Alternative economic system? Gar Alperovitz

Our society’s institutions are in crisis — with looming ecological collapse, historic concentration of capital, incarceration rates far beyond those of any other country, the diminishing civil liberties that come along with a permanent “war on terror,” and a political process bought and paid for by the rich and powerful.

The Next System Project, or NSP, hopes to explain how we arrived here, provide competing visions for where we can and should go, and detail specific proposals for how we can begin to go there.

The project, which launched at the start of April, begins with the premise that our long-term political and economic problems require more than policy changes that alleviate symptoms — like those proposed in the newly released liberal agenda, “Rewriting the Rules,” backed by economist Joseph Stiglitz and Sen. Elizabeth Warren — without focusing on root causes.

The NSP will bring together academics and grassroots activists, as well as policy analysts and advocates, to develop and begin to implement genuinely democratic political and economic institutions capable of producing lasting and shared prosperity.

Gar Alperovitz, a political economist and the project’s co-chair, has been focused on developing a new American political economy for a long time. After publishing his early work on the decision to drop the atomic bombs, Alperovitz turned his attention more explicitly to our political economy, believing that our economic and foreign policies are driven by the institutional capitalist requirement for ever-expanding markets and access to raw materials.

Alperovitz has since developed an alternative political-economic model, called the “Pluralist Commonwealth” — different (plural) institutions of democratized (common) wealth — that seeks, rather than growth and expansion, to preserve individual liberty and to sustain communities and the environment. So far, the most successful implementation of the model is the Mondragon Corporation-inspired Evergreen Cooperatives, a network of worker-owned and community-controlled coops that have brought economic development to Cleveland’s impoverished inner city by tapping into the purchasing power of local “anchor institutions,” like hospitals and universities.

I recently had the chance to speak with Alperovitz about the NSP’s inspiration, the types of solutions it plans to promote, and the efforts already underway that it seeks to amplify.

Can you describe the goals of the NSP?

Here’s our starting point: If you don’t like corporate capitalism or state socialism, then what do you want — and how do we get there? Rather than elevating one model or another, we have two broad goals.

First, to begin to raise our conversation beyond projects and elections. Both are important, but we’re trying to say that the problems we face are systemic.

Second, if systemic change is required, which I think it is, then what is the nature of the system that we would actually want to live in that is different from the old state socialist model or the corporate capitalist model. Because if we had that clear vision, it might also inform our strategy for how to get there.

And it has an emphasis on combining research with popular education and grassroots action?

We hope to have a wide range of discourse — conferences, study groups, academic work on pieces of the puzzle that nobody has done yet. This is time to really open the door intellectually and with experiments on the ground that open up new political-economic directions that we can learn something from. And we want to stimulate people to work in this arena.

We want people to realize this is a really important problem and to open this debate far and wide. We were surprised by the broad range of people who were willing to say, yes, we have to deal with the system, not just electing one candidate or another.

What surprised you?

What’s surprising is that more moderates and liberals signed and said it’s time to talk about the systems issue. Well-known liberals like Robert Reich and Jeffery Sachs signed the founding statement, people who would identify as being on the left, but certainly not as radical as Richard Wolff or Noam Chomsky — both of whom also signed. So did Bill McKibben and a broad range of environmentalists. Also, Daniel Ellsberg, the whistleblower.

It is interesting that you identify liberty as a value the current system is unable to fulfill. Can you elaborate on that?

The anarchists and the genuine conservatives pointed out long, long ago that state socialism would develop a power structure that was going to destroy liberty. And people didn’t listen.

You need to take off your hat to both the anarchists and the conservatives who were really way ahead of the socialists and the liberals on that question. The anarchists have urged different forms of representation that preserve communities and individual activity within them.

How is liberty threatened today?

One aspect is time spent at work. Time could become freedom to do whatever you want to do.

Liberty is also connected with stability and security. If we had a guaranteed job system, or if you had a job as long as you were willing to work, no matter what you did or said politically, it gives you enormous degrees of freedom that you don’t have now.

Thirdly, governments with scale happen to be imperial — like the one that rules this continent. Bringing government close to home — cities, states, regions — is another way to get at liberty denied by big government.

Can you explain why you think we need a new system and new institutions rather than new policies?

The traditional model since the New Deal has been that you have major corporate power and agricultural power; people often leave that out, but the farm groups and lobbies have been much more powerful than the population they represent, which is perhaps 2 percent.

Corporate and business power was on one side with labor on the other — the economist John Kenneth Galbraith used to call the institutional strength of the unions “countervailing power.”

But the American labor movement was never that strong. And it’s getting weaker everywhere.

The basic structure that kept American capitalism somewhat stabilized was this model, which had some capacity to repair the damages that the corporate system was building — some social programs, some welfare programs, some unemployment programs. That whole structure is simply decaying before our eyes.

And what role does ideology play in sustaining the current system? Can you speak to your experience opposing President Carter’s austerity approach to inflation with the consumer advocacy group you helped to create, Consumers Opposed to Inflation in the Necessities, or COIN.

In the 1970s, there was an overwhelming and successful conservative attempt to blame the inflation problem on wages or monetary policy and excess spending, when it was almost self evident that it was largely sectoral — energy, health, food and housing costs were the dominant sources of inflation.

So we attempted to challenge that by putting together COIN. There was a lot of success raising the issue. We tried to get the Carter administration to take a different view, but they were obviously not in a position to do anything serious.

The inflation went on, which paved the way for [Federal Reserve Chairman Paul] Volcker’s extreme policy — at one point it raised interest rates to 17 or 18 percent and created massive layoffs and wage cuts.

And why were the lobbying attempts unsuccessful?

Those in the Carter administration had all been brought up on standard traditional economics and did not feel comfortable attacking those interests. They would have had to go after the oil industry and a number of agricultural programs; the housing issue they could have done, but that would have entailed lowering the interest rate, not raising it.

The standard interest groups bolstered the Carter administration’s fear while at the same time the Republicans attacked them ideologically. They were just cornered. Had they been very bold, which they were not, they might have opened up the direction we are talking about.

Aside from the strictly political power questions — which are very real — there are certainly questions about the role of economic ideas and ideology.

You have been writing about alternative political-economic systems for decades. Why launch the NSP now?

It’s been clear to me that we are facing a systemic crisis for a very long time.

The notion that we might have the chance to launch it became evident as we began to see where the trends were going, and the slow build up of the so called “New Economy Movement,” which I’ve been involved with as well. What has become evident — and Occupy Wall Street helped crystalize it — is that the pain levels are so high, and the political system is so hijacked that something is about to break open.

The pain levels have been there all along. What was new with Occupy was the articulation — putting the 1 percent and 99 percent on the table — and it also produced political activism around economic issues for the first time in a long time.

How do you think Occupy, and its symbolic importance regarding political activism around economic issues, has contributed to the countless local economic experiments being conducted around the country, like those associated with the New Economy Coalition?

One of the little told stories of the Occupy movement is the following: People say it disappeared.

People prior to the Occupy events, isolated individuals, did not know other individuals who were equally isolated had these feelings and views. People met each other in Occupy events.

If you look at the basis for activism now in many parts of the country in the new economy movement, those people met others with whom they could form organizational and social bonds in order to act in a new way during the Occupy movement. The New Economy Coalition is one organization.

People are doing projects all around the country. If you peel back, a lot of the people got activated and found each other at the time of the Occupy movement.

So projects are something you have supported and pursued, obviously, through your activism. But you are also critical of what you have called “projectism,” which I will translate as the failure to see beyond individual projects or groups of projects to a strategic systemic approach.

Projects are absolutely critical; you can’t move without them. The question is whether we are building a strategy that aims at a systemic change. A lot of activism is framed as projects, and thinking through whether A leads to B and B to C is a very important kind of thinking that needs to be done by activists.

What strikes me is I think most people haven’t thought seriously about really winning. A lot of activism is, rightly, protesting or trying to fix a problem or correct an injustice. A much larger question is: How do we win? And if we won, what do we want? And I think that’s a critical psychological issue.

And the emphasis on clear analysis that can be understood by mainstream audiences?

It’s important that the project begins to give people, beyond just activists on the left, the sense that we can talk about this. We’re not going to move the ball unless we get a much broader group of people talking about this. I always think about whether I could explain it to the people who I grew up with.

You ought to be able to explain it to citizens. Tolstoy put it this way: If you can’t explain it to your fellow peasant, that’s your problem, not his.

Can you explain your belief in community as the foundational unit of a political system that is actually participatory and democratic?

Like I wrote in “Cold War Essays,” one of the most powerful sources of the problems we face internationally is that systems, like American capitalism, must expand.

Capitalism has an inherent necessity of expanding, seeking markets, investment abroad, outlets, and control of other communities in trade policies. If the system doesn’t expand it collapses.

If you want systems that are peaceful and do not inherently produce conflict, you must alter the nature of the expansionary element. That means you have to move away from capitalism — there’s also an ecological imperative to do this. That leads you to systems that are not entirely based on markets.

The starting point for my whole vision is this need to develop systems that both foster community and are not inherently expansionary.

You consistently return to economic planning as necessary for any system seeking stability, for both the entire economy and for communities. Can you explain our current system of backdoor corporate planning?

Every area you look at, either tax or regulation or loans or loan guarantees or combinations of those strategies bolster or don’t bolster certain directions in the economy. So the idea that we have a free market in the economy and that there is open competition is absolutely absurd. If you look at the oil industry, for example, it’s supported by special tax programs that give it a particular direction.

The way it’s organized, lobbyists have found ways to get these programs out of the government. As you know I worked in both houses of Congress at one point. The way in which the lobby system works — this is very well known and most people close to the political process just take it for granted.

What would democratic planning look like?

You are going to have to have national economic planning for the big areas — for example, energy, climate impact, transportation. Right now we let the free market control where the major air transport goes. What that means is a city like Cincinnati loses its transportation, then it loses its business. The same thing is going to happen to Cleveland, which is ridiculously inefficient, as well as inhumane. A planning system needs to begin to coordinate that.

How can we do this?

Partly we need to build up local experience through participatory budgeting and planning. That is a whole area for activists to work on.

We also need a theory of how to do it at the national level. Making it explicit — for example, if we want to deal with climate change, saying here are all of the implications captured in an economic plan. Similarly, if we want to stabilize communities, and so on. And then we should debate it back and forth.

Given our country’s size, the region becomes an important political unit in your work. Can you explain this?

Most people haven’t faced this question or wanted to face it. The country is almost obviously too big for the government to be a genuinely democratic institution — it’s almost 3,000 miles from corner-to-corner with 318 million people.

Now, most states are too small, economically. The most logical solution is something bigger than a state and smaller than a continent — a region.

Most European societies are radically smaller than the United States. You could drop Germany into Montana. Large scale gives control to elites — and to money and media. So, at some point, any serious model that wants to be democratic is going to have to decentralize where decisions are made.

California, New York, Texas could probably do it on their own — they are regional scale units. That’s a whole set of questions that have to be put on the agenda.

In your writing on democratic planning, you often confront the tension between the need for action and its centralizing tendencies, and participatory democracy and the decentralization needed to make it a reality. How can this apparent contradiction be overcome?

First, you have to have inclusive units that include everybody — community models, not just worker-ownership models.

The second piece is using both planning and markets. Using Cleveland and the Evergreen Cooperatives as an example, you’ll see that the big institutions — hospitals and universities — both of which have a lot of public money, buy from worker-owned companies that are embedded in the community structure.

That’s a planning system, using the purchasing power of these institutions, a lot of which is public money — Medicare, Medicaid — to help stabilize companies that are owned by the community and workers. It’s not just a free market system.

How can markets be used?

You want some sort of mix of planning and markets, because you want to challenge the planning systems, which can get rigid. If you take this model to the national level, then the government, using just one example, would support mass transit and high-speed rail as one element of its transportation system. That would mean there are a lot of public contracts to build that. They could purchase the goods from worker and community-owned companies. You could have several of them that are quasi-competitive, so that the planning system can be efficient.

What are the basic types of alternative political-economic models that could achieve this?

Most of the models have an element of worker-ownership in them. It’s not the only thing, but it does change the ownership of capital. I think it’s a mistake to say that’s the only element — I don’t agree with some theorists who think that the system is going to be just adding up worker-owned companies.

Another model is a city-ownership model. For instance, in Boulder, Colorado, they have municipalized a private electricity utility. So that’s a different strategy that emphasizes a community model at the city level. Now, you can put both together — I believe in a pluralist system that will include several different models.

A third model is neighborhoods. It’s particularly important for the United States, where neighborhoods are often organized around race. The work we’ve done in Cleveland is a combination of neighborhood ownership and worker ownership.

And you write about the problems that come with economic entities that achieve scale, even if they are worker-owned.

When you get to the larger scale and economies of scale become available, even worker coops develop power relationships because they have to. If somebody else is in the game who can cut costs by polluting, even good guys in the coop will lose their jobs and their company if the other group is able to undercut them.

Especially, if you invest in new equipment that can lower your cost, if somebody else does that in another company, you must do the same thing, otherwise you will be out of business. They have to grow; they have a growth dynamic, as well as a cost cutting dynamic, built into the model. So when you get to significant scale — and that changes in different industries — worker coops, in a market economy, have very similar forces operating against them that any company in a private economy has.

How can problems of scale be overcome?

First I want to say that worker coops make sense on a smaller scale and are doable.

One way to address scale is to build a culture of community that internalizes externalities, through, for example, community-wide ownership. That is to say, a community-wide ownership system can decide to pollute, but it pollutes itself. So it must make the choice of what to do.

Whereas a company, worker owned or not, may like to not pollute, but if it pollutes, it’s polluting the community, not just itself, and it might do that because of cost competition.

How can some of these different ownership models begin to be implemented right now?

I think we are going to see a lot of this. We’re already seeing activity at the city government level. Several city governments — New York, Madison — are beginning to pick up on supporting worker ownership. Some states — Vermont and Ohio — have supported worker-owned companies. That’s a step forward.

How can local government be used as a resource for this type of change?

It’s not just funding. People don’t realize, a worker-owned coop is a “business.” In the United States, there are enormous subsidies and laws and national government policies in support of business. For progressives and people on the left, the light bulb needs to come on that almost all of this could be used for worker businesses.

For example, with the Cleveland model, once the city officials realized they wanted to help, they could begin to use all of the existing tools for this direction. And the mayor often looks good if he or she does this. People are often in opposition and they don’t realize there are a lot of opportunities in government where politicians would look very good if they helped.

And what about the role for anchor institutions, like with the Cleveland Model?

The other strategy is big institutions that have a lot of money in them and can’t move — like hospitals and universities. Medicare and Medicaid, educational money, etc. They buy a huge amount of goods and services. They can be requested, or pressed, or organized to help support these new directions. That’s what’s going on in Cleveland, of course. In many cities, actually, but Cleveland has done the most dramatic work.

What kind of potential exists for activists to tap into these resources and to use them to attain much-needed economic development for marginalized communities?

One thing they can do is use city government purchasing power. They have to procure from somewhere. They could buy from a worker coop.

Another area is government housing programs that the city government manages. And they could do it in a way that supports, not only low-income housing, but either cooperative housing, or housing structures focused on land trusts that control housing prices. Using community land or housing trusts, you can get people into housing.

The typical situation is that when housing prices go up, people get priced out. The first owner makes a lot of money, but then the affordable housing disappears. In a land trust situation, the owners can recapture the cost that they put in. It’s happening in different places, but it’s very difficult to do. You have to learn about it and get tough in your organizing strategies.

Tax incentives, tax abatements, loan guarantees, loans, special zoning, public-private ventures, and other economic “tools” to encourage business development. We regularly use taxpayer money to achieve economic goals.

Where can you see this project going?

Many other movements began small — the women’s movement, the anti-war movement during the Vietnam era, the early environmental movement, and certainly with civil rights. The conservatives were absolutely nowhere in the 1940s. Radical conservatives were talking to themselves, but then they got serious about building a movement that could reach well beyond their narrow ranks. I think that’s what we’re talking about.