The following is an excerpt from City by City: Dispatches from the American Metropolis, a collection of essays on American cities, written by the people who live in them. City by City is edited by Keith Gessen and Stephen Squibb, and published by n +1.
Gar Alperovitz is a historian, political economist, activist, and writer. He has written many books, including The Decision to Use the Atomic Bomb, and, more recently, What Then Must We Do? Straight Talk About the Next American Revolution. He grew up in Racine, Wisconsin, and has contributed to numerous efforts at economic reconstruction, including in Youngstown and Cleveland, Ohio. All of which he discussed with n+1.
n+1: How are American cities, north or south, different from European ones?
GA: I think the really big difference between European and American city politics is that here, if you’re corporate, you can pull the rug out from under the cities all across the continent. In the global market you can move around, and in the American market you can move around.
But it’s different in Europe. I once was at a Brookings Institution seminar. And some guy from Germany was saying, “America, it’s wonderful. You can just get up and move, and the workers will take it. In Germany, we can’t do that; there’s no place really to go. In America, they play the different regions off against each other. You just move the game.”
The term I use now is “throwaway cities”—Cleveland, Detroit, of course. I mean it’s brutal, because it’s not only corporate policy. The U.S. has such an unconsolidated social democratic system: liberalism is so weak that corporations encounter very little constraint. Also, transportation policy is pitifully weak as it relates to city policy. A few weeks ago, I had to go to Cleveland for a meeting from Washington, D.C. The airfare was $850. You can’t do business very well if transportation costs that much.
n+1: Huge transaction—
GA: Yes. Amazing. And the same thing in Cincinnati. There’s no attempt to coordinate the development of transportation policy and city policy. And furthermore there’s nobody with power in the city who gives a damn. By pulling transportation out of the city as has happened with some airlines in Cincinnati—or making it costly as in both Cleveland and Cincinnati—they’re making it so expensive that you can’t run a large business in the city. It isn’t quite so bad in European countries, where there is an attempt to stabilize with regional policy, as they call it, and to coordinate it with transportation policy.
n+1: So what you’re describing then is that, for lack of a better term, the mode of distribution in Europe is smaller—
GA: Scale matters. This is historian William Appleman Williams’s influence, because he made me think about it in a way I hadn’t before. The founding fathers—especially Madison—understood that if you spread people you can divide them, you can conquer them. That’s straight Madison. Federalist No. 10 also says explicitly that power is based on who owns the wealth. And the problem from Madison’s point of view is to spread out those people who want to take the wealth. So we spread them out around the continent. And expand. We divide and conquer.
In the United States, you can drop Germany into Montana. People don’t realize the scale that we live in; the same thing that goes on in the global empire is being done in the continent. They just keep sprinkling jobs and moving them around. So it’s a very difficult system—very different. There’s no other place quite like this in the advanced world.
n+1: What can cities do?
GA: Some cities still have a political structure that can tax, and allocations can be used for interesting purposes. More important, many of the larger cities established universities and health systems during the era of industrial development. And these institutions are anchored—they don’t get up and move—and are actually channels for a lot of public money.
They also have populations that are under intense pressure, so there’s the possibility of different politics, and you can begin to generate models that are essentially quasi-socialist models. Not around state ownership, but around more complex communities/worker structures. In Cleveland, for instance, an integrated group of large-scale worker cooperatives and other firms are in part supported by the purchasing power of hospitals and universities that, in turn, have a good deal of public funding.
It’s also a model that in many cases is workable, politically, but one that also introduces entirely different principles. I’m as interested in what principles such models teach as in the terms of the models themselves. This is a country with little socialist tradition in the modern era. So it doesn’t know that changing the ownership of capital is important. It matters who owns capital, and this idea is not widely understood. It’s not an idea in the times, and it’s not even an idea in the culture. How do you introduce the notion that common ownership and democratic ownership is an important principle in the political economy in such a culture?
In cities it can be done. Cities can do that. In real-life terms. Not bullshit terms. Not ideology.
n+1: How do you understand this term “ideology”?
GA: The term that’s most interesting would be the German term Weltanschauung, the encompassing understanding, which is part ideas, part values, part theory. That which tells us where it is we stand and how we are proceeding in the world. Ideology is the ground on which people come to that question. And in terms of future American politics, unless we begin to build that in a way that coheres with a concrete political strategy and a concrete institutional strategy, we lose.
n+1: What is the Cleveland Model?
GA: The idea is to set up an institution, not a corporation, but something else, within a geographic community. And then on that structure you build worker-owned and multi-stakeholder firms that cannot be sold off, which is critical. This means that any growth that happens is distributed more equally because everybody collectively and individually owns a piece of the asset whose value is appreciating, whose revenue is growing.
Then you’ve got these anchor institutions I was talking about earlier: hospitals and universities—Case Western, Cleveland Clinic, University Hospitals. Medicare, Medicaid, education efforts—lots of public money in the area: Those three Cleveland institutions alone purchase $3 billion in goods and services a year. That’s leaving aside salaries and construction—just what they buy. And, until now, none of it from that area. So the model directs some of that purchasing power to the multi-stakeholder firms and co-ops.
Now, these are not your traditional small-scale co-ops. The model draws heavily on the experience of the Mondragon Cooperative Corporation in the Basque Country of Spain, the world’s most successful large-scale cooperative effort, which now employs around eighty thousand workers in more than 250 high-tech, industrial, service, construction, financial, and other largely cooperatively owned businesses.
In Cleveland now, there are three such firms. The Evergreen Cooperative Laundry [ECL] is the flagship, and it capitalizes on the expanding demand for laundry services from the health-care sector, which is huge, something like 18 percent of the national GDP and growing. After a six-month initial “probationary” period, employees begin to buy into the co-op through payroll deductions of fifty cents an hour over three years (for a total of $3,000). Employee-owners build an equity stake in the business over time—a potentially substantial amount of money in a tough neighborhood. Also, it’s totally green, with the smallest carbon footprint of any industrial-scale laundry in northeast Ohio. Most industrial-scale laundries use four to five gallons of water per pound of laundry; ECL uses eight-tenths of a gallon to do the same job.
The second employee-owned enterprise is Evergreen Energy Solutions, which does large-scale solar panel installations on the roofs of the city’s largest nonprofit health, education, and municipal buildings—again, those anchor institutions I was talking about.
The third enterprise is Green City Growers, which operates a year-round hydroponic food production greenhouse in the midst of the Glendale neighborhood in east Cleveland. The 230,000-square-foot greenhouse—larger than the average Walmart superstore—will be producing more than three million heads of fresh lettuce and nearly half a million pounds of (highly profitable) basil and other herbs a year.
Evergreen Cooperatives’ Green City Growers greenhouse.
There is also significant support from local foundations, banks, and the municipal government. The Evergreen Cooperative Development Fund, initially capitalized by $5 million in grants, expects to raise another $10–$12 million—which in turn will leverage up to an additional $40 million in investment funds. So, for example, the fund invested $1.3 million in the Evergreen Cooperative Laundry, which was then used to access an additional $4.2 million in financing, a ratio of over three to one.
An important aspect of the strategy is that each of the Evergreen cooperatives is obligated to pay 10 percent of its pretax profits back into the fund to help seed the development of new jobs through additional co-ops. Thus, each business has a commitment to its workers (through living-wage jobs, affordable health benefits, and asset accumulation) and to the general community (by creating businesses that can provide stability to neighborhoods). It is community reconstructive, sustainable, and democratic. So that’s what’s going on. And it’s very difficult to do. As of my last reading, all three are in the black or in line to be in the black shortly.
This experiment was totally top-down. However, it’s a demonstration that the model works, and it gives people something that’s practical. Small-business men see it as positive. Why? Because it helps the local market, people are working hard, they’re getting a piece of the action, it’s not welfare, it’s constructive, it’s practical. No rhetoric. And it gives the mayor another option when corporations come around asking for something. Most important, it introduces the democratization of wealth, and it introduces a planning model. That is, a quasi-planning model in that the market is stabilized by quasi-public—hospital and university—procurement. And that’s very interesting, because you could do essentially the same thing at scale with, say, national mass-transit production when the next General Motors goes down.
n+1: Parts of it sound like the theory of competitive advantage: this city has these anchor institutions, and these other cities have these other anchor institutions. So what about those cities without anchor institutions?
GA: Any large system has a lot more of these than you think. Hospitals are significant, they’re a very large part of the economy, the health-care systems, the university systems, they’re always around. If you also throw in utilities, which also can’t move, museums and city government, those are also anchor institutions, you’d be surprised. And you have a multiplier—one dollar spent leads to another dollar spent and so forth—and if you can expand the multiplier, you’d be surprised by how much stability you could build in to most cities.
n+1: What is it that allowed this to happen in Cleveland? Is this possible in cities undergoing rapid gentrification?
GA: In highly gentrified cities this is not going to happen. There the question is whether or not gentrification will continue. There’s some fragmentary new data that’s suggesting that it’s slowing down—if not reversing—but in cities where the gentry is moving in, young people, people without families, you just don’t have the political economic preconditions to attempt something like this. Nor is it is going to solve the problem of affordable housing in gentrifying areas.
Though the economics of the model make sense anywhere, the politics are, at this stage, only possible in places like Cleveland. The question is whether or not politics can build these new ideas into larger systems down the road. At this stage, we’re introducing elements, not solutions. And in many cities you can begin to see a whole set of ideas shift. It’s been extraordinary. Two or three years ago, the word “worker-owned co-op” was regarded as ridiculous.
n+1: It’s heartening.
GA: It’s heartening, but there are no other options left. We must democratize. The pain will just continue. Period. It just gets worse, and worse, and worse and worse. And if democratization of wealth is a possibility, it’s going to start small. So that’s how you get your co-ops.
That’s a premise I’ve been working with for many years. It’s interesting to see it pop, and I think it’s over-popped, because now people think worker ownership in a worker-owned co-op is the answer. It’s not an answer. It’s an element of an answer. Worker-guild socialism develops competitive worker-owned companies in a culture of competition, not a culture of cooperation or socialism…