Economic democracy quote #1

A Preface to Democratic Theory

Here’s a great paragraph on why economic democracy – giving people control and ownership of businesses – is a key way of creating greater equality.

Most interestingly, this is from Robert Dahl, a prominent democratic theorist whose big idea was the need for polyarchy rather than democracy, by which he means elites competing with one another for votes based on different interest groups and positions – a situation not that dissimilar from what we have now. Hardly the radical then.

As Dahl puts it:

” . . . differences in ownership and control of enterprises, while certainly not the origin of all forms in inequality, are deeply implicated in inequalities of many kinds: in esteem, respect, and status, in control over one’s daily life, in income and wealth and all the opportunities associated with them, in life chances for children and adults alike. It seems to me scarcely open to doubt that a society with significantly greater equality in owning and controlling economic enterprises would produce profoundly greater equality than exists in America today.”

Robert Dahl, A Preface to Economic Democracy, 1985, pp5-6


The reality of jobs and growth – a view from a bike


Yesterday I spent my lunch break on a bit of a cycle around the border of Manchester city centre and Salford. I didn’t see anything special, or remarkable, but learnt a lot, I think, about the economy, jobs, work and growth in Manchester’s apparently booming economy.

Building work and infrastructure development were everywhere in the centre of Manchester, it was hard to move; the cars were snarled up and people were busily hurrying between work and shops.

The inner suburbs of Salford, down Liverpool Road into Pendleton, were different: shops few and far between, the building projects were on freeze, people were on the streets, but just walking, or in groups talking, hanging out, not rushing around.

Pendleton precinct was busier, apparently overflowing with supermarkets – Aldi, Lidl and a Tesco Extra, all in one small space, competing on price for the same customers. Very different from fifteen years ago when I lived here, with just one small Tesco available to people without transport.

The Salford University strip was all-but abandoned in the summer, save for lone international students; and the old performing arts building that previously brought music (mostly a crash of drums) to a corner of Lower Broughton has now closed, moved to a state-of-the-art facility at Salford Quays.

Greater Manchester, apparently, is the only city in the UK that grew its economy as much as London in the decade before the recession. But a short ride like this, around the Manchester – Salford border, tell us more than growth figures can.

It’s not just the startling difference between the glass high rises of the centre and the concrete high rises of Pendleton. Or the difference between the busy workers of the city centre and the slower pace of the Salford streets.

It’s more than this: in the heart of city, in this shiny model of regeneration and growth, the faces of people hurrying to and from work, nipping out for a sandwich, off to the shops of a lunch break, tell all: Manchester is not a city of high powered jobs and executive lunches groaning under the weight of economic growth; it’s one of mundane office work and plastic sandwiches. Some might be enjoying the spoils, but for most Manchester’s is a service sector economy where growth has little meaning for the people with the jobs, let alone for those without.

An alternative growth index?

According to today’s quarterly announcement on economic growth the UK economy has grown by 0.8%.

Cue the usual debate: Are we pulling out of the financial crisis now? Is the government getting it right, or still holding us back? Are people spending again? Is it because of exports, holiday season, better weather? Can business owners feel more confident?

The usual debate, though, obscures the important questions we should be asking.

A focus on growing national GDP might have some positive effects (although there’s an argument to be had there) but there’s much more that we’d like to see growing in our economy beyond GDP. Are people getting a share of the wealth generated? Do people have any control over the businesses? Do people have decent jobs? Is the economy working for the majority, or just a small group?

So perhaps, alongside the quarterly growth measure, we should have some other kind of alternative growth index: one that tracks how widely the benefits of growth are spread in the UK.

Indicators for this kind of growth could be fairly straightforward, for example:

  • Number of direct shareholders of PLCs
  • Number of co-operative and mutual members
  • Number of micro-enterprises
  • Average wages at different bands and levels
  • The size of average pay ratios
  • Feelings of engagement at work

This is just a starter.

The point is, if you were to combine these, you would get a sense of whether or not the share of ownership and wealth in the UK is growing. And that would be a far more meaningful form of growth to measure in the economy.

Taking power from the people

Yesterday will surely go down in history as a day of distasteful investor news, a day when power was taken from the people.

The big news for those of us in the co-operative and mutual sector was that the Co-operative Bank’s rescue bid will result in the customer members of The Co-operative owning just 30% of the Bank, the rest being taken primarily by institutional investors.

The big news for the UK as a whole was that the development of nuclear power plant will be financed and owned by a consortium of largely overseas companies and investors. Regardless of views on nuclear, this erodes the (admittedly very abstract) principle that the people should have control over their energy power.

Sharing and co-operation: a tale of two economies

After reading Evgeny Morozov’s article on the sharing economy which appeared recently in the FT, I’ve been thinking about the similarities and differences between the sharing economy and the co-operative economy. This is just a start, really, but a few reflections.

The new and increasingly popular idea of the sharing economy, though eclectic, is epitomised by individuals cutting out hotels by hiring their apartments to one another online, by individuals trading with one another rather than through conventional businesses and by new apps to enable peer to peer sharing.

The much older co-operative economy, similarly diverse, is epitomised by farmers clubbing together to share costs on machinery, large retail businesses owned by tens of thousands of customers for the last 100 years or worker owned wholefood businesses.

A number of immediate contrasts and similarities come to mind when you put these, admittedly stereotyped but nonetheless not unfair, descriptions together.

– both are about redistributing wealth and power beyond conventional structures

– both offer the hope of more sustainable enterprise

– one feels very modern, the other more traditional

– one is about individuals, the other about collectives

– one is about entrepreneurialism, the others about sustainable business

Ultimately, the two feel really very different.

The sharing economy seems to be about cutting out corporates, individuals doing things on their own, about enterprise, disrupting bureaucratic structures.

People hiring their apartments, sharing their cars, trading between themselves, lending not owning . . .

In the end, it seems that the sharing economy involves stripping back the structures that have protected and constrained individuals so that they can unleash their entrepreneurial

Co-operatives, on the other hand, seem to be about the structures that protect and support individuals.

They require an element of bureaucracy to give people a voice, to protect them, to treat them fairly.

The downside of this may be occasionally holding individuals back for the sake of the common good. But the upside is that individuals are safer, not left on their own to thrive or die.

So the difference, you might say, is between a more striving and individualistic sharing economy and a safer solidarity co-operative

If Vodafone was a mutual

What would happen if Vodafone was a mutual, owned by everyday people rather than shareholder investors?

Vodaphone announced recently that it was selling its 45% stake in the US mobile company, Verizon Wireless, for over £80 billion. With much praise in the press, Vodaphone said that £66 billion of the sale will go to its shareholders. With nearly 50%of its shareholders in the UK, this will give a much-needed boost to the UK economy, equivalent to around 2% of GDP and some in the press said, akin to quantitative easing.

That’s a lot of money, no doubt, and it shows the ability of businesses to generate and distribute wealth.

The thing is, though, over 75% of Vodafone’s shares are held by ten investment institutions. So only a small amount of money will go into the pockets of real people or into the economy in any meaningful sense. Most of the pay-out will be re-invested in the markets with little tangible impact for economic wellbeing and the wider economy.

If it was a mutual things would be different.

If Vodafone were owned by its 19.3 million UK customers, rather than shareholders, each customer owner would get around £3,500, giving them a significant chunk of money. If Vodafone were owned by its 84,000 staff, the share each would receive would be considerably larger.

Not only would a mutually owned Vodafone put money in people’s pockets and boost the economy, it would share the wealth generated by the business amongst around 40% of the UK adult population.

And that’s without even mentioning tax. Which, it turns out, Vodafone will pay very little of because of its clever tax arrangements. But that’s a different story.

Capitalism and mutualism beyond borders

Listening again to one of Zizek’s lectures, he makes a great point – that the Occupy movement’s major insight and motivation was that national democratic institutions are insufficient for controlling global finance and capital because the latter go, by definition, beyond borders.

It takes a prod like this to remind you why economic democracy is a good thing – it means that democratic control is structured around business and economies not around historically constituted geographic units.

So, one way to give the people some control of global finance is through co-operative and mutual structures that give people a democratic say and control over the businesses that affect their daily lives.

It’s not everything, it’s not sufficient on its own and there are big questions about size, scale, how it’s organised, local control …

But it’s a reminder of why economic democracy is a key element response to the control of capital that ignores borders.