Newsletter - From Neoliberal Injustice To Economic Democracy

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The work to transform society involves two parallel paths: resisting harmful systems and institutions and creating new systems and institutions to replace them. Our focus in this article is on positive work that people are doing to change current systems in ways that reduce the wealth divide, meet basic needs, ensure sustainability, create economic and racial justice and provide people with greater control over their lives.

When we and others organized the Occupation of Washington, DC in 2011, we subtitled the encampment ‘Stop the Machine, Create a New World’, to highlight both aspects of movement tasks — resistance and creation. One Popular Resistance project, It’s Our Economy, reports on economic democracy and new forms of ownership and economic development.

Throughout US history, resistance movements have coincided with the growth of economic democracy alternatives such as worker cooperatives, mutual aid and credit unions. John Curl writes about this parallel path in “For All the People,” which we summarized in “Cooperatives and Community Work are Part of American DNA.”

Mahatma Gandhi’s program of nonviolent resistance, satyagraha, had two components: obstructive resistance and constructive programs. Gandhi promoted Swaraj, a form of “self-rule” that would bring independence not just from the British Empire but also from the state through building community-based systems of self-sufficiency. He envisioned economic democracy at the village level. With his approach, economics is tied to ethics and justice — an economy that hurts the moral well-being of an individual or nation is immoral and business and industry should be measured not by shareholder profit but by their impact on people and community.

Today, we suffer from an Empire Economy. We can use Swaraj to break free from it. Many people are working to build a new economy and many cities are putting in place examples of economic democracy. One city attempting an overall transformation is Cooperation Jackson in Jackson, Mississippi.

Economic Democracy

Economic Democracy in response to neoliberalism

In his new book, “Out of the Wreckage: A New Politics for an Age of Crisis,” George Monbiot argues that a toxic ideology of greed and self–interest resulting in extreme competition and individualism rules the current economic and political culture. It is built on a misrepresentation of human nature. Evolutionary biology and psychology show that humans are actually supreme altruists and cooperators.  Monbiot argues that the economy and government can be radically reorganized from the bottom up, enabling people to take back control and overthrow the forces that have thwarted human ambitions for a more just and equal society.

In an interview with Mark Karlin, Monbiot describes how neolibealism arose over decades, beginning in the 1930s and 40s with John Maynard Keynes, Friedrich Hayek and others, and is now losing steam, as ideologies do. Monbiot says we need a new “Restoration Story.” 

We are in the midst of writing that new story as people experience the injustice of the current system with economic and racial inequality, destruction of the environment and never ending wars. Indeed, we are further ahead in creating the new Restoration Story than we realize.

Cooperatives

New research from the University of Wisconsin–Madison’s Center for Cooperatives (UWCC) has found there are 39,594 cooperatives in the United States, excluding the housing sector, and there are 7 million employer businesses that remain “potential co-op candidates.” These cooperatives account for more than $3 trillion in assets, more than $500 billion in annual revenue and sustain nearly two million jobs. This May, the Office of Management and Budget approved including coop questions in the Economic Census so that next year the US should have more accurate figures. The massive growth of cooperatives impacts many segments of the economy including banking, food, energy, transit and housing among others. 

In cooperatives, workers or consumers decide directly how their business operate and work together to achieve their goals; it is a culture change from the competitive extreme capitalist view dominated by self-interest.

In Energy Democracy: Advancing Equity in Clean Energy Solutionseditors Denise Fairchild and Al Weinrub describe energy cooperatives that are creating a new model for how we organize the production and distribution of energy, which is decentralized, multi-racial and multi-class.

Lyn Benander of Co-op Power, a network of many cooperatives in New England and New York, writes that they transform not just energy but also their communities:

“First, people come together across class and race to make change in their community by using their power as investors, workers, consumers, and citizens ready to take action together. Then, they work together to build community-owned enterprises with local capital and local jobs to serve local energy needs. It’s a proven strategy for making a real difference.”

In Lancaster, CA, the mayor has turned the town into a solar energy capital where they produce power not just for themselves, but also to sell to other cities. They are also moving to create manufacturing jobs in electric buses, which more cities are buying, and energy storage. Research finds that rooftop solar and net-metering programs reduce electricity prices for all utility customers, not just those with solar panels. The rapid growth of rooftop solar is creating well-paying jobs at a rate that’s 17 times faster than the total U.S. economy. Rooftop solar, built on existing structures, such as homes and schools, puts energy choices in the hands of customers rather than centralized monopolies, thereby democratizing energy. 

Including housing cooperatives would greatly increase the number of cooperatives. According to the National Association of Housing Cooperatives“Housing cooperatives offer the more than one million families who live in them several benefits such as: a collective and democratic ownership structure, limited liability, lower costs and non-profit status.”  Residents of a mobile home park in Massachusetts decided to create a housing cooperative to put the residents in charge of the community when the owner planned to sell it.

Related to this are community land trusts. A section of land is owned in a trust run as a non-profit that represents the interests of local residents and businesses. Although the land is owned by the trust, buildings can be bought and sold. The trust lowers prices and can prevent gentrification.

Sharing Economy

Universal Basic Income

Another tool gaining greater traction is a universal basic income.  James King writes in People’s Policy Project that “. . . a universal basic income (UBI) – a cash payment made to every person in the country with no strings attached – is becoming increasingly popular in experimental policy circles. . . payments  [would be] large enough to guarantee a minimum standard of living to every person independent of work. In the US, that would be roughly $12,000 per person based on the poverty line.”

The wealth divide has become so extreme in the United States that nearly half of all people are living in poverty. A small UBI would provide peace of mind, financial security and the possibility of saving money and building some wealth. A report by the Roosevelt Institute, this week, found that a conservative analysis of the impact of a UBI of $1,000 per month would grow the economy by 12.56 percent after an eight-year implementation, this translates to a total growth of $2.48 trillion.

Public Finance

Another major area of economic democracy is the finance sector. At the end of 2016 there were 2,479 credit unions with assets under 20 million dollars in the United States. Members who bank in credit unions are part of a cooperative bank where the members vote for the board and participate in other decisions.

Another economic democracy approach is a public bank where a city, state or even the national government creates a bank using public dollars such as taxes and fee revenues. Public banks save millions of dollars that are usually paid in fees to Wall Street banks, and the savings can be used to fund projects such as infrastructure, transit, housing, healthcare and education, among other social needs. Public banks can also partner with community banks or credit unions to fund local projects. This could help to offset one of the negative impacts of Dodd-Frank, which has been a reduction in community banks. In testimony, the Secretary of Treasury, Stephen Munchin, said we could “end up in a world where we have four big banks in this country.”

North Dakota is the only state with a public bank, and it has the most diverse, locally-owned banking system in the country. Stacey Mitchell writes thatNorth Dakota has six times as many locally owned financial institutions per person as the rest of the nation. And these local banks and credit unions control a resounding 83 percent of deposits in the state, more than twice the 30 percent market share such banks have nationally.” Public banking campaigns are making progress in many parts of the country, among them are Oakland, Los Angeles, Philadelphia, Santa Fe, and other areas.          

Common Good trumps self interest

Mutual Aid

When crises occur, no matter what their cause, people can work together cooperatively and outside of slow and unresponsive state systems to meet their needs. This is happening in Athens, Greece, which has been wracked by financial crisis and austerity for years. People have formed “networks of resistance” that meet in community assemblies organized around needs of the community, such as health care and food. They started with time banks as a base for a new non-consumer society.

Similar efforts are underway in Puerto Rico following the devastation of Hurricane Maria. A group called El Llamado is coordinating more than 20 mutual aid efforts, and providing political education and support for self-organizing at the same time.

As George Monbiot describes it, this is consistent with the truth about what human beings are:

We survived despite being weaker and slower than both our potential predators and most of our prey. We did so through developing, to an extraordinary degree, a capacity for mutual aid. As it was essential to our survival, this urge to cooperate was hard-wired into our brains through natural selection.

As we face more crises, whether in lack of access to health care, education, housing, food or economic and climate disasters, let’s remember that we have the capacity to meet our needs collectively.  In fact, every day, people are putting in place a new economic democracy that allows people to participate based on economic and racial justice as well as real democracy. As these alternatives are put in place, they may become dominant in our economy, communities and politics and bring real democracy and security to our lives. 

  • Aquifer

    Do we need the economy to “grow” or do we need to redistribute what we have – there is already enough for everyone’s need, but not for everyone’s greed ….

  • AlanMacDonald

    Great great, broad, and realistic article, folks. Congrats Kevin and Margaret.

    Your comprehensive review of the many progressive projects that an array of cooperative and engaged people (ourselves) are doing in, as you outline that the people themselves are doing to “work to transform society involves two parallel paths: resisting harmful systems and institutions and creating new systems and institutions to replace them” is very encouraging and instructive.

    Of course, I also love your articulation that we are “we suffering from an Empire Economy.”

    UBI is a great concept as are various Negative Income tax strategies that have been developed by principled economists on the left and right.

    Economic democracy, co-operatives, credit unions, land trusts, and many other public programs can be utilized to both resist bad systems, as you point out, and to build more fair and humane alternatives.

    I do tend to particularly favor “Wealth/capital Reform” in addition to truly progressive income tax reform, primarily because a ‘wealth refrom’ — akin to the ‘Land Reform” that has been justified and very effective in unlocking and moving looted, monopolized, and hoarded wealth (as an asset-class) back into productive use, addresses a far larger form of ‘captured’ assets than ‘Land Reform’ addressed in European and South American countries in the 18th and 19th centuries. And it can actually accomplish essential financial readjustments orders of magnitude FASTER than anything that can be accomplished through progressive Tax Reform.

    Anyway, thanks for the great learning/educational New Letter.

  • Albanius

    You erroneously attribute to Monbiot the idea that Keynes was an early neoliberal alongside Hayek:
    “Monbiot describes how neolibealism arose over decades, beginning in the 1930s and 40s with John Maynard Keynes, Friedrich Hayek and others…”

    Monbiot in the linked interview actually says the opposite, that Hayek led a reaction against Keynesianism:
    “Starting with the formation by Friedrich Hayek and others of the Mont Pelerin Society in 1947, the neoliberals, with sponsorship from some very rich backers, built a kind of international network… They knew that, when Keynesian social democracy was broadly accepted by parties across the political spectrum, that they had no chance of immediate success.”

  • AlanMacDonald

    Albanius, you might enjoy Yanis Varoufakis’s fabulous new work:

    “Having observed the leaders of the European Union and its allies callously disregard democracy in Greece and scare off the Spanish, many supporters of the Labour Party in Britain went on to vote to leave the European Union in June 2016. Brexit boosted Donald Trump. Donald Trump’s triumph blew fresh wind into the sails of xenophobic nationalists throughout Europe and the world. Vladimir Putin was suddenly rubbing his eyes in disbelief at the way the West was undermining itself so fabulously.”

    Varoufakis, Yanis. Adults in the Room: My Battle with the European and American Deep Establishment (p. 2). Farrar, Straus and Giroux. Kindle Edition.

  • subcomandante Felix

    An excellent analysis that speaks directly to the fundamental nature of power as collective action. Power, political and otherwise, is the ability to organize collective action for a particular purpose, whether that be growing food, helping others or waging war and taking from the Mother Nature and other people. As E.O Wilson says, humans are one of the ultra-social species on the planet and this capacity for collective action is our greatest strength and source of power. Whether it is used to create or destroy depends on how our societies are organized and structured – whether that be hierarchically (& patriarchal) as now or horizontally in a social democratic society.

    P.S. This is what David Graeber calls the egg-shell method of revolution. Create a new paralel society from the inside and when it is ready the old corrupt decaying society simply falls away. This is what happened in the Russian Revolution, except that unfortunately the new society was unable to survive it’s violent birth.

  • DHFabian

    The US (like other developed countries) requires a legitimate system of aid and social services, for reasons that media have buried, especially since the Clinton administration. We’re stuck with real life. In real life, not everyone can work (health, etc.) and there aren’t jobs available to all. The US began shipping out jobs in the 1980s, ended actual welfare aid in the 1990s — lost over 5 million manufacturing jobs alone just since 2000. Our current middle class have no comprehension of the consequences. Over the past quarter-century, the overall life expectancy of the US poor fell below that of every developed nation. During this time, the very issue of “inequality” remained confined to the gap between the working class and rich.

  • DHFabian

    Written from the middle class perspective, which centers on somehow protecting the advantages of the current middle class. This remains the equivalent of busying yourself with improving your home with new carpeting and furniture while ignoring the crumbling foundation of your house. That house is going to come crashing down on all your new stuff.

  • DHFabian

    No, it’s about protecting the advantages of the middle (or “working,” if you prefer) class while ignoring the very factors that are ending it. The world of cooperatives, etc., etc., defines gated middle class class communities. When there is revolution, these are the gates that get torn down first. The Russian Revolution targeted the bourgeoisie, the middle class, as much as it did the rich.

  • kevinzeese

    Not on these pages or any of our related sites, or on the Occupy Washington, DC site and others that preceded it. In fact, we have always urged policies like a guaranteed universal basic income as well as policies like national improved Medicare for all, housing for all among others that would benefit those that cannot work as well as the working poor. In fact, we do so in the article on which you are commenting. So, speak more narrowly — it is not everyone who does what you accuse, in fact a growing number of people are joining us in advocating for those who do not or cannot work as well. Give people some credit and some positive re-enforcement. We need to grow support for these views so what is now a growing under-current becomes the dominant current in our culture.

  • kevinzeese

    You need to read this article again. Doesn’t a universal basic income help those who cannot work? How about universal health care in an improved Medicare for all? You want to complain so badly you seem to not even read what you are commenting on. Your comments are so absurd. If you want to complain go to a Democratic or Republican party party. On this page you should be applauding.

  • lobdillj

    I’m afraid this article has missed the cause of our sick economy. The cause is clearly described by Michael Hudson in his book “Killing the Host”, and the cure is given by Modern Monetary Theory. (See Stephanie Kelton and L. Randall Wray YouTubes.) Unless and until we break free of rentier control we are doomed to see declining prosperity for the 99%.
    We must understand how our fiat money system can be made to eliminate inequality, poverty, and government finance by borrowing. We need to understand that there is no need for our government to be indebted and that it can never become insolvent.

  • subcomandante Felix

    You see revolution as primarily political when in fact, it is cultural revolution that is the driving force behind transformational change. The Russian Revolution was perhaps, a poor example in that it was largely a political revolution that failed in part because the requisite cultural basis was not present. I’m using culture here in the ecological sense, the unique way that a society makes a living, i.e. economics. The Soviet system tried to create the necessary cultural revolution after the fact, and did accomplish a great deal under very adverse circumstances. The Russian Revolution targeted the bourgeoisie because they were the primary supporters of capitalism and its basis private property. The article s not really about class but the capitalist versus the socialist economic systems, private ownership of the means of production e.g. land versus the commons..

  • Jon

    Once again, despite a fine positive article, I see the odious term “neoliberal” used in the headline and in the article. Nothing “liberal” about the present system of deceit and oppression. That term is the euphemism used by the ruling class to describe one segment of it. Please use “neofeudal” instead–a system in which the corporations have replaced the ancient feudal class. All together now. “Neoliberalism: is a euphemism and I will not use it any longer.”

  • Bob Beal

    Popular Resistance is, for me, the most important news and opinion aggregation site on the Internet.

    Its associated newsletter adds context and analysis to that provision of information sources–on a wide range of, connected, issue arenas.

  • Bob Beal

    I didn’t understand that it was your web site; otherwise, I would have been more circumspect. Your work is on an important issue arena: growth, ungrowth, degrowth, etc. Your approach to a dense book is similar, although more ambitious, to mine. I’m sure your synopses will be helpful.

    After reading your post, I brought Prosperity Without Growth to the attention of a friend. It elicited an interesting, if indirect, response:

    “One idea that struck me recently is the notion of how public expenditures can be a way of saving money and saving resources. Few if any American politicians express it that way.

    “But obviously, for example, a public single payer health care system could save 50% of the budget —or 8% of the GDP. Likewise, a robust public transit system could save 10% of the GDP —considering that we now spend around 20% of the GDP on transportation. A well run public housing program could also save massive amounts of money.

    “But as you know, we are in a high cost privatized economy for a reason. It’s a setup that makes the rich richer.”

  • fjwhite

    Bob, thanks for the clarification. I appreciate your referral of my Jackson posts to a friend. What with Google’s censoring of left-wing content on the Internet, visits to my site are down, as they are for other leftist sites such as Common Dreams, World Socialist Web Site, Truthout, etc.