Power to the people! McDonnell’s ambitious agenda on democratic public ownership
by Thomas M. Hanna (@ThomasMHanna) on September 24, 2018



One of the themes of the past few days at the Labour Party conference in Liverpool has been the importance of extending and embedding democracy in order to build an economy and a society that works for the many not the few. In the economic realm, the Labour Party is now suggesting mechanisms for giving employees an ownership stake in their companies as well as giving them a voice in the governance and organisation of their workplaces through worker representation on boards.

Going a step further, in his conference speech today John McDonnell set out the importance of a new model of democratic and participatory public ownership—heralding the dawn of a post-neoliberal era in terms of how we provide vital public services and how citizens, the state, and the economy relate to each other. This agenda is incredibly exciting coming from the leadership of a major national political party on the threshold of government power.

Steps like this, beyond the 2017 manifesto, further undermine the accusation that Labour simply wants a return to past approaches and retrograde economic models. On the contrary, under Corbyn and McDonnell the party is now at the very cutting edge of forward thinking about what a more democratic, equitable, and sustainable economy might look like in an era beset by the challenges wrought by decades of neoliberalism—climate change, rampant inequality, surging support for fascism and white supremacy, and collapsing trust in institutions.

The focus on who owns and controls key resources, from land to finance, and attempts to change the power and agency in both the present and the future represents a key challenge to the past decades. Capitalist ownership idolizes private forms and the profit motive, seeing institutional and political support for the accumulation of capital on behalf of private individuals works as worth more than any formal support for the common good. In respose to the failures of this, public ownership—the concept that the public at various levels and geographies should own and control key economic resources—is making a storming political comeback.

Around the world, remunicipalisation campaigns are bringing water, electricity, sanitation, and other services back into public ownership—reversing the neoliberal privatisations of the 1980s, 1990s, and early 2000s. New forms of “public-public partnerships” and regional networks are being formed to increase effectiveness and deal with the challenges of scale and vertical integration rather than resorting to privatisation. And energetic campaigns are being run around issues such as public banking and public broadband internet provision.

Under the present leadership, Labour has been unapologetically calling for renationalisation of the railways, the energy system, the water system, and Royal Mail—as well as the establishment of a publicly owned National Investment Bank, a network of regional public development banks, and new local publicly owned banks. These ideas are generally popular. Recently the Legatum Institute, a right-wing think tank, was horrified to discover that there is a strong appetite among British voters to return many privatised industries into public hands. Eighty-three per cent of the public believed that the water sector should be renationalised, seventy-seven per cent for electricity and gas, and seventy-six per cent the railways—with even fifty per cent support for nationalising the banking sector.1

Together with Professor Andrew Cumbers of Glasgow University, I have been working with the Labour Party to begin to think through what genuine, democratic governance of the renationalised industries might look like. When the last great wave of public ownership took place in the UK, the Labour Government of Clement Atlee preferred the “Morrisonian” model of a rather top-down public organisation run by an autonomous, arms-length, appointed board (answerable only to secretaries of state and the occasional Parliamentary committee) and designed to be largely independent of government control, worker representation, and democratic accountability.

While it should be commended for presiding over one of the most radical peaceful ownership transitions in modern economic history—by 1951, a fifth of the economy was publicly owned, with the government responsible for 19.5 per cent of gross fixed capital formation—the Atlee Government was extremely wary of entrusting the public with any real say over their own institutions.2 Nationalisation had failed to rebalance the economy away from private vested interests, despite the subsequent rhetoric, leading one commentator to note: “Labour had taken certain industries into public ownership, but it had done nothing to alter the structure of power in British society.”3

With the public lacking a voice, as well as a real sense of ownership and control, the nationalised industries failed to develop a strong and deep constituency of support with consumers, workers, and citizens (excepting the NHS). Thus, despite Thatcher’s privatisation agenda being generally unpopular, it was pushed through relatively quickly and without effective opposition. Although the nationalised industries performed much more effectively in terms of total factor productivity than many contemporary policymakers recognise or admit, they lacked the kinds of democratic accountability, scrutiny and broader public engagement that are critical if public organisations are to serve social needs and concerns rather than narrow commercial ones.4

There are at least four reasons to favour democratic public ownership. First, evidence suggests that involving workers, the public, and other stakeholders in economic decision-making has a range of societal and economic benefits. Second, participation of these groups can enhance the effectiveness of publicly owned enterprises by tapping into grassroots forms of knowledge from the direct experience of workers and users/consumers. Third, economic democracy—the active participation of individual workers and community members in both micro- and macro-economic decision-making—is a critical cornerstone (and pre-requisite) of genuine political democracy. And fourth, democratisation empowers and builds the capacity of groups and individuals that have traditionally been excluded from economic power.

As with any organisational structure, there will inevitably be tensions to be resolved and trade-offs that need to be made when establishing democratic public enterprises. Questions of subsidiarity and decentralisation on the one hand, and higher-level strategic planning and network integration on the other, are just some of the challenges. Another is the critical need to preserve enterprise autonomy while ensuring accountability to the public and responsibility for the common good. Or the relationship between maximal worker self-management and other stakeholder involvement. And impacting all such decisions is the critical question of how to design the mechanisms and structures to allow for effective and broad-based participation—especially of people and groups that are often marginalised or prevented from being actively involved in decision-making or exercising power.

These, and many more, are the questions and issues that the Labour Party is now actively asking and investigating. Fortunately, there are real-world examples from across the globe from which to draw lessons—from the widely lauded re-municipalised water system in Paris, to the highly democratic and ecologically-focused Banco Popular in Costa Rica, to participatory budgeting and the hundreds of efforts around the world to increase participation and accountability of public services and agencies through new online and digital tools.5

All in all, Labour is showing incredible leadership in setting out an ambitious and potentially transformative agenda for democratising the economy—one with new, cutting-edge forms of public ownership and economic democracy at its core. For once, the challenge is for policy wonks and movement activists to keep up with the pace being set by political leadership—and in particular by Shadow Chancellor John McDonnell, with his simple but radical proposition that an economy that works for the many not the few requires giving real power to the people. It’s time for a broad movement conversation—among workers, consumers, trade unions, local officials, business and more—to put flesh on the bones of this incredibly promising new political-economic agenda. The road to Labour’s Long Revolution in the economy and society stretches out ahead from Liverpool.


  1. Matthew Elliott and James Kanagasooriam, Public Opinion in the Post-Brexit Era: Economic Attitudes in Modern Britain (London, U.K.: Legatum Institute, October 2017). 

  2. Martin Chick, Industrial Policy in Britain 1945-1951: Economic Planning, Nationalisation and the Labour Governments (Cambridge: Cambridge University Press, 1998). 

  3. John Singleton, “Labour, the Conservatives and Nationalisation,” in Robert Millward and John Singleton, eds., The Political Economy of Nationalisation in Britain, 1920-50 (Cambridge: Cambridge University Press, 1995). 

  4. There is now quite a volume of evidence that public enterprises, including the British nationalised entities between 1945 and 1979, perform as well if not better that their private counterparts in the same sectors (see: Thomas M. Hanna, Our Common Wealth: The Return of Public Ownership in the United States (Manchester: Manchester University Press, 2018). 

  5. See, for instance, some of the case studies at Participedia 


author

Thomas M. Hanna (@ThomasMHanna)

Thomas M. Hanna is Research Director at The Democracy Collaborative, a Washington DC-based think-do tank. His new book, Our Common Wealth: The Return of Public Ownership in the United States was published by Manchester University Press this month.

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