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I was the Head of Policy and Public Affairs at UNISON Scotland until my retirement in September 2018. I now work on several policy development projects, so all views are very definitely my own. You can also follow me on Twitter. I hope you find this blog interesting and I would welcome your comments.

Friday, 26 July 2019

The making of a democratic economy

Progressive writers, including me, have filled libraries with polemics against austerity or neo-liberal economics. However, we have been somewhat less prolific when it comes to setting out the alternatives. What turns reactive movements into transformative ones, is to be clear what we are for as well as what we are against.

A new book by Marjorie Kelly and Ted Howard, 'The Making of a Democratic Economy' offers some alternatives. As Naomi Kline says in her foreword; "It’s not enough to imagine that another world is possible; we need to be able to picture it, experience it in miniature, feel and taste it.”



Kelly and Howard indeed start by explaining what is wrong with corporate capitalism and the task ahead. As they put it:

“This emerging democratic economy is in stark contrast to today’s extractive economy, designed for financial extraction by an elite. It’s an economy of, by, and for the 1 percent. Society long ago democratized government, but we have never democratized the economy.”

The principles of their democratic economy, in contrast to the extractive economy, include:

  • Community: The common good comes first. The self-contained individual does not exist, the community creates the conditions in which each of us may flourish.
  • Inclusion: Creating opportunity for those long excluded. Particularly those excluded based on race, sex and wealth.
  • Place: Building community wealth that stays local. Grounded in loyalty to a geographic place where working together for the common good instinctively makes sense.
  • Good Work: Putting labour before capital with a living wage as a central aim.
  • Democratised ownership: Enterprises are understood to be human communities. They operate at an appropriate scale with living missions and with decision making by moral agents. This is more likely when ownership is locally rooted and close to daily operations.
  • Sustainability: Humans are not masters of the world but members of it. The extractive economy is waging war on nature. The democratic economy understands that we must meet present needs without compromising the ability of those in the future to meet their needs.
  • Ethical Finance: Investing and lending for people and place. Bringing money back to the real world, reaching actual companies to fund operations – not the casino economy of speculative trading.

The meat of this book sets out practical examples that highlight the above principles, mostly from the USA and UK. From rural native American communities to areas of urban decay. For example, community wealth building in Preston, being developed in North Ayrshire and elsewhere, was based on a model in Cleveland. In that city anchor institutions built a new economy of place – less inclined to abandon their community to profit as maximising corporations did. 

They don't duck the challenges. The example of a New York cooperative of home care workers faced many of the problems we have with a marketised social care system. This highlights the importance of having a government that is focused on supporting the democratic economy.

Ownership is vital in all these examples, and they include municipal, cooperatives, social enterprises and private companies. Providing new forms of finance is also critical. Labour's National Investment Bank could play an important role, together with the development of local and regional banks. There are European and US examples of how this is actually working in practice.

This is not a dry economic textbook, even if it is rooted in financial accountability and sound business systems. It is also a moral call to arms; “When we see with moral clarity, it becomes blindingly obvious that democracy is about the pursuit of happiness for everyone.” 

There is an afterword by Aditya Chakrabortty, which highlights the many similar stories he has reported on in his Guardian column. Another Guardian columnist, George Monbiot, in today's paper, highlights the strategy behind 'disaster capitalism' and their political puppets like Trump, Farage and Johnson. The new oligarchs want the deconstruction of the administrative state with chaos being the new profit multiplier.


Our democracy is struggling under the new populism financed by the oligarchs. We need to find ways of democratising our economy, to shift wealth and power from the few to the many. This book doesn't just point the way, you can also 'feel and taste' what it might look like. 

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