Why we can and must build our own economy

UK companies are sitting on a cash pile of about £750 billion, and EU companies have about €2 trillion stashed away. So why on earth is our economy struggling? There is plenty of cash to get the economy moving and create the much-vaunted 2.5 million private-sector jobs that George Osborne has been promising us. Why isn't this private-sector job creation happening? Apparently, it's because firms don't want to invest due to a lack of "confidence" (sic!). The problem is that neoliberal austerity policies are reducing the share of national income for working people and depressing demand in a consumer-capitalist society. This is confirmed by a quote from the following article in the Wall Street Journal which states:

".... that policies aimed at further depressing the share of labor in national income will further undermine economic growth. He [SimonTilford] suggests increasing corporate income won't help spur investment while squeezing households by cutting wages will damp growth." [my italics]

In other words, neoliberalism is self-defeating as I argued in a recent post. Erm... but isn't our government meant to be doing what the private sector - the market - wants? If the corporations and banks want austerity, why haven't they any confidence? What this situation clearly illustrates is that capitalism always wants to have its cake and to eat it. They want austerity to make us pay for the crisis and to trash the welfare state but they also want us to be able to buy their products!

If we can't rely on either governments or the private sector to lift the economy and produce the jobs that we so desperately need, what are we going to do? Well, we can forget the banks and the corporations because they are not going to help us. They are part of a failing neoliberal economic system which is essentially exploitative and destructive, a system which is eating the planet, and in the process, destroying the prosperity of most of us, of the 99%. As capitalism gobbles up the planet's resources, cannibalises the public sector, and indulges in an orgy of financial and property speculation in order to try and maintain its falling profitability, millions of people are suffering globally. Not just people in the so-called third world, but people in the once-prosperous west, and nowhere has this become more obvious than Greece, which is the front-line of neoliberal austerity.

But one the starkest outcomes of this crisis is in the modern home of capitalism itself, the USA. Detroit, the motor city, and once-great powerhouse of American capitalism has been devastated. Paul Craig Roberts has written about this in The Ruins of Detroit :

"Detroit’s population has declined by half. A quarter of the city 35 square miles is desolate with only a few houses still standing on largely abandoned streets. If the local government can get the money from Washington, urban planners are going to shrink the city and establish rural areas or green zones where neighborhoods used to be. President Obama and economists provide platitudes about recovery. But how does an economy recover when its economic leaders have spent more than a decade moving high productivity, high value-added middle class jobs offshore along with the Gross Domestic Product associated with them?"

Capitalism at work: economic devastation in Detroit

But amongst the ruins of Detroit, at the grassroots, economic activity is stirring. This is a grassroots revolution. People are beginning to come together and realise that if they want a better economy they are going to have to do it for themselves, and they are starting to rebuild from the ground upwards through co-operatives like the Evergreen Co-op. What's so inspiring about this re-birth is that it is community-focused and lead not by overseas investors or the 'entrepreneurs' of neoliberal myth, and hungry for a buck, but 'ordinary' citizens, and what it shows us just how extraordinary us ordinary people can be. Here is an extract from the recent Re-imagining Work in the Motor City conference:

"In another discussion, participants acknowledged that relying on political and economic leaders to lead was a fruitless endeavor because they have forgotten the people they are supposed to represent. A “we have to do it ourselves” attitude permeated the conference in a recognition that representative democracy is in serious decline. Besides, they said, societal change usually occurs at the grassroots level—and rigid social class distinctions and hierarchies have no place in the new economy we are envisioning". [my italics]

People in Detroit have realised an essential truth - that capitalism dis-empowers all of us. The system is designed to make us think that we need the super-managers and capitalists, that without them, we just couldn't survive. This system is designed to keep us in our place and to keep them in the luxury that only they can afford. But as a result of this crisis, in which whole communities have been abandoned, this myth has been busted, because more and more people are beginning to understand that 'they' need us but we really don't need them.

But its not just in Detroit that this phenomenon is happening. All over the USA people are beginning to turn their backs on capitalism and the banks and find their own solutions by building their own economy. According to Gar Alperovitz in his New York Times article entitled Worker Owners of America Unite:

"Some 130 million Americans, for example, now participate in the ownership of co-op businesses and credit unions. More than 13 million Americans have become worker-owners of more than 11,000 employee-owned companies, six million more than belong to private-sector unions."

The politicians and corporations who control our economy want us to believe that it can be restored, but only on their terms, and they are resorting to ever more desperate means to try and continue as if the great crash of 2008 never happened. In the process, through neoliberal austerity, they are making the poorest pay for the crisis, but they're also beginning to scrape the bottom of the fossil fuels barrel with tar sands extraction and shale gas exploitation, both of which are environmentally destructive. These are acts of desperation, meant to prop up a failed system which has run its course.

The truth is that we cannot rely on capitalism and its tame politicians like Obama and Cameron to help us. Essentially, we are on our own. But that, despite the hardship, gives us an opportunity, an opportunity to build an economy that we own and control ourselves. Such an economy needs to be co-operative and community based, supported by local banks and credit unions, which are subject to democratic control.

Co-operatives create wealth and employment, they are rooted in communities, they do not downsize or outsource jobs overseas. They build strong local economies that are resilient in the face of climate change. Best of all, there are no fat-cat managers or owners to cream off the bulk of the wealth that is created. That does not mean we should ignore political parties, we need to support and help build parties that are supportive of this kind of economic development. And we need to help to propel such parties, through the democratic process, into government. Then we can really get down to the business of rebuilding an economy that is truly our own.

For reference see: America Beyond Capitalism