Promoting Cooperatives by the Use of Eminent Domain: Argentina and the United States

The role of the state and the social economy context

The major challenge to the proliferation of cooperatives today is the retreat of the state in its responsibilities for establishing societal justice and economic fairness. The struggle today centers on working-class activism combined with the recuperation of state responsibility for employment. We are surrounded with evidence of growing poverty, unemployment, unprotected informal labor, and stagnant wage levels. Median income for households has fallen from $65,000 in 2000 to $57,500 in 2012, a decline of 11.6%, while the poverty rate is 15%, as income for the top 1 percent rose 31% from 2009 to 2012 while for the bottom 40 percent it fell 6% (New York Times, April 19, September 17, 20, And 23, 2013). The combined figures for unemployed and underemployed workers have now have reached 13.8%. Much of the hiring that occurs has been concentrated in low-wage service sectors such as retailing, home healthcare and food preparation and in other contingent jobs at temporary hiring agencies. These are particularly in job areas that cannot be outsourced and where the creation of community-based cooperatives could well make an important contribution to economic growth and well-being.

As opposed to equity firms with their bottom-line profit orientation, cooperatives would be more likely to hire full-time as opposed to part-time contingent workers that can easily be fired. The greatest challenge within capitalist-state arrangements are the myths and fallacies surrounding the role of government, its capacity for engineering change, and its potential for fiscal and monetary interventions. Fears of inflation, of unbalanced budgets, and of deficit spending are all hobgoblins that keep governmental options within a rigid framework, an anathema to working-class interests and survival. Counter-cyclical governmental interventions of the type that John Maynard Keynes advocated are in retreat. Symbolic of this retreat is the neo-classical acceptance given to the flawed research of economists Kenneth Rogoff and Carmen Reinhart, who argued that economic growth declines dramatically when the public debt threshold exceeds 90% of gross domestic product (New York Times, April 16, 2013).

Robert Skidelsky argues that the Bretton Woods Keynesian economic years within the United States (1951-73) surpassed the later Washington Consensus period in terms of GDP growth rates, absence of recessions, lower unemployment, and more income equality. In opposition to neo-classical economists, he demonstrates that despite the better growth rates, lower unemployment and greater income equality, inflation rates were no different in these two periods (Skidelsky 2009: 116-126). Moreover, the US economy grew more quickly during the 1950s and 1960s despite higher top tax rates (up to 91%).

The state has retreated from infrastructure investment, public education, child care, employment programs – what Fred Block called “productive consumption” – which it views as fiscally irresponsible. As Block clearly assessed the current conundrum, “The simple reality is that global financial integration does not work. The pressures of the financial markets operate to keep nations from moving close to full use of their supplies of capital equipment and labor, and there is absolutely no countervailing mechanism that pushes toward full employment because governments have lost most of their ability to pursue fiscal and monetary policies. The dictatorship of international financial markets has become a powerful obstacle to conscious adaptation and effective steering” (Block 1996: 207). As one antidote to this malaise, Block wrote of decentralization and debureaucratization, allowing workers – freed of profit-maximization outlooks – to collectively demonstrate their creativity and problem-solving capacities at the firm level. He calls this “popular entrepreneurialism” and advocates the development of cooperatives as one outlet for it (257-265).

James K. Galbraith sees the US government as a state that has the potential to intervene for the public good, as in the days of the New Deal, on behalf of workers and consumers, but which instead has been captured by corporate interests that have colonized it on their behalf. Using the bromides of monetarism, supply-side economics, tax cuts and deregulation, the government has shrunk in its responsibilities to the needy, while it has become a reliable surrogate for corporate interests. Galbraith calls this the Predator State. He writes,

It is a coalition of relentless opponents of the regulatory framework on which public purpose depends, with enterprises whose major lines of business compete with or encroach on the principal public functions of the enduring New Deal. It is a coalition, in other words, that seeks to control the state partly in order to prevent the assertion of public purpose and partly to poach on the lines of activity that past public purpose has established. They are firms that have no loyalty to any country. They operate as a rule on a transnational basis, and naturally come to view the goals and objectives of each society in which they work as just another set of business conditions, more or less inimical to the free pursuit of profit ….

These developments—the placement of corporate men in charge of the state on the one hand, and the decline in their base of popular support on the other—have a profound effect on the character of the state itself. They bring on a tendency to run the state as though it were, in fact, just a corporation, with the rules that govern companies displacing the rules that govern republics. And so today we live in a corporate republic, where the methods, norms, culture, and corruption of government have become those of the corporation…. Everywhere you look regulatory functions have been turned over to lobbyists. Everywhere you look, public decisions yield gains to specific private persons. Everywhere you look, the public decision is made by the agent of a private party for the purpose of delivering private gain. This is not an accident; it is a system. (2008: 131, 144, 147)

Worker cooperatives: the worker ownership alternative

As Occupy Wall Street (OWS) has amply demonstrated, when multiple frustrations boil over, people do not wait for the advent of some magical revolutionary moment to vent their grievances. By confronting corporate capital with democratic alternatives, the Occupy movements have given added motivation for the working class to begin to consider its own earned space. Workers have the same legitimacy in their place of work as the Occupy movements have to occupy public spaces. Workers by dint of putting in decades on the job should have the right to claim their enterprise or factory if and when the owners claim bankruptcy or decide to downsize, outsource or abandon their community in search of higher profit margins elsewhere. This is clearly the breach into which working-class cooperatives can enter today. The rights to the urban commons that David Harvey writes of should be extended explicitly to the workplace itself because it has become a socially constituted labor property based on years of developing its capital (Harvey 2012: 72-73).

Cooperatives, whether in Argentina, Spain, Italy, Canada, Great Britain or the US, have the virtue of fulfilling five features that provide the working class with both justice and equity.

1. They are all-encompassing ideologically, absorbing different sectors and individuals of the working class, be they radical, progressive, liberal or conservative in outlook. Cooperatives are clearly more likely to eliminate a two-tier wage structure while they upend existing de facto discrimination against women, minorities and immigrants.

2. They establish participatory worker involvement in managing enterprises, direct democracy through periodic assemblies, job rotation and re-skilling of the worker. They eliminate targeted layoffs and end disjunction between full-time and part-time workers. Profits and wages move together. In fact, in some preliminary way, wages become decommodified in cooperatives, in that they are distributed as rewards for collective efforts rather than on the basis of individual negotiations with a boss. Enterprise upturns and downturns are shared equally. The focus is on education and training. These factors allow for imagining relationships among workers that are healthy and important.

3. They share the potentiality of creating working-class autonomy and a sense of class consciousness based on learned experiences in the process of production. Workers begin to conceive of themselves not as private individuals struggling to survive but as collectivities. They understand that they are not merely consumers or ephemeral voters but members of a class. It is a class consciousness born through everyday struggle in the workplace rather than an externally promoted ideology.

4. They are less likely to see their enterprise in isolation apart from other cooperatives and from society-at-large. Worker cooperatives develop both interest and involvement in politics in association with their community’s cultural, arts, healthcare and continuing educational activities. Community outreach is the default position of cooperative workers. It becomes part of their DNA reality principle for guaranteeing continuance.

5. Once established, cooperatives are available for wider struggles against repressive capitalist policies. They are far more likely than trade unions to support fraternal strikes, other worker occupations, and working-class struggles outside their own workplace. Worker cooperatives, as opposed to private hierarchical enterprises, are not likely reversible once organized because they develop a keen sense of worker autonomy and decision-making as a real and long-term alternative.

Among Argentine recuperated enterprise cooperatives the workers’ assemblies are the critical decision-making body, even where there is a strong leadership administrative council. 79% of them meet either weekly or monthly as workers’ assemblies (Programa Facultad Abierta 2011: 73-74). Over half have modified their work patterns in terms of multi-tasking, collective work assignments, and learning new functions within the administration of the enterprise, and 70% of the recuperated enterprises have adopted worker job rotations (82-83).

Research in Argentina points to a heightened involvement among cooperative and recuperated enterprise workers in public policy and its implications for the working class writ large (Ranis 2010). Workers in Argentine cooperatives have a far better sense than other workers, even those unionized, of how to relate their working lives to the other roles they exercise as community citizens and political activists.

It is significant that the multiplication of worker cooperatives in Argentina followed on the heels of the financial default and economic crisis of 2001 fueled by rampant deindustrialization, high unemployment and a dramatic growth of poverty and indigence, comparable to the US experience after 2008. In Argentina, workers have asserted their right to take over factories on the basis of national and provincial constitutional law embedded in the federal constitution’s articles 14b and 17 that allow for the takeover of private enterprises with reasonable compensation for purposes of the “public benefit” and “public interest” (Feser & Mutuberría Lazarini, 2013). These actions occur when there is clear evidence that the effects of economic recession are fraudulently used by owners to decapitalize and disinvest in their firms. Some owners have reaped millions of dollars in government credits for non-production-related financial speculation while breaking labor contracts with workers and depriving them of their earned wages. Still others simply walked away from the factory or enterprise by declaring bankruptcy, and then, unburdened by financial duress, began new enterprises with cheaper unorganized labor.

Expropriation by Argentine provincial or municipal legislatures on a case by case basis gives the cooperative workers protection from creditors’ demands on previous owners who incurred debts. Without expropriation, creditors can demand the auctioning off of the buildings and their contents, thus throwing the workers into the streets. 60% of the worker cooperatives have been given legal protection by provincial and municipal expropriations, and the continuity of Argentine cooperatives as of 2008 was 93% with only a 7% mortality rate (Palomino 2010: 29-36). In some cases bankruptcy court rulings allow the workers to commence production as compensation for lost wages and benefits, or allow for rental or lease agreements—always under the legal usage of the right to set up worker cooperatives. In a few exceptional cases, workers themselves are able to purchase the bankrupt enterprise, which has greater intrinsic value than what the previous owners claimed for purposes of the bankruptcy proceedings (Ranis 2005: 100-105).

A major breakthrough in support of Argentine recuperated enterprises and the subsequent creation of cooperatives occurred in 2011 (Pagina 12, April 12, 2011). After years of lobbying by various recuperated factory and enterprise movements and federations, the Argentine congress passed a reform of the national bankruptcy law making it easier to form cooperatives and putting the workers in line as the prime credit beneficiaries of outstanding debts, wages and benefits owed to them because of the factory or enterprise closings. Before the passage of this important measure, and under the previous bankruptcy proceedings, priority was given to the prime bank mortgage holders, then the creditors, thirdly the various suppliers and finally the balance to the workers themselves.

The University of Buenos Aires has amassed comprehensive studies on the current state of Argentine recuperated enterprises (Ruggeri 2010, Programa Facultad Abierta 2011). Whereas there were 161 recuperated enterprises as cooperatives in 2004, their numbers had increased to 205 by March 2010 and the numbers of workers so employed and officially documented increased from 7000 to 9400 (Ruggeri 2010: 7, 37). Once the recuperated enterprises have formed cooperatives and been legitimized by provincial and municipal expropriation laws, they demonstrate impressive solidarity among themselves by way of inter-cooperative associations, community and neighborhood groups, and a scattering of political parties and social movements such as the piqueteros (representing the poor and unemployed who take direct action to express their grievances) (18-19). Though the Argentine national state has not been the initiator of the recuperated enterprise movement, it has not obstructed its development. While the support has not been overwhelming, ministries in the federal government, such as Ministry of Labor and the Ministry of Social Development, as well as those of various provinces and municipalities have intervened with subsidies, worker training and legal counseling as well as social welfare programs. There has also been support from the communities at-large by way of donations, client help, food contributions and political party pro bono advice (69-70).

Many cooperatives open up their facilities to the community, creating specialized elementary and secondary schools, as well as student internship and training programs and even documentation centers and worker-oriented libraries (Ruggeri 2010: 77-79). Significantly, Argentine recuperated enterprises and cooperatives are important participants in social movements and are particularly active in cultural and educational outreach to their surrounding communities and neighborhoods. For example the large 480-member Zanón/Fasinpat cooperative tile-ceramic factory of Neuquén Province has created a community health clinic which it subsidizes; opens its warehouse to concerts and public school presentations; maintains a strike fund for other striking Neuquén labor unions; donates tiles and labor for local school construction, and offers several weekly radio programs of wide working-class interest. In the city of Buenos Aires, Maderera Córdoba has created a cooperative woodworking secondary school and IMPA (Industria Metalúrgica y Plástica de Argentina) has set up an alternative adult education secondary school, a neighborhood health clinic, a gym for seniors and a cultural center; while the Chilavert printing cooperative opens its space to publishing workshops, history and literature lectures, literary and poetry readings, book presentations, dance recitals, art exhibits, theater performances and an archive about Argentine recuperated enterprises; and the Hotel Bauen cooperative facilitates space for community groups to present artistic, cultural and political events.

Over time and with the persistence of the Argentine cooperative social movements and their activist leaders within the recuperated enterprise community, the very notion of occupying factories and establishing cooperatives to continue operations to preserve jobs has become more acceptable and legitimate in Argentina. Thanks to the early leadership and the mobilizational and legal interventions of Eduardo Murúa of the MNER (Movimiento Nacional de Empresas Recuperadas) and Luis Caro of the MNFRT (Movimiento Nacional de Fábricas Recuperadas por los Trabajadores), the occupations and their public acceptance and support have become more mainstream. The original recuperated enterprise movements have morphed into multiple regional and national associations that have legitimated the movement in the eyes of public policy-makers. For example, we now have a proliferation of the more regional associations of FACTA (Federación Argentina de Cooperativas de Trabajadores Autogestionados), ANTA (Asociación National de Trabajadores Autogestionados) and the federal association of CNCT (Confederación Nacional de Cooperativas de Trabajo). Each of these associations broadens Argentine inter-cooperative relationships and eases the learning curve as they seek to expand worker ownership and management.

Eminent domain and the solidarity economy

When cooperatives are not created to fill a niche economy, they usually emerge via struggle against irresponsible and selfish capital. In the US, two of the major stumbling blocks for workers to recuperate factories and enterprises in bankruptcy proceedings or when owners are searching for larger profit venues are (a) the underlying ideology of the sanctity of private property and (b) the understandable but misguided willingness of US workers to accept severance pay and walk away in lieu of maintaining their jobs. This will require a multi-pronged methodology: 1) Workers on learning that their factory or enterprise is about to be moved or about to claim bankruptcy, must occupy the facilities; this is primordial. 2) Workers must gather the support of the surrounding community—this prospect has been made considerably easier since OWS came on the scene. 3) Public sector intervention by way of the legal tool of eminent domain must be applied by local city councils and/or state legislatures. Finally, 4) in most cases this will require a short term public subsidy or low-interest public seed loans.

In the US we have the same legal mechanism as Argentina for promoting worker-owned and worker-managed enterprises, by way of the US Constitution’s 5th Amendment “takings clause,” extended to the States by the 14th Amendment. Eminent domain is thus constitutionally sanctioned and has been applied multiple times for community, infrastructure and development purposes. In a landmark decision for the struggling US working class, the Supreme Court in Kelo v. New London (2005) ruled in favor of the city of New London by reason of eminent domain to take over private property for “public purpose.” The court ruled on behalf of New London’s economic development plan based on the 5th Amendment which states, “…nor shall private property be taken for public use, without just compensation.” Justice John Paul Stevens wrote for the majority that expropriation of private holdings as part of urban development is justified for the public purpose of increasing jobs and tax revenues and reversing urban decay. In a previous relevant case, Berman v. Parker (1954), a unanimous court observed: “The concept of public welfare is broad and inclusive.” It becomes clear in Berman that the meaning of public use had been expanded to include “public interest” and “public welfare” by way of displacing blight in a poverty-stricken neighborhood in Washington, DC.

In Berman, Justice William O. Douglas wrote in part, “It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled.… Congress and its authorized agencies have made determinations that take into account a wide variety of values.… There is nothing in the Fifth Amendment that stands in the way.” In still another case the Hawaii Housing Authority v. Midkiff (1984), the state legislature transferred landownership from a few owners to multiple owners guided by the belief that restricting “social and economic evils of a land oligopoly” qualified as a valid public use to “correct deficiencies in the market determined by the state legislature…” in Midkiff “public use” has been substantially replaced by “public purpose” as a more encompassing interpretation of public policy responsiveness to the needs of the community as a whole.

The recent initiative by Mayor Gayle Mclaughlin and the City Council of Richmond, California, moves us in the right direction and provides a powerful test case of the potential uses of eminent domain. The Richmond plan intends to purchase underwater mortgages of homes in danger of foreclosure from the banks at the fair market value and return them to the homeowners and readjust their mortgages to their real market value. If the banks refuse, eminent domain will be applied to defend the economic integrity of the community and avoid the impact of blighted neighborhoods (New York Times, July 29, 2013).

Plant closings have severe negative economic repercussions and societal externalities on workers and communities. These economic fallouts then legitimize the right to regulate them by way of eminent domain on behalf of the public interest. Eminent domain legislation and application would create a public investment climate in manufacturing which has a clear multiplier impact on subsequently creating other service and commercial jobs surrounding the creation of industrial jobs. The impact on US economic growth and productivity would be clear. Beyond that, the growth of cooperatives represents efficient investment in job creation because the highly skewed compensations of owners and managers of equity firms are eliminated.

The collective social rights of workers who have built up the value of the firm through years of hard work and applying their know-how and skill have to be legally asserted. The companies cannot be free of societal obligations. By outsourcing jobs they have broken a contract; there must be reparations and consequences. Labor has few options, and the use of eminent domain can spark a public debate about the obligations of corporations and would reverse the steady decline of jobs at livable wages.

Although there are thousands of credit, consumer, housing, utility, insurance and agricultural cooperatives in the US servicing millions of Americans, they are most often clientelist arrangements that, while providing consumer benefits and increased access to widely cast shareholders spread over large distances, are largely run by administrators and specialists with minimal daily involvement by the rank and file membership. By contrast, there are only about 300 worker cooperatives, in which workers are truly involved in the day- to-day organization of production and services. Nevertheless there is a growing groundswell to see the social economy as an alternative to traditional hierarchical capitalist-oriented economies. It is testimony to the universal drive of working classes to pursue justice and fairness even if global capitalism itself has not yet been superseded (Chibber 2013).

The United Nations declaration of 2012 as the international year of cooperatives underlines this shifting orientation. Cooperative development is on the agenda, focusing on the consolidation of the message and the sustainability of cooperatives by creating the financial and political infrastructure to assure their continuity (Heller, 2013a, Imen, 2013). The international cooperative association working with the UN initiative emphasizes a dual goal: create an alternative democratic social economy network but one that can survive by an intelligent use of personnel and resources. Without a competent worker self-management administration the cooperative message would ring formal and discursive (Heller 2013b).

The use of eminent domain can provide the impetus to inject the idea of worker-owned and -managed enterprises into the debate on restoring jobs in America. In the US, eminent domain has been used for many decades for building highways, airports, hospitals, municipal offices, schools, libraries, public parks and sport complexes, in the name of urban development and the public benefit. It is especially appropriate to apply this same rationale to protect against the loss of industrial and service jobs by the working class (Ranis 2007). What greater public purpose could there be than preserving work for the same public! We need to use eminent domain for development purposes, much as we use taxation, zoning, and regulatory legislation.

Once expropriated, the enterprises would be turned over to the workers, who have the technical skills and know-how to run them. In Argentina, for example, workers have shown that they can successfully manage metal plants, tire factories, food processors, chemical plants, meat-packing plants, textile factories, auto parts installations, electronic component suppliers, ceramic factories, lumber factories, glass factories, supermarkets, printers and publishers, health clinics, hospitals, schools and hotels.

In the US case too, eminent domain can legitimize worker-owned and -managed factories as they strive to salvage the enterprises for themselves and their communities, while organizing for the same goals on a larger canvas. We have seen that workers can understand their rights as the creators of capital and their rights to keep their industry and jobs when equity firms have sought to vacate the premises and break contracts. We have the inspiring examples of the Republic Windows and Doors workers in Chicago in 2008-09 and again in 2012, the Stella D’Oro bakery workers in the Bronx, New York, in 2008-09 and the Taunton, Mass., Haskon Aerospace workers in 2010-11, all of whom took the crucial initial steps of sit-down strikes and factory occupations to oppose plant-closings. In each of these cases, equity firms Gillman, Brynwood and Esterline moved equipment to cheaper sites elsewhere. The Stella d’Oro and Haskon plants have closed, throwing 136 and 100 people out of work. In the Chicago case, a new firm (Serious Materials) took ownership, rehiring only a few of the former 260 workers. Again, the new firm planned to shut down its facilities in 2012. This time the workers, by dint of examples they had garnered from Argentina, shifted their strategy to ask for time to raise the funding to purchase the factory and establish a worker’s cooperative. In this they had the critical financial and logistical support of The Working World, a non-profit, micro-lending organization, and the United Electrical Workers local union.

Factory occupations, sit-ins and petitioning public authorities to save jobs are the necessary backdrops to advocacy for the application of eminent domain procedures. The formation of cooperatives by US workers has major potential if supported by labor unions and central and municipal labor councils, combined with local legal organizers and activists. Desperate times call for desperate measures, and enterprise occupations need to be placed on the immediate horizon. US labor unions, by and large, have acquiesced to simply slowing down contract givebacks. They have bargained with corporate owners under the rules of a game that severely degrades the rights of workers. The only way for the working class to have autonomy is to run the enterprise themselves. Workers need a modicum of political autonomy and the power that comes with owning and managing the means of production, which can lead to the pursuit of expanded economic goals. Workers must initiate eminent domain proceedings in every single case of a runaway ownership, and it must become the de rigueur default initiative everywhere in the US, so that it becomes a reflexive, multiplier process accepted as a legitimate legal response to arbitrary behavior by private owners.

Both in Argentina and the US, cooperative development has had to combat the powerful ideology of private property. In both countries the leading majority parties, be they the Peronist party in Argentina or the Democrat/Republican juggernaut in the US, constitute bulwarks against forms of collective ownership and control, as do powerful industrial and commercial interest groups. But public opinion represents a different story.

The American public has shown in surveys that it supports tax increases to bridge budget deficits rather than decreasing pay and benefits to workers or reducing healthcare, educational expenditure, or public transportation (New York Times, March 1, 2011). Particularly since OWS emerged, focusing on home foreclosures, student loan debt, skewed income distribution between the 1% and the 99%, and an unregulated Wall Street (see Socialism and Democracy, vol. 26, no.2, July 2012), there is little question that public opinion would support workers defending their jobs and homes against equity firms whose commitment is not to any particular community or country but to itself and its investors. Similarly, in recent public opinion surveys in Argentina, 86% of respondents supported workers’ rights to recuperate factories that were about to close, the vast majority answering that the workers are defending their workplace which is a product of their past labor, and 97% gave recuperating enterprises a positive evaluation (IIGG/-CEDESAL survey 2012). Moreover, cooperatives in Argentina maintain indirect alliances with the CTA (the alternative union federation), the Assembly of Small and Medium Businesses (APYMES) and the Argentine University Federation (Heller 2013a: 54).

These responses offer great hope that as cooperatives proliferate they will gain increasing community support. Chains of worker cooperatives could then become regional interlacing industrial zones committed to each other’s survival, with an outreach to ever wider communities in terms of educational, cultural and job opportunities. We see this kind of municipal support and cooperation in Cleveland in the interlinked green worker-cooperative network including laundries and hydroponic greenhouses, anchored by the Cleveland Clinic and Case Western Reserve University (Alperovitz 2013).

The iconic representative of international success as a cooperative is the Mondragón Corporation, a federation of worker cooperatives of the Basque region of Spain. Founded in 1956 by a village priest, José Maria Arizmendiarrieta, with a tiny nucleus of student-workers, it has grown to over 80,000 workers and employees encompassing 280 cooperatives, subsidiaries and affiliated organizations worldwide with sales of over 14 billion Euros. It is notable that cooperatives can become huge yet maintain basic integrity. For example, the salary differential between the highest and the lowest paid employees is less than five times. In 2012 Mondragón signed an agreement with the United Steel Workers to develop mixed union/cooperative industries in the US (Huffpost Business, September 13, 2013).

Mondragón demonstrates that profits from one cooperative can be used as start-up monies to develop new cooperatives, regional economic offshoots, and even research institutes and universities (Schwartz, 2009). They are more likely to withstand economic crises such as the US sustained in post-2008. Cooperatives, like Mondragón, avoided the massive turmoil and malfeasance of finance capital while continuing to meet their needs and those of the public generally. Cooperatives keep wealth within their communities. These are critical public policy benefits (Robb, Smith & Webb, 2010).

Worker self-empowerment in the US: beyond factory occupations

After occupying the enterprise, it is critical to take the second step by forming a worker-managed cooperative and calling for city or state legal action using eminent domain. Leaving a factory before securing political and legal support, as did the Stella D’Oro bakery workers, is not the best alternative. The 136 workers had shown themselves to be a cohesive and solid group, striking for 11 months to resist draconian job give-backs. Not a single worker crossed the picket line, while they engaged an important but small community, political and labor support group and used its union, Local 50 of the Bakery Confectionary, Tobacco Workers and Grain Millers (BCTGM), to obtain a positive National Labor Relations Board (NLRB) ruling that mandated back pay and benefits. Almost immediately after the NLRB ruling in July 2009, Brynwood Partners, the equity firm that now owned Stella D`Oro, announced plans to close the factory and eventually sold it to the manufacturer, Lance, Inc., which moved the company to Ohio that fall.

As important as the Stella D’Oro solidarity outreach had been, it was not enough to save the jobs of its workers. Without a decisive plant-occupation, community groups and a smattering of labor union activists alone are not enough to carry the day. Labor union rank and file are often far too mute observers of capital offenses against the working class and rarely act beyond their own immediate place as individuals within society. They await trade union leadership to speak for them, and that is most often simply unavailable. Concerted worker activism from below is the required first step followed by the use of eminent domain proceedings instituted by the municipalities involved. Forming worker-managed cooperatives must become the final aim. In New York City, neither the city council nor the mayor provided the necessary support. Had OWS been in place at that time, there is little doubt that this movement could have provided the necessary mobilization on behalf of these Bronx workers.

In Taunton, Mass., workers, again of the United Electrical Workers (UE), were in a serious labor conflict with Esterline Technologies, which planned to move 100 jobs to non-union plants in California and Mexico. The Taunton plant, Haskon Inc., made door sealants and silicon gaskets for aircraft. Despite earning profits of $120 million in 2010, Esterline announced it would auction off the equipment in December 2010 to pay for the workers’ severance package. The UE was able to get the support of Congressman Barney Frank, state legislators and the City Council to request a delay of the auctioning until mid-February 2011. For the first time in recent labor history, the union then attempted to initiate eminent domain proceedings, with the support of the City Council and the Mayor, to seize the Esterline machinery and buy the property and factory on behalf of the workers.

This purposeful and creative step sadly failed for several reasons. First, the Taunton City Council in late December 2010 sent the Massachusetts legislature a home rule petition to use eminent domain to purchase the company machinery and equipment. A home rule petition was necessary because Esterline owned only the machinery and equipment, not the building itself. Second, the Esterline Company demanded $300,000 from the Haskon workers for the equipment and machinery, to avoid an auction that would probably yield a third of that. Third, the auction occurred on January 19, two days before the Massachusetts legislature reconvened to even consider an eminent domain intervention, and, in the interim, the severance package was approved by the aerospace workers at Haskon.

This labor confrontation in Taunton showed the possibility of applying eminent domain to runaway plants. The UE and the workers were able to get the support of local unions, the Jobs with Justice chapter, the Massachusetts Nurses Association, the Jewish Labor Committee, the Greater South East Massachusetts Central Labor Council, and community residents of Taunton. They were able to use this groundswell to get the City Council and Mayor to vote in favor of eminent domain and to get voices of support from state legislators as well as their congressional representative, Barney Frank. As in the Stella D’Oro case, an important factor was the certainty of a severance package as opposed to the challenges of the struggle, both political and financial, to see eminent domain proceedings to their conclusion. This requires a good deal of courage on the part of the workers involved as well as a willingness to depart from the norms of previous plant-closing scenarios. Unless eminent domain becomes a manageable choice—a default alternative–severance payouts will continue to poorly compensate workers for the loss of their jobs.

The UE Chicago workers took that first principled and reasonable step of peacefully occupying and maintaining the Republic plant ready for production. This stood as a powerful message and opportunity for the American working class to make that cultural leap. In February 2009, a bankruptcy court judge ruled that a California building materials company (Serious Materials) could purchase the plant’s assets and employ the 260 workers involved in the occupation of the factory (Lydersen 2009). However, this alternative was fraught with the uncertainty of market calculations by the private buyer. By mid-2010, Serious Materials had rehired only 30 workers. It would have again been appropriate if a progressive community and political coalition in Chicago had called for intervention from the City Council to implement eminent domain proceedings.

Nevertheless, the Republic workers have learned an important historical lesson that represents a change in the political climate in the US. After those six heroic days of occupation by most of the 260 workers of the plant and significant support from local, state and national politicians, including President Barack Obama, the owners relented via a newly stipulated loan from Bank of America, which had just been bailed out by the federal government to the tune of $25 billion. Eventually a buyer was found from California called Serious Energy (formerly Serious Materials) which promised to rehire all the workers as they resumed production. Three years later only about a third of the workers had been rehired.

By late February 2012, the new owners again announced an immediate illegal shutdown. Again the workers occupied the plant, asking for time to come up with a plan to find a new buyer or establish a worker-managed cooperative plant. This time, because of the groundswell of community support arriving at the plant led by Occupy Chicago and Jobs with Justice, instead of taking six days, it took but eleven hours for the workers of Republic Windows to be given a three-month reprieve which was subsequently extended. Dramatically, in May 2013, the workers established the New Era Windows Cooperative, the largest industrial worker cooperative in the US. One of the leaders of the workers, Armando Robles, spoke of plant occupations and worker cooperatives created in Argentina as their model.

The sacrifice in this Chicago cooperative was sui generis since workers had to raise their own substantial capital of $665,000, with the crucial help of The Working World, and move the equipment and furnishings on their own, piece by piece, to a more economically sustainable location in the same Chicago area. Nevertheless, it provides a model for recuperating workplaces in the US that have been destroyed by owners seeking higher profit margins elsewhere. Robles hoped that their struggle through occupation would become something repeated across the US and the world when workers face similar arbitrary closings. Another leader of the New Era Windows Cooperative, Ricky Macklin, said, “In opening up this plant we have learned we are so much more than what we thought we were. In opening up this plant we’ve done our own electrical work, we’ve done the plumbing work. And all we thought was we were just window makers” (GRITtv.org, May 9, 2013).

Final comments

Cooperatives and recuperated enterprises are in the last analysis defensive strategies that allow the workers to act “as a class in itself and for itself” as Marx advocated. These structures combine human values of self-interest and survival with real democratic participatory life. On the other hand, liberal democratic representational government just is not in the workers’ personal ken nor has it proven over time to be worth their commitments and struggles. As the Occupy movements have shown us once again, one must combine economic self-interest and knowledge with actual on-the-ground democratic participatory life. In taking over the factories and enterprises, workers can concretize the Occupy movements and act as essentially confrontational agents that represent themselves and, in so doing, represent the overwhelming majority of people in any given community.

When workers occupy a factory or enterprise, they are not really taking something; they are trying to keep something that is already theirs. By dint of their work, they have produced a product, raised capital and invested it, and supplied the surrounding community with their consumption-expenditures, their taxes, and their everyday involvement in civic life. It is crucial to go beyond the notion of private property. Whose property is it anyway? The erstwhile owners and managers who accumulated the original capital and initiated the investment proposal, or the workers and employees who have made those ingredients a reality through years and often decades of commitment and hard work?

Workers cannot be separated from the capital they have produced. An implicit collective contract has developed over time that puts the workers and employees in the forefront of who is responsible in the final analysis. This relationship – really, a social contract – has superseded the simplistic notion of productive property as belonging simply to a private owner. Worker-managed enterprises represent an attempt to bypass and even subvert the traditional capitalist firm as they experiment with workplace organization that avoids the traditional top-down controls. They suggest an alternative way of organizing work.

Eminent domain, a legal process, has a basis in established public policy, which includes the powers to tax and spend, to impose environmental regulations, to zone for economic purposes, to apply rent control, and to protect workers and the surrounding community from health and safety hazards. Worker control requires a novel approach to eminent domain, using it on behalf of workers for the clear benefit of economic development, social justice, and worker autonomy. Otherwise we condemn these workplaces and their surrounding communities to unemployment, a shrinking tax base, poverty, and, as a result, the continuing erosion of America’s skilled labor force. One needs to recall that the consistent subtext of Marx’s later writings is capitalism’s dependence on unemployment and a reserve army of the unemployed (Jameson 2011).

How can communities continue to stand idly by when they could instead apply eminent domain against employers who have for so long fed off the public trough and their loyal workers? Eminent domain remains the untapped viable legal mechanism that will place worker rights at the center of the political debate in face of the continuing decline of decent jobs in North America. In so doing, it can take a major step – within capitalism itself – toward the goal evoked by Marx: the free association of worker producers.

References

Alperovitz, Gar. 2013. Beyond Capitalism. New York: Bloomsbury.

Block, Fred L. 1996. The Vampire State. New York: New Press.

Chibber, Vivek. 2003. Postcolonial Theory and the Specter of Capital. London: Verso.

Feser, Maria Eleonora and Valeria Mutuberría Lazarini. 2013. Expropiaciones y Empresas Recuperadas por sus Trabajadorees en la Ciudad de Buenos Aires. Idelcoop 210. (July): 259-265.

Galbraith, James K. 2008. The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. New York: Free Press.

GRITtv.org, May 9, 2013.

Harvey, David. 2012. Rebel Cities: From the Right to the City to the Urban Revolution. London: Verso.

Heller, Carlos. 2013a. Cooperativismo y Política. Idelcoop 210, (July): 46-66.

_____. 2013b. El Modelo Integral de Gestión. Idelcoop 210, (July): 131-137.

Idelcoop 210. 2013. (Buenos Aires: Instituto de la Cooperación (July).

IIGG-CEDESAL. 2012. (Instituto de Investigaciones Gino Germani-Centro para el Desarrollo Social en América Latina).

Imen, Pablo. Los Desafíos del Cooperativismo Argentino. Idelcoop 210, (July): 67-79.

Jameson, Fredric. 2011. Representing Capital: A Reading of Volume One. London: Verso.

Lydersen, Kari. 2009. Revolt on Goose Island: The Chicago Factory Takeover and what it Says About the Economic Crisis. New York: Melville House.

Marx, Karl. 1967. Capital, Vol. I. New York: International Publishers.

Palomino, Hector et al. 2010. La Nueva Dinámica de las Relaciones Laborales en la Argentina. Buenos Aires: Jorge Baudino Ediciones.

Programa Facultad Abierta, Facultad de Filosofía y Letras de la Universidad de Buenos Aires. 2011. Las Empresas Recuperadas en la Argentina. Buenos Aires: Ediciones de la Cooperativa Chilavert.

Ranis, Peter. 2005. Argentina’s Worker-Occupied Factories and Enterprises. Socialism and Democracy 19, No.3 (November): 93-115.

_____. 2007. Eminent Domain: Unused Tool for American Labor. Working USA: The Journal of Labor  and Society 10, No.2 (June): 193-208.

 _____. 2010. Argentine Worker Cooperatives in Civil Society: A Challenge to Capital-Labor Relations.  Working USA: The Journal of Labor and Society 13, No. 1 (March): 77-105.

_____. 2011. Occupy Wall Street: An Opening to Worker-Occupation of Factories and Enterprises in the US. mrzine.Monthly Review (November 9).

Robb, Alan J., James H. Smith and Tom J. Webb. 2010. Cooperative Capital: What It Is and Why Our World Needs It. Paper for EURICSE Conference on Financial Cooperative Approaches to Local Development through Sustainable Innovation Trento, Italy, (June 10-11).

Ruggeri, Andrés. 2010. Las Empresas Recuperadas en la Argentina. Buenos Aires: Programa Facultad  Abierta, Facultad de Filosofia y Letras de La Universidad de Buenos Aires.

Schwartz, Judith D. 2009. In Cleveland, Worker Coops Look to a Spanish Model. Time (December 22, 2009).

Skidelsky, Robert. 2009. Keynes: The Return of the Master: Why, Sixty Years after his Death, John Maynard Keynes Is the Most Important Economic Thinker for America. New York: Public Affairs Press.

 

This entry was posted in 64, Volume 28, No. 1. Bookmark the permalink.