by Randolph T. Holhut
American Reporter Correspondent
July 23, 2010
AUSTERITY FOR WHOM?
DUMMERSTON, Vt. -- Henry Ford understood that his business wouldn't survive unless his workers could buy his product, and so he paid them well.
A society based on consumption may not have been the brightest idea in the basket - anyone could see it would come to a natural end - but it worked well in this country for a long, long time.
You can call that time the golden age of capitalism.
In the past three decades or so, however, the formula has been trashed. The stock market turned into a casino, only without the shows and the buffet. Upper management went from paying workers enough to buy the products to, "To hell with the workers, I'll outsource my production line to China." Unemployment flourished while CEO pay skyrocketed. Goldman Sachs' $16 billion in bonuses has left many of us speechless.
"We face a terrible political truth," wrote author Chris Hedges on TruthDig.com this week. "Those who hold power will not act with the urgency required to protect human life and the ecosystem... These political and corporate masters are driven by a craven desire to accumulate wealth at the expense of human life."
But maybe there's another way.
While big business has been out raping and pillaging, the tiny state of Vermont has been inventing new ways to conduct business responsibly. Although profit is still the driving motive, I've heard this new way called "venture socialism," and that's as good a name as any.
It involves organizations like Vermont Businesses for Social Responsibility, the largest group of its kind in the country, with 1,200 business members devoted to a triple bottom line: profit, planet and people.
This year, VBSR pushed through the Vermont Benefit Corporation Act, which allows corporations to serve a public benefit even when it conflicts with the financial interests of their shareholders. Vermont was the second state in the union, behind Maryland, to pass such a law.
It involves the Vermont Employee Ownership Center and a surprising number of large companies here that are owned by their employees: King Arthur Flour, Pizzagalli Construction, Carris Reels, the Trust Company of Vermont and Chroma Technology.
It involves pioneering the formation of L3Cs, or "low profit limited liability corporations," a hybrid legal structure that combines the financial advantages of a limited liability company with the social advantages of a nonprofit.
Vermont may be actually leading the charge against the misguided yet rampant Ayn Randism of the past few decades.
A few weeks ago I sat down with Paul Millman, the president of Chroma and a leader in the field of employee ownership, to hear his explanation of how venture socialism might eat traditional capitalism's lunch.
"Capitalism has no choice but to become worker-participatory," he said. "What the U.S. has forgotten is what Henry Ford knew, that you can't survive unless the workers can buy your product."
Worker-owned companies have significant advantages over equity owned companies, he said.
"We're more productive, and that's statistically provable," Millman said. "We can work with fewer employees. We are more grounded in our communities and less likely to run away. There is no reason why we have to remain employee-owned and no reason why it would not be advantageous to relocate overseas or to outsource, but those are the last choices instead of the first choices."
Millman laughed at the shortsightedness of most venture capital.
"There's a consistent paradigm to these companies, a five-year plan," he said. "Year One, startup and raise capital; Year Two, create product; Year Three, finalize product and begin to market; Year Four, maximum success of product line; Year Five, sell the company. That kind of thinking is by no means long-term."
Capitalism has become so big and so intricate that it is now a corporate form of socialism, complete with its own Supreme Court. Is venture socialism the new paradigm?
"The alternative to capitalism changing toward social democracy is revolution," Millman said. "We're already are seeing it. The Tea Party movement is a right-wing revolutionary movement. The same people, at a different point in history, might have been left-wing revolutionaries."
A right-wing revolution is much easier to fathom, Millman said. It's all about anger and blame.
"The problem with left-wing revolution is that it takes anger and tries to make it into something constructive," he said. "That's another step."
The constructive alternative may be the Vermont way of doing business.
"The idea that jobs and wealth are related has to occur at some point," Millman said. "We can't be the wealthiest county in the world with 90 percent unemployment. In the future, entrepreneurs will say, 'I want to create a company, but with that company I want to create a community. And I want to create jobs, and I'm willing to accept less equity, less return on my investment in order to have this greater social return."
Joyce Marcel (joycemarcel.com) is a journalist and columnist. You can reach her at email@example.com.