Why are we told a broken system that creates vast inequality is the only choice? Spain’s amazing co-op is living proof otherwise
There is no alternative (“Tina”) to capitalism?
Really? We are to believe, with Margaret Thatcher, that an economic system with endlessly repeated cycles, costly bailouts for financiers and now austerity for most people is the best human beings can do? Capitalism’s recurring tendencies toward extreme and deepening inequalities of income, wealth, and political and cultural power require resignation and acceptance – because there is no alternative?
I understand why such a system’s leaders would like us to believe in Tina. But why would others?
Of course, alternatives exist; they always do. Every society chooses – consciously or not, democratically or not – among alternative ways to organize the production and distribution of the goods and services that make individual and social life possible.
Modern societies have mostly chosen a capitalist organization of production. In capitalism, private owners establish enterprises and select their directors who decide what, how and where to produce and what to do with the net revenues from selling the output. This small handful of people makes all those economic decisions for the majority of people – who do most of the actual productive work. The majority must accept and live with the results of all the directorial decisions made by the major shareholders and the boards of directors they select. This latter also select their own replacements.
Capitalism thus entails and reproduces a highly undemocratic organization of production inside enterprises. Tina believers insist that no alternatives to such capitalist organizations of production exist or could work nearly so well, in terms of outputs, efficiency, and labor processes. The falsity of that claim is easily shown. Indeed, I was shown it a few weeks ago and would like to sketch it for you here.
In May 2012, I had occasion to visit the city of Arrasate-Mondragon, in the Basque region of Spain. It is the headquarters of the Mondragon Corporation (MC), a stunningly successful alternative to the capitalist organization of production.
MC is composed of many co-operative enterprises grouped into four areas: industry, finance, retail and knowledge. In each enterprise, the co-op members (averaging 80-85% of all workers per enterprise) collectively own and direct the enterprise. Through an annual general assembly the workers choose and employ a managing director and retain the power to make all the basic decisions of the enterprise (what, how and where to produce and what to do with the profits).
As each enterprise is a constituent of the MC as a whole, its members must confer and decide with all other enterprise members what general rules will govern MC and all its constituent enterprises. In short, MC worker-members collectively choose, hire and fire the directors, whereas in capitalist enterprises the reverse occurs. One of the co-operatively and democratically adopted rules governing the MC limits top-paid worker/members to earning 6.5 times the lowest-paid workers. Nothing more dramatically demonstrates the differences distinguishing this from the capitalist alternative organization of enterprises. (In US corporations, CEOs can expect to be paid 400 times an average worker’s salary – a rate that has increased 20-fold since 1965.)
Given that MC has 85,000 members (from its 2010 annual report), its pay equity rules can and do contribute to a larger society with far greater income and wealth equality than is typical in societies that have chosen capitalist organizations of enterprises. Over 43% of MC members are women, whose equal powers with male members likewise influence gender relations in society different from capitalist enterprises.
MC displays a commitment to job security I have rarely encountered in capitalist enterprises: it operates across, as well as within, particular cooperative enterprises. MC members created a system to move workers from enterprises needing fewer to those needing more workers – in a remarkably open, transparent, rule-governed way and with associated travel and other subsidies to minimize hardship. This security-focused system has transformed the lives of workers, their families, and communities, also in unique ways.
The MC rule that all enterprises are to source their inputs from the best and least-costly producers – whether or not those are also MC enterprises – has kept MC at the cutting edge of new technologies. Likewise, the decision to use of a portion of each member enterprise’s net revenue as a fund for research and development has funded impressive new product development. R&D within MC now employs 800 people with a budget over $75m. In 2010, 21.4% of sales of MC industries were new products and services that did not exist five years earlier. In addition, MC established and has expanded Mondragon University; it enrolled over 3,400 students in its 2009-2010 academic year, and its degree programs conform to the requirements of the European framework of higher education. Total student enrollment in all its educational centers in 2010 was 9,282.
The largest corporation in the Basque region, MC is also one of Spain’s top ten biggest corporations (in terms of sales or employment). Far better than merely surviving since its founding in 1956, MC has grown dramatically. Along the way, it added a co-operative bank, Caja Laboral (holding almost $25bn in deposits in 2010). And MC has expanded internationally, now operating over 77 businesses outside Spain. MC has proven itself able to grow and prosper as an alternative to – and competitor of – capitalist organizations of enterprise.
During my visit, in random encounters with workers who answered my questions about their jobs, powers, and benefits as cooperative members, I found a familiarity with and sense of responsibility for the enterprise as a whole that I associate only with top managers and directors in capitalist enterprises. The easy conversation (including disagreement), for instance, between assembly-line workers and top managers inside the Fagor washing-machine factory we inspected was similarly remarkable.
Our MC host on the visit reminded us twice that theirs is a co-operative business with all sorts of problems:
“We are not some paradise, but rather a family of co-operative enterprises struggling to build a different kind of life around a different way of working.”
Nonetheless, given the performance of Spanish capitalism these days – 25% unemployment, a broken banking system, and government-imposed austerity (as if there were no alternative to that either) – MC seems a welcome oasis in a capitalist desert.
(Sections IV – VI of The Political Perspectives of the Democratic Socialists of America )
Section 4: A Strategy for the Next Left
Socialists have historically supported public ownership and control of the major economic institutions of society — the large corporations — in order to eliminate the injustice and inequality of a class-based society, and have depended on the the organization of a working class party to gain state power to achieve such ends. In the United States, socialists joined with others on the Left to build a broad-based, anti-corporate coalition, with the unions at the center, to address the needs of the majority by opposing the excesses of private enterprise. Many socialists have seen the Democratic Party, since at least the New Deal, as the key political arena in which to consolidate this coalition, because the Democratic Party held the allegiance of our natural allies. Through control of the government by the Democratic Party coalition, led by anti-corporate forces, a progressive program regulating the corporations, redistributing income, fostering economic growth and expanding social programs could be realized.
With the end of the post-World War II economic boom and the rise of global economic competitors in East Asia and Europe in the 1970s came the demise of the brief majoritarian moment of this progressive coalition that promised–but did not deliver–economic and social justice for all. A vicious corporate assault on the trade union movement and a right-wing racist,populist appeal to downwardly mobile, disgruntled white blue-collar workers contributed to the disintegration of the liberal wing of the Democratic Party in the 1970s and 1980s.
Today, the mildly redistributive welfare state liberalism of the 1960s, which accepted the corporate dominance of economic decision-making, can no longer be the programmatic basis for a majoritarian progressive politics. New Deal and Great Society liberalism depended upon redistribution at the margins of an ever-expanding economic pie. But today corporations no longer aspire to expand production and consumption by raising global living standards; rather, global capital engages in a race to increase profits by “downsizing” and lowering wages.
With the collapse of the political economy of corporate liberalism came the atrophy of the very institutions upon which the progressive politics of the New Deal and Great Society had been constructed. No longer do the social bases for a majoritarian democratic politics — strong trade unions, social movements and urban, Democratic political machines — simply await mobilization by a proper electoral appeal. Rather, a next left must be built from the grassroots up.
Given the globalization of economic power, such grassroots movements will increasingly focus upon building a countervailing power to that of the transnational corporations. A number of positive signs of this democratic and grassroots realignment have emerged. New labor leadership has pledged to organize a workforce increasingly constituted by women, people of color, and immigrant workers. Inner-city grassroots community organizations are placing reinvestment, job creation, and economic democracy at the heart of their organizing. The women’s movement increasingly argues that only by restructuring work and child care can true gender equality be realized. And the fight for national health care — a modest reform long provided by all other industrial democracies — united a broad coalition of activists and constituencies.
But such movements cannot be solely national in scope. Rather, today’s social movements must be as global as the corporate power they confront; they must cooperate across national boundaries and promote interstate democratic regulation of transnational capital.
If socialism cannot be achieved primarily from above, through a democratic government that owns,control and regulates the major corporations, then it must emerge from below, through a democratic transformation of the institutions of civil society, particularly those in the economic sphere — in other words, a program for economic democracy.
As inequalities of wealth and income increase and the wages and living standards of most are either stagnant or falling, social needs expand. Only a revitalized public sector can universally and democratically meet those needs.
Economic Democracy . Economic democracy can empower wage and income earners through building cooperative and public institutions that own and control local economic resources. Economic democracy means, in the most general terms, the direct ownership and/or control of much of the economic resources of society by the great majority of wage and income earners. Such a transformation of worklife directly embodies and presages the practices and principles of a socialist society.
Alternative economic institutions, such as cooperatives and consumer, community, and worker-owned facilities are central to economic democracy. Equally important is the assertion of democratic control over private resources such as insurance and credit, making them available for socially responsible investment as well as over land, raw materials, and manufacturing infrastructure. Such democratic control must also encompass existing financial institutions, whose funds can be used to invest in places abandoned or bypassed by transnational capital, such as urban and rural areas, and in sectors of the population that have been historically denied control and ownership of significant economic resources. Such a program will recognize the economic value of childrearing and home care by family members as unpaid labor, and account for this work in all considerations of benefits.
Key to economic democracy is a democratic labor movement that plays a central role in the struggle for a democratic workplace, whether worker or privately owned. In workplaces that the employees do not own – traditional corporations, family businesses, government, and private nonprofits – only independent, democratically run unions can protect workers.
The importance of economic democracy extends beyond the ownership and control of economic resources. It is the only way to fulfill the democratic aspirations of the vast majority of Americans. The democratic ideal today has been drastically narrowed in scope and substance to reduce its threat to established power and privilege. The current assault on the welfare state led by corporate and conservative elites is also an attack on political democracy. Democratic socialists must reinvest democracy with its political and economic content to give full voice to popular democratic aspirations.
Finally, economic democracy is also the only way to mediate and overcome divisions based upon race, gender, religion, and ethnicity that undercut universal social justice.
Global Justice. A program of global justice can unite opponents of transnational corporations across national boundaries around a common program to transform existing international institutions and invent new global organizations designed to ensure that wages, working conditions, environmental standards and social rights are “leveled up” worldwide. The basis of cooperation for fighting the transnationals must be forged across borders from its inception. Economic nationalism and other forms of chauvinism will doom any expanded anti-corporate agenda.
The international financial institutions serving the interests of transnational capital are important arenas of struggle for a global social and environmental agenda. Elements of this agenda include efforts to advance social charters in free trade agreements; to propose alternative investment strategies for the World Bank and the International Monetary Fund; to strengthen the enforcement of existing treaties on the environment, labor standards, social policies etc.; and to promote international standards that put social justice before corporate profit. Stronger international ties among trade unions and joint actions across borders in defense of wage standards, working conditions and social rights are critical.
Social Redistribution. Social redistribution–the shift of wealth and resources from the rich to the rest of society–will require:
massive redistribution of income from corporations and the wealthy to wage earners and the poor and the public sector, in order to provide the main source of new funds for social programs,income maintenance and infrastructure rehabilitation, and
a massive shift of public resources from the military (the main user of existing discretionary funds) to civilian uses.
Although such reforms will be very difficult to achieve on a national scale in the short term, their urgency increases as income inequality intensifies. Over time, income redistribution and social programs will be critical not only to the poor but to the great majority of working people. The defense and expansion of government programs that promote social justice, equal education for all children, universal health care, environmental protection and guaranteed minimum income and social well-being is critical for the next Left.
At the same time, the military Keynesianism that has dominated federal expenditures, constricting the capacity of governments at all levels to respond adequately to social needs, must end. Much of the current distortion in government spending and taxation has its roots in the massive military and national security build-up in the 1980s, combined with the massive tax cuts for the wealthy. The great run-up in national debt is due directly to military-led deficit financing. Reduced military expenditures and more equitable taxation represent the only sources of funds on the scale needed to provide the social programs required to ameliorate declining living standards.
Together, economic democracy, global justice, and social redistribution are the linchpins of abroad-based anti-corporate left, that is international in character and local in its reliance on popular control of economic resources and decision-making.
Section 5: The Role of Electoral Politics
Democratic socialists reject an either-or approach to electoral coalition building, focused solely on anew party or on realignment within the Democratic Party. The growth of PAC-driven,candidate-based, entrepreneurial politics in the last 25 years leaves little hope for an immediate,principled electoral response to the rightward, pro-corporate drift in American politics. The fundamental task of democratic socialists is to build anti-corporate social movements capable of winning reforms that empower people. Since such social movements seek to influence state policy,they will intervene in electoral politics, whether through Democratic primaries, non-partisan local elections, or third party efforts. Our electoral work aims at building majoritarian coalitions capable of not only electing public officials on the anti-corporate program of these movements, but also of holding officials accountable after they are elected.
The U.S. electoral system makes third parties difficult to build at both the national and state level.Winner take-all districts; the absence of proportional representation; open primaries; executive-run governments that make coalition governments impossible; state legislative control over ballot access and election laws all combine to impede third parties. Much of progressive, independent political action will continue to occur in Democratic Party primaries in support of candidates who represent a broad progressive coalition. In such instances, democratic socialists will support coalitional campaigns based on labor, women, people of color and other potentially anti-corporate elements.
Electoral tactics are only a means for democratic socialists; the building of a powerful anti-corporate coalition is the end. Where third party or non-partisan candidates mobilize such coalitions, democratic socialists will build such organizations and candidacies. However, to democratize U.S. electoral politics – whatever its party form -requires serious campaign finance reform both within and without the Democratic Party.
Section 6: The Role of Democratic Socialists
Any differences are due to changing conditions,and not changing principles. The continuities are unmistakable. The same spirit animates both documents.
In fact, the most important difference between the documents is neither strategy nor program,mission nor vision, but rather expectation. The founding document called for carrying out a strategy and program that were already the mainstays of mass liberalism, but moving this broad liberal coalition considerably to the left. DSA’s new document points in another direction, toward the founding of a new progressive movement…a next Left. That is because the political momentum of mass liberalism is depleted. If we once positioned ourselves as the left wing of the possible, there is now no “possible” to be the left wing of. Of course, considerable opposition has arisen in response to the program of the conservative and corporate elites. But, that opposition confronts a profound crisis of leadership, particularly at the national level.
Increasingly, many of our fellow citizens recognize that the American dream is becoming a chimera. We as democratic socialists believe that it can be made real. No laws of nature or “free markets” dictate that we must destroy our environment, worsen global inequality, squander funds on useless deadly weapons, and continue to relegate women and people of color to second-class citizenship. But if the American dream is indeed ever more elusive, we seek much more than to simply revive it as an aspiration. For in one respect the right-wing would-be prophets are correct: The success of global capitalism demands that traditional democratic standards of justice, equality,and decency be undermined. For the simple dream of a comfortable standard of living, of community, and of equity to be realized, radical political, economic, and social changes in the established order are required.
The belief is widespread that we stand at the beginning of a new political era — that the Left must create a new vision and a new mission rooted in a new sense of purpose. Democratic socialists have an historic opportunity and responsibility to play a central role in the founding of a next Left, and DSA is prepared to meet this challenge. We invite you to join us in this effort worthy of a lifetime of commitment.