Economic Restructuring Through Community and Employee Ownership

PCDForum Column #52,  Release Date June 25, 1993

by Gar Alperovitz

When world leaders meet to discuss the global economic crisis, their focus of attention on international exchange rates, central bank lending policies, trade barriers, and international investment flows seems far removed from the concerns of most of the world's people and communities. Indeed, people of all nationalities increasingly sense a wide gap between their own concerns and those of the political classes that meet in Geneva, Washington, and Tokyo to manage the global economy. It is a gap attributable to the institutionalized power of wealth and the dominant influence of big corporations. This gap is producing human inequity on a vast scale, strengthening power relationships inimical to meaningful democracy, and actively preventing us from building the kind of societies we want.

The practice of democracy as a living form of community must foster substantial equality, nurturing the capacity in every citizen to affect the governing decisions that determine the fate and shape of the society in which they live. The concept of one person - one vote clearly does not go far enough in providing this equality. Indeed, even in many Western democracies, and especially in the United States, the conditions for a "living democracy" are weak and fading as capitalism generates an extraordinary degree of inequality.

For most of the twentieth century, the progressive vision of the future has centered on the socialist idea that equality and democracy can best be achieved by a system in which ownership of society's wealth is vested in a structure, usually the state, beholden to and controlled by society. Now the traditional socialist ideal has collapsed, along with its distant cousin the liberal welfare state.

Fortunately, there is a structural alternative to both the socialist solution of state ownership and the capitalist solution of large corporate ownership. That option is an economy built on community-based ownership through such mechanisms as small-scale co-ops, worker-owned firms, and neighborhood and municipal corporations.

Many successful examples are found in United States, where thousands of grassroots enterprises economically empower American workers and communities. They are led neither by policy elites in Washington nor by financial elites on Wall Street, but rather by civic-minded entrepreneurs, innovative labor unions and effective local governments. Such initiatives, found in many countries, collectively offer the beginnings of a fundamental economic restructuring.

I'm not talking of a few isolated examples. In the United States alone, there are now hundreds of worker-owned firms. At Weirton Steel in Pennsylvania, the company is 77 percent employee-owned with 8,000 men and women participating. At City Pride Bakery in Pittsburgh, a coalition of religious, labor and community organizations helped former employees raise 12.6 million from public and private investors to reopen after a major shutdown. Avis Inc. was purchased by its employees in 1987 for $1.75 billion, making it one of the largest worker-owned firms it the country. Worker-owned plywood firms in the Pacific Northwest account for more than 10 percent of all production in recent years. Using a broad definition that includes all forms of employee stock-ownership plans, the number of firms now experimenting with worker-ownership approaches 10,000. They involve perhaps 12 million people--more than the entire membership of private-sector trade unions in the United States.

The United States also has more than 30,000 co-ops, including 4,000 consumer goods co-ops, 13,000 credit unions, nearly 100 cooperative banks and more than 100 cooperative insurance companies. Add to this 1,200 rural utilities and nearly 5,000 housing co-ops, plus another 115 telecommunication and cable co-ops.

Less well known but equally important are numerous community owned cable systems, hotels, fertilizer manufacturing companies, towing services, real estate development efforts and even professional sports teams. Supplementing this list are thousands of efficiently run city-owned electric utilities. At the state level, examples range from the 75-year old state bank of North Dakota to the state-owned insurance company in Wisconsin.

These practical alternatives demonstrate the creative capacity of an industrialized citizenry motivated to restructure their economic reality. Workers and communities have developed new structures to reestablish control over the quality of their lives. Such developments as described above could provide the foundation for the beginnings of a new form of democratized political-economic system one different in moral and human meaning from both traditional capitalism and traditional socialism. It is this system, rather than the system of transnational capital, that international, national, and local policy should be encouraging.

Gar Alperovitz is president of the National Center for Economic Alternatives, a fellow of the Institute for Policy Studies, and a contributing editor of the People-Centered Development Forum. This column was prepared and distributed by the PCDForum based on a number of his articles. His address is 3217 Ashmead Place, NW, Washington, DC 20009. Fax (202) 986-7938.

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