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The Power And Potential Of Democratic Public Ownership

Above Photo: FelixMittermeier / Pixabay.

Democratic Public Ownership combines solidarity economy principles around democratic governance, equity, subsidiarity, and sustainability with the benefits of collective ownership in its widest, most holistic sense.

Rather than ignore the world’s existing public enterprises and services, we should leverage their scope and scale by infusing them with democratic governance structures, innovative missions and mandates, and robust transparency and accountability mechanisms.

In most cases, it would be absurd to think that the same approach that created a problem would also be the one best suited to solve it. Yet this is exactly what we are expected to believe regarding the existential ecological threats our world now faces. As predicted by many since its inception, capitalism and its core interconnected tenants — private ownership of the means of production, market allocation, and exponential economic growth — have brought us to the precipice of both environmental and social disaster. Yet, year after year we continue to be told that capitalism will save us. Just a few more dashes of regulation here, some different market incentives there, and the turning point is right around the corner. All the while, temperatures climb, species disappear, the air is choked with smog, waters rise, forests burn, and storms rage.

If capitalism and its institutions can’t save us, what can? For many, the answer is, and always has been, some form of socialism or post-capitalism. In recent years, there has been an increasingly active and spirited debate around the issues of (eco)socialism and growth/degrowth. While all sides generally agree that capitalist growth is unsustainable and undesirable, they differ on the possibilities and implications of various alternatives. On the one hand, writers like Leigh Phillips suggest the potential and merits of “socialist growth,” arguing that carefully planned growth can occur within planetary limits and not require large-scale reductions in living standards (austerity). On the other hand, authors like Timothée Parrique and Giorgos Kallis counter that all economic growth is unsustainable and that “socialism without growth” can deliver prosperity through a combination of wealth redistribution, reductions in unnecessary materialism, and an end to extraction and exploitation in pursuit of profit.

This article does not attempt to evaluate either of these perspectives, except to say briefly that they may not be as irreconcilable as they first appear. For instance, Phillips states that socialists must take planetary limits very seriously, although he believes that humans can and should attempt to innovate their way around such limits. While Parrique and Kallis, for their part, reject both the austerity and capitalist variants of degrowth and admit that “the provision of certain useful goods and services must increase and should increase under socialism.” Rather, this article focuses on what is one of the implicitly agreed underpinnings of any anti-capitalist or post-capitalist transition strategy and envisioned sustainable future — namely collective, democratic control over the means of production — and makes the case for one form, Democratic Public Ownership (DPO), in particular.

Socializing the means of production

That collective, democratic control of the means of production is a necessary precondition for any form of degrowth or eco-socialist transition strategy is hardly a novel concept. Indeed, as Diego Andreucci and Salvatore Engel-Di Mauro wrote in their introduction to a 2019 symposium titled Capitalism, Socialism and the Challenge of Degrowth, “what eco-socialism and degrowth have in common is precisely the need to democratically control social metabolism” and “the first and most important challenge for any degrowth ‘transition’ is precisely to socialize the means of production and reproduction.” However, what “collective control” and “socializing the means of production” entails in practice is the source of considerable debate.

Historically, in many parts of the world this has traditionally taken the form of large state-owned enterprises (SOEs) and national level public services (such as healthcare, education, transportation, and so on). This model undeniably delivered many material benefits, especially with regards to industrialization, reducing inequality and poverty, economic and social development, quality employment, increased union density and power, solving market failures, and regaining sovereign control of resources and assets (especially in the Global South in the post-colonial era).

However, in most cases it manifestly failed to genuinely redistribute economic power beyond the limited benefits derived from broad-based ownership. In other words, these enterprises and services were often hierarchical and managerial organizations with little in the way of direct worker and/or community participation, control, transparency, or democratic accountability. Moreover, in some countries they eviscerated longer-standing traditions of local municipal and collective forms of production and service delivery, became engines of political corruption, clientelism, and state oppression, and/or fueled resource extraction and environmental despoliation. As a result, when confronted with the privatizing, marketizing, and liberalizing forces of neoliberalism during the 1980s and 1990s, many of these enterprises and services found few staunch defenders, leading to a massive transfer of wealth and assets from collective to private hands.

Due at least in part to the many failings of the traditional statist model of public ownership (and nation-states more generally), in recent years and decades many socialists and other anti- and post-capitalists have started to focus their attention — and hopes — on an array of decentralized institutions and approaches with more direct forms of governance and management. Sometimes grouped together under the moniker of the solidarity economy, social economy, democratic economy, or economic democracy, these often include institutions like worker cooperatives, volunteer collectives, mutual associations, producer cooperatives, worker self-managed enterprises, and, in some cases, small-scale for-profit businesses (e.g., B-corps or ‘triple bottom line’ companies).

Undoubtedly, these democratic models of ownership and control are a major advance over the profit-maximizing corporate variant of private ownership that currently predominates in many economies around the world, and they should be supported and expanded wherever possible. However, they are not without their limitations. First and foremost, with the exception of commons-based approaches and some multi-stakeholder approaches (both of which are, arguably, a form of public ownership, as will be discussed further below), these models are largely membership-based rather than truly collective in the widest sense of the term. In other words, the enterprise or service is owned and controlled by some subset of the larger population in a given area. For instance, in a traditional standalone worker cooperative only workers in that particular enterprise have ownership and control rights. The vast majority of a local population, including workers in other industries, retirees, children, family caregivers, the unemployed, and those with disability, are not included.

Secondly, inasmuch as these are profit-making enterprises operating in competitive markets, they are often constrained and/or impacted by some of the same forces as private companies — including pressure to externalize labor and environmental costs, sell to private competitors or demutualize, and grow market share and profits. In other words, as decentralized membership-based entities currently operating in a market-based capitalist system, many of these entities are structurally constrained from implementing certain approaches (such as degrowing or remaining at a steady state) and are not necessarily accountable to society as a whole (and societal priorities).

Take, for example, the case of the Mondragón cooperatives in the Basque region of Spain. With around 95 cooperatives and 80,000 workers the Mondragon Corporation is one of the world’s largest worker cooperative networks and has achieved many tremendous successes, especially as it relates to economic and social development in the Basque region and democratic governance. However, Mondragon is competing in international markets and has had to make certain sacrifices to its cooperative ethos in order to survive. Specifically, it has established a three-tiered labor force consisting of cooperative members, temporary workers on short-term contracts, and wage laborers in a number of international subsidiaries (i.e., workers who are not cooperative members). Moreover, many of the Mondragón cooperatives are industrial in nature and, as Jill Bamburg observed in 2017, “even as ‘sustainability’ issues have found a place in most global firms, I did not see much traction in Mondragon in either practice or articulated values. There is nothing in cooperativism that is inherently greener than any other structure.” And, lastly, the Mondragón cooperatives are famously not unionized and have strained relations with the rest of the working class in the Basque region.

The Mondragón network is important not just because of its successes and challenges, but also because it is one of the few modern membership based models of socialized production that have reached anything like the kind of scale that will be needed to displace corporate power and move towards a post-capitalist economy in the time frames dictated by climate change and other planetary boundaries. (Another, perhaps more interesting, model is provided by the cooperative networks in the Indian state of Kerala, but they too are facing challenges and pressures as India continues to open its economy to international trade and markets.)

So, despite renewed interest and attention (and in some cases, expansion), in most countries these membership models collectively remain relatively peripheral to the overall system of production. For instance, if all worker cooperative and ESOP (employee stock ownership plan) members in the United States were put together, they would still amount to just around 6.5 percent of the civilian labor force (almost all of whom are in ESOPs which, in most cases, are a much more passive form of worker ownership than worker cooperatives). Simply put, while these models are a critical component of any pluralist vision of post-capitalism, they have yet to reach anything like the scale, impact, and potential of the previous generation of state-owned firms and nationalized services — and time is running out.

Democratic Public Ownership

Another model that is implicit in the solidarity economy ecosystem, but not as often discussed, is public ownership. In contrast to both private, corporate models and many member-based models, public ownership refers to enterprises and services that are owned by all people in a given geographic area and governed either directly through commons-based approaches or indirectly via government structures at various levels (from local to regional to national). By virtue of its direct connection to, and embeddedness in, society (rather than purely markets), public ownership is an inherently flexible ownership form that can be deployed for whatever ends a community prioritizes.

As E.F. Schumacher, the British economist and author of Small is Beautiful, once put it:

Private ownership of the means of production is severely limited in its freedom of choice objectives, because it is compelled to be profit-seeking, and tends to take a narrow and selfish view of things. Public ownership gives complete freedom in the choice of objectives and can therefore be used for any purpose that may be chosen. While private ownership is an instrument that by itself largely determines the ends for which it can be employed, public ownership is an instrument the ends of which are undetermined and need to be consciously chosen.

Moreover, there are already hundreds of thousands of publicly owned enterprises and services in existence around the world and usually new ones can be created relatively easily and quickly through government action at various levels. (During the financial crisis of the late 2000s, for instance, governments around the world nationalized dozens of banks, auto-makers, and other private sector businesses virtually in the blink of an eye.)

In other words, whatever society’s goal might be — whether it is degrowth, steady state, or carefully planned growth — public ownership is a tool with immense possibility, especially if rapid action is needed (as it undoubtedly currently is). For instance, in public hands an oil or coal company could be more easily and rapidly decommissioned or converted to alternative production in a way that provides a just transition for workers and communities. Similarly, a publicly owned renewable energy company could quickly scale up operations without exacerbating economic inequality (e.g. by not serving as a tax shelter for large corporations and wealthy investors).

However, this flexibility and potential cuts both ways and, as previously mentioned, many traditional publicly owned enterprises have been deeply flawed, both in terms of their operations (e.g., resource extraction) and governance. Recognizing this, in recent years a new alternative has started to emerge (albeit one with deep historical roots). Known as Democratic Public Ownership (DPO), it is based not only in a critique of privatization and neoliberalism, but also of traditional forms of public ownership and statism. In particular, DPO rejects the SOE model prevalent around the world and throughout the 20th century for being overly top-down, bureaucratic, managerial, centralized, and alienating. It also opposes neoliberal inspired efforts to ‘reform’ publicly owned enterprises by enshrining private sector aims (such as profit maximization) and approaches (such as New Public Management).

Rather, DPO focuses on combining solidarity economy principles around democratic governance, equity, subsidiarity, and sustainability with the benefits of collective ownership in its widest, most holistic sense. Democratic Public Ownership is about establishing or significantly enhancing democratic decision-making structures, transparency, and accountability both within and around (i.e., the wider political economic system) a publicly owned enterprise or service. What this looks like, in practice, is, and will be, different from community to community, but some examples (all drawn from real-world practice) include:

  • genuinely multi-stakeholder boards that include worker, community, state, environment, and other representatives;
  • democratically elected governing assemblies;
  • works councils and empowered trade unions;
  • autonomous community ‘observatories’ as vehicles for community participation, transparency, and accountability;
  • participatory planning and budgeting processes;
  • and public-community partnerships and co-governance arrangements with community-based membership organizations.

Strategically, the concept of Democratic Public Ownership suggests that rather than simply ignoring the world’s expansive panoply of existing public enterprises and services — or worse, standing by as they are asset stripped and sold off to wealthy private investors — we should leverage their scope and scale by infusing them with democratic governance structures, innovative missions and mandates, and robust transparency and accountability mechanisms. Moreover, this should be supplemented by creating a new generation of publicly owned organizations in strategically and socially important sectors with various forms of democracy (including commons-based governance), transparency, and accountability baked in from the start. This includes, but is not limited to, municipalizing / nationalizing and then reorienting extractive, exploitive, and ecologically destructive for-profit companies.

The right tool for the job

Recently, the Intergovernmental Panel on Climate Change (IPCC) has warned that the window to mitigate the worst effects of climate change is closing fast. In order to save the planet and lay the foundations for a flourishing, equitable, and genuinely sustainable, global post-capitalist society, we are going to need every tool available to quickly and urgently assert collective ownership and control over the means of production and displace for-profit corporate power. While this includes decentralized membership and voluntary models, we would be remiss to neglect the potential and power of Democratic Public Ownership.

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