We are now in the sixth year of a continuing economic crisis sparked by the financial meltdown of 2008 – a collapse that might have brought down capitalism were it not for a massive bailout by the state. With the likelihood of another financial crisis in the near future the question arises whether the Left is ready for a possible collapse of capitalism this time? We have been waiting for a long time for the revolutionary moment when we can take state power and begin to build socialism.
That fantasy has sustained our hopes for too long. We need to face the reality that revolutionary change is not going to happen that way, in an abrupt political rupture that will open the way to a new future. Even if an economic crisis of capitalism were to bring the Left into political power at the national level – a prospect not in the immediate future – do we know what we’d do with it? Given the economic dependency most of the population has on corporate capitalism, we might well find ourselves trying to fix the system to keep it functioning. That immediate response has too often been necessitated by the short run survival requirements of daily life.
Philosopher Slavoj Zizek has written recently of
“the recurrent story of the contemporary left. A leader or party is elected with universal enthusiasm, promising a “new world” — but, then, sooner or later, they stumble upon the key dilemma: does one dare to touch the capitalist mechanisms, or does one decide to “play the game”? If one disturbs these mechanisms, one is very swiftly “punished” by market perturbations, economic chaos, and the rest.” [At the moment of triumph,] “at this precise conjuncture, radical emancipatory politics faces its greatest challenge: how to push things further after the first enthusiastic stage is over.”
Zizek raises a crucial question here. What do we do after we have toppled the old regime, after we have the levers of state power in our hands? I suggest the reason we face the dilemma of either encountering chaos or having to go along with the still dominant capitalist relations is because we have failed to build an alternative to them before coming to power. We failed to realize that the revolution had to begin long before this moment of triumph. If we had built alternative institutions in the nooks and crannies of capitalist society, then they could sustain us while serving as a platform from which we construct a new society while dismantling the old. If we had made the long march through the institutions of society, then we would be ready to found society anew once the old system collapses.
That is what is being done in many places in Latin America –the region most severely impacted by neoliberal globalization –where efforts are under way to invent a 21st Century Socialism. And it is also happening in many cities of the U.S. that are building a New Economy. In the face of a predatory capitalism, there are those who are creating institutions that promise to give a measure of independence from Wall Street. Rather than simply resisting imposed austerity and protesting policies that inflict pain on the 99%, they are building alternatives where they live. In many communities across the country people are building resilient institutions where they live, institutions like public banks, local currencies, community based agriculture, consumer cooperatives, participatory budgeting, worker-owned cooperatives, alternative media and more.
Declaring Independence from Wall Street
One of the immediate responses of many to the collapse of the Wall Street banks was to move their money out of Bank of America and its ilk and put it in credit unions and local banks. They closed their checking and savings accounts with banks that had gambled it away. So depositors moved their money closer to home where they could keep a better eye on it. While that is not likely to bring down the big banks, it does give us some independence from them and some control over how our money is used –at least if the local credit union is democratically run.
There was one state that was little affected by the banking crisis of 2008. That was North Dakota. It faired well largely because it has a public bank, the only one in the U.S. Established in 1919, the Bank of North Dakota is held by the state government, which deposits all of the tax revenues in it. Those funds are then used to make loans for agriculture, students, small businesses, etc. partnering with local banks around the state, functioning as a central bank for the state. Unlike most state and local governments elsewhere, North Dakota does not send its revenue to Wall Street by depositing it in the Bank of America or CitiCorp. As a result North Dakota had the lowest rate of mortgage defaults, the lowest unemployment rate, and it has a healthy state budget since the profits from bank loans go back into the state treasury -- all because it declared independence from Wall Street long ago.
How can such a semi-socialist institution exist in a politically conservative state like North Dakota? Answer: the state bank has a proven record of benefiting the people of the state. When public institutions meet the concrete needs of people in their daily lives, ideological labels loose their importance. There is an important lesson in this for all of us who seek a better world.
Some 20 states are now considering establishing public banks on the North Dakota example. Municipal governments and large hospitals and universities can also create their own public banks. There is something of a social movement growing with groups across the country proposing public banks in their localities. Ellen Brown’s Public Banking Institute provides organizing and technical assistance. These local, democratically controlled financial institutions can augment public monies in financing infrastructure projects by not having to pay interest on bonds. They can finance local development efforts, loan startup capital to local businesses such as cooperatives. By keeping banking close to home, public banks can strengthen communities, rather than distant corporations. And if they are run democratically for the common good, they can bring communities together across class, race and ideological lines.
Public banks are often thought of as democratizing capital. However, it should not be assumed that just because a bank holds public funds and may even be governed by elected officials that it is democratic. The governing board of the Bank of North Dakota consists of the Governor, the Attorney General and the Secretary of Agriculture –all public officials to be sure, but not elected to represent the public on banking policy. There needs to be some way that the lending policies actually promote the public good rather than private goods and is responsive to the public. Principles of social responsibility and accountability should be written into their charters. That might even include mandating promotion of cooperatives as a lending priority. That would go far in empowering working people in their daily lives. Public finance should be a natural ally of worker owned cooperatives.
Own Your Own Job
Worker owned self managed cooperatives are another institution that can strengthen communities and offer working people a measure of independence from the corporate world. Coops bridge the divide between employees and employers since their members are both workers and owners. And since they are democratically run, coops can operate without a managerial/supervisory stratum. The members supervise one another. They share a common interest that makes a coop a more agreeable place to work and the collective work more productive. And unlike a capitalist business, more of the wealth generated circulates in the local community and the business itself will not relocate elsewhere in search of lower wage workers.
Beyond these benefits, cooperatives nurture a democratic personality. One’s daily worklife is based on cooperative social relations and an ethic of solidarity. Participation in collective decision making promotes a sense of shared responsibility. Individual interest is linked to a collective interest. I prosper only if we prosper. Daily worklife re-educates members away from individualism into a broader self identity based on awareness of interconnectedness with others. It thus develops ones social being, it engenders a new human being and prepares the way toward a new society beyond capitalism.
At the same time, progressive worker cooperatives must not focus solely on their self interest. Their aim is not to maximize the income of their members. They must be more than collective capitalists. They must function with a sense of social responsibility. This can happen when they are rooted in their community. That rootedness means support from the community, accountability to the community, and service to the community. The Cleveland model is a case in point. Worker coops are linked to larger anchor institutions and are accountable to a community corporation.
We might wish that such democratically empowering institutions as cooperatives and public banks would be promoted at the national level. However, the popular classes do not have power there. But under the federal system there is room to innovate at the local level. And that’s where a lot of experimentation is happening, as Katrina vanden Heuvel has pointed out.
But, you might object, to move beyond capitalism we need to directly confront it, not just hide from it in the nooks and crannies of society. Public banks and cooperatives will not overthrow capitalism. At best they only provide a limited escape from it. I agree. If we were to succeed in building an alternative strong enough to threaten capital, they will find us and seek to stamp out our institutions. But by then we will have awakened in people’s consciousness an awareness that there is a better way, that a different world is possible. And then we can respond with the power of a popular front struggling to defend the alternatives we have come to know and value. Or it might not even come to that if the crisis of capitalism leads to its collapse. In that case, we will be there with our alternative already in place, firm in the knowledge that we don’t need Wall Street any longer.
How Does the Ruling Class Rule?
This brings me to a fundamental question. How does a ruling class rule? I’m not just talking about the governing elite. I’m talking about those great concentrations of wealth in the big corporations and banks, like General Motors and Goldman Sachs. It’s not just a matter of buying influence with political decision makers. Wall Street has long occupied Washington, long before its agents infiltrated the Administration and its lobbyists occupied Congress and its money flooded political campaigns.
Fundamentally, the ruling class rules because the interests of the ruling class rule over the society as a whole. It’s because the interests of the subject classes are dependent on them. They rule because we are all dependent on them, workers and consumers alike. The system works only if their interests are served. When there is a crisis, as in 2007-2008, they must be rescued lest the whole system collapses. We are all caught in what Cynthia Kaufman calls “the economic dependency trap of capitalism.” It is because we are all dependent on them that they have the power to hold the rest of society, the 99%, hostage. That’s what it means to be a ruling class. It is their interests that rule.
Thus the solution to the political dominance by “big moneyed interests” does not lie in campaign finance reform, although that would certainly be a step forward. But even if there were complete public financing of elections, the responsibility of the governing class is to maintain the social order. And in a class divided society that means protecting the interests of the ruling class upon which we all depend, thereby maintaining that division.
In times of high political mobilization of the dominated classes, governability may require making concessions to those popular classes even though that may limit the benefits to the ruling class. That is the price they have to pay in order to have an effective political instrument that maintains that class division. But as the popular classes demobilize, the state reverts to its default position.
What then is the solution? The beginning lies in step by step overcoming that dependence on the ruling class. As I have argued, that can be done even in a class divided society by building alternative institutions that empower people in their lives. That is most easily done at the local level with public banks, cooperatives, communal councils, participatory budgeting, local currencies, eminent domain, etc.
The U.S. has a tradition of local governance in a federal system. While the powers of local and state governments are limited, they have not been fully utilized. They have the potential to carve out spheres of empowerment that are less closely tied to the interests of the ruling class. With them civil society can begin to declare its independence from Wall Street. In so doing we also are developing schools of democracy, educating people in the virtues and skills of citizenship. This was Jefferson’s vision: the little republics would ensure the health of the larger republic.
The building of local institutions that democratize capital and labor involves class alliances. The Occupy slogan that pits the 99% against the 1% is overly inclusive in defining who our friends are. But it recognizes that there is a broad multiclass interest in opposing the concentration of wealth and power in the large corporations. On the local level the petty bourgeoisie is an important ally against these national and increasingly transnational forms of capital. It is ironic that the largest business lobby is the U.S. Chamber of Commerce which advocates for the interest of the large corporations even though its membership is overwhelmingly small businesses. The fact that Wall Street has abandoned Main Street shows the weakness in the alliance between the petty bourgeoisie and the big bourgeoisie. If public banks and public development authorities can bring capital under local control, that can work to the advantage of small and medium businesses and at the same time that of working people.
This strategy of localization does not directly confront the ruling class. It does not storm the barricades. But given correct leadership it can be transformatory. It begins by just quietly planting the seeds of a new order in the little free spaces remaining in society. But it is not a reformist strategy that simply makes the present system a little more tolerable. Because among the seeds planted is the vision of an alternative, more democratic society, a participatory democracy. And at some point that may become too threatening a vision for the ruling class and they will have to strike back. Yes, the time will come when we will have to take to the barricades. But then the people will respond to the call to defend their institutions. So it can lead to a ruptural systemic change.
That in sum, is the long term strategy for moving beyond capitalism even when we do not have state power and there is no immediately foreseeable prospect of revolutionary insurrection.
21st Century Socialism
Let me now shift our attention from the U.S. to those countries in the global South where popular forces do hold state power. I refer to Venezuela and Cuba and those liberated areas in the Mexican state of Chiapas held by the Zapatistas. Here we will see many of the same principles in operation although under very different circumstances.
21st Century Socialism is usually associated with the Bolivarian Revolution in Venezuela. There the state led by the late Hugo Chavez and supported by the popular classes has been fashioning an alternative to the failed state socialism that prevailed elsewhere in the 20th century. Socialism is a transition toward a more equal society without exploitation guided by a participatory democratic solidarity. The construction of institutions to realize this vision is the historical challenge of our epoch. In the socialist projects that prevailed in the 20th century, state power was used to construct economic institutions that were to operate according to an overall plan designed to develop forces of production and meet the material needs of the population. While this state socialism had some impressive successes, we now know that it was neither able to sustain itself nor, more importantly, did it lead toward the kind of society envisioned.
The Bolivarian Revolution seeks to reinvent a socialism truer to the original vision. This is a model in which the state rather than acting for society in a paternalistic way, plays a more facilitating role to develop the capacities of civil society to direct the common affairs of the people. In Venezuela, the state provides resources to local levels to facilitate cooperatives and communal councils, thereby building constituent power. As the constituted power of society, the state is planting the seeds of an alternative economy and an alternative government alongside capitalist society and its representative institutions. In effect the state is creating a situation of dual power. Following the principle of subsidiarity, it empowers ordinary people collectively in their daily lives through participative and protagonistic institutions of direct democracy . In so doing it is nurturing the seeds of a non-capitalist society within what is still a capitalist one. But equally important, it is developing non-capitalist sensibilities within civil society. These are crucial for energizing a democratic movement beyond capitalism.
In Cuba we see a similar effort to build a 21st century socialism, only not within a capitalist society but an existing state socialism. The renovation of Cuba’s socialism that has been underway for the last few years and is projected to take 15 years, seeks to transform a state-directed society into one in which other social entities play a more participatory role. This involves a devolving of state powers to lower levels of government and a strengthening and diversification of civil society in a different relation to the state than previously. Significant areas of economic activity are being turned over to small private businesses and cooperatives that operate in market relations with each other, the public and the state.
The development of new urban cooperatives is especially important in this. Beginning in 2013, hundreds of coops in urban services have been established that are independent and self governing by their members. In a large measure their success or failure will depend on the existing political culture and its transformation. A half century of Revolution has engendered an ethic of solidarity common among the Cuban people. They are not afflicted by the atomistic individualism common in the U.S. There is a high level of social consciousness. There is also a long established habit of participation in public affairs. However, under state socialism this tended to be a passive participation that accepted the directions that came from above. A paternalistic state provided for the well being of its subjects who in turn gave it their loyalty. There were ample opportunities for participation, but little for initiative. That is the feature of the political culture that will have to change if a socialist civil society is to emerge from the reforms now under way.
Cooperatives provide the space for both initiative and participation in promoting a common good. They hold promise of nurturing the New Man, the New Human Being, that Che Guevara called for in socialism. If values of cooperation, solidarity, and democratic participation can be built into the daily lives of Cubans, that can make socialism irreversible because it comes not from the constituted power of the state but from the character of the people themselves.
Here, as in the Bolivarian Revolution, a revolutionary state is supporting the building of a cooperative civil society. It is understood that it is there that real social change has to be rooted if we are to see an alternative to hierarchical domination, whether it be from a paternalistic state or private corporations. It is this understanding of the central importance of a vibrant civil society, or constituent power, that links the New Economy movement in the North with 21st Century Socialism in the South.
A rejuvenation of civil society has been key in the democratic empowerment in the Zapatista areas of the Mexican state of Chiapas. There the constituent power of indigenous communities has recovered a traditional economy and constituted a new kind of state as an alternative to the surrounding nation-state. Participatory democratic institutions of good governance, buen gobierno, have been built in inward oriented caracoles (snails), with their own educational and healthcare systems, production cooperatives, credit unions, media and legal system. It is within these small autonomous territories that a cooperative alternative has been created that nurtures the human development of men and women. They have changed their world and themselves by taking back their own powers as communities.
Everywhere neoliberal corporate capitalism has been a dead end for popular classes, although it has enriched the few. Latin America, the region first flooded by the neoliberal tsunami, has been the first to seek alternatives. In the global North, the U.S. middle classes have also found neoliberal promises to be empty. As progressive forces in the global North and South have looked for another way forward, they are converging on a remarkably similar vision.
The principles that move this vision are subsidiarity (or localism), participation, and cooperation, all of which empower people and nurture human development. Subsidiarity: decisions should be made at the lowest level feasible, with higher levels supporting the lower. This is to put power in the hands of ordinary people. State or corporate bureaucracies are to serve the people, not substitute for them in a paternalistic way. This is not quite horizontalism, but it does represent a considerable flattening of hierarchies. The resulting expansion of participation promotes human development. Rather than turning ones powers over to representatives, direct engagement in making the decisions that affect ones life and in implementing those decisions, foster the development of human capacities – such capacities as a sense of agency, instrumental knowledge and wisdom, values clarification, and social consciousness. Participation in social decision making is cooperative. It involves dialog with others in furtherance of a common project aiming toward shared values. The individual is part of a larger social whole, not an isolated atom, and thus is enriched as a social being.
These principles define a democracy. Democracy involves more than periodic voting for representatives who are then legitimated to act in your name. As a popular sovereignty, it must involve direct participation in shared decision making for collective action for the common good. Only then can it be what the original Greek word denotes: demos (the people) + cracy (rule) = rule by the people. Such a democratic society must extend that rule to all aspects of our life together as a society. That means it must overcome the division between the political and the economic in bourgeois society where workplaces are governed by the dictatorship of owners and managers. It means that investment must be democratically directed toward the social good rather than private enrichment. What this means is the democratization of capital.
As we have seen in the U.S., efforts to build a degree of independence from corporate capitalism point toward a society that is more participatory, more cooperative, more democratic at a local level. This is the same direction that 21st Century Socialism points in the global South. In both cases, institutions that move beyond capitalism point toward a kind of socialism, i. e. a society in which associated producers are empowered to democratically found anew a society that is more equal and in which all may flourish.
Whether this is called socialism or not, it is an alternative that is more humane and nurturing of our human capacities. As capitalism collapses around us, we will invent that new future. Indeed, we must in order to survive.
Cliff DuRand is a Research Associate at the Center for Global Justice located in San Miguel de Allende, Mexico. A former Philosophy Professor, he is co-author and co-editor of Recreating Democracy in a Globalized State (Clarity Press). Contact him at firstname.lastname@example.org.
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