Building the Future Now

Tag: politics

  • Cooperatives and a New Economy

    In some of my previous blog posts, I mentioned cooperative businesses and a cooperative-based economy as an alternative to Capitalism and conventional-style corporations. But because cooperatives as a business form are not really well-known, I’d like to briefly explain them. 

    To begin, a very basic and broad definition of a cooperative business is where the workers own the business and make decisions about its operation. It is democracy in the workplace, democracy in the economic sphere. This cooperative model directly challenges the ownership model in our current capitalist system.

    In a worker cooperative, the ownership is moved from CEOs and shareholders to the workers themselves. They become the shareholders. The profits of the business go to the workers. But the responsibilities in running it as well fall to them. In most worker-owned cooperatives, each member gets one vote in the decision making process. The worker-owners make decisions through a democratic process, which can vary from company to company. 

    In order to help ensure that the business is profitable and tasks are being completed, the workers can elect a supervisor or even a management team, depending on the size of the cooperative. So it is not completely non-hierarchical, it is just that the decisions about the hierarchy are made democratically among the workers. 

    This bottom-up control has many advantages. One is efficiency. Workers that directly benefit from hard work and figuring out ways to save time and money will usually do just that. Having hands-on experience in the decision making process helps avoid the dumb decisions that we all know comes from the top, wherever we work. 

    Workers cooperatives also help pull wealth down from the upper tier of the economic system – from the wealthy – to the worker-owners who often live in or near the communities in which they work. Worker ownership helps anchor wealth in communities, instead of it being extracted by large corporations such as Walmart. 

    Many worker cooperatives have a specified ratio between the highest paid worker and the lowest paid worker. It can be 9 to 1, 7 to 1, or 5 to 1 depending on what the workers in the company decide. This helps wealth to not be concentrated among the top tiers of the company, while still allowing for some upward mobility and incentives for career growth. 

    Here are a couple examples of worker-owned cooperatives operating in the United States in a range of industries. 

    New Era Windows

    This worker-owned cooperative based in Chicago sells energy-efficient windows throughout the United States. They formed after an abrupt closure of the plant in 2008, eventually purchasing the company in 2012. By 2015 they had 20 employees and were generating around 1 million in revenue per year. They are still going strong today. 

    Namaste Solar

    Namaste is a major solar installation company in Colorado that has been operating for over 20 years. It currently has over 60 worker-owners, and is a top rated solar company. 

    Select Machine, Inc.

    This machining shop was sold by the retiring owner to the workers, becoming a cooperative in 2010. It is located in northeastern Ohio, and it currently has 11 worker-owners. It specializes in metal applications for construction projects.  

    Palante Technology Cooperative

    Palante Tech Cooperative formed in 2010, and provides technological services to non-profit corporations and other similar organizations. There are currently 8 worker-owners at the company. 

    These are all examples of worker cooperatives around the United States. A current estimate of the total number of American cooperatives, though, is only around 612. Compared to the rest of the world, worker cooperatives represent a small slice of the business landscape here in the United States. Increasing that number could result in a ground shift in our economy and society. 

    Mondragon Corporation

    To see an economy composed of cooperative businesses at a larger scale, we can look at the Mondragon Corporation in the Basque Region of Spain. Mondragon is a federation of ninety-five cooperatives that make a wide range of products. Mondragon operates in four economic sectors, Manufacturing, Retail, Finance, and Education, and is the seventh largest corporation in Spain. It employs about 70,000 people, 80% of whom are worker-owners. 

    The impact that this corporation has had on the community around it is enormous. In the town of Mondragon where it was founded, it has been noted that there is not extreme wealth, but there is not any poverty. A majority of the townspeople have shares in the company. This extends to the communities around Mondragon where many of the cooperative businesses are themselves located. This has helped the overall Basque Region, which historically has been a less economically developed area, turn into a more prosperous one.

    All in all, cooperative businesses provide more wealth and stability for the workers and communities where they are located. During the economic downturn in 2008, Mondragon as a federation of cooperatives spanning multiple industries, was able to avoid mass layoffs by shifting workers from impacted industries to ones that were affected less. This took sacrifice on the part of all the workers in the company, and it was a very different decision than the executives and shareholders in capitalist corporations made.

    Cooperative businesses still operate under the same forces of competition and the need for innovation just like any other business. So a cooperative economy still has those same forces just like our current capitalist system.

    The primary difference is who owns the company, who makes the decisions, and who profits from it. It makes so much more sense that the workers in the business should be the ones in charge. What do most shareholders really know about the day to day operations of a specific company? Almost nothing. 

    I want to make it clear that I am not selling a utopian dream. Cooperatives are difficult, they take time and effort. It entails making business decisions with your coworkers. Not all cooperatives are successful, just like any business. And working in a cooperative is not for everyone. That’s okay.

    But for those of who want something different, who want to make an impact with our work, cooperatives are the way to go. They are the ultimate team ball, we’re just playing a different game than Capitalism.  

    Additional Reading:

    What is a Worker Cooperative?

    Spanish Town Without Poverty

    How Mondragon Became the World’s Largest Co-Op

  • Is Capitalism Really Responsible for our Modern World, Part 2

    Part 2: The Role of the Public Sector in Innovation 

    One of the primary justifications for Capitalism is that it is the cause behind our modern world, creating the comforts and health benefits we all enjoy. This is the second part of an essay that critically examines that claim. In this part, I will be focusing on the impact of research and innovation that has come from the public sector. 

    The term “public sector” means any sort of research funded by public money, whether through federal, state, or local governance. This means the military, public universities, and governmental agencies such as NASA and the National Institute of Health. 

    Starting with the US military, there have been a multitude of innovations that have come from the Defense Department. Maybe one of the most profound innovations is that of the internet. The prototype for this was developed by DARPA, a highly innovative research arm of the US military. In addition, most of the developments in computer technology and science in the early years of computing were from publicly funded universities.

    So much of our modern world is based upon this foundational development of computing and the internet. Over one trillion dollars of US retail commerce happens online each year. Social networking sites such as Facebook and Twitter exist because of the US military’s invention of the internet in the late 1960s.

    Add to the internet the following list of items that the US military either invented or substantially helped in the development of; the microwave, GPS, jet engines, canned food for mass production, synthetic rubber and fabrics, superglue, jeeps, EpiPens, WD-40, and many other items. The list is pretty exhaustive. And that is just for the US military, not to mention other militaries around the world.

    Another major source of public sector innovation is NASA. Maybe even more than the military, NASA has contributed greatly to our modern way of life. Public funding put a human on the moon and developed most of the technology to put satellites in orbit. Satellites are a critical component of our interconnected world, allowing almost instantaneous communication from almost anywhere on the globe. 

    Beyond satellite and rocket technology, NASA has created or been a major part in the development of the following items: scratch-resistant lenses, memory foam, cochlear implants, freeze-drying, digital cameras, ear thermometers, wireless headphones, advancements in baby formula, cordless power tools, artificial limbs, housing insulation, and solar cells…to name just a few. 

    In the field of medicine, the federal government has played a massive role through agencies such as the NIH, public universities, and research institutions. One of the most notable achievements of publicly funded research is that of the human genome project. Achieved in only 13 years versus the 15 years it was projected to take, this cracking of the human genome has transformed medical research. 

    Beyond this, public funds have funded much of the basic research for medical advancements that is not viable in the capitalist market. A good example is the Nobel Prize winning research of Julian Axelrod at the NIH on neurotransmitters in the brain. This research has led to the development of a wide range of drugs to treat depression. 

    Another major discovery that altered the modern world is that of penicillin. It was discovered by Alexander Fleming, a researcher working on a publicly funded project at a publicly funded hospital in the UK. This discovery is arguably the most significant medical breakthrough in modern history. It allowed for the creation of antibiotics that have saved millions upon millions of lives. The infant mortality rate has seriously decreased because of penicillin, as well as post-surgery deaths from bacterial infections. All in all, the discovery of penicillin has extended the average life expectancy by 23 years. 

    Cancer research is another area where public funding has driven a large share of the innovation. Add to this the fact that insulin was discovered at a public university in Toronto, Canada. Beyond this, I could list a whole host of drugs and medicines discovered from publicly-funded research that benefit people everyday.

    All this shows something very impressive. That we, as a people, have come together and through our elected officials have hired some of the most talented researchers in the world. Researchers who often toil in obscurity, and without the compensation researchers in the corporate world receive, to make all of our lives better. It’s an amazing thing, and it has nothing to do with Capitalism. 

    This doesn’t mean that Capitalism has not come up with innovations and inventions. It has, the automobile is a primary example. But it’s hard to argue that Capitalism is the cause behind innovation when so much of our modern lives was developed through publicly-funded research. 

    In conclusion to this two part series, Capitalism is an economic system where innovation does happen. But it is not the cause of it, and it is not the sole reason that we in the modern world live in comfort and relative prosperity. Humankind has been inventive since we first entered the scene 200,000 years ago. Technology builds upon itself, upon the accumulated skills, experience, and knowledge of millions of unnamed people in the past. 

    That drive for bettering ourselves and our situation is not going to change if we build a new economic system. In fact, a cooperative economy still fosters innovation, and still involves competitive forces. The difference is that the profit from that innovation is not concentrated among the executives and shareholders at the top. 

    All this goes to show that we do not have anything to lose if we give up Capitalism. We can go about our modern lives with the same amount of comfort. But with a lot less poverty around us and a whole lot healthier and wealthier communities. A better future is possible, we just have to build it.  

  • Why Tariffs Hit Regular People Harder

    Tariffs are once again in the news because President Trump recently implemented them against a number of our trading partners. The argument behind tariffs are that while they may raise consumer prices in the short-term, they will result in more manufacturing jobs in the long-term.

    In reality they are a form of regressive tax which means they hit poorer people harder than they do wealthy people. This is because tariffs are a tax that is most often passed on to the end consumer. Me and you.

    Prices for basic goods will go up, meaning all the things we need to live our daily lives will cost more. Think about how this will impact people on a fixed income such as elderly retirees. Or how it will affect a single parent raising a child. Or someone just trying to work their way out of poverty. 

    Wealthy people, on the other hand, can absorb these costs better because they are less of a share of their overall income. But for the rest of us, a 10% or 25% increase in basic goods will hit our wallets very hard. 

    Add to this regressive tax the Republican budget that is being debated that extends Trump’s tax cuts from his first term. These tax cuts heavily favor the rich. Both of these factors, the tariffs and the tax cuts, represent a redistribution of wealth upward.

    In regards to tariffs bringing back domestic production, manufacturing output in the United States actually hit an all time high in 2023. The issue is that automation and now artificial intelligence has shrunk the number of workers needed in the production process. Looking at the chart below, it is easy to see the decline in manufacturing jobs in juxtaposition to a steady increase in manufacturing.

    Figure 1: Chart showing the decline of manufacturing employment (red), the increase of manufacturing as gross domestic product (green), and as real gross domestic product (blue).

    So, the idea of a manufacturing renaissance in America that rebuilds the middle class is a good narrative to sell, but only if you don’t factor in automation and AI. In reality, this is just another shift of wealth upward.

    Sources:

    Figure 1

    From Wikipedia, ultimate source is Federal Reserve Economic Data