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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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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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Co-Op Nation: Shareable’s Interview with Gar Alperovitz

1:27 pm in Uncategorized by Gar Alperovitz

Originally published in Shareable

In this interview, Shareable publisher and editor Neal Gorenflo and P2P Foundation’s Michel Bauwens chat with Gar Alperovitz, the Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative.

NG: In your book, America Beyond Capitalism, you say that 120 million Americans are involved in citizen-controlled cooperatives and credit unions, and that there are 11,000 worker owned companies in the United States. This paints a totally different picture of Americans today than seems to be popularly understood – that ordinary Americans are helpless in the face of corporate and government power. Why are Americans so blind to their own economic power? But on the other hand, are you sure that this actually the case, have some of these older organisations lost their original spirit?

GA: I spend a great deal of time asking, “Is there anything that the major media—which greatly shape Americans’ worldviews and perceptions—aren’t covering?” I try to learn what’s out there, and I’ve been doing it for longer than I care to remember. What I’ve found out is exactly what you describe—an astonishing number of developments that the press doesn’t cover, either for lack of interest or funding for on-the-ground reporting. Read the rest of this entry →

How the 99 Percent Really Lost Out – in Far Greater Ways Than the Occupy Protesters Imagine

9:40 am in Uncategorized by Gar Alperovitz

Pierre-Joseph Proudhon (Image: cinaski, flickr)

Pierre-Joseph Proudhon (Image: cinaski, flickr)

This article originally appeared on Truthout.
October 29, 2011

“Property is theft,” French anarchist Pierre-Joseph Proudhon famously declared in 1840 – a judgment clearly shared by many of those involved in the occupations in the name of the 99 percent around the country, and especially when applied to Wall Street bankers and traders. Elizabeth Warren also angrily points out that there “is nobody in this country who got rich on his own. Nobody.” Meaning: if the rich don’t pay their fair share of the taxes which educate their workers and provide roads, security and many other things, they are essentially stealing from everyone else.

But this is the least of it: Proudhon may have exaggerated when, for instance, we think of a small farmer working his own land with his own hands. But we now know that he was far closer to the truth than even he might have imagined when it comes to how the top 1 percent really got so rich, and why the 99 percent lost out. The biggest “theft” by the 1 percent has been of the primary source of wealth – knowledge – for its own benefit.

Knowledge? Yes, of course, and increasingly so. The fact is, most of what we call wealth is now known to be overwhelmingly the product of technical, scientific and other knowledge – and most of this innovation derives from socially inherited knowledge, at that. Which means that, except for trivial amounts, it was simply not created by the 1 percent who enjoy the lion’s share of its benefits. Most of it was created, historically, by society – which is to say, minimally, the other 99 percent.

Take a simple example: In our own time, over many decades, the development of the steel plow and the tractor increased one man’s capacity to farm, from a small plot (with a mule and wooden plow) to many hundred acres. What changed over the years to make this possible was a great deal of engineering, steelmaking, chemistry and other knowledge developed by society as a whole. Read the rest of this entry →