Who Owns the City?
by Hettie O'Brien (@hettieveronica) on July 10, 2018



In a room on the third floor of a Barcelona building, Xavi Palos is showing us some flags. “This one is from the early 20th century – cooperative workers would take it on marches,” he says, pointing to the tapestry details on a sun-faded flag that sits in a glass display case. Palos is the friendly guardian of the Fundació Roca i Gales. Its book-lined rooms house an archive of old currencies, texts and photographs documenting Catalonia’s worker cooperatives. “The UK was where the cooperative movement got going,” he says. “What happened?”

Palos can be forgiven for underestimating the UK’s recent interest in worker cooperatives and alternative models of ownership. The meaning of “ownership” in our present economy has been distilled into shares held for minutes and traded in seconds. Finance has stopped resourcing things that are tangible, giving primacy to the “fictitious capital” of debt, bonds and stocks that have no physical basis in factories or workers. Investors preoccupied by risk err towards the safety of a few monopolistic firms, concentrating resources among companies that, intent on market dominance, route profits offshore to avoid tax. Rather than circulating wealth in the places where they do business, today’s corporations harvest resources and siphon capital upwards, deploying hollow promises of trickle-down growth and job creation to justify their actions.

These forces are tangible in cities. The city is a site of both “capital accumulation” and “revolutionary potential”, David Harvey writes in Rebel Cities. Municipalism is a theory of change that adopts the latter to tackle the former. Through models of broad-based and shared ownership, it reclaims civic services like bins, water, energy and wifi, and locates these within the hands of devolved communities rather than disembedded corporations, allowing the benefits of ownership to flow within the places where services are located.

Key to municipalism is the concept of “predistribution”. The idea is that, rather than attempting to correct malign economic outcomes through redistributive taxes and benefits, government and civil society can get it right the first time by inscribing better outcomes within the economy itself. These common forms of ownership spread democracy beyond the ballot box and challenge the idea that the economy is a realm for technocrats rather than citizens.

Labour’s 2017 report, Alternative Models of Ownership, drew on this municipal framework and gave an optimistic glimmer of a postcapitalist future. Yet making broad-based ownership a reality can seem an exhausting task. The New Economics Foundation estimates that over half of UK company equity is owned abroad. In their recent article for the journal Renewal, Martin O’Neill and Joe Guinan note that between 1980 and 1996, Britain “racked up forty percent of the total value of all assets privatised across the OECD”. Compared to its European counterparts, the UK privatised with alacrity.

In Spain, however, governments are already getting to work rolling back waves of privatisation and building economic democracy within neoliberal urban landscapes. If municipalism is the key to cities built on broad-based ownership and democratic control, then examining how it has worked elsewhere – what knowledge can be borrowed, what theories should be drawn upon, and what is specific to particular places – will be formative to Labour’s own municipal socialist agenda.

The Spanish story

In 2015, alongside seven other citizens’ platforms in major Spanish cities, Barcelona en Comú defeated a long-entrenched political class to win power. The platform resists the terminology of a political “party”, instead emphasising its porosity and openness to people with no former political expertise. Headed by former housing activist Ada Colau, it has since pushed to remunicipalise water and energy services and committed millions of euros to incubating the city’s “social and solidarity” economy, turning alternative models of ownership from thought experiment into reality.

The success of Spain’s municipal tide can be traced to an urban model that predates the 2008 crisis. During the same time that Spain joined the European Economic Community in 1986, its economy registered a global shift towards international capital flows, and grew to depend on the real estate and tourism sectors, giving a free ride to financial capital and banking monopolies. Cities like Madrid, Valencia and Barcelona started to roll back the state and roll out an experimental mix of partnerships and privatisation schemes inspired by the New Public Management School, which adopted business models to make public services more “efficient” – and, consequently less democratic.

The 2008 financial crisis exacerbated the faultlines in this model. Homeowners who defaulted on their mortgages were evicted; those who could no longer afford to pay for water went without. Banks and private equity firms had long monopolised the city’s means of production and control of its public services. From this picture, the precursor to today’s municipalist movements began to flower. Civil society groups like the PAH (Plataforma de Afectados por la Hipoteca – or platform for those affected by mortgages), to which Colau belonged, took aim at an urban model that facilitated the accumulation of private capital by dispossessing people of their homes and access to basic services.

The clue to Barcelona en Comú’s ambition is in its name – Barcelona in Common. It has created a municipal energy company that will be up and running from 2019, challenged a monopoly in the funeral sector by founding a publicly-owned funeral company, and will hold a referendum on the future of the city’s water ownership. According to data published in Open Democracy, the city’s eviction rates have declined by 14% since 2016, in part due to the anti-extractive Special Tourist Accommodation Plan that is infamous for limiting Airbnb apartments and fining illegal tourist housing.

Cooperatives are an important part of this new urban economy. Though they have historically flourished in Catalonia and the Basque country, worker co-ops came into their own during the financial crisis, when they proved to be more resilient than typical enterprises – in part because of their willingness to reduce collective wages rather than fire staff. Barcelona en Comú has created a new commission aimed at bolstering cooperatives as part of the city’s “social and solidarity economy”, which strives for models of broad-based rather than concentrated private ownership while embedding equality and environmentalism in corporate practice.

But are these alternatives strong enough to stand on their own? It would be premature to pronounce a verdict just yet. As Vicente Rubio-Pueyo writes, “there is, among both participants and supporters … a strong sense of exhaustion. Two and a half years of constant attacks by other parties, economic forces, and mainstream media have led to a feeling of isolation that can obscure successes and highlight failures”. For now, at least, a richer understanding of other municipal movements is formative to an agenda for alternative ownership here in the UK. So what can we learn from Spain?

1. Cooperatives alone aren’t the future

Fetishising the cooperative as the key to ownership in a postcapitalist society is like trying to make a cup of tea without water. The tea bag alone will never be enough. “For us, building an alternative economy isn’t about legal forms – it’s about practices. It takes into account a whole family of elements – connection to the local community, democracy of organisation and property, environmental awareness; some cooperatives don’t practice any of these, and other organisations, which aren’t cooperatives, practice all of them,” Alvaro Porro, the commissioner for the social and solidarity economy (SSE) in Barcelona tells us. On its own, the legal form of a cooperative without a political culture intent on broad-based ownership is a hollow shell.

Mondragon exemplifies this. The company has hired workers on precarious contracts without the legal benefits of member-ownership, has opened global subsidiaries that are not cooperatives, and has watered down its anti-hierarchical structure by changing the pay divide from 1-3 worker/executive to 1-6. In her 1996 book on the Mondragon group, anthropologist Sharyn Kasimir found that Mondragon workers were less likely to assert their democratic rights than workers in private companies. The latter engaged in antagonistic class struggle because they belonged to trade unions that pitted themselves against employers. If your boss is ostensibly on you side, it becomes difficult to express opposition.

“The history of cooperativism in Catalonia was pretty much destroyed by the Franco dictatorship,” Porro tells us. It’s interesting, though, that Franco was content to see Mondragon’s continued existence in the Basque region. Why did he outlaw trade unionism and attempt to smash other cooperatives while allowing Mondragon, the world’s largest worker co-op, to flourish? The reason is simple: it posed no threat to his regime. Mondragon was – and still is – an apolitical enterprise that exists harmoniously within the capitalist order. In contrast to the cooperative movement in Catalonia, which was inflected with the region’s anarchistic political culture, Mondragon focused on supplying jobs – not on seizing the means of production. As Sam Gindin notes, unless cooperatives are part of a larger political movement that addresses the logics of competition and profit extraction, they will inevitably be absorbed within the capitalist system.

This is summed up by the changing identity of the worker co-op in Britain. Back in 1866, the Spectator Magazine conceded that although the Rochdale experiment in Manchester was “successful”, it “did not leave a clear place for the masters”. Its anti-hierarchical flavour was worrisome, and thus not to be encouraged. Today, however, cooperatives tend to be more John Lewis furnishings than seats of potential class dissent. David Cameron’s Big Society agenda co-opted the co-op as a justification for the roll-back of the state, while Labour’s 2017 report noted that although housing associations are cooperatives, they have behaved “like mainstream property developers”.

This isn’t to detract from the individual benefits of working for a cooperative. Collapsing hierarchies and giving workers an equal say in their business can be empowering; as Angelina Kussy, an anthropologist and member of Barcelona en Comú told us, cooperatives are like “laboratories of democracy”. But without a broader movement that challenges corporate power and is intent on owning the means of production rather than just supplying jobs, co-ops will remain a benign footnote in capitalist history. Which brings us to the next point: the importance of scale.

2. Scale is everything

It seems the social and solidarity economy that municipalist platforms including Barcelona en Comú and Ahora Madrid are focused on building is an attempt to embed the cooperative form within a larger social movement for a progressive political economy – one based on values like equity, participation, sustainability and solidarity. But a question still hangs over it. Does this alternative economy intend to challenge the tenets of capitalism, or is it merely another sector within this system? When we ask him about this, Porro tells us that the SSE is “both things: it is a challenge to the mainstream market because it puts different practices on the table”. His commission has recently opened an office in Montreal, Canada, and plans to share its policies with cities in South Korea and Mexico, indicating its awareness that the strength of an alternative economy is found in numbers.

But the SSE is so far limited to the service sector and does not extend to productive industry. As long as this remains the case, cooperative ownership will leave corporate monopolies and privatised heavy industries intact. While fair trade coffee and locally sourced ingredients may be a heart-warming addition to high streets, a truly progressive political economy must be scaled. This means moving past the paradigm of the “citizen-consumer” and towards an understanding of citizens as political stakeholders who, in addition to deciding what services and products to buy, decide who owns productive industries and, by implication, who owns the city.

“Every bylaw is political” is the municipalist’s mantra. At the level of local government, decisions about procurement can help scale up forms of broad-based ownership by contracting the delivery of public services to worker and municipality-owned companies. We’ve seen how this works in Preston, Lancashire, where the council created a network of co-ops to plug service gaps. In Madrid, procurement has become a hot political battleground. Ahora Madrid reserved 8% of the city’s public tenders for companies within the social and solidarity economy; the right-wing press hit back at the municipal platform with allegations of fraud. Data, too, has shown how the city can be a vanguard for scaled collective ownership. Barcelona’s contract with Vodafone reverses the corporate smart-city paradigm, and forces the company to give all readable data it has extracted to city hall.

But remunicipalisation at the urban level is insufficient when it comes to services such as water, gas, electricity and transport, which work in grids and networks that span regions. With this in mind, Labour’s 2017 report also identified nationalisation as an essential third fork in its agenda for alternative ownership. Efforts to renationalise public services have often been curtailed by a central government intent on privatisation. Spain’s “Montoro Law”, named after its architect, tax revenue minister Cristobal Montoro, narrowed the spending powers of local administrations and limited them from hiring new staff or remunicipalising public services. In the UK, Margaret Thatcher went to war with local government, cutting devolved powers and dissolving the Greater London Council. In both cases, state centralisation has acted to effectively privatise municipalities by curtailing the spending powers of councils and thus forcing them to adopt public-private initiatives.

Things get even more complicated at the international scale. The competition laws within EU member states are bad news for remunicipalisation, as they prevent governments from showing favouritism to municipal companies in tendering processes, and are allergic to public ownership. What’s more, investor-state dispute settlements, such as those included in TTIP, allow private companies to sue governments if they decide to re-municipalise public services like water. As seen with France’s recent decision to open rail network SNCF to “market competition”, the state often willingly climbs into bed with these neoliberal structures. In thinking through what a politics of alternative ownership might look like, then, it’s important to also think beyond the state form, which has often strengthened rather than challenged a status quo that favours privatisation.

3. We should think beyond the state

As geographer Bertie Russell writes in his recent reflections on municipalism, “asking ‘what can the local state do’ tends to reify existing institutions, limiting our spectrum of consideration to the different functions that the existing state-form can undertake”. Thinking through scales of action beyond the state can help formulate municipal politics that function in, against and aside from centralised power, and that can be used to act now rather than awaiting the arrival of the ideal state-form.

Central to the success of Barcelona’s municipal movement is the region’s opposition to the centralised Spanish state and its attempts to secede, seen most recently in the referendum last year. Instead of asking ‘what can the state do’, Barcelona en Comú has contested a Spanish state long associated with a corrupt political class. It borrows from the Spanish tradition of “anarcho-syndicalism”, which positions itself against institutions of political power, and the Catalan concept of “autogestió”, which refers to democratic self-organisation without recourse to the state.

As sociologist Iván Miró puts it when we ask him about the link between the welfare state and Catalonia’s cooperative movement, “cooperativism preceded the welfare state; it was the worker movements that created a collective political demand for the welfare state, and who were paying pensions long before the the welfare state existed”. Likewise in the UK, the miners’ cooperative of Tredegar, Wales, in which workers paid a weekly subscription to receive health coverage, inspired Aneurin Bevan to found the National Health Service. Power is never given freely; worker cooperativism and unionism have often been the antecedent to welfare policies. Drawing on an embedded political culture of cooperativism and self-government, BComú collapses the distinction between social movement and political party and sees itself as a citizen-powered alternative to a state characterised by political corruption and corporate elites.

So instead of asking what the state can do for us, we should be asking what we can do to it. This would approach the institutions of the centralized state as themselves bound up with capitalism and private ownership. By broadening the field of social contestation, we come to see state institutions as a problematic concentration of power in need of reform. As Bertie Russell describes, the concern would then become challenging the state form and attempting to meaningfully decentre ownership and political decision-making, spreading these attributes more evenly throughout societies and regions.

In thinking through a politics of decentered broad-based ownership, however, it’s important to avoid ceding ground to those intent on rolling back state services. Though they may be signs of solidarity, schemes such as food banks are a last resort in the face of state failure and austerity, not a compassionate tale of community self-government.

4. We should get better at communicating everyday economics

The success of Spain’s municipal platforms in the 2019 elections will depend, in part, on their ability to transmit their message. For citizens used to governments who have thrown billions at infrastructure signalling the city is open for business, the smaller story about everyday economics may be more difficult to communicate. As Vicente Rubio-Pueyo writes, “It is difficult to transmit the message that [Spain’s] city governments are doing things for the public – even if they do not cut ribbons on new buildings – that appeal to a traditional developmentalist imaginary of government action”. Likewise for the UK, a citizenry conditioned by Olympic parks and high-speed rail networks may be more difficult to convince when it comes to the less sexy work of reinvesting in regional bus services in Witney. While it is of greater importance than any sky garden, the smaller-scale work of municipal governments sings a quieter song.


We’re currently hurtling towards a situation where monopolistic corporations that own public services, the earth’s resources, and new technologies, will extract rent from a class of people whose wages are stagnant and whose jobs are under threat. Within this context, the question of who owns capital has never been more important.

Market triumphalists and centrists will argue that a solution is to be found in the economic growth whose benefits spread beyond the private company and into the rest of society. But this just isn’t true. Not only is infinite growth impossible on a finite planet with scarce natural resources, but our society is a living example of how growth’s benefits do not flow equitably if ownership of capital and resources remains concentrated within the hands of a few. The municipal agenda is a “nonreformist reform” – a strategy that corrects unjust outcomes by transforming rather than tinkering with an underlying framework. It offers a real opportunity to radically reform our political economy, transitioning to one that conceives of citizens as political stakeholders, where wealth is embedded and shared among communities rather than extracted for private gain.

Maria Faciolince (@maria_fm) also contributed to this report. Hettie and Maria’s research into Barcelona’s new economy was funded by the European Cultural Foundation.


author

Hettie O'Brien (@hettieveronica)

Hettie O’Brien is a researcher at Rethinking Economics and writes about political economies and cities for Jacobin, CityLab, the London Review of Books and New Socialist.

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