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Gar Alperovitz: The Rise of the New Economy Movement

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As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In ‘New Economic Visions’, a special five-part AlterNet series edited by Economics Editor Lynn Parramore in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

Just beneath the surface of traditional media attention, something vital has been gathering force and is about to explode into public consciousness. The “New Economy Movement” is a far-ranging coming together of organizations, projects, activists, theorists and ordinary citizens committed to rebuilding the American political-economic system from the ground up.

The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

Thousands of real world projects — from solar-powered businesses to worker-owned cooperatives and state-owned banks — are underway across the country. Many are self-consciously understood as attempts to develop working prototypes in state and local “laboratories of democracy” that may be applied at regional and national scale when the right political moment occurs.

The movement includes young and old, “Occupy” people, student activists, and what one older participant describes as thousands of “people in their 60s from the ’60s” rolling up their sleeves to apply some of the lessons of an earlier movement.

Explosion of Energy

A powerful trend of hands-on activity includes a range of economic models that change both ownership and ecological outcomes. Co-ops, for instance, are very much on target—especially those which emphasize participation and green concerns. The Evergreen Cooperatives in a desperately poor, predominantly black neighborhood of Cleveland, Ohio are a leading example. They include a worker-owned solar installation and weatherization co-op; a state-of-the-art, industrial-scale commercial laundry in a LEED-Gold certified building that uses—and therefore has to heat—only around a third of the water of other laundries; and a soon-to-open large scale hydroponic greenhouse capable of producing three million head of lettuce and 300,000 pounds of herbs a year. Hospitals and universities in the area have agreed to use the co-ops’ services, and several cities—including Pittsburgh, Atlanta, Washington, DC and Amarillo, Texas are now exploring similar efforts.

Other models fit into what author Marjorie Kelly calls the “generative economy”–efforts that inherently nurture the community and respect the natural environment. Organic Valley is a cooperative dairy producer in based in Wisconsin with more than $700 million in revenue and nearly 1,700 farmer-owners. Upstream 21 Corporation is a “socially responsible” holding company that purchases and expands sustainable small businesses. Greyston Bakery is a Yonkers, New York “B-Corporation” (a new type of corporation designed to benefit the public) that was initially founded to provide jobs for neighborhood residents. Today, Greystone generates around $6.5 million in annual sales.

Recently, the United Steelworkers union broke modern labor movement tradition and entered into a historic agreement with the Mondragón Cooperative Corporation and the Ohio Employee Ownership Center to help build worker-owned cooperatives in the United States along the lines of a new “union-co-op” model.

The movement is also serious about building on earlier models. More than 130 million Americans, in fact, already belong to one or another form of cooperative—and especially the most widely known form: the credit union. Similarly, there are some 2,000 municipally owned utilities, a number of which are ecological leaders. (Twenty-five percent of American electricity is provided by co-ops and public utilities.) Upwards of 10 million Americans now also work at some 11,000 employee-owned firms (ESOP companies).

More than 200 communities also operate or are establishing community land trusts that take land and housing out of the market and preserve it for the community. And hundreds of “social enterprises” use profits for social or community serving goals. Beyond these efforts, roughly 4,500 Community Development Corporations and 1.5 million non-profit organizations currently operate in every state in the nation.

The movement is also represented by the “Move Your Money” and “bank transfer day” campaigns, widespread efforts to shift millions of dollars from corporate giants like Bank of America to one or another form of democratic or community-benefiting institution. Related to this are other “new banking” strategies. Since 2010, 17 states, for instance, have considered legislation to set up public banks along the lines of the long-standing Bank of North Dakota.

Several cities—including Los Angeles and Kansas City— have passed “responsible banking” ordinances that require banks to reveal their impact on the community and/or require city officials to only do business with banks that are responsive to community needs. Other cities, like San Jose and Portland, are developing efforts to move their money out of Wall Street banks and into other commercial banks, community banks or credit unions. Politicians and activists in San Francisco have taken this a step further and proposed the creation of a publicly owned municipal bank.

There are also a number of innovative non-public, non-co-op banks—including the New Resource Bank in San Francisco, founded in 2006 “with a vision of bringing new resources to sustainable businesses and ultimately creating more sustainable communities.” Similarly, One PacificCoast Bank, an Oakland-based certified community development financial institution, grew out of the desire to “create a sustainable, meaningful community development bank and a supporting nonprofit organization.” And One United Bank—the largest black-owned bank in the country with offices in Los Angeles, Boston and Miami—has financed more than $1 billion in loans, most in low-income neighborhoods.

Ex-JP Morgan managing director John Fullerton has added legitimacy and force to the debate about new directions in finance at the ecologically oriented Capital Institute. And in several parts of the country, alternative currencies have long been used to help local community building—notably “BerkShares” in Great Barrington, Massachusetts, and “Ithaca Hours” in Ithaca, New York.

Active protest efforts are also underway. The Occupy movement, along with many others, has increasingly used direct action in support of new banking directions—and in clear opposition to old. On April 24, 2012 over 1,000 people protested bank practices at the Wells Fargo shareholder meeting in San Francisco. Similar actions, some involving physical “occupations” of bank branches, have been occurring in many parts of the country since the Occupy movement started in 2011. Large-scale demonstrations occurred at the Bank of America’s annual shareholder meeting in May 2012.

What to do about large-scale enterprise in a “new economy” is also on the agenda. A number of advocates, like Boston College professor Charles Derber, contemplate putting worker, consumer, environmental, or community representatives of “stakeholder” groups on corporate boards. Others point to the Alaska Permanent Fund which invests a significant portion of the state’s mineral revenues and returns dividends to citizens as a matter of right. Still others, like David Schweickart and Richard Wolff, propose system-wide change that emphasizes one or another form of worker ownership and management. (In the Schweickart version, smaller firms would be essentially directly managed by workers; large-scale national firms would be nationalized but also managed by workers.) A broad and fast-growing group seeks to end “corporate personhood,” and still others urge a reinvigoration of anti-trust efforts to reduce corporate power. (Breaking up banks deemed too big to fail is one element of this.)

In March 2012, the Left Forum held in New York also heard many calls for a return to nationalization. And even among “Small is Beautiful” followers of the late E. F. Schumacher, a number recall this historic build-from-the-bottom-up advocate’s argument that “[w]hen we come to large-scale enterprises, the idea of private ownership becomes an absurdity.” (Schumacher continuously searched for national models that were as supportive of community values as local forms.)

Theory and Action

A range of new theorists have also increasingly given intellectual muscle to the movement. Some, like Richard Heinberg, stress the radical implications of ending economic growth. Former presidential adviser James Gustav Speth calls for restructuring the entire system as the only way to deal with ecological problems in general and growth in particular. David Korten has offered an agenda for a new economy which stresses small Main Street business and building from the bottom up. (Korten also co-chairs a “New Economy Working Group” with John Cavanagh at the Institute of Policy Studies.) Juliet Schor has proposed a vision of “Plentitude” oriented in significant part around medium-scale high tech industry. My own work on a Pluralist Commonwealth emphasizes a community-building system characterized by a mix of democratized forms of ownership ranging from small co-ops all the way up to public/worker-owned firms where large scale cannot be avoided.

Writers like Herman Daly and David Bollier have also helped establish theoretical foundations for fundamental challenges to endless economic growth, on the one hand, and the need to transcend privatized economics in favor of a “commons” understanding, on the other. The awarding in 2009 of the Nobel Prize to Elinor Ostrom for work on commons-based development underlined recognition at still another level of some of the critical themes of the movement.

Around the country, thinkers are clamoring to meet and discuss new ideas. The New Economy Institute, led primarily by ecologists and ecological economists, hoped to attract a few hundred participants to a gathering to be held at Bard College in June 2012. The event sold out almost two months in advance! An apologetic email went out turning away hundreds who could not be accommodated with the promise of much bigger venue the next year.

And that’s just one example. From April to May 2012, the Social Venture Network held its annual gathering in Stevenson, Washington. The Public Banking Institute gathered in Philadelphia. The National Center for Employee Ownership met in Minneapolis—also to record-breaking attendance. And the Business Alliance for Local Living Economies (BALLE) held a major conference in Grand Rapids, Michigan. Other events planned for 2012 include the Consumer Cooperative Management Association’s meeting in Philadelphia; the U.S. Federation of Worker Cooperatives’ gathering in Boston; a Farmer Cooperatives conference organized by the University of Wisconsin Center for Cooperatives; and meetings of the National Community Land Trust Network and the Bioneers. The American Sustainable Business Council, a network of 100,000 businesses and 300,000 individuals, has been holding ongoing events and activities throughout 2012.

Daunting Challenges

The New Economy Movement is already energetically involved in an extraordinary range of activities, but it faces large-scale, daunting challenges. The first of these derives from the task it has set for itself—nothing less than changing and democratizing the very essence of the American economic system’s institutional structure.

Even viewed as a long-range goal, the movement obviously confronts the enormous entrenched power of an American political economic system dominated by very large banking and corporate interests—and bolstered by a politics heavily dependent on the financial muscle of elites at the top. (One recent calculation is that

400 individuals at the top now own more wealth than the bottom 160 million.)

A second fundamental challenge derives from the increasingly widespread new economy judgment that economic growth must ultimately be reduced, indeed, even possibly ended if the dangers presented by climate change are to be avoided—and if resource and other environmental limits are to be responsibly dealt with.

Complicating all this is the fact that most labor unions—the core institution of the traditional progressive alliance—are committed to growth as absolutely essential (as the economy is now organized) to maintaining jobs.

History dramatizes the implacable power of the existing institutions—until, somehow, that power gives way to the force of social movements. Most of those in the New Economy movement understand the challenge as both immediate and long-term: how to put an end to the most egregious social and economically destructive practices in the near term; how to lay foundations for a possible transformation in the longer term.

And driving the movement’s steady build up, day by day, year by year, is the growing economic and social pain millions of Americans now experience in their own lives—and a sense that something fundamental is wrong. The New Economy Movement speaks to this reality, and just possibly, despite all the obstacles—as with the civil rights, feminist, environmental and so many other earlier historic movements—it, too, will overcome. If so, the integrity of its goals and the practicality of its developmental work may allow it to help establish foundations for the next great progressive era of American history. It is already adding positive vision and practical change to everyday life.

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32 comments

    1. nonclassical

      …with bushcheney deregulated infrastructure (water-electricity) “Public Utility Holding Company Act of 1930″, private investors will still commoditize ability to produce. This is one of first measures of success in central and south america’s
      rebuilding, after horrendous Milton Friedman-”Chicago boys” economic disaster perpetrated by military dictatorships, 70′s, 80′s.

      “Citizen’s United” must also go…FIRST.

  1. Jean

    The Alternate Economy is a great site with more particulars.

    http://www.verdant.net/alternate_economy.htm

    Here’s a bit of it…

    “How do you determine if a business is part of the alternate economy or not?

    1. Just ask people in a business that you are investigating, “who owns this business?” “Is it owned and run by a family?”

    The people working there will either be part of the family or will know the answer if it is. We’ve found that asking both these questions in a row puts people more at ease than just asking the first. If the people working there have no idea who owns it, that is a bad sign.

    2. Look for a business license, resale license or health inspection report on the wall behind the cash register. Chains and corporations usually keep these in their headquarters. Note: “LLC” or “Incorporated” on the license is not necessarily bad as it may mean that the business is incorporated for the legal protection of the owners: for example: “Joe’s Cafe LLC” or “Joe’s Cafe Incorporated” is a lot different than “The Southland Corporation”, the owners of 7-11 also known as Chevron.

    3. If employees are open and cheerful and take the time, that is a good sign. Everyone gets tired sometimes but if they are sullen, hostile and you have to chase them down to get help, that is bad.

    4. Reputation and longevity. If when you ask somebody about where there is a good place to eat or buy something in and they immediately tell you “Go to Joe’s”, that is a good sign. If you have to draw it out of them and they finally point you toward a shopping mall that is bad.”

  2. K Ackermann

    What a great post. At first I thought it was an announcement of some well-meaning but futile endevour, but this is much bigger.

    The challenges are immense, but by pointing out the examples as you did, it hammers home the point that many small changes add up to big changes, and we can all do small changes.

    1. Vonmisee2012

      Good luck with your profitless enterprise. (tongue firmly in cheek) You will ultimately face a choice when you needing larger financing and therefor must rely beyond the kindness of like minded enlightened souls. You’ll thus come begging to the bankers to throw you a lifeline when all is pillaged.

  3. Christophe

    I have noticed over the past several months that a consistent narrative is finally beginning to emerge among the fringes outside the neo-liberal hegemony. A lot of corresponding and organizing must be going on behind the scenes for such sane ideas to be generating agreement and getting a wider hearing.

    For this antidote to neo-liberalism to “explode into public consciousness”, all sorts of practical experiments in communal empowerment will need to be tried. There is no telling in advance which project will seize the public imagination, loosening the stranglehold of mainstream lies and unleashing our creativity. Rather hopeful after so many years of listless passivity.

    1. nonclassical

      ..big problem is amerikans strapped to the (Michael Hudson-Debt Deflation In AmeriKa) debt-survival treadmill..

      there are reasons people received all those credit card offers daily during bushit..there was intent involved…then credit card companies lobbied for (and lobbyists wrote) new bankruptcy laws, 2005.

      I remember thinking, “A whole, whole lot of ameriKans are going to go bankrupt”…intended..

  4. skippy

    Sure beats the crap out of private stock Lberto[ian free market BS. People and environment first, locally[!], then see about over laps of cooperative activity as the distance increases.

    Skippy… people engaging in the own fate. Not some corperation *designing* it for them.

    1. F. Beard

      Common stock as money is an IDEAL way for many small owners of capital (including their own labor) to consolidate it for economies of scale. How else? Put Commissar Skippy in charge?

      The problem is the banks. Those common stock companies that don’t borrow from the counterf***ing cartel will be at a competitive disadvantage to those who do borrow. It’s called “The Tragedy of the Commons” – the Commons being in this case the purchasing power of the entire population.

  5. ambrit

    Folks;
    Wonderful movement, wonderful ideas, but where are the Wobblies when we need them? The inescapable lesson to be learned from History here is that large Elites, (large in the influence sense,) end up relying on force to promote their goals when all else fails. The Molly Mcguires, Kaintuck Rednecks, Ludlow Miners, all learned that lesson to their, sometimes eternal, cost. As the Ghandi orchestrated Salt March showed, ordinary people had to offer up their very lives to move ahead their goals. Ghandi was perversely, very lucky in the choice of opponents offered him. As one wag commented, what if Ghandi had had Herr Hitler as Raj to oppose him?
    All of the proposals here are, in and of themselves, fine and good, given the caveat that they are left roughly alone to work out their fates. Unfortunately, we now live in a nascent Police State, just starting to flex its’ muscles. Hope for the best, and prepare for the worst. Where ARE those Wobblies? Gone to Mexico again?

  6. avg John

    Economies of scale should be identified and taxed accordingly. On the surface, it seems they provide a low cost benefit to society, but taken as a whole, the concentration of political and market power that economies of scale provide, is extremely destructive and kills competition and innovation as well. Get busy and begin breaking up monopolies and oligopolies by using and strengthening anti-trust laws and set higher federal and state tax rates on large global corporations.

    I would also like to see the elimination of the ability to expense accounting, audit and tax services for tax purposes by large corporations. They use economies of scale to drive small businesses out of markets, enjoy unchallenged profit margins and cash flows, then turn around and use these advantages to hire clever tax lawyers and accountants, lobby congress for tax breaks, and otherwise dodge their legitimate tax obligation.

  7. Moneta

    In Quebec, students have been striking for weeks now. In Montreal yesterday, there were more than 200K protesting.

    They are fighting tuition hikes and asking for an investigation into the management of universities. The media keeps on saying they should stop complaining because they enjoy the lowest fees in North America. The students are trying to explain that the US is not a good comparison but the Canadian population is not very open and understanding. We are in a credit bubble but because house prices are still up there, most do not grasp it yet.

    It has been a battle because the general population has been calling the students a bunch of entitled whiners. However, the movement is growing as more and more people realize how screwed our system is.

    The media in Canada has been keeping the population in the dark… which is understandable since it is owned by the 1%.

  8. ella

    As a part of the New Economy Movement, workers threaten with job loss and wage suppression from imported workers needs a strong voice. Some US Senators are proposing legislation to import more high tech workers from abroad. This legislation does not consider the number of unemployed highly educated high tech workers in the US. Employers have every incentive to hire from abroad and pay the workers less.

    Until our own tech workers are employed, no other workers should be imported. Estimates claim that there are already 250,000 imported high tech workers. Numerous articles posted by advisers will train American employers on the fine art of advertising for American workers and finding no qualified workers thus requiring H1B and other visa workers. Time to end this fraud on the American trained, and educated workers.

    Tell you Senators, hire US workers first. If imported workers are necessary, which in this economy is a stretch, then the visa’s should only be issued when the unemployment rate of American Tech workers, or for that matter workers in any field, is almost zero.

    We need the jobs.

    1. Christophe

      Ella,
      If only everyone could, like you, experience safe, cuddly feelings from faith in protectionist/isolationist policies. Alas, some of us cannot help but consider the broader, longer-term effects of such policies.

      If you want to find out what the romanticized “American way of life” would be like were we to consume only our fair share of the world’s resources, putting protectionist employment and trade barriers in effect would certainly accelerate that day’s arrival. Be careful what you wish for.

  9. Gerald Muller

    Criticizing banksters and their pratices is well and good and should be done. But switching from this noble task to no-growth leftist ideas is a huge and dangerous leap that, personnally, I am not prepared to take.
    Excess in everything leads to catastrophes.

  10. Moneta

    But switching from this noble task to no-growth leftist ideas is a huge and dangerous leap that, personnally, I am not prepared to take.

    GDP should probably grow in line with population growth… unless productivity takes off.

    When you have a generation about to cut its hours because of a retirement slowdown, it’s hard to say that GDP will grow by leaps and bounds… are boomers going to start working even harder than they hhave been to? What about the young?

    So saying that growth might slow or disappear fro a while in many countries seems quite logical. In my mind, clinging to perpetual growth amid today’s realities might help distort the system even more.

    The radicals are those who think growth should be everywhere. Many businesses should be proccupied with managing their operations properly and maintaing a good dividend instead of pretending they have growth in the pipeline.

    1. They didn't leave me a choice

      Given that this is a limited planet, the entire idea of consistent compound growth on growth is just insane. We as a species really need to get away from this lunacy before it destroys us. If that means we have to get rid of the main driver of this insanity, positive interest on loans, then so it must be.

      Reality will not bend it’s knee to human convenience and needs, human systems simply must evolve to accomodate the surrounding reality. If they won’t, reality will make sure that such systems will die out.

  11. Don Beal

    Excellent post but cooperatives and employee owned enterprises have been around for a long time. I would be very interested in a historical review of those endeavors to give context to the probable success or failure of the efforts outlined here.

  12. davidgmills

    I have never been a proponent of nuclear power and Fukishima made me even more reticent to ever want it — that is until I heard about a form of nuclear power from a different element than uranium — nuclear power from a slightly smaller element thorium.

    It turns out that thorium was the element we should have used for nuclear power. It would produce only 1% nuclear “waste” instead of 99% nuclear waste we get from uranium reactors and much of that 1% waste can be used for medicine and space exploration. And it burns up the nuclear waste of existing plants.

    We have nuclear power from uranium because uranium is what we use for nuclear weapons. Making a thorium bomb is extermely difficult and dangerous so it was rejected for weaponry.

    The great thing about thorium reactors is their safety (quantum leap in safety because the saftey is passive not active) and their size. They can be very small and be local even for small municipalities and places like islands that have no source of power. We invented thorium power at Oak Ridge and never used it. But there is enough of it in the US to supply our energy needs for the next 1000 years.

    It can be used to make gasoline and diesel substitutes and used to desalinate water and can be produced on assembly lines like airplanes providing jobs.

    Learning about thorium as a power possibility is the only thing that has made me optimistic for the future.

    Watch the best video on the subject:

    http://www.youtube.com/watch?v=lG1YjDdI_c8

    1. Christophe

      Davidgmills,
      Wow, that’s quite a pitch! If only I were in the market for a fantasy-based, universally positive, deus-ex-machina at the eleventh hour solution to all our current problems, I’d be all over your safe, cheap, clean, abundant, scalable new energy source. But wouldn’t a perpetual motion machine be an easier sell? After all, it moves, and people are awfully visually oriented.

      1. F. Beard

        But wouldn’t a perpetual motion machine be an easier sell? Christophe

        You be dumb to compare nuclear with perpetual motion.

        Does it make you sad if life is more serendipitous than you think it should be? Does God’s generosity annoy you?

      2. davidgmills

        Yep. That is quite a pitch. But it really is not mine. As much as I would like to believe that solar and wind and geothermal can take over for loss of energy production from oil after the peak of oil production, I simply don’t think it is possible.

        This video not only goes into what is wrong with uranium based nuclear, it also points out what is wrong with coal, gas, oil, and why alternatives will never reach present demand. Alternatives will not even come close to replacing those polluting forms of power.

        This video will also will piss you off a bit. We had a choice for a vastly different and vastly better source of nuclear power, but the government wanted to enrich uranium for bombs so it supported technology based on uranium.

        If you bother to watch the video you will find that many of the great minds in nuclear physics supported power from thorium. They lost out to the military hard liners and we have Three Mile Island, Chernoble and Fukishima as a result.

        One other point the video makes — China has taken our thorium technology and will make a thorium reactor by 2020. If we don’t do something, we will be buying thorium reactors from them, because the world will want them because they are that good. Your choice, build them here, or buy yet another product from China.

    2. A Real Black Person

      No one wants to pay for it. That’s usually a bad sign as to whether something is worthwhile.

      1. F. Beard

        True but government subsidies and regulations play a big role in determining what is profitable.

        I think nuclear can be done safely but obviously we have to be wiser than we have been so far.

      2. davidgmills

        Actually the government paid for all the research. It paid for a pilot project that worked and was on track to produce a fully comercially viable reactor an before the project was scuttled by the government.

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