By Gar Alperovitz, The Nation, February 11, 2016
Experiments with public ownership are thriving across the country. The challenge is to link them and scale them up.
In 1970, the great liberal economist John Kenneth Galbraith declared that the “Democratic Party must henceforth use the word ‘socialism.’ It describes what is needed.” Like many others, however, Galbraith largely dropped the subject in subsequent years. The response to Bernie Sanders’s insurgent presidential campaign, along with polls showing that large numbers of young people and minorities in America have a positive view of socialism, suggest that this once-forbidden concept may no longer be taboo.
More than 40 percent of Americans under the age of 30 view socialism favorably, according to the most recent YouGov poll. Positive responses among black Americans have ranged between 29 and 41 percent in recent surveys. A 2011 Pew Research Center poll that omitted the “undecided” option found that 49 percent of its young participants viewed socialism favorably.
The most obvious source of this sea change is the failure of traditional approaches to address the nation’s most pressing problems: growing inequality, poverty, economic insecurity, global warming, perpetual war, and the decay and violence visited on black communities. Side by side with the increasing concentration of wealth has been the ever more blatant exploitation of the political power that wealth confers on elites and major corporations, most obviously by the Koch brothers and their right-wing allies.
Widespread dissatisfaction with the status quo creates a climate receptive to sweeping change. But such a climate can also devolve into indifference or cynicism if clear alternatives are not presented. With that in mind, how might a practical and politically viable alternative to our current system actually be constructed? What would socialism look like in 21st-century America?
At the core of the traditional socialist argument has always been the judgment that democratic ownership of the nation’s wealth – and especially what Marx called the “means of production” – is essential. The question of ownership, however, has rarely been mentioned in conventional political debate. The traditional socialist idea of “nationalized industry” is beyond the pale, and the vast majority of progressives have so far avoided discussing alternatives to the statist socialist model.
Despite his self-definition as a democratic socialist, Sanders has offered what is essentially a strong liberal or social-democratic program of progressive taxation, financial regulation, single-payer healthcare, increased Social Security and income-support programs, and environmental regulation. Although he backs worker-owned companies, Sanders explicitly disavowed government ownership of businesses in his major theme-setting speech at Georgetown University last November.
The general argument for democratized ownership has always been much broader than simply capturing profits for social use.
At the same time, new resources have become available to support the construction of a serious alternative system – one that is “socialist” in content and vision, but also highly democratic and accountable in structure. It is a system that could become increasingly viable as Americans’ disillusionment with traditional strategies continues to grow.
In recent years, there has been a steady buildup of interest in new forms of democratized ownership. Worker-owned cooperatives, neighborhood land trusts, and municipal corporations all democratize ownership in one way or another, but they do so in decentralized rather than statist fashion. The trajectory of change is impressive. Examples of successful worker ownership range from Cooperative Home Care Associates in New York City to the Evergreen complex of solar, greenhouse, and laundry cooperatives in Cleveland. Mayors and city councils in places like Austin, Texas; Madison, Wisconsin; Richmond, California; and New York City have started to provide direct financial or technical support for these developments, suggesting a new nexus of political power.
Older forms of worker ownership – most notably employee stock-ownership plans, or ESOPs – leave much to be desired, but they nonetheless offer a similar sense of what a more expansive buildup in democratized ownership might look like. Approximately 7,000 ESOP enterprises exist nationwide, largely owned by about 13.9 million workers (roughly 3.3 million of whom are nolonger active). A number of these companies have attempted to combine unions with ESOP ownership. A related approach is being tested in new union/co-op efforts backed by the United Steelworkers.
Cities have also begun to support other forms of public ownership. Communities as diverse as Philadelphia, Pittsburgh, and Santa Fe, New Mexico, are working to establish municipally owned banks. In Boulder, Colorado, climate-change activists have triumphed over intense corporate opposition in two major referendum battles to municipalize the local utility. More than 250 community land trusts – a model of city and neighborhood development in which land is socialized to prevent gentrification – have been set up across the country, building on the foundational work done by the Champlain Housing Trust in Burlington, Vermont.
Some 450 communities have also established municipally owned Internet systems, commonly against powerful corporate opposition. In recent years, legislators in 17 states have introduced bills to create stateowned public banks like the nearly centuryold Bank of North Dakota. Roughly the same number of states have considered legislation to establish single-payer healthcare programs. In 2016, voters in Colorado will decide via referendum on the single-payer ColoradoCare initiative.
None of these efforts have had a major impact yet, but they all offer blueprints for the development of a larger platform – along with concrete and actionable examples of what a radically new economy would look like at the level of enterprise, neighborhood, municipality, and state. Importantly, many “nonpolitical” Americans – some of whom even identify as conservatives (as opposed to right-wing ideologues) – support such efforts. Rhetoric aside, these conservative Americans also commonly oppose big government, big banks, and big corporations, and are often open to alternatives.
During the 1930s, strategies based on the seemingly modest efforts developed by the states in their “laboratories of democracy” became the basis for key elements of the New Deal – including labor law, Social Security, and a range of other programs. Modern experiments with socialized ownership suggest a trajectory with similarly farranging implications. This will remain true no matter who wins the 2016 presidential race.
A new politics could infuse local examples of public ownership with fresh energy, and perhaps scale them up.
The great 20th-century conservative economist Joseph Schumpeter once said that the left had missed the boat in its arguments for systemic change. “If radicals were not so fond of chivying the bourgeois,” he declared, they would have realized that not having to depend on taxes was “one of the most significant titles to superiority” they could have advanced in favor of their vision. Indeed, a number of states have gained a great deal of experience owning and managing land, real estate, and mineral rights – and many use the proceeds to fund social services and reduce taxes, although this fact hasn’t received much attention.
Almost 150 years ago, for instance, Texas’s Permanent School Fund took control of about half the land and associated mineral rights in the public domain. In 1953, the state added coastal “submerged lands” to the portfolio after the federal government relinquished them. Each year, distributions from the earnings support education in every county of Texas ($838.7 million in fiscal year 2015 alone). Another fund, the Permanent University Fund, owns more than 2 million acres of land and helps underwrite the state’s public-university system. In these and other cases, social ownership supports public education in ways that also significantly reduce the tax burden.
Similar sovereign-wealth funds exist in Louisiana, New Mexico, Wyoming, and North Dakota. Alaska, of course, famously collects and invests revenue from extraction of the state’s oil and minerals. Dividends are paid out annually to state residents as a matter of legal “right” – the only practical model in the United States of publicly supported income with no additional work requirement. In 2008, under the governorship of Tea Party favorite Sarah Palin, each resident received $2,069 – over $10,000 for a family of five – from these “socialized” funds. That year, Palin also signed into law a bill that gave every resident an extra $1,200 from the state’s natural-resource revenues.
The general argument for public ownership has always been much broader than simply capturing profits for social use. For one thing, unlike private corporations, publicly owned enterprises are not required to grow to meet Wall Street’s demand for ever increasing profits – a critical consideration in any serious effort to move beyond our current “growth at all costs” system toward a more sustainable model. Public forms of enterprise can also be made far more transparent than private firms, and they’re more open to regulation, especially concerning climate change. And, critically, they can be excluded from funding political campaigns.
An obvious question is what to do about large-scale industry – a subject that many have simply avoided, preferring instead to focus on local strategies. Yet even the economist and self-proclaimed socialist E.F. Schumacher, author of the classic Small Is Beautiful, judged that “the idea of private ownership becomes an absurdity” on a larger scale. Americans witnessed this during the most recent financial crisis when the federal government de facto nationalized several banks, two auto companies, and the insurance giant AIG. The government gave them
back once the crisis was over, but when the next crisis hits, a future progressive government might well turn them into publicly owned features of a new system. (Breaking up the banks, as some have proposed, would likely produce a subsequent reconsolidation of power – as AT&T and Standard Oil showed after they were broken up.)
A major problem involves the inevitable institutional power that comes with such large scale. During the 1960s and ’70s, the pathbreaking radical historian William Appleman Williams suggested that one way for socialists to deal with this challenge was to focus on regions rather than the national system as a whole – especially in a country the size of the United States.
Modern innovators are bringing a similar idea to life as they experiment with regional models. “Bio-regional” efforts that anchor economic, social, and environmental development in natural regions can be found in places as diverse as the Connecticut Valley and the Ozark Mountains. The Kansas Area Watershed Council, for example, supports sustainable development in the prairie region through a range of projects and community-building events, and the Salmon Nation project is bringing a similar perspective to the Pacific Northwest. Nine states, mainly in New England, have formed the Regional Greenhouse Gas Initiative to reduce emissions. Another effort, Food Solutions New England, has put forward a comprehensive plan to develop a robust, collaborative, sustainable, and equitable regional food system by 2060.
The most important precedent for a long-term regional plan is the Tennessee Valley Authority. Established by the New Deal, this public-energy corporation currently serves 9 million people in seven states. At one point in the 1930s, Franklin Roosevelt supported legislation that would have created seven “little TVAs” as a step toward a much more expansive economic-development plan. “If we are successful here,” he argued, “we can march on, step by step; in a like development of other great natural territorial units within our borders.”
Although many mid-century theorists and planners believed in the promise of such regional proposals, the development of a more expansive, democratic, and ecologically sustainable regionalist vision was hampered by the centralizing thrust of the New Deal and then cut short by World War II. The TVA itself lost direction and largely succumbed to bureaucratic and other corrosive pressures.
Nevertheless, as today’s regional efforts show, the concept has endured. It’s also worth noting that conservative support for decentralized forms of public ownership may not be totally foreclosed. In 2013, President Obama proposed privatizing the TVA in his annual budget, but a group of Republican legislators, concerned with higher prices for consumers and less money for their states, vigorously (and successfully) opposed the idea. A new and more radical regionalism might also draw some lessons from the conservative Appalachian Regional Commission (ARC), which has recently funded innovative efforts to help move the area away from a coal economy. One such effort is Kentucky’s Shaping Our Appalachian Region (SOAR), which is working to develop local food systems, broadband Internet infrastructure, new businesses, youth engagement, and a stronger cultural identity. The Chesapeake Bay Commission, which includes Maryland, Pennsylvania, and Virginia, has brought together a broad coalition to deal with the pollution that threatens the ecological health of a shared regional resource.
California – itself equivalent in scale to a sizable region (and appropriately understood as such) – is a national leader in developing regional climate-change solutions. In October 2015, Governor Jerry Brown signed the most comprehensive and far-reaching climate-change bill that any state has enacted since California first passed landmark climate-change legislation in 2006. The new law requires state utilities to purchase 50 percent of their power from renewable sources by 2030; it also doubles the energy-efficiency requirements of buildings and provides incentives for creating the charging stations needed by electric vehicles.
Another promising strategy is to combine elements of these various approaches. There is no reason that large-scale enterprises couldn’t be structured as joint ventures that would include worker, community, and regional institutions. Many states and localities across the country collaborate to manage, regulate, and share the benefits of publicly owned electric utilities. Roughly 25 percent of the nation’s electricity is, in fact, supplied by publicly owned firms and co-ops. In conservative Nebraska, every resident and business gets its electricity from a local public utility or cooperative. In both liberal and conservative states, examples of public ownership – municipally owned hospitals, hotels, convention centers, transit systems, ports, and airports, among many other services – are ubiquitous. A new politics might one day infuse these local efforts with fresh purpose and energy, and perhaps scale them up to the state or regional level.
None of this is to suggest that largescale political change is imminent or inevitable. Social, economic, and environmental conditions – to say nothing of assaults on traditional liberties – are likely to get worse before they get better. For precisely this reason, the systematic development of a practical alternative to the status quo is critically important.
The change we need will not come from the top. As we’ve seen in countless ways, our current political system limits the potential for traditional progressive strategies. A new vision – one that encompasses fresh political strategies as well as new political-economic content – must be built from the bottom up. The overarching goal must be to develop a set of ideas that challenge the dominant ideologies and move the country in a fundamentally new direction.
The Sanders insurgency, the polling data, and the growing experimentation with a range of alternatives all suggest that we may be on the brink of a new era – an extended and difficult period in which a new economy is slowly forged. Such a system might perhaps be called a “pluralist commonwealth” to reflect its diverse forms of common ownership. But whatever we call it, it is time to start discussing this system more openly and to refine its practical elements. As ever-greater numbers of Americans are forced to ask fundamental questions about where their nation is going, we must start offering the answers.
Comments
In an earlier article I wrote on “Occupy Economics,” I referred to Gar Alperovitz’s approach to a paradigm shift based on redistribution of wealth as distinguished from reform of the present system or revolution:
“The third process, Evolutionary Reconstructionism, Alperovitz defines as a Third Way wherein, beneath the radar, a new paradigm has been emerging quietly over the past decades. Instead of regulating wealth (reform) or seizing wealth (revolution) he avers that this third option is steadily democratizing wealth over time and creating the underlying institutional blocks of a new system, inserting new institutions into the system, and transforming it piece by piece toward a more equal and democratic society. He provides numbers to show the significant growth in worker co-operatives, coalitions of co-operatives, community development corporations, and community and public sector forms of banking all of which keep money in the local economy or as he calls it democratizing wealth. He also notes that ultimately larger scale institutional changes are also essential especially in regard to the financial, banking and health care systems.” https://beyondcollapse.wordpress.com/2012/03/17/occupy-economicshow-the-occupy-movement-has-helped-toshift-the-economic-paradigm-2
Janet M. Eaton, March 18, 2012
You may recall that Galbraith also pointed out that “the new [was] already with us,” and that the first step to the change necessary would be “the emancipation of belief.”
What’s behind this “sea change” is not a new level of thinking – that’s always been there – but a new intensity, a new degree of convergence – a global response to a global corporatocracy that has not only made “the failure of traditional approaches” clear, but has so exacerbated “the nation’s most pressing problems” as to perhaps trigger Galbraith’s “emancipation of belief.”
The wide range of examples cited are particularly encouraging in what they reveal about the “trajectory of change.”
The impetus to take back the commons is key in the development of a true alternative.
Alperovitz’s “Evolutionary Reconstructionism,” is an attractive option. We Canadians have a distinct advantage on this score, in our traditional socialist bent, and in our public central bank.
Alas, that advantage is under siege. We have work to do. “From the bottom up”?
Élan
