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Little noticed by most Americans, Merriam Webster, one of the world's most important dictionaries, announced a few months ago that the two most looked-up words in 2012 were "socialism" and "capitalism."

Traffic for the pair on the company's website roughly doubled from the year before. The choice was a "kind of no-brainer," observed editor at large, Peter Sokolowski. "They're words that sort of encapsulate the zeitgeist."

Leading polling organizations have found converging results among younger Americans. Two recent Rasmussen surveys, for instance, discovered that Americans younger than 30 are almost equally divided as to whether capitalism or socialism is preferable. Another Pew survey found those aged 18 to 29 have a more favorable reaction to the term "socialism" by a margin of 49 to 43 percent.

Note carefully: These are the people who will inevitably be creating the next American politics and the next American system.

As economic failure continues to create massive social and economic pain and a stalemated Washington dickers, search for some alternative to the current "system" is likely to continue to grow. It is clearly time to get serious about a different vision for the future. Critically, we need to be far more sophisticated about what a meaningful "systemic design" that might undergird a new direction (whether called "socialism" or whatever) would entail.

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Classically, the central idea undergirding various forms of "socialism" (and there have been many, many forms, some of which use the terminology, some not) is democratic ownership of "the means of production," or "capital," or more simply, "productive wealth." Quite apart from questions of exploitation, systemic dynamics (and "contradictions"), the core idea is simple and straightforward: Those who own wealth - and the corporations that operate it - have far more power to control any system than those who don't.

In a nation in which a mere 400 people own more wealth than the bottom 180 million together, the point should be obvious. What is new in our time in history is that the traditional compromise position - namely progressive, or social democratic or liberal politics - has lost is capacity to offset such power even in the modest (compared, for instance, to many European states) ways the American welfare state once represented. Indeed, the emerging direction is to cut back previous gains in many areas - not to sustain or enlarge them. Even Social Security is now on the table for cuts.

Perhaps the most important reason for the decline of the traditional reform option is the decline of labor: Union membership has steadily decreased from roughly 35 percent of the labor force in 1954, to 11.3 percent now - a mere 6.6 percent in the private sector.

Along with this decay, and give or take an exception here and there, major trends in income and wealth, in civil liberties, in ecological devastation (and the release of climate-changing gases), in poverty and many other important indicators have been "going South" for several decades.

It is, accordingly, not surprising that dictionary look-ups and polls show interest in "something else." If, as is likely, the trends continue, that interest is also likely to increase. But what, specifically, might that "something else" entail? And is there any reason to hope - even as interest in the word "socialism" grows in the abstract - that we might move from where we are to "some other system" that might nurture equality, liberty, ecological sustainability, even global peace, more than the current decaying one we now have?

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President Obama is Time magazine’s “Person of the Year” – the first Democratic president to receive two consecutive popular-vote majorities since Franklin Delano Roosevelt. Yet these are clearly tough times for progressives. Everything progressives have fought for is seemingly on the chopping block nationally, and in many states and cities. Programs are being cut; public assets are being sold off; school teachers are losing their jobs; unions are being attacked; pension and health care benefits are being slashed – even Social Security is being challenged.

Progressives, in short, remain on the defensive.

No one would deny that defense is important. But even as every effort must be made to hold the line, how, specifically, might it be possible to regain the political initiative?

History suggests one powerful strategy – one that begins by getting clear about the checkerboard of power, and its possibilities.

Washington may be stalemated. But Washington is not the only space on the political checkerboard. The American system of federalism allows for political initiatives that can take the offense across a range of scales and locations, and politics involves many different squares on the board. Some are currently blocked, but others may be open for doing something interesting. A serious checkerboard strategy may also open the way to national solutions as well.

The steady city-by-city, state-by-state Progressive Era buildup to national women’s suffrage offers one well-known example of a checkerboard offensive. Another involved the state-by-state buildup of work and safety regulations prior to the New Deal. In more recent times, numerous places on the checkerboard have demonstrated how progress on social issues can be made as well, square by square, over time, even in a very conservative era.

Prior to 2004, for instance, no state in the nation allowed same-sex marriage. Today, less than ten years later, same-sex marriage is legal in nine states and the District of Columbia. Moreover, broader public opinion is slowly turning in favor of equal rights for same-sex couples. Step-by-step, further progress is all but certain.

Similarly, fed up with the harsh repercussions of the failed drug war, a majority of Americans now favor legalization or decriminalization of marijuana – and two states on the checkerboard, Colorado and Washington, recently voted in favor of legalization. (Many more already permit the use of medical marijuana).

Along with such highly visible successes on social issues, just below the surface of public awareness numerous important economic and institutional advances have long been developing in cities and states occupying different squares on the board. Although the increasingly hobbled national press rarely covers state and local issues, the advances include little noticed progressive policies in support of cooperatives and worker-owned firms, public- and neighborhood-owned land development, public power and internet delivery, new environmentally sustainable energy strategies and even public enterprise, including publicly-owned health care facilities.

Numerous additional policies operating in various parts of the country also could be turned to progressive advantage and expanded over time – if there were a clear strategic determination to do so (and a lot of hard work). Among others, these include: municipal investing strategies, state venture capital investing, pension and retirement fund investing, move-your-money and bank-transfer efforts, land and mineral revenues for public benefit and municipal methane-capture efforts. On a larger scale, public banking efforts similar to the Bank of North Dakota and progressive health care reforms similar to those recently adopted in Vermont are being pursued in dozens of states.

What is striking about the new range of possibilities is that most also introduce the concept of democratizing wealth ownership into practical and political reality.

There is obviously every reason, first, to learn about what is happening just below the surface of media attention and, second, to build up and steadily expand the number of squares on the checkerboard that are currently open to expansion. The goal should not only be to help people in specific local communities and states, but also to demonstrate possibilities to others working in other squares – and together to slowly surround the hold-back cities and states with what makes sense as they flounder and fail on their regressive path over time.

In certain cities and states a comprehensive strategic option also appears to be opening up – and here the issue is how it might be tested, refined, and then put forth as a serious approach in one or more cities or, ultimately, on a number of squares on the board – especially as economic difficulties and the fiscal crisis intensify.

Traditional progressive strategy for financing public expenditure has always tried to focus taxation at the very top to the extent feasible – both as a matter of equity and of good politics (keeping the middle class out of the line of fire and out of the political embrace of the opposition). There is nothing wrong with this approach except that it is obviously inadequate – as the ongoing right-wing budget program/salary-and-benefit-cutting bonanza so painfully remind.

The strategic way out of the box, logically, is an approach that draws on demonstrably viable checkerboard efforts to rebuild the local economy (and the local tax base) in ways that are effective, stable, redistributive and ongoing – and that also capture greater revenues and profits for public use. Which means a different form of “democratized” development – and a specific plan for how to implement it over time so as to secure funds for vital institutions and infrastructure (such as schools and mass transit), for obligations to past and future retirees, and for programs to conserve resources and protect the environment – all while preserving and expanding services for those who badly need them.

Numerous practical ingredients that can be included in a comprehensive checkerboard strategy include:

• The use of city, school, hospital, university and other purchasing power to help stabilize jobs, anchor wealth, support employee-owned businesses and cooperative ownership, strengthen local small- and medium-sized business and improve the local economy.

• The use of public and quasi-public land trusts (both for housing and also commercial development) to capture development profits for community use, and to prevent gentrification.

• An all-out attack on absurdly wasteful and costly – around $70 billion a year in public subsidies! – giveaways that corporations extract from local governments.

• The use of community benefit strategies – and community organizing, backed also by labor unions – to achieve traditional development but also, where possible, to democratize the local economy, stabilize the tax base and support public services.

• The exploration of further ways for cities to make money by directly managing resources and providing services, thereby offsetting costs and taxpayer burdens. These include taking direct public ownership over utilities (as cities like Jacksonville and Los Angeles already do) to improve services, reduce costs and secure added revenues; and expanding city revenues through city-owned land and other existing strategies that provide non-tax revenue.

Obviously, not all these approaches can be adopted at once. And they may be viable at the outset only on very specific squares on the checkerboard. On the other hand, practical precedents for every element in the mix are now operating in one or more city or state – and the stark reality is that times are getting worse and are likely to continue to get even worse in the coming years.

As problems and pain at the local and state level increase, at some point more squares on the checkerboard are certain to open up. And, as always, it will take some specific person or group of people to grab the reins, set the wheels in motion and flip the switch to light up that square with a new way forward.

Equally important – as the long developing pre-history of women’s fight for the vote, the long developing pre-history of the New Deal, and now the developing state-by-state changes in connection with same sex marriage and marijuana all suggest – the pre-history of potentially much larger national change is all but certain to be developed through such efforts in local and state laboratories at various places on the checkerboard.

And the notion of democratizing ownership in general through such practical efforts – at a time when a mere 400 individuals own more wealth than the bottom 185 million Americans taken together – is likely to be of additional political significance to increasing numbers as social and economic difficulties increase.

For progressives bruised by the battles of recent months and years, a cool look at other opportunities on the checkerboard offers a different way to think about change. Defensive struggles must continue. But forward movement is available on the board, and time and pain are on the side of a serious strategy.

Originally published @ Truthout

Copyright, Truthout.org. Reprinted with permission.

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Social pain, anger at ecological degradation and the inability of traditional politics to address deep economic failings has fueled an extraordinary amount of practical on-the-ground institutional experimentation and innovation by activists, economists and socially minded business leaders in communities around the country.

A vast democratized “new economy” is slowly emerging throughout the United States. The general public, however, knows almost nothing about it because the American press simply does not cover the developing institutions and strategies.

For instance, a sample assessment of coverage between January and November of 2012 by the most widely circulated newspaper in the United States the Wall Street Journal, found ten times more references to caviar than to employee-owned firms, a growing sector of the economy that involves more than $800 billion in assets and 10 million employee-owners — around three million more individuals than are members of unions in the private sector.

Worker ownership — the most common form of which involves ESOPs, or Employee Stock Ownership Plans — was mentioned in a mere five articles. By contrast, over 60 articles referred to equestrian activities like horse racing, and golf clubs appeared in 132 pieces over the same period.

Although 2012 was designated by the United Nations as the International Year of the Cooperative — an institution that now has more than one billion members worldwide — the Journal‘s coverage was similarly thin. More than 120 million Americans are members of co-operatives and cooperative credit unions, 30 million more people than are owners of mutual funds. The Journal, however, devoted some 700 articles to mutual funds between January and October and only 183 to cooperatives. Of these the majority were concerned with high-end New York real estate, with headlines like “Pricey Co-ops Find Buyers.”

The vast number of cooperative businesses on Main Streets across the country were discussed in just 70 articles and a mere 14 gave co-op businesses more than passing mention. Together, the articles only narrowly outnumbered the 13 Journal pieces that mentioned the Dom Perignon brand of champagne over the same time frame, and were eclipsed by the 40 Journal entries that refer to the French delicacy foie gras.

Another democratized economic institution is the not-for-profit Community Development Corporation (CDC), roughly 4,500 of which operate in all 50 states and the District of Columbia. Such neighborhood corporations create tens of thousands of units of affordable housing and millions of square feet of commercial and industrial space a year. The Journal ran no articles mentioning CDCs in 2012 and only 43 over the past 28 years — less than two a year. Meanwhile, the word château appeared in 30 times as many articles, and luxury apartments received 300 times as much coverage over the same period.

 

Not surprisingly, the growing “new economy movement” championing democratization of the economy has itself received even less coverage, despite growing citizen involvement on many levels. Over the past year, major national, state and other conferences focusing on worker-owned companies, cooperatives, public banking, nonprofit and public land trusts, and neighborhood corporations were oversubscribed, reflecting the growing interest in these forms. The Journal, however, gave scant coverage to the movement.

Thousands of other creative projects — from green businesses to new forms of combined community-worker efforts — are also underway across the country but receive little coverage. A number are self-consciously understood as attempts to develop working prototypes in state and local “laboratories of democracy” that may be applied at regional and national scale when the right political moment occurs. In Cleveland, Ohio, for instance, a complex of sophisticated worker-owned firms has been developing in desperately poor, predominantly black neighborhoods. The model is partially structured along lines of the Mondragón Corporation, a vibrant network of worker-owned cooperatives in northern Spain with more than 80,000 members and billions of dollars in annual revenue.

Since 2010 legislation to set up public banks along the lines of the long-established Bank of North Dakota has been proposed in 20 states. Several cities — including Los Angeles and Kansas City — have passed “responsible banking” ordinances that require banks to reveal their impact on the community and/or require city officials to do business only with banks that are responsive to community needs. But municipally led responsible banking initiatives appear to have received no attention in the Journal, whereas the newspaper published seven articles this year discussing President Obama’s birth certificate.

The limited nature of the coverage can also be seen in particular cases. Recreational Equipment, Inc. (REI) is a highly successful consumer co-op with $1.8 billion in sales for 2011, allowing it to share $165 million of its profits with its 4.7 million active members and 11,000 employees. Organic Valley, a Wisconsin-based cooperative dairy, generated more than $700 million in revenue for nearly 1,700 farmer-owners. From January through October 2012, the Journal referred (briefly) to REI in just three articles; Organic Valley rated just one mention. In combination, REI and Organic Valley appear in the Journal only as often as the Cavalier King Charles spaniel, a breed of dog that turned up in four entries in the Journal‘s pages this year.

Further perspective on the coverage is offered in the way in which “hot topics” are presented, and others of greater economic significance played down. Co-ops in the U.S. generate over $500 billion in annual revenues. The global market for smartphones is estimated by Bloomberg Industries at $219 billion — less than half as large. Furthermore, there are 20 million more co-op members than smartphone users in the United States. The Journal, however, published over 1,000 print articles that included the terms “smartphone” or “smartphones” from January through October this year — more than five articles for each piece mentioning co-ops (many of which, as noted, were about upscale Manhattan apartments.)

The print coverage of the Journal was analyzed by the Democracy Collaborative of the University of Maryland through the online database ProQuest. Although the assessment focused on the Journal, the nation’s preeminent source of news for economic and business affairs, a preliminary review suggests that other national media outlets devote a similarly miniscule proportion of space to the exploding “new economy” sector. This highlights the need for greater media exposure regarding important developments toward a more democratic, sustainable and community-based economy.

This article originally appeared in Alternet and was co-authored with Keane Bhatt.

Gar Alperovitz, Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative, is the author of  What Then Must We Do? Straight Talk About The Next American Revolution, forthcoming in May 2013 from Chelsea Green Publishing. Keane Bhatt is a research associate at the Democracy Collaborative. 


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This article originally appeared in the June 11, 2012 issue of The Nation magazine, and was coauthored with Thomas Hanna.

It’s time to put the taboo subject of public ownership back on the progressive agenda. It is the only way to solve some of the most serious problems facing the nation. We contend that it is possible not only to talk about this once forbidden subject but to begin to build a serious politics that can do what needs to be done in key sectors.

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Activists, theorists, organizations and ordinary citizens are rebuilding the American political-economic system from the ground up.

Originally published at Alternet.

As our political system sputters, a wave of innovative thinking and bold experimentation is quietly sweeping away outmoded economic models. In a special five-part series edited by AlterNet’s Lynn Parramore, in partnership with political economist Gar Alperovitz of the Democracy Collaborative, creative thinkers come together to explore the exciting ideas and projects that are shaping the philosophical and political vision of the movement that could take our economy back.

Just beneath the surface of traditional media attention, something vital has been gathering force and is about to explode into public consciousness. The “New Economy Movement” is a far-ranging coming together of organizations, projects, activists, theorists and ordinary citizens committed to rebuilding the American political-economic system from the ground up.

The broad goal is democratized ownership of the economy for the “99 percent” in an ecologically sustainable and participatory community-building fashion. The name of the game is practical work in the here and now—and a hands-on process that is also informed by big picture theory and in-depth knowledge.

Thousands of real world projects — from solar-powered businesses to worker-owned cooperatives and state-owned banks — are underway across the country. Many are self-consciously understood as attempts to develop working prototypes in state and local “laboratories of democracy” that may be applied at regional and national scale when the right political moment occurs.

The movement includes young and old, “Occupy” people, student activists, and what one older participant describes as thousands of “people in their 60s from the ’60s” rolling up their sleeves to apply some of the lessons of an earlier movement.

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Originally published in Shareable

In this interview, Shareable publisher and editor Neal Gorenflo and P2P Foundation’s Michel Bauwens chat with Gar Alperovitz, the Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative.

NG: In your book, America Beyond Capitalism you say that 120 million Americans are involved in citizen-controlled cooperatives and credit unions, and that there are 11,000 worker owned companies in the United States. This paints a totally different picture of Americans today than seems to be popularly understood – that ordinary Americans are helpless in the face of corporate and government power. Why are Americans so blind to their own economic power? But on the other hand, are you sure that this actually the case, have some of these older organisations lost their original spirit?

GA: I spend a great deal of time asking, “Is there anything that the major media—which greatly shape Americans’ worldviews and perceptions—aren’t covering?” I try to learn what’s out there, and I’ve been doing it for longer than I care to remember. What I’ve found out is exactly what you describe—an astonishing number of developments that the press doesn’t cover, either for lack of interest or funding for on-the-ground reporting. For example, in addition to the numbers you mention, in one form or another there are four to five thousand neighborhood nonprofit corporations trying to benefit communities—some good, some bad, some very interesting, some not so interesting. If you include all forms of worker-owned co-ops, you’ll see that they come in various flavors: some not so good, some wonderful, some changing. Even employee stock ownership plans (ESOPs) are changing, by the way—a number are becoming more employee-controlled and participatory. Some have unions. There are close to three million more worker-owners in ESOPs than unionized employees in the private sector, which suggests at the very least an institutional power base that can be further developed.

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(hyperlinked version available at http://bit.ly/...)

On Monday, Bloomberg News estimated that Mark Zuckerberg, Facebook's 27-year-old founder, will be worth about $21 billion based on his company's forthcoming initial public offering. Although he won't qualify (yet) for a slot among the planet's richest 20 people in the Bloomberg Billionaires Index, Zuckerberg will still enjoy iconic status as an entrepreneur of mythic proportions. Indeed, the Wall Street Journal credited Facebook with creating "a new way of living," and hailed the company—thought to be worth $100 billion—as a "prototypical American success story, complete with technological brilliance and a fair amount of drama." Bill Keller of the New York Times similarly "marveled" at Mark Zuckerberg's "imagination and industry."

But does Zuckerberg deserve all this money? To what degree does his shrewd business idea—rather than the conditions that allowed it to happen—“deserve” credit for creating this enormous bounty? Some obvious questions: Where would he be without the Internet? Or the computer? Or all the many other publicly financed technologies that made Facebook possible? Certainly, he “deserves” something, but how do we gain perspective on the bounty created, on the one hand, by public investment; and on the other, by smart entrepreneurs who run off with the lion’s share of the benefits of such investments?

Take the Internet itself: The first large-scale computer network, the ARPANET, was launched in the late 1960s by the Department of Defense. Between the mid-1980s and the mid-1990s the National Science Foundation spent $200 million to build and operate a network of regional supercomputing hubs called the NSFNET. Connected to the ARPANET, this network established Internet access for nearly all U.S. universities, making it a civilian network in all but name. The rest was history.

Much else of Silicon Valley's enormous wealth also originates from taxpayer investment. Indeed, the Mark Zuckerbergs of the world might still be working with vacuum tubes and punch cards were it not for critical research and technology programs created or financed by the federal government after World War II which led to semiconductors, solid-state electronic devices, integrated circuits and computers.

Even more powerful, but less often realized, is the role of socially created knowledge in general—including the long, long historical development that produced advanced mathematics, modern chemistry, physics, metallurgy and the many specialized fields that over the last century have led to the technologies and information systems that are the precondition of today’s computer and Internet realities. Mark Zuckerberg and an equally intelligent individual working 30 years ago might have the same human capital and might work with the same commitment, risk and intelligence. But the individual working 30 years ago simply did not have the fruits of society’s general, slowly built "stock of knowledge" to be able to develop and market a social-networking platform.

The popular, conventional view of technology is one in which progress is viewed as a sequence of extraordinary contributions by "great men" (occasionally "great women") and their heroic innovations. But historians of technology have carefully delineated the incremental and cumulative realities of how most technologies actually develop. In general, a specific field of knowledge builds up slowly through diverse contributions over time until—at a particular moment when enough has been established—the next so-called "breakthrough" becomes all but inevitable.

Often, many intelligent people reach the same point at virtually the same time, for the simple reason that they all are working from the same developing information and research base. The next step commonly becomes obvious (or if not obvious, very likely to be taken within a few months or years). We tend to give credit (and often a vast fortune!) to the person who gets there first—or rather, who gets the first public attention, since often the "real" first person may not be as good at public relations as the one who jumps to the front of the line and claims credit.

Thus we remember Alexander Graham Bell as the inventor of the telephone even though, among others, Elisha Gray and Antonio Meucci got there at the same time or even before him. Both Newton and Leibniz developed versions of the calculus at roughly the same time. If Bill Gates hadn’t "invented" the MS-DOS operating system, someone else would have invented a similar system—and, in fact, Gary Kildall did. Few recall that Campus Network, the social Web site of Columbia University student Adam Goldberg, predated Zuckerberg's Facebook, and in many ways was more sophisticated. Other forgotten innovations include the precursor to Siri, the latest iPhone's conversational personal assistant, CALO (Cognitive Agent that Learns and Organizes), which was developed by a California company called SRI International with a five-year, multimillion-dollar Pentagon grant.

At a broader level, "nearly 90 percent...of current GDP was contributed by innovation carried out since 1870," in the estimate of leading economist William Baumol. He points out that even "the steam engine, the railroad, and many other inventions of an earlier era still add to today’s GDP." Nobel Prize-winning economist Robert Solow has calculated that nearly 90 percent of the growth in productivity in the first half of the 20th century can only be attributed to "technical change in the broadest sense," while the supply of labor and capital—what workers and employers contribute—appeared almost incidental to this massive technological "residual." It is clear that before anyone is a "talented" entrepreneur or a "menial" laborer, or anything in between, most of the economic gains that get distributed to individuals in a given year or period are derived from technological and other contributions inherited from the society of the past, not created by them in the present.

Put another way, the current technological contributions that produce huge rewards for the fortunate few are a mere pebble placed atop a Gibraltar of historically received science and technology that makes the modern additions possible—a  mountain of knowledge often paid for by the public.

An obvious question arises from these facts: if most of what we have today is attributable to advances we inherit in common, why, specifically, should this gift of our collective history not more generously and broadly benefit all members of society? Today’s distributive realities are hard to ignore: Mark Zuckerberg is already within the highest echelon of the wealthiest 400 Americans, who collectively own more wealth than the bottom 60 percent of the country combined.

Current elites, William Gates Sr. points out, disproportionately reap the harvest of what is inherently a collective investment; he urges that their estates be taxed accordingly. The late Herbert Simon, winner of the 1978 Nobel Prize in economics, similarly proposed that this sort of "patrimony" be subject to large-order taxation. Particularly appropriate uses might be to support educational and research institutions that generate and pass on knowledge at all levels; to offer tuition relief; to expand opportunities for college education; and to provide much more generous underpinnings for low- and moderate-income citizens.

Gar Alperovitz, author of America Beyond Capitalism, is Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative. Connect with him on Twitter or Facebook.

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(This first appeared in The Washington Post on March 7, 2012. Read the hyperlinked version at http://bit.ly/...)

This piece is part of an On Leadership special feature exploring the present-day Iran tensions in the context of leadership lessons from crises confronted by Presidents Truman, Eisenhower and Kennedy.

First the shock of the atomic bomb, and then: a shock of questions.

Though often taken for granted today, after World War II numerous top military leaders — from the hawkish Gen. Curtis Lemay to President Dwight D. Eisenhower — went public with statements declaring that the atomic bombing of Japan was completely unnecessary. Even Adm. William D. Leahy, the president’s chief of staff, bluntly stated: “The use of this barbarous weapon at Hiroshima and Nagasaki was of no material assistance in our war against Japan.”

Whatever one thinks of the decision, that these and many other top military figures would make public such view raises obvious questions about the leadership process by which the decision was made — as well, inevitably, about the wisdom of the decision itself. Had President Harry S. Truman heard more dissenting voices during the decision-making process, the nuclear history of our world may have been far different.

And yet Truman didn’t hear them, though not because they weren’t speaking. If there is one leadership lesson we should take from the decision to use the bomb nearly 70 years ago, it is the importance for our presidents to truly attend to dissenting views.

Right now, as we look out at the next chapter of our world’s nuclear history — the possibility of a nuclear Iran and the question of whether Obama will support an attack — we should be reminded of this lesson, and what can happen when a president makes a profound decision without the full weight of robust and diverse debate.

Though documentation is sketchy, the Hiroshima decision appears to have been dominated by the inexperienced new president’s top adviser and personal friend, Secretary of State James F. Byrnes. A shrewd and highly secretive Washington operator, Byrnes was adept at keeping the decision process closed to contending views. By all accounts he operated in a manner similar to the way another experienced insider, Vice President Dick Cheney, guided another inexperienced president, George W. Bush, at the outset of his administration.

President Truman accepted this, deciding only a year and a half later to fire Byrnes for overreaching.

One product of the insular nature of this Hiroshima decision-making arrangement was that Truman hardly considered the question of alternatives. There were no contending position papers, no deep analyses of the pros and cons for American policy, no careful assessments of longer-term implications. A special group, the Interim Committee, was appointed to consider how — not whether — to use the new atomic weapon. A brief discussion of whether it might be necessary occurred over lunch one day, with most present reportedly in favor. Virtually every student of the “decision,” however, understands this to have been a casual conversation, not a serious policy exploration.

Before the bombing of Hiroshima, the U.S. chiefs of staff, clearly frustrated by the narrow decision-making process, even resorted to an end run to get their views considered. They persuaded the British chiefs of staff to have Prime Minister Winston Churchill talk with President Truman about providing Japan with assurances for its emperor. (The U.S.-U.K. chiefs were looking at intelligence reports suggesting that if Truman did this, Japan was likely to surrender shortly after an expected Soviet Army attack in the first or second week of August — thus probably eliminating the need for the bomb long before a November invasion could begin.)

Prime Minister Churchill did, in fact, make such an approach to Truman, but his suggestion was rejected. Secretary of War Henry L. Stimson similarly advised the president that if assurances for the emperor were offered, the war would likely end. Such assurances were initially included in the famous Potsdam Proclamation warning Japan to surrender, but they were removed before it was issued, making the document all but impossible for Japan to accept.

So what is the lesson here? A president today needs to be fully, not secondarily, on top of the decision-making process in a way that Truman never was. Fortunately, on this matter we seem to be far ahead of the experience of Hiroshima. President Obama appears to be in much greater control. And the modern White House and National Security Council are light-years ahead of the 1945 process, with options papers and fully briefed alternatives regularly considered.

Yet even today, there must be clear channels open for those who disagree.

Numerous reports detailing how economic policy was made at the outset of the Obama administration suggest that ‘problematic’ views, even those advanced by important officials like the chairman of the Council of Economic Advisers, were shunted aside.

This insularity has been one of the common criticisms of the current presidential administration. Obama’s “tightly knit circle of loyal senior advisers” and his deep-rooted history with some White House staff can be a leadership asset. But the magnitude of the Iran decision — like the Hiroshima decision — requires that the smallest to the very broadest issues be considered and debated from as many perspectives as possible.

So far, the decision-making process concerning  Iran seems still to be open today. On Monday, President Obama said, “We do believe there is still a window that allows for a diplomatic resolution to this issue.” How long this posture can be maintained, though, is by no means clear. To maintain it will require great skill, as well as determination.

What the Hiroshima decision most reminds us, however, is that a president making decisions of this scope and scale, and facing an unruly political world, needs — there is no other word for it — wisdom. And he needs to bring in outsiders who can help him gain perspective, free from the bubble of insider debate. He also needs to make time to think; too much depends on whether he gets this one right.

Gar Alperovitz, author of The Decision to Use the Atomic Bomb and a former special assistant in the Department of State, is the Lionel R. Bauman Professor of Political Economy at the University of Maryland, College Park.

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Thu Feb 23, 2012 at 12:18 PM PST

New thinking for city finances

by GarAlperovitz

Local governments can find sources of revenue through innovative leveraging of public assets.

This op-ed originally appeared in the Baltimore Sun and the Progressive

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Inspired by the Occupy movements around the country, nearly two-thirds of a million Americans joined credit unions in the brief five weeks between the beginning of October and “Bank Transfer Day,” November 5, 2011.

The mass movement created $4.5 billion in deposits – another sign that large numbers of people, fed up with Wall Street, are ready to act in some fashion to change the system whenever a plausible opportunity arises.

“Change the system”? Not simply move money to demonstrate anger at the big banks? To be sure, for some, the move was simply one of anger. For others, however, there was a clear sense that the humble, down-home American credit union was somehow a cleaner, better institution. In fact, credit unions are more than that; they are democratized “banks” that suggest practical ways to begin to build, however tentatively, in the direction of a more democratic economy. Nor are they marginal: credit unions hold roughly a trillion dollars in deposits, and involve more than 90 million Americans as participant owners.

Most credit unions help finance routine consumer investments – especially the purchase of homes and automobiles. But credit unions start to get interesting when they go beyond simply being nonprofit, one-person/one-vote cooperative banks and start working actively to open a more expansive direction. The Bronx’s Bethex Federal Credit Union, founded in 1970 by Joy Cousminer and the “welfare mothers” in her adult education class, is a good example.

Bethex began as a purely volunteer project to meet the needs of its immediate community. It now serves over 9,000 members, has $16 million in deposits and continues to empower local residents with a range of financial services, including savings and checking accounts; children’s accounts; holiday accounts; ATM and Visa cards; and, importantly, student, auto, mortgage and  business loans. Other examples include the Alternatives Federal Credit Union, which lends to cooperatives, worker-owned enterprises, small businesses and community groups in Ithaca, New York. It also invests in programs such as the BR MicroCapital organization at Cornell University, which provides customized services and microloans to self-employed community residents.

Nor are all efforts small-scale. The Hope Credit Union in Memphis has lent over $1.6 billion to more than 90,000 individuals in the Mississippi Delta region of Tennessee and in Katrina-impacted areas and other distressed communities throughout Arkansas, Louisiana, Mississippi and Tennessee. In 2010, it lent millions to companies operating in poverty-stricken communities, provided two-thirds of its mortgages to low-income borrowers and financed the renovation of a 62-unit apartment complex.

Other credit unions, particularly those registered as community development financial institutions (CDFIs), use the pooled financial resources of members to help local economies in more far-reaching ways. In North Carolina, the Self-Help Credit Union not only makes loans to small businesses and local nonprofits, but also has financed major development projects to revitalize downtown Durham and, through its Center for Responsible Lending, fights for the financial rights of consumers through intense casework and legislative advocacy.

None of this is to suggest that credit unions offer more than one modest line of attack to help restore a decaying economy, nor to suggest that they cannot be improved by doing more to expand their membership in minority communities and by becoming much more active development agents. An effort, in fact, is underway to expand beyond traditional strategies by chartering a Worker Cooperative Federal Credit Union, which would both provide financial services to existing worker cooperatives and use pooled assets to finance new cooperatives – something traditional banks have been reluctant to do.

This approach and a variety of other little-discussed institutional strategies suggest that traditional credit unions are not alone in working to slowly lay the practical basis for long-run change at the foundational, community level of the American economic system. Among other evolving “new economy” building blocks are more than 11,000 worker-owned companies, 4,500 neighborhood corporations, 20,000-plus co-ops, hundreds of social enterprises, 2,000 municipal utilities, and a variety of land trusts and other alternatives to the large corporation.

The unexpected explosion of the Occupy movement and the success of “Move Your Money Day” – and, along with these, other little-noted large-scale developments – suggest that many Americans may be quietly beginning to get much more serious about wanting an economy owned and managed on a more democratic basis. If so, the preliminaries of a new economic politics may also be beginning to emerge just below the radar of most nationally focused media efforts. Its central judgment appears to be that if it is possible to run nonprofit banks for the benefit of 90 million members, there is no reason other institutions can’t be shaped to make democratization a top priority – and perhaps, one day, an overall economy that is of, for and by the 99 percent.

     

     
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Here's two videos making the connections between informed economic critique and the #Occupy movement/moment (I appear in some capacity in each of them).

The first is from Econ4.org; it's a powerful video version of the Economists Statement in Support of Occupy Wall Street:

Occupy Economics from Softbox on Vimeo.

The second is an interesting attempt to provide a ""Crash" Course for Occupy Wall Street - Thirty Years in Thirteen Minutes":

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Thu Nov 17, 2011 at 09:50 AM PST

America Beyond Capitalism

by GarAlperovitz

This article originally appeared in the November/December 2011 issue of Dollars and Sense. It is drawn from the new introduction to the 2011 edition of my book, America Beyond Capitalism.

“Black Monday,” September 19, 1977, was the day 34 years ago when the shuttering of the Youngstown Sheet and Tube steel mill threw 5,000 steelworkers onto the streets of their decaying Midwestern hometown. No local, state or federal programs offered significant help. Steelworkers called training programs “funeral insurance”: they led nowhere since there were no other jobs available. Inspired by a young steelworker, an ecumenical religious coalition put forward a plan for community-worker ownership of the giant mill. The plan captured widespread media attention, the support of numerous Democrats and Republicans (including the conservative governor of the state at the time), and an initial $200 million in loan guarantees from the Carter administration.

Corporate and other political maneuvering in the end undercut the Youngstown initiative. Nonetheless, the effort had ongoing impact, especially in Ohio, where the idea of worker-ownership became widespread in significant part as the result of publicity and educational efforts traceable to the Youngstown effort—and because of the depth of policy failures and the continuing pain of deindustrialization throughout the state. In the more than three decades since that effott, numerous employee-owned companies—inspired directly and indirectly by the effort to save the Youngstown mill—have been developed in Ohio. Individual lives were also changed, among them that of the late John Logue, a professor at Kent State University who established the Ohio Employee Ownership Center, an organization that provides technical and other assistance to help firms across the state become worker-owned.

There has also been an evolution in the position of the United Steelworkers union. In the late 1970s the union saw worker-ownership as a threat to organizing, and it opposed efforts by local steelworkers to explore employee-owned institution-building in cities like Youngstown. Over the decades, however, the union changed its position as its leaders saw the need to supplement traditional forms of labor organizing with other strategies. The union has now become a strong advocate of worker ownership, and is actively working to develop new models based upon the Mondragón Cooperative Corporation in the Basque country of Spain. This highly successful grouping of worker-owned cooperatives employs 85,000 people in fields ranging from sophisticated medical technology and the production of appliances to large supermarkets and a credit union with over 21 billion euros in assets.

The developmental trajectory from Youngstown to today illustrates what might be called “forced institutional innovation”—a process that, once underway, also suggests further possibilities for larger-scale and more refined development both within Ohio and elsewhere—especially as many other parts of the nation now experience the massive job losses and community decay that hit Ohio and other rustbelt states three decades ago. Critically, all involve new ways to give concrete meaning to the idea of democratizing capital.

§§§

One line of this development points towards increasing knowledge, along with local innovation and the buildup of new and ever more sophisticated strategies over time. The most recent and advanced of these is a major effort in Cleveland that has taken the idea of worker-ownership forward in new ways. The “Cleveland Model” now underway in that city involves an integrated complex of worker-owned cooperative enterprises targeted in significant part at the $3 billion purchasing power of such large scale “anchor institutions” as the Cleveland Clinic, University Hospital, and Case Western Reserve University. The complex also includes a revolving fund so that profits made by the businesses help establish new ventures as time goes on. (Full disclosure: I was one of the chief planners of the Youngstown steel effort, and The Democracy Collaborative, an organization which I co-founded, played a major role in helping develop the Cleveland effort.)

The first of the linked worker-owned companies, Evergreen Cooperative Laundry, is a state-of-the-art commercial laundry that provides clean linens for area hospitals, nursing homes, and hotels. The thoroughly “green” company operates out of a building that received a LEED (Leadership in Energy and Environmental Design) “Silver” rating for its energy-saving design and uses (and only has to heat) less than one third as much water per pound of laundry as typical competitors. At full staff it will include 50 worker-owners. The enterprise pays above-market wages, provides health insurance, and is still able to compete successfully against other commercial laundries. Another company, Ohio Cooperative Solar (OCS), provides weatherization services and installs, owns, and maintains solar panels on the rooftops of large university, hospital, and civic buildings. In its first year of operations OCS installed 400 kilowatts of solar generation capacity and is on target to more than double Ohio’s current total statewide solar generating capacity of two megawatts by 2012.

A commercial hydroponic greenhouse that covers 3.25 acres and will be capable of producing three million heads of lettuce a year broke ground on October 17 of this year. Additional new worker-owned businesses are being developed at a planned expansion rate of two to four ventures per year. A twenty-acre land trust will ultimately own the land upon which many of the businesses are situated and will serve as a first step to facilitating development in targeted neighborhoods of urban agriculture, and, when conditions permit, affordable housing. Like the Steelworkers, the Cleveland group has also drawn upon the experience of the Mondragón cooperative model, particularly in the design of its revolving fund.

Although the model began as a foundation- supported effort, the trajectory of institution-building development also has clear political implications. The Cleveland worker-owned businesses, backed by the city’s mayor, shrewdly utilized many of the same municipal, state, and federal tax, loan and other incentives available to any business. In turn, the success of the effort has also bolstered political support for the city’s liberal mayor. It also has slowly begun to suggest ways to make city officials less vulnerable to demands by major corporations seeking huge tax and other inducements to locate, often temporarily, in the city. Put another way, the developing institutional form has suggested the outlines of a new power constellation that in effect slowly displaces corporate influence, a strategy that may one day take its place alongside more traditional “countervailing-power” strategies that attempt to regulate, tax, and “incentivize” corporate power. In a further development, the Cleveland model has become the basis for new national legislation about to be introduced by Sen. Sherrod Brown to provide federal support to test the approach in other cities.

The effort has also struck a chord among activists and economic development practitioners throughout the nation who are concerned with the collapse of the economic core of many cities. Exploratory efforts are currently underway to replicate aspects of the Cleveland model in Atlanta, Pittsburgh, Washington, D.C., and several other communities. The “demonstration effect” of the highly unorthodox model has also begun to challenge community organizers to find ways to incorporate worker-owned development into grassroots activist strategies.

§§§

The long evolutionary trajectory traced by developments in Ohio offers lessons worth careful examination by activists and scholars alike. First, experience in Cleveland and in many cities now exploring replication of the model demonstrates that worker-owned co-ops are well within American political possibilities. Local businessmen, bankers, and others, in fact, commonly support the idea both on practical and moral grounds. To the extent such efforts increase local economic activity they help the local economy. Moreover, the focus on work and even ownership is seen by all parties as a positive contribution. The atmosphere at the local level is far different from the ideologically driven national political debate: What counts above all is whether the projects are intelligently developed, practical, and serious. In the midst of the worst financial crisis in modern history, the Cleveland worker-owned co-ops were able to secure bank financing for key projects. The idea of creating wealth, not simply jobs, also has a powerful resonance. The Evergreen model takes us well past token job creation at minimum wages in states like Rick Perry’s Texas, to a very different conception of what people deserve and ought to be able to have.

Institution-changing projects like the Cleveland model also demonstrably have the power to alter ideas about what can be talked about in conventional discourse—particularly ideas about who should own “the means of production.” The developmental path, importantly, is an example of the historical creation of political knowledge: To use a concept put forward by Italian theorist Antonio Gramsci, the practical, the very down-home efforts challenge the dominant, hegemonic ideology in a very unorthodox American way. They introduce a new idea into common culture. Another question they pose is how, in practical terms, serious activists committed to the long haul might aim in this and other ways to self-consciously shift what can be discussed in politics over time. One obvious line of development that might flow from the Ohio experience would be a concerted and self-conscious effort to attempt to create more worker-owned businesses, backed by local political support, wherever possible. The nation’s ongoing and likely continued economic stagnation and decay appear all but certain to create conditions in many American communities similar to those that gave rise to the Youngstown effort, the follow-on developmental path in Ohio, and the Cleveland model.

A mere one percent at the top now owns roughly half of the nation’s investment capital—more wealth than the entire bottom half of society taken together. This is literally a medieval pattern of ownership. Worker co-ops are one way to offer a practical alternative to this pattern, but they are not the only way. There are many other ways to democratize ownership—to move ownership out of the corporate system and in one way or another to institutions that are community-serving. This is far less familiar ground for most activists and scholars. Nonetheless, at the community level where the pain has been greatest, many other ways to democratize ownership have been quietly developing over the last several decades. All in one way or another give practical meaning to the simple idea that wealth and ownership ought rightly to be lodged in institutions that serve the community or broader social purposes.

Just below the surface of media attention, for instance, there are more than 4,500 not-for-profit community development corporations that operate affordable housing and other community-building programs in cities throughout the United States. In many cities new “community land trusts,” once viewed as beyond the pale, now increasingly use nonprofit or municipal ownership to develop and maintain permanently affordable housing. “Social enterprises” that run businesses to support such community-serving missions as drug rehabilitation and training programs comprise an emerging “fourth sector” of the economy (different from the government, business, and non-profit sectors). Another 130 million Americans are members of urban food and housing co-ops, traditional agricultural cooperatives and, importantly, widespread credit unions. Additionally, approximately 1.5 million non-profits provide more than 10% of the nation’s employment.

It is also important to begin to take seriously the 11,000 other businesses that are owned in whole or part by their employees. More than 13 million individuals are involved, several million more than are members of private-sector unions. Though Employee Stock Ownership Programs (ESOPs) have often been the subject of well-deserved criticism, many are now experimenting with increasingly participatory strategies aimed at overcoming past difficulties. Some are both worker owned and unionized, suggesting further longer-term evolutionary possibilities in connection with this ownership model. In Ohio, moreover, preliminary research indicates that as the share of ownership increases over time, so too does participation. Other studies show that greater participation brings greater profit—another longer-term dynamic favoring change in this sector. At some point a serious effort to radically reform the ESOP model and build upon its long developmental trend might well converge politically with other democratizing efforts. Critically, even in compromised form, the various enterprises all demonstrate the political viability and importance of the principle that workers can and should own capital.

Virtually all the democratized ownership forms—including thousands of co-ops, land trusts, social enterprises, and worker-owned companies of one kind or another—are also characterized by another principle of political importance, especially as ongoing economic decay destabilizes city after city: All are inherently anchored in, and supportive of, the local economy. Unlike private corporations, worker-owned companies of all descriptions rarely move to another city. The fate of those who own the company is intimately tied to the fate and health of the locality in which they both live and work. Virtually all the many other non-profit and related institutions based on democratized ownership principles are similarly place-anchored.

§§§

It is instructive to underscore the “situational logic” that is both allowing and helping generate long-term innovation and institution-building of this kind—and its relationship to possible new directions for progressive politics. The driving force is the ongoing failure of traditional policy—and a deepening awareness that traditional efforts have reached a dead end.

A careful review of developments in connection with health care and finance also suggests emerging democratizing possibilities in other areas as well—again, especially as pain levels increase, and again when understood not simply in terms of immediate politics, but in terms of longer evolutionary trajectories of committed development. Even as the Obama health-care reform law has come under intense attack—and indeed, in significant part because of this—more than fifteen states are exploring one or another form of single-payer health care. Another fourteen states are considering creating state banks, following the long-established North Dakota model, a trend that is also likely to intensify when further Wall Street financial crises again have an impact on Main Street. Other well established public forms might also potentially be built upon—including state pension fund investing for public purposes (as in California and in Alabama where a somewhat maverick public strategy has long invested even in worker-owned firms). The well-known case of the Alaska Permanent Fund is also of interest as a model that translates public ownership of assets into direct citizen financial benefits. Many states, moreover, now commonly invest in new companies through venture capital strategies, keeping significant shares under public ownership—an approach that in future could open the way to other, more expansive public possibilities.

Central to these various developments is the question of perspective: Many of the possibilities in one way or another have begun to take shape and move in a new direction, again, because as in Ohio traditional progressive reform strategies are no longer capable of providing solutions to ever more painful problems. Confronting—and taking advantage of—this paradoxical dynamic presents challenges to both traditional and radical understandings. The “evolutionary reconstructive” strategic approach they illustrate is a form of change different not only from traditional reform, but different, too, from traditional theories of “revolution.” The various efforts all also involve a sense of the importance of a long, evolutionary process that builds towards institutions (and ideas) that may offer ongoing ways to fundamentally alter economic and political relationships over time.

At this stage of development the central strategic questions are how to refine and expand various models—and how over time to legitimate the idea of democratized ownership in general. Ultimately, however, such strategies must converge with (and provide new content for) political mobilizations, movement-building and electoral efforts that take us beyond liberal and populist categories of change. As in the prehistory of the Progressive Era—when what subsequently became elements of the New Deal were first developed in state and local “laboratories”—it is also possible that the quietly emerging mosaic of experience and ideas could establish principles that might be applied to larger scale structures when a new progressive politics once again arises out of the pain. The U.S. government did, after all, nationalize two auto giants, G.M. and Chrysler, in the recent crisis for a substantial period. Given the huge financial flows it directed to major banks and other financial institutions, it also could well have established public control of one or more of these as well. Such possibilities are likely to return in future. Far-reaching change of this kind, and beyond, might one day be achieved if serious scholars and activist are able to build forward on the emerging developments to create even more advanced democratizing models—along with constituencies that have come to understand why they are important to a democratic future.

GAR ALPEROVITZ, Lionel R. Bauman Professor of Political Economy at the University of Maryland and co-founder of the Democracy Collaborative, is the author of America Beyond Capitalism: Reclaiming Our Wealth, Our Liberty and Our Democracy, a new paperback edition of which will be published this month by The Democracy Collaborative and Dollars & Sense. He is working on a new book on long-term institutional and systemic change.

SOURCES: Gar Alperovitz and Geoffrey P. Faux, Rebuilding America (New York: Pantheon Books, 1984); Staughton Lynd, Fight Against Shutdowns: Youngstown’s Steel Mill Closings (San Pedro: Singlejack Books, 1982); Terry F. Buss and F. Stevens Redburn, Shutdown at Youngstown: Public Policy for Mass Unemployment (Albany: State University of New York Press, 1983); John Logue and Jacquelyn Yates, The Real World of Employee Ownership (Ithaca: Cornell University Press, 2001); Mondragon Corporation, 2010 Annual Report (Mondragon, Spain: MCC, 2011); The Cleveland Foundation, The Cleveland Foundation Report to the Community 2010-2011 (Cleveland, OH: Cleveland Foundation); Gar Alperovitz, Thad Williamson, and Ted Howard, “The Cleveland Model,” The Nation, March 1, 2010; Edward N. Wolff, Recent Trends in Household Wealth in the United States: Rising Debt and the Middle-Class Squeeze-an Update to 2007 (Annandale-on-Hudson, NY: Levy Economics Institute of Bard College, March 2010, Working Paper No. 589), accessed December 15, 2010; Steven Deller, Ann Hoyt, Brent Hueth, and Reka Sundaram-Stukel, Research on the Economic Impact of Cooperatives (Madison, WI: University of Wisconsin Center for Cooperatives, March 2009); CUNA Economics and Statistics, U.S. Credit Union Profile: Year-End 2010 Summary of Credit Union Operating Results (Washington, DC: Credit Union National Association, March 31, 2011); National Rural Electrical Cooperative Association, About NRECA (Arlington, VA: NRECA, 2010), accessed December 26, 2010; Urban Institute, Nonprofits (Washington, DC: UI, 2011), accessed September 21, 2011; National Center for Employee Ownership, A Brief Overview of Employee Ownership in the U.S. (Oakland, CA: NCEO; accessed September 21, 2011); ESOP Association, ESOP Statistics (Washington, DC; accessed September 21, 2011); Bureau of Labor Statistics, Union Members—2010 (accessed September 21, 2011); Joseph R. Blasi, Richard B. Freeman, Christopher Mackin, and Douglas L. Kruse, “Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance,” in Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-Based Stock Options, eds. Douglas L. Kruse, et al. (Chicago: University of Chicago Press, 2010); Public Banking Institute, State Activity, Resource and Contact Info (accessed September 21, 2011); Physicians for a National Health Program.

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