Tuesday, December 20, 2011

Employee Owned Businesses

Finally, for a welcome bit of positive news:

Worker-Owners of America, Unite!
But at another level, something different has been quietly brewing in recent decades: more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing.

Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions. And worker-owned companies make a difference. In Cleveland, for instance, an integrated group of worker-owned companies, supported in part by the purchasing power of large hospitals and universities, has taken the lead in local solar-panel installation, “green” institutional laundry services and a commercial hydroponic greenhouse capable of producing more than three million heads of lettuce a year.
There is an interview with the author on Democracy Now! This idea is not new, I ran across a book years ago called The Ownership Solution by an attorney named Jeff Gates who specialized in setting up such businesses. To me, it seemed elementary. Why shouldn't workers own the value they produce? Why should their work be property of an investor class that contributes nothing but money? Can anyone give me any justification for this?

We've previously said that our capitalist economic model isn't working, and is in the stages of utter failure. We've also seen the state socialism of the Soviet Union end in utter failure. Clearly, a third way is needed. The Soviet system also had the distinction of numerous human rights abuses and repression of the citizenry to keep the system going. As we've described here, capitalism is now going down the exact same route. I've previously said that the struggle for economic democracy will be the defining struggle of the twenty-first century.
If such cooperative efforts continue to increase in number, scale and sophistication, they may suggest the outlines, however tentative, of something very different from both traditional, corporate-dominated capitalism and traditional socialism. It’s easy to overestimate the possibilities of a new system. These efforts are minor compared with the power of Wall Street banks and the other giants of the American economy. On the other hand, it is precisely these institutions that have created enormous economic problems and fueled public anger.
Yes it is easy to overestimate the possibilities of a new system. Is that what we're doing? Its' hard to tell. And from my understanding, what he's describing actually is traditional socialism. The original intent of socialism is that workers would own the means of production so that they would keep the value they produce, rather than have it all in the hands of absentee owners. As I wrote earlier, the current system gives every incentive to underpay workers and overpay owners, leading to a distorted system of rewards. Owners get richer and workers get poorer simply because that's the way the system is set up, not because owners are creating more value. What we're now seeing is workers who keep so little of the value that they produce that the market for goods and services is confined to a shrinking class of owners. That is not sustainable.
And while the American public has long supported the capitalist model, that, too, may be changing. In 2009 a Rasmussen poll reported that Americans under 30 years old were “essentially evenly divided” as to whether they preferred “capitalism” or “socialism.”

A long era of economic stagnation could well lead to a profound national debate about an America that is dominated neither by giant corporations nor by socialist bureaucrats. It would be a fitting next direction for a troubled nation that has long styled itself as of, by and for the people.
I imagine that if worker-owned compnaies become a threat to the system, the state will amend the laws at the behest of their corporate benefactors to crush them. After all, there have been similar moves against small farmers all around the country with no logical explanation than the use of state power to shut down competition for large agribusiness. From a review of the movie Farmageddon:
Using the government crackdown on the sale of raw milk as a gateway to her larger argument, Ms. Canty produces distressing evidence of victimization and excessive force on the part of official agencies. Although food-related illness has so far been traced almost exclusively to the industrial food chain, federal and state enforcers seem more concerned with monitoring small organic farmers than large-scale livestock producers, genetically modified products (which do not require labeling) or the abuses of factory farming. 
I should interject at this point that I myself work for an employee-owned company (and am a member of a credit union). It's far from perfect - only "certain" employees get to be owners, they have to buy in, and it's expensive, and being "chosen" mainly has to do with politics. The good side is, you don't have to worry about being laid off because of some stock price on some exchange somewhere. Overall, it is a better environment, despite its flaws.

I actually think this model is the only way forward. The only question is, will it be a gradual transition, or will it be the way we pick up the pieces of a fallen society?

More on economic democracy:

What is economic democracy?

Economic democracy exists when the units of economic organisations are owned and controlled by the people who work in them, and/or by those who use their services – people who have a genuine long-term interest in the organisations and the communities in which they operate rather than remote shareholders whose overriding interest is short-term financial gain. There are many different ways for employees to control a business and we believe that economic democracy in all its forms should be tried and evaluated until it becomes clear which work best.

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