Cooperatives can emerge as an important part of a different economic order, an alternative to an establishment order of insecurity and poverty for the many and privilege and wealth for the few. 

In these Trump times of ours, the case for cooperatives is only likely to become more evident and gather steam. The cooperatives movement can emerge in the eyes of an increasing number of people as a way to stop depending on boss and elite classes and to start taking their security and prosperity into their own hands.

Economist Antonio Callari discusses the 'why now,' the 'how' and the 'so-what' of such a movement. 

BY ANTONIO CALLARI | MARCH 5, 2017

Congratulations, Democracy at Work, for this initiative on cooperatives. In the U.S., the case for cooperatives has been in the making for some time now, both intellectually (e.g., Democracy at Work, The Democracy Collaborative, Parecon, Solidarity Economy Network) and practically (e.g., Cleveland’s Evergreen Cooperatives and Cooperative Home Care Associates). Cooperatives have even begun to capture some of the country’s political imagination (e.g., Newark’s Mayor Ras Baraka and Vermont Senator Bernie Sanders). In these Trump times of ours, the case for cooperatives is only likely to become more evident and gather steam. Democracy at Work's initiative, Coop Talk, could not be more timely as fuel for a growing cooperatives movement.

I would like to add a bit of fuel myself by discussing the ‘why now,’ the ‘how,’ and the ‘so-what’ of such a movement. (Dear reader: please read the footnotes). 

I          Cooperative Prospects Now

Establishment economics and politics have failed. They have failed ‘the people,’ that is; for they clearly did not fail the now mythical “1%” (and those on their coat-tails). Cooperatives can emerge as an important part of a different economic order, an alternative to an establishment order of insecurity and poverty for the many and privilege and wealth for the few. 

The capitalist contradiction between wealth (as the privilege of the few) and debt & poverty (as the lot of the many) already had crashed the economy in 2008. Establishment policies since then have failed to produce an economy of broad security and prosperity. Trumpism will also fail the working class. These failures will (should) make it clear to the people that neither a ‘liberal’ (Democratic) nor a ‘corporate’ (Republican) regime can deliver an economy that works for them. The cooperatives movement can emerge in the eyes of an increasing number of people as a way to stop depending on boss and elite classes and to start taking their security and prosperity into their own hands.

The Obama years (2009-16) may well go down in history as the last gasp of political legitimacy for the liberal (Keynesian) regime of economic management. During these years, government spending (pump-priming) did keep the economy from the more complete devastation into which the 2008 crash could have driven it. But that pump-priming was not able to generate the shared prosperity that a continuation of the political legitimacy of liberalism would have needed. With the defeat of Hillary Clinton, the pump-priming regime paid the ultimate price for its inability to deliver on its promises to the people. The liberal Keynesian approach is not ever likely to return as the main character in any actual playbook of economic management.

Yes, there was a time when the pump-priming approach had political legitimacy. But the economic prosperity on which this legitimacy rested was due to rather special (and no longer extant) circumstances. Before the mid 1970’s (before, that is, the latest rounds of automation and of globalization), with the US still the dominant industrial power in the world, there had been a strong(er) link between “spending” and “domestic jobs.” US spending (and, to some degree even spending abroad) generated US jobs at a substantive rate. So, understandably, people came to believe that more government spending (pump-priming) could always be used to generate more jobs as a counter to any emerging ‘jobs’ problem--naively, some people even thought that pump-priming could get the economy up to some mythical point of full-employment.

We should be clear however that things were never as solid as the pump-priming mindset presumed. In general, that mindset worked to cover up, rather than to address, two of the fundamental problems of the capitalist economy: 1) what I’d call the sclerosis of capitalist circulation; and 2) the impossibility of a sustained condition of full employment in capitalism. First, in capitalism, the arteries are relatively healthy for circulating ‘value’ among peoples and places already well-networked in the economy; but the arteries for bringing wealth to areas and communities that, for reasons of history and/or geography, have been either excluded from or only marginally connected with the network of ‘value,’ are genetically sclerotic. Pump priming cannot bring wealth to these areas and communities: any extra pumped money flows naturally only to those already well-networked in the economy. Second, as regards to the condition of  full-employment, the general impossibility of sustaining such a condition in capitalism emerges out of the desire capitalists have for as much of a regime of low wages as they can get. Capitalists need unemployment and poverty to keep wages “in line” (i.e., to keep workers needy and obedient), and pump-priming has never been able to overcome this structural need of capitalism for unemployment and poverty.[1] Because of these problems, the liberal Keynesian pump-priming regime has never really been able to deliver on promises of shared and inclusive prosperity. But this inability notwithstanding, the optimism of the nineteen-fifties and nineteen-sixties (and the lingering memories in the three subsequent decades) had predisposed people to believe in the liberal promises of pump-priming efficacy. In that climate, the fundamental problems of insecurity, unemployment, and poverty could be, if not ignored, deferred under a cruel illusion that capitalism could indeed eventually be coaxed into a condition of prosperity for all.

But circumstances are very different now. Increasingly since the millennium, feelings of optimism, the presumption of a substantive link between spending and jobs, and the expectations of an ever-widening network of shared prosperity have become only material for the next generation of history books. Intense processes of automation and of globalization have significantly reduced the jobs-creating effects of spending (private investment, private consumption, or government spending), and this has shaken badly the foundations of the political conditions and legitimacy of the liberal establishment.[2]

In the new circumstances, the best the liberal establishment’s pump-priming regime has delivered is a strange, and indeed jarring, new phenomenon of ‘jobless recoveries’ (recovering profits and investments but laggard job growth). We seem to have entered a phase of generalized and intensified capitalist sclerosis, a shrinking of the areas and communities included in the capitalist network of ‘value’ and an enlargement of the ranks of the marginalized or excluded. In these conditions, people have come to sense a certain powerlessness of the pump-priming regime of economic management—and, indeed, to sense even a certain perverseness attached to it: rather than the shared-prosperity effect it used to have, the pump-priming strategy seems now to have the effect of increasing inequality (not trickling down to workers, the extra cash-flow generated by any pump-priming seems rather to ‘gush-up’[3] to, and stick at, the top). To the 99%, the resulting inequalities have become all too clear socially and culturally as well as economically: of the jobs still available, more and more of them tend to be less-well-paid and/or concentrated in services to the rich (who can afford them). Ours has become a society suffering not only from increased economic inequality, but also from social stratification and from the political resentment that inevitably accompanies it.[4]

The Trump times we are now entering (if we survive them) are sure to intensify the general trend toward privilege for the few and insecurity for the many. For the reasons we have already discussed (automation and globalization), Trump’s own pump-priming (if the Republican congress allows the infrastructure spending he has promised) is quite unlikely to have the kind of jobs-effect on which a reality of shared prosperity could be revived.[5] His spending, if it occurs, will strengthen certain sectors of the economy, and perhaps even create a few oases of prosperity (along with, it seems, an intensification of the process of environmental degradation). But both automation and globalization will keep any spending from spreading throughout the economy as evenly and as widely as a broad sense of shared prosperity would require. Republican hopes of a resurgence of widespread entrepreneurialism (an ideology resting on an imagined set of opportunities which was rather limited in the past but is, for reasons of scale, even more limited today) will be even more cruelly dashed by a reality of checkered and limited prosperity and blocked opportunities.

With Trump, vast swaths of people will continue to experience, as they had experienced before him, the new norm of economic insecurity and class inequality that capitalism has been increasingly producing since the last quarter of the 20^th century. With the failure of both government (Democratic Party) and corporate (Republican Party) management regimes, how can it not become clearer and clearer to an increasing number of people that they can no longer leave their economic dignity in the hands of strongmen or elites, and that they must rather take it into their own hands? A cooperatives project can be a part of this taking. If we are really to move to a condition of shared security and prosperity, it must!

II         A Proposal for a Practical Transformative Cooperatives Initiative

A broad cooperatives initiative can play a crucial role in the building of an effective movement through which the people could take their security and prosperity into their own hands. It can do so both directly and indirectly. Directly, cooperatives can place chunks of the economy under the direct control of working people. Indirectly, but equally importantly, they can give much needed energy to a general culture of working people values, showing it capable of competing with the corporate and Wall-Street cultures that so badly eroded any (real or perceived) sense of shared prosperity. Energizing such a culture, cooperatives can help shape a new politics, a real “political revolution” with which to cure the scleroses of capitalism, resetting and expanding (inclusively and democratically) the bonds of shared prosperity.

How could such a broad initiative be launched? It seems to me that the greatest potential for such a launching lies in urban areas beset by systemic patterns of poverty, marginalization, and exclusion. The establishment has failed miserably to make a dent in areas of concentrated poverty (overdetermined by processes racialization[6] as well as of automation and globalization). So, this is where there is an opening for a cooperatives movement to expand as an alternative to the establishment approach. Now, it makes sense that a need for cooperatives would have been first, and most acutely, felt in places like Cleveland and Newark. My argument for the broadly transformative potential of a cooperatives initiative emerging from these communities, however, rests only partially on the obvious need for jobs in these communities. It also, and most importantly, rests on a real potential of these communities to capitalize the initiative with their own economic resources. It is on such a capitalization (the terms of which we will soon see) that the ability of these communities to take charge of their own development (and thus to serve as an example for people taking the economy into their own hands generally) depends.[7]

The own-resources of poor communities have been given scant attention in establishment economic development discourse. Across the board (across the network of for-profit and not-for-profit private entities, and governmental and quasi-governmental entities), establishment circles have focused on the insufficiency of wealth flowing into areas of urban poverty. But, by itself (without, that is, at least equal attention being paid to poor communities’ own-resources) the concentration on this insufficiency has had the effect, ironic and perverse, of strengthening, not weakening, the political and cultural mechanisms that have kept these communities poor. To the degree that the question of the ‘economic development’ of ‘poor communities’ has remained a question of “lack,” these communities have tended to be pushed (if not “locked”) into a logic of dependency (“we depend on those who have the wealth,” we can hear this logic whisper into the inner ear of those within its orbit, “we adopt their ways, accept their values, and dance to their tunes”). This logic can and sometimes does engender cultural and political pathologies (denigrating, and mostly racist ‘explanations’ of poverty; political opportunisms)[8] layered on the economic realities of poverty—which is, by the way, an outcome reminiscent more of colonial-type conditions of dependence and poverty than of democratic possibilities for development.[9]

It is in order to push back against this “dependency” outcome that the struggle to combat urban poverty must as much as possible be based on a capitalization of the communities’ own-resources. Such a capitalization would work to reorient the primary axis of the discourse of economic development from a logic of “lack” to a logic of self-reliance. Structured in ways that rely on the own-resources of poor communities, cooperative initiatives can have effects that go beyond simply producing healthier area-economies: by practically and effectively undermining the logic of “lack,” they can add considerable power to legal and political movements for the elimination of the sclerosis of racism. They can emerge as well, as we will see, as an inspiration-for and examples-of activism in a broad movement of working people everywhere finding ways of taking the economy back (from the hands of corporate or government elites) in their own hands. 

Where are the resources with which poor communities can capitalize a cooperatives movement? The stream of revenues associated with ‘housing’ is the most promising potential source of tappable wealth in poor urban areas: housing expenses are the single largest chunk of value-flow out of the economies of poor communities. Poor communities are poor not only because of the weak inflow of value (low wages, low investment), but also because of strong mechanisms that quickly suck out whatever value flows in. Rent payments to absentee landlords (and, that, almost always in exchange for bad housing to boot!) are the main form of leakage from these communities. If captured, these revenues (and possibly other revenues spent by residents on housing) could be used to capitalize cooperatives-networks which would be community-grounded and capable of generating a self-sustaining and expanding process of wealth production. Arguably, within the current state of affairs, only such networks could weaken, and potentially even break, the systemic patterns of dependency (and the associated cultural, and political pathologies) that establishment has so so miserably failed to break.  

Existing cooperative initiatives have achieved much already. They have not however, to my knowledge, broken the links of dependency that keep poor communities trapped within the network of establishment circles and, thus, subject to the pathologies we have discussed. The Cleveland Evergreen cooperative initiative, for example, has followed a strategy of cultivating special relationships with ‘anchor institutions’ (relatively place-bound entities such as hospitals and universities) to provide the capital and markets necessary to the monetary bottom-line of cooperatives. I am not arguing that these relationships should be eschewed; opening up otherwise-blocked channels for the circulation of wealth from wealthier to poorer areas can in itself be seen as a mark of success. But these relationships cannot absorb the primary energy of a cooperatives movement that can rise to the task of breaking the structural and organic conditions of US urban poverty.

To the degree that the success of any cooperatives relies primarily on forces outside their constituent communities, that success is likely to remain more limited in scope and in effect than the success cooperatives built with internal resources (the capital and market arrangements) could achieve. If cooperative initiatives remain dependent on the network of ‘value’ and the values of the establishment, their work will fail to confront directly, forcefully, and successfully the logic of “lack” that sustains the general cultural and ideological pathologies we have discussed. They will fail, that is, to challenge the general environment responsible for the generation and reproduction of poverty to begin with. They will, likely struggle simply to keep place rather than to make progress, like already-weakened fish swimming up a strong stream.   

How can cooperative initiatives be structured in a way that relies on internal community resources? They could and should be structured so as organically to pair up worker (and consumer) cooperatives with community-controlled housing organizations (e.g., ‘community development corporations,’ ‘housing cooperatives’) with ‘absentee-landlord displacing’ and ‘community-revenue retaining’ effects.[10] The initiatives would, in other words, need to move strategically, beginning by first creating (or transforming from existing housing organizations) community housing organizations with the specific goals of displacing absentee landlords and of rechanneling the otherwise leaking revenues they would capture into both capital and work contracts for appropriate (linked to housing activity—construction, maintenance, household expenditures) worker and consumer cooperatives. Mechanically, these housing organizations could, and should, function in much the same way as the ‘anchor institutions’ of the Cleveland Evergreen Cooperatives now function: as sources of capital and as markets.[11] But they would have much greater value added than ‘external anchor institutions’ have for a project of community development: they would produce ‘jobs’ in the immediate community but they would do so in a way that directly combat the general cultural and political pathologies that any successful project of community development must overcome.

III        Resetting Politics: Cooperatives and a New Economy

A cooperative movement such as we have described has great potential for tackling the concentrations of urban poverty that the establishment has either ignored or miserably failed to turn-around. Such a movement can take the process of community economic development out of the control of the establishment (untying the knots of economic, cultural, and political threads that have condemned entire communities into cycles of dependency and poverty) and put it in the hands of the communities themselves (to reconnect the threads into virtuous cycles of empowerment and development). It is not difficult to see how such a movement would have implications for the struggle of the American people as a whole have been waging in the hope of recovering a sense of control over their general increasingly sclerotic economic conditions. Beyond any direct lessons it could offer, such a movement would serve as a striking example of people-guided development and, as such, a powerful inspiration for people everywhere to set out to take their economic security and prosperity into their own hands.  

Of course, a wide cooperatives initiative of the type I have described would not in itself produce the general economy of shared security and prosperity the American people have been yearning for. Producing such an economy will require more than a successful and effective cooperatives movement in existing areas of poverty. It will require addressing matters of policy (we know them: trade, education, health care, wages and hours of work, the environment, race and gender policies, banking and finance) that go beyond cooperatives and that, in fact, set the general terms on which enterprises (cooperative or not) operate. A national economy of security and shared prosperity will depend on the ability of working people to shape the politics addressing these policies as well as on whatever progress will have been made directly on the cooperatives front. But the point is that progress on the cooperatives front of the type I have described would in itself make an important (substantive, exemplary, inspirational) contribution to an effective (more effective than anything now on the horizon) shaping of such a general working people’s politics.

For sure, elements for a working people’s politics have already been roiling the establishment order for nearly a decade already. Beginning with Occupy Wall Street and continuing into the last presidential campaign, the distinction between the 1% and the 99%, simplistic as it needs to be for its symbolic value, has set the big question for our politics. But, as we have seen (through the timidity of the Obama years first, and through the utter collapse of the entire political establishment thereafter), and as we now continue to see (through the rapacity and social morbidity of the Trump Gang), the question may not have been set as effectively as it needed to be for victory of working people values.

Arguably, the missing piece in shaping a winning political movement of the “99%” has been, a “concrete sense” (cultivated widely across the country, and in varied forms: cultural, reasoned, emotional, programmatic, etc.) of the people’s power to take the economy into their own hands. Without such a sense, and having understandably grown doubtful of establishment figures and promises, the movement for the 99% (which must include not only activists, but all people who felt left behind and voted accordingly) has found itself reduced to looking for a savior (to run the economy for the people). This explains the popularity and cult-like figures of Sanders and Trump. But it explains as well the otherwise utterly unexplainable transition (after the Democratic Party primary) of enough anti-establishment voters from Sanders to Trump to deliver the economy into the hands of the Bannon gang.

For all of its power, the movement of the 99% failed to move enough people in the deindustrialized belt (and other such areas) beyond a horizon of dependency. Failing to provide concrete confidence in and knowledgeable about the power of people to control their own destinies, the movement for the 99% left too many them open to the traditional pathologies of a right-wing populism. This is a failure that the movement for the 99% has yet failed to own, and has perhaps even failed to recognize.  My hope and argument are that a successful cooperative initiative of the type I have discussed would go a long way toward building a practical and institutional scaffolding for the concrete sense of popular empowerment to which the movement for the 99% has been only generally aspiring.