The Workers' Paradise

February 23, 2010

Capital? We Don’t Need No Stinkin’ Capital

Filed under: Movement,The Cleveland Model — Tags: , , — Fred Schepartz @ 12:17 pm

Publisher’s Note: this is the second of hopefully several articles about the Cleveland Model Fred Schpartz. Fred publishes Mobius: A Journal of Social Change publisher is a member of Union Cab of Madison Co-operative and authored Vampire Cabbie.

Labor, properly organized, accompanied by sufficient community support equals capital. That is the lesson of the Cleveland Model.

Cleveland, like many Rust Belt cities, is an economic disaster area. Its population has dropped to less than half of what it was in 1950. Glenville, the Cleveland neighborhood where worker-owned Evergreen Cooperative Laundry is based, has a median annual income of roughly $18,000. Yet, in the depths of the worst economic downturn since the Great Depression, something amazing has happened.

Last year, Evergreen Cooperatives was born. Spearheaded by the private, non-profit Cleveland Foundation, grants and loans were secured allowing for the creation of the Evergreen Cooperative Development Fund with the purpose of creating worker-owned cooperatives, starting in the Glenville neighborhood, thus taking advantage of the presence of a university, a hospital and a large medical clinic in the neighborhood and the subsequent demand for a variety of services that previously had been provided by non-local businesses.

Last year, Evergreen Cooperative Laundry and Ohio Cooperative Solar were born. Aside from being worker cooperatives, both businesses are significantly green. Green City Growers, an urban hydroponics greenhouse and Neighborhood Voice, a community newspaper will open their doors later this year.

Taking a cue from Mondragon Cooperative Corporation in the Basque region of Spain, each Evergreen cooperative is obligated to pay 10 percent of pre-tax profits into a cooperative development fund.

The Cleveland Model is a significant development given the devastation wrought by capital abandonment, not just in Cleveland, but all throughout the Rust Belt. Capital abandoned the inner city in favor of the suburbs. Capital abandoned the north in favor of the Right To Work south and west. And when the imposition of neo liberalism in developing nations allowed capital to sidestep local labor and environmental laws and regulations, capital abandoned the United States.

During the current recession, we’ve seen a different variety of capital abandonment. Fearful of financial instability, capital hoards its resources. The financial sector won’t loan money to businesses. The Obama Administration is desperate to launch a new green economy, but capital is unwilling to risk their resources on a new, unproven economic sector.

This points out a significant advantage of the sustainability model versus the profit model. The reluctance of capital to venture into untested waters is understandable, given the financial risk. Obviously, a cooperative wants to turn a profit, but the cooperative is not out to maximize profits. Its board of directors does not demand tribute. There is no CEO demanding an eight or nine figure salary. In addition, risk is spread among more people in a cooperative, so cooperatives are willing to go where capital fears to tread.

Obviously, it takes money to start a worker-owned cooperative business. In the case of the Cleveland Model, this was accomplished through community support, with funding coming from area foundations, locally owned banks and municipal government, along with some federal grants.

When capital abandons a place, the solution is that labor can become capital, if properly organized and with sufficient community support. And given that capital has abandoned a great deal of this country, the Cleveland Model is a solution for Anywhere, USA. We as a nation need not be held hostage by capital.

Workers need to march back to the shuttered factories where they used to work and decide they will resume building goods in those darkened plants. And that effort needs to be supported by the community and by local, state and federal government. The Obama Administration must lead the way by allocating economic stimulus money for the formation of worker-owned cooperatives. Imagine the impact of one billion dollars provided as seed money for worker cooperatives. That’s a little more than one tenth of one percent of the total amount of money allocated for the stimulus. This would be money well spent. Not only would it get people back to work relatively quickly, but it would provide a conduit for long-term economic growth.

Lest I paint too rosy a picture, I should mention that I have heard a critique of the Cleveland Model that it is top down and thus paternalistic. I believe that criticism is fair. I have not visited any of the Evergreen Cooperatives, so I cannot say this with utmost certainty, but it appears that the management and leadership structure is superimposed upon these cooperatives rather than grown organically from the membership. My sense is that the Cleveland Foundation et al probably believes professional leadership is necessary, at least in the beginning, for these cooperatives to survive, that it was absolutely necessary for hired-gun technocrats to be brought in to run things.

While The Nation absolutely gushed about the effort it took to organize these cooperatives and how green these businesses are, there was not a word about what it’s actually like to work in any of these places.

Are these workplaces democratic? Is it a humane work environment? Are workers paid a living wage?

A worker’s cooperative that does not have these things is not much of a cooperative. At Evergreen Cooperative Laundry, there is the hope that workers can accumulate upwards of $65,000 in retained equity within 10 years. This is an admirable goal, but is it realistic or is it pie in the sky? And to achieve that goal, are worker’s paid a substandard wage? I don’t know.

For the Cleveland Model to succeed in a meaningful way, each worker’s cooperative must have self-rule and self-determination. It is imperative that management provides training opportunities so the workers can learn how to run their own business because when it’s all said and done, it’s their business, and no one will know how to run it better than them.

I do sincerely hope a form of the Cleveland Model can be implemented on a national scale. Capital has abdicated its responsibility to the citizens of this country. The Cleveland Model teaches us that together, we can live without capital by essentially generating it ourselves.

A tsunami of new cooperatives could create thousands upon thousands of new jobs and could get America back in the business of building good that the rest of the world wants to buy.

But to make this a truly worthwhile endeavor, the cooperative movement has to be proactive in its efforts to train and organize those who might form these future cooperatives, so these future cooperative members can be best equipped to organize themselves.

February 18, 2010

The Cleveland Model–Take One

Filed under: Movement,The Cleveland Model — Tags: , , , — John McNamara @ 7:00 am

Recently, The Nation sent out a broadcast with an article about the emerging worker cooperatives of Cleveland asking those of us in the bog-o-sphere to comment. As someone who has been an active member of a worker co-operative for over 20 years and involvement in the national and international movement for the last 4 years, I definitely have some ideas.

The folks are really doing this right. I spoke with one of the organizers of Evergreen Laundry a few years ago. They lined up the customers as part of the planning stage. The idea wasn’t to struggle as so many worker co-ops do in the beginning, but to start-up with a strong source of work (this was touch and go, but it appears that Case Western and other institutions will be sending their laundry to Evergreen). Second, the Mondragon style commitment to return 10% of surplus (the article calls it ‘pre-tax profits’) to a development fund. Third, I like the commitment expected from the workers that may require a long-term buy-in—I think that low-cost buy-ins have a tendency to devalue the membership or ownership aspect of the experience.

I’m a bit stunned at the amount of capital amassed. One of the well identified stumbling blocks for worker co-operative development in the United States has been the lack of access to capital. I realize that there are a number of groups, involved, I would like to know where  the $5 million came from and what strings are attached to it. I’m not casting aspertions, but I just have to assume that these organizations that ponied up the start-up cash expect to getting something out of the project and won’t want it to fail. A look at their website suggests that all three of the start-up co-operatives have the same group of customers (Cleveland Clinic, University Hospitals, Case Western Reserve, City of Cleveland, and Housing Network). This project is a great example of what can happen when different organizations working around economic justice, worker rights and sustainable communities break down the “silos”. I do hope that other communities learn from the Cleveland model especially Milwaukee and Madison (sadly, Madison’s current Economic Director doesn’t really seem to know much about that subject other than the standard refrain that government should get out of the way).

This does turn the traditional model on its head in that this was a top-down organizing effort. This likely helped with fund-raising as established rain-makers were able to tap into professional relationships where a gaggle of workers would likely be turned away with a shrug. I’m not so sure how I feel about that. I’m happy to see the effort up and running, but I wonder how much of the paternalism associated with a  top-down organizing effort will interfere with the transition to a true worker democracy in which the workers may make decisions that the founders fundamentally disagree with. I can see a dynamic where there could be a difficult (even fatal) transition in generational succession. This may be exacerbated by the management being chosen from a management class that may not really have anything in common with the workers. Will future managers be developed within the organization or sought within the existing worker co-operative movement?

Another issue with the top-down model involves labor relations during the start-up phase. Who will decide who gets off of probation and becomes a member before there are members? Will there be an appeal process? How will disputes get resolved without ownership or a labor union? They are creating good paying jobs (although the article didn’t really mention expected pay and benefits) in a very depressed area. I imagine a lot of people are looking forward to the work and see the ownership part as an abstraction. Working is a worker co-operative is not for everybody (at least not without a lot of therapy and training). We don’t refer to the Yellow Family at Union Cab for nothing, the relationships are very personal and very difficult to walk away from when times get tough. The intimacy of the work relationships due to ownership can make the disputes powerful and difficult to manage. Not everybody is ready for that or can deal with it.

This brings up my other concern: how will these co-operatives interact with the co-operative movement? A similar co-operative is Co-operative Home Care Associates of New York that generally doesn’t interact with the larger movement despite being the largest worker co-operative in the country. Will the Cleveland Model co-operatives join the US Federation of Worker Co-operatives? Will they subscribe to the CICOPA World Declaration of Worker Co-operatives? Will they subscribe to the Statement on Co-operative Identity?

I raise the last question because it seems that there is a trend to see co-operatives and worker co-operatives as an extension of the not-for-profit model of community development. We’re not. The growth of social workers creating co-ops is, I think, a danger for US co-operatives as they become more identified with a movement that tends to enable the worst aspects of capitalism. The rise of Policy Governance Model among consumer co-operatives is, in my opinion, a travesty that has allowed small cabals of managers and directors to create fiefdoms and barriers to expressing the user principles as well as the values of co-operatives. I would hate to see that cancer emerge into the worker co-operative world.

Finally, I have a small bone to pick. The authors make this comment, “These are not your traditional small-scale co-ops.” <COUGH, COUGH!> Union Cab with 230 members, Rainbow Grocery approaching 250 members, CHCA with over 1,000 members have been “traditional “ co-operatives for over 25 years. Granted the common stereotype is 5-10 member organizations, but the Cheeseboard and Arizmendi co-operatives all have over 30 members. The Cleveland co-ops are only looking at around 50 jobs per co-operative (according to The Economist). What makes these co-ops Mondragonish is the funding and mutual support mechanism, not the size of the organization.

I think that the Cleveland Model is an exciting development in the worker co-operative movement. However, it is one aspect. Our movement has been active for decades if not centuries. I am glad to see journals such as The Nation finally discover the co-operative model, although they probably could have covered the Democracy at Work Conferences (2006 in New York City and 2008 in New Orleans, and the 2010 conference in San Francisco). Perhaps they could ask their colleagues over as Dollars and Sense for tips on covering worker co-operatives.

To me, the best thing about the Cleveland Model is that it promises to open up some serious capital for worker co-operative development. It will still need to be determined how the strings attached to that capital work. It will also need to be seen if a top-down organizing model works to create a truly democratic work place and governance model or becomes another version of ESOP. Finally, after all the news of 2009, it is nice to be in a movement that isn’t entirely invisible any more.

We can, however, definitely agree that CLEVELAND ROCKS!

February 16, 2010

Coming Soon-A Group Discussion (I hope)

Filed under: Movement,Site News,The Cleveland Model — Tags: — John McNamara @ 7:10 am

The March 1 edition of The Nation has an article on the growing industrial worker cooperative movement. I use the word “industrial” to differentiate it from the worker cooperative movement in the United States that has flourished over the last 30-40 years. This group is big (even by Rainbow and Union Cab standards). It is very traditional blue collar (laundry, construction, etc).

I have asked the folks who are on this site as authors to post their reactions to the article. This is because The Nation wants this to go viral. They sent out the following email:

“Afternoon,

I’m Ben Wyskida, Publicity Director for The Nation magazine. We have a major feature this week from Gar Alperovitz & Ted Howard (of the Democracy Collaborative and Community-wealth.org) and Thad Williamson  that they wanted me to share with you. We hope you’ll read the article, blog, tweet, email, post and pass on to your colleagues. Hardcopies are available as well. Here is the piece:

The Cleveland Model
GAR ALPEROVITZ, TED HOWARD &THAD WILLIAMSON : Thoroughly green and worker-owned, co-ops are a vibrant response to economic distress.

http://www.thenation.com/doc/20100301/alperowitz_et_al

The article features the work of five different organizations in Cleveland, and explains how their approach could be a potent model of sustainable economic development for cities across the country.

Thanks so much,

Ben


Ben Wyskida
Publicity Director
The Nation ”

If you aren’t on the list, we still want to hear your views. Send me a note on your ideas and I will publish them. Email me: johnmac<at>tds.net.

I hope to see the posts up soon. So far, only one of the other writers for this blog have committed (and even then only mildly so), I but I promise to have something up by the end of the week and I hope that the them will carry on through the end of February.

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