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Economic Alternatives to Capitalism

Occupy Wall Street protesters stage a demonstration at Foley Square, in New York, November 17, 2011. (Photo: Richard Perry / The New York Times) Richard Wolff: My guest for today, Gar Alperovitz, is the Lionel Bauman Professor of Political Economy at the University of Maryland. He is a co-founder of the Democracy Collaborative. I have read a whole bunch of his articles and books over the years. The one I am holding in my hand right now, and perhaps the one he’s best known for these days, is called America Beyond Capitalism and is currently in its second edition. The people who have commented on it as wonderful include Noam Chomsky and Howard Zinn. Now I will read what both gentlemen had to say. Noam Chomsky called this “a marvelous book, I recommend it all the time” and Howard Zinn “A set of eminently practical ideas…” Gar, it’s a pleasure to welcome you to the program and thank you for taking the time to spend with us today. Gar Alperovitz: Thank you, Rick. I really appreciate it.

Richard Wolff: My guest for today, Gar Alperovitz, is the Lionel Bauman Professor of Political Economy at the University of Maryland. He is a co-founder of the Democracy Collaborative. I have read a whole bunch of his articles and books over the years. The one I am holding in my hand right now, and perhaps the one he’s best known for these days, is called America Beyond Capitalism and is currently in its second edition. The people who have commented on it as wonderful include Noam Chomsky and Howard Zinn. Now I will read what both gentlemen had to say. Noam Chomsky called this “a marvelous book, I recommend it all the time” and Howard Zinn “A set of eminently practical ideas…”

Gar, it’s a pleasure to welcome you to the program and thank you for taking the time to spend with us today.

Gar Alperovitz: Thank you, Rick. I really appreciate it.

Wolff: Well, let’s get right into discussing both your general work and this book. A basic premise of the book has been the notion of a long-term decline in or of U.S. capitalism. You stated that in the first edition of your book, America Beyond Capitalism, some years ago and again in the new second edition this year. Between those two editions, U.S. capitalism did indeed crash quite badly and we’re in the soup of an economic crisis now. So I want to begin by asking you to tell us whether you still believe there’s a long-term decline and whether the current crisis makes you feel that more or less strongly, or just how the current crisis has shaped your thinking.

Listen to the radio show:

Alperovitz: Well, broadly the notion that—and the premise of the book, and we can go to a longer discussion—is that in fact we are entering an era of deepening stagnation and political stalemate. I think you can make a case, and Rick you’ve made the case in terms of the loss of demand that can’t offer a solve the a Keynesian to the problem, many, many times. If you don’t have buying power, you can’t solve the Keynsian problem, but I think it’s a deeper problem and an ongoing problem.

A short form of the argument would be: in the first quarter of the century, up to World War I, there was decay, decline, and indeed almost major recession and almost depression. We don’t know what would have happened, but World War I certainly bailed out the economy. In the second quarter of the century in the 1920s, you find the same pattern and then the Great Depression and World War II bailed out the economy. In the third quarter of the century, the post-war economic boom derived partly from savings built up during the war, partly from the Korean War, the Vietnam War, the big military budgets of the Cold War—and because the competitors, Germany, Japan, and many others—were significantly destroyed. We experienced unusual boosts from all these in the third quarter. I think you can see that now, even though the military budgets are high absolutely, they are declining as a share of the GDP.

So I think that we are facing these difficulties, plus global competition, and I think these difficulties could be resolved even in a corporate capitalist system if you have sufficient political power to mount a traditional Keynesian solution. But what is significant—and this is the heart of the matter—why that solution is not available is that American progressive or liberal politics has decayed—above all because the labor movement has declined. The labor movement is no longer what it once was. Its membership was 34-35% at its peak just after the war, it’s now down in the 11% range and down in the 6% range for private sector unions. Quite simply, the muscle behind a traditional way to balance a corporate capitalist system through Keynesian solutions and social programs—the muscle power of labor (in Sweden it was 85% of the labor force unionized)—is declining. So that’s a picture of decay, and there doesn’t seem to be an easy way out of that. And on the other hand, and here’s an oddity: nuclear weapons now prevent, I think, an industrial scale war like World War I or World War II. We can have small horrible wars, but they don’t function economically in a way that larger wars did previously.

Wolff: So that even the technology of warfare undermines its economic effects.

Alperovitz: Exactly. Which means ongoing stagnation, decay, pain, and with that, growing awareness. And here, we have to thank the Occupy groups. People now sense something new. Something fundamental is wrong, not just if we elect the next guy it will all work out. That’s a big deal in history when that begins to happen and I think that’s one of the things coming out of this pattern of decay and stagnation.

Wolff: Yes, it’s absolutely remarkable and I try to suggest it wherever I go, too. That a movement like this can grow so rapidly across the country and draw such a popular support and yet at the same time has the unprecedented—at least over the last century—courage to talk about a basic inequality and a basic economic dysfunction, that’s an amazing thing to see, and in the United States all the more.

Let me pick up on a point you made. It would be reasonable, given what you said, to see anger in the streets as we’re seeing, to see resignation on the part of people who don’t know what to do, despair, turning away from politics, the kind of disengagement from civic involvement that that Harvard sociologist that you and I both admire, Robert Putnam, talks so poetically and so statistically well about. And yet your work is infused with a certain optimism, and I noticed that it was present again in this month’s op-ed in the New York Times that you wrote. Mainly, that Americans in huge numbers are turning to collective, co-operative kinds of economic institutions that are not your typical capitalist top-down hierarchical enterprise. Talk to us a little bit about whether that’s happening, how it’s happening, and whether we have the grounds to see in that a positive response to the kind of decay that you identify.

Alperovitz: Well, let me just set the stage of that. I’m a historian and a political-economist, and I think about it in historical terms. The book is called America Beyond Capitalism which means, what is the next stage? And I think there’s a stage beyond the current stage, a much more interesting stage. What I see happening just under the horizon is that all of the traditional solutions—at the local level, the state level, the national level—simply don’t work. And the pain level is driving people to begin to build on things that they’ve done in the past. So for instance, most people don’t realize it: there are 130 million people involved in co-ops and credit unions in the United States, democratizing the ownership of those institutions. That’s at least 40% of the society.

There are something like 13 million Americans in one or another form of worker ownership. Some good, some bad, some that could be organized much better if organizers began taking them on. There are 4,000 or 5,000 neighborhood corporations. Again, changing and democratizing instead of privatizing the ownership of capital, a central principle that’s got to build and develop. America Beyond Capitalism is filled with these practical things that Howie Zinn was commenting on. But I’ll give you one more: 25% of American electricity today is produced by socialist institutions. Co-ops and municipal enterprises—25%. A quarter. Most people aren’t aware of the actual very American, very decentralized, very ordinary ways of changing the ownership of capital in a society in which 1% owns half the investment capital just about. Let me say that again, the top 1% owns just about, a little bit under, half of the investment capital. That’s a medieval number, and I don’t mean that rhetorically.

Wolff: No, the inequality is stunning.

Alperovitz: And particularly in capital ownership, the structure of the ownership. So these institutions willy-nilly are beginning to change the ownership of capital in a way that people understand in very practical terms…They’re “talking prose” and don’t know that there’s something very important happening there. So partly, we have to make manifest, make available to people what they already are beginning to do. And there’s a building up, people are learning from this. The most interesting development is something that’s going on in Cleveland, where there’s a complex, in part based on the Mondragon experience in the Basque country of Spain, a big, very successful cooperative effort—100,000 people, roughly. But in Cleveland, there are 3, 4, 5 linked worker co-ops; they’re building a whole complex of worker-owned companies, and these are not little co-ops. For instance, there is a large-scale industrial laundry, there is a hydroponic greenhouse, capable of producing something of the order of 3 million heads of lettuce a year. There’s a solar installation company. And they’re building a complex which is linked together throughout the community through a non-profit corporation.

So it’s not just worker-ownership, it’s community building and includes a revolving fund to help build more of these entities. Well, that structure in turn is building on things people have learned over the last 30 years particularly in Ohio, beginning with the decay of the steel mills in that state. It’s also using the purchasing power of public and quasi public institutions like hospitals and universities that are buying from the co-ops in ways that also help to stabilize the market. And that’s a really important principle—in part stabilizing (but not subsidizing) the “market” through public or quasi public purchases.

The important point is that there are many, many things that are developing that the press simply doesn’t cover. I wrote America Beyond Capitalism partly to give focus to the idea of what can be done in this phase of development—and hopefully building beyond that to much more interesting things once we learn more about how to do real things on the ground.

Wolff: Yes, I can add a little example of my own about the importance of books like yours and programs like this and other efforts to get the word out. Before we even sketch alternatives that are better, to even make the American people aware of what they themselves have accomplished in this area. I taught for many years at the University of Massachusetts. Just a few miles up the road from the small city of Holyoke, MA.

Holyoke has a public power company, and the public power company services the people of Holyoke. And it provides them with two benefits: lower rates for electricity than are paid by the surrounding communities that don’t have public power, a power operated by the community. And not only does it give them electricity for lower rates, but even at the lower rates, it makes a profit which it contributes to the city’s treasury, thereby lowering the taxes these people have to pay. A double benefit of public over private power, that they would save on electric rates and lower their taxes compared to what their neighbors a few miles down the road have to do with the big utility company.

And yet, when I had students from Holyoke, they were the ones whose eyes opened the widest when the learned of this, because they had grown up for 20 years in a community that never had explained to them in any school room or any kind of public way what they had and how it differed from the normal businesses in the United States.

Alperovitz: That’s a perfect example, and again, that’s why I wrote America Beyond Capitalism. Because throughout the country, and it’s one of our tasks—people who write and talk and lecture—to begin to show people what they already know how to do and are doing in many parts of the country. It’s based on the principle of changing the ownership and then capturing the resources for public use. And building up the understanding in theory, as well, so we can go to larger institutions as we develop the theory.

Wolff: And one of the really virtues of your book, America Beyond Capitalism, is it contains huge numbers of examples and lots of footnotes. So if you’re interested in pursuing some of these, you can find out ways of doing it.

Okay, Gar, let’s turn to look at this a little bit more closely. You are a critic of American capitalism, and this is certainly a time when more people than perhaps in a long time are interested, sympathetic, open to a criticism of a system that, clearly, for the mass of American people is not working very well to be as polite as I could possibly be.

But, of course, critics of capitalism are not a new phenomenon. Over the 20th century, critics of capitalism in the United States and abroad have mostly been advocates of one or another variant of traditional socialism or communism. While they often argued with one another, those socialist critics of capitalism seemed concerned to affirm that socialism was the alternative to capitalism. On the one hand, your approach seems to share much of their criticisms, and yet, it also seems to be determined not to embrace their notions—at least, of the socialist alternatives—and to come up with something else. Could you either correct if I’ve gotten that wrong or clarify for us your take on your critique as opposed to the more traditional socialist?

Alperovitz: Well, the central question in all of these, and which I certainly share, is who gets to own the capital? Because it’s not only an economic question, it determines the politics in large part. The corporate capitalist system lodges such power in the corporations, so the central argument here is that that many of these must be made public, and so in that sense, the argument absolutely shares this principle with traditional socialism.

The problem that I’m searching for words for is partly that socialism to most Americans in a country that has very little socialist background means Stalinism and it means centralized state planning. And the truth is the centralized planning in the traditional socialist model is subject to serious criticism from the left, as well as the right—at least in the form it has taken in “actually existing socialism.” There was also a theoretical problem—which is that to invest a state organ with all the power— which is what most people understand socialism to mean—given all the economic power, it means that in all likelihood a good deal of political power stays there, too. So, we do need to find new language to describe how to do what needs to be done, but we’ve also got to get to the principles and deal honestly with the question of centralized power in traditional models.

The argument of America Beyond Capital in this regard is that there are many different forms of democratized ownership, not simply central ownership of large industries (which is certainly appropriate in a number of areas). I agree with that and banking as well; there’s also no doubt that central planning in many areas must be done or you can’t manage a large-scale advanced and post-industrial system. The question is can we decentralize the ownership also at the community and regional level, so that we build both a different power base, so the state doesn’t control everything, and a different cultural base, so that the cultural ideas lead to democratic action from the bottom up?

And the heart of that is what I tried to get at—and I termed it a “Pluralist Commonwealth.” Pluralist forms of common wealth. So worker ownership, so coops, so municipal utilities, so neighborhood land trusts, so state-owned — we just nationalized GM and Chrysler — state-ownership of national firms. Plural forms. I don’t like that language, it’s not a very sexy language, but it attempts to get to the idea that you must change ownership of capital, but in many ways in order to achieve democratic results and achieve cultural results that allow us a democratic solution to the problem of who owns capital.

Wolff: This is very important, so let me underscore, because your modesty will probably hold you back in this area. Let me underscore something for all of our listeners. First, you mention that there were critics of centralized planning and Stalinism and so forth. That’s a very important point. To remember that socialism, just like capitalism, feudalism, slavery, is a system that’s been around now for a while, that’s been the subject of enormous disputes and debates. That there are many varieties of socialism, just as there have been varieties of capitalism, and that alternative models exists. So that when someone says “I don’t like socialism” and then describes a particular system, most of the time, particularly in the United States, what that person doesn’t seem to grasp is that what he or she has described is at best one of a variety of contesting interpretations and embodiments and concrete versions of this idea of socialism, but it is by no means the only one, and it becomes a dialogue to the death if you can’t have a conversation about the alternatives. And in a sense, you’re championing one of those alternative interpretations and criticizing others, and indeed that has always been the case.

Alperovitz: Let me just say one word about that because it’s really, really interesting, and you’ve pointed out the utility near the university there in the city. In most communities—and I’m from Racine, WI, a decaying industrial town on Lake Michigan—you can talk about all of these things in practical terms to liberals, conservatives, radicals, if you actually know what you’re talking about. The utility is a good example, once they realize that. So, too, worker ownership. And the rhetoric can get in the way of learning what the principles are. But, this is a key point: People who care about these things, I think, really need to learn to speak directly about what it is they want. And if you do, you can have 13 million people involved in worker-owned companies, you can have 25% of the electricity already in forms that transforms the ownership of capital. And it’s our problem to be able to speak about this, rather than assuming “they don’t understand.”

Wolff: It’s a good message, it’s a good slogan, it’s a good procedure to use in any kind of political work. And to remember that the part of the reason the American people tend too often to associate the term ‘socialism’ with one particular awfully described version of it is it’s a scare tactic. It’s a way to avoid conversations about the different kinds of socialism by imagining it has to always be one kind and that one kind is then painted in the worst conceivable colors. That’s a standard ploy of propaganda and should be recognized for what it is.

Okay, let me turn to push you a little further on this question. Some people when they talk about worker enterprises, use the term, and you have, too, “worker-owned.” There the key idea is that the workers become the owners, rather than say, another collection of persons called shareholders or something like that. Or the workers become themselves the shareholders. An alternative vision—and it’s not an either/or, obviously—but an alternative vision is where the workers are not so much the owners, but the decision makers, operating in some sense the way we now see boards of directors of corporations operating. They make those key decisions: what to produce, how to produce, where to produce, what to do with the profits—decisions which in most corporations are made by a board of directors, which may or may not be overseen by the major shareholders.

Can you talk about whether your vision stresses one or the other, or how you see the relationship between the future in which workers become increasingly the owners of enterprises, as opposed to a future in which the workers literally become collectively their own directors, rather than having a board of directors selected by a handful of major shareholders.

Alperovitz: Well, let’s go to the second vision. The second vision is the democratic vision which must be the direction we want to go. Control and the decision-making process. Mostly, that requires, I think, a substantial degree of ownership, otherwise, the owners who are somebody else, begin to say “No, no, no, you can’t do this and you can’t do that.” Some of the existing worker-owned companies suffer from that, but it can be challenged. We have experience of people challenging that. So, we’re talking about democratizing the processes. One of the…

Wolff: So you would say… Pardon me for interrupting, so you would say democratizing both the ownership and the directorate function.

Alperovitz: Exactly. You don’t get one, in the real world, without the other. You have to have democracy, both of ownership, who owns the capital, and how the decisions are made. But there is a problem with the traditional vision of the worker-owned company and the worker-managed company floating in a “capitalist market,” the market you talked about earlier.

What happens often is two things—and this also relates to the model that I mention that’s developing in Cleveland and many other cities are exploring; they give some preliminary some insight into it: What happens even in worker owned companies is, under the pressure of the market, there is a deep tendency to try to expand. Why? Because if you don’t expand, someone might expand and take your market. So you find a good deal of pressure to operate somewhat like a capitalist firm, which means growth, which means ecological destruction, which means pollution. Why? Because it cuts costs and beats the opposition.

So you really must begin to think, one, of planning systems that can stabilize the market to a substantial degree. Like these in the mini-form, like the hospitals and universities buying some of the output of these local worker firms. And more than that, trying to build a sense of community, so that a little structure of a non-profit organization linking these companies, so that they can’t just make some money and then sell off the firm—as happened with the plywood companies in Oregon, which were worker-owned, but started making money and then sold out.

Well, what you want is rebuilding community in a culture of democracy throughout, not just helping the workers who may be 40% of society and who get into a situation where despite themselves, pressures of the market force them to become more aggressive and undercut what we’re trying to do. So it’s a larger vision, I think, of the community, or in the abstract, the commune, as the central building block of culture, within which there is worker control, management and ownership and a planning capacity to help stabilize the market. All that sounds abstract, but if you look at communities, that’s the sort of thing that you can see happening slowly even now.

We described some of this in America Beyond Capitalism; it’s on the ground. You can see this kind of work in many communities. And the interesting thing is it makes sense to people locally, not just the theoreticians. There’s a great deal of rhetoric when people talk about this, but actually, you can explain these things in very, very ordinary American terms, if you actually try to do it. And one of the messages of America Beyond Capitalism, and it’s Howard Zinn’s message, is: find a way to talk not just to our friends. The tough part often is we don’t want to talk to people who we think can’t hear, and in my experience, that’s often our problem, not theirs.

Wolff: Yeah, I agree with you; it’s been my experience, too. You know, as we run out of time for this interview, I have to ask you a question which literally a half dozen people to whom I mentioned we were going to have this interview, independently of one another, urged me to ask you. And these are folks who are familiar with your work. So, let me close with that.

Many of those people you rightly say we can speak to, and we should be speaking to, are distracted by abstract terms that make them shy away from the very concrete things we want to talk about. That raises the question: why do they think like that? And the answer has something to do with those who do not want to see the democratization of our economic system along the lines you sketch and people like me, as well, talk about. Tell me what you think is the prognosis. How is it shaping up? The battle between those who want to move in the direction of democratization of our economy, and those social forces you see opposed to that or trying to slow it or stop it or reverse it for that matter. How do you think this is going to play out in the time ahead, especially in an economy under the crisis kinds of pressures it now has?

Alperovitz: Well, we obviously don’t know. We obviously know that if you don’t try, you certainly will fail. But I can give you, hopefully, a more thoughtful answer. The prognosis I’ve suggested is not the traditional massive crisis, a total collapse in which the “revolution”—which could very well go to the right and not to the left—occurs. Why do I say that a traditional crisis is unlikely? Mainly because in 1929, the government support system was 11% of the GDP, it is now in the 30% range. Which I think means you get stagnation and decay as an ongoing, long, painful process, rather than the classic crisis. That is really a very interesting organizing context. It teaches people that something is fundamentally wrong. It deepens pain at the local level…the ends of the internal empire. The Ohios, the Michigans, where there is real pain. And it teaches people they either have to try something new or the pain will deepen.

Now, the book is called America Beyond Capitalism. I think that means two to three decades of building, of re-thinking, of developing on the ground. I sometimes say “You want to play this game? The chips are two to three decades of your life. This is what it’s about—don’t start if you’re not serious.” But building up experience, knowledge, theory, over time from the ground up, it’s almost like an anti colonial struggle –in this case at the end of the internal empire. We are a big country: you can drop Germany into Montana. We are a continent. And the “empire’ can’t solve the problem in Detroit, or Cleveland, or St. Louis.

What is needed—and in many areas quietly underway—is a reconstruction of ideas, over time, as in the pre-history of the New Deal where things were done at the local and state level, and then became national. Or maybe some crisis will occur in certain sectors—as I said before, we did in fact nationalize General Motors and Chrysler. When the next financial crisis happens, we will probably take over some of the big banks. (We’ll probably break them up first; then they’ll regroup, and then we’ll take them again…) So, I think an evolving sense of history building from the bottom up gives give us a fighting chance to lay down groundwork in ideas, in practice, in people, in culture…for larger subsequent change… We shall see… And in any case all of this is positive in any case, and even a little positive change helps people in great distress. So I think the time now is to, you know, put on your walking shoes and get out there and really build. But I do urge—getting particularly out of Washington where I come from, and out of New York—places where we often largely talk to our friends. Get out to the Midwest and you’d be surprised what people can hear. The Occupy movement was so successful because the American people sensed that something was wrong. It’s not just that they did great work—it’s the pain levels that taught millions of people it’s time to re-think.

Wolff: Well, thank you very much. Gar Alperovitz has been my guest for this interview. Please take a look at his book America Beyond Capitalism, even more importantly think about the kinds of issues the book raises and that he has raised with us today. Thanks again, Gar, for joining us today.

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