Democracy and Decentralization: UK Labour Leaders Reframe Socialism for the 21st Century

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Bernie Sanders has made an unprecedented and extraordinary contribution to the US political landscape this election cycle. Whatever the outcome of the primaries, a whole generation has learned that talking about socialism, explicitly and proudly, is no longer as politically radioactive as once supposed. But can we not expect more from our economic populism than just knitting back together a frayed social safety net, kick-starting the engines of Keynesian demand with ecologically appropriate infrastructure and imposing some long overdue reforms on our largest financial institutions? Might the United States not be ready for a socialism that actually takes the question of “who owns the economy” seriously?

Though perhaps tactically understandable, given his own previous efforts, it’s a little surprising that Sanders has not made ownership (and new forms of ownership) more of a theme in his campaign. “I don’t believe the government should own the means of production,” he emphasized in his major speech on democratic socialism in November 2015, even though elsewhere he has given vociferous support for expanding the scope of the US Postal Service into retail banking. Community development advocates are scratching their heads, wondering why Sanders’ longtime support at the municipal and state level for transformative ownership strategies – employee ownership, community land trusts, cooperative low-income housing – haven’t shown up on the stump. Hillary Clinton’s tepid profit-sharing plan, where businesses could claim a tax credit for 15 percent of the amount of profit they share with their workers, and which grows out of Larry Summers’ “inclusive capitalism” framework, at least opens the door to a (very) weak form of ownership.

A look at what’s brewing on the other side of the Atlantic gives us some reason to dream a little bigger about what might be possible and also politically viable here, especially given the new direction socialist thought is taking all around the world.

Jeremy Corbyn’s insurgent, grassroots-powered win that took the British Labour Party back from neoliberal centrists shares a lot with Sanders’ presidential primary campaign. However, Corbyn has tackled the ownership question head-on, coming out strong for a modern approach to public ownership as a basic principle to defend and fight for: “After a generation of forced privatisation and outsourcing of public services, the evidence has built up that handing services over to private companies routinely delivers poorer quality, higher cost, worse terms and conditions for the workforce, less transparency and less say for the public.”

His vision of public ownership, however, is quite new; it has more to do with Chattanooga’s experiments in municipal broadband then it does with the monolithic centralized state bureaucracies of mid-20th-century Britain. Corbyn believes “local councils [should] have the freedom to develop their local economies and communities and to become the public entrepreneurs of the 21st century and to directly provide cutting edge public services and utilities in the economy of the future.”

Looking past Corbyn to his economic team – and in particular, the direction being articulated by his shadow chancellor, John McDonnell – we see something transformative: not just a strong pushback against the corporate economy, but the outlines of “a new, positive economic alternative for Labour … the new economics.” Part of this involves revitalizing the long cooperative tradition in the UK, which stretches back to the original Rochdale Pioneers, who inaugurated the modern consumer cooperatives in 1844. “In an uncertain world where a laissez faire market approach continues to fail, co-operation is an idea whose time has come again,” McDonnell said.

In his approach to bringing more democracy into the workplace, McDonnell picks up on developments that US-based co-op developers have also been focusing on, such as converting existing businesses to achieve increased worker ownership. For example, McDonnell said that the law should “[offer] employees first rights on buying out a company or plant that is being dissolved, sold, or floated on the stock exchange.”

McDonnell also highlights the growing trend in the US and the UK toward a model that uses the power of municipal government, together with the procurement resources of large nonprofit and public institutions, to build frameworks for inclusive, locally anchored economic development:

Preston, inspired by the example of Cleveland, Ohio, has developed an extensive programme of work. Preston was one of the councils facing the very sharpest cuts to its funding out of any in the country. But they are responding creatively.

They have got major local employers and buyers – so-called anchor institutions, like the University of Central Lancashire – to drive through a local programme of economic transformation. By changing their procurement policies, these anchor institutions were able to drive up spending locally.

They’re looking to shift a proportion of the joint council’s £5.5bn pension fund to focus on local businesses, keeping the money circulating in Preston.

And the council is actively seeking opportunities to create local co-operatives as a part of local business succession, working with the local Chamber of Commerce. The aim is to sustain high quality local employment, by giving the chance for workers to keep a business in local hands.

Crucially though, for McDonnell, the task is bigger than just creating a few more worker cooperatives; the project for Labour in the 21st century is to articulate “how we can change our economy to suit our society, rather than changing society to suit our economy … We need to go much further than simply offering a defence of what we already have.” And such a vision should not just fall back on old models of centralized, technocratic state ownership, with all their well-documented flaws:

Nor can we simply demand top-down nationalisation as a panacea. The old, Morrisonian model of nationalisation centralised too much power in a few hands in Whitehall. It had much in common with the new model of multinational corporations, in which power is centralised in a few hands in Silicon Valley, or the City of London. It won’t work in a world in which technological change is providing opportunities to decentralise power.

Ultimately, what is at stake for McDonnell is nothing less than a real, rigorous conversation about a next system, one that rises above the rhetoric common on both the left and right, and that rigorously explores the kind of economic institutions and infrastructure we want to build, beyond both corporate capitalism and state socialism:

Friedrich von Hayek, who taught for many years at LSE, is politically somewhat distant from myself, it’s fair to say. But he raised a profound point about how information operates in a society, when he noted that centralised bureaucracies can be overwhelmed by the information processing demands of complex, modern societies. His preferred solution, of allowing the market to act as an information processor, was equally unviable.

Markets can be crude information processors at best, as the crash of 2008 showed. […] We should look, instead, to how different forms of organisation can operate in the economy – not just the capitalist firm, or the nationalised industry, but many different ways of organising ownership and production. We need a far more sophisticated argument about ownership that does not just fall into the caricature of either pure privatisation, or pure state control.

If Jeremy Corbyn and his team – which now includes Joseph Stiglitz, Thomas Piketty and Mariana Mazzucato as economic advisers – continue to bring this kind of thinking into the national political conversation in the UK, it’s possible that such ideas will start to gain more widespread voter support and implementation. Democratic socialists in the US should pay close attention.