Economic democracy

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Economic democracy is a social and economic concept that is offered as an alternative to large scale capitalism and consumerism, by means of placing emphasis on the individual versus money. It is employed as a loose, umbrella term for opposition to a globalized economy dominated by large corporations and neoliberal economic policies. One of the main goals of economic democracy is to put emphasis back on to community and local economies, restoring the important individual and overall human involvement within all aspects of society.

In this context, economic democracy is accomplished through a variety of activities that focus on both the individual and the community: local, sustainable food production, worker ownership of companies, consumer cooperatives, local currencies, small and closely-held corporations, and political networking between localities. It is through these efforts that other important facets of economic democracy occur, by means of recognizing the embedded social importance of and relationships between people and their communities, putting emphasis on the local economic processes, and restoring meaning and value into work.

Other important goals of economic democracy include:

1. Narrowing the gap between the rich and poor
2. Making more conscience decisions that impact economic well-being
3. Collective cooperation and responsibility
4. People having control over the market, as opposed to the market having control over the people
5. Redirects the meaning of "economy" to include more than normally recognized economic processes, such as social relationships and other areas of everyday human life
6. Making business consider their impacts on the community and environment in which they're a part of

Contents 1 Economic theory behind economic democracy 2 Co-operatives 3 Closely held businesses 4 Local and slow food production 5 Local currencies 6 External Links 7 References

[edit] Economic theory behind economic democracy

There are two principal figures in economic history that address economic democracy in their writings, the first of which is Karl Marx. He explains that social relationships, important aspects of economic democracy, are embodied in the products consumed, and he continues by stating that looking at a product as something only to consume or trade is to be blind. By this, Marx means that society has lost its basic humanity, its innate humanness, and has replaced humans with figments of labor. Marx builds on this idea by speaking of commodity fetishism, a term describing people who do not interact with other people in a market economy, but instead interact with the commodities and lack private experiences. He further vindicates that humanity ignores labor values attributed to the products it purchases. In these situations, it is not the people who decide where the market is going; rather, it is the market that controls the people. Thus, as opposed to being blind to the significance embodied in a product, the consumer should be aware of where their product came from and who instead of simply buying a generic product, neglecting to realize that an individual put time and effort into it. Marx describes the relationship between a consumer and the producer of the product to be void of any meaning if only consuming or trading it is recognized. He also asserts that in a capitalistic society, consumers are constantly purchasing products whose origins and creators are completely unknown to the consumer, and there lacks a social relationship between the two. This concept is what is referred to as “Marx's theory of alienation.” Alienation is tremendously important to economic democracy, as it points out the disconnect in the capitalistic economy and emphasizes the importance of individuals.

Karl Polanyi's writings relate to and extend Marx's ideas, for he too emphasizes the individuals in market economies - individual emphasis being one of the primary goals of economic demicracy. A recurring motif throughout his writings is the idea that economies need to be subordinate to individuals and social needs. One of Polanyi’s most prominent writings is The Great Transformation. Here, Polanyi states that capitalism causes modern states and market economies to grow simultaneously, and are necessary to each other’s development. He further points out that in many modern economies, the state plays an essential role in maintaining a competitive capitalist market, and an overall successful economy. However, he reasons that for a market economy to be truly prosperous, social constructs need to play more of a part in the economy, and that social aspects need to be of more importance. The ramifications of these social and economic aspects result in people and land becoming commodities. In The Great Transformation, Polanyi also explains his idea of “fictitious commodities,” being land, labor, and money; these all concern such consequences. They are called “fictitious” because commodities, by definition, are produced for sale; however, these items were not originally produced to be sold. For example, Natural resources including land, are “God-given”; humans, the source of labor, do not reproduce for the sole purpose of providing the market with laborers; money is a social convention and is essentially a “book-keeping entry,” validated by the government and law. These concepts help make up the foundation of economic democracy, by emphasizing the importance of people over capital.

[edit] Co-operatives

A co-operative, (often referred to as a Co-Op business or just Co-Ops) use a cooperative business structure, where everyone shares equal work and decision-making abilities. This is opposed to a more universal hierarchical structure, where a relatively small percentage of the company has the greatest amount of money and power. It is an autonomous group of people, usually running producer, consumer or housing associations to meet common social or economic needs. Co-operatives are member-controlled, and non-discriminatory in their openings to others. Such organizations are independent entities that thrive under community cooperation and full member participation, in addition to operating under democratic principles. This highlights the importance of individuals and their needs, as well as their right to participate in the organization’s governance. The concept of co-operatives is focused around meeting needs on a long-term sustainable basis, as it is rooted in a specific place with no intention to leave. In many cases, large-scale businesses and corporations provide only temporary jobs and often will abandon its community when a more profitable location becomes available, despite the employees which rely on it for income. Co-ops, on the other hand, commit to a long-term investment in where they are established, providing jobs and products produced within the community and thus strengthening the community. This in turn, creates a dis quantifiable importance of each participating individual. These aspects of a co-operative reinforce economic democracy and ensure its existence and success by maintaining a worker-over-profit dynamic while simultaneously meeting the needs of multiple people on a sustainable level. An example of a successful co-op is the Mondragón Cooperative Corporation in Spain

Co-Ops normally fall into two types: consumers' co-operative and worker cooperative companies. Both use a democratic decision making process, but can differ fundamentally in how that specific company is run, or who can gain participatory ownership within the company.

[edit] Closely held businesses

Closely held businesses are steadily being applied as an alternative to lage corporations within communities, because they tend to care more for the people within the community, in addition to the communiy as a whole, more than a publically traded company. It is in this way that closely held business help with the practice of economic democracy, because a closely held company is far more likely to stay in a community that has treated it well, even if going through hard times, in comparison to a business that is not closely held, and driven more by profits than people . The owners of a closely held company can normally take some of the financial damage the company may experience from a bad year or slow period from the company profits. Workers often benefit in the sense that closely held companies often have a better relationship with their workers, by caring more for their time and efforts, in addition to their overall wellbeing. In larger, publicly traded companies, usually when a year has gone badly, the first area to feel the effects is the workforce, with layoffs or worker hour, wage, or benefit cuts. Again, in a closely held business, the owners can transfer this profit damage to another area, rather than passing it straight on to the workers. Closely held businesses are also often known to be more socially responsible than publicly traded companies.

[edit] Local and slow food production

Being able to grow, obtain, distribute and sell food can represent an economical dilemma in the sense of where the food comes from. Oftentimes, local farmers can struggle because the community they grow in imports the crops they grow. The ideas of local and slow food production can help local farmers prosper, in addition to giving the consumer a fresher product.

Named the “slow food” movement in opposition to fast food, the original idea came out of Italy, with the purpose of preserving local, cultural food items, in addition to combating the increase in both the globalization and industrialization of agriculture worldwide.

One popular method of organizing slow food production is through the use of community-based buying clubs and food co-ops. Although there are subtle differences in the two (for example, buying clubs don’t have to have a store front, whereas food co-ops do), both share the common goal of providing a community with fresh, locally raised or grown food, all of which are from local farmers.

[edit] Local currencies

Local currencies are increasingly becoming an important dimension in the pursuit of economic democracy. Used widely in the early 1900s, the practice of using localized money is becoming popular again as a way to ensure that money coming into a community can stay in that community. This is in contrast with a national or federal currency like the dollar, which can leave an economic area as fast as it comes in. Local money is not always legal tender outside of that community (in fact, it usually isn’t), which requires those who hold it to spend it on local businesses, products, and services.

One of the best examples of a successful local currency in the United States is the use of the currency HOURs in Ithaca, New York. Ithaca Hours, which are worth $10 and named after the $10 average hourly wage in the area, started out as a solution to economic recession in 1991, and have been going strong ever since. Another example of an accomplished local currency system is the use of BerkShares in Southern Berkshire region of Massachusetts. By benefiting both local businesses and the consumer ($0.90 U.S. dollars is equal to 1 Berkshares, essentially giving the consumer 10% off in dollars of their purchases), Berkshares are a popular alternative to federal money within the area.

[edit] External Links

• Co-ops: http://www.ica.coop/coop/index.html
• Co-ops: http://www.commondreams.org/headlines01/0706-03.htm
• Slow Food: http://www.slowfood.com/about_us/eng/popup/campaigns_future.lasso

[edit] References

• Karl Marx: http://en.wikipedia.org/wiki/Marx%27s_theory_of_alienation
• Polanyi and The Great Transformation: http://en.wikipedia.org/wiki/The_Great_Transformation
• Co-op: http://www.ica.coop/coop/index.html
• Co-op: http://www.commondreams.org/headlines01/0706-03.htm
• Co-op: The Take directed by Avi Lewis http://www.thetake.org/
• Slow Food: http://www.slowfood.com/about_us/eng/popup/campaigns_future.lasso
• Social Responsibility: http://www.csr-news.net
• Social Responsibility: The Corporation Documentary written by Mark Achbar http://www.thecorporation.com/
• Social Responsibility: "Rethinking Socially Responsible Business" article by John Mackey http://www.wholefoodsmarket.com/blogs/jm/archives/2005/09/rethinking_the.html
• Small Businesses: Small Giants by Bo Burlingham http://www.smallgiantsbook.com/reviews.html
• Small Businesses: Good to Great by Jim Collins http://www.goodtogreat.com/