6 Ways We’re Already Leading an Economic Revolution
PARADIGM CHANGES, 26 September 2016
Gar Alperovitz – Yes! Magazine
From the “buy local” movement to public banking, we’re well on our way to a more democratic, cooperative, and people-centered economy.
7 Sep 2016 – Many years ago, while researching the history of the U.S. decision to use atomic weapons on the people of Japan, I came to understand something: There was something deep at work in the American political and economic system driving it toward relentless expansion and a dangerous, informal imperialism. I began thinking about how to fundamentally change America out of concern with what America was doing—and is still doing—to the rest of the world.
Many experiences since—especially working in the U.S. House, Senate, and at upper levels of the State Department trying to resist the war in Vietnam; and thereafter with activists in the antiwar and civil rights movements—taught me something important: It wasn’t enough to stand in opposition to the injustices America inflicted on the world and its own people. It was equally important for these movements to operate with an idea of what they want instead.
Could we imagine a system that undercuts the logic responsible for so much suffering at home and abroad?
It was reflections like these that brought me to first sketch the idea of a “pluralist commonwealth”—an economic and political system different from both corporate capitalism and state socialism grounded in democratic ownership, decentralization, and community that could fulfill two key functions. On one hand, it offered a general map of where we might want to go—a design for a next system in which a plurality of overlapping institutions reinforce each other to democratize our common wealth. On the other hand (and unlike other more utopian blueprints), I’ve always believed that the Pluralist Commonwealth, grounded in everyday American reality—like the deep cooperative tradition of the Wisconsin where I grew up—was also an effective guide to how we might actually get there.
While progress is never strictly linear, I believe that we are beginning to see an accelerating development of the foundations for a system that looks a lot like the Pluralist Commonwealth, and a growing recognition of how they begin to fit together.
So how do we maintain and deepen the momentum? Here are six areas where it’s particularly strategic to be organizing and building institutional power in the current moment.
- Public banking: Take it to the cities
Public banking, which invests capital for the common good rather than Wall Street’s bottom line, has existed at the state level for nearly 100 years in North Dakota.
Now, activists are taking this model to cities and uncovering exciting possibilities. In Santa Fe, for instance, organizers have worked with Mayor Javier Gonzales to begin serious consideration of a municipal-level public bank. As an official city study released earlier this year showed, instead of the city’s $200 million in cash deposits sitting in large, nonlocal financial institutions, a municipal public bank could leverage those deposits to reduce borrowing costs for the city—saving millions of dollars of taxpayer money every year that would otherwise go toward costly bond offerings.
Similar efforts in Philadelphia and other cities are also picking up steam as more and more people discover just how much money is wasted on Wall Street to finance the growth and development of city infrastructure. Why make a bond trader rich when you could build better schools and lower taxes instead?
A municipal public bank could save millions of dollars of taxpayer money every year.
The publicly owned Bank of North Dakota has long strengthened the state economy, expanded access to affordable credit, and contributed its revenues to supporting vital services like education. But the institution is also the product of a unique history, in which progressive populism was able to use the state Legislature to create this innovation. Today, in the face of relatively unresponsive state legislatures, progressives are proving that cities are promising spaces to channel energies for creative action.
By demonstrating the power of finance as a public utility, the public banking movement is building momentum for and giving shape to a democratic system of investment that is much larger. Public banks, credit unions, and community development financial institutions can all grow over time to displace the financialized, profit-seeking banking sector, helping turn the tables to put the public’s money to work for the benefit of everyone.
- Worker ownership: Build the ecosystem for economic democracy
There’s been an explosion of interest in worker cooperatives as a simple solution to begin democratizing ownership of the economy. An ecosystem is emerging that allows people all across the country to accelerate these cooperatives’ development by engaging local governments for support, converting existing businesses, or even investing personal savings into their expansion.
Worker cooperatives, by directly shifting ownership and control of the workplace to workers themselves, are some of the most intuitive and immediately appealing institutions of the Pluralist Commonwealth. Studies show that worker-owned companies don’t just democratize wealth, they can also operate more efficiently and are more likely to stay in business than “normal” firms.
Yet while there are more than 10 million Americans working in companies in which they also own a share, the number of worker cooperatives—where these shares are equal for all workers, and come with an equal vote in the future of the business—is far smaller.
But this isn’t because of some intrinsic problem with worker co-ops. Traditional businesses, in which workers labor for someone else’s profit, have an entire ecosystem of support—from the business schools that train their managers to the banks and public subsidies that finance their creation and expansion.
Worker-cooperative advocates are building a parallel ecosystem of this kind all across the country. Cooperative development projects like the Wellspring Collaborative in Springfield, Massachusetts, and the CERO cooperative in Boston are creating exciting new crowdfunding mechanisms to help communities launch democratic enterprises. Organizations like The Working World and the Shared Capital Cooperative are building national networks to channel financial resources into the cooperative economy, creating diversified opportunities in which both institutions and individuals can invest.
In cities like New York, Madison, Wisconsin, and Rochester, New York, municipal funding is now being used to support the work of cooperative developers focusing on creating worker-owned businesses in low-income communities. There is no reason why every city and town’s existing infrastructure for helping small businesses cannot be turned toward democratic alternatives, and the more this happens, the easier it becomes to make the case to community stakeholders and policymakers.
A key opportunity here is conversions of existing businesses. As the boomer generation retires, the future for hundreds of thousands of small- and medium-sized businesses is unclear. Without a succession plan, many of these businesses may get absorbed by financialized private equity or simply cease to exist. If we organize to take advantage of this historical moment, we can convert many of these to worker-owned businesses instead.
- Procurement politics: “Buy local” at a bigger scale
Solid local organizing is shifting the purchasing behavior of place-based nonprofit institutions—or “anchor” institutions—toward sustainability and economic inclusion. This means big steps toward the Pluralist Commonwealth can be achieved with relatively small amounts of activist resources.
Consider the Real Food Challenge: In less than a decade, this network of student activists has secured pledges to shift more than $60 million of food purchases at 73 colleges and universities across the country into more sustainable and just options.
Opportunities exist in every aspect of anchor institution operations. A student-led study at the University of Michigan found that just a 5 percent shift in procurement to local suppliers would increase local economic activity by more than $13 million and create more than 450 jobs.
Nonprofit hospitals may be particularly open to such demands with new rules under the Affordable Care Act mandating “community health need assessments”—reports that can illuminate the role that poverty plays in poor public-health outcomes and make clear the responsibility of health care institutions to use their resources to address economic inequality.
And campaigns to alter purchasing can strategically link up with campaigns to shift investment dollars in the same institutions. For instance, the Reinvest in Our Power campaign is mobilizing students to demand not just divestment from carbon in their schools’ endowment portfolios, but active reinvestment in community-controlled financial institutions.
“Buying local” may make us feel better about the consequences of our consumer choices, but when we change the way our public and large nonprofit institutions like universities and hospitals spend their money, we’re shifting hundreds of billions, if not upwards of a trillion, dollars into local economies—and creating a kind of decentralized planning system in the process.
This is the concept behind the Evergreen Cooperatives, which channel the purchasing power of Cleveland’s biggest anchors into a network of green worker cooperatives, creating opportunities for ownership in some of the city’s hardest-hit communities and communities of color.
As we work to shift the dollars spent by public and nonprofit institutions into patterns that support and stabilize thriving local economies, it’s important to remember that we must defend our right to do so politically. Right-wing state legislatures and large-scale international trade agreements like TTIP and the TPP aim to remove barriers to the global movement of capital and undermine local procurement initiatives.
- Participatory governance: Organize for renewed democracy
At the heart of the Pluralist Commonwealth is the idea of renewed democracy. We all know that American democracy is severely broken—but just “getting the money out” of our political system is insufficient.
A compelling alternative is suggested by participatory budgeting, which allows residents of a community to vote directly on how a portion of public money is spent. The mechanism, developed initially in Latin America, has been making substantial progress in the U.S. in recent years and can be built upon, shifting our political culture away from spectacles of personality and toward real engagement with the project of self-government.
Boston has placed $1 million of public money under binding, directly democratic control of Boston residents between the ages of 12 and 25.
Following the lead of city officials in places like Chicago and New York who embraced participatory budgeting to manage discretionary funds, smaller cities like Vallejo, California, and Greensboro, North Carolina, have embarked on citywide participatory budgeting processes. Santa Fe, New Mexico, is pioneering a participatory budgeting process tied to a fund for renewable energy investments.
While the amounts of money in each project to date remain small, participatory budgeting at once normalizes the demand for direct community control over the allocation of resources and provides a site in which the muscles of community self-government can be strengthened and scaled up. In short, it is an organizing process as much as it is budgeting process. And it’s only through such organizing and development that we can build toward higher-order processes of truly participatory planning.
Boston’s trailblazing participatory budgeting process, for instance, recognizes the key role it can play in developing long-term community leadership by prioritizing the city’s youth. Boston has placed $1 million of public money under binding, directly democratic control of Boston residents between the ages of 12 and 25.
And even in cities where municipal officials aren’t ready to embrace direct participation in budgeting, there are plenty of opportunities for creative grassroots organizing to expand participatory budgeting. The Department of Housing and Urban Development has officially endorsed it as a way to implement required community oversight of money allocated locally through Community Development Block Grants. In Toronto, for the past 13 years public housing residents have had direct, binding control over millions of dollars of annual capital improvement funding.
As we seek to reinvent, reinvigorate, and revitalize American democracy, we can begin by empowering the communities far too commonly denied the right to meaningfully participate.
- Energy democracy: Plan it by region
Building democratic ownership at the community level opens up the possibility for planning. In Boulder, Colorado, citizens felt that their city’s power supplier—corporate giant Xcel Energy—was not taking the threat of climate change seriously. Rather than trying to force the company to comply with regulations, the residents of Boulder decided to take their utility back. When this municipalization (currently in progress despite multiple political and legal roadblocks thrown up by the corporate incumbent) is complete, the city will be able to democratically manage its own energy sources.
Boulder proves that planning is by no means necessarily undemocratic or centralized—in fact, one of the reasons I believe changing the underlying ownership patterns of the economy is so important is that it begins to unlock possibilities not just for a more equal distribution of wealth, but for the kinds of decentralized planning we need.
Ultimately, we need to be scaling up beyond the city level to the regional level if we really want to plan effectively for a new energy system. Those most affected by the old energy system already realize this—and in many cases are at the forefront of efforts to imagine what a just transition looks like at a regional level.
A particularly exciting effort is the one being led in parts of Appalachia by groups like Kentuckians for the Commonwealth and Mountain Association for Community Economic Development. Faced with a recalcitrant state government opposed to implementation of the federal Clean Power Plan, local activists have been engaging stakeholders on the ground to develop a clean power plan of their own, from below, with a particular focus on rebuilding economic opportunity for the workers and communities that have traditionally depended on the coal industry as one of the few sources of jobs in the region.
Even without the ability to directly translate this popular planning process into public policy, such activism, oriented around large-scale alternative visions, can be a powerful organizing tool as we work toward a post-carbon future.
- Stop imperialism, tame growth
I have worked nearly my entire life in the United States, inside what has been the most powerful capitalist state in the world. And while bottom-up, grassroots experiments at increasingly larger levels of scale are key, it is important to remember why they matter.
Simply put, without dismantling the engine of growth at the heart of the American economy, we don’t stand a chance of making the world a sustainable and equitable place for the human species to thrive. This ultimately means transforming some very large corporations into public utilities, preferably at the regional level. Such entities would not be subject to the Wall Street maxim of grow or die, nor would they drag the U.S. into support of right-wing dictators willing to allow American corporations to control a good deal of their development.
Building the Pluralist Commonwealth in America is, to my mind, an act of anti-imperialism. But recognizing this deep connection between building a more local and sustainable economy at home and the well-being of the rest of the world does not absolve us of responsibility to oppose the government’s efforts to reassert America’s grasp on global hegemony. The same good conscience that leads us to reconstruct the American economic system over decades should also lead us to oppose the rattling of sabers, the support for the overthrow of inconvenient foreign democracies, and the destruction wrought by American military action overseas.
Gar Alperovitz is the former Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative. His most recent publication is What Then Must We Do? Straight Talk About the Next American Revolution (2013).
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