Green Economy

In late August, my colleague Tom Prugh blogged about a non-capitalist, worker-owned corporation—the Mondragón Corporación Cooperativa (MCC) in Spain’s Basque region. For Americans who are skeptical about European ideas of how to run the economy in a more socially-conscious manner, it may be all too easy to dismiss MCC as yet another crazy idea that will never take root in American soil.

But on October 27, the United Steelworkers (USW)—North America’s largest industrial union—and Mondragón Internacional, S.A. signed an agreement to collaborate in establishing Mondragón-style manufacturing cooperatives in the United States and Canada. These cooperatives are to be governed by MCC’s model of “one worker, one vote.”

MCC has its own—highly regarded—university. Photo credit: Mahaiburuak http://www.flickr.com/photos/30633476@N04/3946745983

MCC is a federation of democratically-run enterprises that produce and sell a range of goods and services (including appliances and machinery needed to produce solar panels). Set up in 1956 in the Basque town of Mondragón, it relies on democratic methods in its organizational structure and is concerned with generating assets for the benefit of its members and their communities, rather than for shareholders. Today, MCC is the seventh largest company in Spain. It has about 100,000 cooperative members in about 250 cooperative enterprises that operate in more than forty countries. (It should be noted that MCC has acquired some companies that are run in conventional capitalist style, although the idea is to convert them to cooperatives in due time. An MCC enterprise in Poland, Fagor Mastercook, has been embroiled in controversy over low wages and anti-union tactics.)

The loss of nearly 6 million U.S. manufacturing jobs over the past decade and the stagnation of real wages across the economy during the last three decades are throwing more and more families and communities into a tailspin. Signing the agreement, USW President Leo Gerard commented: “Too often we have seen Wall Street hollow out companies by draining their cash and assets and hollowing out communities by shedding jobs and shuttering plants. We need a new business model that invests in workers and invests in communities.”

It remains to be seen how well the USW-MCC agreement can be translated into a new U.S. economic model. Even before this agreement was struck, some promising new worker co-op initiatives motivated by the Mondragón experience were started, including the Evergreen Cooperative Laundry and a solar installation service and an industrial-size hydroponics greenhouse, all located in Cleveland, Ohio. If the USW-MCC connection takes off, such initiatives may well multiply—not just in the service sector, but also in manufacturing.

In the discussion on how best to address climate change, carbon pricing is regarded as a principal tool to “internalize” the full costs associated with fossil fuel use. Higher prices will lead individuals to rethink their purchasing decisions. Thus, they may choose a more fuel-efficient car, drive less, mind their thermostat settings in winter and think whether and when to switch on the air conditioning in the summer. And so on.

To the extent that this helps to make consumers more discriminating and smart about their choices, it is all for the better. But a strategy that is driven solely or primarily by market signals can quickly translate into hardship, as skyrocketing home heating bills in the United States in 2008 demonstrated. In the United States, and maybe elsewhere as well, full-cost pricing and current socio-economic trends seem to be on a collision course.

Over the past quarter century or so, the gap between rich and poor has widened dramatically. More than a quarter of all U.S. workers earned poverty level [Excel] hourly wages in 2007. Inflation-adjusted average hourly earnings [Excel] were slightly above $17 in 1978, a level not seen again until 2002. From a perspective of simple economic justice, wages should be on a par with productivity gains—something that has not been the case [Excel] in the United States for at least 20 years now.

Some will say that higher disposable incomes associated with rising wages will only further drive consumption. While that may be true, stagnating wages as such certainly did not lead to wiser consumption decisions. Many families balanced their books by taking on growing debt—in part to support questionable purchasing decisions. (One can debate whether these are the consequence of innate foibles or insistent advertising that insinuates that happiness is a function of possessing the latest gadgets).

At a time of both tremendous global economic tumult and gathering climate catastrophe, will people be forced into false tradeoffs—choosing economy over ecology, or vice versa? Will sustainability happen at the cost of growing disparities and hardship?

Market signals can and should play a role in the move toward a sustainable economy. But environmental sustainability requires social sustainability. People who don’t have to constantly worry about making ends meet will be more likely to accept that prices should tell the ecological truth.

Environmentalists need to be as aware of the social dimensions of sustainability—well-versed in issues like living wages or occupational health and safety—as labor representatives are mindful of the environmental dimensions. Luckily, there are indications of growing recognition of mutual concerns, as well as cooperative efforts, from the Apollo Alliance and the Blue-Green Alliance to the very well-attended “Good Jobs Green Jobs” conferences in Pittsburgh (2008) and Washington, DC (2009).

Some weeks ago, my former Worldwatch colleague Zoë Chafe—now a PhD student with the Energy and Resources Group of the University of California at Berkeley—queried me whether I was aware of any major occupational health and safety issues in the renewable energy industry.

What quickly came to mind was a March 2008 newspaper story about polysilicon, a material critical to the solar photovoltaics (PV) industry. The article reported that a number of Chinese companies were cutting corners in the rush to fill booming demand and keep costs low. Instead of recycling a highly toxic byproduct, silicon tetrachloride, the companies were stockpiling the substance in drums or simply dumping it, rendering land infertile and exposing both workers and surrounding citizens to dangerous concentrations of chlorine and hydrochloric acid.

Raw silicon. Image courtesy of Le Piment.

It may be tempting to regard this as just another case of China’s “Wild East” development model. The truth is that the solar PV industry, regardless of location, uses “extremely toxic materials or materials with unknown health and environmental risks,” in the words of a January 2009 Silicon Valley Toxics Coalition report. The study speaks of a “limited window of opportunity to ensure that this extremely important industry is truly ‘clean and green,’ from its supply chains through product manufacturing, use, and end-of-life disposal.”

But it’s also important to assess the situation in a comparative manner. How does the renewable energy industry compare with the one it seeks to replace—the fossil fuels industry? Zoë kindly sent me an article in the Journal of the American Medical Association that examines this question. The piece notes that there are some limits concerning available data and studies, and more comprehensive assessments will be needed in the future.

Nonetheless, the authors conclude that occupational hazards in the fossil fuel sector—with regard to mining and power plant operations—are substantially higher than those associated with wind and solar energy. This is true not just in absolute terms (the fossil sector is presently still so much bigger), but also with regard to the relative risks (i.e., per unit of output.)

The perhaps most rigorous comparative assessment to date, undertaken by the European Union, confirmed this judgment. In the U.S. context, the JAMA authors find that “the potential occupational health benefits of transitioning to renewable energies are considerable.”

The wind and solar industries hold tremendous potential to halt humanity’s race to the climate precipice. Their appeal will be even stronger if they are developed in such a way as to respect not only environmental limits, but also to protect those who often find themselves on the frontline of exposure—the world’s workers.