Building the Third Way

Profiting from Disease

2012-02-13T21:00:00.005-06:00

Sometimes I think there’s nothing that corporations could do that would still shock me. Then I’m proven wrong.

According to the NBC Nightly News (“Capitalizing on drug shortages, companies turn profit” broadcast October 17, 2011) there’s a shortage of certain drugs. While there are several legitimate reasons for these shortages, NBC reported that an investigation by Congress found that one disturbing reason was that some companies are buying up a wide range of drugs used for the treatment of cancer and other serious diseases then turning around and selling them at unbelievable high prices. For example, according to the report one company sold a vial of leukemia medicine that would normally sell for $12 for an amazing $990 a vial!

There’s a point where as system as corrupt as Capitalism can go so extreme that it even offends Big Media such as NBC. This is one of them.

The Truth About Adam Smith

2012-01-22T14:38:00.003-06:00

It’s amazing how often Capitalists love to quote Adam Smith, the author of the book Wealth of Nations, which one might call the Capitalist Bible. Well, maybe I should rephrase that. I really should write that it’s amazing how Capitalists love to pick and choose quotes from Adam Smith but fail to mention views that he held that they disagree with.

Capitalists love to refer to Adam Smith’s “invisible hand” when it comes to the power of the market. I have no problem with that habit being that the market would still be an important part of an Economic Democracy. Very simply put, Smith was indeed right that what we today call natural selection when applied to the market can indeed make for a better product or service.

However, he made many statements in the Wealth of Nations that Capitalists and their defenders fail to mention.

Progressive Taxation
"It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

Smith also wrote:
"The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities, that is, in proportion to the revenue which they respectively enjoy under the protection of the state."

These two statements are especially timely. Right now on Capitol Hill, one of the biggest arguments is whether the tax rates for the rich should be raised. It’s obvious that Adam Smith supported a progressive tax on the wealthy.

Poverty
"No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable. It is but equity, besides, that they who feed, cloath and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged."

Another hot topic right now is the fact that there has been such a growth in the disparity in incomes between the very rich and, well, everyone else. A small percentage of the wealthy American population has gained dramatically while the rest of the nation has seen dramatic drops in wealth.

Fair Wages v Profits
"Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people."

It's amazing how Capitalists fail to mention this statement. Smith is saying clearly that workers deserve a fair wage and actually refers to "the bad effects of high profits" and "the pernicious effects of their own gains."

Trade Associations
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."

I wonder how many business trade associations would admit that they meet "in a conspiracy against the public?"

Labor Protection Laws
"Whenever the legislature attempts to regulate the differences between masters and their workmen, its counselors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters."

There’s a statement here that deserves repeating, "When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters." Such regulation in favor of labor "is always just and equitable" but is sometime not when "in favor of the masters." The reader needs to remember that at the time the word master was used for the sole-proprietor or what we today would say boss.

Redistribution of Wealth
"All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind."

For Capitalists the term "redistribution of wealth" is a filthy phrase. However, here we find Smith saying the opposition of such redistribution is a "vile maxim."

Worship of the Wealthy
"This disposition to admire, and almost to worship, the rich and powerful, and to despise, or, at least neglect persons of poor and mean conditions, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments."

We all know the obsession many have with the 'Lives of the Rich and Famous.' Smith found such obsessions "the great and most universal cause of the corruption of our moral sentiments."

Looking Out for Number One
"How selfish so ever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it."

Even though much of Smith's writings seem harsh he couldn’t help but accept that it was in our nature to care for our neighbors. Even he admitted that altruism was part of human nature.

Corporations
"The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.... Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company."

Capitalists have many ways of trying to explain away this statement. Some say he's only referring to sovereign entities that were created by the Crown and had been granted exclusive monopolies, such as the British East India Company. However, the establishment by the State of a company with a monopoly of the system doesn’t appear in his wording. His criticism is that the managers are watching over "other people's money than of their own." Another defense is that modern corporations have accountability systems set-up to compensate for this, which didn’t exist in Smith’s time. The problem with this argument is that recent history has shown this to be false. Companies such as Enron, Arthur Anderson and Countrywide Financial are just a few examples.

Conclusion
I’m not saying Smith was always right. Nor am I saying that if alive today he would be an advocate of Economic Democracy. However, I do want to bring some balance to the discussion on his work.

The Return of Bill Moyers

2012-01-15T12:46:00.004-06:00

Something I find exciting is that Bill Moyers has decided to return to the media with a new show on PBS "Bill Moyers and Company." Moyers has been a voice of reason and common sense for years and his return here in 2012 is a fantastic development.

We got a glimpse of what to expect from his show's premiere episode, on January 15, 2012, "On Winner Take All Transcript." At the end of the show, Moyers gave a fantastic commentary in response to an interview to someone who said the country was waking up:

Waking up is right. Waking up to the reality that inequality matters. It matters because what we’re talking about is what it takes to live a decent life. If you get sick without health coverage, inequality matters. If you're the only breadwinner and out of work, inequality matters. If your local public library closes down and you can't afford to buy books on your own, inequality matters. If budget cuts mean your child has to pay to play on the school basketball team or to sing in the chorus or march in the band, inequality matters. If you lose your job as you’re about to retire, inequality matters. And if the financial system collapses and knocks the props from beneath your pension, inequality matters.

I grew up in a working class family. We were among the poorest in town, but I was rich in public goods.

I went to a good public school, played sandlot ball in a good public park, had access to a good public library, drove down a good public highway to a good public college, all made possible by people I never met. There was an unwritten bargain among the generations -- we didn’t all get the same deal, but we did get civilization.

That bargain’s being shredded. The occupiers of Wall Street understand this. You could tell from their slogans. A fellow young enough to be my grandson wore a t-shirt emblazoned with the words: "The system's not broken. It’s fixed." That's right. Rigged. And that's why so many are so angry. Not at wealth itself, but at the crony capitalists who resorts to tricks, loopholes, and hard, cold cash for politicians to make sure insiders prosper and then pull up the ladder behind them.

Yes, Americans are waking up. To how they're being made to pay for Wall Street’s malfeasance and Washington's complicity. Paying with stagnant wages and lost jobs, with slashing cuts to their benefits and to their social services. And waking up to the grotesque Supreme Court decision defining a corporation as a person, although it doesn't eat, breath, make love or sing, or take care of children and aging parents. Waking up to how campaign contributions corrupt our elections; to the fact that if speech is money, no money means no speech.

So the collective cry has gone up loud and clear: enough’s enough. We won't, as I said, know for a while if this is just a momentary cry of pain; or whether it’s a movement that, like the Abolitionists and Suffragettes, the populists and workers of another era, or the Civil Rights movement of our time, gathers force until the powers-that-be can no longer sustain the inequality, the injustice and yes, the immorality of winner-take-all politics.

You can watch the entire episode online at Bill Moyers and Company web site along with other great web articles.

Welcome back, Mr. Moyers!

International Year of Cooperatives

2012-01-01T10:59:00.003-06:00

New Year’s Day usually brings hopes of good times to come. On a personal level, we make resolutions with promises of changes we plan to improve ourselves. We also can’t help but wonder what might 2012 bring to society as a whole.

In October of last year, the United Nations declared 2012 to be "The International Year of Cooperatives."

The President of the General Assembly Nassir Abdulaziz Al-Nasser correctly explained, "By virtue of their organizational characteristics, cooperative enterprises are user-owned and community responsive. They continue to aggregate economic power enabling communities to compete successfully in the global economy."

Deputy Secretary-General Asha-Rose Migiro also stated, "As self-help organizations, cooperatives are inherently people-centered. They not only meet material needs, but also the human need to participate proactively in improving one's life. Moreover, with democratic decision-making processes and a focus on cultivating member skills and capacities, cooperatives offer a model for harnessing the energies and passions of all."

Has the UN given us a preview of what 2012 might bring?

Halleluiah Corporation

2011-12-17T15:31:00.001-06:00

In the spirit of the season I think we need a little musical number for this blog entry. Therefore, I give you "Halleluiah Corporations" performed by Stanza XXI.

Happy Holidays!

Wal-Mart: Save Money. Screw Employees

2011-12-04T21:53:00.003-06:00

Wal-Mart is at it again. According to the Associated Press Wal-Mart is slashing its health care coverage for part-time employees and jacking up its premiums for its full-time employees.

Of course, Wal-Mart isn’t alone in screwing its employees. AP reported that according to the insurance company Kaiser only 42% of companies offer health care coverage to their part-time workers. It’s even worse if the employee is in retail because according to Mercer only 28% of those companies offer health care coverage.

Health care is a universal human right. It’s that simple.

Black Friday Backlash

2011-11-20T19:57:00.003-06:00

According to the New York Times there’s a growing backlash against Black Friday by consumers. Some say it’s an extension of the Occupy Wall Street sentiment. Others say they don’t like that the Black Friday openings are pushing further and further into Thanksgiving. One interesting motivation for some is an acknowledgement of the strain it places on the Workers, which might indicate a growing Worker identity in America.

Whatever the reason for the backlash, the fact that some people are standing up and declaring that they’re not going to take it anymore is a great thing. It gives one hope.

The Beginning and the End

2011-11-05T14:34:00.003-05:00

"You tell me that it's evolution
Well, you know
We all want to change the world
But when you talk about destruction
Don't you know that you can count me out"
~ Revolution by the Beatles

Over the last few weeks events in Oakland took a violent turn as a minority of people rioted after an Occupy Oakland protest. Even the police agreed that the rioters were not part of the Occupy Oakland group but a group of outsiders. In fact, the next day the true members of Occupy Oakland came out to help clean up. But with events such as this I thought it was important for me to state emphatically where I stand.

My position can be best summed up by the words of Martin Luther King Jr. back in December 11, 1964 "Nonviolence is the answer to the crucial political and moral questions of our time; the need for mankind to overcome oppression and violence without resorting to oppression and violence. Mankind must evolve for all human conflict a method which rejects revenge, aggression, and retaliation. The foundation of such a method is love."

If we truly want change we have to become part of the political process. By becoming part of the process we can change the world in a peaceful and orderly manner from the current one of injustice to a world built on justice. To quote Adlai E Stevenson, "As citizens of this democracy, you are the rulers and the ruled, the law-givers and the law-abiding, the beginning and the end."

Become organized, get involved, and most importantly: vote. Those are the keys to change.

Occupy Wall Street

2011-10-22T11:00:00.005-05:00

It's been over a year ago that I stopped posting here and my return took longer than I expected. However, with recent events in the news I felt like I couldn't wait any longer.

What a field-day for the heat
A thousand people in the street
Singing songs and carrying signs
Mostly say, hooray for our side
It's time we stop, hey, what's that sound
Everybody look what's going down

~ Buffalo Springfield, “For What It's Worth”

You can’t miss them because they’re all over the news media. In major cities across the world groups of people, some groups are small while others are large, setting up camps under the banner of Occupy Wall Street. There are no obvious leaders of this movement. Certainly, the Canadian based magazine Adbusters deserves some credit for helping to provide the spark but the magazine has pulled back and the movement has grown and taking a life of its own. PBS Newshour provided a very good report on the movement.

Most criticisms of Occupy Wall Street have simply been nonsense. Contrary to what critics say, while comments by a few protestors have been rather unrealistic, the majority of the protestors appear unified with three primary complaints: wide-scale corporate greed, excessive unemployment and underemployment, and the power of the top 1% wealthiest of the population over our political and economic system.

However, while their complaints are valid there has been one criticism by commentators that I think has merit. Most protestors have failed to provide practical proposals on how to fix these social injustices. When injustices exist, then it’s good and right to complain but it’s meaningless if real world solutions aren’t proposed.

This is not to say there haven’t been any proposals. In an article on MSN Money “What if we took down Wall Street?”, Anthony Mirhaydari wrote, “One thing the occupiers on Wall Street seem to imagine is a return to a small, community-based lending model -- with mortgages and small-business loans owed to the bank down the street…” While this is a good start, it’s not complete enough. Any socio-economic model big enough to successfully replace Capitalism requires something more than just mom and pop shop lenders.

What the Occupy Wall Street movement needs is to demand replacing Capitalism with an Economic Democracy, which would incorporate these proposed small, local lenders as part of a bigger and more robust model that would actually work.

Those that have followed my blog in the past are knowledgeable of Economic Democracy. For my new readers this is a good time to review what that means.

An Economic Democracy would be a market economy,
The core economic unit would be based on autonomous, democratically governed, worker-owned cooperatives,
In addition, there would be an increase in the number of family-owned enterprises and sole-proprietorships in comparison to the current capitalist system,
Both types of enterprises would be networked together by economic councils that would allow for mutual aid and input from the community,
There would also be the existence of non-profit and community-owned enterprises for services that cannot be provided by either co-ops or sole-proprietorships,
Investment would be provided by a mix of public sources in the form of governmental bodies and non-profit NGO’s rather than private capital, and
There would be extensive support to individuals and the various enterprises by local, state, and federal governments, such as universal health care and free education from pre-school through college.

Here’s my message to the Occupy Wall Street participants. You have two choices. While you have the right to protest, are you going to do nothing but continue camping out, carrying around signs and complaining? Or will you turn your anger into something productive by entering into the political process and electing representatives who will pass legislation that will actually make a difference?

The choice is yours.

An Important Announcement

2010-10-02T11:06:00.007-05:00

I began writing this blog back in October of 2007, making this month the third anniversary of my first entry. Upon this anniversary I've decided to take an approximately three month sabbatical from this blog until the end of 2010.

Over the last year I’ve developed a serious medical condition, which requires that I reorganize my life. I don't make this decision lightly, for I'm still a strong advocate for the cause, but I've decided that a temporary leave from writing this blog is best.

To my loyal readers over the years I want to say thank you for following my blog. I hope my writings have been helpful to the cause of creating a more just society.

If Providence allows, I expect to start posting to this blog again in January of 2011. There's other possible venues to advocate for the cause that I might use other than returning to this particular blog come the new year. I will decide over the next three months what path I take.

Until then I leave you with the words of W. E. B. Du Bois, “Believe in life! Always human beings will live and progress to greater, broader and fuller life.”
Pax,
Larry

Who We Are: Conclusion

2010-09-19T14:29:00.005-05:00

Paleontology
This is the final installment in a series of postings in which I explore the growing mountain of scientific evidence that supports that human have, as a species, a cooperative nature.

Olivia Judson in an article titled "How Heroes Are Made" (USA News and World Report Special Edition: Mysteries of Science) explained that in nature benefit and costs are determined by one standard and one standard alone, which is the number of offspring that an organism has. The more children an organism has then the more successful that organism is. This standard poses a problem for those of us who claim that humans have a cooperative nature. It would seem that if we cooperate then we run the risk of helping others pass along their genes at the expense of ours. Altruism and cooperation would seem to contradict natural selection. If mutual cooperation is indeed what separated us from the other primates what might have been the evolutionary pressure that could have created a cooperative and altruistic ape?

The famed evolutionary biologist and game theory pioneer William Douglas Hamilton published several studies on what might cause altruism to evolve in the species. According to Hamilton a gene that promoted extreme altruism, which is a form of altruism that is so sacrificial that the organism leaves no descendants, could spread if it helped individuals who were closely related. Hamilton created a formula to predict whether an organism had a predisposition to altruism. Known as Hamilton’s Rule if the action’s benefit is large enough and if there is a close enough genetic relationship so as to outweigh the cost then the altruistic gene would be promoted.

One can expand this principle of "kin selection" beyond the immediate family. Many species live in large groups such as herds and flocks in which they interbreed. For example, the Common Chimpanzees mentioned in my last blog while intolerant aren’t loners but live in large communities with layers of sub-communities. While the females leave during adolescence the males stay and form gangs which roam across their territories guarding it from interlopers. These males can set up friendships across family lines and prefer to set up gangs with their maternal brothers and half brothers. If they run across a gang from another community there can be violence to the point that some smaller communities may be wiped out.

According to Judson in the 19th century Charles Darwin hypothesized that early humans warring in same fashion as the chimps might actually have created altruism. Darwin hypothesized that unified groups of caring early humans might have been more successful in competition with the rugged individualist humans. Over time the rugged individualists and non-cooperative humans were put under such evolutionary pressure that they were replaced by cooperative humans.

Darwin’s hypothesis is intriguing but is there any evidence to support it? In a paper published in the journal Nature, Judson reported that it was found that people tend to prefer to help strangers from their own ethnic group. Such studies as the one in Nature, along with others, have increased interest in Darwin’s idea. But some of the strongest evidence may have been found by the evolutionary biologist Sam Bowles. According to Bowles during the last 90,000 years of the Pleistocene era, which lasted from 100,000 to the 10,000 years ago, there was little growth in the numbers of humans. Certainly climatic volatility during this time was rather extreme and that could have kept numbers down. But Bowles reviewed the archeological records and various studies and estimated that a substantial numbers of the deaths could have resulted from wars. According Judson, "Bowles shows that supercooperative, altruistic humans could indeed have wiped out groups of less united folk." Judson wrote that for this to be a success the model would also require supportive groups based on monogamy, sharing of food, and little disparity between members. It’s interesting to note that Judson states that if Bowles was right then any group that failed to drive out or kill disruptive or non-cooperative members would have had a disadvantage in battles.

With these studies are taken together, along with many others that I haven’t covered, it turns out that natural selection can indeed lead to the development of an altruistic and cooperative ape.

Conclusion of Series
In conclusion, what can we draw from these studies reviewed over the past months? We are hardwired by millions of years of evolution to make cooperative behavior intrinsically reinforcing. Because of these studies we can now see that the very heart of capitalism, the idea of the rugged individual and looking out for Number One, is a myth. Economic democracy is built upon the reality of the cooperative nature of humans. It’s time for society to move beyond the unnatural system of capitalism and move on to its logical successor: economic democracy.

Who We Are: Part III

2010-09-04T21:52:00.005-05:00

Animal Studies

This is the third installment in a series of postings in which I explore the growing mountain of scientific evidence that supports that human have, as a species, a cooperative nature.

Brian Hare, researcher for the Max Planck Institute for Evolutionary Anthropology, has been studying cooperative behavior in various animals for years. As a teenager Hare started studying the behavior of dogs in his parent’s basement. In his childhood experiments, which were the first of their kind, he indicated that the dogs were very good at following human non-verbal instructions. Later studies by other researchers supported Hare’s results showing that such attributes are genetically predetermined. Wolves lack this capacity, so the dog's abilities have been artificially selected by humans over the centuries through breeding.

At one point in his career Hare ended up at the Institute for Psychology and Genetics in Akademgorodok, Russia in which the researchers had been studying foxes since 1959. They were selectively breeding the foxes based on their degree of fear exhibited of humans. A control group was allowed to breed as usual while in the experimental group only those less fearful of humans were allowed to breed. Over time the behavior of the foxes in the experimental group changed. Those foxes took on dog like behaviors of barking and wagging their tails in the presence of humans as well as dog like physical appearance such as floppy ears, coats with differing degrees of markings, their skeletons became weaker, and their hormone balance changed. Along with all of this their social intelligence had begun to resemble the dogs in that they developed the ability to intuitively understand the directions of humans.

This trait of co-habitation and tolerance in dogs and the specially bred foxes lead to a hypothesis by Hare. He hypothesized that similar behavioral changes were prerequisites for the evolution of intelligence in humans. In other words, he hypothesized that our intelligence could not have evolved if we had not developed a prior practice of tolerance and the ability to cooperate with each other. He then proceeded to test his tolerance hypothesis. This required studying our closest relatives: the chimpanzees.

The Common Chimpanzees are known to be highly competitive and intolerant. For example, if a chimp of a lower rank attempts to eat from a bowl of food first then the higher ranking chimp will beat him and horde the food. Hare decided to test how far he could push this intolerance and find out what it would take for the chimps to cooperate with each other.

He set up an experiment with a bowl of food that could only be acquired by two chimps pulling on a rope together. If any chimpanzee alone tried to pull the rope it would fail so the only way to succeed would be for at least two chimps to cooperate. Time and time again they tried it individually and failed. But occasionally a few chimps would cooperate and successfully pull the rope together. It turned out that it was those few chimps that had already exhibited tolerance, such as eating together, that would be the ones that would cooperate with each other and would therefore succeed in the exercise.

When Hare studied Bonobos, a sub-species of chimpanzee, he found a very different story. Rather than a few tolerant members working together the bonobos naturally worked together to solve the problem. But true to their nature the bonobos, in a hedonistic style that would have made the free love of the 1960's seem puritanical, they would first have sex and would then cooperate in acquiring the food.

Bonobo Chimpanzees are interesting for many reasons. Being a sub-species of the chimpanzees they share at least a 98% genetic similarity with humans. Plus, their physical appearance is intriguing. The Bonobo have long head hair, pink lips, small ears and wide nostrils. In comparison to the Common Chimpanzee they have long legs, slim upper torso, and human-like breasts that are more prominent.
Hare has hypothesized that the point of separation of our ancestor from the chimps resulted from our ancestors purging the dominating and power hungry members in favor of tolerant and mild temperament members, which contrasts against the now discredited, though still widely accepted in pop culture, “killer-ape” theory. Hare and the other animal researchers have presented evidence that supports that what started our species in becoming human was not due to struggle and violence but mutual aid and cooperation.

In the next entry I will conclude this series with research that supports how natural selection can encourage the rise of a cooperative species.

Who We Are: Part II

2010-08-22T13:59:00.004-05:00

Social Networks and Obesity

This is the second part of a series of postings in which I explore the growing mountain of scientific evidence that supports that human have, as a species, a cooperative nature.

In July of 2007 the New England Journal of Medicine released a study that had followed 12,067 people in the Massachusetts town of Framingham over a fifty year period of time. What they found was astounding. According to the Dallas Morning News, the study "was the first to demonstrate that obesity – and perhaps other health problems that involve behavior or lifestyle – spreads through social networks."

To show how effective social networks are in affecting weight it was found that the chances of becoming obese went up 57% if a friend became obese, 40% if a sibling’s changed, and 37% if the person was a spouse. The most outstanding chance of change was if a close friend’s weight changed. If so then the chances that a person would become obese went up an amazing 171%!

In the study they were able to rule out several factors. First, they found that there was no statistical significance for socioeconomic class or access to healthy food. It turned out that there was a closer connection between friends that lived hundreds of miles away than there were between next door neighbors. In addition, they were able to rule out "birds of a feather" or that obese people were attracted to similarly obese by excluding those friends who were both obese at the start.

So what was taking place? According to a co-author of the study, Nicholas Christakis with the Harvard Medical School, "What we think is going on here is emulation." The behavior of emulation is certainly one trait expected to be found within a cooperative species.

In the third part of this series I’ll explore some of the animal studies and how they support the evolution of a cooperative human species.

Who We Are: Part I

2010-08-08T16:11:00.005-05:00

Longevity, Cooperativism and Human Nature

Philosophers have historically taken the three highly simplified views of human nature and have built various models consisting of differing degrees of complexity. Jean Jacques Rousseau believed that we are by nature good and that we are corrupted by society (the “noble savage”). The existentialist philosopher Jean-Paul Sartre held that human nature is neutral, with an individual’s free will being the sole element that decides our actions. According to Sartre as humans we have a radical freedom to the point that we are “condemned to be free.” Others that share his view of neutrality often give control largely to environmental socialization and conditioning (such as B.F. Skinner). Then there was Thomas Hobbes who held that human nature is bad. In Leviathan Hobbes wrote, “So that in the first place, I put for a general inclination of all mankind, a perpetual and restless desire of power after power, that ceaseth only in death.” He thought that any goodness exhibited by someone was the result of society keeping that person’s dark side in check. Otherwise, without society’s restrictions, human existence would be “nasty, short, and brutish.”

There is a growing body of scientific studies that now point towards an understanding that humans have a hardwired predisposition in which working together appears to be intrinsically reinforcing and which in turn encourages future cooperative behavior. Studies show that this drive is so powerful that if someone fails to cooperate then another person will go out of his or her own way to punish the uncooperative one, even at his or her own sacrifice. This revelation of the cooperative nature of humankind is so important that it deserves close examination.

A recent study by Brigham Young, published in the Public Library of Science, found that having social relations can actually increase one’s longevity. They took the results of 148 studies involving 138,000 people and combined them. What they found was a clear statistical trend that indicates that having strong social relations could increase a person’s lifespan in comparison by as much as four years.

What we see in this study is natural selection at work in the evolution of early humans. Those early humans who were by nature cooperative lived longer and therefore had more babies than their less cooperative peers. Over time the cooperative members of our human ancestors became dominant in the species and the “rugged isolationists” became a rarity.

In the next installment I will look at another study which involves social networking that found further support for cooperativism being hardwired within our nature

The Silver Screen

2010-07-23T18:44:00.006-05:00

After a depressing post such as the last one, which addressed the ongoing disaster on the gulf, I felt that it was time for something positive. Surprisingly, it was handed to me all wrapped up like a Christmas gift by the corporate news media.

On July 20th of this year NBC Nightly News ran during their feel good feature, "Making A Difference," a segment about community-owned theaters in 19 small towns across North Dakota. The report centered on theaters in the towns of Rockford and Langdon.

These theaters are perfect examples of how community-ownership could function in an economic democracy. The towns identified a need of the larger community (in this case the continued existence of movie theaters in the old city downtown areas that help to preserve the traditions and heritage of the community) in which the market, even if the economic enterprises were cooperatively owned and managed, wouldn't work. As a result the towns have converted the dead or dying historic privately-owned movie theaters into community-owned, non-profit theaters. In the news report at the Rockford Theater one volunteer stated, "Nobody is in here to make a profit, we're in here to keep the theater open." There was a community need and the towns took action to solve it when the market was incapable of doing so.

I've embedded the video of the news broadcast into the blog. Go ahead and watch it. It just might remind you that there is still hope.

Visit msnbc.com for breaking news, world news, and news about the economy

BP

2010-07-10T19:23:00.005-05:00

"I’m shocked, shocked to find gambling going on in here." Captain Renault, Casablanca

In my last posting I mentioned that Marx used a building’s structure as an analogy of the functional relations of society but that a new model was needed. My recommendation was to use genetics instead.

To recap we could think of DNA as being representative of the economic relationships within society. Just as DNA shapes and decides the functions of the organism the economic systems shapes and establishes the functions of the various social structures. In turn, while an organism protects and strives to pass on its DNA, social institutions work to protect and promote their economic systems. Organisms and social systems are both generally stable and adaptable for long periods of times but there is hope because history shows that just as organisms evolve and become extinct to be replaced by new ones the same happens to economic systems.

So now we can better understand some of the events of today. As we watch in horror at the nightmare unfolding in the Gulf of Mexico due to the explosion of Deepwater Horizon, people look for someone to blame. But as it turns out there’s plenty of blame to go around.

People naturally look to blame the corporation BP, which is a logical place to start. BP in its greed for profits, which is endemic in corporate structure, drilled far beyond what technology will safely allow as proven by its inability to cap the flow of oil. Plus, also due to this same greed it cut corners, which helped set the stage for the disastrous explosion.

But others point out that blame goes far beyond BP. It was well known long before the explosion that the Minerals Management Service (MMS), which is the government agency responsible to oversee the oil industry, was in bed Big Oil and was letting them get away with multiple violations while taking gratuities.

In addition to government agencies that are supposed to protect us the legal system has been shown owned by Big Oil. When the Obama administration ordered a six-month moratorium on offshore drilling Judge Martin L.C. Feldman issued a ruling blocking the moratorium because of "irreparable harm" to the businesses in the gulf that depend on drilling activity. But many say that Feldman is owned by the oil industry. As recently as 2008 he owned stock in Big Oil, including Transocean, a company which owns the oil rig Deepwater Horizon.

Like Claude Rains in Casablanca, it’s almost funny watching politicians and commentators exclaim how shocked they are that government officials and judges are bought and paid for by Big Oil. Yet, as the genetics analogy shows it’s in the nature of the system that the various social institutions should support and work to defend the economic system.

Some might point out that it’s different in countries other than the US. They point to other capitalist countries, such as France and Germany that seem to successfully regulate corporations and limit their influence. Does this somehow cause a problem with the analogy? Actually it’s very consistent.

Animal behaviorists have shown that with the right use of conditioned reinforcement one can train an animal in such a manner as to override their natural instincts.

That’s what the Europeans have done. They keep political pressure on their governments so as to override the natural tendencies of their social institutions to obey their capitalist instincts. As one Frenchmen said in Michael Moore’s excellent movie, Sicko, the American people are afraid of their government yet the French government is afraid of its people.

But I believe there is a better way than the European model. Rather than the constant vigilance necessary to keep the beast under control, which could someday turn on its master as it has in here in the US, a better solution would be to replace it with a new economic system. It’s time for the US and the other nations of the world to evolve from Capitalism to an Economic Democracy.

A New Analogy

2010-06-27T14:41:00.006-05:00

Karl Marx used architecture and engineering as an analogy for society. In his analogy a building’s base establishes both the shape of the building as well as the various functions of the building’s superstructure. In turn, Marx wrote, the superstructure functions to provide support and protection to the base. Marx compared human productive relations (i.e. economic system) as being like the building’s base in that they shape society’s legal, social, artistic, religious, political and other cultural features and institutions. In return, according to Marx, these various social features and institutions function to protect and support that same economic system that created them. G.A. Cohen, in his book Karl Marx’s Theory of History, gives an excellent analysis of Marx’s work.

One can understand why Marx might use such an analogy being that he lived during the heart of the industrial age. But maybe it’s time for a new analogy that we can better relate to here in the 21st century. Rather than looking to engineering and architecture it might be best that we look to the cutting edge science and technology of our age: genetics.

As we all know DNA is the blueprint that governs not only the development but the functioning of any living being. It even governs how an organism responds to the operant conditioning of the environment. DNA tells a dog to bark and a cat to meow. But unlike Marx’s architectural analogy, the reciprocal relationship between the organism and its DNA is well established. Not only does DNA shape and govern the organism but an organism strives to protect and pass along its own DNA. Biologists tell us that reproduction is the ultimate goal of any living organism.

Genetics as an analogy has another benefit that Marx’s building analogy didn’t. It provides a mechanism for change. Natural selection guides the evolution of life by putting pressure on organisms. Those that are most fit for their environment are able to have more offspring and therefore they pass along their genes more often than the less fit. While species tend to be stable and adaptable, something shown by Stephen Jay Gould, resulting in the outstanding diversity we see in nature, with the right conditions new species will arise.

We can take genetics and use it as an analogy of human society. An economic system might be compared to the DNA of an organism. The economic DNA of society shapes and governs the functions of the various social institutions and culture. Also, like the organism striving to survive and pass along its own DNA through reproduction, these social and cultural institutions in turn function to protect and reproduce their own economic systems.

But I find evolution to be the most exciting aspect of this analogy, especially Gould’s Theory of Punctuated Equilibrium. Using his theory as an analogy we can see how capitalism can appear to be beaten down and against the ropes yet by adapting come back strong while still keeping its nature of being capitalism. Just like most species, capitalism as a mode of production is both stable and adaptable.

That being said, speciation, the evolutionary process by which new species arise, is a fact proven by the fossil record. Like the fossil record, human history also shows that over time the various modes of production become extinct to be replaced by new ones. The Slave System was succeeded by the Feudal System, which was succeeded by Capitalist System. Just as species evolve so do modes of production.

While I don’t know when capitalism’s successor will arise this analogy gives me hope that it can happen. Hopefully Providence will allow me to see it occur in my lifetime.

Toyohiko Kagawa

2010-06-13T14:51:00.004-05:00

What follows is another installment in occasional biographies of influential people in cooperativism.

Toyohiko Kagawa (b. 7/10/1883, d. 4/23/1960) was one of five children. At the time of his birth his father was the secretary of the Privy Council to the Emperor of Japan. Kagawa’s mother was one of his father's two wives and was a professional dancing girl. His father was later made the governor of two provinces and vice-president of a third. Tragedy struck early in his life for when Kagawa was just four years old his father died. Kagawa was then adopted by his father's other wife. Though the family was wealthy and Kagawa lived in splendor his home was empty of love and according to Kagawa a living hell.

At the age of nine Kagawa was sent to a Christian convent for his education. When he entered high school he learned English from an American missionary, using the Sermon on the Mount. According to Kagawa it was Luke 12:27, "Consider the lilies, how they grow: they neither toil nor spin; but I tell you, not even Solomon in all his glory clothed himself like one of these”, that changed his life. It was due to this verse that he began to notice the beauty of the world and began to pray. He then realized that it was possible, in spite of the pressure of his peers, to live what he considered to be an ethical life.

After high school he entered a Christian college and later begun his ministry in Tokyo. Shortly after arriving he became seriously ill and rented for one yen a month a fisherman's cottage in the slums. The minister stayed with Kagawa for four days. It was then that Kagawa decided that to become healed he needed to begin ministering to the impoverished lower class of Tokyo.

Over time more men joined them to stay at the house. One was a convicted murderer, while another suffering from syphilis. Together the four men attempted to survive on just eleven yen. This tight budget meant eating only two meals a day. They would fill themselves up on water and thin their rice with water. Kagawa wrote, “If you have plenty of food you can never understand the meaning of the Lord's Prayer.”

Eventually Kagawa traveled to America and attended Princeton University. Once he graduated Kagawa went back to Japan. Rather than simply preach to the downtrodden he became a labor organizer. At one point he was arrested for participating in a general strike, which would be just one of many times he would be arrested for throughout his life. After his arrest Kagawa started organizing cooperatives throughout Japan, as well as organizing farmers into associations.

Eventually he moved on to organizing student cooperatives, consumer cooperatives, and credit unions. As World War II loomed on the horizon Kagawa shuttled back and forth between the US and Japan in a futile attempt to head off war. At one point the fascist government of Japan arrested Kagawa but later released him. Following the end of the war Kagawa traveled across the world to spread his message of cooperative economics. After his death in 1960 the Emperor of Japan awarded him their nation's highest honor, the Order of the Sacred Treasure.

In 1936 Kagawa wrote his landmark book Brotherhood Economics in which he presented his philosophy of change, theological framework for change, the history of the cooperative movement, and the direction of change that he advocated. In Kagawa’s model he proposed networks of cooperatives that would be organized into federations. The cooperatives within the federations would provide for health care, production, marketing and transport, credit, education, utilities, and distribution.

The cooperative federations would also send representatives to a Social Congress and an Industrial Congress. These congressional bodies would in turn send legislative proposals up to the legislative body. The Social Congress would send legislation on social issues while the Industrial Congress would send legislation on economic issues. Funds for their creation would be provided by the cooperative credit unions.

In Kagawa's model of Cooperative Commonwealth, he also kept small family enterprises and other private enterprises. Kagawa advocated setting caps on the private enterprises to prevent them from growing large and become a threat to the cooperative economy.

Certainly there are some differences between the model of economic democracy advocated here and Kagawa’s. Most importantly though, the core of his economic model, with its emphasis on cooperatives as economic enterprises along with the continuation of family enterprises, without a doubt places Kagawa well within the school of the economic democracy.

A Story of EPIC Proportion

2010-05-30T15:34:00.002-05:00

The year was 1934 and the world was in the grip of The Great Depression. America had recently elected FDR, a progressive Democrat, for President in the hopes that he could save the country. But one man offered something different. Something radical. His name was Upton Sinclair.

Sinclair wasn’t unknown. He had made a name for himself in 1906 by writing the landmark book, “The Jungle,” which revealed to the nation the atrocious conditions of the workers in the American meat packing industry and the horrendous quality of the food supply. The public was shocked and shortly after it was published Congress passed the Pure Food and Drug Act and the Meat Inspection Act.

Though he had previously run for President on the Socialist ticket in 1934 he was running for the Democratic Party to be the Governor of California. While FDR had the “New Deal” Sinclair offered California what he called “EPIC,” which stood for “End Poverty in California.” That year the highly popular magazine The Literary Digest ran a series of articles concerning, “outstanding issues of the forthcoming campaign and the fundamental problems confronting the country to-day.” Following is an excerpt from the October 13th, 1934 article written for the Digest by Sinclair in which he laid out a plan that contained many elements of what’s advocated for an economic democracy. You can read the whole article here.

The “EPIC” (End Poverty in California) movement proposes that our unemployed shall be put at productive labor, producing everything which they themselves consume and exchanging those goods among themselves by a method of barter, using warehouse receipts or labor certificates or whatever name you may choose to give to the paper employed. It asserts that the State must advance sufficient capital to give the unemployed access to good land and machinery, so that they may work and support themselves and thus take themselves off the backs of the taxpayers. The “EPIC” movement asserts that this will not hurt private industry, because the unemployed are no longer of any use to industry.

We plan a new cooperative system for the unemployed. Whether it will be permanent depends upon whether I am right in my belief about the permanent nature of the depression. If prosperity comes back the workers will drift back into private industry. No harm will have been done, because certainly the unemployed will produce something in the meantime, and the State will be that much to the good.

New Cooperative System
To meet the immediate emergency in our State and get the money to start our new cooperative system, we propose what we call an “EPIC” tax. That is an ad valorem tax on property assessed above $100,000, which means about $250,000 of actual value. This tax will fall almost entirely upon our great corporations and utilities, and to make it easier for them we shall make it payable at the option of the State, in goods and services. That will give us most of the raw materials and all of the utility services which the unemployed will need to get production started.

We have a great irrigation and power project known as the Central Valley Project. We propose to send fifty thousand unemployed into this work and ask the farmers of the Central Valleys to bring their surplus food crops, taking credits which will be good for water and power when the project is completed. The “EPIC” tax will give us the needed lumber, cement, rock and gravel, steel, etc., and light, heat, power, and transportation. The project will be carried out by our Public Works Department, and it will bring industry back to life in California.

Of Noise and Profits

2010-05-09T16:15:00.004-05:00

Not often a topic just drops in my lap right before my bi-weekly blog. You’re probably thinking, “Of course, he’s gonna write about the BP offshore oil well explosion and the dangers of Big Oil.” If that’s what you were thinking, well, you’re mistaken for that’s not the subject this time.

Thanks to Yahoo.com I learned of a recent article titled “How Restaurants Get You Drunk”, posted on the web site The Daily Beast, in which the author of the book “In Pursuit of Silence,” George Prochnik, explored the reasons behind the current trend in restaurants to louder and louder settings.

In his article he noted several recent studies. In one study that was done by Fairfield University it was found that the rate that people chew their food increased as the tempo of the music being played increased. The researchers found that by raising the tempo of the music it increased the rate of chewing from 3.83 bites a minute to 4.4 bites a minute. Corporate restaurant industry certainly took note of the study. According to Prochnik the corporate restaurant chain Dick Clark American Bandstand, “developed computerized sound systems that were preset to raise the tempo and volume of music at hours of the day when corporate wanted to turn tables.”

Prochnik also referenced another study, this time done by French researchers, which found that by raising the sound level of the music being played caused a corresponding increase in the number of drinks ordered. At 72 decibels the average number of drinks was 1 every 14.51 minutes. By cranking up the decibels to 88 the number of drinks went up to 1 every 11.47 minutes.

The goal of all of this should be obvious. Increasing the tempo and beat of the music isn’t done to increase for the enjoyment experienced by the customers. The corporate goal in this is the same as it always is. Manipulating the music played is done with the goal of a corresponding increase in sales. An increase in sales means an increase in profits, which are funneled into the pockets of shareholders in the form of dividends. In addition, profitable businesses usually, though not always, translate into increases in the value of shares.

US Steelworkers and Worker-Owned Co-ops

2010-04-25T15:51:00.002-05:00

Contrary to the claims of many, most unions (at least in the last 50 years) aren’t anti-capitalist. They’re more than happy to always be what one might call the "loyal opposition." As long as they’re outsiders they can rant and rave against management while always sounding pro-worker but never, ever, sounding like they opposed capitalism. Most unions are been quick to disavow any idea that the workers themselves should own and manage the shops and factories. The majority of unions are content with negotiating for better pay and more benefits. Sure, there are a few, like the International Workers of the World (IWW), that go beyond but they’re the exception and not the rule.

Finally, there now seems to be a change for one union.

In October of 2009 the United Steelworkers Union announced they were collaborating with the Mondragon Cooperative Corporation (MCC) of Spain to explore increasing the number of worker-owned cooperatives here in the US.
According to the USW International President Leo W. Gerard, “We see today's agreement as a historic first step towards making union co-ops a viable business model that can create good jobs, empower workers, and support communities in the United States and Canada.” He went on to say, “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities.”
(Source: SolidarityEconomy.Org)

The MCC President of Mondragron Internacional, Josu Ugarte, stated: “What we are announcing today represents a historic first--combining the world's largest industrial worker cooperative with one of the world's most progressive and forward-thinking manufacturing unions to work together so that our combined know-how and complimentary visions can transform manufacturing practices in North America. We feel inspired to take this step based on our common set of values with the Steelworkers who have proved time and again that the future belongs to those who connect vision and values to people and put all three first.”

There’s simply no way to predict what will come out of this collaboration. As I mentioned in my blog entry of March 30th there is also the Cleveland Model in which several cooperatives haven been formed. One can hope that maybe, just maybe, that collaboration between MCC and the USW along with the Cleveland Model are examples that the dream of an economic democracy is starting to become more than just a dream.

2012

2010-04-11T15:06:00.002-05:00

“The end of the world as we know it and I feel fine.” R.E.M.

Forget all the reports about the world coming to an end in 2012. What everyone should be taking note of is that back on December 21, 2009 the UN declared 2012 to be “The International Year of Cooperatives.”

NEW YORK, 21 December (Department of Economic and Social Affairs) -- The United Nations General Assembly has declared 2012 as the International Year of Cooperatives, highlighting the contribution of cooperatives to socio-economic development. In adopting resolution 64/136 on 18 December, the Assembly noted that cooperatives impact poverty reduction, employment generation and social integration.

A cooperative is an autonomous voluntary association of people who unite to meet common economic, social and cultural needs and aspirations, through a jointly owned and democratically controlled enterprise. In general, they contribute to socio-economic development.

As self-help organizations that meet the needs of their members, cooperatives assist in generating employment and incomes throughout local communities. Cooperatives provide opportunities for social inclusion. In the informal economy, workers have formed shared service cooperatives and associations to assist in their self-employment. In rural areas, savings and credit cooperatives provide access to banking services that are lacking in many communities and finance the formation of small and micro businesses, promotes inclusive finance.

The cooperative sector worldwide has about 800 million members in over 100 countries and is estimated to account for more than 100 million jobs around the world. The strength and reach of cooperatives are illustrated in the following examples:

* Under the umbrella of the World Council of Credit Unions, 49,000 credit unions serve 177 million members in 96 countries, and 4,200 banks under the European Association of Cooperative Banks serve 149 million clients;

* Agricultural cooperatives account for 80 to 99 per cent of milk production in Norway, New Zealand and the United States; 71 per cent of fishery production in the Republic of Korea; and 40 per cent of agriculture in Brazil;

* Electric cooperatives play a key role in rural areas. In Bangladesh, rural electric cooperatives serve 28 million people. In the United States, 900 rural electric cooperatives serve 37 million people and own almost half of the electric distribution lines in the country.

International Years are declared by the United Nations to draw attention to major issues and encourage action. To commemorate the Year, regional conferences will raise awareness of cooperatives and seek ways to leverage their contribution to socio-economic development and foster regulatory frameworks. A research agenda will be proposed and Member States are to form national committees that will serve as focal points for the Year’s activities.

http://www.un.org/News/Press/docs/2009/dev2784.doc.htm

Leaving aside how generally impotent the UN is at achieving its goals one can’t help but hope that their declaration is a premonition of something great to come.

The Cleveland Model

2010-03-30T09:09:00.002-05:00

Due to my health problems this entry is shorter than I had hoped. I apologize to my readers for its brevity.

There’s something exciting happening in the Buckeye State. While most of the corporate media is fixated on the crass politics going on in Congress there are some events taking place in the American heartland that are important in the movement towards creating an economic democracy. The few articles that are appearing in the media, while brief, are providing glimpses into these exciting developments.

The Evergreen Cooperative Initiative of Cleveland, Ohio is actively creating worker-owned cooperatives based on the Mondragon Cooperative. According to an article in Time Magazine this Initiative, which has been dubbed the Cleveland Model, the Evergreen Cooperative Development Fund provides to co-ops, “low-interest, long term financing. In the future, a financial institution more aligned with the Caja Laboral, which also handles consumer savings and lending, might be developed.”
(Source: Time Magazine)

Several of the cooperatives started by the Evergreen Cooperative Initiative are getting special attention in the press. The one that gets the most coverage is the Evergreen Cooperative Laundry, which specializes in providing laundry service for the healthcare industry of Cleveland. Another co-op that’s received interest by the press is the Ohio Cooperative Solar (OCS) which specializes in installing large-scale solar panels. According to the Nation the Initiative isn’t stopping with just these two co-ops. It’s creating other co-ops in the Cleveland area such as the Green City Growers (which has a hydroponic garden that’s larger than a Wal-Mart superstore) and a community newspaper “Neighborhood Voice,” which will start printing later this year. (Source: The Nation)

The Cleveland Model is using the principles of Economic Democracy to solve one of the serious problems for starting co-ops, which has been access to investment. The Nation goes on the report that, “each of the Evergreen co-operatives is obligated to pay 10 percent of its pre-tax profits back into the fund to help seed the development of new jobs through additional co-ops. Thus, each business has a commitment to its workers (through living-wage jobs, affordable health benefits and asset accumulation) and to the general community (by creating businesses that can provide stability to neighborhoods).”

Another important feature of this is that it’s occurring from the grassroots level. Historically every change in any mode of production has originated from the bottom up rather than the top down. The potential for the Cleveland Model to be the start of a movement that could someday threaten capitalism is amazing.

Without a doubt the events in Cleveland are fantastic. Yet the Evergreen Cooperative Initiative is just one of several developments that are appearing not only in America but on the international scene. In the future I plan to draw attention to some of the other important developments.

For more information Evergreen Cooperative Laundry, Ohio Cooperative Solar and Green City Growers all share a web site: http://www.evergreencoop.com/

The Importance of Nonviolence

2010-03-14T18:08:00.003-05:00

“Nonviolence is the answer to the crucial political and moral questions of our time- the need for people to overcome oppression…Nonviolence is not sterile passivity but a powerful moral force which makes for social transformation”- Dr. Martin Luther King Jr.

In recent postings I attempted to define what capitalism is. Most of my previous postings consisted of laying out arguments for what I believe to be a system that would be far better than capitalism: economic democracy. An important issue that needs to be addressed at this time is a detail about changing the system: the necessity of nonviolence.

First, it’s delusional to think that it’s possible to change America through violence. Joseph Stack’s attack on an IRS building in Austin, Texas was a nothing more than cowardly act of evil. All it did was terrorize the hard working government employees in the building and murdering an American hero, Vernon Hunter, 67, who was laid to rest with full military honors.

Even if there was a remote possibility, which there isn’t, of success by such means what would a change by violence show from an ethical standpoint? Do we really want a system changed by violent means? Benjamin Franklin wrote, “Whatever is begun in anger ends in shame.”

Then there is a purely patriotic reason. Rev Norman Thomas once said, “If you want a symbolic gesture, don't burn the flag; wash it." The drive to change America from a capitalist system to an economic democracy should come from a sense of true patriotism in which, out of love, we hope to “wash” our nation of the wrongs that exist rather than burn it.

It’s also important that as we write and discuss concepts such as class, and toss around terms such as “capitalists” or “workers”, that we avoid demonizing any one person or group of people. In all socio-economic classes there are individuals who are morally good and morally bad. Being a laborer doesn’t make one a saint nor does being a capitalist make one a villain. We need to emphasis that it’s the degrading and dehumanizing system of creating dominating relationships based on capital and the private control of marketable wealth that we strive against and not the individuals within the system. If we begin to demonize people then we run the risk of creating “The Other”, which often leads to violence.

A brief comment is needed here about the efficacy of nonviolent methods. Some, especially on the radical Left, claim that nonviolence is weak and ineffective. They point to all of the past changes in the modes of production and that they all were the result of violent means. What they fail to consider is that all of the prior changes occurred prior to the development of the modern democratic state. It’s the power of parliamentary, democratic institutions that has since shown to be the key to a modern peaceful transition.

On a summer day in 1963, standing on the steps of the Lincoln Memorial, Dr King said, “In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred. We must forever conduct our struggle on the high plane of dignity and discipline.” The only choice available to us is a dedication to the use of peaceful, democratic, and parliamentary procedures. We won’t give up our right to protest and publicly demand change but our chosen means will be peaceful. We owe this to our ancestors, to our descendants, and to the nation that we love.

What is Capitalism? – Part 5

2010-02-28T17:14:00.002-06:00

Capitalism: A Definition

Historically, the definition of capitalism depended on what source one used. According to the Brooklyn College Core web site, “the term capitalism was first used to describe the system of private investment and industry with little governmental control which emerged, without an ideological basis, in the Netherlands and Britain in the 17th and 18th centuries.” Most Marxists define capitalism as the, “socio-economic system where social relations are based on commodities for exchange, in particular private ownership of the means of production and on the exploitation of wage labour.” David Schweickart defines capitalism as consisting of three components: the bulk of the means of production are privately owned, the products are exchanged in a market, and that most of the people work for those that own the means of production. David Ellerman reduces capitalism to being defined by one primary feature, which is “the legal relation for the voluntary renting or hiring of human beings.” When one combines all of the previous installments of this series one can see that, in my opinion, Schweickart’s definition is the closest of them all in providing a complete and accurate definition of capitalism, which is that capitalism is a socio-economic system that has essentially three co-dependent elements: Capital, a Two-tiered Class System, and Market Domination.

One element is private investment known as “capital” from which capitalism gets its name. Capital is, by its very nature, always striving to expand and reproduce itself. When reproduction isn't possible, such as an economic downturn, it then strives to at least survive until the day when it can again begin to reproduce. It’s an essential nature of capital to attempt to grow.

A second element is that capitalism is a class system in which there are two primary socio-economic classes. There is an upper class (“capitalists”) whose members control the capital and who maintains power in society due to their ownership of the majority of the marketable assets (i.e. wealth). In addition, there is a lower class that has limited power and survives largely through wages acquired from employment by the upper class along with the self-employed, entrepreneurs and sole proprietors. (The homeless make up a hidden underclass who have little productive role in capitalist society and is essentially powerless.)

The third element is the absolute domination by the markets, which molds the culture to service the capitalist system; using the force of the State if necessary. This domination by the markets provides a vital means by which the capitalists appropriate the fruits of the labor of the lower class so that they can increase their own wealth and the market provides a mechanism by which capital is able to reproduce itself. Ultimately the domination of the market provides the means by which the capitalist class is able to obtain its wealth and hence to maintain its position of power.

What is Capitalism? – Part 4

2010-02-14T13:46:00.002-06:00

The Dominance of Markets

At this point we’ve established that capitalism is a two-tiered class system based on capital (i.e. private investment), which provides wealth and hence power to an upper class (‘capitalist’). Now we need to look at a vital feature of capitalism, which is the domination of the market. Much of what I’ll cover here I’ve addressed before. But the because of the unique role of the market in the capitalist system one cannot define capitalism without discussing the role of the market.

Ever since humanity left the tribal system (what Marx erroneously called “primitive communism”) markets have existed in some fashion. But, as has been shown by Karl Polanyi, the market in the prior modes was “embedded” within the social relations of their societies. Capitalism changed this in that in a capitalist system the economic and market relations define social relations. Polanyi was able to show that prior to capitalism the relations of reciprocity, redistribution, and communal obligations dominated while market relations were secondary. Capitalism, according to Polanyi, irreversibly destroyed the first three relations resulting in an “ascendency” of market relations to be the position of being considered the sole relationship. He called this ascension the “great transformation.”

In capitalism there are essentially three major types of markets: the exchange of goods and services; a labor market; and financial markets that include stocks, bonds, along with money markets as well as a variety of other investments. These three markets either directly or indirectly touch nearly every aspect of life in a capitalist system.

The market for goods and services was the world’s first market, appearing shortly after humanity left the tribal system. It is through the market for goods that today we acquire everything from food to cars to yachts. It is nearly impossible to survive in capitalist society without buying goods or services from the market. One simply cannot avoid this market and retain contact with civilization. It’s through this retail market that the upper class appropriates the residual resulting from the production process as wealth is distributed from the lower class to the upper.

The upper class (i.e. capitalists) needs the labor of the lower class to create goods for sale or to provide services in the before mentioned retail market. Therefore, there also exists a labor market by which people of the lower class are rented, using Ellerman’s term, by those in the upper class. To a limited degree this practice of renting people for their labor was found in the ancient world as well. But nowhere in the ancient world did labor markets play the dominant role that they do in capitalist society.

The third type of market is the securities market, which is the primary realm of capital. The stock market deals exclusively with the public buying and selling of shares of ownership of the means of production. Originally this market was simply to provide capital investments for businesses (“primary market”) though increasingly today the stock market serves the purpose of doing nothing more than making profit through the trading of already issued shares among the capitalists (“secondary market”). In addition to the securities market there are markets for commodities, futures, and money. There are many types of investments and not all of them involve tradable securities. Recently there has been a rise in “private equity firms” in which stocks are not listed on the various security exchanges and are not overseen by government regulators as publically traded stock companies are.

Simply identifying these markets and who reaps their profits does not by itself establish their dominance. Polanyi was able to show that in capitalism, unlike prior socio-economic systems, it is the culture that is expected to be subservient to the market. If the culture does not naturally mold itself to the market then capitalism forces it to change through the power of the State. By the market dominating culture and forcing it to bend to its will the capitalists can increase their wealth and hence increase their power.

In the next, and last, installment of this series I’ll pull all of these components together to present a definition of capitalism.

What is Capitalism? - Part 3

2010-02-01T18:24:00.002-06:00

Class Structure of Capitalism

The class system in America is a largely two-tiered structure that is based on a socio-economic power relationship in which, as we saw in the previous posting, the ownership and control of wealth plays a defining role. There are several distinguishing features of the American class system.

First, the two classes, while roughly correlating to income, are not based necessarily on income. Instead each class is largely based on the type of property owned and the degree of power welded by that ownership. Second, while there are, of course, circumstances where there’s been movement of individuals from one class to another the two classes are, for the most part, stable over the generations.

There’s an upper class that holds the reins of economic and political power through the ownership of marketable wealth (i.e. stocks, bonds, non-occupied real estate) and which therefore has a dominating power over society. This class can be sub-divided between the heavily propertied families that call the shots and the wealthy elite that manage those operations and implement the propertied family’s wishes. The upper class acquires its wealth largely through a combination of inheritance and the claim to the residual of production and management of the production process. This upper class largely segregates itself socially from the lower class by often sending their children to exclusive private schools, participating in exclusive social clubs, and appearing on social registers.

The other American socio-economic class is a lower class that lacks substantial ownership of marketable assets and survives largely on the upper class for wages. This lower class also can be sub-divided. There are three essential sub-groups to the lower class, though it is possible to sub-divide it even finer.

One major division of the lower class is the famed “middle class” that often owns some personal-use property, such as a house or a car. Most of the members of the middle class don’t own controlling marketable assets and, as a result, most do not have access to any substantial amount of the profits of the various firms or to the governance of those firms. The majority of their children attend public schools though some do attend private schools. Few middle class children attend the exclusive schools that the elite upper class sends their children to. Members of the middle class are likely to have some college, tend to work in white collar occupations, and often achieve mid to low level management jobs. The power of the middle class, while praised by pundits and politicians, is relatively limited in comparison to the power of the upper class.

Another division of the lower class is the “working poor.” This sub-group rarely owns property beyond possibly a car and usually rents their housing. The working poor rarely attends, much less completes, college and usually works until death in blue collar fields as low-level workers in which they occasionally rise to become managers. Needless to say the working poor have little power in the American system.

Finally, there’s the poorest of the poor, the “underclass’, who are often homeless and impoverished. Members of the underclass tend to work day jobs and are highly dependent upon charity and public assistance for their survival. The existence of this sub-class is nearly invisible to most of society and is certainly powerless in nearly all aspects.

This is the reality of the American capitalist class system. Some, especially conservatives, deny this reality. Others will acknowledge most aspects of it but complain that we’re instigating class warfare by bringing it up. To the former they’re simply hiding their heads in the sand. Those who accept it but refuse to address it are doing nothing more than telling us to ignore the man behind the curtain.

While it’s important that we understand the role of class there’s one last important piece of the puzzle to understanding capitalism, which is the unique role of the market in the capitalist socio-economic system.

What is Capitalism? - Part 2

2010-01-17T15:45:00.002-06:00

The Importance of Wealth to Power

When class is addressed in America it has historically been defined by income. The revered “middle class” is usually defined by an annual income ranges from $40,000 to $250,000. The next class, which starts at annual incomes above $250,000, belongs to what has historically been called the "upper class."

Breaking down the classes based solely on income doesn’t accurately reflect the true nature of the class system either in the types of classes or their origin. While there is a rough correlation between income and class centering on exclusively on income misses the true nature of the beast. This is because class is actually a characteristic of power relationships between groups of people. To understand these power relationships one needs to first understand how power is tied to wealth in America.

G William Domhoff (psychologist and author of "Who Rules America?") points out that one needs to start by understanding the meaning of the word "wealth." Economists have a specific definition. They define wealth as "marketable assets, such as real estate, stocks, and bond, leaving aside consumer durables like cars and household items." In addition to marketable assets economists use "financial wealth," which is a person’s net worth minus their net equity in owner-occupied housing.

According to research as of 2001 forty-four percent of all privately held stock, fifty-eight percent of financial securities, and approximately fifty-seven percent of business equity was owned by households in the top one percent of net worth. If one expands this to households with the top ten percent of net worth the percentage of ownership jumps to an enormous eighty-five to ninety percent of stocks, bonds, trust funds, and business equity.

If such wealth was earned largely through one’s own labor it might be excused. Domhoff shows otherwise. The Federal Reserve Bank of Cleveland published a study that indicated that only 1.6% of all Americans inherit $100,000 or more. Another 1.1% inherits between $50,000 and $100,000.

In addition, Domhoff has established through extensive research that there are a very small percentage of the American families who have a long stable history of dominating the American economic and governmental system. He’s documented how these small numbers of families have the controlling shares of stock in American commercial banks, investment banks, law firms, and corporations. By owning the majority of such stocks these families call the shots on the operations of the businesses. These families guide economic and political policies and dominate political institutions from the highest political office down to the local levels.

But the issue isn’t only the wealth but the connection between wealth and power. Domhoff defines power as "the ability (or call it capacity) to realize wishes, or reach goals, which amounts to the same thing, even in the face of opposition." He shows that wealth provides a resource that’s extremely useful in exercising power through political donations, paying off lobbyists, and money to think tanks. Another way wealth provides power is through the control of corporations, which exert extreme power in our society. A third wealth/ power connection is not only does wealth provide power but that same wealth-generated power can create a feedback loop by which it in turn generates additional wealth. This additional wealth can result not only from the reinvestment of proceeds such as dividends and interest, but also through sweetheart loans, quid pro quo deals, and well paying jobs upon leaving a public office.

Therefore, class should be defined not by the amount of income but by wealth and the power that it provides.

In the next post I’ll take this information and apply it to understanding the class system in capitalism.

To learn more about Domhoff's work visit his web site, "Who Rules America?"

What is Capitalism? - Part 1

2010-01-03T16:45:00.003-06:00

"Know thy self, know thy enemy. A thousand battles, a thousand victories." ~ Sun Tzu

This is part one of a series in which I try to break down capitalism into its essential elements.

In capitalism we find an economic system with three central components that work together to serve one goal, that is to increase for a small group of people that mysterious and elusive thing called “capital” by which capitalism gets its name. Therefore, it’s with the nature of capital that we begin.

Defining Capital

While many capitalists actually prefer the term “free market” or “free enterprise” rather than “capitalism” (Richard Sennett in his book “The Culture of the New Capitalism” credits Werner Sombart with coining the term “capitalism” though many credit Karl Marx) they inevitably pay homage to capital in their theories. But what is capital and why does it plan such a dominant role as to name a whole economic system after it?

The term capital is used today for nearly every aspect of production. We hear about “human capital”, “investment capital”, “intellectual capital”, and so forth. Even in the political process when President Bush declared that he had earned “political capital” after the 2004 election. But the application of these terms hides the true nature of capital.

Essentially capital is the private investment of money. While private investment is most commonly thought of as stock ownership it also includes speculative investment in commodities, real estate, and financial markets along with the ever growing types of new investment mechanisms. In capitalism the supplier of capital lays legal claim, if not factual, to any profit generated by the investment mechanism, which the supplier of capital may then choose to reinvest. It’s because of this claim by the capitalist to the profits generated that gives capital its self-reproducing characteristic.

By understanding capital as private investment of money we can therefore define a "capitalist" as one who through sufficient investment is able to comfortably live on the profits generated by their investment rather than fruits of their own labor. In addition to claiming the profits the capitalist also lays legal claim to the right to manage any business that he or she invests in. The greater the percentage of shares owned then the greater the capitalist’s claim to the right of management.

In the next installment I’ll address the connection between wealth and power.

52

2009-12-20T14:50:00.002-06:00

Senate Democrats Friday reported that they finally have the 60 votes needed to pass health care legislation. But is it really health care reform? Does the Senate bill really put the fear of God in the health care industry? The simple answer is no.

We can debate this aspect or that aspect of the bill but an important indicator is to see who likes it. On Meet the Press today (12/20/09) both Vermont Governor Howard Dean and Joe Scarborough, a previous Congressman and currently the morning host on MSNBC, pointed out that "insurance companies' stocks reached a 52-year high on Friday after this so called reform bill got its 60th vote."

The actions of the shareholders tell us all that we really need to know about the Senate bill. Scarborough described it well when he said on the same show concerning President Obama, "He has made a lot of people with insurance stock a lot richer."

The Senate bill doesn’t reform the health industry but instead uses the power of the State to support the shareholders of the insurance corporations. In other words, it’s business as usual in Washington, D.C.

Vanity

2009-12-06T17:15:00.002-06:00

"The offspring of riches: Pride, vanity, ostentation, arrogance, tyranny" ~ Mark Twain

On November 27th, 2009 the Los Angeles Times ran an excellent Op-Ed piece by Steve Salerno titled, “Can America afford the 'vanity tax'?” Salerno wrote about how he had a found a pendant for the price of $1,195 at a jewelry store in a shopping center and then a very similar one at Wal-Mart for just $39. While he never explains what the hell was he was doing at Wal-Mart in the article he does a very good job of exploring something he calls the “vanity tax.”

According to Salerno a “vanity tax” is “the difference between what a thing needs to cost (to fulfill a given function) and what it ends up costing (after being artificially inflated by imperatives besides function).” This vanity tax isn’t simply an extra cost tacked on for a better product. In fact, the more expensive item is often worse than the less costly. As he states in his article, “It costs more to own a shoe that does a worse job of doing what a shoe is supposed to do.”

While it’s a great article it fails to explain why this “bastardization of value” exists. To understand this phenomenon one needs to understand the role the market plays in modern capitalism.

As I’ve explained previously the market for goods and services was the world’s first market, appearing shortly after the advent of agriculture. And it’s through this market today that we acquire everything from food to cars to yachts. In fact it’s nearly impossible to survive in modern Western society without buying goods or services from the market. But in modern capitalism the market does much more. Rather than simply providing a mechanism to delivers goods and services or the Darwinian effect of Adam Smith’s “invisible hand,” the retail market in a modern capitalist system functions, in conjunction with other markets, as a mechanism to distribute wealth to the capitalist class, often in the form of dividends from profits or increased value of stock.

With this knowledge we can see the origin of the vanity tax. The modern capitalist system creates a false need in consumers to purchase items with artificially inflated prices, a “vanity tax” as Salerno calls it, which thereby increases the amount of wealth distributed to the capitalists via the markets.

Main Street v. Wall Street

2009-11-22T18:32:00.000-06:00

The November 9th, 2009 issue of Time magazine had an interesting cover which read, “Why Main Street Hates Wall Street.” While there were several interesting articles and commentaries in that issue it’s the cover article that I want to write about.

Before discussing the article though I would like to comment briefly about the cover. The term “hate” really bothers me. In my opinion, we should be angry, frustrated and disgusted with Wall Street. But I would discourage “hating.” When we hate then far too often we forget that the target of our hatred is often times a human being, who then becomes ‘The Other.’ As a result we may begin down a path that ultimately ends in violence. Let us be angry but let us not hate.

Now, back to the subject at hand, the Time magazine article written by Allan Sloan which is actually titled “What’s Still Wrong with Wall Street.” There’s a lot of good that can be said about the article. It starts out with a very good analysis of what led up to the crash, such as the actions of AIG and Citibank. It then dives into the post-crash events in which these fat cats were bailed out by the feds. Sloan also centers his fire on those same execs that won’t have to face justice for swindling so many people and destroying so many lives. The article wraps up with some recommendations on fixing the system.

I have only two real criticisms of the article but I think these are important. My first critique is that it fails to point the blame where it belongs, which is the capitalist system itself. Instead, the article states that the failure was not enough regulations on the financial industry. This mistaken assumption leads to the second criticism, which is that the recommended solutions consist of simply more regulation and a warning not to blindly trust Wall Street.

Progressives need to drop these constant calls to save capitalism. These repeated statements that capitalism can be saved are starting to resemble the plot from “Weekend at Bernie’s.” Let’s just go ahead and acknowledge the demise of capitalism so that we can move on to a better system.

Moneytheism

2009-11-08T16:37:00.002-06:00

"No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money.” - Jesus of Nazareth

If you listen to capitalists and their apologists they claim to be the voice of reason while, according to them, those of us on the Left run on passion. But actually it’s the capitalists, especially the current breed who’s been in vogue for the last few decades, who are the ones running on faith.

In his most recent book, No Rising Tide, Joerg Rieger explains that there are several tenants to this bizarre capitalist religion and they are built on blind faith. No amount of rational proof will sway the capitalist from these tenants. According to Rieger those tenants are:

• Economic deregulation always promotes growth,
• Tax cuts for powerful corporations and the wealthy always spur the economy,
• Wealth gathered at the top inevitably trickles down, and
• A rising tide will lift all boats.

The comedian Stephen Colbert hit the nail on the head when he coined the term “Moneytheism” to describe this twisted religion. One must wonder how much longer before people finally wake up and realize that they’ve been duped by false prophets all of this time?

I’ve been lucky to have heard Joerg Rieger speak on several occasions and I highly recommend his new book, No Rising Tide.

The Silver Screen

2009-10-26T21:03:00.002-05:00

There already exists many reviews of Michael Moore’s new movie, Capitalism: A Love Story. I would echo the various reviewers who have said that this may be his best movie yet. But what's lost in all of these reviews is that this is more than just a good movie.

In his new movie Moore does the one thing no other popular commentator has been willing to do. He’s willing to go on record and call capitalism an evil that has to be replaced. Most will critique and criticize but then they wimp out saying, “But I still support capitalism.” Moore instead steps up to the plate and tells it like it is.

If that wasn’t enough Moore goes one important step further. At one point in the movie he shows a possible alternative to the corporation. And what do we see? He visits two worker-owned cooperatives!

Finally, Moore ends the movie with a call for the viewer to join him in replacing capitalism with a more just system. Amazingly this call seems to be resonating with the audience for at the showing that I attended half of the theater broke out in applause at the movie’s end.

Some criticize Moore for taking liberties with the facts. Admittedly there are times when the critics are right. In the movie he strongly criticizes the bail out yet all evidence points that this Keynesian action may have indeed pulled the economy out of a nose dive.

Yet Moore provides the style and emotion needed to transmit our message via the mass media. With Capitalism: A Love Story Michael Moore has taken a stand and has joined the call for an economic democracy.

Olbermann on Health Care

2009-10-15T20:08:00.004-05:00

There’s a distinct possibility that most of my readers are already aware of this but just on the off chance that some aren’t I thought I would write about it. Most know that one of Keith Olbermann’s claims to fame is his occasional “Special Comment,” which is usually just a few minutes long. Recently, Keith Olbermann gave another Special Comment but this one was very different than his previous. Olbermann’s most recent Special Comment was an hour long commentary on health care in which he destroyed the false arguments against the public option and presented numerous powerful arguments for the need for universal health care.

This Special Comment is one of his best as well as one of his most important. I highly recommend it to both those who support health care reform and to those who oppose it.

MSNBC will replay this Special Comment on October 16th at 8:00 PM ET. It can also be viewed at the MSNBC web site.

Delay

2009-10-13T16:10:00.001-05:00

I apologize but due to circumstance beyond my control this week’s blog will be delayed until Friday, October 16th.

Choice?

2009-09-27T18:57:00.002-05:00

"Now, if you're one of the tens of millions of Americans who don't currently have health insurance, the second part of this plan will finally offer you quality, affordable choices." President Barack Obama, September 9, 2009, Remarks by the President to a Joint Session of Congress on Health Care.

So here we are at the beginning of autumn and Congress has yet to pass health care reform. To make matters worse the legislation that we’ve been given is the Baucus Bill. While there are numerous problems with the bill I want to center on only two elements: weak, poorly funded health care cooperatives and the lack of a public option.

First, the problems with the provisions relating to health care cooperatives. While I strongly support their creation, which I’ve mentioned previously, the details in this bill will handicap the new co-ops. According to the bill the start-up capital would only be $6 billion, which would be spread among the new co-ops. That’s far too little investment to create the type of co-ops that can challenge the private insurers. Add to this the co-ops will be limited in their scope. Ezra Klein with the Washington Post reports that rather than being able to contract with large employers the co-ops would be limited to contracting only with "small groups and individual markets." Another major flaw in the cooperative provision is that it fails to give the co-ops special pricing power. While they can band together to increase their purchasing power they’re restricted from setting national payment rates. To challenge the big boys these co-ops need this power. As Klein put it, "The insurance industry is, in other words, being protected from not just public competition, but co-op competition." Finally, even if the above flaws are fixed there needs to be a restriction placed on these co-ops that would prevent them from some day demutualizing into private corporations as some co-ops have done in the past.

Second, the Baucus Bill lacks a public option. The poorly funded co-ops, as they would be set up by the Baucus Bill, simply would not be able to reign in the abuses of the private insurers. If we’re not going to properly fund and empower the co-ops where that they’re able to challenge the private insurance companies then why not create a strong public option that could have a real effect on the private insurers?

Let me make my position clear. It’s my belief that quality, affordable health care is a fundamental human right. A sure way to guarantee this right would be through a Single-Payer system operating within a network of private practitioners and community-based, non-profit clinics/ hospitals. But we know that no matter what legislation comes out of Congress this year it will not include this. So whatever legislation that we do get must have the ability to restrict the power of the private insurers and to provide access to quality health care to those who currently don’t. This means that we need legislation that includes either a strong public option or well-funded and powerful health-care cooperatives.

One last comment. I can’t help but wonder why couldn’t a bill include both a strong public option and well-funded, powerful co-ops? What would prevent such a combination? The President said that this legislation will include "quality, affordable choices." Then I say that Congress should give the American people exactly that. Give us the ability to choose either well-funded co-ops with real power or a strong public insurance.

Faith and Economic Democracy

2009-09-15T20:34:00.002-05:00

Back in July of this year Bill Moyers sat down with three leading theologians on his PBS show to discuss the role of faith and social justice. One of his guests was Gary Dorrien, who is the Reinhold Niebuhr Professor of Social Ethics at Union Theological Seminary and Professor of Religion at Columbia University. He’s the author of 13 books and numerous articles. As I mentioned in a prior post Professor Dorrien is also a strong advocate of economic democracy.

In the Bill Moyers production Dorrien stated,

“That's why I'm for economic democracy, because I think that economic democracy is essentially an attempt to sort of hold down, serve as a kind of a break on human greed and will to power, which are virtually universal, so I'm not talking about anything that requires some kind of idealistic idea about human nature, or what we're capable of, or the like. My main argument for it is the same that Niebuhr, that Reinhold Niebuhr had about democracy. You know, the human capacity for goodness makes democracy possible, but it's precisely the human capacity for evil that makes democracy utterly necessary. There are two sort of fundamental stories or ideas about a just society, what it could be, that have been operative in US American history virtually from the beginning, and that are always there. And that one is the idea of providing unrestricted liberty to acquire wealth.

And there's a politics that goes with that. You want to hold down government. You want to hold - even democracy is not really necessarily a good word, in that conception. And then in the other idea, it's that you want to attain as much through a democracy as you can, over society's major institutions.

You can interpret virtually every decade of U.S. American history by the way these two different sort of conceptions of what a just society would be, end up conflicting with each other, sometimes modifying each other, sometimes changing each other.”

I highly recommend to this episode. You can download the episode’s transcript as well as view the show at the PBS web site.

Bad Attitude

2009-08-30T18:08:00.004-05:00

“Every hero was once, every villain was once just a boy with a bad attitude.” ~ Meatloaf

Blogs like mine tend to be rather academic. I write about cooperatives and social investment. I post concerns about the existential effects of capital and globalization. While there’s a need for such talk (I wouldn’t keep writing this blog if I didn’t think it was needed) sometimes it seems rather cold and maybe even a little elitist. To use a term I heard as a boy one might call it “highfaluting.” What the discussion needs at times is a little attitude. Or maybe I should say what’s needed is someone with a bad attitude.

I’ve found a group that’s more than happy to provide exactly that.

The Pittsburgh G-20 Resistance Project exists to coordinate various groups whose goals are to protest the upcoming G-20 Summit that will take place September 24-25 in Pittsburgh, PA. According to the PG20RP web site their goal is to, “deepen ongoing social resistance locally, to demonstrate and build new and existing alternatives to the worldview represented by the G20 and the direct policies it promotes, and to disrupt the summit and undermine its attempts to gain legitimacy.”

Many of the events of the PG20RP are expected to be peaceful. On September 22 there will be an “Anti-G20 Community Gathering” that will consist of food and entertainment designed to spread the message of the dangers of globalization. While on the 23rd there will be a peaceful protest including a “Red and Black contingent,” which according to the site would “not be masked.”

After that it promises to get a lot more interesting. On the 24th there will be the “March on the G20” in which the site advises of the possibility of “direct actions” and that there would be ways made available to those who didn’t want to participate but want to show “solidarity with those do.” On the 25th the protests will continue and conclude at the local jail in a show of support to those who are arrested during the protests.

It’s very important that I stress here that I strongly oppose the use of violence, which many times occur at these protests. But I do have to say that I like the energy and passion that groups such as those associated with the PG20RP bring to the process. When these groups channel their efforts into non-violent direct action (such as marches, strikes and sit-ins) they can play a positive role in the creation of a more just system.

Sometimes it’s good to have a bad attitude.

What can you do?
* Post this promotion (Click Here) to your web site. (Warning: this flyer includes the use of the “F-Word.”)
* Link to the PG20RP from your site or blog: Link to PG20RP
* Organize a non-violent group to participate with the PG20RP events in Pittsburgh.
* Provide medical support to the participants. To learn how you can provide aid Click Here

Polly Want a Dividend?

2009-08-17T19:01:00.001-05:00

Many of you might have already heard this story. Keith Olbermann included it one night in his program and several news outlets have carried it. AFP reported that a Korean researcher has compared the performance of a parrot by the name of Ddalgi, which translates as “strawberry,” with the performance of ten investors in choosing stocks to invest in. The human investors had free reign to pick any stocks they wanted while Ddalgi would use her beak to randomly pick blue balls that each represented a major corporation. Each investor started out with 60 million imaginary Won (which is the equivalent of $48,380).

The results were that Ddalgi beat all but two of the investors hands down. One human had a return of 64.4% and another human investor had a return of 21.4%. Ddalgi, because of simple random chance, came in third with a return of 13.7% from her investments. The other investors performed so poorly that the humans overall averaged a loss of 4.6%.

One might be inclined to assume that the reason that most of the humans performed so poorly compared to the parrot was that the researchers had the bad luck of picking some really bad investors to participate. But this was not the first study to show an illogic to the financial system.

Numerous studies have shown that the weather affects the volatility of the stock market. One such study was done by the Kurtz Chair in Finance at Ohio State University's Fisher College of Business, David Hirshleifer, along with Tyler Shumway, assistant professor of finance at the University of Michigan. In this study they compared the daily returns of the leading stock exchange in 26 countries over a 15-year period starting from 1982 until 1997 with the average cloud cover for those cities using data from the US government.

What they found was that when the weather was sunnier in those cities the stock market returns were higher. When the weather was cloudy the returns were lower. When they combined all of the cities data together the result was even a greater collation between weather and returns than it was when each city was taken individually.

So what can we learn from the parrot Ddalgi and the various weather studies? The lesson is that the claim that private investment is logical and that it’s necessary for efficient production is a myth. Private investment is nothing but a mechanism by which capitalists retain control over the means of production and redistributes wealth from the workers to themselves.

It’s time to replace private investment with social investment.

Health Care Cooperatives

2009-08-03T19:45:00.002-05:00

Since I last wrote about the health care crisis the topic has moved front and center in Washington. At this time there are several proposals on the table. The House Democrats had proposed a public plan involving insurance exchanges that would be run by the secretary of Health and Human Services that, by last Wednesday, was watered down to nothing but negotiating with insurance companies. The Health, Education, Labor and Pensions Committee of the Senate, along with President Obama, instead support legislation that would establish a public plan that would compete with private health insurers. The Republicans are proposing, well, nothing. All they’ve done is put out a vague outline with no details. Rather than providing something positive the Republicans spend most of their time on hate-radio trying to scare people with “socialized medicine.” A real solution such as the single-payer option, much less cooperatively-owned and non-profit hospitals/ clinics that I had previously endorsed, is nowhere among the choices.

But something exciting and new has recently been placed on the table.

A group of six Senators on the Finance Committee, which includes the highly controversial chairman of the finance committee Sen. Max Baucus (D – Montana), are proposing legislation that would establish non-profit consumer health care cooperatives as a solution to the health care crisis. These consumer cooperatives would receive “seed money” to start but would then be expected to be self-sustaining.

Let that sink in for just a moment. Government provided social investment (i.e. “seed money”) would be used to establish non-profit cooperatives. Sound familiar?

Originally proposed by Sen. Senator Kent Conrad (D – North Dakota) the proposal has started to gain steam in Congress. Reuters is predicting that it will ultimately be part of the health care package.

Of course it might not become law. Yet even if it doesn’t the fact that this discussion is taking place is wonderful for economic democracy. Reuters has already done a Q&A on Co-ops due to this. Newspaper articles have been written on this proposal. NPR has run several radio articles on the subject including one that was very positive.

One can’t help but daydream at times like these. What seeds are being sown by this proposal? What if health cooperatives based on social investment become a reality? People just might wake up one day, look around and ask, “Why aren’t all private-insurance companies organized as cooperatives using social investment?” Then there may a come a day when that people might ask, “Since socially funded insurance cooperatives work so well why isn’t the corporation that I work for also a cooperative using social investment?” When the day arrives that people ask that last question then the dream of economic democracy will become a reality.

Schweickart Interview

2009-07-19T19:56:00.000-05:00

Rather than a full blown posting I'd like to post this link to a phone interview with David Schweickart by Tikkun magazine that took place on June 2nd, 2009. It’s a fascinating interview, which I highly recommend to anyone interested in Economic Democracy. You can hear it at the Tikkun web site.

Edward Carpenter

2009-07-06T21:33:00.004-05:00

I thought I would post a brief biography of one of the most colorful and interesting advocates of cooperative economics in history: Edward Carpenter.

Carpenter was born on 8/29/1844 in Brighton, England. He was one of ten children raised in a middle-class family. Unlike the rest of his brothers, who all went into the military, Carpenter entered Cambridge in 1864 to start a career in academics. Carpenter excelled in studies and by 1867 had become a fellow of Trinity Hall.

A watershed moment for Carpenter was when he read the poems by Walt Whitman “Leaves of Grass.” Whitman’s socialist writings had a profound effect on Carpenter who, in 1873, decided he needed to leave his comfortable life and to join “the mass of the people and the manual workers.” He then stepped down from Cambridge and started working with the University Extension, which involved a travelling circuit concerning lectures on scientific matters. But Carpenter eventually tired of this and moved on.

After inheriting his parent’s wealth in 1883 he bought a home in Millthorpe near Sheffield. Carpenter lived at Millthorpe for forty years and developed his philosophy of a “simplification of life”. In that same year Carpenter published his landmark poem cycle “Towards Democracy” in which he moved beyond simple working class support, to openly working for socialist and co-operative causes.

Though Carpenter joined the Labour Party he later sided with William Morris and changed allegiances to the Social Democratic Federation (SDF) in 1884. Carpenter leaned towards Anarchism more than Marxism in his socialism and supported the philosophical leanings of the SDF.

Though he was thought of as a crank by many at the time, Carpenter’s “simplification of life” philosophy would shock few people today. Carpenter advocated to reduce air pollution, opposed vivisection and was a vegetarian. In addition, he advocated the making and wearing of sandals, which was a fashion shock at that time. All of those today are considered mainstream. Even his advocacy of nudism isn’t shocking in a post-Woodstock era. Of everything it was the fact of Carpenter’s sexual orientation that shocked the Victorian world the most.

Though he first had a romantic relationship with a man at Cambridge it was after he moved into Millthorpe that he openly expressed his homosexuality. For a while he had a relationship with George Adams but later George Merrill moved in. From then on Merrill and Carpenter were lifelong partners until Merrill died in 1928 and Carpenter passed away in 1929.

Carpenter wrote numerous poems and books. Concerning homosexuality he wrote “Homogenic Love”, “Intermediate Sex”, and the “Intermediate Type among Primitive Folk.” But what he’s most famous for was the socialist hymn, “England Arise!” and of course for his support of the co-operative movement.

Steampunk

2009-06-22T20:55:00.002-05:00

Now there’s a word you don’t hear every day. Steampunk is a growing cultural phenomenon with different meanings depending on who you listen to. In a New York Times article the owner of the Steampunk Workshop Jake von Slatt was quoted as saying that, “To me, it’s essentially the intersection of technology and romance.” Bruce Sterling, the author of the definitive Steampunk novel The Difference Engine, agrees that there is a romantic element to it. In the current issue of Steampunk Magazine he estimates that as much as 90% of the participants are primarily interested in dressing up in pseudo-Victorian clothing and reading sci-fi novels such as those by Jules Verne and H.G. Wells as well as contemporary authors. But he says that there’s more to Steampunk. According to Sterling the other 10% of the phenomenon is a "counterculture arts and crafts movement in a 21st century guise" in which this minority fraction have a "determination to take the means of production away from big, mind-deadening companies who want to package and sell shrink-wrapped cultural product."

To understand this minority within Steampunk requires that one understands the Arts and Crafts Movement of the late 19th century. The goal of the Arts and Crafts Movement was essentially to humanize the means of production. They had seen how the industrial process, especially the division of labor, in the hands of capitalism had turned men and women into machines and presented a threat to the continued existence of the craftsman.

It’s Sterling’s opinion that the proposals of John Ruskin, the founder of the Arts and Crafts Movement, specifically his opposition to Industry, were unrealistic. Attempts to use his work or the others in the Movement as a guide for real world production are doomed to failure, according to Sterling.

I would agree that there were some elements that weren’t realistic within the Movement. Certainly the strong opposition by some to the division of labor was misplaced. That being said the Arts and Crafts Movement did have elements that were very good and need to be remembered.

Rather than focus on Ruskin it’s better to look to the leading voice of the Arts and Crafts Movement, William Morris. According to E.P. Thompson in a speech to the William Morris Society in 1959 Morris,

"…had no time for noble savages, and even less for the Fabian nostrum of State bureaucracy. No amount of mechanical manipulation from above could engender the ethic of community; ‘individual men’ (he said) ‘cannot shuffle off the business of life onto the shoulders of an abstraction called the State.’ Contrary to the prevalent opinion, Morris welcomed all machinery which reduced the pain and drudgery of labour; but decentralisation both of production and of administration he believed essential. In True Society, the unit of administration must be small enough for every citizen to feel a personal responsibility."

With this information we can now see that many in the 10% “troublesome” (using Sterling’s words) fraction of the Steampunk phenomenon, being the spirit of the Arts and Crafts Movement, are therefore also in keeping with the spirit of Economic Democracy.

So feel free to dress up in romanticized Victorian garb and don’t stop reading those stories of great airships, analytical engines, and fantasy adventures. Go ahead and dream of a world built on brass, steel and steam. But at the same time don’t forget the artisans and craftsmen who provide the subversive element to Steampunk.

We Got It ... Now What?

2009-06-08T19:51:00.002-05:00

Congratulations! You and I are now the proud new owners of one of the great classic American institutions: General Motors. Or as some wags have started calling it: Government Motors. Of course this doesn’t mean we can just stroll into one of the remaining GM dealers and just drive off with some of the inventory without paying for it. But it does raise the question of where to go from here. Or more precisely, “What should the Obama administration do with General Motors?” Unfortunately what the administration should do and what it will do are certainly not going to be one in the same.

Because of the nature of this blog let me focus primarily on what it should do. As part of the bankruptcy restructuring GM should be converted from an investor-owned firm (IOF) into a worker-owned economic enterprise. As a result the current employees of GM would become the new owners who would elect their own board of directors. By doing so the Obama administration would be increasing the success of GM. Cooperatives have been proven in study after study to be more efficient than joint-stock companies. That’s due to several factors but one reason is due to liability. In an IOF the worker has little stake in the production and certainly no say in it. If the company is more profitable or less it’s all the same to his or her weekly pay. But in a cooperative the worker’s take home is solely dependent on the success of the enterprise. When one combines the monetary incentive with the fact that they have a real voice in operation it makes a real difference. Add to that the pride that comes from ownership and one can see why cooperative enterprises are more efficient.

But we know that this won’t happen. The administration has already stated that it plans to dump the government’s ownership as soon as possible. Even the GM executives currently ignore the fact that the American people own their company. The CFO of General Motors recently said, “As a privately held company, it’s likely we’re not going to disclose information except to the shareholders.” We shouldn’t be surprised. This wasn’t a true nationalizing of GM but an attempt to help the economy within the system as it currently exists. While I do think that President Obama very well may end up being one of the greatest presidents in American history, unlike the claims of the far Right, he is certainly not a revolutionary.

TIKKUN

2009-05-25T17:07:00.001-05:00

Over the last few months I’ve posted several brief biographies of individuals of faith who have advocated economic democracy principles. Now economic democracy has received attention by the magazine Tikkun, which is edited by its founder Rabbi Michael Lerner. Rabbi Lerner is the progressive rabbi of the Bay Area synagogue Beyt Tikkun and author of “The Left Hand of God: Taking Our Country Back from the Religious Right” (Harper San Francisco, 2006). Most recently Tikkun has expanded its outreach to include the non-Jewish community through the formation of the Network of Spiritual Progressives.

The current issue of Tikkun (May/June 2008) has several articles not only about why capitalism is corrupt and dangerous but two excellent articles on economic democracy as well. One fantastic article is by David Schweickart who is the author of “After Capitalism” and who is a high profile advocate for economic democracy. It’s safe to say that without a doubt Professor Schweickart has been a major influence on my advocacy for third way economics.

Schweickart’s fantastic article, “What to Do When the Bailout Fails,” is written as an open letter to President Obama. It explains in clear and straightforward language why the economy collapsed and, while there are some good ideas from the current administration (unlike some conservatives Schweickart expresses hope for their success), he explains why the odds are against the policies succeeding. Schweickart then explains what economic democracy is and why it would be superior in every way to capitalism.

In addition to the article by Professor Schweickart there is a very good article on economic democracy by Gary Dorrien titled, “A Case for Economic Democracy.” Professor Dorrien not only addresses the need for creating an economic democracy but addresses some of the challenges we would have encounter as we try to make it a reality. I found it to be a very thought provoking article.

Finally, I think it’s important to give serious consideration to the editorial by Rabbi Lerner. In it he wrote, “This is too important a task to be left to the economists, political scientists, Washington policy mavens, journalists, columnists and talk show hosts (though we do wish there were more like Jon Stewart and Amy Goodman). We need a grassroots movement of people meeting together in their communities in "After Capitalism" groups and discussing their own ideas about how to create a better global economy. Spiritual progressives should play a central role in stimulating these discussions-not only in every church, synagogue, mosque, and ashram, but also on college campuses, in union halls, in professional organizations, and at town meetings. Just as the American Revolution was stimulated by "committees of correspondence" in which people met and shared their ideas about what should replace British rule, today we need a democratic mobilization for this kind of discussion.”

My question is whether we are willing to answer Rabbi Lerner’s call for action?

Well… are we?

A Glimmer of Hope

2009-05-12T20:11:00.001-05:00

Dallas, Texas has always been a place of contradictions. It’s a city known for being the buckle of the Bible Belt with many churches that are hostile to gays yet it has twice elected a lesbian as county sheriff. It’s a city known for banking and big business yet some of the early settlers were socialists from a nearby failed commune known as Las Reunion. And then last Saturday this Republican dominated city, which recently saw a massive “tea bag” demonstration, voted to start a community-owned economic enterprise.

Like so many urban centers the city of Dallas has long struggled to revitalize its once vibrant downtown business district. Over time businesses had fled the downtown area to the suburbs, leaving it largely a ghost town. Some progress has been recently made as abandoned office buildings are starting to be converted into apartments. But City Hall is still struggling to bring life back to the heart of the city. One of those challenges that have made it especially difficult has been the lack of adequate hotel space in the downtown area. This lack of hotels has cost the city convention business as well as sporting events. Over the years the city has tried, to no avail, to get a new hotel through the old standby techniques of giving tax incentives for new construction. In the 90’s the city seemed close to having a new hotel built but the Crow family, who owns the Dallas hotel Hilton Anatole, provided land to build a park, which was so generous that the city couldn’t politically turn it down. The idea of a new hotel in the central business district seemed dead.

Then the city leaders had an idea.

After years of trying to get the market to provide a new hotel the city leaders decided to build a publically-owned hotel. Once the city council approved the enterprise the city started working to have it built. First, it bought the land (admittedly it overpaid for it). It then hired a construction firm to break ground and begin construction. To no one’s surprise not long after that forces opposed to the hotel, which consisted largely of the Crow family (remember them?), were able to push through a referendum to force a public vote on the hotel. After a dirty and expensive campaign, with the most money spent by the hotel opponents, amazingly the Dallas voters approved the publically-owned hotel.

This hotel project is far from perfect. The biggest flaw is how it will be managed. The city chose a private firm, Omni Hotels, to manage the new hotel. The city should have instead established a worker-managed corporation in which the workers of the hotel elected their own board of directors to manage the enterprise.

That criticism being said the idea that a conservative, pro-business, heavily Republican, city such as Dallas can choose to start a community-owned enterprise, which is one of the elements of an economic democracy, should give us all hope for the future.

G.K. Chesterton

2009-04-26T20:16:00.002-05:00

“I have said that the strong centers of modern English property must swiftly or slowly be broken up, if even the idea of property is to remain among Englishmen. There are two ways in which it could be done, a cold administration by quite detached officials, which is called Collectivism, or a personal distribution, so as to produce what is called Peasant Proprietorship. I think the latter solution the finer and more fully human, because it makes each man as somebody blamed somebody for saying of the Pope, a sort of small god.” ~ G.K. Chesterton

What follows is another installment in occasional biographies of influential people in cooperativism.

Gilbert Keith Chesterton (b. 5/29/1874 – d. 6/14/1936) was born in Campden Hill in London, England to a Unitarian family. His father was a successful auctioneer and considered liberal in his political thought. Chesterton was a large man in more than just intellect and words. Chesterton was six foot four and weighed over three hundred pounds. In addition he carried around with him a small arsenal consisting of a sword, a knife and a gun. When once asked why he had a firearm he said he had bought it to protect his wife right after their marriage. He bragged that whenever he heard someone say that life wasn’t worth living he would pull it out and point it at the person. One must wonder at the other person’s reaction facing down the barrel of his gun.

While Chesterton was a towering intellect that loved to debate he was very dependent upon his wife and others. He was unable to dress or shave himself due to his large size. Plus, he was dependent upon his wife to make nearly every decision for him. She handled his finances, such as filing and paying his income tax, and even details as minor as whether he would take the stairs or an elevator to go to another floor.

One might wonder how much his father’s liberalism influenced him. According to Christopher Hollis his liberalism was based on a “belief in small units.” For example, GK Chesterton supported the South Africans against his own British during the Second Boer War because he felt like the British were using their Imperial might against the weaker South Africans.

This belief in small units also translated into a disdain for nationalistic patriotism. According to Hollis, “At the same time he had no sympathy with those who decried the virtue of patriotism. For the British Empire as such he cared little, but he championed as passionately the right of an Englishman to live England as of a South African to love South Africa.”

One might also see his advocacy of the small over the large reflected in his economics. Chesterton ran a newspaper called the New Witness in which they would, “oppose alike the capitalist solution which would concentrate all property in the hands of rich men and the Socialist solution which would concentrate all property in the hands of the State and to argue that instead property should be as widely distributed as possible.” As a result Chesterton is widely known as a Distributist.

In would be incorrect to say that Chesterton would approve of all elements of economic democracy. It’s known that he opposed the state insurance for workers in England, which were modeled after Germany’s, because he thought it would lead to a “return to slavery and a Servile State.” And he held several views that very few today would support, capitalist or otherwise. For example, he opposed giving women the right to vote. Even with these faults Chesterton was a strong supporter for cooperativism and for that he deserves to be recognized here.

Take Me Out to the Ballgame

2009-04-12T15:22:00.003-05:00

Ah, spring. Flowers are in bloom. Grass is turning green. Birds are singing. Spring also means the return of America’s favorite past-time: baseball. Baseball is of course more than just a sport. The boys of summer bring with them tradition and history that strikes a chord deep within into the American psyche. Baseball is also special in another way. Within baseball we can see evidence of the superiority of cooperativism over rugged individualism.

While baseball grants numerous opportunities for individual displays of talent for a team to be successful it demands teamwork and a willingness of each team member to make personal sacrifices. The best batter on the team at times may have to sacrifice bunt if it means advancing another player. On a fly ball one outfielder often has to swallow his or her pride and allow another to make the catch. All of these plus other sacrifices will often times be necessary for the good of the team.

The Texas Rangers are the perfect example of how the lack of teamwork will work against a baseball team. How could a team that had great pitchers like the all-time no-hitter Nolan Ryan never win a single playoff series? A major reason is that while the Rangers have had great batters, great pitchers, great catchers they have always lacked teamwork.

Like a well run baseball team a cooperative strikes a balance between the needs of individual and the needs of the group. Each individual has opportunities to show his or her talents in the daily operations. Yet, for the cooperative to be successful the individual members must work together. If they begin to compete against each other in their daily operations then the cooperative will fail.

So as you sit there at the ballgame eating your hot dog and drinking your beer remember that you’re not just watching a wonderful sport. You’re watching a great example of cooperativism in action.

PS: Looking for a great baseball team? Check out the Wisconsin Timber Rattlers. According their web site, "The Timber Rattlers are a non-stock, community-owned team similar in structure to the Green Bay Packers organization."

Bad Air

2009-03-30T20:25:00.003-05:00

You’re mad. I know it because that’s all I hear or read about in the news. They say that every time a person hears "AIG" and "bonuses" used together he or she gets so angry they could spit. It turns out that the politicians on Capitol Hill are mad too. They make comments such as the executives should either "resign or go commit suicide" (Sen. Charles Grassley later said that he really didn’t mean they should kill themselves). The problem with all of this outrage is that it redirects us from the real source of the problem much in the same way that a magician redirects our eyes as he does his magic trick.

My readers over the years know that I often use analogies in my postings. A while ago I wrote about the attempt to control malaria during the construction of the Panama Canal. ("Draining the Swamp" 10/14/2007) This horrible disease can also serve as an analogy for AIG and the "retention bonuses."

According to Wikipedia malaria gets its name from Medieval Italian mala aria, which means "bad air." At one time malaria was thought to be caused by miasma, or "pollution", which was defined as a poisonous vapor of particles consisting of decomposed matter. It was thought that one could identify this miasma by the presences of foul odors. Of course the real cause of malaria is not some particulate cloud but is actually a virus carried by the mosquitoes that flourish in unclean conditions and that live in stagnate water and swamps.

Limiting ourselves to being angry about the bonuses is like limiting ourselves to bad odors while being blind to the underlying cause of disease. We can scream in anger, jump up and down, and tax the bonuses but it won’t get to the source of the problem because it isn’t the greed of just a few executives. The source is an economic system based on capital.

As an example of historical irony the answer can be found in the works of Adam Smith, who most consider to be the father of capitalism. Of corporations ("joint stock companies") in his classic An Inquiry into the Nature And Causes of the Wealth of Nations he wrote, "The directors of such companies, however, being the managers rather of other people's money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company."

Smith showed us years ago that it was inevitable that the executives of corporations should develop this culture of greed because it goes to heart of capitalism. Centering on the bonuses and not removing the source, capital and the investor-owned firms, is like spraying perfume to try to prevent malaria. It might smell nice but it ignores the source.

Reverend Frederick Denison Maurice

2009-03-15T16:14:00.002-05:00

Back in May of 2008 I posted a brief biography about the founder of The Catholic Worker: Dorothy Day. This time I’ve decided to post a short biography of one of the lesser known advocates of cooperativism: Reverend Frederick Denison Maurice.

Reverend Maurice (b. 8/29/1805 – d. 4/1/1872) was the son of a Unitarian minister and one of the most brilliant of the 19th century Christian Socialists. He’s been described as “mild, unobtrusive, averse to undue opposition, convincing by his example and his earnest logic rather than by appeals to the feelings.”

Maurice honed his skills on a debate club as a young man in an Owenite society. As a young adult he was denied the right to graduate from Cambridge for refusing to sign the Anglican Church’s "Thirty-nine Articles." He later reversed himself and signed the Articles, which allowed him to attend Oxford. Between Cambridge and Oxford, Maurice worked as a writer and wrote a novel. In addition, after being ordained he served as a chaplain at Guy’s Hospital.

While a member of the faculty at Cambridge's King's College Maurice was known for being scholar, theologian, and historian. After his book, Kingdom of Christ, was published his reputation was enhanced. The Kingdom of Christ is often viewed as an omen of the future ecumenical movement for holding that while there are many divisions, such as denominations and sects, the church is essentially united. In 1848 Maurice joined with Kingsley and others to form the Christian Socialist Movement. Then in 1853 he published Theological Essays in which he expressed a belief that hell was not eternal. This was the last straw and as a result he was dismissed from his position at King’s College. He then became the first principle of the Working Men’s College.

According to Capaldi, the Christian Socialists "tried to combine cooperative economics with political conservatism." Of Christian Socialism, Maurice wrote that it was, "true socialism, true liberty, brotherhood, and equality- not the carnal dead level equality of the communist, but the spiritual equality of the Church idea, which gives every man an equal chance of developing and rewards every man according to his work." Once Maurice learned of the Parisian co-ops he was convinced that there was a need of cooperatives in England. He then wrote several pamphlets on cooperatives and declared that anyone that accepted the principles of cooperation could be called a socialist. In addition, Maurice and the Christian Socialists rented a building in London to start a cooperative with 12 tailors called the Working Tailor’s Association. Later the Society for Promoting Workingmen Associations was formed, which made loans to start-up other cooperatives.

Early on Maurice and the Christian Socialists were very successful. Soon in London there were approximately 17 cooperatives. After a point these cooperatives formed a central body, which was a forerunner of the Co-operative Wholesale Society. But they weren't limited to London. Cooperatives also began springing up in other large cities.

By 1853 though, things began to fall apart. The productive cooperatives started to close as problems appeared in their organizations. Some workers were robbed of their funds. Others closed due to internal disputes or apathy. Yet, he did help push through some legislation that helped cooperatives. While the Christian Socialists of the time failed to substantially change England, the work of Reverend Maurice did have a major impact on Christianity that is still felt today.

The Other

2009-03-01T20:36:00.003-06:00

"If men could only know each other, they would neither idolize nor hate." ~ Elbert Hubbard, US author (1856 - 1915)

Recently our new President made history (again) by speaking before a joint session in Congress in his first year. The majority of his speech consisted of Obama making his case for his economic package. Near the end the President introduced several guests. One of them was a banker name Leonard Abess. I’ll let the President explain:

"I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company, took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn't tell anyone, but when the local newspaper found out, he simply said, "I knew some of these people since I was seven years old. I didn't feel right getting the money myself.""

Leonard Abess provides an interesting lesson for us on the Left. The lesson isn’t a claim in the nobility of capitalists nor is it to praise bankers. The lesson Mr. Abess teaches is that we cannot, we must not, stereotype capitalists or anyone else as being "The Other." It’s the socio-economic system of capitalism that’s evil. Capitalists are people who are caught up in an oppressive system. We need to recognize that the capitalists are victims as well as workers.

Labeling any group of people as evil runs the risks of starting down a path that eventually ends at a guillotine.

Lack of Trust

2009-02-16T17:09:00.002-06:00

"The chief lesson I have learned in a long life is that the only way to make a man trustworthy is to trust him; and the surest way to make him untrustworthy is to distrust him and show your distrust." ~ Henry L. Stimson

The capitalists are rattled. They’ve suddenly realized that there’s a serious absence of trust in our economy. In a December 24th, 2008 editorial the staff of the Dallas Morning News whined, “For want of trust, the global economy nearly melted down.” On his web site the capitalist apologetic Scott Burns cried, “Right now all we know is that nothing is trustworthy. Not our political leaders. Not our business leaders. Not the government or private institutions that are supposed to provide oversight and evaluation.”

Like Captain Renault exclaiming that he’s shocked, shocked to find gambling at Rick’s their surprise isn’t very convincing. That’s because the seeds of the current growth of distrust were planted by the capitalism itself.

Distrust originates in capitalism from its own hyper-competitive nature. It’s well documented by authors such as Barbara Ehrenreich and Robert Sennett that within capitalism, especially the current globalized version, relationships are viewed as simply means to an end. The other person is either a threat or an opportunity. So we don’t want to show our hands, to borrow a gambling phrase, to just anyone lest we allow the other person to learn something that they can use to either get ahead or against us.

It took hundreds of years but this distrust has spread from the economic infrastructure and now infects all aspects of the superstructure of society. Parents distrust their children so they place nanny technology on their computers. Couples distrust each other and jealousy abounds. Neighbors distrust each other so people set up housing associations full of rules and regulations to make sure that each person maintains his or her property just as the neighborhood expects.

How can we climb out of this pit? While the return of Keynesian-style regulation by the Obama administration will provide limited increase in trust in the short-term it won’t truly solve the problem. The only real solution is to replace our greed-based competitive system with a system based on cooperation and mutual support. The solution demands an economic democracy.

Death by Greed

2009-02-03T10:38:00.001-06:00

Most of us have heard or read how hundreds of people were sickened, and eight died, from a recent outbreak of salmonella. Recently the FDA reported that they had finally traced the source of the outbreak to a factory in Blakely, Georgia owned by Peanut Corporation of America. But while the peanut butter shipped by the factory was indeed contaminated with salmonella it wasn’t the ultimate source of what sickened and killed people. The ultimate source of their suffering and death was greed.

According to the Wall Street Journal the government has charged that the company’s own internal tests had found salmonella but that the company didn’t disclose their results and continued to ship the contaminated peanuts. Why didn’t the company report their internal findings? According to the article they didn’t because they weren’t required to.

Was this the result of corporate abuse of power? Not in this case. Headquartered in Lynchburg, Virginia, PCA is actually a privately owned company with approximately one-hundred to two-hundred and fifty employees. Their annual sales have ranged from $10 million to $25 million.

When one considers the seriousness of the charges along with the nature of the company we see a simple truth. An economic enterprise doesn’t have to be an investor-owned firm to be corrupted by greed.

What lesson might we learn for a future economic democracy out of this mess? As I see it the most important lesson is that in an economic democracy there would still be a need for government regulation. While cooperatively run enterprises tend to operate with a higher level of ethics people won’t become angels with the end of capitalism just as they weren’t angels in the modes of production that preceded it. So we can expect that there will still be a need for oversight by federal, state, and local authorities to insure safety for both consumers as well as workers.

Poor People’s Campaign

2009-01-19T11:33:00.001-06:00

A brief post on this historic day. Shortly before his assassination Dr. Martin Luther King Jr. had started what he referred to as the “second phase” of the civil rights movement, which was to confront capitalism head on with a “Poor People’s Campaign.” Reverend Hosea Williams explained the reason for the PPC, “We will never get free by eliminating racism or bringing about integration. If black people were able to eliminate every aspect of racism and integrate every aspect of American life, we would not be free. Black folks will never be free until we have our fair share of the economy. We live not in a political society, nor in a social society, nor a religious society, we live in an economic society. So we had to launch a movement to gain our fair share of the economy.”

We need to honor Dr. King by demanding an economic democracy.

Congo

2009-01-10T11:52:00.003-06:00

The four horsemen of the apocalypse are riding across the heart of Africa. According to the International Rescue Committee malnutrition, war, and disease is killing 45,000 people every month in the Congo. Since the start of the war as many as 5.4 million people have died. All of this death and suffering is largely due to powerful forces (such as Rwanda, Uganda, Burundi) who have tried to dominate and exploit the Congolese natural resources, primarily Columbite-tantalite known as coltain.

While conservatives tend to turn a blind eye to the suffering liberals tend to place too much emphasis on blaming people rather than analyzing the socio-economic relations at play. The Cowardly Lion closes his eyes while Dorothy pays too much attention to the image of the wizard with the noise and the fire and ends up ignoring the man behind the curtain.

The cause of the problem isn’t simply that we buy electronics, such as cell phones, with coltan. While the situation in the Congo is rather complex a large part of the blame for the violence in the Congo belongs to globalized capitalism. As I’ve written before capitalism is a socio-economic system focused on the expansion and protection of capital (i.e. private investment). One of the primary ways of expanding capital in the manufacturing process is to acquire raw materials at the lowest price possible. These cheap resources help increase surplus value (i.e. profit), which the corporations send to their shareholders (i.e. capitalists) in the form of dividends. This perpetual demand by corporations for cheap raw materials, such as coltran, regardless of the human consequences is what drives the violence in the Congo.

Do you want to do something substantial to help the people of the Congo? Get involved in helping to replace capitalism with an economic democracy.

Kwanzaa

2008-12-29T11:18:00.003-06:00

Kwanzaa, which takes its name from the Swahili word matunda ya kwanza meaning “first-fruits”, was started in 1966 by Ron Karenga to "...give Blacks an alternative to the existing holiday and give Blacks an opportunity to celebrate themselves and history, rather than simply imitate the practice of the dominant society." (Source: Wikipedia)

The holiday is divided into seven days in which each day represents one of the seven principles of Kwanzaa. The principle of Ujamaa, or “Cooperative Economics”, is celebrated on the fourth day of Kwanzaa and occurs on December 29th. According to the official Kwanzaa web site this principle means, “To build and maintain our own stores, shops and other businesses and to profit from them together.” (Source: Official Kwanzaa Web Site.)

One of the early African-American advocates of cooperative economics was W.E.B. Du Bois. Du Bois was born in 1868 in Great Barrington, Massachusetts. In 1888 he graduated from Frisk University and later received his Ph.D. from Harvard in 1895. As a professor at Atlanta University between 1897 and 1914 he published 16 research monographs; most notably the landmark sociological study “The Philadelphia Negro: A Social Study”, which was the first of its kind. Du Bois’ extensive work helped to establish him as one of the pioneers in the study of African-American society.

Early on W.E.B. Du Bois found himself in conflict with Booker T Washington when he concluded that the only way African-Americans could achieve equality was through demanding it and through protest. Du Bois laid out in his opposition to Washington’s views in his landmark book “The Souls of Black Folk.” It was his book that established Washington and his supporters as “conservatives” while Du Bois and his supporters were labeled as “radicals.” History, of course, ultimately proved Du Bois right and Washington wrong.

In 1905 Du Bois was one of the prominent founders of the Niagara Movement, which helped lead to the establishment of the NAACP. In addition to the founding of the NAACP he edited the magazine The Crisis. Du Bois is also widely known for being a pioneer for the Pan-African movement. Plus, he’s known for his support of black literature and the recognition of “Beauty in Black” through his editing of The Crisis.

For Du Bois, cooperatives were the wave of the future for African-Americans. He was able to show that since the early days after the end of the Civil War cooperatives had played a major role in the economic survival of African-American communities. He used as an example the Dry Dock Cooperative and the African-American cooperatively-owned railroad in Wilmington, North Carolina. Du Bois recommended that African-Americans use these cooperative enterprises as models to develop an alternative economy to capitalism in which African-Americans would cooperatively own and operate their own enterprises.

While I disagree with some of his views that he held (later in life he advocated the Soviet model and gave up his US citizenship) Du Bois was without a doubt a great man and a great advocate of cooperative economics.

The Health Care Crisis

2008-12-15T19:25:00.002-06:00

The cost of health care has skyrocketed in the last few years. Americans spend more on health care than food. In fact, 16 percent of our GDP goes to health care (as of 2004). Compare this to 1960 in which it was only 5.2 percent. This is bad enough but it’s really severe if one doesn’t have health insurance. In America there are 46 million without health insurance. 8 million of those uninsured are children. Not having health insurance can be a death sentence if one becomes seriously ill. According to one study those individuals who were diagnosed with colorectal cancer were 70 percent more likely to die if they lacked health insurance than those who were covered.

Usually the debate over health care is presented as being between just two alternatives. One choice given is to leave the current system of private insurance and private providers essentially the same. Possibly add a safety net here or a tax deduction there but not do much else. The only alternative to the status quo is usually presented as the specter of “socialized medicine” with the entire medical system owned and operated by the Federal government. According to this scenario all doctors would become government employees while all private hospitals and clinics become government facilities.

But as my regular readers should expect I believe that there is a third way to solving this crisis. A major component of this third way alternative would be a single-payer health care system. According to the Physicians for a National Health Care Program (PNHCP), the “National Health Insurance Act” HR676, which is currently up before Congress, introduces a “publicly financed, privately delivered health care program that uses the already existing Medicare program by expanding and improving it to all U.S. residents, and all residents living in U.S. territories.” PNHCP states at their web site, “This program will cover all medically necessary services, including primary care, inpatient care, outpatient care, emergency care, prescription drugs, durable medical equipment, long term care, mental health services, dentistry, eye care, chiropractic, and substance abuse treatment. Patients have their choice of physicians, providers, hospitals, clinics, and practices.”

While HR 676 would be a great leap forward the business model of medical providers also needs to be changed. Rather than corporate ownership, medical facilities and clinics must be converted into non-profits institutions. Many should be community-owned while others should be established as non-profits.

In addition to removing corporations as medical providers there needs to be an end to Big Pharma. Unfortunately, how to change the way we create pharmaceuticals requires far more than this one post can address and will have to wait until another time.

It’s important to note that in such a health care system with single-payer insurance, non-profit and community-owned medical providers and a reformed pharmaceutical system there would still be private practitioners. Americans would still be able to choose their own doctors.

In a third way medical system the power over life and death of Americans would no longer be a commodity controlled by a corporate oligarchy nor would it power belong to the State. That power would rest where it belongs; with the American people.

To learn more about HR676 visit the RESULTS web site.

Baby You Can Drive My Car

2008-12-07T13:43:00.002-06:00

The astronomer Fred Hoyle once wrote that “Space isn't remote at all. It's only an hour's drive away if your car could go straight upwards.” Last week the auto industry executives went before Congress to tell them that there would likely not be any new Americans cars to go anywhere, much less to outer space, unless they were soon given billions of dollars in government loans.

The financial woes of the Big Three, and their request for aid, have sparked a national conversation as to what should be done to help the American auto industry. Everyone seems to have an opinion on what to do.

One choice is to do nothing at all. The classic capitalist mantra is that if these companies can’t survive in the jungle of the marketplace then they don’t deserve to exist. The graven idol of Smith’s Invisible Hand demands a blood sacrifice so what better one is there than the jobs of thousands of American auto workers.

Others take a more Keynesian and less Social Darwinist approach. They say that we should go ahead and give the auto industry the money they’re asking for. Those that support this position point out that when Chrysler was on the ropes in the late 70’s they were granted loans, which pulled them out of a similar tail spin. The government even made a profit by doing so. Though bailout advocates fail to explain why if it was such a success that this same company is in need of another bailout. The bailout advocates say that regardless of the Big Three’s poor track record and the high cost being requested, the massive loss of jobs if nothing is done would be too great with the economy in the midst of a recession, which might be heading into a depression, to handle.

What the media isn’t saying is that we aren’t limited to just these two choices. The acclaimed filmmaker Michael Moore has proposed an intriguing alternative. At his web site he recommends a three point plan. One element of his plan is that because transporting Americans is an important responsibility of the government the president along with Congress should direct the automakers, “to build only cars that are not primarily dependent on oil and, more importantly to build trains, buses, subways and light rail (a corresponding public works project across the country will build the rail lines and tracks).” The second element of Moore’s plan is for the government to buy all of the common shares of General Motors, which are worth only about $3 billion. The third element would be, rather than government officials running the auto industry, to hire the greatest minds of the transportation industry to develop a 21st century Marshall Plan that would, “switch us off oil-dependent vehicles.”

To read the details of Moore's proposal visit his web site:
Saving the Big Three for You and Me: A Message from Michael Moore

While I strongly endorse Moore’s plan I would add something to the third element of his proposal. After purchasing the stocks the government should turn the ownership and management of the enterprises over to the auto workers. In other words, GM and any others purchased should be reorganized as worker-owned cooperatives. It’s an established fact that employee-owned enterprises are more efficient than investor-owned firms, which would solve the American auto industry’s historic problems of quality and overhead. In addition, while cooperatives have a history of being more socially responsible than IOF’s the government could mandate that their cooperative bylaws include a clause that would require them to operate as a public trust. This would insure that they make socially responsible products such as Moore addressed in his three point plan.

We can solve the problem with the American auto industry. All it takes is the political will to do so.

Thanksgiving Day

2008-11-23T19:27:00.004-06:00

Thanksgiving is right around the corner. Thoughts fill with the images of friends and loved one’s gathered around the dining room table. There will be the sharing of good food and good conversation. Afterwards, many of us will sit back, stuffed and happy, and fall asleep on the couch in front of the television. Others will go outside and toss a football around. Heck, maybe we’ll even play a little dominoes. A day filled with the joy of hearth and home that warms the heart.

Then comes the day after. Aptly named “Black Friday,” the day after Thanksgiving many Americans will swarm to the stores to go on a buying binge. In some major cities people even line up outside the stores over night. We’ll spend millions of dollars, mostly on credit, at stores such as Wal-Mart, Target, and the numerous mega-malls around the country.

Black Friday is also a big day for the corporate news media. Reporters will loiter around the stores to video tape shoppers as they stampede through the opening doors, pushing and shoving each other as though their lives depended on it. The TV stations will consider themselves lucky if they catch a shot of an elderly person or child who falls during the stampede as people mindlessly stomp on them. Plus, they always build it up as such an important event that, according the newscaster, the very fate of our nation rests on whether we will show up and spend. “Go out and shop for your job depends on it!” they’ll exclaim as they show scenes of the crowded parking lot taken from the helicopter hovering over the mall.

But there is another way to spend the day after Thanksgiving. Sponsored by Adbusters, November 28th, 2008 is also known as “Buy Nothing Day.” Rather than being another lemming at the mall we can do something else. Stay home. Go for a walk. Read a book to a child. Volunteer at a charity.

Don’t let the capitalists and the corporate media control you. Rather than participate in Black Friday join me in Buy Nothing Day instead. You’ll feel better that you did.

Change?

2008-11-09T18:19:00.002-06:00

Without a doubt, history was made on November 4th 2008. With the election of Barack Obama to the White House our country crossed an important milestone in its history. From now on when we say that any child can grow up to be president it’s not just a feel good axiom. While we shouldn’t fool ourselves into thinking that all is suddenly rosy in race relations, there are still many challenges, President-elect Obama shows that our nation has truly changed in a positive way.

Barack Obama brings with him many other positive changes to Washington as well.

Since the Reagan administration Washington has been enamored by a radical laissez faire capitalist economic theory championed by the economist Milton Friedman. Known as the Chicago School, Friedman’s theory openly despised any governmental intervention in the economy.

Compare the Chicago School to that of the economist John Keynes. Keynes held that governmental intervention played a very positive role in an economy. The government, according to Keynes, could stabilize the economy and encouraging growth through lower interest rates and public projects.

With the election of Barack Obama we will see the return of Keynesian capitalism. According to various press releases and public statements President-elect Obama’s agenda includes dramatically increased government investment in the creation of the next generation of biofuels, the further development of plug-in hybrids, and in renewable energy. In addition, he would provide a $1,000 energy rebate for families to offset the cost of energy as well as other “middle class” tax breaks so as to pump more money into the economy. These proposals along with new job training programs, targeted tax breaks for small businesses, raising the minimum wage, greater access to health care and increased regulation of the financial industry places him firmly within Keynesian economics.

Without a doubt the Keynesian school of thought is far superior to that of Friedman. Though Keynesian theory still maintains the class system it reduces the distance between the classes by redistributing the wealth downwards. Such redistribution provides some economic relief to the working class. In addition, Keynesian capitalism helps to reduce the risk of economic recessions and depressions by pumping money in through the consumer-side and by regulating the supply-side, which helps to prevent the financial scandals as has recently occurred.

The problem with Keynesian capitalism is that it’s still capitalism. This means that no matter how successful President-elect Obama is during his term in office we will still have the same socio-economic system based on class division, alienation, domination by the market and by capital.

While my prayers are with our new President-elect I’m very much aware that for all of the good that he certainly will bring to the office he is still a capitalist. Economic democracy is still just a dream.

Social Deficits

2008-10-26T19:07:00.003-05:00

In his book, The Culture of the New Capitalism, Richard Sennett states that large scale structural changes currently occurring in the corporations are resulting in increases in three social deficits: low institutional loyalty, diminished informal trust among workers, and weakening of institutional knowledge.

Sennett explains that in the modern corporate world the employee is viewed to be on his or her own. If you need health care don’t look to the corporation, instead you need to buy your own. Want a pension? Forget it, better start putting money in a 401K and an IRA. Don’t even think that you have job security for there is someone in India that your job could be sent to tomorrow.

But this lack of loyalty works both ways. As corporations abandon any loyalty to their employees then the workers begin to lack any sense of loyalty to their employers. Hence, when times get tough for the corporations management is shocked when employees refuse to take cuts in pay or benefits.

Trust is also passé in the new capitalism. Sennett points out that trust takes time to develop. But in the high-paced modern corporation employees struggle to keep up with demands of both the market and shareholders. Reorganization has become the norm, which prevents employees from forming informal bonds of trust.

Finally, the new capitalism creates conditions where institutional knowledge is lost. In the old bureaucratic capitalist businesses employees on the floor learned the system. In fact, the lower employees often better understood how to work the system than management. The rise of distance and the high turnover of employees this knowledge is now being lost. Corporations try to compensate for the lost with new technologies but it doesn’t solve the problem.

As it turns out these three social deficits are not unique to the new capitalism. It’s simply that these deficits are dramatically increasing in magnitude. So what is the source of these three deficits? Sennett references to Mark Roe, a legal scholar, who states that the source of the three social deficits is due to “separation of ownership from control.” Managers try to build loyalty, trust, and institutional knowledge within corporations but the shareholders, who have no day to day control of operations, have the ultimate power.

The problem of the three social deficits wouldn’t occur in an economic democracy because the workers of the cooperative enterprises would have both ownership and control over the operation. Workers could insure their needs are taken care of. The workers of the cooperative enterprise would naturally develop loyalty because the economic enterprise would be their own creation. Trust would develop naturally between the workers of the enterprise because cooperative enterprises by nature are stable allowing for long term relations to develop. Finally, this long-term stability would also translate into the retaining of institutional knowledge by the workers.

The Real Alternative Part 2

2008-10-12T18:50:00.004-05:00

In part 1 of this series I pointed out that Treasury Secretary Paulson was wrong when he said on Meet the Press that taxpayers bailing out the financial markets was “far better than the alternative” because the real alternative is to replace capitalism with an economic democracy based on worker-owned cooperatives supported by a system of social investment. I also explained that while such a conversion would be possible by simply passing the appropriate laws, and possibly constitutional amendments, to accomplish this there would be problems for the middle-class along with the non-profits that are vested in the financial markets. It’s these problems that I wish to address.

In an excellent web article David Schweickart recently wrote, “There’s one more thing we should do. A lot of people have seen their pensions disappear. Let’s restore those pensions. We’ll pick a date before the crash. Whatever value a person’s holdings in a pension fund was at that date will be transferred to that person’s social security account, to be paid out as an annuity supplement to that person’s basic social security income, when s/he retires.”
http://progressivesforobama.net/2008/09/25/thinking-about-the-real-socialist-way-out/
(I’d like to send a special thank you to activist Carl Davidson for providing this link.)

In his book, After Capitalism, Schweickart provided an expanded version of this solution. In his book he proposed that the government would, “exchange all outstanding stock certificates and corporate bonds for long-term government annuities – guaranteeing a steady income to each holder until the value of his investment portfolio has been redeemed. “ Schweickart also wrote that the government would, “bail out those pension funds invested in the stock market – and all other stockholders as well, capitalists included.” (Emphasis is mine) To pay for this he recommended a sharply graduated tax on the annuity. (pg 174 - 175)

While his web article was very good I believe that his proposal as he presented it in his book to be far better. I’ll let Schweickart himself make the case from me. On pages 175-177 of his book he gave six arguments in support of this expanded buy-out:
* These payments would not be paid forever but would end once the value of the investment has been recovered or once a set date is passed, such as a maximum of thirty years.

* The pension funds would be exempt from the annuity tax. This would protect the retirees while taxing what would have been reinvested by the capitalists

* While we may recoil at propping up the rich in their lifestyle there is something to be said about the economic benefits of their consumption. Allowing them to spend would help continue providing jobs.

* To answer the objections over the cost of such a bail out Schweickart points out that we currently pay for the lifestyle of the rich since part of what should be paid to the workers are instead siphoned off to pay dividends and interest to the capitalists.

* The fundamental problem with capitalism isn’t supply side. It’s the power that capitalist have that is the problem. Paying off the capitalists is a small price to pay to transfer economic power to the workers.

* We should not demonize individual capitalists. Providing the annuity to everyone would help create a spirit of generosity to the economic conversion. This could also mollify many capitalists who may otherwise try to prevent such a conversion.

I would add to Schweickart’s six arguments a seventh. By providing this annuity it would take into account those non-profits that are invested as well as the individuals who depend on their earnings from investments.

In conclusion, not only do we know what the real alternative that Paulson failed to mention is (economic democracy) but we also have a good idea of the democratic, peaceful and equitable means by which to achieve it. The only question then that remains is how long do we have to wait until we see an economic democracy, this Third Way alternative to capitalism, become a reality? How long?

The Real Alternative Part 1

2008-09-28T18:50:00.006-05:00

On September 21^st, 2008 Treasury Secretary Henry Paulson said on Meet the Press that while he hated putting the taxpayers in the position of bailing out the financial markets (which as of this posting appears will indeed happen) it was “far better than the alternative.” To say that our choices are limited just to either a bail-out or doing nothing is simply not true. Replacing capitalism with an economic democracy based largely on worker-owned cooperatives and supported with a system of social investment is the true alternative.

Advocating such a massive undertaking as replacing capitalism with an economic democracy leads to the question of how such a conversion might take place. David Schweickart in his landmark book, After Capitalism, describes four possible steps that could be taken. (Note: In my opinion all of these steps would likely require constitutional amendments.)

First, Congress could pass a law that would outlaw the payment of either dividends or interest to individuals or institutions.
The second step for Congress would be to declare that the authority for all businesses that employ more than a set number of employees would be with the employees of those same firms.
Congress could then establish a flat-rate capital asset tax on those newly created cooperative enterprises so as to fund the social investment system.
The forth step would be to nationalize all of the banks, cancel all loan interest obligations, and have these banks begin dispensing the revenues from the capital asset tax with the goal of ensuring full employment and profitability of the cooperative enterprises.

Schweickart also correctly points out in his book that while this four step plan sounds easy there would be serious problems implementing it. Aside from the massive opposition that we would face from the capitalists there is an ethical challenge for there are many people who are not capitalists, mostly middle-class families, who do own some shares of stocks and financial notes. While some securities are owned by individuals many people are invested indirectly through pensions, mutual funds, trusts, or small estates. In addition to these non-capitalist shareholders there are many non-profits, such as religious and civic organizations, that are heavily invested in the financial markets. Eliminating investment proceeds could cause serious hardships for many of these middle-class families and non-profits.

In part 2 of this series I will explore possible answers to these problems. Stay tuned.

Freddie and Fannie Sitting in a Tree…

2008-09-15T18:58:00.000-05:00

As the media has reported the mortgage giants, Freddie Mac and Fannie Mae, were recently placed in conservatorship by the Federal Government. First, what are Freddie Mac and Fannie Mae?

According to Wikipedia:

The Federal Home Loan Mortgage Corporation (FHLMC) (NYSE: FRE), commonly known as Freddie Mac, is a privately-owned and run government sponsored enterprise (GSE) of the United States federal government. It is a stockholder-owned corporation, authorized to make loans and loan guarantees.

http://en.wikipedia.org/wiki/Freddie_Mac

The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a publicly owned government sponsored enterprise (GSE). It is a stockholder-owned corporation authorized to make loans and loan guarantees.

http://en.wikipedia.org/wiki/Fannie_Mae

Both enterprises play a major role in the US housing market. According to Wiki, “As of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) own or guarantee about half of the U.S.'s $12 trillion mortgage market.”

Now that the Federal government is managing these enterprises how should it proceed? There are several good options:

State Agency: One good option is to convert them both into government agencies. By doing so, the government can insure that everyone has access to good, affordable housing.

Worker Cooperatives: Rather than make these enterprises government agencies another good possibility is to give them to the workers of those agencies in the form of worker-owned cooperatives. These co-ops could be chartered as non-profits with mandates to insure quality housing for everyone.

There is a difference between how the government should proceed and how it will. The problem is that the federal government is highly unlikely to keep them as state agencies and is certainly not going to make give them back to the workers.

Price of Oil: A Follow-Up

2008-09-01T16:34:00.003-05:00

“You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.” ~ The Gambler by Kenny Rogers

In a previous blog I wrote that one of the major reasons for the increase in the price of oil was due to capitalists who were speculating that the price would go up and were therefore helping to cause the price to indeed rise. Since that post the price of oil has actually dropped moderately. This recent change in price serves to further illustrate the complex nature of capital and its insatiable drive to reproduce itself.

To help understand this complex nature one can draw an analogy between capital and gambling. In gambling the ultimate goal is not to break even but to end the game ahead of where you started. The same might be said about private investment for the ultimate goal of capital is its own reproduction. Also, just as in gambling there is some degree of risk in most investment. Like gamblers, some investors are high rollers while others play it safe. Just as the gambler in the Kenny Roger’s song investors sometimes pull back and hold to defend their capital. Other times they will run from one investment and into another. While these tactics aren’t always successful generally long term investments have a consistent positive growth.

With the gambling analogy in mind we can therefore better understand the changes in the price of oil in the last few weeks. As the price skyrocketed there were repeated news reports of people beginning to conserve along with reports of a drop in consumer spending. Plus, there were promises made by political candidates for the promotion of alternative energy along with promises by both parties of increased regulation of the commodities market. All of this caused some capitalists to fear a possible drop in the demand for oil. Such a drop in demand along with new market controls could result in less gain or possibly even losses.

As oil became a riskier investment some capitalists ran from the commodities markets and into stocks for protection of their capital. But this fear wasn’t universal so some capitalists continued to invest in commodities while others decided to simply hold by neither selling nor buying. This conflicting pattern of run and hold has resulted in the observed moderate drop in the price of oil and the slight rebound in the stock market. In other words, the changes in the price of oil is due to the movement of capital in an attempt to protect itself and to try to insure its continued growth.

What will happen in the near future to the price of oil is anybody’s guess. While the dollar has gained in recent weeks it’s still very weak. Plus, the legal obligation of corporations to return dividends to their shareholders certainly hasn’t changed. What we can say with confidence is that the price of oil has less to do with supply and demand and more to due with the bizarre nature of capitalism.

Autonomous Individuality v. Rugged Individualism

2008-08-17T19:40:00.002-05:00

Capitalism is internally contradictory. In one breath it promotes rugged individualism, where the “self-made man” is said to have raised himself by his own bootstraps, while at the same time creates a dependency of workers who are forced to survive on the often meager wages paid to them by employers. If you fail to find someone to hire you then you are likely to find yourself out on the street. One of the stipulations forced on the worker by the employer is to give up his or her individuality and to conform to the mainstream in the hopes of being employed. We see this in the corporate dress codes (written and unwritten) along with the corporate disdain for tattoos.

The capitalist class is free of this burden. The financial freedom that comes with being a capitalist is why some of the rich are known as being “eccentric” for their wealth allows them to exhibit their own individuality. They can show their individuality because they can afford to.

In an economic democracy it would be different. According to Nicholas Capaldi in his book John Stuart Mill: A Biography the reasons Mill supported cooperatives, “were to promote autonomy, to promote the cooperation that flows from autonomy, and to turn workers into entrepreneurs.” Mill also understood that the worker cooperative would end the class system of capitalist and worker and would eliminate the wage system. In an economic democracy people would have the dignity of being able to stand on their own without stepping on someone else and therefore the freedom to express one’s own individuality without fear.

Collective Copies

2008-08-03T20:50:00.005-05:00

Life was difficult for the workers of Gnomon Copies in 1983. The workers of the shop had been on strike for months due to bad pay, poor equipment, and horrible working conditions. Making ends meet was difficult as they struggled to survive. Then, just when things were looking up because an agreement had been reached with management, Gnomon Copies was evicted and shut down.

Rather than going their separate ways the workers started their own copy center. But this one would be like no other. It would be a worker’s cooperative called Collective Copies.

With its original site located in Amherst, Massachusetts Collective Copies is the only worker-owned copy center in the nation. They provide a wide range of services such as file printing, high resolution digital reproduction in a wide variety of formats, digital scanning of documents and images, finishing services, and much more.

Collective Copies is organized as a collective, meaning that it’s a worker-owned cooperative in which all of the members are equally involved in the operation and there is no management or labor division. Decisions are made through consensus with the workers sharing the various duties in the operation of the copy center.

The workers of Collective Copies care for more than just their own members and customers. Each year the cooperative donates ten percent of their pre-tax profits to help organizations such as student groups, child development, human rights, environmental defense and many more.

Collective Copies is a unique and special economic enterprise. Through it we get a glimpse of hopeful future for us all.

Visit their web site (the source of the above information) at: http://www.collectivecopies.us/

Corporations and Global Warming

2008-07-20T16:50:00.003-05:00

Occasionally there comes a news series that is so well written, so very important, that it speaks for itself. Back in 2005 Mother Jones published a special project on global warming titled “As the World Burns”. In it they documented how corporations are funding special interest groups to spread disinformation denying the reality of global warming and are working to stop legislation to combat it. This series is a must read for everyone.

http://www.motherjones.com/news/featurex/2005/05/world_burns.html

Corporate Factory Farming

2008-07-07T19:54:00.002-05:00

Not too long ago the majority of American food came from family farms. Gradually over time, with help from the US government, the family farm was forced out and replaced with big corporate factory farms. According to sustanabletable.org today as much as 40% of all farm animals are now raised on just 2% of the livestock farms in the US. And 62% of all agricultural products come from just 3% of the farms.

Technically known as Concentrated Animal Feeding Operations (CAFOs) these corporate owned factory farms are massive operations. On a large CAFO one may find 1,000 cattle, 2,500 hogs, or 125,000 chickens. To manage the massive amount of waste they use a liquid manure system mixes the animal's urine and feces with water. Often this is held in huge open air lagoons.

It’s important to understand the seriousness of the threat CAFOs provide.

Pollution: CAFO’s produce large amount of liquid waste, which leaks into local water supplies. In addition, the greenhouse gases generated by such facilities are suspected as being one of the contributing factors to global warming.

Disease: Because so many animals are enclosed together in small places the animals raised in CAFOs are more susceptible to disease. As a result Big Agra has to pump them with antibiotics, which increases the chances of an epidemic of antibiotic resistant disease.

Pesticides: CAFOs use large amounts of pesticides, which run off into the creeks and rivers and contaminate local water supplies. The effects of such run off go far beyond the local area. The Gulf of Mexico has a reoccurring dead zone every summer due in part to the massive amount of pesticides dumping into it from the Mississippi.

Slaughterhouses: Today just a few corporations dominate the US meatpacking industry. We see the results of this near monopoly every time there is a recall of beef or chicken. The political power of these corporations is seen in the impotent food inspections by the USDA.

Workers: Just as the slaughterhouses use their political power to castrate the USDA they’ve also helped make OSHA a joke. The working conditions in CAFOs along with large corporate slaughterhouses are highly dangerous to the employees, many of whom are undocumented workers.

Treatment of Animals: The list of suffering that animals on CAFOs undergo is extremely long and is morally unjustifiable. Just as C.S. Lewis said in his condemnation of animal testing the same can be said of the suffering of the animals on CAFOs, “In justifying cruelty to animals we put ourselves also on the animal level.”

To learn more about the dangers of corporate farming visit http://www.sustainabletable.org/ (Source for majority of this article.)

Leland Stanford

2008-06-22T21:37:00.001-05:00

Last week my wife and I spent several days with our daughter at a parent-student freshmen college orientation. Spending that time walking around her university campus inspired me to share a brief biography about the founder’s of one of America’s great universities: Leland Stanford.

Leland Stanford was born in1824 on a farm near Albany, New York. In 1848 Stanford passed the bar and moved to Port Washington, Wisconsin to begin a law practice. After his business was destroyed in a fire Stanford packed up and struck out on his own to join his brothers in California to operate a mercantile business. On his way to the Golden State he stayed in Michigan to work in a general store. Stanford did very well at the store and after three years he was able to purchase it and bring his wife from Albany.

Leland Stanford’s wealth came not from the store but from the railroad. Stanford along with other high risk investors formed the Central Pacific Railroad, most famous for building the transcontinental railroad. It was Stanford who had the honor of hammering in the golden spike at the meeting with the Union Pacific in Utah.

The year prior to the completion of the transcontinental railroad his son, Leland, was born. Young Leland was a creative child. He raised dogs and horses and had an interest in both farm equipment and trains. He was a tall child, at 15 young Leland stood taller than 5 feet 10 inches, he was fluent in French, and had interests in art and archeology.

After finally arriving in California, Leland Stanford helped organize the state Republican Party. He worked for Abraham Lincoln during his election in 1860 and was elected governor in 1861. Stanford was elected by Californians to the U.S. Senate in 1885 and 1893.

In 1884 tragedy struck when young Leland contracted typhoid fever. Young Leland died in Florence just two months before turning 16. This tragic event, a heart ache that few can imagine, changed Stanford forever. The day after his son’s death, when Stanford awoke he turned to his wife and said, “The children of California shall be our children.”

After the death of his son Stanford took on a new mission in life. His goal was to replace capitalism and corporations with an economy based on worker-owned cooperatives. His solution to the problem of capitalism was, “through co-operation, labor could become its own employer.”

As a senator he was the author of several cooperative related bills. One bill was to provide a legal basis for worker cooperatives to incorporate. The text of the bill, oddly enough, actually stated how the cooperatives were to be organized. Rather than one person-one vote the voting rights were to be based on the amount of capital that each member provided. Not only did that go against the basic operating principles of cooperatives as established by the Rochdale Principles but it seems to reflect Stanford’s capitalist mentality. No matter what he still unconsciously gave preference to those with wealth.

Along with the legislative efforts, there was also the founding of Stanford University. Stanford explained that the three objectives of the university were education, conservation of the great doctrines, and “the independence of capital and the self-employment of non-capitalist classes, by such system of instruction as will tend to the establishment of cooperative effort in the industrial systems of the future.”

So how successful was Stanford? In both the legislative and the educational arena he failed utterly. None of the senate bills he proposed ever became legislation. And while Stanford University is today known as one of the great universities of the world it never became a center of cooperative economics. Today there is no reference to Stanford’s third objective anywhere on the official school web site.

For a good online article about Leland Stanford and his historic role in Economic Democracy I recommend: http://dynamics.org/~altenber/PAPERS/BCLSFV/

The Price of Oil

2008-06-08T16:06:00.001-05:00

You can’t get away from it. Even if you don’t drive you’re going to be affected by the price of gas. Not only is the high cost found at the pump but it’s also to be found in the cost of food along with services. No matter what you are affected by the rising cost of oil and gas.

Everyone from the local barbershop to the TV commentators to the politicians is talking about the causes of the price of gas. People blame the high prices on OPEC, the executives of Big Oil, or government regulations. It’s safe to say that to some degree supply and demand is indeed an issue. China, India, and the US are consuming more and more every day. Plus, there’s good reason to accept the Peak Oil Theory. Originating in the 1950s the Peak Oil theory predicts that at some point the amount of available cheap crude oil would eventually be used up.

But the rise of “third world” economies, American addiction to oil and Peak Oil can truly account for the rise in gas prices. The real reason for the high prices of gas is actually the product of the very nature of globalized corporate capitalism.

The Low dollar And Corporate Earnings
Part of the problem is the dramatic drop in the value of the dollar. A weak dollar means that it cost more for Americans to purchase a barrel of oil than much of the rest of the world. As much as a third of the price of gas in the US is the result of the drop in the dollar. (Dallas Morning News, 5/25/08, page 10A)

While most politicians say they support a strong dollar little effort is actually spent to increase its value. The reason is because the low dollar helps to increase corporate profits. Kathy Lien of the investment web site “Seeking Alpha” wrote, “The further the dollar drops, the more that it will help corporate earnings.” http://seekingalpha.com/article/72708-good-news-for-earnings-dollar-hits-record-low

The reason it helps corporate profits is that it helps exports by making US products cheaper. So those US industries that are heavily reliant on free trade benefit from a declining dollar.

Corporate Obligations to Shareholders
This benefit to the corporate bottom line by the depressed dollar leads to the next major reason for the high cost. Corporations are legally obligated to their shareholders to maximize their profits. It’s in the nature of corporations to take steps to maximize their bottom line regardless of the consequences to society. This is why that even though they could reduce their prices and still make large profits for their shareholders they won’t.

Commodities market
The biggest influence on the price of oil is activity by capitalists who invest directly in oil through the commodity and futures markets. According to that same article in the Dallas Morning News the Cambridge Energy Research Associates, “estimates that crude oil trading is up 350 percent since 2002. And the daily average trading volume in energy futures contracts on the New York Mercantile Exchange rose 53 percent for 2008 from last year.”

So who are these investors? They’re primarily large hedge funds, which are investment partnerships that often prefer high risk trading strategies. The average hedge fund doesn’t consist of small time investors. Instead, many of them require enormous personal investments in the range of millions of dollars.

What’s driving these hedge funds is the Peak Oil theory. With the likelihood that the Peak Oil theory is correct the capitalist predators are seeking to turn this into an opportunity to make a profit. To show that the capitalist hedge fund investors are listening when T Boone Pickens, a prominent oilman and hedge fund operator, recently went on television to promote the Peak Oil theory the next day oil futures hit an all time high. Capitalists are driving the prices up by speculating that the prices would go up and are therefore creating a self-fulfilling prophesy.

Conclusion
As we have seen it’s in the structural nature of capitalism that largely responsible for the current rise in the price of oil. In each element listed here there is one common theme, which is the insatiable drive to reproduce capital for the capitalist class.

Dorothy Day

2008-05-25T17:24:00.002-05:00

On this Memorial Day I thought I would post a brief biography of one of the great American pioneers of economic democracy: Dorothy Day.

“We believe in loving our brothers regardless of race, color or creed and we believe in showing this love by working for better conditions immediately and the ultimate owning by the workers of their means of production.” - Dorothy Day

Dorothy Day was born on November 8, 1887 in Brooklyn, New York. By 1906 her family had relocated to Chicago. It was in Chicago that as a young child Day became acquainted with Catholicism after coming across the mother of one of her friends praying beside her own bed. She recalled being impressed by the calm appearance of the woman and how she lacked any form of embarrassment. Day once wrote that in Catholicism she saw “the church of the immigrants, the church of the poor.”

After dropping out of college Day moved to New York City where she became a reporter for various socialist newspapers, first The Call and then later the The Masses. The Masses opposed America’s entry in WWI, which quickly brought it the wrath of the Wilson administration. Later, in 1917 Day was sentenced to prison for protesting in support of Women’s Suffrage in front of the White House. Day, along with the other women, responded to being handled roughly at the workhouse by going on a hunger strike. They were later freed by Presidential order.

After spending some time working in New Orleans she returned to New York where she lived with an Anarchist by the name of Forster Batterham. When she became pregnant in 1926 she felt that it was a miracle because she had long thought she was infertile due to a previous abortion. But Batterham felt otherwise for he thought that bringing a child into a world filled with such pain and sorrow was wrong. Ultimately Day and Batterham separated.

In 1932 Day met Peter Maurin. Maurin was a French immigrant and a former Christian Brother. Maurin convinced Day that she needed to publish a paper that promoted Catholic social teachings as well as a peaceful change to society. Day took to the idea and began publishing The Catholic Worker.

Over time The Catholic Worker became more than just a newspaper. It became a call for the homeless and the downtrodden, who often sought out Day for help. Eventually The Catholic Worker began opening houses for the homeless across New York. It wasn’t long before The Catholic Worker opened homes throughout the country.

Day and the Catholic Worker Movement joined the civil rights movement in the 1950’s and 1960’s. While visiting the racially integrated commune “Koinonia”, which had been attacked previously by the Ku Klux Klan, Day volunteered to stand sentry. While on watch she noticed a car racing towards the house. Realizing that it was an attack she ducked just as bullets hit the interior of the car she was in.

In 1967, when Day was visiting Rome, she was one of two Americans invited to receive the Eucharist from Pope Paul VI. Later, in 1973 the Jesuit magazine dedicated a special issue to her saying that she represented “the aspiration and action of the American Catholic community during the past forty years.” In recognition for “comforting the afflicted and afflicting the comfortable” Day was presented with the Laetare Medal from Notre Dame University. Near the end of her life, when she was no longer able to travel, Day was pinned with the cross worn by the Missionary Sisters of Charity by Mother Theresa. Dorothy Day died November 29, 1980.

To understand Day’s views one can simply look at the Catholic Worker’s mission statement. “We advocate. . . [a] decentralized society in contrast to the present bigness of government, industry, education, health care and agriculture. We encourage efforts such as family farms, rural and urban land trusts, worker ownership and management of small factories, homesteading projects, food, housing and other cooperatives—any effort in which money can once more become merely a medium of exchange, and human beings are no longer commodities.”

Along with the Catholic Worker’s mission statement Day herself wrote in her 1939 essay The Catholic Worker and Labor, “We pointed out again and again that the issue is not just one of wages and hours, but of ownership and of the dignity of man. It is not State ownership toward which we are working, although we believe that some industries should be run by the government for the common good, it is a more widespread ownership through cooperative ownership.”

Without a doubt Dorothy Day was a great defender of the poor and the downtrodden. Though she never considered herself a saint there continues today a movement to have Dorothy Day canonized.

Worker Cooperatives – Part 4

2008-05-12T19:05:00.001-05:00

This is the last installment in this series on worker cooperatives.

Sometimes one will find cooperatives where one would least expect to. This is the case with Arghand Cooperative in the heart of Afghanistan. The Arghand Cooperative was started by Sarah Chayes, who at the time was a war reporter for NPR during the NATO invasion after 9/11. While there she fell in love with the Afghan people and realized that they needed more than just talk but needed action and started a worker cooperative that produced soap using local materials.

The early days of her efforts were difficult. The most difficult challenge was negotiating the capitalist mindset of the US bureaucracy in a search of financial aid. Chayes turned to the Alternative Livelihoods Program, which is a branch of the U.S. Agency for International Development (USAID), for financial start-up assistance. Though they were eventually able to win a contract essentially what she found was mountains of red tape and resistance.

Rather than sit around and wait for the US government to help Chayes and the Afghanis went ahead and started production. They learned how to extract seed oil and turn it into soap. With help from individuals around the world they gradually acquired the resources necessary to begin making sufficient amount of soap to export. Today the men and women of the Arghand Cooperative successfully sell soap and body oil in shops in both the United States and Canada.

To read more about the Arghand Cooperative go to: http://www.theatlantic.com/doc/200712/afghans

The web site for the Arghand Cooperative is http://www.arghand.org/

Book Review

2008-05-06T19:03:00.001-05:00

I decided to interrupt my series on worker cooperatives to post a brief book review. I plan to pick up the series in the next posting.

Sometimes it takes a while before one finds a treasure. I recently found such a gem. Written in 2000 the book “Self-Management and the Crisis of Socialism: The Rose in the Fist of the Present” by Michael W Howard is an excellent work. Howard begins by taking the proposal of self-management and demonstrates in a very convincing and clear manner how it’s consistent with John Rawls Theory of Justice. Later in the book Howard defends economic democracy it against criticisms from Marxists, environmentalists and feminists.

One of the most intriguing proposals presented by Howard is for a universal Basic Income. According to Howard a guaranteed basic income, which is not means tested and would be set at the highest economically feasible level, would compliment economic democracy and resolve concerns Howard expresses about social justice and self-management.

Michael Howard’s book is a must read for anyone interested in economic democracy.

Worker Cooperatives – Part 3

2008-04-26T20:55:00.004-05:00

I apologize to my readers (what few there are) for the delay. I thought this post had loaded a while ago but it hadn't.

Someone once told me that they thought worker self-management could never succeed in either the restaurant or fast food industry. A little cheese shop in Berkeley, California is proving them wrong.

The Cheeseboard Collective originally opened in 1967 as a family-owned business of Elizabeth and Sahag Avedisian. A few years later the owners reorganized it into a collective with the hopes of living out their beliefs in social justice. In addition to being a cheese shop the Collective serves morning coffee and operate as a bakery. Later, in 1985 the Cheeseboard Pizza Collective was opened and operates independently of the original cheese shop.

The Cheeseboard Collective consists of a thirty members while the Pizzeria has twelve. The pay scale is the same for all of the workers and decisions are made in both using a direct democracy in which the members debate on such details as to whether or not to accept credit cards or to accept a new member. In neither the Cheeseboard nor the Pizzeria will you find either bosses or managers.

The workers of both the Collective and Pizzeria are all cross trained, which keep the employees engaged and allows them to rotate the various duties during the day. In addition, this gives the workers a flexibility that allows them to cover for each other and can make it easier to take time off for illness or vacation.

But one must ask about quality of the food. The Cheeseboard Collective was declared in 2006 by the USA Today to be one of the top ten pizzerias in the nation. Social justice and great food. What a wonderful combination.

To read more about the Cheeseboard Collective go to
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/10/08/FDGDR22FJ71.DTL

The web site for the Cheeseboard Collective is http://cheeseboardcollective.coop/index.html

In the next installment of this series I plan to go to the other side of the world and show how a small cooperative in the Middle East is giving hope of peace and self-reliance to a war torn people.

Worker-Owned Cooperatives: Part 2

2008-03-30T18:42:00.002-05:00

In part 1 we learned about the famous Rochdale Cooperative and the Rochdale Principles. Now we need to jump to today and learn about the International Co-operative Alliance (ICA).

The ICA describes their “Co-operative Values” as: “Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.”

In addition to Co-operative Values the ICA provides a set of operating principles for cooperatives:

1st Principle: Voluntary and Open Membership
Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.

2nd Principle: Democratic Member Control
Co-operatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner.

3rd Principle: Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.

4th Principle: Autonomy and Independence
Co-operatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.

5th Principle: Education, Training and Information
Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.

6th Principle: Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.

7th Principle: Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.

The ICA values and principles are universal standards by which nearly all modern cooperatives operate.

In part 3 of this series I’ll show these principles and values in action by covering one of the great American cooperatives.

Worker-Owned Cooperatives: Part 1

2008-03-17T17:24:00.002-05:00

Since the core of an economic democracy would be democratic enterprises in the form of worker-owned cooperatives it’s important to understand what a cooperative is. A good place to start is with the Rochdale Cooperative.

The Rochdale Society of Equitable Pioneers was formed in 1844 on Toad Lane in Rochdale, England. Known as the Rochdale Cooperative it was highly successful, unlike its predecessor the Rochdale Friendly Co-operative Society, and is still in operation today. The members of that cooperative wrote down what would later be known as the “Rochdale Principles”:

Voting is by members on a democratic (one-member, one-vote) basis.
Membership is open
Equity is provided by members.
Equity ownership share of individual members is limited.
Net income is distributed to members as patronage refunds on a cost basis.
Dividends on equity capital are limited.
Exchange of goods and services at market prices
Duty to educate
Cash trading only
No unusual risk assumption
Political and religious neutrality
Equality in membership (no discrimination by gender)

To learn more about the Rochdale Cooperative visit: http://uts.cc.utexas.edu/~laurel/cooproots/history.html

In the next part of this series I’ll explore the International Co-operative Alliance and the ICA’s “Co-operative Principles”.

Shock

2008-03-02T21:08:00.001-06:00

What does the CIA, Milton Friedman, Augusto Pinochet, Boris Yeltsin, and the George W Bush Administration all have in common? They are all major players in Naomi Klein’s terrifying new book, “Shock Doctrine: The Rise of Disaster Capitalism.”

In her new book Klein begins with the experiments conducted by Ewan Cameron and the CIA in the late 1950’s through early 1960’s. During that time scores of individuals were subjected to Electroconvulsive therapy with the expectations that it would wipe their brains clean. Instead these experiments destroyed lives and caused untold suffering to the victims.

Klein then follows the trail of destruction from Cameron’s torture chambers to Chile, Russia, Poland, China, Iraq, and finally to New Orleans. Throughout the book Klein documents how the “Chicago boys” adopt Cameron’s theories to their own ends. Friedman and his ilk are shown to be opportunistic predators who have no need to create chaos but instead wait for events to happen (such as military coups, revolutions, wars, economic downturns, and environmental disasters) and then move in to take advantage of the shocked and frightened population to tear down the existing social institutions.

The goal of the Chicago Boys is to replace democratically run social institutions, especially Keynesian economic systems, with “Corporatism.” She explains that modern corporatism has evolved from Mussolini’s police state model based around government, business, and trade unions to a system based on, “a mutually supporting alliance between a police state and large corporations, joining forces to wage all-out war on the third power sector – the workers – thereby drastically increasing the alliance’s share of the national wealth.”

They say that knowledge is power. We should be grateful to Naomi Klein for providing us with this knowledge and therefore giving us another tool by which to fight back with.

Band-Aid

2008-02-17T18:46:00.002-06:00

So the politicians are finally admitting that there is a recession. It took them long enough to figure that one out. Unfortunately the suffering of the working people hasn’t been the cause of their concern. It was only when the value of their stock portfolios started going down then they realized there was a problem. It makes one wonder if the market hadn’t tanked whether they would ever have admitted there was a recession. Probably not.

To understand the recession we should remember that there are three essential components to capitalism: the central position of private investment (i.e. capital), a primarily two-tiered class system of Laborers and Capitalists, and a totalitarian dictatorship by the markets. This market dictatorship, which is detached from society and is propped up by the State, is the means by which wealth is redistributed from the laborers to the capitalists.

The recent problems of the bursting housing bubble and rising gas prices helped caused the current recession because they drained money from the market, which therefore meant that there was less redistribution of wealth from the workers to the capitalists. Less redistribution meant less accumulation of wealth and therefore the less likely that the capitalists were going to reinvest. This lack of investment results in a vicious cycle of more layoffs, which in turn results in reduced consumer spending and a further reduction in the redistribution of wealth.

In an attempt to kick start this redistribution of wealth the politicians have decided upon a “stimulus package” that will consist largely of rebates. Critics on both the Left and Right have pointed out the numerous problems with this solution. Many of the recipients won’t use the rebates to make new purchases but to pay off their debts from their previous. Those that do spend it will buy many products that are foreign made so that much of this money will just leave the country rather than result in new domestic jobs. Even if the rebate helps it doesn’t go to the root of the problem, which is an economy based on consumption rather than production.

Contrast this with an economic democracy. In an economic democracy the goal would not be the redistribution of wealth from one class to another but instead would be the constant creation and maintenance of high quality jobs for everyone. Therefore, if signs of a recession began to appear then action would be taken to head it off by the social investment system so as to create new cooperative enterprises and to boost entrepreneurial activity.

This difference shows the superiority of economic democracy over capitalism. In capitalism a recession isn’t a problem until it begins to hurt the capitalists. In an economic democracy the welfare of everyone is a concern so a recession is never allowed to happen. Recovery in capitalism is based on a hope and a prayer that token efforts like tax rebates will spur consumers to spend the economy into recovery. While recovery in an economic democracy goes to the source of the problem and insures that everyone has high-paying employment opportunities.

The Time Has Come

2008-02-03T15:44:00.000-06:00

The day was January 11th, 1944. The Battle of Monte Cassino was waging on the Italian front in Europe while the 1st Marine Division had successfully taken Aogiri Ridge on a small island in New Guinea. Across the world President Franklin Delano Roosevelt gave what was to be his last State of the Union address. As he neared the end of the speech, he presented a vision for America. “It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known.” FDR pointed out that while the original Bill of Rights served us well it was insufficient for the reality of our industrial economy. He then stated that it was time for a “second Bill of Rights.”

This Economic Bill of Rights, as it would become known, included:

The right to a useful and remunerative job in the industries or shops or farms or mines of the Nation;
The right to earn enough to provide adequate food and clothing and recreation;
The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;
The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
The right of every family to a decent home;
The right to adequate medical care and the opportunity to achieve and enjoy good health;
The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
The right to a good education

The time has now come when, through the establishment of an Economic Democracy, we can finally create the America that President Roosevelt dreamt of.

TINA – Part 4

2008-01-21T10:37:00.000-06:00

Q&A
Following are concerns and questions that have been raised by readers in previous postings about public investment as alternatives to capital.

Democratic Accountability
It’s been asked whether public investment system would be democratically accountable. The CDC’s and the CDFI’s would be accountable to the local and community level along with the state in some cases. The national social investment system would be established by democratic mandate through Congressional action. I would expect that the social investment banks would operate independently much like the Federal Reserve. Currently Congressional oversight is to, “clearly establish a viable objective for the Federal Reserve and to ensure the Central Bank is fully accountable for achieving this goal.” http://www.house.gov/jec/fed/fed/fed-impt.htm Democratic accountability of the social investment system would be similar.

Should Social Investment be Profitable?
Another question that was asked was whether the public investment system would be required to make the best possible use of the tax money. Without a doubt the social investment system would be expected to meet the requirements of its mandate, which would be to insure universal employment through the ongoing creation of profitable cooperative and family-owned enterprises.

At one point that questioner used the P-Word: profitable and whether it would need to “show evidence of actual growth.” In answer to profitability the social investment system would not operate to make a profit in the same fashion as business. Instead, the success of the public investment system would be in whether it’s meeting its mandate. If it wasn’t then the leadership would be replaced with those who would insure that the mandate was met.

Risk of Bureaucratic Control
It was also asked whether public investment would leave control in the hands of the politicians. The concern being that the system might cause the only way to get investment would be through backdoor politics. This concern is another reason why the social investment banks would need to operate independently plus the reason for the existence on the CDC’s and CDFI’s.

Availability of Investment
Another questioner pointed out that capitalism is a good way to make money available to companies. I would point out that actually most of the money in the system moves through the Secondary Market, which means it moves between the shareholders without actually reaching the companies. It’s the Primary Market, which involves direct investments with the businesses, that provides money to businesses. Take venture capital, for example, which is important for the creation of new enterprises. In 2007, according to a report by PricewaterhouseCoopers and the National Venture Capital Association, there was $29.4 billion invested into business ventures by venture capitalists. The social investment system along with the CDC/CDFI would be more than sufficient.

TINA -Part 3

2008-01-06T20:06:00.000-06:00

In the prior installments of this series I’ve presented three real world examples of alternatives to capital. We can now build on those models to create a possible alternative to capital on a national scale. Luckily much of the work has already been done.

In his book, “After Capitalism”, author David Schweickart proposed replacing capital with social investment. His model involves a "capital asset tax" levied on all of the cooperative enterprises, which would then be returned back in the form of start-up and expansion grants provided by a social investment banking system.

Schweickart mentions a variety of ways that this banking system might function. His preference, which is the same as mine, is that the system should be set up to distribute the funds via regional authorities rather than distributed directly by the Federal government. The various regional authorities would then distribute these funds down to community level non-profit banks. These banks would operate on a mandate to provide the funds to the various economic enterprises for start-ups and pro-growth expansion investment in the form of grants with the goal of universal employment. This grant money would be added to the capital value of the enterprises, which would then be subject to the capital asset tax.

Along with Schweickart’s social investment network I would also want to see a dramatic expansion of the Community Development Corporations and the Community Development Financial Institutions mentioned in part 2. One reason for these additional bodies would be to expand the sources of capital for entrepreneurs and cooperatives. If the social investment banks miss an opportunity with an entrepreneur then a CDC of CDFI might take a chance and provide the needed investment. The more investment money from more sources the better the chances for innovation. Plus, they would provide political pressure on the social investment banks because they would be forced to compete for applicants to satisfy their mandate. In addition, their existence would help insure that investment isn’t controlled by bureaucrats.

I don’t mean to imply that Schweickart’s model is the only possible alternative. For example, Venezuela uses loans rather than grants as social investment for new cooperatives, which was a method advocated by John Stuart Mill. But Schweickart’s model does show that, along with CDC’s and CDFI’s, there are indeed viable alternatives to capital. TINA has been proven false and the final objection to the establishment of a successor system has been removed.

In the next and final installment of this series I’ll address some concerns expressed by readers.