An Opportunity Society III

by Gary Boatwright, Sun Feb 20, 2005 at 08:52:28 AM EST

Having gotten off to a rash start on my first diary on Gar Alperovitz's book, America Beyond Capitalism, I can say with a high degree of confidence that the secret to a good book review is to read the book. I laid the groundwork for his book in diaries on the Preface and one on The Introduction. Today I will cover Part I, The Pluralist Commonwealth: Equality, Liberty, Democracy.

It seems only fair to engage in a bit of appropriate blogwhoring by linking to Alperovitz's site, America Beyond Capitalism and a bibliography page at The Kelso Institute. Louis Kelso is a progressive economist/lawyer who invented the concept of ESOPs, which I will cover in greater detail in Part II of Alperovitz's book, The Democratization of Wealth.

Alperovitz also has written a synopsis of his book, America Beyond Capitalism: What a "Pluralist Commonwealth" Would Look Like that should be helpful to those who have not read his book. The magazine that carried his book review Dollars and Sense: The Magazine of Economic Justice is itself an intriguing source of economic information.

Alert readers will notice that I have shortened the title of my diary to An Opportunity Society. George Bush was never any more serious about forming an opportunity society than he was about compassionate conservatism. A couple of helpful sites are a Tom Dispatch site that carried Kennedy's speech Creating a Genuine Opportunity Society and a blog by Jim Gilliam, co-producer of Outfoxed, that briefly explains why the Opportunity Society is already our idea anyway.

You may want to read the rest of my diary and come back to browse some of the links above. I think I'm ready to get started in the extended diary

Part I: The Pluralist Commonwealth: Equality, Liberty, Democracy.

A theoretical model is a beginning point for serious discussion. The obvious question is whether there are any reasons to believe that the various elements of the Pluralist Commonwealth - separately and taken together - might ever build to significant scale and power.

. . .

Few observers have as yet grasped the extent - or further possibilities - of wealth-related strategies that benefit the public directly. It is obvious, however, that a great deal of hands-on experience now offers practical backing for ideas at the heart of the Pluralist Commonwealth vision - including (among others) worker ownership, cooperatives, municipal ownership, neighborhood ownership, nonprofit ownership, individual development accounts, and a wide range of major public investment strategies. There is also evidence that such efforts can be efficient, especially if adequate attention is paid to developing and refining management, training, and other strategies over time.

I haphazardly covered the ideas of equality, liberty and democracy in my first diary in this series A Progressive Opportunity Society and added some useful and informative links.

Equality:Beyond Tax-and-Spend

The basic idea of this chapter is that traditional approaches to generating more equality of wealth, primarity progressive taxation, no longer work. The two primary factors inhibiting traditional approaches are the decline of labor unions and globalization. Labor unions have been the "most important countervailing force (partly) offsetting conservative political power throughout much of the twentieth century." Globalization has put additional downward pressure on wages by forcing government to reduce business tax rates, "shifting more of the burden to low and moderate-income earners."

Corporate taxes have fallen from 35.4% of federal receipts in 1945 to 7.4% in 2003. "More than three-fifths of U.S. corporations paid no federal taxes at all in each of the years between 1996 and 2000! If we continue on our current path "real inequality will continue to worsen, no matter what."

The federal government "already provides very large indirect tax subsidies to encourage asset ownership by middle and upper-income Americans. . . . [I]ncentives also should be used to develop asset holding among the poor." Michael Sherraden, an expert from Washington University proposed Individual Development Accounts and other vehicles to change the focus of welfare away from income and consumption to "allowing low-income individuals to benefit from the ownership of capital. I've already linked to The Kelso Institute who Alperovitz credits with the idea of ESOPs, which are covered in some detail in upcoming chapters.

Alperovitz also credit John Roemer, who wrote a recent book, A Future for Socialism which, believe it or not, received a somewhat hostile reception from book reviewers. With Alperovitz's help we can change the conventional wisdom that government welfare should be the exclusive perogative of corporations and the privileged wealthy elite.

Liberty: Money, Time, and Real Freedom of Choice

As we have seen, two distinct trends have produced growing concern that the political-economic system no longer appears able to sustain a culture of liberty. The first and most obvious involves restrictions on individual liberties in response to terrorism and war, and in reponse to crime. The second, and more fundamental, relates to foundational issues involving the underlying structures and institutions of the political-economic system as a whole.

. . .

That "big government" is anathema to individual liberty is the fundamental structural argument of traditional theory.

Traditional conservatives, like the founder of the University of Chicago free-market school of economics, Henry C.Simmons, begged fellow conservatives to recognize that "[t]urned loose with inordinate powers, corporations have vastly overorganized most industries." Indeed, this highly respected conservative (and Milton Friedman's revered teacher) held that "America might now be better off if the corporate form had never been invented or never made available to private enterprise."

Another leading conservative, Friedrich A. Hayek, years ago urged that "if we continue on the path we have been treading [toward what he termed the `monopolistic organization of industry' closely allied with government], it will lead us to totalitarianism."

Broadly speaking, emerging modern theories of liberty converge on three central propositions:

First, liberty requires institutional and structural support for individual economic security to replace that which at least in theory was once provided by entrepreneurial property. Second, it requires support for the community-wide conditions needed to nurture the intermediate associations and civil society organizations that are essential to sustaining a culture supportive of liberty. Third, it requires greater amounts of equitably distributed free time (without which the capacities needed to exercise real freedom must inevitably be limited.

That third idea will be covered in fuller detail in an upcoming chapter The Twenty-five Hour Workweek?

Democracy: From the Ground Up

The place to look for democratic renewal is at the local level.

The heart of the larger foundational argument - and this is a criticial emphasis - might be put thus: Is it possible to have Democracy with a Big D in the system as a whole if you do not have real democracy with a small d at the level where people livve, work, and raise families in their local communities? If the anser is no, then a necessary if not sufficient condition of rebuilding democracy in general is to get to work locally.

But Tocqueville, in fact, had gone beyond "associations" to take up the deeper question of how - and whether - democratic practice is reflected no only in civil society, but in actual local government. "Municipal institutions," he stressed, "constitute the strength of free nations. Town meetings are to liberty what primary schools are to science; they bring it within the people's reach, they teach men how to use and enjoy it."

John Stuart Mill similarly held that direct experience with local governance was essential to "the peculiar training of a citizen, the practical part of the political education of a free people." . . . [I]t is only by practicing popular government on a limited scale, that the people will ever learn how to exercise it on a larger."

I'll close this chapter with a link to an article Alperovitz mentions that the Greens carried by Michael Shudman, Going Local: Creating Self-Reliant Communities in a Global Age

Democracy: Is a Continent Too Large?

The judgment that very large scale is inimical to democracy was also taken very seriously by the founding fathers. . . . [E]ven James Madison (who challenged the traditional argument that democracy was possible only in small nations) believed that a very large republic could easily become a de facto tyranny because elites at the center would be able to divide and conquer diverse groups dispersed throughout the system. Few people imagined democracy in a continent.

The two traditional responses to the argument that democracy is impossible in a country the size of America have been decentralization to the states and regionalism. Regionalism proposes regional solutions, like the TVA, Tennessee Valley Authority, to regional problems. The regionalist movement "was cut short by a combination of anti-New Deal politics and the advent of World War II and the era of the Cold War.

A fully developed long-term ecological vision in which many "regions within the United States could become relatively self-sufficient" has been put forward by Harman Daly and John Cobb. "[T]he nation-state is already too large and too remote from ordinary people for effective participation to be possible."

There have been conservative and liberal arguments that we need to address regional problems that cross the borders of the states, but are difficult to address at the federal level. This topic has filled several books, so I'll just mention several of them:

Thomas H. Naylor, Downsizing the USA

Joel Garreau, The Nine Nations of North America

Robert Goodman, The Last Entrepreneurs: America's Regional Wars for Jobs and Dollars

Tomorrow I'll cover Part II: The Democratization of Wealth where Alperovitz gets into the nuts and bolts of progressive economic development programs and projects that are already working to equalize wealth in America/

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Great stuff!

One comment, though.

We need to be careful about this "rush to localism" as a response to globalization.

I think some of these people (like Schuman, for example) would like to see nations and communities actually follow a policy of "trade contraction" through self-sufficiency.

As a long-run program, this "self-sufficiency" is a really bad idea. There really are gains from trade from specialization, economies of scale, and so forth, that you will be throwing away with such a strategy. One of the "secrets" of US ecoonmic development is that it has been a giant free-trade area and an increasingly well-integrated market since the early-to-mid-19th century.

Better to follow a general policy of trade expansion through reduction of trade barriers, making sure to compensate people who lose out through full employment and community development programs.

I say a "general" policy, because we might need to, from time to time, resort to temporary trade barriers as part of industrial policies for growing or declining industries. But that should be the exception, not the rule.

by tgeraghty 2005-02-20 12:39PM | 0 recs

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Re: Great stuff!

Point taken on the rush to localism. Stay tuned. I'm working on the next section of Alperovitz's book, where he describes specific well established local initiatives. I was quite frankly surprised at how numerous and broad they were. Alperovitz explains this with the "silo effect" where experts and local activists are not aware of related programs outside their area of expertise.

Tomorrow's installment will be the real eye opener. Up to now Alperovitz has been laying a firm structural foundation to support his thesis that equality leveling activities are both politically possible and compatible with a market economy.

by Gary Boatwright 2005-02-20 02:18PM | 0 recs

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Another question(s)

(1) Where do these reforms fit in in terms of timing?

The idea of widespread employee or consumer ownership of businesses seems like it would be a long-term type of initiative. In the near-term, is this something to experiment with via small-scale pilot programs?

(2) The modern trend seems to be away from state ownership (even at the local level) of enterprises toward "privatization," in the belief that experiments with state ownership were mostly failures, certainly at the national level, although less so at the local level. Even there, we have these "deregulation" experiments in electricity and other public services.

Is Alperovitz totally against these "privatization" experiments? If not, does he have some kind of idea as to when privatization works and when municipal ownership might be called for?

by tgeraghty 2005-02-20 02:34PM | 0 recs

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Re: Another question(s)

(1) Employee Ownership is alreadyu growing, and there are tax-incentives for business to shift to this model called ESOPs (Employee Stock Ownership Plans). At the most remidial level it is just what it sounds like: employees getting stock options in their company relative to their salary. At it's most advanced level it amounts to complete employee ownership, and democratization of workplace. An example of the latter is Gore-Tex ® which looks more like anarcho-syndicalism than capitalism.

(2) Alperlovitz rejects ideological arguments for privatization ("efficiency", "reduced bureaucracy"), and argues that private companies have their own inefficiencies (ex: maximum profit as the #1 goals). He mostly looks at quasi-public solutions, merging the private and the public, and taking the best of each model. You'll have to read about the many examples, but onw of my favorities is public "Land Trusts", where the municipalities buy land and lease it to developers, and raise revenue through profit-sharing, rather than taxation. Also, municipal broadband/cable companies that provide the infastructure, and servicies at a cheaper rate than private enterprise because they're not concern with maximum profit, but rather city funding. These are win-win ideas.

by colorless green ideas 2005-02-22 10:57AM | 0 recs

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Re: Great stuff!

two things to keep in mind about the free-trade / localism debate:
1- classical comparative adv. theory (Ricardo) assumes capital IMmobility (see Herman Daly on this)
2- how much more quantitative growth do we need? are we not wealthy enough (as a society) already? more locally-produced goods might mean slightly fewer goods, but less environmentally toxic.

by terpitudinal 2005-03-01 09:00AM | 0 recs

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this book was hard for me to read

i'm very interested in decentralization, localization, regional federalism, (and of course increased freedom and democracy) but i felt this book was so rich with examples, it was almost like reading a reference book.

don't get me wrong, this is an important book, and probably the most detailed policy study of an emerging school of thought--a pro-local, pro-business (but stil pro-worker) sort of new leftism. i think makes a great compliment to books like David Korten's Post-Corporate World which is more about ideas than policies, and Paul Hawken's Natural Capitalism which is more about business strategies in relation to natural resource scarcity, but still focuses on localization.

American beyond Capitalism asks:
is true democracy possible in our current system? (no)
what conditions would allow true democracy? (pluralist commonwealth)
then the bulk of the book: what policy tools do we have in our chest for achieving these long term goals?

well, we have many, and thay almost all go beyond the old conventions of left vs. right, and most appear at once radical, and totally common sense.

by colorless green ideas 2005-02-22 10:38AM | 0 recs