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Total System Change: A Real-Life Look at Regional Governance and Public Ownership
(Image: Democracy Collaborative)

Total System Change: A Real-Life Look at Regional Governance and Public Ownership

(Image: Democracy Collaborative)

Part of the Series

This is the second installment in an exclusive Truthout series from political economist and author Gar Alperovitz. We will be publishing weekly installments of the new edition of “America Beyond Capitalism,” a visionary book, first published in 2005, whose time has come.

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This brief note is offered for readers who wish to grapple with some of the longer term directions implicit in the emerging and proposed model.

Four critical principles underlie the democratic theory of the systemic model sketched in the following pages: [1] democratization of wealth; [2] community, both locally and in general, as a guiding theme; [3] decentralization in general; [4] and substantial but not complete forms of democratic planning in support of community, and to achieve longer term economic and ecological goals.

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Several but not all aspects of the argument are developed in the theoretical chapters of Part I of “America Beyond Capitalism.” Here let me again simply note the judgment (quite apart from other considerations) that traditional “after-the-fact” redistributive measures depend upon power relationships that no longer hold. Hence, either another way forward is possible, or the power that attends high levels of income and wealth is likely to continue to produce growing inequality, and thereby subvert genuine democratic processes. On the other hand, in the previous pages and elsewhere, I have reviewed some of the reasons why it may be possible to slowly develop new forms of democratized wealth ownership in the painful economic and political context we are clearly entering. Part I of the book also suggests how such institutions can contribute both to greater equality and to community social and economic well-being.

The various institutions, from co-ops to land trusts, and including municipal enterprise and state investing, all also challenge dominant ideologies which hold that private corporate enterprise offers the only possible way forward; and they help open new ways of conceptualizing practical approaches to meaningful larger scale democratization. Ultimately the steady illumination of this principle has important political implications both locally and nationally. New wealth-building forms may also contribute directly to building progressive political power. And, over the longer haul, taken together and generalized, they begin to suggest some of the rudimentary elements and potential outlines of a possible community-based systemic model. (Simply to note: As discussed also in Part I, traditional small- and medium-size business and entrepreneurship are fully compatible with the logic of such a model.)

Even as it welcomes diverse democratizing efforts for these various reasons, the systemic model suggested in the following pages and in other writings places particular emphasis on community-encompassing forms of ownership in its larger vision and theory. Thus in the Cleveland effort discussed above, the central institution is a community-wide, neighborhood-encompassing, non-profit corporation. Worker co-ops are linked to this (and to a revolving fund at the center), and though independently owned and managed, they cannot be sold without permission from the founding community-wide institution. The basic principle is that the effort should benefit the broader community, not only or simply workers in one or another co-op. Related to this is the fact that initial support is provided by the core institution. Furthermore, it is only because of this larger community-benefiting legitimating principle that serious political and moral claims on broader public support can be put forward with integrity, and with force.[1]

Ultimately a systemic model that hopes to alter larger patterns of distribution and power must also nurture a culture that is supportive of broad and inclusive goals; and this requires paying attention at all points, again, to nurturing institutions that are inclusive. Coops, worker-owned firms, small business and the like, though important, inevitably represent interests distinct from those of the community as a whole. Moreover, the people who comprise the work force at any one time number less than half of the larger community. The “entire community” includes older people, stay-at-home spouses, children, and the infirm. The interests of the workers – and particularly workers in any single sector – are not inherently (and institutionally) the same as those of the overall community understood in terms of its necessarily broader and more encompassing concerns.

This is not to suggest that free-standing worker owned cooperatives are unimportant. It is simply to suggest that any genuine effort to emphasize equality must come to terms with the fact that large order systemic models based entirely (rather than partly) on worker ownership, as urged by some theorists, are likely to develop power relationships of a particular kind. The workers who might control the garbage collection enterprises, for instance, are obviously inherently on a different footing from the workers who might control the oil industry in a model structured along pure worker ownership lines. Furthermore (as discussed more fully below) worker-owned businesses operating in a challenging market environment can easily be overwhelmed by competitive forces that undermine larger social goals. Though to a degree regulations and after-the-fact efforts aimed at controlling the inherent dynamics of such models can modify and refine outcomes, they are unlikely to be able to alter the underlying conflicts of interest involved.

To emphasize the importance of local communities – and within that, of institutions of democratized ownership both of encompassing and of independent and diverse forms – is implicitly to emphasize decentralization. The model discussed in the following pages, however, takes up a further more difficult and challenging question: Can there be meaningful democracy in a very large system without far more rigorous decentralization? It is a commonplace that Washington is now “broken,” that decision-making at the center is stalemated, in decay. Part of this is clearly Constitutional (e.g., the “checks and balance” system, voting procedures in the Senate, the over-representation of small states, etc.)

But part of the problem, the following work argues, has to do with scale – and in two quite distinct ways. First, we rarely confront the fact that the United States is a very, very large geographic polity – one difficult to manage in general, or to manage through meaningful democratic participation in particular: Germany could easily be tucked into Montana; France into Arizona and New Mexico. In the words of George F. Kennan, compared with most nations ours is a “monster” country.

Furthermore, it is very large in population – currently more than 310 million, likely to reach 500 million shortly after mid-century and in the “high estimate” of the U.S. Census Bureau possibly to reach or approach over a billion by 2100.

Decentralization in these circumstance is inevitable, and if the continental nation is too large and most states too small to deal with economic matters, what remains is the intermediate scale that we call the region – a unit of organization much discussed in serious theoretical work by conservatives and liberals and radicals at various points in modern history – and a unit of scale, the following argument suggests, that is likely to become of increasing importance as time (and population growth) go on. The question is almost certainly how to regionalize, not whether to do so – what powers to maintain at the center and what powers to relegate to various smaller-scale units. The principle of subsidiarity – keeping decision-making at the lowest feasible level, and only elevating to higher levels when absolutely necessary – is a guiding principle of the model throughout. (As noted in the following pages, a particularly robust discussion of such issues was begun in the 1930s, only to be sidelined by World War II. The implicit judgment is that the scale issue is likely to re-emerge especially as economic conditions challenge different regions in different ways, and the central government is unable to deal effectively with the results.)

Clearly we are discussing long term change, not abrupt shifts in direction. One of the purposes of the following work is to suggest the importance, not only in the abstract, but in connection with practical organizing work, of dealing with large order matters of principle. It is to suggest that at each stage, very serious questions need to be asked of specific projects – whether genuine democracy can be maintained without altering current patterns of wealth ownership, without nurturing a culture of community, and without dealing with the problem of scale, particularly as population and the economy grow in our continent spanning system.

A final point concerns planning – and of two kinds (and including variations and contributions from the market). In the Cleveland effort the principle of community-wide economic benefit and stability is partly affirmed by the inclusive structure of the model. It is also affirmed, however, by a carefully structured relationship to institutions that can help stabilize the local “market” – in this case, the so-called “anchor institutions” (non-profit hospitals and universities) that rarely leave the community. Within one small geographic neighborhood in Cleveland such institutions purchase roughly $3 billion in goods and services each year. One element of the developing model is based on agreement by such institutions to purchase some part of their needs from new businesses that are owned by the employees, and that are also part of the larger integrated community-wide effort.

This arrangement approximates in very rough outlines a systemic planning design in which community is a central goal (but with worker ownership as a subsidiary feature) – and in which substantial support is provided through a partially planned market. Partially planned, not totally planned. There are no subsidies involved, and outside competitors may challenge local firms. In principle, however, since there are much broader community benefits (including rebuilding the local tax base, and a better local economic environment for independent small businesses, co-ops, and worker-owned firms), the principle of support for the larger community-building effort is seen as both socially and economically important.

Note also that for the most part the large “anchor institutions” are substantially dependent directly and indirectly on public programs (e.g. Medicare, Medicaid and new health efforts, and on public support for education in various forms). In the Cleveland model the taxpayer funds that support programs of this kind do double duty by helping, too, to support the broader community through the new institutional arrangements. The same, of course, is true for a range of municipal, state, and other federal policies available to local businesses, including employee-owned firms.

Two further points of principle: As discussed in more detail in the following pages, substantial local economic stability is clearly necessary if democratic decision-making is to be meaningful in local communities. First, because without stability, the local population is unstable, tossed hither and yon by uncontrolled economic forces that undermine any serious interest in the long term health of the community. Second, because to the extent local budgets are put under severe stress by these processes, local community decision-making (as political scientist Paul Pierson in particular has shown) is so financially constrained as to make a mockery of democratic process.

If an authentic experience of local democratic practice is also absolutely essential for there to be genuine national democratic practice (as theorists from Alexis de Tocqueville and John Stuart Mill to Benjamin Barber, Jane Mansbridge, and Stephen Elkin have argued), then some form of explicit public planning to achieve the local economic stability required for this becomes absolutely essential as well. Elsewhere I have suggested ways to think about larger scale planning approaches by considering the nation’s longer term mass transit and high speed rail needs. The United States has very little capacity to build equipment for any of this. (Though there is one small firm in Portland, Oregon, in the main we assemble parts, most of which are produced by foreign companies.) In the future, a new systemic model might well use public contracts needed to build mass transit and high speed rail in ways that also help support quasi-public national and community-based firms – both to produce what is needed and simultaneously (as in the Cleveland model) to help stabilize local communities. (Again, note that the entire effort is financed by the taxpayer and commuter.) The approach – which might appropriately involve joint public-worker owned firms[2] – could clearly be applied in connection with other industries as well; and, again, some carefully structured forms of competition might be encouraged to keep the model on its toes. And, of course, the further public development of major sectors like health and finance as described above would provide additional avenues of approach to a comprehensive planning system.

A related point has to do with community stability and global warming. It is not often realized that stability is required to help deal with climate change issues as well – and again for two quite distinct reasons. The first is simply that it is impossible to do serious local “sustainability planning” that reduces a community’s carbon footprint if such planning is disrupted and destabilized by economic turmoil. Stability is especially important in achieving high density housing and in transportation planning.

The second reason stability is important in this regard is simply that it is very carbon costly (as well as capital costly) to continue our current policy of literally “throwing away communities.” Unplanned corporate decision-making commonly results in the elimination of jobs in one community, leaving behind empty houses, half empty schools, roads, hospitals, public buildings and the like – only to have to build them again in the new location to which the jobs have been moved. The process is wasteful of capital and human resources in the extreme, but also extremely wasteful in terms of the carbon content both of the structures discarded – and then of replacements built anew in a different location.

One further point related both to local and national planning (or partial planning): To the degree that businesses (including worker-owned businesses) are subjected to intense market competition (and/or Wall Street pressures), most must attempt to steadily expand sales, profits, and growth. If they do not, they are likely to be severely punished by the markets, or, alternatively, competitors will find ways to achieve gains as they expand, often to the detriment of a less aggressive firm. If longer term ecological sustainability requires reducing growth, some form of partial planning like that which stabilizes the market in Cleveland, or on a large scale potentially in connection with transportation, will also be necessary to alter such patterns. A form that deals both with major national (ultimately, regional) employment and growth management must be developed in ways that also deals with community and nationwide ecological requirements.

This obviously also raises the question of how planning might be made both efficient and democratic. As to the first point, note carefully, our ongoing lack of serious planning has resulted in huge local “throw-away city costs” as well as massive national recession, stagnation, employment, revenue, ecological and other costs – as each recession’s unemployment and trillion dollar scale GDP and revenue losses so clearly demonstrate. Any planning system will involve both efficiencies and inefficiencies. Given the stakes – and the extraordinary costs, wastes and inefficiencies of our current practices – a carefully designed form of planning is likely to be able to meet the comparative efficiency test, even as it exceeds current practices in its community, ecological sustainability, and climate gains. The present, extremely wasteful bar is set very low. (References to some promising directions in democratic forms of planning are provided below.)

Obviously, these brief notes are only that – notes towards the design of a longer term community-sustaining system. Supplementary materials on various elements can be found in the references below and in the book itself. That said, the specific democratizing efforts suggested in the following pages stand on their own – as important to undertake for economic, equity, ecological and democracy enhancing reasons, and regardless of whether or not a longer term systemic model is ultimately achieved in all its inter-related parts.

In addition to references provided throughout “America Beyond Capitalism,” the following may be useful in connection with certain of the above issues:

  • On local community ownership and on planning for community and wealth democratization: Gar Alperovitz, Thad Williamson and Ted Howard, “The Cleveland Model,” The Nation, March 1, 2010.
  • On the theory of distributive justice underlying the argument for wealth and income democratization: Gar Alperovitz and Lew Daly, “Unjust Deserts: How the Rich are Taking Our Common Inheritance and Why We Should Take It Back” (New York: New Press, 2008).
  • Regarding the democratization of wealth and the question of community: Gar Alperovitz, “The Reconstruction of Community Meaning,” Tikkun, May 1996.
  • Regarding the importance of local community democracy: Thad Williamson, Gar Alperovitz, and David Imbroscio, “Making a Place for Community: Local Democracy in a Global Era” (New York: Routledge, 2002).
  • On democratic forms of planning: Gar Alperovitz and Jeff Faux, “Rebuilding America” (New York: Pantheon Books, 1984) Chapters Nine and Ten; Erik Olin Wright, “Envisioning Real Utopias” (New York & London: Verso, 2010), pp. 155-167.
  • On the ecological importance of community stability: Thad Williamson, Steve Dubb, and Gar Alperovitz, “Climate Change, Community Stability, and the Next 150 Million Americans” (College Park, MD: The Democracy Collaborative, 2010).
  • On longer term political possibilities: Gar Alperovitz, “Neither Revolution Nor Reform: A New Strategy for the Left,” Dissent, Fall 2011.
  • On community wealth-building efforts around the country.

1. In the Cleveland effort the board of the non-profit institution includes representatives both of the worker cooperatives and of key community institutions. Future efforts in other settings will undoubtedly test further approaches to democratizing core community-wide institutions.

2. For a discussion of this possibility, see Gar Alperovitz, Thad Williamson and Ted Howard, “The Cleveland Model,” The Nation, March 1, 2010; Thad Williamson, Steve Dubb, and Gar Alperovitz, “Climate Change, Community Stability, and the Next 150 Million Americans” (College Park, MD: The Democracy Collaborative, 2010).

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