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Carl Gibson
Occupy.com / Op-Ed
Published: Sunday 2 June 2013
We’re witnessing capitalism’s death throes right now.

Cooperative Economics: Replacing a Collapse in Capitalism

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I live in a co-op house with 30 other people in Madison, Wisconsin. While we pay rent to the nonprofit organization that manages Madison’s co-op properties, our only landlords are each other. We have weekly meetings to discuss house business and make decisions in a democratic process, using a consensus model. We agree to not buy any food or products for the house that come from detestable companies like Monsanto, Koch Industries and Tyson, and get most of the ingredients for house meals from the farmer’s market and a local food co-op. We all actively take part in our own residence by making sure things are kept (relatively) clean, problems are solved quickly, and the house remains a thriving community.

As 30 people all living in one big house, sharing expenses, growing our own food in rooftop gardens and recycling/composting as much we can, our environmental footprints are much smaller as a whole. Also, I only pay $500 a month in rent, utilities, washer/dryer, internet, and even food. And this is in a house within walking distance of the downtown area, right on the lakefront.

This made me wonder - why did I ever allow myself to live alone with no community and pay a landlord who doesn't make decisions with tenants in a democratic process? And why did I do it considering that form of living cost twice as much as my current housing situation? It's just one example of cooperative economics replacing the outdated corporate capitalist model.

We’re witnessing capitalism’s death throes right now. The stock market surges to new highs on a regular basis, corporate profits soar every quarter, and taxes on corporations as a percentage of GDP are lower than they’ve ever been in decades. Despite all the success of corporations, they’re actually squeezing more productivity out of their workers by laying off their coworkers.

Productivity is at historic highs, but Americans making minimum wage have less buying power as a whole now than they did 51 years ago. Like all top-heavy structures, it won’t be too long before the unsustainable model of everlasting growth comes to a crashing halt. The co-op movement will become our new economic model if we start seriously building it now and introducing mainstream America to co-op living and working in the next 5 years. It’s already happening in several parts of the country.

Richmond, California had a chronic unemployment problem, and decided to tackle it by thinking outside the box with the co-op model in mind. After Gayle McLaughlin, a Green Party candidate, was elected mayor, a hub of co-op businesses emerged where workers all owned their labor. The community modeled their efforts after the Mondragon co-op in Spain, the world’s largest successful co-op business with 83,000 employees.

When the Windows & Doors factory closed in Chicago, fired all its workers and vacated its building, the workers eventually realized there was still a demand so they took over the vacant building and re-opened the business as a co-op. Imagine if GM’s workers decided to take over the business after the corporate model failed. Imagine how many workers could have shared the boost in profits from the company’s recovery!

Co-op residences are also great organizing spaces. One of the biggest blows to the Occupy movement was being evicted from the spaces which had become our central organizing hubs. But in a residential co-op community that makes decisions by consensus and decides on house responsibilities through elected positions, everyone takes an interest in their community and works to maintain it. The same holds true when a worker is responsible for their labor – they strive to be more productive, so they can share directly in the profits instead of cede it all to a corporate executive in exchange for a 25-cent an hour raise. When living and working in a co-op environment, one learns solidarity and teamwork as a way of life that's also best for self-preservation.

The cooperative economic model can also apply to banks, as seen in the Bank of North Dakota. It’s a bank that works with 80 community bank branches to collectively store and invest the money of North Dakota’s people. It stores North Dakota’s tax revenues and distributes its profits to the state treasury and the people of North Dakota, who are their shareholders.

The bank doesn’t engage in risky Wall Street gambling on the derivatives or credit default swap markets. The bank’s executives, while making a comfortable six-figure salary, aren’t paid exorbitant salaries and bonuses, defeating the argument of Wall Street executives that high pay is the cost of effective financial management. Using that model, we can and should nationalize the Federal Reserve and make it the people's public bank, instead of Wall Street's arm of control over our currency and economy.

With a nation fully engaged in a society where cooperative resident-owned housing and cooperative, worker-owned labor is the norm, public banking and hyper-localized economies will also become the new norm. This is essential because with the collapse of capitalism will come numerous other solutions for systems that will only exacerbate the problems of wealth inequality, poverty, debt and unemployment. The co-op model is the best model to succeed capitalism, as it still incentivizes workers and residents to do the best they can for a positive living environment or a lucrative career while also doing away with the corporate hierarchy that is an unnecessary drain on workers’ financial and emotional vitality. It’s the best solution for poverty and inequality, two of the most common byproducts of capitalism.

Co-ops are a perfect antidote to homelessness. There are six vacant houses for every homeless person; we can simply occupy these buildings, file for nonprofit status and form a co-op fair housing organization that employs the homeless to adapt the vacant buildings to modern code, while allowing them to live in the spaces they renovate.

Co-ops can also be formed in “food desert” neighborhoods, where the lack of affordable healthy food options within walking distance leads to obesity and other resulting health problems in a community. If a co-op formed to employ people to build, plant and maintain community gardens to supply healthy local food for the community, isn’t that worth a public investment?

All it takes to form a co-op is a small group of determined people all set on an idea to cooperatively own and operate a facet of the economy and allow them to make decisions in a democratic process. By democratizing society through housing and work, we can start a new revolution in our politics, our economy, and even our environment by choosing to consume sustainably and minimize our impact on the planet. It’s up to us - let’s get it done.



Author pic
ABOUT Carl Gibson

Carl Gibson, 27, is co-founder of US Uncut, a grassroots direct action group that mobilized thousands against corporate tax dodging and budget cuts in the months leading up to Occupy Wall Street. Carl and other US Uncut activists are featured in the Sundance-selected documentary We're Not Broke, available on Netflix. He is a contributing editor for Reader Supported News, and the lead investigative reporter for Occupy.com. Follow him on twitter at @uncutCG.

I grew up in Reba Place

I grew up in Reba Place Fellowship, an urban commune in Evanston, Ill. founded in the late 50s, and still going strong. It did go though a nasty cult phase, and I personally didn't enjoy living there as a child of a founder, but the lifestyle and economics are nothing new.

Every utopia becomes dystopian when examined closely. Entities do not remain equal. Some conflicts cannot be resolved. Ideologies rear their ugly heads. The strong and lazy take advantage of the weak and diligent.

DISCLAIMER: I am not

DISCLAIMER: I am not potosting this detailed critique by John Spritzler because I agree with him, but precisely because I wish to publicly challenge him, this seems the appropriate forum for this purpose, and John has been unable, for technical reasons, to post to the NoC website himself (though this response of his is posted on his own website). I post his response here with his expressed permission.
-Ken Freeland

www.NewDemocracyWorld.org

Why Cooperative Businesses Are Not the Answer

by John Spritzler

June 2, 2013

Are cooperative businesses the way to achieve the end of capitalism and create an egalitarian society without class inequality and exploitation? Some people believe they are, as this article by Carl Gibson (a co-founder of US Uncut), titled "Cooperative Economics: Replacing a Collapse in Capitalism," illustrates. This article is about two kinds of cooperatives, living arrangements and businesses. The part of the article that discusses the advantages of cooperative living arrangements makes some valid points. But the article is wrong in claiming that cooperative businesses, like "the Mondragon co-op in Spain, the world’s largest successful co-op business with 83,000 employees," should be "our new economic model" to replace capitalism.

The problem with the worker-owned cooperative business economic model is that this model retains one of the most important defining characteristics of the capitalist model with which we are so familiar today: production of commodities to be sold for a profit in the market place (as is the case with the Mondragon co-op, discussed here). The appeal of this "coop" economic model is, of course, that it entails the workers of a business being the owners of the business as well, rather than the owners and workers being distinct people. Since the workers are the owners, there is no exploitation of the former by the latter; no longer is it the case, in other words, that an owner obtains a profit by paying workers less than the value they add to raw materials in making a product (or service), which product the owner then sells for its full value (including all of the value the workers added to it) in the market place, claiming to be the sole owner of the product because he/she asserts sole ownership of the means of production required by the workers to produce it. Arguments for the "coop" economic model only discuss the benefits of workers being the owner; they never discuss the serious problem of it retaining the capitalist character of production for profit.

What Are the Consequences of Production-For-Profit?

To properly evaluate the desirability of the "coop" model, however, one has to consider the consequences of production-for-profit. What are these consequences?

What happens when production is for profit, instead of for the purpose of being shared, with others who contribute reasonably to the economy, on the basis of need? What happens is what happens today: It is often the case that the people who need something important cannot obtain it even though the supply is (or could easily be made) adequate. Poor people today, to take just two examples, lack good food and good health care simply because they lack the money to buy these things for a price that enables the sellers to obtain a profit as large as the profit they could make producing and selling something else to other buyers. This problem stems from production-for-profit per se, not from the separation of workers and owners; thus eliminating the latter leaves the former intact and hence does not solve the problem of people lacking good food and health care. And this is a huge problem, not a minor one.

Production-for-profit also has a very negative consequence for the workers in a given worker-owned business themeleves. What tends to happen is that the logic of production-for-profit eventually separates the workers from their "ownership" role in every respect except nominally. How does this happen? Success in the production-for-profit business requires obtaining bank loans (for all of the same reasons that today's capitalist owners rely on bank loans). Banks, in a society based on production-for-profit, only make loans for profit, meaning they require their loans to be repaid with interest. As soon as workers in a "worker owned" business take out a bank loan, the ownership of the business is no longer only its workers, because now the bank is a part owner. The bank sets conditions on its loan and extracts some of the profits of the business from the pockets of the workers. This is true even if the bank is a worker-owned bank, or a bank like the Bank of North Dakota (about which, more below) that Gibson holds up as an example of a good bank because it is owned by the State of North Dakota, gives business loans conditional on the business providing jobs, and returns some of its profits to the General Fund of the state. The conditions that the bank makes for its loans are those required to make the business profitable, which include lowering the costs of production (just as today) and hence lowering the cost of labor (just as today) and hence reducing wages and benefits as much as possible. The workers are told to wear their "we are the owners" hat and accede to the logic of these demands.

In a production-for-profit economy some businesses will be more profitable than others; the businesses are competing against each other so some will be winners and others losers. What happens to the workers in a business that is a loser and goes bankrupt? These losers will end up being poorer than workers in businesses that are winners. This is a seed of inequality that grows in the soil of the very logic of production-for-profit. This is exactly what happened in Yugoslavia under Tito's "market socialism" in which workers controlled their businesses. In "Yugoslavia: The Case of Self-Managing Market Socialism" in the Journal of Economic Perspectives, Saul Estrin reports that the result of "allocation by markets" was that "The Communists felt that markets were taking the economy in a direction they did not want to go, with sharp trade cycles, unemployment and pay inequality."

What Will It Take To Win an Egalitarian Society?

The example of the Bank of North Dakota (BND) that Gibson highlights is interesting to examine. This bank is the only bank in the United States that is owned by the state itself. Its existence raises two questions: #1) Can the negative consequences of the "coop" economic model based on production-for-profit be eliminated if banks like the BND replace traditional capitalist banks? #2) If so, what would it take to go from the present status quo to the full implementation of this solution?

Regarding question #1, the only way it would seem possible for a BND-type of bank to eliminate the problems caused by production-for-profit would be for the bank to give (for free, via the state or directly on its own) everybody the money they lacked to buy the things they needed but couldn't afford. The bank would in effect tell a business, "Produce X instead of Y, because even though the people who need X can't afford to buy it at the price you'd have to charge to make a profit, we (the bank) will give them the money to buy it." But this is equivalent to the bank saying, "Produce X instead of Y because the people need X, and we (the bank) will pay you directly (why pay you indirectly by giving money to poor people who then just turn around and give it to you?) enough money for you to make your profit." The bank, in turn, would get the money to make these payments by taking it from the profits of the businesses (as "interest" on a loan or on some other pretext.) What this ends up being is an economy that is not really based on production-for-profit at all anymore, but rather production for need, with those who need something getting it for free if the bank decides they deserve it.

This scenario represents something entirely different from the "coop" model based on production-for-profit; it is a sharing economy. In fact, the role of money would be entirely superfluous now. The bank simply tells workers what people need and asks them to produce it and give it to them for free, period. When cost/benefit decisions are made about trade-offs between the desirablility of using resources for this or that, it is no longer profit that determines the decision but the bank's considerations of the pros and cons of various choices. And if the bank is controlled democratically, and democratic decision-making is based on decentralized voluntary federation of local assemblies, then this scenario is what is described in what Dave Stratman and I wrote about in Thinking about Revolution.

Now let us consider question #2, about what it would take to achieve this desirable scenario. Do we merely need to set up some more "coop banks" like the Bank of North Dakota. This is what Gibson implies when he writes, "The cooperative economic model can also apply to banks, as seen in the Bank of North Dakota," as if nobody would mind if we created more and bigger BNDs. As nice as the currently existing Bank of North Dakota may be, it is the only such bank in the United States, and its role even in North Dakota is very small economically. The BND provided only $60 million to the North Dakota general fund during the 2001-3 biennium (the most recent biennium for which this figure is online). In stark contrast, the state's budget for the earliest biennium reported online (2005-7) is $5.5 billion, or almost 100 times what the BND contributes. Our society is one in which a very wealthy and powerful plutocracy prevents something like the BND from playing anything but a minor role. Wikipedia reports:

"Though initially conceived by populists in the Non-Partisan League as a credit union-style institution to free the farmers of the state from predatory lenders, the bank's functions were largely neutered by the time of its inception by the business-backed Independent Voters Association. The recall of NPL Governor Lynn Frazier effectively ended the initial plan, with BND taking a more conservative central banking role in state finance. The current president and CEO is Eric Hardmeyer, however the bank is managed by the North Dakota Industrial Commission, which is composed of the Governor, Attorney General, and the Agriculture Commissioner (formerly the Agriculture and Labor Commissioner) of North Dakota.[4]"

Since 2010 the governor of North Dakota has been Jack Dalrymple, a Republican businessman whose speech here indicates that he thinks things are good and getting better for people in his state. In truth, in the last two decades the average annual increase in income for North Dakota's poorest fifth of families compared to its richest fifth of families was $175 for the poorest versus $2,525 for the richest. Governor Dalrymple is the kind of person who manages the Bank of North Dakota today. Expanding the magnitude enormously and drastically changing the nature of the role of the BND to the point where egalitarianism prevails would clearly require abolishing the power of the wealthy class that currently rules North Dakota and the rest of the nation. This is not something that can happen without at some point confronting and defeating the full power of the American ruling class with an explicitly revolutionary mass movement.

Although the "coop" economic model does not solve the problems caused by capitalism, there is one reason that this model nonetheless remains attractive to some people. The reason is that one can advocate for this model and try to implement it today without having to confront, and fear opposition from, the plutocracy that rules the United States. Thus when United Airline workers became owners of United Airlines with what is called an Employee Stock Ownership Plan (ESOP), the Associated Press covering the business community's response reported, "It was greeted with much fanfare, even lauded by the Clinton administration." President Clinton, let us not forget, was a darling of the capitalist class who ushered in NAFTA that has enabled countless employers to threaten workers that their jobs would be sent to Mexico unless they accepted deep cuts in pay and benefits. President Clinton also, to the dismay of his liberal supporters, “abolished welfare as we know it” to rip apart the social safety net in the U.S. and thereby force workers to work at very low-paying jobs with few if any benefits.

Class inequality and the capitalist system that creates, enforces and is based upon this inequality, are a Big Problem that requires a Big Solution. It is not possible to abolish a social and economic system based on inequality by "sneaking" in a different system without confronting and defeating the plutocracy whose wealth, power and privileges depend on keeping the present system. But this is essentially what many advocates of the "coop" model suggest. Thus Gibson's article concludes with this:

"All it takes to form a co-op is a small group of determined people all set on an idea to cooperatively own and operate a facet of the economy and allow them to make decisions in a democratic process. By democratizing society through housing and work, we can start a new revolution in our politics, our economy, and even our environment by choosing to consume sustainably and minimize our impact on the planet. It’s up to us - let’s get it done."

But this is not "all it takes" to create an egalitarian society. What it takes is a vision of an egalitarian society with an economy based on sharing according to need instead of buying and selling for profit, and a vision of genuine democracy that, unlike Communist and theocratic revolutionary models, is based on voluntary federation of local communities instead of the top-down principle of hierarchical authority that is shared in common by capitalist "democracies," as well as Communist and theocratic regimes. It also takes a determination to remove the plutocracy from power, which in turn requires an understanding of why this is not only necessary but possible. We need, in other words, to start Thinking about Revolution.

www.NewDemocracyWorld.org

This article may be copied and posted on other websites. Please include all hyperlinks.

Let me be clear at the outset

Let me be clear at the outset that I fundamentally agree with Carl Gibson's Op Ed admonition to cooperative enterprise as the solution to capitalism. Notwithstanding, I consider John Spritzler's critique important and worthy of response, so much so that I will treat it piece by piece until each aspect of it is fully answered. My responses to his points will be bracketed [] to distinguish them from John's original text.

Why Cooperative Businesses Are Not the Answer
by John Spritzler
June 2, 2013
Are cooperative businesses the way to achieve the end of capitalism and create an egalitarian society without class inequality and exploitation? Some people believe they are, as this article by Carl Gibson (a co-founder of US Uncut), titled "Cooperative Economics: Replacing a Collapse in Capitalism," illustrates. This article is about two kinds of cooperatives, living arrangements and businesses. The part of the article that discusses the advantages of cooperative living arrangements makes some valid points. But the article is wrong in claiming that cooperative businesses, like "the Mondragon co-op in Spain, the world’s largest successful co-op business with 83,000 employees," should be "our new economic model" to replace capitalism.
The problem with the worker-owned cooperative business economic model is that this model retains one of the most important defining characteristics of the capitalist model with which we are so familiar today: production of commodities to be sold for a profit in the market place (as is the case with the Mondragon co-op, discussed here). The appeal of this "coop" economic model is, of course, that it entails the workers of a business being the owners of the business as well, rather than the owners and workers being distinct people. Since the workers are the owners, there is no exploitation of the former by the latter; no longer is it the case, in other words, that an owner obtains a profit by paying workers less than the value they add to raw materials in making a product (or service), which product the owner then sells for its full value (including all of the value the workers added to it) in the market place, claiming to be the sole owner of the product because he/she asserts sole ownership of the means of production required by the workers to produce it. Arguments for the "coop" economic model only discuss the benefits of workers being the owner; they never discuss the serious problem of it retaining the capitalist character of production for profit.

[Whoa, hold it right there, John! You've defined capitalist profit in classic Marxian terms, as the expropriation of “surplus value” from the labor of workers by the capitalist, in the form of “profit.” But if the workers are themselves the entrepreneurial owners of a given enterprise, by definition, there can be no profit in this classic socialist sense, because there is no alienation of worker and owner. The classic socialist argument that the worker is entitled to the full value of his product (“to each according to his work”) is fully realized in the cooperative model. “Profit,” in this classic socialist sense, is a dirty word, so to continue using it, as you do below, to describe cooperative production is misleading, and necessarily self-contradictory.]

What Are the Consequences of Production-For-Profit?
To properly evaluate the desirability of the "coop" model, however, one has to consider the consequences of production-for-profit. What are these consequences?
What happens when production is for profit, instead of for the purpose of being shared, with others who contribute reasonably to the economy, on the basis of need?

[You are drawing a false dichotomy here John. And it brings us to the heart of the matter: What is the measure of productive utility? We shall return to this question shortly, because it is central to this debate, but for our purposes here, let us ask the following question: if a society of worker-owners is producing a variety of goods sold through the market and consumed by other worker-owners in relative equability, who is to say that the purpose of cooperativism, considered as a whole, is not the to produce socially useful goods to share with other producers, rather than for “profit?” Where is the contradiction?]

What happens is what happens today: It is often the case that the people who need something important cannot obtain it even though the supply is (or could easily be made) adequate. Poor people today, to take just two examples, lack good food and good health care simply because they lack the money to buy these things for a price that enables the sellers to obtain a profit as large as the profit they could make producing and selling something else to other buyers. This problem stems from production-for-profit per se, not from the separation of workers and owners; thus eliminating the latter leaves the former intact and hence does not solve the problem of people lacking good food and health care. And this is a huge problem, not a minor one.

[This analysis is short-sighted and, in my opinion, not in keeping with classical socialist theory. You are sounding more and more like an exponent of social credit rather than of socialism, John! For if the problem of poor people is really only lack of money, the obvious solution is to just print some more and give it to them. This is social credit, not socialism. The socialist wants to know, first of all, WHY poor people lack money. And the answer, in classical socialist analysis, in the first place is because they are pauperized by the exploitation of the capitalists, who push the working poor down below the subsistence level, and through perennial market glut (endemic to capitalism) force the rest into unemployment. Various social programs, augmenting private charity, provide sops to the poor, but the problem is systemic and lasts as long as capitalism lasts. If, on the other hand, economic activity were fully conducted by worker-owners, this systemic problem is wholly eliminated. If workers are receiving the full value of their product, they will also be able to redeem that full product in the market place, and this will keep the wheels of industry turning indefinitely, eliminating the structural unemployment inseparable from capitalism. Of course, someone who doesn't wish to work for a living may still be poor, but do you wish to subsidize indolence? ]

Production-for-profit also has a very negative consequence for the workers in a given worker-owned business themselves. What tends to happen is that the logic of production-for-profit eventually separates the workers from their "ownership" role in every respect except nominally. How does this happen? Success in the production-for-profit business requires obtaining bank loans (for all of the same reasons that today's capitalist owners rely on bank loans). Banks, in a society based on production-for-profit, only make loans for profit, meaning they require their loans to be repaid with interest. As soon as workers in a "worker owned" business take out a bank loan, the ownership of the business is no longer only its workers, because now the bank is a part owner. The bank sets conditions on its loan and extracts some of the profits of the business from the pockets of the workers. This is true even if the bank is a worker-owned bank, or a bank like the Bank of North Dakota (about which, more below) that Gibson holds up as an example of a good bank because it is owned by the State of North Dakota, gives business loans conditional on the business providing jobs, and returns some of its profits to the General Fund of the state. The conditions that the bank makes for its loans are those required to make the business profitable, which include lowering the costs of production (just as today) and hence lowering the cost of labor (just as today) and hence reducing wages and benefits as much as possible. The workers are told to wear their "we are the owners" hat and accede to the logic of these demands.

[Your assertion here might have relevance to industries which are ESOPs, in other words, which are sold to employee buy-outs, but which continue to be managed along capitalist lines and which are leveraged in advance to the banks which finance the worker buyouts. It does not apply, however, to worker-cooperatives that have been built from the ground up, and I cite Mondragon as a perfect and well-known example. ]

In a production-for-profit economy some businesses will be more profitable than others; the businesses are competing against each other so some will be winners and others losers.

[This is something of a half-truth, in my opinion. Does a baker compete with the hardware store? No, both contribute different products to the market. Bakers do, however compete with other bakers. But if a cooperative were effectively meeting market demand for its product, there would be no incentive for a group to start another cooperative to produce the same item. This type of competition does not, in my experience, fit into the cooperative modality as it does the capitalist. Indeed, as you should know, if a cooperative grows too large to be democratically manageable, it “hives off” a component to become an independent cooperative. How “competitive” is that? ]

What happens to the workers in a business that is a loser and goes bankrupt? These losers will end up being poorer than workers in businesses that are winners.

[You're borrowing from capitalism again! The motives of cooperators are not the same as capitalists, and there is no desire to compete with others producing the same item effectively...what would be the point? The only reason to start a cooperative is to meet a social need that is not currently being served by cooperative labor.]

This is a seed of inequality that grows in the soil of the very logic of production-for-profit. This is exactly what happened in Yugoslavia under Tito's "market socialism" in which workers controlled their businesses. In "Yugoslavia: The Case of Self-Managing Market Socialism" in the Journal of Economic Perspectives, Saul Estrin reports that the result of "allocation by markets" was that "The Communists felt that markets were taking the economy in a direction they did not want to go, with sharp trade cycles, unemployment and pay inequality."

[This is an apples and oranges argument. As you well know, the Yugoslavian experiment in market socialism, while it had many things in common with cooperative production, did not give actual ownership of factories, etc., to the workers, it simply allowed them to make managerial decisions, and many used their carte blanche to run up unpayable debt, for the sake of short-term payoffs. This made a certain kind of sense in their situation, but worker-owners, who by definition MUST be concerned about the long-term viability of their cooperative, would be much less likely to make such short-sighted decisions.]

What Will It Take To Win an Egalitarian Society?
The example of the Bank of North Dakota (BND) that Gibson highlights is interesting to examine. This bank is the only bank in the United States that is owned by the state itself. Its existence raises two questions: #1) Can the negative consequences of the "coop" economic model based on production-for-profit be eliminated if banks like the BND replace traditional capitalist banks? #2) If so, what would it take to go from the present status quo to the full implementation of this solution?
Regarding question #1, the only way it would seem possible for a BND-type of bank to eliminate the problems caused by production-for-profit would be for the bank to give (for free, via the state or directly on its own) everybody the money they lacked to buy the things they needed but couldn't afford. The bank would in effect tell a business, "Produce X instead of Y, because even though the people who need X can't afford to buy it at the price you'd have to charge to make a profit, we (the bank) will give them the money to buy it." But this is equivalent to the bank saying, "Produce X instead of Y because the people need X, and we (the bank) will pay you directly (why pay you indirectly by giving money to poor people who then just turn around and give it to you?) enough money for you to make your profit." The bank, in turn, would get the money to make these payments by taking it from the profits of the businesses (as "interest" on a loan or on some other pretext.) What this ends up being is an economy that is not really based on production-for-profit at all anymore, but rather production for need, with those who need something getting it for free if the bank decides they deserve it.

[This strikes me as a very convoluted and confused argument. In the first place, we have to ask the question again: Why don't people have the money to buy the things they need from the market? Putting consumer dollars into their hands is a kind of Keynsian approach (of which our current Welfare system is an instance), but this is done because capitalism creates an endemic shortfall between market and consumer (because of profit-extraction). But cooperativism allows for no such class division in the proceeds of production. Therefore, all producers would benefit equitably in the process of production, and have the income they need to purchase back their own product (or its exchange equivalent) in the market place. It is ironic that you are feel so responsible for solving a byproduct of capitalism (poverty) but you think that a bank's only use in doing so is to supply consumer credit. The key to truly cooperative banking would be that it would supply capital credit to new and existing cooperatives, as was the early history of the Caja Laboral Popular, Mondragon's TRULY cooperative bank. ]

This scenario represents something entirely different from the "coop" model based on production-for-profit; it is a sharing economy. In fact, the role of money would be entirely superfluous now. The bank simply tells workers what people need and asks them to produce it and give it to them for free, period. When cost/benefit decisions are made about trade-offs between the desirablility of using resources for this or that, it is no longer profit that determines the decision but the bank's considerations of the pros and cons of various choices. And if the bank is controlled democratically, and democratic decision-making is based on decentralized voluntary federation of local assemblies, then this scenario is what is described in what Dave Stratman and I wrote about in Thinking about Revolution.

[Yes, well, the devil is in the details of your proposal, which I hereby challenge you to spell out for the public: once these assemblies make these decisions, how exactly do the enterprises in question assemble the means to produce what you want, and how do they know how much to produce? Are those who produce capital goods going to just produce them on command too, and deliver them in appropriate quantities to the producers of the consumer items who need them? How exactly, in other words, are you going to substitute for the market a complete economic decision-making structure without falling into same tautological trap as GOSPLAN in the USSR?]

Now let us consider question #2, about what it would take to achieve this desirable scenario. Do we merely need to set up some more "coop banks" like the Bank of North Dakota. This is what Gibson implies when he writes, "The cooperative economic model can also apply to banks, as seen in the Bank of North Dakota," as if nobody would mind if we created more and bigger BNDs. As nice as the currently existing Bank of North Dakota may be, it is the only such bank in the United States, and its role even in North Dakota is very small economically. The BND provided only $60 million to the North Dakota general fund during the 2001-3 biennium (the most recent biennium for which this figure is online). In stark contrast, the state's budget for the earliest biennium reported online (2005-7) is $5.5 billion, or almost 100 times what the BND contributes. Our society is one in which a very wealthy and powerful plutocracy prevents something like the BND from playing anything but a minor role. Wikipedia reports:
"Though initially conceived by populists in the Non-Partisan League as a credit union-style institution to free the farmers of the state from predatory lenders, the bank's functions were largely neutered by the time of its inception by the business-backed Independent Voters Association. The recall of NPL Governor Lynn Frazier effectively ended the initial plan, with BND taking a more conservative central banking role in state finance. The current president and CEO is Eric Hardmeyer, however the bank is managed by the North Dakota Industrial Commission, which is composed of the Governor, Attorney General, and the Agriculture Commissioner (formerly the Agriculture and Labor Commissioner) of North Dakota.[4]"
Since 2010 the governor of North Dakota has been Jack Dalrymple, a Republican businessman whose speech here indicates that he thinks things are good and getting better for people in his state. In truth, in the last two decades the average annual increase in income for North Dakota's poorest fifth of families compared to its richest fifth of families was $175 for the poorest versus $2,525 for the richest. Governor Dalrymple is the kind of person who manages the Bank of North Dakota today. Expanding the magnitude enormously and drastically changing the nature of the role of the BND to the point where egalitarianism prevails would clearly require abolishing the power of the wealthy class that currently rules North Dakota and the rest of the nation. This is not something that can happen without at some point confronting and defeating the full power of the American ruling class with an explicitly revolutionary mass movement.

[Although your criticism here is valid, this is essentially a strawman argument, as you, following the implication by Gibson, that the Bank of North Dakota is in some sense a “cooperative” bank. But this conflates the idea of “cooperative” with “public.” A public bank it is, but a cooperative bank has a different mission, however, it WOULD be fair to consider CREDIT UNIONS as a type of (consumer) cooperative!]

Although the "coop" economic model does not solve the problems caused by capitalism,

[You have not made this case, John, because you fail to identify the actual cause of the problems caused by capitalism, which are in fact resolved by cooperativism.]

there is one reason that this model nonetheless remains attractive to some people. The reason is that one can advocate for this model and try to implement it today without having to confront, and fear opposition from, the plutocracy that rules the United States.

[Well, to paraphrase Clinton, whom you cite later in the paragraph, that all depends on what you mean by the word “confront.” If by “confront” you mean fight a violent revolution against, by golly, you are right! Cooperation neatly skirts the need for that by supplanting capitalism as it goes...no bloody mess to clean up! If you mean something else you need to spell it out. What does it mean to “confront” the plutocracy in some political sense unless you have an alternative political economy to replace it with. Cooperation has that plan, which can be implemented without any political to do. If you've got a better one, I'd still like to see the details of exactly how you are going to regulate production (but then, I repeat myself).]

Thus when United Airline workers became owners of United Airlines with what is called an Employee Stock Ownership Plan (ESOP), the Associated Press covering the business community's response reported, "It was greeted with much fanfare, even lauded by the Clinton administration." President Clinton, let us not forget, was a darling of the capitalist class who ushered in NAFTA that has enabled countless employers to threaten workers that their jobs would be sent to Mexico unless they accepted deep cuts in pay and benefits. President Clinton also, to the dismay of his liberal supporters, “abolished welfare as we know it” to rip apart the social safety net in the U.S. and thereby force workers to work at very low-paying jobs with few if any benefits.

[ Let's agree that ESOPs and cooperatives are different animals; even though it is conceivable that an ESOP could lead in the long run to a cooperative, it is NOT the same thing at all.]

Class inequality and the capitalist system that creates, enforces and is based upon this inequality, are a Big Problem that requires a Big Solution. It is not possible to abolish a social and economic system based on inequality by "sneaking" in a different system without confronting and defeating the plutocracy whose wealth, power and privileges depend on keeping the present system. But this is essentially what many advocates of the "coop" model suggest. Thus Gibson's article concludes with this:
"All it takes to form a co-op is a small group of determined people all set on an idea to cooperatively own and operate a facet of the economy and allow them to make decisions in a democratic process. By democratizing society through housing and work, we can start a new revolution in our politics, our economy, and even our environment by choosing to consume sustainably and minimize our impact on the planet. It’s up to us - let’s get it done."
But this is not "all it takes" to create an egalitarian society. What it takes is a vision of an egalitarian society with an economy based on sharing according to need instead of buying and selling for profit, and a vision of genuine democracy that, unlike Communist and theocratic revolutionary models, is based on voluntary federation of local communities instead of the top-down principle of hierarchical authority that is shared in common by capitalist "democracies," as well as Communist and theocratic regimes. It also takes a determination to remove the plutocracy from power, which in turn requires an understanding of why this is not only necessary but possible. We need, in other words, to start Thinking about Revolution.
www.NewDemocracyWorld.org
This article may be copied and posted on other websites. Please include all hyperlinks.

[Well, to paraphrase Clinton once again, that all depends on what you mean by the word “egalitarian.” A society of worker-owners would be relatively equal economically, and fully equal politically, and that is so much of an advancement over the present that I'm willing to call it “egalitarian.” Yes, it can exactly be “snuck in” under the radar because there is no law against partnership enterprise, which is essentially what cooperation boils down to. Yeah, it lacks the drama of “Revolution,” but its results are more durable and fully “grounded.” The fact is this, John: capitalism persists in part by separating and mystifying entrepreneurship from the productive process. Cooperation de-mystifies it and reintegrates it. Your solution appears to be assign this function to a committee or a group of assemblies, but I'm still waiting for the details of how that would work in practice. Personally, I'm for the free market and freely associated owner-producers as the most efficient path to an egalitarian society, and I have not seen a single compelling argument from you in all of the preceding to convince me otherwise. The ball is back in your court now, if you can make a convincing argument for a better model of politico-economic transformation (nonviolently, por favor).

Peace,
Ken Freeland]

Carl, thanks for your

Carl, thanks for your interesting articke, and thanks Frigate also (i think Zyxomma meant the comment to go to the Monsanto article).

"Just doing it" (as you are doing) is the best response to the naysayers.

There's a similar phenomenon in the computer world, caled the "Free Software Movement" (from which the "Open Source" movement is a sort of diluted descendent). People said that you can't do it, that nobody will write software without oodles of money, that actually sharing software is a horrible crime, etc etc etc. But the naysayers were, and are, wrong, and there's a thriving and growing group of people producing software restricted only by the requirement that you cannot turn free software into non-free software. See http://www.gnu.org and also http://www.fsf.org

A relative lives in a coop

A relative lives in a coop building in Miami. Most of the residents are elderly. Some are not capable of helping to run the place, don't contribute economically, or even attend meetings. Therefore, they will be turning this coop into a condominium.

This problem seems to apply to governments. When the people are not involved, or can't be involved in helping a group to function, they tend to leave things up to those who like being the authority, or can profit from its management. When these eventually turn into dictators as they usually do, the people complain.

The proven solution seems to be to hire managers or politicians to run things, but let all the people have the last word. It can be done by consensus, popular referendum or other democratic way. But by law, the people must be the final arbiters who can overturn any decision or law made by judges, representatives or politicians at any time.

Spiderbaby, that research is

Spiderbaby, that research is disseminated in Jeffrey Smith's excellent book and companion documentary film, "Genetic Roulette."

It includes the conductors of a controlled study of mice fed a diet of GMO and nothing but GMO (tumors the size of chicken eggs!), and a diet of non-GMO.

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