Editors’ Note: The following interview with Gar Alperovitz serves this sector with a major challenge. Alperovitz believes that the ground we have lost in recent years with regard to our social contract provisions should alert us to the need for a broad new strategy. This strategy draws from previous eras in which a new form of social contract is experimented with before it is parried at a national level. In this case, Alperovitz focuses on the concept of ownership and wealth development, posing a more collective model against an individual model of ownership. Clearly, this kind of social experimentation is entirely native to us and in our imaginings, such activity could conceivably address and link many problems of social exclusion. But is this the way to go? To give us some additional perspective we have asked Rick Cohen, a veteran of community building work to comment; and to help make Alperovitz’s ideas a little more concrete, we have asked Bob Agres, of the Hawai‘i Alliance for Community-Based Economic Development (HACBED) to discuss a strategy they have pursued at both local and state levels.

NPQ: Please frame some of the issues related to what the political environment means for people who intend to strengthen their communities. Is there some other way that people should be approaching this work in these times?

GA: Broadly, I think we are going through a systemic crisis, not simply a political crisis. And by that I mean that the assumptions that people have had for the last three decades about the relationship between politics, social and economic programs, and the economy are now radically out of date. And I don’t think the pendulum is going to swing back in any serious way.

Three fundamental factors have changed the way in which the balance of power in the system is organized—irrespective of the current administration. The first major change in this country and many other countries is that organized labor, which is a key part of the political equation, has gone from 35.5 percent of the overall labor force to 7.3 percent in the private sector and is likely to continue to decline. This has shop floor implications, but more importantly it undermines one of the key factors that has balanced corporate political power at the national level—it has further weakened all efforts to enact progressive programming, and whether we like it or not, will continue to do so.

The second major change that I see is the change in the South. First, the civil rights movement changed the Old South, but thereafter the exploitation of implicit and explicit racial divisions has meant that the whole complexion of power in the United States has moved to the right. We have fundamental divisions in our society along racial lines, and this weakens the possibility for progressive social and economic programs of a traditional kind.

NPQ: Can you explain that a little bit further?

GA: Well, it’s very easy in one sense: If you look at the map, you can see that the heart of the red states is the old Confederacy. The organization of power by implicitly and sometimes explicitly dividing the races and splitting and conquering has been a mainstay of conservative politics since 1964. This is at the center of politics in the “New South.” The implicit and explicit exploitation of racial divisions, particularly in the South, has helped elect radical conservatives—and this in turn has produced greater support for greater conservative economic as well as social policies on the national level. The Bush era is no accident.

The third big change is that globalization is undermining jobs and strengthening the power of corporations as opposed to communities and workers all over the world.

Although I think that at some point there may be a Democrat elected president, in the near term I don’t think this would change the basic trend of growing inequality and difficulty in moving social programs though the federal government. So I think we are in for a long haul of things getting worse before they get better. However, I don’t think that this is the end of the story. I think we are building up to very serious times of potentially historic change.

NPQ: How did we end up here? Why could we not depend on the old political forces to move things back from the extreme directions in which they’ve moved?

GA: The truth is, what is called social democracy in Europe and what is called liberalism here and what is called the welfare state in general is in decline all over the world. There are very fundamental factors at work here. We are living in an era where the welfare state in general is under attack, but we have special conditions here that make it worse. We have had a very minimal welfare state to start with. At its maximum, the welfare state got to roughly 33 to 34 percent of the gross domestic product (GDP) whereas in most European countries it is in the 40 to 50 percent range. Every other advanced country in the world has healthcare programs or universal social services, but we have a weak welfare state historically—and the reason for that in significant part has to do with racial divisions, weak organized labor, the size of the country, and a variety of other historical factors.

Secondly, we have a very unusual kind of aberration at the heart of our politics. The South should always have been a conservative Republican bastion. For a century after the Civil War it happened to elect Democrats because Lincoln was a Republican. This aberration modulated things for a long while because the South would vote for Democratic presidents. That’s over, and we are back to deeply conservative politics in the South—which in turn translates now into national politics.

Finally, the decline of labor is really fundamental. It means that there is very little institutional capacity to politically balance the corporations. As I say, the model that we have grown up with, the social-democratic or “liberal” model, is in decline worldwide, and given our unusual history we are in greater and faster decline than most other nations.

This obviously means at some point we are going to need an alternative. I think we have to look at this time in history as a time of laying the foundations for something very different and very new, or else we are simply going to continue in a rear guard action as a resistance movement moving backwards as the deep trends get worse and worse. I have tried to sketch some of the outlines of both a near term and a long term alternative which seem to be emerging in my recent book, America Beyond Capitalism.

NPQ: Can you be explicit about what you think will get worse?

GA: Well, first, political power is not going to increase major taxation and will not significantly increase social programs. Discretionary domestic programs as a percentage of GDP have gone down 40 percent since 1981. Such programs now represent about 3 percent of the GDP, and the percentage is falling. That reflects the underlying power relationships. Many of the programs in this figure are unrestricted programs—the kinds of programs that people in the nonprofit sector particularly need to focus on and worry about.

In addition to that, the emerging problems with Medicaid and Medicare will obviously put additional burdens on federal and state budgets. And these levels of government, in turn, do not have a significant political capacity to increase taxes and revenues. That’s what I’m talking about—given the power shifts we do not have the potential for a viable political agenda that would allow us to swing the pendulum back—at least not very far. The squeeze is on and will continue for the next decade, at the very least. There are other problems as well. Union organizing, for instance, now faces enormous legal and administrative challenges. The emerging political-economic context will be markedly different from what most people have experienced in the past 20 or 30 years. It is a context of decreasing capacity to implement traditional strategies to achieve significant shifts at the national level. As I said, we may elect a Democrat, but I don’t think that the fiscal and political power trends will change much.

NPQ: How does this compare with other historical or major political and economic shifts we have experienced in this country?

GA: I’m a historian as well as an economist, and when things progressively get worse in this way it is often a prelude to a massive reassessment. I think we are at the beginning of this—an agonizing reassessment of how we understand and deal with the underlying problems facing this society.

Although I believe the old options are on the way out, let me emphasize that we nonetheless need to do everything we can to sustain as much of the traditional social program as we can. Working to hold the line on policy, and if possible, to achieve small gains, is very important. However, I think what we will get from this effort will continue to decrease and that the capacity to solve social and economic problems through traditional spending will also diminish.

NPQ: Based on your assessment, things are looking fairly gloomy. Do you see any long term hope?

GA: My own assessment is that there are two or three major emerging issues that suggest longer term hope. The first involves populist rather then liberal tax strategies. A populist tax strategy is one tha