The $100bn Facebook question: Will capitalism survive ‘value abundance’?

1 03 2012

from Al Jazeera English

by Michel Bauwens

Open-source software, shared innovation and crowd-sourced manufacturing threaten capitalism as we know it.

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Chiang Mai, Thailand – Does Facebook exploit its users? And where is the $100bn in the company’s estimated value coming from?

This is not a new debate. It resurfaces regularly in the blogosphere and academic circles, ever since Tiziana Terranova coined the term “Free Labour” to indicate a new form of capitalist exploitation of unpaid labour – firstly referring to the viewers of classic broadcast media, and now to the new generation of social media participants on sites such as Facebook. The argument can be summarised very succinctly by the catch phrase: “If it’s free, then you are the product being sold.”

This term was recently relaunched in an article by University of Essex academics Christopher Land and Steffen Böhm, entitled “They are exploiting us! Why we all work for Facebook for free“. In this mini-essay, they make a very strong claim that “we can certainly position the users of Facebook as labourers. If labour is understood as ‘value producing activity’, then updating your status, liking a website, or ‘friending’ someone, creates Facebook’s basic commodity.”

This line of argument is misleading, however, because it conflates two types of value creation that were already recognised as distinct by 18th century political economists. The distinction is between use value and exchange value. For thousands of years, under conditions of non-capitalist production, the majority of the working population directly produced “use value” – either for themselves as subsistence farmers, or as tributes to the managerial class of the day. It is only under capitalism that a majority of the working population produces “exchange value” by selling their labour to firms. The difference between what we are paid and what the market pays for the products we are making is the “surplus value”.

But Facebook users are not workers producing commodities for a wage, and Facebook is not selling these commodities on a market to create surplus value.

Indeed, Facebook users are not directly creating exchange value at all, but instead communicative use value. What Facebook does is to enable this pooling of sharing and collaboration around their platform – and by enabling, framing and “controlling” that activity, they create a pool of attention. It is this pool of attention which is sold to advertisers, for an estimated $3.2bn per year, which is barely $3.79 in ad revenue per user.

We can, of course, argue that Facebook does a lot more than just selling the attention. For instance, their knowledge of our social behaviour, down to the individual level, has undoubted strategic value – for political power players and commercial firms alike. But is this surplus value really worth $100bn? That remains a speculative bet. For the moment, it’s likely that the nearly one billion users of Facebook do not find the $3.79 in ad revenue per user very exploitative, especially since they do not pay to use Facebook, and are using the website voluntarily. That said, there is a price to pay for not using Facebook, in terms of relative social isolation from their peers who are users.

Engineering scarcity

What is important, however, is that Facebook is not an isolated phenomenon, but part of a much larger trend in our society: an exponential rise in the creation of use value by productive publics, or “produsers“, as Axel Bruns calls them. It is important to understand that this creates a huge problem for a capitalist system, but also for workers as we have traditionally conceived them. Markets are defined as ways to allocate scarce resources, and capitalism is in fact not just a scarcity “allocation” system but also a scarcity engineering system, which can only accumulate capital by constantly reproducing and expanding conditions of scarcity.

Where there is no tension between supply and demand, there can be no market and no capital accumulation. What peer producers are doing, for now mostly producing intangible entities such as knowledge, software and design, is to create an abundance of easily reproduced information and actionable knowledge.

This cannot be directly translated into market value, because it is not at all scarce – it’s over-abundant. And this activity, moreover, is done by knowledge workers, whose ranks are steadily expanding. This over-supply threatens to make knowledge workers’ jobs precarious. Hence, an increased exodus of productive capacities, in the form of direct use value production, outside the existing system of monetisation, which only operates at its margins. In the past, whenever such an exodus occurred – of slaves in the decaying Roman Empire, or of serfs in the waning Middle Ages – that is precisely the time when conditions were set for major societal and economic changes.

Indeed, without a core reliance on capital, commodities and labour, it is hard to imagine a continuation of the capitalist system.

The problem is this: internet collaboration has enabled the creation of use value in a way that totally bypasses the normal functioning of our economic system. Normally, increases in productivity are somehow rewarded, and these rewards enable consumers to derive an income and buy products.

But this is no longer happening. Facebook and Google users create commercial value for their platforms, but only very indirectly. And they are not at all rewarded for their own value creation. Since what they are creating is not what is commodified on the market for scarce goods, these value creators do not receive income. Social media platforms are exposing an important fault line in our economic system.

We have to link this emerging social economy, based on sharing creative expression, with the more authentic field of commons-oriented peer production, as expressed in the open-source and “fair use” open-content economy, which one estimate said made up one-sixth of US GDP. There is also no doubt that one of the key ingredients of China’s success so far has been the combination of the open-source – such as the country’s domestic “Shanzai” economy – together with the patent-free policies that are imposed on foreign investors. This has guaranteed an open, innovative commons for much of Chinese industry.

Even as the open-source economy becomes the default way to create software, and even as it creates companies that reach a revenue of more than $1bn, such as Red Hat, the overall effect is still deflationary. It has been estimated that open-source annually destroys $60bn in revenues for the proprietary sector.

Thus, the open-source economy destroys more proprietary software value than it replaces. Even as it creates an explosion of use value, its monetary value decreases.

Open-source manufacturing

The same effects occur when the shared innovation commons approach is used in physical production, where it combines an open-source approach with distributed machinery and capital allocation (using techniques such as crowd-funding and social lending platforms, like Kickstarter).

For example, the Wikispeed SGT01, a car that received a five-star security rating and can attain a fuel efficiency of 100 miles per gallon (roughly 42.5 kilometres per litre), was developed by a team of volunteers in just three months. The car is being sold for only $29,000, about a quarter of what a traditional industrial automobile firm would charge, and for which it would have needed at least five years of development and billions of dollars.

Local Motors, a rapidly growing crowd-sourced car company, claims to develop automobiles five times faster than Detroit, with 100 times less capital, but WikiSpeed has achieved even faster design and production times. The WikiSpeed car is designed for modularity, using sophisticated software development techniques (such as agile, scrum, and extreme programming), an open design, and local production by garages, using distributed manufacturing techniques.

And Arduino, an open-source electronics prototyping platform, works similarly to WikiSpeed and is driving prices down in its sector. If Marcin Jakubowsky’s Open Source Ecology project is successful, this will happen for at least 40 different types of machinery. In every field where an open-source manufacturing alternative develops – and I predict that they will be developed in every single field – there will be similar pricing and income pressures on mainstream economic models.

‘Collaborative consumption’

Another expression of the sharing economy is collaborative consumption. As Rachel Botsman and Lisa Gansky have demonstrated in their recent books – What’s Mine is Yours and The Mesh, respectively – there is a rapidly growing sharing economy developing through product-service systems, sharing marketplaces and collaborative lifestyles.

For example, it’s estimated that there are about 460 million homes in the developed world, and that each home has, on average, $3,000 worth of unused items available. There is clearly economic benefit to be had by using these idle resources. Much of it will not be rented, however, but swapped and bartered for free. Even the paid sharing economy will have a depressive effect on the buying of new products.

Such developments are good for the planet and good for humanity, but the larger question is: are they good for capitalism?

What will happen with capitalism given social media-based exchanges, commons-based production of software and hardware, and collaborative consumption, on an increasingly massive scale?

What happens if more and more of our time goes into producing use value – a fraction of which creates monetary value – but there is not a substantial return of income to the use value producers?

The financial crisis beginning in 2008, far from diminishing the enthusiasm for sharing and peer production, is in fact accelerating the adoption of such practices. This is not just a problem for the increasingly precarious working class, but also for capitalism itself, which is seeing its opportunities for accumulation and expansion dry up.

Not only is the world faced with a global resource crisis, it is also facing a crisis of intensive development, because value creators are increasingly income-less. The knowledge economy turns out to be a pipe dream, because what is abundant cannot sustain market dynamics.

Thus we have an exponential rise in the creation of use value, but only a linear increase in the creation of monetary value. If workers have less and less income, who can buy the commodities that are offered for sale by companies? This, in a nutshell, is the crisis of value that we are facing as humanity. It is a challenge just as big as climate change or increases in social inequality.

The meltdown of 2008 was a prefiguration of this crisis. Since the advent of neoliberalism, workers’ wages have been stagnating and purchasing power was maintained only by an over-extension of credit throughout society. This was the first phase of the knowledge economy, in which only capital had access to networks, which it used to create globally coordinated multinationals.

As the knowledge society grew in size, more and more of businesses’ value consisted of intangible, not physical, assets. The neoliberal stock market and its speculative excesses can be seen as a way to evaluate the amount of intangible value that is added to the stock’s value by human co-operation. This bubble had to burst.

The second phase of the knowledge society, in which networks are diffused throughout society and allow productive publics to be directly engaged in peer production, creates an additional layer of problems. Add to the wage stagnation and the exodus out of wage labour that peer-based use value creation causes, and we can see that the problem is not solvable within the present paradigm. Is there a solution?

There is – but that is for the next installment. The solution involves an adaptation of capitalism to peer production, but also opens up the avenues for a transcendence of capitalism.

Michel Bauwens is a theorist, writer and a founder of the P2P (Peer-to-Peer) Foundation.





Practical Post Scarcity by Open Source Ecology

1 02 2012

http://vimeo.com/33701676

by Open Source Ecology





Occupy Buddha: Reflections on Occupy Wall Street

23 01 2012

from The Huffington Post

http://media.photobucket.com/image/buddhism/Dooley_04/BuddhistPath/BUDDHISMzen2.jpg

by Lewis Richmond

The word “Buddha” means to wake up. More precisely it means to see what is really going on (in other words, “dharma”), and understand that it has always been so. The Occupy Wall Street movement and its 1,000 offshoots worldwide is that kind of awakening. Its overarching theme is inequality: rich and poor, haves and have-nots, just and unjust. It has always been so, but the scale of it varies through time. In the U.S., the objective reality and statistical fact of this economic divide has been brewing since the 1980s (for an excellent historical perspective, see this article by Bill Moyers in The Nation magazine).

But now in times of unemployment and bread-line level deprivation, that reality has broken through the veil of public unknowing, taken form as the Occupy movement and has been transmitted at light speed from city to city courtesy of social media and the web.

Many of my Buddhist friends are sympathetic to this movement, and want to help. Many of them, like me, were themselves youthful demonstrators once, long ago when the issues were civil rights and the Vietnam war. Just as now, that awakening in the 1960s was to perennial truths to which we had up to then been oblivious. “Black people in the South can’t vote! They are oppressed!” Yes, as they had been forever. “This war is unjust. It’s horrible! The innocent die!”–another perennial truth. In those days it was television, rather than the internet, that broadcast these truths into everyone’s living rooms and woke us up.

I was once one of those youthful anti-war protestors, linking hands and facing down riot police armed with batons and guns. We self-righteously referred to the police in those days as “pigs,” ignoring the unwiseness of hurling such insults at a phalanx of heavily armed men. We too were beaten, bloodied, and in a few cases killed. When I look back through the lens of my own youth at today’s protestors and their pithy slogans (“We are the 99%”) I see myself.

However, we Buddhists all need to remember that Gautama was in his time a one-percenter or worse–he was, after all, a prince. He had his own awakening from unknowing (or so the accounts of his life tell) when he walked out of the palace as though for the first time and saw what was really happening — “People are old and poor! People are sick! They die! Look, a monk!” This is an archetypal moment (referred to in Buddhist literature as the “four sightings”); I think it happens in some fashion for each generation–an onrush of awakening that keeps societies from sinking totally into the quicksand of their own corruption.

My Buddhist friends think of conveying well-meaning instructions to today’s Occupiers about non-violence, compassion, and meditation, so they will not become angry in the face of the injustice they see. This is good, but I am not sure that is exactly the right medicine. Maybe it is good that they are angry. Maybe they don’t need meditation instruction just now. Gautama, after all, was not schooled in meditation when he experienced the four sightings. He just opened his eyes, which anyone can do.

Others say the Occupiers need a goal, demands, a program. Perhaps. I’m not sure today’s protestors need anything right now except to be appreciated for the truths they are speaking and the role they are playing at this critical time in the development of human consciousness. They have already discovered what the Buddha taught in his second Noble Truth — that the root cause of our unnecessary suffering is grasping, clinging, selfishness, and greed — often for money, sometimes for emotional or physical safety, nearly always for power. The energy of greed is the prime distorter of human community. The Buddha clearly saw this.

My feeling is that we are seeing the first raw beginnings and baby steps of a giant leap forward, one that will transcend and outgrow whatever form the Occupy movement is currently taking. Let it develop, let it learn what nourishment it needs. If it needs or wants our gray-haired advice — and it may not — then let it ask. I am ready if anyone asks, knowing that my time on the barricades was long ago and that I may not know the answers. If no-one asks, I am content to be watchful, to appreciate, and to allow this fervent historical moment to unfold.

One last note: much later, when I had become a Buddhist teacher, I met a policeman who had been on that police line where I demonstrated in front of the Oakland, California Army Induction Center so long ago. By now he too was a Buddhist. He told me how it was for him back then. “We were scared,” he said. “We didn’t know who you were or what you would do. We didn’t know what weapons you had or whether you would riot. And when you started screaming at us and calling us pigs, we got mad. We weren’t pigs (well, a few of us were brutes, he admitted) we were just people trying to do a job. I understood that you were angry, but I didn’t like being called a pig. I wasn’t a pig.”

The policemen, the firemen, the teachers, the workers everywhere — they are all part of the 99%. And more to the point, this really isn’t just about the 99%, it is about the 100% — in other words, all of us. Who knows what Gautama was like in the years before he walked out of the palace. He may have been a self-satisfied aristocratic twit — until he woke up. People can change. That is the unwritten liner note to the 2nd Noble Truth — the deep truth of human suffering is for everyone, it is about the 100%. For Buddhists, this 100% is not just human beings, but everything living, the air and the clouds, even the whole earth itself.

Occupy Buddha!





Some US legislators abandon anti-piracy bills

19 01 2012

from Al Jazeera

At least six members of Congress switch sides as protests against the legislation blanketed the internet.

At least six members of the US Congress have switched sides to oppose anti-piracy legislation as protests blanketed the internet, turning Wikipedia dark and putting black slashes on Google and other sites as if they had been censored.

The legislators, including Senators Marco Rubio, Roy Blunt and John Boozman, said they were withdrawing their support, and blamed Senate Majority Leader Harry Reid for not heeding criticisms of the Senate version of the bills.

Friends of the bills, meanwhile, stepped up their efforts on Wednesday.

Creative America, a studio- and union-supported group that fights piracy, launched a television advertising campaign that it said would air in the districts of key legislators. In Times Square, it turned on a digital pro-SOPA and PIPA billboard for the day, in space provided by News Corp, which owns Fox Studios.

The group also said it is sending a team of 20 organisers to big events around the country, including the upcoming Sundance Film Festival, to try to get voters to see the situation their way.

Some volunteer editors of Wikipedia said the protest of anti-piracy legislation could threaten the credibility of their work.

“My main concern is that it puts the organisation in the role of advocacy, and that’s a slippery slope,” said Robert Lawton, a computer consultant and site editor who would prefer that the encyclopaedia stick to being a neutral repository of knowledge.

“Before we know it, we’re blacked out because we want to save the whales.”

During the 24-hour blackout, Wikipedia visitors can only see a black-and-white page which says, “Imagine a world without free knowledge”, with a link to information about the controversial Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA).

The site urges Wikipedia readers in the US to contact their local congressman to vote against the bills. “This is a quite clumsily drafted legislation which is dangerous for an open internet,” Jimmy Wales, the founder of Wikipedia, said.

Google and others used the black censorship bars to draw attention to what had until recently been an obscure and technical legislative proposal to curb access to overseas websites that traffic in stolen content or counterfeit goods.

‘Don’t censor the web’

Ben Huh, the founder of the popular Cheezburger humour network, said on his Twitter feed that his 58 sites would also observe a blackout on Wednesday.

Search engine Google added a link to a petition against the bills on its site, reading, “Tell Congress: Please don’t censor the web!”.

Social media-sharing Reddit launched a 12-hour blackout, starting at 13:00 GMT.

But Dick Costollo, the chief executive of Twitter, said that while he opposed the SOPA legislation, shutting down the service was out of the question.

“Closing a global business in reaction to single-issue national politics is foolish,” Costollo tweeted.

The bills pit technology companies such as Google and Facebook against the bill’s supporters, including Hollywood studios and music labels, which say the legislation is needed to protect intellectual property and jobs.

The proposed SOPA legislation aims to crack down on online sales of pirated US movies, music or other goods by forcing internet companies to block access to foreign sites offering material that violates US copyright laws.

US advertising networks could also be required to stop online ads, and search engines would be barred from directly linking to websites found to be distributing pirated goods.

However, supporters argue the bill is unlikely to have an impact on US-based websites.

Google has repeatedly said the bill goes too far and could hurt investment.

Along with other internet companies, it has run advertisements in major newspapers urging Washington legislators to rethink its approach.

The founders of Google, Twitter, Wikipedia, Yahoo! and other internet giants said in an open letter last month the legislation would give the US government “power to censor the web using techniques similar to those used by China, Malaysia and Iran”.

“We oppose these bills because there are smart, targeted ways to shut down foreign rogue websites without asking American companies to censor the internet,” a Google spokesman said on Tuesday.





Activists Gather Over 1 Million Signatures in Walker Recall Effort

17 01 2012

from The National Journal

by Sean Sullivan

Wisconsin Republican Gov. Scott Walker is virtually certain to face a recall election following an announcement from the state Democratic Party that over a million signatures will be filed on Tuesday afternoon to put the first term governor on the ballot this year.

“The collection of more than one million signatures represents a crystal clear indication of how strong the appetite is to stop the damage and turmoil that Scott Walker has caused Wisconsin,” said Ryan Lawler, board member for United Wisconsin, the group spearheading the signature gathering process.

ust over 540,000 valid signatures are required to trigger a recall election. Activists had 60 days to collect the signatures, during which time they brought in nearly double the requisite amount.

Democrats were quick to tout magnitude of their accomplishment, noting that they collected 3,000 pounds worth of signatures, which fill 300,000 pages at 14″ each.

The signatures are now subject to review by the state Government Accountability Board, which has 60 days to examine the validity of the signatures, though the head of the board has said the process will take longer. Some will no doubt be disqualified, but given the amount collected, Walker — who has already been preparing for a recall campaign by raising money, staffing up and running television ads in the state — will almost certainly face another election, less than two years into his first term.

Several Democratic names have been floated as potential Walker challengers, including Walker’s 2010 opponent, Tom Barrett, the mayor of Milwaukee. Other names include former Dane County Executive Kathleen Falk, state Sen. Jon Erpenbach and retiring Sen. Herb Kohl, among others. A recall election would be ordered within six weeks of the date the petition signatures are validated, but a contested Democratic primary could further push that day back by four weeks.

For his own part, Walker was nowhere near Madison on Tuesday, opting instead to attend a fundraisier in New York.

United Wisconsin collected over 845,000 signatures for the recall Rebecca Kleefisch, the lieutenant governor of Wisconsin.





TO REWIRE WITH RENEWABLES THE 99% MUST END THE TYRANNY OF OIL, GAS AND COAL

14 01 2012

from Realizing The Future

by Steve Liptay
December 1, 2011

As 2012 approaches and movement strategies are being shaped within the 99% movement and the climate justice movement, we stand at a pivotal moment in history. The climate crisis is bearing down on us stronger than ever, the ecological crisis is deepening, and economic, social and environmental injustices are escalating. With our hijacked democracy in gridlock we’ve taken to the streets and sparked what many, including Dr. Cornel West, would describe as a ‘deep democratic awakening’. How do we yield the paradigm level changes that are needed to heal the earth and make our human world both just and sustainable? That’s the question of our time. None-the-less, solving the climate crisis will require us to rewire the globe with renewable energy and put an end to the tyranny of oil, gas and coal. To do this I propose that the 99% movement and the climate justice movement initiate a sustained civil disobedience campaign targeting climate deniers in the U.S. Congress to dramatize the need for their ouster.

To end the extraction and burning of fossil fuels it is necessary to put a rising price on carbon pollution. For Americans, this means that rewiring our country with renewable energy will require the U.S. Congress and our President pass a new law that taxes the most profitable industry in the history of the world. The revenue generated would then be distributed in its entirety on a per capita basis back to the American people to buffer rising energy costs. A monthly dividend check would give the 99% the ability to become more energy efficient and afford the transition to renewable energy. A highly centralized energy sector in which the 1% have become richer and richer would be transformed into a highly decentralized sector in which the 99% power their lives with rooftop solar panels and a host of other renewable energy technologies. This policy is called ‘fee-and-dividend’ – you can download a PDF of a legislative proposal at: www.citizensclimatelobby.org/. If enacted, the thriving fossil fuel industry could potentially be put to an end in the matter of a decade.

Electing a Congress to pass ‘fee-and-dividend’ would require a massive and sustained civil disobedience campaign to shine a light on the urgency of climate change. One of the central lessons we can take away from the Tar Sands Action campaign to oppose the Keystone XL pipeline is that civil disobedience gets the goods. A 2-week long sit-in at the White House led to 1,253 arrests and an explosion in media hits. During the sit-in and in the weeks to follow the American people were educated by our mass media and social media – they learned the who, what, where, when and why of the tar sands in Alberta, Canada. The media and the American people began to evaluate the costs and the benefits of the proposed pipeline and the events that unfolded were nothing short of remarkable. The big environmental groups came together against Keystone, Republicans and Democrats found common ground in opposition, the New York Times wrote a timely editorial and an in-depth investigation of pipeline safety, Nobel laureates a wrote letter to the President, and a State Department scandal broke (among other developments). The Obama administration responded by sending the pipeline proposal back to the drawing board, promising a thorough and independent review that will include climate change. If we had instead decided to pass around a petition, hold permitted protests, submit op-eds to the newspapers, and make phone calls to our elected officials this fight would very likely not have gained the momentum it needed. Of course I think we all wish it weren’t the case, but as history has proven over and over there comes a time when we have no other choice but to take a stand. As the Tar Sands Action and the Occupy movement have demonstrated, it is time for direct action.

If our movements were to get behind this line of reasoning, I believe that it would leads us into a sustained civil disobedience campaign targeting the U.S. House and Senate calling for 1. an immediate end to all fossil fuel subsidies and 2. a comprehensive renewable energy bill centered around ‘fee-and-dividend’. It would trigger a grassroots mobilization with all hands on deck and everyone playing to their strengths. On the ground it would likely mean occupying House and Senate offices and disrupting debate in Congress from the House gallery and the Senate gallery. In addition, mic checking and bird-dogging Congress’ climate deniers would help maintain pressure when Congress was not in session.

A few months ago I disrupted the House of Representatives with 8 others on the day that Power Shift 2011 began. (Here’s a video.) Our intent was to spark a conversation within Power Shift about the need for civil disobedience in the climate movement and to speak directly to our elected officials about the urgency that the climate crisis demands. We were handcuffed by the Capitol police and transported to a D.C. police station where they booked and held us for the afternoon and early evening. In the end, we all took a settlement offer, completed 32-hours of community service for a non-profit of our choosing, and waited out a 4-month stay away from the Capitol grounds. It was a minor sacrifice relative to the suffering endured today by our frontline communities and the suffering to come if we continue to extract and burn fossil fuels. As I look back, disrupting Congress with my fist raised and singing ‘We Shall Overcome’ was the possibly first time I felt fully engaged as an American citizen.

If we were to begin this campaign when Congress reconvened in January 2012 it could potentially put a proposal to end fossil fuel subsidies up for a vote during the 112th Congress and make ‘fee-and-dividend’ a key election issue in November. While ending fossil fuel subsidies would do little to curb carbon pollution and would only reduce the national debt by an estimated $122 billion over 10-years, it would be a small step in the right direction. Putting a significant price on carbon would get us on the path to a renewable energy future and put the fossil fuel industry in the grave where it belongs. Maybe we’d achieve one or both of these goals during the 112th and 113th Congresses, maybe we wouldn’t. What’s critical is that we start to wake up our elected officials and fellow Americans who are asleep at the wheel on climate change. Now is our hour. It’s up to us to end the tyranny of oil, gas, and coal.

Steve Liptay
@Liptay





Worker Cooperatives Can Revitalize Our Economy

12 01 2012

from Sustainable Tompkins

by Joe Marraffino and Gay Nicholson

Leaders in the sustainability movement believe that the most promising economic development strategy available may be a focus on economic justice. This would reduce poverty and increase tax revenues, strengthen democracy and the sense of a shared future, reduce the tax burden for social services, and increase support for investments in education and public infrastructure. All of these are part of a viable and sustainable local economy.

Worker cooperatives can be an important tool in this strategy. According to the Democracy Collaborative at the University of Maryland, cooperatives can create a green and just economy by building community wealth “in which ownership is broadly shared, locally rooted, and directed toward the common good. Worker cooperatives are businesses owned and democratically controlled by their workers. They have been organized since the dawn of the industrial revolution and have been successful in virtually every industry – from mining companies, to robotics firms, taxi drivers, health care providers, food processors, to creative and technology firms – anywhere where the workers and their community would benefit from having a stake in their workplace and the incentive of receiving an equitable share of the fruits of their labor.

While worker cooperatives have been a steady presence in modern history, they have surged during times of economic dislocation, and rapid cultural and technological change. During the massive movement of capital and jobs out of the upstate (New York) region in the 1970s and 1980s, a wave of efforts to create and save jobs through cooperatives and employee ownership rose up in Jamestown, Herkimer, Saratoga, the Mohawk Valley, Ithaca and elsewhere.

The wave was given technical assistance by the NYS School of Industrial and Labor Relations and supported by government loans. State workers, researchers and organizers in Central New York were considered authorities throughout the country, structuring buyouts and training workers. In the mid-1980s the New York State Legislature formalized their support by writing a new article into State Corporations law recognizing the benefits of the worker cooperative model.

Worker cooperatives can have profound social benefits in terms of job satisfaction and empowerment of citizens through the everyday practice of democratic participation. They have also been shown to have significant economic benefits, both at an individual and regional level. Participation in decision-making and an equitable share of profits increases worker productivity and creativity, and decreases the need for supervision. A broad base of employee ownership increases economic stability by increasing the incentive for firms and workers to stay in the region and via the multiplier effect of worker/resident’s local spending. Worker cooperatives also build and retain locally-rooted assets for workers who may have no other path to wealth creation or entry to the middle class.

In our current economic climate, worker cooperatives are increasingly being seen by governments, community groups, and workers as a valuable tactic to stabilize regional economies, create and retain local jobs, and create assets for residents, including those that may have no other path to enter the middle class. For example, Cooperative Home Care Associates, a NYC home health care business, has over 1,500 worker-owners and annual income of over $40 million. The cooperative has helped raise the base pay for the entire sector of workers in the region, and has created full-time work and career paths in an industry notorious for its instability and low pay. South of Rochester, one of the oldest worker cooperatives in the country, the 35-year-old, and $18 million per year food processor Once Again Nut Butter has grown and created jobs despite regional closures and layoffs.

The Finger Lakes and Southern Tier regions need a program to mobilize the creation of regional worker cooperatives. Worker cooperatives need technical assistance to get started. They need incubation services, connections with investments, and organizational development that is not available through existing business development agencies. This need exists in part because of the relative lack of familiarity that banks, attorneys, and workers have with the model, and also because of some unique aspects of the model itself.

Sustainable Tompkins is proposing a pilot project of an incubator and technical assistance center for worker coops. Let’s make sure that economic justice is at the heart of our economic development strategy. It’s good for business. Contact us at info@sustainabletompkins.org to learn more and get involved.

Joe Marraffino is a Cooperative Organizer with Democracy at Work Network
Gay Nicholson is President of Sustainable Tompkins

Tompkins Weekly 10/3/11