Progressives Are Pushing Economic Democracy. Democrats Need to Listen

The U.S. doesn’t have a problem of economic scarcity. The problem is unequal power.
alexandria-ocasio-cortez.jpg

Alexandria Ocasio-Cortez addresses the crowd gathered at La Boom night club in Queens on November 6, 2018, in New York City. With her win against Republican Anthony Pappas, Ocasio-Cortez became the youngest woman elected to Congress.

Photo by Rick Loomis/Getty Images

On Tuesday night, the Democrats scored electoral victories by taking advantage of the energy behind the growing progressive movement. At the state level, Democrats elected seven new state governors and flipped six state legislatures. At the federal level, Democrats retook the House and elected the most progressive group of politicians in a generation—seven candidates endorsed by Justice Democrats, an electoral advocacy group focused on finding progressive alternatives to corporate Democrats, were elected to the House, including Alexandria Ocasio-Cortez, Rashida Tlaib, Ilhan Omar and Ayanna Pressley. Moving forward, the progressive movement has the opportunity to organize both inside and outside of the Democratic Party at the city, state and federal levels to continue building a vision for a transformed society.

Democrats have the opportunity to advance this vision by bringing attention and resources to powerful local organizing throughout the country and by advancing legislation that can move the party and the political mainstream to the left. The newly elected progressive House Democrats have a chance to greatly affect national political narratives by creating a left caucus or a Democratic Socialist caucus.

The progressive agenda must include displacing the corporate economy and creating a democratic political economy in which everyone together controls the systems that provide the things we need to live meaningful and joyous lives—our workplaces, schools at all levels, our systems for health care, housing, energy, food, and so on. As progressives build this vision, we should look to the movements in the U.S. and around the world that are already building economic democracy through solidarity economy institutions. These movements include Cooperation Jackson and the New Economy Coalition in the U.S., the Zapatistas in Mexico, the Landless Rural Workers’ Movement in Brazil, the Kurds in Rojava in Northern Syria and the municipalist movement in Spain.

YES! needs to raise $264,000 by December 31 to keep publishing in 2019. We don’t take advertising or corporate money. The only way we succeed is if readers like you pitch in to support us. Don’t wait, please make a tax-deductible donation today.

Solidarity economies are rooted in direct democracy, community power and local control of institutions that affect people’s lives; they include and build upon many of the policies that are included in the Movement for Black Lives policy platform and the Black Youth Project 100’s Agenda to Build Black Futures. Solidarity economies bring democracy to the workplace in the form of worker cooperatives, to land ownership and use through community land trusts and land banks, to the financial system through city-owned banks, and to the more traditional public sector with participatory budgeting and municipal ownership of vital infrastructure, including energy, transportation and internet infrastructure.

Why do we need the solidarity economy?

In 2015, the U.S. economy produced the equivalent of $223,639 for every family of four in the country, illustrating that we don’t have a problem of economic scarcity; we have a problem of unequal power. Despite the immense wealth in the U.S., more than half the people living here possess zero net wealth, and many people struggle to meet their basic needs for housing, food, health care and education. While the popular press and politicians from both parties claim that the economy is strong, this argument is based on misleading statistics. It matters very little to most people that the stock market is up, as about 10 percent of the U.S. population owns more than 80 percent of all publicly traded corporate stock. Nor is the employment rate a very useful stat, because it excludes many discouraged people who have given up looking for work and does not account for the fact that many employed people have low-wage jobs that don’t allow them to meet their basic needs. The focus on economic growth is also misleading, because growth does not trickle down. Whether people get access to the wealth we need in order to survive is a function of power.

Currently, wealth is in the hands of a few. A very small number of corporations owned by a very small number of people own and control our economy — the 500 corporations of the Fortune 500 account for around two-thirds of our annual GDP and the 42 wealthiest people in the world own as much wealth as 3.7 billion least wealthy people. The small group of people who own the economy possess extreme power over the rest of us: they make the investment decisions that determine how everything we need to live will be produced, whether or not people will have affordable access to these goods and services, what jobs will exist, where jobs will exist, and so on. Whoever is empowered to make these decisions governs any given society, irrespective of the structure of its government and other institutions.

We don’t have a problem of economic scarcity; we have a problem of unequal power. 

If the U.S. aspires to democracy, we must democratize these decisions and our economy. The progressive economic agenda of progressive politicians like Alexandria Ocasio-Cortez, Bernie Sanders and Elizabeth Warren, and of leading progressive electoral advocacy groups such as Justice Democrats is a great start. Generally, this agenda calls for a living minimum wage, including significant expansion of paid sick time, vacation time and family leave; blocking “free-trade” deals; strong enforcement and expansion of antitrust law, labor law, banking regulation, and public health and environmental regulation; significant increases in public spending through the expansion of Social Security, affordable housing spending, public infrastructure investment and investment in renewable energy; and creating new programs, including Medicare for All, tuition-free public college for all, public child care for all and a federal jobs guarantee.

Yet one problem remains: This agenda leaves significant wealth under corporate control. Federal government spending is typically around 20 percent of annual GDP. Public interest labor, health and environmental regulations place restrictions on corporate activity, yet, even with a significant increase in public spending, a huge portion of the economy will remain under relatively unconstrained corporate control.

Local, bottom-up power and the pace of change

The growing progressive movement can create economic democracy through solidarity economy institutions that displace corporate institutions. We can pressure Democrats at all levels of government to support solidarity economy institutions. We can use elections to popularize economic democracy ideas and policies, and we can use public spending and government contracts to create financially sustainable solidarity economy institutions that are themselves democratic and independent from political parties. These institutions can become a strong base for popular progressive power through which we can deliberately displace corporate economic power and move toward economic democracy.

Democrats at the city, state and federal levels can work together to push power toward the local level, which can allow us to re-create our democracy at a scale that allows for popular power. It is far easier for corporate elites to control centralized federal institutions than it is for them to control empowered city- and state-level institutions. Federal and state governments can push power to more local levels by creating space for local policy power. Officials can eliminate barriers to local economic democracy by supporting initiatives like California’s defeated Proposition 10, which would have overturned the state law that prevents cities from passing their own rent control laws. Similar laws, including community benefit agreements and responsible banking ordinances, can curb the most predatory corporate practices and create more space for the development of solidarity economy institutions at the local level.

The solidarity economy vision for economic democracy is built around democratic ownership and control of land, labor and money.

Federal and state officials can also drive resources to local solidarity economy institutions. One way to do this is by creating new automatic spending programs that prioritize solidarity economy institutions like a Green New Deal or significant increases in spending on affordable housing and public infrastructure. Another way is for government contracts at all levels to prioritize solidarity economy institutions. Under the status quo, large corporations receive overwhelming percentages of the hundreds of billions of dollars of contracts that government at all levels awards each year. By directing resources to local solidarity economy institutions, progressive Democrats can make us less dependent on elections, as solidarity economy institutions can become self-sustaining institutions that become a base for building progressive power. Solidarity economy institutions are democratic institutions themselves and can function as their own independent spheres of democracy that work together as elements of a larger, bottom-up democratic society.

The scale of institutional change represented by the solidarity economy might appear unrealistic. But, historically, significant change on this scale is very realistic— it happens regularly. The New Deal and the Great Society represented significant and very sudden institutional change. We should not reject prioritizing the solidarity economy out of fear that it would bring too much change, too fast. However, both the New Deal and the Great Society were not progressive in many respects—the programs and institutions were largely available exclusively to White people, and they allowed continued corporate ownership and control of most of the economy and the political process. Times of great inequalities of power like our own require fast and large-scale change—and the change we create through the solidarity economy must acknowledge and not reproduce the shortcomings of the New Deal and the Great Society.

Democratic land

The solidarity economy vision for economic democracy is built around democratic ownership and control of land, labor and money.

With respect to owning and controlling land, a land-value sales tax can decommodify land, stopping the engine that drives gentrification, and land banks and community land trusts can be used to redistribute land and to create ongoing democratic ownership and control of land. A land-value sales tax, advocated by the economist Henry George more than a century ago, could decommodify land by taxing 100 percent of any gain on the sale of land at the point of sale. A land-value sales tax could be made law at any level of government and would apply to the land in that level of government’s jurisdiction. Rather than raising revenue, such a tax would likely discourage investors from treating land as a financial commodity because, under a land-value sales tax system, an investor could only sell land for a price that recovers their investment—any profit is taxed away. Eliminating land as a vehicle for financial speculation—which benefits primarily, if not exclusively, landowners—removes the main tool through which landowners control land use and can clear the way for a system of land use that reflects more closely human needs, including housing, enjoyment and use for production of goods and services.

We can create democratic institutions for producing money.

We can then use land banks and CLTs to create a new democratic system for owning and controlling land, as opposed to the current landowner-controlled system. Land banks and CLTs are best situated at the city level and below, where they can be more easily democratically governed, though federal and state governments can advance them by explicitly enabling their authority and by directing to them new and existing federal and state spending programs. Land banks can be authorized to acquire—at market or below-market prices—government-owned land, tax delinquent land and land left unused by absentee landlords. Land banks can transfer this land to community land trusts that are democratically governed by people who live near and use the land so that communities can prioritize land use that fits their needs. We can then create a bottom-up system for coordinating land ownership and use policies across cities, states and regions through confederations of local land banks and CLTs that could effectively act as legislatures that focus exclusively on issues of land ownership and use.

Movement groups around the country are already building land banks and CLTs. Democrats at all levels of government should amplify these efforts and drive resources to them. In Boston, the Dudley Street Neighborhood Initiative operates a community land trust that has turned vacant land, acquired in part through eminent domain authority obtained from the city of Boston, into 225 affordable homes and extensive public community space, including a community greenhouse and an urban farm. Meanwhile, the Baltimore Housing Roundtable has developed, and is organizing around its 20/20 New Vision for Development, which calls for an annual city commitment of $40 million—$20 million for jobs for city residents to deconstruct vacant buildings and lots, and $20 million for creating a community-controlled housing sector, which emphasizes use of community land trusts. The plan also includes creating a land bank to be used by community groups in order to transfer title of vacant and underutilized properties to community land trusts. And in Philadelphia, an activist group, Campaign to Take Back the Land, successfully organized to pressure the city council to create the Philadelphia Land Bank in December 2013. The group is trying to pressure the city to use the land bank to take ownership of and transfer vacant properties to community land trusts.

Democratic labor

With respect to democracy in the workplace, cooperatives provide rights to governance to all members—workers, community members or some combination of both—on a one person, one vote basis. Profits, or what cooperatives call “surplus,” are typically distributed to member-owners in proportion to the amount of work they put in to the business. Cooperatives with different member groups take different forms; popular forms include worker cooperatives, consumer cooperatives and producer cooperatives. Cooperative practices concerning governance and surplus-sharing are far different than those of modern corporations, which provide rights to profit and governance exclusively to the financial investors who purchase the corporation’s equity.

As the progressive movement continues to grow, progressives must work to build economic democracy.

People all around the U.S. are already hard at work building worker cooperatives, and some city governments have begun to support their development. Democrats at all levels of government should amplify these efforts by highlighting local organizing and by directing resources to these efforts through public contracts and new public spending programs. Cooperative Home Care Associates, a home health care business based in the Bronx in New York City, is the largest worker cooperative in the U.S. The co-op is owned by 1,100 worker-owners, more than 90 percent of whom are women of color. Its workers earn wages and benefits double the industry standard, and its CEO-to-minimum-wage-worker peaked at 11:1 in 2006, while the CEO-to-minimum-wage-worker ratio in the larger economy is somewhere between 296:1 and 373:1. Coalitions of movement organizations in many cities, including Jackson, MississippiNew York CityPhiladelphia; Chicago; Cleveland; and the San Francisco Bay Area are at various stages of building city-level plans for worker cooperative development. In New York City, the city government increased its annual budget spending toward worker cooperative development, through its Worker Cooperative Business Development Initiative, to $3.048 million for 2018, up from $1.2 million during the program’s inaugural year in 2015.

Democratic money

With respect to democratizing our financial system, we can create democratic institutions for producing money. Banks create new money each time they extend credit. Money is a creature of law. It is denominated in state-backed currencies and is widely accepted as valuable because states enforce the agreements that people make to exchange money with one another. By allowing investor-owned banks to create money, the government effectively allows investor-owned banks to privatize the public good of money creation. Investor-owned banks use this power to plan our money creation system to benefit themselves—they create money, i.e., extend credit, when they identify a borrower who is likely to repay the credit with interest.

We can create a banking system of democratically owned and controlled institutions that coordinate with one another to create our society’s money. Variations of the system already exist, as with the Bank of North Dakota. A system built around city-owned banks could allow cities to democratically determine how to allocate credit creation, rather than allowing banks to do so. Cities could finance production of the things humans need to live—housing, food, clothing, health care, education, ecologically sustainable energy systems and social infrastructure, etc. Such a system can prioritize allocating money to people who have historically been excluded from accessing the land and other material goods that they have needed to live with dignity, among them, Indigenous people, people of color, women and LGBTQ folks. Organizers have undertaken campaigns to create public banks in many cities, including New York; Oakland, California; Los Angeles; Santa Fe, New Mexico; Portland, Oregon; and Seattle. Alexandria Ocasio-Cortez, who was elected to the House from New York City, campaigned in Los Angeles in support of the public bank initiative. Democrats at all levels can follow Ocasio-Cortez’s lead and support public banking by highlighting ongoing organizing efforts and by helping to advance public banking legislation wherever possible.

As the progressive movement continues to grow, progressives must work to build economic democracy. Solidarity economy institutions—which are themselves democratic and independent from political parties—can become a strong base for popular progressive power. We can use solidarity economy institutions to deliberately displace corporate economic power and to move toward economic democracy. And we can pressure Democrats at all levels to help us build these institutions by driving public resources to them.

This article was originally published by Truthout. It has been edited for YES! Magazine.