Cooperative Movement Owners Development Fund

Worker-Owners Cheer Creation of $1.2 Million Co-op Development Fund in NYC

  By Rebecca Burns, In These Times | Report

In a victory for new economy advocates, the New York City Council passed a budget last month that will create a $1.2 million fund for the growth of worker-owned cooperative businesses. The investment is the largest a municipal government in the U.S. has ever made in the sector, breaking new ground for the cooperative development movement.

Melissa Hoover, executive director of the U.S. Federation of Worker Cooperatives and the Democracy at Work Institute, hails the New York City Council’s move as “historic.” “We have seen bits and pieces here and there, but New York City is the first place to make an investment at that level,” she says.

New York’s cooperative development fund was the brainchild of a coalition of community groups—including the Federation of Protestant Welfare Agencies, the New York City Network of Worker Cooperatives, the Democracy at Work Institute, Make the Road New York and others—that came together to stage a series of public forums and advocacy days to secure widespread support for the initiative on the City Council. Over the next year, the fund will provide financial and technical assistance in the planned launch of 28 new cooperatives and the continued growth of 20 existing cooperatives, supporting the creation of 234 jobs in total.

While this may just be a drop in the bucket when it comes to the city’s $75 billion total budget, cooperative advocates are hoping New York’s example can help turn the tide in favor of alternative strategies for urban development.

“We’d like to get to a tipping point where [cooperatives] really have a measurable impact on the local economy,” says Hilary Abell, a San Francisco-based co-op development consultant who co-founded the group Project Equity. She notes that while interest in cooperatives has surged, there are still fewer than 5,000 “worker-owners” nationwide. Nevertheless, the model of worker-owned cooperatives has captured the imaginations of many low-income communities of color hit hardest by the Great Recession, she says, creating “a window of opportunity to take this to the next level.”
 
Last month, Abell released a report called “Worker Cooperatives: Pathways to Scale,” which outlines a set of strategies to grow the cooperative movement nationwide. While  there are several promising federal policy initiatives underway—Senator Bernie Sanders (I-Vt.), for example, has introduced a bill that would create an Office of Employee Ownership and Participation within the U.S. Department of Labor, as well as another that would establish a U.S. Employee Ownership Bank—Abell believes that “advocacy for cooperatives may have the greatest momentum at the state and municipal levels.”

Across the country, similar local economic justice coalitions have been seeking to persuade municipal governments and local institutions to throw their resources behind the development of worker-owned co-ops. It’s those resources, many advocates believe, that could take co-ops from a niche movement to a broad-based strategy for creating living-wage jobs and putting economic power in the hands of workers.

To that end, Abell hopes to see more cities follow in New York’s footsteps. In the Bay Area, she tells Working In These Times, local organizers are currently reaching out to local officials for support in scaling up worker-owned cooperatives to the point that they constitute five to 10 percent of the local economy. The coalition is particularly focused on creating jobs for workers of color in the low-income areas of the East Bay , as past experiences have shown that worker-owned co-ops can be particularly effective in redressing racial inequities in the job market. For example, Women’s Action to Gain Economic Security (WAGES), a network of nearly 100 worker-owned cleaning cooperatives in Oakland, has increased members’ incomes by more than 50 percent.

Other hotbeds of co-op development include Richmond, California, where the city has hired its own cooperative developer and is launching a loan fund under the leadership of Green Party Mayor Gayle McLaughlin. In Cleveland, Ohio, the city’s economic development department has worked closely with the Evergreen Cooperatives, a network of worker-owned green cleaning, farming and construction businesses; local hospitals and universities have also thrown their purchasing power behind worker-owned businesses. And as In These Times has reported previously, several unions have made a foray into the co-op business, combining place-based growth with a focus on leveraging changes across industries such as homecare.

Instead of simply appealing to local leaders for support, some activists have sought to build both political and economic power by building electoral campaigns around the issue of cooperative development. No city had secured greater local support for co-ops than Jackson, Miss., a majority African-American municipality where human rights attorney and longtime black radical activist Chokwe Lumumba was elected mayor last year on a platform that included the use of public spending to promote cooperative enterprises. But following Lumumba’s sudden death in February, the movement that brought him to office has been left struggling to implement the vision it had forged.

Local activists say new Mayor Tony Yarber has been tepid in his support for the cooperative development plan developed by Lumumba’s administration, leaving them uncertain as to whether they can count, for example, on city contracts being awarded to local worker-owned businesses. According to Brandon King, a member of the group Cooperation Jackson who also worked on the Lumumba campaign, access to such contracts would have been a huge boon for nascent construction and waste-management cooperatives, as Lumumba’s campaign had estimated that the city would need to spend $1.2 billion over the next 10 to 15 years on infrastructural upgrades and repairs. What often happens, says King, is that contracts go to companies located in wealthier and majority-white suburbs outside of Jackson, with the result that “people in Jackson aren’t really engaged in building their own city.”

Despite the change of course in city government, King says Cooperation Jackson “is still working on building co-ops that are large-scale, and getting as many people engaged in economic democracy as possible.” The movement has a history of black community participation in cooperative enterprises to draw from, King notes. Meanwhile, adds Cooperation Jackson memberIya'Falola Omobola, while the group works to get childcare and urban farming cooperatives off the ground, with or without city support, “We’re going to be ready to mobilize around an appropriate candidate in the next [mayoral] election.”

Noting the particular conditions that have helped secure local support for cooperatives in New York City and Jackson, the Democracy at Work Institute’s Hoover acknowledges that activists are still exploring how these can be replicated elsewhere. But if these cities are successful in retaining long-term support for cooperative growth, they can serve as a jumping-off point for other areas. “Our hope is that these won’t be one-off examples,” Hoover says. “What we need ultimately is a shift among those doing local development: from, ‘Quick, let’s get a Home Depot to come in and create jobs, but they’re low-wage and low-skilled,’ to a deeper and more patient strategy. These places could really start that shift.”

Originally published at InTheseTimes.com 

Rebecca Burns

Rebecca Burns, In These Times Assistant Editor, holds an M.A. from the University of Notre Dame's Kroc Institute for International Peace Studies, where her research focused on global land and housing rights. A former editorial intern at the magazine, Burns also works as a research assistant for a project examining violence against humanitarian aid workers.

Systematic Corporate Irresponsibilty Resulting in Death

Giant Corporations, Giant Failures

  By Richard D Wolff, Truthout | News Analysis

(Image: General Motors, Crime scene via Shutterstock; Edited: EL / TO)
General Motors recently released the report it commissioned from the huge Jenner & Block law firm.

The latter's chairman, Anton Valukas, investigated how and why GM failed - for over 10 years - to recall cars it produced while knowing they had defective ignition switches. The eventual recall of 2.6 million Chevrolet Cobalt cars in February, 2014, followed 13 deaths GM linked to those defective switches (many others were injured, and government officials believe there were more fatalities).

GM's chief executive, Mary Barra, admitted publicly this April what Valukas wrote in his report: GM failed systematically to identify, take responsibility for, and act properly in the face of life-threatening defects in millions of automobiles it sold since 2002. On June 16, 2014, GM recalled an additional 3.16 million defective vehicles across seven of its models. GM's total recalls in North America so far this year exceed 20 million vehicles.

Lessons from so major a failure go far beyond GM leaders promising to fix their internal operations. As the Valukas report documents, many layers of the GM bureaucracy routinely ignored evidence of defective ignition switches and their risks to customers' lives. None of thousands of engineers and executives - even those who had recognized the problem or mentioned it to other GM officials - was able or willing to achieve the recall decision until 2014. Chief executive Barra attributed this failure to a "pattern of incompetence and neglect." Five years ago, GM announced another failure, its own bankruptcy, and got the US government to bail it out with $ 49.5 billion in taxpayers' money. We paid collectively to save a corporation whose chief describes its activities in terms of a "pattern of incompetence and neglect."

Despite such catastrophic failures over the past decade, we permit, and indeed subsidize, the continued operation of GM by the same bureaucracy. To date, a total of 15 engineers and other employees have been dismissed from GM for failures related to the faulty ignition switch. No one was fired because of any explicit responsibility for bankruptcy. GM had a total of 219,000 employees as of 2013.

GM's plunge into bankruptcy shook the entire economy. That same corporation persistently produced and marketed life-threateningly defective vehicles. Yet no serious steps are taken to correct actions that far exceed any reasonable standard for allowing such enterprises to continue. Are we a society that cannot recognize or deal with antisocial behavior when the culprits are large corporations?

Punishing more individuals is not the point. That would change little in the internal corporate system of rewards and punishments that produced GM's behavior. After all, GM leaders all knew the company risked major, punishing damage (loss of sales, profits and market share, law suits from victims, extremely negative publicity, government investigations, etc.) by not recalling vehicles that killed, injured, or endangered people, yet they did it anyway. The market simply did not adequately discipline GM. The corporation believed it could control its markets (by mountains of advertising, via political influence at federal, state and city levels, using massive, costly legal maneuvers, and so on).

Running the firm into bankruptcy and selling unsafe vehicles happened because GM saw both series of actions as more advantageous and less dangerous to them than other options (from earlier recalls, to sharply reduced payouts to executives and shareholders, to public discussion of mass-transportation alternatives to producing cars and trucks). In such calculations, GM is not atypical among large corporations. That is why damaging the environment; bureaucratic oppression (the "suck-up-and-kick-down" system); moving jobs to low-wage countries; producing poor quality outputs; paying their top executives and shareholders huge amounts and deepening the divide between rich and poor; crippling public revenues by shifting operations to foreign tax havens; and so many other antisocial consequences flow from those corporations.
 
The major lesson of GM's failures is that we cannot afford to leave such corporations in charge of producing the goods and services we all depend on.
 
Similarly, can we allow that system to keep purchasing our major parties and politicians to secure its immunity from real accountability? The answer is that we can and should do better than a system so obviously failing.

What is to be done? One basic problem is the link between jobs and incomes. The layers of GM bureaucracy looked the other way, did not pursue what they knew, avoided making waves inside the company etc. because they feared for their jobs and incomes. Especially in an economy with high unemployment and job insecurity, acting in socially responsible ways becomes too risky personally. If employees knew that their companies' failures would not necessarily jeopardize their personal incomes, we could expect far more socially responsible behavior from many more of them.

If government guaranteed personal incomes even when individuals had to move from one job or enterprise to another, those individuals could better face and fix the failures where they work. Making families' incomes depend on their jobs pressures job-holders not to rock the corporate boat even when they know they should. We ought to disconnect our citizens' incomes from their particular jobs (national discussions of this idea have increasingly engaged the Swiss and others in Europe over recent years).

Another lesson from GM's failures is the need to broaden the community of people making key economic decisions. If the citizens of Detroit had had real participatory power over GM decisions, GM might have kept more facilities there and thereby avoided urban collapse. If GM customers had more institutionalized participation in corporate decisions, concerns about faulty ignition switches might have gained hearings sooner and so saved lives and avoided vast financial losses.

Here lies yet another argument to shift from private, capitalist corporations (governed by major shareholders and the boards of directors they select) to cooperative enterprises (governed democratically by workers, surrounding communities, and customers/consumers).

Such cooperatives would democratize enterprises in ways likely to make their economic decisions far more socially responsible.

Richard D Wolff

Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne). His work is available at rdwolff.com and at democracyatwork.info.