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How socialists created a co-operative commonwealth in the American midwest

Joe Biden’s victory in the 2020 Presidential election is a victory for liberalism against America’s populist right but the struggle within the Democratic Party between its moderates, like Biden, and it’s progressives, like Sanders or AOC, now takes on a new dimension.

Even in ‘purple’ areas have appetites for new economic reforms with 60.8% of Florida voting for a $15hr minimum wage in November but to gain more electoral wins they might want to look to their history.

In the early 20th century, the socialist party gained some minority support under the banner of Eugene Debs. By 1912, more than 75 socialist mayors presided in 23 states but nowhere were socialists more influential than Wisconsin’s largest city. 

Milwaukee sent socialists to congress, elected a socialist city council and socialist mayors served the city for most of the period between 1910 and 1960. The progressives of today could learn some valid lessons from the Wisconsin city’s “sewer socialists”.

Socialists took power in Milwaukee thanks to a mixture of corruption and filth, the literal kind. The city’s sewer systems were a mess and the socialists ran on a platform of cleaning the city up metaphorically and literally. They gained a majority on the city council in 1910 and effectively cleaned up the city’s water and sewage system becoming renowned for economic competence and efficiency in the process. Time magazine reported that “Milwaukee became one of the best-run cities in the U.S.”

The Socialists also created the country’s first public housing project, raised the minimum wage for the city’s workforce and brought the stone quarry, street lighting, sewage disposal, and water purification into municipal ownership.

More extensive socialist reforms such as municipal ownership of the street railways and the electric utility were proposed but never implemented. Nevertheless, socialists gained a reputation for competent and non-corrupt governance.

Such a reputation for a progressive local governments would be a serious boost to progressive electoral appeal, especially as major parts of their policy platform calls for bold government interventions. 

The added issue here is the electorate are sceptical of the government’s ability to improve their lives, particularly the federal government. Only 41% of people trust the federal government to solve domestic problems. However, voters are more likely to trust local government action with  71% trusting the local government and 60% trusting the state government, these areas also have a small partisan gap when compared to other branches of government. 

If progressive could demonstrate their policies at a local or state level, where they could find greater support for their policies, it can then in time help them win federal elections using their previous success stories.

However, it wasn’t just a competent government that created success for the socialists in Wisconsin. The city’s political leaders helped form a co-operative commonwealth that improved living conditions for a variety of workers that were impoverished, creating a new alternative economy. 

The concept of co-operative commonwealths could be described as a network of cooperative businesses forming an ecosystem of mutual cooperation that offers a tangible, everyday life economic alternative that aims to gradually replace the capitalist economic order. 

In Wisconsin, this began with farming co-operatives. Spearheaded by Nordic immigrants, the 1910s saw 40,000 farmers in the region join these newly formed ventures. These organisations took two forms: producers cooperatives that together could bargain not to sell their products below a certain price and purchasing cooperatives that enabled farmers to bargain the price of fertilisers and equipment down by making joint-purchases.

It soon spread to other sectors with consumer owned cooperative stores, gas and electrical operations and banks (as credit unions) becoming established, where the surplus was distributed to ordinary customer members according to how much they had spent in the cooperative as opposed to disappearing to the pocket of capitalists in the form of profit.

These co-operative worked across industries through forming beneficial relationships with each other. A farmer could join a credit union to take out a loan to buy farming equipment from a hardware cooperative, that could help them improve the yield of their farms. They could then sell their produce through a farmers producer cooperative to a consumer owned cooperative store, enabling a virtuous cycle that grew into a cooperative economy.

One of the crown jewels of the ecosystem was the Co-operative Central Exchange, a network of consumer owned retail cooperatives established by 19 Finnish-Americans in 1917. It soon grew to become the largest of its kind in the country, with over 200 stores. The CCE’s purpose was to use economies of scale to reduce prices for members as well as facilitate trade between co-operatives. It also worked to overcome discriminatory credit practices practiced by the largest regional grocery and hard goods wholesaler, who restricted the extension of credit to the cooperatives at the behest of the privately-owned retailers who were competing with them.

Another great achievement was the Commonwealth Mutual Savings Bank, which was founded in 1912 and focused on providing mortgages for the ordinary working class residents who owned and managed it, while investing the surplus to municipal bonds. The bank survived for over 70 years, until it was converted into a conventional bank in 1983. 

This co-operative economy meant work that individuals own economic interests were tied with the good of the community, and the local cooperative economy prospered by retaining more of its members money circulating within it. The Upper Midwest still has a strong co-operative tradition, with over half of the largest 100 cooperatives in the country located within the midwest. Rural America still has numerous cooperative clusters where people earn, save and spend large parts of their money in the local cooperative ecosystem.

These ideas established a local link with the movement convincing voters by providing them with cheaper food, energy and fairer financial services. This translated to electoral success even in federal elections with the Socialist Candidate in the 1932 Presidential elections receiving their strongest support in Wisconsin. It differs from the progressive action of today as it goes beyond campaigning for a candidate during election times and instead encourages people to practise mutual self-help through direct, everyday participation that creates tangible economic benefits. These tangible economic benefits help attract those on lower incomes, who might lack time and resources to sacrifice for conventional activism.

The socialists came to end in the city thanks to a mix of more pro-worker Democratic politics and anti-communist sentiment but the socialist tradition survives. 

The socialists of the 20s and 30s called for intertwining individual interest and common good and not languishing in the petty attempt to benefit oneself at the expense of others. The noble ambitions to implement bold and radical ideas can more easily be achieved if citizens see these ideas helping them in their local communities first.

The potential for cooperative commonwealth is greater now than ever, as digital technology enables global, instead of just local, cooperation.

We at Mutual Interest are a living example of this – instead of Patreon, we collect membership fees using Open Collective, hosted by a democratically managed Platform6 cooperative development fund. This ensures the transaction fee does not enrich Patreon shareholders, but flows back to fund new cooperatives. Our website is hosted by Webarchitect Cooperative, and our decision making is done through Loomio, a tool for democratic decision making developed and hosted by a New Zealand worker cooperative.

Each member who joins us therefore not only contributes to Mutual Interest, but also enriches a wider ecosystem. And unlike the Mutual Commonwealth Savings Bank or Cooperative Central Exchange that were limited to their region, everyone in the world with an internet connection are just few clicks distance from joining. You can join here.

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