Econ4 on the New Economy

Econ4, a group of heterodox economists, has released a short video and a statement on the “new economy” which they define as more sustainable and equitable forms of organizing “productive” activity and the resources that support them.

While the discussion is helpful, I wish they had gotten more granular in describing specific examples of the sort of organizations they have in mind and how they operate. Mondragon is an obvious illustration, but some US case studies would be helpful. Can readers point to some here or in other countries?

From their statement:

Screen shot 2013-07-13 at 1.19.45 AM

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  1. Paul P‎
    Below is a quote from Gar Aperovitz’s article in Dollars and Sense:Real World Capitalism. Gar has a book by the same name. The Evergreen Cooperative Laundry is a large commercial laundry. Interesting is the strategy of building cooperatives to serve large urban anchor institutions.

    One line of this development points towards increasing knowledge, along with local innovation and the buildup of new and ever more sophisticated strategies over time. The most recent and advanced of these is a major effort in Cleveland that has taken the idea of worker-ownership forward in new ways. 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 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. (Full disclosure: I was one of the chief planners of the Youngstown steel effort, and The Democracy Collaborative, an organization which I co-founded, played a major role in helping develop the Cleveland effort.)

    The first of the linked worker-owned companies, Evergreen Cooperative Laundry, is a state-of-the-art commercial laundry that provides clean linens for area hospitals, nursing homes, and hotels. The thoroughly “green” company operates out of a building that received a LEED (Leadership in Energy and Environmental Design) “Silver” rating for its energy-saving design and uses (and only has to heat) less than one third as much water per pound of laundry as typical competitors. At full staff it will include 50 worker-owners. The enterprise pays above-market wages, provides health insurance, and is still able to compete successfully against other commercial laundries. Another company, Ohio Cooperative Solar (OCS), provides weatherization services and installs, owns, and maintains solar panels on the rooftops of large university, hospital, and civic buildings. In its first year of operations OCS installed 400 kilowatts of solar generation capacity and is on target to more than double Ohio’s current total statewide solar generating capacity of two megawatts by 2012.

    A commercial hydroponic greenhouse that covers 3.25 acres and will be capable of producing three million heads of lettuce a year broke ground on October 17 of this year.

  2. Goin' South

    Red Emma’s in Baltimore is a truly self-organized collective, unlike the Cleveland Coop which is a project of the Cleveland foundation. It began as a coffeehouse/radical bookstore and spun off a community organizing aspect with a local church and a free school. Now it’s moving and adding a restaurant and adding space to its bookstore.

  3. Skeptic

    The government wants to drive small enterprises out of business. They want these businesses either owned by chains or by franchise or otherwise connected to Racket Central. Like Al Capone, they don’t want competitors or competition of any type. The $$$ then flows to a central location and the government’s take can be directly distributed to them. Very efficient.

    I live in Canada and have seen many vivid examples of this. One technique is to create onerous, ridiculous regulations which will be too costly for small business. Then the corporations move in, consolidate the small business share among themselves. Where I live there are only two food wholesalers, therefore independent restaurants are subject to a supplier oligopoly. Many, many other examples.

    Two things they tried here were to make all small butchers comply with expensive regs (thank you Meat Packers). Second was to require certification of people working at Church Suppers and Fundraisers (thank you Restaurant Industry). Both were stopped only by public outrage.

    What does exist is The Underground Economy which I am very surprised was not mentioned in the video. It may be the New non-academic endorsed Economy. Where I live we have this in the fishing, firewood-lumber, car repair, home reno, food, entertainment, recreation and many other businesses. (My wife just went off to the Farmers’ Market where I would imagine there are numerous Underground Economists.)

    As the Government and the Elite loot from and impoverish people more and more, they may not “fight back” but they will find inventive and creative ways to survive. They are certainly doing so around here. They also see the Government and Elite as less and less legitimate which raises the further problem of compliance.

    Here is a personal anecdote:

    About a year after Prime Minister Mulroney, a proven crook who Agnew style took his lucre in cash in paper bags, passed his infamous HST tax (a VAT style tax), I called a major plumbing supplier for a quote on a hot water heater. The salesperson on the phone asked me “with or without a receipt?”, meaning there were two prices, one on the books and one off. Even I was shocked at that. This was a big supplier not Joe The Plumber down the block.

    So, there may be lots of economic activity, it is just not reported and can’t be accurately measured.

    Related to this subject, I have often wondered how rigourously tax and other regulations are enforced in the ghettoes and impoverished areas of America. After all, there is only so much injustice and disenfranchisement people will bear.

    1. diptherio

      Lovely! I hope you took the “without receipt” option.

      Sometimes I think that the utter stupidity of our “elites” will be the salvation of us all. They seem to think that people will put up with, literally, anything and so they just keep pushing and pushing and pushing. Eventually people will see through the game and just refuse to comply. Some of us already have…

    2. Banger

      The oligarchs do what they can to attempt to stamp out small businesses as you say and will do all they can to stamp out innovation of any kind through government regulation and the mainstream media’s lies and distortions about almost everything.

      You make a great point about the underground economy–it exists and it is growing as people realize the system is fixed against them and I hope it grows–it’s always been there but I don’t know if it’s more common now–I know it is more accepted now. The reason it was not mentioned in the video is that the producers are trying to convince an upper-middle class audience that is very focused on propriety and that hasn’t yet, for the most part, been radicalized but prefers to think that we live in a culture that honors rule-of-law, the Constitution and following procedures–they need to believe in that or they cannot, with a clear conscience, continue in their corporate, government or professional jobs. This is one of the main reasons why American intellectual culture has, in my view, become increasingly degraded. This stems from a desire to maintain what I believe is the illusion of American Exceptionalism (AE). Some of the most ardent supporters of AE are intellectuals of the center left and even further left. This notion is that Machiavellian politics or a classical reading of history does not pertain to the United States because American politicians and power-elite cannot do things other leaders in history have done including all the skullduggery and conspiracies that fill history books. This notion is utterly childish and it this childishness that is one of the chief causes of political confusion in this country. The intellectual class has failed to arouse opposition to the power-elite because it does not recognize them for the bloody hands and thieving hearts that are in fact part and parcel of all power-elites.

      So the intelligentsia cannot, when confronted with criminal behavior (the underground economy) possible condone or approve of it so it must be something that cannot be talked about in polite company just as the “n” word cannot be uttered (what a lot of f!cking nonsense that is!).

    3. JEHR

      I am of two minds about not paying taxes, although I did pay cash for the building of cupboards because I knew the carpenter badly needed the work and he worked for himself. However, I think the reduced taxes of corporations is badly misplaced. The large companies have not hired more workers and are sitting on large piles of money. Even the Bank of Canada governor gave these companies a tongue lashing for not investing in our citizens.

      I know that the HST is a regressive tax and affects the poor more than the well off. Unfortunately, we have a neoliberal government that is busy deregulating the banks and changing mortgage requirements to suit banks, using private/public partnerships for public services, attacking unions through legislating back-to-work, and privatizing whatever can be privatized while at the same time requiring 10% downsizing of public institutions which weakens them further from their work in preventing pollution and paying attention to climate change to mention two things that cause public suffering.

      I would really like to avoid shopping at Wal-Mart (with its reputation for low wages and bad working conditions), Target, Costco, etc. I support local businesses and shop at the Co-op and try to avoid large international companies. I am very worried about the work that hedge funds and PE firms are undertaking to own anything and everything (including CN Rail and CP Rail).

      Eventually, we may have large financial institutions that control the way all natural resources in Canada are allocated and used. This has begun already in the tar sands. Things are going to get very much worse if we continue to let the wealthy control more and more of our country’s resources and finances. The future looks very bleak.

  4. Rob Whitman

    The growth in locavore “farmers markets,” or more accurately, community organized food production and consumption networks, has got to be a prime example. Wendell Berry’s Jefferson lecture end of 2012 on this topic is really instructive. He identifies the growth in farmer’s markets as one of the most hopeful signs in what has got to be the very depressing landscape of centralized agricultural capitalism.

    I am a community member of two such networks; one is in central NH (which includes the Hanover COOP cited above) with central gathering points at the Wilmot and Concord farmer’s markets. In this network I buy locally grown meat protein in bulk (as do many others) including beef, pork, lamb, buffalo, and chickens. I barter, as many do in NH, for deer meat meaning I tutored my neighbors kid when she had trouble with reading and for that I got 1/2 a deer. This all goes into my basement freezer and that does it for meat protein for a family of 4 for the entire year. Last year our cost was about $1300.00. We also pick and cellar apples, pick and freeze rasberries, strawberries, and blueberries. We can tomatoes, pickles, peaches, and pears. We buy from, at last count, 13 local family businesses.

    My point in all of this is to say this is a serious commitment and we did not do all this in one go. We started travelling down this path 11 years ago. The finance led crash of 2008 actually accelerated this process in New Hamster as we saw many in our communities going back to gardens and barter as a matter of survival. In our case this allowed us to hunker down and live a very low cost existence as we gradually climbed back (in some ways) into the “formal” economy.
    Nine months ago we moved to the mass north shore so we could get two decent incomes. We continue to buy from our network in NH but are also now networking with a group of farms in this area; central gathering towns are Marblehead and Newburyport. Pollan and others have called these the “new commons” and I confess I like to chat, hang out, and get to know my farmers as people. Our goal as a family is to move 85% of our food spending to local pockets – our friends and neighbors.

    When there is a beef recall or a spinach alert we make burgers and spinach salad.

    And we are slowly backing out of a system that treats animals and people in fundamentally inhumane ways. Also a big thank you to Lambert who has posted/linked us many times to areas germane to this topic.

  5. Vox Populi

    Arizmendi Bakery in the San Francisco Bay Area is a worker-owned cooperative specializing in morning pastries, artisan breads and gourmet pizza. There are several outlets located in San Francisco and the East Bay. Their baked goods are delicious!

  6. Susan the other

    So if we had to just cold-turkey our fossil fuel cars, and electric cars proved not to be any more CO2 clean, so we had to quit them too and go with public transportation, what kind of communities are best? Small ones. Even a lot of small ones together in one place, like Manhattan. Let’s all take a minute and imagine NYC streets without any cars on them. Nice.

  7. LAS

    Call me a tired old fart, but I don’t see anything very new. Small companies invent a new product or service but they’re too small to be effective beyond a small market. A big company takes over the idea to scale it up for profit and homogenizes the product/service with various efficiencies. This pretty much puts us back on the same big Titanic ship.

  8. F. Beard

    Employee owned co-ops are a GREAT idea. But what’s to protect them from leveraged buyouts financed by the counterfeiting cartel, the banks? And what’s to prevent the co-opts themselves (once they are deemed “creditworthy”) from joining the exploiters of everyone else, except for their own members?

    “Meet the new boss? Same as the old boss?” Why not, so long as banks are privileged by government?

    1. Banger

      The other change that goes hand-in-hand with this movement towards local networks and cooperatives formal and (mainly) informal is the growth of non-religious spirituality or non-dogmatic and fear-based spirituality. Once this “infects” large numbers of people they no longer as swayed by consumer lures or the need to acquire a “nest egg” just for themselves but would rather plow back their resources into waking people up. This fact has the potential to change everything.

    2. diptherio

      No stock = no leveraged buy-out…or do you have some evidence of this actually happening? Co-ops have their issues, but leveraged buyouts aren’t one of them.

      1. F. Beard

        Well, that still leaves the possibility of a co-opt being driven into debt by the government-backed credit cartel as HotFlash below describes.

        My point is that honest endeavor is handicapped in a society with a government-backed credit cartel.

    3. Andrew

      Beard is right on this one. In the long terms co-ops can not live within capitalism. They all sell out to the leveraged capitalist.

      It’s all or nothing. Capitalism has to go, A socialist state with one form or another of anarchist institutions.

      People need to get real THERE IS NO THIRD WAY.

  9. allcoppedout

    I’d recommend ‘The Cooperative Revolution’ by Polyp – which calls itself a graphic novel but is full of facts like there being 1.4 million coops on this planet, that one in three Japanese families are in one and 91% of their farmers.

    Google scholar produces a massive literature and quite a few PDFs on the search “cooperatives” if you aren’t familiar – filter the search for ‘after 2013’.

    Examples are legion – the Cooperative (UK), Scott Bader Commonwealth (chemical multinational), Auchan (France supermarket chain)and on and on.

    Econ4 is a good call but not at all new. There have been regular conferences on this subject for at least 50 years. I used to be a regular participant.

    The dark side might be summed up in that the ideology of the soviets (small, plural collectives) was lovely and the USSR four words, four lies.

    Cooperative models have been out there in practice ‘forever’. I’ve conducted literature reviews in the past and been convinced they are as successful as our over-lauded private sector.

    The real questions are about why and how the dominant ideology of neo-liberalism holds sway. People who do dominant ideology speak do not really believe what they say, and the Soviet apparatchiks soon became the entrepreneurchiks. There is no shortage of coops to study, but such study has not achieved much in 50 years other than a vast literature almost no one is up to speed with.

    Most of the theory can be found in this example on the Swedish system:

    We don’t really need to know any more about coops. They make sense and financialisation and rich dictatorship does not. There are 53 business schools in Britain and I know of none teaching cooperative business and all are teaching the rubbish of neo-classical economics, kwality, excellence that run contrary to available research.

    The problem in front of us is mobilising an already mass movement to be mainstream. This means taking the world back from those who rent our own planet to us.

    1. F. Beard

      The problem in front of us is mobilising an already mass movement to be mainstream. allcoppedout

      That’s simple enough. The entire population, debtors and non-debtors alike, has been cheated by the banking cartel, at least to the extent that deposits are not 100% backed by reserves. So hand out new fiat equally until deposits are 100% backed by reserves. Oh, and in the mean time, forbid the banks from further counterfeiting.

      1. allcoppedout

        I take something like that as read Beard. The problem is we need a big fix and to regroup the thinking of those who vote GOP/Tory – which is most of us as Democrat/Labour shun any fix of the financial system too.

        I’d suggest the big fix is less of a change than many think because we have alternative practical models in use and all that is in the way is the rich-political class.

        1. F. Beard

          and all that is in the way is the rich-political class. allcoppedout

          Not quite. There is still a bit of deprogramming to be done over the nature of money since many still think it can only be issued as debt. On the contrary, money can be issued as Equity too – as “shares.”

  10. HotFlash

    Worker-owned co-ops are can just be another way to pass the risk to the workers, eg ESOP’s. Execs still get high compensation, dividends need never be declared, stock values can drop, etc. The difference would be that they are worker RUN. After that, could be worker or state-owned. R D Wolff makes the case, he calls it Democracy in the workplace (what a concept!). more here.

    For instance, when the economy in Spain started going bad, workers in some FAGOR appliance divisions voted to take pay cuts in order to avoid layoffs in other divisions. That is solidarity, and *their* decision.

    In contrast is BAXI, a worker-owned but ‘professionally’ managed corporation that embarked on a typical expansion and acquision until “In July 2009, heavily laden with debt, the group agreed to merge with Netherlands business rival De Dietrich Remeha.” (jthis and lots more at Wiki I also own one of their boilers which has operated badly since I got it, and when it failed finally after only 6 years I was told it was unrepairable. The failed component was the main circuit board and BAXI was no longer supporting my model or supplying parts. I screamed blue murder and the company I had purchased it from told me that BAXI would allow me $1000 against a new model, which for me would run $6,000 plus installation.

    I would hope that workers would have opted to support their products longer than 6 years.

    1. F. Beard

      I would hope that workers would have opted to support their products longer than 6 years. HotFlash

      By that time they were debt slaves, no?

      1. HotFlash

        Yes, they were, thanks to the expansionist policies of their ‘professional’ management. Just folks raising their kids and paying their mortgages tend not to go empire, it’s the MBA’s that do that.

  11. Code Name D

    I wish we could see more public engagement from the heterodox economists. So videos like this are a good thing and I want to encourage more. But some constructive criticisms are called for. Here are some problems I have with the Econed videos.

    Talking heads:
    Yes, I have made political videos. And all of them fall into the talking head category. But I am an amateur video maker with virtually no budget, what’s their excuse? Talking heads is about the most boring and uninteresting format you can use. The cut seines and background music help brake up the monotony, but it doesn’t do anything to engage the audience in the material being presented. At worst, the cut seines and background music begin to outshine the talking heads. You want to avoid this at all costs.

    But with these kinds of videos, talking heads are unavoidable. But there are some tricks you can use to cut down on the talking heads.

    A master at this was Carl Sagan. Look up “Where did God come from.” This is a typical talking head. But look at the background. It looks like he is in a boat, floating gently down a small lake with cheery blossoms in fool bloom overhead. You also have flares in the forground. This isn’t boring, it actually draws us in.

    But also look at how he speaks. What you are hearing here is not a teacher lecturing to a classroom, but a poet that gives attention to the words he uses, how he uses them, is very economical; almost stingy with the words and time he uses changes in inflection, changes in timber and temp.

    He put a lot of time and effort into this seine, with nothing happening by accident. He clearly rehearsed this over and over until he could speak it from memory, paring and tweaking the speech itself with an intense eye for detail. He probably did multiple takes so he could pick the best one with the fewest mistakes.

    And he engages the audience and understands them. He knows that he is likely speaking to a skeptical audience, likely even fundamentalists Christians. The serenity and raw beauty of the seine and background music is intentional. He is attempting to disarm and placed the skeptic at ease, to lower their emotional reaction. He even emphasizes with the audience, “These are not easy questions. Cosmology brings us face to face with the deepest mysteries, with questions that were once treated only in religion and myth.”

    Hope Mongering:
    A lot of time is spent simply asserting that things are getting better. “Changes are in the wind.” This is how you entertain the quire, but not how you engage or convince a skeptical audience. And you are not likely to inform the quire anything that they don’t already know. But gosh darn it; doesn’t it just make you feel good?

    This is NOT a good sign. Going back to the other videos, they weren’t nearly as deep with the hope mongering and were more engaging with facts and arguments. This suggests they are running out of ideas, even before the real debate had begun.

    If you are going to hope monger, then you need to take the narration away from the heterodox economist, and put it in the hands of real writers and artists. Show, don’t tell. You show hope, you do not simply assert hope is real. And this means delving into story telling.

    Again, Carl Sagan was a master at this. In the last episode of Cosmos: Who Speaks for Earth, we see him on the set of his space ship of the imagination. Take takes a flight of fancy, speculating on what other intelligent civilization might accomplish.

    Then, as he looks down on one amazing world, filled with grand cities and a thriving civilization, its brilliant sparkling lights of it’s cites, suddenly fell dark. They had destroyed themselves through nuclear war. But Sagan is suddenly struck with a new appreciation of home, and races back to the Earth. As he approaches home, all seems well, as he can hear the radio and TV signals. Then suddenly – silence.

    We see him pacing on the deck of his imaginary starship as he races home to a dead world. No more big questions.

    This was unheard of at the time. Documenters avoided drama; they just stuck to the facts. With his “Where did God come from” speech, Sagan worked to place the audience at peace, to still the emotion, so that he could pose the hard question. Here, Sagan intentionally targets our emotions, deliberately going for a emotional response so that he can exploit it in order to ask his question.

    This is NOT hope mongering, this is presenting the consequences for our decisions. Do we choose life? Or do we choose death? Rather than trying to paper over the dilemma with a false sense of hope, he lays out dilemma for what it was, honestly; and completely.

    This is where we need to go.

    Meandering message:
    All of these videos suffer from meandering to some extend or another. But this one is particularly bad at it. Meandering is basically when you change subjects without cluing the audience in that you have changed subjects. This is particularly problematic with short ten minute videos. It makes your documentary appear random and unfocused, even when there is an effort involved to be specific and ordered with the subjects.

    What is needed here is a visual form of paragraphs or even chapter brakes. A good example of how to do this would be NOVA documentaries. First, the narrator, usually out in the world, on the street, or some real world location, sets up a question, dilemma, or makes an observations. NOVA then cuts to the talking heads who places the dilemma into perspective and kicks around possible solutions, usually in the form of an experiment or prediction. We then cut back to the narrator who follows up on those solutions. Usually he or she visits some lab or observatory to talk to the grunts, perform the experiment, or look into the predictions. This usually gives us more questions, dilemmas, and observations. And the cycle repeats.

    For chapter brakes, the narrator usually “sets the stage”, literally. The narrator will stand on a sound stage or other set and then tie up the loose ends for what was just discussed, and set up the new topic.

    There aren’t a lot of options here. The best solution is to dedicate more time to the video, allowing more flexibility and more time to focus on a specific question. If you are stuck with 10 minute videos, then you have to focus like a laser on the specific issue you want to explore. Either way, you want to set up a specific pattern; set up the question, then answer the question.

    1. F. Beard

      A master at this was Carl Sagan. Look up “Where did God come from.” Code Name D

      What an annoying voice Sagan had! And you had to remind me!

      But anyway, the Bible leaves open the possibility that God Himself evolved:

      “You are My witnesses,” declares the Lord, “And My servant whom I have chosen, so that you may know and believe Me and understand that I am He. Before Me there was no God formed, and there will be none after Me. Isaiah 43:10 [bold added]

      I suspect Sagan may have had other reasons to disbelieve, logic not being one of them.

      People should read the Bible itself and not assume that they know what it says without doing so. I suspect that many are rebelling against a God of their own imagining.

  12. Jeremy Grimm

    Looking at form separate from content — this brief video appears very slickly made. I realize that the cost of doing video make it possible for almost anyone to make an excellent video if they work at it. Still this video is a little too well done.

    As for content — it warmed my tummy but wasn’t filling. I felt good for a moment.

  13. Cindy Walsh

    You really need to get another name than the New Economy. The term New Economy was coined at DAVOS Switzerland to represent what was next now that all the world’s wealth was moved to the top by massive corporate fraud. So, they set out to start the New Economy that has the people left with nothing fending for themselves. It involves moving large number of immigrants to the US to change the dynamic of first world middle-class America to the third world autocratic society that foreign immigrants already know. The Immigration bill does this with the ever larger high-end immigration levels as US unemployment soars to 25% and to 40% for those part time wanting more and better work.

    So, it is this dynamic that is unfolding of American citizens getting increasingly poor and less jobs available domestically and overseas expansions and immigrants with no citizenship rights taking the financial lead. THIS IS THE NEW ECONOMY AS LAID OUT BY THE BROOKINGS INSTITUTION AND THIRD WAY CORPORATE NEO-LIBERALS.

  14. allcoppedout

    There’s a review of the UK Cooperative economy here:
    and the PDF contains a global analysis too. It’s a bit biased, but reasonably accurate. There are plenty of sites offering advice on how to start a coop, constitutions and so on.
    I met some people from Chicago in 1999 at a conference in Spain (Vigo) who were trying to do worker buyouts. There is a 50’s film ‘The Way Forward’ that should make us all cry.

    There was a plan to re-model Afghanistan on the Turkish model – small scale industrial production for the domestic market and so on. The Brits scuppered the leadership, doing much the same in Argentina by deals with its landed class (their beef for our over-priced manufactures) around the same time.

    Standard ideological economics runs on the basis of comparative advantage based on daft 18th century homilies about England, Portugal, wine and cloth. They are like Brer Rabbit stories with the clever cutie removed.

    A rather ponderous deconstruction can be found here:

    Obvious threats to cooperative change come from competition by accounting that amounts to tax and wage theft, pension theft, benefits theft, obscene remuneration theft, buying contracts corruptly and the destruction of markets by impoverishing consumers by global wage arbitrage and crony subsidy from the public purse and enforcement of historic and financially manipulated economic rents.

    The John Lewis Partnership is probably the UK’s most successful coop –
    owning department stores and supermarkets.

  15. geojos

    Am I missing something here? How will these “new” businesses grow or survive in a system that is based on profits and competition. Turning a company into a cooperative does not really change the production and economic conditions that lead to the present state of affairs. And as people tout these coop models as the answer, the large transnational corporations still rule and are getting bigger, austerity still is the budget mantra, and now even the public education systems is being torn down and completely turned into a tool for the corporations. Me thinks these localist and new economy types are overwhelmed by modern capitalism and living in a fantasy world and are escaping reality. If you an’t beat them join them, but wear a different suit.

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