It is vital to prepare for next year's general elections and to make sure that capable progressive populist candidates are lined up to run for public offices from the courthouse to the statehouse to the White House. But Bill Greider thinks if progressives want to try for real change they should also focus on where the real power is -- Wall Street.
Greider, the longtime journalist and bestselling author of five books, including his latest, The Soul of Capitalism [Simon & Schuster], spoke Oct. 11 at the Austin Green Festival, sponsored by Global Exchange and Coop America. He told the crowd that the US is at the edge of what could be a pivotal period of reform. "I feel the momentum and anger building in lots of places," he said. But don't count on the federal government to take care of it. "The federal government is in paralysis -- and that's the nice way to put it ... even if government wanted to act it wouldn't know how to do the right thing."
There is a role in the business world for "humanist populist capitalists" -- people who understand that the world is destroying itself and they don't want to be part of that destruction.
Progressives must think strategically how to gain power, he said. "Not necessarily politically but through the marketplace of finance and business. ... [Corporations] do have their vulnerable points." It is possible to pick good targets and take down a couple CEOs, he said, adding, "To do this successfully requires us to change ourselves a bit. We need to look for allies even in hostile territory and recognize commonality of purpose with people we may not normally recognize as allies."
The road to restoring democracy starts at the workplace, not at the ballot box, Greider said. At the heart of capitalism is a master-servant relationship that is inherited from feudalism. The feudal lord ruled over whoever was on his land. ... Today he's called the CEO." As long as very few insiders at the top of the pyramid to set the terms, you'll have a guaranteed maldistribution of wealth. The solution is workers sharing the ownership of work through co-ops, employee-owned companies and hybrids.
The US has 11,000 employee-owned companies with eight to 10 million people working in them. "It's not utopia but it's a very strong model for what a company can be," he said.
Even those workers who are not politically engaged recognize that the content and the quality of work has been been systematically degraded in the last generation, he said. And low-wage workers aren't the only ones who are hurting. Computer software engineers who bought into the idea that globalization was the key to prosperity now recognize that their jobs are going out the door too, as are factory workers and engineers who find that their jobs can be done cheaper overseas.
After years of class divisions, "It's not easy to begin these conversations but we have to find a way," Greider said. "We need to do deep listening so they'll recognize that we're concerned about the same things."
One example of workers cooperating for their self-interest is the Baltimore temporary labor agency, Solidarity. It is owned by the temp workers who set their own rules -- and they earn a dollar or two an hour more than competing temp agencies. They also get health insurance, which is a rarity for temp workers, and they share in the returns. All or nearly all of the workers are recovering narcotics addicts and nearly all have spent time in prisons. "Because they've been through the fire it's actually a basis for mutual trust and self-discipline," Greider said.
"We could create a Solidarity in every city," but like most businesses, it struggles with the need for working capital. "We can build a structure to help small, green businesses survive and expand. We need to find ways to accumulate capital."
One way is community development banks that could use deposits from working people and invest in community businesses. "We're not, on the whole, poor. We have quite a bit of wealth. The problem is that we don't have a lot of control over our money and we need to work on that." Even a church congregation with 300 families whose average income is $30,000 is worth $9 million. If they own homes valued at an average of $50,000 they have another $15 million in assets.
On their own, working people are treated like widows and orphans by Wall Street and big financial institutions. "We saw how they took care of our money in the last few years," Greider noted. He suggested that unions, churches, progressive organizations and foundations to conduct audits of capital and coordinate a campaign to go to Wall Street financial managers and tell them they're mishandling money. "The largest banks and brokerages quiver at these sorts of threats," he said. An organized minority block of shareholders can take down a corporate board, he added.
The AFL-CIO is working to harness the power of $400 billion in union-managed pension funds and the trillions in public-employee pension funds where labor unions can influence the patterns of investment. The AFL's Office of Investment won a big victory in 2000 when it persuaded the SEC to require mutual funds to disclose when they vote against the interest of their rank-and-file investors to curry favor with corporate management, which is in a position to swing lucrative contracts their way. When mutual funds continue to vote against their customers, the AFL-CIO and other shareholder activists target them as a bad place to park money.
Leo Gerard, president of United Steelworkers of America, created the Heartland Labor Capital Network with the goal of replicating Canada's successful labor-sponsored investment funds, which attract small investors with tax incentives. However, Gerard told Greider, "American politics, as regressive as it is at the national level, makes it extremely difficult to do this here." Congress created tax breaks for local venture capital, but subsidies go only to large investors, banks and businesses.
Greider told of a Wall Street investment firm -- KPS Special Situations Fund -- that rescues mid-sized manufacturing companies and turns them around with labor cooperation. In one case it took over assets that Champion Paper was abandoning in North Carolina. Recreated as Blue Ridge Paper, the company has become a major producer of milk and juice cartons and paper cups with 2,000 employees at six processing plants as well as the main pulp mill in Canton, N.C. The workers own 45% of the company through an employee-ownership trust and have four elected directors sitting on the 11-member board. Before it became co-owned, the paper mill was a notorious polluter of the Pigeon River. Now it is working with the Sierra Club and the Pigeon River Association to reduce the pollution. "It's going to take a lot of time," says Mike Psaros, one of the KPS partners and the son of a West Virginia steelworker, in the book, "but we are transforming what I would call a Stalinist, reactionary, stifling, autocratic, oppressive culture that has existed in those plants for more than 70 years. We are creating a participative, communicative, 21st-century culture where the company relies on people's brains more than it does on their backs."
Bob Smith, vice president of the Papermakers, Atomic and Chemical Employees union (PACE) spoke in the same terms. "For many, many years, American management of labor has been totally authoritarian," Smith says in the book. "... Our people were accustomed to that and accepted the adversary culture. ... The culture needs to be 'Hey, I'm part owner, I've got part of the responsibility for making this operation survive. the quality of the product is no longer the company as such. The company is now partly me."
The enterprise has not been without challenges from workers and managers who were slow to give up the old culture, but Blue Ridge Paper became a more effective and profitable company rather quickly, expanding its cash flow by more than $100 million in the first two and a half years, which was reinvested into the plants and acquiring another packaging company that expanded Blue Ridge's market share.
Democracy is still possible, but progressives have to fight on two fronts, in D.C. and on Wall Street. -- JMC