Neither Revolution Nor Reform: A New Strategy for the Left
For over a century, liberals and radicals have seen the
possibility of change in capitalist systems from one of two perspectives: the
reform tradition assumes that corporate institutions remain central to the
system but believes that regulatory policies can contain, modify, and control
corporations and their political allies. The revolutionary tradition assumes
that change can come about only if corporate institutions are eliminated or
transcended during an acute crisis, usually but not always by violence.
But what happens if a system neither reforms nor collapses
in crisis?
Quietly, a different kind of progressive change is emerging, one that
involves a transformation in institutional structures and power, a process one
could call “evolutionary reconstruction.” At the height of the financial crisis
in early 2009, some kind of nationalization of the banks seemed possible. “The
public hates bankers right now,” the Brookings Institution’s Douglas Elliot
observed. “Truthfully, you would find considerable support for hanging a number
of bankers…” It was a moment, Barack Obama told banking CEOs, when his
administration was “the only thing between you and the pitchforks.” But the
president opted for a soft bailout engineered by Treasury Secretary Timothy
Geithner and White House economic adviser Lawrence Summers. Whereas Franklin
Roosevelt attacked the “economic royalists” and built and mobilized his
political base, Obama entered office with an already organized base and largely
ignored it.
When the next financial crisis occurs, and it will, a different political
opportunity may be possible. One option has already been put on the table: in
2010, thirty-three senators voted to break up large Wall Street investment
banks that were “too big to fail.” Such a policy would not only reduce
financial vulnerability; it would alter the structure of institutional power.
Still, breaking up banks, even if successful, isn’t the end of the
process. The modern history of the financial industry, to say nothing of
anti-trust strategies in general, suggests that the big banks would ultimately
regroup and reconcentrate and restore their domination of the system. So what
can be done when “breaking them up” fails?
The potentially explosive power of public anger at financial institutions
surfaced in May 2010 when the Senate voted by a 96-0 margin to audit the
Federal Reserve’s lending (a provision included ultimately in the Dodd-Frank
legislation, which was designed to protect American taxpayers and consumers
from financial corruption and to make the financial system more
accountable)—something that had never been done before. Traditional reforms
have aimed at improved regulation, higher reserve requirements, and the
channeling of credit to key sectors. But future crises may feature a spectrum
of sophisticated proposals for more radical change offered by figures on both
the left and right. For instance, a “Limited Purpose Banking” strategy put
forward by conservative economist Laurence Kolticoff would impose a 100-percent
reserve requirement on banks. Because banks typically provide loans in amounts
many times their reserves, this would transform them into modest institutions
with little or no capacity to finance speculation. It would also nationalize
the creation of all new money as federal authorities, rather than the banks,
would directly control system-wide financial flows. A variety of respected
liberal as well as conservative economists have welcomed this
strategy—including five Nobel laureates in economics.
On the left, the economist Fred Moseley has proposed that for banks
deemed too big to fail “permanent nationalization with bonds-to-stocks swaps
for bondholders is the most equitable solution…” Nationally owned banks, he
argues, would provide a basis for “a more stable and public-oriented banking
system in the future.” Most striking is the argument of Willem Buiter, the
chief economist of Citigroup no less, that if the public underwrites the costs
of bailouts, “banks should be in public ownership…” In fact, had the taxpayer
funds used to bail out major financial institutions in 2007–2010 been provided
on condition that voting stock be issued in return for the investment, one or
more major banks would, in fact, have become essentially publicly controlled
banks.
Unknown to most Americans, there have been a large number of small and
medium-sized public banking institutions for some time now. They have financed
small businesses, renewable energy, co-ops, housing, infrastructure, and other
specifically targeted areas. There are also 7,500 community-based credit
unions. Further precedents for public banking range from Small Business
Administration loans to the activities of the U.S.-dominated World Bank. In
fact, the federal government already operates 140 banks and quasi-banks that
provide loans and loan guarantees for an extraordinary range of domestic and
international economic activities. Through its various farm, housing,
electricity, cooperative and other loans, the Department of Agriculture alone
operates the equivalent of the seventh largest bank in America.
The economic crisis has also produced widespread interest in the Bank of
North Dakota, a highly successful state-owned bank founded in 1919 when the
state was governed by legislators belonging to the left-populist Nonpartisan
League. Over the past fourteen years, the bank has returned $340 million in
profits to the state and has broad support in the business community as well as
among progressive activists. Legislative proposals to establish banks patterned
in whole or in part on the North Dakota model have been put forward by
activists and legislators in Washington, Oregon, California, Arizona, New
Mexico, Montana, Illinois, Louisiana, New York, Maryland, Virginia, Maine, and Massachusetts.
In Oregon, with strong support from a coalition of farmers, small-business
owners, and community bankers, and backed by State Treasurer Ted Wheeler, a
variation on the theme, “a virtual state bank” (that is, one that has no
storefronts but channels state-backed capital to support other banks) is likely
to be formed in the near future. How far the various strategies may develop is
likely to depend on the intensity of future financial crises, the degree of
social and economic pain and political anger in general, and the capacity of a
new politics to focus citizen anger in support of major institutional
reconstruction and democratization.
That a long era of social and economic austerity and failing reform might
paradoxically open the way to more populist or radical institutional
change—including various forms of public ownership—is also suggested by
emerging developments in health care. Here the next stage of change is already
under way. At first, it is likely to be harmful. Republican efforts to cut back
the mostly unrealized benefits of the Affordable Care Act, passed in 2010,
provide one example of this. The first stages, however, are not likely to be
the last. Polls show overwhelming distrust of and deep hostility toward
insurance companies. We can also expect public outrage to be fueled by stories
like that of fifty-nine-year-old James Verone who attempted to rob a bank in
Gastonia, North Carolina this year—but only, he made clear, for one dollar. The
reason: unemployed and without health insurance, Verone simply saw no way other
than going to jail to get health care for a growth on his chest, foot
difficulties, and back problems.
Cost pressures are building in ways that will also continue to undermine
corporations facing global competitors, forcing them to seek new solutions. A
recent report from the federal Centers for Medicare and Medicaid Services
(“National Health Expenditure Projections, 2009–2019”) projects health care
costs to rise from the 2010 level of 17.5 percent of GDP to 19.6 percent in
2019. It has long been clear that the central question is to what extent, and
at what pace, underlying cost pressures ultimately force development of some
form of single-payer system—the only serious way to deal with the underlying
problem.
A new national solution is ultimately likely to come either in
response to a burst of pain-driven public outrage or more
slowly through a state by state build up to a national system. Massachusetts, of
course, already has a near universal plan, with 99.8 percent of children
covered and 98.1 percent of adults. In Hawaii, health coverage (provided mostly
by nonprofit insurers) reaches 91.8 percent of adults in large part because of
a 1970s law mandating low cost insurance for anyone working twenty hours or
more a week. In Vermont, Governor Peter Shumlin signed legislation in May 2011
creating “Green Mountain Care,” a broad effort that would ultimately allow
state residents to move into a publicly funded insurance pool—in essence a form
of single-payer insurance. Universal coverage, dependent on a federal waiver,
would begin in 2017 and possibly as early as 2014. In Connecticut, legislation
approved in June 2011 created a “SustiNet” Health Care Cabinet directed to
produce a business plan for a nonprofit public health insurance program by
2012, with the goal of offering such a plan beginning in 2014. In California,
there is a good chance a universal “Medicare for all” bill may be on the
governor’s desk for signature by mid-2012. (Similar legislation passed by both the House and the
Senate was vetoed by then-Governor Schwarzenegger in 2006 and 2008.) In all, nearly twenty states will soon consider
bills to create one or another form of universal health care.
One can also observe a developing institutional dynamic in the central
neighborhoods of some of the nation’s larger cities, places that have
consistently suffered high levels of unemployment and underemployment, with
poverty commonly above 25 percent. In such neighborhoods, democratizing
development has also gone forward, again paradoxically, precisely because
traditional policies—in this case involving large expenditures for jobs,
housing and other necessities—have been politically impossible. “Social
enterprises” that undertake businesses in order to support specific social
missions now increasingly make up what is sometimes called “a fourth sector”
(different from the government, business, and nonprofit sectors). Roughly 4,500
not-for-profit community development corporations are largely devoted to
housing development. There are now also more than eleven thousand businesses
owned in whole or part by their employees; five million more individuals are
involved in these enterprises than are members of private-sector unions.
Another 130 million Americans are members of various urban, agricultural, and
credit union cooperatives. In many cities, important new “land trust”
developments are underway using an institutional form of nonprofit or municipal
ownership that develops and maintains low- and moderate-income housing.
The various institutional efforts have also begun to develop innovative
strategies that suggest broader possibilities for change. Consider the
Evergreen Cooperatives in Cleveland, Ohio, an integrated group of worker-owned
companies, supported in part by the purchasing power of large hospitals and
universities. The cooperatives include a solar installation company, an
industrial scale (and ecologically advanced) laundry, and soon a greenhouse
capable of producing more than five million heads of lettuce a year. The Cleveland
effort, which is partly modeled on the nearly 100,000 person Mondragón
cooperatives in the Basque region of Spain, is on track to create new
businesses, year by year, as time goes on. However, its goal is not simply
worker ownership, but the democratization of wealth and community-building in
general in the low-income Greater University Circle area of what was once a
thriving industrial city. Linked by a nonprofit corporation and a revolving
fund, the companies cannot be sold outside the network; they also return 10
percent of profits to help develop additional worker-owned firms in the area.
(Full disclosure: The Democracy Collaborative, which I co-founded, has played
an important role in helping develop the Cleveland effort. See
www.Community-Wealth.org for further information on this and many other local
and state efforts.)
Another innovative enterprise is Market Creek Plaza in San Diego. There a
comprehensive, community-owned project links individual and collective
wealth-building through a $23.5-million commercial and cultural complex
anchored by a shopping center. The complex has developed a range of social and
economic projects that have resulted in the employment of more than 1,700
people. Its multicultural emphasis on the arts has helped create several venues
for common activity among the local Asian, Hispanic, and black communities.
Significantly, these collectively owned businesses are commonly supported
by unusual local alliances, including not only progressives; labor unions;
and nonprofit and religious leaders; but also, in many cases, the backing of local businesses and bankers.
The efforts have also attracted surprising political support. In Indiana, for
example, Republican State Treasurer Richard Mourdock has established a state
linked deposit program to provide state financing support for employee
ownership. At this writing, Ohio Democratic Senator Sherrod Brown has plans to
introduce model legislation to support the development of an initial group of
Evergreen-style efforts in diverse parts of the country. Environmental concerns
are also involved; many of the enterprises are “green” by design, increasingly
so as time goes on. Cleveland’s Evergreen laundry, which uses less than a third
the amount of water used by comparable commercial firms, is one of the most
ecologically advanced in the Midwest. In Washington state, Coastal Community
Action (CCA) operates a portfolio of housing, food, health, and employment
programs for low-income residents that uses development and ownership of a fourteen
million dollar wind turbine to generate income to support its social service
programs.
Yet another sphere of institutional growth centers on land development.
By maintaining direct ownership of areas surrounding transit station exits,
public agencies in Washington, D.C., Atlanta, and other cities earn millions
capturing the increased land values their transit investments create. The town
of Riverview, Michigan, has been a national leader in trapping methane from its
landfills and using it to fuel electricity generation,
thereby providing both revenues and
jobs. There are roughly five hundred
similar projects nationwide. Many cities have established municipally owned
hotels. There are also over two thousand publicly owned utilities that provide
power (and, increasingly, broadband services) to more than forty-five million
Americans, in the process generating $50 billion in annual revenue. Significant
public institutions are also common at the state level. CalPERS, California’s
public pension authority, helps finance local community development needs; in
Alaska, state oil revenues provide each citizen with dividends from public
investment strategies as a matter of right; in Alabama, public pension
investing has long focused on state economic development (including
employee-owned firms).
ALTHOUGH PUBLIC ownership is surprisingly widespread, it can also be
vulnerable to challenge. The fiscal crisis, and conservative resistance to
raising taxes, has led some mayors and governors to sell off public assets. In
Indiana, Governor Mitch Daniels sold the Indiana Toll Road to Spanish and
Australian investors. In Chicago, then-Mayor Richard Daley privatized parking
meters and toll collection on the Chicago Skyway and even proposed selling off
recycling collection, equipment maintenance, and the annual “Taste of Chicago”
festival. How far continuing financial and political pressures may lead other
officials to attempt to secure revenues by selling off public assets is an open
question. Public resistance to such strategies, although less widely
publicized, has been surprisingly strong in many areas. Toll road sales have
been held up in Pennsylvania and New Jersey, and newly elected Chicago Mayor
Rahm Emanuel recently voiced his opposition to an attempt to privatize Midway
Airport as previously attempted by Daley. An effort to transfer city-owned
parking garages to private ownership in Los Angeles also failed when residents
and business leaders realized parking rates would spike if the deal went
through.
One thing is certain: traditional liberalism, dependent on expensive
federal policies and strong labor unions, is moribund. The government no longer
has much capacity to use progressive taxation to achieve the goal of equity or
to regulate corporations effectively. Congressional deadlocks on such matters
are the rule, not the exception. At the same time, ongoing economic stagnation
or mild upturns followed by further decay, and “real” unemployment rates in the
15 percent to 16 percent range appear more likely than a return to booming
economic times.
IRONICALLY, THIS grim
new order may open the way for the kinds of “evolutionary reconstructive”
institutional change described here. Since the Great Depression, liberal
activists and policy makers have implicitly assumed they were providing one or
another form of “countervailing power” against large corporations. But institutional reconstruction aims either to weaken or displace corporate power. Strategies like anti-trust or efforts to “break
up” big banks aim to weaken. Public banking, municipal utilities, and
single-payer health plans attempt to displace privately owned companies. At the
same time, community-based enterprises offer public officials alternatives to
paying large tax-incentive bribes to big corporations.
Of course, “evolutionary reconstruction” might fail, as have most kinds
of top-down national reform. The era of stalemate and decay might continue and
worsen. Like ancient Rome, the United States could simply decline and fall,
unable to address its social ills.
However, even during a sustained era of stalemate and decay, it may be
possible to develop a coherent long-term progressive strategic direction. Such
a direction would build upon the remaining energies of traditional liberal
reform, animated over time by new populist anger and movements aimed at
confronting corporate power, the extreme concentration of income, failing
public services, the ecological crisis, and military adventurism. And it would
explicitly advocate the construction of new institutions run by people
committed to developing an expansively democratic polity, thereby giving
political voice to the new constituencies emerging alongside the new
developments at the same time it helps to begin altering underlying
institutional power balances.
In connection with environmental issues, at least, some “capitalists”
also seem willing to sign onto this vision. New organizations like the Business
Alliance for Local Living Economies (BALLE) and the American Sustainable
Business Council (ASBC) have been quietly developing momentum in recent years.
BALLE, which has more than 22,000 small business members, works to promote
sustainable local community development. ASBC (which includes BALLE as a
member) is an advocacy and lobbying effort that involves more than 150,000
business professionals and 30 separate business organizations committed to
sustainability. Leading White House figures and such Cabinet-level officials as
Labor Secretary Hilda Solis have welcomed the organization as a counter to the
national Chamber of Commerce. (Jeffrey Hollender, chair of ASBC’s Business
Leadership Council and former CEO of Seventh Generation, has denounced the
Chamber for “fighting democracy and destroying America’s economic future”
because of its opposition to climate change legislation and its support for the
Citizens United decision.) Gus Speth, a member of ASBC’s Advisory Board (and
former environmental adviser to Presidents Carter and Clinton) offers a more
far-reaching general perspective: “For the most part, we have worked within
this current system of political economy, but working within the system will
not succeed in the end when what is needed is transformative change in the
system itself.”
AT THE heart of the spectrum of emerging institutional change is the
traditional radical principle that the ownership of capital should be subject
to democratic control. In a nation where 1 percent of the population owns
nearly as much wealth as the entire bottom half of the nation, this principle
may be particularly appealing to the young—the people who will shape the next
political era. In 2009, even as Republicans assailed President Obama and his
liberal allies as immoral “socialists,” a Rasmussen poll reported that
Americans under thirty were “essentially evenly divided” as to whether they
preferred “capitalism” or “socialism.” Even if many were unsure about what
“socialism” is, they were clearly open to something new, whatever it might be
called. A non-statist, community-building, institution-changing, democratizing
strategy might well capture their imagination and channel their desire to heal
the world. It is surely a positive direction to pursue. Just possibly, it could
open the way to an era of true progressive renewal, even one day perhaps
step-by-step systemic change or the kind of unexpected, explosive, movement-building
power evidenced in the “Arab Spring” and, historically, in our own civil
rights, feminist, and other great movements.
0 komentar :
Posting Komentar