← Economic Update with Richard D. Wolff
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Sam. Saint gonna change. Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives. Our jobs, our incomes, our debts, those of our children and those coming down the road to confront us in the near and distant futures. I'm your host, Richard Wolff. I've been a professor of economics all my adult life and currently I teach at the new school year. I wanted to begin today's program by talking for a moment about a historic event with historically important economic consequences. You might have thought I was about to speak about 911 and what happened here in the United States and the economic consequences. I am, but I'm just as interested in another memorial. But before I get to it, what were the economic consequences of 911 in the United States? Well, there were quite a. The explosion of government spending on security, homeland security of all kinds that hadn't happened before, putting all kinds of new strains on the budget. A ratcheting up of military preparedness and military activity around the world along the idea of combating terrorism, which is a complicated thing because we don't know exactly what it is, where it is, when it is. And, and so it kind of means you have to be armed for everything all the time. And that for sure is expensive. And the government pays that bill and so ultimately so do the people. It also gave a tremendous boost to the security industry. All the companies that make arms for the government, bombs for the government, drones for the government, and all the companies that produce things for a security obsessed population, whether it be in the backyard of your house or in your business, in your office, and so on. Security became one of the fastest growing job categories in the United States as most major cities began to hire all kinds of people who stand near the entrance of the building, requiring all kinds of procedures before they let people in, and so on. So it did have important economic consequences. But there's another 911 that wasn't marked here in the United States, and I want to comment on that too. In 1973, that was the time when the president of Chile, Salvatore Allende, was assassinated. An assassination of a political leader perfectly legitimately elected earlier to be the new leader of Chile. Chile had been going through quite a change. It had moved to the left among Latin American countries, become much more progressive in terms of its social programs. This had led to a backlash which took the form of an engagement with the American economics profession, particularly one Milton Friedman at the University of Chicago, who began a program some earlier years training especially Chilean economists who went back and argued that Chile shouldn't go in the direction that the people voted for, but in a completely different conservative. We would nowadays call it neoliberal direction. Mr. Friedman and his supporters had their chance when Mr. Allende was assassinated, and there's plenty of evidence ever since that the United States, Henry Kissinger in particular, had more than a little to do with all of those events, although the details, of course, will remain secret, probably forever. Did it have an effect? Yes, it did. It deflected, it controlled, it stopped a leftward direction among Latin American countries for decades. It took several decades before that reasserted itself, as it did in the 1980s and 90s, slowly, and then in the new century, quite more quickly. That is still going on, although it has suffered some setbacks in Brazil and elsewhere. But it had enormous effects on the economic development of Latin America, most of which would have to be counted as negative. Important Historical Events with important economic consequences before jumping into our next updates, I want to remind you that everything you hear or see on this program is also available on our websites, where all of these programs are archived. As I've mentioned in the past, we began in March of 2011. We have produced a unique program every week since without one failure. And all those programs are archived and available if you're ever interested, on our rdwolff with two Fs.com and democracyatwork.info that's all one word, democracyatwork.info both of those websites give you ways to communicate to us, to tell us what you like and don't like, what you would like us to do on this program. Every single one. Both of those websites also provide you with ways to sponsor our programs to get more information, to get us on your Twitter or Facebook feeds. You can follow us that way and get continuous contact from us with everything new that we put up there. The websites are available 24 7, no charge. Of course, all that material updated continuously is there for your use. We ask you to partner with us. If these programs are interesting, share them. That would be the best partnership we can imagine with all of you. I will come back with a few words later. Let's jump right in. Well, over the last few days there has been a great deal of celebration that in the year 2014-2015 we had an improvement in the average or median incomes of the American people. And indeed that is cause for celebration. But the celebration has become absurd because it is unaware. And it's hard for me to say that word because it's hard for me to believe that the spokesmen and Women are indeed unaware of what I'm about to tell you, that the improvement over the last year doesn't solve the problem of what has happened over the last 20 years. And the story of the last 20 years is much more powerful than what happened in just one of them. Let me explain the big number of the last few days. Median household income. Let's be clear what that means. The median household income means the level of income such that 50% of American households do better and 50% do less. The median is a number we calculate and use because it gives you a sense of where things are going. So there was an improvement over the last year. 2015 was better than 2014. But 2015 might have been better than 2014, but it wasn't as good as 2007 and it wasn't as good as 1997. In other words, over the last 20 years, we have seen a decline in the median household income. Let me give you the numbers, not that you need to remember them, but so it's clear. Median household income calculated by the United states government in 1997, roughly 20 years ago, 57,900. That's the $57,000. Nine hundred ten years later, in 2007, the median income had dropped to 57,000. Excuse me, 400. All right, let me repeat that to be clear. From 57,900 ten years later, 57,400. And what is it in this good year of 2015? 56,600. In other words, 20 years of the declining income of the American people. No wonder folks are upset. No wonder the population is angry and bitter at what's happening to them. And one year's improvement. However, what much we celebrate, it has to be put in the context of a 20 year decline. And what do I mean by context? Let's be clear. Over the last 20 years, the output of the American economy has grown dramatically. Wow. The productivity of American workers has increased dramatically. Well, let's see now. If we've produced a lot more wealth and we've become a lot more productive, how do you account for the fact that the median income of a household has declined all those 20 years? And the answer is, is simple. All that output, all that growth in productivity and wealth went to the top 5% of the American households. That's why everybody else is doing poorly. And the top 5% are laughing all the way to the bank. Normally, I would stop at this point, the point having been made, I hope, by the statistics released by the government. But I can go one better today. And I want to do that, since the opportunities I have to celebrate the Wall Street Journal are few and far between, given the political and ideological orientation of that newspaper. But I want to give credit where it's due. On the 13th of September, that's just a few days ago, the Wall Street Journal carried an article written by Josh Zumbrun. I hope I'm pronouncing his name real well. I'm going to spell it so those of you who might want to pursue this can do so. Z U M B R U n Josh Zumbrun, September 13, Wall Street Journal and there his article is entitled US Poverty and Income Inequality in Nine Charts. And there they are, if you're interested. All that I have just told you is beautifully and clearly laid out in those charts by the Wall Street Journal showing that poverty is a serious problem in the United States that has gotten worse over the last 20 years, that inequality has gotten much worse even than the story of household income. No wonder Bernie Sanders captured the imagination of millions. No wonder Mr. Trump is able to do the same from a different perspective. The economics of the United States are shaking this society to its foundations. Let me get at this in another way. Recently there have been a number of studies that have talked about maternal and paternal leave policies. What does that mean? Governments around the world pass laws that impose on employers the obligation to do something for their workers. When those workers have a new child, they give birth to a baby or they adopt a child. And the 35 countries whose laws are reviewed by the OECD, a very important and prestigious international organization that I cite often, it's the Organization for Economic Cooperation and Development. They keep track of the 35 mostly wealthier countries in the world. How do we look? We here in the United States, when, when it comes to family leave, parents and children, the answer is out of 35, we rank the worst. Let me do that again. Out of 1 to 35, we are number 35, the United States, because basically we don't mandate we don't mandate maternal, paternal, mother and father getting a leave for a few weeks, a few months, to take care of newborn children or newly adopted children. Every other country surveyed, which includes poor countries like Slovenia and Mexico and so on, do better than we do. Long overdue. This shameful reality of a wealthy country not providing what its fellow countries, most of whom are much less wealthy, see fit to do. This is so grotesque that both Mrs. Clinton and Mr. Trump, the two major party candidates, have said something in recent weeks about it. They are both in favor of providing some paid leave for new parents. But here again, like with that statistic about rising income. But before you applaud, Hear me out. Mr. Trump has proposed six weeks of paid leave for a new child. Mrs. Clinton has proposed 12 weeks. What is the average for the 35 countries followed by the OECD? What's the average amount of paid weeks those countries give out? Ready 54 weeks. That's right. We mandate none. The other countries mandate an average of 54. And our pioneering major candidates can come up with the number 6 and 12. It's hard for me to take this seriously. Countries like Estonia, Finland, Hungary, Slovakia, they're all ahead of us. They always have been for many, many years, and they continue to here in the United States. The United States government spends less on child care and preschool than in most developed countries. This is a story from the New York Times on 15 September 2016. When you add up federal, state and local government spending on child care and preschool, it's less than 0.4% of the gross product of the United States in France, Britain and New Zealand. The New York Times reports it's three to five times greater. What possible excuse can be made for this next economic update? The Kaiser foundation is a famous foundation here in the United States. The Kaiser Family foundation is its formal name and it has just released a survey about health care costs here in the United States. And it has many dimensions that I could spend time on if I had more, but there's one that I wanted to bring to your attention. Commentators have been struck in recent years that the rate of growth of spending on health care has slowed dramatically from what it had been until recently. There's a debate about what the reasons are, but for me, the most persuasive argument is that economic pinching of the mass of people, the very thing we've discussed a few moments ago, 20 year declining household income explains, I think, quite well why families increasingly postpone avoid going to the doctor because they don't have the money. That the decline in spending is not because we're more efficient in providing medical care, it's because more and more people afford it. That's the honest truth. And so they're not going. But there's a greater and more important statistic that the Kaiser Family foundation survey resulted. While businesses are not spending as much for their medical insurance because working people are not going to the doctor the way they once did, that has not stopped employers, public and private, from shifting more and more of the cost of medical insurance off of themselves and onto the workers. Here is A stunning statistic from the Kaiser Family foundation between 2006 and 2016, that is over the last 10 years, the average annual deductible for a single person's coverage among the workers who were covered went from $500 per worker per year. That's the part they have to pay. Deductible means before the insurance kicks in, you have to pay that amount. In 2006, the average was $500. In 2016, the average $1500. You heard me right. The amount that the worker has to pay has tripled, even though the rate of growth of what the employer who hires that worker has to pay for the insurance hasn't gone up very much at all. So the cost of health care not rising as fast because people don't go. And when people go, they have to pay much more of the cost of their medical care than they did before. That is as profound a burden on the American working class of people as anything else. So when politicians, and most recently it was Bill Clinton campaigning around the country telling everybody what a wonderful thing it was that the number of uninsured Americans, that's people who have no health insurance at all, is down to 9%. And heaven knows, while that is not 100% as it should be, it's better than it was. This is a way of focusing on one of the few statistics that's a little better to distract attention from the statistic that is stunning across the administration of Barack Obama. The average worker covered by insurance saw his or her deductible, the part they have to pay, go from an average of $500 a year to $1500 a year. What comment could I make? The next update comes with a groan. Why? Because you hear this so often. So I don't tell you about it very often, but every now and then it's so gross that it needs a mention. This one has to do with a man named Jose Manuel Pa Barroso. He recently retired from being the head of the European Commission. That's basically the institution that governs all of Europe, an economic area that has more population and produces more wealth each year than does the United States. Okay, he quit that job. And by the way, while he was the head of the European Commission, that was the time when. When they imposed austerity on Europe. This program in which the banks bring us to the edge of disaster in 2008, the government is asked to bail them out. It does. It borrows a lot of money to do that. And then it says to the mass of people, we borrowed a lot of money to bail out the banks. You're going to have to make good the economic situation, help us to lower our deficits because they went up so much to bail out the banks so that the mass of people have less in the government services, have higher taxes to pay to reimburse the government for all it's spent to bail out the banks. As if that Weren't bad enough, Mr. Barroso was also in charge of the European government when it savaged the Greek economy in recent times, something that we have documented on this program repeatedly. So this is a man who is not well beloved, by the way. Before he became head of the European Commission, he was the former Portuguese prime minister, powerful European politician. Why am I telling you all this? Well, this last week it was announced that he's taking a new job. And I wanted to share with you what Jose Manuel Barroso's new job is. He took a job as a banker with Goldman Sachs. Uh oh. This is another example of musical chairs. Musical chairs being top levels of government and top levels of banks and other multinational corporations. You're one. You wear one hat for a few years, then you wear another. You behave nicely while you're the government supposedly monitoring and controlling these companies. If you do it nicely, they'll hire you at astronomical salaries as soon as your government job is done. 140,000 people have already signed petitions in Europe denouncing this charade. The French president, Francois Hollande, sorry, said the this may be legally possible, but it is morally unacceptable. I can't add to that. I can only say he's not the first, he's not the last. We see that all the time. And it tells you that the problem of our modern economy is not a debate between the government, Is it the government? Is it big business? Because the difference between those two has long since been erased. These are the same people. In fact, it's a little hard to keep track of which particular hat they're wearing, nor does it matter. Last item that I have time for today is a response to something some of you have sent in. You wanted me to talk about Social Security because you've heard that there are attacks on Social Security. You're right. And that there are criticisms of Social Security that somehow we don't need it, or we don't need so much of it, or it isn't that important, or we would be better off without it, et cetera. So the question that many of you asked was just how many Americans get Social Security, particularly people over 65, who are the major group of Beneficiaries in America. How important is it to them? What difference would it make if we didn't have it? So here's what I did. I went to a research group in Washington, D.C. that has helped me often. I have been very appreciative of the work they do. They're called the center on Budget and Policy Priorities. You can find out all about them by going to CBPP.org CBPP center for Budget and Policy Priorities. Here's what I learned when I inquired about the Americans Depending on Social Security. Here we go. Simple statistics summarized what percentage of the American people rely on Social Security for more than 50% of their annual income. Let me repeat that. How many Americans over 65, elderly folks, how many of them need Social Security for at least half or more of what they live on? The answer 65%. Nearly 2/3 of our elderly, that's people over 65, the vast majority of whom have given a lifetime of labor to this economy, have worked, raised children, been members of their communities and want to have a retirement that is safe, that is comfortable. You took away, if you did in this country, Social Security from the mass of elderly people, 2/3 of them would see their income drop by half or more. Let me go even further. I ask the question, how many Americans rely on Social Security, which is very little, 11, $12,000 a year is what the average is very hard to live on. Puts you right in the horror of poverty in America. If you go how many Americans rely on Social Security? Poverty level income for 100% of their income ready 1/4 25% of all Americans rely on Social Security for everything. What in the world would happen to them? What kind of homelessness, what kind of poverty, what kind of begging would we have if we took away Social Security from 25% of all Americans? And for Hispanic Americans, that number is over 40%. Rely altogether 100% on Social Security. Attacking Social Security is a level of cruelty and insensitivity beyond words. Folks, we've come to the end of the first half of today's economic update. Please stay with us. We will be back in a very short time with what I believe you will find to be an extraordinarily important and interesting interview on worker co ops. Those that were formed in Argentina, those that are forming in Cuba. The whole phenomena by an expert, Peter Ranis, whom I will introduce to you immediately after the break. Stay with us.
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Oh my God, please don't mean me. Deep in the river trying to get clean. He says wash your hands, get out the seams what you best believe or there's hell to paint? Yeah your best believe believe for this hell to pay. Oh my God, please stop me waist deep in the river can you hear my plea? He says son, you come like a beggar in the streets of my make your father by the skin of your teeth. My make your by the skin of your teeth. I revel with the the worst of them fell in love with the harlequin, saw the darkest parts of men and I saw myself there and back again and I saw myself staring back again. Oh my God you saw me next deep feeling a little screaming for relief. He says it's mine to give but it's yours to choose. You're going to sink or swim? You're going to learn the truth. No matter what you do, you're going to learn the truth. It's a breath of once the stone but from a cliff never broke a bone. My da get the kings over throne and I'm all alone and the fire cross and I'm all alone in the fire grow.
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Welcome back friends, to the second half of economic update for this middle of September 2016. Well, I think we have something extraordinarily important and interesting for all of you. I am going to introduce to you now Peter Ranis. He's a professor emeritus of political science at the Graduate center of the City University of New York and also of York College, which is a unit within the City University of New York. He has published many things. He's been a specialist on political science in the Western Hemisphere and more, social science broadly. But what brings him to us is that he has been studying worker cooperatives as an alternative labor movement as an alternative way to organize an economy for many years, looking at worker co ops in the United States, South America and Europe, but with special attention to the experiments in Argentina that have been so important and influential. He remains active in the CUNY Faculty and Staff Union's International Committee. Peter, welcome to the program.
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Thank you for having me.
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Before I even launch into questions, let me hold up here for everyone to see the new book that Peter has written and published by Zed Press, and it's called Cooperatives Confront Capitalism. The subtitle Challenging the Neoliberal Economy. Peter Ranis so if what you are about to hear is of interest, here's a book that will allow you to follow in much more detail some of the studies that Peter has achieved. All right, let me begin with the biggest questions and we can get into it from there. Why do you think worker co ops should confront capitalism? Why Are they a challenge to the neoliberal economy? I guess I'm asking you in a way, why have you spent so much of your time and energy studying them?
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It was in 2002, I was taking a plane to Argentina and I was going to look at the alternative Argentine labor federations, the cta, which are a progressive federation opposed to the kind of Argentine version of the afl, cio, the cgt. And I started thinking that I'd read a few things about Argentine cooperatives. And that inspired me to change my whole research topic and begin looking at Argentine cooperatives. Why I think they confront capitalism more than the trade union movement is that they go beyond collective bargaining, always looking for the crumbs that fall off the table and taking slowly giving up benefits at the bargaining table. Cooperatives, I think, are a very progressive potential movement. And in that, what's interesting about cooperatives is that they appeal to, to conservatives, to liberals, to radicals, even to anarchists. Why? Because as the workers achieve cooperative status, they begin to develop class consciousness from inside rather than from externally received ideology. And that's what makes them very exciting, because you see before your eyes conservative workers, Peronist workers, who become progressive workers because of the struggle that they have in creating the cooperative.
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So you would even say, if I'm understanding you, that this is a way, it's not only an alternative to the conventional trade union or labor union, but it's more successful in even what the conventional labor unions had hoped to do, which is to develop a consciousness that makes people sympathetic to engage in labor development and labor benefiting social programs.
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Right? The trade union movement really accepts the capitalist class as the engine of development. Cooperatives really realized that the market is probably necessary under any system, but the capitalist is not, the manager is not. And unions have not accepted that. Maybe there's a few unions who are open to that view, but very few in the United States or in Argentina.
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All right, let me ask you then the follow up question and let me preface it this way. If I had to pick, what question comes in to us here from our now 1.2, 1.3 million person audience that we have. It's the. Is it really possible? Is it really feasible? In other words, it's such a delicious idea, I think, for so many people, as you just said, conservative, liberal, radical, the whole span that people can't quite believe it's real, that it can actually happen. Now, Argentina had experiments in doing it. Can you tell it? Is it doable? Is it achievable? Have you seen and participated in Worker co ops that have lasted for years and have developed in the way you say you hoped they would.
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Actually 93%, as I understood it, Argentine cooperatives have longevity. Very few go defunct because the workers are willing to sacrifice when the economy goes down, the wages go down collectively when the economy goes down.
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And they decide that for themselves.
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They decide that collectively for themselves. So that the Argentine cooperative movement embodies not just steel companies, auto manufacturers, hotels, health care facilities, restaurants, bakeries, you name it. Argentine workers have shown that they can run almost anything without owners and managers. They reskill themselves, they spend a lot of time retraining. And the important thing is they make the decisions on pay collectively and on investment collectively. So it's always a rational, collective decision.
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And the fact of the matter is that 93% of these cooperatives that were formed back at the beginning of this century have survived. Well, you know, if that's true, I should tell my listeners that's a much better percentage than capitalist enterprises. They don't survive at that rate. So you're telling me not only that they can do it, but that they have a better success rate over time, which means there's a very powerful implication that a human being, a man or a woman who goes to work in a worker co op has a better and more secure job than a person who goes to work for a conventional capitalist employer. Right?
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And to be fired from a co op, you have to really be derelict and have proven yourself incapable of doing the work. So it can't be an arbitrary firing under a normal oligarchic, hierarchical capitalist firm. So there's a collective spirit. Now, cooperatives have struggles because it's hard for them to get loans from private banks. So they really need state help, state intervention, and that's where Argentina comes in. Very importantly, tell us about what the.
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What were the co ops able to get in the way of state aid?
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Argentina has expropriation laws embedded in their constitution, just like our fifth Amendment, which says, nor can private property be expropriated without for public use, without just compensation. They have the exact same clause in their 17th article of their constitution. So in Argentina, several provinces in the capital of Buenos Aires have intervened on behalf of the workers and expropriated factories, where the owners have run away or defaulted or created fake bankruptcies, is very common in Argentina. So they can invest in horses, women and wine, which is often what happens. So this is very important. The other shoe has not dropped in Argentina, and that is the expropriation is there, but the money has not been forthcoming because one house in the national legislature has supported it and the other, the Senate has not. So they're a bit in the legal limbo. But meantime they continue working, they continue struggling through the court system, the commercial court system, and they continue to work. And the important thing is that they have a really popular following. In public opinion polls, the cooperatives are seen in a very positive light as compared to people on welfare, quote, unquote. And the picoteros who don't have jobs and demonstrate in the streets. Corporatives are seen as hard working proletarians who are just trying to survive and are taking over a factory that really they're trying to not take, but keep.
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To keep it going, keep it going.
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Because they're the capital formation people for the last 20, 30 years in many cases. So they have a very strong positive residue in Argentine general population.
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But they still can't get financial help, capital help.
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That's why they need, under the Kirchners, they, the Social Welfare Ministry, they've begun to give small subsidies for retraining, for health benefits, for technology resources. However, it's not been sufficient and they sometimes have to go through hoops to get aid from the Ministry. Ministry of Economics has been awol, but the Ministry of Labor has been involved and the Ministry of Social Welfare has been involved. So the situation is complex in Argentina. But you have the case of about 360 recuperated enterprises. This is the key contestatory relationship. These are workers who have camped out, taken over the factories and where the police haven't dared to come in and smash heads because the community has surrounded the factory. Left wing parties, community activists, students from University of Buenos Aires have come to their aid. The reason is because there's a populist uprising in Argentina that understands that cooperatives are an alternative to the normal capitalist status quo.
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Let me do a little economic history for people listening. Capitalism 2 to 300 years old, has benefited capitalist enterprises. Whole industries, firms have benefited from government capital subsidies, tax reductions, loans, outright grants. I could make a very fat book just listing all the ways that government money has subsidized capitalism. It's remarkable that an alternative sector like the Co op, with its kind of popular support, can't simply say we represent an alternative. We are just as deserving of governmental subsidy and support. We're not asking for something that wasn't given to the alternative capitalist. We're asking for treatment on a scale that's comparable and that would then provide the capital that these enterprises, these co op enterprises need to really show to the large community what they can do, how they can work if given the same amount of support that the capitalists did. Otherwise, it's not a fair fight at all. It's a fight between one sector cashing in on 200 years of government help and another sector being told there isn't any government help for you.
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I think, as you say, Rick, I think, for example, in the United States, until, and this is a major message in my book, is eminent domain has to become part of public policy. Just as taxation and subsidies for private industry, as you say, eminent domain is there to be used. It's public policy. It's been supported by the Fifth Amendment Constitution. It's been applied in various.
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You mean here in the United States?
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Yes. Supreme Court cases. The Kelo case, for example, in New London, there was a case in Washington D.C. of clearing the southeast part of Washington, D.C. for housing.
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Could you just for our audience's sake, remind us what exactly is eminent domain?
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What does it mean, eminent domain? It's been used in the United States since the, really since practically the early part of the 19th century. And often it implies that the state has the right, in a Benthian sense, to do something for the popular good of the majority. Sometimes it hurts another group while it's doing eminent domain. However, it's a public policy that focuses on production, on increasing taxation, unemployment. And eminent domain is so critical this day and age. Most of the time it's been used with a mixed public private sector. For example, the Pfizer plant in New London. That came to a bad end. But the idea is that it can be used by the public sector to defend workers in companies that are about to flee to another country or often to another state. And it's at that moment that expropriation through eminent domain would be proper because there are no victims. Sometimes eminent domain in other cases has a victim of a mom and pop garage or a house. Like in the Kilo case, a woman had a pink house on Long Island Sound that she was defending. In the case of eminent domain on behalf of workers, there are no victims. You pay off the leaving enterprise, you create eminent domain and allow the workers to form a cooperative at that point.
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And the state has, in the United States, local government, regional government, state government, federal, they all have the right, in the interest of the broader community, to require a capitalist who owns an enterprise to sell that enterprise at the so called market rate to enable the governmental level that does this, to turn it over to a worker cooperative to save the jobs, to save the tax Revenue for the community, that that's all a perfectly legal procedure and only needs the political will to enact it.
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It's not any different from, let's say, rent control or decisions about health care or various interventions from state to protect its citizenry. So in terms of eminent domain, it's not a revolutionary potential policy at all. It's just saving jobs and saving tax benefits and allowing the workers to stay on their jobs. So you pay off the runaway company and then you subsidize the workers. They probably need some kind of long term investment, long term credit or subsidies, direct subsidies, but that's not unusual. I just read recently where Cuomo gave Alcoa $70 million to stay in upstate New York.
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Absolutely. Meanwhile, happens every day.
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The New York City Council has given cooperative formation in New York, which was tremendous change, $3 million. 3 million for the development of 30 co ops in New York City. But Alcoa got 70 million for one company staying in upstate New York. And that's the potential we have in using eminent domain.
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Tell us a little bit about Cuba, about the co ops that you have studied or visited. Give us a sense, because there's a, a government that used to believe in mainly state enterprise in the manner of the socialist bloc, as we used to call it. Argentina was never part of that. So this is a different kind of society, but seems also to be finding its way towards the development of co ops. Tell us a little bit about that.
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The sixth Party Communist Party Congress came up with a new linea mientos, new guidelines. And I think they have five clauses, five articles in the new guidelines that deal explicitly with cooperatives. So under Raoul, successor to Fidel, a youngster I think is only 85 have decided that cooperatives are not only good for production, but they're the right thing to do because they can emancipate the Cuban working class. There's been an acceptance in Cuba, slowly, that the Cuban trade union movement has been not the representative of worker grievances, but it's been more sort of like the Stakhanovites. Those who produce get work harder. Yes, work harder. Rather than what are the grievances of the working class. So they've begun to move in the direction of cooperatives. There's several hundred have been created in the service sector, industrial sector. Most of them have been state enterprises that have been turned over into cooperatives.
- [49:33]
A
But let me just underscore that that means that instead of the state determining what happens, who runs it and all of that, they really have devolved that they have changed that and made it an enterprise run and operated by the collective of workers. I mean, it's a real. Is it a real transition like that?
- [49:54]
C
Yes, it's still. We don't know. There's a problem. There's also a series of stages that they go through and it goes right up to the Council of Ministers and probably the Politburo. So it's not easy. But the seventh Party Congress that just met in April has said we will continue on this road in creating cooperatives. And we know in the agricultural sector, the cooperatives that are most productive are those run by the workers in the field, so to speak, rather than those who are fulfilling government mandates. They're more autonomous, more entrepreneurial, if we can use that word. The problem is that we tend to think of entrepreneurial in the capitalist term. But workers can be entrepreneurial, use the market, but still be democratic and participate. And that's what's so important about cooperatives.
- [50:48]
A
Well, you as a student of this, what's your feeling as the likely direction that Cuban co ops will go? Will they proliferate? Will they grow? Is this a commitment that will allow that to happen?
- [51:03]
C
Yeah, Fidel, back in 61, he made a very famous speech at all Cubanists. No, he was talking before the uniac, the Union of Writers and Intellectuals and Artists in Cuba. And he said the famous phrase, within the revolution, everything, outside the revolution, nothing. And I think that mentality is still existing in Cuba, so that Cuba is beginning to think of cooperatives as a bacillus against the resurgence of capitalism in Cuba and yet at the same time decentralizing the state. So cooperatives in Cuba, it's the first country in the world where a government has put its energy and its money into creating a cooperative society. It's going to be in stages, but the seeds are there.
- [51:58]
A
Okay, amazing. Do you think a cooperative sector of the American economy is developing now? Do you think it can grow? What are the prospects, just in your mind as a student of this, for a non capitalist co op sector to become a significant part of of the American economy?
- [52:31]
C
It has to become the default resolution in crises. It's probably not going to happen at the federal level, as I see it, but it will happen in progressive states. Washington, Wisconsin, New York and so on. And cities, different cities. Seattle, New York City, Madison. There are moves towards seeing cooperatives as a very legitimate alternative to typical capitalist oligarchic firms. Now, it's not going to be easy, but I see cooperative development as really the way for the United States to move towards what we would all like to see is the development of a social democratic party, a socialist party. I don't believe it's going to happen from top down. As you see, Bernie himself understood. I've got to work through the Democratic party. Our single member election system, our electoral college makes it virtually impossible for a third party to get anywhere. But if there's a groundswell from below that builds up on cooperatives, then a political party can latch onto that and begin when it closes up. The cooperative party or socialist party makes no difference. But I think it has to be from the economy before the political intervention.
- [53:58]
A
Yeah, I noted recently, and you remind me of that. I learned recently that Great Britain, the United Kingdom, has had for the last hundred years a cooperative party. And that the cooperative party has seats in the Parliament, both the House of Commons and the House of Lords. That it has an electoral alliance with the Labour Party in Great Britain. So that the notion that there could be a political party, one of whose central commitments is the growth, the development, the aid of the government to a cooperative sector, that in a sense the sketch of how to do that already exists in a country rather like the United States in many ways, Great Britain. And it is fascinating to imagine that co ops could become perhaps the base of support for a party in exchange for the party using the lever of government to build and sustain co ops. Because if you did that, then you'd have a real competitor to the Republican and Democratic parties who do that for capitalist enterprise and who always have.
- [55:06]
C
I don't see an alternative because as you well know, that the two leading parties are both bourgeois parties. What we need is a new alliance between the state under crisis. Probably we have to have more bad news before the good news. The state under crisis creating new coalition with the civic society and creating kind of new worker hegemony that creates the potential for real economic change. Otherwise I don't see how the American working class can survive under present conditions with the technology. What it is with the multinational corporations which have no loyalty to community or country, will forever use the world as their stamping grounds. I think each working class has to deal with its government within a particular nation. It would be nice to think working class of the world unite, but it's not going to happen that way. Different countries have to deal with their capitalist class individually and then that becomes the default model for others to copy.
- [56:24]
A
So if I could conclude, since we're running out of time. Do I hear you right? You're optimistic. You think that the silver lining, if I could say on the imminent crises you see besetting capitalism are that they create opportunities for this alternative to emerge?
- [56:43]
C
I think so. I think cooperatives are a sensible alternative to the capitalist firm because of their commitment to their communities, whether it's in Toledo or Cleveland, Cincinnati, New York. They have a sense of the collectivity and they have a sense of their responsibility to the community. They're not they never will be flight capital. They're committed to the community. That's where they were born and that's where they will remain.
- [57:16]
A
Peter Rannis, thank you very, very much for being with us. Once again, here's the book Cooperatives Confront Capitalism. I think it's worth your pursuing these ideas. I'm glad to have had Peter on. Thank you very much.
- [57:31]
C
Thank you for having me.
- [57:33]
A
And we're done with today's program and I look forward to speaking with all of you again next week.
- [57:40]
C
Change, change.
- [57:47]
A
Fam Going to change. Yes, it is. Sam.