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Socialist Studies / Études socialistes 12 (1) Spring 2017
Copyright © 2017 The Author(s)
Socialist Studies / Études socialistes:
The Journal of the Society for Socia list Studies / Revue de la Société d'études socialistes.
www.socialiststudies.com. ISSN 1918‐2821
Article
CO-OPERATIVE DEVELOPMENT, POLICY, AND POWER IN A
PERIOD OF CONTESTED NEOLIBERALISM: THE CASE OF
EVERGREEN CO-OPERATIVE CORPORATION IN CLEVELAND,
OHIO
JAMES K. ROWE, ANA MARIA PEREDO, MEGAN SULLIVAN,
JOHN RESTAKIS
Abstract
After the financial crisis in 2008 and amid growing concerns about
climate change, interest in systemic alternatives to neoliberal capitalism is
growing. This cultural shift helps explain the enthusiasm from political elites,
media, and academics that greeted the launch of Evergreen Co-operative
Corporation in 2009. Based in Cleveland Ohio, Evergreen is a network of
worker-owned co-operatives with scalability and replicability woven into its
design. But how warranted is the broad-based enthusiasm around Evergreen? Is
this a model that can be replicated across North America as its founders
suggest? Based on site visits and stakeholder interviews, we argue that there
are important limits on desires to reproduce the “Cleveland Model.” However,
its ambitions for scalability and replicability position it to contribute to the
important project of movement building that can facilitate the policy change
needed to scale up the co-operative alternative.
Keywords
Co-operative movement, co-operative policy, alternatives to capitalism,
Evergreen, worker-cooperatives
Introduction
Since its launch in 2009, Evergreen Co-operative Corporation, a network of
worker-owned co-operatives in Cleveland Ohio, has magnetized media, political elite,
and academic attention. Evergreen has garnered supportive coverage in the Economist,
Harper’s, The Nation, The New York Times, Fast Company, Time, and Business Week.
Sarah Raskin lauded the initiative in 2013 while she was serving on the Board of
Governors for the Federal Reserve System (Raskin, 2013).1 Ron Sims, then Deputy
Secretary for the U.S. Department of Housing and Urban Development, referred to the
1 Raskin is now Deputy Secretary of the Treasury.
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Socialist Studies / Études socialistes 12 (1) Spring 2017
Evergreen network as “brilliant” during a 2011 interview (Axel-Lute, Hersh, & Simon,
2011). Intellectuals on the Left have also been attracted to the initiative: Noam Chomsky
has celebrated Evergreen in interviews and public talks, and the initiative has been cited
by numerous academics as a hopeful alternative to the capitalist firm and its social and
environmental externalities (Maheshvarananda, 2012; Wolff, 2012a; Gibson-Graham,
2014).
Evergreen is currently comprised of three worker-owned co-operative enterprises:
Evergreen Laundry (offering sustainable and large-scale laundry service), Evergreen
Energy Solutions (designing, installing, and developing PV solar panel arrays), and Green
City Growers (a 3.25-acre hydroponic greenhouse that grows and sells leafy greens).
Evergreen was designed to capture procurement flows from area “anchor” institutions:
large hospitals and universities that are unlikely to leave the community, have a general
commitment to improving it, and can do so by leveraging their purchasing power in
support of local economic development (Wang & Filion, 2011).
While Evergreen currently employs approximately 120 people, the vision is that it
will become a large network of worker co-operatives that can rejuvenate the depressed
regional economy in Cuyahoga County and inspire replications in other regions across
the United States. Evergreen’s key features are ensuring worker ownership, harnessing the
local wealth of anchor institutions, and prioritizing sustainable service delivery. The
initiative is designed with both scalability and replicability at its heart. Supporters refer to
Evergreen as the “Cleveland Model,” an approach that can be pursued in communities
across the country (Alperovitz et al., 2010). According to leaders with Evergreen, “What’s
especially promising about the Cleveland model is that it could be applied in hard-hit
industries and working-class communities around the nation” (Ibid).
Despite all of the (mostly laudatory) attention, the Evergreen case has not yet been
studied in a sustained way. Furthermore, there is a dearth of literature on co-operative
development in general (see Adeler, 2014; US Overseas Co-operative Development
Council, 2007). With this article we aim to contribute to the collective learning that can
happen from successful and failed co-op development experiments. Building this
knowledge is especially important at a time when heightened contestation over neoliberal
capitalism has intensified interest in the co-operative model (Restakis, 2010; Harrison,
2013; Cheney, Cruz, Peredo, & Nazareno, 2014).
Our primary finding is that Evergreen’s development depended on contextual
factors that might not be replicable: a supportive and wealthy community foundation and
champions within local government. The post-2008 period of contested neoliberalism in
which Evergreen emerged (discussed in the “context” section, below) created
opportunities for new alliances, as diverse actors were willing to consider alternative
economic models. These alliances were critical to Evergreen’s emergence, but similar
connections might not be available elsewhere. The fact that Evergreen’s start-up relied so
heavily on context-specific private and ad hoc arrangements suggests that more
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ROWE, PEREDO, SULLIVAN AND RESTAKIS: Co-operative Development, Policy, and Power in a Period of
Contested Neoliberalism
systematic, government-supported programs of financing and technical support are
needed if worker co-operatives are to thrive in North America. We conclude that bottom-
up, movement-driven action often precedes – and creates a climate for – policy change.
Our analysis therefore falls within the social movement approach to co-operative
development, which argues that robust popular movements are integral to successful
development of co-operatives and often predicate policy breakthroughs (Develtere, 1996;
Fairbairn, 2001; Diamantopoulos, 2012). While Evergreen’s replicability may be limited,
its social movement orientation and ambition to scale up the co-operative alternative to
neoliberal capitalism position it as a contributor to the important project of movement
building that can facilitate the policy change needed to grow the co-operative economy.
Methodology: “movement-relevant research”
To contextualize our case study we conducted an extensive literature review on co-
operative policy, focused specifically on co-op dense regions (see table 1). Our research
team then visited Cleveland in May 2013. We did site visits to Green City Growers and
Evergreen Laundry, interviewing management and speaking with employees at each
location. We also conducted semi-structured interviews with key actors involved in the
conception and implementation of the project. We sought from the outset to make our
findings relevant not only to academics, but also to practitioners in the co-operative
movement.2
We thus undertook this project as a form of “movement-relevant” research (Flacks,
2004; Bevington & Dixon, 2005; Dixon, 2014). According to Bevington and Dixon,
movement-relevant research “emerges out of a dynamic and reciprocal engagement with
the movements themselves. This engagement not only informs the scholarship but also
provides … accountability” (Ibid, p. 190). Our research team would like to see Evergreen
and the co-operative movement in general thrive, and this article is an effort to
understand the conditions that might enable this success. We believe, following
Bevington and Dixon, that this commitment to the co-operative movement does not lead
to bias, but instead adds incentive to provide the “best possible information” (Ibid, p. 192)
to movement participants and supporters.
Context: Co-op development in a period of contested neoliberalism
Interest in the “Cleveland Model” has cut across the political spectrum, coming
not only from progressive media and academics on the Left, but also from conservative
venues like the Economist and the Federal Reserve Board. Evergreen emerged one year
2 A member of our research team, John Restakis, is a leader in the international co-operative movement and
he helped shape our research design, interview questions, and analysis of findings.
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Socialist Studies / Études socialistes 12 (1) Spring 2017
after the 2008 financial crisis, during heightened contestation over the philosophy and
policy mix that has guided political economic affairs for the past forty years:
neoliberalism. Neoliberalism involves a significant reduction in the state’s social and
environmental welfare role coupled with an expansion in the state’s facilitation of private
capital accumulation (Harvey, 2005; Collard et al., 2016). While neoliberalism has been
consistently challenged since it arose in the late 1970s, contestation became mainstream
after 2008, as the financial crisis raised questions about the viability of under-regulated
financial markets and the growing inequality that helped fuel increased consumer
reliance on credit (Piketty, 2014). During this period, too, climate change moved into the
mainstream of political debate: in 2007 Al Gore’s film An Inconvenient Truth won an
Academy Award, and Gore shared the Nobel Peace Prize with the Intergovernmental
Panel on Climate Change. As Gore himself articulates, neoliberal philosophy and policy
has been a significant impediment to strong government action on climate change (Gore,
2010; Klein 2014).
This more mainstream contestation of neoliberalism – fuelled by economic crisis,
rising inequality, and climate change – has not facilitated the emergence of broadly
accepted alternatives, leading some critics to worry about a “zombie neoliberalism” that
will not die (Peck, 2010). While the post-2008 period of contestation has not enabled a
consensus solution to neoliberal capitalism’s contradictions, it has powered the search for
alternatives (Wright, 2010). Ideological perspective necessarily conditions the kinds of
solutions different actors seek and support. American political elites like Sarah Raskin
and Ron Sims, for example, are interested in innovative ways of addressing inequality and
ecological strain that leave in place the fundamentals of capitalism (e.g. private ownership
of key productive assets and the profit motive). Radical critics like Chomsky are
interested in systemic alternatives to not only neoliberalism but also capitalism itself
(Flanders, 2012). Co-operatives, Evergreen founders note, provide alternative economic
models that “cut across ideological lines – especially at the local level, where practicality,
not rhetoric, is what counts in distressed communities” (Alperovitz et al., 2010).
Evergreen, then, is an ideologically flexible initiative: an innovative market-based poverty
alleviation strategy or the germ of capitalism’s successor, depending on one’s point of
view.
While Evergreen has benefitted from the surge of interest in economic alternatives
post-2008, the whole co-operative movement is experiencing resurgence. The General
Assembly of the United Nations declared 2012 the International Year of Co-operatives.
The International Co-operative Alliance (ICA), an organization representing the global
co-operative movement, recently reflected that “rarely has the argument in favor of co-
operatives looked stronger” (2013, p. 2). Co-ops can be read as either an ethical
supplement to neoliberal capitalism, one that evens out its contradictions in distressed
communities, or they can be read as the basis for a systemic alternative. Leaders of the
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ROWE, PEREDO, SULLIVAN AND RESTAKIS: Co-operative Development, Policy, and Power in a Period of
Contested Neoliberalism
Cleveland Model explicitly subscribe to the latter, more radical view, even as they
strategically benefit from the former.
Evergreen is modeled after the Mondragon Cooperative Corporation (MC) in
Spain, which has long been a model for large-scale co-operative development worldwide.
Founded in 1956, MC is now a conglomerate including 110 worker co-operatives, and
employing more than 80,000 workers (Abell, 2014, p. 16). Mondragon does business in
manufacturing, retail, finance, and knowledge (research and development). As a worker
owned co-operative system, Mondragon has several features that distinguish it from
traditional capitalist firms: for example, a pay cap specifies that top earners with MC can
only earn six times the pay of those in the bottom bracket (Mondragon, 2015). By
comparison, CEOs for US corporations regularly make 400 times an average worker’s
salary – a rate that has increased twenty fold since 1965 (Wolff, 2012c).
Mondragon is one of the largest employers in the Basque region of Spain where it
is centered (Dewan, 2014). The Mondragon model is not without its challenges, including
the recent bankruptcy of Fagor, one of its larger companies (Alperovitz & Hanna, 2014),
but it remains an example of how co-operatives can operate on a large scale, produce
considerable wealth, share it equitably, and promote relative worker satisfaction. As such,
Mondragon is a longstanding inspiration for movements and intellectuals interested in
alternatives to the capitalist firm and economy (Gibson-Graham, 2006; Wright, 2010;
Wolff, 2012b). Replicating Mondragon’s successes, however, is no easy task. The region’s
political culture is an enabling factor: Basque country is home to a robust nationalist and
separatist movement, and considerable associational energy is generated from feelings of
marginalization at the hands of a dominant majority (Beland & Lecours, 2008).3 Political
culture supportive of co-operative development is not easily replicated, a fact that limits
the ability of the co-operative movement to transplant successes from one region to
another (see Corcoran & Wilson, 2012; Logue, 2006; Logue, 2009).
Evergreen has generated popular and movement excitement partly because it
appears to have successfully adapted the Mondragon model for North America.
Northeast Ohio is not home to a political culture distinctively supportive of co-operatives.
As Ted Howard, one of Evergreen’s leaders, told us, “Some people think there must have
been something about the Cleveland community that would welcome this co-operative
development, but it was a foreign concept” (T. Howard, interview, May 29, 2013). As we
learned, however, key supports were available in Cleveland – mainly a wealthy
3 The three regions with the highest levels of co-operative enterprise in the global north are all home to
influential nationalist movements: the province of Quebec in Canada, the region of Emilia-Romagna in
Italy, and Basque country in Spain. In these regions, a whole complex of factors have contributed to
political cultures amenable to co-operative enterprise, nationalist sentiment being one (MacPherson, n.d.).
Emilia-Romagna’s political culture, in particular, is more shaped by a history of strong leftist political
movements.
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Socialist Studies / Études socialistes 12 (1) Spring 2017
community foundation and champions in local government – that might not exist in
other North American communities.
The case of Evergreen Co-operative Corporation in Cleveland, Ohio
Cleveland is still struggling to recover from the economic decline that began in the
late 1960s. Once the fifth-largest city in the US and a center for manufacturing, Cleveland
was hit hard by forces of economic globalization and the deindustrialization they
brought. Plant closures, unemployment, and out-migration contributed to a depressed
urban economy. Between 1970 and 1980, the city lost 24 percent of its population, one of
the steepest drops in US urban history (Warf & Holly, 1997, p. 212). Those who left
generally had the means to do so, “with the poor, elderly, structurally unemployed, or
marginally unemployed remaining behind” (Ibid). White flight, the large-scale migration
of whites from racially mixed urban neighborhoods to more suburban regions, was also a
factor in the hollowing out of Cleveland (Song, 2014).
In the 1990s Cleveland began to slowly recover economically, and the city is
currently a hub for health care services, biotech, and polymer manufacturing (Kaplan,
1999, p. 192). The two largest employers in the region are the Cleveland Clinic and
University Hospitals, together employing 46,000 people (Suttell, 2014). Both institutions
are located in the Greater University Circle (GUC), an area four miles east of downtown
that is also home to Case Western University, the Cleveland Museum of Art, and the
Museum of Contemporary Art. While the GUC is an economic and cultural engine, it is
surrounded by seven low income and racially segregated (predominantly Black)
neighborhoods. The median income for households in these communities is $18,500; it is
$47,626 in the rest of the city (Cleveland Foundation, 2013). Unemployment sits at 24
percent, nearly three times the rate for the city at large (Ibid). The asymmetry between the
economic dynamism of GUC and the racialized poverty of its adjacent neighborhoods
points towards the unevenness of Cleveland’s economic recovery.
Evergreen finds one of its origin points in a larger effort undertaken by the
Cleveland Foundation (CF), a local community foundation, to harness the wealth of the
GUC for the economic benefit of the neighborhoods surrounding it. A product of
Cleveland’s wealthy past, the Cleveland Foundation is one of America’s largest
foundations, with an endowment of $1.8 billion. In 2005 it launched the Greater
University Circle Initiative, which sought to capture some of the $3 billion dollars spent
by GUC institutions each year for the purposes of local economic development (Ibid).
In 2006, India Pierce Lee, a program director with CF, heard Ted Howard from
the Democracy Collaborative (DC) give a presentation on his vision of community wealth
building. The Democracy Collaborative is a leader in the growing “new economy
movement,” which seeks systemic change by challenging the imperative for constant
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ROWE, PEREDO, SULLIVAN AND RESTAKIS: Co-operative Development, Policy, and Power in a Period of
Contested Neoliberalism
economic growth and by promoting economic equality and democracy (Alperovitz,
2011). The Collaborative defines community wealth building as “improving the ability of
communities and individuals to increase asset ownership, anchor jobs locally, expand the
provision of public services, and ensure local economic stability” (DC, 2015). A key part
of DC’s community wealth-building strategy is harnessing procurement flows from
anchor institutions whose deep rootedness in a community creates an incentive to
prioritize local economic development.
Ted Howard’s strategy for community wealth building mirrored priorities of the
Cleveland Foundation’s recent GUC initiative. Shortly after hearing his presentation,
India Pierce Lee invited him and DC to do a feasibility study for enacting their
community wealth-building strategies in Cleveland. The initial plan was to encourage
pre-existing Community Development Corporations (CDCs) to incubate new social
enterprises that could harness procurement flows, but no takers could be found. The plan
was too risky for local CDCs whose expertise was rooted in affordable housing
development (T. Howard, interview, May 29, 2013).
The worker-run co-operative model was a secondary plan that developed through
conversations between Howard (from DC) and John Logue from the Ohio Employee
Ownership Center (OEOC). Logue was a leading figure in co-operative studies and the
employee ownership movement. He had written on the successful models in Mondragon
(2009), Emilia Romagna (2006), and Quebec (Dubb, 2008); Evergreen was designed with
these models in mind, especially Mondragon. The final plan was for a network of worker-
owned co-operatives designed to capture procurement flows from anchor institutions,
especially strategic opportunities in the emerging green economy.
It is important to understand Evergreen in the context of the Democracy
Collaborative’s larger vision and work. The DC describes their mission as the pursuit of
“a new economic system where shared ownership and control creates more equitable and
inclusive outcomes, fosters ecological sustainability, and promotes flourishing democratic
and community life” (Democracy Collaborative, 2016). In 2015, DC launched the “Next
System Project,” (NSP) an initiative seeking to “launch a national debate on the nature of
‘the next system’ … to refine and publicize comprehensive alternative political-economic
system models that are different in fundamental ways from the failed systems of the past
and capable of delivering superior social, economic and ecological outcomes” (Alperovitz,
Speth, & Guinan, 2015). The NSP includes a statement signed by a broad assemblage of
the political left (e.g. John Bellamy Foster, Van Jones, Roxanne Dunbar-Ortiz). Position
papers on eco-socialism, commoning, and solidarity economics have been forwarded as
part of the effort to debate and actualize the “next system” (Next System Project, 2016).
Evergreen, then, should be understood as a local experiment in next system design. As we
unpack below, there are limits to Evergreen’s nationwide replication. But the movement-
building and systemic thinking that it is part of are crucial to the growth of the co-
operative economy, and the transformation of neoliberal capitalism.
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Socialist Studies / Études socialistes 12 (1) Spring 2017
Given Evergreen’s roots in the “next system” vision of the Democracy
Collaborative, it is surprising that it would attract support from the Cleveland
Foundation, a wealthy charitable foundation established by a banker and governed by
members of Cleveland’s economic elite. Indeed, once the plan for Evergreen was
finalized, the CF pledged $3 million of seed funding to the project (T. Howard, interview,
May 29, 2013). The Foundation’s support for a network of worker-owned co-operatives
reveals some openness among local higher-ups to the idea of systemic reform. India
Pierce Lee, for example, had previously held a post as a Director of the Empowerment
Zone with the City of Cleveland’s Department of Economic Development. Empowerment
zones are federally designated high-distress communities eligible for a combination of tax
credits, loans, grants, and other publicly funded benefits. At this post, Pierce Lee saw
millions of public dollars being spent on economic development – all of it directed to
employers – with minimal to zero effect: few new businesses, few new jobs created (Ibid).
Brenner and Theodore have described empowerment zones as “neoliberal policy
experiments” (2010, p. 413). Pierce Lee had experienced these experiments as failures,
and was keen to try the alternative that Evergreen represented. Similarly, Howard told us
how some CF board members raised ideological concerns over worker ownership, but
that a willingness to try alternatives prevailed (interview, May 29, 2013). Cleveland’s
painful history of de-industrialization, out-migration, and persistent racialized poverty
likely facilitated elite openness to new forms of economic development.
The Cleveland Foundation provided Evergreen with crucial seed funding and
technical support. “I cannot stress enough that without the people at the Cleveland
Foundation, Evergreen would not have happened,” noted Candi Clouse from Cleveland
State University’s Center for Economic Development during our interview (May 28,
2013). Replicating the “Cleveland Model” is challenging when an integral piece is a
supportive and wealthy community foundation. The current conjuncture of “contested
neoliberalism,” however, does make the availability of this support more probable.
Research by DC on foundations experimenting with funding alternative economic
development strategies (including support for co-operatives and employee-owned
enterprises) found examples in Atlanta, Denver, and Washington, D.C. (Kelly & Duncan,
2014). But the authors also note how “many community foundation leaders talked about
conservative boards, isolated from new ideas, who were reluctant to take up seemingly
risky new ways” (Ibid, p. 29). Popular and elite frustration with neoliberalism means that
foundation support for co-operative development is more possible than in previous eras,
but this support remains contingent on local circumstance.
Elite frustration with mainstream economic development mechanisms also played
a key role in the city’s support of Evergreen. While the Cleveland Foundation provided
seed funding and technical assistance, the city played a key role by helping to secure
financing. Tracy Nichols, Director of Cleveland’s Department of Economic Development,
had seen the plans for Evergreen and wanted to help finance it. Evergreen lost a bank loan
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Contested Neoliberalism
in the 2008 financial crisis and having the City’s support in securing financing was a big
step towards actualizing their plan. For Nichols, the fact that the Cleveland Foundation
was providing seed funding and logistical support helped legitimate Evergreen as a safe
bet for municipal resources. But what really attracted Nichols, she said, “was the fact that
they expected to hire people who were formerly incarcerated” (T. Nichols, interview, May
30, 2013). Indeed 62 percent of the workers for Evergreen Co-operative Laundry were
formerly in jail (Ibid).4 Nichols noted:
We have a huge issue in Cleveland, in regard to both poverty and
returning convicted felons to our community. When these people are
unemployed you have high amounts of recidivism and you are spending
taxpayer dollars for prisons and drug treatment or Medicaid. Or you can
spend a smaller amount up front to help a worker-owned business get
started that will employ and train those people with prison records.
(Capital Institute, 2011, p.7).
For Nichols, a project like Evergreen fulfills an important social function by providing
livelihood opportunities for the hard to employ, but can also save public money by
reducing outlays caused by recidivism. Like Pierce Lee of the Cleveland Foundation,
Nichols was frustrated by neoliberal forms of economic development focused on
attracting employers with tax breaks and other incentives, only to see them leave when a
better deal was offered elsewhere. As Nichols explained:
In economic development you create jobs by offering incentives to
companies to relocate and a company is here for 10 years and then moves
away, and you have to ask yourself, are these people measurably better off?
They had a low-paying job for ten years and they paid their bills but they
didn’t build equity … In a worker-owned co-operative everybody has to
agree to move the operations. And that’s unlikely to happen. (Nichols,
interview, May 30, 2013).
The frustration that both Nichols and Pierce Lee felt towards the economic development
status quo was an important element in the vital support Evergreen received from the
Cleveland Foundation and the City.
4 Once hired, Evergreen’s workers undertake one year of probationary employment before the membership
votes on their inclusion as worker-owners who will share in the co-operative’s profits (Capital Institute,
2014).
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Socialist Studies / Études socialistes 12 (1) Spring 2017
Accessing federal funds: The importance of alliances
All three Evergreen co-operatives are capital intensive. Without clear policy
frameworks for funding (e.g. the co-op loan fund managed by Quebec’s provincial
government; see table 1), putting financing in place required ingenuity. Evergreen is
almost entirely debt-financed. The majority of its funds have come from two federal
social financing programs: Department of Housing and Urban Development (HUD)
Section 108 funds, and New Market Tax Credits (NMTCs). Of the nearly $24 million that
have been raised from federal sources for Evergreen’s development, approximately $11.5
million came from HUD section 108 loans and approximately $9.5 million came from
NMTCs (T. Howard, interview, May 29, 2013).
The HUD Section 108 funds were established to provide communities with a
source of financing for “economic development, housing rehabilitation, public facilities,
and large-scale physical development projects” (HUD, n.d.) The HUD low-interest loans
were inaccessible without the City’s sustained help; funds flow through state and local
governments. Monies from HUD provided the core financing for the $17 million, 3.25-
acre greenhouse that now houses Green City Growers (Ibid). The greenhouse is located
on land that included residential housing prior to Evergreen’s development. Not only did
Cleveland’s Department of Economic Development play a central role in securing
financing, but it also facilitated the purchase of homes that needed to be demolished
before construction of the greenhouse could begin.
Unlike HUD Section 108 funds, New Market Tax Credits could be accessed
directly by Evergreen’s founders without the City serving as intermediary. But NMTCs
are also complex and would have been very challenging to negotiate without the
Cleveland Foundation’s technical assistance. “We call the New Market Tax Credits a full
employment program for lawyers and accountants,” reflected Howard “because there
are hundreds of thousands of dollars of fees” (Howard, interview, May 29, 2013). The
Clinton Administration launched the NMTC program in 2000 as a for-profit
community development tool. The goal of the program is to help revitalize low-income
neighborhoods with private investment that is incentivized through federal income tax
credits (CDFI Fund, n.d.).5 The NMTC program is meant to be a “win-win” for
investors and low-income communities, but investors win more, and at public expense
(in the form of forgone tax revenue). The NMTC program is arguably an example of
what Peck and Ticknell call “roll-out neoliberalism” (2002); they argue that the
neoliberal agenda “has gradually moved from one preoccupied with the active
5 Investors make capital available for community economic development, and receive a tax credit worth
nearly 40 percent of their investment over a seven year period (Community Development Financial
Institutions Fund, n.d.). Since NMTCs operate as loans, investors earn interest on the capital they make
available, in addition to the tax credits they receive (Ibid).
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ROWE, PEREDO, SULLIVAN AND RESTAKIS: Co-operative Development, Policy, and Power in a Period of
Contested Neoliberalism
destruction and discreditation of Keynesian-welfarist and social-collectivist institutions
(broadly defined) to one focused on the purposeful construction and consolidation of
neoliberalized state forms, modes of governance, and regulatory relations” (2002, p.
384). The NMTC program creates new profit opportunities for private investors at
public expense: the privatization of gain and socialization of loss common to neoliberal
economic policy. A framework that made federal loans available directly to community
organizations would arguably be more efficient and less bureaucratic. Lacking this
option, Evergreen’s founders pragmatically harnessed whatever resources they could
access.
Policy support for co-operative development
Evergreen’s emergence would have been greatly facilitated by policy mechanisms
that made financing and technical assistance more readily available. The international co-
operative movement has prioritized supportive legal frameworks as a key constituent of
co-op growth (ICA, 2013), but there is not a robust literature on policy support for co-
operatives. Supportive legal frameworks for co-operatives are a “deeply under-researched
area” (Adeler, 2014, p. 50). Based on our review of existing literature, however, we found
that there were six primary forms of policy support that have been successfully deployed
internationally: co-op recognition, financing, sectoral financing, preferential taxation,
supportive infrastructure, and preferential procurement. The most developed examples of
these policies are found in areas of dense co-operative concentration: the Basque region
of Spain, Emilia Romagna in Northern Italy, and Quebec, Canada.6 Below is a table
summarizing how these six policy forms are deployed in the co-op dense regions (table
1). The table is included to facilitate further research in the understudied area of co-
operative policy, and to clarify policy successes for organizers in the co-operative
movement interested in emulating them. In the next section we examine “private” or ad-
hoc versions of the policy supports that Evergreen used and explore what these
improvisations reveal about the legislative needs of the US co-op movement more
broadly.
6 Venezuela, under the leadership of the late Hugo Chavez, has recently emerged as another key area of co-
operative growth (Harnecker, 2009; Purcell, 2011). More research is needed on the Venezuelan experience
and the key role the state has played in expanding the sector.
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Socialist Studies / Études socialistes 12 (1) Spring 2017
Table 1. Characteristics of enabling policy environments, by region
Policy Forms
Spain
Italy
Quebec
1. Governmental
recognition:
acknowledgement of
the economic
development and
social justice benefits
of co-operatives.
Constitution (1978)
pledges to support
co-op growth.
Constitution (1947)
recognizes the value of
co-operatives.
Co-operative
Development Policy
(2003) notes that co-
operatives play a key role
in the economy and
affirms Quebec’s aim to
remain a leader in the
sector.
2. State Financing:
support in the form
of grants and loans
Not applicable
Majorca Act (1985) set
up two funds for
financing co-op
development.
Government of Quebec
maintains a robust low
interest co-op loan fund
for starts up and
expansion.
3. Sectoral
financing: legislation
that supports the
development of
financing
mechanisms within
the co-operative
movement itself
Federal Co-operatives
Act mandates an
indivisible reserve
fund.
Capital can be re-
invested or leveraged
for loans.
Solidarity Fund created
in 1992. Co-operatives
contribute 3 percent of
their profits to co-op
development funds
used to support growth
of the wider sector
Co-operative Investment
Plan (CIP) (1985) offers
members a tax deduction
of 125 percent for any
capital invested in their
co-op.
4. Preferential
taxation: tax code
changes that benefit
cooperatives
Corporate tax rate is
30 percent; co-ops
pay 20 percent (or 10
percent, in the case of
worker-coops).
Basevi Law (1947)
allows co-ops to assign
all their surpluses to
indivisible reserves
with large tax
exemptions.
Not applicable. Canadian
tax system does not
distinguish between co-
ops and other
corporations.
5. Supportive
infrastructure: state-
funded technical
assistance (money
ear-marked for the
technical side of
cooperative
development).
Co-operatives Act
requires that each co-
op establish an
education and
promotion fund. At
minimum, 5 per cent
of profits are to be
directed towards the
fund.
Co-operatives are
legally required to join
a co-op federation. As
such, federations are
well resourced,
politically strong, and a
key support for co-op
development.
Regional Development
Cooperatives (RDCs),
funded by the province,
(formed in 1985) support
co-op development.
6. Preferential
procurement: public
Basque Cooperatives
Act gives worker co-
Many municipalities
only accept bids from
Under developed.
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Contested Neoliberalism
Sources: Adeler, 2014; CCA, 2009; Corcoran & Wilson, 2010; Government of Quebec 2005;
Labelle, 2001; Logue, 2006.
Moving from private and ad-hoc to public and sustained
Of the six enabling policy forms, Evergreen has benefitted from private and ad-
hoc versions of recognition, financing, supportive infrastructure, and procurement. The
Mayor of Cleveland, Frank Jackson, and Ohio Senator Sherrod Brown spoke at the
opening ceremonies of Green City Growers. These high-level endorsements, while not
written into policy, conferred legitimacy and boosted media coverage. In terms of
financing, having a wealthy foundation backstopping the initiative was a crucial first step.
The Foundation’s support helped bring the City on board, giving the Department of
Economic Development the confidence to access HUD 108 funds to support the co-op.
As Nichols reflected: “the loans have some risk for us, but I know the Foundation is
backing this initiative, and I know they don’t want it to fail. They have money. I don’t
have to worry” (interview, May 30, 2013).
Without technical assistance from the Cleveland Foundation and the Ohio
Employee Ownership Center (OEOC), securing New Market Tax Credit funds would
have been even more of a byzantine process. Both the Foundation and the OEOC offered
legal support and co-op training respectively. The OEOC has received both state and
federal funding, but its state funding has been largely cut. Again, the technical support
Evergreen received was ad-hoc and private. Regularization of public funding for co-
operative development, as is the case in Northern Italy and Quebec, would greatly
facilitate US co-op development.
Evergreen is premised on harnessing procurement flows from anchor institutions,
but this approach relies on the enlightened leadership of the anchors – most of which are
private institutions and not subject to any public procurement policy, were it to be
instated. Fortunately anchor leaders in Cleveland support the plan to direct procurement
flows towards community economic development: as well as their contract with
Evergreen, they participate in a Community Benefits Agreement (CBA) recently
spearheaded by the City to promote local and diverse hiring in Cleveland construction
projects (Atassi, 2013). Civic and anchor leaders are committed to community wealth
building, but nurturing this support has been an ongoing process for representatives from
the Cleveland Foundation and the Democracy Collaborative. In spite of these alliances,
purchasing that
privileges
cooperative sellers.
ops preferential rights
in the cases of tie
bids.
organizations meeting
minimum
requirements of
disadvantaged
employees (co-ops
more likely to meet
criteria).
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Socialist Studies / Études socialistes 12 (1) Spring 2017
capturing procurement flows has been a significant challenge for Evergreen. For example,
until recently, Evergreen Laundry did not have a single contract with an anchor in
Greater University Circle.7 The anchor institutions are generally locked into long-term
million dollar contracts with their laundry services. Evergreen plans to forward bids when
contracts end, as was done with University Hospitals, but in the meantime has focused its
efforts on nursing homes and hotels. “We still have a long way to go in terms of really
capturing anchor supply chains,” said Howard during our interview (May 29, 2013).
The City of Cleveland has been supportive of Evergreen but has not yet directed
procurement flows its way. The City’s charter requires competitive bidding for its
contracts, with economic performance as the primary determinant for a successful bid.
Recent efforts, however, have sought to heighten purchasing flexibility to support broader
policy goals. For example, a 2010 ordinance gives a slight bidding advantage to local firms
and to companies certified for their use of green business practices, such as reducing
waste and energy consumption (Gillispie, 2010). Bidding advantages also exist for firms
certified as a small business or as a female-owned or minority-owned enterprise.
Evergreen is positioned to benefit from these procurement advantages in the future. Rules
to facilitate competitive bidding are meant to forestall cronyism, but they can also be a
barrier to social impact procurement efforts. Policy innovations that enable public bodies
to responsibly direct purchasing power towards community wealth building would
accelerate co-operative growth. Experiments by the City of Cleveland are promising in
this regard, and may become important policy supports for Evergreen’s growth.8
Evergreen has benefitted from ad-hoc and private versions of co-op recognition,
financing, infrastructure support, and preferential procurement. More regularized public
support in all six policy areas (table 1) would have made Evergreen’s founding less
dependent on contingencies and heroism and would smooth the way for replications in
other regions. Co-operative policy in the US is underdeveloped, especially compared to
the co-op dense regions. The US Department of Agriculture does offer grants to rural co-
operatives for technical assistance and product development (though these grants are
capped at between $200,000 and $275,000) (United States Department of Agriculture,
2015). A similar program focused on urban co-operatives would have been a helpful
funding source for Evergreen.
The Cleveland Model was enabled by robust foundation support and champions
in local government. There is evidence suggesting that in this period of contested
neoliberalism similar alliances might be possible elsewhere. In 2014, local governments in
New York City and Madison, Wisconsin approved initiatives aimed at financing the
7 University Hospitals recently signed a five-year laundry contract with the co-op (Friess, 2014).
8 There is the looming danger, however, that preferential procurement policies will get overruled by
international trade law. See McMurtry, 2014.
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Contested Neoliberalism
development of worker co-ops (Kerr, 2015).9 These local measures offer co-operative
recognition, financing, and technical assistance. At the state level, California has passed a
bill that establishes a legal form for worker co-operatives (Democracy at Work Institute,
2015). The bill offers official recognition by explaining the purpose and benefits of worker
co-operatives, and allows worker co-operatives to create voluntary indivisible reserve
accounts (Indivisible reserves are legislated in Spain and help generate sectoral financing).
According to Sushil Jacob of the Tuttle Law Group, who helped craft the legislation, the
long-term goal is to get tax credits for monies invested in indivisible reserve funds, as is
done in Italy (see table 1) (interview, November 17, 2014). Finally, the legislation allows
worker co-operatives to raise capital from “community investors,” a new legal category of
investor; worker cooperatives can raise up to $1,000 per investor, without registering
these investments with the state securities regulator (thereby substantially reducing legal
fees).
Federally, the National Co-operative Business Association is spearheading an
effort to pass legislation that would create a program within the US Department of
Housing and Urban Development to provide capital and technical assistance to co-
operatives. This program would be a much-expanded version of the USDA’s rural co-
operative development program; it would help with financing, not just technical support,
and urban co-operatives would be eligible. The bill has been introduced twice (in 2011
and 2013) but has not yet made it out of the House of Representatives (NCBA, 2013).
This would be a breakthrough piece of legislation; it would greatly facilitate co-operative
growth in the United States.
Mondragon, and the robust co-op sectors in Quebec and Emilia Romagna, have
all benefitted from supportive policy. But a crucial point that became apparent during our
literature review is that strong co-op sectors in these regions all preceded the policy
breakthroughs that enabled further sectoral growth. Adeler writes: “In the Spanish, Italian,
and Quebec examples, co-operative development was pursued by federations of co-
operatives, and co-operative groups or alliances, initially with little or no state support,
yet proved highly successful in producing an enabling environment for co-operative
development” (2014, p. 51). Policy change played an important role in facilitating sectoral
growth, but a robust sector was needed to win and keep these legislative victories in the
first place. This finding is aligned with the social movement approach to co-operative
development. According to Diamantopoulos (2011, p. 49), “Co-operative development
may benefit from supportive public policy and sound management but it necessarily
depends on concerted movement action to transform the field, periodically realigning
movement frames and resources to effectively focus on new opportunities and drive new
9 The Madison plan is to create a co-operative loan fund that offers low to no-interest loans.
Straightforward financing support like this would have made launching Evergreen easier (although its
capital needs were more substantial than what recent allocations in New York and Madison could cover).
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Socialist Studies / Études socialistes 12 (1) Spring 2017
campaigns.” The political muscle needed to pass co-op-supporting legislation first
requires a more robust national sector. Local policy change can precede vibrant co-op
movements, but movement building will be needed to win the state and national
legislation required to scale-up the co-operative economy. The Next System Project is
hopeful in this regard. While still a young initiative, it is beginning to assemble the
popular power required to push legislative and systemic changes that can facilitate the
scaling up of the worker-cooperative alternative that Evergreen represents.
Conclusion
Evergreen and its leaders have played a key role heightening the co-operative
movements ambitions for growth and power in North America (Abell, 2014).There are
efforts afoot to replicate Evergreen in Prince George’s County, MD; Rochester, NY; and
Richmond, VA. There is also a related model being experimented with in Cincinnati and
Denver: a partnership between Mondragon and the United Steel Workers (USW). This
new “union Co-op” model allows for co-op developers to benefit from the expertise and
capital of unions. New union co-ops being started in Cincinnati, for example, received
financing from a variety of sources including USW and the Greater Cincinnati
Foundation (Gilbert, 2015). Future research should track these cases of co-operative
development, as insight into the successes and challenges of these initiatives can help
facilitate sectoral growth.
Evergreen’s leaders are well aware of the challenges they face expanding the
network in Cleveland and sparking copycat co-ops across the continent. The Democracy
Collaborative hopes that publicity around the Evergreen story will increase popular
interest in co-operatives and ultimately grow the sector. At the same time, Howard noted
a disjuncture between attention Evergreen has received and the co-op’s actual growth: “In
some ways,” he said, “the story around Evergreen is more robust than actual fact”
(interview, May 29, 2013). Stabilizing the system in Cleveland is a crucial part of this
movement-building effort, as is managing expectations around replicating the model.
Evergreen CEO John McMicken recently said Evergreen has “closed the door down on
some of the hype while we focused on our operations and our staff and the health and
well-being of our business. We have to have a real story to tell, that we’ve launched
ourselves into consistently successful businesses. That has to be the focus” (Friess, 2014).
Our argument is that replicating the “Cleveland Model” will be challenging given
the serendipity that allowed for Evergreen’s emergence (the two central contingencies
being backing from the Cleveland Foundation and the City). This said, the period of
“contested neoliberalism” has increased popular and elite interest in economic
alternatives. Evergreen benefitted from growing fatigue with neoliberal economic
development in Cleveland, and co-op developers in other regions may find similar
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Contested Neoliberalism
openings. Evergreen’s growth locally and ability to become a replicable model nationally
faces significant challenges. Its efforts towards scalability and replicability, however, along
with the Democracy Collaborative’s larger effort to build popular power for systemic
change, are precisely what the US co-operative movement needs to become a stronger
political force, one capable of winning legislative change. For Howard:
It’s been harder than I thought, but I’m heartened we’re still here … We’ve
stabilized and we’re back on a growth curve, and I think Evergreen …
represents a possibility or hope for people, in a field where so much of
what people have tried has just hit a dead end. This has been a learning
laboratory. It’s been an experiment. I don’t say Evergreen’s the answer, but
I think it’s been able to unlock the imagination for people way beyond
Cleveland (ibid).
Ambitious co-operative development initiatives like Evergreen, coupled with self-
conscious efforts to strengthen the political power of the co-operative movement, are
needed to make the co-operative economy a viable alternative to neoliberal capitalism.
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