From Globalization to Localization Bringing Kentucky Out of Poverty

8/14/2019 From Globalization to Localization Bringing Kentucky Out of Poverty

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From Globalization to Localization: Bringing Kentuckyout of Poverty by Garda Ghista

The Kentucky River in the state of Kentucky, USA

The solution to removal of Appalachian impoverization is to adopt theprinciples that will support economic decentralization, namely: (1) Allresources in a socio-economic unit should be controlled by the localpeople. (2) Production must be based on consumption and not on profit. (3)Production and distribution of all natural resources and finished productsmust be carried out by cooperatives. (4) Local people must be employed inlocal business enterprises, and (5) All goods that are not produced locallyshould be removed from local stores. In addition to these five principles for

creating and maintaining a decentralized economy, Sarkar has providedrequirements for the implementation of economic democracy, as follows:(1) The minimum requirements of a particular age food, clothing, housing,education and health care must be guaranteed to all citizens; (2)Increasing purchasing capacity must be guaranteed to all citizens. In fact,adequate purchasing capacity of every person must be guaranteed in thenational constitution; (3) The power of making economic decisions must lieentirely with the local people; and (4) Outsiders, non-local people, must in


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no way be allowed to interfere in local economies. This will stop theoutflow of local capital, the present cause of local impoverization. Thesefour requirements if implemented along with the principles necessary tocreate a decentralized economy will lead people closer to economicdemocracy, because the power to control the economy will lie with the

people. When outside ownership of local land and resources is prohibited,and when local lands and resources are owned collectively by local people,at that point in time poverty in Kentucky will cease to exist, and willbecome a relic in the history museum. - Garda Ghista

A typical Kentucky horse farm. The American Saddle Horse originates fromKentucky.

BackgroundCommunism as an economic model was tried in various parts of the world suchas Russia and Eastern European countries, however it failed. Under communisteconomies the common people became even more impoverished than they were

prior to communism. Communism is symbolized by state ownership and publicenterprise. In essence, it is state capitalism. Capitalism is the economic model invogue today in most countries of the world. The United States is the bastion ofcapitalism. In fact, many scholars and historians refer to it as the AmericanEmpire, which has replaced the British Empire of the 19th and 20th centuries.Capitalism is symbolized by individual ownership and private enterprise. Wehave today not merely capitalism but global capitalism, also referred to asglobalization. In all these economic systems, i.e., communism, capitalism and


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global capitalism, the economic system is centralized with control being in thehands of a few persons. The question begs to be asked as to whether thecommon people have fared well in centralized economies, and whether theyhave been guaranteed an improved standard of living based on increasingpurchasing capacity. According to economist Prabhat Sarkar, in a centralized

economy exploitation cannot be eradicated nor can the poverty of the commonpeople be removed. In the above economic paradigms, economic policies areformulated by a handful of men for the benefit of those men who are generallyindifferent to the plight of the masses.

GlobalizationFor the past several decades, economists, political scientists, presidents, primeministers and corporate CEOs have championed the cause of economicglobalization, saying that a nations economic goals should include comparativeadvantage and international competitiveness. Globalization as an economicconstruct has become the new global theology. Comparative advantage refers to

the belief that accessing the cheapest source of supply is of greatest benefit andefficiency to a particular country. The term was coined by British economist AdamSmith in 1776 and later refined by David Ricardo in 1817. According to Smith andRicardo, all nations benefit when each nation specializes in particular products,i.e., specialized cash crops. If one nation has the land, climate, natural resourcesor labor to produce a good more cheaply than other nations, it should focus onmass production of that product. This gives it a comparative advantage in theglobal market. Economies of scale the idea that the more goods you produce,the cheaper they become to produce is a contributing factor in pushing forcomparative advantage, i.e., specialization of particular crops and goods in eachnation. Smith believed in open trade boundaries between all nations to maximize

the benefits of comparative advantage. He further insisted that the invisiblehand of market forces would bring about the best global scenario. Neither Smithnor Ricardo could predict the unfettered flow of money across nationalboundaries. This free flow of capital has led to comparative advantage changingto absolute profitability, and hence absolute advantage has replaced comparativeadvantage. The other factor they overlooked was that comparative and absoluteadvantage were guaranteed not just by corporations but by state governmentsand their military machines. The present Bush-Cheney regime in the U.S. hastaken this guarantee to new heights such that militarization has replacedglobalization as the U.S. government invades other nations at will in the name ofgaining market shares or trade advantage for U.S. corporations. While the WTO,IMF, WB, NAFTA, MAFTA, et al were the legal handmaidens of U.S.corporations, today they became insignificant in the face of U.S. globalmilitarization to ensure obscene profits for the Iron Triangle, i.e., the nexusbetween government, military and corporations.

Globalization supporters claim that the theory of comparative advantage andinternational competitiveness support the growth model, i.e., the growth of GNP.In reality, globalization compels state leaders to sign away the rights of the


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common people and hand them over to corporations and financial speculators. Inthat process the common people lose their right to better wages, better healthcare, better education and a host of other social benefits. Furthermore, in thename of benefiting international trade, what used to be an infinite spectrum ofavailable goods became a consumer monoculture.

Production in other countries means unemployment for local people. Even thelowest-priced items at Walmart cannot be purchased when people areunemployed. Hence, the urgency is to bring production back to the localcommunity or region. When goods are produced in China or India, local peoplehave no control over that production or that economic process. In contrast, localproduction leads to local control and hence control over the local economy. Thegoal of concerned citizens is to regain control over the local economy. Thecommon people should not live at the mercy of transnational corporations who onany particular day may decide to move their factories from Bellevue, Kentucky toTijuana, Mexico or to Dhaka, Bangladesh. The owners of those transnational

corporations may reside in New York, San Francisco, Germany or Australia andhave never met anyone in Bellevue, Kentucky. There is no relation, nosentimental connection, and hence there is corporate indifference to the welfareof the Bellevue population. If 90 percent of Bellevue residents lose their jobs, it isof no concern to corporate CEOs living in another region or country. Internationaltrade, be it in bananas, hormone-filled beef or genetically modified (GM)vegetables, benefits the owners and CEOs of gigantic agri-corporations. Thecommon workers and consumers do not benefit financially from internationaltrade. At present, the laws of the World Trade Organization (WTO), NorthAmerican Free Trade Association (NAFTA), Middle-East American Free TradeAssociation (MAFTA) and other global corporate bodies are carefully crafted so

as to create a continuous curb on public expenditure, meaning health, social andeducation programs for the common people. Corporations, who in nexus withnational governments create global trade agreements, do not acknowledge anyneeds of the people. For this reason, alert citizens often refer to globalization asthe trade liberalization beast.

Evidence indicates that economic globalization, whose hallmarks areinternational competitiveness and comparative advantage, leads to a rise inunemployment. Higher GNPs give the illusion that national economies benefitfrom globalization. However, only the owners of corporations benefit from globalcompetition and comparative advantage. The common people of all countries,including the United States, are suffering economically as a direct consequenceof globalization. As a simple example, in recent years India has signed severaltrade agreements with the United States that give all-powerful Americancorporations unhindered access to Indian markets as well as raw materials. TheIndian GNP has risen markedly during the same period. Both Indian and non-Indian businesses have flourished. However, during the same period, Indianfarmers have starved. In the past year in Central and Southern India, thousandsof farmers have committed suicide, either by hanging themselves or taking


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poison, because they saw no escape from crushing poverty caused by theintroduction of western seeds, western fertilizers and pesticides, whose costswere insurmountable in comparison to the simple seeds and local farmtechnologies used prior to the onset of globalization. Corporations look formaximum profit at any cost. Maximum profit at any cost does not take into

account the lives and well-being of human beings, animals and plants.

Today millions of households around the world live in deep insecurity, neverknowing whether the next day will bring them the final day of their employmentand source of income. In the United States, while official statistics give theillusion that unemployment is stationary, in reality millions of Americans have losttheir jobs since 2000. Many, after losing high-paying jobs, have taken up new

jobs, but invariably those jobs are in a far lower position and pay scale.Thousands of other Americans have given up looking for jobs and insteadreturned to university to get higher degrees, in the hope that jobs await them ongraduation.

At present the global trade laws of WTO, World Bank (WB) and InternationalMonetary Fund (IMF) are penned by big business lawyers to bring more profit tocorporations. Those same laws cause regions and nations to become theenemies of one another. When negative results occur, big business claims thateventually benefits will trickle down to the masses. Thus far, it has not happened.What has happened is that the income gap between rich and poor has steadilyincreased. Social benefits for the masses have decreased. Environmentalpollution has spiraled out of control. According to the International Labor Office(ILO), in the late 1990s one third of the worlds work force was either unemployedor underemployed. We can recognize the hallmarks of the economic process

called globalization by the following features: (1) ever decreasing trade barriers,(2) ever decreasing constraints on capital flows, (3) increasing privatization (evenof things as basic as water), (4) deregulation (particularly with regard to theenvironment), (5) increasingly severe constraints on all public expenditure, i.e.,social, health and educational welfare programs, in the name of ever higher profitfor corporate CEOs. The signs of success of globalization are rising GNPs, risingstock market prices and rising trade statistics. These three indicators, however,provide no indication of the well-being of the common people.

Globalization, or global capitalism, has resulted in 80 percent of the worldpopulation living in absolute poverty. Absolute poverty is economically defined asa person without one or more of the five fundamental necessities of life, i.e., food,clothes, housing, health care and education. Glocalization refers to the attemptby transnational companies (TNCs) to become accepted by local people so thattheir presence and their products are accepted and purchased by the people. Inmost countries of the world glocalization has succeeded. In a few, like India andBolivia, the people saw the direct consequence of global trade treaties on theirlives and drove the oppressive corporations out of their countries.


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Colin Hines tells in a nutshell the history of trade as represented by four phases:(1) the mercantile division of labor, wherein surplus of goods was caused bygeography, climate, and the availability of animals and plants. (2) the industrialdivision of labor, wherein machines began to replace people in the production ofgoods, causing more workers to be dependent on wages and leading to the first

worker strikes; (3) the imperial division of labor, wherein companies moved todeveloping countries where workers sweated and scrounged for raw materials forcompanies to ship back to their home countries. Gradually workers in developingcountries became cash crop producers to suit the profit goal of corporations; (4)the transnational era, wherein migrant labor is imported to developed countries tobecome wage slaves in local corporations. Increasingly, production of goods hasshifted entirely to countries like India and China where wages come to merepennies per worker per week. In addition, developing countries do not have thelabor law restrictions of western countries, hence even ten-year-old children workin Chinese, Indian and Bangladeshi factories making goods for western export.Globalization has drastically reduced the power of national governments to take

care of its citizens. In the words of David Korten, today corporations do indeedrule the world.

LocalizationConcerned citizens around the world, observing the effects of globalization overthe past two-three decades, have begun grassroots movements in an effort toregain control of their local economies. The process of moving from the global tothe local has been called localization. The force propelling this process is thedesire for an economy that protects people and rebuilds local communities. To beengaged in this process requires the courage to publicly reject the mantra ofinternational competitiveness that is repeated worldwide by big business,

financiers and mainstream economists, and replace it with new words such aslocal sustainability, cooperative economy, and economic democracy.Concerned citizens engaged in the struggle to improve their local region nolonger listen to the idea that every country must economically outcompete everyother country. Instead of purchasing products from the cheapest source, whichmay be Brazil or China, it is more beneficial to the people if those same productsare produced locally, even if the cost of production and hence the final price tothe consumer is higher.

We need not condemn all global trade. We need only change the end goal oftrade. We need to move from GATT (General Agreement on Trade and Tariffs) toGAST (General Agreement on Sustainable Trade). If international trade is tocontinue, a new end goal is required. The goal of world trade must be to protectthe local people, not politicians or owners of corporations. The local inlocalization can refer to a nation state or, as in the case of larger nations like theU.S., Canada or Russia, it can refer to a particular bioregion, state or provincewithin the larger nation. It means simply to bring economic control back to thelocal arena. Localization does not refer to state control, as in the communist


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model. It refers to local people in a town. Every person must have a voice and avote in the economic direction of his community.

The Universal Declaration of Human Rights guarantees every human being theright to food, clothing, shelter, employment, education and health care, to justice,

and especially the right to take part in the decisions that affect our lives. In asociety dominated by corporations whose goal is maximum profit, human beingswill not have these rights. Localization does not mean closing off the outsideworld. It means becoming more self-sufficient and less dependent on imports.When we gain control over our local economies, our lives will have more stability.Our jobs will be more stable.

What is local? Economist Prabhat Sarkar refers to the lowest socio-economicunit as a bloc comprising 100,000 persons. Sociologists refer to social fields,which are towns of 1500-100,000 population living within a 10-15 mile radius. Indeveloping countries blocs will refer to groups of villages or medium-sized towns.

To go local means to move from a centralized, corporate-controlled economy to alocal, decentralized economy controlled by communities, by local people. Itmeans to completely reverse the present economic direction around the worldfrom global to local. It also means that instead of individuals and communitiesbeing indifferent or feeling powerless, every individual needs to become involvedin the economic future of the community. We need to participate in the process ofchanging our economy from global to local.

Sarkar says that economic planning must start from the lowest level, from thegrassroots, where the knowledge, experience and talent of local people can beapplied to solve local problems and build local economies. He further says that

since the handful of capitalists presently controlling the global economy will nevervoluntarily give up their vast power, it is up to the common people to start aglobal movement in which the slogan should be: Abolish centralized economy toend exploitation; establish decentralized economy.

Sarkar provides five principles for creating and maintaining a decentralizedeconomy: (1) All resources in a socio-economic unit should be controlled by thelocal people. This applies particularly to those resources that are essential inproviding the minimum necessities of life. Raw materials should be converted bythe local people into finished products to be sold locally to the local people.Sarkar defines local people as those who have merged their individual socio-economic interests with the interests of the local, socio-economic unit. Hence,the term local people has no relation to ones race, complexion, language orbirthplace. The one point of consideration is whether an individual has made thatgeographical region and community as his own, and whether he has merged hisindividual socio-economic interests with the collective. If an individual has notdone this, then he would not be deemed as a local person, and hence wouldhave no say as regards local socio-economic issues, for example, as regardsproduction and distribution of either natural resources or their finished products.


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Surplus wealth, after meeting the needs of the local people, can be distributed tothose having greater merit, such as doctors, engineers, scientists and teachers.These persons with highly specialized knowledge and acumen can be providedwith extra amenities that will help them in their profession. However, the goal ofthe community will be to constantly reduce the economic gap between the

wealthiest person and the poorest person.

(2) Sarkars second principle for maintaining a successful decentralized economyis that production must be based on consumption and not on profit. In adecentralized economy, all goods produced will be sold in the local community.Hence a sound economic and moral stability will be established. This practice willalso cause the local money to be continually flowing inside the community, whichwill further strengthen the economy, and make it practically immune from anyupheaval or depression. With the constant internal circulation of money, bothincomes as well as peoples purchasing capacity will go on increasing. This hasnever been achieved with the communist model or the capitalist model.

(3) The third principle for maintaining a healthy decentralized economy is thatproduction and distribution of all natural resources and finished products must becarried out by cooperatives. It is extremely difficult for cooperatives to survivewhen surrounded by capitalist enterprises. The prices of goods sold bycooperatives cannot compete with the prices of Walmart corporation, which hastheir goods made in China often by ten-year-old children earning a few pennies aday, then has those goods flown directly to private air terminals next to Walmartheadquarters. The consequences of Walmarts actions are that local people whocould have produced those goods are without jobs and hence do not even havemoney to shop at Walmart; (2) small children and women in China are paid

pittance and work 70-80 hours per week making those products; (3) peopleemployed in Walmart stores earn pittance and receive no benefits. HenceWalmart engages in a full (global) circle of exploitation to end up ranked as oneof the top ten richest companies in the world. According to Sarkars first principle,Walmart does not classify as a local person. Hence it must be removed fromthe community and replaced by local companies managed by local people toproduce many of the same goods produced by slave labor in China for Walmart.The final price of locally made goods will be higher; however, people will not mindthose slightly higher prices with the realization that local people are gainfullyemployed in producing and selling those goods and are receiving living wages fortheir work. Living wages and adequate purchasing power will be guaranteedbecause the business model of all companies created in local communities willbe the cooperative business model. Raw materials, i.e., the natural resources ofa bioregion, will provide constant supplies to cooperative businesses that canproduce finished goods and sell them in the local market. When people of acommunity understand the benefits of the cooperative business model, they willaccept it whole-heartedly. Agriculture, industry and trade can all be organizedthrough cooperatives. Private ownership of these industries can be abolished


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because in private ownership the well-being of the larger community will not beserved. Cooperatives and decentralization are inseparable.

(4) The fourth principle required of a decentralized economy is that local peoplemust be employed in local business enterprises. If they are not employed in local

businesses, the problem of unemployment cannot be solved. Local peopleshould collectively decide on the minimum requirements essential for theirphysical and economic well-being. It is critical that no outside interference isallowed in a local economy. Cooperatives can provide employment to the localpeople. People knowledgeable in agriculture, in agro-industries (industriesrelated to farm production) as well as agrico-industries (industries related toproducts from farming, i.e., silk from sericulture, rope from jute) will be required towork in agricultural cooperatives.

(5) The fifth and perhaps the most difficult principle to implement is that all goodsthat are not produced locally should be removed from the local stores. The goal

of decentralization is for communities to become self-sufficient. So long asimported goods are available, there will be no incentive for blocs and regions toproduce those goods. So long as imported goods are available, the local peoplewill not be guaranteed employment in local cooperative industries. For thisreason, banishing all imported products is critical to a community gaining self-sufficiency. Local products may not be as cheap as imported goods. They alsomay not be as efficient or technically sophisticated. Nevertheless, this principle isessential in order to create self-sustaining communities. During times ofeconomic collapse as we saw in the 1930s, it is only the self-sufficientcommunities that will be able to survive and reasonably cope during hard times.Self-sustaining communities will be immune to inflation and deflation. Bringing in

imported products means the money gained in sales of those products will notremain in the community. It will leave and travel to the company owner who maybe in another state or even another country. Money leaving a community willcause it to suffer. In order for people to prosper, money must remain in a townand must keep circulating through production, sales and continually improvingproduction and increasing wages.

If any good can be produced locally, it should not be imported. Several centuriesago, when men ventured by ship to India for spices and other luxuries, theybrought products back to their home countries that were unavailable locally. Thismotto must be revived. Global trade must be used only to acquire essential itemsthat cannot be produced locally. It is the premise of the fair trade movement.This will protect local jobs and local cooperative businesses. If goods areproduced locally, and sold locally, local money returns to the producingcooperative, and profits are given to the employee-owners in the form ofdividends. All money involved in production and sales remains in the local area.This money can be used to create more cooperatives or to strengthen the localeconomic infrastructure. Resource and other taxes can be introduced to helpcover the costs of converting from a global to a local economy. Thus only that


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trade should be undertaken that enhances and strengthens local economies andlocal environments. The shorter the distance between producer and consumer,the greater control of that economy by the consumers.

Cooperativization

Peter Warbasse wrote in 1923 about his experiences traveling throughoutEurope to see first hand cooperatives in action. He wrote:

"The student of Co-operation, if he is not already familiar with the facts, willdiscover with some amazement its actual extent. This revelation is bound togratify anyone who is seeking a tested method for the reorganization of society. Ihave for months at a time lived and traveled among co-operative societies whereI have seen many thousands of Co-operators living in their co-operativehouses, supplied by their own stores, working in their own industries, financedthrough their own banks, entertained in their own theatres; I have seen happy,healthy children frolicking in their own playgrounds; and I have realized that I was

in actual contact with a demonstration of that very society for which utopiantheorists hope as a remote possibility of the future and strive to attain by someother means."

While the five principles stated earlier for establishing decentralized economiesare clear guidelines, the overriding factor in decentralized economies will becooperatives, as mentioned in the third principle. The goal is to move from acapitalist economy to a cooperative economy. American universities in theirmacro and micro economic courses teach three types of business models: (1)proprietorship, i.e., single owner; (2) partnership, i.e., 2 or more owners of acompany, and (3) corporation, which has multiple shareholders. However, the

fourth business model, which is the cooperative business model, is omittedentirely from 99 percent of American economics courses.

We can give the example of any Walmart outlet where a minimum of 20 womenare employed, earning minimum wage and barely making ends meet. If those 20women were to form a cooperative of any kind a health food store, a cornermini-mart, or a dairy cooperative raising cows and selling the fresh milk, laterexpanding to make fresh butter and cheese they will work for living wages, andthey will get their equal and fair share of surplus funds at the end of each year.They will no longer be slaves to a wealthy man. The women are both employeesand owners. All share in the work and all share in the profits. Together thewomen decide how much of profits is ploughed back into the business and howmuch goes to the owners/employees as annual dividends. This business modelcan help all women in Kentucky to escape poverty.

Cooperatives leads to humane, democratic production. Wages must be kept asclosely together as possible to avoid the entry of classism. Tasks should bedivided as equally as possible. Other precautions are necessary, such as taking


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care that the collectively appointed manager of the cooperative does not misusehis position to take excessive control of its management.

In 1844 the weavers of Rochdale, England formed a cooperative and wrote upthe Principles of Cooperation. These principles later became the Principles of

the International Co-operative Alliance. They continue to form the bedrock of co-operatives around the world, and are as follows:

Principle 1: Voluntary and Open MembershipCooperatives are voluntary organizations, open to all persons able to use theirservices and willing to accept the responsibilities of membership, without gender,social, racial, political or religious discrimination.

Principle 2: Democratic Member ControlCo-operatives are democratic organizations controlled by their members, whoactively participate in setting their policies and making decisions. Men and

women serving as elected representatives are accountable to the membership.In primary co-operatives members have equal voting rights (one member, onevote) and co-operatives at other levels are also organized in a democraticmanner.

Principle 3: Member Economic ParticipationMembers contribute equitably to, and democratically control, the capital of theirco-operative. At least part of that capital is usually the common property of theco-operative. Members usually receive limited compensation, if any, on capitalsubscribed as a condition of membership. Members allocate surpluses for any orall of the following purposes: developing their co-operative, possibly by setting up

reserves, part of which at least would be indivisible; benefiting members inproportion to their transactions with the co-operative; and supporting otheractivities approved by the membership.

Principle 4: Autonomy and IndependenceCo-operatives are autonomous, self-help organizations controlled by theirmembers. If they enter into agreements with other organizations, includinggovernments, or raise capital from external sources, they do so on terms thatensure democratic control by their members and maintain their co-operativeautonomy.

Principle 5: Education, Training and InformationCo-operatives provide education and training for their members, electedrepresentatives, managers, and employees so they can contribute effectively tothe development of their co-operatives. They inform the general public particularly young people and opinion leaders about the nature and benefits ofthose co-operatives.


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Principle 6: Co-operation among Co-operativesCo-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional andinternational structures.

Principle 7: Concern for CommunityCo-operatives work for the sustainable development of their communities throughpolicies approved by their members.

The most famous example of a successful co-operative is the Mondragoncooperative network that originated in the town of Mondragon in the Basquecountry of northern Spain. In 1956 a priest named Jose Maria Arizmendiarrietaopened a small stove factory and ran it with five former students as a democraticco-operative. In 1958 the government denied them health and unemploymentbenefits, hence in 1959 the co-op members created the Caja Laboral Popular,which provided banking, entrepreneurial services and health care to all co-

operative members. The Mondragon group of co-operatives focused onhousehold appliances and machine tools. During the 1980-83 economicrecession, the Basque region lost 20 percent of its jobs and numerous firms laidoff thousands or shut down completely. Five co-operatives had to close andothers reduced wages by 11 percent. However, all other co-operatives survivedwithout financial setbacks and without layoffs, and served to stabilize the regionaleconomy. It is an example of how during economic recession, if the economicpower is decentralized and wholly locally controlled, that local economy will berelatively unaffected by external economic crises. In the 1980s Mondragonformed a huge network called the Mondragon Co-operative Corporation in orderto compete with capitalist corporations whose appliances were coming into Spain

from other European countries such as France and Germany. As of 2003, theMondragon co-operative network had more than 66,000 employees/ownersoperating more than 160 co-operatives; 135 are industrial, 6 are financial and 14are distribution co-operatives. In addition they run housing, service, research,education and training co-operatives. In 1997 they founded the MondragonUniversity, which trains students in the skills required to work in their co-operatives. The University board of directors comprises members from thestudent body and faculty and some members from local co-operatives. Since1997 they have founded technology and management schools and researchinstitutes affiliated with the university. Every co-operative in the Mondragonnetwork has an annual general assembly when the board of directors is elected.That board of directors appoints the management persons, elects a watchdogcouncil that monitors management, and a social council, which has theresponsibility to index all jobs on a 1 to 6 spread based on the job requirementsfor experience, training and responsibility.

As James Warbassa points out, the quest for profits and privilege in a societyleads to unending crime, corruption, immorality, poverty and wars. According tohim, the only solution is to introduce the co-operative business model at every


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level, for all production, distribution and administration of economic issues. Co-operatives can bring about real economic democracy, which in turn can fostergenuine political democracy. The critical factor to remove is the profit motive, dueto its de-humanizing influence on human beings. It must be replaced with the farmore humane mindset of thinking for collective welfare above individual welfare.

Warbassa sees this change of mindset as an evolutionary process that more andmore people will accept as they witness the great benefits from working in co-operatives. Sarkar also says that changing to the co-operative model will be agradual and voluntary process. It cannot be forced upon the people. People needto be educated and convinced regarding its benefits. At present the poverty inKentucky and elsewhere may not be severe enough for people to consider theco-operative option. It is the opinion of this author that in the near future the U.S.economy will collapse, heralded by a collapse of the dollar. At that time, whenunemployment begins to reach the levels of those during the Great Depression(25 percent), people will become amenable to the co-operative business modeland way of life.

Poverty in KentuckyRalph Ramsey describes poverty in Kentucky as being a condition of deprivationin any aspect of living which handicaps a person in acquiring the good things oflife as measured by the following factors: (1) income, (2) education, (3)employment, (4) housing, (5) health, (6) social participation, and (7) welfarerecipients. Kentucky, USA has the second highest poverty levels in the UnitedStates after Mississippi. The average annual household income in easternKentucky is under $22,000 per annum. In 1999, 15.6% of Kentuckys womenover 18 were living below poverty level, while 11.6% of men were below povertylevel. More than 20 percent of families are headed by single mothers. While in

the U.S. 34.3 percent of single mothers live below poverty level, in Kentucky thepercentage is 42.7 percent. Older women at poverty level in Kentucky are 16.7percent, while older men comprise 10.5 percent. In 1999, the Center on Budgetand Policy Priorities stated that 80,000 Kentucky families with children live inpoverty despite one working parent. According to the Center, poverty amongworking families increased during the 1990s, with less than 20 percent of familiesrelying on welfare. The reason can be attributed to the fact that 60 percent ofthose leaving welfare and returning to work received wages of less than $7.00per hour. Author Barbara Ehrenreich has stated categorically that the minimumwage in the United States must be not less than $14.00 per hour in order forworking families to move out of the working poor category into the self-sustaining category. Nearly one in four children in Kentucky is poor, according tothe Center. They report that job growth has been primarily in the area of serviceand retail jobs, both of which are low-paying positions. Second, the minimumwage of $5.15 per hour has not kept up with inflation over the past 20 years.Third, the Center notes that poor families in Kentucky pay a higher percentage oftheir salaries into taxes than is paid by middle and upper-middle class families.


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As of August 31, 2006, 1,806,397 Kentuckians lived in rural areas, 2,367,008 inurban areas, coming to a total of 4,173,405. Per capita income in 2004 in ruralareas averaged $21,203, in urban areas $30,827, coming to a state average of$26,642. The percentage of Kentuckians living in poverty was 17.5 percent in1979, 19 percent in 1989, 15.8 percent in 1999 and 14.9 percent in 2003. The

percentage of rural Kentuckians living in poverty in 2003 was 18.4 percent,substantially higher than the national average of 12.7 percent. The percentage ofKentuckians completing high school in 2000 was 33.6 percent (35.5 percent inrural areas and 32.1 percent in urban areas). Kentuckians completing college in2000 was 17.1 percent: 11.3 percent in rural areas and 21.8 percent in urbanareas. In 2002 18.4 percent of Kentuckians were in farming or farm-related jobs.

Poverty is the single greatest cause of disease in Kentucky. The life expectancyfor men in Harlan County in 2001 was 65 years, which is shorter than indeveloping countries like Ecuador, Columbia and Turkey. Due to impoverization,people in rural areas and particularly in the Appalachian mountain region of

eastern Kentucky go without essential medicines such as blood pressure, insulinand ulcer medications. Seventeen of the 20 counties of Kentucky having thehighest death rates have poverty levels of more than 20 percent, includingpeople who have been impoverished for 30 years, i.e., they have known onlypoverty. However, health crisis and early deaths are not restricted to rural areas.Poor residents in urban areas unable to afford basic medications and medicalitems like inhalers for asthma suffer likewise. According to Laura Ungar, in 2005one in six Kentuckians live below the federal poverty level, in contrast to thenational average of one in eight. Kentuckys median household income is 20percent lower than the national average, and 38 percent of Kentucky householdsearn less than $25,000 annually, while nationally 29 percent of households earn

less than $25,000. More than 50 percent of Kentuckians earn less than $35,000,while the national average is 41 percent. Poor health is directly correlated to botheducation and income, with people in lower income brackets being far more likelyto smoke, have poor diets and a sedentary lifestyle. As healthy whole wheat andother full-grain breads cost double in price compared to white bleached breads,poor people are often condemned to the least healthy supermarket products. In2005 just 75.1 percent of Kentuckians graduated from high school one of thelowest rates in the United States. The poor are hit from all sides: due to povertythey are less likely to have education and hence more likely to adopt bad habits.They are more likely to purchase cheap foods having zero nutritional value. Andagain due to poverty they are less likely to have medical insurance and hencevisit the doctor only when in dire straits, when their diseases are too advanced tobear without pain medication.

Causes of PovertyDwight B. Billings and Kathleen M. Blee in their study of poverty in EasternKentucky have provided plausible reasons for its development from 1860onwards. One reason was the high rate of population growth among localfamilies, leading to the constant division and re-division of land as fathers


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parceled out their holdings equally amongst their children. Eight to fifteenchildren in a family was normal in the mid and late 19th century. While theoriginal settlers had vast land holdings, over generations through repeateddivisions to accommodate all siblings the holdings became relatively small andoften contained no fertile land, i.e., the agricultural land available was generally

over-cropped, causing it to become rocky and unproductive. From the beginningin the mid-19th century, emphasis was on subsistence farming rather than oncommercial farming. The same pattern had occurred in New England, with theonly difference being that in Kentucky subsistence farming continued muchlonger due to the regions relative geographical isolation and delayeddevelopment of transportation.

Billings and Blee note that when lumbering came to eastern Kentucky, localpeople prospered financially and consequently gave up their traditional crafts ofweaving and shoemaking, preferring instead to purchase clothes and shoes.While they had formerly produced flour, sugar, lard and meat, they likewise

stopped home production and began to purchase these items, gradually losingmore and more ability to sustain themselves through their own labor andingenuity.

Salt mining became the states first significant commercial activity, and farmersmoved into the region to work in the salt mines. Wealthy, slave-owning familiesalso moved to Appalachian Kentucky to reap the benefits of salt-mining. Thefamily of James White had an estate worth $2 million by 1838. James Garrard,the second governor of Kentucky, owned more than 45,000 acres of land,including in the Appalachian region, where he built salt wells and furnaces. Thesetwo families became wealthy due to salt-manufacturing, large-scale commercial

farming and the use of slave labor. The growing wealth disparities causedpronounced social stratifications, with the wealthy, slave-owning familiescontrolling huge lands, commercial ventures and personal estates worth nearly$46,000, while the vast majority of Appalachian farmers had holdings worth only$859. The wealthiest individual in Clay County, Francis Clark, had an estateworth $175,000 in 1860. In the late 19th century most African-Americans leftAppalachia and moved westward. Former slave owners continued in their role aswealthy landowners, corporate commercial investors, and as local agents forexternal capitalist interests in local resources such as land, timber and coal. Thuswhile half a century earlier the farmers had been relatively self-sufficient, povertyincreased as farm sizes along with livestock inventories diminished and land wasover-cropped, rendering the soil infertile. Soil exhaustion and soil erosion wascommonplace. By 1880 poverty was entrenched in Appalachian Kentucky.

While Billings and Blee focus on non-capitalist causes of Kentucky poverty,subsequent scholars have highlighted the encroachment of absentee, non-Kentuckian owners of mines and timberland as well as increasing corporatestranglehold of local energy and other natural resources. Ronald Eller claims thatthe small, impoverished, subsistence farms characteristic of eastern Kentucky


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today developed in tandem with the invasion of external coal and timberinterests. Slow economic growth, rapid population increase, small land holdingsper farmer and soil depletion were all factors leading to Appalachianimpoverishment. Subsistence farming in the region was the norm during theantebellum era in Kentucky and other southern states. Many farms continued to

be non-commercial through the first half of the 20th century. While initially theregion underwent capitalist transformation in the latter half of the 19th century,today eastern Kentucky has been swallowed up by national and internationalcorporations.

International Coal Group (ICG) is a major coal producer with mine complexthroughout Appalachia and headquarters in West Virginia. ICG East Kentucky isa surface mining operation in Pike County that manages the Blackberry mine. Itincludes three coal beds. The Blackberry mine has about 2.6 million tons of coalreserves. According to ICG, when Blackberry mines are empty, the company willstart mining the Mount Sterling property in Martin and Pike Counties near the Tug

Fork River. Another 4.4 million tons of coal reserves is in the Mount Sterlingproperty. ICG mines in Northern and Central Appalachia and sells to bothdomestic and international customers. As of January 1, 2006 ICG owned morethan 315 million tons of metallurgical quality coal reserves and 572 million tons ofsteam coal reserves. In addition the company owns another 707 million tons ofcoal resources coal-bearing bodies that have been analyzed but are notpresently considered as commercially viable coal according to SEC rules.Metallurgical coal is used for producing coke and steam coal is used by utilitiescompanies. The ICG is an investor group formed in May 2004 that acquired thebankrupt Horizon coal company through a public auction on August 17, 2004.ICG purchased only the nonunion operations of Horizon, and operates the Sago

mine in West Virginia where 12 coal miners died on January 2, 2006.

International Coal Group is an example of the increasing consolidation of the coalindustry, which causes smaller coal companies to go bankrupt or sell out to themega coal companies such as ICG. ICG Chairman Wilbur Ross previouslybought up dying steel companies, consolidated them into one company calledInternational Steel Group, made them profitable and then sold them at a hugeprofit to the Mittal Group. In this process, and as he is now doing in the coalindustry, unions will be eliminated or grossly restructured and pension obligationsto miners will be shifted to the federal government. The top ten coal companiesas of November 20, 2004 were Peabody Eergy, Arch Coal, Kennecon Energy,Foundation Coal Holdings, CONSOL Energy, Massey Energy, Horizon NaturalResources, North American Coal, Westmoreland Mining, TXU and VulcanPartners. Kennecon Energy and TXU are Australian-owned companies.Foundation Coal Holdings and CONSOL Energy are German companies. GeorgeBush has removed restrictions on strip mining as well as emissions from coal-based electric generators, making it thus more profitable for coal industries. Thecoal business is already an oligopoly, with the top five companies controllingmore than 50 percent of domestic coal production. The strategy is not to build


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new mines but to buy out smaller existing mines, as it is cheaper and financiallyinvolves less risk. According to Steve Hannaford, the top five coal producers -Peabody Coal, Kennecott Energy, Arch Coal, RAG American and Consol Energy

are all now owned by foreign corporations.

Mergers and acquisitions are an ongoing phenomenon, leading to increasinglyconcentrated oligopolies, be it in coal, gas, petroleum, timber, beef cattle orvegetable produce. In every case, it is the worker, the labourer, who suffersmaximally, as in the name of higher profits the companies constantly squeezetheir salaries and benefits. We find the same scenario in the tobacco industrywith increasing mergers and acquisitions leading to larger oligopolies with fewercorporate members. The worlds second largest tobacco company, Dimon, buysleaf tobacco from farmers in more than 40 countires and has more than 30percent of the market share with companies like Philip Morris (Altria) and JapanTobacco. The largest tobacco-processing corporation is Universal Corporation,which also deals in lumber and other agricultural products. Economic

globalization compels consolidation and oligopolies, which demand freemarkets of national governments. However, these free markets are only free forcorporations, as those same corporations using financial and political powereffectively crush smaller companies, driving them out of business and livelihood.Hence, in every country, including the U.S., the small companies and the smallfarmers suffer to the point of sell-out, bankruptcy and starvation. Farm laborersand coal miners are at the mercy of corporate boards whom they never see butwho they know as denying them their fundamental rights to a living wage, to safeworking conditions, to health care and to pension benefits. In the New York Timesarticle Supermarket Giants Crush Central American Farmers, published Dec 28,2004, the plight of millions of Guatemalan farmers is highlighted as they simply

do not have the technological skills and equipment to create the standardproduce required by the mega supermarkets taking over the towns and cities.

As Steve Hannaford points out, the WTO treaties serve the wealthy alone, as itslaws provide a means for wealthy corporate farmers to unload their unsoldproduce onto third world countries. Local people in third world countries do notbenefit. Only a handful of local elites benefit. The small farmers and landownerseverywhere suffer. It is a natural then that the United States would expect moreand more immigrants to arrive on its shores or to scramble over the wall alongthe Mexican border, as the only means of providing economic relief to peoplestarving as a direct result of WTO/corporate laws and policies.

The Capitalist FactorAs Sarkar has correctly stated, capitalism turns men into beggars andcommunism turns men into beasts. The world today is controlled by oligopolies(a few companies controlled by a handful of extremely wealthy men that sellgoods to other people or companies.) As elaborated by Lawrence, Vidal andMorris in their article Unfair trade winds, the food industry has likewise becomean oligopoly. For example, the banana market is dominated by an oligopoly of


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five companies: Chiquita (formerly United Fruit), Dole, DelMonte, Fyffes andNoboa. The coffee industry is dominated by Kraft, Nestle, Proctor & Gamble,Sara Lee and Tchibo. These mega corporations squeeze the farmers and pit onecountrys farmers against another countrys. The farmers do the only thing theycan do which is to squeeze and cut labor costs. As an example, in 2002 a

Ugandan farmer received 14 cents for one kilogram of coffee beans. The samekilo was sold in stores as instant coffee for $26.40, which is 7000 percent morethan the price received by the farmer.

According to Steven Hannaford, oligopolies (a handful of sellers) invariably leadto oligopsonies (a handful of buyers). Examples of oligopsonies are Barnes &Noble, ClearChannel andViacom. The supermarket industry is a further exampleof an oligopsony, where in 2003 three major chains existed: Safeway, Kroger andAlbertsons. These three have bought out most smaller chains, a step that givesthem tremendous power, leading to oligopsony exploitation, which has led toseverely reduced income for farmers as the oligopsony of produce buyers

squeezes prices using their power to select the lowest price from amongst thehelpless farmers. In addition, growers in the United States, or example, areexpected to not only sell at a cheaper price but are obliged by the buyer oligopolyto market and promote their produce inside the supermarkets. In the producesphere, supermarket chains are now an oligonomy, which means they are boththe buyers (oligopoly) and the sellers (oligopsony). The supermarkets are themiddlemen and use their middle position to exploit in either direction. (It isinteresting to note here that Venezuelan President Hugo Chavez eliminatesmiddlemen in every sphere of the economy, both in Venezuela as well as in hisprogram to supply oil to poor Americans. He bypasses politicians andgovernmental structures and ensures that the oil reaches the poor directly.)

Hannaford says that just oligopolies breed oligopsonies, the converse is alsotrue. While the two words oligopoly and oligopsony exist in economicvocabulary, there is on economic term that covers the increasingly commonscenario of corporations serving as both oligopolies and oligopsonies, i.e., whenthe same few buyers are also the same few sellers. Hannaford has coined theword oligonomy, which means that companies are an oligopoly towards onegroup (i.e., farmers) and an oligopsony towards another group (retailers). Theonly group strong enough to deal with an oligopoly is an oligopsony, which leadsthen to a tiered oligonomy. Safeway, Kroger and Walmart are an oligopoly toconsumers, while to producers/farmers and food brokers they are an oligopsony.Vendors providing ice cream are an oligopsony to dairy farmers andsimultaneously an oligopoly to supermarkets. The two huge chocolate companiescalled Archer-Daniels-Midland and Cargill are an oligopsony to West Africanfarmers, bidding one against the other to get the cheapest price for cocoa beans.Thereafter they become an oligopoly when selling to chocolate manufacturerssuch as Nestle, Kraft, Mars and Hershey. These four chocolate producersbecome an oligopsony to cocoa merchants, while simultaneously serving as anoligopoly to cocoa retailers who need their products to sell to the consumers.


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This inter-layered process becomes what Hannaford calls the tiered oligonomy.He presents the following example of the chocolate oligonomy:

1. Cocoa growers2. Cocoa processors (ADM, Cargill) Oligopsony for cocoa beans, Oligopoly for

processed cocoa.3. Chocolate makers (Kraft, Nestle, Mars, Hershey) Oligopsony for processedcocoa. Oligopoly for chocolate candy.4. Key retailers (Walmart, Safeway, CVS) Partial oligopsony for chocolatecandy. Partial oligopoly for retail candy.5. Candy eater / consumer

Understanding the tiered oligonomies that today permeate the capitalisteconomic paradigm helps us to understand how the various market layers exploitthe two end-layers of each layered tier: the farmers/producers at the beginning ofthe tier and the consumers/shoppers at the other end. These two end layers

have no control and no leverage over the middle layers which comprise theoligopoly and oligopsony. Hence, there is no way for the producers andconsumers to avoid exploitation. As oligonomies are permeating every sector ofthe market, including coal, timber and produce, it becomes easier to understandwhy Kentucky is impoverished. Several reasons have been cited above as thecause of poverty: slow economic growth, rapid population increase, repeatedland division generations, re-cropping and soil depletion, However, Appalachianwriter and activist Scott Goebbels cites the prime cause of poverty in Kentuckyand particularly in eastern Kentucky as being capitalist exploitation, which beganin the early 19th century with the in-migration of slave-holding southerners whobecame exceedingly wealthy while surrounded by impoverished Appalachian

farmers. From the few wealthy local exploiters, capitalism has grown until today itis represented by international oligonomies, manifested by companies inGermany and Australia owning Kentucky coal mines. Another word foroligonomies is globalization or capitalism on a global scale. Unless the economicparadigm of capitalism is removed and replaced by a more democratic,egalitarian economic structure, a large percentage of Kentuckians will remainimpoverished due to circumstances far beyond their control.

Kentucky ResourcesAs Florence Cope Bush writes, Most everything we needed for survival wasthere in the mountains. Bushs book about her mother Dorie details life in theAppalachian mountains from the period 1898 to 1942. Even In 1942 poorAppalachian families were remarkably self-sufficient as compared to otherregions of the state. They made their own furniture, kitchen utensils, and grewwheat, corn, potatoes and oats. Beef cattle and sheep were slaughtered forconsumption, while milk cattle were utilized for milk consumption, butter andcheese-making. The people produced their own sugar from maple trees,collected wild honey, and in addition had their own beehives, and knew how tomake sorghum molasses. They spun sheeps wool into thread that was used to


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make cloth. People raised both cotton and flax to use for cloth and linen-making.Tanned hides were used for shoe-making. Farmers owned oxen, hogs, horsesand mules. To augment this they hunted deer, boar, squirrels and other animalsfor food. Food, clothing and shelter were available in Appalachian Kentucky sincethe 19th century and earlier. Health care and education were deficient and

remain so today, with only a handful of colleges and an even smaller handful ofdoctors to serve the people.

Many Appalachians who live way in the outback move by walking, not by car.There is no store nearby so they rely on help from neighbours. When they needthe home heated, they pick up a bucket and go out and fetch a bucket full of coalfrom the coal pile next to the house. When they need water, they take a bucketand go out to draw water from the well. Many continue to heat their homes withwood. Many homes continue to have outdoor toilets and rainwater is collected incisterns and used instead of municipal water.

Bartering continues to be common. If a womans well breaks down, she visits theneighbours to get help and offers a quilt in return for repairing the well. If moneyis not available to purchase jewelry for Christmas presents, a man may collectsome of his guns and take them to a jewelry shop in Williamsburg, Kentucky andoffer them in exchange for jewelry. Others in the region may use food stamps asa bartering item. This style of bartering remains commonplace amongst thepeople of Appalachia. Sarkar has advocated that bartering take place as much aspossible as a means for acquiring essential goods and services. VenezuelanPresident Hugo Chavez has led the world in reviving the barter system byproviding oil to other countries in exchange for goods and skills needed inVenezuela, such as doctors, medical skills and cows.

Kentuckys most valuable natural resources are bituminous coal, timber, crushedstone, natural gas and oil. Eastern Appalachia, which is historically and presentlyriddled with poverty, has abundant natural resources. In 1993 bituminous coalcomprised 85 percent of mineral production in the United States. Other types areanthracite, subbituminous, lignite and brown coal. At present only 80 percentKentucky coal deposits have been utilized. In addition there are clay deposits,commercial and industrial limestone, dolomite, glacial sand/gravel, iron, shale,riverine sand/gravel, rockcastle sandstone, phosphate and zinc deposits.Besides coal and minerals, Kentucky has substantial natural gas deposits, whichhave increased, and small reserves of petroleum with original supplies nearlyexhausted. Kentucky contains a large network of gas transmission anddistribution lines, including not just local gas but lines between majornortheastern and midwestern markets. Kentucky gas comprises 3 percent of thetotal amount of gas running through the distribution lines.

Another vast resource in Kentucky is timber, including yellow poplar, shortleafpine, black gum, sweet gum from the south and northern red oak, white pine,hemlock, hard maple, basswood, black walnut and beech from the north. About


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one half or close to 12 million acres of Kentucky land is forested. Oak andhickory represent the main commercial timber sources. Most of Kentuckystimber is privately owned with each owner averaging between 10 and 25 acres.Kentucky produces around 800 million board feet annually.

Kentucky with its rolling hills, limestone bedrock and river floodplains has amplecultivatable land, particularly in the loess-filled Jackson Purchase area. TheBluegrass regions with their shale and limestone backed soils also serve as richagricultural lands. While presently a strong trend predominates for farmers to selltheir land due to price competition with foreign imports, yet the potential toincrease farming in Kentucky remains if and when pricing becomes adequatesuch that farmers can make a reasonable living. Principal crops have been hay,soybeans, wheat, corn and tobacco. Again, the diversity of crops could expandsubstantially if required and if a solid local market for those crops were madeavailable. In addition there is ample hog and pig production, broiler and otherchickens, beef cattle, dairy cattle, horses that are sold on a commercial basis.

Other animals such as deer, wild boar, turkeys and peasants are available inplenty. With its vast waterways, lakes and reservoirs, Kentucky abounds in fishthat provide another source of local subsistence.

Manufacturing is extensive in Kentucky and presently includes a largepercentage of foreign ownership. Only eastern Kentucky lags behind inmanufacturing development. As of 994, General Electric, Toyota MotorManufacturing, Fruit of the Loom, Ford Motor Assembly Plant, Ford Motor TruckPlant, Lexmark international, Philip Morris USA, Martin Marietta Energy Systems,Armco Steel, Porter paints, General Tire, Brown-Forman Corporation, Fisher-price, Ashland Petroleum Co., The Apparel Group, Square D Company and

Courier Journal & Louisville Times all had plants located in Kentucky. Productsmade in Kentucky range from chemicals, petroleum refining, tobacco,transportation equipment, metal industries, electrical and electronics industries,paper and related products, stone, clay and glass products, printing andpublishing, rubber and plastics, food and related products, furniture andaccessories, wood products, leather and leather products such as shoes, andclothing. In 1990 there were 41,100 Kentuckians working for foreign-ownedplants in Kentucky, which came to about 14 percent of its manufacturingemployees. Only six states had a higher share of their manufacturing workforceemployed in foreign-owned companies.

In 2005 Kentucky remains exceedingly rich in natural resources. The top fiveagricultural commodities in Kentucky were (1) horses/mules, at $1,010,000 or82.2 percent of US value, (2) broilers, at $704,297 or 3.4 percent of US value; (3)cattle and calves, at $561,348 or 1.1 percent of US value; (4) tobacco, at$342,540 or 31.3 percent of US value, and (5) corn, at $336,060 or 1.8 percent ofUS value. The top five agriculture exports in 2005 were tobacco (with numberone ranking in the US), live animals and meat (ranked number 8), soybeans andrelated products (number 15 rank), feed grains and related products (14 ranking),


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and wheat and related products (22 ranking). In 2006 Kentucky continues tohave abundant natural resources and manufacturing capabilities.

Kentucky landscape - rolling green hills covered with trees

While multiple causes are cited for Kentucky poverty, the single greatestcause above all else is the predatory capitalism via economic exploitationand political domination that took place from the very early days of the 19thcentury and stands in sharp contrast to the culture-of-poverty theory ofAppalachia. The deep culture and kinship helped the people to survive theonslaught of capitalist exploitation that arrived in tandem with racialoppression to establish the salt mines and later coke manufacturing. Whilethe official rate of (structural) unemployment in 1989 was about 9 percent,the real rate of unemployment, which includes those who have given uplooking for work, came to more than 54 percent of the population. Alongwith capitalist exploitation, the concurrent crime in Appalachia is the

continuous lack of public investment by state and federal governments tobuild up health care and educational facilities along with cultural activities,environmental programs and the building of other public goods such asmore roads, libraries, theaters, colleges, etc., leading one to speculate onthe inherent bias of political structures against the subordinate, poor andneglected segments of society. Despite the severe exploitation, the poorestof the poor in Appalachia have resisted and survived by making endsmeet the Kentucky way, as has been described earlier. In addition, there is


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today a strong peoples movement for social, economic and environmentaljustice, indicating that, aided by close relationships with neighbours andkin, the people of Appalachia may soon lead the nation in creating apolitical and socio-economic revolution in the United States. - Garda Ghista

Kentucky warbler

ConclusionsWhile scholars and politicians find various causes of Kentucky poverty, includingthose enumerated herein, they overlook the fundamental cause, which isexploitation by capitalists, particularly external corporations, based in the UnitedStates or elsewhere, such as Germany and Australia, as is evidenced by coalmine ownership. Billings and Blee write of the exodus of millions from Appalachiaafter World War II with the increasing mechanization of coal mining. Due tostrong kinship and reciprocity among the people, land was divided over

generations until at present the descendants have small parcels of not more than160 acres. Billings and Blee put the poverty rate in eastern Kentucky at 42percent, three times the national rate; 54 percent of the children in Clay, Owsley,Perry and Leslie Counties are living below poverty level. While poverty hasdecreased to some extent, in 1990 one-fourth of the people in AppalachianKentucky were poor.


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While Billings and Blee elaborate on multiple causes of poverty, includingfamilism, traditionalism, cultural legacies, yet they emphasize above all else thepredatory capitalism via economic exploitation and political domination that tookplace from the very early days of the 19th century and stands in sharp contrast tothe culture-of-poverty theory of Appalachia. The deep culture and kinship

helped the people to survive the onslaught of capitalist exploitation that arrived intandem with racial oppression to establish the salt mines and later cokemanufacturing. While the official rate of (structural) unemployment in 1989 wasabout 9 percent, the real rate of unemployment, which includes those who havegiven up looking for work, came to more than 54 percent of the population. Alongwith capitalist exploitation, the concurrent crime in Appalachia is the continuouslack of public investment by state and federal governments to build up healthcare and educational facilities along with cultural activities, environmentalprograms and the building of other public goods such as more roads, libraries,theaters, colleges, etc., leading one to speculate on the inherent bias of politicalstructures against the subordinate, poor and neglected segments of society.

Despite the severe exploitation, the poorest of the poor in Appalachia haveresisted and survived by making ends meet the Kentucky way, as has beendescribed earlier. In addition, there is today a strong peoples movement forsocial, economic and environmental justice, indicating that, aided by closerelationships with neighbours and kin, the people of Appalachia may soon leadthe nation in creating a political and socio-economic revolution in the UnitedStates.

The solution to removal of Appalachian impoverization is to adopt the principlesoutlined earlier that will support economic decentralization, namely: (1) Allresources in a socio-economic unit should be controlled by the local people. (2)

Production must be based on consumption and not on profit. (3) Production anddistribution of all natural resources and finished products must be carried out bycooperatives. (4) Local people must be employed in local business enterprises,and (5) All goods that are not produced locally should be removed from localstores. In addition to these five principles for creating and maintaining adecentralized economy, Sarkar has provided requirements for theimplementation of economic democracy, as follows: (1) The minimumrequirements of a particular age food, clothing, housing, education and healthcare must be guaranteed to all citizens; (2) Increasing purchasing capacitymust be guaranteed to all citizens. In fact, adequate purchasing capacity of everyperson must be guaranteed in the national constitution; (3) The power of makingeconomic decisions must lie entirely with the local people; and (4) Outsiders,non-local people, must in no way be allowed to interfere in local economies. Thiswill stop the outflow of local capital, the present cause of local impoverization.These four requirements if implemented along with the principles necessary tocreate a decentralized economy will lead people closer to economic democracy,because the power to control the economy will lie with the people. When outsideownership of local land and resources is prohibited, and when local lands and


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resources are owned collectively by local people, at that point in time poverty inKentucky will cease to exist, and will become a relic in the history museum.

Notes

1 Jake Karlyle, A Cooperative Economy What Might it Look Like? Paperpresented at the Conference: Community, Economy and the Environment:Exploring Tasmanias Future, Hobart, Tasmania, October 15, 2005.2 Prabhat Ranjan Sarkar, Proutist Economics: Discourses on EconomicLiberation, Kolkata, AM Publications, 1992., p. 212.3 Colin Hines, Localization: A Global Manifesto, Earthscan, 2000, p. 10.4 In Kentucky the largest cash crop is tobacco. However, corn and soybeans arealso sold outside the state.5 Colin Hines, p. 11.6 Ibid, p. 13.7 This new U.S. militarization around the globe is amply elaborated upon by

Chalmers Johnson in his book Sorrows of Empire, Owl Books (NY), 2005..8 Colin Hines, p. ix.9 Numerous articles are available in the Frontline magazine published by TheHindu newspapers.10 Vandana Shiva, Stolen Harvest: The Hijacking of the Global Food Supply,South End Press, 2000.11 Colin Hines, p. 6.12 Ibid, p. 6.13 In his book The Myth of Free Trade, Professor Ravi Batra documents howsince the beginning of the free trade era in the early 1970s real wages havesteadily declined. This has led to the necessity of both parents working, which

prior to the 1970s was not an economic necessity in the majority of families.14 Absolute poverty can be economically defined as missing one of the fiveminimum necessities of life, i.e., food-water, clothing, shelter, health care andeducation.15 Colin Hines, Localization.16 Numerous articles in Frontline magazine, The Hindu, and Zmag.17 In fact, many more countries are involved, such as Turkey, Malaysia,Indonesia, Mexico and Guatemala to name a few.18 David Korten, When Corporations Rule the World, Berrett-Koehler Publishers,2001.19 Colin Hines, p. x.20 Ibid, p. ix.21 Ibid, p. 2822 Ibid.23 Prabhat R. Sarkar, Proutist Economics, p. 213.24 Ibid, p. 214.25 Ibid.26 As is mentioned later in this paper, the Mondragon Cooperative conglomeratein the Basque region of Spain has set salary gradations of from 1 to 6. That is,


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the highest salary in any cooperative will not be more than six times the lowestsalary. Economics professor Ravi Batra, who is a lifelong student of Prouteconomic model, has stipulated that the wage differential not be more than aratio of 1 to 10.27 Prabhat R. Sarkar, Proutist Economics, p. 216.

28 Ibid, p. 217.29 Ibid.30 Ibid. p. 218.31 James Peter Warbasse, Co-operative Democracy: Attained ThroughVoluntary Association of the people as Consumers A Discussion of the Co-operative Movement, Its Philosophy, Methods, Accomplishments, andPossibilities, and its Relation to the State, to Science, Art, and Commerce, and toOther Systems of Economic Organization, New York: The MacMillan Company,1923, p. ix.32 Northern Kentucky University is an example.33 In Betsy Bowman and Bob Stone, Cooperativization As Alternative to

Globalizing Capitalism, it is mentioned that this same cooperative in Rochdalefounded in 1844 degenerated when in 1859 it took on investment members to getthe requisite funds to purchase a new mill. The investor members outvoted theco-operative members steadily and within three years converted the cooperativeto a capitalist business.34 International Co-operative Alliance. http://www.coop.org/ica/ica-rules.pdf.35 Betsy Bowman and Bob Stone, Cooperativization as Alternative toGlobalizing Capitalism, http://www.geo.coop36 Ibid.37 Ibid.38 Ibid.39 Ibid.40 James Warbasse, Co-operative Democracy, p. 480.41 Prabhat Sarkar, Proutist Economics, p. 105-121.42 Garda Ghista, The Fall of the American Empire and the Rise of a NewEconomy, at Prout World, http://www.proutworld.org.43 Ralph J. Ramsey, Forms and Scope of Poverty in Kentucky. ResourceDevelopment Series 10. 1967. 50 pp.44 2003 Fact Sheet, Kentucky Commission on Women. www.women.ky.gov45 Ibid.46 Poverty despite work: Many working families with children in Kentuckyremain poor, in the report Poverty Despite Work in Kentucky, published by theCenter on Budget and Policy Priorities and Kentucky Youth Advocates, April 7,1999. http://www.cbpp.org/4-7-99sfp.htm.47 Barbara Ehrenreich, Nickel and Dimed: On (Not) Getting By in America. OwlBooks, 2002.48 Two simple solutions to both these issues is to raise the minimum wage to$14.00 per hour, as calculated by Ehrenreich , and to remove all income taxobligations to persons earning less than $30,000. These steps wouldimmediately bring thousands of Kentuckians out of poverty. One more essential


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step is to provide universal health care to all Kentuckians and all Americans, toremove a major source of mental tension amongst the poor and the middle classwho face bankruptcy in the present medical system.49 State Fact Sheets: Kentucky. USDA United States Department ofAgriculture, Economic Research Service. Data updated August 31, 2006.

50 Ibid.51 Laura Ungar, Poverty fuels medical crisis: Access to care is difficult for ruralresidents, The Courier Journal, Louisville, Kentucky, September 25, 2005.52 Ibid.53 Ibid.54 Ibid.55 Dwight B. Billings and Kathleen M. Blee, Agriculture and poverty in theKentucky mountains: Beech Creek and Clay County, 1850-1910, Paper providedby University of Wisconsin Institute for Research on Poverty in its series Institutefor Research on Poverty Discussion Papers with number 1064-95. March, 1995,50 pp.

56 Ibid, p. 4.57 Ibid, p. 6.58 Ibid. p. 28.59 Ibid, p. 3060 By the early 1920s Tennessee farmers had succumbed to similarimpoverishment.61 Ibid, p. 1.62 Ibid, p. 2.63 Coal follow-up, Oligopoly Watch, November 20, 2004,http://www.oligopolywatch.com/2004/11/20.html.64 International Coal Group, Inc. http://www.intlcoal.com.65 Oligopoly Watch. The latest maneuvers of the new oligopolies and what theymean.http://www.oligopolywatch.com.66 This figure is based on September, 2003 data. Most likely there has beengreater consolidation in the past three years up to the present - November, 2006.67 Oligopoly Watch. http://www.oligopolywatch.com68 Ibid.69 Celia W.Dugger, Supermarket Giants Crush Central American Farmers,New York Times, December 28, 2004.70 Felicity Lawrence, John Vidal and Steven Morris, Unfair trade winds, TheGuardian, May 17, 2003. As the article is three years old, it is likely that theinterim period has seen further consolidation.71 Oligopoly Watch. http://www.oligopolywatch.com72 Ibid.73 Interview with Appalachian writer-activist Scott Goebbels on November 9,2006.74 Florence Cope Bush, Dorie: Woman of the Mountains, Knoxville, University ofTennessee Press, 1992. The author has written the story of her mother andfathers life in the Appalachian mountains during the period 1898-1942.


28/28

75 Ibid, p. 15-16.76 Phone interview on November 2, 2006, with Peggy King, Library Specialist,Steely Library, who with her husband originates from the Appalachian region.77 Richard Ulack, Karl Raitz and Gyula Pauer (Eds.)Atlas of Kentucky,Lexington: The University Press of Kentucky, 2000, p. 133.

78 Ibid, p. 135.79 Ibid, p. 145.80 Ibid, p. 146.81 Ibid, p. 149.82 Ibid, p. 181.83 Ibid, p. 183.84 State Fact Sheets, Kentucky, USDA U.S. Dept of Agriculture, Economicresearch Service.85 Ibid.86 Dwight B. Billings and Kathleen M. Blee, The Road to Poverty: The Making ofWealth and Hardship in Appalachia, Cambridge: Cambridge University Press,

2000, p. 318.87 Billings and Blee, p. 319.88 Ibid, p. 321.89 Ibid, p. 325

_____________________

Garda Ghista is a freelance journalist, author of The Gujarat Genocide: A CaseStudy in Fundamendalist Cleansing, and Founding Director of World ProutAssembly.
http://www.amazon.com/o/ASIN/1425944531/ref=s9_asin_image_1/002-6236447-0468808http://www.amazon.com/o/ASIN/1425944531/ref=s9_asin_image_1/002-6236447-0468808http://www.amazon.com/o/ASIN/1425944531/ref=s9_asin_image_1/002-6236447-0468808http://www.amazon.com/o/ASIN/1425944531/ref=s9_asin_image_1/002-6236447-0468808

From Globalization to Localization Bringing Kentucky Out of Poverty

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