Democratic Wealth: Building a Citizens' Economy

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Democratic Wealth:Building a Citizens Economy

Edited by:Stuart White, Niki Seth-Smith


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Copyright 2014 by openDemocracy.

All following texts published under a Creative Commons Non-Commerciallicense. In each case copyright resides with the author. All rights reserved forimages.

This book brings together a selection of essays first published as an onlineseries under the same name, Democratic Wealth: building a citizenseconomy, between November 2012 and February 2014. The series and thisbook are the result of a partnership between openDemocracy and Politics in

Spires, a blog run by the universities of Oxford and Cambridge. You can findthe complete series at bothopenDemocracy andPolitics in Spires.

Cover designer: Kadie ArmstrongCover image: David Shankbone
http://www.opendemocracy.net/ourkingdom/collections/democratic-wealth-building-citizens-economyhttp://politicsinspires.org/special-series/democratic-wealth/http://politicsinspires.org/special-series/democratic-wealth/http://www.opendemocracy.net/ourkingdom/collections/democratic-wealth-building-citizens-economy


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Table of Contents

~Introduction,by Stuart White and Niki Seth-Smith

~ Taking B ack the Economy

1. The Market as a Res Publica,Philip Pettit2. The Commercial Republic: a Contradiction in Terms?Jessica

Kimpell3. Social Democracy must Radicalise to Survive,Joe Guinan4. A Democratic Case for the Free Market?Martin ONeill and Thad

Williamson

~ Republ ican Econ omy in Pract ice

5. An iron chainof bondage: Lessons from the Knights of Labor,Alex Gourevitch

6. Civic Italy: a model for Britain?Kaveh Pourvand,7. Revolutionary France and the Social Republic that Never Was,

Vincent Bourdeau8. Democratising Capital at Scale,Joe Guinan and Tim Hanna9. Sovereign Wealth Funds: Can They Be Community Funds?

Angela Cummine10. Ownership for all: The Lost Radicalism of the Centre,Stuart

White11. A Republican Call for a Basic Income,Daniel Ravents and JulieWark

12. The Alaska Model: a Citizen's Income in Practice,Karl Widerquist13. Republicanism and Tax Justice,David Owen14. Toward a Generative Economy,Marjorie Kelly

~ Repu bl ican Pol i t ics

15. Radical Virtues,Alex Gourevitch16. Britain, Become a Republic!Dan Hind17. Liberty, Liberalism and Surveillance: An Interview with Quentin

Skinner,Richard Marshall and Quentin Skinner18. Democrats Today can Learn from Machiavelli,John P. McCormick19. Republicanism and Revolutions,Karma Nabulsi

~Afterword,by James Meadway


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Acknowledgment:

Many people have contributed to making this e-book possible. In addition to all

those who contributed to the original debate series and the e-book itself, the

editors would like to thank Blake Ewing, Liz Greenhalgh, and Olly Huitson fortheir work in creating and managing the project.


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Democratic Wealth: an Introduction~ Stuart White, Niki Seth-Smith

In 2008, as the severity of our current economic crisis started to becomeclear, many expected the rapid demise of neo-liberalism as the reigningeconomic philosophy. This has not happened. Over time the dominant policyresponses to the crisis have increasingly looked to free-market ideas orserved to reinforce them. David Camerons call in 2012 for the UK to wage aneconomic warbased on a new wave of deregulation is one example of this.New citizen movements, such as theindignadosin Spain, and Occupy inother countries, have articulated a sense that there must be an alternative.They are, in part, protests at a poverty of political imagination in the face ofthe crisis.

We need urgently, therefore, to explore in an open-minded andcreative fashion what resources we have for a renewal of economic thinkingresources of hope, to use Raymond Williamss helpful phrase. This book,Democratic Wealth, on republicanism and political economy, is onecontribution to this. The articles were first published as part of an online serieshosted in 2012-2014 by openDemocracy and Politics in Spires, a website runby the Departments of Politics and International Relations/InternationalStudies at the universities of Oxford and Cambridge. You can read thecomplete series atopenDemocracy orPolitics in Spires.

Whats republicanism?

The past two decades or so have seen a renewal of interest within academicpolitical theory in something, or some things, called republicanism. As atradition (or set of traditions) within political theory, republicanism is not goingto give us a direct handle on, say, the details of monetary and fiscal policy.But it can perhaps provide a constructive basis for thinking about what wefundamentally want from an economic order and about some of theinstitutions or approaches that will promote these goals. It can help us thinkabout the relationships between society, economy and politics.

By republicanism we dont mean (just) opposition to monarchy, or theUS Republican party. Its ahighly contested term, but a working definitionwould probably include the following four things:

(1)Popular sovereignty. A legitimate political order must make law andpolicy through processes that are appropriately inclusive of allcitizens. Classical republicans understood this idea in terms of amixed constitutionthat balances popular and elite forces. Modernrepublicans understand it as requiring popular sovereignty in theprocess by which laws and policies are made. This excludesoligarchy: rule by wealthy elites.
http://www.telegraph.co.uk/finance/economics/9688715/Britain-is-in-an-economic-war-says-Cameron.htmlhttp://www.telegraph.co.uk/finance/economics/9688715/Britain-is-in-an-economic-war-says-Cameron.htmlhttp://www.opendemocracy.net/anthony-barnett/long-and-quick-of-revolutionhttp://www.opendemocracy.net/anthony-barnett/long-and-quick-of-revolutionhttp://www.opendemocracy.net/anthony-barnett/long-and-quick-of-revolutionhttp://www.opendemocracy.net/ourkingdom/collections/democratic-wealth-building-citizens-economyhttp://politicsinspires.org/special-series/democratic-wealth/http://en.wikipedia.org/wiki/Mixed_governmenthttp://en.wikipedia.org/wiki/Mixed_governmenthttp://en.wikipedia.org/wiki/Mixed_governmenthttp://politicsinspires.org/special-series/democratic-wealth/http://www.opendemocracy.net/ourkingdom/collections/democratic-wealth-building-citizens-economyhttp://www.opendemocracy.net/anthony-barnett/long-and-quick-of-revolutionhttp://www.telegraph.co.uk/finance/economics/9688715/Britain-is-in-an-economic-war-says-Cameron.html


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(2)Common good. A legitimate political order must direct law andpolicy to a genuine common good. Economic arrangements are aconstruction of people in their capacity as sovereign and, when thissovereign power is rightly exercised, economic institutions aredesigned to serve this common good.

(3)Freedom. A central part of the common good of the citizenry is eachcitizens interest in freedom. In his Discourse on the Origins ofInequality,Jean-Jacques Rousseausays that the worst thing thatcan happen to one in the relations between man and man [sic] is tofind oneself at the mercy of another. According toPhilip PettitandQuentin Skinnerthere is a distinctively republican (or neo-Roman)conception of freedom that consists precisely in not living at themercy of another. We are free when we are able to live withoutbeing subject to the arbitrary will of another, when we enjoy whatPettit calls non-domination.

To achieve its common good, therefore, a people must deploy itssovereignty to create political and economic arrangements thatsecure freedom in this sense for all citizens. It is not only a questionof protecting the individual from domination by the state, but ofharnessing the state constructively to prevent relations ofdomination emerging in the economy and wider society.

(4)Civic participation. A citizen is not only someone with a specificlegal status, but is properly a participant in shared decision-making,with a concern for the common good. Political and economicarrangements must enable and encourage this participation.

Can republicanism offer resources for rethinking our political economy?

The contributors to this book do not share the same philosophical orpolitical perspectives, and none of them should be understood to endorsecontributions other than their own. But they have been willing to share in ourexploration of this question.

Taking Back the Economy

Part 1 of the book begins with republican philosopher, Philip Pettit, making apoint that is central to this project. He argues that economic institutions,including markets and private property, are not part of a natural, pre-politicalorder. Rather, they are a product of political construction and properly amatter of political choice (chapter 1).

In the following chapter, Jessica Kimpell presents a challenge (chapter2): Is a republican market economy really possible? Is the market compatible

with the civic virtue this apparently requires? With social democracy currentlyat an impasse, Joe Guinan argues that it is time for a new agenda focused on
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spreading wealth and assets (chapter 3). Finally, Martin ONeill and ThadWilliamson consider the claim that something akin to a free market economyis the right (the just) political choice for a democratic citizenry. They disputethis, defending John Rawlss preference for a market economy based on aproperty-owning democracy (chapter 4).

Republican Economy in Practice

In Part 2 our contributors dig further into some of the detail of the institutionsof a republican economy. Our authors explore co-operatives (chapters 5-7),unconditional basic income (chapters 11-12), collectively-owned sovereignwealth funds (chapters 9-10)and tax fairness (chapter 13). We not onlypresent the ideas in theory but practical examples, from the co-operatives ofEmilia Romagna in Northern Italy to the Alaska Permanent Fund, whichprovides Alaskan citizens with a real-world citizens income. Contributors alsoconsider how related ideas can help build a green, sustainable economy

(chapter 14)and how to take alternative models, often local or regional, andemploy them more generally and at scale (chapter 8).

Republican Politics

In Part 3 we turn to the politics of republican political economy. We includeinterviews with three prominent thinkers in this area: Quentin Skinner, whosereflections on liberty before liberalism close with an indictment of modern-daysurveillance (chapter 17); John McCormick on Machiavellis relevance tocontemporary democracy (chapter 18); and Dan Hind on his contemporaryvision of a British maximum republic (chapter 16). Alex Gourevitch exploresthe radical virtues celebrated by 19thcentury labor republicans in the US(chapter 15). Finally, Karma Nabulsi discusses the connections betweenrepublicanism and the revolutionary tradition (chapter 19).

We end the book with a responsive Afterword from James Meadway.

What next for Britain and the world?

Our exploration of republicanism and the economy in this book connects witha range of discussions which have emerged in recent years and which we

have only managed to capture partially in our contributions.One important area we did not cover in the book is the Republic of

Ireland, whereFintan OToolehas argued that Ireland needs radical reform ofits political and economic institutions to become, at last, a genuinerepublic. InSpain, where republican theory was explicitly used as a guide to governmentfrom 2004 to 2011, republicanism remains highly relevant with contributionsfrom researchers and activists such asEva Botella-Ordinas,David CassasasandJos Luis Mart,as well as Daniel Ravents and Julie Wark who featurehere. France hosted thefirst colloquiumon the subject of republican politicaleconomy in Paris in 2007, and an important edited volume on this subject is

forthcoming. Vincent Bourdeau, one of the organizers of this conference andvolume, writes here. In the United States, Jessica Kimpell, Alex Gourevitch
http://en.wikipedia.org/wiki/Fintan_O%27Toolehttp://en.wikipedia.org/wiki/Fintan_O%27Toolehttp://en.wikipedia.org/wiki/Fintan_O%27Toolehttp://www.booksandideas.net/La-democracia-directa-de-la-Puerta.htmlhttp://www.booksandideas.net/La-democracia-directa-de-la-Puerta.htmlhttp://www.booksandideas.net/La-democracia-directa-de-la-Puerta.htmlhttp://www.ciepp.org.ar/index.php?page=shop.product_details&flypage=flypage_new1.tpl&product_id=53&category_id=8&option=com_virtuemart&Itemid=1http://www.ciepp.org.ar/index.php?page=shop.product_details&flypage=flypage_new1.tpl&product_id=53&category_id=8&option=com_virtuemart&Itemid=1http://www.ciepp.org.ar/index.php?page=shop.product_details&flypage=flypage_new1.tpl&product_id=53&category_id=8&option=com_virtuemart&Itemid=1http://www.booksandideas.net/Republicanismo-y-participacion.html?lang=frhttp://www.booksandideas.net/Republicanismo-y-participacion.html?lang=frhttp://www.booksandideas.net/Republicanismo-y-participacion.html?lang=frhttp://sophiapol.u-paris10.fr/laboratoire-sophiapol/l-economie-politique-republicaine-juin-2007-174095.kjsp?STNAV=&RUBNAV=&RH=1258728292213http://sophiapol.u-paris10.fr/laboratoire-sophiapol/l-economie-politique-republicaine-juin-2007-174095.kjsp?STNAV=&RUBNAV=&RH=1258728292213http://sophiapol.u-paris10.fr/laboratoire-sophiapol/l-economie-politique-republicaine-juin-2007-174095.kjsp?STNAV=&RUBNAV=&RH=1258728292213http://sophiapol.u-paris10.fr/laboratoire-sophiapol/l-economie-politique-republicaine-juin-2007-174095.kjsp?STNAV=&RUBNAV=&RH=1258728292213http://www.booksandideas.net/Republicanismo-y-participacion.html?lang=frhttp://www.ciepp.org.ar/index.php?page=shop.product_details&flypage=flypage_new1.tpl&product_id=53&category_id=8&option=com_virtuemart&Itemid=1http://www.booksandideas.net/La-democracia-directa-de-la-Puerta.htmlhttp://en.wikipedia.org/wiki/Fintan_O%27Toole


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and Thad Williamson are joined by other important thinkers in the field suchasMichael Sandel,Stephen ElkinandWilliam H. Simon.While not identifyingas republican, theDemocracy Collaborativeat the University of Marylandand theReal Utopias Projectat the University of Wisconsin-Madison havemuch to contribute and are important reference points for those interested in a

republican political economy.

What will be the future of the diverse social movements that sprung uparound the globe in the last half a decade? The Occupy movement, theindignados, the Arab Awakening and post-revolutionary struggles may seemincomparable, but they share common elements that can be seen through arepublican lens. The injustices that prompted them, and the desire for radicalparticipation and a reclaiming of the economic sphere as politic and public,are not likely to disappear in the coming decade. These social movementscan be seen as modelling, however imperfectly and transiently, analternativerepublicto what many see as the broken, failed republics of mainstream

politics. A recognition and application of the republican framework might aidthese movements in their pursuit of a cohesive, anti-sectarian politics beyondpolitical parties and static groupings.

In Britain, a discussion of republican political economy also has thepotential to connect with debates within the various political parties - as wellas to a citizens politics outside of them. A renewed focus on cooperative andmutualist economics in Blue Labour and Red Toryism, manifested inCamerons Big Society and Ed Milibands One Nation agenda, may suggestan opening. The Greens might also have things to learn from a discussion ofrepublican economics. And as the Liberal Democrats reflect on theexperience of the Coalition, a discussion of republican economics might helpthem reconnect with their partys somewhatoccluded traditionof interest inthe distribution of wealth and workplace democracy. Apart from its influenceon global social movements, republican ideas could help inform British civicbodies such as Citizens UK and the Peoples Assembly that aim to rallyaround the common good.

Of course, we should ask whether a future informed by republicantheory is really desirable. How far and how successfully do contemporaryrepublicanisms overcome the exclusions which were a feature of classical

republicanism? Is the republican model of the virtuous citizen too demandingfor people in a contemporary commercial society? Is the republican frameunhelpful, distracting from other, more promising ways of thinking about arenewed economy? How does republican political economy relate to thechallenge of climate change and a recognition of other environmentalconstraints? What does it have to say, if anything, about global justice?

Clearly, this book does not answer all the questions we need to askabout an alternative political economy. Not by a long chalk. But it does try tothink about the philosophy, policy and politics of an alternative in a reasonablyintegrated way, using the organizing concept of republicanism.
http://en.wikipedia.org/wiki/Michael_Sandelhttp://en.wikipedia.org/wiki/Michael_Sandelhttp://en.wikipedia.org/wiki/Michael_Sandelhttp://www.press.uchicago.edu/ucp/books/book/chicago/R/bo3750695.htmlhttp://www.press.uchicago.edu/ucp/books/book/chicago/R/bo3750695.htmlhttp://www.press.uchicago.edu/ucp/books/book/chicago/R/bo3750695.htmlhttp://www.law.columbia.edu/fac/William_Simonhttp://www.law.columbia.edu/fac/William_Simonhttp://www.law.columbia.edu/fac/William_Simonhttp://www.democracycollaborative.org/http://www.democracycollaborative.org/http://www.democracycollaborative.org/http://www.ssc.wisc.edu/~wright/RealUtopias.htmhttp://www.ssc.wisc.edu/~wright/RealUtopias.htmhttp://www.ssc.wisc.edu/~wright/RealUtopias.htmhttp://www.opendemocracy.net/bernardo-guti%C3%A9rrez/15m-towards-real-time-democracyhttp://www.opendemocracy.net/bernardo-guti%C3%A9rrez/15m-towards-real-time-democracyhttp://www.opendemocracy.net/bernardo-guti%C3%A9rrez/15m-towards-real-time-democracyhttp://www.opendemocracy.net/bernardo-guti%C3%A9rrez/15m-towards-real-time-democracyhttp://ppu.politics.ox.ac.uk/materials/liberalismassetsseminar.pdfhttp://ppu.politics.ox.ac.uk/materials/liberalismassetsseminar.pdfhttp://ppu.politics.ox.ac.uk/materials/liberalismassetsseminar.pdfhttp://ppu.politics.ox.ac.uk/materials/liberalismassetsseminar.pdfhttp://www.opendemocracy.net/bernardo-guti%C3%A9rrez/15m-towards-real-time-democracyhttp://www.opendemocracy.net/bernardo-guti%C3%A9rrez/15m-towards-real-time-democracyhttp://www.ssc.wisc.edu/~wright/RealUtopias.htmhttp://www.democracycollaborative.org/http://www.law.columbia.edu/fac/William_Simonhttp://www.press.uchicago.edu/ucp/books/book/chicago/R/bo3750695.htmlhttp://en.wikipedia.org/wiki/Michael_Sandel


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In a republican spirit, we offer the book to our fellow citizens in the UKand across the globe, not as a definitive set of prescriptions, but as acontribution to an urgent democratic discussion which implicates, and shouldinvolve, us all.


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The Market as a Res Publica~ Philip Pettit

Republicans seek to protect and promote individual freedom. So dolibertarians of the right. The difference? Republicans recognise that themarket is constructed through political, public action.

Freedom in the republican tradition requires enjoyment of the fundamentalliberties with the security that only a rule of law can provide. You must bepublicly protected and resourced in such a way that it is manifest to you andto all that under local (not unnecessarily restrictive) conventions, you canspeak your mind, associate with your fellows, enjoy communal resources,locate where you will, move occupation and make use of what is yours,without reason for fearing anyone or deferring to anyone. You have the

standing of a liberor free person; you enjoy equal status under the publicorder and you share equally in control over that order.

This approach to the public world ascribes importance to a sphere ofrelatively private relationships and actions, insisting that within that sphereyou should not be beholden to anyone for your ability to act as you will. But onany of the established republican views, that sphere is a space that is carvedout by public custom and law, maintained by public enforcement, and securedby a form of public control in which each has an equal share. The rules ofpublic order constitute the possibility of private life in the way in which therules of a game like chess constitute the possibility of playing that game. Theyrepresent enabling (or enabling-cum-constraining) rules, not rules that merelyregulate a pre-existing domain.

This republican image runs into sharp conflict with a more receivedpicture, celebrated by right-wing libertarians, according to which the rules ofpublic order regulate the private sphere rather than servingnow in thefashion of one culture, now in the fashion of anotherto make it possible. Onthis libertarian view, the private sphere is only contingently dependent onpublic regulation, not dependent in the constitutive manner envisaged in therepublican. The conflict between the images is important because it shows upin alternative visions of the economy and the relationship between theeconomy and the state.


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City of London. Image: Flickr/Torcello Trio

Property: the contrast in libertarian and republican views

To bring out the conflict of images, consider the property conventions thatestablish the titles and rights of ownership. On the libertarian picture owning isa natural relationship you might think of it as a relationship of possession

and use and the rules of property serve to affirm and protect the naturalrights of owners.

On the republican picture, owning is a relationship that presupposes law,if only the inchoate law of informal custom. You do not own something youdo not have the freedom of an owner just insofar as you can hang onto it,frightening off or driving off potential rivals. You own something only insofar asit is a matter of accepted convention that given the way you came to hold it given public recognition of the title you have to the property you enjoypublic protection against those who would take it from you. It is yours to holdand enjoy in private; but it is yours in that sense only by grace of publicconvention.

This view of property, prominent inRousseauand presupposed in thebroader republican tradition, is scarcely questionable in view of the salientdiversity in systems of property. These differ in how far they allow forcommunal and public property as well as private; in the titles they recognizeon the private front; and in the rights of usage that they grant to privateowners. Think of the variation in how far landowners are taken to ownminerals under the surface of their land, or of the diversity in copyright lawand intellectual property, or of the differences in how far people are allowed totreat their animals or extend their houses. Or think, of course, of the range ofvariation in taxation regimes, remembering that public taxation is part and

parcel of any property system.
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These observations, scarcely richer than platitudes, are important forgiving us a perspective on the market and the economy, undermining thelibertarian image. That picture represents the market as a res privata, aprivate thing, suggesting that the role of the state is merely to lay low the hillsin the way of the market and smooth the paths for its operation. And so it

depicts any other interventions of government in the market as dubious onphilosophical, not just empirical, grounds. I suspect that this image accountsfor the continuing attachment to austerity among those on the right. They arephilosophically opposed to Keynesianism, not just opposed on empiricalgrounds, and their ideological stance makes empirically based arguments forKeynesianism invisible to them.

The public rules of economic association

What constitutes the economy on the republican approach? The answer is:

the sorts of public rules that create private space in general, such as thepublic rules that create the possibility of private ownership. These rules arepublic in the sense of being accepted across the society as a matter ofcommon awareness, and being normally spelled out in statutory or customarylaw. And they vary across societies and periods, reflecting the varyingassumptions of parliaments and courts and other public forums. They includethe property conventions that we have been discussing but also extend muchfurther. Without aspiring to be exhaustive, we should add to the Rules ofpropertyat least the following four categories of market-enabling rules.

Rules of incorporation. These determine the forms in which individualscan combine to form new economic players. They have evolved greatly over

the past two hundred years, giving companies and banks and other suchentities life without a sunset clause; liability that is limited to a shared treasury;the possibility of owning other such entities; the possibility of changinglocation and sphere of operation; and so on. While the rules for the formationand operation of commercial entities have generally become more and morepermissive, most countries impose some anti-trust restrictions, guardingagainst monopoly. And countries vary a great deal, of course, in how far theyallow corporations political influence, with the United States growing evermore tolerant of the pretence thatcorporations have the rights of naturalpersons.

Rules of production. These rules impose restrictions on how far the

larger players in an economy, especially in manufacturing industry, areallowed to locate near centers of population, to pollute the ground or water oratmosphere, to contribute to global warming, and to impose negativeexternalities on other players, individual or corporate. Many of these rulescome about via statute while others emerge from the courts in the resolutionof common law issues, in particular issues oftort.TheLearned Hand ruleonsuch questions of tort would suggest, for example, that producers and otherparties ought to take precautions against harming others in any cases wherethe cost of the precaution is less than the expected cost of the damage: thatis, the cost of the damage, discounted by the probability of its occurring.

Rules of contract. These determine a variety of matters that have to be

sorted out for the smooth and successful operation of a market. Who arecompetent parties to make contracts? What conditions, say in the matter of
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records of the transaction, are required for a binding contract? How far is thecontract to be understood on the basis of the exact words used and how faron the basis of presumptions reasonably ascribed to the parties? When is acontract null and void? What damages may a party seek for breach ofcontract: the loss suffered as a result of reliance on the other or the loss of the

benefits that the contract promised? And so on.Rules of finance. By what agencies is the money supply in the economy

to be controlled? And what are the guidelines that those agencies shouldfollow? Most countries rely on central banks for controlling the money supplyand impose guidelines related to keeping inflation down and employment up.In pursuing its aims, and subject to statutory constraints, the central bank willvary factors such as the base interest rate at which commercial banks canborrow, the ratio they have to preserve between their reserves and theirloans, the extent to which their loans can be bundled together in derivatives,the insurance available to depositors in the event of a bank defaulting, and soon.

As the rules of property establish a system of ownership, so these andother rules combine with them to establish, more broadly, a full-scale marketeconomy. This claim, like the earlier claim about the role of propertyconventions, borders on the platitudinous. But by giving it prominence we canavoid being seduced into the libertarian view now, alas, almost anorthodoxy that the market is a relatively autonomous sphere whichdepends only contingently on the framework of custom and law, and on therole of the state in supporting that framework. The role of the state in relationto the market the role of the community, operating through the state isconstitutive and not just regulative, enabling and not just constraining. And itis extensive in even a greater measure than my five sets of rules suggest,since it also includes providing for the infrastructure of education,communication, transport and insurance that any contemporary economyrequires.


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City Hall during Occupy Philly, November 2011. Image: Demotix / Rachael Cerrotti

Taking back the economy: the first step is philosophical

The message, to end on a slogan, is that we should take back the economy inthe course of our political thinking. As we theorize normatively about theorganization of political life, and about the distribution of socio-economic

assets, so we should also theorize about what general shape our economyought to take and about how our states ought to combine in shapinginternational economic forces. We should not shrink from such prescriptionson the spurious ground that the economy is a natural reality, subject to its ownautonomous laws, and that government intervention always represents apotentially warping influence: the source of what are often described asdistortions.

The philosophical re-construal of the market that I am recommending isquite consistent with empirically based arguments to the effect that one oranother form of government intervention is counter-productive and that it maymake very good sense in some areas of activity to let the market operateunder its own logic. The point is that on issues of economic policy we shouldkeep an open empirical mind. We should not be seduced into a hands-offpresumption of the kind that libertarians support. But neither should wepresume that we can rely usefully on the hand of government in every area ofeconomic performance.

We may know as republicans what we ultimately want to secure inpolitical action and organization within our domestic community. I would saythat we want to establish peoples equal enjoyment of the basic liberties,secured by a public order that is itself subject to their equally shared control; ifyou like, we want to promote equal freedom as non-domination in both private

and public spheres. But neo-republican philosophy on its own does not tell ushow best to achieve that goal on any front, economic or otherwise. It sponsors


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a research program on such matters, framing that program as an inquiry intowhat we can collectively do through government in trying to further thecommon good.

What, then, have I wanted to do here? Merely to insist that that research

program should not be inhibited by libertarian presumptions about the marketthat are implicit in much contemporary thinking. We should not go along withthe naturalization of the market, as we might describe it in more or lessMarxist terms. We must resist the presumption that government interventionshould be limited on the basis of principle, rather than empirics. The market isnot a natural domain with its own natural laws.


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The Commercial Republic: a Contradictionin Terms?~ Jessica Kimpell

Republican thinking today relies heavily on a classical conception ofcitizenship. Can this ever be compatible with modern commercial society?

If there are resources in republicanism for re-thinking the contemporaryeconomic order, it might be worth turning to a republican thinker who wrote onthe topic of political economy. Jean-Jacques Rousseauin A Discourse onPolitical Economy articulated a key worry now held by various groups today,including the Occupy movement, dissatisfied with existing political responseson poverty, education, health care and economic opportunity. For Rousseau,

like republican authors before him, that central concern was about extremesin material inequality and their effect in the public sphere. Groups today, evenin their criticism of the use of tax loopholes by the wealthy, for instance, echoRousseaus sense that the poor man always bears the burden which hisricher neighbour has influence enough to get excepted from.

Rousseaus work proposed, among other things, taxation measurestargeted at the rich and objects of luxury (and there was no doubt, hethought, that one could determine what was and what was not asuperfluity). With his various proposals, Rousseau was trying through thestate apparatus to get at the root of the problem of inequality, not simply tomanage its effects. It is, he said, one of the most important functions of

government to prevent extreme inequality of fortunes; not by taking awaywealth from its possessors, but by depriving all men of means to accumulateit; not by building hospitals for the poor, but by securing the citizens frombecoming poor. Today, policy wonks call this sort of thingpredistribution.

Rousseaus claim that it was an essential role of government to ensurecitizens were neither too poor nor too rich was informed by his commitment toan ideal of citizenship and the republican notion that the state should aim atthe common good. For him and others in this tradition, it was the civic virtueof citizens that secured the common good. But in a situation of vastinequality, citizens could not be virtuous and therefore freedom could not beachieved. This was because those with wealth dominated, directing laws in

their favor, or in other words, toward sectional or private interest. Extremes inresources also undermined a shared sense of value and perspective.Whereas shared experience and commonality motivated virtuous activity, thelack of a common perspective and lack of a shared sense of values to bepursued reduced the motivation not only to place the good of the communityahead of ones partial interests, but also to try with ones fellow citizens toidentify a common good in the first place.

This issue, however, about the nature of citizenship in republicanthought and the (pre)conditions for certain kinds of citizen activity pose adifficulty when turning to republicanism for guidance in contemporarydemocracies. Accordingly there are two interrelated questions that need to beexplored in considering what a republican political economy could mean for
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today: First, what will it demand of citizens or what ideal of citizenship is beingadopted? Second, to what degree will market institutions be challenged?

Rousseaus ideas about the common good and citizenship place him ina classical tradition of republican thought that was mostly hostile to commerceand commercial society. Commerce and commercial societies not only

undermined the ideal of citizen-farmer-soldier, but also introduced acompeting system of motivations and values to those central to republicanthought.

Commerce against virtue?

The tension between virtue and commerce was at the heart of the luxurydebates of 18thcentury Europe. Those who critiqued commercial societyand its increasing wealth and luxury in republican terms consideredcommerce and moveable capital as corrupting of citizen virtue. Commerce,

and the luxury to which it was thought to give rise, encouraged boundlessappetites and selfishness, drawing individuals away from public life bycoaxing them to prefer private pleasures. Commercial society created a set ofincentives and fostered values that encouraged individualism and materialism,which made wealth rather than political virtue a main good to besought. Accordingly, it also undermined the political culture needed fornurturing a virtuous citizenry by displacing republican norms and examples,which in turn was deeply subversive of civic education.

In other words, commercial activity and markets themselves wereviewed as corrupting of citizens in their relationships with each other bychanging their practices, perspectives and mores. Markets and market

values, in particular, were threatening because they invaded areas of humanactivity that were central to the building of civic character. The mark ofcorruption, Rousseau thought, was when virtue was rated at a market price,and this together with other developments associated with commercial societywere the causes of opulence and of poverty, of public interest, of mutualhatred among citizens, of indifference to the common cause, of the corruptionof the people, and of the weakening of all the springs of government.

Thinkers associated with the Scottish Enlightenment who defendedcommerce and luxury similarly thought commercial society involved its ownsystem of values, principles and motivations. In defending commerce, luxury,

politeness and sociability, they shifted the locus of virtue,J. G. A. Pococksaid in an essay in Wealth and Virtue, decisively from the civic to the civil,from the political and military to that blend of the economic, culture and moralwhich we call the social for short.

For thinkers likeAdam Smith,activity in the market operated accordingto the exchange of utility, and networks of cooperation could be built fromindividuals pursuing their own interests. Even more, individuals did not needto sacrifice their personal interest or property in order for politics to go well.David Humethought the political environment might even be more moderatein such circumstances. Indeed, while republicans had tied the rise of self-interest to a negative story of change and corruption, in this nascent languageof political economy of the eighteenth century, individuals pursuit of theirprivate interest was thought to be consistent not just with social and political
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order, asAlbert O. Hirschmanargued in The Passions and the Interests, butwith social and political progress. Private interest could be the engine ofprogress. Yes, luxury weakened civic virtue, but it also created economicdemand and fuelled economic growth.

The other threat to republican virtue in the late eighteenth century, which

formed a point of contention especially in the American context between theFederalists and the Anti-Federalists, was the sheer size of the territorialstate. It was axiomatic in the republican tradition prior to the late eighteenthcentury that republics had to be small. Monarchy was appropriate for largestates, but not republics. The worry for those adopting republican ideas wasthat as the size of the state increased, such growth stretched the bondsbetween citizens and their sense of collective identification, removing the verygrounds needed for encouraging virtuous activity in the public sphere.

The re-definition of the republic to include a vast territory was performedin part by figures likeJames MadisonandAbbe Sieyes,who drew upconstitutions involving programs of limited government that made possible

individual security, a form of citizen-rule and commerce. The small-stateargument of the Anti-Federalists was laid to waste by Madisons claim that theway to solve the problem of faction was to control its effects through the sheersize and clash of interests within the American republic. Around this time,imagined communities, as Benedict Anderson has argued, becameincreasingly possible through print media, providing some motivation on thepart of large populations to think and act collectively.

But for republicans embracing the ideal of civic virtue, even though thisnew form of collective imagining might create a sense of community of somesort, it would not be sufficient for motivating the right kind of politicalbehavior. The presence of face to face moments between citizens, or thepossibility of those moments, was still considered as crucial for fostering ashared sense of belonging, motivating the pursuit of the common good andsecuring laws and institutions from turning into mechanisms through whichgroup interests competed. Patriotism was kindled, as Rousseau said, amongthose with whom we have to live, adding that this attachment to our fellowcitizens in our immediate community received new force because we are inthe habit of seeing them

Contemporary republicanism: too classical?

Contemporary republicanism in academic political theoryneo-republicanismis partly informed by a critique of liberal democracy andproposed as a corrective to the problematic effects of markets andindividualism. But the version of republicanism proposed as part of thiscorrective is classical in perspective, especially in the work of politicaltheorists such asPhilip Pettit,Maurizio Viroli andMichael Sandel.
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Harvard University Professor Michael Sandel. Image: Demotix / Pierre Teyssot

Despite shedding some classical features, such as service in citizenmilitias or the exclusion of vast numbers of people from citizenship, neo-republicans profoundly share with the classical tradition its emphasis on the

tight interconnection between good citizens, good norms and good laws andinstitutions. Pettit in Republicanism: A Theory of Freedom and Governmentsays Machiavelli teaches the importance of having civil norms that mesh withpolitical laws, citing Machiavellis advice: Just as good morals, if they are tobe maintained, have need of the laws, so the laws, if they are to be observed,have need of good morals. Contemporary republican thought adopts theclassical proviso that one needs all of these parts working together or theentire project fails. Additionally, classical and neo-republicans share thecentral claim that the achievement of freedom and the stability of republicanlaws and institutions depend on widespread civic virtue on the part of thecitizenry. But in these ways, neo-republicans have turned back to the ideal ofthe virtuous republic that the rise of commercial society and territorial statesunraveled.

Neo-republicans do not reject the market itself, but as Ccile Labordeand John Maynor say, republicans object to the market society, wheremarket relations spill into, and corrupt, parts of life where they should notreign supreme. Yet, these thinkers do not explain why they are not similarlyconcerned as classical republicans were about the threat the veryaccommodation of commercial society and its egoism poses to republicanideals. They offer no argument as to how the spread of market values can becontained, so as not to invade the political sphere or to shape citizens

desires, perspectives, relationships and dispositions, even though today mostcitizens are participants in the market. Given the pervasiveness of


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commercial society, it would seem that contemporary thinkers would be evenmore vulnerable to this problem than classical republicans.

The problem yet to be solved: civic virtue in a marketeconomy

Thus, key questions in thinking about the shape and commitments of arepublican political economy for today are: What kinds of demands are goingto be placed on citizens and on their political behavior? Are these compatiblewith the kinds of behavior promoted by wide use of markets?

Merely exhorting citizens to be more engaged, more community-oriented, more cooperative, more virtuous is not enough. We must ask againwhether the tension between commerce and virtue can be overcome. Is theresome kind of reconciliation possible that has not yet been imagined?


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Social Democracy Must Radicalise toSurvive~ Joe Guinan

Social democracy is at an impasse, bereft of an economic programme.Democratic wealth-holding may open a way forward.

Social democracy seems perpetually at a crossroads. But today, more than ahundred years after the first of the parties affiliated to theSecond Internationalwon a plurality in a parliamentary election (in Finland in 1907; Anderson,1992, 307), social democrats may finally be running out of rope. All the mainEuropean social democratic parties are facing a crisis, registering at long lastendlessly postponed questions about their fundamental purpose.

As with the last great crisis of social democracy in the 1970s, todays

stark choices are being posed as the result of a major economic shift withincapitalism: the deep disruption of capital accumulation as a consequence ofthe crisis in global financial markets unleashed in 2008. Social democratshave been dealt a tremendous double whammy. On the one hand, theirdecade-long strategy of full accommodation to neo-liberalism in order to skimoff the surplus for ameliorative social spending has collapsed. On the other,contrary to expectations, the crisis has not thus far unseated neo-liberalism asthe reigning economic paradigm, and financiers and the political right haveneatly turned the tables on the centre-left. The big banks, having caused thecrisis in the first place and led governments to borrow vast sums to come totheir aid, have successfully redefined the resulting fiscal deficits as entailing

cuts to public spending and social protection.Stuck in this quandary, social democracy is unlikely to be afforded any

relief by the markets. Rather than giving way to a resumption of growth, theGreat Recession shows every sign of turning instead into a Long Slump.

Nature, too, has some nasty surprises in store for us. As a result ofglobal warming that has already occurredit is now too late to avoid a cascadeof local and regional natural disasters in the medium term (Barnes andGilman, 2011, 43). Price shocks, supply disruptions, dislocations, the risingcosts of urban coastal infrastructure and remediation is the shape of things tocome.

Even whenifgrowth resumes, it will not deliver on the promises withwhich it is being invested. A modelling exercise for theResolution Foundationby the Institute for Employment Research and the Institute for Fiscal Studiesfinds that on the basis of annual average UK growth of 2.5 per cent from2015-2020an optimistic scenarioand no further cuts in public spending,living standards will fall for low and middle income households by between 3and 15 per cent (Brewer et al., 2012). Only the rich will escape this raveningmaw of austerity.
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Socialist chromolithograph in the Romanian magazine Lumea Noua, 1895

Morbid symptoms

How have Europes social democrats responded to this conjuncture? The

early signs are not propitious. The politics of austerity is proving as disruptiveas the economics. To the zombie households, companies and banks of thepost-crisis landscape (Giles, 2012) must now be added zombiegovernments. A horror show of decrepit political formations not seen sincethe inter-war years has been exhumed from the crypt and installed acrossEurope: national governments, externally-imposed technocrats, eveninGreecea troika-dictated regimen reminiscent of Austria in 1922, when aHigh Commissioner was posted to Vienna by the Ententeunder League ofNations coloursto run the economy to its satisfaction (Anderson, 2012,57).

Unsurprisingly, turnouts at elections are falling, but this has notprevented an anti-incumbency tide sweeping over Europe to which governingparties in country after countryBritain, Ireland, Spain, Portugal, France


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have succumbed. The likelihood of continuing political volatility can be seen inthe fact that, for the most part, their successors are prescribing even largerdoses of the same awful medicine.

Against this backdrop, many social democratsstill desperate to hauntthe house of power (Weber, 1991, 194)have begun to position themselves

as the left wing of austerity.One result of this posture is that social democracy is beginning to facesignificant challenges from the left. Thus far, existing party systems have justabout contained the fallout. Greece, however, is the counter example. ThePanhellenic Socialist Movement(PASOK) went into the May 2012 electionson the back of a 43.9 per cent showing last time around but carrying heavybaggage as a signatory of the troika memorandum. The retribution it wasdealt was impressive. PASOK slumped to 13.2 per cent, a fall of some 2.2million votes since 2009 (Mavris, 2012). The main beneficiary of this has beenSyriza,the left coalition, which trebled its vote to 16.8 per cent. The responseof social democrats elsewhere in Europe has been to heap vitriol on Syriza

and paint its leader,Alexis Tsipras,in the most lurid of colours. His crime?Opposing austerity and daring to put forward what amounts to a genuinesocial democratic platform.
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Syriza placard, translated as: In unison and in a left-wing spirit, we make the impossible, possible.

From Keynesianism to neo-liberalism and back again

The difficulties facing social democrats today are deeply embedded in theirhistory. Always more pleased with itself than its record would warrant, socialdemocracy must now make a true reckoning with that history if it is to emergefrom the current crisis as a continuing force for progressive change.

Social democrats first entered government in the inter-war period,largely as temporary shock-absorbers in the great European turbulence thatfollowed the Armistice (Anderson, 1992, 308). Part of their function wascontainment and suppression of political unrest. The widespread belief that

they were moving with an inevitable historical current seemingly absolvedthem of the need for any specific economic programme of their own, and as a


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result they did not initially make their mark anywhere. The conformism whichhas been part and parcel of social democracy from the beginning,WalterBenjaminobserved, attaches not only to its political tactics but to itseconomic views as well (Benjamin, 1969, 258). In Berlin in 1923, the SPDsRudolf Hilferdingwas a model of economic orthodoxy; as wasPhilip Snowden

in London in 1924, Chancellor in aminority Labour governmentthat busieditself with nothing much besides RAF bombing of recalcitrant tribes in Iraq(Elliott, 1993, 38).

It was not political victory but total war that first installed socialdemocracy in government with an effective economic programme of counter-cyclical demand management and welfare state expenditure. In this, socialdemocrats were borrowing the clothes of two heirs of nineteenth-centuryliberal progressivism, Keynes and Beveridge (Elliott, 1993, 57). It was afortuitous piece of political cross-dressing. With the Second World War andvictory over fascism, there was a mass influx of workers into unions andpolitics across Europe. Combined with the unique circumstances of the post-

war world, the stage was set for an extended period of broad-based economicgrowth that could accommodate both increased profit rates for capital andhigher real living standards for labour (Anderson, 1992, 310).

Among the principal beneficiaries of this golden age was socialdemocracy, which had now found its raison dtre:

"Keynesianism suddenly provided working-class political parties with areason to be in office. It appeared that there was something to be done, thatthe economy was not moving according to natural laws, that economic crisescould be attenuated and the waste of resources and the suffering alleviated ifthe state pursued anticyclical policies of demand management. If theeconomy was producing at a level below its capacity, given the existing stockof capital and labour, a proper government policy could increase output until itapproached the economys full potential." (Przeworski, 1986, 208)
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John Maynard Keynes, 1946

The overall weaknesses of this posture eventually became clear. Inparticular, redistributive social spending was linked to the life of the post-warboom. Even before the oil shocks of the 1970s the terms of this boom werebeing called into question, as productivity waned and capitalists facingdeclining rates of profit sought new ways to outflank mass trade unionmovements. When the onset of stagflation in the 1970s underminedKeynesianism, social democrats had no alternatives to hand.

A few years later the verdict was in. New right-wing governments wereinstalled across the social democratic heartland of northern Europe. Theiroverall mission, in Perry Andersons summation, was to change the relationof forces between capital and labour, where necessaryprincipally in Britainand Americaafter tough class struggles to crush resistance to a new order.Deregulation, tax reduction, de-unionisation and privatisation became themain engines of a sustained drive to install a neo-liberal economic framework(Anderson, 2001, 5). The terms had been set for the 1980s and 1990s.

We are all familiar with the end of this story. The onset of a long periodin opposition for social democratic standard-bearers such as Labour in Britainand the SPD in Germany, coupled with continuing slow growth, high

unemployment and falling unionisation, led the parties of the SocialistInternational into a comprehensive accommodation with neo-liberalism


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albeit one wrapped in soothing social market rhetoric and homeopathicconcessions at the margins.

Once again, the verdict is in. The so-calledThird Waywas a fair-weather formation totally incapable of withstanding the onset of the GreatRecession (Anderson, 2001, 8). Governments of the centre-left have toppled

like ninepins. Those social democratic parties fortunate enough to have beenin opposition when the crisis struck are struggling to find their feet andadvance a credible alternative to austerity.

Conservatives have an in-built strategic advantage over socialdemocrats in the current era of austerity, in which a pared-down neo-liberalism now appears shorn of no-longer-affordable social accoutrements.The neo-liberal consensus never enjoyed the same legitimacy as the post-warconsensus but was instead based on division. Part of the reason neo-liberalism has survived the catastrophic market failures of 2008 is thatconservatives can still wield such division to their advantage. This isespecially true when they are faced with opponents who seem above all else

to be shy of reactivating the left/right divide for their own purposes.

Democratising capital

Now for the good news. Social democracy may be at an impasse, but historyis once again on the march. From Cairo to Wall Street and from Santiago tothe City of London, change is in the air (Schiffrin and Kircher-Allen, 2012).2011 has already joined 1848, 1968, and 1989 as a year of revolution. Morerecently, a wave of industrial action has broken out across southern Europe,culminating in general strikes in Spain and Portugal and associated

stoppages in Greece, Italy, France and Belgium. As part of this mass politicalmobilisation, growing numbers of peopleespecially the younghave begunto conclude that traditional policies to achieve equitable and sustainablesocial, economic and ecological outcomes simply no longer work. A full-scalelegitimation crisisis in the making. Growing income and wealth disparities areseen to be corrosive of democracy. Governments are judged as lacking thewill or capacity to regulate corporations effectively. A generation of youngpeople expects to be worse off than their parents.
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N14 General Strike, Seville. Image: Lig Ynnek

Confronted with these realities, more and more people have begun to askever more penetrating questions. They see traditional politics as no longereven attempting to address the issues that matter most. To do so would infact require confronting the need for fundamental systemic change. But what

would this entail? And what would a different system even look like?The social pain arising from the continuing economic crisis has made itpossiblefor the first time in decadesto pose these questions in a seriousfashion. But despite this new space for a major public debate aboutfundamental change, serious political challenges to the systemfromOccupyprotestors, community activists, environmentalists and othershavethus far been contained by the continuing sense of a lack of viablealternatives. The only choices have seemed to be corporate capitalism, on theone hand, or state socialism, on the other. Neither seems capable ofaddressing the problems of the twenty-first century. Neither commands theintellectual and ideological support of a new generation of indignados. But is

there any alternative?Today there is a real need forand hunger fornew understanding,

new clarity, and a new way forward. At the same time, growing despair at theinability of traditional politics to address economic failings has fuelled anextraordinary amount of practical experimentation. Over the past decades,literally thousands of on-the-ground efforts have been developing. Evenexperts working on such matters have rarely appreciated the sheer range ofactivity.

In spite ofor perhaps because ofthe lack of many of the socialdemocratic features of European countries, a lot of this experimentation hasbeen taking place in the United States. TheDemocracy Collaborativehasbeen gathering information on the steadily building array of alternativeeconomic institutions in communities across America. They include social
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enterprises that undertake businesses to support social missions; non-profitcommunity development corporations(CDCs) andcommunity land truststhatdevelop and maintain low-income housing; andcommunity developmentfinancial institutions(CDFIs) that now invest more than $5.5 billion a year increating jobs and housing and providing services for poor communities.

Employee ownership is on the rise. Around 11,000 businesses are nowowned in whole or part by their employees, involving 10 million workersthree million more than are members of private sector unions. More than onein three Americans130 millionare members of urban, agricultural andcredit union co-operatives. There are also 2,000 publicly-owned utilities thattogether with co-operativesprovide some 25 per cent of Americaselectricity. More and more US states are looking into the creation of publicbanking systems along the lines of the long-standing public Bank of NorthDakota (Alperovitz and Dubb, 2012;Alperovitz, 2013, forthcoming).

Most of these projects, ideas and research efforts have gained tractionslowly and received little attention. But in the wake of the financial crisis they

have proliferated. They illuminate how new community wealth-holdingprinciples and approaches can work in practice and generate new solutions topolitical and economic challenges. It is slowly becoming possible to see how,by projecting and extending these practical experiments, the underlyingstructural building blocks of a new political-economic system might beassembled. What is neededbesides more capital to build up the sector overtimeis an integrated and strategic effort to bring all this together and showhow, in total, it forms the lineaments of a radically different system capable ofdelivering superior social, economic and ecological outcomes. The variousinstitutions and elements already work in practice; now we must make themwork in theory.

Although this self-conscious discussion about a new economy isperhaps more advanced in the United States, Europe is no stranger to theinstitutions involved. Indeed, many of them have their origins in the politicaland economic struggles of the nineteenth- and twentieth-century Europeanlabour movement. The birth of the modern co-operative movement can betraced back to theRochdale pioneers,and now boasts a billion membersworldwide (Co-operative Group, 2012, 29). In Italy and Spainboth on thefront lines of austerity strugglesthere are examples (the 'Emilian Model' asdiscussed byRestakis, 2000,andMondragon)that show the power of theseinstitutions when taken to scale in particular geographical locations.

Developments in the US also have their roots in the nation's own radicaltraditions, such as the labor republicanism of the Knights of Labordiscussedby Alex Gourevitch in this series.

Taking sides

Social democracy today is bereft of an economic programme. So is thebroader left, which has not yet developed an alternative to an unappealingand discredited state socialism. The slow and steady build-up of democraticwealth-holding institutions provides an obvious avenue for the re-animationand re-radicalisation of both, through the generation of a new set of economic

institutions and political power bases. But this will require a long-term
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commitment to evolutionary change and a willingness to step outside of thefalse choices and immediate constraints of crisis management.

In doing this, the assumptions behind austerity must be called intoquestion. It is a deep irony that the Great Recession is unfolding among someof the richest societies the world has ever known. While the relations of

production remain contested, the forces of production have been reachingnew heights. In the United States in 2011, the economy produced almost$200,000 (over 125,000) per family of four. In Britain in the same year, theequivalent number was almost $150,000 (almost 95,000). In Germany, itwas nearly $160,000 (100,000). Even in Greece, going through the agony ofausterity, production reached over $100,000 (63,000) per four-personhousehold (OECD, 2012). This is wealth enoughespecially given theresource constraints imposed by climate change and emerging energy,mineral, water and other limits to unending growth. The challenge is nottechnological but organisational and political. It is a matter of systemic design.

Work is already underway to flesh out the elements of what a system

based on pluralist forms of democratic capital ownership might look like(Alperovitz, 2013, forthcoming). That there is political space to be occupied inthis regard is increasingly evident. In the UK, Ed Miliband has acknowledgedthe need for a different institutional basis for Labours economic strategy withhis embrace of pre-distribution (Miliband, 2012). However, despite the valiantefforts of left Rawlsians to press down hard on pre-distribution and force it toyield some radical implications (ONeill and Williamson, 2012;Doron, 2012),in Milibands formulation it seems a weak reed, relying on labour marketinterventions such as education and training to alter distributional outcomes.This is unlikely to achieve much. In Germany, where the workforce is highlyskilled and high-tech manufacturing jobs have been retained, the price hasbeen continuing stagnation of wage levels. That said, Miliband's impulse is theright one.

For social democracy it eventually comes down to the need to takesides. Whose side are you on? Now is not the time for timidity, for all the oldfears about frightening horses with manifestos for radical change; quite thereverse. The upside of an almost total disenchantment on the part of theelectorate with politics-as-usual is that they are now ahead of the politicians inthis game. People buy the argument that things are not working any more.They experience directly the growing inequity, the insecurity, the unfairness.They are no longer creatures of a discredited media. Now people want to

hear, boldly and clearly, an authentic message about change that will make adifference.Having been dealt out of the game for so long, the left suddenly has

everything to play for again. As popular movements and new institutionaldevelopments converge, there is the glimpse of a new world in the making.Embracing these possibilities will require abandoning some of the mentalfurniture acquired from long residence in the house of power. For socialdemocrats, it will also mean becomingfor the very first time in theirconformist historya political force willing to be as radical as reality itself.

This article is based on alonger piecepublished in 'Renewal'. With thanks to

Gar Alperovitz, Steve Dubb, Martin Guinan, Patricia Harvey, Peter Harvey,
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Ben Jackson, Martin ONeill, Emily Robichaux, Roux Robichaux, PeterSparding and Stuart White.

Go toreferencesfor th is art ic le.


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A Democratic Case for the Free Market?~ Martin ONeill, Thad Williamson

A no te from the edi tors :

This collection begins from the premise that democracy is morally prior to theeconomy. The structure of the economy should be designed to secure thecommon good of the peoplethat is, the shared interest of each and evercitizen. This is by no means an uncontroversial premise. It stands opposed toa tradition of libertarian thought, which argues that people can establish moralrights to highly unequal amounts of private property and income. A free-market economy, or something close to it, is therefore held to have moralpriority over democracy. So the philosophical choice has often been posed asone between democracy or private property rights.

Very recently, however, a new school of free-market thought has begunto emerge which rejects this as a false choice. John Tomasis recent book,

Free Market Fairness,is an important work from this new school. Tomasiaccepts that the economy is fundamentally subject to democratic authority.However, he argues that the common good is in fact best served by(something close to) a free-market economy.

Tomasis thesis is an audacious one. Unsurprisingly, it is stimulating a lotof debate. In the article below, republished with kind permission of theBostonReview,Thad Williamson and Martin ONeill respond to Tomasis thesis.

If you call yourself a libertarian, there may be no two scarier words in the

English language than social justice.
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There are many ways to look at social justice, but it is generallyunderstood as demanding that institutions and social practices promote theflourishing of each and all and prevent the domination of any one group byanother. This view of justice is inconsistent with the libertarian claim that somepeople have absoluterights to property, rights that cannot be overridden even

by others needs for the share of resources that would allow them to have adecent life. That claim also holds that property owners are unconditionallyjustified in excluding others from using their property, beyond the taxationneeded to sustain a minimal state.

This positionassociated most famously with Robert Nozickdeniesthe basic requirement of justice: that individuals (and their families) enjoy adecent or equitable share of resources, social esteem, or opportunities todevelop their own capabilitiesa share sufficient to make it reasonable forthem to endorse the social order. Its too bad that some people are unlucky,but property rights cant be violated in order to improve their situation.

Because Nozick was an effective writer who produced many interesting

thought experiments, and because he showed the impossibility of combining afree market with strict equality of outcomes, he has remained a staple in thedebate about justice. But he is often used as a punching bag, to illustrate whystrong libertarian views are not properly conceptions of justice at all, but areinstead rationalizations for the exclusion of the many and the domination ofthe property- owning few.

Political philosopher John Tomasis new book Free Market Fairness is acarefully crafted attempt to provide what has long been missing from thedebate: a non-egalitarian, non-utilitarian, and non-aristocratic conception ofsocial justice that is recognizably a conception of social justice. Tomasi rejectsstrict libertarian views that identify absolute property rights with absolute rightsof individual self-ownership. Instead, he aims to revive the classical liberalismof F. A. Hayek and Milton Friedman and to bring it into conversation with JohnRawlss idea of a just society, a society whose political and economicarrangements are acceptable and justifiable to each of its members.

The book is written in a friendly, relaxed tone that seeks to build bridgesin two directions. First, Tomasi aims to convince the libertarian-minded thatthey neednt be hostile to the idea of social justice. He emphasizes thatleading classical liberals and libertarianseven Ayn Randhave implicitly orexplicitly invoked something like the Rawlsian idea that the social systemought to work to everyones benefit. Tomasi himself endorses this basic

Rawlsian claim and argues that Hayeks critique of social justice does notundermine the core of Rawlss project.Second, Tomasi seeks to persuade liberal egalitarians in the Rawlsian

modethose he terms high liberalsthat their thinking fails to recognize themoral significance of economic liberties. He believes that this failure in turnbends liberal egalitarian thought toward an excessively critical assessment ofcapitalism. Tomasis proposed alternative viewmarket democracyendorses enthusiastically capitalistic institutions as the best way not only torespect political and economic liberties, but also to achieve a just society. Inpractical terms, this may mean using taxation to assure access to key publicgoods such as education, health care, and a minimum income, but it also

means abandoning material egalitarianism and, whenever possible, seekingnon-statist ways to achieve social goals. While market democracy does aim to


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lift the income of the least well off over time, Tomasi argues that the best wayto achieve this is to permit large-scale inequalities and as free a market asfeasible.

But while Tomasis critique of egalitarianism and trenchant defense ofcapitalism enrich the classical liberal position and extend the debate on what

constitutes justice, ultimately they dont hold up.Rawlss theory of justice contains two principles. The first requires a

scheme of basic liberties to be enjoyed and exercised by each and all. Thesecond requires substantive equality, combining fair equality of opportunitywith limitations on inequality so as to maximize the position of the least welloff group. The first principle is prior to the second.

At the heart of Tomasis revival of classical liberalism is the claim thateconomic liberties ought to be considered basic in the same sense thatpolitical liberties are in the Rawlsian scheme. Basic liberties are not absolute;they can be legitimately curtailed to protect other basic liberties or to ensurethat everyone can exercise them. But a high moral value is attached to basic

liberties; proposals for limiting them must reach a very high justificatorystandard. As Tomasi observes, Rawlss account of basic liberties denies thatspecial status to economic rights, such as a right to free commerce and a rightto hold productive property. Instead, basic liberties for Rawls consist only incivic and political freedoms, such as a right to equal political voice, andpersonal freedoms, such as freedoms of movement and occupational choiceand freedom to hold personal property.

A libertarian conception of social justice?

For Tomasi economic liberties appear to include a right to hold productiveproperty; a right to engage in commercial contracts in ones interest, includinga right to sell ones own labor on ones own terms; a right to make ones owndecisions about savings and long-term financial planning; and, in general, aright to benefit from ones own economic activity. If these liberties arerecognized as basic, then even within a Rawlsian scheme they cannot beoverridden for the sake of promoting the secondary principle of equality.

Tomasis support ofeconomic liberties is not rooted in libertarian claimsabout self-ownership, taxation as theft, or the unjustifiability of regulatingmarket transactions. At various points, he recognizes the legitimacy of all fourcommon justifications of market regulation: to protect workers from

exploitation, to protect consumers, to protect third parties harmed by markettransactions (through externalities), and to preserve the stability of theeconomy or society as a whole (e.g., through regulation of the financialsector).

Instead, Tomasis case for the economic liberties is rooted in two moralclaims. The first is that free economic activity is both a fundamentalexpression of human freedom and, more powerfully, a fundamentalmechanism for self-realization. He frequently returns to the example of AmysPup-in-the-Tub, a small business outside Providence, Rhode Island cateringto the bathing and grooming needs of pets. On Tomasis account, Amyinvested not only her money but also her time and effort to make the store a

reality, knowing that prospects for success were uncertain. Consequently, she


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can take great pride and satisfaction in her business. She has made her ownlife through her economic activity.

Free Market Fairnessis largely innocent of serious empirical inquiry intomarket societies and how they work, but there is in fact strong empiricalsupport for the story about Amy. Robert Lanes landmark 1991 book The

Market Experienceconcludes that a primary benefit of markets is the sense ofaccomplishment they confer on many peopleincluding not onlyentrepreneurs such as Amy, but also many employees. Tomasis view is thathigh liberals often undervalue the moral significance of such satisfaction. Hethinks that progressive political theorists, lacking experience in theentrepreneurial world themselves, have a bias toward political liberties. If theylooked at the world through Amys eyesor even for a time, tried to follow inher footstepsperhaps theyd have a healthier appreciation for economicliberties.

Tomasissecond moral claim depends upon the long-term effect ofcapitalism. Capitalism, he points out, has produced enormous economic

growth and increased living standards in the developed nations. Continuedeconomic growth is the surest recipe for further enhancing the prospects ofthe working class and the poor, who have already benefited. Hence we havea moral obligation to pursue capitalist growth. Tomasi criticizes Rawls forimplying that a no-growth economy could make for a just society.

Amys story

Tomasi makes important arguments for both of his moral claims, but neither ispersuasive. Lets start with Amy and the benefit of working and achieving for

oneself.Amys story proves far less than Tomasi suggests. If he simply meansthat a just society should accept and promote the basic right of individuals tocontrol productive property, such as a small business, then high liberals canagree. Protection of a general right to operate a small business is consistentwith a Rawlsian property-owning democracy. It is true that Rawls did notargue for a citizens basic liberty to ownproductive resources; he believedthat justice could be achieved under different regimes of property-ownership,whether fundamentally capitalist or socialist in nature. But ensuring broadaccess to controlover productive resources is a central demand of his view ofsocial justice. Amy could take satisfaction in the success of her Pup-in-the-

Tub in a Rawlsian society, just as much as she does in Tomasis free marketworld.

Amy is a curious example not only because her activities are protectedin Rawlss framework, but also because her business represents a small andthreatened sector of modern capitalist economies. The dominant form ofeconomic organization today is not the small business but the large-scalecorporation, which is itself a creature of the state. Should there be a generalpresumption in favor of corporations rights to engage in free contracting, andif so, should this be enshrined as a basic liberty? Tomasi doesnt say, but it isclear that defending a right for Amy to own and operate a business need notentail that corporations have a strong right to minimal regulation.

The Amy story is also misleading because it privileges the experience ofthe small business owner. What about the worker in a large-scale firm? Blue-


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collar workers in industrial enterprises also take satisfaction in their economicaccomplishments and their ability to make a life for themselves, their families,and their communities through their own efforts. Tomasi faults leftist politicaltheorists for being insufficiently familiar with or sympathetic to Amysexperiences, but there is little in Free Market Fairness to suggest that Tomasi

is familiar with or sympathetic to the moral experiences of ordinary workers.And he evinces even less recognition of the ways in which corporationsdestroy working-class communities through plant closures, wage cuts, andpoor working conditions.

Historically, collective bargaining is one of the principal vehicles throughwhich

Democratic Wealth: Building a Citizens' Economy

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