Category Archives: Articles

In conversation with Michael Albert

An abridged version of the following conversation with Michael Albert, developer with Robin Hahnel of  the participatory economics model or “Parecon” appeared on Truthout.

MICHAEL ALBERT: Participatory economics proposes a small set of institutions that define the heart of a new type of economy. These institutions are conceived to further various values: self-management, solidarity, diversity, ecological sanity. The idea is that as you carry out economic activities—in other words, as you produce and you allocate and consume—you simultaneously accomplish not only those functions, but by virtue of what the institutions require of us as we operate, you also advance those values.

The basic institutions that are meant to accomplish this are few. There are worker and consumer self-managing councils; where self-management means that people should have a say in decisions proportionate to the degree they are affected by them. There is equitable remuneration—referring to the share we get in the economy in the form of income, our claim on the social product. Under participatory economy these are in proportion to how long we work, how hard we work, and the onerousness of the conditions under which we work. There is also what’s called balanced job complexes, which is a way of organizing the tasks that we do, so that our work lives, our economic activity and production, has a comparably empowering effect on us all. Finally, there is an allocative system to apportion work, labor and effort—the goods and services we produce—that isn’t a market or central planning but is something we call participatory planning. So in a nutshell, that’s participatory economics (http://zcomm.org/category/topic/parecon/).

GAR ALPEROVITZ: Even though I disagree with many aspects of Michael’s model, what I like about it its rigor and clarity. Parecon is a very tough-minded economic vision and model and it sets a standard for us to look at.

One place to start (with my own work) is that—given the specific historical conditions we face in the United State—I’m primarily interested in the question of how we begin to move in the direction of a model that realizes the kinds of values that Michael just laid out though is different in structure. I am interested in the political economy of institutional power relationships in transition. The question is one of “reconstructive” communities as a cultural, as well as a political fact: how geographic communities are structured to move in the direction of the next vision, along with the question of how a larger system—given the power and cultural relationships—can move towards managing the connections between the developing communities. There are many, many hard questions here—including, obviously, ones related to ecological sustainability and climate change.

I’ve called the model for what this might plausibly look like in practice “the pluralist commonwealth”: commonwealth because it seeks transitionally to restructure political reality by democratizing the ownership of wealth, pluralist because it embraces a variety of institutional approaches towards that end. The model includes some planning, a great deal of decommodification, and partial use of markets in certain areas. It adheres to the principle of subsidiarity, meaning we decentralize as far as possible to the local level where direct democracy is truly possible, but we are also not afraid to look towards institutional forms like regional or national public ownership when the problems are best solved at those scales…

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Beyond the Dreamer

Originally published in the January 2014 issue of Sojourners

IN THE LAST YEAR of his life, Martin Luther King Jr. struggled with what are best understood as existential challenges as he began to move toward an ever-more-profound and radical understanding of what would be required to deal with the nation’s domestic and international problems.

The direction he was exploring, I believe, is far more relevant to the realities we now face than many have realized—or have wanted to realize.

I first met King in 1964 at the Democratic Party’s national convention held that year in Atlantic City—the occasion of an historic challenge by the Mississippi Freedom Democratic Party (MFDP) to the racially segregated and reactionary Mississippi Democratic Party. I was then a very young aide working for Sen. Gaylord Nelson of Wisconsin.
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Debating public ownership of too big to regulate banks in the New York Times

The New York Times’ Room For Debate recently featured an exchange around the question Are Big Banks Out of Control?  My contribution to the debate follows (originally posted here):

Nationalize Banks That Overwhelm Regulation

The announcement of a settlement with JPMorgan Chase in connection with the Bernie Madoff Ponzi scheme brings into focus one of the most important, if unexpected, strategic ideas of the early, highly conservative Chicago School of Economics. The key judgment: Contrary to the conventional wisdom calling for stronger regulation, a number of early conservative economists held that some institutions were simply too big and too powerful to regulate. They would always find a way around government efforts to keep them in line in connection with certain critical economic issues. George Stigler, for one, received a Nobel Prize for illuminating the institutional power relations involved in what is commonly referred to as “regulatory capture” — the informal way in which regulations always get watered down sufficiently so that somehow things tend to slip through the cracks.

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Mondragón and the System Problem

fagor(with Thomas Hanna, originally published at Truthout)

As America moves more deeply into its growing systemic crisis, it is becoming increasingly important for activists and theorists to distinguish clearly between important projects and “institutional elements,” on the one hand, and systemic change and systemic design, on the other. The recent economic failure of one of the most important units of the Mondragón cooperatives offers an opportunity to clarify the issue and begin to think more clearly about our own strategy in the United States.

Mondragón Corporation is an extraordinary 80,000-person grouping of worker-owned cooperatives based in Spain’s Basque region that is teaching the world how to move the ideas of worker-ownership and cooperation into high gear and large scale. The first Mondragón cooperatives date from the mid-1950s, and the overall effort has evolved over the years into a federation of 110 cooperatives, 147 subsidiary companies, eight foundations and a benefit society with total assets of 35.8 billion euros and total revenues of 14 billion euros.

Each year, it also teaches some 10,000 students in its education centers and has roughly 2,000 researchers working at 15 research centers, the University of Mondragón, and within its industrial cooperatives. It also actively educates its workers about cooperatives’ principles, with around 3,000 people a year participating in its Cooperative Training program and 400 in its Leadership and Team Work program.

Mondragón has been justly cited as a leading example of what can be done through cooperative organization. It has evolved a highly participatory decision-making structure, and a top-to-bottom compensation structure in a highly advanced economic institution that challenges economic practices throughout the corporate capitalist world: In the vast majority of its cooperatives, the ratio of compensation between top executives and the lowest-paid members is between three to one and six to one; in a few of the larger cooperatives it can be as high as around nine to one. Comparable private corporations often operate with top-to-median compensation ratios of 250 to one or 300 to one or higher.

Although it has been criticized for violating its cooperative principles through somewhat “imperial” control of some of its foreign operations, for its use of non-cooperative labor, and for a less-than-active concern with environmental problems, in recent years Mondragón has begun to address deficiencies in these areas.

Bankruptcy for Fagor Electrodomésticos

Mondragón Corporation’s historically most important unit is Fagor Electrodomésticos Group, which makes consumer appliances – “white goods” such as dishwashers, cookers and other related household items. It is the fifth-largest manufacturer of such products in Europe. It employs roughly 2,000 people in five factories in the Basque region and has and additional 3,500 in eight factories in France, China, Poland and Morocco. Its direct predecessor (ULGOR) was the first-ever Mondragón cooperative – established in 1956 by five young students of José María Arizmendiarrieta, the spiritual founder of Mondragón cooperative network.

Mondragón recently announced that Fagor was failing and that the company would be filing for bankruptcy protection. Ultimately, Fagor was unable to find financing to pay off debts of around $1.5 billion related to a 37 percent slump in sales since 2007 that resulted from Spain’s economic crisis and housing market collapse. Under Spanish law, the company now has four months to negotiate with its creditors – which include the Basque government, banks and others – and formulate a restructuring plan.

As part of any restructuring or liquidation, Mondragón will provide jobs and income security for a certain period for some its workers in Spain. This is one of the cooperative network’s great advantages. It has announced that its internal insurance company Lagun Aro will pay 80 percent of the cooperative member’s salaries for two years and the corporation will strive to relocate as many employees as possible to other cooperatives in the network.

The fate of the roughly 3,500 non-Spanish wage laborers (i.e. not cooperative members) in other countries, however, is unclear.

Some Specific Problems

Given its importance, we are certain to see any number of economic reports on the specific problems that created the failure of Fagor. The larger questions posed by the failure, however, are the relationship of large-scale economic institutions to the market in any system, and the lessons for long-term systemic design for people concerned with moving beyond the failings of corporate capitalism and traditional socialism.

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How to Democratize the US Economy

The following adapted excerpt of my book What Then Must We Do? appeared in the 10/28 edition of The Nation

Everyone knows the United States faces enormous challenges: unemployment, poverty, global warming, environmental decay—to say nothing of whole cities that have essentially been thrown away. We know the economic system is dominated by powerful corporate institutions. And we know the political system is dominated by those same institutions. Elections occur and major fiscal debates ensue, but most of the problems are only marginally affected (and often in ways that increase the burdens).

The issue is not simply that our situation is worrisome. It is that the nation’s most pressing problems are built into the structure of the system. They are not unique to the current economic slump or the result of partisan bickering, something passing in the night that will go away when we elect forward-looking leaders and pressure them to move in a different direction.

Not only has the economy been stagnating for a long time, but for the average family, things have been bad for a very long time. Real wages for 80 percent of workers have not gone up more than a trivial amount for at least three decades. At the same time, income for the top 1 percent has jumped from roughly 10 percent of all income to more than 20 percent. A recent estimate is that a mere 400 individuals in the United States own more wealth than the bottom 180 million Americans taken together.

Unfortunately, what we call traditional politics no longer has much capacity to alter most of the negative trends. To be clear: I think projects, organizing, demonstrations and related efforts are important. But deep down, most people sense—rightly, in my view—that unless we develop a more powerful long-term strategy, those efforts aren’t going to make much of a dent.

 Read the rest at The Nation

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