By Anna Coote, New Economics Foundation
Should resources essential for human survival be placed in the control of the people who need them? What would this mean in practice – and how could it be achieved?
At the New Economics Foundation we are opening up a broad debate about the control of ‘the commons’ – the resources we rely upon to survive and flourish. This began with a roundtable we held on the 18th July, which focused on two kinds of common resource: land and care.
The concept of the commons is a useful tool for progressive change-makers. Whether we are concerned with land or wealth, or with water, energy, transport, fisheries, parks or libraries, the ‘commons’ enables us to think through a range of important issues, including ownership and control and the links between top-down and bottom-up politics.
As an organising principle, it challenges orthodox market economics and implies a radically different role for the state. At a time when long-established political certainties are increasingly shaky, the ‘commons’ emerges in the current moment as an idea of enduring and widespread relevance.
It draws on – and deepens – our understanding of universal human needs and the dynamics of wellbeing. It speaks directly to the systemic links between social, environmental and economic resources, and introduces into this ‘triumvirate’ a crucial fourth dimension – that of power.
It offers a framework for making decisions about access and distribution. It implies entitlements that are shared by all, and it offers a critique of some forms of private ownership.
It provides a route towards sustainable development, which according to the 1987 Brundtland Report, means ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs.’ The ‘commons’ are resources required to meet both present and future needs. Only by understanding which resources are essential and how they can be secured for the benefit of all, over time, can we achieve long-term sustainability.
Another great strength of the concept of commons is that it makes sense to people outside ‘expert’ circles – it belongs to all whose lives depend on essential resources. People decide for themselves what the conditions are for a decent life. Codified knowledge and professional expertise can inform and support such decisions, but cannot determine them.
Different kinds of commons call for different strategies. What are considered essential resources and how these can be claimed will be established partly by where people live and what they decide they need. Strategies for managing the commons will vary from one kind of resource to another.
The process of ‘commoning’ goes beyond markets and states, but not without them. Where markets are concerned we can learn from current work developing models for a sharing economy, and from innovations in collaborative consumption, where value is attributed to people’s access and use of things, more than to ownership. Digital platforms can help to support these developments, as they have potential to transform relationships between producers and consumers.
Commoning calls for a new kind of ‘partner’ state, with which people can work to regulate for guaranteed access to essential resources, as well as standards, sustainability and fair distribution. It follows that new, stronger forms of participatory democracy are essential to transforming public institutions and holding them to account.
This raises questions about duty and obligation, because not everyone has sufficient disposable time to contribute, or has the desire to be heavily involved. Could the courtroom jury – where individuals are randomly assigned to take a decision on behalf of others for a limited period – provide a useful model?
The question of ‘who’s in’ matters. In some communities where resources are held in common for a defined group of people, membership can be hard to establish and members may choose to exclude ‘outsiders.’ This underlines the importance of regulation for equal access to the commons. But according to what criteria? Citizenship could be too narrow a qualification. Would residence work better?
There are two mutually reinforcing steps that can be taken. One is to build power among people to own and co-produce a story of the commons that gains real traction and helps to reframe politics for the coming decades. The other is to demonstrate and develop new ways of enabling people to define, claim and control essential resources so that everyone benefits from them.
We can start by supporting local innovation, and by building on existing examples of shared control. Examples include parent-led childcare co-operatives, Bristol’s municipal energy company, shared land ownership in ‘garden cities’ such as Letchworth, and land owned by local authorities and the Crown Estates. Further examples are detailed in NEF papers on land reform (publication forthcoming) and the social commons. Smaller cities and towns may be the best place to start building locally generated actions to share essential resources.
We are keen to hear more about these and other examples. And all comments on these reflections will be very welcome. Please send them to firstname.lastname@example.org.
A half-century ago, a top automobile executive named George Romney — yes, Mitt’s father — turned down several big annual bonuses. He did so, he told his company’s board, because he believed that no executive should make more than $225,000 a year (which translates into almost $2 million today).
He worried that “the temptations of success” could distract people from more important matters, as he said to a biographer, T. George Harris. This belief seems to have stemmed from both Romney’s Mormon faith and a culture of financial restraint that was once commonplace in this country.
Romney didn’t try to make every dollar he could, or anywhere close to it. The same was true among many of his corporate peers. In the early 1960s, the typical chief executive at a large American company made only 20 times as much as the average worker, rather than the current 271-to-1 ratio. Today, some C.E.O.s make $2 million in a single month.
The old culture of restraint had multiple causes, but one of them was the tax code. When Romney was saying no to bonuses, the top marginal tax rate was 91 percent. Even if he had accepted the bonuses, he would have kept only a sliver of them.
The high tax rates, in other words, didn’t affect only the post-tax incomes of the wealthy. The tax code also affected pretax incomes. As the economist Gabriel Zucman says, “It’s not worth it to try to earn $50 million in income when 90 cents out of an extra dollar goes to the I.R.S.”
The tax rates helped create a culture in which Americans found gargantuan incomes to be bizarre.
A few years after Romney turned down his bonuses from the American Motors Corporation, Lyndon B. Johnson signed legislation that lowered the top marginal tax rate to 70 percent. Under Ronald Reagan, it dropped to 50 percent and kept falling. Since 1987, the top rate has hovered between 30 percent and 40 percent.
For more than 30 years now, the United States has lived with a top tax rate less than half as high as in George Romney’s day. And during those same three-plus decades, the pay of affluent Americans has soared. That’s not a coincidence. Corporate executives and others now have much more reason to fight for every last dollar.
The theory behind all those high-end tax cuts — a theory that I once found persuasive, I admit — was that it would unleash entrepreneurial energy: The lure of great wealth would inspire business leaders to work harder and smarter, and the economy would flourish.
The first half of that theory may well have come true. Many of the world’s most successful companies are American — not only Amazon, Apple, Facebook and Google, but also Exxon Mobil, Walmart, Johnson & Johnson and JPMorgan Chase. The second half of the theory, however, has been a bust. Most Americans have not flourished in the era of a reduced top-end tax rate.
Incomes for the middle class and poor have grown sluggishly since 1980, while the upper middle class has done modestly better. Only the wealthy have enjoyed the sort of healthy pay increases that had been the norm in the 1950s and ’60s. (Last month, I published a chart that showed these trends better than any paragraph can, and I encourage you to take a look if you haven’t already.)
The decline in high-end tax rates has helped change the culture of money. George Romney, a highly successful and personally decent man who thought that making even a couple million dollars a year was unseemly, begot Mitt Romney, a highly successful and personally decent man who has made a couple hundred million dollars.
Across society, the most powerful members of organizations have fought to keep more money for themselves. They have usually won that fight, which has left less money for everyone else.
What would be the right top tax rate today? I don’t know the precise answer. A top rate of 90 percent clearly has the potential to drive away entrepreneurs. But I am convinced that the current top tax rate, 39.6 percent, is too low.
It has contributed to soaring inequality, with the affluent having received both the biggest pretax raises and the biggest tax cuts. Plus, there is no evidence that a modestly higher rate would hurt the economy. The recent president with the strongest economic record, Bill Clinton, increased the rate, while the one with the weakest economic record, George W. Bush, cut it.
This week, President Trump and Congress will turn their attention to tax policy. After the failure of their health care bill, they are desperate for a legislative win and hope to pass a bill by year’s end. Of course, they are not considering a higher top tax rate.
The question is whether their plan will further cut taxes on the wealthy. The early evidence is that it will — enormously — while Trump pretends otherwise. If so, the tax bill will deserve the same fate as the health care plan: energetic and organized opposition, followed by defeat.