When Hurricane Katrina struck New Orleans, the city where I went to high school and where my parents still live, I was a continent away in San Francisco. It was impossible to get any clear picture of what was happening from the news media. They depicted full societal breakdown, the war of all against all: looting, arson, withdrawal-crazed addicts roaming the streets. The chief of police was forced to step down after he went on national television and repeated hysterical, unfounded and since-debunked rumors of small children being raped inside the Superdome.

There couldn't be a bigger contrast with the stories I got later from those who were actually there. While mayhem and fear certainly existed, so did an amazing collective will towards cooperation. An acquaintance told of the excitement and camaraderie among a group of friends and neighbors stranded by floodwaters on the second floor of an apartment complex. They rescued dogs and made sorties by makeshift raft to local supermarkets to bring food, water, medicine and diapers to people awaiting rescue. "It was the best days of my life," he told me with no irony.

In the two years since the storm, recovery has been agonizingly slow. The failures of government are endless. The strength of people banding together to help each other, however, has been the one bright spot. I have seen it in the city's 70-odd neighborhoods, where dozens of new neighborhood organizations have started up – people helping each other with rebuilding, planning, and expressing their political voice. I've seen it in the efforts of hundreds of newcomers – dubbed Young Urban Rebuilding Professionals – who have come or returned South to clean up, educate, feed, offer health care, create job opportunities, and organize people to help themselves. And I've seen it on the block where my parents live, where neighbors have become friends.

Community is a neutered word nowadays. In the stale intellectual landscape of contemporary politics, there are two opposing loci of control from which large-scale solutions to social problems are thought to flow. Liberals idolize the government and conservatives, individual interest (as pursued through the market). Neither side has much to say about cooperative power beyond the utterly platitudinous.

But human societies have always nurtured, and been nurtured by, a third type of institution. In New Orleans, for over a hundred years they have called them Social Aid and Pleasure Clubs. These are the neighborhood meeting places, burial societies, and musical marching clubs that strut their stuff on Mardi Gras, St. Joseph's Day, and whenever it's time for a party.

Whether guild or labor union, religious or ethnic society, producer or consumer cooperative, crew or brotherhood or club, these are the people's bastions of power. Over the past three decades they've played a vanishing role in the life of the average American. Now is the time for that to change.

Mutual aid societies prefigure most functions of the modern state. They're at least as old as armies, but their mission is life, not death. For millennia, people have banded together to provide each other with health care, pensions, unemployment aid, investment capital, buying power, aid to the poor, disaster relief, old age care, child care, culture, entertainment, political efficacy, education, food, shelter and livelihoods. They have also leveraged their numbers to elicit some of these same benefits from those other two institutions, business and the government. Mutual aid extends the bonds of kinship and makes individuals into citizens.

Beginning in southern India around 800 AD, a network of merchants' societies known as the Ayyavole 500 spread as far as Sri Lanka, Burma and Sumatra. The merchants agreed to cooperate and abide by a dharma, or code of conduct, ensuring honor both within the group and with outsiders. They sponsored trade fairs and maintained good relations with their local communities through philanthropic activities and tribute. The Ayyavole name was adopted far and wide for over 500 years; it became a "brand" associated with high quality products and fair dealings.

In the 1891 history Two Thousand Years of Gild Life, the social reformer Rev. Joseph Malet Lambert described the rules of guilds in ancient Rome, Anglo-Saxon England, and medieval Persia. Many of these societies united people by livelihood, some were religious cults, and others were locality-based, but they had common characteristics: regular contributions by members; bonds of fellowship confirmed by an oath or promise and reinforced by regular feasts and drinking parties; rules for preserving courtesy and order; and interestingly, most often, burial assistance. Beyond these basic attributes, the "gilds" were flexible, allowing for "the application of the fellowship or association to the most pressing need of the society of the day, whether mutual insurance against theft or fire, facilitation of trade, or in an imperfectly organized society, for purposes of police."

In American society, these ultimately flexible institutions found a new place and purpose. The rise of America's unprecedented multicultural democracy, middle class, and global economic power is directly tied to the rise of intermediary institutions, most famously but not only the labor union. The first labor action in America was a strike among Maine fishermen in 1636. In Northeastern cities during colonial times, master craftsmen and journeymen of many different trades formed "friendly societies," which became politically active in the fight for independence. During the Jeffersonian era these organizations grew and provided a full range of social benefits to their members, including death benefits to widows, assistance to the ill and unemployed, loans and credits, and libraries. They also helped establish a high standard of craftsmanship, a minimum wage for their work, and settle disputes among members.

As America industrialized and urbanized, mutual aid helped maintain our humanity. Historian Richard Morris writes, "Workers created a wide variety of institutions, all of them infused with a spirit of mutuality. Through their fraternal orders, cooperatives, reform clubs, political parties, and trade unions, American workers shaped a collectivist counter-culture in the midst of the growing factory system."

The phrase "labor history" invokes sepia-toned images of the late 19th and early 20th centuries – sitdown strikes, the Triangle Shirtwaist Factory fire, and the successful fights against child labor and for the eight-hour day. If we hold up a vanished past as the paragon of what can be accomplished by mutual aid institutions, it will prevent us from seeing what is possible in the future. In fact, the heroic image is true to a point, but the facts are far from an unbroken march to victory. Three separate times in the 19th century, national unions built hundreds of thousands of members only to be quashed by economic panics and political repression. Two of the most significant national organizations, the Knights of Labor (which claimed as many members as all of America's churches in the 1880s) and the Industrial Workers of the World, were put down with the help of federal action. Just as they are today, the haves were always ready to scorn the "levellers, mob, dirty-shirt party, tag, rag, and bobtail, and ringstreaked speckled rabble."

Ironically, the collectivist counterculture met its match for good in the New Deal. The leaders of the biggest unions, representing mainly skilled, industrial, white, native-born, male workers, agreed to establishment status in exchange for pulling up the ladder for all who came after then. The "tuxedo unionist" was born along with the corrupt image that dogs unions to this day. More fundamentally, the New Deal transferred many large social functions from the old mutual aid institutions to the federal government, usurping power from the grassroots. The War on Poverty with the creation of Medicare in the 1960s accelerated the process, the closest that America has ever come to a true social welfare state. Overnight, America's workers, poor and elderly received more money and assistance, but in exchange they became clients of the government rather than true agents of their own and their fellows' destinies.

For a variety of well-documented reasons, participation in mutual social institutions of all types has been in a slide since the 1960s, and union memberships' slide has been uninterrupted. However, it was not until the Reagan years that labor began to be methodically forced away from the policy table. By no means coincidentally, our social safety net has also disintegrated since then. The health care system and private pensions; Social Security and Medicare; K-12 and higher education; even infrastructure and credit; if it's a social benefit it's in an economic and political crisis right now. With the collapse of labor as a wielder of meaningful power, our economy has reverted to a model not seen since the Gilded Age. The only type of mutual benefit association currently enjoying decided government favor, the corporation, is the winner that takes all.

Clearly, the time is ripe to restore the power of intermediaries to create social good. What's been less recognized even among self-professed radicals is how much of the power is in our own hands to do so. The idea is not to turn our backs on government, nor even the market, for what they can do to supply human needs, but to ask what we can also contribute as people cooperating together.

By many measures today, we are living in a golden age of collective energy and power thanks to the Internet. The values of association, fellowship, and participation are all flourishing here online. Livelihoods are generated collectively on the Internet too: eBay is the second largest employer in the country, with nearly a million people making their living as independent online merchants.

The cutting edge of New Economy business theory is all about how companies can capture this awesome power of collective participation for their own profit. Networks of people acting over the Internet for no reason other than to express themselves, amuse themselves or connect with others create value as an emergent property. As consultant Don Tapscott, a top advisor to Fortune 50 companies, describes in his recent book Wikinomics: How Mass Collaboration Changes Everything, "social media" are becoming a crucial source of innovation, new products and improved services for a whole range of companies; indeed, he says, every company needs a strategy for harnessing this kind of human capital power .

But the value of online networks have only rarely been tapped in a similar way by individuals themselves for the exchange of practical, immediate benefits – other than the very valuable and important one of information.

Similarly, the social entrepreneurship movement offers a new avenue for social change by conceiving organizations that are run as efficiently and innovatively as businesses, perhaps at a profit, but with social missions. Some social entrepreneurship organizations, like the Nobel Peace Prize-winning microlending program the Grameen Bank, fit the model of mutual aid societies and have found success as a result. But too many are conceived like welfare programs, run on a client-based, not member-participation, model from the top down. So they fail to empower people beyond their own employees.

For the past year I have been working with an organization that points the way toward a new future of mutual benefit. Sara Horowitz was raised in the traditional left – her grandfather was vice president of the International Ladies' Garment Workers Union, and she and her father were both labor lawyers. But she grew impatient with the old categories and old ways of thinking. In 1995 she founded Working Today, now known as the Freelancers Union. She won a 1999 MacArthur Genius Grant for her work with the organization, which was conceived as the first step toward a "New New Deal," or new social safety net, that fits the way Americans live and work today. They currently have 52,000 members and provide health care at group rates to 17,000 freelancers in New York City. Freelancers Union members are also eligible for life, dental, and disability insurance, discounts, and connect online to exchange referrals, tricks of the trade and job opportunities. They are beginning to have meet-ups nationwide to encourage political participation and the all-important value of fellowship. Currently the Freelancers Union is expanding health insurance to members in 30 states. Plans for providing more benefits like unemployment and retirement are underway.

Right now a turn of the political wheel gives us an opening to grow and strengthen a new type of institution: networks formed by social entrepreneurs and maintained by members, using technology, for mutual aid. The Freelancers Union example shows what's already possible. Long term, Horowitz and I envision a new social safety net to replace the one that is disintegrating, delivered by a new breed of intermediaries. New unions or other types of nonprofit affinity groups can band together to deliver services such as pensions, unemployment insurance, and group health insurance. Unlike employers, membership-supported nonprofits have a bigger chance of having a long-term stake in their members' wellbeing – and 30% of the workforce and growing doesn't have a traditional employer relationship anyway. These new groups will have some characteristics of the old institutions, but will be more flexible and adapted to our less rooted way of life. They may unite people by type of work, neighborhood, heritage, or family status. They have a chance to move beyond old political debates and strengthen democracy by channeling people's energy into participation and efficacy.

What should the government's role be? Encouraging the growth of these institutions requires halting the political war on organizing and organizers fomented by business conservatives and waged through the courts. Financially, the investment would be modest: perhaps a program of tax breaks and incentives for providing benefits similar to that now given to corporations, as well as access to low-cost capital for organizations providing a social benefit. Mutual aid is not a political cure-all or even a policy program – it's a means of delivering solutions.

For individuals, the benefits are much richer, and they can start today. If you read this site, you probably already participate in some form of mutual aid, like a dumpster-dived salvaged food potluck, a benefit party to help a friend with a health care expense, a clothing swap, or a community supported agriculture program. A growing movement of people are getting together to provide themselves with space and resources to work and make art. They are lending money to each other at mutually-agreed upon rates, rather than use banks. They are forming educational and fun business networks. The Burning Man community in many cities provides a form of the old Social Aid and Pleasure club. You don't need to wait for political action; you can work within or outside the existing system, just like Indian merchants or Roman craftsmen a thousand years ago.

The idea of fostering the growth of mutual aid satisfies many political and cultural yearnings at once. Conservatives have sought to strengthen churches as social institutions, and centers of worship do have an important place in the panoply of mutual aid societies. But they don't satisfy the full range of needs for organization and political efficacy in a multicultural, non-theocratic democracy. Liberals are very vocal about the need to foster community, but too often we form organizations under duress around political grievance or "resistance," and we don't sustain them. Without rewarding self-interest through providing benefits, long-term continuity goes missing. And with a charity-based model of simply delivering benefits across class lines, populism is an empty, not an empowering, message.

Unlike the prescription of government welfare benefits, which Americans seem to be hardwired against anyway and which seem further out of reach than ever in the current atmosphere of fear and scarcity, mutual aid fosters competition, and strengthens democracy by building civic involvement and political constituencies. Unlike winner-take-all capitalism, labor market intermediaries create more winners than before. The old solutions are dead, and we have a chance to get it right this time if we join together.