A Real Ownership Society

Gar Alperovitz

May 23, 2005

Gar Alperovitz is Lionel R. Bauman Professor of Political Economy at the University of Maryland. This article is drawn from his recent book, America Beyond Capitalism : Reclaiming Our Wealth, Our Liberty and Our Democracy. (Wiley 2005)

George Bush has proclaimed an “ownership society.” Do progressives have an alternative? “You can’t beat somebody with nobody”—and until progressives come up with their own strategy, what you see is what you’re going to get for a very long time indeed.

New policies may be largely blocked by conservative control at the national level, but there are reasons to believe a new approach can build power at the state and local level. This is where the rubber hits the road—and where the pain of Bush era fiscal problems, spending cut-backs and job dislocations are felt directly.

Moreover, just below the radar of most media attention, innovative progressive community-benefitting “ownership strategies” have been developing at the state and local level for the last several decades. Many have been fine-tuned through trial and error experimentation and are ready to be put forward in a politically exciting form.

One of the most important involves employee-owned companies that both alter who owns wealth and helps stabilize the local economy. Once thought of as marginal, there are now 11,000 companies in the United States that are wholly or substantially employee-owned. Such firms anchor jobs, contribute to the local tax base and rarely, if ever, get up and move to Mexico.

An initiative based on a comprehensive program of loans, grants, technical assistance and new tax provisions could offer progressive governors and legislators a politically appealing way to deal with growing state economic problems. Because they are highly productive, moreover, many conservatives have shown a willingness to support locally based employee-owned companies. Significantly, the battleground state of Ohio is one of the leaders in on-the-ground development of the approach.

Even more interesting are strategies that use wealth that is already owned by employees and managed by the states—public pension funds—in a comprehensive community-benefitting approach. Here, too, there are many precedents to build upon—and not only in states like California and New York where strategic pension fund investing is commonplace. Conservative Alabama has for years quietly been using public pension funds to create and hold jobs in the state—including investing in numerous employee-owned firms.

There are also sophisticated and highly developed community-benefitting ownership strategies available at the local level. For instance, some 4,000 to 6,000 nonprofit neighborhood corporations now regularly invest in—and own—housing and businesses and provide other services on behalf of communities throughout the United States. In Newark, N.J., one such corporation—New Communities, Inc.—generates $50 million in economic activity each year, employs more than 1,600 people and uses its ownership position to leverage other community services.

Still another strategy operating just below the level of media concern involves cities becoming owners of productive and profitable enterprises which make money, produce new revenues and help the local economy in a variety of other ways. Enterprises range from hotels and large-scale city-owned real estate projects (especially in connection with transit development) to cable television, Internet and other services. And, of course, there are some 2,000 public utilities operating at the local level. Many efforts have proven so effective that even Republican mayors have begun to back new municipal enterprise strategies.

A fully developed approach could also include support for producer and consumer co-operatives and for land trusts (which turn another form of non-profit community ownership into support for low and moderate income housing). A surprisingly large constituency is there for the asking, especially in connection with new applications of the co-op principle.  More than 100 million Americans are already members of one or another form of co-op.

Finally, of course, there are progressive individual ownership strategies—including support for Individual Development Accounts that match the savings of low-income families, and for child accounts that help build asset-ownership that can be used for college or other purposes at maturity. Here, too, state efforts are on the rise—and ready for broad application.

Our current “ownership society” allocates just under 50 percent of the nation’s business wealth to the top 1 percent of people. The most recent data (1999) showed that an even smaller group—a mere two-tenths of 1 percent at the very top—made more money on the sale of stocks and bonds than all other taxpayers taken together. These are truly medieval patterns. Moreover, the Bush ownership proposals—especially his Social Security privatization scheme and tax-reducing strategies for savings and  health care—are designed to further benefit upper income groups, thereby exacerbating the present patterns.

Over the next two years, there will be a series of potentially dramatic theme-setting races for mayor in key cities (like the recent mayoral race in Los Angeles) and for governor in states like New York, Ohio, New Jersey and Iowa. A bold progressive ownership strategy could give new meaning to a very different conception of economic justice rooted in the notion that we are all in it together—and that our strategies need to, and can, reflect this larger vision of the good society.

It might also nurture the kind of on-the-ground experience which can ultimately become the basis of the next national progressive vision. That, in fact, is precisely what happened in the boldest era of American development: A nation in great pain turned to the New Deal—which, when the right moment arose, translated important state and local precedents into federal policies that ultimately transformed the nation.