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New Models for a New Economy

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  • Dan Clore
    News & Views for Anarchists & Activists: http://groups.yahoo.com/group/smygo http://www.commondreams.org/headline/2010/02/15-7 Monday, February 15, 2010 The
    Message 1 of 1 , Feb 15, 2010
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      News & Views for Anarchists & Activists:

      Monday, February 15, 2010
      The Nation
      'The Cleveland Model': Democracy, Community, and Economic Vision
      New Models for A New Economy: Large-Scale Worker Cooperatives
      by Gar Alperovitz, Ted Howard & Thad Williamson

      Something important is happening in Cleveland: a new model of
      large-scale worker- and community-benefiting enterprises is beginning to
      build serious momentum in one of the cities most dramatically impacted
      by the nation's decaying economy. The Evergreen Cooperative Laundry
      (ECL)--a worker-owned, industrial-size, thoroughly "green"
      operation--opened its doors late last fall in Glenville, a neighborhood
      with a median income hovering around $18,000. It's the first of ten
      major enterprises in the works in Cleveland, where the poverty rate is
      more than 30 percent and the population has declined from 900,000 to
      less than 450,000 since 1950.

      "The only way this business will take off is if people are fully vested
      in the idea of the company," says work supervisor and former Time-Warner
      Cable employee Medrick Addison. "If you're not interested in giving it
      everything you have, then this isn't the place you should be." Addison,
      who also has a record, is excited about the prospects: "I never thought
      I could become an owner of a major corporation. Maybe through Evergreen
      things that I always thought would be out of reach for me might become

      These are not your traditional small-scale co-ops. The Evergreen model
      draws heavily on the experience of the Mondragon Cooperative Corporation
      in the Basque Country of Spain, the world's most successful large-scale
      cooperative effort (now employing 100,000 workers in an integrated
      network of more than 120 high-tech, industrial, service, construction,
      financial and other largely cooperatively owned businesses).

      The Evergreen Cooperative Laundry, the flagship of the Cleveland effort,
      aims to take advantage of the expanding demand for laundry services from
      the healthcare industry, which is 16 percent of GDP and growing. After a
      six-month initial "probationary" period, employees begin to buy into the
      company through payroll deductions of 50 cents an hour over three years
      (for a total of $3,000). Employee-owners are likely to build up a
      $65,000 equity stake in the business over eight to nine years--a
      substantial amount of money in one of the hardest-hit urban
      neighborhoods in the nation.

      Thoroughly green in all its operations, ECL will have the smallest
      carbon footprint of any industrial-scale laundry in northeast Ohio, and
      probably the entire state: most industrial-scale laundries use three
      gallons of water per pound of laundry (the measure common in
      industrial-scale systems); ECL will use just eight-tenths of a gallon to
      do the same job. A second green employee-owned enterprise also opened
      this fall as part of the Evergreen effort. Ohio Cooperative Solar (OCS)
      is undertaking large-scale installations of solar panels on the roofs of
      the city's largest nonprofit health, education and municipal buildings.
      In the next three years it expects to have 100 employee-owners working
      to meet Ohio's mandated solar requirements. OCS is also becoming a
      leader in Cleveland's weatherization program, thereby ensuring
      year-round employment. Another cooperative in development ($10 million
      in federal loans and grants already in hand) is Green City Growers,
      which will build and operate a year-round hydroponic food production
      greenhouse in the midst of urban Cleveland. The 230,000-square-foot
      greenhouse--larger than the average Wal-Mart superstore--will be
      producing more than 3 million heads of fresh lettuce and nearly a
      million pounds of (highly profitable) basil and other herbs a year, and
      will almost certainly become the largest urban food-producing greenhouse
      in the country.

      A fourth co-op, the community-based newspaper Neighborhood Voice, is
      also slated to begin operations this year. Organizers project that an
      initial complex of ten companies will generate roughly 500 jobs over the
      next five years. The co-op businesses are focusing on the local market
      in general and the specific procurement needs of "anchor institutions,"
      the large hospitals and universities that are well established in the
      area and provide a partially guaranteed market. Discussions are under
      way with the "anchors" to identify additional opportunities for the next
      generation of community-based businesses. Evergreen Business Services
      has been launched to support the growing network by providing
      back-office services, management expertise and turn-around skills should
      a co-op get into trouble down the road.

      Significant resources are being committed to this effort by the
      Cleveland Foundation and other local foundations, banks and the
      municipal government. The Evergreen Cooperative Development Fund,
      currently capitalized by $5 million in grants, expects to raise another
      $10-$12 million--which in turn will leverage up to an additional $40
      million in investment funds. Indeed, this may well be a conservative
      estimate. The fund invested $750,000 in the Evergreen Cooperative
      Laundry, which was then used to access an additional $5 million in
      financing, a ratio of almost seven to one. An important aspect of the
      plan is 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).

      The overall strategy is not only to go green but to design and position
      all the worker-owned co-ops as the greenest firms within their sectors.
      This is important in itself, but even more crucial is that the new green
      companies are aiming for a competitive advantage in getting the business
      of hospitals and other anchor institutions trying to shrink their carbon
      footprint. Far fewer green-collar jobs have been identified nationwide
      than had been hoped; and there is a danger that people are being trained
      and certified for work that doesn't exist. The Evergreen strategy
      represents another approach--first build the green business and jobs and
      then recruit and train the workforce for these new positions (and give
      them an ownership stake to boot).

      Strikingly, the project has substantial backing, not only from
      progressives but from a number of important members of the local
      business community as well. Co-ops in general, and those in which people
      work hard for what they get in particular, cut across ideological
      lines--especially at the local level, where practicality, not rhetoric,
      is what counts in distressed communities. There is also a great deal of
      national buzz among activists and community-development specialists
      about "the Cleveland model." Potential applications of the model are
      being considered in Atlanta, Baltimore, Pittsburgh, Detroit and a number
      of other cities around Ohio.

      What's especially promising about the Cleveland model is that it could
      be applied in hard-hit industries and working-class communities around
      the nation. The model takes us beyond both traditional capitalism and
      traditional socialism. The key link is between national sectors of
      expanding public activity and procurement, on the one hand, and a new
      local economic entity, on the other, that "democratizes" ownership and
      is deeply anchored in the community. In the case of healthcare the link
      is also to a sector in which some implicit or explicit form of "national
      planning"--the movement toward universal healthcare--will all but
      certainly increase public influence and concern with how funds are used.

      Whereas the Cleveland effort is targeted at very low-income, largely
      minority communities, the same principles could easily be applied in
      cities like Detroit and aimed at black and white workers displaced by
      the economic crisis and the massive planning failures of the nation's
      main auto companies. Late in October, in fact, the Mondragon Corporation
      and the million-plus-member United Steelworkers union announced an
      alliance to develop Mondragon-type manufacturing cooperatives in the
      United States and Canada. Says USW's Rob Witherell: "We are seeking the
      right opportunities to make it work, probably in manufacturing markets
      that we both understand."

      Consider what might happen if the government and the UAW used the stock
      they own in General Motors because of the bailout to reorganize the
      company along full or joint worker-ownership lines--and if the new
      General Motors product line were linked to a plan to develop the
      nation's mass transit and rail system. Since mass transit is a sector
      that is certain to expand, there is every reason to plan its
      taxpayer-financed growth and integrate it with new community-stabilizing
      ownership strategies. The same is true of high-speed rail. Moreover,
      there are currently no US-owned companies producing subway cars
      (although some foreign-owned firms assemble subway cars in the United
      States). Nor do any American-owned companies build the kind of equipment
      needed for high-speed rail.

      In 2007 public authorities nationwide bought roughly 600 new rail and
      subway cars along with roughly 15,000 buses and smaller "paratransit"
      vehicles. Total current capital outlays on vehicles alone amount to $3.8
      billion; total annual investment outlays (vehicles plus stations and
      other infrastructure) are $14.5 billion. The Department of
      Transportation estimates that a $48 billion investment in transit
      capital projects could generate 1.3 million new green jobs in the next
      two years alone. There are also strong reasons to expedite the
      retirement of aging buses and replace them with more efficient
      energy-saving vehicles with better amenities such as bike racks and GPS
      systems--the procurement of which would, in turn, create more jobs.

      President Obama has endorsed a strategy for making high-speed rail a
      priority in the United States. In a January 28 appearance in Florida he
      announced support for rail expansion in thirteen corridors across the
      nation based on an $8 billion "down payment" for investments in
      high-speed rail included in last year's stimulus package. The
      administration plans an additional $5 billion in spending over the next
      five years. Interest at the state level is also strong; in November 2008
      voters in California approved a $10 billion bond to build high-speed rail.

      Even more dramatic possibilities for a new industry organized on new
      principles are suggested by experts concerned with the impact of likely
      future oil shortages. Canadian scholars Richard Gilbert and Anthony
      Perl, projecting dramatic increases in the cost of all petroleum-based
      transportation, have proposed building 25,000 kilometers (about 15,000
      miles) of track devoted to high-speed rail by 2025. Along with
      incremental upgrades of existing rail lines to facilitate increased and
      faster service, they estimate total investment costs at $2 trillion
      (roughly $140 billion each year for fifteen years).

      All of this raises the prospect of an expanding economic sector--one
      that will inevitably be dominated by public funds and public planning.
      In the absence of an effort to create a national capacity to produce
      mass-transit vehicles and high-speed-rail equipment, the United States
      in general, and California and other regions in particular, will likely
      end up awarding contracts for production to other countries. The French
      firm Alstom, for example, is likely to benefit enormously from US
      contracts. The logic of building a new economic sector on new principles
      becomes even more obvious when you consider that by 2050 another 130
      million people are projected to be living in the United States; by 2100
      the Census Bureau's high estimate is more than 1 billion. Providing
      infrastructure and transportation for this expanding population will
      generate a long list of required equipment and materials that a
      restructured group of vehicle production companies could help
      produce--and, at the same time, help create new forms of ownership that
      anchor the economies of the local communities involved.

      As reflection on transportation issues and the current ownership
      structure of General Motors suggests, the principles implicit in the
      nascent Cleveland effort point to the possibility of an important new
      strategic approach. It is one in which economic policy related to
      activities heavily financed by the public is used to create, and give
      stability to, enterprises that are more democratically owned, and to
      target jobs to communities in distress. The model does not, of course,
      rely only on public funds; as in Cleveland it serves a private market
      and hence faces the "discipline" of the market.

      We are clearly only on the threshold of developing a sophisticated
      near-term national policy approach like that suggested for
      transportation--to say nothing of the fully developed principles of a
      systemic alternative. The Cleveland experiment is in its infancy, with
      many miles to go and undoubtedly many mistakes to make, learn from and
      correct. On the other hand, as New Deal scholars regularly point out,
      historically the development of models and experiments at the local and
      state levels provided many of the principles upon which national policy
      drew when the moment of decision arrived. It is not too early to get
      serious about the Clevelands of the world and the possible implications
      they may have for one day moving an economically decaying nation toward
      a new economic vision.

      Dan Clore

      New book: _Weird Words: A Lovecraftian Lexicon_:
      My collected fiction: _The Unspeakable and Others_
      Lord We├┐rdgliffe & Necronomicon Page:
      News & Views for Anarchists & Activists:

      "From the point of view of the defense of our society,
      there only exists one danger -- that workers succeed in
      speaking to each other about their condition and their
      aspirations _without intermediaries_."
      --Censor (Gianfranco Sanguinetti), _The Real Report on
      the Last Chance to Save Capitalism in Italy_
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