The Working World (TWW) is an alternative loan fund that supports worker run co-operatives and other democratic workplaces with micro-credit loans and technical support. They also refer to themselves as a “solidarity financial organization” which promotes community wealth maximization and worker ownership through loans to worker-run companies.

Annie McShiras talked with Brendan Martin, founder and president, and Ethan Earle, a board member, about the solidarity philosophy they use as an organized loan fund, their goal of maximizing community wealth through their loan funds, and the importance of building a “culture of belief.” She also reviewed the basic kind of work they do with them.

Working Worlds work

Annie McShiras (AMc): Would you like to give a brief introduction to who you are and what your organization does? Ethan, would you start.

Ethan Earle: I’m Ethan Earle. I joined The Working World (WW) originally as a volunteer and as an intern in late 2007, and I am currently a board member. I was formerly the U.S. director. That was between the end of 2010 and the summer of 2012. Before that I was a loan coordinator and loan agent for The Working World’s La Base Loan Fund in Buenos Aires, Argentina. from 2008 until I came to the U.S.

Annie: Brendan?

Brendan Martin: My name is Brendan Martin. I founded The Working World along with Avi Lewis and some colleagues in Argentina at the end of 2004. I’m currently the global coordinator.

The Working World came out of the documentary, The Take which was about the phenomenon of factories being reopened, or “recovered,” by their workers and put under democratic worker control as co-operatives. After meeting the director of the film, Avi Lewis (Naomi Klein’s partner), I went to Argentina with him and met a number of the people who had worked in or with recovered factories, and I presented the idea of starting the Working World (also called La Base). The Working World was to be an alternative financial organization that would both parallel and support the alternative production of the recovered factories. There was strong interest in the idea from people Avi and I spoke with, so in 2004, I moved to Argentina and lived there full-time for the next five years. In 2009, I began living part-time in Nicaragua to help set-up a second branch of Working World along with Emma Yorra, who began living there full-time. This new branch was intended to test out the applicability of what we did in Argentina in a totally different environment.

Most recently, in 2010, I started working with Ethan on opening up our third branch here in the U.S.

Annie: Could you give us your elevator pitch as to what The Working World does.

Ethan: The Working World is an alternative loan fund that supports worker run co-operatives with loans and technical support. I don't know if that was my best elevator pitch, but it’s a pretty good one.

Brendan: Yeah, we’ve had so many different ones and the concepts have developed. The one I'm thinking of now is a mouthful, but it covers the ground: we're a solidarity financial organization which promotes community wealth maximization and ownership distributed through solidarity loans to worker-owned companies. Our goal is to couple together the pillar of alternative production with the pillar of alternative finance in order to show the possibility of building a new economy.

Current projects

Annie: So you’ve told us about yourselves and how you came to be doing this work. Let’s shift to some of your current projects and how they show what your basic work is? Can we start with a brief summary of your very exciting breakthrough in Chicago—the grand opening of the New Era Windows Co-operative.?

Ethan: Well, a lot of people know the history of this factory, formerly known asRepublic Windows and Doors, which was closed in a financial scandal and subsequently occupied by its workers for illegal treatment in 2008. See This struggle actually captured the imagination of the country, which was going through its own financial scandal and economic crisis.

Brendan: In February 2012, the same workers who occupied and won their fight for fair treatment came to us for help to buy their old factory and re-open it as a worker-owned co-operative. Six months later in August we were able to invest $665,000 to buy the needed equipment and start the business.
It has taken an incredible amount of work and dedication on everyone involved to achieve this victory. To begin, the workers had to fight for the basic right to be at the table and buy the business. [See](http://www.thenation.com/blog/168727/workers-vs-investors-famous-windows-factory-danger-liquidation]. They then had to dismantle the old factory, move it across the city to a more appropriate and affordable space, and put it back together again piece by piece. Each of these steps the workers did on their own, and in the process they demonstrated incredible potential that had never been tapped in their old jobs.

Ethan: And Democracy Now recently did an interview with two worker-owners and Brendan right after the opening.

Annie: Guys, this is really amazing, but let’s get to the full story later in the second part because in this first part we want to cover the whole foundation of your approach to solidarity financing. Can we start with just some snapshots of some of your other current projects so we know the territory we are covering?

Ethan: Sure. I'll start. I’ve been working a lot with Sí Se Puede on a project to design their own green cleaning products. They came to us and said they’d like to make their own green cleaning products like another cleaning co-op in New York City, Apple Eco-Cleaning. Sí Se Puede members view this as a great multiple opportunity: to work in healthier ways, to provide healthier services to clients, and, if all of that works well, maybe to also improve their bottom line by bringing in new clients through the advertising. This would enable their co-op to create more jobs in their community. And a far off possibility is to sell their green cleaning products. And if that happens, maybe even spin off a production cooperative.

Annie: And what is The Working World's main focus in this project?

 Brendan: We've been working with a subcommittee to develop a long-term business plan and to begin implementing it. Those co-op members then take the results of our meetings back to the assembly. So far we've already rolled out their first 2 products: a wood cleaner and all-purpose cleaner.

 Ethan: We're financing the new products project. As with all the projects we work on, we only want the money to be returned if loan is actually able to generate revenue for the co-op. Right now, we’re sinking very little money into it, and it's been well worth it for us because it's a project with great potential.

In addition, we've been working from the tech side working out the kinks and getting the right sort of branding for the products, and helping with coordinating of the project. Aside from all of that is accompanying and just being there and really helping the women to believe that it's possible—keep that drive going.

Brendan: Our basic role is financing, but as an alternative solidarity financier, we have to be very aware to provide capital in a way that will help build economic power for people, not take it away, as mainstream banks so often do. In this case, as Ethan said, there's not yet much capital needed, so we’re not investing a lot at the moment, whereas a mainstream bank would be motivated to get the co-operative indebted as soon as they could if there was any profit for the bank to capture. At some point, though, a large investment could be very powerful for the co-op. For example, if Sí Se Puede decides to produce these products on a larger scale, then they would need a serious capital infusion for the manufacturing, marketing and distributing of the product. In this case, the capital could give them the potential to become a company generating significant wealth for the co-operative. If that opportunity arises, we’ll be there for them.

A fundamental principle is to make investment projects when the worker co-operative wants to grow or wants to increase their productive capabilities. We don’t make any investment, just those where the capital will create real growth and not create debt. When we do identify such a project, we work with the co-operative to design a plan and then help them see the plan through to the end. In the New York City region, we are doing this with a few other co-ops as well:Third Root, OccupyCopy, Bluestockings Bookstore and a women’s textile factory in Long Island.

Ethan: One other thing to add—and this is relatively new to us, that we began doing previously in Argentina and Nicaragua—is to help groups with their bylaws and more broadly with the formation of their co-operatives, even imagining on a more detailed level what that co-operative is going to look like. We do this also with co-operatives that are going through difficulties—trying to sort through what are the roots of those difficulties and how to resolve them. I think that's sort of becoming a role we’re taking on more and more.

Brendan: There are times when I sort of feel like a co-operative “counselor” or “therapist”—talking people through problems. For sure, co-operatives need therapy just the way a person needs therapy and couples need therapy. And the need to be able to say that when issues come up.

Our last project currently in the U.S, a very big one in this case, is the Republic Windows and Doors where we've put in over half a million dollars. It represents a lot of different people and organizations including the New Economy Network, which helped to promote it.

Loaning money, interest, and solidarity

Annie: How does WW handle charging “interest” for its loans. As a “solidarity loan organization” how do you do that with worker co-ops and other democratic workplaces?

Brendan: First, the idea is not to be a zero-interest loan fund. The idea is to cover our costs, to pay for our labor, and ultimately to be a sustainable part of the solidarity economy. We should cover our costs the same way the people at the Occucopy co-operative would say, “we’re giving you a piece of paper and some ink and some of our labor and that’s a total of 10 cents a copy.” So to cover our costs, we have to bring in income from on our loans.

Ethan: The reality is that our interest doesn’t cover any reasonable income at all. We’d love for it to, but we’re not there yet. It barely covers some secondary administrative costs and, say, financial transaction fees.

Brendan: One key in loaning money through a solidarity model is not just simply calling it interest and obscuring how it works and where it goes. Institutions like banks and loan sharks can make a fortune off of “interest,” but that is not a goal in a solidarity economy. We do a similar thing that Occucopy does with its print product: break what would look like “interest” into component parts and be very clear about what that includes—we’re charging in order to cover our costs, cover inflation, and cover the risks involved in all of the investments we are making. But we’re not doing is charging interest at a level which would generate massive returns or extract wealth from co-operatives.

Ethan: This is called disaggregating what interest really is. It’s a way of unbundling the black box rather than getting people to pay a bunch of interest and not knowing what it’s for or what it means. We’re building a mutual relationship explaining how the money they are paying in interest will be used. Saying, “Okay, the first point and a half or 2 that you pay back are to cover the inflation over the length of the loan.” If we don’t charge this, then the fund will get eaten up by inflation.

Then we go to the next component: “The next two to three percent is our historic loan loss rate as an organization.” So, you who are borrowing money for your single project will be doing your part to collectivize the losses of the loan fund across the entire community of co-operatives using The Working World as opposed to charging other projects disproportionately —

Brendan: those solidarity businesses who are taking on a higher risk for a project that is well worth doing —

Ethan: who have quote unquote a “higher risk profile.”

Brendan: There are additional factors involved with collectivizing risks. We only allow co-ops to pay us back from the profit a project generates. If one of them is a complete failure despite our collective best efforts—say, because of some “act of god,”—then maybe we’ll get paid back nothing. Or, if the project is sort of a marginal failure, we might get back 80% of the total amount we’ve loaned. Another factor comes because we also forgive interest when a project may have just barely paid itself off. All of these factors exist because of one of our fundamental commitments: to use finance to create wealth, and never to extract it from the communities it’s meant to serve.

Ethan: The last component is for eventually covering all of our labor and organizational costs. Our aim is to be able to do this with about 4-5%, though we are not there yet. But it is through this last component that we hope to grow more sustainable and self-sufficient as an organization.

So covering costs, inflation and the risk factors, all adds up to about five to nine percent.

Maximizing community wealth through a culture of belief

Annie: So, you have this commitment to collectivizing risk among all the co-operatives using The Working World loan fund. How open are people to it?

Brendan: One of the interesting lessons we've learned, and now it’s one of the more important things we can offer, is simply the belief that a new kind of economy, a solidarity or alternative economy, is possible. This doesn’t mean that all you need is heart and things will work out. You need at least as much hard work as you need heart.

It's not just about optimism, but so much of why things don't get done is that people don't think they can. In Argentina many of the first recovered factories took years to happen. But once they succeeded and people realized it was possible, things would happen much more easily in subsequent efforts to cooperatize a factory. There were times when it started taking only a matter of weeks. This wasn't just because the workers believed it was possible, it's also because people’s families began to believe, government officials came to believe, the police came to believe, judges came to believe. Even the neighbors near the factory who at first thought the takeovers implied violent revolution began to believe. In that context of belief, everything you wanted to do began easier.

Ethan: Right, it was a culture of belief.

Brendan: Once the takeovers became known, the reaction wasn’t, “It's a revolution! They’re taking over the factories! Communists are gonna behead us!” It became “Oh, the workers are running the factory, we’ve seen that, glad it won’t be idle anymore.”

And now, in the U.S., we have to believe “this is possible.” Now we’re bringing that lesson from Argentina and trying to bear witness to this potential and assure people “yes, this can work, you can do this.” And again, this is needed with would be worker-owners, but it’s also needed with the public at large. I recently had to talk an insurance company off a ledge who didn’t believe co-ops really existed and didn’t want to give New Era Windows in Chicago any coverage. So I put on my suit and became an advocate for the belief that cooperatives are possible. It's an odd job, but it’s a form of persuasion we’ve found to be very important.

Ethan: A culture of belief has to emerge here as it did in Argentina. It has to happen on several levels at the same time. If it were happening people would be understanding that co-operatives, etc. were viable models for doing business. Then there would be people wanting and trying to start more of them. And there would be more and more people who would buy from them, etc. And there would also be enough people who believed they could safely invest in these alternative kinds of businesses rather than put it all in profit-maximizing institutions.

Brendan: Right, when people here begin believing as they have in Argentina and Nicaragua, then it will be much easier for co-operatives or The Working World to thrive. So one of our basic activities is to show that these cooperative models can work, and to help stimulate that kind of culture to emerge.

Annie: So you think this could happen in the US?

Brendan: I think there are enough people in the various communities who would support our financing work if they believed their investments would really help build community wealth as well as give them a small return. Even if it begins with people just moving a small percentage of their savings from profit-maximizing investments into community wealth maximizing investments, that would have an enormous impact.

Annie: So it seems like there’s a sort of “win-win-win” dynamic in this approach, no? There would be the success of a venture you finance, and the growing of its local community’s wealth, as well as the sustaining of TWW to grow its loan fund for other alternative businesses.

Brendan: Very true. Because we only “win” if the co-operative succeeds, more revenue for them is also better for us, and the solvent fund is then also better for other alternative ventures. We need to sell this idea much better than we are. Unions, as one example, have billions of dollars that they keep with the most ill-reputed and anti-labor of investment. That same money is then put back into the very corporations that are trying to break their unions and turn them into wage slaves.

There’s lots of power in communities already if we could cultivate it, make people believe in it. But we don’t believe in just preaching about it, we want to demonstrate it. That’s why we created The Working World.

The conundrum: getting enough people to believe

Annie: So how do we get that culture of belief going here in the US?

Ethan: Since we are still new here in the States, we have to bootstrap. And we have a lot of companies, like most of the new start-ups. We need more money to help more co-operatives start, but, at the same time, we need a sufficient number of succeeding co-ops so that we can show that these alternative models work.

Annie: So where are you now in this bootstrapping struggle?

Brendan: Right now we are in a squeeze because that culture of belief doesn’t exist in any significant way in the States. We have proven this different economy can work in Argentina. Our job in Argentina was to prove that people could support those worker-run factories, since no financial institution on the planet was willing to give them support. Our job was to show that they could succeed if they could get adequate financing. And we did it. We can now show that well over 95% of our loans to recovered, worker-run factories them have been paid back. This can happen here as well.

But there are other beliefs that need to change too, like the myth that if you start a co-operative, you will have conquered strife and work will become a big love-fest. Or, our fetishizing of any one co-operative, so that if a cooperative fails, it suggests that perhaps worker co-operatives just don’t work period. We have to understand that the majority of corporations fail, and yet corporations dominate the planet. If we want to replace the corporate form, we better be able to stomach a fair amount of failure in the getting there.

So much is simply about education, building cultures of belief in alternative possibilities. To get traction around these ideas and possibilities, with people in the communities where co-ops and other kinds of businesses want to start-up.

Ethan: I think Brendan has given you a great answer that gets to the underlying issues. It’s a cultural problem that we’re trying to break through. Visibility is a part of that certainly, but it’s also trying to break through a certain mindset and a common understanding of how things should be. That investing doesn’t have to be just about profit maximization. That people can invest with their social values and put their money into low interest savings accounts that promote those values. That they’d be doing it because they believe it’s the right thing to do. So it all just comes down to culture. That means that a lot of our work in The Working world and all of the co-ops and solidarity groups is to show how these alternative forms of business can work. To do the public education part.

Everything challenging us is based on there not yet being that culture of belief. For example: Right now TWW couldn’t become solvent on interest alone even if we wanted to. We don’t have a big enough fund for it. Therefore, we don’t have enough money for staff, our US work has been all voluntary so far. Still, that’s not the fundamental problem. The fundamental problem is not enough people believing an alternative economy is possible. 

We’re proving that solidarity and co-operative loan funds can do these kinds of loans sustainably like a regular bank does, but that’s not enough to get people to support alternative businesses, a whole alternative economy. That’s why having people around, movement people, who keep saying in many different ways, “Hey! Look at these things! This works! It’s not a magic thing, maybe we should all put 5% of our money in an alternative financial organizations to build a different kind of economy.” It can’t happen without that kind of movement. The kind of work you all do in SolidarityNYC, getting people to realize these alternatives aren’t just in books. They’re actually here already. That map on your web site makes everything seem so real and present. Like, “Oh! It’s already happening.” That’s how we can build support.

Brendan: Yes, this is how we can find people who want alternatives but don’t yet know them or don’t believe they exist: “Oh, I didn’t know there was a shop down the street, so I’ll buy from them sometimes.” Or: “I’ll put some of my money into this fund.” It’s about finding people who want to participate in an alternative economy. You need people to participate in an economy to have an economy.

Ethan: For example, we’ve been starting to try to imagine using crowdsourcing by having a South Bronx fund or something dedicated to supporting the development of worker co-operatives in the South Bronx. I think things like that will be more successful if you already have the community of people who consider themselves a part of the solidarity economy or having already bought in. That’s the power of the belief thing. People have to believe that something is really real, that it is happening. That it’s legitimate. There are some threshold barriers.

Barriers

Annie: So, what would be a breakthrough point? Or, a key, concrete way to break through?

Ethan: Having a broad swath of people probably who already consider themselves to be members or sympathizers with the solidarity economy, and who want to put, on average, say 5% of their savings. Or, maybe a sliding scale percentage would be more like it. Because that’s how you grow these things outward. Becoming stakeholders in these funds—coming back to what Brendan was saying before about making this a real community of people that thinks of itself as such would be a real breakthrough.

Annie: And what are some specific things in the way of getting there?

Ethan: You have the collective action problems. You really need to have people who are willing to be the first people in. Who aren’t afraid to jump in and support things they believe in a meaningful way, and sort of take it on faith that other people will follow that lead and come in behind them as peers.

Brendan: Visibility. I meet very left-wing people who say things like, “I thought co-ops can’t work?” But then you find they are just going on something someone said at a party once or the like. It’s so important to get these stories of functioning alternatives out there.

Ethan: I think that’s also a broader problem here, the idea of consumption being the primary form of civic participation. I support consumption as one kind of civic participation, but I have big problems with the effort to sell it as the major way of being a good citizen, of participating in a democracy or engaging with your community. It‘s by definition incapable of breaking the stranglehold of consumerism and consumption on our world. As long as politics are defined by consumption, consumption in one form or another will continue to dictate the world around us. It just brings you into this very narrow way of looking at your relationship to the things around you in the world.

Annie: Are there policy issues that are in the way?

Brendan: Then there’s the big problem of resources. WW is mostly all volunteer, like many alternative business projects. It’s not at all like when someone starts a new bank. They can get money from a bigger bank. Starting co-operatives or solidarity businesses is usually a bootstrap thing. Its really hard and it takes a lot of sweat equity from the members. And we need that from supporters as well. Not just money from those who can give, but also time from those who can give that, specific skills and knowledge that people can help support with. That could be a different way of approaching people who want to support our work. We’re not building a small fix, we’re working on systemic changes, and that take deep, long-term resources and support.

Brendan: Yes, there are definitely regulatory issues. For example, we’re allowed to take tax-deductible donations and solidarity, zero-interest loans, but it’s much more complicated for us to pay out interest to people who are “investing” in our fund. Also, it’s very, very difficult to take on other bank-like functions, like serving as a savings bank on any serious level. The field is very much tilted toward the big banks, something you can see pretty easily through the last crisis and the banking sector consolidation in the past years. This something you can even ask successful credit unions about, how much harder it’s been for them.

Toward a tipping-point

Annie: So, overall, what I am hearing is that building the culture of belief and an alternative economy is a long, slow process. Is that right?

Ethan: Yes. We take an evolutionary perspective about the process, and that includes cobbling things together as we go. If you look into revolutions that seem spontaneous, you will usually find their antecedents stretching back for a long time. Then, suddenly, they hit a tipping point, and all kinds of opportunities break open.

I think solidarity economics is moving toward such a tipping point. We’re talking about a tipping point 20 years from now. Here’s a possible scenario. Just trying to imagine a “how it would happen.” It’s like we would be going along where there actually were enough local solidarity economies across the country for a big shift, but they still just weren’t visible enough. Then, boom! Maybe some laws got changed and in the ripple effects people in the US began to see big changes in a lot of economic and human relationships occur and that they were good. And exciting. And that they were just became very moving to a lot of people.

Brendan: That’s why steadily building the visibility of these alternative ways of doing business is so important. It’s how we will grow the network of people who find them useful and valuable, and who become interested in this work. Growing the number of those people will shorten the bootstrap period. A new solidarity company would be getting more customers, the new solidarity bank more depositors. There would be more people wanting to start various kinds of co-operatives. It’s literally just getting the necessary resources and hands and minds and hearts involved.

Ethan:I think there’s a lot in Park Slope Food Co-op’s model, about how they take and enable people to work for two hour and 45 minute shifts doing different sorts of work out in New York City communities. And I don’t know all of the details of this but I think it’s been about trying to help start up food coops in Brooklyn. But I think that there is real potential in that kind of thing.

Brendan: And there’s the time bank practice for getting people involved. Like letting people know about these opportunities. This and all the other ideas are essentially about creating community. So much will become possible as these communities emerge and grow and connect to each other.