i read your "small is not beautiful" essay previously in an issue of *the baffler*, and was intrigued, but took issue with a lot of its conclusions. with some modifications, i still take issue with them...
In a message dated 9/27/00 2:19:07 PM Central Daylight Time, dhenwood at panix.com writes:
> Small business creates jobs, yes, but it also destroys them in large
> numbers, since small firms go under so frequently.
perhaps this is the case at present, but it needn't necessarily be. from some old notes of mine:
SHARE (Self Help Association for a Regional Economy): local nonprofit corporation to encourage small businesses producing necessary goods and services for the region (already used in Berkshires, Massachusetts), which works in conjunction with a local bank. Members open a SHARE Joint Account with bank. Small interest received from account, but small loans can be given at less interest. Person receiving loan must collect lots of references from community, and show that proposed business will serve community well.
SHARE
PO Box 125
Great Barrington, MA 01230 CELT: Community Enterprise Loans Trust (New Zealand), a charitable trust to promote and support small businesses and co-ops. Provides advice, runs training sessions, gives out loans. Funded by subscriptions from public, donations, and government. Borrowers must be willing to work closely and regularly with CELT during loan (85% of small businesses normally fail within the first 2 years; CELT businesses, funded by credit union and supported by local community, have a failure rate of less than 20%).
CELT
PO Box 6855
Auckland, New Zealand
the examples of the SHARE and CELT systems suggest to me an alternative model for "economic development" which is socially responsible (regulated by locally-controlled, democratic institutions which are accountable to the community) and productive (even by capitalist standards). if the statistics i jotted down are to be believed (they come from bill mollison's intro text on permaculture), such institutions would help small businesses to provide more stable and secure employment... and in the case of CELT, they also serve to promote the growth of cooperative, worker-owned and -controlled businesses, which are less often "nasty places to work" than their conventional counterparts.
> What about job quality? Let's start with pay.
start with pay, by all means, but don't finish there. what i mean is that you do well to address the overstated claims made for small businesses by conservatives touting a mythology of entrepeneurial capitalism, and an attention to blunt statistical realities like pay scales helps you to do this -- but that you seem not to engage some of the claims made by leftists on behalf of certain kinds of small business, which are more qualitative than quantitative claims. what i do hear folks on the left saying with some frequency -- and i agree -- is that living (and working) in a commercial environment solely composed of big chain stores sucks. the growth of the malls and the blighting of the commercial streets doesn't just affect peoples' incomes, it affects the landscape, and it changes the sort of experiences we have on a daily basis. what happens when more and more of our lives takes place in the private space of malls, and less and less in the public space of mixed commercial/residential streets? this is the way things are going, and it doesn't bode well for any projects of social transformation -- political movements gather in streets, but they don't gather in malls, or when they do they get thrown out with no legal fuss...
> A study by the U.S.
> Bureau of Labor Statistics (BLS) for 1995 showed little variation in
> pay for professionals and managers by establishment size, with small
> operations (those with fewer than 500 workers) paying 1% below the
> national average, and larger ones (1,000 workers or more) paying 2 to
> 3% above average.
>
> At finer levels of occupational classification, the differences were
> occasionally a bit wider, but not profoundly so. Differentials widen,
> though, as you move down the status hierarchy. Data entry clerks in
> small establishments earned 7% below the national average, while
> those in large firms earned 20% above. Gaps for janitors were wider,
> and those for labourers were wider still.
and yet clearly some "big" employers provide crappy pay, e.g. wal-mart, which is the beast that leftist supporters of "small business" typically have in mind. i think left-wing types are generally thinking about the threat posed by big-box stores like wal-mart to the retail environments of cities, to family-owned storefronts, that sort of thing, rather than some heroic image of the individualistic entrepeneur riding out on his horse to enlarge the GNP. it's demoralizing to watch a little mom & pop gardening/hardware store get plowed over to build an 80-acre strip mall anchored by a "sam's club." even people with few radical or even liberal instincts get angry when they watch that happen. suburbanites have been known to turn that anger into organization and action when they hear that (yet again) their local government has dished out subsidies to the big-box developers to help them wipe out whatever's left of the local small business storefronts. in some cases, they have been led to make critiques of the ideology and goals of "economic development" as practiced by said local government units, and even to propose institutional changes in the way decisions about development get made...
> As with pay, so with benefits. As of the mid-1990s, just 62% of
> full-time workers in small independent establishments (what the U.S.
> BLS calls plants and offices with fewer than 100 employees not owned
> by a larger entity) were covered by health insurance, compared with
> 77% of those working in larger operations; 42% of those in the small
> shops had a retirement plan of any kind, compared with 80% of those
> in larger ones. And as with pay and benefits, so with worker safety.
here you raise another important point, but rest in the assumption that employers are and ought to be responsible for workers' health insurance -- an assumption which naturally favors "big" employers, who are more able to bear that burden, at least given the way that health insurance is now delivered, which is another thing i'd like to take issue with. if health care was nationalized, of course, this point would be moot. short of that, it should be asked -- are there ways to make health insurance available to small business employees at low cost? could communities independently implement some sort of fair and appropriate means of getting small business workers access to health care, preferably with as little bureaucratic nonsense as possible?
> Why does size matter? Here the answers are a bit harder to come by,
> though there's no shortage of suggestions. It's nicer to work for
> small firms -- fewer rules, less hierarchy -- so they can get away
> with paying less (though large firms have lower quit rates than
> smaller ones). Large firms are more vulnerable to unionization, so
> they pay more to keep workers happy and organizers away (though the
> fact that the size effect prevails even among union workers calls
> this one into question).
another possibility: are there other modes of organizing that would make it easier for unions to penetrate small businesses? e.g., where commercial streets still exist, how about unionizing the street as a whole, rather than by storefront? have a district-wide union capable of responding to grievances brought up by workers at the movie theater, the furniture store, the music shop, the bar, the video rental, the restaurant?
> Small firms have less market power, so profit margins are thinner and
> they're under greater pressure to keep down costs.
sure -- but this assumes the level of competition that small businesses actually face. systems like SHARE and CELT are designed to alter that picture, to reduce the pressures of competition enough that the small businesses have more room to do things like innovate, give pay increases, allow unionization, etc....
> It's harder to
> supervise a large group of workers, so higher pay is an incentive for
> them to behave without the boss keeping an eye on them every minute
> of the workday (though the persistence of the size effect even for
> workers paid piece rates, where the wage is a direct function of
> productivity, calls this into question).
this part seems questionable to me. big businesses have a much larger budget for surveillance than typical small businesses, don't they? i don't just mean cameras, i mean layers and layers of administrators, managers, supervisors... it depends on the place, but some small businesses let employees get away with murder, so to speak, precisely because they can't afford to pay for someone's eyes to be constantly trained on everyone's work.
> What I find more surprising, and disturbing, is the tendency of some
> folks on the left to embrace small business with some passion. This
> is particularly true in the unfortunately named anti-globalization
> movement -- as if internationalization itself were the problem rather
> than the way it's carried out. Their anti-globalism is connected to a
> desire to "relocalize" economies, and with them to reorient
> production on a much smaller scale. These aims seem more motivated by
> nostalgia -- and, in many cases, by a nostalgia for something that
> never existed -- than any serious analysis.
this statement is hard to sustain if you read -- for instance -- francis moore lappe and joseph collins on the hunger question. their study concludes in favor of "relocalizing" food production with a vengeance -- because the world hunger problem is not the result of any failure to practice "big"-style agricultural development (heavy capital investment, heavy machinery, heavy use of chemicals, large land parcels under single ownership, e.g., agribusiness). on the contrary, "big" agriculture has led to the absurd situation in which massive food production outpaces actual food needs and yet people starve -- because they have no access to the food being produced. "relocalizing" the food economy means establishing local democratic control over food production (and distribution) resources -- in their words, reorganizing for "food self-reliance." see their website at www.foodfirst.org .
> Larger firms are also far more productive than smaller ones.
> Small-is-beautiful advocates rarely tell us how tiny enterprises
> would produce locomotives, computers or telephones; maybe they'd
> prefer to do away with these things and revive a hunter-gatherer
> society. But if that's what they intend to do they should tell us.
here you're lumping lots of issues together, so that it's hard to tell how to reply, but overall this bit doesn't make sense. to defend small businesses against bloated chain stores is hardly to take a luddite position.
as for the sorts of large-scale technological structures you list off (train lines, computer networks, phone service), i'm not sure that anyone on the left or right is suggesting that small businesses take these over. my preference would be to reevaluate their use and socialize them -- but we can't speak of such a sweeping transformation in the limited context of this discussion about the fate of small businesses.
what do you think?
--jesse.