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The Question of Socialism (and Beyond!) Is About to Open Up in These United States

9:31 am in Uncategorized by Gar Alperovitz

Little noticed by most Americans, Merriam Webster, one of the world’s most important dictionaries, announced a few months ago that the two most looked-up words in 2012 were “socialism” and “capitalism.”

A dictionary open on a library desk

Merriam-Webster's records are just the beginning of a growing fascination with socialism and alternatives to capitalism.

Traffic for the pair on the company’s website roughly doubled from the year before. The choice was a “kind of no-brainer,” observed editor at large, Peter Sokolowski. “They’re words that sort of encapsulate the zeitgeist.”

Leading polling organizations have found converging results among younger Americans. Two recent Rasmussen surveys, for instance, discovered that Americans younger than 30 are almost equally divided as to whether capitalism or socialism is preferable. Another Pew survey found those aged 18 to 29 have a more favorable reaction to the term “socialism” by a margin of 49 to 43 percent.

Note carefully: These are the people who will inevitably be creating the next American politics and the next American system.

As economic failure continues to create massive social and economic pain and a stalemated Washington dickers, search for some alternative to the current “system” is likely to continue to grow. It is clearly time to get serious about a different vision for the future. Critically, we need to be far more sophisticated about what a meaningful “systemic design” that might undergird a new direction (whether called “socialism” or whatever) would entail.

Classically, the central idea undergirding various forms of “socialism” (and there have been many, many forms, some of which use the terminology, some not) is democratic ownership of “the means of production,” or “capital,” or more simply, “productive wealth.” Quite apart from questions of exploitation, systemic dynamics (and “contradictions”), the core idea is simple and straightforward: Those who own wealth – and the corporations that operate it – have far more power to control any system than those who don’t.

In a nation in which a mere 400 people own more wealth than the bottom 180 million together, the point should be obvious. What is new in our time in history is that the traditional compromise position – namely progressive, or social democratic or liberal politics – has lost is capacity to offset such power even in the modest (compared, for instance, to many European states) ways the American welfare state once represented. Indeed, the emerging direction is to cut back previous gains in many areas – not to sustain or enlarge them. Even Social Security is now on the table for cuts.

Perhaps the most important reason for the decline of the traditional reform option is the decline of labor: Union membership has steadily decreased from roughly 35 percent of the labor force in 1954, to 11.3 percent now – a mere 6.6 percent in the private sector.

Along with this decay, and give or take an exception here and there, major trends in income and wealth, in civil liberties, in ecological devastation (and the release of climate-changing gases), in poverty and many other important indicators have been “going South” for several decades.

It is, accordingly, not surprising that dictionary look-ups and polls show interest in “something else.” If, as is likely, the trends continue, that interest is also likely to increase. But what, specifically, might that “something else” entail? And is there any reason to hope – even as interest in the word “socialism” grows in the abstract – that we might move from where we are to “some other system” that might nurture equality, liberty, ecological sustainability, even global peace, more than the current decaying one we now have?

New Models of Socialist Structures

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What Then Must We Do?

11:45 am in Uncategorized by Gar Alperovitz

My new book, What Then Must We Do? Straight Talk About the Next American Revolution is beginning to hit bookstore shelves, and should be available to ship online next week.  In the meantime, here’s an interview with Laura Flanders exploring the themes of the book:

You can read the transcript of the interview here.  And mark your calendars for May 12th, when I’ll be answering your questions in the FDL Book Salon.

A Checkerboard Strategy for Regaining the Progressive Initiative

9:37 am in Uncategorized by Gar Alperovitz

President Obama is Time magazine’s “Person of the Year” – the first Democratic president to receive two consecutive popular-vote majorities since Franklin Delano Roosevelt. Yet these are clearly tough times for progressives. Everything progressives have fought for is seemingly on the chopping block nationally, and in many states and cities. Programs are being cut; public assets are being sold off; school teachers are losing their jobs; unions are being attacked; pension and health care benefits are being slashed – even Social Security is being challenged.

Checkerboard laid out for a game

Does the successful checkerboard strategy provide a model for future activism?

Progressives, in short, remain on the defensive.

No one would deny that defense is important. But even as every effort must be made to hold the line, how, specifically, might it be possible to regain the political initiative?

History suggests one powerful strategy – one that begins by getting clear about the checkerboard of power, and its possibilities.

Washington may be stalemated. But Washington is not the only space on the political checkerboard. The American system of federalism allows for political initiatives that can take the offense across a range of scales and locations, and politics involves many different squares on the board. Some are currently blocked, but others may be open for doing something interesting. A serious checkerboard strategy may also open the way to national solutions as well.

The steady city-by-city, state-by-state Progressive Era buildup to national women’s suffrage offers one well-known example of a checkerboard offensive. Another involved the state-by-state buildup of work and safety regulations prior to the New Deal. In more recent times, numerous places on the checkerboard have demonstrated how progress on social issues can be made as well, square by square, over time, even in a very conservative era.

Prior to 2004, for instance, no state in the nation allowed same-sex marriage. Today, less than ten years later, same-sex marriage is legal in nine states and the District of Columbia. Moreover, broader public opinion is slowly turning in favor of equal rights for same-sex couples. Step-by-step, further progress is all but certain.

Similarly, fed up with the harsh repercussions of the failed drug war, a majority of Americans now favor legalization or decriminalization of marijuana – and two states on the checkerboard, Colorado and Washington, recently voted in favor of legalization. (Many more already permit the use of medical marijuana).

Along with such highly visible successes on social issues, just below the surface of public awareness numerous important economic and institutional advances have long been developing in cities and states occupying different squares on the board. Although the increasingly hobbled national press rarely covers state and local issues, the advances include little noticed progressive policies in support of cooperatives and worker-owned firms, public- and neighborhood-owned land development, public power and internet delivery, new environmentally sustainable energy strategies and even public enterprise, including publicly-owned health care facilities.

Numerous additional policies operating in various parts of the country also could be turned to progressive advantage and expanded over time – if there were a clear strategic determination to do so (and a lot of hard work). Among others, these include: municipal investing strategies, state venture capital investing, pension and retirement fund investing, move-your-money and bank-transfer efforts, land and mineral revenues for public benefit and municipal methane-capture efforts. On a larger scale, public banking efforts similar to the Bank of North Dakota and progressive health care reforms similar to those recently adopted in Vermont are being pursued in dozens of states.

What is striking about the new range of possibilities is that most also introduce the concept of democratizing wealth ownership into practical and political reality.

There is obviously every reason, first, to learn about what is happening just below the surface of media attention and, second, to build up and steadily expand the number of squares on the checkerboard that are currently open to expansion. The goal should not only be to help people in specific local communities and states, but also to demonstrate possibilities to others working in other squares – and together to slowly surround the hold-back cities and states with what makes sense as they flounder and fail on their regressive path over time.

In certain cities and states a comprehensive strategic option also appears to be opening up – and here the issue is how it might be tested, refined, and then put forth as a serious approach in one or more cities or, ultimately, on a number of squares on the board – especially as economic difficulties and the fiscal crisis intensify.

Traditional progressive strategy for financing public expenditure has always tried to focus taxation at the very top to the extent feasible – both as a matter of equity and of good politics (keeping the middle class out of the line of fire and out of the political embrace of the opposition). There is nothing wrong with this approach except that it is obviously inadequate – as the ongoing right-wing budget program/salary-and-benefit-cutting bonanza so painfully remind.

The strategic way out of the box, logically, is an approach that draws on demonstrably viable checkerboard efforts to rebuild the local economy (and the local tax base) in ways that are effective, stable, redistributive and ongoing – and that also capture greater revenues and profits for public use. Which means a different form of “democratized” development – and a specific plan for how to implement it over time so as to secure funds for vital institutions and infrastructure (such as schools and mass transit), for obligations to past and future retirees, and for programs to conserve resources and protect the environment – all while preserving and expanding services for those who badly need them.

Numerous practical ingredients that can be included in a comprehensive checkerboard strategy include:

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Wall Street Journal More Interested in Caviar and Obama’s Birth Certificate Than Worker Owned Firms

11:47 am in Uncategorized by Gar Alperovitz

Social pain, anger at ecological degradation and the inability of traditional politics to address deep economic failings has fueled an extraordinary amount of practical on-the-ground institutional experimentation and innovation by activists, economists and socially minded business leaders in communities around the country.

A vast democratized “new economy” is slowly emerging throughout the United States. The general public, however, knows almost nothing about it because the American press simply does not cover the developing institutions and strategies.

For instance, a sample assessment of coverage between January and November of 2012 by the most widely circulated newspaper in the United States the Wall Street Journal, found ten times more references to caviar than to employee-owned firms, a growing sector of the economy that involves more than $800 billion in assets and 10 million employee-owners — around three million more individuals than are members of unions in the private sector.

Worker ownership — the most common form of which involves ESOPs, or Employee Stock Ownership Plans — was mentioned in a mere five articles. By contrast, over 60 articles referred to equestrian activities like horse racing, and golf clubs appeared in 132 pieces over the same period.

Although 2012 was designated by the United Nations as the International Year of the Cooperative — an institution that now has more than one billion members worldwide — the Journal‘s coverage was similarly thin. More than 120 million Americans are members of co-operatives and cooperative credit unions, 30 million more people than are owners of mutual funds. The Journal, however, devoted some 700 articles to mutual funds between January and October and only 183 to cooperatives. Of these the majority were concerned with high-end New York real estate, with headlines like “Pricey Co-ops Find Buyers.”

The vast number of cooperative businesses on Main Streets across the country were discussed in just 70 articles and a mere 14 gave co-op businesses more than passing mention. Together, the articles only narrowly outnumbered the 13 Journal pieces that mentioned the Dom Pérignon brand of champagne over the same time frame, and were eclipsed by the 40 Journal entries that refer to the French delicacy foie gras.

Another democratized economic institution is the not-for-profit Community Development Corporation (CDC), roughly 4,500 of which operate in all 50 states and the District of Columbia. Such neighborhood corporations create tens of thousands of units of affordable housing and millions of square feet of commercial and industrial space a year. The Journal ran no articles mentioning CDCs in 2012 and only 43 over the past 28 years — less than two a year. Meanwhile, the word château appeared in 30 times as many articles, and luxury apartments received 300 times as much coverage over the same period.

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A New Era for Worker Ownership?

8:10 am in Uncategorized by Gar Alperovitz

This post was originally published by Commondreams.org

The workers of the just-formed New Era Windows cooperative in Chicago—the same workers who sat in and forced Serious Energy to back down on a hasty shutdown of their Goose Island plant a few months ago, and famously occupied the same factory for six days in December 2008—not only are putting together a bold plan for worker ownership, they are likely to move the entire subject into national attention, thereby spurring others to follow on. Though they have a powerful start, if the past is any guide, they will need all the help they can get—financial as well as political.

A grid of colorful factory windows.

Photo: Bob Segal / Flickr

I was one of the architects of an attempt to establish a worker-owned steel mill in Youngstown, Ohio in the late 1970s—a plan that began with powerful intentions, the financial support of the Carter administration, and the backing of religious and political leaders in the state of Ohio and nationally. The plan was on-track, including a promised $100 million in loan guarantees from the Carter Administration—until, somehow, those opposed to the plan sidetracked the effort, with the promised money disappearing conveniently just after the fall 1978 elections had passed.

The Chicago workers have a much, much greater chance of success. They have the skills they need to run a manufacturing business. They have a good market—an energy efficient window is a good friend in a Chicago winter, after all—and heavy, fragile, made-to-order windows are much less vulnerable to global competition than other products. And, thanks to their inspiring struggle to keep their jobs, they can count on a significant amount of public support.

They also have the backing of the United Electrical workers (UE): an independent and fiercely democratic union; and the support of the Working World, a non-profit that has helped make hundreds of loans to Argentina’s thriving network of “recuperated” worker-owned businesses.

Above all, their own track record of bold and brave action to defend their jobs is promising in itself, and stirring in terms of public response: many more people are rooting for this company than your average small manufacturing startup.
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How Big Banks Run the World – at Your Expense

12:51 pm in Uncategorized by Gar Alperovitz

Originally published on Truthout

Money

(photo: 401K2012/flickr)

The recent Public Banking conference held in Philadelphia offered a message that is at once so simple – but also so bold – it is hard for most Americans to pause long enough to understand how profoundly their thinking had been corralled by the masters of finance – in ways far, far, far more insidious and powerful than even the latest financial crisis suggests.

To understand what has happened, however, you first have to take a minute to shake a few cobwebs out of your brain about “money” – and how it is created and by whom and for whose benefit.

Money is “created”? Yes, obviously so – or did you imagine there is some fixed pile of “money” some place that exists once and for all and for all times?

Think about it: If that were true, it would be impossible for the economy ever to change and grow. If the “money supply” were not increased over time, the original economy of, say, 1776 – which served about 2.5 million Americans – would still define the amount of “money” we would have to work with today.

(And yes, going back further, if money were not increased – i.e. “created” – the amount that existed even in a far smaller economy prior to 1776 would be all there was and is, even down to today.)

* * *

Once you realize money must be and is regularly created and expanded, then the interesting questions begin to occur – like “How is it done?” and “Who benefits from it?”

Step One: Most people think of “money” as something real, something that is kind of like gold or silver or anything that has intrinsic value. Allowing for a very, very few minor exceptions, that is simply not what “money” is.

“Money” in the real world is a piece of paper (or electronic version of the same) that is a promissory note – a promise to pay you – that legally must be accepted by anyone to whom it is given to settle a debt. Behind this promise is the federal government in two very big ways: First, the government itself stands behind the promise as the party that will pay what it says it will pay on the piece of paper. Second, the government ensures that everyone must accept this promise if the piece of paper is handed over when you buy something or settle a debt.

So, money is a promise to pay? Yes and that is all it is – but that is huge, especially when backed and enforced by the government.

Once you fully grasp this simple truth, things get very, very interesting:

Some “authority” must have the power to issue or authorize the issuing of “promises to pay that must be accepted” – i.e. to “create” money. In the United States that “authority” is called the Federal Reserve (“the Fed”).

And yes – because the economy does, in fact, get bigger over time – the Federal Reserve Board must have a way to create more money (more promises to pay) as time goes on. It does this all the time. In the modern era, it does it via computers issuing – literally out of thin air, via nothing more than accounting entries – promises to pay that are called “dollars.”

The Federal Reserve uses these to buy up securities owned by banks – and then these newly created “dollars” are deposited in the banks’ reserve account at the Fed.

Again, yes, created literally out of thin air. (Otherwise the money supply wouldn’t expand and we would be back in 1776 …)

* * *
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The Cleveland Model, Illustrated

6:48 am in Uncategorized by Gar Alperovitz

The Cleveland Model: building green worker cooperatives within a community framework that leverages the procurement power of non-profit anchor institutions:

Cleveland Model

Beyond Corporate Capitalism: Not So Wild a Dream

9:32 am in Uncategorized by Gar Alperovitz

This article originally appeared in the June 11, 2012 issue of The Nation magazine, and was coauthored with Thomas Hanna.

TVA offices in Chattanooga, Tennessee

It’s time to put the taboo subject of public ownership back on the progressive agenda. It is the only way to solve some of the most serious problems facing the nation. We contend that it is possible not only to talk about this once forbidden subject but to begin to build a serious politics that can do what needs to be done in key sectors.

Proposals for public ownership will of course be attacked as “socialism,” but conservatives call any progressive program—to say nothing of the modest economic policies of the Obama administration—“socialist.” However, many Americans are increasingly skeptical about the claims made for the corporate-dominated “free” enterprise system by its propagandists. A recent Pew Research Center poll found that a majority of Americans have an unfavorable view of corporations—a significant shift from only twelve years ago, when nearly three-quarters held a favorable view. At the same time, two recent Rasmussen surveys found Americans under 30—the people who will build the next politics—almost equally divided as to whether capitalism or socialism is preferable. Another Pew survey found that 18- to 29-year-olds have a favorable reaction to the term “socialism” by a margin of 49 to 43 percent.

Public ownership in certain sectors of the economy is the only way to solve some of America’s most pressing problems. Take the financial arena, where the current recession was hatched. Today, five giant banks control more than one-third of all deposits. Wall Street claims this makes it more efficient; but even if the Big Five banks were efficient (which is open to question—how “efficient” are institutions that didn’t know they were carrying a huge backlog of underwater loans?), they were all deeply involved in creating the meltdown that cost taxpayers billions in bailouts, and the overall economy trillions. Numerous economists, left and right, believe that these unbridled operations will inevitably lead to another crisis. JPMorgan Chase’s recent speculative loss of at least $2 billion should be fair warning.

The traditional liberal approach calls for more regulation. But, important as it is, this tool for controlling corporate behavior has been increasingly undermined by fierce lobbying. As Senator Dick Durbin observed, “The banks…are still the most powerful lobby on Capitol Hill. And they, frankly, own the place.” Most of those who created the mortgage crisis went scot-free, and the financial reforms that have since been enacted are flimsy in many areas and easily evaded. Nearly two years after the Dodd-Frank legislation was approved, only 108 of 398 necessary regulations have been written, 148 deadlines have been missed (67 percent) and nearly two dozen Congressional bills scrapping parts of the law proposed. The draft measures implementing the Volcker Rule (which limits proprietary trading by banks) are so full of holes as to be almost meaningless.

The underlying problem is that the economic and political power of corporations in general, and banks in particular, has grown dramatically. On the eve of the Great Depression in 1929, 250 banks controlled roughly half the nation’s banking resources. Now, a mere six banks control almost 74 percent of the nation’s banking resources. The steadily increasing concentration of power occurred, not surprisingly, as progressives’ power declined. Organized labor, the institution that has given progressive politics its muscle, has shrunk from a 1954 peak of 34.7 percent of the workforce to a mere 11.8 percent—only 6.9 percent in the private sector. As unions have grown weaker, conservative politicians at the state level, backed by right-wing-funded lobbying groups like the American Legislative Exchange Council, have launched drives to pass a raft of “right to work” and other anti-labor laws, further undermining the liberal-left’s key institutional power base.

That corporations can undo the regulations affecting them has been demonstrated time and again. Starting with trucking, airlines and railroads, since the 1970s deregulation has gone forward in sector after sector under Democratic and Republican administrations alike. The trend has continued in the energy, communications and, to a lesser degree, food and drug industries. The big coal and oil companies have resisted comprehensive curbs on greenhouse gas emissions, including spending millions in 2009–10 to defeat cap-and-trade legislation in the Senate after it passed the House. This is in addition, of course, to concerted efforts, year in and year out, to discredit climate change science.

The other traditional progressive response to concentrated corporate power has been stronger enforcement of antitrust laws. In the wake of the mortgage crisis, demands to “break them up” were made as a way of bringing under control banks deemed “too big to fail.” These demands were ignored, but even if they were to succeed, within a few years the most aggressive of the broken-up banks would likely find ways to regroup, just as AT&T did recently (and as Standard Oil did after it was broken up in the early part of the twentieth century). After banks were deregulated in the 1980s and ’90s, the majors gobbled up the small fry, eliminating 7,000 banks and increasing average bank size 400 percent. The institutional power imbalances guarantee that the banks will likely overcome any temporary effort that does not strike deep when the next crisis opportunity arises.

The near collapse of several big banks and mortgage lenders in 2008–09 offered such an opportunity, but it was squandered. The government provided so much bailout money to institutions like Citigroup and AIG that it could easily have taken them over, turning them into managed public utilities. Instead, it meekly handed voting to trustees who, in the case of AIG, were corporate insiders recruited by the New York Federal Reserve. At the outset of the crisis Willem Buiter—shortly before becoming the chief economist of Citigroup—came much closer to the right approach than many progressive critics when he asked: “Is the reality…that large private firms make enormous private profits when the going is good and get bailed out and taken into temporary public ownership when the going gets bad, with the taxpayer taking the risk and the losses? If so, then why not keep these activities in permanent public ownership?”

There is a second reason that a strategy going beyond regulation and antitrust is essential. Large corporations are subject to Wall Street’s first commandment: grow or die. “Stockholders in the speculation economy want their profits now,” observes Lawrence Mitchell, author of The Speculation Economy, “and they do not much care how they get them.” If a corporate executive does not show steadily increasing quarterly earnings, the grim quarterly-returns reaper will cut her down sooner or later.
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The Rise of the New Economy Movement

5:25 am in Uncategorized by Gar Alperovitz

Originally published at Alternet.

Activists, theorists, organizations and ordinary citizens are rebuilding the American political-economic system from the ground up.

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In a special five-part series edited by AlterNet’s Lynn Parramore, in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

Organic Valley Cooperative butter (left) compared to store brand butter. Photo by Julie Magro.

Just beneath the surface of traditional media attention, something vital has been gathering force and is about to explode into public consciousness. The “New Economy Movement” is a far-ranging coming together of organizations, projects, activists, theorists and ordinary citizens committed to rebuilding the American political-economic system from the ground up.

The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

Thousands of real world projects — from solar-powered businesses to worker-owned cooperatives and state-owned banks — are underway across the country. Many are self-consciously understood as attempts to develop working prototypes in state and local “laboratories of democracy” that may be applied at regional and national scale when the right political moment occurs.

The movement includes young and old, “Occupy” people, student activists, and what one older participant describes as thousands of “people in their 60s from the ’60s” rolling up their sleeves to apply some of the lessons of an earlier movement.

Explosion of Energy

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The New Economy: A State-by-State Look

9:35 am in Uncategorized by Gar Alperovitz

History is paradoxical: Our politics are stalemated, our economy stagnating. But precisely because of this, literally thousands of new social and economic initiatives suggest the possibility, over time, of literally rebuilding the system from the bottom up.