How do we develop a democratic economy, which is underpinned by the values of social justice, rather than exchange value? For me, alongside tackling climate change, this is the critical economic question of our time. The alienation and marginalisation felt by many from three decades of increasingly autocratic neoliberal economic governance is becoming politically manifested in different ways but most worryingly through the resurgent economic nationalism of Brexit, Trump, Le Pen, Orban and others on the right.
A revitalised project for economic democracy
There is however a more hopeful and inspiring economic narrative emerging through the Sanders and Corbyn insurgencies on the left, as well as movements such as Podemos in Spain. In Scotland, this has been partly invoked by movements such as the Common Weal and the recent commitments by the Scottish Government to a new public bank and public ownership in the energy sector. Although, this new economic thinking is still nascent, it does build on important alternative and longer established new left traditions of a more participatory and democratic economics from the 1960s and 1970s.
Reanimating economic democracy for the twenty first century means coming to terms with a dramatically changing global economic context, characterised by growing inequalities and an increased concentration of wealth. Fundamental changes to the world of work include the emergence of the gig economy, the collapse of secure employment, and the decline of trade unions as a powerful countervailing force to capital.
Given these unpropitious circumstances, a revitalised project for economic democracy means moving beyond older forms centred upon the workplace and collective bargaining to develop a broader strategy for democratic participation across the economy more generally. Labour rights, unions and collective bargaining will still be important in the struggle for social justice, but a much greater remit is required to democratise the economy.
Developing new narratives around the economy
This is about developing new narratives around individual economic rights, public participation and deliberation of the economy itself. In the first place, the alienation from neoliberal globalisation, which is fanning the flames of reactionary right wing economics, and the xenophobia promoted by Trump and his ilk, is partly driven by growing individual economic insecurity. This has been produced by disciplinary neoliberal labour policies around welfare, labour market deregulation, and flexibility for employers at the expense of precarity for workers. Official thinking for almost two decades at the international scale has eulogised the flexible labour market as the solution to the employment problem. Today, the most obvious outcome of this in the UK is the zero hours economy with the number of workers employed on these contracts rising from just over 100,000 to almost 1 million in the space of a decade. This is the ‘road to serfdom’ – not Hayek’s overweaning state – in the twenty first century.
Combating these developments in practical terms means rebalancing the labour market from employers to employees, but at a deeper level it requires new thinking and policy around how we generate individual economic freedoms. Not the freedom to exercise property rights and exploit the labour of others – but freedom to choose how you exercise your own labour. This is an important, but long neglected, agenda for economic democracy, bringing together the enlightenment liberalism of John Stuart Mill with the radical political economy tradition. In this respect it is worth recalling that it was freedom from economic servitude that most animated Marx.
In an increasingly automated economy, where decent, secure and well-remunerated work becomes scarce, there is a need to rethink how individuals, families and communities secure the income and resources needed to live decent lives. This needs a fresh approach to how work is distributed, new initiatives around working time, and a rebalancing of work and leisure around the fundamental individual economic right to a decent sustainable livelihood.
A second key component of a revitalised economic democracy is the need to open up the economy, and in particular decision-making, to broader public participation and engagement. Here, one might compare favourably Denmark’s associational economy, where there is a high level of cooperative associations, strong trade unions and business associations with countries such as the UK or to a lesser extent US, where elite corporate interests dominate the economic discourse, often with the result that policy-making becomes very restrictive and tends to favour established vested interests (e.g. property owners, financial elites, media moguls).
Democratising the public sphere and decentring economic knowledge production
A more robust democracy requires a strong deliberative public sphere where economic ideas and narratives are not the preserve of elites but are the subject of debate, contestation and even conflict between competing groups. The contemporary global economy suffers a knowledge deficit in the sense that economic discourses – alongside wealth – have become appropriated and concentrated through elite interests and institutions. Faux consensuses over everything from trade policy, macroeconomics and the ownership of firms become established which fit the needs of these interests to the increasing detriment of much of the rest of the population.
Economic decision-making should be embedded within the democratic public realm as far as possible, rather than delegated to a remote class of technocratic experts who end up serving dominant vested interests. The triumph of a form of liberal capitalism globally – increasingly enshrined through the institutions of the Washington Consensus and supranational organisations like NAFTA and the EU – has not produced the much-trumpeted democracy or effective freedom of the individual, but instead over time has led to the effective suspension of democratic politics in many places: Greece and Italy for example in the wake of the Eurozone crisis.
If we accept that democracy is ultimately about offering competing alternative visions of society that are given effective voice in public debate, and individual economic rights to both flourish and participate in such public debates, the emergence of an austerity driven last gasp neoliberalism that ruthlessly represses, neutralises or incorporates alternatives to corporate capitalism is paving the way for the advance of the far right and economic nationalism, shading in to fascism, everywhere.
A more democratic economy would require greater investment in the development of popular education, engagement and participation of the citizenry in economic decision-making through institutional and organisational forms that both foster collective decision-making, but also the decentralisation and dispersal of economic knowledge and practice throughout the community. Collective learning institutions dedicated to the common good should replace elite institutions (such as the rent-seeking neoliberal university model) that appropriate knowledge and education for commercialised ends.
The appropriate question then becomes what kind of economic institutions would be needed to deal with these issues? Strong collective bargaining rights for workers and unions remains an essential element of a democratic economy but a citizen income would also be a good way to promote individual economic rights, set at a level that allows individuals the positive freedom to choose how they sell their labour. And democratic forms of public ownership are one important way to deal with the increasing capture of common wealth on behalf of the elite. The devolution of economic decision-making by the state and the increased use of participatory planning and budgeting for a are also essential ingredients. A functioning democratic economy would require a mix of planning and markets, with the emphasis in the latter on those that deal in use value rather than pure exchange value (e.g. farmers’ markets rather than stock markets). But it would require very different forms of social regulation and economic institutionsthan are currently on offer.
Andrew Cumbers, Professor of Regional Political Economy, University of Glasgow