Bankruptcy of Mondragon company demonstrates limits of cooperation under capitalism

The announcement that one of Mondragon’s companies is filing for bankruptcy isn’t a commentary on cooperatives, but it is a reminder that even the world’s largest cooperative enterprise is not immune to capitalist competition.

Cooperatives point toward a more humane way of organizing production, but in themselves don’t necessarily alter market relations. That is true not only because cooperatives are yet minuscule islands in a vast sea of capitalism, and thus must make decisions strongly impacted by a continual buffeting by market forces, but because a cooperative economy would require that cooperation, rather than competition, be the basis of relations.

The shuttering of Mondragon’s household-appliances company, Fagor Electrodomésticos, is also an opportunity to ask if there comes a point where a cooperative becomes too big. Mondragon has expanded steadily, through internal growth and creating new businesses but also through buying companies outside Spain. Although that expansion is not a factor in Fagor’s closing, Mondragon has had difficulty absorbing some of its acquisitions, with the result that at least 14,000 workers are actually employees of the cooperative.

Mondragon UniversityThus the cooperative members profit through extracting surplus value from these employees, who do not share in the decision-making. In fact, Fagor’s Polish factory (where the workers are employees, not members of the cooperative) was the subject of a slow-down strike in 2011. Fagor, reacting to capitalist competitive pressures, had moved some production there from France to take advantage of lower wages.

The failure of Fagor, unable to survive the drastic downturn in the Spanish economy, is also noteworthy because it is Mondragon’s original business, and one of the larger among Mondragon’s federation of 110 cooperatives. A manufacturer of washing machines, refrigerators, dishwashers and other “white goods,” Fagor’s revenues declined to €1.1 billion in 2012 from €1.8 billion in 2008, the year of the financial crash, and has not earned a profit since 2008. Revenue has been hurt by the intensity of the economic downturn in Spain, where unemployment is 27 percent amidst a collapse of the housing market.

Cooperative members better off than capitalist employees

Unlike at a capitalist corporation, where workers are routinely laid off merely because of a slight decline in profits, Mondragon strives to keep all its members employed. Decision-making is made by the workers themselves, in assemblies and through their elected, accountable managers, representatives and board members.

In the case of Fagor, its cooperative members had previously agreed to cut their pay by 20 percent. In addition, Mondragon had provided €300 million in financing in an effort to keep the appliance maker afloat. But Mondragon’s general council, which coordinates the policies of the various companies, decided it would provide no more funds, rejecting Fagor’s request for another €180 million that Fagor believed would finally stabilize itself.

A Mondragon press release issued on October 30 said:

“[T]he proposal submitted by Fagor Electrodomésticos is not viable, and [Mondragon’s general council] has unanimously agreed the company no longer responds to market needs, and the financial resources it requests would not ensure its business future.

“The [Mondragon] Corporation has analysed the situation following the financial assistance given to Fagor Electrodomésticos in recent years both by the cooperatives themselves and through sundry corporate instruments, and it has considered that the feasibility plan submitted by Fagor Electrodomésticos is not viable.”

Because each of Mondragon’s companies are autonomous, self-managed cooperatives (which assist each other through mutual support mechanisms), Fagor’s closing has no effect on the viability of other units. But because one of the mutual-support mechanisms is retraining workers in struggling companies and their transfer to stronger businesses, Mondragon may have difficulty absorbing a bankruptcy unprecedented in size.

On the other hand, the cooperative members of Fagor are not simply out in the street, as they would be at a top-down capitalist corporation. Mondragon’s press release went on to say that its general council pledges to:

“[C]ontinue to activate all the support mechanisms required to reduce to the furthest possible extent the impact on employment due to the circumstances of Fagor Electrodomésticos. These measures will range from reassignments to early retirements and the implementation of training schemes that will reinforce the employability of the worker-members of Fagor Electrodomésticos. … The diversity of sectors and markets in which our cooperatives operate is an assurance that leads us to believe they will continue to launch new activities in the short-to-medium term, with a positive knock-on effect on job creation. The fact our businesses are competitive in their respective markets is good news for the absorption of any redundancies forthcoming at Fagor Electrodomésticos.”

Given Mondragon’s history, that is not empty talk, although El País reports that Fagor’s employed workers, which would include those in its Polish factory, are not covered. There have been no layoffs in Mondragon despite the exploding Spanish unemployment rate; instead workers have agreed to reduce their wages by an average of five percent with a shifting of some to stronger from weaker companies. Fagor’s cooperative members will be paid 80 percent of their salaries for two years through Mondragon’s own insurance company.

Forced to ‘become their own capitalists’

Mondragon’s growth from a handful of people in the 1950s to its status as a major competitor in a range of industries rests on its ability to successfully compete against capitalist enterprises while riding the ups and downs of market competition. No article about Fagor’s closing — not even the sneering “I told you so” of The Economist’s report — so much as hints at any quality-control issues. Rather, Fagor went under due to slack demand in Spain and France, and stiff competition from low-wage Asian imports.

Therein lies a contradiction. Mondragon operates as a cooperative, fully under the control of its workers (at least those in Spain), in which all management and oversight posts are elected internally, wages are vastly more equal than in a capitalist enterprise, and it is owned exclusively by its workforce. In other words, the cooperative members share in the risks, gains and decision-making, with profits distributed to the workers themselves, to investment funds and to the overall organization’s internal support fund.

Despite that internal cooperation, Mondragon must operate like a traditional capitalist enterprise outside its gates. Forced to compete against capitalist corporations operating in capitalist market conditions, it can not do otherwise if it is to survive. This is the case for other cooperatives today. In essence, cooperative workers in a capitalist economy are, in the words of Karl Marx, forced to “become their own capitalists.”

Because of Mondragon’s size, Fagor’s workers may be able to secure work elsewhere in Mondragon. They didn’t face the prospect of their jobs being moved to a low-wage haven on the other side of the world, but they also could not stay in business in the face of capitalism’s worst slump since the Great Depression.

Moreover, Mondragon also acts like a capitalist corporation in that it acquires businesses and sometimes the employees of those acquired businesses, particularly those outside Spain, remain employees of the cooperative rather than become full members. Such a result flows from the need to expand to survive the rigors of capitalist competition. Any economy that operates on the basis of market competition — that is, in which markets are allowed to determine social outcomes — will lead to some form of “grow or die,” in which enterprises struggle to survive.

Cooperators’ own wages remain a commodity if everything else is a commodity priced by markets. In an economy dominated by cooperatives but with capitalist market relations intact, collective workers would face market pressure to reduce their own wages in order to compete better against their competitors. Some enterprises would become much bigger than others; smaller enterprises would be compelled to sell themselves to larger competitors, consolidating production until an oligarchy arose. Some industries would be much bigger than others. As market competition intensified, survival would require more ruthless behavior.

Democratic control as the basis for a new economy

A cooperative economy, therefore, has to not only be based on enterprises run on cooperative lines, but the cooperatives must cooperate with each other as well. The entire economy would have to be based on democratic control, with commodity prices negotiated in fair and open talks, and with a rational system of distribution that would be supple enough to respond to changes in consumer demand while not over-producing. Such an economy might largely be in the hands of cooperative enterprises, but with critical industries, such as banking and energy, in state hands, under democratic control.

Successful cooperative enterprises such as Mondragon provide glimpses of an economy organized for human need rather than uncontrolled private profit, but are insufficient by themselves. That is not a criticism of cooperatives; on the contrary, the growth of cooperatives should be encouraged as strongly as possible. In present circumstances, they exist on the margins, fully subject to the rigors of capitalist competition.

No cooperative today, no matter how successful, can operate outside the demand of the “market” — and the capitalist market is the aggregate interests of the world’s largest industrialists and financiers. As more industries follow the leads of textiles and electronic gadgets — that is, move production to places with ever lower wages and ever less regulations — the more pressure there will be to follow suit or go out of business. Fagor will not be the last cooperative to face this dilemma. It is inevitable as long as cooperatives remain small islands at the mercy of capitalist competition.

A better world, a rational economy geared to human need, requires a different system. As large as Mondragon is, it is has no ability to operate outside the logic of capitalism. Overall, it has thus far competed successfully, but at the price of becoming too large to integrate all its workers. The world would need many more Mondragons, cooperating and negotiating with one another, to even begin to crack the façade of capitalism, and capitalists are not likely to sit by idly while an alternative to their rule grows.

As worthy a model as cooperatives can be, they are not a substitute for working people around the world struggling collectively to create a better world. All the advances of the 20th century are the product of collective struggles, but because those movements settled for reforms while leaving the system in place, the gains have steadily been taken back.

If capitalism is to be transcended, the relations among enterprises, and between people and enterprises, have to be put on a new footing — one based on cooperation, not competition.

Those who do the work in the workplace should get the rewards

A cooperative enterprise rests on a basic concept — the people who do the work earn the money. Strange, isn’t it, that this straightforward idea is considered radical.

It shouldn’t. Yet it is. The modern capitalist system is advertised as a “meritocracy” — those who work the hardest earn the most. In reality, this is a fairy tale; those who accumulate the most are those who have the most capital, often inherited. The system is called “capitalism” for a reason.

Not even the hardest-working chief executive officer works 340 times harder than his or her average employee. The financier who manipulates numbers on a computer screen, indifferent to the humanity that produces those revenues and net incomes, surely does not work hundreds of times harder. Or, likely, even as hard, particularly if the corporate raider is looting a manufacturing company with a factory floor.

If the chief executive, or any manager, is elected from the ranks of the workforce by those same co-workers due to his or her meritorious effort and/or willingness to obtain a degree in management, then indeed an enterprise can be said to operate on a meritorious basis. Such enterprises already exist; some were created as cooperatives at the start and some were taken over by their workers to forestall closure or abandonment.

If you gave the average employee the choice of working in a cooperative, in which everybody shares in the rewards if the enterprise succeeds and everybody has a vote in strategic decisions in a democratic process, as opposed to being an exploited, powerless cog in the traditional authoritarian, top-down capitalist enterprise, there would be considerable support for the former option. If the person given this choice were to be told that wages, benefits and working conditions would be better in the cooperative (as in fact is the case), the decision becomes easier.

But what do we say to a small-business owner? Mom-and-pop businesses form part of the backbone of communities and, unlike a large corporation in which ownership shares are traded among speculators far removed from the actual underlying business, the small businessperson is present, often for long days. Here we have people who do put in more hours than others, and have put their limited capital at risk.

Why should anyone have to work 14 hours a day?

Two recent conversations have gotten me to think about this particular question. One was a debate conducted on another blog in direct response to a question from a small business owner who said he works 14 hours a day, six days a week. The other was a debate with a passerby I had last weekend while staffing an Occupy Wall Street literature table who insisted she was more deserving than others because she worked 12 or more hours a day when others weren’t willing to do so.

If someone chooses to work such hours and is personally fulfilled by doing so, that is that person’s business and not mine. But if you are at your job 14 hours a day, six days a week, your family is missing all the other things you have to offer them. And no matter how nice a house you may have, you’re not there to enjoy it.

Nobody should have to work such punishing hours. There are those who choose to do so out of personal conviction, but there are many millions of people in sweatshops working such hours, or still longer hours, who earn starvation wages — and they have no choice about it. The big capitalists of the world — people who have far more than any small-business owner — earn their fabulous wealth by exploiting such people, and by exploiting relatively more privileged people in advanced capitalist countries who work lesser hours but nonetheless work long, hard days.

Capitalists become rich by paying their employees less than the value of what they produce — usually far less. That doesn’t mean that there aren’t capitalists who don’t work, but a person who runs a small family business is not in the same category as a big capitalist. The passerby with whom I debated last weekend said if the people whom she claimed were jealous of her house were to run businesses like she does, and put in as many hours, they could have what she has.

But there is only so much space for such businesses; under capitalism, most people are going to have to work for somebody else. Moreover, opportunities are vastly unequal. I grew up in a middle class household where the expectation was always that I would go to college (which I did), and we lived in a town with an excellent public-school system, so I received a better education than most students. I had advantages that many people do not have, had I wished to pursue a business career.

Yes, some folks do climb out of disadvantageous situations, but only so many can do that in a (capitalist) system that puts tremendous roadblocks in front of people. Saving is difficult when mere survival is an increasingly difficult struggle.

A small-business owner may object that s/he puts in more hours than employees do (if they have any) and has capital at risk. That may be true, but having to do so is a requirement imposed by the capitalist system; it is not something ordained by some natural order. The capital put at risk was undoubtedly lent by a bank, which collects high interest — in other words, the bank is exploiting the small businessperson. The banker did nothing but sign a piece of paper while the owner works 14 hours a day. Why should the banker earn such big money? Quite likely, the banker, who repeats this exploitative operation with others, earns far more money and works far fewer hours.

The small businessperson is exploited by capitalists, too, just in a different way than an employee is.

The proprietor works, the landlord takes

Let’s take a concrete example. For more than 30 years, including two decades at his last location, a vegan baker much loved by the community operated a bakery before being forced out of business by a landlord who continually jacked up his rent, at three times the rate of inflation. The baker always gave to the community, frequently donating goodies at public events; I was far from the only person routinely greeted with a hug and often offered a free tea when I stopped in. During those years, the Lower East Side neighborhood of New York City changed from a unique enclave of Puerto Ricans, Ukrainians, Poles, artists, squatters, community gardeners, anarchists, communists and beatniks to its present-day state of gentrification run amok.

[Credit: VegGuide.org at http://www.vegguide.org/entry/436]

[Credit: VegGuide.org]

The baker worked from early afternoon to midnight six, and usually seven, days a week, just so all of his money could go to the landlord, who merely needs to sit in his comfortable office many miles away and let the money roll in. For landlords, the neighborhood is nothing but a cash cow to exploit, cynically taking advantage of the cachet created by the residents they are squeezing out by their exorbitant rents. The baker’s fate has been the fate of countless small businesses; only faceless chain stores are able to afford the rents. This corporatization has been replicated in countless other neighborhoods.

The free-lance worker gets the short end as well. For years, I was self-employed, and had to, for tax purposes, operate as my own small business and fill out tax forms the same way an actual small business would. But I was no businessperson — I was a worker who didn’t have a regular job. I was exploited; in fact I was more exploited than I now am with a regular job because I had no health insurance and I had to pay double the usual Social Security taxes (my half and the employers’ half).

People are taught to have a 19th century, romantic notion of capitalism — a myriad of small enterprises competing in a free market. But a “free market” has never existed. Capitalism was built on pushing people off their farms and passing draconian laws to force them into the new factories; markets are expanded through force both military (World War I is one particularly bloody example) and financial (such as International Monetary Fund diktats); and the largest competitors become a handful of oligarchs whose wealth enables them to get governments to give them yet more advantages and who compete by cutting wages rather than through competition that exists only in textbooks.

Employees are exploited through this system, regardless of collar color, by being paid only a small fraction of what they produce and forced to compete for a dwindling number of jobs, but also because they, as consumers, have to pay the high prices that result when competition reduces an industry to a small number of oligopolistic behemoths who dominate a market. Small businesses are also at the mercy of larger corporate entities, including rapacious bankers, and are hurt when their customers have less money.

In a cooperative economy, no individual must assume all the risk. The cooperative can do so, taking loans at reasonable rates by making a good case to a publicly accountable bank operated as a public utility. Enterprises would relate to other enterprises in a cooperative, not competitive manner, eliminating much of the anxiety inherent in a capitalist system in which humans serve markets instead of the other way around.

Hard workers such as the small businesspeople under discussion would be valuable to a cooperative enterprise. Someone possessing such drive would likely wind up being elected to an administrative or management post by their collective. Talents and hard work would still be recognized; such a driven person would still have the personal satisfaction of a job well done; and s/he could work fewer hours, allowing more time to be spent with family and friends.

Others, too, will contribute talent and work to the cooperative enterprise while sharing the burden. Everybody who works should have a say in what is produced, how it is produced and how it is distributed, with community input — after all, it is the community that would be supporting the enterprise, and the enterprise in turn would be operated by people from the community. Production should be for human need, not for a minuscule elite’s private profit with no regard to the greater good. Benefiting the community and earning a comfortable living while working a humanistic workday shouldn’t be oxymoronic.

The formation of cooperatives doesn’t by itself eliminate competition

More people are becoming interested in cooperative enterprises as an alternative to the capitalist top-down corporation. In reading about and discussing the topic, I have found an interesting pattern: An assumption that competition will continue but that it will become benign.

It would be unrealistic to forecast that a cooperative economy would be without competition. But competition in what, and in what form? When we think of competition, often the visualization is of two or more companies competing to make a better consumer product. That is visible — the company that produces a shoddy product when another company produces a quality product puts itself at risk of going out of business (at least in theory).

Less visible, because it is abstract unless it is your job that is shipped overseas or eliminated, are the marco-economic results of competition. Among these are increasing downward pressure on wages; the creation of rust belts as industrialists move production to locations with ever cheaper wages; the relentless pressure (most often applied by the financial industry) to reduce costs, often by workforce reductions; the drive to produce ever higher profits, regardless of human cost; and environmental destruction. All these developments arise not because of this or that greedy banker or the personality of this or that industrialist. They arise because they are the inevitable product of market forces.

Market forces are not a “natural” phenomenon, they are the aggregate interests of the most powerful capitalists. The concentration of production in most industries into a handful of giant corporations — an oligopoly — is also the result of capitalist competition. Expand or die is the inexorable law a capitalist lives by: If you don’t get bigger and stronger, your competitor will and put you out of business. As the winners from this ruthless competition grow bigger and more powerful, they have more weight to throw around the political arena, and can (and do) exert decisive influence over the political process. It is in their interest for them to do so — and we shouldn’t expect them to act otherwise.

I have often been struck by a belief I often encounter that presumes that we need only convert business enterprises into cooperatives and capitalist competition will cease. Underlying that assumption, in my opinion, is locating the cause of greed, injustice, inequality and other social ills in the authoritarian, hierarchical structure of the capitalist enterprise. That structure is surely a significant contributing factor. But that shouldn’t obscure the cut-throat nature of unfettered, market-driven competition: The relentless pressure to increase profits, maximize market shares and eliminate competition — on pain of enterprise death for those who don’t do this sufficiently — makes unethical or anti-social business decisions inevitable.

It is not only the direct competition that compels such behavior, it is also the financial industry: Billionaire speculators, institutional investors, hedge funds, investment banks and other financiers are ever ready to apply the whip if profits falter — and can move gigantic sums of money through stock, bond and foreign-exchange markets at the click of a button to punish those who don’t deliver. During periods of economic upswing, wages may rise for a time as unemployment falls. But wage increases eventually eat into profits; falling profits are intolerable and will be punished by financiers. Cuts to wages, whether in givebacks or in the form of layoffs, and the destruction of productive capacity ensues.

Wages — and thus the human beings who work for the wages — are commodities in capitalism, or any system in which distribution is monopolized or largely controlled by capitalist-style market relations. If all enterprises were converted into cooperatives, collectively owned and managed by the full workforce, but capitalist market relations were left intact, the same competitive pressures would exist. There would be much less inequality because, presumably, all workers within a given enterprise would receive the same wage or would have small differentials, and the workers would be sharing in the profits they create rather than have them confiscated by top executives and financiers.

But their own wages would remain a commodity if everything else is a commodity priced by markets. The collective workers would face market pressure to reduce their own wages in order to compete better against their competitors. Some enterprises would become much bigger than others; smaller enterprises would be compelled to sell themselves to larger competitors, consolidating production until an oligarchal situation arose. Some industries would be much bigger than others. As market competition intensified, survival would require more ruthless behavior. In somewhat different form and with somewhat less intensity, the instability and social ills of capitalism would be reproduced.

A cooperative economy, therefore, has to not only be based on enterprises run on cooperative lines, but the cooperatives must cooperate with each other as well. An economy would have to be based on democratic control, with commodity prices negotiated in fair and open talks, and with a rational system of distribution that would be supple enough to respond to changes in consumer demand while not over-producing.

Part of the waste of capitalist production lies in its chaotic, unplanned nature: Production is increased until too much product is produced that can’t be sold; productive capacity is then destroyed (such as shuttering factories) until a shortage arises and a new cycle begins. This is done through uncoordinated, individual decisions based on guesswork. The pressure of competition compels decision-making to be done in secrecy and, additionally, no mechanism exists to judge composite demand. The result is alternating booms and busts, with accompanying human costs.

Democratic planning, from the bottom up, would be necessary to determine need and enable proper distribution. Ideally, there would be many enterprises for most products. Enterprises might work best as small or midsized production units. Here is where competition would still exist and provide a positive, rather than a destructive, role. If there are dozens of cooperatives producing shoes, the consumer would have many choices, and the enterprise that made a poor-quality shoe would have to do better — a producer that makes a product that people don’t want to buy won’t stay in business.

If one cooperative makes an innovation that gives it a higher-quality product, then other cooperatives would naturally copy the innovation. If democratic planning, to throw out a hypothetical example, determines that 1.2 million shoes need to be made because 1.1 million shoes were produced last year and the supply fell a bit short, and there are several shoe makers who make a quality shoe, that increased target can be distributed among them. If limits to capacity are being approached, one or more cooperatives can go to the local community-run and -controlled bank for a loan to expand capacity by making a case that more shoes should be made.

Production in unfettered markets will become production for private profit, not social need, even if that private profit is collective rather than concentrated at the top. Production needs to be oriented toward human need — that is the other half of the equation of cooperative enterprises.

Cooperation is not only a good idea, it already works in practice

Cooperation is a fundamental human trait. You may find it bizarre to read a post that begins with such a sentence, but sometimes we do have to point out the obvious.

Competition, we are continually lectured, is the primary driving force animating human beings. It is rarely, if ever, put quite so explicitly, but the prevailing ideology does tell us exactly that. Competition is the fuel of economic growth and progress in a system based on never-ending life-and-death fights to gain dominance at pain of going out of business — so we are told. Competition, conveniently, can be won by only a few heroic figures, who must be given control over other peoples’ lives and rewarded with stratospheric pay.

We lowly employees, who can not comprehend the divine will of the market (which is governed by an invisible hand that only the chosen few of the business elite can see because they possess the magic glasses that see what is otherwise invisible), must sit in awe and gratitude of our capitalist masters. In fact, we should turn over the workings of our entire government to them, and be grateful for their selfless attitude in leaving the business world behind so that they can change the laws to benefit the businesses to which they will return.

Yes, I am going to commit sacrilege here. The world of the preceding two paragraphs, despite their continual propagation, does not have to be so. Places where they aren’t so already exist. Human beings can cooperate with one another (and routinely do — how would a product or service exist if employees did not work together?). The following is by no means a comprehensive list of successful cooperative enterprises, but represent building blocks toward a different way of organization.

Cooperative enterprises, in which all employees share in all the decision-making and manage themselves, are not pie in the sky. They already exist. Cooperatives are distinguished by higher pay than received by employees in traditional businesses, and studies have shown greater levels of job satisfaction — neither is a surprise when large sums of money are not funneled upward and workers have control and decision-making power over their jobs.

The recovered factories of Argentina

Practical experience in Argentina, where cooperatives have existed in a variety of industries since 2001, has provided a demonstration of worker-run enterprises forging strong links with their communities, with mutual benefit to the enterprise and the community that supports the enterprise.*

Solidarity and community instincts have not disappeared under the stress of competition from the capitalism surrounding Argentine cooperatives. A high level of idealism was necessary to initiate the process and in turn the experience has raised consciousness to new levels. After an upsurge in new occupations in 2009 (the latest year for which I can find a reliable figure), the Argentine movement of worker recovery of factories encompassed about 250 enterprises with more than 13,000 workers. The factory takeovers came in the wake of economic collapse a decade ago.

Néstor Kirchner, upon taking office as president early in 2002, suspended Argentina’s foreign-debt payments before agreeing to pay only 30 percent of the crippling debt, an unusual example of a country standing up to the capitalist world’s multi-national financial institutions. But Kirchner and his wife and successor as president, Cristina Fernández, did almost nothing internally to disturb the workings of capitalism — Argentina’s worker-run factories have contended with hostility from domestic political authorities and from corporate power inside and outside the country.

Most of the cooperatives formed in the worker-run factories began with similar stories — owners failing to pay employees, owners stripping the enterprises of assets, owners shutting down plants with no notice and of police using force to expel workers who had occupied plants for the purpose of getting some of the back pay owed to them after production was halted. The cooperatives were formed when workers maintaining their occupations realized that their factory owner did not intend to restart production, and decided to restart production themselves. The employees doing so first had to overcome their own doubts about themselves, but were able to draw on the experience of those who went first and created national organizations to represent the cooperatives and enable coordination among them.

The president of the national coordinating body National Movement of Reclaimed Companies, Eduardo Murúa, explained this process in an interview published in the book Sin Patrón:

“Since the restoration of democracy [after the 1976-1983 military dictatorship], all the laws that have been passed are against workers’ rights. The laws, enacted first by the dictatorship and then by the formal democracy, served to consolidate a global economic model organized according to the [existing capitalist] international division of labor. The changes to the bankruptcy law, for example, had left us without the possibility of severance pay. The reformed law also requires the judge to liquidate a bankrupt company’s assets in 120 days. The only way to reclaim the company is to occupy it and show, first the judge, and then the political class, that we’re not going to leave the factory. … Certainly, if there weren’t so many doubts and fears among the entire working class, there would be many more reclaimed factories. Because of these uncertainties, this process only works in places where there is some level of organization and capable leadership.” [pages 214-215]

The largest of these reclaimed factories is the Zanón factory producing ceramic tiles, which is now known as FaSinPat, a contraction of the Spanish-language words meaning “Factory Without a Boss.” The process started when the original owner, Luis Zanón, stopped paying his employees, who went on strike in response. Zanón received loans from the provincial government to pay back wages, but pocketed the money instead. Finally, the employees went back in, occupied the silent factory, sought and received community support, and decided to restart production themselves in March 2002.

Despite legal obstacles and police harassment, the collective works. In the first four years of worker self-management, the number of employees increased from 300 to 470, wages and factory output increased, and without the speedups and insensitivity to safety imposed by bosses, accident rates were reduced 90 percent. New workers are not hired hands, but become part of the collective. The collective allies itself with the struggle of local Indigenous peoples, who have donated clay from their lands to the factory. The collective also donates tiles to community centers and hospitals and, in return, the nurses’ union donates the services of a nurse during each shift.

The path of the FaSinPat collective was not an easy one — the workers had to physically defend their occupation, with community assistance, more than once and they had to wait eight years before the provincial government passed a law granting the collective legal control of the factory in August 2009. The government also paid off part of the debt incurred by Luis Zanón — much of it owed to the World Bank, which gave a loan of 20 million dollars to Zanón for the construction of the plant, a loan he never paid back. Zanón’s creditors had pushed for the eviction of the collective and foreclosure of the plant during the months leading up to the legislative vote.

The cooperatives operate in a myriad of Argentine industries, including “white collar” businesses. One example is a speciality newspaper covering economic and judicial issues in Córdoba. The newspaper, Comercio y Justcia, was sold by its long-time family owners to a conglomerate during the 1990s wave of corporate consolidation of Argentine media. The new corporate owners hired managers at enormous salaries, stopped paying employee salaries and staged a fake robbery that emptied the office of most of its equipment. The workers brought in their own computers so the newspaper could continue to publish, then went on strike when the new owners failed to pay them for five months.

Finally, the workers went back in to restart the newspaper themselves, making it a going concern after a great struggle. In contrast to other media outlets cutting staff and quality, the Comercio y Justcia collective maintained the size of its staff and its quality, more than doubling circulation in its first year.

In almost all of the Argentine cooperatives everybody earns the same amount, and none hires outside managers — the cooperatives are governed by assemblies of the entire workforce with their decisions carried out by managers who are elected from their own ranks and who serve limited, specified terms. In a separate interview in Sin Patrón, one of the Comercio y Justcia collective members said of the new way of working:

“Inside, we have a setup that goes against the logic of capitalism. A humanized work régime, a production arrangement decided by workers themselves. In relationships outside the institution, we can’t detach ourselves from the economy’s logic, but we give ourselves the luxury of doing work for free and doing what we decide as workers. On the inside the revolution has already happened. And looking externally, our biggest contribution is demonstrating that workers can efficiently run an enterprise.” [page 208]

Not all the Argentines who recovered their abandoned companies initially wanted to form cooperatives — there were those who wished for nationalization. There was no interest on the part of the federal or provincial governments to take over factories, so those workforces that initially sought nationalization had no choice but to adopt the cooperative form. Proponents of nationalization argued that cooperatives would be at the mercy of an intact capitalist system and that the cooperatives would eventually be forced to pay the old owner for the recovered factory, an expense they would be unable to meet. Proponents of cooperatives argued that direct worker takeovers would be faster and more practical — the jobs would be saved faster this way, the aim of the takeovers.

The cooperatives — although many successfully bought their factories from the old owners at discounted prices thanks to strong community support and their perseverance through long legal battles and repeated attempts at physical expulsion — remain small islands in a vast sea of capitalism. They are merely tolerated by an Argentine establishment loath to appear too openly to challenge continuing community support, and they represent an example that capitalists everywhere wish to stamp out. These cooperatives must survive in an economic environment that operates on a very different basis than they do and are at the mercy of the powerful forces unleashed by that environment, including boom/bust economic cycles. But they have survived.

Mondragon, the world’s biggest cooperative

Based in the Basque Country of northern Spain, Mondragon has more than 83,000 jobs among its many businesses. Mondragon produces industrial components and consumer goods, provides construction services, and operates a supermarket chain, a bank and a university. These are not small operations — the cooperative reports annual revenue of nearly 15 billion euros.

New workers become full members after a trial period of six to twelve months. All ownership is in the hands of Mondragon workers; each buys one non-transferable share upon become a member and sells it back to the collective upon leaving or retiring. In addition to the regular wage, members also share in the profits, with a dividend being paid to each out of the surplus the members’ business earns. Thirty to seventy percent of the profits are distributed as dividends, depending on the health of a given business. Profits are also distributed among the individual businesses, set aside for investment and to replenish reserves, and distributed into the overall organization’s internal support fund.

Mondragon’s English-language web site explains the basis of its workers’ renumeration, which are on a very different principle than a capitalist corporation:

“Labour is granted full sovereignty in the organisation of the co-operative enterprise, the wealth created is distributed in terms of the labour provided and there is a firm commitment to the creation of new jobs. As far as the wealth generated by the co-operative is concerned, this is distributed among the members in proportion to their labour and not on the basis of their holding in Share Capital. The pay policy of Mondragon’s co-operatives takes its inspiration from principles of Solidarity, which are expressed through sufficient remuneration for labour on the basis of solidarity.”

All decisions on working hours, pay, allowable pay differentials, strategic decisions and management are made by a collective vote off all members. The supreme body of Mondragon is the general assembly, in which all members participate and vote on the basis of “one member, one vote.” The general assembly elects the governing council, which represents and governs the cooperative — and is accountable to the general assembly. The governing council in turn appoints the executive management team. Management does not act independently, however — a separate cooperative congress, consisting of 650 members delegated by individual businesses, is tasked with “establish[ing] the strategic criteria by which the Corporation is to be administered.”

Members are also represented in all internal bodies by the social council, and an elected monitoring commission ensures compliance with accounting principles.

Decision-making power, however, resides with the full membership. According to Mondragon:

“The first and foremost body of participation is the General Assembly, in which rests the full sovereignty of the co-operative. Its most important powers include: appointing and revoking members of the Governing Council and Accounts Auditors by means of a secret vote; examining company management, approving the annual accounts and the distribution of surplus and apportioning of losses; approving the general policies and strategies of the co-operative; approving increases in share capital, the rate of interest to be accrued by capital contributions and the joining fees for new members; modifying the Company Statutes and approving everything implied by a substantial modification in the economic, organisational or functional structure of the co-operative.”

Management comes from within; it is not hired from outside. And there are no layoffs — if a business experiences a slowdown, some of its members are transferred to another business that has need of more workers. Mondragon, however egalitarian its internal structure, does have to compete in a capitalist environment against capitalist enterprises, and so continues to expand into new ventures and to, outside of Spain, buy companies. The latter are bought with an eye toward converting them into cooperatives and making the bought companies’ personnel worker/owners equal to those in established businesses, but has not succeeded in converting all.

Nonetheless, Mondragon’s workers don’t face the continual prospect of being laid off every time there is a slight dip in profits. Georgia Kelly and Shaula Massena, writing in Yes magazine, reported on what happened when one of the Mondragon businesses experienced difficult times:

“The worker/owners and the managers met to review their options. After three days of meetings, the worker/owners agreed that 20 percent of the workforce would leave their jobs for a year, during which they would continue to receive 80 percent of their pay and, if they wished, free training for other work. This group would be chosen by lottery, and if the company was still in trouble a year later, the first group would return to work and a second would take a year off. The result? The solution worked and the company thrives to this day.”

Nobody votes to send their jobs to a low-wage haven in another country.

The “Cleveland model” starts with anchors

The Evergreen Cooperative Initiative — often referred to as the “Cleveland model” — seeks to strengthen a local community from the ground up through the creation of cooperative enterprises anchored to large institutions. Based on the east side of Cleveland, Ohio – a city that has lost half of its population since 1960 — Evergreen creates worker-owned small businesses that provide products and services to established “anchor” institutions in the immediate area (such as hospitals and universities) and other customers.

The Evergreen Cooperative Corporation, which describes itself as a holding company “leading this initiative,” says on its web site:

“The Evergreen Cooperative Initiative is based on a vision of ‘community wealth building.’ Community wealth strategies aim at improving the ability of communities and individuals to increase asset ownership, anchor jobs locally, strengthen the municipal tax base, prevent financial resources from ‘leaking out’ of the area, and ensure local economic stability.

The strategic pillars on which the Initiative is built are: (1) leveraging a portion of the multi-billion dollar annual business expenditures of anchor institutions into the surrounding neighborhoods; (2) establishing a robust network of Evergreen Cooperative enterprises based on community wealth building and ownership models designed to service these institutional needs; (3) building on the growing momentum to create environmentally sustainable energy and green collar jobs (and, concurrently, support area anchor institutions in achieving their own environmental goals to shrink their carbon footprints); (4) linking the entire effort to expanding sectors of the economy (e.g., health care, our aging population, local food, and sustainable energy), many of which are recipients of large-scale public investment; and (5) developing the financing and management capacities that can take this effort to scale (that is, to move beyond a few boutique projects or models to have significant municipal impact).”

Evergreen hopes to create as many as ten more cooperatives in the next three to five years, and ultimately create 5,000 cooperative jobs during the next decade. In a city the size of Cleveland, that is a small number, but it represents a model that others can replicate. Success in this initiative would also demonstrate a different, more humane model than that of modern-day capitalism, with its authoritarian top-down structures and vastly unequal levels of compensation and power.

Successful local businesses such as these would also stabilize neighborhoods that suffer when jobs in manufacturing and older industries are moved away.

Cooperative businesses include Evergreen Laundry, which provides industrial-scale laundry services; Evergreen Energy Solutions, which designs and installs solar panels and provides energy-efficiency services; and Green City Growers Cooperative, which operates a hydroponic food-producing greenhouse covering more than three acres (more than one hectare). Local institutions that contract for services from the cooperatives include Case Western Reserve University, the University Hospitals system and the Cleveland Clinic (a local medical center and research facility).

By using local institutions that will not be moving as anchors, the Cleveland model seeks to create worker-owned enterprises that will also stay in the community:

“Rather than a trickle down strategy, it focuses on economic inclusion and building a local economy from the ground up; rather than offering public subsidy to induce corporations to bring what are often low-wage jobs into the city, the Evergreen strategy is catalyzing new businesses that are owned by their employees; rather than concentrate on workforce training for employment opportunities that are largely unavailable to low-skill and low-income workers, the Evergreen Initiative first creates the jobs, and then recruits and trains local residents to take them.”

The Cleveland Foundation, a local funding organization, provided capital, guaranteed a bank loan and conducted talks with executives of the anchor institutions to start the initiative. Each individual business received a loan that was subsidized with federal tax credits, and low-interest funding was also provided by the U.S. Department of Housing and Urban Development. Using its seed capital, Evergreen provides long-term financing to start cooperative businesses and to provide them with technical support and training.

Similar to Mondragon, on which Evergreen is modeled, employees work a six-month probationary period, then begin to buy into the company through payroll deductions over three years. Evergreen estimates that its worker-owners will build an equity stake of $65,000 after eight years of working at an Evergreen cooperative in a section of Cleveland in which the median annual income is $18,500. When worker-owners retire or leave the company, they relinquish their ownership share and the value of their capital account is returned to them, as their equity stake in the company. Workers also share in the profits generated.

Cooperatives as yet are too small to represent anything other than the smallest crack in the edifice of capitalism. But the bricks of today will be used to build the world of tomorrow. These models could spark similar enterprises or cooperatives on different models — and demonstrate that cooperation can become the standard in a better world.

* This discussion of Argentina is based on an excerpt from my forthcoming book It’s Not Over: Lessons from the Socialist Experiment. Among the sources used here are lavaca collective, Sin Patrón [Haymarket, 2007]; Peter Elliot, “Zanon Workers in Argentina Still Waiting for Security,” posted June 27, 2006, on the Upside Down World web site, upsidedownworld.org; Ginger S. Gentile, “Argentine Lessons,” posted March 8, 2004, on the ZNet web site, http://www.zmag.org; Marie Trigona, “Argentine Factory Wins Legal Battle: FaSinPat Zanon Belongs to the People,” posted August 14, 2009, on the Upside Down World web site

There is no democracy without economic democracy

By Pete Dolack

When we talk about “democracy,” inevitably, it seems, the discussion is about political democracy. Rarely is there discussion about economic democracy. Democracy stops at the entrance to the workplace.

At the workplace, you have no say in what is produced, how it is produced or much of anything beyond what you will be eating for lunch. You surely did not get a vote when the corporation decided to drop a large sum of money on a candidate for public office whose positions you detest even though that donation came out of the profits created by the work you and your co-workers performed. As large businesses become ever larger and accumulate ever more money — and fewer survive as competition causes some of the previous winners in competition to go under or merge — their power grows ever stronger.

That power enables decisive influence over the political process. So we have formal democracy — political office-holders submit to elections and abide by the results. But choosing between two bad candidates, and selecting the one not quite as bad as the other — both completely beholden to corporate interests and unable to compete without truckloads of their money — could qualify as a living democratic system only under the most sterile and narrowly formulaic definition.

Inseparable from a vigorous and real political democracy is economic democracy. Economic democracy is impossible without production being oriented toward human, community and social need rather than private accumulation of capital. And economic democracy, in turn, requires an economy that is based on, and rewards, cooperation rather than competition. An economy in which enterprises are cooperative ventures rather than top-down authoritarian institutions.

Economic democracy means that everybody who contributes to production earns a share of the proceeds — in wages and whatever other form is appropriate — and everybody is entitled to have a say in what is produced, how it is produced and how it is distributed, and that these collective decisions are made in the context of the broader community and in quantities sufficient to meet needs, and that pricing and other decisions are not made outside the community or without input from suppliers, distributors and buyers.

Nobody is entitled to take disproportionately large shares off the top because they are in a power position. Every person who reaches retirement age is entitled to a pension that can be lived on in dignity. Disabled people who are unable to work are treated with dignity and supported with state assistance; disabled people who are able to work can do so. Quality health care, food, shelter and education are human rights. Artistic expression and all other human endeavors are encouraged, and — because nobody will have to work excessive hours except those who freely volunteer for the extra pay — everybody will have sufficient time and rest to pursue their interests and hobbies.

In such a world, there would not be extreme wealth and the power that wealth concentrates — political opinion-making would not be dominated by numerically tiny but dominant capitalists perpetrating their rule. Without extreme wealth, there would be no widespread poverty — large groups of people would not have their living standard driven as low as possible to support the accumulation of a few.

A critical component of the capitalist ideology that is so pervasive is that only a tiny handful of entrepreneurial geniuses can master business, and so must make all decisions and therefore reap massively disproportionate rewards. That is heavily stressed because it contradicts our everyday experience at the workplace.

In the modern capitalist enterprise, most of us complain about management, who so often have no experience in the lower levels and don’t really understand the nuts and bolts of how the business works. Top managers collect salaries tens or hundreds or thousands of times larger than yours while making decisions that make no sense and without consulting the employees who actually do the work and who could provide insight if only they were asked. Most of us have been in at least one job like this; for many of us it might even be the norm.

Why wouldn’t we want to take some responsibility for making decisions? Line workers could develop into managers, or perhaps different people would rotate in management positions for set periods, enabling many people to gain administrative experience. Management could be promoted from within, elected from the ranks of the full workforce by the workforce. The cooperative enterprise’s workforce would retain the right to remove managers who deviate from carrying out decisions made by the collective. (Just as managers today are answerable to owners and boards of directors.) Different enterprises would surely develop different cultures.

With no more rigid hierarchy, no more capitalists to rake in massive amounts of money, a business enterprise can be run on a democratic basis, without internal exploitation of any of its staff. Yet this is not the whole story: In what sort of economic system would such enterprises operate?

In a cooperative model, all strategic enterprise decisions would be made by a vote of all the workers. Meetings to discuss, and vote on, the enterprise’s business would be a part of the regular workweek. All ownership would stay within the workforce — each would own one share and relinquish it upon leaving or retiring. Shares could not be transferred or sold, except to the collective.

Without stratospheric executive pay or financiers getting fat by skimming off a large share of the pie, less profits would be necessary, leading to reduced work hours, higher pay and more left over for investment and taxes paid to the community to support schools and social services.

The internal workings of capitalism inevitably result in the cut-throat competition and inequalities that are so familiar. If collective enterprises, no matter how democratically they are run internally, compete with each other in unfettered markets, market forces would require the collectives to become more “efficient” — they would have to ruthlessly reduce costs (including their own wages) and aggressively expand the market for their products.*

Failure to do so would mean not surviving in competition with the enterprises who do adapt themselves to market conditions. The accumulation of capital becomes paramount under unfettered market forces due to the need to expand — failing to expand risks being driven out of business. Because all materials and finished products would remain commodities subject to price volatility in this scenario, the cooperative workers’ own labor would also become a commodity — in essence, they would “become their own capitalists.”

Cooperation and self-management within an enterprise — without owners, executives or speculators grabbing the profits for themselves — would mean that material gains would be distributed fairly among the workforce, certainly a far better result and itself a harbinger of a much more rational societal distribution of income. Although the hypothetical example of cooperatives competing fiercely against one another would be an odd hybrid because it would be based simultaneously on cooperation and competition, the distortions of capitalism would nonetheless be reproduced, albeit less severely.

Uncontrolled competition would lead to large disparities of income and power. An aggressive collectively run enterprise theoretically could gain control of the market for a particular product in high demand, resulting in the enterprise wresting for itself a commanding position. Perhaps several aggressive enterprises would do this, and we would once again find ourselves in a society with a power imbalance — not nearly the towering imbalance of present-day capitalism, but nonetheless the goal of creating a fully democratic society with no permanent sources of power would have been thwarted. In this hypothetical society, there would still be a market that operated on a capitalist basis and therefore capital would tip the balance of power to those who accumulated it.

In any country in which a model of worker cooperation or self-management (in which enterprises are run collectively and with an eye on benefitting the community) is the predominant model, there would need to be regulations to augment good will. Constitutional guarantees would be necessary as well. Some industries are simply much larger than others. In a complex, industrialized society, some enterprises are going to be much larger than others. Minimizing the problems that would derive from size imbalances would be a constant concern.

Furthermore, if enterprises are run on a cooperative basis, then it is only logical that relations among enterprises should also be run on a cooperative basis. An alternative to capitalist markets would have to be devised — such an alternative would have to be based on local input with all interested parties involved. Such an alternative would have to be able to determine demand, ensure sufficient supply, allow for fair pricing throughout the supply chain and be flexible enough to enable changes in the conditions of any factor, or multiple factors, to be accounted for in a reasonably timely and appropriate fashion.

Central planning in a hierarchal command structure with little or no local input proved to not be a long-term viable alternative system. Nor is tight regulation a solution on its own. Regulators, similar to central planners, can never possess sufficient knowledge to adequately perform their job and local enterprises can use their special knowledge to give themselves an advantage rather than share that knowledge with regulators.

Responsibility, then, would have to be tied to overall society. Negotiations among suppliers and buyers to determine prices, to determine distribution and a host of other issues would be necessary. Such negotiations are already common in certain industries; for example in the chemical industry, where companies negotiate commodity prices on a monthly or quarterly basis. Those are competitive negotiations in which the dominant position oscillates between buyer and supplier, resulting in dramatic price changes.

In a cooperative economy, negotiations would be done in a far more cooperative manner, with a wider group participating in the discussions. In this model, prices of raw materials, component parts, semifinished goods, finished goods, consumer products and producer products such as machinery would be negotiated up and down the supply chain, leading to an rationalization of prices — markups to create artificially high profits or pricing below cost to undercut competitors would be unsustainable in a system where prices are negotiated, pricing information is widely available and all enterprise financial information is public.

These would have to be fair negotiations — prices throughout the supply chain would have to be set with an eye on rational economics. Industry facilitators to assist negotiations and/or a government arbitration board to make decisions when parties are unable to agree to terms might be necessary. Community input would also be desirable, in the industries in which a given community is directly involved and for retail prices of consumer goods. It may be desirable to include these community interests in pricing negotiations directly.

As more people take on more responsibility, more will gain the experience of fair negotiations, enabling more to peer over the shoulders of those involved in these decisions. In turn, more experience means more people within the community who can shoulder responsibility.

Although regulation, as noted above, is not in itself a solution, that is not a suggestion that regulation should be done away with. One method of using regulation to ensure socially positive economic activity might be a system of certification. Enterprises would be responsible for investment, production and financial decisions, but might be required to demonstrate full compliance with a range of standards on issues such as equal opportunity, workers’ rights, health and safety, environmental protection and consumer protection. Enterprises could be required to be certified on all relevant issues before conducting business, and perhaps be re-certified at specified intervals.**

In a cooperative economy, it is possible — and perhaps likely — that certain critical industries and services would remain in state hands (but fully subject to public accountability). Public transportation systems and water supply might be two examples of these types. Employees in large enterprises of these types would have the same dual role of managing the enterprise collectively at the same time they remain workers. It is not impossible that biases or favoritism could slowly arise in such enterprises; a union would provide another source of protection that could defend a worker as an individual when necessary.

Workers in enterprises that are collectively owned, since they would be owners and not simply managers, might find less ambiguity between their two roles, as long as strategic decisions are made collectively. Still, it may be that there remains a place for trade unions even in these types of enterprises, or it could be that unionization is simply a social value and all members of the enterprise join or form a union for reasons of social solidarity or to provide another check against any centralizing tendencies emerging within the enterprise or within government.

A system of democratic control and social accountability would require open information. Records and accounts of all enterprises and major production units of enterprises would have to be made available to all other parties to negotiations in order for the fairest deals to be reached and to prevent attempts to unfairly benefit at the expense of suppliers or customers. Social-justice organizations — such as those upholding civil rights, consumer rights or the environment — should also have a role, perhaps in enterprise negotiations when appropriate, but more likely in helping to set social goals, in monitoring compliance with standards and possibly being the bodies that issue certifications.***

Some amount of planning and coordination would be necessary as part of the process of determining raw materials needs and ensuring that those needs are met. Any planning committee would have to be democratically controlled and have wide social representation to oversee production and to assist in the determination of investment needs. Planning would be bottom-up and democratic, based on the best estimates of aggregate demand, and not top-down and authoritarian. Planning would provide a guide, not a hard numerical total.

Investment would need to go to where it is needed, a determination made with as many inputs as possible, but because of its importance finance and banking is one area that would have to be in state (or local community) hands (subject to full public accountability) and not in collectives. Financial speculation must be definitively ended. Enterprises seeking loans to finance expansions or other projects will have to prove their case, but should have access to investment funds if a body of decision-makers, which like all other bodies would be as inclusive as possible, agrees that the project is socially useful or necessary.

Government infrastructure projects should be subject to the same parameters as enterprises, with the added proviso that the people in the affected area have the right to make their voices heard in meaningful ways on local political bodies and on any other appropriate public committees. No private developer wielding power through vast accumulations of money will be able to destroy forests or neighborhoods to build a project designed for the developer to reap profits while the community is degraded. Development would be controlled through democratic processes at local levels, and regional or national infrastructure projects should require input from local bodies representing all affected areas.

An unprecedented level of democracy would be possible in a cooperative economy because the power of capital would be ­broken. Social constraints ensuring responsibility to the larger community would be required to prevent the accumulation of capital that translates into power, although such tendencies would be countered by a system that rewards cooperation rather than greed.

The society that has been sketched out in these very broad strokes is a society in which working people — the overwhelming majority of society — have taken control over their lives. The (ex-)capitalists are just as free to go to work as everybody else. Surely some, those with expertise and an ability to work well with others, would be among those cooperative members elected into administrative positions; regardless, they would have to become regular cooperative workers, contributing to the production of a quality product or service and having their say equal to all others who do the work.

Society as a whole benefits when everybody is entitled to contribute, and the more who do so the more likely it is that the right solution to a problem will be found. Someone who would not have been able to make a social or artistic contribution will be able to do so, enriching society. That does not mean that all ideas are equal, or good, or that all ideas are entitled to equal time. It does mean that ideas intended to better society or to advance the greater social good can receive a hearing, rather than the privileged so permeating society with an ideology that benefits themselves that other ideas are dismissed at the start.

These are not steps that capitalists would willingly take. Bringing about such a world would mean an enormous amount of organization and struggle, regardless of the methodology used to bringing a end to capitalist rule. It would be necessary to write new constitutions codifying the new society’s changes, locking advances and rights into formal law while preventing centralization of power; nonetheless, without the assumption of responsibility and participation, democracy will inevitably erode.

Freedom and democracy are not gifts handed down from above, and never have been — they are goals that are won through struggle and determination, through a synthesis of theory and practice.

* This and the following paragraph draws upon David McNally, Against the Market [Verso, 1993]; Bertell Ollman, “Market Mystification in Capitalist and Market Socialist Societies,” Socialism and Democracy, Fall 1997
** This paragraph draws upon Diane Elson, “Socializing Markets, Not Market Socialism,” The Socialist Register, 2000
*** This and the following paragraph draws upon “Socializing Markets, Not Market Socialism”; Pat Devine, “Self-Governing Socialism,” anthologized in William K. Tabb (ed.), The Future of Socialism: Perspectives from the Left [Monthly Review Press, 1990]

  • Next week, an examination of the workings of real-life cooperative enterprises.

Envisioning an evolutionary path toward a democratic economy

By Pete Dolack

It is never sufficient in itself to be against something. Activists seeking to bring a better world into being have to be for something. That is no easy task for people advocating for something better than today’s world of corporate domination, harsh austerity and races to the bottom.

It is not an easy task because capitalists have saturated the world’s cultures with their ideologies, and the 20th century’s biggest anti-capitalist challenge — state ownership of the means of production on the model of the Soviet Union and its Central European satellite states — has irretrievably lost credibility. Yet the capitalist triumphalism that smoothly maintains nothing could possibly be wrong with our modern consumer paradise, which continues essentially unabated despite four years and counting of deep malaise, can not mask profound structural problems.

The endless drive on the part of capitalists to increase profits that leads to continual movements of production to new sources of cheaper labor; the continual downward pressure on wages that leads to an inability of people to be able to buy what is produced; the continual despoiling of the environment under the pressure of ever more intense competition; and the finiteness of the Earth’s resources in the face of a structural need for limitless expansion all impose limits on the capitalist system.

Grandiose plans to strip-mine the Moon and the asteroid belt aside, humanity will have to develop a more stable, more humanistic system of production and consumption. A realistic plan to guide the world out of runaway capitalism and into a new system that is sustainable is necessary.

Can such a sustainable, more humanistic system evolve out of capitalism itself? Gar Alperovitz, in his newly re-issued book America Beyond Capitalism,* firmly believes the answer is yes.

Explicitly attempting to find an intermediate course between reform and revolution, Professor Alperovitz has laid out a program designed to gradually bring large corporations under public control and therefore make them socially accountable through a “Public Trust” system whereby public institutions buy progressively larger portions of corporations’ stock. Concomitantly, cooperatively owned enterprises rooted in their communities and enterprises owned by local governments would be nurtured; community-development organizations expanded and funded through progressive taxation; and long-term strategies would be implemented to capture the new wealth that will be created as productivity continues to increase in the future.

Details of many of these plans are not yet worked out. The details of a better world can only be worked out in its creation, and therefore Professor Alperovitz provides conceptions rather than details. New ideas have to begin somewhere — conceptions based on real-world conditions are the beginning place for serious ideas. Is the professor’s optimism warranted? That is a difficult question to answer, and one that this review will return to presently.

Professor Alperovitz introduces the term “Pluralist Commonwealth” to encompass his ideas of leveraging the structures of modern capitalism for a transition to a democratic, decentralized system in which the wealth created in production would be distributed fairly; economic power has been wrested from a small class of capitalists so that economic and political power is no longer concentrated; and the length of the workweek is gradually reduced so that everybody has the time and opportunity to participate in community decision-making.

None of the pieces of the Pluralist Commonwealth system constitute leaps or revolutionary breaks. Instead, the author assembles an impressive collection of ideas and institutions already in existence; ideas for building upon these; proposals for new institutions and structures that flow out of existing ones; and concrete measures to break down racial, gender and other disparities. He is not shy about analyzing an ideologically diverse collection of thinkers and writers: In one three-paragraph stretch, for instance, he quotes favorably Friedrich Hayek, Hannah Arendt, Jane Jacobs and W.E.B. DuBois.

But fear not those of you who blanch at the mere mention of neoliberal godfather Hayek (a number that would include myself). Professor Alperovitz has assembled a damning array of statistics to illustrate the debilitating inequality of the United States — among them, that one percent of U.S. households hold half of the entire country’s wealth; that corporate taxes accounted for 35 percent of federal receipts in 1945 but only seven percent in 2003; and that 300 multi-national corporations account for 25 percent of the world’s productive assets. With such concentrations of economic power comes instability at the community level because corporate power can shutter enterprises that are depended on for jobs, he writes:

“A central question concerns the economic underpinnings of local democracy. It is obvious, for instance, that active citizen participation in local community efforts is all but impossible if the economic rug is regularly pulled out from under them. What, precisely, is ‘the community’ when citizens are forced to move in and out of specific geographic localities because of volatile local economic conditions? Who has any real stake in long-term decisions? That a substantial degree of economic stability is one of the critical preconditions of local involvement is documented in several important studies. …

A related issue involves the power relationships that set the terms of reference for municipal government. Numerous scholarly studies have demonstrated that local government decision making commonly is heavily dominated by the local business community. Commonly, too, the thrust of decisions favorable to business groups radically constrains all other choices. The use of scarce resources to develop downtown areas, and especially to attract or retain major corporations, inevitably absorbs funds that might alternatively be used to help low- and moderate-income neighborhood housing, schools, and community services.” [page 47]

That the vast size and reach of corporations is debilitating to democracy is obvious; Professor Alperovitz even quotes conservatives to that effect. But he goes beyond the size of gigantic enterprises to the gigantic size of the United States, arguing that the very size of the U.S. (and its projected population increase this century) is a hinderance to democracy as well. He asks:

“[I]s it really feasible — in systemic and foundational terms — to sustain such values [equality, liberty and democracy] in a very large-scale, centrally governed continental system that spans almost three thousand miles and includes almost 300 million people? And, if not, how might a democratic nation ultimately be conceived?” [page 63]

Following up on this idea later in the book, he concludes that the “regional” level would be the appropriate level to deal with economic and political issues. Most U.S. states contain too small a population to solve large problems on their own; Professor Alperovitz conceives a region as the equivalent of a large-population state such as California or Texas, or a group of states such as New England, seeing such large states or groupings as the equivalent of stable, midsized European Union countries such as the Netherlands.

Underlying this advocation of regionalization is the idea that decentralization is more conducive to local democracy. To support his argument, he cites U.S. Supreme Court decisions overturning federal laws in favor of state powers and the increasing assertiveness of state governments in challenging federal laws.

But here we should pause for further thought. That trend, if anything, is stronger than when America Beyond Capitalism was originally written in 2005, but these Supreme Court decisions have been ideological and political pronouncements backing conservative attacks on federal protections, not legal decisions or responses to popular pressure. Frequently, the court strikes down state laws that provide protections beyond federal law but that are opposed by the Right on ideological grounds.

Both political devolution, as a concept, and Professor Alperovitz’s contention that democracy can’t flourish unless it is strong at the local level are sound, but it is at our peril that we fail to distinguish properly between the current conservative campaign to impose an extremist agenda masquerading under the guise of “states’ rights” and a genuine grassroots movement to promote local control and progressive change.

The heart of America Beyond Capitalism’s concept of economic and political democracy is the “Pluralist Commonwealth.” The author, in broad strokes, provides an interesting, worked-out conception of gradually bringing large-scale corporations under public control through acquisitions of their stock. There is a clear goal in mind:

“The schematic model … prioritizes a variety of strategies to undergird local economies and thereby establish conditions favorable to nurturing local civil society associations and to increasing local government’s power to make meaningful decisions. Partly to achieve such local democracy objectives — but for much larger reasons as well — the model also projects the development over time of new ownership institutions, including locally anchored worker-owned and other community-benefiting firms, on the one hand, and various national wealth-holding, asset-based strategies, on the other. These would ultimately take the place of current elite and corporate ownership of the preponderance of large-scale capital.” [page 70-71]

These ideas come with a freely offered, and appropriate, caveat that the details need to be worked out. Nonetheless, the strategy of carrying out a program of bringing large corporations under public control through acquiring controlling blocks of their stock could have been articulated with greater clarity. At the national level, a new institution given the generic name “Public Trust” is conceived to “oversee the investment of stock on behalf of the public, as state and other pension boards commonly do today.” Proceeds could be directed toward individuals, local or higher-level governments, or funding of public services.

Professor Alperovitz projects that:

“Over time, a fundamental shift in the ownership of wealth would slowly move the nation as a whole toward great equality directly — through, for instance, worker-owned enterprises; and also indirectly — through a flow of funds from the larger asset-based strategies and investment on behalf of the public.” [page 71]

The capital needed to acquire the stock of large corporations would be assembled from higher taxation of elite incomes and from setting up public banks that would loan money that would accrue from profits and dividends of stock held by them.

“The Pluralist Commonwealth structurally tethers large-scale firms at the top by lodging stock ownership in a Public Trust entity accountable to (and open to scrutiny by) the public — and it steadily expands four major vectors of activity and structure (robust community democracy, steadily increasing free time, greater citizen equality, regional decentralization) that over the long haul offer expanding opportunities for democratic control from the bottom. Additional elements of the model include new public chartering requirements, the addition of specific stakeholders to corporate boards, and the democratization of corporate structures from within.” [pages 73-74]

In addition to the gradual assumption of control of large corporations envisioned above, the book also advocates worker-owned cooperatives (which can be anchored to local institutions such as hospitals and universities that can steadily buy the cooperatives’ goods and services); companies owned by municipal and state governments (utilities and banks are common examples that provide lower rates and profits to their communities); and community-development organizations (which operate a variety of businesses that plow proceeds back into their communities).

Each of the examples in the above paragraphs already exist, and can be expanded. City-owned power companies are already common and generally offer lower rates than traditional companies. A network of cooperatives anchored to local institutions have been successful in Cleveland, and larger, freestanding cooperatives exist in a myriad of industries.

A significant change in the political climate of the United States would be a pre-condition of the “Pluralist Commonwealth” coming to fruition. Citing an abundance of polls, Professor Alperovitz is optimistic that latent public support exists for such ideas. He also believes that the mounting costs of health care, Social Security and retirement in general will force a re-thinking of existing structures and ideas, bringing to the fore new concepts of ownership and control.

The “Pluralist Commonwealth” concept rests in part on the vast increases in wealth and productivity of the past century and a half to continue throughout the 21st century. That, too, should give us pause for thought. The author, on the one hand, unsparingly points out the unsustainability of U.S. consumption but on the other hand situates his wealth-sharing strategy within a forecast of the dramatic growth of capitalism to continue unabated.

He notes the sixfold increase in per-capita production during the course of the 20th century, and projects a similar sixfold increase for the 21st century that would result in a cornucopia of wealth for everyone. Is another such leap possible? Given that natural resources are, or are soon to be, dwindling, and that successive introductions of machinery tend to yield declining rates of increase in productivity, it is reasonable to doubt the mature capitalism of today will produce the same gains for another century. The ongoing stagnation of the advanced capitalist countries, and that the strongest growth is invariably found in developing economies, adds additional doubt.

Then again, there is no reason why the wealth that exists today shouldn’t be shared far more equitably; if the present-day per-capita income were merely to keep pace with inflation or rise slowly, there would be plenty to go around.

Earlier, I asked if the optimism behind the “Pluralist Commonwealth” is warranted. The thought that kept leaping at me is this: The program, particularly as regards to the steady acquisition of stock in large corporations so that control of them is wrested from executives and speculators and given to the public, is dependent on capitalists sitting back and letting their power be taken away. There is absolutely no precedent of any capitalist class acting that way, and none would willingly consent to it.

Such a peaceful evolution would require not only a suite of new laws, it would also require huge organization, mass mobilizations and a very large majority that would retain their energies and motivation for long periods of time, perhaps decades. As just one example, corporations would have to be forced to issue new stock that would be sold to the Public Trust — a system-altering concept that would require an extremely powerful movement. Such a movement can easily be conceived, and would be articulating a concrete goal that is tangible and imaginable as a linear evolution from present-day economic structures.

It is possible to argue that powerful movements are also a necessary precondition for a revolution to be successful. Could the aim be higher? Could a successful completion of an evolutionary program build momentum for still greater changes? That is unknowable today. But the “Pluralist Commonwealth” program has the concrete benefit of providing a positive program of change. If there is to be any meaningful change it will have to come as a result of great struggle.

That acknowledgment is not missing from America Beyond Capitalism. Professor Alperovitz writes that people must “confront the emerging logic that suggests that either economic pain and social decay will continue” [page 213] or that diverse groups begin work on long-term systemwide change. He is appropriately realistic on the need for a high level of activism and organization to bring his ideas to fruition, while at the same time offering a set of concrete goals. Although the precedents are not a snug fit because transcending capitalist relations threatens the roots of the economic system (and those who profit well from it) in a way that social movements do not, he draws on the experiences of past struggles to conclude on an optimistic note:

“Long before the civil rights movement, there were many years of hard, quiet, dangerous work by those who came before. Long before the feminist explosion there were those who labored to establish new principals in earlier decades. It is within the possibilities of our own time in history that — working together and openly charting an explicit new course — this generation can establish the necessary foundations for an extraordinary future and for the release of new energies.

It may even be that far-reaching change will come much earlier and much faster than many now imagine.” [page 240]

Regardless if the transcending of capitalism is accomplished through a revolution, through struggling to rebuild in the ruins after a collapse or through an evolutionary change as envisioned in America Beyond Capitalism, a long, organized struggle will be necessary. The sooner the task begins, the less dangerous and difficult (comparatively) the change should be: Organizing change today is a hard enough task; having to do so in conditions of total collapse would be a nightmarish task none of us would like to contemplate.

* Gar Alperovitz, America Beyond Capitalism, second edition [Democracy Collaborative Press, Takoma Park, Maryland, USA and Dollars and Sense, Boston 2011]

Charting a path out of impasse for Greece, and other countries (part 2)

The inability of Greece, Portugal and other “peripheral” European countries that use the euro to devalue their currencies has meant that all “devaluation” required by the global capitalist economy has to come in the form of wage and pension reductions, cuts to social welfare programs such as health care, and other internal austerity measures.

International lending institutions controlled by advanced capitalist countries, led by the World Bank and the International Monetary Fund, have long imposed harsh austerity on the countries of the South as the price to be paid for loans; such loans were necessitated by one-sided trade terms and the massive extraction of capital from them by the multi-national corporations of the North.

What is new is that countries of the North are now having similar austerity imposed on them. As with the stronger countries that also run deficits, the countries so targeted borrow from the rich and domestic corporations instead of taxing them, thereby running budget deficits; the lenders then complain that the deficit is too large and demand budget cuts or they will refuse to buy any more debt or will buy debt only at much higher interest rates. Demands that governments sell off assets at fire-sale prices are always a part of these scenarios, and that is no accident — privatization means big profits for the buying corporations at the public’s expense.

In part 1 of this discussion, posted on April 4, I presented arguments in favor of radical economic transformation but with Greece remaining in the eurozone. In this post, I will present arguments, although also in favor of radical economic transformation, for Greece dropping the euro and re-instituting its former national currency, the drachma.

A ‘progressive exit’ from the euro

In the conclusion of an interesting paper, “Eurozone Crisis: Beggar Thyself and Thy Neighbor” by eight authors led by economist Costas Lapavitsas, the authors argue for an “exit conditional on radical restructuring of economy and society,” or what they call a “progressive exit.” Such an exit, they wrote, “cannot be national autarky” and would have to “confront the deeper problem of attaining national development in a globalized economy.”

Within Europe, the costs of austerity have been disproportionally shifted on to the “peripheral” countries such as Greece, Portugal and Ireland, but without investment and without addressing the underlying causes of the economic crisis. “Competitiveness” can’t be raised when wages are already lower than they are in Germany. Because there is no single European state, there is no prospect of a unified fiscal policy; therefore, any reforms to the eurozone won’t alter the dynamics of stagnation and inequality.

The authors note that competing plans they define as “good euro reforms” propose more national independence, democratic accountability of the European Central Bank and European Union-wide social programs. But those plans’ underlying goal of maintaining the euro as a “world currency” — as a currency that competes with the United States dollar — with highly divergent national deficits and policies would be impossible, the authors wrote. The logic of a single currency, they argue, requires a “European budget run by a unitary state with a sufficiently integrated presence across the eurozone to support a common currency.”

Leaving the euro under present conditions, with the current capitalist dynamics untouched, would also be a bad solution, the authors wrote, because the onus would be on local capitalists to restructure production and expand investments, and they see capitalists in countries like Greece and Portugal as incapable of meeting such a challenge. Under such a scenario, such countries would be undercut by the lower wages in the global South, leading to stagnation, successive devaluations and the slow erosion of labor income.

The “progressive exit” from the euro that the authors advocate would come with pain, they acknowledge:

There would be devaluation, which would release some of the pressure of adjustment by improving the balance of trade, but would also make it impossible to service external debt. Cessation of payments and restructuring of debt would be necessary. Access to international capital markets would become extremely difficult. Banks would come under heavy pressure, facing bankruptcy. The point is, however, that these problems do not have to be confronted in the standard conservative way.

Sustainable growth could be ensured, they argue, “provided there was drastic economic and social transformation” built on the mobilization of “broader social forces capable of taking economic measures that would shift the balance of power in favour of labor.” Among the measures to be taken in this scenario would be to nationalize banks, guarantee deposits, orient banking toward socially beneficial lending and imposing capital controls. Public banking in itself, however, would not be sufficient, the authors write:

The combination of public banking and controls over the capital account would immediately pose the question of public ownership over other areas of the economy. The underlying weaknesses of productivity and competitiveness already threaten the viability of entire areas of economic activity in peripheral countries. Public ownership would be necessary to prevent collapse. The specific sectors taken under public ownership, and even the form of public ownership itself, would depend on the characteristics of each country. But public utilities, transport, energy, and telecommunications would be prime candidates, at the very least in order to support the rest of economic activity.

Investment would be re-oriented toward housing, urban planning, transportation and research and development. The tax base would be broadened through taxes on income, wealth and capital while reducing indirect taxes.

Progressive exit for peripheral countries would be predicated on genuine structural reform of economy and society. Such change has nothing to do with the tired shibboleths of liberalisation. If productivity is to be set on an upward path, peripheral economies have to be weaned away from consumption, low savings, individual borrowing, low investment, and speculative bubbles. Structural change requires public mechanisms that could mobilise available resources for investment. It also requires transforming education by committing additional resources and expanding its reach to the poorest. Improving education would, in time, produce gains in labour skills, thus also benefiting productivity.

The authors note that the political and social alliances to bring about such a change are not yet in existence, but wrote that working people in the “core” countries would be natural allies of those in the “peripheral” countries. Such comprehensive cross-border alliances would be necessary.

It would be necessary for peripheral countries to maintain access to international trade, particularly within the EU. It would also be necessary to seek technology transfer and capital from abroad. There are no guarantees that such flows would be forthcoming, particularly as the established order in Europe would be hostile to radical change. But progressive exit also offers the prospect of different development for workers in the core countries, who have come under heavy pressure during the last two decades. Labour in core countries would be a natural ally of peripheral countries attempting a radical transformation of economy. And if the eurozone came apart in the periphery, it could also unravel at the core, allowing for genuinely cooperative relations among European countries.

Exiting the euro while forming new regional alliances

Noting that Greece has ceded its independence to “experts” who will oversee its budget and that the latest round of bonds issued to pay speculators are governed by English law rather than Greek law, international affairs professor Vassilis Fouskas also proposes a radical restructuring of the economy and an exit from the eurozone.

Writing in openDemocracy, Professor Fouskas argues that the “only solution for Greece remains a debtor-led default and exit from the euro-zone under the leadership of a radical democrat political movement.” Furthermore,

The disintegration of the productive base of the country over the last two decades due to the competition it faced from the countries of the European core and, above all, Germany, make any futurologist betting on a substantial Greek recovery within the euro-zone sound ridiculous.

Because taxpayers can’t be bled dry forever, nor can ruling elites deliver economic growth, Professor Fouskas argues for a “radical political program” backed by a “united front of the radical left in Greece.” He advocates an immediate exit from the eurozone and denomination of new debt in drachmas; nationalization of banks and capital controls to prevent the systematic buying of Greek assets with foreign money but encouraging foreign direct investment in productive sectors of the economy; boosting wages to offset devaluation; and taxing large estates and “Greek shipping capital.”

Although this program is more nationalistic than any of the others presented in this and my April 4 post, Professor Fouskas does also argue for “drastic cuts” in Greece’s defense budget, re-orientation of foreign policy toward Balkan countries, Turkey, the Arab world and Asia. His goal would be “the development of regional organisations and NGOs promoting the fraternity and solidarity of all peoples of the former Ottoman and Soviet spaces.”

A criticism of this program would likely be — and I would agree — that it insufficiently acknowledges the need for solidarity with Europe. Such a program couldn’t accomplish its goals without simultaneous movements across the European Union moving toward radical structural changes. Nonetheless, Professor Fouskas is correct in writing that Greece has no prospect for anything other than being bled dry within the current structure of the eurozone.

Exiting the euro as part of a multi-national uprising

Dropping the euro as its currency in itself is far from sufficient, the commentators on all sides of this debate have agreed. At the Left Forum in New York City last month, there seemed to be a consensus that Greece should leave the eurozone and default on its debt. Doing so would not be without considerable pain, but the current situation can’t continue — no people can be bled indefinitely.

“The point isn’t that neoliberals are crazy,” David McNally, a political science professor in Canada, told a Left Forum audience. “They are, but are expressing the pathology of capital.” Linking the austerity being imposed on Greece with the larger struggles beginning to take form across the world, Professor McNally said, “Anti-austerity politics can only be an anti-capitalist struggle,” arguing that “Greece should default and leave the euro. You then have to issue a manifesto to the working class of the world and internationalize the struggle.”

Adding to those thoughts, on his blog, Professor McNally wrote, “For the only hope today of reclaiming democracy in Greece (and elsewhere) resides in the prospect of a mass uprising against modern debt-bondage that extends the rule of the people into the economic sphere.”

The commonality with all the viewpoints presented in this discussion is that an uprising across the advanced capitalist countries, refusing to further accept savage cuts in a system that has ceased delivering adequate standards of living, is the route of the impasse. No single country, certainly not one as small as Greece, can become an island of plenty in a world of austerity.

Divisions within the Greek Left

A question that naturally arises is: Can the Left parties of Greece put the country on a different path? Three parties of the Left — the Communist Party, Syriza and the Democratic Left — have consistently polled a combined 30 to 40 percent. It is possible for the Left to be elevated to power, but it seems unlikely it would be in any alignment other than a coalition with one another. But they are deeply divided.

The Communist Party of Greece, or KKE in its Greek abbreviation, is something of a throwback, continuing to adhere to a sectarian and orthodox Communist line 20 years after the dissolution of the Soviet bloc. The KKE favors Greece leaving the eurozone, the European Union and Nato and refuses cooperation with any other party, while advocating the socialization of production. But the party has been content to wait until objective conditions swing in their favor — this is a traditional orthodox Communist line that combines strong rhetoric with postponing action until the hazy, undefined future.

Writing in the November-December 2011 edition of New Left Review, Stathis Kouvelakis summed up this paradox:

“[The KKE] has been cautious on this subject since the start of the debt crisis, stressing that none of the problems the country confronts can be resolved until the ‘power of the capitalist monopolies’ has been overturned and ‘popular power’ established (under the party’s direction, naturally). This ‘leftist’ rhetoric in fact serves to justify a quietist practice when it comes to mobilizations, concerned above all to avoid joining any unified actions of the left, and to portray Syriza … as ‘opportunist forces’ that are ‘playing the game of the bourgeoisie and of the EU.’ “

Syriza – the Coalition of the Radical Left — contains 16 groups within it, advocating a variety of Left positions other than that of the KKE. Syriza seeks to work with other Left parties, and while it contains differing opinions on retaining the euro and definitively advocates remaining within the E.U., it calls for a thorough restructuring of the E.U. Syriza demands a suspension in debt payments until the economy recovers, followed by a “selective” default; redistribution of wealth; and a re-orientation of priorities toward growth-inducing investment.

Syriza leader Alexis Tsipras, in an interview published in Athens News, advocated a Left coalition based on common grounds:

The common framework exists. It has been shaped in city squares, workplaces, neighbourhoods and social solidarity networks. It is about ridding ourselves of the bailout memorandum. It is about the imperative need to put a stop to the voracious appetite of usurers. It is about public regulation of the banking system and about taxing wealth. It is about turning to a development model based on stable and permanent employment, expanding social goods and bolstering the welfare state. That’s the only way to get out of the crisis. … It is obvious that Europe will either change or break apart. There is no Greek solution, only a European one. … [C]hange cannot come from the EU directorate or from banks. It will begin at grassroots level, within societies, and will be imposed, because there is no other way. The dilemma is between a Europe of capital or a Europe of solidarity and democracy.

The third component of the rising Greek Left is the Democratic Left, a party only recently come into existence and composed of splits from other Greek Left parties and PASOK, the Greek “socialist” party now disgraced after agreeing to the full implementation of the bankers’ austerity. The party says it would only enter a coalition government after the elections if there is some convergence with the other parties on the policies that need to be adopted to lift Greece out of recession, according to Athens News.

The Democratic Left promotes itself as a moderate alternative to the KKE and Syriza. The party firmly advocates continued membership in the E.U. and the eurozone, but would seek to renegotiate Greece’s loan terms. The party said it would loosen deficit-reduction targets; implement policies to fight corruption and tax evasion; and promote growth through measures such as reversing recent edicts that slashed the minimum wage. At least in public, the party has suggested it could consider entering a government coalition only if KKE and Syriza moderate their positions.

Greece, and the rest of the advanced capitalist world, will be living in interesting times.