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Building the new left economics: public-commons partnerships and new circuits of ownership

Public-commons partnerships would undo the damage done by PFI while providing a new model for socialist institutional transformation.

Keir Milburn Bertie Russell
27 June 2019
Image: Roger Kidd, CC BY-SA 2.0

Late last year the hopes for a new municipal politics in the UK took a blow as two progressive local authorities made some less-than-progressive decisions. The first involved the Greater Manchester Combined Authority, who a year before had seemed poised to establish its own local energy company.

Following the successful 2017 election of Andy Burnham as the first Mayor of Greater Manchester, a plan was made to establish a GM Energy Company to provide affordable power to residents, reduce carbon emissions, and invest money back in the community. With public ownership of services ever-popular with the public (according to a 2017 poll by the Legatum Institute, 77% of the public support the public ownership of energy), the idea arguably helped Burnham win the mayorship. But by late 2018, the Combined Authority had hired an outside consulting firm who reasoned against a public energy company, citing the potential economic and political risk. As the year drew to a close it seemed clear that Greater Manchester will be focusing on a much less ambitious “Energy Innovation Company”.

As of yet, there has been no observable progress as to what this may entail (and no publicly available minutes to substantially address the issue for the past six months), casting serious doubt that the eventual outcome will represent any form of economic democracy or participatory governance.

Around the same time in North London, similar pressures were being felt by another local authority facing an altogether different issue. Faced with a potential lawsuit, Haringey’s ‘Corbyn Council’ decided to go ahead with a redevelopment scheme led by property giant Grainger. The scheme includes the demolition of the Seven Sisters ‘Latin Village’ market. The contract signed by the previous council leadership would see the now familiar transfer of public resources and assets to facilitate the growth of private oligopolies. The local residents who depended on the Seven Sisters market – and who had built the market into a unique space of social and economic prosperity – had little say in the matter.

The coincidence of these decisions bodes ill for British radical municipal politics. So, let’s try a counterfactual. How might things have gone differently if Manchester and Haringey local authorities had broken with conservative, conventional calculations of economic and political risk? In our new report on progressive governance, released with the think tank Common Wealth, we propose an alternative model, one that could strengthen local public ownership, give power back to communities, and eventually help reshape the economy. We call it the Public-Common Partnership (PCP).

PCPs are a reply to Public-Private Partnerships (PPPs), and their subset Private Finance Initiatives (PFIs). PPPs have been among the most prominent mechanism through which public funds and assets are transferred into private hands. Under the guise of privatising risk, PPPs dumped costs onto wider society. With the recent collapse of two of the giant PPP contractors – Carillion in early 2018 and Interserve in March 2019 – it became apparent that ultimately the risk still lay with the public sector who had to pick up the pieces when the profiteering privatisations went wrong. In yet another mass transfer of public wealth into private pockets, and despite the Government’s recent decision to sign no new PPPs, the public still owes nearly £200 billion in payments that will continue into the 2040s. Yet perhaps more profound than the huge privatization of public wealth is the deep ideological effect of PPPs, acting as the ‘cutting edge’ of a wider effort to impose privatisation and financialisation on the public sector.

Public-Common Partnerships aim to undo the damage done to the economy and our lives by PPPs, but they could take us much further than that. We argue that the commons can provide a direction of travel for socialist institutional transformation, a process rather than an end-point, that moves beyond simple (but necessary) demands for democratic accountability into a self-expanding and ever deepening democratisation of society itself. Commons are well suited for this purpose because both collective ownership and decentralised democratic governance are built into the model. After all, commons can only persist if they are governed by a community of commoners.

Noam Chomsky once called private corporations ‘islands of tyranny’, noting how democracy ends at the company gates. As Labour’s “Alternative Models of Ownership” report documented, most previous attempts to socialise the economy have changed the model of ownership but kept similar, ‘tyrannical’ models of management. We aim for PCPs to be islands of democracy in which associations of commoners join with local authorities, workers, and project-specific experts in embedded democratic decision-making. At the centre of PCPs are what we call Commons Associations, groups of citizen-owners who are able to contribute not just to the direction of their PCP, but also where the financial surpluses of the project end up.

The German town of Wolfhagen offers a useful model for how one version of a Commons Association might form. When the town’s contract with a major energy company was up, local government took the decision to establish an energy company that would be co-owned and co-governed with a citizens energy cooperative. Citizen shareholders – many of whom had previously been involved in a campaign favouring the construction of a nearby windfarm – each receive a dividend from the company, whilst a proportion of the surplus flows into the cooperative’s energy saving fund. The Cooperative’s Energy Advisory Board – which is primarily formed of the coop’s members alongside specialists such as the environment agency – uses the fund to support new energy efficient projects to combat carbon emissions, as well as climate change mitigating subsidies for the community. Furthermore, the cooperative holds a 25% share in the energy company itself, including 2 of the 9 seats on the executive board.

Of course, cooperatives and commons have been around a long time and they haven’t yet expanded to world changing dimensions. There are material reasons for that, chief amongst them is the difficulties cooperatives encounter finding financing from the private sector. It is partly this problem that PCPs set out to solve, whilst also triggering a dynamic of definancialisation that works to decrease ‘the role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies'.

Just as PFIs acted as the cutting edge of an effort to transform what constitutes a ‘sensible’ decision, so we intend Public-Common Partnerships to function as the cutting edge of a wider project to socialise and commonise the way we process economic decisions. The aim is to produce a self-expansive circuit of the commons, one that will bypass the need for private financing, sidestep the mechanisms through which finance capital exercises its discipline and structures the economy, and help foster a new common sense that changes how we as citizens relate to one another and the resources and infrastructure we rely upon. PCPs do this by incentivising an interlinking, self-expansive circuit of the commons in which the surplus of one PCP helps finance another.

PCP_Diagram1.jpg

This interlinking circuit structure of PCPs mean that a Greater Manchester Energy Company could put a proportion of its surplus towards funding a community-owned Latin Village in Haringey, imbricating the two distant groups on the level of ownership and governance structure, distributing ownership and wealth. In this way, these islands of democracy can link up into chains of support, archipelagoes of democracy, before ultimately forming into a complete circuit of the commons. The growth of this circuit entails the transfer of resources from the private sector to the public – via taxation – and from the public to the common. The commons take on a self-expansive dynamic to rival that of capital with ever larger areas of economic activity removed from the capital circuit and undertaken in the commons circuit.

This may seem like a radical project, but as the examples of the Greater Manchester Energy Company and the Latin Village show, it is possible for a democratic economy to be built in the here and now, from the bottom up, whilst embedding the ability to both scale and amplify collective forms of ownership and governance elsewhere. While PCPs are only one part of this project, their operation will help facilitate the democratisation of wider society. Just as neoliberal institutional reform aimed to create and propagate an ‘entrepreneurial’ common sense, participation in commons helps develop a truly democratic common sense.

The stakes really couldn't be higher, the fate of the world depends on humankind’s ability to collectively govern the global commons of the atmosphere. PCPs represent a training in democracy that, by increasing the capacities of those doing the commoning, can help set the conditions for a democratic solution to the biggest issues we face today.

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