Amid “Constitutional Crisis,” Bernie Sanders Urges Workers To Seize Means Of Production

“When employees have an ownership stake in their company, they will not ship their own jobs to China,” Bernie Sanders said in a recent statement. (Photo: Mark H. Anbinder)

On May 16, 2017, Kate Aronoff writes on Truth Out:

The last few days have been a bit of a whirlwind, politically speaking. Most of it has to do with the onslaught of chaos that followed Donald Trump’s abrupt firing of FBI Director James Comey — a move political scientists agree is off the spectrum of normalcy in the history of the American presidency. Before his termination, Comey was leading an investigation into the Trump team’s alleged ties to the Russian government. Keith Ellison, deputy chairman of the Democratic National Committee, has said “we are witnessing a constitutional crisis.” Calls for impeachment are in the air, along with a good deal of conspiracy theorizing.

In sum, the republic as we know it may be its closest yet to tatters. Enter: Bernie Sanders, the senator from Vermont and the country’s most popular politician. He — alongside Democratic Sens. Patrick Leahy, from Vermont, Kirsten Gillibrand, from New York, and Maggie Hassan, from New Hampshire — is encouraging workers to take control of the means of production.

This isn’t some right-wing conspiracy theory, but the intended result of two bills introduced to relatively little fanfare last Thursday. The first, the WORK (“Worker Ownership, Readiness and Knowledge”) Act, would direct more than $45 million in funding to state-level employee ownership centers, aimed at providing training and technical assistance to current and prospective worker-owners. A second piece of legislation would establish something called the US Employee Ownership Bank, via $500 million in funds for low-interest rate loans and financial assistance for workers who want to buy out the businesses where they work and either incorporate them as worker-owned cooperatives or establish employee stock ownership plans (ESOPs), which give workers an ownership stake in their company.

“By expanding employee ownership and participation, we can create stronger companies in Vermont and throughout this country, prevent job losses and improve working conditions for struggling employees,” Sanders said in a statement. “Simply put, when employees have an ownership stake in their company, they will not ship their own jobs to China to increase their profits, they will be more productive, and they will earn a better living.”

Notably, a provision outlined in the second bill would give employees the first crack at taking over their workplace if owners move to offshore their jobs, according to John Duda.

Duda works for the Democracy Collaborative, a research institute that supports cooperative development. He also helped found the worker-owned cafe and bookstore Red Emma’s in Baltimore, Maryland.

“I think it would be a game changer both in terms of accelerating worker-ownership, and discouraging companies from pursuing a race to the bottom in terms of looking for cheaper wages overseas,” Duda said about the legislation.

Cooperative ownership has a long history in the United States, Duda explains. The earliest champions of organized labor in America pushed for cooperatives as a means to shore up employee control over the workplace. As a document officially adopted by the Knights of Labor in 1878 put it, “The recent alarming development and aggression of aggregated wealth … render it imperative … that a check should be placed upon its power and upon unjust accumulation, and a system adopted which will secure to the laborer the fruits of his toil.” Later, New Deal initiatives like the Rural Electrification Administration provided start-up funds for people in rural areas to create cooperatives, with rural electric cooperatives now meeting 11 percent of the country’s demand for electricity. Civil rights leaders from Ella Baker to Fannie Lou Hamer would also cut their teeth in cooperative self-help programs.

Today, companies from Cabot Creamery to REI are cooperatives of one form or another. And Publix Super Markets and Wawa convenience stores are just two of many major firms in the United States that offer their employees ESOPs. Worker-owned cooperatives, by contrast — governed by the principle of “one worker, one vote” — tend to be smaller in the United States than either ESOPs or producer and consumer cooperatives, but more widespread throughout South America and Europe. In contrast to the estimated 10.3 million Americans covered by ESOPs, just over 5,000 people are a part of worker-owned cooperatives.

Sanders himself is no stranger to cooperatives. He’s introduced similar bills before, and the legislation is partially inspired by the Vermont Employee Ownership Center, or VEOC, of which Sanders has been a longtime booster. Speaking to a forum on workers’ ownership at Burlington City Hall in 1985, then-Mayor Sanders said, “Democracy cannot just mean the opportunity to vote for a Walter Mondale or a Ronald Reagan once every four years … If we have a vision as to what democracy is about, it’s got to mean the right of a working person to control his or her job, to have some say about what’s being produced, to sit down with the other workers and say, ‘This is what I think we should do.'” (You can watch the full clip here.)

One of the other models for the kind of support programs outlined in the WORK Act emerged out of the closure of the Youngstown Sheet and Tube factory in 1977 — a siren song for the kind of deindustrialization that would plague the Rust Belt for years to come. Workers, Duda said, attempted to seize the plant and run it cooperatively in the run-up to the closure. The effort ultimately failed, but captured the attention of Ohioans interested in developing cooperative businesses. Started in 1987, the Ohio Employee Ownership Center (OEOC) has since helped some 90 companies to become employee-owned, creating an estimated 15,000 employee-owners in the Buckeye State. A like-minded push in New York City has seen some initial success after an investment of $1.2 million in worker cooperative business development efforts in 2014.

“It’s hard stuff getting all the legal ducks in a row, getting all the financing lined up, figuring out how to take advantage of the tax incentives that exist. Having technical assistance and having grant support for technical assistance is incredibly key,” Duda said.

He wasn’t overly optimistic about the bills’ chances in Congress, but thought their introduction represented a step forward in terms of bringing cooperatives further into America’s economic mainstream.

“We have a lot of drama going on, and it’s vitally important to pay attention to,” Duda told In These Times, “but we need to not forget that we are seeing historic levels of inequality. We need to be thinking about solutions and a transition to a broader-based ownership of the economy that allows us to tackle that question. We may not be able to pass this legislation today, but there’s going to be a time at which policymaking is possible again and we need to be ready.”

http://www.truth-out.org/news/item/40596-amid-constitutional-crisis-bernie-sanders-urges-workers-to-seize-means-of-production

One of the major reasons I supported Bernie Sanders throughout the primaries, and never voted for Hillary Clinton or Donald Trump, was because I felt that his platform statements, in support of broadening individual capital asset ownership with individual workers owning the future economy, meant that he was potentially the leader we desperately needed to forge a reform of the financial system to ensure that EVERY child, woman, and man was empowered equally to acquire  ownership shares in the future capital asset formation of a vibrant growing economy, without taking from those who already owned capital assets, and without the requirement of past savings to pledge as loan collateral.

I recognized that Sanders really did not fully understand the private property principles necessary to reform the system nor the actual financial mechanism that would do the job, but I thought we had our best shot at reform with him leading the necessary reform of the system.

I’d like to retrace some of the commentary I wrote on Sanders advocating for worker cooperatives and Employee Stock Ownership Plans (ESOP) during the primary race. After all, I founded in the late 1960s the ownership advocacy firm Agenda 2000 Incorporated with binary economics and father of the ESOP, Louis Kelso, taught binary economics in the graduate school at the University of California, Berkeley, and ran as a Democrat for Congress in 1974, always advocating broadening wealth-creating, income-producing capital ownership simultaneously with the growth of the economy.

A far better invisible incorporation structure for worker-owned corporations is the Employee Stock Ownership Plan (ESOP), which Bernie Sanders advocates. In fact, there are thousands of corporations owned by workers using an ESOP-structured S-corporations whose owners elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes. But there is a limitation to worker-owned corporations, that is: ONE MUST BE AN EMPLOYEE/WORKER. That means, due to tectonic shifts in the technologies of production, millions and millions of Americans are or will be, by definition, left out and even those Americans working now may not be working in the near future as such tectonic technological shifts and the globalization of production at the lowest cost destroy jobs and devalue the worth of labor.

A cooperative is member-owned and -controlled, rather than controlled by investors as in a corporation. But this is not to say that a corporation cannot be broadly owned by its workers and other citizens (there are presently over 11,000 employee-owned corporations structured under an Employee Stock Ownership Plan), all with voting rights and entitlement to their share of full earnings dividend income. Unlike a cooperative in which all members and shareholders have to be active in the co-operative, in a corporation the shareholders elect a board who in turn hires a CEO to oversee the day-to-day operation of the corporation. As cooperatives are formed to provide a service to their members rather than a return on investment, it is difficult to attract potential members/shareholders whose primary interest is a financial return. The idea to broaden personal/individual ownership of corporations, is to create new owners and empower each to benefit fully from a return on investment. While cooperatives are not obligated to seek profit for investors, but are created to meet members’ needs, there is still the requirement, as with corporations, that the investment to create them will generate a profit. Otherwise, there would be no income to sustain the business. So both cooperatives and corporations must operate using the logic of corporate finance that investments must pay for themselves.

Both cooperatives and business corporations are legally corporations under state charters. Both structures can be broadly OWNED (cooperatives: member/shareholder/investors; corporations: shareholder/investors) with operations overseen by vote of the members or owners. The problem today with respect to corporations is that they are NARROWLY OWNED and thus a say in decisions is restricted to those who OWN the most shares.

Note, though, millions of Americans own diluted stock value through the “stock market exchanges,” purchased with their earnings as labor workers, their stock holdings are relatively minuscule, as are their dividend payments compared to the top 10 percent of capital owners. Statistically, stock market wealth is held by a relatively small number of the most affluent. In reality, most Americans don’t have any stocks to their name. In fact, many Americans don’t even have any savings to their name. A Pew Research survey found that 53 percent of Americans say they have no money at all invested in the stock market, including retirement accounts.

The idea behind the proposed Capital Homestead Act is to use financial mechanisms that broaden the ownership of corporations, broaden decision making and operational oversight, and return fully the profit earnings to the owners, rather than retain those earnings or debt finance for reinvestment, neither of which creates ANY new capital owners.

As for financing business growth, the corporation would issue and sell new stock, which would be acquired broadly by children, women, and men using insured, interest-free capital credit, repayable out of the future earnings of the growth investment. Thus, by re-invisioning the corporation, we can achieve the full benefits of the corporate structure, controlled by the people, for the people. Broadly owned corporations would empower all current and future generations to take priority over profits (for shareholders and executives) by operating in the best interests of the well-being of people, communities, and the planet.

For a comparative structure tutorial see http://www.uwcc.wisc.edu/whatisacoop/BusinessStructureComparison/

Bernie Sanders, while a long-time advocate for and supporter of employee-owned business corporations, now needs to take this comprehensive concept to its fullest outcome and introduce legislation for the proposed Capital Homestead Act.

Support the Capital Homestead Act (aka Economic Democracy Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

Concurrently, support Monetary Justice at http://capitalhomestead.org/page/monetary-justice and Justice Based Management at http://www.cesj.org/?s=Justice+Based+Management.

The Capital Homestead Act is the fulfillment of the promise to broaden FUTURE wealth-creating, income-producing capital assets by creating millions and millions of NEW capital owners. Using financial mechanisms that provide insured, interest-free capital credit, repayable out of the FUTURE earnings of investments in the corporations growing America would empower EVERY child, woman, and man, whether employed or not, to acquire personal OWNERSHIP stakes in America’s viable and successful corporations simultaneously with their growth, without the requirement of past savings or ANY reduction in wages or benefits, if employed.

The Capital Homestead Act would facilitate the transformation of America’s corporations, now OWNED by a tiny minority wealthy ownership class, into a nation of universal capital owners, who would earn income through profit sharing and the full-earnings dividend payout of corporations, and enable America to finance its future economic prosperity while simultaneously creating new capital owners.

Norman Kurland, President of the Center for Economic and Social Justice (www.cesj.org) argues, “The haves represent a tiny fraction of humanity. Our ideas will split them between those who see our point and understand that they would benefit everyone without taking anything away from them during their lives, and those who want to keep ownership in an exclusive club. The latter cannot publicly attack the institution of private property without threatening the legal foundation that gives them their monopoly over the money system and the ownership system.”

Bernie Sanders was the ONLY candidate for president that would have provided leadership to awaken all American citizens to force the politicians to follow the people and lift all legal barriers to universal capital ownership access by every child, woman, and man as a fundamental right of citizenship and the basis of personal liberty and empowerment. The goal should be to enable every child, woman, and man to become an owner of ever-advancing labor-displacing technologies, new and sustainable energy systems, new rentable space, new enterprises, new infrastructure assets, and productive land and natural resources as a growing and independent source of their future incomes.

Now is Sanders and others time to lead our nation to an end result wherein citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elite controls the coercive powers of government.

 

 

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