Research and Policy & Executive Director, Next System Project and Sarah McKinley, Director of European Programs April 20, 2020 EXPANDING DEMOCRATIC OWNERSHIPCENTERING COMMUNITY AND PLACE
On both sides of the Atlantic, the COVID-19 crisis poses a double challenge. Beyond the terrifying public health emergency, the vitally necessary immediate response has been an economic shutdown of unprecedented proportions. But that is only the beginning of our difficulties. When the medical emergency passes, we will emerge into a shattered economic landscape. The challenge of restarting—in some sectors, even rebuilding—a severely stressed economy will remain, with the inequalities of wealth, power, and control we faced beforehand now amplified many times over.
For advocates of systemic transformation to a more just and sustainable economy, the occasion demands bold and strategic ambition, grounded in an honest assessment of prior convictions and assumptions. Today, we are excited to release, in partnership with the Centre for Local Economic Strategies (CLES), a new white paper—“Owning the Future”—that begins to chart this course. Together with our CLES coauthors Jonty Leibowitz and Neil McInroy, we outline a COVID-19 economic recovery plan capable of ushering in a new era of community wealth building in the United Kingdom.
In the paper, we counterpose this good outcome—in which we seize our last best opportunity to build a more local, generative, social and democratic economic system—to the bad and ugly ones that wait in the wings if we fail to act transformatively. The bad outcome is a re-run of the kinds of responses we saw in the aftermath of the Great Financial Crisis of 2007-08, reinstalling globalised neoliberal corporate capitalism, with bailouts for the banks and the corporate sector, and precious little for the rest of us, excepting another more brutal round of belt-tightening austerity. But beyond the bad there is also the ugly—a full-on “shock doctrine” disaster response, combining a new state authoritarianism with ongoing uncontrolled corporate capitalism, shredding already tattered commitments to tolerance, inclusion, and social welfare.
The COVID-19 pandemic could become a moment of crystallisation, with communities and governments working together to build a genuinely inclusive economy. But to do so, we need ambitious interventions, both at the national level and at the level of a new common sense, built upwards from community—and our joint paper outlines both.
Nationally, we need:
Buyouts not bailouts: To avoid repeating the mistakes of the Great Financial Crisis, we need to consider national and local publicly-owned holding companies, designed to acquire and mothball failing businesses up until the point when they can be re-launched as part of the economic recovery.
A new green industrial strategy: We must replace the UK’s discredited industrial strategy with a Green New Deal, funded by a green stimulus recovery package.
A new social contract and welfare system: We must recognize that austerity was a mistake and that we must restore the capacities and capabilities of the national and local state, while also expanding real community power.
These interventions could help set the stage for a new era of community wealth building in the UK, in which the extractive features of our economy are replaced with more democratic and sustainable ones. We lay out five key emergent steps towards this new economic common sense:
• Democratic and plural ownership of the economy—rethinking business support and economic development to advance democratic ownership of firms and a new era of municipal ownership.
• Financial power that works for local places—building a new national fiscal and devolution framework, as well as expanding community finance initiatives.
• Progressive procurement of goods and services—advancing real social value across all of public spending and commissioning, potentially through a social license to operate.
• Fair employment and just labour markets—with more forceful interventions in regional labour markets, especially in foundational economy sectors such as utilities, food, social and health care.
• Socially productive use of land and property—rolling back the enclosure of public land through municipal development vehicles, community land ownership and a democratic revolution in the planning system.
Constructing the Democratic Public Enterprise
DEMOCRATIC OWNERSHIPDEMOCRACY & GOVERNANCE
Public ownership is making a comeback around the world because of its utility in addressing critical public policy questions. The prevailing model of private sector-led and market-driven approaches, dominant across much of the world since the 1980s, has been found wanting in addressing key challenges, notably economic inequality and climate change. The lesson emerging is that forms of public ownership and management are essential not only for the kinds of patient, long-term, and strategic investment needed to deliver accessible and affordable public goods and services, but also to ensure a more equitable, democratic, and sustainable economic system. From the global remunicipalisation movement, to the Green New Deal, to the international quest for public banking, activists and politicians alike are rediscovering the power and potential of public ownership to address the many real and escalating economic, social, and environmental challenges we now face.
In the past, many publicly owned enterprises have tended to be overly top-down, managerial, opaque, and unaccountable (although this is equally the case with many private enterprises). Whether through older forms of state ownership, or recent forms of privatisation, public services have conventionally been managed and run by elite groups who are often far removed from the circumstances and consequences of their decisions. This means that they are divorced from the very people who are supposed to have ownership: the public writ large. This is not only undemocratic but also inefficient; excluding the public comes at the cost of harnessing varied forms of “on the ground” knowledge that employees and users possess through their everyday interactions with public services. It also limits the ability of publicly owned enterprises to build up a constituency of support among its employees, local residents, and community interest groups, making them easier to privatise when political winds shift.
As the Labour Party commits itself to reintroducing public ownership in such key sectors as transportation, communications, banking, energy, and water, what is required is a new and more democratic approach in order to avoid the mistakes and missed opportunities of the past. There is a great opportunity to develop forms of organisation, governance, and regulation that stimulate public participation, increase accountability, and empower communities and individuals that have traditionally been excluded from economic decision- making in publicly owned enterprises and services.
Such an approach needs to be integrated fully into the Labour Party’s broad programme of public ownership. Democratic public ownership represents not only a paradigm shift in how publicly owned enterprises and services (of which there are millions around the world) are structured and governed, but also offers the opportunity to shift the distribution of economic power in our society, moving it from the hands of the few to the many.
In this response to the Labour Party’s consultation on democratic public ownership, we set out the key features of what existing research and experience tells us works for creating democratic forms of public enterprise. Our response is provided in two sections: 1) core components of democratic public ownership and 2) indicative structures of organisation and the underlying value systems that we believe should inform a new generation of public enterprise.
Download and read now:
Mission-led employee-owned firms: The Best of the Best
by Sarah Stranahan, Marjorie Kelly
Mission-led employee-owned firms embody a powerful model of enterprise design for a new era of environmental sustainability and social equity. This report shares the story of this emerging model, embodied in 50-plus firms that are employee-owned B Corporations and benefit corporations, plus dozens October 31, 2018
Our Common Wealth: The return of public ownership in the United States
by Thomas Hanna
This book is the most comprehensive and up-to-date analysis of the scope and scale of U.S. public ownership, debunking frequent misconceptions about the alleged inefficiency and underperformance of public ownership and arguing that it offers powerful, flexible solutions to current inequalities. July 16, 2019
Redesigning Business for a Democratic Economy
by Marjorie Kelly
Even as widespread faith in the workings of our economy is falling apart, unsung innovations are quietly arising. Entrepreneurs, business executives, investors, and community leaders are choosing to get in front of this problem, showing how we can move beyond an economy that serves the few to one January 10, 2019
To make companies moral, make the employees the owners
by Marjorie Kelly
Having stockholders can offer confusing incentives for business owners with a mission–but not if those stockholders are employees who believe in the mission, too. March 28, 2019
Marjorie Kelly on employee ownership and community wealth
The Democracy Collaborative’s Marjorie Kelly on how we create a democratic economy.
