A Magazine about the Hudson Valley’s local economy, published by Hudson Valley Current.

A Path to Ownership

I have a pet peeve about the conversation around economic development: people always talk about “jobs, jobs, jobs.” For me, this represents an avoidance of some very deep basic issues, and it’s also out of step with the times and the place in which we find ourselves. Let me be clear that I’m not somehow denying that people have to work, or that there is important work to do. This point brings to mind a story that went around at the time of the recent recession, in which a father was trying to explain to his little child what unemployment meant. Finally the child asked, “Well, has all the work been done?” Right. And not only is there work to be done, but work is part of life. If you listen to Freud (at least in this regard), it is right up there amongst the essentials of life, along with love.

So what’s wrong with focusing on jobs as the answer in economic development? Simply put, the shortcoming is that it avoids the issue of ownership. Historically, of course, there has been tremendous polarization around this question. Absolutists on either end of the political spectrum have staked out rigid positions that have made real progress slow and difficult. One “middle-way” innovation of note was the employee stock ownership plan (ESOP), pioneered by Louis Kelso in the 1950s, which brought employee ownership into the mainstream for the large enterprise. Today we take it for granted that various kinds of employee ownership structures exist. At the level of large corporations, however, ESOPs have had a somewhat mixed record. Emblematic of that for me is the sort of situation where you have an employee-owned airline and the pilots and flight attendants are locked in bitter, destructive contract negotiations. A lot of this has to do with the overall climate of business in the modern world, but it also speaks to the predominant attitudes of workers. Yes, the modern corporation is an impersonal, profit-driven, extractive entity, but workers tend to mirror that attitude with their demands.

As an alternative type of system with deep historical roots, the cooperative movement represents an honorable and very successful approach to the challenge of ownership and management of the productive enterprise. The Rochdale Society was founded in 1844, and is considered the model for the modern cooperative movement, but similar cooperative organizations were launched as early as the 1760s. We will be covering the cooperative business model in more depth in future articles in Livelihood, and it is important to know that such a model represents wonderful possibilities for many kinds of businesses and work situations. As Shawn Berry, a presenter at a recent New Economy Meetup and a founder of LIFT Economy, explained, the key features of a cooperative business from his point of view are democratic management and a path to ownership.

Let’s focus on ownership, because democratic workplace management is a whole other (and very interesting) ball of wax. What does ownership really mean here? Typically we think of it in terms of power and control, and indeed that is one reason that ownership is so important. It represents real economic security. When we create a path to ownership in a business, we are opening the door to that security for others.

How do we make this happen? At the inner level, I believe there needs to be a shift in the very spirit of ownership, a shift away from emphasis on the possessive and exclusionary side of power and control and toward power in the sense of creativity. Economic power is then seen as the ability to create what we need. If we do that with awareness, we are led toward other positive qualities of ownership, like stewardship, collaboration, and renewal. At that point, ownership becomes a spirit of responsibility.

At the outer level, there is a real way forward in focusing on small, local businesses. I don’t know if we can shift attitudes on Wall Street in New York City. But we may be able to do something with Wall Street in Kingston! This is especially true since small, local businesses are increasingly understood as the key drivers of economic development, and yes, employment.                                   Because of this, let’s talk a bit about entrepreneurship, which is very much part of the New Economy landscape. And by the way, what I mean by the entrepreneurial spirit applies to creating a non-profit, a social enterprise, or a cooperative, along with more conventional for-profit businesses.

  Entrepreneurship is a creative process, and instead of “job creators” it’s better to think of New Economy entrepreneurs as equity creators, which can be understood in several senses. First, they are creating durable, productive businesses that are worth something—and this really ought not be just for a few founders and bosses, but for a broad-based mix of workers. Second, at a societal level, equity creation also means building businesses that are assets to the community in social and environmental terms.

Developing a small-business economy with opportunities for ownership will evolve with shifts in attitude from both entrepreneurs and workers. If ownership is responsibility, there is a maturity factor that can’t be avoided. Some aspects of that are natural and age-related. There is a different kind of thinking that comes into play when you need to provide for a family, and when you need to plan for retirement. Other aspects have more to do with one’s overall world view—whether you see things in dog-eat-dog terms, or more as a collaborative co-creation. 

As a region, we have a long way to go. Worker co-ops are still very rare in the Hudson Valley. There are a lot of locally owned small businesses, but it’s a mixed bag as to whether they are offering a path to ownership, or even if they have a plan of succession when the founders retire. (If anyone in the business world is reading this with interest, I’d like to hear from you for a future article as to your thoughts on path to ownership and succession.)

The great German spiritual teacher and social reformer Rudolf Steiner spoke of what he called a fundamental social law. And what is that law? It is simply that cooperation is the purest source of human well-being. If we want security for ourselves, for our families, and for future generations, we could ask ourselves about the real meaning of that truth as it pertains to the ownership of the economic process. Stirring up such questions in the minds of thoughtful people is far more important than whatever opinions I may have to share.

David McCarthy is:                                                                                                       Author of Civil Endowment—The Transformation of Economic Power, Co-founder and Board Member of The Hudson Valley Current: Our local currency. Organizer of the Hudson Valley, New Economy Meetup