Transformative Business: A Report from the U.S. Social Forum 2007

Germai Medhanie, Good Economic News

Unionizing used to be a viable strategy for U.S. workers.  Workers would prefer to form a union. Those workers who formed unions indeed benefited. But in today’s global economy, corporations don’t stay around when they don’t get their way. They leave the workers on edge; they breed insecurity andfear that they may leave at any time, and taking the jobs and workers’ livelihood with them. 

These events have been witnessed again and again, and they are real.  There is a growing realization, in the US, that corporations cannot be trusted – that it is dangerous to rely on them for our livelihoods.  Even top management guru Peter Drucker complains about their cruelty and immorality:  “This is what bothers me. A lot of top managers enjoy cruelty. There is no doubt that we are in period in which you are a hero if you are cruel. In addition, what’s absolutely unforgivable is the financial benefit top management people get for laying off people. There is no excuse for it. No justification. This morally and socially unforgivable, and we will pay a heavy price for it.”

Some workers are responding to these terrifying experiences by creating alternative workplaces which give them control over their work lives.   At the first US Social Forum last summer, in Atlanta, Guramylay, the small nonprofit which I work with, organized a session to showcase some of the exciting alternatives to corporate emotional shock and betrayal, which we called “Transformative Business.”

People are engaging in transformative businesses by starting worker-owned businesses, co-ops and green businesses. These businesses represent a rejection of the traditional business model.  It came out of the realization of private corporations’ greed. Traditional businesses corporations are always in search for more profit, they lack responsibility, decency, and civility. They create environmental degradation for profit, and they put us all in danger. It has become fundamental to our very survival to create businesses with new values that bring a new spirit.

The new spirit is hope. It is a new mindset that embraces new ideas put forward by different communities or interested groups. This strategy is not based on competition or the old paradigm, but instead on knowing your role and your responsibility as a global citizen. This new strategy is about choices, and the desire to bring resources, skills, and dreams together in a way that benefits workers, consumers, community, and the environment. 

The speakers at my session discussed a number of innovative examples of transformative businesses (link to transformationcentral.org).  Here, I will briefly discuss a few of them. 

Collective copies, a worker-owned copy shop in Amherst, Massachusetts, is a good example of a transformative business. Collective copies came out of a union strike. The workers wanted to form a union; then once the union got the contract, the company closed down. Then, the workers bought the business and created workers’ co-op.

As I see it, owning collectively is one aspect of transformation, an aspect which benefits the coops worker-owners.  To assess how transformative a business is, we also need to look at how they are operating, and how they are connecting and collaborating with other worker- owned businesses or coops; we need to see whether the products that they use and their products are environmentally friendly or not; we need to see the business’ relationship with the community where the company is located.  Ideally, these new transformative businesses have to aspire beyond self interest, and they must find ways to save the planet while they are making a decent living.

Adam Trott, one of the Collective Copies members, said that Collective Copies uses only recycled paper. It is expensive but the workers control the surplus, and they can adjust their markups. They chose to make less profit in order to remain competitive while they are doing good for the environment. Collective Copies also sells coffee and chocolate produced by another local Fair Trade cooperative, Equal Exchange.  Collective Copies is a transformative business because the workers are making a living out of their activism.

A second innovative and transformative business model was BIG WASH,   a community-owned Laundromat, in Washington, D.C., Presented at the Forum by Jessica Gordon Nemhard. The community decided to open a laundromat out of necessity – there was no laundromat in their neighborhood. The community worked with a non-profit organization to do the feasibility study. They went door to door and sold 30 shares of stock for about $100 per share and the rest they got as loans for the additional investment needed. It was a need-based business, not a profit-motivated venture. Its setup was designed to invite people to come, to sit, and to talk. Although it had no protective grate, it was never broken into. The community did not want to expand or to franchise. They want to use it and maintain it. It was an exemplary business model. If any community wants a laundromat, bookstore or community center, it is possible to organize and raise the funds needed as the Big Wash did.  

Another interesting example given by Jessica was the Arizmendi Bakery & Pizzeria, a worker-owned cooperative.  They are committed to providing support to others who want to open new, independent worker-owned businesses like theirs, in other neighborhood.

Another example is Community Supported Agriculture, shared by Ken White, of Amherst MA. In CSA model, the farmers get their money in advance for future weekly delivery. Ordinary farmers can do business with their community, and maintain the integrity of the land. Farmers will not be affected by demand and supply that often left many farmers crippled financially. Members will get fresh produce, and transportation costs and greenhouse gases are greatly reduced.  The CSA example shows that acting locally can have a beneficial impact on the rest of the world. 

Yes, these businesses are small but they are a good start.  These business models may work for any size firm if they have the support they needed from the government such as free technical support, good public policy that supports worker owned businesses in giving them tax brakes, and access to capital at low interest rates.

It is true that entrepreneurship is not for everyone. Maybe many workers would prefer to have a secure and a fixed income for their labor, and let the business people take the risk. But those kinds of choices are getting fewer and fewer. The options that are available to workers to find well-paid full-time jobs with benefits, retirement plans and security are practically slim. At this particular time, collective ownership could be the best way to go despite the size of the business– especially if the business is closing down.

Transformative business is about practicing what you preach, in the sense of injecting our moral values into our economic lives.  Workers in transformative businesses produce a product that they believe in that makes them proud.  Enlightened consumers use their purchasing power to buy from transformative businesses who treat their workers well, and who preserve the environment. Transformative businesses also means making workplaces as democratic as possible, and doing business with firms that share the same values as we do.

Germai Medhanie October 30, 2007 at 2:07 pm