Bringing Kentucky Out of Poverty By Garda Ghista ProutWorld News Features Ideology Sarkar FAQ Prout in 60 minutes Newsletter
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From Globalization to Localization: Bringing Kentucky Out of Poverty By Garda Ghista May 2007
Background Communism as an economic model was tried in various parts of the world such as Russia and Eastern European countries, however it failed. Under communist economies the common people became even more impoverished than they were prior to communism. Communism is symbolized by state ownership and public enterprise.[1] In essence, it is state capitalism. Capitalism is the economic model in vogue today in most countries of the world. The United States is the bastion of capitalism. In fact, many scholars and historians refer to it as the American Empire, which has replaced the British Empire of the 19th and 20th centuries. Capitalism is symbolized by individual ownership and private enterprise. We have today not merely capitalism but global capitalism, also referred to as globalization. In all these economic systems, i.e., communism, capitalism and global capitalism, the economic system is centralized with control being in the hands of a few persons. The question begs to be asked as to whether the common people have fared well in centralized economies, and whether they have been guaranteed an improved standard of living based on increasing purchasing capacity.[2] According to economist Prabhat Sarkar, in a centralized economy exploitation cannot be eradicated nor can the poverty of the common people be removed. In the above economic paradigms, economic policies are formulated by a handful of men for the benefit of those men who are generally indifferent to the plight of the masses.
Globalization For the past several decades, economists, political scientists, presidents, prime ministers and corporate CEOs have championed the cause of economic globalization, saying that a nation’s economic goals should include comparative advantage and international competitiveness. Globalization as an economic construct has become the new global theology. Comparative advantage refers to the belief that accessing the cheapest source of supply is of greatest benefit and efficiency to a particular country. The term was coined by British economist Adam Smith in 1776 and later refined by David Ricardo in 1817.[3] According to Smith and Ricardo, all nations benefit when each nation specializes in particular products, i.e., specialized cash crops.[4] If one nation has the land, climate, natural resources or labor to produce a good more cheaply than other nations, it should focus on mass production of that product. This gives it a comparative advantage in the global market. Economies of scale – the idea that the more goods you produce, the cheaper they become to produce – is a contributing factor in pushing for comparative advantage, i.e., specialization of particular crops and goods in each nation. Smith believed in open trade boundaries between all nations to maximize the benefits of comparative advantage. He further insisted that the “invisible hand” of market forces would bring about the best global scenario.[5] Neither Smith nor Ricardo could predict the unfettered flow of money across national boundaries. This free flow of capital has led to comparative advantage changing to absolute profitability, and hence absolute advantage has replaced comparative advantage. The other factor they overlooked was that comparative and absolute advantage were guaranteed not just by corporations but by state governments and their military machines.[6] The present Bush-Cheney regime in the U.S. has taken this guarantee to new heights such that militarization has replaced globalization as the U.S. government invades other nations at will in the name of gaining 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. global militarization to ensure obscene profits for the Iron Triangle, i.e., the nexus between government, military and corporations.[7]
Globalization supporters claim that the theory of comparative advantage and international competitiveness support the growth model, i.e., the growth of GNP. In reality, globalization compels state leaders to sign away the rights of the common people and hand them over to corporations and financial speculators. In that process the common people lose their right to better wages, better health care, better education and a host of other social benefits. Furthermore, in the name of benefiting international trade, what used to be an infinite spectrum of available goods became a consumer monoculture.
Production in other countries means unemployment for local people. Even the lowest-priced items at Walmart cannot be purchased when people are unemployed. Hence, the urgency is to bring production back to the local community or region. When goods are produced in China or India, local people have no control over that production or that economic process. In contrast, local production leads to local control and hence control over the local economy. The goal of concerned citizens is to regain control over the local economy. The common people should not live at the mercy of transnational corporations who on any particular day may decide to move their factories from Bellevue, Kentucky to Tijuana, Mexico or to Dhaka, Bangladesh. The owners of those transnational corporations may reside in New York, San Francisco, Germany or Australia and have never met anyone in Bellevue, Kentucky. There is no relation, no sentimental connection, and hence there is corporate indifference to the welfare of the Bellevue population. If 90 percent of Bellevue residents lose their jobs, it is of no concern to corporate CEOs living in another region or country. International trade, be it in bananas, hormone-filled beef or genetically modified (GM) vegetables, benefits the owners and CEOs of gigantic agri-corporations. The common workers and consumers do not benefit financially from international trade. At present, the laws of the World Trade Organization (WTO), North American Free Trade Association (NAFTA), Middle-East American Free Trade Association (MAFTA) and other global corporate bodies are carefully crafted so as to create a continuous curb on public expenditure, meaning health, social and education programs for the common people. Corporations, who in nexus with national governments create global trade agreements, do not acknowledge any needs of the people. For this reason, alert citizens often refer to globalization as the “trade liberalization beast.”[8]
Evidence indicates that economic globalization, whose hallmarks are international competitiveness and comparative advantage, leads to a rise in unemployment. Higher GNPs give the illusion that national economies benefit from globalization. However, only the owners of corporations benefit from global competition and comparative advantage. The common people of all countries, including the United States, are suffering economically as a direct consequence of globalization. As a simple example, in recent years India has signed several trade agreements with the United States that give all-powerful American corporations unhindered access to Indian markets as well as raw materials. The Indian GNP has risen markedly during the same period. Both Indian and non-Indian businesses have flourished. However, during the same period, Indian farmers have starved.[9] In the past year in Central and Southern India, thousands of farmers have committed suicide, either by hanging themselves or taking poison, because they saw no escape from crushing poverty caused by the introduction of western seeds, western fertilizers and pesticides, whose costs were insurmountable in comparison to the simple seeds and local farm technologies used prior to the onset of globalization.[10] Corporations look for maximum 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, never knowing whether the next day will bring them the final day of their employment and source of income. In the United States, while official statistics give the illusion that unemployment is stationary, in reality millions of Americans have lost their 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 instead returned to university to get higher degrees, in the hope that jobs await them on graduation.
At present the global trade laws of WTO, World Bank (WB) and International Monetary Fund (IMF) are penned by big business lawyers to bring more profit to corporations. Those same laws cause regions and nations to become the enemies of one another. When negative results occur, big business claims that eventually 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 steadily increased. Social benefits for the masses have decreased. Environmental pollution has spiraled out of control. According to the International Labor Office (ILO), in the late 1990s one third of the world’s work force was either unemployed or underemployed.[11] 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 (even of things as basic as water), (4) deregulation (particularly with regard to the environment), (5) increasingly severe constraints on all public expenditure, i.e., social, health and educational welfare programs, in the name of ever higher profit for corporate CEOs.[12] The signs of success of globalization are rising GNPs, rising stock market prices and rising trade statistics. These three indicators, however, provide no indication of the well-being of the common people.[13]
Globalization, or global capitalism, has resulted in 80 percent of the world population living in absolute poverty.[14] Absolute poverty is economically defined as a 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 attempt by transnational companies (TNCs) to become accepted by local people so that their presence and their products are accepted and purchased by the people.[15] In most countries of the world glocalization has succeeded. In a few, like India and Bolivia, the people saw the direct consequence of global trade treaties on their lives and drove the oppressive corporations out of their countries.[16]
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 by geography, climate, and the availability of animals and plants. (2) the industrial division of labor, wherein machines began to replace people in the production of goods, causing more workers to be dependent on wages and leading to the first worker strikes; (3) the imperial division of labor, wherein companies moved to developing countries where workers sweated and scrounged for raw materials for companies to ship back to their home countries. Gradually workers in developing countries became cash crop producers to suit the profit goal of corporations; (4) the transnational era, wherein migrant labor is imported to developed countries to become wage slaves in local corporations. Increasingly, production of goods has shifted entirely to countries like India and China where wages come to mere pennies per worker per week. In addition, developing countries do not have the labor law restrictions of western countries, hence even ten-year-old children work in Chinese, Indian and Bangladeshi factories making goods for western export.[17] Globalization has drastically reduced the power of national governments to take care of its citizens. In the words of David Korten, today corporations do indeed rule the world.[18]
Localization Concerned citizens around the world, observing the effects of globalization over the past two-three decades, have begun grassroots movements in an effort to regain control of their local economies. The process of moving from the global to the local has been called localization. The force propelling this process is the desire for an economy that protects people and rebuilds local communities. To be engaged in this process requires the courage to publicly reject the mantra of “international competitiveness” that is repeated worldwide by big business, financiers and mainstream economists, and replace it with new words such as “local sustainability,” “cooperative economy,” and “economic democracy.” Concerned citizens engaged in the struggle to improve their local region no longer listen to the idea that every country must economically outcompete every other country. Instead of purchasing products from the cheapest source, which may be Brazil or China, it is more beneficial to the people if those same products are produced locally, even if the cost of production and hence the final price to the consumer is higher.
We need not condemn all global trade. We need only change the end goal of trade. We need to move from GATT (General Agreement on Trade and Tariffs) to GAST (General Agreement on Sustainable Trade).[19] If international trade is to continue, a new end goal is required.[20] The goal of world trade must be to protect the local people, not politicians or owners of corporations. The local in localization can refer to a nation state or, as in the case of larger nations like the U.S., Canada or Russia, it can refer to a particular bioregion, state or province within the larger nation. It means simply to bring economic control back to the local arena. Localization does not refer to “state” control, as in the communist model. It refers to local people in a town. Every person must have a voice and a vote in the economic direction of his community.
The Universal Declaration of Human Rights guarantees every human being the right 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.[21] In a society dominated by corporations whose goal is maximum profit, human beings will not have these rights. Localization does not mean closing off the outside world. 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-economic unit 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.[22] In developing 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 a local, decentralized economy controlled by communities, by local people. It means to completely reverse the present economic direction around the world from global to local. It also means that instead of individuals and communities being indifferent or feeling powerless, every individual needs to become involved in the economic future of the community. We need to participate in the process of changing our economy from global to local.
Sarkar says that economic planning must start from the lowest level, from the grassroots, where the knowledge, experience and talent of local people can be applied to solve local problems and build local economies. He further says that since the handful of capitalists presently controlling the global economy will never voluntarily give up their vast power, it is up to the common people to start a global movement in which the slogan should be: “Abolish centralized economy to end exploitation; establish decentralized economy.”[23]
Sarkar provides five principles for creating and maintaining a decentralized economy: (1) All resources in a socio-economic unit should be controlled by the local people.[24] This applies particularly to those resources that are essential in providing the minimum necessities of life. Raw materials should be converted by the 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 one’s race, complexion, language or birthplace. The one point of consideration is whether an individual has made that geographical region and community as his own, and whether he has merged his individual socio-economic interests with the collective.[25]
If an individual has not done this, then he would not be deemed as a local person, and hence would have no say as regards local socio-economic issues, for example, as regards production and distribution of either natural resources or their finished products. Surplus wealth, after meeting the needs of the local people, can be distributed to those having greater merit, such as doctors, engineers, scientists and teachers. These persons with highly specialized knowledge and acumen can be provided with extra amenities that will help them in their profession. However, the goal of the community will be to constantly reduce the economic gap between the wealthiest person and the poorest person.[26]
(2) Sarkar’s second principle for maintaining a successful decentralized economy is that production must be based on consumption and not on profit.[27] In a decentralized economy, all goods produced will be sold in the local community. Hence a sound economic and moral stability will be established. This practice will also cause the local money to be continually flowing inside the community, which will further strengthen the economy, and make it practically immune from any upheaval or depression. With the constant internal circulation of money, both incomes as well as people’s purchasing capacity will go on increasing. This has never been achieved with the communist model or the capitalist model.

3. The third principle for maintaining a healthy decentralized economy is that production and distribution of all natural resources and finished products must be carried out by cooperatives. It is extremely difficult for cooperatives to survive when surrounded by capitalist enterprises. The prices of goods sold by cooperatives cannot compete with the prices of Walmart corporation, which has their goods made in China often by ten-year-old children earning a few pennies a day, then has those goods flown directly to private air terminals next to Walmart headquarters. The consequences of Walmart’s actions are that local people who could have produced those goods are without jobs and hence do not even have money 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) people employed in Walmart stores earn pittance and receive no benefits.

Hence Walmart engages in a full (global) circle of exploitation to end up ranked as one of the top ten richest companies in the world. According to Sarkar’s first principle, Walmart does not classify as a “local” person. Hence it must be removed from the community and replaced by local companies managed by local people to produce 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 mind those slightly higher prices with the realization that local people are gainfully employed in producing and selling those goods and are receiving living wages for their work. Living wages and adequate purchasing power will be guaranteed because the business model of all companies created in local communities will be the cooperative business model. Raw materials, i.e., the natural resources of a bioregion, will provide constant supplies to cooperative businesses that can produce finished goods and sell them in the local market. When people of a community understand the benefits of the cooperative business model, they will accept it whole-heartedly. Agriculture, industry and trade can all be organized through cooperatives. Private ownership of these industries can be abolished because in private ownership the well-being of the larger community will not be served. Cooperatives and decentralization are inseparable.[28]
(4) The fourth principle required of a decentralized economy is that local people must be employed in local business enterprises.[29] If they are not employed in local businesses, the problem of unemployment cannot be solved. Local people should collectively decide on the minimum requirements essential for their physical and economic well-being. It is critical that no outside interference is allowed in a local economy. Cooperatives can provide employment to the local people. People knowledgeable in agriculture, in agro-industries (industries related to farm production) as well as agrico-industries (industries related to products from farming, i.e., silk from sericulture, rope from jute) will be required to work in agricultural cooperatives.
(5) The fifth and perhaps the most difficult principle to implement is that all goods that are not produced locally should be removed from the local stores.[30] The goal of decentralization is for communities to become self-sufficient. So long as imported goods are available, there will be no incentive for blocs and regions to produce those goods. So long as imported goods are available, the local people will not be guaranteed employment in local cooperative industries. For this reason, banishing all imported products is critical to a community gaining self-sufficiency. Local products may not be as cheap as imported goods. They also may not be as efficient or technically sophisticated. Nevertheless, this principle is essential in order to create self-sustaining communities. During times of economic collapse as we saw in the 1930s, it is only the self-sufficient communities 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 not remain in the community. It will leave and travel to the company owner who may be in another state or even another country. Money leaving a community will cause it to suffer. In order for people to prosper, money must remain in a town and must keep circulating through production, sales and continually improving production and increasing wages.
If any good can be produced locally, it should not be imported. Several centuries ago, when men ventured by ship to India for spices and other luxuries, they brought products back to their home countries that were unavailable locally. This motto must be revived. Global trade must be used only to acquire essential items that cannot be produced locally. It is the premise of the “fair trade” movement. This will protect local jobs and local cooperative businesses. If goods are produced locally, and sold locally, local money returns to the producing cooperative, and profits are given to the employee-owners in the form of dividends. 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 local economic infrastructure. Resource and other taxes can be introduced to help cover the costs of converting from a global to a local economy. Thus only that trade should be undertaken that enhances and strengthens local economies and local 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 throughout Europe to see first hand cooperatives in action. He wrote: The student of Co-operation, if he is not already familiar with the facts, will discover with some amazement its actual extent. This revelation is bound to gratify anyone who is seeking a tested method for the reorganization of society. I have for months at a time lived and traveled among co-operative societies where I have seen many thousands of Co-operators – living in their co-operative houses, supplied by their own stores, working in their own industries, financed through 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 utopian theorists hope as a remote possibility of the future and strive to attain by some other means.[31]
While the five principles stated earlier for establishing decentralized economies are clear guidelines, the overriding factor in decentralized economies will be cooperatives, as mentioned in the third principle. The goal is to move from a capitalist economy to a cooperative economy. American universities in their macro 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 a company, and (3) corporation, which has multiple shareholders. However, the fourth business model, which is the cooperative business model, is omitted entirely from 99 percent of American economics courses.[32]
We can give the example of any Walmart outlet where a minimum of 20 women are employed, earning minimum wage and barely making ends meet. If those 20 women were to form a cooperative of any kind – a health food store, a corner mini-mart, or a dairy cooperative – raising cows and selling the fresh milk, later expanding to make fresh butter and cheese – they will work for living wages, and they 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 employees and owners. All share in the work and all share in the profits. Together the women decide how much of profits is ploughed back into the business and how much goes to the owners/employees as annual dividends. This business model can help all women in Kentucky to escape poverty.
Cooperatives leads to humane, democratic production. Wages must be kept as closely together as possible to avoid the entry of classism. Tasks should be divided as equally as possible. Other precautions are necessary, such as taking care that the collectively appointed manager of the cooperative does not misuse his position to take excessive control of its management.
In 1844 the weavers of Rochdale, England formed a cooperative and wrote up the “Principles of Cooperation.”[33] 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 Membership
Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
Principle 2: Democratic Member Control
Co-operatives are democratic organizations controlled by their members, who actively 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, one vote) and co-operatives at other levels are also organized in a democratic manner.
Principle 3: Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
Principle 4: Autonomy and Independence
Co-operatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
Principle 5: Education, Training and Information
Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public – particularly young people and opinion leaders – about the nature and benefits of those co-operatives.
Principle 6: Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
Principle 7: Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.”[34]
The most famous example of a successful co-operative is the Mondragon cooperative network that originated in the town of Mondragon in the Basque country of northern Spain. In 1956 a priest named Jose Maria Arizmendiarrieta opened a small stove factory and ran it with five former students as a democratic co-operative.[35] In 1958 the government denied them health and unemployment benefits, 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 on household appliances and machine tools. During the 1980-83 economic recession, the Basque region lost 20 percent of its jobs and numerous firms laid off thousands or shut down completely. Five co-operatives had to close and others reduced wages by 11 percent. However, all other co-operatives survived without financial setbacks and without layoffs, and served to stabilize the regional economy.[36] It is an example of how during economic recession, if the economic power is decentralized and wholly locally controlled, that local economy will be relatively unaffected by external economic crises. In the 1980s Mondragon formed a huge network called the Mondragon Co-operative Corporation in order to compete with capitalist corporations whose appliances were coming into Spain from other European countries such as France and Germany.[37] As of 2003, the Mondragon co-operative network had more than 66,000 employees/owners operating more than 160 co-operatives; 135 are industrial, 6 are financial and 14 are distribution co-operatives. In addition they run housing, service, research, education, and training co-operatives. In 1997 they founded the Mondragon University, which trains students in the skills required to work in their co-operatives. The University board of directors comprises members from the student body and faculty and some members from local co-operatives. Since 1997 they have founded technology and management schools and research institutes affiliated with the university.[38] Every co-operative in the Mondragon network has an annual general assembly when the board of directors is elected. That board of directors appoints the management persons, elects a watchdog council that monitors management, and a social council, which has the responsibility to index all jobs on a 1 to 6 spread based on the job requirements for experience, training and responsibility.[39]
As James Warbassa points out, the quest for profits and privilege in a society leads to unending crime, corruption, immorality, poverty and wars. According to him, the only solution is to introduce the co-operative business model at every level, for all production, distribution and administration of economic issues.[40] Co-operatives can bring about real economic democracy, which in turn can foster genuine political democracy. The critical factor to remove is the profit motive, due to its de-humanizing influence on human beings. It must be replaced with the far more humane mindset of thinking for collective welfare above individual welfare. Warbassa sees this change of mindset as an evolutionary process that more and more 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 a gradual and voluntary process. It cannot be forced upon the people. People need to be educated and convinced regarding its benefits.[41] At present the poverty in Kentucky and elsewhere may not be severe enough for people to consider the co-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.[42] At that time, when unemployment begins to reach the levels of those during the Great Depression (25 percent), people will become amenable to the co-operative business model and way of life.
Poverty in Kentucky, USA Ralph Ramsey describes poverty in Kentucky as “being a condition of deprivation in any aspect of living which handicaps a person in acquiring the good things of life…” as measured by the following factors: “(1) income, (2) education, (3) employment, (4) housing, (5) health, (6) social participation, and (7) welfare recipients.”[43] Kentucky, USA has the second highest poverty levels in the United States after Mississippi. The average annual household income in eastern Kentucky is under $22,000 per annum. In 1999, 15.6% of Kentucky’s women over 18 were living below poverty level, while 11.6% of men were below poverty level.[44] 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 the percentage is 42.7 percent. Older women at poverty level in Kentucky are 16.7 percent, while older men comprise 10.5 percent.[45] In 1999, the Center on Budget and Policy Priorities stated that 80,000 Kentucky families with children live in poverty despite one working parent.[46] According to the Center, poverty among working families increased during the 1990s, with less than 20 percent of families relying on welfare. The reason can be attributed to the fact that 60 percent of those leaving welfare and returning to work received wages of less than $7.00 per hour. Author Barbara Ehrenreich has stated categorically that the minimum wage in the United States must be not less than $14.00 per hour in order for working families to move out of the ‘working poor’ category into the ‘self-sustaining’ category.[47] Nearly one in four children in Kentucky is poor, according to the Center. They report that job growth has been primarily in the area of service and retail jobs, both of which are low-paying positions. Second, the minimum wage 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 of their salaries into taxes than is paid by middle and upper-middle class families.[48]
As of August 31, 2006, 1,806,397 Kentuckians lived in rural areas, 2,367,008 in urban areas, coming to a total of 4,173,405. Per capita income in 2004 in rural areas 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 in 1979, 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,[49] substantially higher than the national average of 12.7 percent. The percentage of Kentuckians completing high school in 2000 was 33.6 percent (35.5 percent in rural areas and 32.1 percent in urban areas). Kentuckians completing college in 2000 was 17.1 percent: 11.3 percent in rural areas and 21.8 percent in urban areas. In 2002 18.4 percent of Kentuckians were in farming or farm-related jobs.[50]
Poverty is the single greatest cause of disease in Kentucky.[51] The life expectancy for men in Harlan County in 2001 was 65 years, which is shorter than in developing 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, insulin and ulcer medications. Seventeen of the 20 counties of Kentucky having the highest death rates have poverty levels of more than 20 percent, including people who have been impoverished for 30 years, i.e., they have known only poverty.[52]
However, health crisis and early deaths are not restricted to rural areas. Poor residents in urban areas unable to afford basic medications and medical items like inhalers for asthma suffer likewise. According to Laura Ungar, in 2005 one in six Kentuckians live below the federal poverty level, in contrast to the national average of one in eight. Kentucky’s median household income is 20 percent lower than the national average, and 38 percent of Kentucky households earn less than $25,000 annually, while nationally 29 percent of households earn less than $25,000.[53] More than 50 percent of Kentuckians earn less than $35,000, while the national average is 41 percent.[54] Poor health is directly correlated to both education and income, with people in lower income brackets being far more likely to smoke, have poor diets and a sedentary lifestyle. As healthy whole wheat and other full-grain breads cost double in price compared to white bleached breads, poor people are often condemned to the least healthy supermarket products.
In 2005 just 75.1 percent of Kentuckians graduated from high school – one of the lowest rates in the United States. The poor are hit from all sides: due to poverty they 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. And again due to poverty they are less likely to have medical insurance and hence visit the doctor only when in dire straits, when their diseases are too advanced to bear without pain medication.
Causes of Poverty Dwight B. Billings and Kathleen M. Blee in their study of poverty in Eastern Kentucky have provided plausible reasons for its development from 1860 onwards.[55] One reason was the high rate of population growth among local families, leading to the constant division and re-division of land as fathers parceled out their holdings equally amongst their children. Eight to fifteen children in a family was normal in the mid and late 19th century. While the original settlers had vast land holdings, over generations through repeated divisions to accommodate all siblings the holdings became relatively small and often contained no fertile land, i.e., the agricultural land available was generally over-cropped, causing it to become rocky and unproductive. From the beginning in the mid-19th century, emphasis was on subsistence farming rather than on commercial farming. The same pattern had occurred in New England, with the only difference being that in Kentucky subsistence farming continued much longer due to the region’s relative geographical isolation and delayed development of transportation.
Billings and Blee note that when lumbering came to eastern Kentucky, local people prospered financially and consequently gave up their traditional crafts of weaving and shoemaking, preferring instead to purchase clothes and shoes.[56] While they had formerly produced flour, sugar, lard and meat, they likewise stopped home production and began to purchase these items, gradually losing more and more ability to sustain themselves through their own labor and ingenuity.
Salt mining became the state’s first significant commercial activity, and farmers moved into the region to work in the salt mines. Wealthy, slave-owning families also moved to Appalachian Kentucky to reap the benefits of salt-mining. The family 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. These two families became wealthy due to salt-manufacturing, large-scale commercial farming and the use of slave labor. The growing wealth disparities caused pronounced social stratifications, with the wealthy, slave-owning families controlling huge lands, commercial ventures and personal estates worth nearly $46,000, while the vast majority of Appalachian farmers had holdings worth only $859.[57] The wealthiest individual in Clay County, Francis Clark, had an estate worth $175,000 in 1860.[58] In the late 19th century most African-Americans left Appalachia and moved westward. Former slave owners continued in their role as wealthy landowners, corporate commercial investors, and as local agents for external capitalist interests in local resources such as land, timber and coal. Thus while half a century earlier the farmers had been relatively self-sufficient, poverty increased as farm sizes along with livestock inventories diminished and land was over-cropped, rendering the soil infertile.[59] Soil exhaustion and soil erosion was commonplace. By 1880 poverty was entrenched in Appalachian Kentucky.[60]
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 corporate stranglehold of local energy and other natural resources. Ronald Eller claims that the small, impoverished, subsistence farms characteristic of eastern Kentucky today developed in tandem with the invasion of external coal and timber interests.[61] Slow economic growth, rapid population increase, small land holdings per farmer and soil depletion were all factors leading to Appalachian impoverishment. Subsistence farming in the region was the norm during the antebellum era in Kentucky and other southern states. Many farms continued to be non-commercial through the first half of the 20th century.[62] While initially the region underwent capitalist transformation in the latter half of the 19th century, today eastern Kentucky has been swallowed up by national and international corporations.[63]
International Coal Group (ICG) is a major coal producer with mine complex throughout Appalachia and headquarters in West Virginia. ICG East Kentucky is a surface mining operation in Pike County that manages the Blackberry mine. It includes three coal beds. The Blackberry mine has about 2.6 million tons of coal reserves.[64] According to ICG, when Blackberry mines are empty, the company will start 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 Sterling property. ICG mines in Northern and Central Appalachia and sells to both domestic and international customers. As of January 1, 2006 ICG owned more than 315 million tons of metallurgical quality coal reserves and 572 million tons of steam coal reserves. In addition the company owns another 707 million tons of coal resources – coal-bearing bodies that have been analyzed but are not presently considered as commercially viable coal according to SEC rules. Metallurgical coal is used for producing coke and steam coal is used by utilities companies. The ICG is an investor group formed in May 2004 that acquired the bankrupt 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 coal industry, which causes smaller coal companies to go bankrupt or sell out to the mega coal companies such as ICG. ICG Chairman Wilbur Ross previously bought up dying steel companies, consolidated them into one company called International Steel Group, made them profitable and then sold them at a huge profit to the Mittal Group. In this process, and as he is now doing in the coal industry, unions will be eliminated or grossly restructured and pension obligations to miners will be shifted to the federal government. The top ten coal companies as of November 20, 2004 were Peabody Eergy, Arch Coal, Kennecon Energy, Foundation Coal Holdings, CONSOL Energy, Massey Energy, Horizon Natural Resources, North American Coal, Westmoreland Mining, TXU and Vulcan Partners.[65] Kennecon Energy and TXU are Australian-owned companies. Foundation Coal Holdings and CONSOL Energy are German companies. George Bush has removed restrictions on strip mining as well as emissions from coal-based electric generators, making it thus more profitable for coal industries. The coal business is already an oligopoly, with the top five companies controlling more than 50 percent of domestic coal production.[66] The strategy is not to build new mines but to buy out smaller existing mines, as it is cheaper and financially involves 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.[67]
Mergers and acquisitions are an ongoing phenomenon, leading to increasingly concentrated oligopolies, be it in coal, gas, petroleum, timber, beef cattle or vegetable produce. In every case, it is the worker, the labourer, who suffers maximally, as in the name of higher profits the companies constantly squeeze their salaries and benefits. We find the same scenario in the tobacco industry with increasing mergers and acquisitions leading to larger oligopolies with fewer corporate members. The world’s second largest tobacco company, Dimon, buys leaf tobacco from farmers in more than 40 countires and has more than 30 percent of the market share with companies like Philip Morris (Altria) and Japan Tobacco. The largest tobacco-processing corporation is Universal Corporation, which also deals in lumber and other agricultural products.[68] Economic globalization compels consolidation and oligopolies, which demand “free markets” of national governments. However, these free markets are only free for corporations, as those same corporations using financial and political power effectively crush smaller companies, driving them out of business and livelihood. Hence, in every country, including the U.S., the small companies and the small farmers suffer to the point of sell-out, bankruptcy and starvation.
Farm laborers and coal miners are at the mercy of corporate boards whom they never see but who they know as denying them their fundamental rights to a living wage, to safe working conditions, to health care and to pension benefits. In the New York Times article “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 “standard” produce required by the mega supermarkets taking over the towns and cities.[69]
As Steve Hannaford points out, the WTO treaties serve the wealthy alone, as its laws provide a means for wealthy corporate farmers to unload their unsold produce onto third world countries. Local people in third world countries do not benefit. Only a handful of local elites benefit. The small farmers and landowners everywhere suffer. It is a natural then that the United States would expect more and more immigrants to arrive on its shores or to scramble over the wall along the Mexican border, as the only means of providing economic relief to people starving as a direct result of WTO/corporate laws and policies.
The Capitalist Factor As Sarkar has correctly stated, capitalism turns men into beggars and communism turns men into beasts. The world today is controlled by oligopolies (a few companies controlled by a handful of extremely wealthy men that sell goods to other people or companies.) As elaborated by Lawrence, Vidal and Morris in their article “Unfair trade winds,” the food industry has likewise become an oligopoly. For example, the banana market is dominated by an oligopoly of five companies: Chiquita (formerly United Fruit), Dole, DelMonte, Fyffes and Noboa. The coffee industry is dominated by Kraft, Nestle, Proctor & Gamble, Sara Lee and Tchibo.[70] These mega corporations squeeze the farmers and pit one country’s farmers against another country’s. The farmers do the only thing they can 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 same kilo was sold in stores as instant coffee for $26.40, which is 7000 percent more than the price received by the farmer.[71]
According to Steven Hannaford, oligopolies (a handful of sellers) invariably lead to oligopsonies (a handful of buyers). Examples of oligopsonies are Barnes & Noble, ClearChannel andViacom. The supermarket industry is a further example of an oligopsony, where in 2003 three major chains existed: Safeway, Kroger and Albertson’s. These three have bought out most smaller chains, a step that gives them tremendous power, leading to oligopsony exploitation, which has led to severely reduced income for farmers as the oligopsony of produce buyers squeezes prices using their power to select the lowest price from amongst the helpless farmers. In addition, growers in the United States, or example, are expected to not only sell at a cheaper price but are obliged by the buyer oligopoly to market and promote their produce inside the supermarkets.[72] In the produce sphere, supermarket chains are now an oligonomy, which means they are both the buyers (oligopoly) and the sellers (oligopsony). The supermarkets are the middlemen and use their “middle” position to exploit in either direction. (It is interesting to note here that Venezuelan President Hugo Chavez eliminates middlemen in every sphere of the economy, both in Venezuela as well as in his program to supply oil to poor Americans. He bypasses politicians and governmental structures and ensures that the oil reaches the poor directly.)
Hannaford says that just oligopolies breed oligopsonies, the converse is also true. While the two words ‘oligopoly’ and ‘oligopsony’ exist in economic vocabulary, there is on economic term that covers the increasingly common scenario of corporations serving as both oligopolies and oligopsonies, i.e., when the same few buyers are also the same few sellers. Hannaford has coined the word “oligonomy,” which means that companies are an oligopoly towards one group (i.e., farmers) and an oligopsony towards another group (retailers). The only group strong enough to deal with an oligopoly is an oligopsony, which leads then to a tiered oligonomy. Safeway, Kroger and Walmart are an oligopoly to consumers, while to producers/farmers and food brokers they are an oligopsony. Vendors providing ice cream are an oligopsony to dairy farmers and simultaneously an oligopoly to supermarkets. The two huge chocolate companies called Archer-Daniels-Midland and Cargill are an oligopsony to West African farmers, bidding one against the other to get the cheapest price for cocoa beans. Thereafter they become an oligopoly when selling to chocolate manufacturers such as Nestle, Kraft, Mars and Hershey. These four chocolate producers become an oligopsony to cocoa merchants, while simultaneously serving as an oligopoly to cocoa retailers who need their products to sell to the consumers. This inter-layered process becomes what Hannaford calls the “tiered oligonomy.” He presents the following example of the chocolate oligonomy:
1.
Cocoa growers 2.
Cocoa processors (ADM, Cargill) – Oligopsony for cocoa beans, Oligopoly for processed cocoa 3. Chocolate makers (Kraft, Nestle, Mars, Hershey) – Oligopsony for processed cocoa. Oligopoly for chocolate candy 4. Key retailers (Walmart, Safeway, CVS) – Partial oligopsony for chocolate candy. Partial oligopoly for retail candy 5. Candy eater / consumer
Understanding the tiered oligonomies that today permeate the capitalist economic paradigm helps us to understand how the various market layers exploit the two end-layers of each layered tier: the farmers/producers at the beginning of the 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 the oligopoly and oligopsony. Hence, there is no way for the producers and consumers to avoid exploitation. As oligonomies are permeating every sector of the market, including coal, timber and produce, it becomes easier to understand why Kentucky is impoverished. Several reasons have been cited above as the cause of poverty: slow economic growth, rapid population increase, repeated land division generations, re-cropping and soil depletion, However, Appalachian writer and activist Scott Goebbels[73] cites the prime cause of poverty in Kentucky and particularly in eastern Kentucky as being capitalist exploitation, which began in the early 19th century with the in-migration of slave-holding southerners who became exceedingly wealthy while surrounded by impoverished Appalachian farmers. From the few wealthy local exploiters, capitalism has grown until today it is represented by international oligonomies, manifested by companies in Germany and Australia owning Kentucky coal mines. Another word for oligonomies is globalization or capitalism on a global scale. Unless the economic paradigm of capitalism is removed and replaced by a more democratic, egalitarian economic structure, a large percentage of Kentuckians will remain impoverished due to circumstances far beyond their control.
Kentucky Resources As Florence Cope Bush writes, “Most everything we needed for survival was there in the mountains.”[74] Bush’s book about her mother Dorie details life in the Appalachian Mountains from the period 1898 to 1942. Even In 1942 poor Appalachian families were remarkably self-sufficient as compared to other regions of the state. They made their own furniture, kitchen utensils, and grew wheat, corn, potatoes and oats. Beef cattle and sheep were slaughtered for consumption, while milk cattle were utilized for milk consumption, butter and cheese-making. The people produced their own sugar from maple trees, collected wild honey, and in addition had their own beehives, and knew how to make sorghum molasses. They spun sheep’s wool into thread that was used to make cloth. People raised both cotton and flax to use for cloth and linen-making. Tanned hides were used for shoe-making.[75] Farmers owned oxen, hogs, horses and mules. To augment this they hunted deer, boar, squirrels and other animals for food. Food, clothing and shelter were available in Appalachian Kentucky since the 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 of doctors 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 need the home heated, they pick up a bucket and go out and fetch a bucket full of coal from the coal pile next to the house. When they need water, they take a bucket and go out to draw water from the well. Many continue to heat their homes with wood. Many homes continue to have outdoor toilets and rainwater is collected in cisterns and used instead of municipal water.
Bartering continues to be common. If a woman’s well breaks down, she visits the neighbours to get help and offers a quilt in return for repairing the well. If money is not available to purchase jewelry for Christmas presents, a man may collect some of his guns and take them to a jewelry shop in Williamsburg, Kentucky and offer them in exchange for jewelry.[76] Others in the region may use food stamps as a bartering item. This style of bartering remains commonplace amongst the people of Appalachia. Sarkar has advocated that bartering take place as much as possible as a means for acquiring essential goods and services. Venezuelan President Hugo Chavez has led the world in reviving the barter system by providing oil to other countries in exchange for goods and skills needed in Venezuela, such as doctors, medical skills and cows.
Kentucky’s most valuable natural resources are bituminous coal, timber, crushed stone, natural gas and oil. Eastern Appalachia, which is historically and presently riddled with poverty, has abundant natural resources. In 1993 bituminous coal comprised 85 percent of mineral production in the United States.[77] Other types are anthracite, subbituminous, lignite and brown coal. At present only 80 percent Kentucky 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.[78] Besides coal and minerals, Kentucky has substantial natural gas deposits, which have increased, and small reserves of petroleum with original supplies nearly exhausted. Kentucky contains a large network of gas transmission and distribution lines, including not just local gas but lines between major northeastern and midwestern markets. Kentucky gas comprises 3 percent of the total amount of gas running through the distribution lines.[79]
Another vast resource in Kentucky is timber, including yellow poplar, shortleaf pine, black gum, sweet gum from the south and northern red oak, white pine, hemlock, hard maple, basswood, black walnut and beech from the north.[80] About one half or close to 12 million acres of Kentucky land is forested. Oak and hickory represent the main commercial timber sources. Most of Kentucky’s timber is privately owned with each owner averaging between 10 and 25 acres. Kentucky produces around 800 million board feet annually.[81]
Kentucky with its rolling hills, limestone bedrock and river floodplains has ample cultivatable land, particularly in the loess-filled Jackson Purchase area. The Bluegrass regions with their shale and limestone backed soils also serve as rich agricultural lands. While presently a strong trend predominates for farmers to sell their land due to price competition with foreign imports, yet the potential to increase farming in Kentucky remains if and when pricing becomes adequate such that farmers can make a reasonable living. Principal crops have been hay, soybeans, wheat, corn and tobacco. Again, the diversity of crops could expand substantially if required and if a solid local market for those crops were made available. In addition there is ample hog and pig production, broiler and other chickens, beef cattle, dairy cattle, horses that are sold on a commercial basis. Other animals such as deer, wild boar, turkeys and peasants are available in plenty. With its vast waterways, lakes and reservoirs, Kentucky abounds in fish that provide another source of local subsistence.
Manufacturing is extensive in Kentucky and presently includes a large percentage of foreign ownership. Only eastern Kentucky lags behind in manufacturing development. As of 994, General Electric, Toyota Motor Manufacturing, Fruit of the Loom, Ford Motor Assembly Plant, Ford Motor Truck Plant, 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.[82] Products made 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 and publishing, rubber and plastics, food and related products, furniture and accessories, wood products, leather and leather products such as shoes, and clothing.[83] In 1990 there were 41,100 Kentuckians working for foreign-owned plants in Kentucky, which came to about 14 percent of its manufacturing employees. Only six states had a higher share of their manufacturing workforce employed in foreign-owned companies.
In 2005 Kentucky remains exceedingly rich in natural resources. The top five agricultural commodities in Kentucky were (1) horses/mules, at $1,010,000 or 82.2 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 of US value.[84] The top five agriculture exports in 2005 were tobacco (with number one ranking in the US), live animals and meat (ranked number 8), soybeans and related products (number 15 rank), feed grains and related products (14 ranking), and wheat and related products (22 ranking).[85] In 2006 Kentucky continues to have abundant natural resources and manufacturing capabilities.
Conclusions While scholars and politicians find various causes of Kentucky poverty, including those enumerated herein, they overlook the fundamental cause, which is exploitation by capitalists, particularly external corporations, based in the United States or elsewhere, such as Germany and Australia, as is evidenced by coal mine ownership. Billings and Blee write of the exodus of millions from Appalachia after World War II with the increasing mechanization of coal mining. Due to strong kinship and reciprocity among the people, land was divided over generations until at present the descendants have small parcels of not more than 160 acres. Billings and Blee put the poverty rate in eastern Kentucky at 42 percent, three times the national rate; 54 percent of the children in Clay, Owsley, Perry and Leslie Counties are living below poverty level.[86] While poverty has decreased to some extent, in 1990 one-fourth of the people in Appalachian Kentucky were poor.
While Billings and Blee elaborate on multiple causes of poverty, including familism, traditionalism, cultural legacies, yet they emphasize above all else the predatory capitalism via economic exploitation and political domination that took place from the very early days of the 19th century and stands in sharp contrast to the “culture-of-poverty” theory of Appalachia. The deep culture and kinship helped the people to survive the onslaught of capitalist exploitation that arrived in tandem with racial oppression to establish the salt mines and later coke manufacturing.[87] While the official rate of (structural) unemployment in 1989 was about 9 percent, the “real” rate of unemployment, which includes those who have given up looking for work, came to more than 54 percent of the population.[88]
Along with capitalist exploitation, the concurrent crime in Appalachia is the continuous lack of public investment by state and federal governments to build up health care and educational facilities along with cultural activities, environmental programs and the building of other public goods such as more roads, libraries, theaters, colleges, etc., leading one to speculate on the inherent bias of political structures against the subordinate, poor and neglected segments of society. Despite the severe exploitation, the poorest of the poor in Appalachia have resisted and survived by “making ends meet the Kentucky way,” as has been described earlier. In addition, there is today a strong people’s movement for social, economic and environmental justice,[89] indicating that, aided by close relationships with neighbours and kin, the people of Appalachia may soon lead the nation in creating a political and socio-economic revolution in the United States.
The solution to removal of Appalachian impoverization is to adopt the principles outlined earlier that will support economic decentralization, namely: (1) All resources 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 and distribution of all natural resources and finished products must be carried out by cooperatives. (4) Local people must be employed in local business enterprises, and (5) All goods that are not produced locally should be removed from local stores.
In addition to these five principles for creating and maintaining a decentralized economy, Sarkar has provided requirements 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 the national constitution; (3) The power of making economic 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. This will stop the outflow of local capital, the present cause of local impoverization. These four requirements if implemented along with the principles necessary to create a decentralized economy will lead people closer to economic democracy, 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 will become a relic in the history museum.
Notes [1] Jake Karlyle, “A Cooperative Economy – What Might it Look Like?” Paper presented at the Conference: Community, Economy and the Environment: Exploring Tasmania’s Future, Hobart, Tasmania, October 15, 2005.
[2] Prabhat Ranjan Sarkar, Proutist Economics: Discourses on Economic Liberation, 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 are also 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 The Hindu 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 how since the beginning of the free trade era in the early 1970s real wages have steadily 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 five minimum necessities of life, i.e., food-water, clothing, shelter, health care and education.
[15] Footnote Colin Hines. It’s his definition.
[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. 28
[22] 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 conglomerate in the Basque region of Spain has set salary gradations of from 1 to 6. That is, the highest salary in any cooperative will not be more than six times the lowest salary. Economics professor Ravi Batra, who is a lifelong student of Prout economic model, has stipulated that the wage differential not be more than a ratio 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 Through Voluntary Association of the people as Consumers – A Discussion of the Co-operative Movement, Its Philosophy, Methods, Accomplishments, and Possibilities, and its Relation t the State, to Science, Art, and Commerce, and to Other 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 Rochdale founded in 1844 degenerated when in 1859 it took on investment members to get the requisite funds to purchase a new mill. The investor members outvoted the co-operative members steadily and within three years converted the cooperative to 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 to Globalizing Capitalism,” http://www.geo.coop
[36] 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 New Economy,” at Prout World, http://www.proutworld.org.
[43] Ralph J. Ramsey, “Forms and Scope of Poverty in Kentucky.” Resource Development Series 10. 1967. 50 pp.
[44] 2003 Fact Sheet, Kentucky Commission on Women. www.women.ky.gov
[45] Ibid.
[46] “Poverty despite work: Many working families with children in Kentucky remain poor,” in the report Poverty Despite Work in Kentucky, published by the Center 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. Owl Books, 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 tax obligations to persons earning less than $30,000. These steps would immediately bring thousands of Kentuckians out of poverty. One more essential step is to provide universal health care to all Kentuckians and all Americans, to remove a major source of mental tension amongst the poor and the middle class who face bankruptcy in the present medical system.
[49] State Fact Sheets: Kentucky. USDA – United States Department of Agriculture, Economic Research Service. Data updated August 31, 2006.
[50] Ibid.
[51] Laura Ungar, “Poverty fuels medical crisis: Access to care is difficult for rural residents,” 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 the Kentucky mountains: Beech Creek and Clay County, 1850-1910,” Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for 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. 30
[60] By the early 1920s Tennessee farmers had succumbed to similar impoverishment.
[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 they mean. http://www.oligopolywatch.com.
[66] This figure is based on September, 2003 data. Most likely there has been greater consolidation in the past three years up to the present - November, 2006.
[67] Oligopoly Watch. http://www.oligopolywatch.com
[68] 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,” The Guardian, May 17, 2003. As the article is three years old, it is likely that the interim period has seen further consolidation.
[71] Oligopoly Watch. http://www.oligopolywatch.com
[72] Ibid.
[73] Interview with Appalachian writer-activist Scott Goebbels on November 9, 2006.
[74] Florence Cope Bush, Dorie: Woman of the Mountains, Knoxville, University of Tennessee Press, 1992. The author has written the story of her mother and father’s life in the Appalachian mountains during the period 1898-1942.
[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, Economic research Service.
[85] Ibid.
[86] Dwight B. Billings and Kathleen M. Blee, The Road to Poverty: The Making of Wealth 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.


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