Nevermind Guaranteed Income, we want the cow

I’ve spent a lot of time lately speaking against the establishment of a guaranteed minimum income as an important policy to advocate. I want to make a few things clear:

  1. I feel the current distribution of wealth is grotesquely unfair.
  2. I don’t believe that those who cannot or will not work should be allowed to starve.
  3. I would be against plans to eliminate or cut the existing welfare system as long as it is needed.
  4. I believe that we should build a community in which everyone’s needs are met.

But, even so, I oppose fighting for a guaranteed income. Let me explain why.

First I want to be clear that it is simply more widely available welfare. Second, it would only help people have more access to consumption without altering anything about how production is organized. Third, it would not alter wealth distribution and ownership. And finally, it would require a new bureaucracy staffed by agents and experts to regulate and allocate this universal distribution of money.

My objections have surprised many people, but I think they are consistent with what I do think is the solution to our economic justice problem. I favor deep democracy replacing the rule of capital in our lives. This would require reparations and the reconstruction of the commons, but this time including the earth and the fungible financial resources that have been created by our labor within exploiting systems.

According to an article in the Atlantic, (The Conservative Case for a Guaranteed Basic Income, by Noah Gordon, AUG 6, 2014) the guaranteed income proposal isn’t new.

As Frum notes, Friederich Hayek endorsed it. In 1962, the libertarian economist Milton Friedman advocated a minimum guaranteed income via a “negative income tax.” In 1967, Martin Luther King Jr. said, “The solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Richard Nixon unsuccessfully tried to pass a version of Friedman’s plan a few years later, and his Democratic opponent in the 1972 presidential election, George McGovern, also suggested a guaranteed annual income.

What could possibly prompt such a wide range of supporters?

Our economy suffers from the fact that communities are not having their needs met and the quality of life equitably elevated by all. Neither the self-regulated market nor the intervention of government has been successful in doing this to the satisfaction of the many. The lack of purchasing power of working class people is a factor in the cyclical crises we face. The few who are privileged within and dominate the existing system induce others to believe that rather than oppose their domination and exploitation, we should instead struggle to emulate the rich and then all of who are worthy could be successful and take care of our responsibility to others. We are also told not to bother to understand how we got into the situation we are in, but rather forget the past and look ahead to the future.

Reparations and the cow

Those who argue the loudest for letting the past go are those who continue to benefit from the disparity. Their call to forget the past is a call to allow them to retain their unearned privilege, pretending that they deserve it.

I’m reminded of a story that I was told by Rev. Bugani Finca who was involved in South Africa’s Truth and Reconciliation work. A black South African, Tabo, confronted a white man, Mr. Smith, who had disrespected him and stolen his prize cow. With the prospect of amnesty for telling the truth, the white man admitted to having done what he was accused of, recognized how horribly wrong it was and asked for forgiveness, saying that he was truly sorry. Tabo was visibly relieved for having an opportunity to confront his oppressor and get an apology. They shook hands and embraced. As Mr. Smith, stood to leave, free, with his amnesty, the black man called out to stop him. The white man turned back with a questioning look on his face, not sure why he was being stopped, Tabo, the black South African, asked him: “But what about the cow?” Mr. Smith was visibly angry: “You are ruining our Reconciliation,” he shouted, “This has nothing to do with a cow.”

That is the question we must ask to all those who say that the past is long gone but still retain ownership of the herd produced by that old cow. We won’t forgive and forget until we get the cow back. But just suppose that the Mr. Smiths in the world make a counter offer: “I’ll tell you what, why don’t I just give you a supply of butter?” “The hell,” Tabo might reply, “If you give me back my cow, I can give you butter!”

Guaranteed income is a supply of butter. More than that, it makes two assumptions, both of which I think are false: It assumes that the government can simply pay out the money without having other negative consequences for the economy as a whole, and it also assumes that there is a rational amount of money and process for its allocation that experts can figure out and apply fairly.

What I do believe to be true is that with Labor being the sole creator of value, there is no place for the money to come from but out of the social surplus, either as taxes or reduced wages. There is a political and economic price to be paid that cannot be avoided. I also have a healthy distrust for decision making by experts. Typically, in spite of their declarations and the veneer of objectivity, they are guided by the class interests of those deeply entrenched in, and benefiting from the status quo. I have never heard that there would be a deeply democratic regulatory process to work out the details of a guaranteed. . If you would like to see how hard this is to implement, look at this article by someone deeply involved in efforts to make this work about 40 years ago.

What I do think we need is reparations, the democratization of wealth, the recreation of the commons and the outlawing of theft and speculation. I think that communities must become their own developers through broadly democratic planning any democratic access to non-extractive financing. The details of how these things are done is the content of many more pieces. But the key is democracy and expanded opportunities to be productive rather than enhanced consumption. We need the cow back, not just a supply of butter.

Finally, I want to say that even though some conservative economists and politicians have found guaranteed income something that they support, there is widespread opposition and a serious political struggle would need to be mounted to attain that end. I would hate to see us squander that much of our energy, resources and time on what would objectively be a giant welfare system.

Dara Cooper, a good friend of mine ended an email to me with this quote:

We can even produce more than we need. Unfortunately, because of lack of organization, we still need to beg for food aid and has kept us thinking that we can only be beggars who need aid. We must produce more because the one who feeds you usually imposes his will upon you. -Thomas Sankara, Burkina Faso

This is why I oppose guaranteed income “…the one who feeds you usually imposes his will upon you.” We have enough of that already.

Reparations: How are We Doing it?

At the CommonBound 2016 Conference in July, I had the honor of working with Aisha Shillingsford of Intelligent Mischief on a strategy session about reparations. We had about 80 people attend and participate in a very interactive session that Aisha and I facilitated. This is the result from that session that Aisha has put together. It includes some of the materials that we shared as well as the design process that was used. As you will see, the group was divided into smaller groups that were highly engaged in proposing what became a long list of concrete steps in multi-faceted reparations activities.

We are not content with continuing to make the case for reparations nor sitting and waiting on the federal government to listen to reason and take seriously our needs and demands. While the struggle for federal acknowledgement and action should continue, we were able to talk about what we can do now, and why we need to do it. The session made use of facilitation and design processes that were helpful in drawing from the energy, knowledge and passion of the assembled group. While, this is not a final statement on reparations, I hope that it will spark further thinking and discussion as we continue to build power and work for what is needed.

Blood, Bones, and Dirt

Earth, photographed by Voyager 1.

Adapted from the opening plenary speech at the Jackson US Social Forum People’s Movement Assembly on Just Transition and Economic Democracy. The image above is of Earth, photographed by Voyager 1.

This big, wet, ball of Dirt, spinning as it floats through space with the Sun shining on it was all that we had and all that we needed. At one point we all had access to it. We didn’t make it, we were born from it. Some call it Mother Earth out of respect, but we must all respect the wet warm earth as the source of all. Over the years we engaged our labor with the earth and made things to meet our needs and elevate the quality of our lives. We built shelter, made roads, planted food, developed science, developed agriculture, created tools and refined and improved them constantly. We discovered things we reflected on our lives and our needs and our communities and developed the core of information that we passed down generations at a time. We stored food and goods for later days and future generations. All that we made from our living labor, that I call Blood, is the value that living labor alone can create, and once made, it is dead labor, Bones, in service to meeting our needs and elevating the quality of life.

So that is all there is — Blood, Bones and Dirt. Living labor, dead or past labor, and nature—the earth. Once, the earth belonged to us all, but it is now “owned” by a few who exploit its resources and determine the conditions for its use. That same few “owners” appropriate all of the dead labor that they can, particularly the dead labor that is used to enhance the productivity of living labor. They own the community’s wealth that was generated by the labor of us all. That is the system that we live under. Where this ownership of the Bones and Dirt confers enormous power to a few people in the world whose interest is not in meeting needs and elevating the quality of life, but rather their interest is in increasing their degree of ownership and control; their wealth and power.

This system, where nearly everything on earth is owned by someone, means that the access and use of everything is restricted by an owner. While this may make sense for the product of our individual labor or for personal items like toothbrushes, clothes or even jewelry, it makes no sense for large expanses of land nor the technology, tools and factories for production that are needed by everyone for all of us to have opportunities to be productive. These things that were socially produced and that are needed to enhance the productivity of labor have been appropriated as the private property of the owning class. That type of ownership is neither natural, inevitable nor beneficial for the majority of people. It is the product of centuries of theft backed up by creative legal structures and outright violence. It is only by maintaining a system of coercion and violence that the majority of people can be kept away from the product of their own labor the Bones and the access to nature, the ball of Dirt that is the basis for all that we have.

The resulting system means that people who are able to be productive and can produce more than they need to consume, allowing for a social surplus that continues to enhance our lives are instead left idle and despairing. Those who are capable, ready and eager to work to provide for themselves, their families and their communities are prevented from doing so because the owners are unable to make as much profit from people working as they would like to make.

Another by-product of this system of ownership is the extraction from nature at unsustainable rates that leads to ecological devastation and the ruin of the earth’s capacity to provide for human and most other life.

The call for A Just Transition is the call to give us back our Bones. Give us back the huge pile of wealth that we have created so that we can use it to be productive, to meet our needs and the needs of our community for generations to come and live in harmony with nature. These Bones should form the framework on which we build with the materials from the earth, the Dirt, to make all that we will ever need. But instead they are used to box us in, to dominate and control our lives as even more value is extracted from our labor.

But we must also understand Power. It is the capacity to convert your dreams and aspirations into reality, to shape and control the unfolding of events. There are three aspects of power: The concentrated power of others can crush you, and it will crush you if you don’t resist it. So we build resistance struggles to survive. The concentrated power of others can possibly help you, if you direct it and advise what is needed. And so we build advocacy movements to direct concentrated power and wealth in ways it can be useful. But we don’t always have to accept the existence of concentrated power outside of us that we must Resist or Advise. We can be the power of our own lives if we build the necessary structures and institutions to meet our own needs and elevate our own lives. We can be power by Doing for Ourselves. Resistance, Advocacy and Doing for Ourselves represent three aspects of how we relate to power that can be found together in different proportions. As long as oppressive systems and concentrated power exist, we will always have to do some Resistance and Advocacy work, but we need to remember that the goal is for us to organize ourselves to be the power within our own lives and communities. We must create the world we want to live in by doing for ourselves.

When we understand that all real value is created by human labor, we have beautiful new ways to understand the world. That does not mean that everything that we find valuable is created by labor. As we have said, this big wet ball of dirt has everything that we work on with our labor to create value. Think of air and diamonds. Few people would think of buying air. We don’t need to because it is here for us to use. If we go without it for just a few minutes we will die. It is absolutely important. On the other hand, gold and diamonds can be avoided all together for your entire life. No one would die without them, (although many people have died for them). But their value lies in the large amounts of human labor that go into their discovery, retrieval and “prettification”. Gold and Diamonds will continue to be exchanged for much more than air and water, not because they are more useful, but because they are embodiments of more concentrated labor.

The whole world of money is an abstraction of, and a reflection of the world of values created by labor. Money serves to measure, store and facilitate the exchange value. Anything that can be used to do this, whether it is stamped in a piece of metal, written on a piece of paper, encoded on a magnetic strip, on a piece of plastic, or just kept as accurate accounting records in a reliable and secure place is money. The world of money enhances and reflects the world of values that are being exchanged. Finance can be thought of ais the general realm of money. At one point in time financial services developed to help people do very specific things that made sense to do. The process of trading over long distances was made easier by money, using accounting, credit and finance rather than trying to carry pineapples and mangoes to the folks who had wool and meat. Something can be bought or sold at great distance and over long time delays from where it was produced allowing people all over the world to share in the bounty and productivity of the earth without wandering all over the globe.

The rise of financialization, has however, taken these conveniences to levels of destructive absurdity. In these times people buy and sell money itself along with gambling on the possibility of unknown future events then buying and selling the speculative possibilities of the future. No one really needs a derivative, but the amount of financial activity tied up into trading abstractions that are not needed, have no use value whatsoever and are only bought and sold in order to buy and sell more of them at a later time, or take advantage of those who bet the wrong way is obscene. The collapse of the housing market connected to securitized cash flows based on mortgages which were themselves predicated on constant, never ending inflation of housing values is an example of the damage caused by financialization gone wild.

But proper financial work is an opportunity to access the Bones and Dirt needed for our labor to be fully productive. This is why we are building the Southern Reparations Loan Fund for the development of sustainable cooperative enterprises that are democratically owned and democratically controlled. This loan fund is based on three principles:

  1. It is Radically Inclusive. That means that you can’t turn down folks because of who they are. They can be Black, poor, previously incarcerated, queer, trans have bad personal cred histories and still they are qualified to access credit for building cooperative community enterprises.
  2. It seeks to Maximize Community Benefit. That means that it will not waste financial resources on projects that are not able to be sustainable and productive, but also that that it will not simply preserve the financial assets by not risking them on meaningful projects with the potential for great community benefit.
  3. It seeks to be Non-Extractive in its lending. That means that it does not seek to take more out of a community than it helps to create and puts in, nor will it take anyone’s house or their previously accumulated business and personal assets.

These three principles make the SRLF different from other loan funds, even those that claim to help folks who have little access to finance. The others will do all three of the things that SRLF will not do. They will turn you down for who you are, preserve rather than risk their assets on community benefits and take your house.

Finally I want to make a point about reparations. Forty acres and a mule was a unit of production, not a unit of consumption. It had nothing to do with the “forty acres and a Bentley” that some think is the modern equivalent. A mule could help grow its own food, feeding itself and your family. A Bentley only helps you spend more money. We think that by building this type of financial entity, we honor the spirit of those who, following their forced enslavement, called for reparations as an opportunity to be productive, as a way to be in control of their lives as producers rather than mere consumers. They asked for Bones and Dirt. We still struggle to make this a reality.

Traveling through the Delta

Ed Whitfield recently spent a few days traveling through the Mississippi Delta. Here are some photos and reflections from that trip. The above photo was taken at Red’s Blues Club in Clarksdale MS.

A stop in Mound Bayou MS is always inspiring to me. This is the cradle of Black independent development in the USA.

Founded by former slaves, this was the first and largest Black town in the U.S. It boasted having the best health care in Mississippi. It had a successful bank, insurance company and later an agricultural cooperative that ginned it’s own cotton and treated people fairly. There was a big business in sweet potatoes too.

The fraternal group whose sign you see below grew out of a secret society which had planned to recruit an army across the country to fight to free slaves. It gave up these plans only after the civil war broke out. The hospital that it founded offered care to people from all across the state. The boarded up building in the photo is the lodge hall of the International Order of Twelve Knights and Daughters of Tabor.

Despite its small size and poor funding, Mound Bayou had – and still has – excellent schools, winning competitions against larger better funded schools across the state in music, academics, and sports. The girls just won the state basketball championship with a 31 – 0 season. The schools are being threatened with closing from consolidation efforts to increase diversity and gain more funding. This will be a great loss.

Knights & Daughters of Tabor - Mound Bayou

Knights & Daughters of Tabor - Mound Bayou

The Riverside Hotel was once a black hospital in Clarksdale Mississippi. The room I stayed in, shown below, was one of two operating rooms. I mused about how many people had died there and that is when I was told that Bessie Smith was one. She never regained consciousness after an operation in which her right arm was amputated following a severe traffic accident.

In the period since its conversion to a hotel in the 1940’s, many other notable entertainers stayed there. Now it is the temporary home for blues tourists from Europe and Japan who are seeking more authenticity than comfort. There are common toilets in the hallway, and if you get cold during the night you can knock on the wall and the host will come into your room to light the un-vented heater. But two people can stay there for $65 which includes tax.

Riverside Hotel sign

Ed at Riverside Hotel

Riverside Hotel room where Bessie Smith died

Leaving Clarksdale Mississippi this morning, the site where bluesman Robert Johnson allegedly sold his soul to the devil in exchange for musical skills, I passed the Hopson plantation. Over a thousand slaves and their share cropping descendants once worked on this plantation. The former slave owners sold the homes of black agricultural workers to the devil for a mechanical cotton picker made by International Harvester.

In 1943, newspapers from across the country came to witness the beginning of the end of blacks in cotton. From split school sessions that subordinated education to the cotton season, to being totally dispossessed from the land in little more than a generation, it was quite a transition. This picture shows the commissary at the Hopson plantation which is now converted into a blues venues with an on-site motel where visitors can stay in a remodeled, air conditioned share cropper shack.

Hopson Plantation

This morning before leaving the Mississippi Delta, even though I was running late, I had to stop by the memorial to my hero Fannie Lou Hamer in her home town of Ruleville MS. This is a bigger than life bronze that overlooks her grave site on a small park.

Ed Whitfield at the Fannie Lou Hamer Memorial Garden

Fannie Lou Hamer historical marker

Fannie Lou Hamer memorial

Fannie Lou Hamer statue

Fannie Lou Hamer tombstone

Pitfalls of Buy Black/Black Capitalism

Buy Black (via Twin Cities Daily Planet)

During recent Kwanzaa celebrations there was a call for collective economics. “Ujamaa (Cooperative Economics): To build and maintain our own stores, shops, and other businesses and to profit from them together.” This was explained by many as a call to “Buy Black” with others accepting that it was a call for supporting “Black Capitalism.” I want to offer a critique of this understanding from the standpoint of what would be progressive and beneficial in a transformative way to the black community.

Continue reading Pitfalls of Buy Black/Black Capitalism

Economic Incentives? Yes, But Directly to the Community

Renaissance Community Co-op
Renaissance Community Co-op
Renaissance Community Co-op

Despite what many people believe, there are not many ways for city governments to directly impact economic development in communities. Cities don’t directly start businesses that provide goods and services and create jobs. Cities will tell you that their job is to create and sustain the infrastructure needed by business, and then let the market take over. That means to let businesses be created where owners will profit, let sellers sell for as much as the buyers are willing to pay, and let jobs be created paying wages that allow investors an adequate return on their capital.

But there are clearly times when market forces are not adequate to provide the development that a community desires. If market forces alone were sufficient, someone would have put vibrant stores back into the Renaissance Center (formerly the Bessemer Center, located on Phillips Avenue in Northeast Greensboro) years ago. What developer after developer has found is that the projected return would not make their investment worthwhile. That does not mean that they could make no profit, only that they couldn’t make enough for their investors to be satisfied.

What the city is able to do in such situations is to offer incentives that ‘sweeten’ the deal for a developer. This benefit to the private developer is justified in the hope that it will lead to a pubic good. The idea is that incentivizing a developer will enable enough profit to justify the investment, and the community will indirectly benefit as a byproduct of the profits made by the developer.

That’s the idea, but things don’t always work out that way in practice. What often happens is that the city buys a distressed property at its market value. It is then made available to a developer at below-market rates, so that the developer can “improve” the property, and thus justify renting it at market rates to entrepreneurs who try to make their businesses succeed. In good economic times this might happen. But in rough economic times, like now, we often see a series of businesses moving in and then failing in newly developed areas. We end up with a lot of empty commercial space, run down business districts and underserved communities. In times like these, high rents can be the death of businesses.

On Phillips Avenue there is an opportunity to directly benefit the community by bypassing the below-market-rate deal to a private developer and instead making an incentive deal directly with the group putting together the community-owned cooperative grocery store. Incentivizing this group would facilitate a vibrant community business operation that would be the hub of future growth in the area. Unburdened by high rent, a coop grocery store could meet the need for convenient, quality food at reasonable prices and allow for surplus to remain in the community to enable additional economic development and further enhance the community.

The city should engage in a public/community partnership with the Renaissance Co-op Committee. This is the community group that is working to build a community-owned cooperative grocery store in the center. In this relationship, the city would agree to make funds available as grants and loans with negotiated rates and payment schedules to help make this project a success as they have done with private developers on other projects. With the reduced cost of business space, a well-designed and efficiently operated cooperative grocery store has a great shot at thriving and becoming an engine for economic development in the area.

We often measure economic development by the amount of capital we can attract. I think we should begin to measure it by the capital we can retain in the community. This is what can be used to enable job creation, satisfy community needs, and increase community wealth. We need to find better ways to measure local economic development activity so that we do not celebrate putting money into a community in such a way as to mainly facilitate sucking wealth out of it rather than keeping it in and building on it.

We have lots of money in our community like a river. But the money flows out as people spend to take care of their wants and needs. Currently money that flows through is gathered by investors seeking the highest returns on their investment. This causes them to seek to invest in areas where they find low taxes, lax environmental protection, and low wages—the very factors that damage communities.

We need to slow this flow. We need to construct dams to create the pools of money that can remain in our communities to be used for ongoing development. Cooperative economic ventures that are by their nature democratically owned and controlled provide a means to do this. When communities control the wealth that they produce they can use it to create jobs, meet community needs and elevate the quality of life even subsidizing the arts and recreation, environmental sustainability and community healthcare. With the proper incentives to the right people, the city’s economic development policy and practices can be important parts of helping this happen in the interest of the city as a whole. Public resources should only be used for public purposes, not to further enrich private investors.

Taking Risks and Packing a Parachute

Felix Baumgartner jumps from the edge of space.
Felix Baumgartner jumps from the edge of space.
Felix Baumgartner jumps from the edge of space.

Most of us have never actually had to pack our own parachute, but it is not hard to believe that those who have packed it with great care. While we may think of sky-diving as a high risk activity, practitioners of the sport are extremely cautious and avoid any unnecessary risk. I would go so far as to claim that the risk that they take is less than the risk of walking across a busy street. Sky divers know what they are doing. They are very careful to make sure that they will have a functional parachute when they need it.

The rich often attribute their wealth to their willingness to take risks. I doubt that as a class they got rich by being less careful with their money than sky-divers are with their parachutes. I would be willing to bet that as a group, the wealthy spend a lot of time and energy getting to know the arenas where they operate, they take great precaution with their money and they assume very little risk. When business risk is assumed, it is such that the potential reward is so great when compared to the chance that they will get it that even winning some and losing some they still come out ahead. Well, so much for risky behavior!

What really characterizes the wealthy in not nearly so much their increased willingness to accept risk, but rather their heightened knowledge of ways to avoid risk, their increased access to the resources they need to put together profitable enterprises and a cushion of access to surplus money allowing them to stay in the game in spite of setbacks. These enterprises are dependent on the labor of others who are also risking failure by being involved in an effort which might fail but which will capture all of the surplus their labor produces if it succeeds.

But let me try to give a concrete example of the type of risk that the rich brag about., What would my return have to be to make it worth my time to gamble? First, we need to remember the difference between taking one chance on something, and repeatedly wagering over and over again. If I make one wager with 1-in- 5 odds and could only double my bet or lose it all, I would be taking a risk and I would have a likelihood of losing.

On the other hand, if I bet 5 times, I could expect to win once and lose four times. Betting $10, I will put up $50 and get back the $20 from my one win.. The net loss would be $30 for each average cycle of 5 tries. Now we should understand that in some cycles I might win twice and in others I might not win at all, but if the probability is accurate and the game is fair, overall I will win one and lose four each cycle of 5 tries.

Suppose though that on winning I can more than double my money. Suppose I could get $100 when I win and only lose $10 when I don’t. Then with the same odds, sin 5 tries I will on average win $110 and lose $40. That means that I put up $50 in my 5 bets and got back $110. I will have a net gain of $60 in each cycle of 5 tries. That is my type of “gambling”. There still might be times I win twice out of 5 tries, or even three times, and there might be times I don’t win at all, but in general if the odds are 1 in 5, over the long run I will make out well. Being knowledgeable about the chance and the size of rewards allows me to make a decision to engage in this situation, but not the first one with a 5 to one chance and even money. That is “knowing the game”, but is hardly taking a risk.

With the possibility of greater reward, it would be wise to take on even less frequent payoffs. For a $100, I would risk $10 even if the odds were 1 in 8 or 1 in 9. In the long run, I would still consistently win, putting up $80 or $90 and getting back $100. For a $1000 payoff, I would take on odds up to 1 in 80 or 90 for my $10 bet. In general, where the odds are more and more against me, I would still be smart to wager if the payoff was big enough to make up for the times I would likely lose.

One of the things we heard about the housing bubble was that financial institutions packaging mortgage backed securities made an effort to ascertain the risk of default on the mortgage so they could set the return on the package of securities in relationship to the risk. The idea was that the higher the risk was, the higher the return needed to be to make the purchase worthwhile. Packages were put together that had huge risks and were attractive because they had gigantic returns. The problem with the mathematics of this is that the greatest return will come from buying a security that had a zero chance—that is — no chance of being repaid at all. Many of these were sold because of the promise of huge returns, but when it became clear that the mortgages on which they were based would never be paid, then the giant bubble burst, and these high value securities became worthless – toxic, they were called.

So we have it that higher risk is worthwhile if the reward is high enough, but there is no reward high enough for something that will certainly never pay off. Unfortunately, many wealthy folks who engage in this logic with the idea of not really risking anything, in the long run, found themselves having given away everything until the taxpaying public was called in to bail them out and save the financial system. Now you have to understand how courageous that is. That is an even better way for the wealthy to ‘assume risk.‘: If they win, they get to keep it all. If they lose, we pay it off for them.

So my claim is that the financial practices of the wealthy are not particularly risky. Typically they have sufficient reserves to allow them to “stay in the game” until they win and they have calculated that the return that they get will be great enough to cover for their inevitable loses. When they miscalculate all this, they dump the loss on the public. That is not risk. What would be risky is to let a Wall Street broker pack your parachute or to take care of your safety net.

Fish, Pies, the Commons and Economic Development

Ice Fishing (Photo: Andrey)

Since late last year, F4DC has been working with individuals and organizations from across North Carolina to frame a different approach to economic development action plan. Over the last 9 months or so, we been thinking, planning and organizing with cooperative business stalwart Frank Adams, workers in NC cooperative businesses, and leaders from a range of economic development groups (the NC Community Development Initiative, Ownership Appalachia, Good Work, the NC Association of Community Development Corporations, and others). Out of these conversations has emerged a vision of a statewide initiative and a set of principles that might guide the work of such an initiative.

On Monday, August 29th, this work stepped up a level, when 54 cooperators, lenders, funders, economic development leaders, and other supporters convened in Durham, at the offices of the Self-Help Credit Union. Titled “Building and Strengthening North Carolina’s Grassroots Economy,” the day-long meeting framed the problem of our stuck economy in a new light and then started to map out a set of solutions based in the idea of nurturing community based enterprises that pay a living wage and are rooted in place, green, and sustainable. Lots of great conversations took place across the meeting, and a consensus started to emerge around the need for a coordinated statewide effort.

Marnie and Ed opened the meeting with remarks that gave some context to the day’s work. Marnie tried to define “The problem we’re trying to solve,” and Ed outlined possible solutions in the vein of Mondragon’s worker owned cooperatives and other place-based business models. In preparing his remarks, Ed ended up writing a much longer speech than was needed at the meeting, but which we think provides a useful metaphor for understanding the relationship between communities and their economies, called “Fish, Pies, the Commons and Economic Development.”

Remarks made by Ed Whitfield of the Fund for Democratic Communities at the “Building and Strengthening North Carolina’s Grassroots Economy” meeting held August 29, 2011 at the offices of the Self-Help Credit Union in Durham, NC


Fish, Pies, the Commons and Economic Development

Ice Fishing (Photo: Andrey)
Ice Fishing (Photo: Andrey)

I’m going to talk a little about fish. Not real fish. I’m not a fisherman, although I have cleaned my share from an uncle who loved to fish and eat them, but didn’t want to scale them and remove the guts. But I’m going to talk about metaphorical fish, the kinds that keep showing up in discussions of self reliance and education.

But first a brief digression: I want to mention pies. Another important metaphor.

Why do we talk so much about pies? Slice of the pie, bigger pie, make our own pies, pie chart, etc. Why do we talk about pies and not talk about fish when it comes to sharing?

Pies are not natural. They are simple, easy to divide, relatively uniform whether in a circle or a box, and they make good charts and graphs. Some of the discussion about the economy and economic justice is about pies and dividing things equally. Some folks propose that the current social division of goods and services or even income and wealth, should be redone so everyone gets the same or a fair amount. This redistribution discussion quickly brings up the challenge of some people who don’t want to give up something so that other people can get something that often the folks who have to give up something think they don’t deserve. It is called a zero-sum-game where getting something means someone else losing the same amount. Those who do fairly well with the status quo are afraid of those who are disadvantaged taking something away from them. Pies get us in trouble.

Economic participation is more like fish than pies. It is complex and hard to divide fairly—who gets the head, who gets the fins, who gets the filets and who consistently gets only the fish guts?

We are much better off talking about folks catching their own fish for themselves rather than trying to divide something so complex. But, that brings me to the “great fish lie”. You have all heard it: “Give a person a fish, they eat for a day, teach a person to fish, they eat for a lifetime.” It’s vicious lie. I used to tell it myself, until I thought long and hard about it and did some research. It became clear to me that just knowing how to fish was insufficient. Knowing how to fish will not feed you at all. You have to also have access to a water hole – lake, ocean, river or stream — someplace where fish can be found – and even then, you needed access to some fishing stuff. We can hardly catch fish with our bare hands. We need a pole and line, hook, bait, sinker, float, or some such maybe even less, but still some tools and equipment suited to the fish we want to catch. The idea that knowing how to fish would feed you rang hollow and useless when we live in a world where knowing stuff is relatively easy, but gaining access to the things we need to be productive can be quite difficult. It is another way of blaming people for being poor and hungry because they won’t learn about fishing. If that fish tale wasn’t wrong, we wouldn’t have construction workers who know how to build houses living under bridges or inhabiting homeless shelters.

Once upon a time, everyone had shared access to lakes, streams and oceans. People had access to land where they could plant food to eat. People had access to forests where trees grew (without anyone having to plant them) and they could use the wood to make shelter, or take clay from the ground to make brick or adobe to shield themselves from the elements. These things were available on the lands that were shared in common. In fact, they were even called “the commons”. These commons were shared and available as the basis for the opportunity to be productive. These commons had the water holes on them, and the stuff we would need to make fishing gear. We didn’t make the commons. This is the abundance that has been found by people who, living on this earth, make use of what is here to be productive, to survive and to thrive – to pass on to the next generation to do so as well.

Since the time when the commons was available and widely shared, some people have understood that the commons had a tragic side. Claiming to be worried about this source of livelihood for the community being kept responsibly, the commons were locked up. They were enclosed. Fences were erected and a new understanding came into being that unless these common spaces were owned privately, they would not be properly taken care of. The idea was that people would cheat. Every cow herder would have an incentive to over graze the commons because he could raise a few more cattle for himself, but he would share any degradation of the common space with the others who use it. That is to say, if you are the first one to cheat, you get the entire benefit, while you get to divide any losses with others who get nothing from your cheating, so you come out ahead. The worry then was that the commons had to be protected and that protection could only come from someone locking it away and restricting how others might use it. So, that which had been the basis for everyone being productive – that which was shared in common, that which had been cultivated and cleared, enriched and improved as part of the accumulation and improvement of communities over thousands of years became, relatively quickly, the private property of the king, nobles or other landowners. These people then wielded the considerable power that comes from being able to decide who will or will not be allowed to be productive.

The real facts contradict this so called “tragedy of the commons”. The commons existed for thousands of years without being destroyed in this way by people in whose interest it was to cheat. Many people around the world have been good stewards of their community’s resources. If they hadn’t they couldn’t have survived. But this idea of the tragedy of the commons became a justification for the concentration of ownership and the concentration of power that comes from a few people getting to decide who will be able to be productive.

Now, in our time, great wealth produced by thousands of years of labor, including slave labor, is concentrated in the hands of a few people. Nearly every square inch of the earth is owned by someone. I know there are parts of the ocean that are international water, but they are largely inaccessible without expensive ships and navigation equipment, so it is still not the case that all who know how to fish are allowed to go fishing.

So let’s go back to correcting the fish lie. The ingredients required to feed one for a lifetime are a) one’s willingness and ability to work, b) a place where that can be done, and c) the equipment needed to do it effectively. We don’t have to own each of these things ourselves to use them. If we are not in jail, we certainly do own our ability to work, but land or access to water and equipment are generally owned by someone who can make our use of them conditional. We have to pay to play.

It is the community’s accumulated surplus, stored in financial institutions in our community and around the world that is the pool of funds from which we should be able to borrow what we need to gain access to the places and things we need to be productive. From being productive, catching our own fish, we would be able to produce enough to feed ourselves and our families, pay back the resources we borrowed, invest in improving the community, and keep the excess for a rainy day (or a drought). We can also set aside some surplus so that someone else might borrow it to become productive and give back to the community after paying back what they borrowed.

So, we here today want to talk about facilitating the productivity of a community where many of its members are willing to work, are willing to secure the knowledge to allow them to be a part of the healthy economic life of a community, and still are not able to be productive. People in such communities are told fish stories, that it is their fault they are hungry because they lack the knowledge of how to fish, when instead, they have been denied access to the water holes and the fishing gear.

The financial market crisis is an acute form of this problem that gives us an opportunity to see it sharply and discuss it with folks who are otherwise not interested in talking about pies or fish or access to capital, but the problem is a longstanding one even in relatively good times. The problem with those good times is that they keep periodically changing to bad times, and we don’t know how long these times will be bad times before the good times come back, if they ever do.

We know from what we heard a little earlier that the conditions we face are severe. We need to figure out what we can do to have a big impact on the situation. In North Carolina hundreds of thousands, if not about a million or more people need employment or better employment so that they can become productive and contribute to their communities. But these neighbors of ours are not able to do so, largely through no fault of their own, but rather because they do not have access to the commons, which no longer exists as a free space, and they don’t have access to the money they would need to access these productive spaces in today’s world where everything is owned and restricted.

Responsible and adequate access to finances — to capital — is the key to unlock the commons. It is the key to the health of the community. As political economists Cohen and Rogers have said, investment “is effectively the only guarantee of a society’s future. If that future is not available as a subject of social deliberation, then social deliberations are fundamentally constrained and incomplete.” That is to say, poor communities remain poor when the resources are denied to them or drained from them; when the finances are not available to create opportunities for all who are willing to be productive; when the place and the equipment, the land and the machinery are not made available for people to be productive and produce the surplus that goes into assuring the community’s future.

But we are all concerned about the community’s future. We are concerned about communities developing economically. Local governments offer incentives to bring businesses into communities. We try to make communities attractive to investors so that they will put these productive opportunities in place. Our current way of approaching economic development privileges bad corporate and business citizenship. We have seen development based on the race to the bottom, where businesses are enticed with low wages, few environmental protections and the freedom to externalize the cost of damage to the environment rather than having to pay the full price of doing business. Rather that “what’s good for General Motors” being “what’s good for America”, what is good for business profits is often exactly what is bad for the quality of life in a community.

Still, even with the incentives that are offered, some businesses come to town, stay a while and then leave. In Greensboro we are celebrating the arrival of Honda Jet and mourning the departure of American Express this year. We need businesses that are rooted in place. But how? We can’t tell the owner of finance, tools and equipment that he cannot sell what he has in one place and buy something somewhere else. That he can’t liquidate an investment in one place and make another investment somewhere else where he will get greater returns on his investment. How do we begin to restrict the flow of money out of our community without creating oppressive coercive practices and structures?

The answer is under our noses. It lies in those business entities that have no incentive to relocate. Business entities that are owned by the community do not behave like we have seen so many others behave, and no coercion is required. When the owners of a business are members of the community who need and use the business’s services, then the business has little incentive to leave. When the owners of a business are the workers in the business, they have no incentive to outsource their jobs to other parts of the country or world where wages are lower or where there are less environmental protections or where they can appropriate huge chunks of the tax base for their private use and leave the community without needed services.

Most communities already have some such institutions, but they are not well connected and there are not enough of them. They include credit unions (which are co-ops) as well as individual proprietorships, co-op stores, buying clubs and other small scale things where community members work together on supplying and distributing the things that they need.

There is also a possibility, that many of us are just coming to see, of doing this on a large scale and in a coordinated way that can make a big impact on the kinds of problems we know we are facing.

We have the evidence from Mondragon Cooperatives in the Basque region of Spain, that such large scale businesses are possible and that they can be world class, competing with the rest of Europe, North America, and Asia for innovation, quality and sound management practices. They are organized around the principles of the sovereignty of labor and the instrumental but subordinate nature of capital. They uphold the importance of democratic practice and participatory management. They are owned by the workers, but hire managers with sufficient skills to run large complex enterprises. They have their own insurance company, bank and retirement fund as well as doing research and development and continuing to think about their core business purpose of creating jobs and community wealth rather than simply increasing corporate profit. With about 100,000 jobs, the largest retail store in Spain and the economically healthiest communities in spite of the international financial crisis, there is much we can learn from Mondragon. As we will see shortly with the video of the Evergreen Co-ops done by the Cleveland Federal Reserve, there are already some communities here in the USA who are taking their lessons as a basis for developing new approaches to community economic development.

Cooperatives and worker owned co-ops are certainly not the only economic entities that are rooted in communities. Many of our smaller mom and pop operations are tied to place, and not likely to cash out and move. We need to think about how we can generally make resources available – productive resources that are tied to principles of DEMOCRACY, SUSTAINABILITY and JUSTICE. We need community based enterprises which are a) sustainable, b) pay a living wage, c) pay attention to not damaging the environment (green) and d) have a conscious connection to building community.

We do, however, need to recognize that the current practices of lending and grant-making make it difficult for less common forms of business organization, such as cooperatives, to exist and gain access to finance. This money is a portion of the social surplus, the accumulation of the social product, capital, that businesses need to be as efficient as possible and grow to meet the needs of their communities.

Much of the current way that new business entities are fostered is based on the idea of individual entrepreneurship. While the idea of an individual coming up with innovative business plans and taking clear responsibility for implementing those ideas is commendable, it does not match what is possible and useful with a group of people coming together to share in business ownership and design. Good management can be found and hired until it emerges from the affected communities of workers. Folks in a worker owned business will make the hard decisions that go along with making a business successful and the option of packing up and leaving will be off the table. When we push open the doors wider to the ways of developing local community based enterprises, we need to make sure we make room for businesses organized around co-operative models.

I want to end by adding a few extra points on these community based enterprises:

First, they should produce as much as possible for the needs of the local community before looking to the increasingly distant state, regional, national and international markets over which they have decreasing levels of control and influence. Food, energy conservation, energy, shelter, services and other things that are hard to outsource lend to a certain rootedness and stability. There is less worry about large swings in national or international commodity prices when we are producing first and foremost for our own needs. This is also a way to help the surplus generated by our community stay in our community and not be sucked out and put on the market for the highest returns at whatever social costs that it would entail.

Second, I’d like to say we should promote inclusive entrepreneurship. We want to make sure we are opening doors to allow the entry of those who have previously found it difficult to go into business. This will require us to promote and develop the culture, mentors, financing and inexpensive business spaces that are needed to allow groups entry into business development.

I would conclude by saying that we know a lot about what will not work. Simply talking about redistribution is not sufficient. Re-slicing the pie will not get us what we need. Engaging in more economic-development-as-usual is not sufficient. Continuing this race to the bottom is not sufficient. Low wages, disorganization and fracturing of the communities, a lack of environmental regulation and ultra-low taxes do not make a good community. Education, alone, is not sufficient. We may need to teach people how to fish, but only when we have made sure the waterholes are available for everyone.

We have a lot of work ahead of us, but we can make this work.

Productive Justice

The need for productive justice is largely the result of inequitable systems of distribution and unfair structures of ownership that allow a shrinking group of the élite to accumulate socially produced and socially needed production resources in their hands.

  • Productive justice is having equitable access to productive opportunities.
  • Productive justice means not having to beg someone for a job.
  • Productive justice means not having to beg for land to grow food on.
  • Productive justice means being able to provide for yourself and your loved ones—the very young, the old, the infirmed, and the caretakers—with your labor which produces for all.
  • Productive justice means enjoying the dignity that comes from being a productive and needed part of society.
  • Productive justice means being a role model and teacher to the young who follow.
  • Productive justice means being an independent political thinker and actor, unfettered by fear of displeasing elites on whom you might otherwise depend upon.

Productive justice is needed because the current system means that the control of who is or is not allowed to be productive is in the hands of a small group of people.

This small group has enormous power that derives from this control.

This power is literally power over the life and death of others.

This power robs other people not only of their produce but also of their dignity.

By determining who has access to opportunities, spaces and resources needed to be productive, these owning elite control the actions, direction and rules of the whole community.

They use this power to increase their power and wealth.

This system of the few controlling the many has gotten worse, despite all the talk about democracy.

With the elites controlling even what are the choices put before us, it matters little how we chose.

We need to work in the cracks and fissures of the existing structure to expand and broadly/openly distribute productive opportunities while still looking for ways to undo the historical patterns of power and distribution that have resulted in current inequities.

Southern Grassroots Economies Project

The first meeting of the Southern Grassroots Economies Project took place this weekend, March 18-20,  at the historic Highlander Research and Education Center and it was a great success. There will be much more information posted here in the coming weeks, but for now we want to say how good we feel about the 30+ representatives from organizations from across much of the South from Texas to Georgia and as far north as Kentucky who came together to consider the importance of developing cooperative economics as a part of their social justice work. A temporary steering committee has been formed and will have its first conference call in a week to begin to plan for additional activities to strengthen this part of the movement in the South. As Niqua, a youth member of a worker owned co-operative lawn care business in Atlanta organized by Project South, said on the last of day of the meeting, “I feel like we are a part of history now.”