History is full of examples of people tolerating the cruelest condition of life for decades or even centuries. People do not organize for change just because they are oppressed or exploited. They organize for something. It is not until they are effectively presented a positive alternative that seems achievable that they act in ways that make change possible. This is particularly true of organizing efforts focused on bringing about fundamental change--or, in the language of the time, a new paradigm. It's not enough to have the objective conditions. The subjective conditions must also exist--effective leaders and organizations armed with an appropriate vision and program.
A growing number of leaders and organizers were coming to believe that the conditions of the economy and society in the 1970s and 1980s were not inevitable, and that the objective situation required a new paradigm of development. But it was also clear that the conventional approaches to fundamental change had serious, if not fatal, flaws. To earn mass support, however, the strengths of each framework needed to be recognized and sustained in our search for an approach that was practical and consistent with our social vision.
At least three contending approaches to fundamental change have fundamental flaws that must be addressed as we create the space for a new paradigm of development.
The Socialist Vision:
The socialist vision inspired leaders of huge U.S. movements for change most recently in the 1930s and 1940s, and again in the 1960s and 1970s. It gave many domestic organizers hope that if they could achieve power in one form or another, there was a tested system that worked and could be imported and applied in the restructuring of our society. This was a vision worth sacrifice--death and loss of physical safety, the loss of a job, and the endless difficult meetings that always accompany movements with big ambitions.
The socialist vision had, and still has, enormous strengths. It has contributed and continues to contribute to the development of society. But where it was represented by a command economy and a command state or movement, it was compromised and failed. Its weaknesses have become painfully apparent with the collapse of most socialist command economies and societies, and the ensuing fragmentation and marginalization of the left. Two fatal errors were at the heart of this decline. First was the failure to develop adequately the democratic aspect of the state, the society, and the economy. The command state and party were profoundly coercive and restrictive, failing to educate and motivate citizens in creative and constructive development.
The second fatal error was a wrongheaded perception of the role of the market. The socialist command economy resulted in enormous waste and plummeting productivity, and suppressed entrepreneurial talent at the ground level of the economy. The productivity potential of socialism remained a hollow slogan buried in a pile of heavily subsidized, bureaucratized shells.
The "market" was often equated with capitalism and was only recognized for its negative aspects. Markets have been around for 10,000 years, or since humankind developed enough surplus product to exchange. Markets and market pressures have always had their strengths and weaknesses, their positives and negatives, and each system has recognized and used the strengths and addressed the weaknesses according to its values and priorities. That was true for slave and feudal systems, and it is also true for capitalist and socialist systems.
Markets and market pressures are part of the objective features of society and cannot be wished away, ignored, or crushed. Some on the left may hate to hear it, but to ignore this truth stifles effective leadership at the micro level of the economy--in the companies where production, work, socialization, and education take place.
The Social Democratic Vision:
The social democratic vision--best demonstrated in policies that have guided European governments and movements--has also failed to provide a framework to inspire legions of grass roots leaders and organizations around a vision for restructuring the economy and society. The strength of this international vision is that it has guided governments in power, and in some circumstances, has had enormous influence in all aspects of life in many countries.
At least four major international trends of social democratic thinking exist, each with different characteristics: the Northern European, the Southern European, the Latin American, and the North American. Of these, the North American is by far the weakest, remaining largely the property of academics and the intelligentsia, and influential only in relatively small and narrow circles. Its politics have been typically within the Democratic Party and focused on incremental changes.
Despite a commitment to the social wage, broader access to expanded social services, and a broader democracy, social democrats have remained identified with the "command economy." Their tri-partite democracy brings together big business with big government and big labor, essentially seeking to create capitalism with a human face. As a result, the philosophy hasn't reached close to the ground to provide the kind of transformative experience in communities, companies and organizations that lead to flexibility and innovation. A broad democratic vision that doesn't extend to the micro level of society and the economy in day-to-day activity misses the opportunity to train people and organizations in the skills essential to building and protecting a productive, democratic society.
The Single-Issue Approach:
Over the last 20 years, many activists of the 1960s, in part because of the failure of the that decade's political fights, returned to single-issue, grassroots work. They sought to be closer to the people and to offer practical options. They focused on a very particular approach as a springboard for social change. They include those who think that worker ownership or cooperatives will provide the inspiration to transform society, or that new-age business practices will capture the imagination of those in power and lead to transformation, or that a "green" agenda with a pristine character will lead to an apocalyptic moment of change in society. There are others.
Each current has its own considerable strength, particularly in its focus, but together and separately fall short. They lack the comprehensive programmatic and organizational vision that is essential in mobilizing the kind of support essential for systemic change. Their principal weakness lies in seeing their particular vantage point as "The Strategy" rather than as an essential component or tactical option within what must be a broader vision.
CLCR emerged from discussions among local organizers sensing the need for deeper and more comprehensive understanding of the options for CLCR's main constituency--at that time, unionized workers. The loss of thousands of jobs combined with the political atmosphere of the Reagan era rewrote all the rules of organizing, building union organization, contract negotiations, and fights with the company. CLCR had to start over and dig deep into the details of what was going on in the industrial economy and in the workplace.
Like other networks of organizers from the 1960s, CLCR applied and developed intellectual, strategic, and technical skills within the context of a particular community, a particular issue, and a particular constituency. Our setting was the labor and community movement to retain industrial jobs.
CLCR's focus for the last 16 years has been on investigating and experimenting with approaches to creating a contemporary strategic analysis and tactical framework. For this movement, we have explored such issues as worker ownership, acquisitions, and the various components of community development, trying to find out if these issues were dead ends or part of an emerging and useful strategy for labor and communities.
Others of our political generation went into community organizing, housing, community development, the women's movement, the environmental movement, or local government. Our collective experience contributed to building our new paradigm for management and development of the economy, and standards for our own professional lives that are consistent with our social and political values.
The effort has taken much longer than we would have predicted. Nonetheless, in the course of the last 15-20 years, the scaffolding has slowly risen for a working analysis of our economy and an approach to economic development that can work--that can solve practical, everyday problems in the company, in the community, or in society, and is consistent with our 1960s social vision.
From Business Experience
An enormous contribution to this new vision emerged from the experience of workers, unions, managers, and technical and financial consultants as they helped establish worker-owned and worker-operated companies as one response to the emerging industrial crisis in the late 1970s. Prior to the restructuring of American industry, and notwithstanding the rich European and Canadian experience, worker ownership was generally relegated to the "candle and sandal" sector of the economy--a small utopian option for the margins. The field has gained enormous experience through trial and error and is now changing the way mainstream businesses are owned and managed, bringing new values and priorities into decisions on production.
This field includes attorneys, accountants, managers, investors, business analysts, educators and trainers, policy advocates, labor leaders, and bankers. Within the 10,000-plus Employee Stock Ownership Plans (ESOPs) involving 9 million employees17 are hundreds of companies that are engaged in deliberate and complicated efforts to change how production is managed. A huge network now exists of producer, agricultural, and consumer cooperatives. There is now a wealth of practical experience in this field.
In the United States and Canada, many new investment funds have been guided by social screens reflecting activist values and priorities. These included Working Assets, Shorebank, and new funds linked to the American labor movement. In Canada, labor-initiated investment funds committed to local and employee ownership now represent $4 billion of the $7 billion venture capital pool. These funds reflect a substantial amount of experience on the part of bankers, financial analysts, investment analysts, and government in shaping some of the features needed in a new approach to development.
Thousands of small companies have also been started by social activists who, with a few bucks and a quirky idea, became entrepreneurs and were successful: Ben and Jerry's Ice Cream, the Body Shop and People's Express, to name three. In the last 15 years, entrepreneurs have emerged who explicitly link their social vision to the details of their business and who, with as much creativity as they can muster, try to walk their talk within the restraints of successful companies. These companies have created their own networks such as Social Venture Network and Businesses for Social Responsibility, and collectively seek to influence private sector and public policy. Within high technology firms and other new sectors, traditional values are now an impediment to productivity and profitability and are being replaced with innovative approaches to management and production. Within the walls of thousands of companies, entrepreneurs are gaining experience the hard way, and that experience that will be an essential component of new paradigm approaches.
Equal Exchange
Equal Exchange is a for-profit company, headquartered in Massachusetts, and is engaged in the business of food importing, manufacturing, and distribution--primarily coffee. It is owned and operated by its 30 employees, and supported by another 200 shareholders. It has annual sales of $5 million. Equal Exchange buys its coffee directly from farm cooperatives in Tanzania, Mexico, Costa Rica, Guatemala and other Latin American countries. The beans are purchased at a minimum price of $1.26 per pound based on the calculation that this is the minimum price that allows sustainability of the farm cooperatives. That price is paid, regardless of the world market price.
The company was founded in 1986 as a demonstration project in designing, organizing, and operating a holistic business--one based on the principle of fairness to all stakeholders of the business: suppliers, investors, employees, customers, and the environment. The founders' purpose was to facilitate more direct trading relationships between consumers and producers.18 As company executive Clark Arrington declared at the recent annual conference of Sustainable America, "Our goal isn't just to make profits, but to change the world."
From the Labor Movement
Labor has been the setting for some of the most important changes in any institution in the last 50 years, exactly on the issues that are the subject of this paper. At the end of the 1970s, mainstream labor was dominated--in fact imprisoned--by defenders of the old paradigm. Major unions were recognized for the strength of their bureaucracies and their stubborn resistance to internal and external change rather than as a progressive economic force.
Unions were the predictable partners of the owners of industry and remained loyal partners even when the fissures in the traditional post-war social contract began to widen into chasms. Yet because they were labor unions, they were among the major casualties of the shift--losing millions of members and witnessing double digit declines in the percentage of workers they represented. But this hole, far from becoming a grave, as some of the ideologues in business and government had hoped, became a cauldron of change.
Veteran and emerging leaders began to fight for a new order within local and international unions. The Steelworkers Union shifted from accepting concessions in wages and benefits for the promise of jobs that never returned, to being a leading union in the promotion of sophisticated capital strategies. More than 20 large employee buyouts saved thousands of Steelworker's jobs and their communities. The International Ladies Garment Workers Union initiated the Garment Industry Development Corporation (GIDC) in New York City that sought effective partnerships with government and owners, restoring a sector challenged by the fabled dollar-a-day Asian garment worker. GIDC. initiated training, technology, marketing and export programs that have saved jobs and companies and provided a model for other union leaders. "Sector initiatives" have now emerged in 10 to 15 other areas with equivalent sophistication.
Hundreds of these stories are percolating in this cauldron, often covered in CLCR's Labor Research Review.19 One result has been a dramatic change in the leadership of the AFL-CIO. The new leaders have brought "into the Building" some of the best thinkers in any sector to address the serious issues of our economy and society. A huge reserve of resources and ideas within this movement will shape the character of the new paradigm of development.
From the Environmental Movement
Emerging from 1970s events like Earth Day, environmentalism has gained enormous influence, reflected in desperate marketing efforts by traditional companies to be identified as "green." More recently, an Environmental Justice current has united the concerns of African American, Latino, and indigenous people with environmental issues.
The movement has always had an activist image that has its own strengths. Less visible but as important have been its breakthroughs in thinking on issues of technology, process and product. Leading environmental thinkers such as Amory Lovins have the confidence to say that technological and systems answers exist for all the environmental challenges we face. These developments are picked up by other leading thinkers and organizations in the movement. The challenge is to build a majority consensus for a new paradigm of development through linking economic and environmental sustainability.
From Local Politics and Community Activism
The traditions of the old paradigm included an activist movement that hollered like hell for its piece of the pie. Just because it was loud, visible, and at times effective did not mean it was anything more than a desire to be part of the line at the trough. This is true in local politics and local community organizing--and these currents are as visible today as they were in the past.
Of course, it is critically important to continue to fight for a fair distribution of wealth, and many of these groups and political figures are a constructive and essential part of civil society. Within this context, many political and community organizations went beyond the limits of redistribution and explored the new relationships and responsibilities that will be required in a new paradigm of development.
In the early 1980s, Mayor Harold Washington of Chicago built a grassroots movement and advanced an agenda that became almost a spiritual period for those involved because of the dramatic changes he embodied and suggested. Others like Washington insisted on winning office to further advance similar agendas, not just new clothes to replace the old.
Some pathbreaking efforts in community organizing suggest new social relations of production that would be the norm in a different approach to development. The Dudley Street Initiative in Boston organized residents in true community-based planning and successfully used the tool of eminent domain to assemble land to realize their plans. In a semi-rural community like Athens, Ohio, the Appalachian Center for Economic Networks (ACE Net) has created a Food Kitchen that provides assistance and resources to some 40 micro-enterprises and small companies, helping them grow, expand, increase employment, and build the community. The Intervalley Project in the Northeast has tied industrial retention, business development, health care, and housing together with citizen participation. There are countless other examples of local leaders and organizations engaging in truly pioneering work.
From International Experience
Early in the 1980s, those looking for new approaches to development began to find overseas experiences that were very advanced and consistent with the values of a new paradigm of development. Looming large in influence is Mondragon, a network of worker-owned production cooperatives in the Basque region of Spain.
Mondragon began modestly with the efforts of a visionary priest and a handful of technical workers in the 1950s. They created a small industrial cooperative that grew into a large network of cooperatives. The Mondragon cooperatives restructured in 1991 to form a single company, the Mondragon Corporacion Cooperativa which, as of 1997, employed 30,634 workers, and uses sophisticated technology, and financial and management systems. It remains profoundly linked to all aspects of community in the surrounding region. Each company is run on the principle of "one worker, one vote" and is part of a web of creative democratic life with constant tensions and adjustments. Compensation is calculated on a balanced ratio between the lowest-paid and highest-paid.
Mondragon is even more compelling in its explicit link to the struggle of the oppressed Basque people, who have used their common culture, language, history, and politics in an economic form that now competes at the top of the Spanish economy and provides inspiration internationally. Mondragon represents cooperative principles applied to large-scale industry, in complex and growing communities, and to a living commitment to democracy in the economy.
The Emilia-Romagna and Venezia regions of Northern Italy, known as centers for "flexible manufacturing networks", provide confidence and inspiration for those looking for new models. Here a network of small and often cooperatively owned companies work in constantly changing consortia of companies to secure contracts that permit them to grow and create more companies, more jobs, and more resources for their communities. These companies are typically very small, very high-tech, and very flexible--pooling their strengths, yet not losing their individual initiative. They are also profoundly linked to the local socialist, communist, and labor-oriented Catholic governments that nurture them in many ways, a fact conveniently ignored or avoided by conventional analysts.
In both Mondragon and northern Italy, we found successful entrepreneurs who mastered management of the opportunities within the domestic and international marketplace, yet deliberately maintained a connection and tension with values that give primacy to people and their development. Neither region tolerates a "utopian" label in its candor in trying to manage the tensions and pressures of operating in a different and often hostile world. They continue to learn on the basis of their serious mistakes. In this honesty, as well as in their success, lie inspiration as well as specific sets of skills for those who seek big changes.
In Québec, Canada a large network of producer, consumer, and investment cooperatives has been created by community networks, unions, and entrepreneurs over the last several decades and constitutes a significant force in rural and urban communities. It is supported by a variety of resources including large union-initiated funds such as the Solidarity Fund created by the Fédération des travailleurs et des travailleuses du Québec (FTQ) and the Fondaction created by the Confédération des syndicats nationaux (CSN). In the last few years this breadth of capacity, vision, and experience has been gathered under the umbrella of the "social economy." It has gained political recognition and resources from the government in Québec and from the business community leading to commitments of $500 million to eradicate poverty from a province of 7 million people. The social economy movement has embraced the needs, aspirations, and capacity of all the segments of the economy not included in the traditional private sector or government. This includes the cooperative network, not-for-profits, cultural organizations, social-service organizations, women's and other democratic organizations, the environmental movement, and others--constituting a force of huge influence in society.
Within the socialist world, within the socialist and communist parties, and within revolutionary parties such as the African National Congress, there is experience and analysis that contributes to this search for a new paradigm. It is certainly equal to that found in advanced capitalist countries, companies, and parties. In our travels we would hear about the doctrinaire character of the French Communist Party, but then we would hear about the experience of the printers organized within that party who anticipated the dramatic changes in printing technology and embraced that knowledge as they created cooperative print shops. We noted that the seemingly rigid British Labour Party generated the Greater London Enterprise Board that experimented with community-driven economics, with great sophistication and positive results.
Then there are the large, state-based communist parties like the Chinese Communist Party that have embraced experiments with market forces and new forms of ownership and investments--insisting that the socialist system is still in place and growing, not ceding the stage to the declared victory of capitalism.
In South Africa, the most impressive political liberation of the last 30-40 years has demonstrated stunning creativity, not only in political victory and transition, but in looking at the details of the economy and production in their relation to mass movements. In Europe, Australia and other countries where social democratic parties have gained control of government, countless examples of positive breakthroughs offer lessons about democracy, production, society, and economics that must be included as influential resources for those looking for another way.
This expanding pool of experience and analysis is enough to offer a comprehensive alternative to the current paradigm if we are willing to fight for it and do the work to sustain it.
We now come to the core of this new strategic perspective, which involves two useful concepts--The High Road and the Low Road of development. One holds to the negative features and social roles of the present paradigm while the other seeks to learn new roles in a new paradigm. It's a comparison between those who hold principally to their narrow self-interest despite the cost to society and its productive capacity, and those who share a commitment to the alliance between labor, community, and business in pursuit of the general development of society.
The Low Road seeks big short-term returns to a small section of the "private sector," and its methods are to lower wages, weaken organization, and promote destructive competition. The High Road seeks the highest and best use of our human and material resources and is made possible by values that seek the broadest distribution of wealth and human development as an objective of the economy.
Obviously our strategy is to advance the High Road and block the Low Road. This requires recognition of three key components:
First, many of the traditional stewards of our economy no longer have the incentives to maintain their leadership in developing of our human and material assets in their search for wealth. In fact, their search for personal wealth now leads, in large part, to the destruction of our productive capacity and our communities. Therefore, they have lost the right to be making the key decisions regarding our economy on both the macro and micro level. They are pursuing the "Low Road" of development with zeal. These businesses on the low road must be blocked and prevented from continuing their destructive practices.
Second, a fundamental change is required in the social relations of production and in those finally responsible for the creation and control of wealth and developing our productive capacity. Labor and community must take full responsibility for driving the creation of wealth and developing our productive capacity, rather than merely receiving a passive share of the wealth. They must tap the skills, talents and resources of the section of the business community that has joined them on the High Road of development, providing adequate and fair material incentives. They must lead the way to sustainable development with zeal, creativity, and determination. At the same time, they must join with others in a broad coalition to block those on the Low Road.
Third, labor and community must demonstrate leadership at the micro as well as macro level of the economy and society. Government must be a key component of this strategy, and it must be linked to a vast network of popular organizations and institutions skilled in bringing democracy and participation to life among their constituents.
This strategy represents a third way of development contrasting sharply with both the traditional command and free market approaches.
Both macro and micro levels are essential arenas for education and training in organizations of a transformative movement. Democracy manifested solely in the state or in the election booth misses a key opportunity. Economic activity at the factory level must provide the definition for macro policy. To do otherwise guarantees failure.
The High Road for development calls, in short for: