Academic journal article Pepperdine Policy Review

Rust-Belt Recovery: The Cleveland Model as Economic Development in an Age of Economic Stagnation and Climate Change

Academic journal article Pepperdine Policy Review

Rust-Belt Recovery: The Cleveland Model as Economic Development in an Age of Economic Stagnation and Climate Change

Article excerpt


The economic outlook of the United States is dire. According to the U.S. Census Bureau's supplemental poverty measure, 16% of the U.S. populationnearly 50 million Americanslived in poverty in 2012.2 Perhaps even more ominous, poverty has not lessened even as U.S. Gross Domestic Product (GDP) has rebounded following the Great Recession (U.S. Census Bureau, "Supplemental Measure of Poverty" 2013). Concurrently, income inequality in the United States stands at a historic extreme with the top 10% of income earners taking in over 50% of pre-tax income in 2012 (Saez 2013). Such extreme inequality presents extensive policy challenges for both the goal of broadly responsive democratic governance (Gilens 2012) and community economic development more specifically (Choi 2011).

This challenge is made particularly visceral when considering climate change and issues of ecological sustainability (Hansen et al. 2013). Given this continued economic stagnation and the growing threat of ecological catastrophe, economic development models steeped in workerownership, which internalize a core ecological focus, have been regaining traction both domestically and abroad, including at the corporate level (Blasti, Freeman, and Kruse 2013). In this paper I analyze one of the most promising such experiments in the United States, the Evergreen Cooperative initiative in Cleveland, Ohio, also referred to as the Cleveland Model. I argue that the Cleveland Model, characterized by larger-scale, worker-and-community owned enterprises3 linked together by a nonprofit corporation, offers promising insights into how economic development can evolve in a manner that addresses both major economic and ecological concerns. I also discuss some of the major market pressures that such cooperative efforts face while operating within the existing global market economy, taking the Mondragón Corporation of Spain, the largest grouping of worker-owned cooperatives in the world and the key inspiration for the Cleveland Model, as an illustrative case study.

The Political-Economic Context

Before discussing the structure and trajectory of the Cleveland Model it's important to contextualize the political-economic environment within which it was bom and continues to develop. The Great Recession (2007-09) saw median net worth fall by nearly 40% in America (Bricker et al. 2012), and inequality actually increased during the ongoing "recovery" period. If we broaden our historic lens to the post-World War II era, inequality in America began expanding in earnest in the late 1970s (Saez 2013). From the perspective of democratic theory, it becomes important to understand the nuanced impact of inequality on public policy. It becomes imperative to understand whether wealthy Americans have more influence over public policy than less affluent Americans,4 and, importantly, if the policy views of the affluent differ significant from the less affluent; and, if so, do those differences prevent more equitable development in distressed communities? Understanding these questions is important if we hope to understand the broad-based public policies needed to address our major socioeconomic problems (e.g. high unemployment, inequality, low social mobility, and innovation to address major global challenges such as climate change).

Political science has made notable inroads in addressing these questions, and scholarship increasingly indicates that as inequality has grown, federal government policy has indeed corresponded much more closely with the policy preferences of affluent Americans than with the preferences of lowand even middle-income citizens (Gilens 2012). Furthermore, this shift has taken place despite a majority of Americans being both aware of the growing inequality gap and disproportionately considering it a "bad thing" (Drake 2013). And while data remains sparse on the specific policy opinions of the most affluent (e.g. the top 1% and, even more importantly, the top . …

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