Learning From the Cleveland Model: Notes on the Next American Revolution


Sean Posey I Urban Issues I Analysis I November 12th, 2014



In 2009, during the depths of the Great Recession, a small laundry opened in one of the most depressed neighborhoods in the poverty-stricken city of Cleveland. This seemingly obscure event proved to be a large salvo in what is slowly becoming a national dialogue on the future of wealth democratization in America.

The Evergreen Cooperative Laundry-itself one part of Evergreen Cooperatives-is a "green" industrial laundry rooted in Cleveland's historically challenged Glenville neighborhood. Evergreen Cooperatives mission: to create worker-owned cooperative enterprises connected to a larger concept of community wealth building. Evergreen's economic experiment is part of what is called "The Cleveland Model" by its ideological father, the political economist Gar Alperovitz.

Cooperatives are not new, neither here or aboard. A departure from the traditional cooperative model, the Cleveland Model has been heralded as the start of one of the most concrete initiatives to realize a vision of an economic system beyond currently existing capitalism in America. And as income inequality, wage stagnation, and community disinvestment continues, more and more intellectuals, activists, and urban stakeholders are paying attention.


Ideological Origins

As the New Left began to collapse into rancor and recrimination in the early 1970s, noted leftist intellectuals Gar Alperovitz and Staughton Lynd began a conversation about the direction of progressive movements in the 1970s. Alperovitz, a historian and a political economist, served at high levels in Congress and the State Department before turning his attention to the possible democratic reordering of the economy.

In "Strategy and Program: Two Essays Toward a New American Socialism," Alperovitz tries to chart a course between capitalism and state socialism. By the early 1970s, the failure of the Soviet and Sino socialist models was clear. The destruction of the Soviets (local workers' councils) and the imposition of broad, centralized power in the hands of sclerotic planners had corrupted the Russian socialist model from the very beginning. The results of Maoist totalitarianism, once known, furthered the disillusion with the then currently existing state "socialist" structures.

With this is mind, Alperovitz reiterates a central question that the New Left had groped towards, but never full confronted.

"We return to the basic issue: could society ever be organized equitably, cooperatively, humanely, so wealth benefited everyone without generating a highly centralized, authoritarian system?"[1]

Alperovitz imagines a decentralized system of worker-owned enterprises acting in tandem with the best interests of both their businesses and the local community.

But this is just a first step.

"… Affirm the principle of collective ownership or control of capital… and extend it, at least initially, to local communities, the sub-units of which are sufficiently small so that individuals in fact, learn cooperative relationships in practice. These however should be conceived only as elements of a larger solution-as the natural building blocks of a reconstructed nation of regional commonwealths." [2]

Alperovtiz's ideas are an extension of Leftist economic thinking dating back to Rosa Luxembourg. But in the wake of the collapse of the New Left, few outlets existed to promulgate such ideas. Instead, the shutdown of a steel mill in the highly industrialized city of Youngstown, Ohio, ended up providing a venue for an idea that would later blossom in the fertile soil of post-industrial Cleveland.


The Youngstown Example

On September 19, 1977, the Youngstown Sheet and Tube Company announced it would close its Campbell Works operation, just outside of Youngstown. Within a month, almost five thousand workers found themselves unemployed. This was one of the first large-scale plant closings of the era, but unlike many that came later, a concerted grass-roots effort emerged to not only keep the plant open, but to transfer ownership to the steelworkers themselves.

Within a month of the closing, the Ecumenical Coalition of the Mahoning Valley was organized to address the shutdown. Staughton Lynd and Gar Alperovitz, then director of the National Center for Economic Alternatives, converged on Youngstown to assist the Ecumenical Coalition. The approach involved direct action and intensive feasibility studies to determine how to enact a "community/worker" takeover of the mill.

With a broad array of local religious figures in the forefront, the Ecumenical Coalition led a local fundraising campaign and lobbied officials in Washington for grants and loans. The Carter Administration initially offered $100 million in guaranteed loans to back the project. Yet after a series of political setbacks, the administration ultimately reneged on the deal.

From the start, the steel companies opposed a buyout by workers. But even the United Steelworkers turned their back on the idea of worker ownership of the mills; instead, they closed down the local chapter in Youngstown.

Despite the failure of the Ecumenical Coalition's effort to buy the mill, the example set in Youngstown set the stage for the expansion of worker-owned cooperatives in Ohio. The formation of the Ohio Employee Ownership Center at Kent State University was directly inspired by the events in Youngstown, and today the Buckeye State has one of the best systems for developing cooperatives in the nation. [3] Against this backdrop came the creation of Evergreen Cooperatives in the heart of some of the most troubled neighborhoods in urban America.


Glenville and the University Circle Neighborhoods

Situated on the East Side of Cleveland, the Glenville neighborhood was once one of the finest communities in the city. During the early twentieth century it hosted summer residences for the city's wealthy along with the upscale Cleveland Golf Club and the Glenville Race Track. By the 1950s, white flight had already begun, and African Americans constituted the majority of Glenville's population by the 1960s.

In July of 1966, riots broke out in the Hough neighborhood that lasted for six days. Racial tensions increased in the city over the next two years, and despite the election of the city (and the nation's) first black mayor, Carl Stokes, in 1967, the situation continued to deteriorate.

On the night of July 23, 1968, heavily armed police-units set out on a mission to surveil black power activists in the Glenville area. Within hours a fierce firefight erupted between officers and a group led by Black Nationalist Ahmed Evans. Several civilians and police died in the nights of intense rioting that followed what became known as the "Glenville Shootout." Mayor Stokes was eventually forced to call in the National Guard. The flames died out, but the events haunt the city to this day.

"Cleveland began its steep decline" in 1968, according to long-time investigative reporter Roldo Bartimole. "…[T] he racial disturbances and animosities ingrained themselves into the fabric of the city and I don't believe they yet have worked themselves out." [4]

Today, about 70 percent of the households in Glenville are below the poverty line. The infant mortality rate is on par with Bulgaria. Nor is Glenville alone. Hough is one of the poorest neighborhoods in America, and the neighborhoods bordering University Circle are in various stages of collapse. [5]


The Cleveland Model

In 2005, the Cleveland Foundation along with some of the biggest anchor institutions, business, and civic groups in the city, spearheaded the "Greater University Circle Initiative." It was designed to stimulate real and lasting development in the ailing neighborhoods around University Circle. From this, Evergreen Cooperatives emerged in 2009.

Evergreen Cooperatives-itself a holding company-houses three businesses thus far under its umbrella: Evergreen Cooperative Laundry, a "green" industrial laundry; Evergreen Energy Solutions, which installs solar panels, other environmentally friendly home and commercial energy services; and Green City Growers, the largest hydroponic greenhouse in an American city.

Unlike the many failed efforts to use tax incentives and "empowerment" zones to attract corporations to the inner city, Evergreen draws its initial funding from a variety of corporate, government, and philanthropic sources. However, employees are hired whom will all own a stake in the businesses "over a period of time."

Evergreen shares some similarities with the Mondragon Corporation-a federation of over 250 worker cooperatives in the heart of Spain. Formed in 1956 as a way to economically empower the Basque community, Mondragon is now one of the leading examples of the power of worker cooperatives. But unlike the Basque experiment, Evergreen is more planning oriented, especially in regards to creating a "culture of community." [6]

Cleveland's inner city neighborhoods, devastated by capital flight, have not benefitted from the billions of dollars being spent locally by anchor institutions in the city. Anchor institutions, often educational or medical non-profits, by their very nature are firmly rooted to a particular locality. And they have large budgets. The Cleveland Clinic and University Hospitals spend about $3 billion a year on services and goods.

Evergreen draws on this stream, providing laundry services for the Cleveland Clinic, food for hospital cafeterias, weatherization and solar installation services for other local non-profit institutions.

Employees come from Glenville, Hough, and other low-income neighborhoods. These "worker-owners" and the profits they generate are then able to re-circulate into the surrounding communities. And, over time, more and cooperatives are scheduled to come on line-powered by a revolving loan fund.

A board of directors oversees the cooperatives, assuring they function not just for the workers (a problem that many cooperatives have encountered) but also for the surrounding communities. The board can also prevent any one cooperative from leaving the community, dissolving, or from selling itself to an outside entity.[7]

The broad idea is rooted in economic decentralization and the empowerment of cities and regions. It's related not only to Alperovitz's work, but also bears relation to Jane Jacob's idea that urban areas are the primary centers of successful economies. In the absence of a federal urban policy, the Evergreen initiative can be seen as a very local effort to address very systemic problems.

The Cleveland Model, though only five years old, has already attracted an enormous amount of attention. But is it the beginning of a model that can move beyond capitalism and state socialism?


Criticisms

Evergreen is not without its detractors. For all its potential, it remains unclear where small-scale developments like this could go in terms of challenging large capitalist structures and on what time scale. The environmentally friendly nature of the Evergreen Cooperatives is a crucially important aspect of the operation-one given great emphasis by Alperovitz and others. The Evergreen Cooperative Laundry, for example, uses one third the heat and water of a conventional industrial laundry. Yet, considering the dire straits we face with the continuing shift of the climate, how much longer can we afford to wait for these kinds of initiatives to spread and scale-up?

Even some socialists have gone after the Cleveland Model, dismissing the notion that it represents "municipal socialism," as Alperovitz has claimed.

The socialist publication Workers World states its suspicion quite clearly.

"One even has to wonder if the 'cooperative' is truly worker-owned. After three years, there are reportedly around 50 workers with a $3,000 stake in the company, which comes to $150,000. Who owns the rest of the shares? Evergreen's website encourages investment in the Evergreen Cooperative Development Fund LLC, which provides 'economic returns to Fund investors.' " [8]

As Workers World also mentions, the CEOS and all of the directors are white, while the vast majority of those living in the neighborhoods are African American. Not much progress from the days of Ahmed Evans.

Cecil Lee, the former CEO of Evergreen Laundry, and current president, Allen Grasa, both came from Sodexo-a company that has been boycotted at least nine times, based on their involvement in everything from anti-union campaigns to investments in for-profit prisons. [9]

The Cleveland Clinic, one of the largest anchor institutions involved in using Evergreen's services, has a notoriously poor reputation with the neighbors around it. The clinic's expansion has come at the price of small businesses and low-income neighborhoods; something that even the cooperative's "newspaper" has addressed.[10]

Noam Chomksy has been generally supportive of worker-owned cooperatives, but he also points out some of the more obvious difficulties facing their functioning and their possible expansion across the country.

"That's (the Cleveland Model) a step forward but you also have to get beyond that to dismantle the system of production for profit rather than production for use. That means dismantling at least large parts of market systems. Take the most advanced case: Mondragon. It's worker owned, it's not worker managed, although the management does come from the workforce often, but it's in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you're in a system where you must make profit in order to survive. You are compelled to ignore negative externalities, effects on others."[11]

And Chomsky emphasizes the likely reaction that capitalist institutions will have over time to the spread of community based worker cooperatives: "Of course they're going to be beaten back. The power system is not going to want them any more than they want popular democracy any more than the states of Middle East and the west are going to tolerate the Arab spring…. They're going to try to beat it back." [12]

These legitimate criticisms underline the need to view the one-person one-vote, worker-owned cooperative as simply one step in the democratization of the local.

The Cleveland Model (despite its problems) and initiatives resembling it, is likely to be a piece of the solution to our systemic woes-probably a large piece at that.

Land trusts (as a community-tool to fight displacement by gentrification), B-corporations, public and cooperative banking, and turning private monopolies into public ones, are all likely to become more popular ideas as the current system continues to erode. In particular, when (not if) the financial sector sparks another economic meltdown, support for turning the large banks into public utilities could possibly surge.

For now, as increasing numbers of American cities are effectively left to their own devices, more and more of them are looking towards models like the one in Cleveland. It will be, however, up to those on the Left to assure that a critical spotlight shines on efforts that simply reproduce inequality on a different scale. Communities-not just foundations and large anchor institutions-must have a real seat at the table. This will ultimately require the rebirth of radical grass roots organizations.

"Real power depends upon having a power base to operate from," according to Alperovitz. Neighborhoods, communities, cities, and regions need real economic, cultural, and political power. And it's there where the Left will have to step up, not just with rhetoric, criticism and slogans, but also with viable solutions.



References

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[1] Gar Alperovitz and Staughton Lynd, Strategy and Program: Two Essays Toward a New American Socialism (Boston: Beacon Press, 1973), 53.

[2] Ibid.,

[3] Gar Alperovitz, What Then Must We Do? Straight Talk About the Next American Revolution (White River Junction: Chelsea Green Publishing, 2013), 31.

[4] Roldo Bartimole, "1968-The Year that Changed It All," Cleveland Leader, April 2, 2008. http://www.clevelandleader.com/node/5310 (Accessed October 21, 2014).

[5] David Wilson, Cities and Race: America's New Black Ghettoes (London: Routledge, 2007), 76.

[6] "The Cooperative Economy (a Conversation with Gar Alperovitz)," Orion Magazine, August 2014. http://www.orionmagazine.org/index.php/articles/article/8163/ (Accessed October 31, 2014). Also see Gar Alperovitz, David Imbroscio, and Thad Williamson, Making A Place for Community: Local Democracy in a Global Era (London: Routledge, 2002).

[7] Capital Institute, Field Study no. 2: The Evergreen Cooperatives of Cleveland. http://www.capitalinstitute.org/sites/capitalinstitute.org/files/docs/FS2-Evergreen%20full%20article.pdf (accessed October 22, 2014).

[8] Martha Grevatt, "Beyond Socialism? A Critical Look at the 'Cleveland Model,'" Workers World, April 25, 2013. http://www.workers.org/articles/2013/04/25/beyond-socialism-a-critical-look-at-the-cleveland-model/ (Accessed October 22, 2014).

[9] Mary Bottari, "Outsourcing America: Sodexo Siphons Cash From Kids and Soldiers while Dishing Up Subprime Food," Huffington Post, September 24, 2013. http://www.huffingtonpost.com/mary-bottari/post_5631_b_3982325.html (Accessed October 31, 2014).

[10] Toni White, "A New Perspective," Neighborhood Voice, February 22, 2013. http://www.neighborhood-voice.com/neighborhood-news/a-new-perspective/ (Accessed October 22, 2014).

[11] Laura Flanders, "Talking with Noam Chomsky," CounterPunch, April 30, 2012. http://www.counterpunch.org/2012/04/30/talking-with-chomsky/ (Accessed October 24, 2014).

[12] Ibid.,