How the U.S. Lost Out on iPhone Work

By CHARLES DUHIGG and KEITH BRADSHER
SolidarityEconomy.net via New York Times

Jan. 21, 2012 - When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.

Apple was provided with extensive summaries of The New York Times’s reporting for this article, but the company, which has a reputation for secrecy, declined to comment.

This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.

Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

‘I Want a Glass Screen’

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to Shenzhen, China. If Mr. Jobs wanted perfect, there was nowhere else to go.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.

In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.

But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.

In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

In Foxconn City

An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.

Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

In mid-2007, after a month of experimentation, Apple’s engineers finally perfected a method for cutting strengthened glass so it could be used in the iPhone’s screen. The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones. Within three months, Apple had sold one million iPhones. Since then, Foxconn has assembled over 200 million more.

Foxconn, in statements, declined to speak about specific clients.

“Any worker recruited by our firm is covered by a clear contract outlining terms and conditions and by Chinese government law that protects their rights,” the company wrote. Foxconn “takes our responsibility to our employees very seriously and we work hard to give our more than one million employees a safe and positive environment.”

The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.

Foxconn employees, in interviews, have challenged those assertions.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days.

Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

Some aspects of the iPhone are uniquely American. The device’s software, for instance, and its innovative marketing campaigns were largely created in the United States. Apple recently built a $500 million data center in North Carolina. Crucial semiconductors inside the iPhone 4 and 4S are manufactured in an Austin, Tex., factory by Samsung, of South Korea.

But even those facilities are not enormous sources of jobs. Apple’s North Carolina center, for instance, has only 100 full-time employees. The Samsung plant has an estimated 2,400 workers.

“If you scale up from selling one million phones to 30 million phones, you don’t really need more programmers,” said Jean-Louis Gassée, who oversaw product development and marketing for Apple until he left in 1990. “All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.”

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

But such calculations are, in many respects, meaningless because building the iPhone in the United States would demand much more than hiring Americans — it would require transforming the national and global economies. Apple executives believe there simply aren’t enough American workers with the skills the company needs or factories with sufficient speed and flexibility. Other companies that work with Apple, like Corning, also say they must go abroad.

Manufacturing glass for the iPhone revived a Corning factory in Kentucky, and today, much of the glass in iPhones is still made there. After the iPhone became a success, Corning received a flood of orders from other companies hoping to imitate Apple’s designs. Its strengthened glass sales have grown to more than $700 million a year, and it has hired or continued employing about 1,000 Americans to support the emerging market.

But as that market has expanded, the bulk of Corning’s strengthened glass manufacturing has occurred at plants in Japan and Taiwan.

“Our customers are in Taiwan, Korea, Japan and China,” said James B. Flaws, Corning’s vice chairman and chief financial officer. “We could make the glass here, and then ship it by boat, but that takes 35 days. Or, we could ship it by air, but that’s 10 times as expensive. So we build our glass factories next door to assembly factories, and those are overseas.”

Corning was founded in America 161 years ago and its headquarters are still in upstate New York. Theoretically, the company could manufacture all its glass domestically. But it would “require a total overhaul in how the industry is structured,” Mr. Flaws said. “The consumer electronics business has become an Asian business. As an American, I worry about that, but there’s nothing I can do to stop it. Asia has become what the U.S. was for the last 40 years.”

Middle-Class Jobs Fade

The first time Eric Saragoza stepped into Apple’s manufacturing plant in Elk Grove, Calif., he felt as if he were entering an engineering wonderland.

It was 1995, and the facility near Sacramento employed more than 1,500 workers. It was a kaleidoscope of robotic arms, conveyor belts ferrying circuit boards and, eventually, candy-colored iMacs in various stages of assembly. Mr. Saragoza, an engineer, quickly moved up the plant’s ranks and joined an elite diagnostic team. His salary climbed to $50,000. He and his wife had three children. They bought a home with a pool.

“It felt like, finally, school was paying off,” he said. “I knew the world needed people who can build things.”

At the same time, however, the electronics industry was changing, and Apple — with products that were declining in popularity — was struggling to remake itself. One focus was improving manufacturing. A few years after Mr. Saragoza started his job, his bosses explained how the California plant stacked up against overseas factories: the cost, excluding the materials, of building a $1,500 computer in Elk Grove was $22 a machine. In Singapore, it was $6. In Taiwan, $4.85. Wages weren’t the major reason for the disparities. Rather it was costs like inventory and how long it took workers to finish a task.

“We were told we would have to do 12-hour days, and come in on Saturdays,” Mr. Saragoza said. “I had a family. I wanted to see my kids play soccer.”

Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.

But in the last two decades, something more fundamental has changed, economists say. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class.

Even Mr. Saragoza, with his college degree, was vulnerable to these trends. First, some of Elk Grove’s routine tasks were sent overseas. Mr. Saragoza didn’t mind. Then the robotics that made Apple a futuristic playground allowed executives to replace workers with machines. Some diagnostic engineering went to Singapore. Middle managers who oversaw the plant’s inventory were laid off because, suddenly, a few people with Internet connections were all that were needed.

Mr. Saragoza was too expensive for an unskilled position. He was also insufficiently credentialed for upper management. He was called into a small office in 2002 after a night shift, laid off and then escorted from the plant. He taught high school for a while, and then tried a return to technology. But Apple, which had helped anoint the region as “Silicon Valley North,” had by then converted much of the Elk Grove plant into an AppleCare call center, where new employees often earn $12 an hour.

There were employment prospects in Silicon Valley, but none of them panned out. “What they really want are 30-year-olds without children,” said Mr. Saragoza, who today is 48, and whose family now includes five of his own.

After a few months of looking for work, he started feeling desperate. Even teaching jobs had dried up. So he took a position with an electronics temp agency that had been hired by Apple to check returned iPhones and iPads before they were sent back to customers. Every day, Mr. Saragoza would drive to the building where he had once worked as an engineer, and for $10 an hour with no benefits, wipe thousands of glass screens and test audio ports by plugging in headphones.

Paydays for Apple

As Apple’s overseas operations and sales have expanded, its top employees have thrived. Last fiscal year, Apple’s revenue topped $108 billion, a sum larger than the combined state budgets of Michigan, New Jersey and Massachusetts. Since 2005, when the company’s stock split, share prices have risen from about $45 to more than $427.

Some of that wealth has gone to shareholders. Apple is among the most widely held stocks, and the rising share price has benefited millions of individual investors, 401(k)’s and pension plans. The bounty has also enriched Apple workers. Last fiscal year, in addition to their salaries, Apple’s employees and directors received stock worth $2 billion and exercised or vested stock and options worth an added $1.4 billion.

The biggest rewards, however, have often gone to Apple’s top employees. Mr. Cook, Apple’s chief, last year received stock grants — which vest over a 10-year period — that, at today’s share price, would be worth $427 million, and his salary was raised to $1.4 million. In 2010, Mr. Cook’s compensation package was valued at $59 million, according to Apple’s security filings.

A person close to Apple argued that the compensation received by Apple’s employees was fair, in part because the company had brought so much value to the nation and world. As the company has grown, it has expanded its domestic work force, including manufacturing jobs. Last year, Apple’s American work force grew by 8,000 people.

While other companies have sent call centers abroad, Apple has kept its centers in the United States. One source estimated that sales of Apple’s products have caused other companies to hire tens of thousands of Americans. FedEx and United Parcel Service, for instance, both say they have created American jobs because of the volume of Apple’s shipments, though neither would provide specific figures without permission from Apple, which the company declined to provide.

“We shouldn’t be criticized for using Chinese workers,” a current Apple executive said. “The U.S. has stopped producing people with the skills we need.”

What’s more, Apple sources say the company has created plenty of good American jobs inside its retail stores and among entrepreneurs selling iPhone and iPad applications.

After two months of testing iPads, Mr. Saragoza quit. The pay was so low that he was better off, he figured, spending those hours applying for other jobs. On a recent October evening, while Mr. Saragoza sat at his MacBook and submitted another round of résumés online, halfway around the world a woman arrived at her office. The worker, Lina Lin, is a project manager in Shenzhen, China, at PCH International, which contracts with Apple and other electronics companies to coordinate production of accessories, like the cases that protect the iPad’s glass screens. She is not an Apple employee. But Mrs. Lin is integral to Apple’s ability to deliver its products.

Mrs. Lin earns a bit less than what Mr. Saragoza was paid by Apple. She speaks fluent English, learned from watching television and in a Chinese university. She and her husband put a quarter of their salaries in the bank every month. They live in a 1,080-square-foot apartment, which they share with their in-laws and son.

“There are lots of jobs,” Mrs. Lin said. “Especially in Shenzhen.”

Innovation’s Losers

Toward the end of Mr. Obama’s dinner last year with Mr. Jobs and other Silicon Valley executives, as everyone stood to leave, a crowd of photo seekers formed around the president. A slightly smaller scrum gathered around Mr. Jobs. Rumors had spread that his illness had worsened, and some hoped for a photograph with him, perhaps for the last time.

Eventually, the orbits of the men overlapped. “I’m not worried about the country’s long-term future,” Mr. Jobs told Mr. Obama, according to one observer. “This country is insanely great. What I’m worried about is that we don’t talk enough about solutions.”

At dinner, for instance, the executives had suggested that the government should reform visa programs to help companies hire foreign engineers. Some had urged the president to give companies a “tax holiday” so they could bring back overseas profits which, they argued, would be used to create work. Mr. Jobs even suggested it might be possible, someday, to locate some of Apple’s skilled manufacturing in the United States if the government helped train more American engineers.

Economists debate the usefulness of those and other efforts, and note that a struggling economy is sometimes transformed by unexpected developments. The last time analysts wrung their hands about prolonged American unemployment, for instance, in the early 1980s, the Internet hardly existed. Few at the time would have guessed that a degree in graphic design was rapidly becoming a smart bet, while studying telephone repair a dead end.

What remains unknown, however, is whether the United States will be able to leverage tomorrow’s innovations into millions of jobs.

In the last decade, technological leaps in solar and wind energy, semiconductor fabrication and display technologies have created thousands of jobs. But while many of those industries started in America, much of the employment has occurred abroad. Companies have closed major facilities in the United States to reopen in China. By way of explanation, executives say they are competing with Apple for shareholders. If they cannot rival Apple’s growth and profit margins, they won’t survive.

“New middle-class jobs will eventually emerge,” said Lawrence Katz, a Harvard economist. “But will someone in his 40s have the skills for them? Or will he be bypassed for a new graduate and never find his way back into the middle class?”

The pace of innovation, say executives from a variety of industries, has been quickened by businessmen like Mr. Jobs. G.M. went as long as half a decade between major automobile redesigns. Apple, by comparison, has released five iPhones in four years, doubling the devices’ speed and memory while dropping the price that some consumers pay.

Before Mr. Obama and Mr. Jobs said goodbye, the Apple executive pulled an iPhone from his pocket to show off a new application — a driving game — with incredibly detailed graphics. The device reflected the soft glow of the room’s lights. The other executives, whose combined worth exceeded $69 billion, jostled for position to glance over his shoulder. The game, everyone agreed, was wonderful.

There wasn’t even a tiny scratch on the screen.

David Barboza, Peter Lattman and Catherine Rampell contributed reporting.

Workers at the Evergreen Cooperative Laundry in Cleveland

Worker-Owners of America, Unite!

By GAR ALPEROVITZ
SolidarityEconomy.net via NYT Op-Ed

Dec 14, 2011, College Park, Md.- THE Occupy Wall Street protests have come and mostly gone, and whether they continue to have an impact or not, they have brought an astounding fact to the public’s attention: a mere 1 percent of Americans own just under half of the country’s financial assets and other investments. America, it would seem, is less equitable than ever, thanks to our no-holds-barred capitalist system.

But at another level, something different has been quietly brewing in recent decades: more and more Americans are involved in co-ops, worker-owned companies and other alternatives to the traditional capitalist model. We may, in fact, be moving toward a hybrid system, something different from both traditional capitalism and socialism, without anyone even noticing.

Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions.

And worker-owned companies make a difference. In Cleveland, for instance, an integrated group of worker-owned companies, supported in part by the purchasing power of large hospitals and universities, has taken the lead in local solar-panel installation, “green” institutional laundry services and a commercial hydroponic greenhouse capable of producing more than three million heads of lettuce a year.

Local and state governments are likewise changing the nature of American capitalism. Almost half the states manage venture capital efforts, taking partial ownership in new businesses. Calpers, California’s public pension authority, helps finance local development projects; in Alaska, state oil revenues provide each resident with dividends from public investment strategies as a matter of right; in Alabama, public pension investing has long focused on state economic development.

Moreover, this year some 14 states began to consider legislation to create public banks similar to the longstanding Bank of North Dakota; 15 more began to consider some form of single-payer or public-option health care plan.

Some of these developments, like rural co-ops and credit unions, have their origins in the New Deal era; some go back even further, to the Grange movement of the 1880s. The most widespread form of worker ownership stems from 1970s legislation that provided tax benefits to owners of small businesses who sold to their employees when they retired. Reagan-era domestic-spending cuts spurred nonprofits to form social enterprises that used profits to help finance their missions.

Recently, growing economic pain has provided a further catalyst. The Cleveland cooperatives are an answer to urban decay that traditional job training, small-business and other development strategies simply do not touch. They also build on a 30-year history of Ohio employee-ownership experiments traceable to the collapse of the steel industry in the 1970s and ’80s.

Further policy changes are likely. In Indiana, the Republican state treasurer, Richard Mourdock, is using state deposits to lower interest costs to employee-owned companies, a precedent others states could easily follow. Senator Sherrod Brown, Democrat of Ohio, is developing legislation to support worker-owned strategies like that of Cleveland in other cities. And several policy analysts have proposed expanding existing government “set aside” procurement programs for small businesses to include co-ops and other democratized enterprises.

If such cooperative efforts continue to increase in number, scale and sophistication, they may suggest the outlines, however tentative, of something very different from both traditional, corporate-dominated capitalism and traditional socialism.

It’s easy to overestimate the possibilities of a new system. These efforts are minor compared with the power of Wall Street banks and the other giants of the American economy. On the other hand, it is precisely these institutions that have created enormous economic problems and fueled public anger.

During the populist and progressive eras, a decades-long buildup of public anger led to major policy shifts, many of which simply took existing ideas from local and state efforts to the national stage. Furthermore, we have already seen how, in moments of crisis, the nationalization of auto giants like General Motors and Chrysler can suddenly become a reality. When the next financial breakdown occurs, huge injections of public money may well lead to de facto takeovers of major banks.

And while the American public has long supported the capitalist model, that, too, may be changing. In 2009 a Rasmussen poll reported that Americans under 30 years old were “essentially evenly divided” as to whether they preferred “capitalism” or “socialism.”

A long era of economic stagnation could well lead to a profound national debate about an America that is dominated neither by giant corporations nor by socialist bureaucrats. It would be a fitting next direction for a troubled nation that has long styled itself as of, by and for the people.

Gar Alperovitz, a professor of political economy at the University of Maryland and a founder of the Democracy Collaborative, is the author of “America Beyond Capitalism.”

By Naomi Klein
SolidarityEconomy.net via The Nation, Nov 9, 2011

There is a question from a gentleman in the fourth row.

He introduces himself as Richard Rothschild. He tells the crowd that he ran for county commissioner in Maryland’s Carroll County because he had come to the conclusion that policies to combat global warming were actually “an attack on middle-class American capitalism.” His question for the panelists, gathered in a Washington, DC, Marriott Hotel in late June, is this: “To what extent is this entire movement simply a green Trojan horse, whose belly is full with red Marxist socioeconomic doctrine?”

Here at the Heartland Institute’s Sixth International Conference on Climate Change, the premier gathering for those dedicated to denying the overwhelming scientific consensus that human activity is warming the planet, this qualifies as a rhetorical question. Like asking a meeting of German central bankers if Greeks are untrustworthy. Still, the panelists aren’t going to pass up an opportunity to tell the questioner just how right he is.

Chris Horner, a senior fellow at the Competitive Enterprise Institute who specializes in harassing climate scientists with nuisance lawsuits and Freedom of Information fishing expeditions, angles the table mic over to his mouth. “You can believe this is about the climate,” he says darkly, “and many people do, but it’s not a reasonable belief.” Horner, whose prematurely silver hair makes him look like a right-wing Anderson Cooper, likes to invoke Saul Alinsky: “The issue isn’t the issue.” The issue, apparently, is that “no free society would do to itself what this agenda requires…. The first step to that is to remove these nagging freedoms that keep getting in the way.”

Claiming that climate change is a plot to steal American freedom is rather tame by Heartland standards. Over the course of this two-day conference, I will learn that Obama’s campaign promise to support locally owned biofuels refineries was really about “green communitarianism,” akin to the “Maoist” scheme to put “a pig iron furnace in everybody’s backyard” (the Cato Institute’s Patrick Michaels). That climate change is “a stalking horse for National Socialism” (former Republican senator and retired astronaut Harrison Schmitt). And that environmentalists are like Aztec priests, sacrificing countless people to appease the gods and change the weather (Marc Morano, editor of the denialists’ go-to website, ClimateDepot.com).

Most of all, however, I will hear versions of the opinion expressed by the county commissioner in the fourth row: that climate change is a Trojan horse designed to abolish capitalism and replace it with some kind of eco-socialism. As conference speaker Larry Bell succinctly puts it in his new book Climate of Corruption, climate change “has little to do with the state of the environment and much to do with shackling capitalism and transforming the American way of life in the interests of global wealth redistribution.”

Yes, sure, there is a pretense that the delegates’ rejection of climate science is rooted in serious disagreement about the data. And the organizers go to some lengths to mimic credible scientific conferences, calling the gathering “Restoring the Scientific Method” and even adopting the organizational acronym ICCC, a mere one letter off from the world’s leading authority on climate change, the Intergovernmental Panel on Climate Change (IPCC). But the scientific theories presented here are old and long discredited. And no attempt is made to explain why each speaker seems to contradict the next. (Is there no warming, or is there warming but it’s not a problem? And if there is no warming, then what’s all this talk about sunspots causing temperatures to rise?)

In truth, several members of the mostly elderly audience seem to doze off while the temperature graphs are projected. They come to life only when the rock stars of the movement take the stage—not the C-team scientists but the A-team ideological warriors like Morano and Horner. This is the true purpose of the gathering: providing a forum for die-hard denialists to collect the rhetorical baseball bats with which they will club environmentalists and climate scientists in the weeks and months to come. The talking points first tested here will jam the comment sections beneath every article and YouTube video that contains the phrase “climate change” or “global warming.” They will also exit the mouths of hundreds of right-wing commentators and politicians—from Republican presidential candidates like Rick Perry and Michele Bachmann all the way down to county commissioners like Richard Rothschild. In an interview outside the sessions, Joseph Bast, president of the Heartland Institute, proudly takes credit for “thousands of articles and op-eds and speeches…that were informed by or motivated by somebody attending one of these conferences.”

The Heartland Institute, a Chicago-based think tank devoted to “promoting free-market solutions,” has been holding these confabs since 2008, sometimes twice a year. And the strategy appears to be working. At the end of day one, Morano—whose claim to fame is having broken the Swift Boat Veterans for Truth story that sank John Kerry’s 2004 presidential campaign—leads the gathering through a series of victory laps. Cap and trade: dead! Obama at the Copenhagen summit: failure! The climate movement: suicidal! He even projects a couple of quotes from climate activists beating up on themselves (as progressives do so well) and exhorts the audience to “celebrate!”

There were no balloons or confetti descending from the rafters, but there may as well have been.

* * *

When public opinion on the big social and political issues changes, the trends tend to be relatively gradual. Abrupt shifts, when they come, are usually precipitated by dramatic events. Which is why pollsters are so surprised by what has happened to perceptions about climate change over a span of just four years. A 2007 Harris poll found that 71 percent of Americans believed that the continued burning of fossil fuels would cause the climate to change. By 2009 the figure had dropped to 51 percent. In June 2011 the number of Americans who agreed was down to 44 percent—well under half the population. According to Scott Keeter, director of survey research at the Pew Research Center for People and the Press, this is “among the largest shifts over a short period of time seen in recent public opinion history.”

Even more striking, this shift has occurred almost entirely at one end of the political spectrum. As recently as 2008 (the year Newt Gingrich did a climate change TV spot with Nancy Pelosi) the issue still had a veneer of bipartisan support in the United States. Those days are decidedly over. Today, 70–75 percent of self-identified Democrats and liberals believe humans are changing the climate—a level that has remained stable or risen slightly over the past decade. In sharp contrast, Republicans, particularly Tea Party members, have overwhelmingly chosen to reject the scientific consensus. In some regions, only about 20 percent of self-identified Republicans accept the science.

Equally significant has been a shift in emotional intensity. Climate change used to be something most everyone said they cared about—just not all that much. When Americans were asked to rank their political concerns in order of priority, climate change would reliably come in last.

But now there is a significant cohort of Republicans who care passionately, even obsessively, about climate change—though what they care about is exposing it as a “hoax” being perpetrated by liberals to force them to change their light bulbs, live in Soviet-style tenements and surrender their SUVs. For these right-wingers, opposition to climate change has become as central to their worldview as low taxes, gun ownership and opposition to abortion. Many climate scientists report receiving death threats, as do authors of articles on subjects as seemingly innocuous as energy conservation. (As one letter writer put it to Stan Cox, author of a book critical of air-conditioning, “You can pry my thermostat out of my cold dead hands.”)

This culture-war intensity is the worst news of all, because when you challenge a person’s position on an issue core to his or her identity, facts and arguments are seen as little more than further attacks, easily deflected. (The deniers have even found a way to dismiss a new study confirming the reality of global warming that was partially funded by the Koch brothers, and led by a scientist sympathetic to the “skeptic” position.)

The effects of this emotional intensity have been on full display in the race to lead the Republican Party. Days into his presidential campaign, with his home state literally burning up with wildfires, Texas Governor Rick Perry delighted the base by declaring that climate scientists were manipulating data “so that they will have dollars rolling into their projects.” Meanwhile, the only candidate to consistently defend climate science, Jon Huntsman, was dead on arrival. And part of what has rescued Mitt Romney’s campaign has been his flight from earlier statements supporting the scientific consensus on climate change.

But the effects of the right-wing climate conspiracies reach far beyond the Republican Party. The Democrats have mostly gone mute on the subject, not wanting to alienate independents. And the media and culture industries have followed suit. Five years ago, celebrities were showing up at the Academy Awards in hybrids, Vanity Fair launched an annual green issue and, in 2007, the three major US networks ran 147 stories on climate change. No longer. In 2010 the networks ran just thirty-two climate change stories; limos are back in style at the Academy Awards; and the “annual” Vanity Fair green issue hasn’t been seen since 2008.

This uneasy silence has persisted through the end of the hottest decade in recorded history and yet another summer of freak natural disasters and record-breaking heat worldwide. Meanwhile, the fossil fuel industry is rushing to make multibillion-dollar investments in new infrastructure to extract oil, natural gas and coal from some of the dirtiest and highest-risk sources on the continent (the $7 billion Keystone XL pipeline being only the highest-profile example). In the Alberta tar sands, in the Beaufort Sea, in the gas fields of Pennsylvania and the coalfields of Wyoming and Montana, the industry is betting big that the climate movement is as good as dead.

If the carbon these projects are poised to suck out is released into the atmosphere, the chance of triggering catastrophic climate change will increase dramatically (mining the oil in the Alberta tar sands alone, says NASA’s James Hansen, would be “essentially game over” for the climate).

All of this means that the climate movement needs to have one hell of a comeback. For this to happen, the left is going to have to learn from the right. Denialists gained traction by making climate about economics: action will destroy capitalism, they have claimed, killing jobs and sending prices soaring. But at a time when a growing number of people agree with the protesters at Occupy Wall Street, many of whom argue that capitalism-as-usual is itself the cause of lost jobs and debt slavery, there is a unique opportunity to seize the economic terrain from the right. This would require making a persuasive case that the real solutions to the climate crisis are also our best hope of building a much more enlightened economic system—one that closes deep inequalities, strengthens and transforms the public sphere, generates plentiful, dignified work and radically reins in corporate power. It would also require a shift away from the notion that climate action is just one issue on a laundry list of worthy causes vying for progressive attention. Just as climate denialism has become a core identity issue on the right, utterly entwined with defending current systems of power and wealth, the scientific reality of climate change must, for progressives, occupy a central place in a coherent narrative about the perils of unrestrained greed and the need for real alternatives.

Building such a transformative movement may not be as hard as it first appears. Indeed, if you ask the Heartlanders, climate change makes some kind of left-wing revolution virtually inevitable, which is precisely why they are so determined to deny its reality. Perhaps we should listen to their theories more closely—they might just understand something the left still doesn’t get.

* * *

The deniers did not decide that climate change is a left-wing conspiracy by uncovering some covert socialist plot. They arrived at this analysis by taking a hard look at what it would take to lower global emissions as drastically and as rapidly as climate science demands. They have concluded that this can be done only by radically reordering our economic and political systems in ways antithetical to their “free market” belief system. As British blogger and Heartland regular James Delingpole has pointed out, “Modern environmentalism successfully advances many of the causes dear to the left: redistribution of wealth, higher taxes, greater government intervention, regulation.” Heartland’s Bast puts it even more bluntly: For the left, “Climate change is the perfect thing…. It’s the reason why we should do everything [the left] wanted to do anyway.”

Here’s my inconvenient truth: they aren’t wrong. Before I go any further, let me be absolutely clear: as 97 percent of the world’s climate scientists attest, the Heartlanders are completely wrong about the science. The heat-trapping gases released into the atmosphere through the burning of fossil fuels are already causing temperatures to increase. If we are not on a radically different energy path by the end of this decade, we are in for a world of pain.

But when it comes to the real-world consequences of those scientific findings, specifically the kind of deep changes required not just to our energy consumption but to the underlying logic of our economic system, the crowd gathered at the Marriott Hotel may be in considerably less denial than a lot of professional environmentalists, the ones who paint a picture of global warming Armageddon, then assure us that we can avert catastrophe by buying “green” products and creating clever markets in pollution.

The fact that the earth’s atmosphere cannot safely absorb the amount of carbon we are pumping into it is a symptom of a much larger crisis, one born of the central fiction on which our economic model is based: that nature is limitless, that we will always be able to find more of what we need, and that if something runs out it can be seamlessly replaced by another resource that we can endlessly extract. But it is not just the atmosphere that we have exploited beyond its capacity to recover—we are doing the same to the oceans, to freshwater, to topsoil and to biodiversity. The expansionist, extractive mindset, which has so long governed our relationship to nature, is what the climate crisis calls into question so fundamentally. The abundance of scientific research showing we have pushed nature beyond its limits does not just demand green products and market-based solutions; it demands a new civilizational paradigm, one grounded not in dominance over nature but in respect for natural cycles of renewal—and acutely sensitive to natural limits, including the limits of human intelligence.

So in a way, Chris Horner was right when he told his fellow Heartlanders that climate change isn’t “the issue.” In fact, it isn’t an issue at all. Climate change is a message, one that is telling us that many of our culture’s most cherished ideas are no longer viable. These are profoundly challenging revelations for all of us raised on Enlightenment ideals of progress, unaccustomed to having our ambitions confined by natural boundaries. And this is true for the statist left as well as the neoliberal right.

While Heartlanders like to invoke the specter of communism to terrify Americans about climate action (Czech President Vaclav Klaus, a Heartland conference favorite, says that attempts to prevent global warming are akin to “the ambitions of communist central planners to control the entire society”), the reality is that Soviet-era state socialism was a disaster for the climate. It devoured resources with as much enthusiasm as capitalism, and spewed waste just as recklessly: before the fall of the Berlin Wall, Czechs and Russians had even higher carbon footprints per capita than their counterparts in Britain, Canada and Australia. And while some point to the dizzying expansion of China’s renewable energy programs to argue that only centrally controlled regimes can get the green job done, China’s command-and-control economy continues to be harnessed to wage an all-out war with nature, through massively disruptive mega-dams, superhighways and extraction-based energy projects, particularly coal.

It is true that responding to the climate threat requires strong government action at all levels. But real climate solutions are ones that steer these interventions to systematically disperse and devolve power and control to the community level, whether through community-controlled renewable energy, local organic agriculture or transit systems genuinely accountable to their users.

Here is where the Heartlanders have good reason to be afraid: arriving at these new systems is going to require shredding the free-market ideology that has dominated the global economy for more than three decades. What follows is a quick-and-dirty look at what a serious climate agenda would mean in the following six arenas: public infrastructure, economic planning, corporate regulation, international trade, consumption and taxation. For hard-right ideologues like those gathered at the Heartland conference, the results are nothing short of intellectually cataclysmic.

1. Reviving and Reinventing the Public Sphere

After years of recycling, carbon offsetting and light bulb changing, it is obvious that individual action will never be an adequate response to the climate crisis. Climate change is a collective problem, and it demands collective action. One of the key areas in which this collective action must take place is big-ticket investments designed to reduce our emissions on a mass scale. That means subways, streetcars and light-rail systems that are not only everywhere but affordable to everyone; energy-efficient affordable housing along those transit lines; smart electrical grids carrying renewable energy; and a massive research effort to ensure that we are using the best methods possible.

The private sector is ill suited to providing most of these services because they require large up-front investments and, if they are to be genuinely accessible to all, some very well may not be profitable. They are, however, decidedly in the public interest, which is why they should come from the public sector.

Traditionally, battles to protect the public sphere are cast as conflicts between irresponsible leftists who want to spend without limit and practical realists who understand that we are living beyond our economic means. But the gravity of the climate crisis cries out for a radically new conception of realism, as well as a very different understanding of limits. Government budget deficits are not nearly as dangerous as the deficits we have created in vital and complex natural systems. Changing our culture to respect those limits will require all of our collective muscle—to get ourselves off fossil fuels and to shore up communal infrastructure for the coming storms.

2. Remembering How to Plan

In addition to reversing the thirty-year privatization trend, a serious response to the climate threat involves recovering an art that has been relentlessly vilified during these decades of market fundamentalism: planning. Lots and lots of planning. And not just at the national and international levels. Every community in the world needs a plan for how it is going to transition away from fossil fuels, what the Transition Town movement calls an “energy descent action plan.” In the cities and towns that have taken this responsibility seriously, the process has opened rare spaces for participatory democracy, with neighbors packing consultation meetings at city halls to share ideas about how to reorganize their communities to lower emissions and build in resilience for tough times ahead.

Climate change demands other forms of planning as well—particularly for workers whose jobs will become obsolete as we wean ourselves off fossil fuels. A few “green jobs” trainings aren’t enough. These workers need to know that real jobs will be waiting for them on the other side. That means bringing back the idea of planning our economies based on collective priorities rather than corporate profitability—giving laid-off employees of car plants and coal mines the tools and resources to create jobs, for example, with Cleveland’s worker-run green co-ops serving as a model.

Agriculture, too, will have to see a revival in planning if we are to address the triple crisis of soil erosion, extreme weather and dependence on fossil fuel inputs. Wes Jackson, the visionary founder of the Land Institute in Salina, Kansas, has been calling for “a fifty-year farm bill.” That’s the length of time he and his collaborators Wendell Berry and Fred Kirschenmann estimate it will take to conduct the research and put the infrastructure in place to replace many soil-depleting annual grain crops, grown in monocultures, with perennial crops, grown in polycultures. Since perennials don’t need to be replanted every year, their long roots do a much better job of storing scarce water, holding soil in place and sequestering carbon. Polycultures are also less vulnerable to pests and to being wiped out by extreme weather. Another bonus: this type of farming is much more labor intensive than industrial agriculture, which means that farming can once again be a substantial source of employment.

Outside the Heartland conference and like-minded gatherings, the return of planning is nothing to fear. We are not talking about a return to authoritarian socialism, after all, but a turn toward real democracy. The thirty-odd-year experiment in deregulated, Wild West economics is failing the vast majority of people around the world. These systemic failures are precisely why so many are in open revolt against their elites, demanding living wages and an end to corruption. Climate change doesn’t conflict with demands for a new kind of economy. Rather, it adds to them an existential imperative.

3. Reining in Corporations

A key piece of the planning we must undertake involves the rapid re-regulation of the corporate sector. Much can be done with incentives: subsidies for renewable energy and responsible land stewardship, for instance. But we are also going to have to get back into the habit of barring outright dangerous and destructive behavior. That means getting in the way of corporations on multiple fronts, from imposing strict caps on the amount of carbon corporations can emit, to banning new coal-fired power plants, to cracking down on industrial feedlots, to shutting down dirty-energy extraction projects like the Alberta tar sands (starting with pipelines like Keystone XL that lock in expansion plans).

Only a very small sector of the population sees any restriction on corporate or consumer choice as leading down Hayek’s road to serfdom—and, not coincidentally, it is precisely this sector of the population that is at the forefront of climate change denial.

4. Relocalizing Production

If strictly regulating corporations to respond to climate change sounds somewhat radical it’s because, since the beginning of the 1980s, it has been an article of faith that the role of government is to get out of the way of the corporate sector—and nowhere more so than in the realm of international trade. The devastating impacts of free trade on manufacturing, local business and farming are well known. But perhaps the atmosphere has taken the hardest hit of all. The cargo ships, jumbo jets and heavy trucks that haul raw resources and finished products across the globe devour fossil fuels and spew greenhouse gases. And the cheap goods being produced—made to be replaced, almost never fixed—are consuming a huge range of other nonrenewable resources while producing far more waste than can be safely absorbed.

This model is so wasteful, in fact, that it cancels out the modest gains that have been made in reducing emissions many times over. For instance, the Proceedings of the National Academy of Sciences recently published a study of the emissions from industrialized countries that signed the Kyoto Protocol. It found that while they had stabilized, that was partly because international trade had allowed these countries to move their dirty production to places like China. The researchers concluded that the rise in emissions from goods produced in developing countries but consumed in industrialized ones was six times greater than the emissions savings of industrialized countries.

In an economy organized to respect natural limits, the use of energy-intensive long-haul transport would need to be rationed—reserved for those cases where goods cannot be produced locally or where local production is more carbon-intensive. (For example, growing food in greenhouses in cold parts of the United States is often more energy-intensive than growing it in the South and shipping it by light rail.)

Climate change does not demand an end to trade. But it does demand an end to the reckless form of “free trade” that governs every bilateral trade agreement as well as the World Trade Organization. This is more good news —for unemployed workers, for farmers unable to compete with cheap imports, for communities that have seen their manufacturers move offshore and their local businesses replaced with big boxes. But the challenge this poses to the capitalist project should not be underestimated: it represents the reversal of the thirty-year trend of removing every possible limit on corporate power.

5. Ending the Cult of Shopping

The past three decades of free trade, deregulation and privatization were not only the result of greedy people wanting greater corporate profits. They were also a response to the “stagflation” of the 1970s, which created intense pressure to find new avenues for rapid economic growth. The threat was real: within our current economic model, a drop in production is by definition a crisis—a recession or, if deep enough, a depression, with all the desperation and hardship that these words imply.

This growth imperative is why conventional economists reliably approach the climate crisis by asking the question, How can we reduce emissions while maintaining robust GDP growth? The usual answer is “decoupling”—the idea that renewable energy and greater efficiencies will allow us to sever economic growth from its environmental impact. And “green growth” advocates like Thomas Friedman tell us that the process of developing new green technologies and installing green infrastructure can provide a huge economic boost, sending GDP soaring and generating the wealth needed to “make America healthier, richer, more innovative, more productive, and more secure.”

But here is where things get complicated. There is a growing body of economic research on the conflict between economic growth and sound climate policy, led by ecological economist Herman Daly at the University of Maryland, as well as Peter Victor at York University, Tim Jackson of the University of Surrey and environmental law and policy expert Gus Speth. All raise serious questions about the feasibility of industrialized countries meeting the deep emissions cuts demanded by science (at least 80 percent below 1990 levels by 2050) while continuing to grow their economies at even today’s sluggish rates. As Victor and Jackson argue, greater efficiencies simply cannot keep up with the pace of growth, in part because greater efficiency is almost always accompanied by more consumption, reducing or even canceling out the gains (often called the “Jevons Paradox”). And so long as the savings resulting from greater energy and material efficiencies are simply plowed back into further exponential expansion of the economy, reduction in total emissions will be thwarted. As Jackson argues in Prosperity Without Growth, “Those who promote decoupling as an escape route from the dilemma of growth need to take a closer look at the historical evidence—and at the basic arithmetic of growth.”

The bottom line is that an ecological crisis that has its roots in the overconsumption of natural resources must be addressed not just by improving the efficiency of our economies but by reducing the amount of material stuff we produce and consume. Yet that idea is anathema to the large corporations that dominate the global economy, which are controlled by footloose investors who demand ever greater profits year after year. We are therefore caught in the untenable bind of, as Jackson puts it, “trash the system or crash the planet.”

The way out is to embrace a managed transition to another economic paradigm, using all the tools of planning discussed above. Growth would be reserved for parts of the world still pulling themselves out of poverty. Meanwhile, in the industrialized world, those sectors that are not governed by the drive for increased yearly profit (the public sector, co-ops, local businesses, nonprofits) would expand their share of overall economic activity, as would those sectors with minimal ecological impacts (such as the caregiving professions). A great many jobs could be created this way. But the role of the corporate sector, with its structural demand for increased sales and profits, would have to contract.

So when the Heartlanders react to evidence of human-induced climate change as if capitalism itself were coming under threat, it’s not because they are paranoid. It’s because they are paying attention.

6. Taxing the Rich and Filthy

About now a sensible reader would be asking, How on earth are we going to pay for all this? The old answer would have been easy: we’ll grow our way out of it. Indeed, one of the major benefits of a growth-based economy for elites is that it allows them to constantly defer demands for social justice, claiming that if we keep growing the pie, eventually there will be enough for everyone. That was always a lie, as the current inequality crisis reveals, but in a world hitting multiple ecological limits, it is a nonstarter. So the only way to finance a meaningful response to the ecological crisis is to go where the money is.

That means taxing carbon, as well as financial speculation. It means increasing taxes on corporations and the wealthy, cutting bloated military budgets and eliminating absurd subsidies to the fossil fuel industry. And governments will have to coordinate their responses so that corporations will have nowhere to hide (this kind of robust international regulatory architecture is what Heartlanders mean when they warn that climate change will usher in a sinister “world government”).

Most of all, however, we need to go after the profits of the corporations most responsible for getting us into this mess. The top five oil companies made $900 billion in profits in the past decade; ExxonMobil alone can clear $10 billion in profits in a single quarter. For years, these companies have pledged to use their profits to invest in a shift to renewable energy (BP’s “Beyond Petroleum” rebranding being the highest-profile example). But according to a study by the Center for American Progress, just 4 percent of the big five’s $100 billion in combined 2008 profits went to “renewable and alternative energy ventures.” Instead, they continue to pour their profits into shareholder pockets, outrageous executive pay and new technologies designed to extract even dirtier and more dangerous fossil fuels. Plenty of money has also gone to paying lobbyists to beat back every piece of climate legislation that has reared its head, and to fund the denier movement gathered at the Marriott Hotel.

Just as tobacco companies have been obliged to pay the costs of helping people to quit smoking, and BP has had to pay for the cleanup in the Gulf of Mexico, it is high time for the “polluter pays” principle to be applied to climate change. Beyond higher taxes on polluters, governments will have to negotiate much higher royalty rates so that less fossil fuel extraction would raise more public revenue to pay for the shift to our postcarbon future (as well as the steep costs of climate change already upon us). Since corporations can be counted on to resist any new rules that cut into their profits, nationalization—the greatest free-market taboo of all—cannot be off the table.

When Heartlanders claim, as they so often do, that climate change is a plot to “redistribute wealth” and wage class war, these are the types of policies they most fear. They also understand that, once the reality of climate change is recognized, wealth will have to be transferred not just within wealthy countries but also from the rich countries whose emissions created the crisis to poorer ones that are on the front lines of its effects. Indeed, what makes conservatives (and plenty of liberals) so eager to bury the UN climate negotiations is that they have revived a postcolonial courage in parts of the developing world that many thought was gone for good. Armed with irrefutable scientific facts about who is responsible for global warming and who is suffering its effects first and worst, countries like Bolivia and Ecuador are attempting to shed the mantle of “debtor” thrust upon them by decades of International Monetary Fund and World Bank loans and are declaring themselves creditors—owed not just money and technology to cope with climate change but “atmospheric space” in which to develop.

* * *

So let’s summarize. Responding to climate change requires that we break every rule in the free-market playbook and that we do so with great urgency. We will need to rebuild the public sphere, reverse privatizations, relocalize large parts of economies, scale back overconsumption, bring back long-term planning, heavily regulate and tax corporations, maybe even nationalize some of them, cut military spending and recognize our debts to the global South. Of course, none of this has a hope in hell of happening unless it is accompanied by a massive, broad-based effort to radically reduce the influence that corporations have over the political process. That means, at a minimum, publicly funded elections and stripping corporations of their status as “people” under the law. In short, climate change supercharges the pre-existing case for virtually every progressive demand on the books, binding them into a coherent agenda based on a clear scientific imperative.

More than that, climate change implies the biggest political “I told you so” since Keynes predicted German backlash from the Treaty of Versailles. Marx wrote about capitalism’s “irreparable rift” with “the natural laws of life itself,” and many on the left have argued that an economic system built on unleashing the voracious appetites of capital would overwhelm the natural systems on which life depends. And of course indigenous peoples were issuing warnings about the dangers of disrespecting “Mother Earth” long before that. The fact that the airborne waste of industrial capitalism is causing the planet to warm, with potentially cataclysmic results, means that, well, the naysayers were right. And the people who said, “Hey, let’s get rid of all the rules and watch the magic happen” were disastrously, catastrophically wrong.

There is no joy in being right about something so terrifying. But for progressives, there is responsibility in it, because it means that our ideas—informed by indigenous teachings as well as by the failures of industrial state socialism—are more important than ever. It means that a green-left worldview, which rejects mere reformism and challenges the centrality of profit in our economy, offers humanity’s best hope of overcoming these overlapping crises.

But imagine, for a moment, how all of this looks to a guy like Heartland president Bast, who studied economics at the University of Chicago and described his personal calling to me as “freeing people from the tyranny of other people.” It looks like the end of the world. It’s not, of course. But it is, for all intents and purposes, the end of his world. Climate change detonates the ideological scaffolding on which contemporary conservatism rests. There is simply no way to square a belief system that vilifies collective action and venerates total market freedom with a problem that demands collective action on an unprecedented scale and a dramatic reining in of the market forces that created and are deepening the crisis.

* * *

At the Heartland conference—where everyone from the Ayn Rand Institute to the Heritage Foundation has a table hawking books and pamphlets—these anxieties are close to the surface. Bast is forthcoming about the fact that Heartland’s campaign against climate science grew out of fear about the policies that the science would require. “When we look at this issue, we say, This is a recipe for massive increase in government…. Before we take this step, let’s take another look at the science. So conservative and libertarian groups, I think, stopped and said, Let’s not simply accept this as an article of faith; let’s actually do our own research.” This is a crucial point to understand: it is not opposition to the scientific facts of climate change that drives denialists but rather opposition to the real-world implications of those facts.

What Bast is describing—albeit inadvertently—is a phenomenon receiving a great deal of attention these days from a growing subset of social scientists trying to explain the dramatic shifts in belief about climate change. Researchers with Yale’s Cultural Cognition Project have found that political/cultural worldview explains “individuals’ beliefs about global warming more powerfully than any other individual characteristic.”

Those with strong “egalitarian” and “communitarian” worldviews (marked by an inclination toward collective action and social justice, concern about inequality and suspicion of corporate power) overwhelmingly accept the scientific consensus on climate change. On the other hand, those with strong “hierarchical” and “individualistic” worldviews (marked by opposition to government assistance for the poor and minorities, strong support for industry and a belief that we all get what we deserve) overwhelmingly reject the scientific consensus.

For example, among the segment of the US population that displays the strongest “hierarchical” views, only 11 percent rate climate change as a “high risk,” compared with 69 percent of the segment displaying the strongest “egalitarian” views. Yale law professor Dan Kahan, the lead author on this study, attributes this tight correlation between “worldview” and acceptance of climate science to “cultural cognition.” This refers to the process by which all of us—regardless of political leanings—filter new information in ways designed to protect our “preferred vision of the good society.” As Kahan explained in Nature, “People find it disconcerting to believe that behaviour that they find noble is nevertheless detrimental to society, and behaviour that they find base is beneficial to it. Because accepting such a claim could drive a wedge between them and their peers, they have a strong emotional predisposition to reject it.” In other words, it is always easier to deny reality than to watch your worldview get shattered, a fact that was as true of die-hard Stalinists at the height of the purges as it is of libertarian climate deniers today.

When powerful ideologies are challenged by hard evidence from the real world, they rarely die off completely. Rather, they become cultlike and marginal. A few true believers always remain to tell one another that the problem wasn’t with the ideology; it was the weakness of leaders who did not apply the rules with sufficient rigor. We have these types on the Stalinist left, and they exist as well on the neo-Nazi right. By this point in history, free-market fundamentalists should be exiled to a similarly marginal status, left to fondle their copies of Free to Choose and Atlas Shrugged in obscurity. They are saved from this fate only because their ideas about minimal government, no matter how demonstrably at war with reality, remain so profitable to the world’s billionaires that they are kept fed and clothed in think tanks by the likes of Charles and David Koch, and ExxonMobil.

This points to the limits of theories like “cultural cognition.” The deniers are doing more than protecting their cultural worldview—they are protecting powerful interests that stand to gain from muddying the waters of the climate debate. The ties between the deniers and those interests are well known and well documented. Heartland has received more than $1 million from ExxonMobil together with foundations linked to the Koch brothers and Richard Mellon Scaife (possibly much more, but the think tank has stopped publishing its donors’ names, claiming the information was distracting from the “merits of our positions”).

And scientists who present at Heartland climate conferences are almost all so steeped in fossil fuel dollars that you can practically smell the fumes. To cite just two examples, the Cato Institute’s Patrick Michaels, who gave the conference keynote, once told CNN that 40 percent of his consulting company’s income comes from oil companies, and who knows how much of the rest comes from coal. A Greenpeace investigation into another one of the conference speakers, astrophysicist Willie Soon, found that since 2002, 100 percent of his new research grants had come from fossil fuel interests. And fossil fuel companies are not the only economic interests strongly motivated to undermine climate science. If solving this crisis requires the kinds of profound changes to the economic order that I have outlined, then every major corporation benefiting from loose regulation, free trade and low taxes has reason to fear.

With so much at stake, it should come as little surprise that climate deniers are, on the whole, those most invested in our highly unequal and dysfunctional economic status quo. One of the most interesting findings of the studies on climate perceptions is the clear connection between a refusal to accept the science of climate change and social and economic privilege. Overwhelmingly, climate deniers are not only conservative but also white and male, a group with higher than average incomes. And they are more likely than other adults to be highly confident in their views, no matter how demonstrably false. A much-discussed paper on this topic by Aaron McCright and Riley Dunlap (memorably titled “Cool Dudes”) found that confident conservative white men, as a group, were almost six times as likely to believe climate change “will never happen” than the rest of the adults surveyed. McCright and Dunlap offer a simple explanation for this discrepancy: “Conservative white males have disproportionately occupied positions of power within our economic system. Given the expansive challenge that climate change poses to the industrial capitalist economic system, it should not be surprising that conservative white males’ strong system-justifying attitudes would be triggered to deny climate change.”

But deniers’ relative economic and social privilege doesn’t just give them more to lose from a new economic order; it gives them reason to be more sanguine about the risks of climate change in the first place. This occurred to me as I listened to yet another speaker at the Heartland conference display what can only be described as an utter absence of empathy for the victims of climate change. Larry Bell, whose bio describes him as a “space architect,” drew plenty of laughs when he told the crowd that a little heat isn’t so bad: “I moved to Houston intentionally!” (Houston was, at that time, in the midst of what would turn out to be the state’s worst single-year drought on record.) Australian geologist Bob Carter offered that “the world actually does better from our human perspective in warmer times.” And Patrick Michaels said people worried about climate change should do what the French did after a devastating 2003 heat wave killed 14,000 of their people: “they discovered Walmart and air-conditioning.”

Listening to these zingers as an estimated 13 million people in the Horn of Africa face starvation on parched land was deeply unsettling. What makes this callousness possible is the firm belief that if the deniers are wrong about climate change, a few degrees of warming isn’t something wealthy people in industrialized countries have to worry about. (“When it rains, we find shelter. When it’s hot, we find shade,” Texas Congressman Joe Barton explained at an energy and environment subcommittee hearing.)

As for everyone else, well, they should stop looking for handouts and busy themselves getting unpoor. When I asked Michaels whether rich countries have a responsibility to help poor ones pay for costly adaptations to a warmer climate, he scoffed that there is no reason to give money to countries “because, for some reason, their political system is incapable of adapting.” The real solution, he claimed, was more free trade.

* * *

This is where the intersection between hard-right ideology and climate denial gets truly dangerous. It’s not simply that these “cool dudes” deny climate science because it threatens to upend their dominance-based worldview. It is that their dominance-based worldview provides them with the intellectual tools to write off huge swaths of humanity in the developing world. Recognizing the threat posed by this empathy-exterminating mindset is a matter of great urgency, because climate change will test our moral character like little before. The US Chamber of Commerce, in its bid to prevent the Environmental Protection Agency from regulating carbon emissions, argued in a petition that in the event of global warming, “populations can acclimatize to warmer climates via a range of behavioral, physiological, and technological adaptations.” These adaptations are what I worry about most.

How will we adapt to the people made homeless and jobless by increasingly intense and frequent natural disasters? How will we treat the climate refugees who arrive on our shores in leaky boats? Will we open our borders, recognizing that we created the crisis from which they are fleeing? Or will we build ever more high-tech fortresses and adopt ever more draconian antiimmigration laws? How will we deal with resource scarcity?

We know the answers already. The corporate quest for scarce resources will become more rapacious, more violent. Arable land in Africa will continue to be grabbed to provide food and fuel to wealthier nations. Drought and famine will continue to be used as a pretext to push genetically modified seeds, driving farmers further into debt. We will attempt to transcend peak oil and gas by using increasingly risky technologies to extract the last drops, turning ever larger swaths of our globe into sacrifice zones. We will fortress our borders and intervene in foreign conflicts over resources, or start those conflicts ourselves. “Free-market climate solutions,” as they are called, will be a magnet for speculation, fraud and crony capitalism, as we are already seeing with carbon trading and the use of forests as carbon offsets. And as climate change begins to affect not just the poor but the wealthy as well, we will increasingly look for techno-fixes to turn down the temperature, with massive and unknowable risks.

As the world warms, the reigning ideology that tells us it’s everyone for themselves, that victims deserve their fate, that we can master nature, will take us to a very cold place indeed. And it will only get colder, as theories of racial superiority, barely under the surface in parts of the denial movement, make a raging comeback. These theories are not optional: they are necessary to justify the hardening of hearts to the largely blameless victims of climate change in the global South, and in predominately African-American cities like New Orleans.

In The Shock Doctrine, I explore how the right has systematically used crises—real and trumped up—to push through a brutal ideological agenda designed not to solve the problems that created the crises but rather to enrich elites. As the climate crisis begins to bite, it will be no exception. This is entirely predictable. Finding new ways to privatize the commons and to profit from disaster are what our current system is built to do. The process is already well under way.

The only wild card is whether some countervailing popular movement will step up to provide a viable alternative to this grim future. That means not just an alternative set of policy proposals but an alternative worldview to rival the one at the heart of the ecological crisis—this time, embedded in interdependence rather than hyper-individualism, reciprocity rather than dominance and cooperation rather than hierarchy.

Shifting cultural values is, admittedly, a tall order. It calls for the kind of ambitious vision that movements used to fight for a century ago, before everything was broken into single “issues” to be tackled by the appropriate sector of business-minded NGOs. Climate change is, in the words of the Stern Review on the Economics of Climate Change, “the greatest example of market failure we have ever seen.” By all rights, this reality should be filling progressive sails with conviction, breathing new life and urgency into longstanding fights against everything from free trade to financial speculation to industrial agriculture to third-world debt, while elegantly weaving all these struggles into a coherent narrative about how to protect life on earth.

But that isn’t happening, at least not so far. It is a painful irony that while the Heartlanders are busily calling climate change a left-wing plot, most leftists have yet to realize that climate science has handed them the most powerful argument against capitalism since William Blake’s “dark Satanic Mills” (and, of course, those mills were the beginning of climate change). When demonstrators are cursing out the corruption of their governments and corporate elites in Athens, Madrid, Cairo, Madison and New York, climate change is often little more than a footnote, when it should be the coup de grâce.

Half of the problem is that progressives—their hands full with soaring unemployment and multiple wars—tend to assume that the big green groups have the climate issue covered. The other half is that many of those big green groups have avoided, with phobic precision, any serious debate on the blindingly obvious roots of the climate crisis: globalization, deregulation and contemporary capitalism’s quest for perpetual growth (the same forces that are responsible for the destruction of the rest of the economy). The result is that those taking on the failures of capitalism and those fighting for climate action remain two solitudes, with the small but valiant climate justice movement—drawing the connections between racism, inequality and environmental vulnerability—stringing up a few swaying bridges between them.

The right, meanwhile, has had a free hand to exploit the global economic crisis to cast climate action as a recipe for economic Armageddon, a surefire way to spike household costs and to block new, much-needed jobs drilling for oil and laying new pipelines. With virtually no loud voices offering a competing vision of how a new economic paradigm could provide a way out of both the economic and ecological crises, this fearmongering has had a ready audience.

Far from learning from past mistakes, a powerful faction in the environmental movement is pushing to go even further down the same disastrous road, arguing that the way to win on climate is to make the cause more palatable to conservative values. This can be heard from the studiously centrist Breakthrough Institute, which is calling for the movement to embrace industrial agriculture and nuclear power instead of organic farming and decentralized renewables. It can also be heard from several of the researchers studying the rise in climate denial. Some, like Yale’s Kahan, point out that while those who poll as highly “hierarchical” and “individualist” bridle at any mention of regulation, they tend to like big, centralized technologies that confirm their belief that humans can dominate nature. So, he and others argue, environmentalists should start emphasizing responses such as nuclear power and geoengineering (deliberately intervening in the climate system to counteract global warming), as well as playing up concerns about national security.

The first problem with this strategy is that it doesn’t work. For years, big green groups have framed climate action as a way to assert “energy security,” while “free-market solutions” are virtually the only ones on the table in the United States. Meanwhile, denialism has soared. The more troubling problem with this approach, however, is that rather than challenging the warped values motivating denialism, it reinforces them. Nuclear power and geoengineering are not solutions to the ecological crisis; they are a doubling down on exactly the kind of short-term hubristic thinking that got us into this mess.

It is not the job of a transformative social movement to reassure members of a panicked, megalomaniacal elite that they are still masters of the universe—nor is it necessary. According to McCright, co-author of the “Cool Dudes” study, the most extreme, intractable climate deniers (many of them conservative white men) are a small minority of the US population—roughly 10 percent. True, this demographic is massively overrepresented in positions of power. But the solution to that problem is not for the majority of people to change their ideas and values. It is to attempt to change the culture so that this small but disproportionately influential minority—and the reckless worldview it represents—wields significantly less power.

* * *

Some in the climate camp are pushing back hard against the appeasement strategy. Tim DeChristopher, serving a two-year jail sentence in Utah for disrupting a compromised auction of oil and gas leases, commented in May on the right-wing claim that climate action will upend the economy. “I believe we should embrace the charges,” he told an interviewer. “No, we are not trying to disrupt the economy, but yes, we do want to turn it upside down. We should not try and hide our vision about what we want to change—of the healthy, just world that we wish to create. We are not looking for small shifts: we want a radical overhaul of our economy and society.” He added, “I think once we start talking about it, we will find more allies than we expect.”

When DeChristopher articulated this vision for a climate movement fused with one demanding deep economic transformation, it surely sounded to most like a pipe dream. But just five months later, with Occupy Wall Street chapters seizing squares and parks in hundreds of cities, it sounds prophetic. It turns out that a great many Americans had been hungering for this kind of transformation on many fronts, from the practical to the spiritual.

Though climate change was something of an afterthought in the movement’s early texts, an ecological consciousness was woven into OWS from the start—from the sophisticated “gray water” filtration system that uses dishwater to irrigate plants at Zuccotti Park, to the scrappy community garden planted at Occupy Portland. Occupy Boston’s laptops and cellphones are powered by bicycle generators, and Occupy DC has installed solar panels. Meanwhile, the ultimate symbol of OWS—the human microphone—is nothing if not a postcarbon solution.

And new political connections are being made. The Rainforest Action Network, which has been targeting Bank of America for financing the coal industry, has made common cause with OWS activists taking aim at the bank over foreclosures. Anti-fracking activists have pointed out that the same economic model that is blasting the bedrock of the earth to keep the gas flowing is blasting the social bedrock to keep the profits flowing. And then there is the historic movement against the Keystone XL pipeline, which this fall has decisively yanked the climate movement out of the lobbyists’ offices and into the streets (and jail cells). Anti-Keystone campaigners have noted that anyone concerned about the corporate takeover of democracy need look no further than the corrupt process that led the State Department to conclude that a pipeline carrying dirty tar sands oil across some of the most sensitive land in the country would have “limited adverse environmental impacts.” As 350.org’s Phil Aroneanu put it, “If Wall Street is occupying President Obama’s State Department and the halls of Congress, it’s time for the people to occupy Wall Street.”

But these connections go beyond a shared critique of corporate power. As Occupiers ask themselves what kind of economy should be built to displace the one crashing all around us, many are finding inspiration in the network of green economic alternatives that has taken root over the past decade—in community-controlled renewable energy projects, in community-supported agriculture and farmers’ markets, in economic localization initiatives that have brought main streets back to life, and in the co-op sector. Already a group at OWS is cooking up plans to launch the movement’s first green workers’ co-op (a printing press); local food activists have made the call to “Occupy the Food System!”; and November 20 is “Occupy Rooftops”—a coordinated effort to use crowd-sourcing to buy solar panels for community buildings.

Not only do these economic models create jobs and revive communities while reducing emissions; they do so in a way that systematically disperses power—the antithesis of an economy by and for the 1 percent. Omar Freilla, one of the founders of Green Worker Cooperatives in the South Bronx, told me that the experience in direct democracy that thousands are having in plazas and parks has been, for many, “like flexing a muscle you didn’t know you had.” And, he says, now they want more democracy—not just at a meeting but also in their community planning and in their workplaces.

In other words, culture is rapidly shifting. And this is what truly sets the OWS moment apart. The Occupiers—holding signs that said Greed Is Gross and I Care About You—decided early on not to confine their protests to narrow policy demands. Instead, they took aim at the underlying values of rampant greed and individualism that created the economic crisis, while embodying—in highly visible ways—radically different ways to treat one another and relate to the natural world.

This deliberate attempt to shift cultural values is not a distraction from the “real” struggles. In the rocky future we have already made inevitable, an unshakable belief in the equal rights of all people, and a capacity for deep compassion, will be the only things standing between humanity and barbarism. Climate change, by putting us on a firm deadline, can serve as the catalyst for precisely this profound social and ecological transformation.

Culture, after all, is fluid. It can change. It happens all the time. The delegates at the Heartland conference know this, which is why they are so determined to suppress the mountain of evidence proving that their worldview is a threat to life on earth. The task for the rest of us is to believe, based on that same evidence, that a very different worldview can be our salvation.
Source URL:

http://www.thenation.com/article/164497/capitalism-vs-climate

Bernie Sanders: America's #1 Socialist

Makes His Move into the Mainstream

Vermont senator, for years a political exile, insists his left-wing beliefs chime with Americans far more than people think

By Paul Harris
SolidarityEconomy.net via Guardian.co.uk

Oct 15, 2011 - Bernie Sanders sits in his Senate office and reflects on another unexpected twist in his already unusual political life. As the only self-proclaimed socialist to sit in the US Congress, Sanders is long used to surviving in the political wilderness. But Sanders is now having to get used to a different environment altogether: the mainstream.

His constant slamming of Wall Street, his critiques of big business and the excesses of money in politics, as well as his call for a defence of American jobs, have become hot issues in US politics. The senator from Vermont is now a regular on American TV screens and rapidly becoming a fixture of US politics and a hero to many on the left.

The white-haired and irascible Sanders, 70, who is famed for his blunt outspokenness, almost became bashful at the thought that his exile from the mainstream appears to be ending.

"It's, you know, nice to know that positions you have been advocating for years are now getting out to Main Street, and that millions of people are beginning to say: enough is enough," he told the Guardian.

Is this, at last, his political moment? "Yeah, it is," he said, and then he details why, in a typically long, passionate, Sanders-style explosion of stream-of-consciousness explanation.

"If you were to speak to any audience in America and you say: there's something wrong with our system when the crooks on Wall Street, through their recklessness and criminal behaviour, are able to cause a recession, which has resulted in so much suffering to people, and then they get bailed out by the American people and then three years later end up making more money than they ever have before: people go nuts!"

He pauses for breath to think about the situation. "The short answer to your question is: 'Yes'," he says.

Sanders is unique in American politics. In a country dominated by a two-party system, he is the lone independent in the Senate. In a political landscape where "socialist" is essentially a curse word, he has carved out a successful political career, with a solid base of support in his home state. Tall, with a shock of white hair and a slightly dishevelled appearance even when wearing a smart suit, he speaks with the thick Brooklyn accent of his working-class childhood, even while inhabiting the rarefied atmosphere of the Senate.

Sanders also pounds out the same message every day: the middle class is being destroyed, the government needs to create jobs, the banks are corrupt and big money has bought both political parties and made a mockery of American democracy. His Twitter feed features a constant repetition of economic facts. A few samples from recent days:

"Corporate tax revenue in 2010 was 27% lower than 2000, even though corporate profits are up 60% over the last decade."

"Since 2000, over 12 million Americans have lost their health insurance."

"Since 2000, nearly 12 million Americans have slipped out of the middle class and into poverty."

Such opinions would hardly make Sanders stand out in much of the rest of the world. His beliefs – which idolise Scandinavian-style social democracy – would fit comfortably in the middle left of Britain's Labour party or Germany's SPD. But it is impossible to over-state just how much of a political death sentence being called a "socialist" – nevermind actually proudly proclaiming it – usually is in America.

The strange bird out of Vermont

After all, many elected Democrats shy away from the "liberal" label out of a fear of being demonised as left-wing extremists. Yet, even though political opponents have accurately called Sanders a "red", and the New York Times once derided him as "a strange bird out of Vermont", Sanders has flourished.

Indeed, he says his beliefs chime far more with Americans than people think. "All I can tell you is that in every poll I have seen if you ask people: do you think the wealthiest people in this country should pay their fair share of taxes? Then the answer is: yes, they should," he said.

He rattled off a long list of other issues in the same way, posing a question on an issue and then answering it for the voters in the affirmative: cutting excessive military spending, not cutting social security, creating well-paying jobs in America, closing corporate tax loopholes. "I don't know if that makes us a left nation, but that is where the American people are coming from," he insisted.

No doubt many of his opponents would debate that. But where does America's solitary successful socialist come from himself?

Sanders was born in New York to a Jewish mother and father who had come over from Poland. His family struggled and never really broke out of its tough circumstances. Though Eugene V Debs, a leader of the Socialist party of America in the 1900s, is a hero to him, Sanders does not hesitate when asked what his main political influence has been.

"Growing up without lots of money. I didn't have to have a book to tell me how a family gets by when there is not a lot of money. I saw unfairness. That was the major inspiration in my politics," he said.

He worked hard at school, went to the University of Chicago and came across socialist politics. A spell at a kibbutz in Israel also showed him how a community could work together for a common good. He moved to Vermont with his first wife, and pursued a variety of jobs from writer to film-maker. He got into the state's fringe left-wing politics. After various electoral failures, he finally ran for mayor of Burlington – Vermont's biggest city – as an independent in 1980.

He won by just 12 votes. But it changed everything. Sanders proved himself a master retail politician. He may have been a socialist who made goodwill visits to the Soviet Union and Cuba, but he also got potholes fixed.

He promoted local businesses and brought a small baseball team to Burlington. In 1990 he ran for Congress and won, becoming the first socialist in the House of Representatives since the 1920s. He was re-elected seven times. By 2006 he ran for Senate. He won that, too, beating wealthy Republican Richard Tarrant, who helpfully drove a Bentley, which did not endear him to many poor Vermonters. Sanders crushed him and became the only socialist ever to sit in the American Senate.

It was a remarkable achievement. Though Vermont has a liberal streak and is often mocked as a haven of hippie-ish counter-culture (it is the home of Ben and Jerry's ice cream), it has actually historically favoured Republican politicians.

Sanders dismisses the idea that someone like him could only come from a state like Vermont. Jobs and inequality are hardly a Vermont-only concern, he says. "All these issues will resonate in every state in the country," he says.

They are certainly resonating now. The Occupy Wall Street protests, which began in New York and have spread rapidly across America and the world, have sharpened debate on some of the glaring inequalities in American life.

Statistics pointing out that 1% of Americans own 42% of the country's wealth have become part of the national conversation. After initially slamming attacks on Wall Street, some Republican politicians have even started admitting that the economy looks a little slanted.

For Sanders – whose fame is such that most people just refer to him as "Bernie" – this is old news. He has been saying this for years. In his office, he sits on a couch in front of which are a spread of more than a dozen newspapers and magazines.

'Lobbyists have undue influence'

He vehemently attacks the media for ignoring him up to this point. "If you look at the newspapers here - the Washington papers - most of the discussion deals with campaign gossip," he said.

"But campaigns never stop and they focus on personality rather than say: 'OK, the middle class in America is collapsing. Why is that?'

Sanders picks up one magazine off the table which features a prominent Tea Party politician, and reads out the headline with a scornful laugh. "Rand Paul finds his groove?" he says incredulously. It is hard to get Sanders to talk about such trivia. Every question comes back to economics and the current hard times. His passion is relentless and his sentences endless.

He believes big business has bought off the political elites of both parties.

"Washington is dominated by big money. So you have an overwhelming majority of Americans who believe the wealthy should pay their fair share. But you know what? The lobbyists from Wall Street and corporate America happen not to agree with that, and they're the ones that make campaign contributions. They are knocking on Senators' doors. They have undue influence. The vast majority of the American people feel that we should be tough on Wall Street. Unfortunately, Wall Street spends hundreds of millions of dollars to suggest that we loosen up," he said.

It remains to be seen what will become of Sanders' moment in the sun. He supports the anti-Wall Street protests, but he has joined the critics who want them to organise, get an agenda and try to get people elected. "I think what the Wall Street folks are doing is focusing attention. That's great. But it's not enough. What is your agenda? Wall Street is greedy, reckless and they operate illegally. That's fine. But what do you do?" he said.

But there is one thing Sanders himself will not be doing: running for president.

Earlier that day, one of Sanders's secretaries in his Senate office had fielded a phone call from a supporter urging him to run for the White House. "He has been asked multiple times and he's declined. He's happy serving the people of Vermont," she patiently explained to the caller.

It is not an uncommon request. But Sanders is adamant he will not run, even though he is harshly critical of Barack Obama. Sanders does not want to become a 2012 version of Ralph Nader, whose 2000 campaign is blamed by some for robbing Al Gore of a vital few percent and paving the way for George Bush. Walking to the Senate to vote, Sanders strides past other Senators and attracts a mini-gaggle of reporters.

But, he explains, he is not interested in the White House. "I would likely end up causing a right-wing extremist to be president of the United States. That is not something I would be happy to do," he said.

Then he added for emphasis: "It would likely be a futile and losing campaign. That would not be too smart."

Sanders is many unusual things: loud, outspoken and a successful socialist in America. But one thing he is not is naïve.

© 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved.

SolidarityEconomy.net via Cuba’s Socialist Renewal

Cooperatives and Socialism: A Cuban Perspective is a new Cuban book published in Spanish earlier this year. A compilation of essays, it is divided into four parts. Part One introduces cooperatives; Part Two examines the views of Marxist theoreticians including Karl Marx, V. I. Lenin and Che Guevara on the role of cooperatives in a socialist-oriented society; Part Three looks at the experiences of cooperatives in other countries from Spain to Venezuela; while Part Four analyses the Cuban experience of cooperatives as part of its socialist project.

This important and timely compilation is edited by Camila Piñeiro Harnecker. Avid readers of my blog will recall that I translated and posted a commentary by Camila, titled "Cuba Needs Changes", back in January.

Camila, who lives in Cuba, holds a degree in sustainable development from the University of Berkeley, California. She is a professor at the Centre for Studies on the Cuban Economy at Havana University, and her works have been published both in Cuba and outside the island. She is also, incidently, the daughter of Chilean-Cuban journalist and author Marta Harnecker and her late husband, Manuel "Red Beard" Piñeiro, who headed revolutionary Cuba's state security and intelligence service for many years.

Camila hopes her book may be published in English soon. In the meantime, she has kindly agreed to allow me to translate and publish this extract (about a third) from her preface to Cooperatives and Socialism with permission from a prospective publisher. I hope that sharing this extract with readers of my blog will make you want to read the whole book. If it does become available in English I'll post the details here.

At the end of the text you'll find the footnotes, translated from the Spanish.

Cooperatives and Socialism: A Cuban Perspective

Camila Piñeiro Harnecker, Editor

* * *

Preface (extract)

By Camila Piñeiro Harnecker

Translation: Marce Cameron

This book arises from the urgent need for us to make a modest contribution to the healthy “birth” of the new Cuban cooperativism and its subsequent spread. Given that cooperatives are foreshadowed as one of the organisational forms of labour in the non-state sector in the Draft Economic and Social Policy Guidelines of the Sixth Cuban Communist Party Congress, the Dr. Martin Luther King Memorial Centre approached me to compile this book. The Centre has made an outstanding contribution to popular education aimed at nurturing and strengthening the emancipatory ethical values, critical thinking, political skills and organisational abilities indispensable for the conscious and effective participation of social subjects. The Centre considers it timely and necessary to support efforts to raise awareness about a type of self-managed economic entity whose principles, basic characteristics and potentialities are unknown in Cuba. There is every indication that such self-managed entities could play a significant role in our new economic model.

For this to happen we must grapple with the question at the heart of this compilation: Is the production cooperative an appropriate form of the organisation of labour for a society committed to building socialism? There is no doubt that this question cannot be answered in a simplistic or absolute fashion. Our aim here is to take only a first step towards answering this question from a Cuban perspective in these times of change and rethinking, guided by the anxieties and hopes that many Cubans have about our future.

When it is proposed that the production cooperative be one – though not the only – form of enterprise in Cuba, three concerns above all are frequently encountered: some consider it too “utopian” and therefore inefficient; others, on the basis of the cooperatives that have existed in Cuba, suspect that they will not have sufficient autonomy[1] or that they will be “too much like state enterprises”; while others still, accustomed to the control over enterprise activities exercised by a state that intervenes directly and excessively in enterprise management, reject cooperativism as too autonomous and therefore a “seed of capitalism”. This book tries to take account of all these concerns, though there is no doubt that more space would be required to address them adequately.

The first concern is addressed to some extent with the data provided in the first part of the book regarding the existence and economic activity of cooperatives worldwide today. This shows that the cooperative is not an unachievable fantasy that disregards the objective and subjective requirements of viable economic activity. Thus, the experiences of cooperatives in the Basque Country, Uruguay, Brazil, Argentina and Venezuela that are summarised in the third part of the book demonstrate that cooperatives can be more efficient than capitalist enterprises, even on the basis of the hegemonic capitalist conception of efficiency that ignores externalities, i.e. the impact of any enterprise activity on third parties.

The efficiency of cooperatives is greater still if we take into consideration all of the positive outcomes inherent in their management model, which can be summarised as the full human development[2] of its members and, potentially, of local communities. The democratic abilities and attitudes that cooperative members develop through their participation in its management can be utilised in other social spaces and organisations. Moreover, genuine cooperatives free us from some of the worst of the negative externalities (dismissals, environmental contamination, loss of ethical values) generated by enterprises oriented towards profit maximisation rather than the satisfaction of the needs of their workers.

It’s not possible to take up here the arguments of enterprise administration theorists who hold that cooperatives are inefficient. These criticisms are based, in general, on the fact that democratic decision-making takes time, ignoring the fact that this participation is also the principal source of the advantages of cooperatives over other, non-democratic enterprises. In addition, they condemn cooperatives for not resorting to dismissals, as well as for a supposed tendency to undertake little investment due to the maximisation of member incomes and their aversion to risk. However, such behaviour is not revealed in the practices of the cooperatives analysed in this book, practices which also demonstrate the advantages of democratically managed enterprises in terms of the positive motivation of cooperative members. While the negative incentive of the fear of dismissal is undoubtedly effective in eliciting certain behaviours, not even this is sufficient. The tendency of capitalist enterprises to incorporate methods of democratic management suggests that they understand that participation in decision-making is needed in order to achieve the levels of worker motivation necessary for competitive success in the capitalist market.

We hope that those who, on the basis of the Cuban experience, doubt that it is possible for a cooperative to be truly autonomous and democratic will find this concern adequately addressed in the first part of the compilation. Here, when we explain what a cooperative is, we point to the basic differences between a cooperative and a socialist state enterprise. In a genuine cooperative, the participation of the cooperative members in management does not depend on the enterprise management council deciding to involve them more in decision-making; such participation is a founding principle, concretised in the rights of members established in the internal rules of functioning and exercised through bodies and decision-making procedures that are drawn up and approved by the cooperative members themselves. Although the degree of autonomy of the new Cuban cooperatives will depend, of course, on the content of the anticipated legislation on cooperatives and on the implementation of the regulations it establishes, the Draft Economic and Social Policy Guidelines seem to indicate that they will be granted the powers of self-management that characterise cooperatives everywhere, and without which democratic self-management is impossible. We hope the legislation resolves the deficiencies of the current legal framework for Cuban agricultural cooperatives, which are analysed in the fourth part of this book.

The third concern, that which gives rise to the inclination to reject the cooperative as an option for socialist enterprise organisation because it is considered too autonomous and therefore incompatible with broader social interests, takes up the most space in this book. Beginning with the first essay in the compilation we attempt to demonstrate that genuine cooperatives function according to a logic that is diametrically opposed to that of capitalist enterprises. Instead of profit maximisation for the shareholders, the driving force of cooperatives is the satisfaction of the human development needs of their members, needs which are inevitably bound up with those of local communities and of the nation, and even of humanity as a whole. Throughout the book it is suggested that while it’s true that cooperatives cannot be incorporated into the national economic plan or regional or local development strategies though mechanisms of coercion or imposition, it is possible to harmonise and coordinate the orientation of their activities towards the fulfilment of social needs identified through the planning processes, above all if the latter are democratic and respond to the interests of the surrounding communities or those to which cooperative members belong.

However, to argue for the relevance of cooperatives as part of a socialist project we need to begin by clarifying what we mean when we refer to these socioeconomic entities. In the first part of this book, Jesus Cruz[3] and I try to define the cooperative as simply as possible. Here, it is important to stress that in the international context, cooperatives carry out a great diversity of economic activities, and that a not insignificant part of the global population either belongs to one of these organisations or directly benefits from their activities. This should not be surprising if we consider that the form of the organisation of labour that characterises a cooperative, self-management, has existed since the emergence of humanity. The cooperative has persisted as the most common organisational form chosen by groups of people that seek to resolve common problems through their own efforts.

What differentiates a production cooperative (referred to hereafter as “cooperative” since we emphasise this type[4]) from other forms of enterprise organisation is emphasised, based on an analysis of the cooperative principles[5] that have contributed to the success of these organisations since the emergence of the first modern cooperatives. These early modern cooperatives understood the imperative of achieving an effective enterprise management that would allow them to survive within the more savage and monopolistic capitalism of the late 18th and early 19th centuries. To the degree to which cooperatives have observed these principles in their daily practice, they have benefited from the intrinsic advantages of this form of enterprise. These advantages ultimately derive from a democratic management model that permits the harmonisation of individual interests with those of the collective (i.e. of the common interests of cooperative members) and even, though in a less axiomatic way, with the social interests of the local communities with which they interact the most.

The observance of these principles is also what allows cooperatives to reduce the inevitable corrupting effects of the capitalist surroundings in which the majority of them have developed. The capitalist environment privileges individual over collective solutions; makes it difficult to achieve equality by generating and reproducing differences in abilities and social status among cooperative members; denies them the time needed for democratic decision-making; punishes genuine acts of solidarity; and promotes the super-exploitation of human beings and nature. While this undoubtedly limits the horizon of human emancipation – the overcoming of the barriers that stand in the way of us fulfilling our human potentialities – an emancipatory dynamic has always been latent in genuine cooperatives. The capitalist environment is not an absolute barrier to cooperatives becoming spaces in which these principles are put into practice, and in which the values that such practices instill may develop. The experiences of successful cooperatives presented in this book demonstrate the economic and ethical-political potential of these organisational principals, above all when cooperatives that embody these principles are able to link up with other self-managed entities, and when they promote the approval of laws and regulations that undermine the prejudices that exist regarding cooperatives in the legal framework and in the practices of capitalist enterprises and state institutions.

As Julio Gambina and Gabriela Roffinelli argue, the cooperative should be seen as one of the many forms of the self-managed social organisation[6] that will allow us to transcend the capitalist logic of maximising narrow individual interests. Because it takes no account of human nature and its social and ecological constraints, such economic “rationality” is in fact irrational and suicidal. For as long as it pervades our daily practice, the logic of capitalism will not only distance us ever more from the socialist or communist ideal of complete social justice; it is also taking us to the brink of an irreversible rupture in the dynamic equilibrium of the biosphere.

The rationality that drives a cooperative, as with all forms of genuine self-management, is the necessity for a group of people to satisfy common needs and interests. It is based on the recognition that they share collective interests that correspond to some degree with their own individual interests, and that it is collective action that allows them to pursue these interests most effectively. This, together with the recognition that all its members are human beings with the equal right to participate in decision-making, results in democratic management in which the cooperative members decide not only who the leaders are and how revenues should be allocated, but also how to organise the process of production: what is produced, how and for whom.

The managerial autonomy of the collective that makes up the cooperative – the ability of this group of people to make decisions independently – is the key reason why the historical experiences of socialist construction have rejected their relevance to the building of socialism and have relegated them to agriculture or marginal economic spaces. Some see in autonomy a disconnection from, or a wanting to have nothing to do with, social interests and the strategic objectives embodied in the socialist economic plan, and ask the following questions: Is it possible to “hitch” an autonomous enterprise to a planned economy? Can a cooperative respond not only to the interests of its members but also to wider social interests? When one thinks in terms of absolute autonomy and authoritarian (i.e. undemocratic) planning, if the interests of collectives (groups) are considered a priori to be indifferent to social interests, then the answer is obviously negative. The authors of this book are motivated by the certainty that the answer is affirmative. We argue the case here, though we are unable to respond to all of the questions about how this can be achieved in practice.

Here, we must point out that we make no claim to have solved this practical problem which dates back to the times in which socialist theories were first elaborated. It is perhaps more of a conceptual problem than a practical one, since there are examples of collective and even private enterprises that satisfy social needs more effectively, and that have established decentralised horizontal relations that are more socially responsible, than some socialist state enterprises. Our focus here is on the form of organisation of labour within a productive unit and not in the economic system as a whole. The analysis of how a socialist-oriented society should guide the management of enterprises, or of the form in which the fruits of cooperative labour should be distributed in society, are thus topics that we do not attempt to grapple with in this initial approach to the problem. However, we do put forward some ideas in relation to these themes throughout the book.

The “fruits” of cooperative labour that interest us most here are the human beings themselves that are “produced” as a consequence of the particular form in which the productive process is organised in the enterprise: the social subjects that work together as members of a cooperative and who are motivated to give the best of themselves to the success of their enterprise and, potentially, to local communities.

What differentiates a cooperative member from an employee of either a capitalist or socialist state enterprise? In light of the experiences of cooperatives analysed in this compilation, the member of a genuine producer cooperative, or other form of self-managed entity, is the true owner of their enterprise and thus feels like it. He or she, together with the collective they belong to, participate in a conscious and active way in strategic and managerial decision-making, as well as in their implementation and in verifying that decisions are carried out. What characterises a cooperative is not legal ownership of the means of production (premises, land, machinery) by the collective or group of people that comprise it, but the fact that decisions regarding the use of means of production are made by the cooperative as a whole, either directly or by representatives that they elect, in such a way and with such powers as decided by the collective. Albeit limited to the cooperative enterprise and its activity, this is a concrete form of self-management, of the exercise of popular sovereignty.

Given this, for Gambina and Roffinelli the relevance of various forms of worker self-management, in particular cooperatives, to the building of socialism depends on the degree to which they serve as an “an apprenticeship in administration outside the control of capital”. Thus the value of the cooperative lies in the nature of its daily practice, in the social relations of production that are established among its members: relations between associated producers rather than between wage-workers and capitalists. Cooperative members are not obliged to renounce, in exchange for wages or salaries, their capacity to think, be creative and make decisions. They exercise these capacities via democratic mechanisms in conditions of equal rights and duties. There are no bosses and subordinates in a cooperative but an organisational structure and a technical division of labour that have been collectively drawn up and approved.

Thus cooperatives can be valuable weapons in the struggle to build socialism. They are not the only such weapons, they are insufficient by themselves and are not devoid of risks and challenges, but they are nevertheless tools – perfectible and adaptable – for socialist construction. They are tools that we should not allow to be abandoned due to either state-centric dogma or the misconception that only what is privately owned and managed, and operates according to capitalist logic, works. As Gambina and Roffinelli argue, “... there is a dialectical relationship between socialism and cooperativism that is either promoted or discouraged in specific socio-historical conditions.” The extent to which cooperatives contribute to the building of socialism depends on the context in which they arise and develop, and on the relationship they establish with this context.

Footnotes

[1] By “autonomy” we mean the ability to make decisions independently. As we shall see, no social organisation anywhere in the world is completely autonomous since its options are always conditioned in one way or another by its social context.

[2] The term full or integral “human development” is used to make clear our rejection of the progressivist and economistic mythology that reduces development to achieving an abundance of material goods, without taking into account that development also has intrinsic ethical and spiritual dimensions, in which people can achieve professional fulfilment and the realisation of their potentialities as social beings.

[3] A brief biography of each of the contributors to this compilation is included at the end of the book.

[4] Cooperatives can be classified as either production cooperatives, in which cooperative members unite in order to collectively produce goods or provide services; or consumer cooperatives, in which the members acquire goods or services collectively.

[5] Essentially, as is clarified in the first contribution to this compilation, a cooperative must be: (1) open to members joining and leaving and flexible with regard to its internal organisation; (2) run democratically; (3) based on the labour of its members; (4) managerially autonomous; (5) prioritise the education and training of its members and the general public; (6) establish mechanisms for cooperation with other cooperatives; and (7) committed to the community.

[6] Other forms of enterprise self-management are the various forms of co-management (in which the work collective participates in the management of the enterprise together with the legal owners of the means of production, or owns shares in the company); professional partnerships (professional associations in which members provide services on an individual basis, but pool a part of their incomes to acquire services and goods collectively; they are usually limited liability companies); associations, etc. There are also forms of self-management outside the economic enterprise sphere, such as self-management in regions, communities and local governments.

Huaxi Coop: Sharing the Wealth and

Living Large in a Tiny Chinese Village

By MICHAEL WINES

SolidarityEconomy.net via New York times

Published: July 11, 2011

HUAXI, China — Ask not why the citizens of this village of 2,000, a few hours by car northwest of Shanghai, have built a 74-story skyscraper next to their prim town square. Everybody in China knows the answer: it is another step in their plan to create the communist utopia envisioned by Mao. The skyscraper will include a five-star hotel, upscale shopping mall, revolving restaurant and five life-size statues of a water buffalo, Huaxi’s symbol.

The utopia part certainly seems plausible. Whether Mao would have approved is a bit more in doubt.

Huaxi’s so-called New Village in the Sky — at 1,076 feet, a bit taller than the Chrysler Building in Manhattan — is getting finishing touches this summer in preparation for an October opening. Among other attractions, it will have a five-star hotel, a gold-leaf-embellished concert hall, an upscale shopping mall and what is billed as Asia’s largest revolving restaurant. Also, it will have five life-size statues of a water buffalo, Huaxi’s symbol, on every 12th floor or so.

That this half-billion-dollar edifice is a good 40-minute drive from a city of any size is part of the plan. For though not many foreigners have heard of Huaxi, Chinese far and wide know it as the socialist collective that works — the village where public ownership of the means of production has not just made everyone equal, but rich, too.

Two million tourists come annually to view the Huaxi marvel, no small number of them officials from other villages who yearn to know how Huaxi did it. The enormous skyscraper, topped with a gigantic gold sphere, will never win architectural awards. But it will add to Huaxi’s allure, the village fathers confidently predict — and soak up tourist money as well.

“We call it the three-increase building,” said Wu Renbao, 84, the town’s revered patriarch, meaning that it will increase Huaxi’s acreage (by half), increase its work force (by 3,000) and, hardly least of all, increase its wealth.

If he is right, all 2,000 villagers will get a little richer. They all own a piece of the building — just as they own the town’s steel mill, textile factory, greenhouse complex, ocean shipping company and other ventures. That is Huaxi’s carefully curated narrative: by rigidly adhering to socialism with Chinese characteristics, the citizens of this little village have created an oasis of prosperity and comfort that is the envy of the world.

When China effectively embraced capitalism in the 1980s, Huaxi was an agrarian hovel, reachable by dirt roads. Mr. Wu, then the local Communist Party secretary, seized on the new market freedoms to shift the Huaxi economy from farming to manufacturing and trade, but with a twist: the residents would throw their money into a collective pot and share in the take from whatever new businesses they bought.

“In the 30 years after the opening up, the system changed in many places,” Mr. Wu’s son, Wu Xie’en, said in a recent interview. “Some chose private ownership, but we Huaxi people chose public ownership. The biggest benefit is that the people share the common prosperity.”

That Huaxi is prosperous seems undeniable. Here, the villagers get lavish annual stipends, live in spacious single-family homes instead of China’s usual cramped apartments, drive imported cars, and get basic medical care, education and even an annual vacation free from the government. Lately they also get free helicopter rides, courtesy of a 100 million renminbi, or $15.5 million, fleet of helicopters and small jets the village is buying to attract still more sightseers.

Ge Xiufang, now 62, was a penniless peasant in a northern area of Jiangsu Province when her newly graduated son began looking for work in the early 1990s. “He saw an ad in the paper calling for workers to come to Huaxi,” she said. “So we came here, and two years later, we became villagers.”

That was in 1993, before Huaxi took off. Ms. Ge was interviewed in her son’s house, a two-story building with marble floors, overstuffed leather sofas, a large aquarium and a liquor cabinet dominated by an enormous bottle of expensive Scotch. Ms. Ge said she and her husband live in a sprawling town house a few blocks away and shuttle between homes in one of the family’s three cars.

“We peasants, we didn’t even have apartment buildings in those days,” she said. “We had no idea it would be this good.”

The elder Mr. Wu extols Huaxi’s splendor — and the Beijing government’s wisdom and foresight — in a lengthy lecture given each morning in an auditorium packed with hundreds of tourists. To hammer the message home, there follows a musical, a sort of Chinese opera with Disney characteristics and toe-tapping lyrics:

Where we live: garden, house, little Western-style mansion

What we eat: a food culture full of nutrition

What we wear: big brand names of fashion

and

Huaxi is rich in substance, politics and spirit

One American guest said, “O.K., O.K,

Socialism is so good, we Americans want it, too!”

Yet what is branded as socialism looks from the outside a great deal like an old-fashioned capitalist corporation, apparently savvily managed, with 2,000 shareholders who live comfortably off their dividends. Indeed, Huaxi’s affairs are run by a company, the Jiangsu Huaxi Group Corporation, reported to shelter 57 subsidiaries, including seven more holding companies. The town has interests in everything from extruded aluminum to traditional medicine to spun polyester cloth to real estate.

“We have too many investments to count,” said the younger Mr. Wu, the chief executive of the enterprise, which is said on several Web sites to be managed by members of the Wu family. He said he spends his days worrying about investment bubbles, and sprinkles his conversation with references to business advice gleaned at the University of California, Berkeley, and from studies of General Electric’s business model.

Mr. Wu’s claims of success are hard to verify, because the conglomerate’s revenue and earnings are not disclosed in an audited form. Published but unverified reports indicate that the corporation employs at least 25,000 people, many of whom live in the urban area of about 30,000 that exists outside Huaxi’s cramped legal boundaries. A 2009 report in a state-run newspaper said annual revenue totaled 50 billion renminbi, about $7.7 billion at current exchange rates.

Village leaders have denied persistent reports that Huaxi benefits from substantial government subsidies like low-interest loans, although the younger Mr. Wu said in an interview that some of the village’s ventures are financed by debt that amounts to as much as 60 percent of their value.

While each villager is required to work at a Huaxi business seven days a week, virtually all the manual labor is performed by what Marx might have called the proletariat: thousands of outside workers, many of them migrants, who receive better salaries and benefits than many workers elsewhere, but do not share in Huaxi’s profits. For that, one needs a hukou, or residence permit — and Huaxi hands those out with great care.

“This is called exploitation,” said Fei-Ling Wang, a Georgia Tech professor who has studied Huaxi as part of research into Jiangsu Province villages. “Because the outside workers, by law, cannot become a local resident. They cannot share the results of their works. And they are paid by wages, and if they lost their job, they are simply sent home.

“If all migrant workers are treated as full members of the community,” Professor Wang said, “then Huaxi wouldn’t work.”

The two Wus allow that the village has yet been unable to shed capitalism, but they insist that Huaxi has moved to a higher level of socialism than China at large, and that utopia is a matter of time. “Huaxi’s development depends on capitalism and business,” the elder Mr. Wu said. But “capitalism is only a temporary stage. Eventually, we will build Chinese socialism with Chinese characteristics.”

To Huaxi’s 2,000 shareholders, it may be a distinction without a difference as long as the profits keep rolling in. Mr. Wu says they will: in three decades, he insists, not one business venture has gone sour. To Huaxi’s cautious villagers, he said, investing is “like stepping on sea ice.”

Will a 74-story building in the middle of nowhere crack the ice? Not likely, the Wus say: why, just in the last year, one of the building’s water buffalos has grown in value by 70 million renminbi, or about $10.7 million.

That would be the buffalo destined for the 74th floor. The one cast in solid gold.

Jonathan Kaiman contributed research.

A version of this article appeared in print on July 12, 2011, on page A9 of the New York edition with the headline: Sharing the Wealth and Living Large in a Tiny Chinese Village.

Get a copy of Carl Davidson’s new book on the topic:

 New Paths to Socialism

Contents:

• The Mondragon Cooperatives and 21st Century Socialism
• Mondragon Diaries: Five Days Studying Cutting-Edge People and Tools for Change
• 'One Worker, One Vote:' US Steelworkers to Experiment With Factory Ownership, Mondragon Style
• Green Party Mayor of Richmond, California Signs 'Letter in Intent' with Spain's Mondragon Coops
• There Is An Alternative: Market Socialism with Radical Democracy
• Green Jobs Meets the Solidarity Economy: A Dynamic Duo for Changing the World
• Green Jobs and Class Struggle: A Memo for the Working Class Studies Association
• Alinsky vs. Arizmendi: Redistribution or Control of Wealth In Changing the World
• Eleven Talking Points On 21st Century Socialism
• Jossa: Gramsci, Economic Theory of Worker Cooperatives and the  Transition to a Socialist Economy
• Jossa: Excerpts from ‘Marx, Marxism and the Cooperative Movement’
• Schweickart: Is Sustainable Capitalism Possible? The Case of China
• $15 from Changemaker Publications. http://stores.lulu.com/changemaker

Photo: Bo Xilai

By Peter Martin and David Cohen
SolidarityEconomy.net via The Diplomat

April 25, 2011 - Bo Xilai has a reputation as a rising political rock star. But do his ‘Red Culture’ policies in Chongqing really offer a viable model for China?

As China’s 2012 power transition approaches, politicians and academics are racing to find the theme that will define the country’s direction for the next eight years. The inclinations of Xi Jinping, heir apparent to the presidency, are still unclear, but his recent visit to Chongqing suggests that he’s taking a particular interest in the ‘Red Culture’ policies of municipal Party Secretary Bo Xilai.

Bo is the highest-ranking Party member of the Chongqing Municipal area, an administrative zone four times the size of the US state size of New Jersey. It embraces acity of 10 million, as well as a vast rural hinterland that contains more than 1,200 towns and villages. Over the past few years, Bo has made himself the centre of media attention with eye-catching initiatives such as a ‘red song’ campaign and a ban on advertisements on local TV.

But the significance of Chongqing runs much deeper than socialist gimmicks—Bo has tried to rewrite the social contract of Chongqing with an attack on economic inequality, an expansion of the state role in the economy, and political moves taken straight from Mao Zedong’s playbook.

People often say that politics in China have stood still while the economy has raced ahead. But the placid surface of single-party rule conceals vigorous debate within the Communist Party over China’s future….

…Policy experimentation at the local level provides fodder for arguments that will determine the shape of Chinese socialism during the next administration and beyond. The approach of the 2012 handover has spurred risings stars like Bo, a Politburo member and likely candidate for promotion to the top-rung Politburo Standing Committee, to jockey for top leaders’ attention with striking new policies.

This conversation doesn’t always move in liberal directions. China’s ‘New Left’ has seized upon Bo’s ideas to argue for a radical shift away from the market-oriented policies of the Reform and Opening period, citing Chongqing as proof that China can combine growth with economic equality in a vision of socialism that looks to a more statist past.

New Left proponentsargue that Chongqing’s experience is the beginning of a path for China that will break radically with capitalist reforms begun by former President Deng Xiaoping.Theyhope to restore the state as the centre of China’s economic system with a focus on poverty reduction and to revive Maoist political techniques. In doing so, they claim to have a blueprint for a new era in China’s history.

Socialism 3.0

In a political system where slogans matter, coining a new buzzword is a delicate business, and Bo has been careful to tie himself to the history of the Communist Party. ‘Some people say that “Red Culture” is a move to the left,’ Bo said at a 2009 municipal party meeting. ‘In fact, it’s just about serving the people. That’s why the Communist Party was founded.’

Yet leading members of China’s New Left are beginning to look beyond the theme that has defined Chinese politics for the last 30 years.

Wang Shaoguang, a mainland-born professor of political science at the Chinese University of Hong Kong, has labelled this new period ‘Socialism 3.0’ in an unpublished article focussing on Chongqing, casting it as the successor Mao’s radical egalitarianism and Deng’s reform and opening.

Controversial Peking University political scientist Pan Wei, for his part, describes Chongqing as proof that China is moving into a ‘post-reform and opening era,’ returning to the traditional socialist focus on equality. Arguing that the growth-centred policies of recent decades have created an unacceptable gap between rich and poor, he says the time has come for a radical rethinking of Chinese politics—but he isn’t sure the time has come to say so publicly.

But while Bo’s Chongqing has become a capital for China’s New Left, it’s not the only model competing for the attention of China’s top leaders. Liberals and globally oriented modernizers have also drawn inspiration from local governments, especially reformist policies pursued by the governments of Shenzhen and Guangdong Province.

The city of Shenzhen, which has experimented with Western-style political reforms in a move toward the separation of powers, was the site of Premier Wen Jiabao’s controversial speech last August in which he forcefully argued for political change, while Wang Yang, the provincial leader of Guangdong and Bo’s rival for a seat on the Politburo Standing Committee, has focussed on the catchy theme of ‘Happy Guangdong,‘ calling for measuring growth with a ‘Happiness Index.’

The Post-Reform Economy

So what exactly do New Left thinkers believe the next wave of Chinese socialism is going to look like?

For a start, they say, it’s going to be a lot less like capitalism. They call for a major re-entry of the state into the economy, and point to Chongqing as proof that a large public sector can co-exist with a dynamic market. Over the past few years, as Chongqing has become a popular destination for factories relocating from the more developed coastal provinces, where wages and costs are rising, its GDP has grown by about 14 percent a year—much faster than the national average–providing fodder for left-wing academics to cast it as a model for growth.

The political scientists of the New Left are using Chongqing, which has encouraged the expansion of state-owned enterprises, to respond to the economic argument shared by many market-oriented Chinese economists that state investment ‘crowds out’ private enterprise (guo jin min tui).

However, Cui Zhiyuan, a Qinghua University professor who has spent much of the last year conducting field research in Chongqing, argues that in Chongqing ‘It’s not the state crowding out private enterprise…In fact, the state and the market develop together (guo jin min ye jin).’

Wang agrees, citing the growth of private activity in the city, which has outpaced state investment.  In fact he dismisses the idea of crowding out, writing ‘This kind of idea not only has absolutely no theoretical foundation,but it’s been also been proved absurd by the practical experience of Chongqing…As the state’s absolute role in the Chongqing economy has increased, its proportion of the economy has decreased.’

In the Chongqing model, though, everything links back to the issues of poverty and inequality, and the government of Chongqing has turned the market profits of state-owned enterprises toward traditional socialist projects, using their revenue to fund the construction of affordable housing and transportation infrastructure. It’s perhaps not surprising then that Bo’s biggest policy hit is the affordable housing initiative for the city’s poorest. The massive construction programme aims to provide cheap apartments to a third of the municipality’s 30 million residents, a programme that has received national attention and clearly impressed the central government, which is rolling out a similar plan at a national level as part of the 12th Five-Year Plan.

Bo has tried to cast his programme as a step past the single-minded focus on GDP that has defined Chinese policy since Deng. ‘It’s not about how many tall buildings you have, it’s how happy people are,’ he argued in a 2009 speech to Chongqing Party members.

Such comments have echoes of the Happy Guangdong talk, but the statist raft of policies is a sharp contrast with rival proposals. The export-focussed province’s recent reforms have lookedoutwards, fitting closely with current debates among Western policymakers on improving urban quality of life.

But Bo’s remarks also allow him to set himself apart from the wealth-driven culture of major coastal cities like Shanghai and Guangzhou, flagship cities of the reform and opening era that have accepted significant inequality as the cost of economic growth.

Politics for the Masses

Although the Western media has tended to focus on Wen’s challenge to his colleagues to pursue political reform, proponents of the Chongqing model believe they have an answer that owes nothing to democratic models. Instead, they are drawing on the political thought of Mao.

The wealth of the reform and opening period, they argue, has led cadres to lose touch with the people, and Bo has taken on Party elitism by drawing on the Maoist concept of the ‘mass line’ (Mao’s theory says cadres should live among the people and that they should share the viewpoint of the masses).

With this in mind, Bo has commanded local party members to ‘reconnect’ with poor residents of their districts, including issuing regulations with specific instructions requiring village party secretaries to meet with residents at least once a week for at least half day. At these meetings, party workers are obliged to explain the work of the government, and listen patiently and attentively to their opinions. County leaders, meanwhile, must also visit rural areas at least once a month in order to open up channels for people’s petitions.

But such moral ‘revival’ isn’t only for cadres and bureaucrats. Bo’s Chongqing has also focussed on the ‘spiritual health’ of the people, promoting red culture as an answer to problems ranging from corruption to gambling to social alienation. Chongqing has sought to bring everyone into this campaign with high-profile moves such as hosting a red song competition and sending text messages featuring Mao’s thoughts to each of the city’s 17 million cell phone users.

Indeed, socialist culture has gone hand-in-hand with promotion of Chinese tradition, despite Mao’s animosity toward ‘feudal customs.’ Residents have been encouraged to read Chinese classics and attend traditional storytelling events—but sharply discouraged from the traditional Sichuan pastime of gambling on mah-jong.

The Chongqing model has been hailed by New Left thinkers as a bona-fide example of home-grown political reform—proof that China can improve its government without copying foreign models. Yet Bo, the son of revolutionary elder Bo Yibo, is an unlikely Maoist. He spent much of the Cultural Revolution in prison when his father fell out of favour, and is noted for his own lavish lifestyle, sending his son Bo Guagua to England’s exclusive Harrow school and Oxford University.

With this in mind, Joseph Cheng Yu-Shek, a Chinese leadership specialist based at Hong Kong City University, argues that Bo fears being labelled the privileged son of a major Party leader. ‘Bo is a very typical princeling, and he now adopts rather popular and rather Maoist policies,’ he says.

Red the New Black?

Clearly, it’s impossible to know for sure how the top levels of the Chinese leadership view Bo’s campaign. But he’s clearly got their attention—Xi visited the city in December, praising Bo’s work in a speech as ‘virtuous policy,’ and saying that the red culture initiatives had ‘gone deeply into the hearts of the people.’

Bo has succeeded in igniting a passionate debate about the future of socialism in China. On the question of whether it has won him a seat on the Politburo Standing Committee, though, we’ll have to wait until next October for an answer.

Peter Martin works for a political consulting firm in Beijing. David Cohen is a freelance journalist. They blog at www.sinocentric.net and their writing has appeared in the Christian Science Monitor, the Guardian Online, the Global Times, the China Daily and the Lowy Interpreter among other publications.

OF THE COMMUNIST PARTY OF CUBA

By Raul Castro Ruz

SolidarityEconomy.net

Comrades all,

The opening of the 6th Congress of the Communist Party of Cuba this afternoon marks a date of extraordinary significance in our history, the 50th anniversary of the proclamation of the socialist nature of our Revolution by its Commander in Chief, Fidel Castro Ruz, on April 16, 1961, as we paid our last respects to those killed the day before during the bombings of the air bases. This action, which was the prelude to the Playa Girón (Bay of Pigs) mercenary invasion organized and funded by the United States government, was part of its plans to destroy the Revolution and restore its domination over Cuba in league with the Organization of American States (OAS).

On that occasion, Fidel said to the people already armed and inflamed with passion: "This is what they cannot forgive us…that we have made a Socialist Revolution right under the nose of the United States…" "Comrades, workers and farmers, this is the Socialist and democratic Revolution of the people, by the people and for the people. And for this Revolution of the people, by the people and for the people, we are willing to give our lives."

The response to this appeal would not take long; in the fight against the aggressor a few hours later, the combatants of the Ejército Rebelde, police agents and militiamen shed their blood, for the first time, in defense of socialism and attained victory in less than 72 hours under the personal leadership of comrade Fidel.

The Military Parade that we watched this morning, dedicated to the young generations, and particularly the vigorous popular march that followed, are eloquent proof of the fortitude of the Revolution to follow the example of the heroic fighters of Playa Girón.

Next May 1st, on the occasion of the International Workers Day, we will do likewise throughout the country to show the unity of Cubans in defense of their independence and national sovereignty, which as proven by history, can only be conquered through Socialism.

This Congress, the supreme body of the Party, as set forth in article 20 of its Statutes, brings together today one thousand delegates representing nearly 800 thousand party members affiliated to over 61 thousand party cells. But, this Congress really started on November 9 last year, with the release of the Draft Guidelines of the Economic and Social Policy of the Party and the Revolution, a subject that, as previously indicated, will be at the center of the debates of this meeting that is regarded with great expectations by our people.

As of that moment, numerous seminars were organized to clarify and to delve into the content of the Guidelines in order to adequately train the cadres and officials who would lead the discussions of the material by the party members, mass organizations and the people in general.

The discussions extended for three months, from December 1, 2010 to February 28 of this year, with the participation of 8, 913,838 people in more than 163 thousand meetings held by the different organizations in which over three million people offered their contributions. I want to make clear that, although it has not been accurately determined yet, the total figure of participants includes tens of thousands of members of the Party and the Young Communist League who attended the meetings in their respective cells but also those convened in their work or study centers in addition to those of their communities. This is also the case of non-party members who took part in the meetings organized at their work centers and later at their communities.

Even the National Assembly of People's Power dedicated nearly two work sessions in its latest Ordinary Meeting held this past December to analyze with the deputies the Draft Guidelines.

This process has exposed the capacity of the Party to conduct a serious and transparent dialogue with the people on any issue, regardless of how sensitive it might be, especially as we try to create a national consensus on the features that should characterize the country's Social and Economic Model.

At the same time, the data collected from the results of the discussions become a formidable working tool for the government and Party leadership at all levels, like a popular referendum given the depth, scope and pace of the changes we must introduce.

In a truly extensive democratic exercise, the people freely stated their views, clarified their doubts, proposed amendments, expressed their dissatisfactions and discrepancies, and suggested that we work toward the solution of other problems not included in the document.

Once again the unity and confidence of most Cubans in the Party and the Revolution were put to the test; a unity that far from denying the difference of opinions is strengthened and consolidated by them. Every opinion, without exception, was incorporated to the analysis, which helped to enhance the Draft submitted to the consideration of the delegates to this Congress.

It would be fair to say that, in substance, the Congress was already held in that excellent debate with the people. Now, it is left to us as delegates to engage in the final discussion of the Draft and the election of the higher organs of party leadership.

The Economic Policy Commission of the 6th Party Congress first entrusted with the elaboration of the Draft Guidelines and then with the organization of the discussions has focused on the following five issues:

Reformulation of the guidelines bearing in mind the opinions gathered.

Organization, orientation and control of their implementation.

The thorough training of the cadres and other participants for the implementation of some of the measures already enforced.

Systematic oversight of the agencies and institutions in charge of enforcing the decisions stemming from the guidelines and evaluation of their results.

Leading the process of information to the people.

In compliance with the aforesaid, the Draft Guidelines were reformulated and then submitted to analysis by both the Political Bureau and the Executive Committee of the Council of Ministers, on March 19 and 20, respectively, with the participation of the Secretariat of the Party's Central Committee and the top leaders of the Central Trade Union (CTC), the Young Communist League (UJC) and the other mass organizations, approved at that level –also as a draft—and then delivered to you for its examination during three days in every provincial delegation to the Congress and for its discussion at the five commissions of this party meeting for its subsequent approval.

Next, I will offer some data to illustrate our people on the results of the discussions of the Draft Guidelines, even though detailed information will be published later.

The original document contained 291 guidelines; 16 of them were moved to others; 94 preserved their phrasing; 181 had their content modified; and, 36 new guidelines were incorporated for a grand total of 311 guidelines in the current draft.

A simple arithmetic operation with these numbers avows the quality of the consultation process as a result of which approximately two thirds of the guidelines –68% to be exact—was reformulated.

The principle that guided this process was that the validity of a proposal would not depend on the number of opinions expressed about it. This is shown by the fact that several guidelines were either modified or removed based on the opinion of only one person or a small number of them.

It is also worth explaining that some opinions were not included at this stage either because the issue deserved a more exhaustive analysis for which the necessary conditions did not exist or because they openly contradicted the essence of socialism, as for example 45 proposals advocating the concentration of property.

I mean that, although the prevailing tendency was a general understanding of and support for the content of the Guidelines, there was no unanimity; and that is precisely what was needed for we really wanted this to be a democratic and serious consultation with the people.

For this reason, I can assure you that the Guidelines are an expression of our people's will, contained in the policy of the Party, the Government and the State, to update the Economic and Social Model in order to secure the continuity and irreversibility of Socialism as well as the economic development of the country and the improvement of the living standard of our people combined with the indispensible formation of ethical and political values.

As expected, most of the proposals made during the discussion of the Draft Guidelines were focused on Chapter VI, "Social Policy" and Chapter II "Macroeconomic Policies"; both accounted for 50.9% of the total, followed, in descending order, by Chapter XI, "Construction, Housing and Water Resources Policy"; Chapter X, "Transportation Policy"; and, Chapter I, "Economic Management Model." In fact, 75% of the opinions expressed focused on these five chapters out of a total of twelve.

On the other hand, 67% of the proposals referred to 33 guidelines, that is, 11% of the total. In fact, the highest number of proposals pertained to guidelines number 162, dealing with the removal of the ration book; 61 and 62, on the pricing policy; 262, on passengers' transportation; 133, on education; 54, related to the establishment of a single currency; and, 143, on the quality of healthcare services.

Undoubtedly, the ration book and its removal spurred most of the contributions of the participants in the debates, and it is only natural. Two generations of Cubans have spent their lives under this rationing system that, despite its harmful egalitarian quality, has for four decades ensured every citizen access to basic food at highly subsidized derisory prices.

This distribution mechanism introduced in times of shortages during the 1960s, in the interest of providing equal protection to our people from those involved in speculation and hoarding with a lucrative spirit, has become in the course of the years an intolerable burden to the economy and discouraged work, in addition to eliciting various types of transgressions.

Since the ration book is designed to provide equal coverage to 11 million Cubans, there are more than a few examples of absurdities such as allocating a quota of coffee to the newborn. The same happened with cigarettes until September 2010 as they were supplied to smokers and non-smokers alike thus fostering the expansion of that unsafe habit in the population.

Regarding this sensitive issue, the span of opinions is very broad, from those who suggest dismissing it right away to others who categorically oppose its removal and propose to ration everything, the industrial goods included. Others are of the view that in order to successfully prevent hoarding and ensure everybody's access to basic foods, it would be necessary, in a first stage, to keep the products rationed even if no longer subsidized. Quite a few have recommended depriving of the ration book those who neither study nor work or advised that the people with higher incomes relinquish that system voluntarily.

Certainly, the use of the ration book to distribute the basic foods, which was justified under concrete historic circumstances, has remained with us for too long even when it contradicts the substance of the distribution principle that should characterize Socialism, that is, "From each in accordance with his ability and to each in accordance with his labor," and this situation should be resolved.

In this connection, it seems appropriate to recall what comrade Fidel indicated in his Central Report to the First Party Congress on December 17, 1975: "There is no doubt that in the organization of our economy we have erred on the side of idealism and sometimes even ignored the reality of the objective economic laws we should comply with."

The problem we are facing has nothing to do with concepts, but rather with how to do it, when to do it, and at what pace. The removal of the ration book is not an end in itself, and it should not be perceived as an isolated decision but rather as one of the first indispensible measures aimed at the eradication of the deep distortions affecting the operation of the economy and society as a whole.

No member of the leadership of this country in their right mind would think of removing that system by decree, all at once, before creating the proper conditions to do so, which means undertaking other transformations of the Economic Model with a view to increasing labor efficiency and productivity in order to guarantee stable levels of production and supplies of basic goods and services accessible to all citizens but no longer subsidized.

Of course, this issue is closely related to pricing and to the establishment of a single currency, as well as to wages and to the "reversed pyramid" phenomenon which as spelled out at the Parliament last December 18, is expressed in the mismatch between salaries and the ranking or importance of the work performed. These problems came up often in the contributions made by the citizens.

In Cuba, under socialism, there will never be space for "shock therapies" that go against the neediest, who have traditionally been the staunchest supporters of the Revolution; as opposed to the packages of measures frequently applied on orders of the International Monetary Fund and other international economic organizations to the detriment of the Third World peoples and, lately enforced in the highly developed nations where students' and workers' demonstrations are violently suppressed.

The Revolution will not leave any Cuban helpless. The social welfare system is being reorganized to ensure a rational and deferential support to those who really need it. Instead of massively subsidizing products as we do now, we shall gradually provide for those people lacking other support.

This principle is absolutely valid for the restructuring of the work force, –an ongoing process– streamlining the bloated payrolls in the public sector on the basis of a strict assessment of the workers' demonstrated capacity. This process will continue slowly but uninterruptedly, its pace determined by our capacity to create the necessary conditions for its full implementation.

Other elements will have an impact on this process, including the expansion and easing of labor in the non-public sector. This modality of employment that over 200 thousand Cubans have adopted from October last year until today –twice as many as before– make up an alternative endorsed by the current legislation, therefore, it should enlist the support, assistance and protection of the officials at all levels while demanding strict adherence to the ensuing obligations, including tax payment.

The growth of the non-public sector of the economy, far from an alleged privatization of the social property as some theoreticians would have us believe, is to become an active element facilitating the construction of socialism in Cuba since it will allow the State to focus on rising the efficiency of the basic means of production, which are the property of the entire people, while relieving itself from those management of activities that are not strategic for the country.

This, on the other hand, will make it easier for the State to continue ensuring healthcare and education services free of charge and on equal footing to all of the people and their adequate protection through the Social Welfare System; the promotion of physical education and sports; the defense of the national identity; and, the preservation of the cultural heritage, and the artistic, scientific and historic wealth of the nation.

Then, the Socialist State will have more possibilities to make a reality of the idea expressed by Martí that can be found heading our Constitution: "I want the first Law of our Republic to be the Cubans' cult of the full dignity of man."

It is the responsibility of the State to defend national independence and sovereignty, values in which the Cubans take pride, and to continue securing the public order and safety that make Cuba one of the safest and most peaceful nations of the world, without drug-trafficking or organized crime; without beggars or child labor; without the mounted police charging against workers, students and other segments of the population; without extrajudicial executions, clandestine jails or tortures, despite the groundless smear campaigns constantly orchestrated against us overlooking the fact that such realities are, foremost, basic human rights that most people on Earth can't even aspire to.

Now, in order to guarantee all of these conquests of Socialism, without renouncing their quality and scope, the social programs should be characterized by greater rationality so that better and sustainable results can be obtained in the future with lower spending and keeping the balance with the general economic situation of the country.

As you can see in the Guidelines, these ideas do not contradict the significance we attach to the separate roles to be played in the economy by the state institutions, on the one hand, and the enterprises, on the other, an issue that for decades has been fraught with confusion and improvisations and that we are forced to resolve on a mid-term basis in the context of the strengthening and improvement of institutionalization.

A full understanding of these concepts will permit a solid advance while avoiding backward steps in the gradual decentralization of powers from the Central to the local governments, and from the ministries and other national agencies in favor of the increasing autonomy of the socialist State-funded companies.

The excessively centralized model characterizing our economy at the moment shall move in an orderly fashion, with discipline and the participation of all workers, toward a decentralized system where planning will prevail, as a socialist feature of management, albeit without ignoring the current market trends. This will contribute to the flexibility and constant updating of the plan.

The lesson taught by practical experience is that an excessive centralization inhibits the development of initiatives in the society and in the entire production line, where the cadres got used to having everything decided "at the top" and thus ceased feeling responsible for the outcome of the entities they headed.

Our entrepreneurs, with some exceptions, settled themselves comfortably safe and quiet "to wait" and developed an allergy to the risks involved in making decisions, that is, in being right or wrong. This mentality characterized by inertia should definitely be removed to be able to cut the knots that grip the development of the productive forces. This is a pursuit of strategic significance, thus it is no accident that it has been reflected one way or another in the 24 guidelines contained in Chapter I, "Economic Management Model."

As far as this issue is concerned, we cannot indulge in improvisations or act hastily. In order to decentralize and change that mentality, it is indispensible to elaborate a framework of regulations clearly defining the powers of and functions at every level, from the national to the local, invariably accompanied by the corresponding accounting, financial and management oversight.

Progress is already being made in that direction. The studies began almost two years ago for improving the operation as well as the structure and makeup of the government at the different levels. These resulted in the enforcement of the Council of Ministers Regulation, the reorganization of the work system with the State and Government cadres, the introduction of a planning procedure for the most important activities, the establishment of the organizational bases to provide the Government with an accurate and timely information system supported by its own info-communications infrastructure, and the creation of the provinces of Artemisa and Mayabeque, on experimental basis and under a new structural and functional concept.

To begin decentralizing powers, it will be necessary for the cadres of the State and the companies to redeem the obvious role of contracts in the economy, as expressed in guideline number 10. This will also help bring back order and discipline to making and obtaining payments, a subject in which a good part of our economy has been getting poor grades.

As a no less important byproduct, the appropriate use of contracts as regulatory instruments of relations among the various economic actors will become an effective antidote against the extended habit of "reunionism," that is, calling an excessive number of meetings and other collective functions, often presided by senior officials and uselessly attended by many others, only to enforce what the parties involved recognized as rights and obligations in the contract signed, and whose fulfillment they have failed to demand from those required to do so.

In this respect, it is worth emphasizing that 19 opinions, registered in 9 provinces, claimed for a reduction in the number of meetings and their duration to the minimum indispensible. This issue I intend to take up again when dealing with the functioning of the Party.

We are convinced that the mission ahead of us in connection with this and other issues related to the updating of the Economic Model is full of complexities and interrelations that, one way or another, touch on every aspect of the society as a whole. Therefore, we are aware that it is not something that can be solved overnight, not even in one year, and that it will take at least five years to implement it comprehensively and harmoniously. And, when this is achieved, it will be necessary to never stop and to continue working for its improvement in order to successfully face the new challenges brought up by development.

Metaphorically speaking, it might be said that every now and then, as the scenario changes, the country should make its own well-tailored suit.

We are not under the illusion that the Guidelines and the measures conducive to the implementation of the Economic Model will by themselves provide a universal remedy to all our evils.  It will be required to simultaneously build a greater political awareness and common sense, and to be more intransigent with the lack of discipline and the violations committed by all, but primarily by the leading cadres.

This became all too evident a few months back in the flaws observed during the implementation of some specific measures –neither complex nor of great magnitude– due to bureaucratic obstacles and the lack of preparation of the local governments for the expansion of self-employment.

It is worthwhile reiterating that our cadres must get used to working with the guiding documents issued by the institutions empowered to do so and abandon the irresponsible habit of putting them on ice. Life teaches that it is not enough to issue a good regulation, whether a law or simply a resolution. It is necessary to also train those in charge of its implementation, to monitor them and to check their practical knowledge of the issue. Let's not forget that the worst law is that which is not enforced or respected.

The system of Party schools at the provincial and national level, along with the unavoidable reorientation of their syllabus, will play a protagonist role in the preparation and continuous recycling in these subjects of Party and government cadres as well as the company executives with the aid of the educational institutions specialized in this area of knowledge and the valuable input of the members of the National Association of Economists and Accountants, as it was the case with the discussion of the Guidelines.

At the same time, and with the purpose of effectively arranging in order of importance the introduction of the required changes, the Political Bureau agreed to bring to the Congress the proposal of establishing of a Standing Government Commission for Implementation and Development, subordinated to the President of the Council of State and Ministers which, without affecting in any way the powers invested in the corresponding Central Government Organs, will be responsible for monitoring, checking and coordinating the actions of everyone involved in this activity, and for proposing the insertion of new guidelines, something that will be indispensible in the future.

In this token, we feel it is advisable to remember the orientation included by comrade Fidel in his Central Report to the First Party Congress, nearly 36 years ago, about the Economy Management System that we intended to introduce back then and failed due to our lack of systematization, control and discipline. He said "…that the Party leaders but foremost the State leaders turn its implementation into a personal undertaking and a matter of honor as they grow more aware of its crucial importance and the need to make every effort to apply it consistently, always under the leadership of the National Commission created to that end…," and he concluded: "…to widely disseminate information on the system, its principles and mechanisms through a kind of literature within reach of the masses so that the workers can master the issue. The success of the system will largely depend on the workers knowledge of the issue."

I will not tire of repeating that in this Revolution everything has been said. The best example of this we have in Fidel's ideas that Granma, the Official Party organ, has been running in the past few years.

Whatever we approve in this Congress cannot suffer the same fate as the previous agreements, most of them forgotten and unfulfilled. Whatever it is that we agree upon in this or future meetings must guide the behavior and action of Party members and leaders alike and its materialization must be ensured through the corresponding legal instruments produced by the National Assembly of People's Power, the State Council or the Government, in accordance with their legislative powers and the Constitution.

It's only fair to say very clearly, in order to avoid misinterpretations, that the agreements reached by congresses and other leading Party organs do not become law in themselves. They are orientations of a political and moral nature, and it is incumbent on the Government, which is the body in charge of management, to regulate their implementation.

This is why the Standing Commission for Implementation and Development will include a Judicial Subgroup made up by highly qualified specialists who will coordinate with the corresponding organs –with full respect for institutionalization— the legal amendments required to accompany the updating of the Economic and Social Model, simplifying and harmonizing the content of hundreds of ministerial resolutions, legislative decrees and legislations, and subsequently proposing, in due course, the introduction of the relevant adjustments to the Constitution of the Republic.

Without waiting to have everything worked out, progress has been made in the legal regulations associated with the purchase and sale of housing and cars, the modification of Legislative Decree No. 259 expanding the limits of fallow land to be awarded in usufruct to those agricultural producers with outstanding results and the granting of credits to self-employed workers and to the population at large.

Likewise, we consider it advisable to propose to this Congress that the first point of the agenda of every plenary meeting of the next Central Committee, to be held no less than twice a year, is a report on the status of the implementation of the agreements adopted in this Congress on the updating of the Economic Model, and that the second point is an analysis on the fulfillment of the economic plan, be it from the first semester or from the running year.

We also recommend the National Assembly of People's Power to proceed in the same way during its ordinary sessions with the purpose of strengthening its protagonist role as the supreme organ of the State power.

Starting from the deep conviction that nothing that we do is perfect and that even if it seems so today it will not be tomorrow under new circumstances, the higher organs of the Party and the State and Government Powers should keep a systematic and close oversight on this process and be ready to timely introduce any adjustments called for to correct negative effects.

Comrades,

It's a question of being alert, with our feet and ears to the ground, and when a practical problem arise, whatever the area or the place, the cadres at the different levels must act swiftly and deliberately avoiding the old approach of leaving its solution to time, since we have learned from experience that the problems grow more complicated as time goes by.

In the same token, we should cultivate and preserve a fluid relationship with the masses, devoid of formality, that would allow for an efficient feed-back of their concerns and dissatisfactions so that the masses can indicate the pace of the changes to be introduced.

The attention paid to a recent misunderstanding on the reorganization of some basic services shows that when the Party and the Government, each in its own role, with different methods and styles, act promptly and harmoniously on the concerns of the people providing clear and simple explanations, the people support the measure and their confidence in their leaders grows.

The Cuban media in its various formats should play a decisive role in the pursuit of this goal with clarifications and objective, continuous and critical reports on the progress of the updating of the Economic Model so that with profound and shrewd articles and reports written in terms accessible to all they can help building in our country a culture about these topics.

In this area of work it is also necessary to definitely banish the habit of describing the national reality in pretentious high-flown language or with excessive formality. Instead, written materials and television and radio programs should be produced that catch the attention of the audience with their content and style while encouraging public debate. But this demands from our journalists to increase their knowledge and become better professionals even if most of the time, despite the agreements adopted by the Party on the information policy, they cannot access the information timely nor contact the cadres and experts involved with the issues in question. The combination of these elements explains the rather common dissemination of boring, improvised or superficial reports.

Our media has an important contribution to make to the promotion of the national culture and the revival of the civic values of our society.

Another crucial issue very closely related to the updating of the Economic and Social Model of the country and that should help in its materialization is the celebration of a National Party Conference. This will reach conclusions on the modification of the Party working methods and style with a view to ensure, for today and for the future, the consistent application of article 5 of the Constitution of the Republic setting forth that the Party is the organized vanguard of the Cuban nation and the top leading force of the society and the State.

Initially, we had planned to call that Conference for December 2011; however, given the complications inherent to the last month of the year and the advisability of having a prudent reserve of time to adjust details, we are planning to hold that meeting at the end of January 2012.

Last December 18, I explained to the Parliament that due to the inefficiency of the Government Organs in the discharge of their functions, the Party had spent years involved in undertakings that were not its responsibility, and compromised and limited its role.

We are convinced that the only thing that can make the Revolution and Socialism fail in Cuba, risking the future of our nation, is our inability to overcome the mistakes we have been making for more than five decades and the new ones we could make.

The first thing we should do to correct a mistake is to consciously admit it in its full dimension but the fact is that, although from the early years of the Revolution Fidel made a clear distinction between the roles of the Party and the State, we were inconsistent in the follow-up of his instructions and simply improvised under the pressure of emergencies.

There can be no better example than what the leader of the Revolution said as early as March 26, 1962, by radio and television, explaining to the people the methods and functioning of the Organizaciones Revolucionarias Integradas (ORI), which preceded the Party. He said: "…the Party leads, it leads through the entire Party and it leads through the public administration. An official must have authority. A minister must have authority; a manager must have authority and discuss as much as necessary with the Advising Technical Council (today, the Board of Directors), discuss with the working masses, discuss with the Party cell, but it is the manager who makes the decision, because it is his responsibility…" This orientation dates back 49 years.

There are very well defined concepts that, in substance, remain completely valid regardless of the time that has passed since Lenin formulated them, almost 100 years ago, and they should be taken up again, bearing in mind the characteristics and experiences of our country.

In 1973, during the preparations of the First Party Congress, it was defined that the Party must lead and supervise with its own ways and means, which are different from the ways, means and resources available to the State for exercising its authority. The Party's guidelines, resolutions and provisions are not legally binding for all citizens; it is the Party members who should abide by them as their conscience dictates since there is no apparatus to force or coerce them into complying. This is a major difference about the role and methods of the Party and the State.

The fortitude of the Party basically lies in its moral authority, its influence on the masses and the trust of the people. The action of the Party is based, above all, on the honesty of its motives and the justice of its political line.

The fortitude of the State lies in its material authority, which consists of the strength of the institutions responsible for demanding from everyone to comply with the legal regulations it enacts.

The damage caused by the confusion of these two concepts is manifested, firstly, in the deterioration of the Party's political work and, secondly, in the decline of the authority of the State and the Government as the officials cease feeling responsible for their decisions.

Comrades,

The idea is to forever relieve the Party of activities completely alien to its nature as a political organization; in short, to get rid of managing activities and to have each one do what they are meant to do.

These misconceptions are closely linked to the flaws of the Party's policy with the cadres, which will also be analyzed by the abovementioned National Conference. More than a few bitter lessons are the legacy of the mistakes made in this area due to the lack of rigorous criteria and vision which opened the way to the hasty promotion of inexperienced and immature cadres, pretending otherwise through simulation and opportunism, attitudes fostered by the wrong idea that an unspoken premise to occupy a leading position was to be a member of the Party or the Young Communist League.

We must decidedly abandon such practice and leave it only for responsibilities in the political organizations. Membership in a political organization should not be a precondition for holding a leading position with the State or the Government. What the cadres need are adequate training and the willingness to recognize as their own the Party policy and program.

The true leaders do simply not crop up in schools or from favoritism; they are forged at the grassroots level, working in the profession they studied in contact with the workers and rising gradually to leadership by setting an example in terms of sacrifices and results.

In this regard, I think that the Party leadership, at all levels, should be self-critical and adopt the necessary measures to prevent the reemergence of such tendencies. This is also applicable to the lack of systematic work and political will to secure the promotion of women, black people and people of mixed race, and youths to decision-making positions on the basis of their merits and personal qualifications.

It's really embarrassing that we have not solved this problem in more than half a century. This shall weight heavily on our consciences for many years because we have simply been inconsistent with the countless orientations given by Fidel from the early days of the revolutionary victory and throughout the years, and also because the solution to this disproportion was contained in the agreements adopted by the transcendental First Party Congress and the four congresses that followed. Still, we have failed to ensure its realization.

The solution of such issues that define the future will never again be left to spontaneity but rather to foresight and to the unwavering political intention of preserving and perfecting socialism in Cuba.

Although we kept on trying to promote young people to senior positions, life proved that we did not always make the best choice. Today, we are faced with the consequences of not having a reserve of well-trained replacements with sufficient experience and maturity to undertake the new and complex leadership responsibilities in the Party, the State and the Government, a problem we should solve gradually, in the course of five years, avoiding hasty actions and improvisations but starting as soon as the Congress is over.

This will advance further with the strengthening of the democratic spirit and collective work of the leading Party, State and Government organs as we guarantee the systematic rejuvenation of all of the Party and management positions, from the grassroots to the comrades with the highest responsibilities, including the current President of the Council of State and Ministers and the First Secretary of the Central Committee elected in this Congress.

In this regard, we have reached the conclusion that it is advisable to recommend limiting the time of service in high political and State positions to a maximum of two five-year terms. This is possible and necessary under the present circumstances, quite different from those prevailing in the first decades of the Revolution that was not yet consolidated when it had already become the target of continuous threats and aggressions.

The systematic strengthening of our institutions will be both a premise and an indispensible guarantee to prevent this cadre renovation policy from ever jeopardizing the continuation of Socialism in Cuba.

The first step we are taking in this direction is the substantial reduction of the list of leading positions that required approval from the municipal, provincial and national levels of the Party while empowering senior leaders in the ministries and companies to appoint, replace and apply disciplinary measures to a large part of their subordinated cadres with the assistance of the corresponding Cadres Commissions, where the Party is represented and has a voice but which are presided by the manager who makes the final decision. The view of the Party organization is appreciated but the single determining element is the manager, and we should preserve and enhance their authority in harmony with the Party.

As to the internal functioning of the Party, which will also be examined at the National Conference, we think it is worthwhile reflecting on the self-defeating effects of old habits completely alien to the Party's vanguard role in our society. These include the superficiality and excessive formality characterizing the political-ideological work; the use of obsolete methods and terminology that ignore the instruction level of the Party members; holding excessively long meetings and often during working hours –which should be sacred, especially for the communists– sometimes with inflexible agendas dictated by the higher level in disregard of the context where the Party members develop their activities; the frequent calls to formal commemorations where still more formal speeches are made; and, the organization of voluntary works on holydays without a real content or adequate coordination that cause spending and have an upsetting and discouraging effect on our comrades.

These criteria also apply to emulation, a movement that lost through the years its capacity to mobilize the workers' collectives and became an alternative mechanism for distribution of moral and material incentives not always justified with concrete results, and in more than a few occasions gave rise to fraudulent information.

Additionally, the Conference will analyze the Party's relations with the Young Communist League and the mass organizations to break with routine and schematic approaches and to allow each of them to recover their raison d'être under the present conditions.

To sum up, comrades, the National Conference will focus on enhancing the role of the Party as the main advocate of the interests of the Cuban people.

The realization of this objective definitely requires a change of mentality, avoiding formality and fanfare both in ideas and in action; that is, to do away with the resistance to change based on empty dogma and slogans and reach for the core of things as the children of La Colmenita Theater Company brilliantly show in the playwright "Abracadabra."

It's the only way in which the Communist Party of Cuba can become, for all times, the worthy heir to the authority and unlimited confidence of the people in their Revolution and their only Commander in Chief, comrade Fidel Castro Ruz, whose moral contribution and undisputable leadership do not depend on any position and that as a soldier of ideas has not ceased to fight and help with his enlightening Reflections and other actions the revolutionary cause and the defense of Humanity from menacing dangers.

With respect to the international situation, we shall use a few minutes to assess the predicament of the world at this point in time.

There is no end in sight to the global economic crisis affecting every nation because it is a systemic crisis. The powerful have directed their remedies to protecting the institutions and procedures that originated it and to depositing the terrible burden of its consequences on the workers of their own countries, and particularly of the underdeveloped countries. Meanwhile, the climbing prices of foods and oil are pushing hundreds of millions of people into destitute poverty.

The effects of climate change are already devastating and the lack of political will of the industrial nations prevents the adoption of urgent and indispensible action to avoid the catastrophe.

We live in a convulsive world where natural disasters follow one another like the earthquakes in Haiti, Chile and Japan while the United States wages wars of conquest in Iraq and Afghanistan that have taken the lives of more than one million civilians.

Popular movements in Arab nations are uprising against corrupted and oppressive governments allied with the United States and the European Union. The unfortunate conflict in Libya, a nation subjected to a brutal military intervention by NATO, has given that organization a new pretext to go beyond its originally defensive limits and expand worldwide the threats and war actions undertaken to safeguard its geostrategic interests and access to petroleum. Likewise, imperialism and the domestic reactionary forces connive to destabilize other countries while Israel oppresses and massacres the Palestinian people with complete impunity.

The United States and NATO include in their doctrines the aggressive interventionism against the Third World countries aimed at plundering their resources. They also impose to the United Nations a double standard and use the media consortia in an increasingly coordinated way to conceal or distort the events, as it befits the world power centers, in a hypocritical mockery intended to deceive the public opinion.

Despite its complex economic situation, our country maintains its cooperation with 101 Third World nations. In Haiti, after 12 years of intensive work saving lives, the Cuban healthcare personnel have been working with admirable generosity, since January 2010, alongside collaborators from other countries facing the situation created by the earthquake and the cholera epidemic that ensued.

To the Bolivarian Revolution, and to comrade Hugo Chávez Frías, we express our resolute solidarity and commitment, conscious of the significance of the process undertaken by the fraternal Venezuelan people for Our America, in the Bicentennial of its Independence.

We also share the hopes of the transformation movements in various Latin American countries, headed by prestigious leaders who represent the interests of the oppressed majorities.

We shall continue helping the integrationist processes of the Bolivarian Alliance for the Peoples of Our America (ALBA), the South Union (UNASUR) and the Community of Latin American and Caribbean States (CLACS) currently involved in arrangements for the celebration of its foundational summit on July this year, in Caracas. The establishment of this entity was the most extraordinary institutional event in our hemisphere during the past century, since for the first time all of the countries south of the Rio Bravo were meeting on our own.

We are encouraged by this increasingly united and independent Latin America and the Caribbean, whose solidarity we appreciate.

We shall continue advocating International Law and supporting the principle of sovereign equality among the States as well as the right of the peoples to self-determination. We reject the use of force and aggression, the wars of conquest, the plundering of the natural resources and the exploitation of man.

We condemn every form of terrorism, particularly State terrorism. We shall defend peace and development for all peoples and fight for the future of humanity.

The US Administration has not changed its traditional policy aimed at discrediting and ousting the Revolution. On the contrary, it has continued to fund projects designed to directly promote subversion, foster destabilization and interfere in our domestic affairs. The current administration has taken some positive but extremely limited actions.

The US economic, commercial and financial blockade against Cuba remains in force and intensifies under the current administration, particularly with respect to financial transactions. It ignores the almost unanimous condemnation of the blockade by the international community that for 19 consecutive years has advocated its removal.

Although apparently, as evidenced in the recent visit to the Palacio de La Moneda in Santiago de Chile, the United States leaders do not like to remember history when dealing with the present and the future, it is worthwhile indicating that the Cuba blockade is not something of the past. Therefore, it is our obligation to recall the content of a secret memorandum, declassified in 1991, where Deputy Undersecretary of State for Inter American Affairs Lester D. Mallory wrote on April 6, 1960: "Most Cubans support Castro…There is no effective political opposition (…) The only possible way to make the government lose domestic support is by provoking disappointment and discouragement through economic dissatisfaction and hardships (…) Every possible means should be immediately used to weaken the economic life (…) denying Cuba funds and supplies to reduce nominal and real salaries with the objective of provoking hunger, desperation and the overthrow of the government."

Mark the date of the memorandum: April 6, 1960, almost an exact year to the day of the Playa Girón invasion.

This memorandum was not an initiative of that official. It was part of the policy aimed at overthrowing the Revolution, like the "Covert Action Program against the Castro Regime," approved by President Eisenhower on March 17, 1960, using all the available means, from the creation of a unified opposition, psychological warfare and covert intelligence operations to the training in third countries of paramilitary forces with the capacity to invade the Island.

The United States fostered terrorism in the cities, and that same year, before the Playa Girón attack, promoted the establishment of counterrevolutionary armed-gangs, supplied by air and sea, that robbed and murdered peasants, workers and young teachers, until they were finally annihilated in 1965.

In Cuba, we will never forget the 3,478 dead and 2,099 incapacitated by the policy of State terrorism.

Half a century of hardships and suffering have gone by in which our people have put up a resistance and defended their Revolution, unwilling to surrender or to besmirch the memory of the fallen in the past 150 years, from the onset of our struggles for independence.

The US government has not ceased to give sanctuary and to protect notorious terrorists while extending the suffering and unfair incarceration of the heroic Cuban Five antiterrorist fighters.

Its Cuba policy lacks credibility and moral basis. In order to justify it, baseless pretexts are used, which grow obsolete and then change depending on Washington's interests.

The US government should not have doubts that the Cuban Revolution will be stronger after this Congress. If they want to cling on to their policy of hostility, blockade and subversion we are prepared to continue to face it.

We reiterate our willingness to engage in a dialogue and to take on the challenge of having normal relations with the United States as well as to coexist in a civilized manner, our differences notwithstanding, on the basis of mutual respect and non-interference in the internal affairs.

At the same time, we will permanently give a priority to defense, following Fidel's instructions as expressed in his Central Report to the First Congress, when he said: "While imperialism exists, the Party, the State and the people will pay utmost attention to defense. The revolutionary guard will never be careless. History teaches with too much eloquence that those who forget this principle do not survive the mistake."

In the present scenario and predictable future, the strategic conception of "the Popular War" remains absolutely valid, thus it is constantly enriched and improved. Its commanding and leadership system has been reinforced and its capacity to react to various exceptional situations has increased.

The defensive capacity of the country has reached a higher dimension, both quantitatively and qualitatively. Using our own available resources, we have improved the technical condition and maintenance as well as the preservation of the armament and carried on the production effort and especially the modernization of the military technology taking into account its prohibitive world market prices. In this area, it is fair to recognize the contribution of scores of military and civilian institutions, proof of the enormous scientific, technological and productive potential created by the Revolution.

The degree of preparation of the national territory as the theater of military operations has been significantly boosted; the fundamental armament is protected, the same as a substantial part of the troops, the commanding organs and the people.

A communication infrastructure has been established to ensure the steady functioning of the commanding posts at all levels. All of the material reserves have been raised with better distribution and protection.

The Revolutionary Armed Forces, or put another way, the people in uniform shall continue to constantly improve and preserve the authority and prestige earned with their discipline and order in the defense of the people and of Socialism.

We shall now deal with another no less significant issue of our times.

The Party must be convinced that beyond material needs and cultural interests our people hold a diversity of concepts and ideas about their own spiritual necessities.

Our National Hero José Martí, a man who synthesized that convergence of spirituality and revolutionary sentiments, wrote many pages about this subject.

Fidel addressed this topic quite early, in 1954, when still in jail he evoked Renato Guitart, one of the martyrs of the Moncada: "Physical life is ephemeral; it inexorably passes; the same as many and many generations of men have passed, as our own lives will shortly pass. This truth should teach every human being that the immortal values of the spirit stand above them. What is the meaning of life without the spirit? What is life then? How can death take those that understand this and still generously sacrifice their lives to good and justice!"

These values have always been present in his ideas, and so he insisted on them in 1971, at a meeting with catholic priests in Santiago de Chile: "I tell you that there are ten thousand times more coincidences of Christianity with Communism than there might be with Capitalism."

And, he returned to this idea as he addressed the members of the Christian churches in Jamaica in 1977. He said: "We must work together so that when the political idea succeeds the religious idea is not separate and does not appear as the enemy of changes. There are no contradictions between the purposes of religion and the purposes of socialism."

The unity of the revolutionary doctrine and ideas with regards to faith and its followers is rooted in the basis of the nation, which in asserting its secular nature promoted as an unwavering principle the unity of the spirituality with the Homeland bequeathed by Father Felix Varela and the teachings of Luz y Caballero, who categorically said: "I would chose to see the fall of not only the institutions created by man –kings and emperors—but even the stars from the firmament rather than see falling from the human breast the sentiment of justice; that sun of the moral world."

In 1991, the 4th Party Congress agreed to modify the interpretation of the statutes that limited the admission to our organization of revolutionaries with religious beliefs.

The justice of this decision has been confirmed by the role of leaders and representatives of various religious institutions in the different facets of the national life, including the struggle for the return to our Homeland of the child Elián, in which the Cuba Council of Churches played a particularly outstanding role.

However, it is necessary to continue eradicating any prejudice that prevents bringing all Cubans together, like brothers and sisters, in virtue and in the defense of our Revolution, be them believers or not, members of Christian churches; including the Catholic Church, the Russian and Greek Orthodox Churches, the evangelicals and protestant churches; the same as the Cuban religions originated in Africa, the Spiritualist, Jewish, Islamic and Buddhist communities, and fraternal associations, among others. The Revolution has had gestures of appreciation and concord with each of them.

The unforgettable Cintio Vitier, that great poet and writer, who was a deputy to our National Assembly, used the force of his pen and of his Christian and deeply revolutionary ethic, so profoundly rooted in Martí's, to leave us warnings for the present and the future that we should always remember.

Cintio wrote: "What is in danger, we know it, is the nation itself. The nation is by now inseparable from the Revolution that has been a part of it since October 10, 1868, and it has no other alternative: it is either independent or it is no more.

"If the Revolution were defeated, we would fall in the historic vacuum that the enemy wants for us and prepares for us, and that even the most basic people perceive as an abyss.

"It is possible to arrive at defeat, we know, through the intervention of the blockade, of internal decay, and the temptations imposed by the new hegemonic situation in the world."

After stating that "We are at the most challenging time of our history," he admonished: "Forced to fight the irrationality of the world to which it fatally belongs; always threatened by the sequels of dark age-old blights; implacably harassed by the most powerful nation on Earth; and also a victim of imported or indigenous blunders that history shows have never gone unpunished, our small island constricts and dilates, systole and diastole, as a glimmering of hope to itself and to others."

Now, we should address the recently concluded process of releasing counterrevolutionary prisoners, those that in challenging and distressing times for our Homeland have conspired against it at the service of a foreign power.

By sovereign decision of our Government, they were released before fully serving their sentences. We could have done it directly and take credit for a decision that we made conscious of the fortitude of the Revolution. However, we did it in the framework of a dialogue based on mutual respect, loyalty and transparency with the senior leadership of the Catholic Church, which contributed with its humanitarian labors to the completion of this action in harmony; in any case, the laurels correspond to that religious institution.

The representatives of the Catholic Church expressed their viewpoints, not always coincidental with ours, but certainly constructive. This is at least our perception after lengthy talks with Cardinal Jaime Ortega and the Chairman of the Episcopalian Conference Monsignor Dionisio García.

With this action, we have favored the consolidation of the most precious legacy of our history and the revolutionary process: the unity of our nation.

In the same token, we should mention the contribution of the former minister of Foreign Affairs and Cooperation of Spain, Miguel Angel Moratinos, who facilitated the humanitarian efforts of the Church so that those who wished to travel abroad or accepted the idea could do so with their families. Others decided to remain in Cuba.

We have patiently endured the implacable smear campaigns on human rights, coordinated from the United States and some countries of the European Union that demand from us no less than unconditional surrender and the immediate dismantling of our socialist regime while encouraging, orienting and assisting the domestic mercenaries to break the law.

In this regard, it is necessary to make clear that we will never deny our people the right to defend their Revolution. The defense of the independence, of the conquests of Socialism and of our streets and plazas will still be the first duty of every Cuban patriot.

Days and years of intensive work and great responsibilities lie before us to preserve and develop, on solid and sustainable basis, the independent and socialist future of our Homeland.

So far, the Central Report to the 6th Party Congress

Thank you, very much.

 

Worker-owner in Mondragon coop factory

The Mondragon Cooperatives and 21^st Century Socialism:

A Review of Five Books with Radical Critiques and New Ideas

From Mondragon to America:

Experiments in Community Economic Development

By Greg MacLeod

UCCB Press, 1997

The Myth of Mondragon:

Cooperatives, Politics and Working-Class Life in a Basque Town

By Sharryn Kasmir

State University of New York Press, 1996

Values at Work:

Employee Participation Meets Market Pressure at Mondragon

By George Cheney

Cornell University Press, 1999

Cooperation Works!

How People Are Using Cooperative Action

to Rebuild Communities and Revitalize the Economy

By E.G. Nadeau & David J. Thompson

Lone Oak Press, 1996

After Capitalism

By David Schweickart

Rowman & Littlefield, 2002

Reviewed by Carl Davidson

Solidarity Economy Network

Something important for both socialist theory and working-class alternatives has been steadily growing in Spain’s Basque country over the past 50 years, and is now spreading slowly across Spain, Europe and the rest of the globe.

It’s an experiment, at once radical and practical, in how the working-class can become the masters of their workplaces and surrounding communities, growing steadily and successfully competing with the capitalism of the old order and laying the foundations of something new—it’s known as the Mondragon Cooperative Corporation (MCC).

Just what that ‘something new’ adds up to is often contested. Some see the experiment as a major new advance in a centuries-old cooperative tradition, while a few go further and see it as a contribution to a new socialism for our time. A few others see it both as clever refinement of capitalism and as a reformist diversion likely to fail. Still others see it as a ‘third way’ full of utopian promise simply to be replicated anywhere in whatever way makes sense to those concerned.

The reality of an experiment on the scale on Mondragon, involving more than 100,000 workers in 120 core industrial, service and educational coops, is necessarily complex. It can contain all these features contending within itself at once.

That’s what makes MCC a fascinating story where the final chapters are still being written. But one thing is clear: it continues to grow and provide a quality of life for a participant that is unique in its moral benefits and above average in its material standards. Hardly any concerned would give up their position in the project today for the options of the society around them, even if they are skeptical or dubious about various aspects of MCC’s current practices or future prospects.

One MCC worker, for example recently expressed some cynicism about the coops. “People once took them seriously, but not anymore,” she remarked. “You mean it doesn’t matter to you whether you work here or at a private company?” she was asked. “Of course it matters,” she replied. “Here I have job security, and here I can vote.”

If I had to single out one of the five books listed above to tell MCC’s story, it would be the first one, From Mondragon to America by Greg MacLeod, even if its title is a little misleading and its facts 15 years out of date. The reason? It goes deeply into the structures and values at the core of MCC, as well as discussing the philosophical thinking of its founder, Father Jose Maria Arizmendiarrieta, or known more simply as Father Arizmendi.

A Priest with a Philosophy

The story of Mondragon begins with Father Arizmendi’s arrival in the Basque country of Spain in 1941 following the defeat of the Republicans in the Spanish Civil War. The Basques has been a center of resistance to Franco and the area was devastated by the conflict. Most widely known was the bombing of the Basque city of Guernica, immortalized in the mural masterpiece painted by Pablo Picasso. Father Arizmendi himself had fought with the Republicans, was imprisoned and barely escaped execution.

As a young priest, he was assigned to the Arrasate-Mondragon region, which was suffering from high unemployment and other destruction in the war’s aftermath. Arrasate is the Basque name for the area, while Mondragon is the Spanish name—in any case, the industrial mountain valley received little or no help from the Franco regime and was the target of ongoing repression against the Basques, with the fascists trying to stamp out their language and culture as well as their political organizations.

In reorganizing his new parish, Arizmendi thus had to find a way for the Basques to help themselves. He started by forming a small technical school, and helped finance his efforts by convincing the local Basques with meager funds to form a small credit union. He also formed sports and other family-related organizations that could still allow people to gather under the legal restrictions of the fascists. In addition to being an organizer, Arizmendi was also a deep-thinking intellectual—all the while he was doing a thorough study of Catholic social theory, Marx’s political economy and the cooperatives theories of Robert Owen, the British utopian socialist.

Armed with these ideas, in a few years he selected five graduating students from his technical school and with donations and borrowed funds from the credit union, his team of young workers formed a small cooperative workshop, ULGOR, named from one initial of each of the five students’ names. It brought in about 20 more workers and started to produce a small but very practical kerosene stove for cooking and heating. The single-burner stove was much in demand and the coop thus thrived and grew. Today it’s called FAGOR, and its 8000 current employee-owners in several divisions produce a wide range of high-quality household appliances sold across the world.

But this small startup in 1956 contained the first secret of MCC’s success—the three-in-one combination of school, credit union and factory, all owned and controlled by the workers and the community. Starting a coop factory or workshop alone wouldn’t work; a startup also required a reliable source of credit and a source of skills and innovation.

Typically, an MCC coop is entirely owned by its workers—one worker, one share, one vote. Worker-owners get a salary that is a draw against their share of the firm’s annual profit, and is adjusted upward or downward at the end of the year. By Spanish cooperative law, a portion of the profits has to be turned over to the local community for schools, parks and other common projects, The remainder is set aside for the repair and depreciation of plant and equipment, health care and pensions, and emergency reserves, as well as the workers’ salaries.

Technically, MCC worker-owners are thus not wage labor, but associated producers. There is an income spread, according to skill and seniority, but this is set and modified by the workers themselves meeting in an annual assembly. The assembly also elects a governing council, which in turn hires a CEO and management team. Managers can be removed from their posts but worker-owners cannot be fired. New hires however, can be fired or laid off during their trial period—about six months. But when their trial period ends, they can buy into the coop. If they don’t have the funds for the value of their share—today about 3000 Euros—it’s lent to them by the coop bank, and they repay in small amounts over a few years. MCC coops typically have relatively flat hierarchies, and a much smaller number of supervisors compared to similar non-coop firms.

The Ten Principles

Father Arizmendi’s most important intellectual contribution to MCC, however, was the wider formulation of this structure into ten governing principles, which are firmly held and practiced throughout MCC. There is some flexibility around the edges, but not much. Here’s a brief description:

• Open Admission: This means non-discrimination, that all are invited to join the coops—men or women, Basque or non-Basque, religious or non-religious, or from any political party or nonpartisan.

• Democratic Organization. The principle of ‘one worker, one vote’ is the core here, but it also entails a wider participatory democracy in the workplace and engagement with the management team.

• Sovereignty of Labor. This is the underlying core belief describing the overall relation between capital and labor, primarily that labor is the dominant power over capital, at least within the coops, if not fully in the wider local community.

• Capital as Instrument. This is a corollary of the point above. It defines capital as an instrument or tool to be used, deployed and governed by labor, rather than the other way around.

• Self-Management. This stresses the importance of training worker-owners not only to better manage their work on the assembly line, but also to train those elected to the governing councils or selected for management teams to have the wider educational background to steer the cooperatives strategically in the wider society and its markets.

• Pay Solidarity. Here is where the worker-owners themselves determine the spread between the lowest-paid new hires and the top managers, with various skill and seniority levels in between. Originally it was set at 3 to 1, but that was adjusted because it was too difficult to retain good managers. Today the average is 4.5 to one, compared to 350 to one as the average for U.S. firms. The highest single coop’s range is 9 to one, and only exists at Caja Laboral, MCC’s worker-owned bank.

• Inter-Cooperation. This encourages the various coops to cooperate with each other, forming common sectoral strategies, or for transferring members among coops when some firms’ orders are temporarily too low to provide enough work.

• Social Transformation. The coops are not to look inward and operate in isolation from the community around them. They are to make use of cooperative values to help transform the wider society. In the Basque Country, for many this means seeing MCC’s growth as developing a progressive economy for Basque national autonomy and independence.

• Universal Solidarity. The coops are not only to practice solidarity within themselves, but also with the entire labor movement—and not only in Spain, but across the globe as well. MCC has several projects abroad providing assistance in remote areas of third world nations.

• Education. Just as the first coop was preceded by starting with a school and forming a cadre with a cooperative consciousness, MCC continues to hold education as its core value, seeing knowledge as power—and the socialization of knowledge as the key to the democratization of power in both the economy and the society.

In shaping these principles, Father Arizmendi also discovered what he believed was a fatal flaw in the cooperative theory of Robert Owen, which was the ability of an Owenite worker-owner to sell his or her share to anyone. This permitted external financiers to buy up the shares of the better firms while starving others. Thus in MCC, this is forbidden; a retiring worker may ‘cash out’ on leaving the coop, but he or she is not allowed to sell the share to anyone but a new incoming worker, or to the coop itself to hold until it does. This kept MCC’s capital subordinate to its workers, and is a second secret to its success.

Most of all, these principles have meant that the MCC workers retained control over their own surplus value, using it to provide themselves a modest but above-average standard of living while using their resources for measured and planned growth.

Mondragon has come a long way from ULGOR, the small workshop making the little single-burner kerosene stove. Today MCC unites 122 industrial companies, 6 financial organizations, 14 retailers (including the Eroski chain with over 200 hypermarkets, supermarkets and convenience stores), plus seven research centers, one university and 14 insurance companies and international trade services. Its total sales in 2009 were 13.9 billion Euros and a workforce of nearly 100,000 people.

Less than six of the 120 coops have failed over 50 years. In the most recent economic crisis, MCC weathered the storm fairly well. No coop failed, salary reductions were modest and the only workers laid of were the trial-period new hires. Now things are picking up again. MCC remains a dominant force in the Basque economy, the leading force in Spain overall and is now making waves in high-tech manufacturing worldwide.

Cooperativism and Trade Unionism

What about Mondragon’s wider connections with the Basque and Spanish trade union movement outside the coops? Where do the various parties of the Spanish and Basque left come in?

For some answers to those questions, at least as things were in the mid-1990s, the best treatment is in Sharryn Kasmir’s The Myth of Mondragon. As a sociologist who spent some time in the Basque country, she took great pains to try to discern how workers themselves, inside and outside the coops, viewed MCC. At bottom, she would agree that the MCC workers, whatever criticisms they may have, would not readily trade places with their counterparts outside. She would also agree that the coops have become a powerful and progressive economic force in the Basque country. But in the end, these ‘pragmatic’ concerns are not hers; she wants to view MCC through the more traditional ‘ideological’ lens of the left.

Kasmir place high priority, for example, on trade union militancy and solidarity and examines and celebrates its history in the area in some detail. The Basque are best known for their high-mountain shepherds but they have a long industrial tradition in the valleys and coastal towns, especially in iron and metalworking. The workers in these areas like the Arrasate-Mondragon valley formed trade unions early on and have a tradition of solidarity across industries and trades, often shaped in a lively night life in bars involving entire families.

Kasmir does an excellent job digging out this history and showing how it continues. She also reveals, however, that some of the level of its traditional expression has dropped off in the areas where the Mondragon Coops are prevalent. The MCC worker-owners, she notes, are viewed by other workers as ‘working too hard’ and spending less time in the bars in political discussion. Moreover, when strikes are called and other workers are asked to strike in solidarity, the MCC workers only offer a token presence, or don’t show up at all.

“Ekintza, the Basque concept of ‘taking action,’ is a core cultural value,” Kasmir argues. “Basque towns are centers of political activity. In Mondragon, political discussion takes place in bars, demonstrations are frequent, and town walls are covered with posters, murals and graffiti, making them dynamic arenas for political debate. Far from generating ekintza among workers, however, cooperativism appears to engender apathy.” (p. 195)

Finally, Kasmir gives an example of a small group of young Maoist workers in the ULGOR plant that tried to strike the coop in the 1970s, but failed to win much support. They were expelled from the coop by the other worker-owners, although, after a few years, a good number were brought back in. It was the only strike in all of MCC’s 50 year history although there have been other conflicts over regionalism and inter-cooperation where a few coops split off.

Kasmir seems to hold to a traditional left view that the task of the left is to organize increasing on-the-job militancy while building one’s strength in the political area with socialist political parties, and to work both the arenas of elections and other mass action campaigns. And as she correctly observes, MCC doesn’t fit this mold.

Class: Looking Forward, Looking Back

What Kasmir glosses over or misunderstands, however, is that there is indeed a critical difference between the workers in MCC coops and workers in other firms. The most important, already mentioned, is that MCC worker-owners are not wage-labor, but associated small producers. Most MCC firms are under 500 workers and many quite smaller. Second, the MCC firms are not owned by an external force alien to their production process. The managerial strata and the workers representatives in the governing councils have the same single ownership share and vote as everyone else.

In other words, when workers in a regular firm go on a sympathy strike, they hurt or pressure the interest of external bosses; but when MCC workers go out, they only subtract from their own material interest. They may do so anyway as a matter of solidarity, much as a small store owner may close for the day of a political strike, but the structure of interest is clearly different than the wage-laborer. Likewise when MCC worker-owners spend more time at work, or attending school or training sessions after work, subtracting from time spent in the bars—they are contributing directly to their coop’s growth and their own benefit as well, where on the other hand, forced overtime in a regular firm primarily benefits an external owner.

So the interesting question Kasmir leaves unanswered is whether the class position of the MCC worker-owner is a step backward to a petit-bourgeois past or a step forward to a worker-controlled mode of production of a socialist future. Given the overall picture of MCC’s successful growth since the time of her writing, the latter seems the better answer.

Democracy: Representative and Participatory

But do the MCC firms’ internal practices still stand as well-functioning examples of direct and participatory democracy in the workplace? Kasmir suggests they are not; that they are simply run by the managers and the rest is pro forma. But her ideological presumptions miss a great deal here that is much better treated in George Cheney’s book, Values at Work: Employee Participation Meets Market Pressure at Mondragon.

Cheney is both more in solidarity with the Mondragon project and in some ways, more critical of it at the same time. His criticisms, however, come largely from within. He holds up MCC’s own values as a mirror to its practice, and then examines the realities.

During a recent study tour of MCC, for example, my group had a session with Fred Freundlich, an American who hade been living in the Basque Country for more than a decade and teaching economic theory at MCC’s Mondragon University. We asked for his opinion on how involved the younger MCC workers were with their own governance in the coops.

“Frankly, Basque youth aren't all that active inside the coops. They're into third world global justice issues, environmentalism in general and Basque nationalism. About the coop managers, I'd say a strong minority, maybe 30 percent, have solid cooperative values at heart, another small minority pays lip service to them, and the rest are somewhere in between. We clearly need a new surge of activism to spread cooperativism beyond the factories.”

The highest governing body of each coop, and MCC overall, is its General Assembly or Congress. The average participation is around 70 percent, and attendance is required. (One absence results in a warning; a second results in a fine to be paid.) Issues decided are important, such as overall salary spreads, strategic direction of products and the election of leadership.

“The General Assembly of worker-members is the highest authority in each company,” explains Freundlich in his 1998 paper, MCC: An Introduction.  “It must meet at least once a year to address company-wide concerns (though it often meets twice).  The General Assembly also elects the company's Board of Directors and a President of the Board for four-year terms, based on the principle of one-member one-vote.  The Board appoints the chief executive and must approve his or her choices for division directors. 

“A Social Council,” Freundlich continues, “is elected by departments to represent front line workers' interests and to help promote two-way communication between management and workers.  Pay solidarity and the distribution of profits to all worker-members, as described previously, are other important cooperative policies.

“While the MCC has its share of workforce controversy and apathy,” he concludes, “and perhaps more today than 30 years ago-these structures and policies have contributed to fairly high levels of commitment to the business and to the cooperative idea, which in turn, many believe, have provided Mondragon firms with a difficult to measure, but nonetheless real, competitive advantage over its conventional competitors.”

Other studies of various MCC components, such as Eroski, have placed the average quantifiable advantage self-management has given MCC coops over non-MCC firms in the marketplace at 15%.

“If one enters a Mondragon factory,” writes George Benello in the magazine Reinventing Anarchy Again, “one of the more obvious features is a European-style coffee bar, occupied by members taking a break. It is emblematic of the work style, which is serious but relaxed. Mondragon productivity is very high—higher than in its capitalist counterparts. Efficiency, measured as the ratio of utilized resources (capital and labor) to output, is far higher than in comparable capitalist factories.”

Changes, Large and Small

As for shifting attitudes, Basque society itself has seen major changes over the past 30 years. “Such changes are revealed, for example,” says Cheney, “in the dramatic drop in attendance at Mass in the Basque country, from about 75 percent in 1975 to less than 25 percent today.” (p. 56). What this shows is the Basques were not immune to a weakening of traditional ties and the growing secularism and consumerism prevalent in Europe.

Even so, there is still a considerable degree of participation and debate at the base of the MCC coops, even if it doesn’t take the forms or rise to the level those on the governing councils or management teams would like to see. One ongoing debate is over the salary spread between managers and production workers. According to Wikipedia:

“At Mondragon, there are agreed-upon wage ratios between the worker-owners who do executive work and those who work in the field or factory and earn a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns 5 times as much as the theoretical minimum wage paid in his/her cooperative. This ratio is in reality smaller because there are few Mondragon worker-owners that earn minimum wages, their jobs being somewhat specialized and classified at higher wage levels.^[10]

“Although the ratio for each cooperative varies, it is worker-owners within that cooperative who decide through a democratic vote what these ratios should be. Thus, if a general manager of a cooperative has a ratio of 9:1, it is because its worker-owners decided it was a fair ratio to maintain.^[10]

“In general, wages at Mondragon, as compared to similar jobs in local industries, are 30% or less at the management levels and equivalent at the middle management, technical and professional levels. As a result, Mondragon worker-owners at the lower wage levels earn an average of 13% higher wages than workers in similar businesses. In addition, the ratios are further diminished because Spain uses a progressive tax rate, so those with higher wages pay higher taxes.”^[10]

Another key tension and debate arose in the 1990s, when Mondragon transformed itself from a federation of coops loosely connected through their ‘second degree’ coops—the bank, the social insurance agencies, the university and research institutes—into MCC with its ‘sectoral’ structures—industrial, financial, retail distribution and knowledge. The more centralized and unified structure enabled Mondragon’s management teams to develop and pursue common strategies to better compete collectively with their rivals in the marketplace.

While this relatively greater degree of centralization proved very successful, it also increased market pressures on the individual coops in the form of intensity of work and speed of innovation. ‘Finding the balance’, explains Cheney, is the key term used to resolve differences.

Prospects for Coops in the U.S.

Can an experiment like Mondragon find fertile ground in the U.S.? This is a topic addressed in Cooperation Works! How People Are Using Cooperatives to Rebuild Communities and Revitalize the Economy by E.G. Nadeau and David J. Thompson. This work offers a survey of some 50 cooperative ventures in twelve different areas of the U.S. society, both historical and current—including agriculture, housing, business purchasing coops, credit unions, social services and power utilities—as well as worker-owned industrial coops.

The authors reveal two key points. The first is that cooperatives have a long, rich and varied history across the U.S, ranging from wheat farmers banding together to manufacture and market their own pasta products, to home health care providers building their own company to provide decent wages and benefits in an occupation that often suffers from poor conditions. The second is that none of these 50 case studies, successful or unsuccessful, has followed the Mondragon model of a three-in-one combination of school, credit union and factory—even though in a number of areas these three components exist nearby each other. (The book’s appendix lists the top 100 coops in the U.S. which is quite useful.)

That doesn’t mean some of these coop ventures aren’t doing well or breaking new ground. The Cooperative Home Care Associates, based in the Bronx, NY, has grown to include more than 1600 worker-owners, and vastly improved the lives of the mainly Black and Latino women workers involved.

“By transforming part-time home care jobs into full-time positions,” states board member Kim Alleyne, “CHCA differentiates itself from other firms in New York City's home care industry. Specifically, we invest significant capacity in scheduling our home care workers for at least 30 hours each week …. We also allocate 80 percent of our total revenue to the wage and fringe benefits costs of our home care workers - including a comprehensive health and dental insurance benefit that does not require a financial contribution from employees. 

“We also offer our home care continuing education with many opportunities to accumulate assets, including worker-ownership, through which employees can accumulate a $1,000 equity stake in CHCA and receive dividends based on our annual profits, an employer-contribution to their 401(k) account in profitable years; and as an alternative to predatory payday loans, CHCA offers no-interest loans that average $250. We also encourage workers to create savings and checking accounts, instead of relying on expensive check cashing services.”

For another interesting example, one can look to California’s Bay Area. Here Cheeseboard Pizza and five other bakeries have formed a networked cooperative of Arizmendi Bakeries. With some 200 worker-owners, they produce baked goods combined with retail eateries that keep winning prizes for the best foods and best places to eat in the area. Even though the scale is small compared to MCC in Spain, they also include in their network one ‘second degree’ coop that helps them all with financial services.

In North Carolina, however, a project called the Center for Community Self-Help, started by Martin Eakes and Bonnie Wright, highlighted a core problem. They retrained workers displaced by plant shutdowns, and hoped to help them form coops. Cooperation Works!... explains:

“Eakes and Wright discovered that the engine that gave Mondragon its power was missing in North Carolina and was stalling the development of worker coops. That element was access to capital. For the Mondragon Cooperatives, the Caja Laboral (or ‘Workers Bank’) furnished the necessary capital to launch successful ventures. Thus Eakes and Wright concluded their next step was to create a Caja for North Carolina.”

So that’s exactly what the couple did. Starting with a bake sale, within three years they formed the Self-Help Credit Union with several million dollars in deposits from area churches and government grants. In another seven years, this had launched new businesses with some 4000 jobs and 2000 child care spaces.

Cleveland, Ohio has a similar story. The Cleveland Foundation and other nonprofits for years had been repeatedly funding job training programs for the long-term unemployed in low-income neighborhoods, only to find that their newly certified workers still couldn’t find employment. Finally, a core group of funders and allies made the trek to Mondragon, and was inspired on their return to form the Evergreen Cooperatives, with local colleges serving as schools and the foundations serving as sources of startup capital.

Three businesses are now underway: Evergreen Cooperative Laundry, an industrial-scale operation doing laundry for major medical centers nearby; Ohio Cooperative Solar, which leases urban business rooftops and installs solar arrays, providing electric power to the region’s grid; and Green City Growers, and industrial-scale urban agriculture venture producing fresh produce for local markets and restaurants. A dozen more coop businesses are on the drawing boards.

Another project, in Chicago decided to follow Father Arizmendi’s model closely, and started with the design and organization of a new public school in a low-income neighborhood, Austin Polytechnical Academy. With ideas of worker participation and worker ownership built into the school’s mission and curriculum, it will graduate its first class of students with high-tech manufacturing skills in 2011. The school was developed with partners from area trade unions and some 20 high-tech manufacturing firms. A number of the students have gone to Mondragon on study tours.

Agreement with the Steelworkers

What gave a national focus to all these efforts was a recent decision by the United Steel Workers, one of the largest industrial unions in the U.S, to declare a formal partnership with MCC to try to establish worker-owned enterprises in depressed Rust Belt regions. This was soon followed by a similar partnership declaration between MCC and the City of Richmond in the Bay Area to launch a similar effort.

The U.S., of course, continues to face dire economic conditions. Bank credit is difficult to obtain and unemployment is near 10 percent. Government at every level, blocked by a neoliberal budget-cutting resurgence, is slashing funds for community and small business development in favor of tax breaks for the superrich.

This manufactured austerity is a two-edged sword as far as coops are concerned. One edge is that there is little help coming from government which makes new ventures very tough. The other edge is that the solidarity economy, of which MCC is a mother lode of ideas and experience, emerges precisely when government fails and people have only each other to turn to for mutual aid. The harsh conditions become a spur to radical experiments and strategies for structural change.

This is where the last of these five books takes center stage, David Schweickart’s After Capitalism. In this short but lucid book, Schweickart draws on his earlier studies of workers control in Yugoslavia and his own experiences in Mondragon and elsewhere, and raises all of these to a wider working hypothesis for a new socialism for the 21st century. He calls his effort ‘successor-system theory’ and names its project ‘Economic Democracy.’ The core idea is that the workers themselves democratically elect the managers of their firms, which are either leased from the government collectively or owned cooperatively outright. They also share the wealth they create by sharing the profits among themselves. They make their money the old-fashioned way: by finding consumer needs, meeting those needs with decent products, and selling them to satisfied customers at reasonable prices.

We can see the Mondragon model here, but painted on a much wider canvas of an entire nation’s economy. Schweickart’s theory is one of the main variants of what is called ‘worker controlled market socialism,’ and his task in this work is not so much to tell us how to get there, but how it can work once we do get there.

The heart of his argument rests on dividing markets into three—capital markets, labor markets, and markets in goods and services. Capital markets he would abolish or at least severely restrict by government buyouts or takeovers of major banks and corporations in a time of crisis and turning them into public asset funds. Labor markets he would drastically change or restrict by vastly reducing wage labor, turning most workers into owners or leaseholders of their factories. Workers each have one equal vote, and elect their managers. Markets in goods and services, however, would remain, although regulated for ecological sustainability and other matters related to the common good.

Mondragon as a Bridge to Socialism

Even if the Mondragon cooperators themselves don’t speak directly of wider socialist theory, Schweickart does it for them in this work. “The Mondragon complex did not develop as a purely pragmatic response to local conditions,” he explains. “Arizmendiarrieta was deeply concerned about social justice and explicitly critical of capitalism, basing his critique on progressive Catholic social doctrine, the socialist tradition, and the philosophy of ‘personalism’ developed by Monier, Maritain, and other French Catholic philosophers. He was critical of Soviet state socialism and certain elements of the cooperative movement itself. He was particularly sensitive to the danger of a cooperative becoming simply a ‘collective egoist,’ concerned only with the well-being of its membership.”

Schweickart goes on to note the problems of conflict, tension and abstention from participation within the MCC coops mentioned by both Kasmir and Cheney. But he draws this conclusion:

“The presence of worker alienation and of certain practices that cut against the grain of Arizmendiarrieta’s vision should not blind us to two striking lessons that can be drawn from the economic success of Mondragon. First, enterprises, even when highly sophisticated, can be structured democratically without any loss of efficiency. Even a large enterprise, comparable in size to a multinational corporation, can be given a democratic structure.

“Second, an efficient and economically dynamic sector can flourish without capitalists. Capitalists do not manage the Mondragon cooperatives. Capitalists do not provide entrepreneurial talent. Capitalists do not supply the capital for the development of new enterprises or the expansion of existing ones. But these three functions—managing enterprises, engaging in entrepreneurial activities, and supplying capital—are the only functions the capitalist class has ever performed. The Mondragon record strongly suggests that we don’t need capitalists anymore—which, of course, is the central thesis of this book.”

What Schweickart is doing, of course, is dispensing with all the usual arguments capitalist apologists circulate among average workers as to why socialism can’t work. In addition to the intellectual arguments, he simply points to Mondragon, which continues to move forward as the living example of another path. In this sense, what the MCC worker-owners have established is a bridge to a small fortress that serves as a foothold in the future, a powerful example of one not-so-small victory in a Gramscian ‘war of position.’

To a certain extent, many of the MCC workers and managers would agree. MCC itself is officially ‘nonpartisan,’ meaning that it’s not tied to any particular Basque or Spanish political party.

But this does not mean ‘anti-partisan.’ MCC works with a number of socialist and Basque nationalist parties and officials to build up the economy and educational planning infrastructure of Euskadi, the Basque name of their ‘Basque Country,’ for which they are working for a high degree of regional autonomy, if not national independence. In the MCC coops, the workers belong to a range of socialist, communist and Basque nationalist groups ranging from left to center. There have been sharp differences between socialists and some of the more militant nationalist groups in the recent past, but today, the trend is for a wider popular unity and a cessation of any violence.

Not all cooperatives are on the left, of course, and not only in Spain, but elsewhere, including in the U.S. Nor are those that do have progressive politics at their core the only examples of strongholds that can be won in the ‘war of position.’ There are many other ‘strong points’ in need of multiplying and growing—progressive trade unions and labor councils, community-driven schools and civic organizations and coalitions, and, naturally, progressive political organizations and parties rooted in working-class communities. These are all organizational instruments for a range of tactics that will be required in different phases and a variety of fronts in class struggle and popular democratic campaigns. What Mondragon has done for us, however, is to make a major breakthrough in both theory and practice and bring it to scale as a powerful example of what can begin to happen when ‘labor is sovereign’ in a new socialism for a new century.

[Carl Davidson is a national co-chair of the Committees of Correspondence for Democracy and Socialism, a national board member of the Solidarity Economy Network, and a member of Steelworker Associates. He is also the co-author, with Jerry Harris, of CyberRadicalism: A New Left for a Global Age, at http://stores.lulu.com/changemaker. His email is carld717@gmail, and he is available to speak on Mondragon.]