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Racializing Cooperatives: The Worker Cooperative Model as a Racial Solidarity Building Mechanism against the Eurocentric Capitalism

By Jessica Hyejin Lee

Thesis Draft

Submitted in fulfillment of requirements for the degree of Bachelor of Arts in Political Science

Bryn Mawr College, 2013 Bryn Mawr, PA

Lee 2 I. Abstract Race is one of the components that most clearly determines economic opportunities in the capitalist market. The capitalist market labor is segmented in a way that often builds a hierarchy that disadvantages people of color. I argue in this paper that worker cooperatives cannot eradicate the capitalist market but can counteract the systemic disadvantage against people of color in the capitalist market. Worker cooperatives characteristically cannot successfully integrate workers across different race, due to their operational synergy being inward community trust. However, they can be a very powerful tool to strengthen solidarity within workers of same race. There have been many successful worker cooperatives owned and managed by people of color that successfully utilizes this insular characteristic of the worker cooperative model. However, their history is not well acknowledged by the mainstream discourse on worker cooperatives. The worker cooperative model can truly serve their purpose of taking steps toward political economic equality only when 1) worker cooperatives are owned and operated by communities of color, 2) racially insular tendency of worker cooperatives is considered good, and 3) they are not overestimated to be a complete alternative to capitalism. Concluding my analysis, I consider conventionally successful worker cooperative public policies through the new racialized framework. The ideals of the worker cooperative movement can only be realized in a large scale when there are public policies that explicitly support communities of color to build racial solidarity and empowerment through the worker cooperative model.

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Dedication

To my parents, who dedicated their lives to the revolution by crossing the border undocumented and allowed me the precious opportunity to gain wisdom only known to those undocumented, imprisoned, oppressed, but empowered and liberated.

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Acknowledgement

This thesis would not have been possible without the guidance of my wonderful thesis advisors Professor Deborah Harrold and Professor Sanford Schram. I express a sincere gratitude to both for guiding me through a year-long process of thesis writing. I thank Professor Craig Borowiak for our long discussions on worker cooperatives and directing me down the right path. I am indebted to Professor Erika Marquez for introducing me to Anibal Quijanos work on coloniality of power, which infinitely solidified my thesis. I thank Professor Matthew Murphy for helping me develop my interest in political economy and Professor Peter Baumann for my social and political philosophy background. I also express a gratitude to Professor Anne Dalke and Professor Christine Koggel, both of whom kindled my interest in writing and spent hours helping me improve my writing skills since my freshman year. Last but not least, I thank all my beloved fellow undocumented activist friends of DreamActivist Pennsylvania for providing the mental support needed to complete this thesis.

Lee 5 Table of Contents I. Abstract I. Introduction II. The Dependence of Capitalism on Race III. Public Policy Impact on Capitalist Racial Hierarchy IV. Racial Segmentation of Market Labor V. Worker cooperatives and Race VI. Analysis of the Marxist Thought on Worker cooperatives VII. Response to the Marxist Thought on Worker cooperatives i. Conceptual Evidence of Racial Solidarity in Worker cooperatives ii. Empirical Evidence of Racial Solidarity in Worker cooperatives VIV. Conclusion and policy implications X. Work Cited

Lee 6 I. Introduction Communities of racial minority groups in the US have long overcomed political and financial hardships by establishing their own worker cooperatives, while often not acknowledged in the mainstream discourse of the worker cooperative movement. These worker cooperatives are different from typical worker cooperatives, which are dominantly white or lack focus on communities of color, because they help build solidarity within the racial group that is otherwise marginalized in a largely eurocentric US economy. In addition, the worker owners of these cooperatives are more likely to work in a safer environment and be able to better compensate themselves because they have the power to manage their own business and do not work under a manager, owner, or investor who may take advantage of workers who are considered more disposable. Successful examples of worker cooperatives owned, managed, and run by people of color are Si Se Puede! (We Can Do It!), a house cleaning services business owned by Latino Americans and recent Latino immigrants, Home Care Associate, a home care services business owned by mostly African Americans, and many other historical African American worker cooperatives in the United States. Throughout this paper, I explore how these worker cooperatives successfully counteract the eurocentric hierarchy of capitalism within their cooperatives and change the mainstream discourse on worker cooperatives. The history of racial minority worker cooperatives similar to Si Se Puede and Home Care Associate is significant in its contribution to creation of plural public spheres where marginalized communities can find space for empowerment. While the traditional modes of voicing ones opinion includes marches and protests, these means are largely alienated from the economic sphere which takes up the most of ones life time. Recognizing that work plays a dominant role in determining ones finance and a way of life, the

Lee 7 worker cooperative model creates a unique empowering space in the economic sphere, which is eventually greatly intertwined with the public sphere. It is distinctively different from the kind of public sphere that relies heavily on the hegemonic bourgeois public sphere facilitated by government elites. Such is a unique role of racial minority cooperative model, and it can only be comprehended with the understanding of capitalisms dependency on eurocentric racial hierarchy.

II. The Dependence of Capitalism on Race Capitalism and the idea of race are deeply connected. As the scholar Anibal Quijano puts it in words, the idea of race...this new structure was an articulation of all historically known previous structures of control of labor, slavery, serfdom, small independent commodity production and reciprocity, together around and upon the basis of capital and the world market (Quijano 2010). In other words, capitalism depends on the hierarchy of race to operate in an efficient manner. The efficiency is only achieved by forcing certain populations into a caste system and exploiting a disproportionate amount of labor from those populations. Capitalism does not mind forcing an undignifying quality of labor in order to increase market production. Capitalism has always depended on exploiting certain classes of laborers to increase production, more specifically based on racial hierarchy. This exploitation is becoming clearer worldwide due to the increase in racial diversity everywhere in the globe. From the era of colonization and to a more modern era that is now called globalization, the political economic sphere has become racialized everywhere in the world. This racialization is particularly problematic because it is very dominantly eurocentric. Following colonization, relations between racial groups in the world have been codified in a strong play of new categories: East -West, primitive-civilized, magic/mythic-scientific, irrational-rational, traditional-modernEurope and not Europe. (Quijano 2010). Every description of race has been dominated by a eurocentric

Lee 8 narrative, mainly being categorized by whether a racial group is european or not. Of course, with the forced or voluntary immigration that has taken place throughout colonization and globalization, the eurocentric narrative does not only focus on Europe in a geographical sense, but in a racially white sense. The history of colonization and globalization demonstrates that political, economic, and social hierarchy has always been established through the division in class of labor that is based on race. Non-white racial groups were often forced into a class of work lower than that of whites, being assigned into a low political, economic, and social status. During the time of colonization in the 18th and 19th centuries, European colonies felt that they had to right to dominate nonEuropean countries and freely utilize their labor and capital, all based on the idea of race that non-Europeans were primitive, irrational, not modern, and therefore inferior (Quijano 2010). In colonized countries, it was largely the colonizers, the whites, who permitted themselves to wagelabor and forced the colonized people of color community to either work for no or very little wage because they were, once again, inferior based on the eurocentric idea of race. For example, The vast genocide of the Indians in the first decades of colonization was not caused principally by the violence of the conquest nor by the plagues the conquistadors brought, but took place because so many American Indians were used as disposable manual labor and forced to work until death (Quijano 2010). It was not the eurocentric idea of race by itself that abused and mass murdered the Native Americans. It was the forced labor and the exploitation of their capital by European colonizers that enforced a eurocentric hierarchy onto the colonized America. It is clear that the exploitation of capitalism is inherent in the relationship between eurocentric idea of race and divisions of labor.

Lee 9 It is in the act of devaluing and cheapening ones labor and dignity on the basis of race where the most powerful connection between capitalism and race can be seen. In fact, the history of colonization does not only show the relation between capitalism and race; it shows that the eurocentric idea of race is central to the operation and survival of capitalism. Capitalism is a system of relations of production, that is, as the heterogeneous linking of all forms of control on labor and its products under the dominance of capital (Quijano 2010). In a globalized world following the era of colonization, capitalism has been the source of the creation of the idea of disposable cheap labor and the supplying of it by taking advantage of people of color based on the eurocentric idea of race. This knowledge from analyzing 18th and 19th Century colonization can be brought forward to the current times to examine capitalism and race in vocabularies of the modern world. Today, the main discourse on the economy is still being driven by the rhetoric of capitalist efficiency and on terms of the business elites who are considered job creators. Political and economic impact of such a market system runs deep in the systemic oppression of communities of color. Business elites--investors and owners who are more often white than not-have disproportionate control over businesses compared to low-ranked disposable low-wage workers, who tend to belong to a minority racial group or are recent immigrants. Investors have the power to push corporations to become more profitable by operating more efficiently through further hiring of vulnerable workers who can be threatened to be paid very little, outsourcing to foreign workers, and replacement of workers with automated systems. Business owners can make decisions to hire and fire workers, and this employment power overshadows the fact that businesses cannot be run without the workers. In conventional capitalist economy, the importance of capital investment and management is excessively highlighted, while the

Lee 10 significance of human labor is downplayed. While capital investment is necessary, it is equally true that labor is necessary in running and maintaining business operations that save and create jobs. In fact, it is clear that laborers are job creators as much as investors are. Despite the vital role of laborers, the hierarchical capital distribution structure does not cease to abuse them. In addition, capitalist systems do not respectfully consider well-being and dignity of those who provide labor to the market. A market is considered to have succeeded solely based on the profit generated, regardless of the well-being of laborers who are key operators and benefactor of that very market. Laborers, especially those from minority or immigrant backgrounds who are more vulnerable to abuse, are not treated with dignity nor with respect for their physical and mental well-being. An individual has more power and resources than another person in modern eurocentric, globalized society because she or he is more Western than others and use this Western-ness to dominate others. This happens both knowingly and unknowingly due to the ubiquitous influence of eurocentricism in the world. A class exists as a collectivity only by virtue of its position in that structure and of its relation to other classes (Fraser 1997, 17). In simple words, a boss only exists because workers are placed in a class structure under that boss. In fact, capitalism is fueled by unequal class relations. It requires workers to depend on their boss for management of the company and for compensation for their labor. This overly unbalanced power dynamic leads to dramatically disproportionate difference of control between workers and bosses. In modern society with a clear racial hierarchy, this means that certain racial groups have control over management and compensation of other racial groups. As a result, the dependency of capitalism on racial hierarchy reinforces itself by preventing opportunities for upward mobility from low-income workers of color. This takes

Lee 11 place through the capitalist structure of segmented labor market which systemizes eurocentric idea of race.

III. Public Policy Impact of Capitalist Racial Hierarchy While the primary aim of my research is to explore the impact of minority worker cooperatives in the economic sphere, the deep connection between government and the market system needs to be understood in order to comprehend the role of minority worker cooperatives in the economic sphere. Government cannot be fully trusted to serve the people that the capitalist market has failed serve because the government has a close relationship with the capitalist market. The worker cooperative model provides a unique sphere for the empowerment of people whom the capitalist market and the government have failed to support fully. The racially hierarchic system of capitalism forces the government to favor eurocentric business elites in policy making processes. As Charles Lindblom highlights in his work Politics and Markets: The Worlds Political Economic Systems: Because public functions in the market system rest in the hands of businessmen, it follows that jobs, prices, production, growth, the standard of living, and the economic security of everyone all rest in their hands. Consequently, government officials cannot be indifferent to how well business performs its functions...In a private enterprise market system, [matters] are in larger part decided not by government officials but by businessmen (Lindblom 1978). Lindbloms analysis applies to the current US legal and political systems that favor corporations where only the owners have rights over their businesses and benefit disproportionately from them. In comparison, the cooperative model gives control to all workers. In the US, economic discussions in the government have dodged the real question on the

Lee 12 functionality of the capitalist market, largely by resorting to superficial political maneuvering through the relatively shallow rhetoric of tax policies. It is obvious that, as long as the current form of capitalism remains, the small number of business elites are going to profit disproportionately from the work of a large number of laborers. And the incorrect narrative of the poor depending on the rich for welfare would be sustained. This magnetic relationship between the business elites and the government implies that government systems replicate the eurocentric idea of race. The government is more likely to serve those who have succeeded in the market that operates on eurocentric racial hierarchy. In fact, the interaction between government and its people on the scale of racial diversity is not static but a dynamic one, as observed through examples of Nordic countries in the recent era of globalization. While many past scholars believed that the divisive role of idea of race in political economic hierarchy only existed in certain capitalist states, they have been proven wrong. The increased racial diversity in formerly racially homogeneous countries caused resistance from the eurocentric idea of race, and it has caused people to make existing systems more capitalist to enforce the eurocentric racial order. In the past, for example, Nordic European countries were considered socialist by much of scholarly comparative political economy work. They were known to be more egalitarian, providing excellent welfare to all citizens and imposing heavy government regulation on private sector. Many believed that the Nordic socialist model countered socioeconomic divide and followed the principle of decommodification, which occurs when a service is rendered as a matter of right and when a person can remain a livelihood without reliance on the market, according to Esping-Andersens definition in The Three Worlds of Welfare Capitalism (Esping-Andersen 2010). However, as globalization has progressed and more immigrants--especially those of low-income people of color--have

Lee 13 immigrated to these Nordic countries either with or without immigration documents, their population becomes more racially diverse. From then, residents with citizenship status have been refusing to continue to provide basic livelihood resources as public resources and began to privatize the government (Esping-Andersen 2010). Such practice limits resources to residents who are successful on the standards of eurocentric capitalism, leaving out communities of color trodden on and exploited by the capitalist market. It is not just the Nordic countries. As the population has become more racially diverse in different countries worldwide, the capitalist market and politics have become more commodified and neoliberalized, privatizing services traditionally provided by public sector and leaving much distribution of resources in the hands of private sector, in other words in the hands of business elites who meet white and eurocentric standards. Sven Steinmo compares Sweden, Japan, and the US as different capitalist economies and finds that all three countries seem to be merging to become neoliberalized with the spread of globalization and the consequent diversification of population. Neoliberalization is the takeover of public goods by the private sector that controls those goods by eurocentric capitalistic standards. Understanding the impact of neoliberalization is important in the context of capitalist racial hierarchy and racial minority worker cooperatives. People of color communities become more and more vulnerable as governments begin to provide less protection for equality and privatize many of the basic rights. The power of capitalist racial hierarchy becomes stronger as the distribution of public goods no longer is founded on the basis of equality but eurocentric standards and hierarchy. The worker cooperative model provides a space for marginalized people of color communities to claim power directly in the economic sphere and not just through the dominant bourgeois public sphere and then possibly to the economic sphere.

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IV. Racial Segmentation of Market Labor This race-based process of economic segmentation that has taken place in Nordic country applies to all countries worldwide in a very similar way. With this segmentation, individuals of same race are most likely to do similar kinds of work and be in similar industries. Not only that, the capitalist market is segmented in a way that places people of color on a lower class of work-class of work is determined by how white workers are. Globalization has established a worldwide eurocentric hierarchy in socioeconomic class. A few main but limited examples of disadvantaged racial groups are Arab Europeans in Nordic countries, African Arabs in Middle East countries, Southeast Asians in East Asian countries, and Latino Americans and African Americans in the US. These groups often have less economic advancement opportunities and are forced into cheap manual labor such as janitorial work, gardening, food serving, construction, farming and etc. They are forced into this class of work based on their socioeconomic status founded on eurocentric perceptions on race. The work of Michael Reich, David Gordon, and Richard Edwards represents the most basic analysis of segmentation of market labor. They define three main segments of labor: independent primary, subordinate primary, and secondary. Independent primary jobs encourage and require creative problem-solving...and often have professional standards for work (Reich 1973, 360). These jobs are more commonly known as white-collar jobs. Subordinate primary jobs...encourage responsiveness to rules and authority, and acceptance of a firms goals (Reich 1973, 360). Subordinate primary jobs include blue-collar work in factories and most of government jobs. Secondary job...wages are low; turnover is high; and job ladders are few. Secondary jobs are mainly (though not exclusively) filled by minority workers, women, and youth (Reich 1973, 360).

Lee 15 Their theory recognizes that labor market segmentation is a core feature of capitalist hegemony. Labor market segmentation arose and is perpetuated because it is functional--that is, it facilitates the operation of capitalist institutions. Segmentation is functional primarily because it helps reproduce capitalist hegemony (Reich 1973, 364). Without labor market segmentation, capitalism would not function as it does. Capitalism is operates on separating people into different divisions and classes of labor in order to maintain its order. This theory recognizes that race plays a role in market segmentation. While minority workers are present in secondary, subordinate primary, and independent primary segments, they often face distinct segments within those submarkets. Certain jobs are race-typed, segregated by prejudice and by labor market institutions (Reich 1973, 360). The theory argues that race further segregates labor even within already segmented markets. However, some scholars like Bohmer believe that the most prominent market labor segmentation theories do not sufficiently integrate the racial discourse. The principal weakness of labor market segmentation theory--one admitted by its adherents--is the absence of an explicit theory of racism (Bohmer 1998). Race clearly plays a role in the income difference even between black and white workers in independent primary labor segment. Therefore, a theory of segmented or dual labor markets can complement but not supplement a theory of racism (Bohmer 1998). The big presence of racial discourse cannot and must not be minimized or simplified by the theory of market segmentation. Bohmer also rejects the simplified notion that individual racism dominates market segmentation. The role of race in market segmentation is much more institutional than mere personal discrimination. This theory is not dependent on assuming--as the neoclassical theory does--that employers have an unexplained taste for discrimination (Bohmer 1998). He points out that this institutionalized racial market labor

Lee 16 segmentation is problematic because of the low possibility of an individual moving from a market segment to another. Central to labor market segmentation theory is not just the clustering of jobs into three categories, but also the lack of mobility for employees from one segment to another. (Bohmer 1998). Bohmers racialized analysis on market segmentation provides a solid perspective through which the role of the worker cooperative model could be examined. The worker cooperative model does not necessarily support workers of marginalized racial groups in moving up from secondary labor market to primary labor market. While worker owners of a racial minority cooperative may learn business skills through the collaborative management of their cooperative, they will still have to do the work of the secondary labor market, which is typically the case for racial minority cooperatives that are mostly likely in service industry. However, operating a worker cooperative means participating in the work of both secondary and primary labor. The worker cooperative model, in fact, breaks down the division between different segments of labor. Race-based worker cooperatives do not merely serve to advance marginalized racial groups into primary sector, but more importantly create a new space where the capitalist segmentation of labor is largely absent.

V. Worker cooperatives and Race Considering the relationship between capitalism and eurocentric idea of race as explored previously, the worker cooperative model touches on the structural racial hierarchy in capitalism, with its role of decentralizing and distributing power from investors and owners to laborers. Worker cooperatives, while existing in many varying forms, are for-profit business entities where all workers have one-person one-vote decision power, own most of their business, and receive dividends from their own businesss profit. It is a form of business that removes the

Lee 17 hierarchical nature of operating in a capitalist market: investors no longer own enough of the business to push it to become efficient by exploiting certain low-ranked workers, and no single owner or manager could easily fire workers or manage the operation of the business single handedly. In simple words, every worker in a business is a boss of their own. Some worker cooperatives have managers, but they are elected by worker owners who can fire managers if they are unsatisfied with their performance. This function of worker cooperatives addresses the racial hierarchy in capitalism within each worker cooperative by valuing all workers labor and opinions equally. It counteracts the structural force in capitalism that necessitates a racially unequal valuing of labor, such as an owner of a landscaping company gaining a disproportionate amount of profit from the labor of its gardener workers, who are likely to be people of color and recent immigrants. It also counteracts the division of labor within each worker cooperative by combining the administrative and physical labor-intensive tasks of an owner and a worker for worker owners. Everyone is an owner worker in worker cooperatives. The business is intentionally designed so that not one person only manages others or does the hard labor. In this way, borrowing the example of a landscaping company above again, every gardener would manage their own business operation, compensation, and the quality of work environment. However, the worker cooperative model does not itself de-segment the racially divided class of labor across different industries in capitalist market. It does not change the fact that the current capitalist market runs on certain racial groups being forced to do repetitive manual labor such as farming, cleaning, babysitting, food serving, and manufacturing. It does not support manual laborers to transfer out of their current line of work and pursue professional careers such as medicine or law. While worker owners could be considered to be eradicating labor segmentation with their acquiring of business management skills, they still largely remain

Lee 18 workers. The worker cooperative model largely maintains the segmentation of labor force created by devaluing the labor of communities of color and forcing the labor into unpaid or lowly paid work that puts them at a low position in or even outside of the conventional political economic sphere. Nevertheless, it could afford the worker owners an opportunity to create solidarity within their racial group and advance within their industry together. While the worker cooperative model may not enable migrant farmers to work in a white-collar informational technology industry, it may help support migrant farmers to co-own the farm with other migrant farmers and to no longer work under a white farm owner who may pay him less than a minimum wage for working overtime. By owning the farm on which he works, he would be able to protect the value of his work better than he could under a conventional capitalist business. In addition, he may be able to build solidarity with other migrant farmers of his race by owning a business together and increase the organized power and political voice of his racial group. For this reason, I purposefully chose to write about worker cooperatives among many forms of cooperatives such as consumer, producer, and purchasing cooperatives. In consumer cooperatives, workers do not own the business nor receive profits from the dividends they would have in a worker cooperative. Instead, consumers own the business and gain the power to achieve desired prices and quality on products they purchase. However, the role of consumer cooperatives becomes defunct when they begin to have too many consumer members, decentralizing votes to a degree where members do not actually have any power. This way, it is possible that it could deny power to both consumers and workers, functioning like a conventional capitalist food markets. In producer cooperatives, producers of farm commodities or crafts come together to take charge on processing and marketing their products in order to eliminate the fees

Lee 19 charged by outside processors. While this is a good model to demonopolize industries like agriculture where only a few who own a lot can survive the competition, it still only improves the efficiency of the business, not how workers are compensated. It does not decrease the gap between profits earned by owners and laborers. In purchasing cooperatives, independent businesses and municipalities are the member owners who join each other to increase their purchasing power to obtain a better deal on goods and services they need for the operation of their businesses. While it helps small independent stores to compete with large chain retailers, it still does not transfer power and profits from store owners to workers. ESOPs, Employee Stock Ownership Plans, are a capitalist form of business similar to yet very different from worker cooperatives. ESOPs allow workers to own a share of the business and have voting power proportional to the share they own. According to data from University of Wisconsin Cooperative Center, there were 12,000 ESOPs in the US by 2004. 95% of them were private firms whose median employee ownership percentage was between 30-40%. About 3,000 of all ESOPs were majority employee owned (Lawless and Reynolds 2004). ESOPs, however, have been criticized for their almost non-existent transfer of power through stock sharing, as each worker hardly receives enough stock to matter in voting decisions. A few stocks are distributed to many workers, resulting in each worker have no tangible decision power. The model also replicates the same capitalist system of investor owning the company, only that it allows workers to be virtually powerless investors. While the worker cooperative model is known for its ability to create a horizontal hierarchy in capitalism within workplaces, its impact on racial hierarchy of capitalism has not yet been fully explored by much of scholarly works on worker cooperatives. I aim to deconstruct the influence of racial minority worker cooperative model on capitalist eurocentric capitalist

Lee 20 hierarchy. I will mostly focus on the discussion of racial framework in the worker cooperative model. Despite the potential of the worker cooperative model to weaken capitalisms dependency on racial hierarchy, the worker cooperative movement has mainly been and seen as racially white in most Western countries whose population is no longer solely white. I insist that the worker cooperative model should expand beyond its current niche of mostly white population and that such expansion could be achieved by establishment of public policies that intentionally support the development of worker cooperatives owned by workers of color. Due to the eurocentric racial hierarchy built through colonization and globalization, workers of color are more likely to have less access to founding a worker cooperative. There may be hardships in finding initial capital funding, in seeking supportive network knowledgeable of the worker cooperative model, and in connecting with other workers of color interested in establishing a new model of economic production due to the isolation imposed by the capitalist market. As I will explain later in the paper, the functions of racial minority worker cooperative model are significantly different from those of capitalist ethnic businesses where a person of color owns the business and employs people of color. Capitalist ethnic business model retains its eurocentric capitalist hierarchy, whereas raced-based worker cooperatives do not. This maintained connection with eurocentricism in capitalist ethnic businesses demonstrates that this conversation on capitalist racial hierarchy is not only about the racial discourse; it is about capitalism and its deep dependency on race and power relations as a system in whole. Lastly, I will conclude with public policy implications from my analysis of racial minority worker cooperatives. The current year of 2013 is an exciting time to discuss worker cooperative policies in the United States. While this discussion has been slowed down since the failures of earlier

Lee 21 cooperatives and the fall of communism in the late 1990s, it has recently come back to a more mainstream political sphere. By 2004, there were approximately 400 one-person one-vote worker cooperatives in the US. The largest worker cooperative in the US is Cooperative Home Care Associates, a home health care agency in Bronx, NY with 780 employees (Lawless and Reynolds 2004). I will be analyzing CHCA further later. Most worker cooperatives in the US have about 20-200 worker owners. In 2011, Congressman Chatta Fattah from Philadelphia, PA has put on the floor of the House of Representatives a legislation named National cooperative Development, HR 3677 (US Congress). After a further theoretical and empirical discussion of worker cooperatives and race, I will address what this legislation means in the context of capitalism and race. I will also examine this legislation in the light of other legislations in Quebec and Italy, both of which are known to have been successful in developing worker cooperatives.

VI. Analysis of Marxist Thought on Worker cooperatives The philosopher Karl Marx is known for his criticisms against the worker cooperative movement for its inability to overthrow the capitalist system. He criticized the fact that worker cooperatives do not build broad enough solidarity to organize the laborers--the proletariats--to fight against capitalism and business magnates. He saw the insular nature of worker cooperatives as a movement which, having given up the struggle to overthrow the old world despite all the means at its disposal, prefers to seek its own salvation behind societys back, privately, inside the narrow framework of its existence, and which will thus necessarily come to gri ef (Wright 2010, 235). He believed that the worker co-operative model would not transform the whole system because they would be forced to compete within the capitalist market and on capitalistic

Lee 22 standards. His belief is indeed proven by a more recent example of Spains Mondragon Cooperative Corporation, the worlds biggest worker cooperative. Mondragon has been known for losing its fundamental characteristics of a worker cooperative, as it has disregarded the autonomy of its plant in Mexico by controlling and owning 60% of its operation, displaying a clear sign of becoming more like a typical international hegemonic capitalist. This is mainly attributed to its international expansion, having violated the cooperative spirit of remaining local. Mondragon, however, claims that such expansion was necessary to remain competitive in the international market (Errasti 2003). This raises the question of whether if it is feasible that worker cooperatives survive the globalized capitalist market without losing their characteristics. While the theoretical model of worker cooperatives intends to allow wage laborers to become the owner of their labor and not merely sell their time and labor to their bosses, it is controversial whether they can survive in a largely competitive capitalist environment. To save the industrious masses, cooperative labor ought to be developed to national dimensions, and, consequently, to be fostered by national means. Yet the lords of the land and the lords of capital will always use their political privileges for the defense and perpetuation of their economic monopolies...To conquer political power has, therefore, become the great duty of the working classes (Wright 2010, 236). Survival is difficult especially in the current environment of globalization, where large multinational corporations gain an edge to their competition in the market by outsourcing to countries where the labor is cheaper. Such outsourcing is impossible for worker cooperatives, which are entities that operate on the principle of local community trust and equal ownership. If a worker cooperative chooses to outsource, which many of them have done and are doing, then it wounds up becoming more capitalist and recreating a capitalist hierarchy where only the local

Lee 23 worker-owners have rights to equal power and compensation, whereas outsourced workers abroad become second-tier workers who have less power and less compensation. The same effect takes place when a hierarchy is formed among full-time and part-time workers. However, this may suggest that worker co-operatives are not meant to be expanded like multinational corporations. The strength of worker cooperatives, as I will describe with examples in depth later, come from community-based trust and solidarity. It is quite obvious why a worker co-operative would lose its solidaristic nature when it moves beyond the community from which it originates. Marx has had positive opinions on the worker co-operatives in the past. Once, he heralded the cooperative movement as a major achievement of the working class, of even greater significance than the passage of the ten-hour law (Wright 2010, 235). It is evident that Marx felt differently about two aspects of the worker cooperatives: its insularity and its ability change capitalist hierarchy within its own system. He recognized the unique ability of worker cooperatives to make profits from market opportunities within the capitalist market and yet internally operate away from the capitalist hierarchical structure that imposes devaluing of laborers over investors and owners. He saw that: by deed instead of by argument, [worker cooperatives] have shown that production on a large scale... may be carried on without the existence of a class of masters employing a class of hands... and that, like slave labor, like serf labor, hired labor is but a transitory and inferior form, destined to disappear before associated labor plying its toil with a willing hand, a ready mind, and a joyous heart (Wright 2010, 236). At the same time, he saw the need for the worker cooperatives to push for a nation-wide expansion of their movement, but he did not believe that such expansion could realistically take place. To save the industrious masses, cooperative labor ought to be developed to national

Lee 24 dimensions, and, consequently, to be fostered by national means. Yet the lords of the land and the lords of capital will always use their political privileges for the defense and perpetuation of their economic monopolies...To conquer political power has, therefore, become the great duty of the working classes (Wright 2010, 236). Worker cooperatives were often founded and operated on community trust that produced a desire for equality, which could not be expanded or relocated easily. Marx believed that the political force of the business magnates were too powerful compared to the efforts of worker cooperatives that were small-scaled and difficult to replicate. However, after Marxs time, there have been countries like Italy and Quebec that have implemented public policies to support the proliferation of worker cooperatives, which I will address later. In addition, it is important to clearly re-examine the worker cooperative model with already existing capitalist public policies in mind. Currently, there is a heavily dominant system supporting the maintenance of the capitalist market, with countless public policies that are in place to support capitalist businesses. It is obvious that capitalist businesses would thrive more than it would have without the strong support from public policies all over the world. Alongside it, it should be recognized that there are virtually no public policy that systemically support racial minority cooperatives. Racial minority worker cooperatives have proven their ability to empower racially marginalized population in and outside their cooperatives, as I will demonstrate through examples later. It may be plausible that the racial minority worker cooperative model will prove more replicable and spreadable with the development of appropriate supportive public policies. Many former worker cooperatives could not avoid being sold out to conventionally capitalist companies. This issue raises a question on the purpose of worker cooperatives: is it the workers that worker cooperatives are primarily designed to benefit while they are in operation, and does it matter that worker cooperatives are sold to a capitalist at one point? This is an

Lee 25 interesting question to consider alongside the fact that capitalist businesses, too, rarely continue to exist for a long duration of time. Businesses go in and out of business. On the other hand, while worker cooperatives operation may have been more democratic, it is not clear if they can maintain their value as a medium to achieve an alternative economy if they are eventually sold to capitalists. For example, a plywood cooperative named Olympia Veneer Company was founded in 1921 in pacific northwest US but were sold to US Plywood Corp, a capitalist corporation, after 30 years of operation (Greenberg). With such termination through outsourcing to capitalism, it is questionable whether a more egalitarian world could be achieved through the worker cooperative movement. However, it should be recognized that worker cooperatives cannot counteract all of the effects of capitalism on social, economic, and political spheres. Worker cooperatives can change the disproportionate capital and decision power dynamic within workplaces and put a dent on the eurocentric racial hierarchy by enabling laborers to found a business together in the industry of their specialization. But worker cooperatives are still another model along with capitalist businesses that legitimizes ones social and political power based on the ability to work, while leaving out those who cannot find work or are unable work. It is important to avoid overestimating what the worker cooperative model can do and to learn what it actually can achieve. The impact of the worker cooperative model on the political stance of worker-owners depends on the presence of community-based solidarity. So far, a cooperatives political impact on its worker-owners has been dismissed as merely recreating conservative values of small business owners. However, such conclusion is attributed to the exclusion of ethnic worker cooperatives from the mainstream discourse of the worker cooperative movement. Many worker

Lee 26 cooperatives that are owned and managed by workers of color have generated an extraordinary sense of solidarity in their communities. A well-known interview-based study by Edward Greenberg on the worker cooperative Olympia Veneer Company criticizes that worker-owners become unemphathetic to workers outside their business who belong in the same socioeconomic class. The study indicates that worker-owners tended to lean toward conservative, politically right values such as devaluing of worker unions. As Greenberg concludes, without powerful countervailing forces to the market mechanism, democratic, self-managed enterprises drift inexorably toward enterprise egoism and membership behavior as collective capitalists (Greenberg 1986, 168). He asserts that worker cooperatives eventually become a tool for capitalism to expand further into parts of the society, like believers in the worker cooperative model, that attempts to escape the capitalist system. However, Greenberg seems to have overlooked the impact of eurocentric community presence in the formation and operation of Olympia Veneer worker cooperative. Olympia Veneer Company was built upon a sense of community-based solidarity between its worker-owners that was heavily and almost exclusively white and eurocentric. The majority were Swedish speaking Finlanders, with sprinkling of Swedes, Norwegians, Irish, English, and at least one Italian. Many of these were born in the United States although some were fairly recent immigrants (Plywood Pioneers Association 1969). All worker owners were US born whites, and even the worker owners who were not born in the US were Europeans. It is very important to consider the racial component of Olympia Veneer along with the root of capitalism in eurocentric racial hierarchy. Capitalism was founded on the basis of solidarity of the white community that invaded and disrupted the equality and freedom of people of color throughout colonization and globalization. Therefore, Olympia Veneer Company, as a white-

Lee 27 owned worker cooperative, still replicated eurocentric capitalist values in their cooperative, becoming collective capitalists, as Greenberg puts it. The case of Olympia Veneer, however, does not apply to all of the worker cooperative models. Instead, it clearly demonstrates the failure of majority white and non race-based worker cooperatives to pursue the ideals of the worker cooperative movement. Greenberg also incorrectly implies that those who devalue unions do not hold the ideals of the worker cooperative movement. Unions have a largely different dynamic than a worker cooperative, as unions assume a basic conflict of interest between workers and management. Worker cooperatives require workers to be owners and consider the well-being of the cooperative, including its financial and economic success. Greenberg concludes that worker cooperatives are a political deadend for a working class reform (Greenberg 1986, 168). Indeed, it is possible that the worker cooperative model could be a political deadend if the cooperative is not built on the solidarity in marginalized communities of color. It is plausible that cooperatives could be a tool for an expansion of capitalist values of profit, efficiency, and productivity to laborers who would otherwise be opposed to capitalism had they not been worker-owners who have stake in the business. However, such result does not pertain to a racially oppressed group of people who shares a sense of empathy, solidarity, trust, and accountability formed through the common experience of marginalization. As I will develop further later in this thesis, the impact of worker cooperatives owned and managed by racially marginalized communities is different from Greenbergs conclusion. It is also possible that worker cooperatives that are founded on ethnic empowerment may prevent the conversion of cooperatives into capitalist businesses. As Nembhard finds in her research, worker-owners of African American cooperatives often create for themselves more

Lee 28 permanent jobs with livable wages and benefits and have no desire or incentive to leave their communities (Nembhard). Cooperatives focused on ethnic empowerment may offer tremendous opportunities for local governments to provide chance for self-empowerment to those whose equality is often neglected and, at the same time, prevent local businesses from spilling out to other geographical locations. By the nature of being a racial minority cooperative, consisted of individuals marginalized and oppressed in similar ways in an eurocentric capitalist society, they are different from other cooperatives. Race-based minority worker cooperatives are more solidaristic than white ones or diverse ones that lack focus on destructing the eurocentric hierarchy in capitalism. Racial minority worker cooperatives are more community-based and harder to replace. Therefore, the local economy may be able to benefit in fold by preventing outsourcing, as racial solidarity-based worker cooperative businesses are more likely to stay local. It is a plausible alternative to many former racially non-solidaristic worker cooperatives that were forced to compromise their value of equality and inclusion by selling out to capitalist investors or by expanding internationally.

VII. Response to Marxist Thought on Worker cooperatives Worker cooperatives can be a very powerful tool to strengthen solidarity within workers of same race. As the Marxist criticism suggests, worker cooperatives characteristically cannot successfully integrate workers across different communities due to their operational synergy being inward community trust (Wright 2010). While none of Marxist thoughts on worker cooperatives do not at all focus on the issue of race, this suggest that worker cooperatives may not support building solidarity across different racial groups either. However, this insular nature of worker cooperatives must not be overlooked as a negative factor that entirely prevents any political progress against the capitalist structure of hierarchy. The insular characteristic, in fact,

Lee 29 can support the building of solidarity within a community primarily through economic and social bonds. This is especially empowering when it is difficult for a marginalized community to stick together in the isolating system of capitalism. When a worker cooperative is formed and managed by a marginalized racial group, all worker-owners are tied economically by the responsibility to make the business successful and prosper economically for themselves and for each other. They have the duty to make a working team that is good enough for the business to operate smoothly. The worker cooperative model also supports them to form stronger social bonds, as they are no longer put in a hierarchical relation but a solidaristic one. The formation of a worker cooperative by people of color in itself is a strong statement of solidarity against the traditional eurocentric hierarchy of capitalism. Worker-owners of color found their business in need of finding work away from the control of an owner who is most likely to be from a more racially dominant group. This sense of racial solidarity is indefinitely stronger than the ties in conventional capitalist market where the expression of common experiences of oppression is easily decentralized and jeopardized.

VII.i. Conceptual Evidence of Racial Solidarity in Worker cooperatives Marginalized racial groups are often prevented from participating and voicing out in any public sphere. Their labor-intensive jobs often exhausts them with long hours of work. Their vulnerable position as a hourly wage laborer prevents them from speaking out about discrimination and hardships. Capitalist businesses often decentralize, isolate, and silence workers to a point where any kind of community organizing--political, social, economic-become much more difficult. The worker cooperative model provide opportunities for solidarity and empowerment for racial minority groups who are prevented from participating in a public sphere due to their position in the economic sphere. In fact, the model provides a new public

Lee 30 sphere that is separate from the eurocentric capitalist sphere. As worker owners choose to manage a business with others of the same race and gain their own narrative from their solidaristic experience of working together, a new public sphere, alongside a new solidaristic economic sphere, is created. The worker cooperative model is more than worker owners gaining control of a business internally. It provides a safe space for otherwise oftentimes abused workers to be able to guarantee themselves their rights to equal treatment, to a safe workplace, and to be respected with their opinions. It creates an alternative public sphere. The theorist Nancy Frasers work affirms the role of creation of multiple public spheres in supporting the empowerment of marginalized populations. She recognizes that the hegemony of one dominant public sphere is harmful for anyone who does not fit the norms and standards of that sphere. Fraser points out that where societal inequality persists, deliberative processes in public spheres will tend to operate to the advantage of dominant groups and to the disadvantage of subordinates...these effects will be exacerbated where there is only a single, comprehensive public sphere (Fraser 1997, 81). Her work perfectly fits in the context of this papers discussion on capitalism and race. The eurocentric hierarchy of capitalism remains one dominant public sphere, but multiple public spheres can be created to support those who are not supported by the dominant public sphere. Fraser begins her argument on multiple public spheres by analyzing the sociologist Jurgen Habermass work on public sphere. She points out that Habermass account stresses the singularity of the liberal model of the bourgeois public sphere, its claim to be the public arena in the singular. In addition, his narrative...casts the emergence of additional publics as a late development signaling fragmentation and decline (Fraser 1997, 80). In this context, Habermass singular liberal model of public sphere is comparable to the Marxist argument against the insular

Lee 31 nature of worker cooperatives. Marx argues that worker cooperatives, while praiseworthy for their democratic internal operation, create a space outside the capitalist market that does not connect with the larger struggle of the working class. Habermas theory also portrays a political picture inevitably dominated by the bourgeois elites. Fraser criticizes that to view an alternative public sphere as less of a system would be to conform to the ideals of the singular, hegemonic bourgeois public sphere. Based on Frasers argument, the Marxist argument against the insular nature of worker cooperatives would be the one that conforms to the hegemony of capitalism. Fraser highlights that disregard for an alternative public sphere is informed by an underlying evaluative assumption, namely, that the institutional confinement of public life to a single, overarching public sphere is a positive and desirable status of affairs, whereas the proliferation of a multiplicity of publics represents a departure from, rather than an advancement toward, democracy (Fraser 1997, 80). Her elaboration of modern perceptions on progress on justice hits home for past arguments against alternative market systems like worker cooperatives. The worker cooperative model provides an alternative system that does not follow the eurocentric capitalist hierarchy and the advancement made in this system should not be regarded subordinate to those made in the capitalist market. In fact, she insists that it would be impossible to make quality advancement toward the ideals of democracy in the singular public sphere. The marginalized population would be less likely than otherwise to find the right voice or words to express their thoughts, and more likely than otherwise to keep their wants inchoate (Fraser 1997, 81). She argues that the dominant discourse in the singular public sphere would not cease to evaluate and build hierarchy based on the bourgeois standards. In this aspect, Fraser agrees with Marx that the dominance of the capitalist elites is powerful. However, Marx concludes that

Lee 32 worker cooperatives are too small and insular to change the capitalists way, whereas Frasers analysis on multiple public spheres aligns with the argument that that alternative means such as worker cooperatives are the only way change can be made without being subject to existing discourse of capitalism. Fraser proposes that subaltern counterspheres, parallel discursive arenas where members of subordinated social groups invent and circulate counterdiscourses, which in turn permit them to formulate oppositional interpretations of their identities, interests, and needs (Fraser 1997, 81). With only capitalism in place as a way of market exchange, those who are disregarded by the eurocentric capitalist hierarchy would not have the space in the public sphere to form their own ideas of how the economy and the market should be structured. But with alternative public spheres in place, they would have the space to not only form ideas on the market but also to actually establish and manage their own alternative workplace that supports their racial background, away from the eurocentric idea of race. Frasers theoretical discussion on public spheres rings true to the empirical research on immigrant businesses and their impact on economic bonds within a racial group done by the sociologists Portes and Manning. According to their study, immigrants to the United States struggled fiercely to preserve their cultural identity and internal solidarity. Their approach to adaptation thus directly contradicted subsequent assimilation predictions concerning the causal priority of acculturation to economic mobility (Portes and Manning 1986, 156). Unlike common expectations, immigrants do not advance through the economic ladder by assimilating to the culture of the United States. Immigrants adapt to the United States and advance economically by utilizing resources from their racial groups, what Portes and Manning call enclaves. Once an enclave economy has fully developed, it is possible for a newcomer to live his life entirely within the confines of the community. Work, education, and access to health care, recreation, and a

Lee 33 variety of other services can be found without leaving the bounds of the ethnic economy (Portes and Manning 1986, 161). Portes and Mannings research emphasizes the extraordinary strength of enclave economies that are bound by communities of racial groups. This institutional completeness is what enables new immigrants to move ahead economically, despite very limited knowledge of the host culture and language (Portes and Manning 1986, 161). Such enclave economy does not exist in the sphere of eurocentric capitalist market: The informal mobility ladders thus created are, of course, absent in the secondary labor market where there is no primary bond between owners and workers or no common ethnic community to enforce the norm of reciprocity (Portes and Manning 1986, 160). This norm of reciprocity in immigrant businesses and communities strongly convey that the focus in economic reform should be on multiple communities, not just the mainstream capitalist economy. It highlights that plural economic spheres are more empowering for a more diverse and wider range of population than a single economic sphere that is defined by a eurocentric idea of race. However, capitalistic ethnic enclaves are different from racial minority worker cooperatives, as they still recreate the eurocentric hierarchy within the marginalized racial groups. This demonstrates that racial equality cannot be achieved in a capitalist setting, proving the deep intertwinedness of race and capitalism. The nature of racial minority worker cooperatives and capitalist ethnic businesses are very different. While the capitalist ethnic business model supports racial minority workers to be able to work within their cultural community, it eventually demands that workers submit to the power of more Western and more adjusted people of color who are more likely to be a business owner. Like any capitalist businesses, a racial hierarchical structure can be observed in ethnic businesses, since most recent immigrants usually work for the business owners who are more adjusted to the mainstream eurocentric life of the host country.

Lee 34 Capitalist immigrant businesses are usually owned by a non-immigrant who shares the racial background with the immigrant community or by an immigrant who has been residing in the host country for a relatively long time. While the racial background is often shared between the owner and the workers, there is a sense of labor paternalism because working in the ethnic economy frequently entails the obligation of accepting low pay and long hours in exchange for on-the-job training and possible future assistance in establishing a small business (Portes and Manning 1986, 159). On a short-term, working in a capitalist ethnic business lends an advantage to recent immigrants since they are not required to learn the host countrys language to work and sometimes do not have to have a proper immigration status. Legal documents and language requirement are the primary reasons that prevent immigrants from being employed in the mainstream economy, considering that immigrants have had jobs in the mainstream economy in their country of origin. On a long-term, however, working in a capitalist ethnic businesses has negative effects such as low pay and long hours, often accompanied by poor quality of work environment and no guarantee of workers rights. While it is a possibility that immigrant workers may form connections within their ethnic community to help them establish a small business, it is almost impossible for the recent immigrants to accumulate enough capital to do so with their low pay. This shows the limitation of capitalist ethnic businesses in the eurocentric system of capitalism. While the ethnic enclaves assist immigrants adjustment in the host country, they do not provide strong opportunities for upward mobility that is comparable to working in the eurocentric mainstream economy. Such effect does not only limit to immigrant workers. Any worker involved in ethnic businesses faces the same effect. This phenomenon can be attributed to capitalist ethnic businesses inability to create a separate sphere of operation that defies the

Lee 35 same eurocentric order. On the other hand, the worker cooperative model provides the plural spheres that Fraser argues would provide a more supportive space for marginalized populations like communities of color. It has the potential to both offer solidaristic support to racially marginalized workers and guarantee equality at workplace.

VII.ii. Empirical Evidence of Racial Solidarity in Worker cooperatives Many empirical examples support that worker cooperatives founded and managed by workers of color can be a tool to achieve solidarity economy, decrease wealth disparity, restore social equity and inclusion, and prove economic sustainability of an alternative market system at the same time. Si Se Puede! We Can Do It! house cleaning service cooperative in South Bronx, NY has been successful with 37 worker-owners with $1.6 million revenues (Gotham Gazette 2011). As of 2012, they trained 17 additional workers to meet business demands (The Brooklyn Bureau 2012). The founding of the cooperative was financed by the New York City Council that provided a grant to a Sunset Park, NY local organization Center for Family Life, which then organized and supported workers to found Si Se Puede!. The Center for Family Life cooperative grant model is still in operation--it supports marginalized individuals to found cooperatives together and the cooperative either becomes successful enough to purchase their own office or go out of business (The Working World). All of its worker-owners are Latino Americans and some are very recent immigrants, mostly from Latin America. Instead of earning minimum wage, they now earn as much as $25 an hour (Gotham Gazette). The structure of the Si Se Puede! cooperative is rather horizontal. Every worker owner gets similar number of hours and pay. By founding and owning their own business, they have been able to profit more from their labor, instead of having middlemen from house cleaning agencies take profit from most of their labor. In the light of Portes and Mannings analysis of capitalist ethnic businesses, this cooperative

Lee 36 model is much more equitable than ethnic capitalist businesses, where workers may be able to stay in the community of their culture but may still be mistreated with lower than minimum wage and abuse. While the worker owners of the cooperative earn significantly more money than they have on their previous jobs, they still remain in the lower income bracket. The upward mobility opportunities created by the worker cooperative model should not be overestimated. The president of the cooperative, Yadira Fragoso, used to work 10 hours a day and made $250 -350 every week as a manager of Chipotle, and now she makes about $500 a week working only 2030 hours a week for 12 different clients (The Brooklyn Bureau). Nevertheless, as quoted above, worker owners are able to have time to take care of their children and are able to support them financially. As a worker owner, they are able to schedule clients on their own time with more flexibility than they would if they were working for a capitalist owner. It is significant that they have control over their own work life. In early 2012, the worker owners of the Si Se Puede! cooperative created their own environmental friendly cleaning products in order to improve their working conditions (The Working World). By doing so, they are able to reject the exploitation and abuse that eurocentric capitalist order imposes upon them. They own and manage their own labor in dignity and outpower the eurocentric capitalist hierarchy in solidarity with their racial group and within their industry of expertise. While operating and managing their own cooperative, worker owners also gain business skills, such as marketing, public speaking, advertising, and developing a business plan (The Brooklyn Bureau). As explained by Bohmers theory on labor segmentation and racism, this breaks down the barrier between secondary and primary labor segments. Racial minority worker owners, who would otherwise be limited to a secondary or subordinate primary subsector based

Lee 37 on their race, would be able to participate in both secondary and independent primary sectors through their cooperative. However, the role of the worker cooperative model should not be understood as a way for an individual to advance on terms of the capitalist market. It is not likely that a worker owner of a cleaning service cooperative could earn enough money to pursue professional degrees and become part of the white-collar sector dominated by eurocentrism. While business management skills would enable worker owners to participate in independent primary sector, it would be only within the world of race-based worker cooperative. Therefore, it would be true to state that racial minority worker owners are still limited by what Bohmer calls a subsector within labor segments. One should not believe that independent primary skills acquired from the cooperative would be easily transferable to careers outside the cooperative, in the traditional capitalist market. However, it is also important to take away the assumption that the purpose of the worker cooperative may not to support marginalized groups to excel in a eurocentric capitalist system. Racial minority worker cooperatives create a space where marginalized groups of individuals do not need to submit to a largely eurocentric market labor segmentation. This supports creation of the kind of safe space for which Frasers plural public sphere theory advocates. There is a connection between the separate economic and public spheres afforded by the worker cooperative model and the ability of worker owners to create a separate public sphere that better support their own full enrichment. Cooperative Home Care Associates (CHCA) is the largest worker cooperative in the United States that was founded in 1985, now successfully operating with over 1,000 members and revenue of $40 million. It provides high quality health aides, meeting the demand for quality home health care. The members are mostly African or Latino Americans. The cooperative was primarily founded to assist low-income individuals to obtain decent employment. It suffered

Lee 38 financially for the first two years, but it was supported by a nonprofit during that time and eventually become profitable. It has had some government and grant foundation support throughout its history. Workers can become worker owners with an equity payment of $1,000, often paid over the course of four years. Once a worker becomes a worker owner, they can participate in democratic managing of the cooperative by serving on the Board of Directors, the Worker Council, and Labor-Management Committee, becoming a union delegate, attending quarterly regional meetings, and annually ratifying the allocation of net income (American Worker Cooperative 2011). Most of these positions are filled by worker owners themselves, except the Board of Directors where 95% of 8 elected worker owners out of the total of 14 are board members. However, not all workers become worker owners, as only half of the workers-1,000 members out of 2,000-- become worker owners. While CHCA pays its lower income workers more than the typical market rate, its income distribution structure is not nearly horizontal. Low income workers are paid at 10-12% above market rate, administrative workers at market rate, and executives at less than market rate. The ratio between highest and lowest paid workers in this cooperative was 11:1 as of 2006 (American Worker Cooperative 2011). While there is a noticeable difference between the highest and lowest paid worker, it is much less than the ratio as high as 1,034:1 at Walmart (PayScale 2012). Nevertheless, 80% of their total revenue goes towards worker wage and benefits, which is also significantly high compared to capitalist businesses (Schneider 2010). All workers 401(k) accounts receive employer contribution in profitable years. All workers also have access to free tax preparation services that could help them gain Earned Income and Child Tax Credits. CHCA also offers all of its workers no-interest loans that average around $250, instead of the predatory payday loans. CHCA commits to offering a full-time job and schedules their workers for at least

Lee 39 30 hours per week if the worker has been employed for more than three years and has not declined any assignment to clients (Schneider 2010). CHCA is a unionized cooperative with SEIU local 1199. While both the worker owners and the board were pessimistic about unionization, it later became clear to both of them that unionization would empower workers to be able to change policies in the larger industry outside the cooperative (American Worker Cooperative 2011). The fact that CHCA has shown willingness to make an impact outside their worker cooperative through their union involvement proves Greenbergs and Marxs hypotheses wrong. Greenberg, after interviewing a heavily racially white steel worker cooperative in Olympia, Washington, had concluded that worker cooperatives make their worker owners lean more politically conservative and apathetic to their local community. Marx believed that worker cooperatives would not have an impact beyond themselves and that they would not catalyze nor join the broader workers revolution. At CHCA, the worker owners demonstrated their willingness to make their larger industry better for all workers and their rather progressive political orientation by joining the union. While the act of joining the union itself is not the only way to show their solidarity with the outside struggles, it is evident that they care about not only their local community but also the larger community of workers like them. This suggests that race has an active role in determining the political orientation of a worker cooperative for or against capitalism. This is quite convincing especially considering the organized workers against capitalism who own and work for Si Se Puede!, CHCA, and historical African American worker cooperatives, which I will explore now. Despite such potential for power and success in the creation of ethnic worker cooperatives, the worker cooperative movement have been dominated by racially white discourse, being known primarily as a white movement. Mainstream discourse on US worker cooperatives

Lee 40 has excluded the African American tradition of cooperative business so far. The work of Jessica Gordon Nemhbard demonstrates that the history of African American worker cooperatives begins way back from the time after the Civil War. The first African American worker cooperative, Chesapeake Marine Railway and Dry Dock Company, began after the American Civil War of 1861-1865 when Black stevedores and caulkers founded their own cooperative shipyard in order to protect their jobs, safety, and standard of living because White carpenters boycotted shipyards with African American caulkers (Nembhard 2006). In 1932, the Consumers Co-operative Trading Company was founded by an African American community during the depression in Gary, Indiana. It started with an African American principal in a local high school who saw the need for cooperative economics in his African American community. It operated a grocery store, a branch store, a gas station, and a credit union. By 1936, the cooperative was considered to be the largest grocery business operated by Negroes in the United States with total sales of $160,000 (Nehmbard 2006). With the momentum from the rise of the Black Panther Party in the 1960s, the Federation of Southern Cooperatives/Land Assistance Fund was founded in 1967. It was a network of rural farmers cooperatives, credit unions, state associations of cooperatives, and cooperative centers in the southern US to support land-based economic development for low-income African American communities through cooperative development and saving Black-owned land (Nehmbard 2006). In more recent years of 1966, women in sharecropping families in Alabama founded Freedom Quilting Bee of Alberta, made and sold quilts, and bought 23 acres of land to sell it to sharecropping families who had been evicted from their homes for registering to vote and participating in civil rights activities (Nembhard 2006). Their cooperative business was a tool they used not only to provide for their families but also to empower and liberate their

Lee 41 communities. Such self-initiated worker cooperative model serves marginalized communities and [those who] were not being served well or at all by prevailing market forces or government agencies. They needed to generate income and build assets and generally have control over their own economic lives and their communities (Nembhard 2006). This history reaffirms the power of ethnic worker cooperatives to create new economic, political, and social spheres in which marginalized racial groups can flourish. African American worker cooperatives were able to protect the economic value of their labor despite the racial discrimination. They were able to gain political power together by pulling together their economic gains to support African American individuals outside their cooperative. In the process, they also gained agency over work, dignity, and solidarity with fellow African Americans in the cooperative. Based on examples of successful ethnically empowering cooperatives in the US, it seems that cooperatives best provide racial solidarity and empowerment when they are entirely initiated by a group of people who share similar racial backgrounds and work industry. There have been many successful African American worker cooperatives that could not possibly all be described in detail here: Bricks Rural Life School, Tyrrell Countys credit union, Young Negro Cooperative League, Black Panther Partys cooperative bakeries, SSC Employment Agency, and APR Masonry Arts Corporation. It is clear that there has been a long, successful, and diverse history of worker cooperatives of people of color that has been explicitly excluded from mainstream discourse on the worker cooperative model. Indeed, it is demonstrative of this remaining sense of eurocentricism in the mainstream discourse that the established international worker cooperative principles that widely dominate the ideals of many worker cooperatives are based on an overwhelmingly white worker cooperative model in Rochdale, United Kingdom, a place in Europe.

Lee 42 An example of a worker cooperative in Italy, where worker cooperatives are supported by a well-established, supportive system of public policies, show that eurocentric policies on worker cooperatives will still fail communities of color. Worker cooperatives owned and managed by people of color are by nature different from racially white worker cooperatives. While ethnic worker cooperatives defy the structure of eurocentric hierarchy, majority white-owned worker cooperatives reinforce the capitalist hierarchy. Zappettificio Muzzi, an Italian worker cooperative that produces parts for agricultural implement makers in Imola, Italy, has no worker-owners who are immigrants, despite the fact that 30% of its workers are immigrants (Logue 2012). Such remains true despite the fact that its business operation has been successful, garnering $7.5 million in sales and exports about 55% to the European Union, India, and Africa (Logue 2012). It is a typical worker cooperative that was shut by a capitalist owner in 1981 but was reopened by 25 employees who bought the company using the lump-sum unemployment pay from the Italian government (Logue 2012). Still, its worker-owner membership remains highly exclusive to nonimmigrants, with a high turnover among immigrant employees. In worker cooperatives like Zappettificio Muzzi, immigrants remain in the realm of capitalist hierarchy even when they are hired by worker cooperatives. On the basis of eurocentric idea of race, they are treated as disposable workers who are not given the opportunity to own the production of their labor. Despite the fact the business was democratically created by 25 Italian nationals who came together with their lump-sum unemployment payments supported by the Italian government, the cooperative is not democratic for a certain class of people--non-Italians. It is interesting to notice that both the Italian and African American cooperatives are similar in the homogeneity of the ethnic composition of their worker-owners. It supports the hypothesis that worker cooperatives are highly racialized and solidaristic by nature. However,

Lee 43 there is a clear difference between the two cooperatives that prevents the misunderstanding in how race plays a role in cooperative formation and operation. While the Italian cooperative do have need for the labor from minorities and immigrants and do hire them while not offering opportunities to become worker-owners, minority and immigrant cooperatives do not particularly have a need for labor outside their circle of industry and ethnicity. Worker cooperatives consisted of minorities and immigrants serve a different purpose of empowerment within the labor intensive industries in which they are usually most familiar. On the other hand, the Italian cooperative still maintains the hierarchy between different classes of labor, while keeping the benefits and power dynamics horizontal within a class of labor. In other words, capitalist racial hierarchy continues to exist in worker cooperatives as much as they do in conventionally capitalist businesses, as long as the worker cooperatives are not founded, owned, and managed by people of color. This leads to a conclusion that public policies intended to promote empowerment of the worker cooperative model should seriously consider that worker cooperatives will replicate the eurocentric hierarchy of capitalism if policies are not designed specifically to support people of color.

VIV. Conclusion & Policy Implications By investigating the root cause of capitalism in race, the purpose and the role of the worker cooperative movement can be re-evaluated. If worker cooperatives are to truly counter the capitalist hierarchy, they must address the eurocentric hierarchy of race. Without the racial component, worker cooperatives become another mechanism that expands capitalism in the disguise of a pursuit for equality. They become a tool that provide economic and political workplace equality to only those who are already at the top of the capitalist racial hierarchy based on their race. Therefore, the discourse on worker cooperatives need to confront the issue of

Lee 44 race. The study of public sphere politics reveals that the capitalist racial hierarchy can only truly be countered where there are plural public spheres for multiple communities, especially for marginalized communities such as people of color. The dominant presence of a singular sphere-capitalism in our context--will prevent communities of color from truly claiming equality. This demonstrates that there is a dire need for worker cooperatives that are owned and managed by communities of color. Except, there already are and have been such worker cooperatives in the United States. These worker cooperatives, however, are particularly difficult to replicate due to the initial capital and management skills problems that come with capitalist disadvantages faced by communities of color. In addition, they also often have not been well supported by public policies. This paper was originally intended to analyze the worker cooperative policies of Italy and Quebec, which are conventionally known to be successful, from a racialized framework. However, as there was a lack of political economy and critical theory work on racial minority worker cooperatives, I primarily focused this paper to study the impact of people of color worker cooperatives on the eurocentric racial hierarchy of capitalism. While this paper does not explore much of existing worker cooperative public policies, the implication of this theory on public policies is significant. This paper suggests that the worker cooperative model does not counter capitalism in any way unless it explicitly focuses on dismantling eurocentric racial hierarchy of capitalism. This suggests that policies of Italy and Quebec, known worldwide for having been successful at replicating and sustaining worker cooperatives, may not have been successful at all in countering capitalism by having conformed to eurocentric standards. While the dominant discourse on the worker cooperative model disregards capitalisms root in racial hierarchy, the success of worker cooperatives should be evaluated based on its ability to counter capitalist

Lee 45 racial hierarchy, for capitalism is rooted in eurocentric idea of race from colonization. For example, the New York City Councils targeted effort to develop worker cooperatives owned by workers of color effectively supported countering capitalism on the community level. Nevertheless, considering the relatively small size of the US worker cooperative movement, it is clear that initiatives like that of NYC City Council could be supported on a larger level to encourage the development of racial minority worker cooperatives. However, the House of Representatives bill National cooperative Development pursued by Representative Chaka Fattah that supports building of a national cooperative center lacks a focus on supporting communities of color and is similar to worker cooperative policies of Italy and Quebec that are still eurocentric. It only supports a eurocentric worker cooperative movement that is consequently capitalistic. The conclusion from my theory work on race and worker cooperatives is that the worker cooperative policy development must reject the discourse of worker cooperatives that have been overshadowed by the eurocentric narrative of capitalism. It must defy the notion that most worker cooperatives are white, that the insular nature of worker cooperatives is bad for development, and that worker cooperatives are always a complete solution to capitalism. Future policies must intentionally support people of color to take advantage of the worker cooperative model, encourage the building of solidarity within marginalized racial groups, and recognize the limited functionality of the worker cooperative model as an economic reform. It is important to consider the limit of the worker cooperative model. Much of market inequalities impact political, economic, and social spheres, including those who are not able to or are prevented from participating in any market, capitalist or not. It is important to remember the population that would not be guaranteed various rights if only work status were to provide access

Lee 46 to social legitimacy and entitlement to equality. Additional public policy measures outside the cooperative movement are necessary to move closer to the ideals of the cooperative movement that promises not to leave anyone behind.

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Lee 48 Nembhard, Jessica Gordon. Principles and Strategies for Reconstruction: Models of African American Community-Based Cooperative Economic Development (Harvard Journal of African American Public Policy, 2006) 12. Nembhard, Jessica Gordon. 14 Micro-Enterprise and Cooperative Development in Economically Marginalized Communities in the US (2012) Quijano and Ennis. Coloniality of Power, Eurocentricism, and Latin America (Nepantla, 2000) 1:3. PayScale. CEO Pay in Perspective: Who Earns the Most Compared to Their Employees? http://www.payscale.com/data-packages/ceo-income (Accessed April 29th, 2013). Plywood Pioneers Association. Plywood in Retrospect: Olympia Veneer Company (1969). Portes and Manning.The Immigrant Enclave: Theory and Empirical Examples The Urban Sociology Reader (London: Routledge, 1986). Reich, Michael, Gordon, and Edwards. Dual Labor Markets: A Theory of Market Segmentation American Economic Review (May 1973) 63:2. Schneider, Stu. Cooperative Home Care Associates: Participation with 1600 Employees (Grassroots Economic Organizing, 2010) 443. Steinmo, Sven. The Evolution of Modern States: Sweden, Japan, and the United States. (Cambridge: Cambridge UP, 2010). US Congress. House. National Cooperative Development Act. HR 3677. 112th Cong., 1st sess. (2011). The Working World. Si Se Puede! Womens Cooperative. http://www.theworkingworld.org/us/si-se-puede-womens-cooperative/ (Accessed April 23, 2013). Wright, Erik Olin. Envisioning Real Utopias. (London: Verso, 2010).