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We Need a New Economic System

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As the 2016 election begins to come into focus, economic populism appears to be the order of the day. The Center for American Progress, the Campaign for America’s Future and National People’s Action, Hillary Clinton, Bernie Sanders, Bill de Blasio and the Roosevelt Institute have all in the last few months released programmatic calls to action highlighting the need to tackle economic inequality. This is, of course, laudable — it’s not every day that virtually the entire spectrum of Democratic Party insiders and outsiders concurs that our increasingly unequal distribution of income and wealth is a central problem to be addressed. But are calls for reform and redistribution enough?

I am opposed to very little of what is being presented in these various platforms and proposals. They are, for the most part, perfectly sensible ideas — such as financial transaction taxes, increases to the minimum wage and using government funds to build and repair infrastructure such as roads and railways — that would be, for the most part, noncontroversial if we were living in an era of sensible politics. But the fundamental fact is that we are not.

Instead, we are living in the era in which the corporate institutions at the core of our politics, along with the radical financial inequalities our system now produces, have undermined the power relationships that once allowed for traditional reforms. The labor union — the fundamental institutional power base for tempering the excesses of a corporate economy — is regrettably in terminal decline, down to 6.6 percent of workers in the private sector. Long-term structural shifts in the political economy have rendered the program of regulation and reform more or less inoperative. How long, for example, did it take for the banks to undo and neutralize even the modest post-financial crisis attempts to regulate their activities? Just four years, to judge from their recent success gutting new derivatives regulations before the Securities and Exchange Commission could even implement them. Only when contradictions emerge between different segments of an otherwise consolidated pro-corporate bloc — as they have around net neutrality and LGBTQ inclusion — we may be able to achieve a few victories here and there.

But such modest contradictions between corporate actors will not open up the political space needed to confront the underlying systemic drivers of increasing economic inequality. It’s commendable that economic inequality is on the Democratic Party’s agenda for 2016, but what’s missing is an understanding of the magnitude of this problem in the current context — that any real change will require not just regulatory redistribution, but a fundamental shift in the dynamics of wealth accumulation. The long-term economic trajectory is one that continues to return an indefensibly low share of income to working people even in an era of increased productivity, and that has maintained a more or less constant proportion of families below the poverty line since the 1970s — not to mention continuing to pump dangerous amounts of carbon into the atmosphere and incarcerating an obscene and unprecedented number of Americans. If we want to reverse this trajectory — if we want an economy that delivers democratic rather than plutocratic outcomes — we need to democratize the economy.

If this sounds radical, it is — in the sense of that word’s origin, as something that goes to the root of the problem. In a system in which political power flows, ever more unabashedly, from wealth, the increasing hyperconcentration of that wealth is the root cause that needs to be treated — and while educational disinvestment, crumbling infrastructure, and low wages are all important and pressing problems to tackle, they remain symptoms of the underlying dysfunction.

But this idea that we urgently need to democratize ownership of the economy is not really all that “radical” in the normal sense. It does not reject all private ownership; it merely demands that more people share in it, and that the public undertake new ownership strategies. Even in the recent flood of proposals for reform and regulation, elements of such a next system shine through. Economist Joseph Stiglitz’s “Rewriting the Rules” report for the Roosevelt Institute, for instance, suggests that a public option for mortgages could do much to address the deficiencies in a home-financing landscape where public welfare too often bows to private profit. Stiglitz also recommends a public option for savings banks, organized through the post office, and a public option in health care (“Medicare for all”). These and other kinds of public enterprises, designed to be owned democratically by the nation as a whole, would not aim simply to regulate the consequences of the profit-maximizing behavior of corporations — they would aim to displace them.

Further suggestions in other documents go straight to the heart of the relationship between labor and the ownership of capital. Remarkably, democratic socialist Bernie Sanders, in his presidential campaign economic agenda, and former Treasury Secretary and centrist’s centrist economist Lawrence Summers, writing inside the Beltway for the Center for American Progress, agree that worker ownership, including worker cooperatives, can and should be encouraged through federal policy initiatives.

At the local level in the “laboratories of democracy,” this kind of shift —toward models for economic development that prioritize democratic cooperative and community ownership — is already well under way and picking up steam. In Mayor Bill de Blasio’s New York City, the formation of worker cooperatives in economically marginalized communities is now a funded component of his administration’s business-development strategy. Following the example of Cleveland, cities such as New Orleans, Rochester, New York, and Jacksonville, Florida, are pushing to develop community-owned cooperative businesses as part of municipal efforts to use the procurement of large non-profits to anchor inclusive local economic planning. Cities such as Chattanooga, Tennessee, have developed world-class municipal broadband networks that far outperform the paltry services on offer from the reigning corporate incumbents. And thanks to superb grass-roots organizing, the voters of Boulder, Colorado, are moving forward with an ambitious plan to deprivatize their local energy utility.

Efforts to democratize the ownership of our economy are becoming an increasingly mainstream part of our national conversation. The Next System Project, which I co-chair along with former presidential environmental advisor Gus Speth, is an attempt to do what we feel is necessary as a next step — take all these elements, promising local models and isolated policy proposals, and begin the careful work of knitting together broad, pluralistic conceptions of what a transformed system might look like. Without a systemic approach, acknowledging and aiming squarely at the basic ownership patterns that underlie the inequality we see manifesting in so many tragic ways, we run the risk of just tinkering around the edges. Ultimately, the clarification of a new systemic direction is also critical to political organizing and other activist strategies. A new momentum is quietly building, and it’s not a moment too soon.

Gar Alperovitz blog

25 Comments on "We Need a New Economic System"

  1. Rodster on Thu, 28th May 2015 1:17 pm 

    What’s needed is a new MONEY/BANKING system. As long as the current Ponzi-Scheme banking system stays the same or is run by the current criminal gang nothing will change.

    At this point the patient needs major surgery not a band-aid.

  2. penury on Thu, 28th May 2015 1:59 pm 

    To be real, there is absolutely no way that the current system can be reformed or made more equal. The only way to change the system is to change the system and that would require the positive cooperation of the current beneficiaries of this system. Good luck, let me know when the changes are scheduled. (should be in 100 years or so)

  3. Perk Earl on Thu, 28th May 2015 2:08 pm 

    “…do what we feel is necessary as a next step — take all these elements, promising local models and isolated policy proposals, and begin the careful work of knitting together broad, pluralistic conceptions of what a transformed system might look like.”

    Just knit that sucker together! lol

  4. Davy on Thu, 28th May 2015 2:11 pm 

    Road, just look at the issues with Greece leaving the Euro and you say we need a new money banking system. Tell me how we would ever change over the current system without the whole thing collapsing in on itself. There is no way to change or reform the system for multiple reasons on multiple levels.

  5. Rodster on Thu, 28th May 2015 2:56 pm 

    “just look at the issues with Greece leaving the Euro and you say we need a new money banking system. Tell me how we would ever change over the current system without the whole thing collapsing in on itself.”

    That’s the point they won’t change the system. Too much power, greed and control over the Plebs to give up. So it all will continue until the Wiley E. Coyote moment occurs.

    This cartoon was posted on Zero Hedge and sums up nicely what the new world is right now and will continue to be after a reset.

  6. Lawfish1964 on Thu, 28th May 2015 3:48 pm 

    More government. What could possibly go wrong?

    This sounds an awful lot like nationalizing industries. That always works out well.

  7. Plantagenet on Thu, 28th May 2015 3:58 pm 

    These discussions are a waste of time. The Ds are going to nominate Hillary and she’ll win the election. Then we’ll spend the next eight years with the Ds making excuses for the senile President and her sexual predator first gentleman.

    Fun fun fun!

  8. HARM on Thu, 28th May 2015 4:44 pm 

    If Hillary is supposedly “senile” (despite no evidence of that at all), then what does that make Reagan?

  9. Plantagenet on Thu, 28th May 2015 5:02 pm 

    Of course there is evidence that Hillary is senile. Did you miss the speech she gave in New Hampshire last week where she said she was in DC? You can’t get much more confused then that! or how about the just released batch of emails where Hillary was calling the murdered US ambassador to Libya by the wrong name in her emails? Being so confused that you don’t know where you are and not knowing people or things you should know are the classic signs of Alzheimers.


  10. GregT on Thu, 28th May 2015 5:32 pm 

    Actually planter, two of the most common symptoms of both Alzheimer’s and Dementia, are repetition and paranoia.

    You really should talk with someone.

  11. Apneaman on Thu, 28th May 2015 7:18 pm 

    Planty, men with great power and status have no need to “prey” on women. Many women line up for those guys. Most sexual predators are low status…..or wear cassock’s.

  12. ghung on Thu, 28th May 2015 7:36 pm 

    Bargaining with systemic collapse is a waste of energy at my place. Collectively, we’ll get whatever economic system evolves out of this mess. Best to make one’s own arrangements as best one can.

  13. redpill on Thu, 28th May 2015 7:46 pm 

    “The Ds are going to nominate Hillary and she’ll win the election.”

    Plant, you must hold the hearty crop of R candidates in high regard if you believe she is currently senile yet will be able to “hide” this senility during the presidential debates and give a good enough account of herself to go on to beat _______(R name here) in the general.

    Are you a Faux News bot?

  14. Bob Tegir on Thu, 28th May 2015 8:10 pm 

    Nothing but socialistic claptrap. Bernie was bemoaning that we have a choice of 29 anti-persperants and 18 brands of sneakers yet kids are hungry. OK>….so we do the USSR and North Korea thing with one brand…government store…..any size you need, but none in stock. You wait and wait and wait for products that never come, and they are crap when you get them.

    You want socialized medicine? In Europe, the employer and employee both pay about 8% of salary for healthcare. Those folks pay up to 70% of their income in taxes and ‘social fees’. Then when they go to spend their 30% of salary left over, …..and have to pay rent, the mortgage, buy food…..they get to pay 20% Value Added Tax on anything you buy. Ever wonder why most live in small houses/apartments? They can’t afford much else.

    you want government control of everything? Move to Cuba or Venezuela or NOrth Korea as ‘workers paradises’ with little income inequality, other than the ‘elites’ who will rake in 90% of the total take themselves…. >p>

    Bernie is about lowering everyone to the lowest common denominator, not bringing up the lower income folks. That’s always how socialism works. Makes everyone poorer.

  15. GregT on Thu, 28th May 2015 8:22 pm 

    “Bernie is about lowering everyone to the lowest common denominator, not bringing up the lower income folks. That’s always how socialism works. Makes everyone poorer.”

    That’s what happens when you level the playing field Bob. Quite simply, there aren’t enough resources even now to raise the entire planet’s population to first world status. As those resources continue to become rarer, harder to extract, and more costly, the first world countries’ standards of living will be reduced to third world levels.

    We are already living beyond our means Bob. That is about to become much more apparent as time goes on.

  16. Apneaman on Thu, 28th May 2015 8:47 pm 

    Bob, your spouting propaganda that has been force feed to the masses big time since WWII ended. There are two and only two choices and no other possible alternatives. Communist poverty or Capitalist paradise. No other way can possible exist. How is that capitalist paradise working out for the masses BTW? Me thinks the isims are just by products of the oil age and are going to disappear along with the oil.

    Shocker: 40% of Workers Now Have ‘Contingent’ Jobs, Says U.S. Government

    Jack Rasmus: The Global Jobs Crisis, Inequality, & the ‘Ghost’ of Keynes

  17. Makati1 on Thu, 28th May 2015 9:58 pm 

    Politics and money…dangerous topics.

    Only a total crash and burn can change anything today. We are in a catch 22 world and no one will make the painful choices.

    As for the war mongering, Billary, the Reps will run some loser against her and make it look like a fair choice between two of America’s best. The sheeple will vote, or at least some of them, and they will feel they have done their duty to clean up America and support Democracy. American politics makes professional wrestling look honest. Now back to your regular programming…

  18. Apneaman on Fri, 29th May 2015 12:16 am 

    US Containerized Exports Plunge Off the Chart

  19. GregT on Fri, 29th May 2015 12:31 am 

    In the next US election, vote for anyone other than a Democrat or a Republican, or face the consequences.

  20. Apneaman on Fri, 29th May 2015 12:32 am 

    “Compared to physics, it seems fair to say that the quantitative success of the economic sciences is disappointing. Rockets fly to the moon, energy is extracted from minute changes of atomic mass without major havoc, global positioning satellites help millions of people to find their way home. What is the flagship achievement of economics, apart from its recurrent inability to predict and avert crises, including the current worldwide credit crunch? Why is this so? Of course, modelling the madness of people is more difficult than the motion of planets, as Newton once said [c.1690]. But the goal here [see: social ideal gas law] is to describe the behaviour of large populations, for which statistical regularities should emerge, just as the law of ideal gases emerge from the incredibly chaotic motion of individual molecules.”
    — Jean-Philippe Bouchard (2008), “Economics Needs a Scientific Revolution”

    Capitalism in Wonderland

  21. GregT on Fri, 29th May 2015 12:43 am 

    “global positioning satellites help millions of people to find their way home.”

    That’s a good one Apnea. If people can’t find their way home without GPS, maybe they should never have left home to begin with.

  22. Apneaman on Fri, 29th May 2015 2:42 am 

    A Prehistory of Violence
    27th May 2015

    It now looks as if the greatest mass extinction on Earth – 250 million years ago – was caused by fossil fuel burning.

  23. paulo1 on Fri, 29th May 2015 8:01 am 

    Now I know why TOD shut down. No articles worth reading left to post.

  24. Makati1 on Fri, 29th May 2015 6:16 pm 

    paulo1, we do seem to be in a loop. However, the comments to the articles are usually better than the articles themselves. I know they stimulate my thinking on a multitude of subjects. I learn more and more by having to research my comments to assertions made here by you all.

    If you follow current events of any kind, you will find that they too are stuck in a loop. At least that is my impression.

    The current economic system is dying and there is a fantastic effort underway all over the world to keep it on ‘life support’ and not let the plug get pulled. Facts have been lost in the need to spin bad situations in positive directions, even if it is obviously a lie. Such is the world we currently inhabit. Interesting isn’t it?

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