Humanizing the economy

co-operatives in the Age of Capital


by John Restakis

 

John Restakis

What is now needed is a recasting of the economic paradigm. And so the question must be asked: was the enormous hope for change that was placed on the outcome of the 2009 election a massive act of self-deception?... America seems to be at the tipping point of something momentous, of hope affirmed and further propulsion toward reform, or hope denied and a turn to bitterness and disillusion - a most precarious moment.


Good ideas are contagious.
– Stefano Zamagni

When, on Jan 20 2009 Barack Obama took the oath of office it seemed for one glittering moment as if America had restored itself to its own highest ideals. The terrible waste and wantonness, the utter folly of the Bush era seemed at last to have been purged. It was like awaking from a very long and very dark dream.

Eighteen months later, the American people continue to come to terms with the enormity of the challenge that political action faces in the attempt to reform the economic template of our times. On every front, from regulating the worst excesses of Wall Street, to squeezing the feeblest of reforms from a corrupt health system, corporate power in the US has remained as intransigent and immovable a force as ever. The disrepute and crisis of trust that the capitalist system endured during the financial meltdown of the summer and fall of 2008 continues to cast a lengthening shadow despite the optimistic reports of “recovery” that still find their way into the news. (1) The massive bailouts of the financial sector seemed to have forestalled the freefall that everyone feared. But they have left a crushing legacy of debt that will cripple the American economy for decades to come.

It is only in the face of the most extreme resistance by the banking industry, and the protracted obstructionism of its proxies in the Republican Party, that Congress finally passed legislation intended to reign in the practices of a system that consigned the economic fate of the country, and much of the world, to the gambles of financial speculators.

Nothing at all has changed in the culture either of the financial institutions that brought the US economy to the brink, or within the wider culture of corporate America. The unconscionable bonuses, incentives, and wage packages that became so repellant in the heat of the crisis are still being doled out, with the excuse that things are now turning around, banks are making money again, talented people need to be fairly rewarded. On the ground, things feel very different. The federal bailout money has failed to reach those that most need it. In countless communities, neighborhoods are being gutted as the wave of foreclosures continues at a rate of one every 13 seconds. (2) (On the bright side, hopeful house buyers can take a ForeclosuresToursRUs bus tour in places like Cape Coral in Florida and survey the wreckage with an eye to picking up a bargain.) (3)

It took the prospect of a catastrophic collapse not only of the US economy, but also the global economy with it, that prompted the call for change so urgently needed. Yet these changes, essential as they are, are a form of legislative triage. They target the emergency symptoms of a system fatally infected with an incurable malady – the separation of the market from its social moorings. For this to be addressed, more than legislation is required. What is now needed is a recasting of the economic paradigm. And so the question must be asked: was the enormous hope for change that was placed on the outcome of the 2009 election a massive act of self-deception? It is not a rhetorical question. It points to the essential contradiction of our time. For despite the hard won battles in Congress, we are still speaking of a corporate system, centered in the United States, but spreading, that is beyond control. Yet there remains a fervent desire, a spirit of hope for something better that is deeply moving, powerful and undeniable. America seems to be at the tipping point of something momentous, of hope affirmed and further propulsion toward reform, or hope denied and a turn to bitterness and disillusion – a most precarious moment.

If the hopes placed in the Obama victory turn out to be hollow, if the desired reforms don’t start to repair this fundamental schism between economics on the one hand and social values on the other, something terrible will befall America. For failure may well break the back of a fragile reform movement, one that is already uncertain of its capacity to prevail inside the bounds of America’s deeply compromised political institutions. The most promising recent opportunity for saving the US, and much of the world, from plunging further into a very dark age will have been lost. A charismatic and intelligent leader with a wave of popular support firmly at his back will have lost the one best chance for recasting the American story.

I am not using the phrase dark age lightly. I am speaking of an age in which the values that are essential to the prosperity and wellbeing of a society are eclipsed. One might debate what such values consist of. What I mean by them includes at minimum intellectual and political freedom, the value of both the individual and of community (not the exaltation of one at the expense of the other), equity and economic opportunity and the notion of citizenship in an open and democratic society. But more than this, I am speaking of social and economic institutions that embody and advance these values.

The organization of economic life is fundamental, not only for the character of our societies, but also for the content of our personalities and the conduct of our relations with others. Should we lose sight of those elements that define a fully human life, and truly humane societies, no amount of material prosperity could ever substitute for such a loss. Our sense of alienation and discontent will grow in proportion to the displacement of our social values by material ones. Not only are the western democracies set firmly on this path, but even more troubling, the contaminating influence of consumption ideology has drawn in resolutely anti-democratic states such as China, where prospects for the democratization of economic life are even more remote than they are in the west. Any time or place in which a single worldview comes to dominate the hearts and minds of men is almost by definition a dark age – ideologies of this type diminish people and society to the small and stifling measures that always serve narrow and self-perpetuating elites. Ideology always serves power. It was so in Communist Russia, it is true in the fundamentalist theocracies of Islam, and it is true for the corporate capitalism that has crystallized throughout the west and is being spread now like a contagion through the forces of globalization.

As most readers know, there was a long time in the west when the spirit of free intellectual and spiritual development that flared in the brief light of the Classical Age grew dim. It was eclipsed by a Christian religious dogma that over time became totalitarian, sustained by absolutist religious institutions that were utterly intolerant of dissent. Europe entered a long sleep of forgetfulness. There were periods of awakening, of relative openness and discovery, but they were rare and insufficiently strong to alter the overall stagnation of the era. (4) Not until the rediscovery of classical knowledge in the 14th century, especially the works of Aristotle, did Europe as a whole recover from its stupor. It was thanks to the preservation and study of classical works in Islamic centres of learning in Spain, Morocco, Alexandria, and Baghdad that the ideas of a lost age eventually returned, along with the philosophical and scientific works of Islamic thinkers like Avicenna and Averroes who had been influenced by them. In the monasteries of Europe also, those works that had survived were carefully preserved; diligently copied out by monks for a time when they might again reveal their worth. When they did, they not only opened out the horizons of cultural and scientific achievement, they enriched and deepened the understanding and practice of Christianity itself, including the revolution in theology prompted by the marriage of classical philosophy with Catholicism by thinkers like Abélard, John Duns Scotus, William of Ockham and Thomas Aquinas.

There is a parallel to be drawn between the omnipotence of the church in the age of religion and the analogous influence of the corporation in our own age. In each, the requirements of an imperial ideology spawned the social, cultural and psychological forms that were necessary to its preservation, not only in public life but even more importantly in the interior life of the individual. The external and internal aspects of these systems were, and are, mutually reinforcing. But there is a profound difference between these parallel worlds. It concerns the radically different conception of humankind that each personifies. They are like the inverse of each other. In one, the religious attributes of faith and obedience predominate. These, in turn, fix the individual inside the immutable structures of class while uniting them in the spiritual body of the holy church. As an ideal, this is a universe that is both social and spiritual, drawing forth and embodying the human attributes of service, sacrifice, and ultimately the redemptive power of faith. It is also profoundly conservative, anti-democratic and authoritarian. In the other, materialism and the satisfaction of personal desire predominate. In the ideology of consumerism avarice – not faith – is the propelling force. In turn, the idealized human personality is individualistic, self-serving, competitive and implicitly anti-social. The ideal of our capitalist age is a privatized paradise, one that is realized by the satisfaction of our very fleshly desires here on earth, not in some hoped-for afterlife. The liberal notion of personal freedom as the pursuit of selfish ends is intimately bound up in this strange vision of the good life. On its surface, it appears as a system of perpetual change, as a constant process of destruction and reinvention, but at bottom it too ends up serving authoritarian ends.

It is easy to see that both these idealizations are simplistic and one-sided. But that’s what makes them idealizations – they are not meant to be descriptive, but rather prescriptive. They are symbolic representations that embody our ideals and guide us toward their realization. Given this fact, how can we say with any confidence that the human ideal of the modern age is superior to the one it displaced? From the standpoints of economic achievement and personal and political freedom, it most assuredly is. But the materialization and secularization of the human personality has also cut us off from our social and spiritual foundations. The challenge of our time is to reclaim them without sacrificing the enormous achievements in material prosperity and human freedom that have come with modernity. We have to humanize our economies. This is the essential role of co-operation in the age of capital.

Happiness matters

The case for the gradual ascendance of the co-operative model rests on (at least) three factors. The first is the changing nature of advanced capitalist societies and the transition from scarcity to post-scarcity economies. The second is the accelerating crisis of environmental degradation and resource depletion. The third is the growing movement for global justice and the search for economic models that institutionalize fairness.

The transition from scarcity to post scarcity societies in the latter half of the twentieth century represents a watershed in human development. By post scarcity, I do not mean the elimination of poverty. Poverty remains a problem in advanced capitalist societies, as does the growing disparity in wealth. In scarcity societies, poverty is very much a function of whether economic systems can generate the wealth necessary to meet the basic survival needs of a population as a whole. Even in these societies, as we know, a minority will always accumulate the resources they need to meet, or surpass, their basic needs. In post scarcity societies, poverty is not primarily a consequence of the productive capacity of the economic system. Rather, poverty is a consequence of the unequal distribution of wealth, which, in turn, comes from the inequality embedded both in the economic paradigm and the political system that sustains it. Moreover, even the poor in post scarcity societies are living at a level that is far above basic survival.

The solution of basic survival needs on a mass level in much of western society has given rise to an entirely new kind of civilization. For the first time in human history, societies can be organized around the pursuit of non-survival ends, not only for a privileged minority as in the past, but for everyone. This has prompted a revolutionary effect on concepts of personal identity, on the prospect of personal freedom, and on the pursuit of meaningful life goals. Post scarcity has made the pursuit of happiness a viable goal for societies as a whole, not just privileged individuals.

But the enormous liberation of human energy and capacity that the resolution of scarcity made possible is now being consumed in the pursuit of ends that are not only contrary to the realization of happiness at a personal level, but to the erosion of the social basis of happiness as a socio/cultural possibility. Post scarcity society is for the first time capable of realizing happiness as a broad social project while simultaneously undermining the basis for its realization. For this paradox to be solved, the restoration of social capital through institutions that incorporate and generate reciprocity is essential. The social poverty trap that western capitalism has set for itself is being recognized at different levels – academically, politically, culturally, socially – and the decline of social bonds along with the growing alienation of individuals in society is being noted with alarm. At a personal level, there is a growing thirst for something other than material consumption, and co-operatives are being viewed as a means of delivering the kinds of social and relational goods that are being depleted by commercial culture. Throughout Europe and North America, co-ops that provide personalized services are the fastest growing sector for new co-op development, representing a new wave within the movement. Co-operatives increase the availability of relational goods, which are central to the production of happiness. Whether in elder care, or services for the disabled, or health services, co-ops are responding to a growing public concern over the depletion of social goods. But there is a deeper, far more intimate dimension to this new, post scarcity reality.

If it is true that personal identity has become the locus of consumer culture in post scarcity economies; the co-operative then assumes a central role in providing to individuals a means of realizing a sense of personal identity that is both meaningful and attuned to the need for profound change at the level of economic practice. Because co-operatives recognize and reinforce the social dimensions of identity, they offer the opportunity for individuals to select them as a means of realizing life goals that supercede instrumentality or consumption.

In a post-scarcity identity economy, the central issue becomes “How do I create an identity that can deliver a high level of life satisfaction?” Past a $30-40,000 threshold, this question is not related to income. And if consumer culture, and the economic forms that embody it, are incapable of delivering life satisfaction and wellbeing at this basic emotional level, the human need for social connection as a vital dimension of personal happiness will drive people to the kinds of institutions that can provide it. Co-operatives are chief among these. They build in people the capacity and the satisfaction of creating complex social relationships that are part of a truly meaningful personal identity. Religious organizations are another. But unless co-operatives and other organizations within civil society recognize the urgency of social connection clearly, as well as their role in responding to it, the danger is that other, less positive forms of belonging will inevitably arise to fill the void. The tribalism inherent in fascistic or nationalistic movements, for example, feeds on this. The power of a perfected art of identity manipulation, combined with a broad social disaffection and insecurity at this most elemental level of human psychology is a truly frightening prospect, and the signs of its emergence in contemporary political and religious propaganda gives little room for complacence. The extremist populism that is now disfiguring the political culture of the US is one example. There is much at stake and the role of social institutions that can help to repair the dysfunction caused by our consumption-obsessed culture cannot be overstated.

Post scarcity economies also mean that individuals can make the kinds of economic choices which express values that go beyond the satisfaction of basic needs. There is a growing movement among consumers to align their economic choices with their personal values. This is the positive aspect of identity formation as an extension of consumption. But ethical choices about consumption are redeemed by their social dimension. They are directed to outcomes that reflect a social connection to others who, in turn, are affected by that choice. Co-operatives allow consumers, as well as producers, to humanize markets by incorporating values which increase in relevance as societies solve basic issues of survival. From this standpoint, the nature of co-operatives as socially directed enterprises makes them uniquely suited to the ethical standards that will be increasingly expected of enterprises in the future. The degree to which this is the case may already be judged by the behaviour of capitalist firms today. The entire movement toward corporate social responsibility is a strategic response by corporations to address the growing importance of market ethics in the mind of the consumer. Co-operatives have had a profound influence on corporations in this regard. Their conduct in the marketplace as socially conscious enterprises has become contagious. When corporations like Microsoft encourage their employees to do community work and pay them to do so, or oil companies like BP rebrand themselves as environmental champions, something has shifted. Corporations are attempting to humanize their image, and sometimes, their behaviour. But in the era of ethical consumption, co-ops have a natural advantage, and the more important that ethics and social responsibility become for selling a dysfunctional economic model, or the survival of the planet, the more corporations will be compelled to adopt the appearance, if not the substance, of the co-operative model.

This introduces at least some notion of social accountability into corporate behaviour. But it is not enough. Sooner or later, the gap between appearance and reality that is inherent in the structure of corporations becomes manifest. Rarely has this been more starkly presented than the case of the rebranded BP. For over two months, upwards of 50,000 gallons of crude oil gushed into the Gulf every day, fouling the shorelines of Louisiana, Alabama, Mississippi and Florida and imperiling not only the Gulf fishery, but an entire way of life. By the end of June, the cleanup cost had surpassed $2 billion dollars. This was a predictable catastrophe that mirrors at an environmental level the systemic and ideological failures that led inevitably to the 2008 financial collapse on Wall Street. And behind the sunny, leafy, environmentally friendly new logo of BP, the true character of the company now stands naked. It turns out the oil giant, despite rebranding itself as an environmentally conscious corporation, had devoted a mere .03 of one percent of its profits to ensuring the safety of its operations. No amount of spin or marketing manipulation will ever address the utter disconnect between social values and social controls over corporate behaviour on the one hand and the immoral thirst for profits at any cost on the other. For this to happen, the business model personified by BP has to be reconstructed along democratic principles if it is ever to be truly accountable to anyone beyond its shareholders. Sooner or later, the appearance of corporate social responsibility has to give way to substance.

Adapted from Humanizing the Economy: Co-operatives in the Age of Capital by John Restakis, New Society Publishers, 2010. John Restakis is the executive director of the BC Co-operative Association and a pioneering researcher in the area of international economies. www.bcca.coop

Notes

(1) An article in the New York Times Business Section provided a most revealing, and unintended, reference to the underlying logic that drives the health system in the US. In describing the rebound of the market due to the optimistic reports of recovery by analysts, it was reported that health care shares surged after Congress delayed a new tax on the industry as part of the proposed health reform. Without a trace of irony, one portfolio manager at 1st Source Investment Advisors in South Bend Indiana was quoted as saying, “Every day that the legislation gets watered down and they pull more teeth, the health stocks rally because there is going to be less damage to their profits.” “Markets Rebound on Assist by Optimistic Analysts,” New York Times, Tuesday, Dec. 22, 2009.

(2) Meanwhile, recent efforts by Congress to approve measures giving bankruptcy judges the power to write down the principal on homeowners’ mortgages were killed by the banking lobby. “Foreclosures mark pace of enduring U.S. housing crisis.” Reuters October 8, 2009

(3) Peter S. Goodman, “On Your Left, Another Relic of the Bust,” New York Times, January 3, 2010. Visit www.foreclosuresRUs.com for details.

(4) Some may object that I am equating spiritual values with the kind of religiosity I just finished criticizing. I intend no such thing. I am merely pointing out that the spiritual dimension, however defined, is an essential human attribute – whether one is a believer in any particular form of spiritual practice or not. To cultivate a form of society that is incapable of recognizing it, much less experiencing it, is the most profound folly as is shown in every instance where it has been attempted.