Co-Op Nation: Interview with Gar Alperovitz

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. Among his most recent books are America Beyond Capitalism and (with Lew Daly) Unjust Deserts: How the Rich Are Taking Our Common Inheritance and Why We Should Take It Back.

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. For example, in addition to the numbers you mention, in one form or another there are four to five thousand neighborhood nonprofit corporations trying to benefit communities—some good, some bad, some very interesting, some not so interesting. If you include all forms of worker-owned co-ops, you’ll see that they come in various flavors: some not so good, some wonderful, some changing. Even employee stock ownership plans (ESOPs) are changing, by the way—a number are becoming more employee-controlled and participatory. Some have unions. There are close to three million more worker-owners in ESOPs than unionized employees in the private sector, which suggests at the very least an institutional power base that can be further developed.

Additionally, 25 percent of the American electric system is either co-op or municipal, essentially socialized. Land trusts are developing at the local level, so that when development occurs, the profits of that development accrue to the owner, which in this case is public or nonprofit. At the state level, there is a lot going on, like targeting investments with public pension funds, for example. California is best known for this, but the state of Alabama is also heavily targeting its pension funds to finance in-state investments and even investing in some forms of worker-owned companies. Nobody is covering them; they are not being talked about, but just below the surface of media attention, thousands of grassroots, institution-changing, wealth-democratizing efforts have been quietly developing throughout the nation for the last several decades.

To be sure, as you point out, many of the older forms have lost a good deal of their original spirit. On the other hand, virtually all are open to organizing efforts. Most credit union elections, for instance, are largely uncontested. They could become arenas of democratizing organizational efforts aimed at community-building investment strategies. The same is true of many other institutions.

So I maintain a cautious and paradoxical optimism, despite the current context of ongoing social and economic pain, the overreach of political elites, and the radical decline of organized labor as an institution that was essential to traditional progressive politics. The process of institutional innovation at the grassroots—which responds to nearly four decades of economic and political stagnation, pain and gridlock—suggests further possibilities for larger scale and for more (and accelerating) ongoing development, especially as social and economic pain continue.

NG: Your work with the democracy collaborative has resulted in a much talked about experiment in the use of cooperatives to reduce poverty—the Evergreen Cooperatives in Cleveland, Ohio—which seem to be having some success. The example of the Evergreen Cooperatives along with others is fueling a growing enthusiasm for cooperatives as a fix to unemployment, wealth inequality, and corporate power, especially among activists. Shareable certainly has encouraged this. Yet, in at least one of your public talks, you presented a balanced picture of cooperatives showing both the good and the bad. What is the dark side of worker cooperatives? Are there any legal formulas that could better balance out the different interest of stakeholders such as those of the user/consumers, the wider society, and the natural environment?

Co-ops have had a complex history because problems arise if there is not an adequate capital source or an adequate market. What’s going on in Cleveland draws to some extent on the Mondragón federation of worker cooperatives in the Basque region of Spain, a 56-year-old project that currently employs about 80,000 workers and is involved in very large-scale, technologically sophisticated endeavors.

The effort in Cleveland is also building upon the long developing institutional work in Ohio, originating with the 1977 attempt at community and worker ownership of the Youngstown steel mill. What is new is that it involves an integrated complex of community- and worker-owned cooperative enterprises targeted in significant part to the $3 billion in purchasing power of nonprofit “anchor institutions” such as the Cleveland Clinic, University Hospital, and Case Western Reserve University. The first co-op business produces green laundry services on a very large scale, using less than a third of the heat and water of a typical competitor, likely making it one of the greenest services of its kind in the midwest. There is also an industrial-scale greenhouse for food services which will be on-line shortly; it will hydroponically grow three million head of lettuce a year. Another part of the complex is Ohio Cooperative Solar, which installs solar panels on the roofs of the city’s largest health, education and municipal buildings, and weatherizes residential properties as well.

This emphasis on connecting worker-owned firms to nonprofits that are anchored to the geographical area also attempts to address another challenge that faces many cooperatives. A firm may be participatory and internally democratic, but if its economic activity is mediated largely through the market, it will often have to expand, compete, pollute or cut corners in other ways. So Cleveland uses a quasi-public market – the anchor institutions’ purchasing power, in this case – to help stabilize these cooperatives and somewhat undercut some of the driving forces that they encounter on the open market. (Mondragón, as a growth-oriented, internationally competitive firm, is dealing with the global market pressures and contradictions we’re hoping to avoid.) I use “somewhat undercut” because I think you can’t do it totally or you will end up with the problems of traditional socialism, in which the market is so stable, so guaranteed, that there’s no incentive to innovate. So, there’s a balance that we’re trying to achieve where there is partly an external market which includes the usual market forces. It’s an important principle to experiment with, develop and define further.

Another common shortcoming of worker co-ops is that often they fail to explicitly consider issues of community in larger terms. The worker-owned companies in Cleveland are linked to a nonprofit, community-benefiting corporation. The co-ops return 10 percent of their profits to a revolving fund, part of which is used for the community; otherwise, they are independently run, worker-owned companies—except that they can’t be sold without the agreement of the community organization. The goal is to rebuild community, not simply benefit a small group of workers who may sell the company and run off to the suburbs as soon as they make substantial money—after being financed and developed by the basic complex. This project is located in a part of Cleveland that is almost entirely black and where the median income is $18,500 per family, so the larger focus on revitalizing the community is crucial. Thus: both worker coops and community—both, and not either/or.

NG: While there does seem to be a significant and growing cooperative movement worldwide, it’s doesn’t seem up to the task of replacing corporate control of the provisioning of everyday life. Cooperatives are slow to scale and regulations favor tightly-held corporations. What’s your dream strategy to accelerate the growth of the cooperatives worldwide?

First, the “demonstration effect” of community – and worker-empowering success in one part of the country can radically shorten the time frame of change in new situations, super-charging the dynamics of institutional development. Developments like the Cleveland worker-owned companies also serve to challenge the dominant ideology that there’s no alternative to very stratified, top-down institutions like corporations, and they do so in a very practical, down-home American fashion.

Over the long haul the development of new awareness and of new institutions—cooperatives, land trusts, municipal utilities, state banks, etc.—can suggest a possible path forward over time to create new strategic approaches that can complement and transcend traditional strategies. Also the development trajectory in Cleveland has begun to bolster support for its liberal mayor. At the same time, it has slowly begun to suggest ways to make city officials less vulnerable to the demands of major corporations seeking large tax inducements to locate, often temporarily, in the city.

I view this moment as the most interesting period of American history bar none, because we’ve run out of options in the traditional models. I think that means we’re in for a major, major period of debate, experimentation and ferment about how to run the wealthiest political economy in the world. This is in many ways more interesting than the American revolution, because the principles on which the system is run are being challenged at every level, and where that comes out is by no means obvious, but there are many, many places where progressives can build.

What I’ve sketched involves a long, evolutionary process of several decades. We are learning from the multitude of projects out there that, in my view and at this stage of development, are giving people an inkling of what might be. They’re not much more than an inkling, but that’s a good start. They give people a chance to theorize and to think about what might happen if we put together, piece by piece, parts of the political, social, and cultural movements that are dedicated to community, democracy, equality. Obviously all this has to move to a larger scale at some point. The challenge over time is to apply principles learned at the local level to regional and national scale solutions as time goes on and new openings develop. The U.S. did, after all, nationalize General Motors and Chrysler, only to largely sell them off ones the profits began to roll. In future, new forms may be possible if the groundwork is properly developed over time. The same is clearly true with regard to large banks, and also—inevitably—health care, where the crisis building up ultimately will force this system to some form of single payer or cooperative structure. In the health care case alone we are talking about literally 20 percent of the economic system.

NG: I’m betting that the Evergreen Cooperatives project that you helped kickstart has been a great learning experience. What advice would you give to city leaders who want to stabilize their local economy through cooperatives?

Yes, it has been an incredible experience on many levels and i believe that its success has ensured that in the future we will see the Cleveland model adapted in cities throughout the country. Clearly, the first step in forming any new institution is to bring together a group of people who believe such an effort is important. From there, people that are interested in forming a cooperative or any other wealth democratizing organization can learn from experts and from experiences around the country and throughout history. Much of this kind of information can be found on the Democracy Collaborative’s website.

Next is to take that information and ask what is appropriate for this particular community. In Cleveland, a meeting was held that brought together a wide array of representatives from throughout the community. This was followed by many discussions and a lot of detailed work on the ground to determine what would work for the area—including 140 interviews, many with procurement officers from the local hospitals and universities, to determine what and if they would buy from local cooperative institutions. Another important component is building community support for the strategy. The process will naturally be different in every community, but with every success (and possible failure) it is likely to become more and more advanced and adaptable.

NG: The seven cooperative principles provide the foundation for economic solidarity among citizens. They’re inspiring, but in an age of global warming there’s a glaring gap – there’s no mention of cooperatives’ relationship to the natural world. In fact, virtually all cooperatives operate within in capitalist market economies and some encourage consumption just like corporations. What is happening and what needs to happen within the cooperative movement to connect governance of cooperative enterprises to wise stewardship of the natural world?

First, I think that cooperatives and the cooperative principles often foster an internal culture that is much more attuned to climate change and other environmental issues than other economic institutions. Second, larger-scale cooperative efforts such as the Cleveland cooperatives are designed from the start to be environmentally sustainable. This is not just to reduce their ecological impact—which in itself is vitally important—but also to take advantage of the tremendous economic opportunities that environmental sustainability can provide. For instance, the laundry cooperative operates out of a LEED-gold building and has the smallest carbon footprint of any industrial laundry in the state. In addition to benefiting the environment directly, these characteristics offer the “anchor” universities and hospitals in the area an opportunity to “green” their own operations while simultaneously investing in the community. (They often find both useful because it is good business practice and because many are also personally committed to such principles.) The other linked cooperatives are also similarly environmentally oriented as a matter of principle.

Lastly, cooperatives can play an important role in economically stabilizing and democratizing local communities (especially on a larger scale as in Cleveland), both strategies are critically important to environmental issues given the massive waste of resources—natural and economic—expended when corporations play communities off against one another in a race to the bottom to attract jobs and capital. The schools, the housing, the roads, the hospitals, the government structure in a city like Detroit, Cleveland or St. Louis are simply thrown away, and the companies move elsewhere. We then must build new cities, new roads, new schools, new hospitals, new city structures, with massive capital and environmental costs that are just ignored. To the extent locally anchored co-ops keep jobs locally this helps avoid all these capital, carbon, and other environmental costs.

NG: Our species is in a distressing double bind. If we continue to grow the global economy, we risk depleting our natural resources. If we don’t grow the global economy, we risk a radically destabilizing society as much of our wealth is linked to growth. What role can cooperatives play in opening up another option, one where widespread prosperity and environmental sustainability are compatible?

The first step to addressing this critical issue is to re-define “growth.” some kinds of growth are vital and beneficial both to the environment and to prosperity—growth in renewable energy, growth in sustainable agriculture, growth in the community-controlled finance sector, etc. On the other hand, much of our economic system is tied to the “grow or die” paradigm that forces Wall Street corporations to constantly post increasing profits lest they be punished by stockholders. It is this narrowly defined and haphazard economic growth that is at the root of many of the threats to our environment. Crucially, cooperatives are not inherently beholden to this environmentally destructive form of growth. Cooperatives can, and often do, decide if and how to grow based on factors such as community, democracy, and the environment rather than a single minded focus on quarterly profits. So too, larger forms of cooperative or public enterprise can choose how—or whether—to grow.

MB: The resurgence of cooperatives is happening at the same time as the emergence of open source production in software, nowtopian local production of local food, the mutualization of shared physical infrastructures and idle resources as documented by shareable, and in general, the growing uptake of shared innovation commons and design pools. Do you see any connection between cooperative forms of organisation, and the decision not to privatize social, technical and cultural innovation? Are cooperatives holding on to old formats of IP protection or are they joining the tendency towards sharing knowledge so that it can benefit all of humankind?

Certainly among some sectors of the cooperative movement you’ll find an enthusiastic embrace of some of the trends you mentioned, more generally, I think the situation across the emerging new economy with respect to questions of property is analogous to the situation that free software found itself in with respect to copyright. No matter how ardently we desire to work within a commons-based framework, the fact is the dominant legal and economic framework is based to a large degree around private ownership. But that does not mean nothing can be done. As I mentioned, the community land trust uses ownership of land to make housing permanently affordable for the homeowners who live on that land. In most cases, a very technical legal device—-ground leases—-are used to make this kind of real-estate commons a reality. I’d argue that this is similar to the kinds of legal maneuvering that free software licenses need to do to turn the copyright system towards commons-based ends.

Because these forms of cooperative or commons-based ownership are built within and depend on a legal and economic framework organized around a different set of values (i.e. private property), it means that there’s no guarantee that a project working under one model of cooperative ownership will automatically be sympathetic to other forms. Just as it is far from the case that every company using free software is a worker-cooperative, not every employee-owned business is a paragon of commons-minded workplace democracy. Although, as i noted, there are some interesting studies showing that more and more traditional ESOPs are becoming more democratic.

The initial challenge is to create awareness of different emerging alternatives to traditional private ownership. Because these often have to be quite technical to operate effectively on a meaningful scale the intrinsic affinity between all of these models is sometimes obscured. On the other hand, we need to foster a culture in which all these different models are seen as complementary, developing a new sense of civic responsibility in what I’ve called a “pluralist commonwealth.” It’s to these ends that we’ve developed our community–wealth.org project: as in open-source software projects, you need to both share the technical “code” or know-how, but also build a community committed to the values and norms that make the new ecosystem thrive. The general challenge is to build steadily in the direction of a commons vision, over time, step by step, overcoming obstacles along the way as time goes on.

MB: You have obviously a deep knowledge of the U.S. situation, but is this trend also global, do you see similar resurgences across the world, in Africa, Latin America, East Asia, the Middle East, or are there cultural barriers? What is the state of international cooperation, global action and information sharing in this field?

Certainly there are a lot of interesting experiments and developments happening all over the world; the United Nations-designated “International Year of the Cooperative” is also catalyzing a fair amount of attention to what’s going on globally. The challenge of how to build a sustainable and just economy on the global level is both a pressing and massive challenge. The truth is we really don’t know how to truly manage a cooperative economy successfully on a national or regional scale yet. If anything, we should be learning from the experiences in the global south to help clarify what might work here, but we should also be sensitive to our own unique cultural situation. What worked in Kerala, or Porto Alegre, or Mondragón may not work automatically in the U.S. We also need to be willing to critically evaluate those experiences. The design of “the next system” is, in my opinion, still to be worked out. That said, there’s obviously a lot to learn if we study what’s happening elsewhere with some care. For instance, many people have been (justly) excited by the transformation of a number of factories in Argentina into worker-owned cooperatives. What’s less well known is that many of these cooperatives are now flourishing because the sympathetic municipal government of Buenos Aires has found ways to shift procurement towards the cooperatives, giving them a partly guaranteed market. The trajectory here points toward a kind of hybrid planning system in which cooperatives would be partly embedded in larger community wide public systems, one which draws both on market mechanisms and public institutions, something that confirms some of the design decisions we helped make in setting up the Cleveland model. But obviously the processes leading up to these two experiments—-the decades-long experience of deindustrialization and decay in the rustbelt on the one hand, and the swift shock of the Argentina financial collapse on the other—-are very different, so one can generalize only so far.

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Connect with Gar on his website, by subscribing to his mailing list or podcast, or by following him on twitter and facebook.  If you want to learn more, you can watch a couple of Gar’s videos:

• If you don’t like capitalism, and you don’t like socialism, what do you want?
• Movements, history, and economic transformation

This article is cross posted with permission from Shareable.net.