(Image: Democracy Collaborative)This is the first chapter in an exclusive Truthout series from political economist and author Gar Alperovitz. We will be publishing weekly installments of the new edition of "America Beyond Capitalism," a visionary book, first published in 2005, whose time has come.
The first edition of "America Beyond Capitalism" was published a few years too early. Although it argued that the nation already faced a systemic crisis in 2005 (not simply a political or economic crisis), the financial break-down and Great Recession that began in late 2007 had not yet occurred—to say nothing of the political outbreaks that began with the Wall Street "occupation" in late 2011. The book's message seemed distant to many readers. To some, its argument that fundamental institutional rebuilding was necessary—and, on the basis of the evidence, possible—seemed odd. Nor did large numbers take seriously the conclusion's prediction concerning emerging political-economic realities:
The first decades of the twenty-first century are likely to open the way to a serious debate about these and other systemic questions...
The prospects for near-term change are obviously not great–especially when such change is conceived in traditional terms. Indeed, although there may be an occasional progressive electoral win, there is every reason to believe that the underlying trends will continue their decaying downward course...
On the other hand, fundamental to the analysis presented in the preceding pages is the observation that for precisely such reasons, there is likely to be an intensified process of much deeper probing, much more serious political analysis, and much more fundamental institutional exploration and development...
And only a few readers were willing to accept the book's central judgment that "beneath the surface level of politics-as-usual, it is by no means clear that the public is or will remain quiescent forever—especially if social and economic pain continues, if political elites continue to overreach, and if new directions begin to be clearly defined."
Although such an understanding of the emerging historical era no longer seems unusual, the primary theoretical and strategic argument of "America Beyond Capitalism" has yet to be widely confronted—nor its conclusion, that an "evolutionary reconstruction" of the system is not only necessary but well within the range of long run possibility. The argument rests on three challenging assessments:
The first and foundational judgment is that (quite apart from other considerations) with the radical decline of organized labor as an institution from 35 percent of the labor force to 6.9 percent in the private sector (11.9 percent overall, and falling), a new progressive politics must ultimately build new institutional foundations to undergird its fundamental approach, or it will continue to remain in an essentially defensive and ultimately declining posture.
The second judgment is that a new longer term institution-building effort—one that at its core is based on the democratization of capital, beginning first at the community and state level and then moving to larger scale as time goes on—is both essential, and also that it is possible.
The third is that the emerging historical context is likely to create conditions that steadily open the way to such a strategy, and also help force awareness that it is needed.
These judgments, of course, do not dispute the importance of efforts to help sustain and re-energize labor organizing, create a more engaged activist 'movement' and mobilize a new and more energetic 'populism.' They do, however, point in a direction far more attuned to a diverse, decentralized and more democratized economic and political vision than has been central to progressive thought for much of the last century.
At the center of the traditional progressive theory is the hope that the political and economic power of the large corporation can be contained economically and politically through political mobilization, aided, abetted and bolstered by the organizational and financial power of labor unions. Numerous studies have documented the importance of labor in this theory. The "main finding" of international research on the relationship of union membership to political outcomes in industrialized countries, the late Seymour Martin Lipset and Noah Meltz observe, is straightforward: "support for unions is associated with social democratic strength."
Studies by Emory sociologist Alexander Hicks of European social democracy also reveal a "[near]-perfect relationship between mid-century [social] program consolidation and working class strength" in five major areas of social insurance policy—"retirement, work-injury, illness, unemployment, and child-rearing compensation." Yale University political-economist David Cameron adds: "The existence of a relatively high level of unionization is...an important prerequisite for enduring leftist government, since unionized workers provide the core of the electoral base of most Social Democratic and Labor parties."
Confronting the new realities of labor's decline is not easy; but realities they are. Which means, quite simply, that along with the decline, traditional liberalism has lost a good part of its fundamental power base—and further, that unless some new institutional source of political capacity is developed, it is likely to continue to remain in a defensive and weakened posture. (And this, of course, is to say nothing of race, cultural, religious and other factors weakening traditional reform politics.)
"America Beyond Capitalism's" cautious and paradoxical optimism that a new (and potentially newly energized) institutional way forward is possible derives from two streams of quietly developing evidence that have been largely ignored by many progressives. The first (as Part II of the book documents) is that just below the surface of media attention literally thousands of grass roots institution-changing, wealth-democratizing efforts have been quietly developing throughout the nation for the last several decades. Roughly 4,500 not-for-profit community development corporations devoted in the main to housing manage day-to-day operations in cities throughout the country. There are also now more than 11,000 businesses owned in whole or part by their employees; approximately six million more individuals are involved in these enterprises than are members of private sector unions. Another 130 million Americans are members of various urban, agricultural, and credit union cooperatives. In many cities, important new "land trust" developments are underway using an institutional form of nonprofit or municipal ownership that develops and maintains low- and moderate-income housing. "Social enterprises" that undertake businesses in order to support specific social missions now increasingly comprise what is sometimes called a "fourth sector" (different from the government, business, and non-profit sectors).
Related to this is a "paradoxical dynamic" that is generating more forms of institutional change even as traditional reforms falter. Job training programs, small business programs, incentives to lure major corporations to depressed communities—all of these have either largely failed, or at great taxpayer expense induced corporations to move to one community and away from some other community. A full employment strategy along Keynesian lines could achieve greater results in theory, but in the real world, again, the decay of progressive political power (and its underlying labor union base) has reduced its capacity to achieve traditional policy solutions here as well. Given the inability of politics to provide meaningful solutions to the problems facing millions of Americans, creating new institutional forms appears as the only positive option available, difficult as this may be.
The state of Ohio offers an illustration of just what this can mean both in the short run, but even more important, over time:
"America Beyond Capitalism" opens with a description of a major fight over the fate of a large steel mill in Youngstown, Ohio in 1977. The collapse of Youngstown Sheet and Tube threw 5,000 workers on the streets on "Black Monday" of September 19, 1977. No local, state or federal programs offered any significant help. Steel workers called training programs "funeral insurance;" they led nowhere since there were no other jobs available. Inspired by a young steel worker, an ecumenical religious coalition put forward an innovative plan for community-worker ownership of the mill that captured widespread media attention, the support of numerous Democrats and Republicans (including the conservative governor of the state at the time), and the promise of an initial $200 million in loan guarantees from the Carter Administration.
The corporate and other political maneuvering that in the end undercut the Youngstown initiative has been described at length elsewhere. What is of particular importance from the perspective of this account is that its impact was nonetheless ongoing, especially in Ohio, where the idea of worker ownership became widespread in significant part as a result of publicity and educational efforts traceable to the Youngstown effort, and in part because of the depth of ongoing policy failures, and the resulting pain throughout the state. In the more than three decades since the Youngstown collapse, numerous employee-owned companies have been developed in Ohio. Individual lives were also changed and inspired by the Youngstown effort. Importantly, the late John Logue, a Professor at Kent State University, established the Ohio Employee Ownership Center, an organization that provides technical and other assistance to help firms become worker-owned throughout the state.
At the heart of this trajectory of paradoxical evolution in the wake of the failure of traditional policies is a process of partially forced institutional innovation—a process that, once underway, suggests further possibilities for larger scale and for more (and accelerating) ongoing development. In the brief time since "America Beyond Capitalism" was originally published, for instance, a major effort in Cleveland has built upon the long developing institutional work in Ohio (and on related research and theoretical efforts) to suggest further directions and broader possibilities. The "Cleveland Model" now underway in that city involves an integrated complex of worker-owned cooperative enterprises targeted in significant part at the $3 billion in purchasing power of such large scale "anchor institutions" as the Cleveland Clinic, University Hospital, and Case Western Reserve University. The complex also includes a revolving fund so that profits made by the businesses help establish new ventures as time goes on.'