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The Private Sector Has Failed Us. It is Time to Go Public, Expand Government & Democratize Our Economy

By paulgibson51 on May 15, 2021 • ( 1 )

Today we publish Part II of our analysis of how a robust “commons” and a far more active government can reverse 50 years of neoliberal privatization and 500 years of capitalism & imperialism and rethink a new path, sustainable and equitable path. At the very end of the post, we also offer video recording of this morning’s Retake Conversation on KSFR, a solo show in which Paul discusses the Jason Hickel book, Less is More, citing numerous passages to give you an idea what the book contains….this is Part I of a three-part series on KSFR.

Rethink Our Democracy. Before we dive into an exploration of a new path, we want to let you know that we have added a new feature to our Rethink page. What We Are Reading & Watching is a new inventory of books, articles, research briefs and video that are at the core of both the vision and the process envisioned by Rethink Our Democracy. We will update it regularly, adding new resources for your review. We encourage you to share and discuss these resources with others, but first check them out here.

If you want to check out other info on the Rethink page (our vision and scope of work, video recordings of our two Rethink Huddles, etc.), just click here.

What We Are Reading

Today, we conclude our discussion of The Democracy Collaborative’s “Covid-19 and 21st Century Public Ownership,” To review Part I of this exploration, “Going Public: How Reversing Privatization & Rethinking the Role of Government Can Restore Economic Democracy,” published last Saturday, click here. You’ll need to skip past a bit of other info before you get to this piece.

Public ownership and a vastly expanded role for government is a central premise to Rethink Our Democracy’s exploration of public policy options that can effect a truly just and democratic transition. The Democracy Collaborative (TDC) describes this goal clearly.

“To secure a strong and fair recovery, we, therefore, need to move beyond a narrow monoculture of private ownership to scale a pluralistic ecosystem of ownership models across the full spectrum of assets, resources, enterprises, and services that, collectively, transfer wealth and power from the hands of the few to the many. But broadening ownership is not enough; to address the feelings of disempowerment many feel, we need to democratise economic power. That means transforming the internal structure of institutions to give people and communities real, genuine agency and control over the critical decisions that impact their lives.”
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

TDC then looks back upon how before Reagan and the apotheosis of privatization that began with his presidency, there was a history of an expanded role for government, one that drove innovation and the development of a vast national infrastructure. While applauding these advances, TDC notes that there was also a highly vertical power dynamic that drove that development rather than a more democratic horizontal decision-making structure.

“The pivotal role public ownership played in the development of the national economies of the UK and USA in the twentieth century is often forgotten, or deliberately obscured, from memory. Public ownership of railways and road networks, land and natural resources, water and electricity utilities, and banking and postal services was critical to building the infrastructure, institutions, and technologies of the mid-twentieth century alongside the mixed economy of social democracy and the developmental state. The coming of modernity was inseparable from these ownership forms and ambitious visions of national renewal.”
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

TDC then delineates a different, more democratic approach that is needed to guide the transition from a privatized world to one that is more democratic and publicly managed.

“This will not, and cannot, be the same public ownership of the past. Rather we need a new model that combines the distributional benefits of common ownership with the individual, social, and community benefits of increased agency, control, and transparency. We call this model: Democratic Public Ownership (DPO). This agenda stands in contrast to traditional top-down, ‘Morrisonian’, managerial forms of public ownership that were widespread in the twentieth century, but which were excessively centralising and undemocratic in governance, with the structures of nationalised industries often little changed from their pre-public ownership shape
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

TDC describes the problems with privatized systems using our broadband networks as an example, pointing out how the rollout of that network would be more effectively, efficiently and democratically managed by the public sector. Here in NM we have seen how poorly rural and tribal NM is served by a privatized broadband network. For that matter, half of Santa Fe is plagued with poor broadband, so this is not so much a rural issue, as a systems one. Put simply: privately owned broadband, like a host of other industries, operates in pursuit of profit, not to maximize service to the public. In TDC’s “Covid-19 and 21st Century Public Ownership” and in other publications, TDC points to a range of industries and social services that could be better operated by and for the people either through government or other structures managed by workers or those served by the systems.

“A market-led approach to the roll-out and maintenance of digital infrastructure predominantly undertaken by, and to the benefit of, an oligopolistic set of for-profit corporations, is marked by problems common to all privatised utilities: the prioritisation of shareholder returns over investment in equitably and comprehensively rolling out and maintaining vital infrastructures; undemocratic ownership and governance of essential services; poor coordination of investment with costly and excessive duplication of infrastructure deployment in profitable areas, and severe under-provision in others; and a reliance on expensive public subsidies to private corporations in an effort to address digital redlining and the cherry-picking of provision. The result is a slow, patchy network critical infrastructure and acute inequalities in access.”
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

TDC also describes how the same public ownership principles should apply to the cloud and the storage and use of what is now privately held personal data. Rather than our personal data being utilized for the profit of megacorporations like Apple, Facebook, Microsoft, and Google, it would be managed and protected by a publicly managed body.

The same principles would apply to publicly owned and managed intellectual property and research and development. We have seen how the private sector, with secured IP rights to pharmaceuticals, can charge astronomical prices for critically needed medications while having the development of those drugs subsidized by tax-payer dollars. What’s more, privately-held pharmaceutical corporations’ choices of what to develop are largely derived by market demand and profitability, not public health. Further, with the change in regulations allowing TV advertising for medications, there is an entire new industry that has evolved around manufactured conditions that can be treated with costly and too often unproven remedies. Lastly, for medications that are desperately and broadly needed, the Global North stands first in line while the Global South is served as profits allow and only after the privileged North has been served, Covid vaccines, being but one example..

“The ongoing public health crisis is demonstrating how deficiencies in our approach to intellectual property (IP) – a unique set of rights and protections that applies to the creations of the human intellect – and research and development (R&D) imperil the health, safety, and livelihoods of millions of people around the world. As has happened all too often in the past, the choice to prioritise corporate profits and an exclusionary version of IP rights and R&D over affordable medicines and medical supplies amid the pandemic is proving not only to be deadly, but also threatens to dramatically increase economic, geographic, and social inequality. This has been reinforced in recent weeks as news has started to trickle out about the shocking inequities in Covid-19 vaccine access between the world’s richest countries and
the rest.”
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

TDC points to how the privatized system serves the needs of only those who own the corporations delivering the service, whether that be pharmaceuticals, food, banking services, electricity, and many other industries. The exploration of how the US and NM could offer government managed utilities and services will be a central theme of Rethink Our Democracy’s research.

By allowing these critical systems to primarily benefit private interest and corporations, we are failing to equitably develop and distribute products and services, adequately compensate workers and taxpayers, and maximise and stimulate innovation to address the intensifying and intersecting crises we now face.
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

Another industry TDC feels would benefit from public management is the banking industry and here TDC harkens back a century when post offices offered limited but important banking functions, a system that vastly improved access to banking services in rural communities. Such a system should be explored to offer check cashing and even small loans in rural NM where credit unions and community banks are not available.

Central bank digital currency and a postal banking system: The US ,in particular, should get ahead of private platform capitalists and fintech companies by establishing a democratically accountable digital payments infrastructure, including a central bank digital currency and postal banking system as the digital and physical architectures, respectively.
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

While a system of postal banks could offer limited banking services to the public, state and city public banks could serve as “bankers” banks, with cities, counties and states depositing publicly held funds from taxes, fines, fees and other revenues and collaborating with community banks and credit unions as “participating” but not lead lenders. This is what our allies, the Alliance For Local Prosperity has proposed in the last session and will continue to introduce until the legislature approves a state public bank in NM. Retake has written often about the benefits of a public bank. Click here for one post focusing on how a public bank could be a critical tool in the recovery and just transition.

“National Investment Bank: the US and UK should close the financing gap for platform co-ops and other democratic alternatives via broader transformations of public finance, such as the establishment of a network of public banks led at the national level by a National Investment Bank.”
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

TDC doesn’t overlook the historic impact of centuries of colonization largely conducted by the Global North throughout the Global South. What international scale reparations could look like is something outside the scope of Rethink inquiry, as our field of vision is almost exclusively upon NM. But here in the US, there is also need for reparations with the African American community and for restitutions (#LandBack) with the our indigenous neighbors.

“Centring global solidarity and reparations (including technology transfers) to acknowledge and redress the role of the US and UK in extracting wealth, knowledge, and resources from the rest of the world (primarily the Global South) through centuries of colonialism, enslavement, and imperialism.”
The Democracy Collaborative: “Covid-19 and 21st Century Public Ownership”

There are almost no limits to where this conversation and thinking can take us. There is much government could and should do, but also much that would be better left in the hands of small and medium business operators. TDC and Rethink would like to find ways that government could invest in the spawning of a new, more democratic approach to local business development. And so, while this piece focused on public ownership and public investment, TDC and Rethink Our Democracy are researching ways that small and medium sized local businesses can be reorganized to incorporate more democratic management with employee representation on boards of directors and/or with worker owned and managed cooperatives.

The democratized workplace is a topic for another day, but as a teaser, in 2021 there are two kinds of vulnerable small and medium sized local businesses that could be salvaged through the government’s investment in transitioning these businesses to worker owned cooperatives and other worker managed structures:

Businesses shuttered or in hopeless debt due to closures during the pandemic; and
Millions of sole proprietor businesses with owners approaching retirement.

In both instances, a public bank, state, or federal government could make funds and technical assistance available to help those businesses either recover (in the first example) or sustain operations (in the second), with both operating going forward as worker owned and managed cooperatives.

So much is possible, if we are just willing to look beyond the systems and policies that have governed us for decades, even centuries. Stay tuned.

What We are Watching

May 15, 2021 on KSFR, Retake Our Democracy. Less is More with Paul Gibson who reviews Jason HIckel’s Less is More, in the first of a three part review of this groundbreaking review of what a post-capitalist world could be like and how we get there.