation, and create political movements just as they do everything else: via the materialist dialectic of making their life activity itself the object of their will and their consciousness as they engage & reproduce the world, both natural and social, around them. To oversimplify: learning by doing.

And what do working class women and men learn when they engage in politics, whether at the workplace, or at the ballot box, or in the streets? The dominant lesson throughout the history of capitalism has been that collective action is necessary for working people to have even a chance of success in pressing their interests, which are often learned to be collective in nature: higher wages, shorter hours, better working conditions, more control over the work process.

That is why, despite the forceful and fatal efforts by capitalist governments for centuries, workers spontaneously form unions and engage in collective action against capital: the nature of capitalism renders this the only possibly effective route to influence for the mass of people.

Such institutions and activism may become the schools for working class self-activity, where the ideological hegemony of capital may be challenged. However, as we have seen, the institutions of labor are quite vulnerable to capture, whether total (company unions) or partial (conservative trade unions). At such times, the union itself may temporarily become a more important locus for self-activity than the workplace.

For an excellent example of working class self-activity in relation to OWS, there is the recent struggle by restaurant workers at the Upper East Side location of the “Hot and Crusty” chain, who recently organized a union and extracted a promise from their employer to bargain in good faith.

“After enduring below minimum wage pay and verbal and sexual harassment, the workers reached out to labor organizations and began attending Occupy Wall Street meetings last fall. With the support of OWS and the Laundry Workers Center, a volunteer organizing group, the workers organized an independent union, the Hot and Crusty Workers Association, this spring. They won thousands of dollars in backpay and safer workplace conditions.”

According to Marx, human beings are productive and creative by nature, and when forced to produce and create under conditions that alienate them from the creative process and its results, they will create ideas and activities that are opposed to those alienating conditions and the economic system that requires them. It doesn’t mean they will win, but they will fight. That’s why the struggle continues. Not solely because of the imperatives of capital, but because the imperatives of the creative human spirit demand it.

Cross-posted on Voices on the Square