The Cleveland Model
What's especially promising about the Cleveland model is that it could be applied in hard-hit industries and working-class communities around the nation. The model takes us beyond both traditional capitalism and traditional socialism. The key link is between national sectors of expanding public activity and procurement, on the one hand, and a new local economic entity, on the other, that "democratizes" ownership and is deeply anchored in the community. In the case of healthcare the link is also to a sector in which some implicit or explicit form of "national planning"--the movement toward universal healthcare--will all but certainly increase public influence and concern with how funds are used.
Whereas the Cleveland effort is targeted at very low-income, largely minority communities, the same principles could easily be applied in cities like Detroit and aimed at black and white workers displaced by the economic crisis and the massive planning failures of the nation's main auto companies. Late in October, in fact, the Mondragon Corporation and the million-plus-member United Steelworkers union announced an alliance to develop Mondragon-type manufacturing cooperatives in the United States and Canada. Says USW's Rob Witherell: "We are seeking the right opportunities to make it work, probably in manufacturing markets that we both understand."
Consider what might happen if the government and the UAW used the stock they own in General Motors because of the bailout to reorganize the company along full or joint worker-ownership lines--and if the new General Motors product line were linked to a plan to develop the nation's mass transit and rail system. Since mass transit is a sector that is certain to expand, there is every reason to plan its taxpayer-financed growth and integrate it with new community-stabilizing ownership strategies. The same is true of high-speed rail. Moreover, there are currently no US-owned companies producing subway cars (although some foreign-owned firms assemble subway cars in the United States). Nor do any American-owned companies build the kind of equipment needed for high-speed rail.
In 2007 public authorities nationwide bought roughly 600 new rail and subway cars along with roughly 15,000 buses and smaller "paratransit" vehicles. Total current capital outlays on vehicles alone amount to $3.8 billion; total annual investment outlays (vehicles plus stations and other infrastructure) are $14.5 billion. The Department of Transportation estimates that a $48 billion investment in transit capital projects could generate 1.3 million new green jobs in the next two years alone. There are also strong reasons to expedite the retirement of aging buses and replace them with more efficient energy-saving vehicles with better amenities such as bike racks and GPS systems--the procurement of which would, in turn, create more jobs.
President Obama has endorsed a strategy for making high-speed rail a priority in the United States. In a January 28 appearance in Florida he announced support for rail expansion in thirteen corridors across the nation based on an $8 billion "down payment" for investments in high-speed rail included in last year's stimulus package. The administration plans an additional $5 billion in spending over the next five years. Interest at the state level is also strong; in November 2008 voters in California approved a $10 billion bond to build high-speed rail.
Even more dramatic possibilities for a new industry organized on new principles are suggested by experts concerned with the impact of likely future oil shortages. Canadian scholars Richard Gilbert and Anthony Perl, projecting dramatic increases in the cost of all petroleum-based transportation, have proposed building 25,000 kilometers (about 15,000 miles) of track devoted to high-speed rail by 2025. Along with incremental upgrades of existing rail lines to facilitate increased and faster service, they estimate total investment costs at $2 trillion (roughly $140 billion each year for fifteen years).
All of this raises the prospect of an expanding economic sector--one that will inevitably be dominated by public funds and public planning. In the absence of an effort to create a national capacity to produce mass-transit vehicles and high-speed-rail equipment, the United States in general, and California and other regions in particular, will likely end up awarding contracts for production to other countries. The French firm Alstom, for example, is likely to benefit enormously from US contracts. The logic of building a new economic sector on new principles becomes even more obvious when you consider that by 2050 another 130 million people are projected to be living in the United States; by 2100 the Census Bureau's high estimate is more than 1 billion. Providing infrastructure and transportation for this expanding population will generate a long list of required equipment and materials that a restructured group of vehicle production companies could help produce--and, at the same time, help create new forms of ownership that anchor the economies of the local communities involved.
As reflection on transportation issues and the current ownership structure of General Motors suggests, the principles implicit in the nascent Cleveland effort point to the possibility of an important new strategic approach. It is one in which economic policy related to activities heavily financed by the public is used to create, and give stability to, enterprises that are more democratically owned, and to target jobs to communities in distress. The model does not, of course, rely only on public funds; as in Cleveland it serves a private market and hence faces the "discipline" of the market.
We are clearly only on the threshold of developing a sophisticated near-term national policy approach like that suggested for transportation--to say nothing of the fully developed principles of a systemic alternative. The Cleveland experiment is in its infancy, with many miles to go and undoubtedly many mistakes to make, learn from and correct. On the other hand, as New Deal scholars regularly point out, historically the development of models and experiments at the local and state levels provided many of the principles upon which national policy drew when the moment of decision arrived. It is not too early to get serious about the Clevelands of the world and the possible implications they may have for one day moving an economically decaying nation toward a new economic vision.