Wednesday, July 31, 2019

Capitalism - to suck us dry or to build us up - it's our choice

Mondragon Cooperative Movement

Dramatic change brought about by the Industrial Revolution

In high school history we studied how England was the motor that drove the industrial revolution. Before that time, all “business” was done in homesteads, that is, in homes. Wool was spun and woven into fabric at home and people would sell their produce. Better quality got better prices generally. Then someone invented the “cotton gin”, a machine which processed and wove cotton much faster than by hand, and the industrial factory was born. As jobs were created, people moved from urban areas, left their homes, and moved to proximity to these factories, and the modern city was born. The American Ford is credited with bringing the assembly line to the production of his automobiles, but he did not invent the industrial factory.

Dramatic conflicts between capital and labor

In the 19th century, the 1800’s, there were terrible conflicts between capitalist industrialists and workers. That is primarily because the way factories developed, the work week consisted of 6 days of 10 to 12 hours. Initially people didn’t mind working so long because they were accustomed to long hours on their small subsistence farms. However, factory work was heavy work, and over time, people realized their hours were too long, their work week was too long, and they were suffering fatigue and worse health problems.

The owners, capitalist industrialists, for the most part were not humanists and generally took a dim view of the workers’ complaints and demands for better conditions. Setting aside reason and compassion, they resorted to the police and coercive methods of the state to impose on the workers resolutions favoring the owners.

Trade unions and the new "middle class"

It took a long time but eventually, by the early to mid 20th century, trade unions emerged with sufficient power and representative authority to effectively negotiate better conditions and payment on behalf of workers, including all kinds of benefits. By then, the capitalist industrialists didn’t mind too much making those concessions because they were now making very healthy profits. This was particularly true of the industrial expansion occasioned in North America during WWII. By the 1950’s there emerged a new “middle class” which enjoyed stable employment, excellent remuneration, and valuable benefits. 

Globalization shatters the "American Dream"

This “utopia” lasted only a few decades until the 1970’s and 1980’s with the advent of globalization. American presidents struck down much of the legislation developed in previous decades to protect workers, with the result that there were no longer any obstacles to prevent corporations from exporting jobs to countries where they could pay much lower wages and not be obliged any longer to provide benefits.

As a result, America is no longer the “land of the American dream”; rather, it is increasingly becoming a wasteland. It’s inner city cores are often a dangerous dead zone of abandoned homes ruled by lawless street gangs, and small towns across the nation are resembling more and more the exploited towns in third world countries. How could such a great nation come to this in so short a period of time? That is the question.

One model of capitalism has a stranglehold on western societies

The answer has to do with the model of capitalism at work in the U.S.A. and most of the western world, but also in the rest of the world that has until now admired America and its capitalism. It is a capitalism that champions a few of the basic human values such as the right to private property, the right to work, the right to generate and to accumulate wealth, and so on. However, its basic model also has some flaws. In particular, the wealth generated by most capitalist corporations is accrued almost exclusively to the major shareholders – who hold majority decision-making power and authority – and also to the senior officers and the members of the board.

A realistic economic analysis of what is going on

In all of these corporations, with few exceptions, the workers are not share holders and have no say in the governance and decision making of the corporation. With the advent of globalization as a new trend in business and economics, corporations gave themselves the freedom  to export jobs away from the more expensive home base where they had developed in previous decades in favor of countries where, for various reasons, they could pay much cheaper wages and not have to provide benefits, or not as many.

Why is America becoming an economic wasteland?

This shows that in this model of capitalism, corporations manifest zero loyalty to the populations that gave rise to them and their success. They show no qualms about abandoning those populations, putting them all out of work, pulling up their stakes, and moving out. They do not consider it their concern or responsibility that their former employees go without work, lose their homes, and suffer all the harsh consequences of sudden impoverishment. 

Worse still, these corporations show little interest in taking their fair share of responsibility for the general development and well being of society, what we could call the common good. The burden of maintaining public infrastructures for the most part rest squarely on the shoulders of citizen tax payers; while corporations export their assets to foreign tax havens precisely to avoid paying taxes on their accumulating wealth. If we step back and look at the bigger picture of our western societies, we see the following devastating consequences:

1.      Traditional capitalist corporations take zero responsibility for the well being of their workers.

2.      They show zero concern for the well being of the communities and societies which gave them rise and / or where they currently operate; avoiding as much as possible sharing the burden of maintaining public infrastructures.

3.      They do not hesitate to abandon the populations which gave rise to their success for more profit elsewhere.

4.      Many of them move much of their wealth to foreign tax havens to avoid their corporate social responsibilities.

5.      In an age when workers are no longer illiterate but well educated, corporations still refuse to allow them to participate more fully in the management and profit of the corporation.

6.      Due to competitive pressure from Japanese auto makers, some corporations began to introduce incentives to employees who proposed innovations that improved productivity, but these workers remained outsiders with one time rewards their only benefit.

7.      These corporations, by their very nature, create inequality by separating the small minority of people who are major shareholders, senior officers, and board members from the workers and the general population.


It doesn’t have to go on this way. At present, most of our corporations suck the marrow from the bones of our society and then, when they can make more profit elsewhere, there is nothing to hold them here and they simply leave us high and dry. Unless we choose for ourselves better ways of doing business for ourselves, we and our society will inevitably go down the drain. The choice is ours to make, alone, individually, but also collectively.

Our choice is NOT between capitalism / democracy OR communism / Marxism / socialism

Anyone who spoke this way 50 years ago would have been branded a communist by capitalist industrialist interests. Why did they do this, and why might they do it again? The answer is very simply because they don’t really like competition, not fair competition anyway. They say they thrive on competition, but only when they can rig the game in their favor. That’s how I used to play Monopoly with my 9-year old sister when I was 15. I liked to win and didn’t care about her feelings. Time goes by and we grow up, or at least, we should grow up. Why do you think that most corporations have such big budgets for their lawyers? They need lawyers in order to exploit the best possible interpretations of laws in their favor.

Our choice IS between 

greedy irresponsible capitalism VS cooperative socially responsible capitalism

In politics this is the difference between dictatorship / oligarchy VS participation democracy

What if there is a better way to do business? It would be a way whereby decisions would not be made by senior officers and the profits would not go to a small minority of people. Instead, the workers would own, operate, and manage their own company as a cooperative and democratic venture. After the cooperative company paid its fair share of taxes, taking full responsibility for its corporate existence on an equal footing with the general population, the profits would go 100% to the workers according to a formula something like this:

10% of all profits invested in the education of the workers’ families – in their own schools and university

45% of all profits would be reinvested into the cooperative company for innovation and development.

45% of all profits would go to the worker / owners / members of the cooperative company, but not in immediate cash; rather invested yearly back into the cooperative company for innovation and development of more coops, and to be given to them for their retirement.

This is an alternative version of capitalism – unlike the one we find oppressive and heartless which rewards only major shareholders, senior officers, and board members and sucks dry the marrow of the bones of society and leaving only ruins in their wake – this new innovation has proven since 1956 that we can do it differently and better by together freely turning over the ownership, operation, and management of the company to the worker members. The workers become full participating and voting members of the cooperative and they make all the important decisions for their corporation at the annual general meeting; for which they prepare thoroughly at a series of local meetings on work time. There are no minority millionaires because the whole society benefits from stable work and prosperous living conditions, which in turn enrich and elevate the entire society. How can this work?

Rule #1 – Workers together hire and fire and evaluate the efficiency of managers

Rule #2 – Best paid workers cannot earn more than 8 X the lowest wage. In practice it is 4.5 to 6 times at most.

It all began with a poor priest and a handful of his poor parishioners.

https://www.youtube.com/watch?v=9gPF4fCGO7c&fbclid=IwAR1ZPtymnIP_b2npKnVC0h1_dT-Wiy1d3V6iF_MRtaT5sMglF5Uik7Zav44

Here's a 35 minute interview to help us understand how the 120 coops of Mondragon Corporation and over 100,000 workers operate... in which workers participate cooperatively in management, innovation, and profits. 10% of profits is invested in education, 45% innovation & development of the corp & growing more coops, 45% to the workers but not in cash; rather in capital investment in the corporation which comes to them in retirement... fascinating.... https://www.youtube.com/watch?v=8bcNfbGxAdY&fbclid=IwAR2iYWLEofvPLeNl1BMZV7CW_lEjx_4RqJLLjfFYvMnD4UPpexXyVCqaMoI

Richard Wolff on Mondragon Cooperatives   https://www.youtube.com/watch?v=8bcNfbGxAdY

This is not the only example of innovation and enterprise that puts human beings at the center of any business operation, thereby enriching workers and stabilizing and developing the whole society. There have been and continue to be others. Many believe that these alternative ways of bringing people together cooperatively for work and human development are the future of humanity and they can be seen in such imaginative fiction as the Star Trek universe. 

In our real world, Pope Francis has been writing and speaking about these issues, encouraging everyone to develop new business practices and new economics that do just that, put people at the center rather than profits. As Mondragon Corporation successfully shows, when we put people first and at the center, there will definitely be profits, but these profits will benefit everyone, not only a few, and the whole of society.

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