Public Comment

The well known writer, Upton Sinclair, developed a proposal during the 1930s depression that would encourage the establishment of worker cooperatives via substantial government investment to reduce unemployment and poverty. Sinclair ran for governor in 1934 as the Democratic Party candidate in California for the purpose of implementing his program, which he called End Poverty In California (EPIC). Business interests and their allies, including the leadership of the Democratic Party defeated his candidacy with a campaign filled with deception, dirty tricks, and voter fraud. In one San Francisco district, for example, just three votes were counted for Sinclair although 40 registered voters in the same district claimed they voted for him. Sounds familiar? 

The business community was willing to tolerate the WPA. But it bitterly opposed supporting a program with tax dollars that promoted worker owned cooperatives on a large scale. What history has taught us is that often in politics, particularly class politics, there are no umpires to protect against foul play. But we have also learned from history that we should never give up.

There are about 300 cooperatives with about 3,500 workers. In Berkeley there is the very successful Cheeseboard Collective, which offers us an ideal model of what a workplace should be. This business has been worker owned and controlled for 45 years. The Cheeseboard sells a wide range of products including several hundred different cheeses, an extensive selection of freshly baked breads and pastries and a few doors down it makes and sells pizza. It is among the most successful businesses in Berkeley.

The Cheeseboard is a thoroughly democratic workplace. There are no high paid executive officers that call the shots. The more than 50 co-op owners discuss issues that concern them, and if a vote is taken, each member enjoys one vote. Second, since it does not employ high priced executives whose income and bonuses are excessive, these workers are able to earn a living wage rather than a low minimum wage. Third, there is far more job security than in the private sector. A Cheeseboard member that was interviewed claimed that the cooperative during a serious economic downturn would cut hours of work rather than lay off its members. In private establishments, whatever decision managers make on how to cope with difficult times, they are rarely guided by empathy.

The Cheeseboard has a policy of rotating jobs. So its members all earn the same wage. In many other co-ops where jobs are not rotated, the wages are determined mainly by the skill level that a particular job requires. The wage spread from the lowest to the highest wage on average ranges from three to one up to five to one. In contrast, according to a Harvard Business School study, CEOs at major corporations make more than 350 times the earnings of the average worker.

Although belonging to a workers' co-op satisfies the employment needs of their members, their numbers are too few to impact the economy, particularly with regard to effectively addressing the unemployment problem Although New York City, for example, looks favorably on workers co-ops, and allocated 1,2 million dollars two years ago to promote worker owned cooperatives, there are still only about two dozen in the City. Unlike some countries abroad, among them Italy, France, and Spain, the laws in the US are not favorable to encouraging cooperatives. Banks resist making loans to worker controlled business, and when they are willing, the collateral demanded is unreasonable.

Sinclair was right. To appreciably expand the number of these democratic institutions requires the intervention of the government. Two years ago Bernie Sanders introduced two bills in the Senate on behalf of encouraging worker ownership. One bill would have created a U.S. Employee Ownership Bank to provide loans to help workers develop cooperatives. A second bill would have established worker ownership centers that would provide training and technical support for programs promoting employee ownership. Both bills were defeated.

Meanwhile, to increase profits, many businesses have shipped millions of decent paying jobs to low wage countries. Promoting cooperatives could fill at least some of the void. Their workforce would not relocate to China or anywhere else abroad. Moreover, these cooperatives, by providing job security, are much better for the mental health of their workforce.

Had Sinclair been elected along with a progressive legislature in California, taxes on the rich would have provided the investment dollars. As governor he would have used the power of eminent domain to take over failed businesses which would be fairly compensated. He would have then turned these establishments over to the unemployed. If necessary, the California government would also provide the funds to assure that the business is properly equipped. And it would keep in touch to assist these businesses to succeed.
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But that's not all. Unlike managers in the private sector, whose main interest is in maximizing profits, Sinclair envisioned instead production for use. What is best for the consumer would take priority over maximizing profits. When Sinclair was first developing his proposal in 1933 for publicly funded worker owned and controlled cooperatives, FDR, in the same year, supported the Agricultural Adjustment Act to the disadvantage of millions of hungry and poor Americans. Farmers were paid by the federal government not to produce, which served to maintain higher prices. Also in 1933, FDR signed into law the right of business to fix minimum prices, which was also at the expense of working people.

If production for use prevailed, the government would instead subsidize farmers to encourage production rather than perpetuate hunger. And consumer goods would have become more affordable in these lean years. What is needed is not just worker co-ops. In difficult times, we need cooperatives which favor producing products that people really need. That was certainly Sinclair's inclination.

Unemployment and poverty are not going to disappear; it is likely to increase. Since unemployment and poverty are permanent problems they require permanent solutions. Certainly one important route that should be taken is to encourage the federal, state, and local governments to heavily invest in worker owner and controlled cooperatives.

Like the experience of the 1930s, the resistance of big business to heavy public investment in cooperatives would be enormous. You can count on business to take the same unethical approach now as then. But a broad base of support can be built because this issue is not only a politically left issue. The umbrella member organizations of cooperatives (including the national United States Federation of Worker Cooperatives) can play a leadership role in organizing a vigorous campaign. There is plenty of potential support out there, particularly since so many good paying jobs are disappearing and too many workers are earning poverty wages.

Who would have predicted that the City of New York would allocate a substantial amount of money to promote worker owned and operated cooperatives? Who would have thought that Ronald Reagan believed that worker ownership is a good idea? In a presidential speech that Reagan gave at the White House on economic justice (August 3, 1987) he claimed "I can’t help but believe that in the future we will see in the United States and throughout the western world an increasing trend toward the next logical step, employee ownership. It is a path that befits a free people."
The potential Interest in cooperatives is much broader than many people suspect. When most members of the public realize the benefits of employee ownership, they would be inclined to agree with the radical Upton Sinclair AND the conservative Ronald Reagan AND many of those in-between that worker owned and controlled cooperatives is the way to go.