Sunday, January 02, 2005

Thoughts on the development of a community economy

An essay written long ago... I thought I'd bring it back to address the liberals that have, in the weeks since the elections, been advocating "buying blue". Buy blue if you choose but I'd suggest that such a strategy does not go far enough. In fact, it never really gets started. The following was written in 1993 and is underdeveloped, poorly organized... it needs editing. Still, I think it is worth posting.

Imagine your community for a moment. What is it? What are the spaces of such community? What are its economics? What would an ecological and cooperative economics look like? How might confederalism and democracy play a part in the organization of community economics? How do we break the tight grip of capitalism which has so weakened local economy and self-reliance?

The rise of the capitalist nation-state has depended upon the decline of many interconnected aspects local community life. One of these is community economics. The centralization of wealth into fewer and fewer hands has given rise to an economics which is controlled by fewer and fewer people. Small, neighborhood businesses fail while huge multinationals thrive. We become "workers" who are alienated from our communities and our labor. As workers we go through job after job often unsatisfied with the kind of work we are doing and how little pay we are doing it for. We most often find jobs that exist outside of our own neighborhood with the result that we never actually contribute to our community in any way other than the payment of property taxes.

The hierarchies in the workplace become more manipulative and more oppressive. Often times large corporations move their "operations" overseas where they can exploit the people of other communities by paying them even less and then dumping industrial wastes into their water supply. Corporations become multinational corporations.

Decentralizing the Economy

To begin, it is essential that we completely break down the scale of economy. Corporations have gotten too big. In fact, they have become goliaths that wield awesome and destructive power in communities and ecosystems around the planet. A good first step towards creating an ecological and community-based economics might be to decentralize production. Decentralization is likely a step in the right direction in part because it is a step towards making economics a moral economics of direct, face-to-face human relationships which hinge on the interactions of those creating and exchanging goods.

This is not to say that "Small is Beautiful" alone is the answer. Hierarchy can still exist in small entities and small businesses may be just as unethical, manipulative, and profit oriented as any large corporation. It is often true that smaller businesses are worse in terms of pay and "benefits" because it is difficult for these businesses to "compete" with larger corporations. Let me illustrate with an example in which I was personally involved.

During my first year in Memphis I worked at the Squash Blossom Market which was a medium sized health food business of about 125 employees. The business was run like any other business, with a hierarchical system of management. What made Squash different was that it sold "green" products like organically grown foods, biodegradable cleaners, and "cruelty-free" cosmetics. The management of this business was little different from that of any other grocery store: it was capitalism no matter what color it tried to be. In fact, the control of employees and the manipulation of "consumers" may be worse in cases such as Squash Blossom because consumers do not expect it from such a "socially responsible business". In fact, democracy did not exist in any form as a part of the management at "Squash"--there were no department or store-wide meetings nor were there any other decision making channels open to employees.

It could be said that the business was really nothing more than an opportunistic enterprise which perpetuated "new-ageism" while it encouraged an individualistic approach to health. It is capitalism feeding upon itself in that the problems created by other capitalist enterprises are now being "solved" by others. For example, a large portion of Squash Blossom's products were vitamin and herbal supplements which they advertised as people's personal solution to new environmental hazards such as toxic chemicals and increased UV rays due to a thinning ozone layer, both problems created by other capitalist firms.

A Note About "Socially Responsible Consumption"

In the past 15 years a new movement towards "socially responsible" consumption and even investment has taken hold. This movement, which is spearheaded by groups such as Co-op America, consists mainly in the boycotting of corporations which have been targeted for human and animal rights violations, ecological destruction, and other specified reasons--I would agree that this type of action is completely necessary. The other aspect of this movement, and the major emphasis of Co-op America, is the creation of a radically different economy which is based on sustainability, cooperation, and democracy, and this too is necessary. While I support such a movement it is critical that it be explicitly against the capitalist system; if it is not it will likely evolve into a mere tactic of reform and regulation of a new, more insidious capitalism.

Socially responsible consumption and investment are not undertaken to radically recreate economic relations, but to adjust them to so that they become more tolerable. Just as a civil disobedient accepts the right of a particular system to exist but not a particular law in that system, socially responsible consumption, for many, means accepting capitalism but not certain products or business practices. Thus, if followed to its conclusion, such a reformist approach will only produce a more humane, ecological and just capitalism which appears to be an improvement but which is still hierarchical, manipulative, competitive and, fundamentally unjust.

Cooperative--Inside Workings and Outside Relationships

If we are going to create a free society an essential part of that society must be a cooperative and community-based economics. It is crucial that we begin to undermine the capitalist system while at the same time we support, and carefully create, democratic forms of community economics such as cooperatives, collectives, and bartering networks. Let us start with a beginning definition of community economics. Community economics is not just the supporting small local businesses. Nor is it enough that we just create new businesses that are organized cooperatively on the inside. While it is important that we do create these cooperatives it is essential that they not compete with one another in the capitalist system. They should be run democratically and cooperatively from the outside by the community of which they are a part. Indeed, they must not only be run by the community, but owned by the community. In the journal Society and Nature, Bookchin describes this community economics in terms of libertarian municipalism:

Minimally, a libertarian municipalist economics calls for the municipalization of the economy, not its centralization into state-owned 'nationalized' enterprises on the one hand or its reduction to 'worker-controlled' forms of collectivistic capitalism on the other... It proposes that land and enterprises be placed increasingly in the custody of the community- -more precisely, the custody of citizens in free assemblies and their deputies in confederal councils. How work should be planned, what technologies should be used, how goods should be distributed are questions that can only be resolved in practice.


This point cannot be emphasized too strongly. If our goal is to create a free society, then we cannot allow capitalism to persist in any form, including a cooperative one. Rather, we must struggle in our communities to create an alternative or dual power. Certainly, as with other aspects of community development, we can begin this work today, from the ground up. From the perspective of social ecology the development of a libertarian municipalist community economy must be a cooperative effort within the cooperative, between cooperatives, and finally working into the community and between communities.

The following study/scenario was created by the author in an attempt to further describe how a community owned and operated cooperative might begin:

A community business proposal

The Highland-Southern Community Cooperative (eventually realized as the Midtown Food Co-op) meant to contribute to its community in a variety of ways. The co-op seeks to provide people a place to eat healthy food, educate themselves as community citizens, meet to discuss neighborhood and city issues. The co-op also aims to invest 20% of its worker profits in Highland-Southern neighborhood projects such as the creation of a community cultural center, organic garden network, other cooperatives, and a neighborhood newsletter. The co-op is being planned with the needs of the Highland-Southern community as a focus.

Funds for Initial Start-up

There would initially consist of approximately 8-12 cooperators. These initial cooperators will each provide a part of the initial start-up capital: approximately $3000 each. This ensures that cooperators are serious about the project and will remain committed to its growth and elaboration as a community institution. Cooperators may need to invest more capital at a later date depending upon the success of the cooperative. As a supplement to this cooperator supplied capital the HSCC is seeking a community loan through the creation of "HSCC Dollars" which will be sold for $9 (U.S.) and then redeemed six months later for $10 (U.S.). If more funds are required the HSCC will seek a loan through a local Credit Union.

Initial costs: deposits on building, rent, furniture, cookware, silverware, equipment such as coffee machine, initial food stock, building clean-up and renovation, and necessary licenses.

Structure of HSCC

The HSCC is to be a democratically run and worker owned business and it is critical that its operating and decision making structure be rooted in the principals of democracy and community ownership. We understand democracy to be a participatory process of decision making in which every member of the cooperative and community is deemed to have the capability to equally help in directing the HSCC. As for community ownership, we believe that all businesses should continuously work to strengthen the communities of which they are a part and should, in turn, be nourished by those communities. This can be done by reinvesting the "profits" of a cooperative business back into the immediate community in the form of neighborhood projects which further support self-reliance, democracy, and cooperation.... the HSCC will reinvest 20% of its worker profits back into the Highland-Southern community.

The HSCC will be directed by policy which is created during bi-monthly meetings attended by every working cooperator and community citizens. At this time community citizens will work through a community council but it is hoped that as other cooperatives are formed they will confederate and establish a relationship with neighborhood assemblies.

Philosophy and Mission of the HSCC

The Highland Southern Community Cooperative is being created so that its worker members (cooperators) and the surrounding community have an ethical alternative to the capitalist system. While the HSCC must operate within a capitalist system it will not engage in traditional capitalist goals and will, in fact, work to subvert and undermine this system. While capitalism is based on ever increasing growth, over- consumption, competition and coercion, the HSCC is based on voluntary cooperation, ecology, and sustainability through a constant search for and practice of equilibrium within the cooperative itself and within its community. Through the HSCC cooperators are making our work a social and community asset--we are empowering ourselves and our community. We are also engaging in a direct form of citizen and community activism through which we are trying to create, not just a new economics, but a new society based on a social ecological ethics of freedom.

As a part of its mission the HSCC will continuously work to establish a community network of cooperatives which will, in time, replace any need for capitalism. This network will work within the Highland-Southern neighborhood as well as with interested persons in other Memphis neighborhoods with a goal of creating a confederation of community cooperatives throughout the city......

LETS, Neighborhood Dollars, Outdoor Markets..

It must be stressed that the above "fantasy" cooperative is just one possibility. Other community cooperatives might include a CSA farm, housing, recycling and technology, small crafts production, energy, health, anarchist "deschooling", and the list goes on. But cooperatives are not the only possibilities. We can also begin to create community based bartering networks such as LETS, Local Economy/Exchange and Trading Systems and neighborhood dollars. Systems such as these are currently working in communities across canada and the united states as well as many other countries. One of the best examples is Ithaca Dollars of Ithaca, New York.

According to the Home Town Money Starter Kit
over $27,000 of HOURS (a labor currency valued at $10.00 per HOUR, the average of wages in Tompkins County New York) are being traded by over "550 businesses and individuals who place classified and display ads in Ithaca Money, our skills and goods list. Each advertiser agrees to accept Ithaca HOURS as part or full payment for goods or services. Advertisers seek regular barter partners, to reduce their need for money."


In analyzing many LETS systems including Ithaca HOURS the underlying reasoning is not always an anti-capitalist one but more of a push for small-scale, local capitalism:

The Ithaca HOUR intends to provide a currency which becomes a mainstay of local commerce, keeping wealth in the community, promoting local ownership and ecological responsibility, encouraging local pride, raising the minimum wage, and helping people get paid for doing what they like to do.


This may be a step in the right direction but there is also the possibility that it may lead only to a reform, delaying any radical challenge to capitalism. It is crucial that as we develop alternatives to capitalism such as LETS, local money and time dollars that they be creations and practices that unabashedly confront and seek to undermine capitalism. A LETS or similar system must be a community based institution which offers not just an alternative to capitalism, but a dual power to capitalism. This dual power will, over time, completely replace capitalism as that immoral system is slowly eroded and abandoned.

Another possibility for community economic development are outdoor street markets. Such markets could provide public space for the direct trading of goods between people as well as community festivities and the development of a community culture which includes a participatory politics. The need for communities to reclaim and create public spaces for direct human interactions is a crucial one. These kinds of public spaces will provide the place for a public sphere of life. How these public spaces will look depends upon the communities which create them. A vacant lot may be transformed into a community plaza for a weekend market, festivals, or a meeting place; even an unused parking lot could initially serve as a public space. Street corners and sidewalks could be utilized. Thus a community economics integrates community space, culture, and participatory politics.

The Mondragon Experiment

While what I have described above is, in some ways, theoretical, it is also very real. It is vital in this day, when we seem to be losing our knowledge of history, that we remember that economics, as well as all other aspects of life, have up until very recent times been based in the community. It is also helpful to look at recent examples of community based and cooperative economics. There are many examples of these and they can be found all over the world. I would like to mention perhaps one of the most well known of these and that is the Mondragon cooperatives.

The Mondragon experiment was started in the 1940's in the Basque region of Spain and began with the work of Jose Maria Arizmendiarrieta, a Catholic priest. In his book We Build the Road as We Travel Roy Morrison writes that the experiment began with a simple apprentice school and was soon followed by the League of Education and Culture which served to "encourage and coordinate educational efforts on all levels for children and adults." From this the Mondragon cooperative system was slowly and carefully crafted into a tough network of more than 160 worker-owned and directed cooperatives including a large bank which is also worker owned/controlled. As of 1988 the cooperatives( which include a chain of department stores, appliance manufactures, machine shops...) were serving well over 100,00 people with over 21,000 cooperators directing the system.

How was such a cooperative system able to expand and be so successfull in a capitalist market? Why and how did the system work? Mondragon's success is due, in great part, to the commitment of its workers to their guiding principal of "equilibrio" which, simply put, means a search for balance. Every action that the cooperatives have taken from early on has been carefully thought out and directed through a participatory, democratic process. But this is their philisophical base. Another key to their success has been their development of a cooperative bank and their wise reinvestment of cooperative profits back into this bank so that other cooperatives could be formed. They have sought, from the beginning, to create a whole network, or ecosystem, of cooperatives which compliment and help one another.

A third important ingredient in the sustainability of the cooperatives is their process of creating new cooperatives, which they undertake with great care and planning so as to ensure success. In fact, of all the cooperatives started, only three have failed and two of these were converted capitalist firms. The process usually begins with the forming of a group of potential cooperators who are interested in undertaking a particular project. They work with a cooperative development division of the Caja Laboral Popular (the coop bank) to develop a clear and concise plan and if all goes well they are given a loan by the CLP which is added to the start-up capital that each cooperator has her/himself already provided(all cooperators are required to put in an equal share of this capital investment because they are also the owners).

While we must remember that Mondragon is far from perfect, it is a meaningful experiment and an ongoing work towards a democratic community economics. The main problem of the cooperatives is the size to which some of them have grown individually, the geographical distance which the system tries to encompass, and the centralization that has been a result of the tremendous growth in the systems size. Indeed, in many ways Mondragon has far out grown the communities in which it exists. This growth in size is due in large part due to the pressures of competing in the capitalist system. But, like any ecosystem, we should expect growing pains.

Perhaps Mondragon will eventually fail but that does not mean that it was not, in many ways, a success. Many people, within the system and those of us far away, have learned a great deal from the Mondragon experiment. And it is still very possible that Mondragon will continue and retain or regain its revolutionary core. As Morrison notes " This is 'revolution' construed as a revolutionary kernel within an evolutionary and participatory historical process, something far different from a sudden seizure of power."

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