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Catalyzing worker co-ops & the solidarity economy

Reflections on Moving Beyond Capitalism

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GEO Original
June 6, 2014
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Capitalist Crisis

The financial crisis of 2008 was a moment of truth that laid bare some of the realities of corporate capitalism.  Its own internal contradictions led to the collapse of its financial sector, with grave consequences to the system as a whole.  It took a strong, decisive intervention by the state to save capitalism from itself. 

U.S. Treasury Department Secretary Hank Paulson went to Congress with a three page plan to bail out the bankrupt Wall Street banks by infusing the financial system with trillions of taxpayer dollars (more was to come later).  The public reaction was swift.  Congressional offices were swamped with the demand from constituents: vote NO!  The banks caused the problem, let them pay the price. 

And for once, the people’s elected representatives listened to the people and voted against the bailout.  But the political elite, tied so closely to Wall Street firms, did not accept ‘no’ as an answer.  They convened with Congressional leaders and showed them how the entire economy would collapse if the banks were not saved.  And so Congress voted again on the Paulson plan and approved the bailout.  We, the taxpayers, are still living with the consequences five years later, as our grandchildren will as well. 

The fundamental lesson to take from this moment of truth is that we have all become so dependent on the corporate system of capitalism, that we feel there is no alternative but to save it when it collapses.  The popular will was to abandon it, but most people went along with the rescue of a system that had lost its legitimacy in their eyes.  The banks are too big to fail and we were not able to envision an alternative to actually existing capitalism, odious though it be*.


Declare Independence from Wall Street

Our response to this dilemma should be to DECLARE INDEPENDENCE FROM WALL STREET.  What I mean by this is not to just issue a proclamation, but to begin to actually detach our lives from corporate institutions by building alternatives in our local communities.  We need to build resilient institutions where we live, institutions like public banks, local currencies, community based agriculture, consumer cooperatives, participatory budgeting, worker-owned cooperatives, alternative media and more.  In fact, these institutions are already being built in many communities across the country.  Building this new economy is the challenge before us.  Then the next time the system collapses (and it will) we will be able to see a way to survive without it.

Public banks are a case in point.  There was one state that was little affected by the banking crisis of 2008.  That was North Dakota.  It faired well largely because it has the country’s only public bank.  Established in 1919, the Bank of North Dakota is held by the state government, which deposits all of the tax revenues in it.  Those funds are then used to make loans for agriculture, students, small businesses, etc. partnering with local banks around the state, functioning as a central bank for the state.  Unlike most state and local governments elsewhere, North Dakota does not send its revenue to Wall Street by depositing it in the Bank of America or CitiCorp.  As a result North Dakota had the lowest rate of mortgage defaults, the lowest unemployment rate, and it has a healthy state budget since the profits from bank loans go back into the state treasury -- all because it declared independence from Wall Street long ago. 

How can such a semi-socialist institution exist in a politically conservative state like North Dakota?  Answer: the state bank has a proven record of benefiting the people of the state.  When public institutions meet the concrete needs of people in their daily lives, ideological labels loose their importance.  There is an important lesson in this for all of us who seek a better world.

Some 20 states are now considering establishing public banks on the North Dakota example.  Municipal governments and large hospitals and universities can also create their own public banks.  There is something of a social movement growing with groups across the country proposing public banks in their localities.  Ellen Brown’s Public Banking Institute provides organizing and technical assistance. 

These local, democratically-controlled financial institutions can augment public monies in financing infrastructure projects by not having to pay interest on bonds.  They can finance local development efforts and loan startup capital to local businesses such as cooperatives.  By keeping banking close to home, public banks can strengthen communities, rather than distant corporations.  And if they are run democratically for the common good, they can bring communities together across class, race and ideological lines. 

Worker-owned, self-managed cooperatives are another institution that can strengthen communities and offer working people a measure of independence from the corporate world.  Co-ops bridge the divide between employees and employers since their members are both workers and owners.  And since they are democratically run, co-ops can operate without a managerial/supervisory stratum.  The members supervise one another.  They share a common interest that makes a co-op a more agreeable place to work and the collective work more productive.  And unlike a capitalist business, more of the wealth generated circulates in the local community and the business itself will not relocate elsewhere in search of lower wage workers. 

Beyond these benefits, cooperatives nurture a democratic personality.  One’s daily worklife is based on cooperative social relations and an ethic of solidarity.  Participation in collective decision making promotes a sense of shared responsibility.  Individual interest is linked to a collective interest.  I prosper only if we prosper.  Daily work-life re-educates members away from individualism into a broader self identity based on awareness of interconnectedness with others.  It thus develops ones social being, it engenders a new human being and prepares the way toward a new society beyond capitalism.   

But, you might object, to move beyond capitalism we need to directly confront it, not just hide from it in the nooks and crannies of society.  Public banks and cooperatives will not overthrow capitalism.  At best they only provide a limited escape from it, I agree.  If we succeed in building an alternative strong enough to threaten capital, they will find us and seek to stamp out our institutions.  But by then we will have awakened in people’s consciousness an awareness that there is a better way, that a different world is possible.  And now we will respond with the power of a popular front struggling to defend the alternatives we have come to know and value.  Or it might not even come to that if the crisis of capitalism leads to its collapse.  In that case, we will be there with our alternative already in place, firm in the knowledge that we don’t need Wall Street any longer.    


How Does the Ruling Class Rule?

This brings me to a fundamental question: how does a ruling class rule?  I’m not just talking about the governing elite.  I’m talking about those great concentrations of wealth in the big corporations and banks, like General Motors and Goldman Sachs.  It’s not just a matter of buying influence with political decision makers.  Wall Street has long occupied Washington, long before its agents infiltrated the Administration and its lobbyists occupied Congress and its money flooded political campaigns. 

Fundamentally, the ruling class rules because the interests of the ruling class rule over the society as a whole., because the interests of the subject classes are dependent on them.  They rule because we are all dependent on them, workers and consumers alike.  The system works only if their interests are served.  When there is a crisis, as in 2007-2008, they must be rescued lest the whole system collapse.  It is because we are all dependent on them that they have the power to hold the rest of society, the 99%, hostage.  That’s what it means to be a ruling class.  It is their interests that rule. 

Thus the solution to the political dominance by “big moneyed interests” does not lie in campaign finance reform, although that would certainly be a step forward.  But even if there were complete public financing of elections, the responsibility of the governing class is to maintain the social order.  And in a class divided society that means protecting the interests of the ruling class upon which we all depend, thereby maintaining that division. 

In times of high political mobilization of the dominated classes, governability may require making concessions to those popular classes even though that may limit the benefits to the ruling class.  That is the price they have to pay in order to have an effective political instrument that maintains that class division.  But as the popular classes demobilize, the state reverts to its default position.

What then is the solution?  The beginning lies in overcoming that dependence on the ruling class, step by step .  As I have argued, that can be done even in a class divided society by building alternative institutions that empower people in their lives.  That is most easily done at the local level with public banks, cooperatives, communal councils, participatory budgeting, local currencies, eminent domain, etc. 

The US has a tradition of local governance in a federal system.  While the powers of local and state governments are limited, they have not been fully utilized.  They have the potential to carve out spheres of empowerment that are less closely tied to the interests of the ruling class.  With them we can begin to declare our independence from Wall Street.

In so doing we also are developing schools of democracy, educating people in the virtues and skills of citizenship.  This was Jefferson’s vision: the little republics would ensure the health of the larger republic. 

This strategy of localization does not directly confront the ruling class.  It does not storm the barricades.  But given correct leadership it can be transformative.  It begins by just quietly planting the seeds of a new order in the little free spaces remaining in society.  But it is not a reformist strategy that simply makes the present system a little more tolerable.  Because among the seeds planted is the vision of an alternative, more democratic society, a participatory democracy.  And at some point that may become too threatening a vision for the ruling class and they will have to strike back.  Yes, the time will come when we will have to take to the barricades.  But then the people will respond to the call to defend their institutions, which can lead to a rupture, and to systemic change. 

That in sum, is my long term strategy for moving beyond capitalism even when we do not have state power and there is no immediately foreseeable prospect of revolutionary insurrection.    


21st Century Socialism   

Let me now shift our attention from the U.S. to those countries in the global South where popular forces do hold state power.  I refer to Venezuela and Cuba and those liberated areas in the Mexican state of Chiapas held by the Zapatistas.  Here we will see many of the same principles in operation although under very different circumstances. 

21st Century Socialism is usually associated with the Bolivarian Revolution in Venezuela.  There the state led by Hugo Chavez and supported by the popular classes has been fashioning an alternative to the failed state socialism that prevailed elsewhere in the 20th century.  Socialism is a transition toward a more equal society without exploitation, guided by a participatory democratic solidarity.  The construction of institutions to realize this vision is the historical challenge of our epoch. 

In the socialist projects that prevailed in the 20th century, state power was used to construct economic institutions that were to operate according to an overall plan designed to develop forces of production and to meet the material needs of the population.  While this state socialism had some impressive successes, we now know that it was neither able to sustain itself nor did it lead toward the kind of society envisioned. 

The Bolivarian Revolution seeks to reinvent a socialism truer to the original vision.  This is a model in which the state rather than acting for society in a paternalistic way, plays a more facilitating role to develop the capacities of civil society to direct the common affairs of the people.  In Venezuela, the state provides resources to local levels to facilitate cooperatives and communal councils.  It is planting the seeds of an alternative economy and an alternative government alongside capitalist society.  In effect the state is creating a situation of dual power. Following the principle of subsidiarity, it empowers ordinary people collectively in their daily lives.  In so doing it is nurturing the seeds of a non-capitalist society within what is still a capitalist one.  But equally important, it is developing non-capitalist sensibilities within civil society.   These are crucial for energizing a democratic movement beyond capitalism.  

In Cuba we see a similar effort to build a 21st century socialism, only not within a capitalist society but an existing state socialism.  The renovation of Cuba’s socialism that has been underway for the last few years and is projected to take 15 years, seeks to transform a state-directed society into one in which other social entities play a more participatory role.  This involves a devolving of state powers to lower levels of government and a strengthening and diversification of civil society in a different relation to the state than previously.  Significant areas of economic activity are being turned over to small private businesses and cooperatives that operate in market relations with each other, the public and the state. 

The development of new urban cooperatives is especially important in this.  In the last year hundreds of coops in urban services have been established that are independent and self governing by their members.  In a large measure their success or failure will depend on the existing political culture and its transformation.  A half century of Revolution has engendered an ethic of solidarity common among the Cuban people.  They are not afflicted by the atomistic individualism common in the U.S.  There is a high level of social consciousness.  There is also a long established habit of participation in public affairs.  However, under state socialism this tended to be a passive participation that accepted the directions that came from above.  A paternalistic state provided for the well being of its subjects who in turn gave it their loyalty.  There were ample opportunities for participation, but little for initiative.  That is the feature of the political culture that will have to change if a socialist civil society is to emerge from the reforms now under way. 

Cooperatives provide the space for both initiative and participation in promoting a common good.  They hold the promise of nurturing the New Human Being that Che Guevara called for in socialism.  If values of cooperation, solidarity, and democratic participation can be built into the daily lives of Cubans they can make socialism irreversible, because then they will come not from the state but from the character of the people themselves. 


Conclusion for the U.S. Left

As we have seen in the U.S., local efforts to build a degree of independence from corporate capitalism point toward a society that is more participatory, more cooperative, more democratic.  This is the same direction that 21st Century Socialism points in the global South.  In both cases, institutions that move beyond capitalism point toward a kind of socialism, i. e. a society in which associated producers are empowered to democratically found anew a society that is more equal and in which all may flourish. 

Whether this is called socialist or not, it is an alternative that is more humane and nurturing of our human capacities.  As capitalism collapses around us, we will invent that new future.  Indeed, we must in order to survive.

Philosopher Slavoj Zizek has written recently of

...the recurrent story of the contemporary left. A leader or party is elected with universal enthusiasm, promising a “new world” — but, then, sooner or later, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to “play the game”? If one disturbs these mechanisms, one is very swiftly “punished” by market perturbations, economic chaos, and the rest.  At the moment of triumph, “radical emancipatory politics faces its greatest challenge: how to push things further after the first enthusiastic stage is over.

Zizek raises a crucial question here.  What do we do after we have toppled the old regime, after we have the levers of state power in our hands?   I suggest the reason we face the dilemma of either encountering chaos or having to go along with the still dominant capitalist relations is because we have failed to build an alternative to them before coming to power.  We failed to realize that the revolution had to begin long before this moment of triumph.  If we had built alternative institutions in the nooks and crannies of capitalist society, then they could sustain us while serving as a platform from which to construct a new society while dismantling the old.  If we had made the long march through the institutions of society, then we would be ready to found society anew once the old system collapses.



Not only were the banks judged to be too big to fail, their executives are also too big to jail for their criminal actions.  This became explicit years later when the Justice Department did finally begin to fine them rather than indict them for their crimes.  Attorney General Holder stated openly that criminal indictments against banks or leading bankers might endanger the economy and thus were too big a risk. Here’s what Holder said

“I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy,” he said. “And I think that is a function of the fact that some of these institutions have become too large.”

Holder was responding to questions by Republican Senator Charles Grassley about why the Justice Department brought no criminal charges against the large British bank HSBC after it admitted laundering money for parties in Iran, Libya and Mexican drug lords.  The Attorney General acknowledged that the sheer size of the big banks “has an inhibiting impact on our ability to bring resolutions that I think would be more appropriate.  That is something you (members of Congress) all need to consider.”


Go to the Scaling-Up the Cooperative Movement theme page

Cliff DuRand is a life long political activist and retired Philosophy professor.  Born and raised in the Third World country of North Dakota, he spent 40 years of his adult life teaching at Morgan State University, a historically Black university in Baltimore.  He received a B.A. from the University of North Dakota, a M.A. from Johns Hopkins University, and an interdisciplinary Ph.D. in Social Philosophy at Florida State University. In 1982 he founded the Progressive Action Center as a home for the Left in Baltimore.  He was also a founder of the Radical Philosophy Association and its Secretary and Treasurer for 13 years.  Since 1990 Cliff has organized and led annual educational trips to Cuba, for which he was named Profesor Invitado at the Universidad de la Habana.  For over a decade he was also the China correspondent for the Guardian newspaper (NYC).Since retiring from the university, Cliff and his wife Julie, moved to San Miguel, Mexico where he helped found the Center for Global Justice in 2004.  His primary roles at the Center are coordinating the English language public education events, organizing the Center’s travel programs to Cuba, and serving as Treasurer.  He is a popular public speaker and co-author and co-editor of Recreating Democracy in a Globalized State.


Cliff DuRand (2014).  Reflections on Moving Beyond Capitalism.  Grassroots Economic Organizing (GEO).

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