Transforming the economy

How to move to not-for-profit models

It is through transforming our governing arrangements – or constitutional, state, legal bodies – that we can begin to make the socio-economic transformation. In a truly democratic society those who produce and manage would have ownership and control over the process and results of their labour. One way this could happen is through forms of co-operative ownership, management and planning.

Alternative ways of running parts of the economy and financial system have always existed. As capitalism became the predominant system, people created other forms of economic organisation in opposition to the profit model. In 1844, two types of enterprise were formally established: a shareholding, capitalist form of production on the one side and a democratic, co-operative form on the other.

Private profit versus co-ownership

The first model was enshrined by Parliament’s 1844 Joint Stock Companies Act, followed by the 1855 Limited Liability Act which together allowed greater freedom for incorporation and the legal protection needed to minimise the risk of losses.

In this way, the scene was set for the proliferation of capitalist corporations. They became the primary organisational form for the accumulation of profit derived from the exploitation of the labour of contracted workers and the raw materials available on the planet. Together with private ownership of capital, the wage-labour contract defined the social relations of capitalist production.

Throughout this period, however, another form of organisation – cooperatives – were developing in the belly of the beast. They provided both an antidote to some of the worst effects of the capitalist form of organising production as well as an alternative, democratic model of social organisation.

In 2016 the co-operative idea was inscribed by UNESCO on its Intangible Cultural Heritage list. In fact, this way of organising goes back to 1761, when weavers in Fenwick, East Ayrshire, Scotland, established the first recorded co-operative. The movement proliferated as conditions for the new working class made life intolerable. But it was not until 1844 that the Rochdale Society of Equitable Pioneers set out the ‘Rochdale Principles’ as the basis for development and growth of the modern co-operative movement.

More recently, the Mondragon corporation, a federation of autonomous, independent workers’ co-operatives, based in the Basque region of Spain, has proved highly successful. Founded in 1956 it now employs 74,000 people in more than 250 businesses. It operates production facilities and corporate offices in 41 countries with sales to 150.

However, Mondragon and companies like John Lewis are subject to the huge pressures that come from the capitalist system which dominates the global economy. Noam Chomsky notes that even an advanced case like Mondragon is “in a market system and they still exploit workers in South America, and they do things that are harmful to the society as a whole and they have no choice. If you’re in a system where you must make profit in order to survive, you’re compelled to ignore negative externalities, effects on others.”

Other long-standing examples of not-for-profit organisations have thrived side by side with the for-profit economy for many decades. Some, like the Nationwide and the Co-operative in the UK have a measure of democratic participation. Others, like the NHS, would greatly benefit from it.

Occupations to protect jobs and resources

But why wait for a business to fail before seeking control? Those in employment can begin by occupying their offices, plants, banks and set up a system of workers’ control of production as a first step to running the whole of the economy as a network of not-for-profit co-operatives. Clearly this would need to be part of a larger movement in society so that those occupying are not left isolated and subject to legal threats or eviction.

Experiments with and proposals for new models of democratically-owned and controlled organisations can be found all over the world, in every sector of the economy. #BuyTwitter is among the most recent with practical proposals for converting the social media platform into a global public service.

Moving beyond capitalist production

So what is needed for society to move beyond the social and legal relations that constitute capitalist production and enable the co-operative economy to rise to predominance? It has to acquire the political power to revoke the foundational precepts and supersede the practice of capitalist production and would:

  • • advance co-operative principles in every organisation
  • • violate and overturn the regimes of regulations set out by global agencies such as the World Trade Organisation and the International Monetary Fund
  • • replace capitalist alliances with co-operative regional economies linked into bodies like the Earth Co-op
  • • build resistance to international free trade deals like TTIP
  • • undermine the concept of ‘private property’ with a new commons.

A new ethos – a new concept of citizenship

The dramatic emergence of a socially-oriented ethos is something that participants and observers have seen and experienced in movements like Chartism, the Paris Commune and the Russian Revolution. More recent examples include assemblies in Tahrir Square in Cairo, Occupy Wall Street, Syntagma, where Athenians gathered to resist the Troika, and the Gezi Square movement in Istanbul in defence of a park.

The assertion of an alternative to a dictatorial state, protection of ecosystems as well as cultural heritage all came together. City centres actually created ‘capitalism-free zones’ where people caught a brief, but inspiring glimpse of how things could be different. A spirit of inclusiveness, sharing and community has characterised democratic moments throughout human history. Such movements foreshadow a new concept of citizenship in tandem with a different kind of economy. Instead of a system where political ‘choice’ is restricted to variants on a system dominated by corporate rule, the state and political systems, like the economy, must be directly controlled and driven by the common interest, rather than the money-making classes.

Power to the Assemblies

If democracy is characterised by the self-determination and self-rule of the people, it must be from, for and by the people. Citizens reach decisions and put forward policies that they themselves co-design, based on the common good, rather than the will and might of the current power holders.

Through real and ‘virtual’ assemblies, people can assert their power and direct control over their lives as equally as possible. People will feel encouraged to act for the common good in a society where any surplus is used for the benefit of all.

The sovereignty of the people – where power rests with the majority in society – is the underlying principle. That majority, however, must also recognise the rights and interests of minorities. Participative assemblies can help to ensure that these different interests can be expressed and accommodated.

All citizens have a say and control through their communities through democratic local assemblies that carry legitimacy and support from ordinary people. Each street and area has the confidence to control and administer resources to enhance the wellbeing of all.

Karl Marx proposed in his Critique of Hegel’s Philosophy of Right that society – not the state – would become the real collectivity: “Democracy,” he wrote, “is human existence, while in the other political forms humans only have legal existence.”

Alongside democratic ownership and control of economic and financial resources, we should build on the formal democratic rights we have achieved and give them real meaning and content through a new political framework. This would rejuvenate the House of Commons, and include the abolition of the totally unelected House of Lords, the monarchy and the secretive Privy Council. A framework for a new democratic Britain could be built around:

  • • local and regional Assemblies with executive as well as deliberative power and control over resources in place of existing local government and other structures
  • • Assemblies to decide how best to meet a range of needs in their own areas and send delegates to a national Convention/Parliament with law-making powers
  • • delegates to reflect diversity in our communities, with distinct voices for women, minority ethnic citizens, older people, young people, workplaces, students and small businesses
  • • an electoral system in balance with the new participatory system
  • • all matters discussed, debated and decided upon with full public access
  • • delegates to be paid no more than the average national income
  • • all delegates subject to recall and removal by local/regional voters at any time
  • • mass involvement in the new democratic process through digital technology
  • • extensive and binding consultation with voters before decisions are taken at any level
  • • freedom of political expression and the right to organise politically, in communities and trade unions free from state control.

There would be a national and international approach when making domestic policy and vice versa. For example, local decision-making about production would take into consideration effects on wider communities and the planet as a whole. The earth’s resources would be respected as a “common treasury … for all,” to quote from Digger Gerrard Winstanley.

Different kinds of democracy

There would be a good balance between different types of democracy: including participatory, representative, liquid (aka delegative) democracy, deliberative and direct forms, all of which would be accessible via any digital device and promoted via new (social) and traditional media (TV, radio and publications) as well as face-to-face events. Understanding and practising these variants would be part of school curricula.

State structures

In the transition from the present, the function of state structures would be solely to ensure the needs and requirements of society for the common good. The rights of ethnic, faith and cultural minorities would be respected and have free expression. Inclusiveness and equity is the underlying principle – everyone would have an equal chance to be involved in decision-making.

Co-operative online platforms like Loomio are already being developed to provide the digital infrastructure supporting the decision-processes of real, participative direct democracy across the globe. Others, like the developers of VocalEyes are pushing for bottom-up adoption in colleges, universities, and communities in local electoral wards.

While new technologies have reduced the need for bureaucratic structures to ensure the smooth running of a citizen-based democracy, any remaining functions best organised centrally will be carried out by a transitional, state. By making information technology available to everyone, bringing the economy under the control of communities, workers and consumers, and discouraging bureaucratic trends wherever possible, the state as a separate body can eventually be dispensed with.

These and other draft proposals can take us towards achieving the ideal of a real democracy.

Next: Why a Real Democracy Movement is needed …

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