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Democracy and decentralisation are their watchwords: for Corbyn and McDonnell, it’s municipal socialism reinvented

Corbyn and McDonnell's vision of decentralised public ownership comes from a long and popular tradition.

Lake Champlain from the municipally owned waterfront, Burlington, Vermont: Nagaraju.ramanna, some rights reserved

Labour’s leaders are creating a new twenty-first century socialist political economy for their party – and one that may require reaching back to some of the left’s lost radical traditions in order to achieve it.

Beneath all the Sturm und Drang in the media caused by a bitter faction of the Parliamentary Labour Party in semi-open revolt against the most democratically elected leader in their history, something very interesting is taking place in British politics. Between them, Jeremy Corbyn and his Shadow Chancellor and close ally John McDonnell are quietly putting together a viable economic alternative to neoliberal austerity – and one, moreover, with a direct focus on democratised ownership of the economy at its core. “Co-operatives, shared ownership, and workplace democracy,” McDonnell has stated, “all have a central role to play here” – “here” being at the heart of what he has called “the new economics.”

However, it is the dual emphasis on democratised public ownership and radical political decentralisation that is truly remarkable coming from the national leadership of a major political party. Corbyn has called for local councils to have more freedom to run utilities and services in order to “roll back the tide of forced privatisation.” McDonnell, for his part, has offered an impressively nuanced, cutting-edge analysis of public ownership in the twenty-first century. Referencing Hayek with a sophistication that George Osborne could never muster, he recently discussed the limitations of centralised bureaucracies, stating that “the old, Morrisonian model of nationalisation centralised too much power in a few hands in Whitehall. It had much in common with the new model of multinational corporations, in which power is centralised in a few hands in Silicon Valley, or the City of London.” The alternative, he argues, is plural forms of democratised and decentralised common ownership by publics at a variety of scales: “Decentralisation and social entrepreneurship are part of the left … Democracy and decentralisation are the watchwords of our socialism.”

But however exciting the new direction, on the face of it the Labour party would seem to be confronting an uphill struggle to implement these ideas in what is now one of the most centralised countries, politically and economically, in Europe. “More decentralised forms of public ownership centred around cooperatives and local state ownership might work better around more federal systems with strong traditions of local mutualism in countries such as Germany and the United States than more centralised economic systems such as the UK,” argues Andrew Cumbers, author of a prize-winning 2012 book on the new public ownership. [1] If they are to have any hope of delivering on their radical vision, Corbyn and McDonnell will need to roll back not merely three decades of neoliberalism but also the accretions of the preceding thirty years of top-down social democratic centralism in order to recover and rediscover some older political forms.

Prior to the centralised state control of post-war nationalisation, public ownership at the level of the local authority or municipality was well-established in Britain, as it was throughout much of Europe and North America. Recalling the history of how such widespread local public ownership came about, together with its relationship to the development of ideologies of “municipal socialism,” may offer important insights into possibilities today, when activists and local communities are once again demanding a “right to the city” and looking to re-municipalisation as a means of re-establishing democratic control and accountability over their local economies.

Municipal socialism in Britain

Municipal enterprise – ownership of firms by cities and other local public authorities – has long enjoyed a widespread appeal that cuts across political geography. Having got underway in the 1860s, half of all gasworks in Germany were in municipal ownership by the 1880s, and this was the case in every one of the fifty largest urban areas by 1908. In Sweden, half of the gasworks were municipally-owned by 1870 and 75 per cent by the turn of the century. In Britain, the expansion of municipal ownership took place with equal rapidity. By 1888, some 36 years before the first (minority) Labour government took office, there were 65 local authority water districts and a similar number of municipal tramways, including those in almost all the large provincial centres, accounting for a quarter of all tramway mileage. [2] The full extent of the economic footprint achieved by municipal ownership in late-nineteenth-century Britain is nicely captured in the account given by Sidney Webb in his 1890 book Socialism in England:

The ‘practical man,’ oblivious or contemptuous of any theory of the Social Organism or general principles of social organisation, has been forced by the necessities of the time into an ever deepening collectivist channel. Socialism, of course, he still rejects and despises. The Individualist Town Councillor will walk along the municipal pavement, lit by municipal gas and cleansed by municipal brooms with the municipal water, and seeing by the municipal clock in the municipal market, that he is too early to meet his children coming from the municipal school hard by the county lunatic asylum and municipal hospital, will use the national telegraph system to tell them not to walk through the municipal park but to come to the municipal tramway, to meet him in the municipal reading room, by the municipal art gallery, museum and library, where he intends … to prepare his next speech in the municipal town hall, in favour of the nationalisation of the canals and increase government control over the railway system. ‘Socialism, sir,’ he will say, ‘don’t waste the time of a practical man by your fantastic absurdities. Self-help, sir, individual self-help, that’s what’s made our city what it is’.

Dissatisfaction at clear market failures was a powerful driver towards municipalisation of basic services essential to public health and welfare – especially when those failures were, quite literally, fatal. Almost a third of deaths in Britain in the middle of the nineteenth century were from infectious diseases, and such diseases were not observant of class boundaries. Public intervention increased and the role of the local state shifted to one of owning and providing services rather than simply administering and regulating private provision. Palpable success increased demand as a matter of practical, empirical politics. By the time the new county councils were created in 1888, the Fabian Society urged that they should become units not just of government but also of collective ownership of the economy. The earliest instance of explicit municipal socialism in the UK – in West Ham in East London, run briefly by the Labour Group from 1898-1900 – saw the development of a welfare apparatus with a strong focus on public health and housing as well as urban social improvement.

So rapid was the extension of local public ownership under municipal socialism that eventually sections of private capital banded together in a campaign – the Industrial Freedom League – in an effort to place national legislative limits on its expansion. It is not hard to see why; the growth in municipal enterprise had been phenomenal. Whereas in 1830 only eleven local authorities were providing public water, this had risen to 1,142 by 1905, representing £130 million in public capital as compared to a mere £20 million in private capital in the sector. [3]

The economics were on the side of the municipal socialists. Natural monopolies, public health considerations, and huge capital requirements drew government in still further. In the areas of water, gas and electricity in particular, the utilities could only operate with optimal efficiency as monopolies. In the case of gasworks, the “duplication or triplication” of infrastructure caused by competing suppliers and the “noxious fumes, unsightliness, and dangers attendant thereon” – which included “constant opening up of the highways for work on the mains, and the serious risk from escaping gas” – helped turn the tide of public opinion in favour of public provision. An additional factor in the appeal of municipal ownership to local bourgeois interests could be found in the possibilities for revenue extraction – and thus of tax relief – as well as the provision of efficient public services as cheap inputs into local industry. Such data as we have show that municipal gas, electricity, and tramways were all profitable concerns while water – once loan charges are counted – tended to run at a loss. [4] As time went on, gas, water, and electricity were increasingly taken into public hands, and by the 1940s municipal ownership accounted for 80 per cent of total provision nationwide, with receipts from these essential services providing 30 per cent of local authorities’ income. [5]

Municipal socialism in America

Meanwhile, across the pond, American proponents of municipal public ownership – the so-called “sewer socialists” – drew considerable inspiration from the more developed practice in Great Britain. At its height in 1912, more than seventy U.S. municipalities had socialist mayors, including cities as diverse as Berkeley, California, Butte, Montana, and Schenectady, New York, while 340 cities and towns elected some 1,200 socialist officials. [6] In addition there were 33 socialist state legislators, and in the years preceding the First World War two socialists were elected to the United States House of Representatives. [7] In 1917, the Socialist mayoral candidate in New York City won almost a quarter of the vote, ten socialist representatives were elected to the state legislature, five to the board of aldermen, and Jacob Panken became the first socialist judge on the bench in the United States. [8]

Institutionally and rhetorically, public ownership was a lynchpin of the municipal socialist approach and a key component of its popularity. “American socialism,” historian Bruce Stave wrote, “was most successful in winning power when it was most progressive; as ‘gas and water socialism,’ it espoused democracy rather than revolution.” [9] Under socialist control or influence, many municipalities took direct control of public transport (including subways, trolleys, and buses), power systems (including power plants), telephone systems, sanitation systems, railways, ice plants, transport facilities (bus and train stations, as well as freight shipping facilities), grocery shops, coal distribution companies, and even lodging houses.

Despite the demise of the Socialist Party amid the red-baiting and state repression that followed the U.S. entry into the First World War, the legacy of municipal socialism in the United States remains inescapable even today. For decades, the Public Ownership League of America –officially non-partisan, but led by municipal socialists, including long-time Secretary Carl Thompson – reported on the thousands of ongoing local public ownership efforts across the country. What might be termed “Actually Existing Municipal Socialism” in the United States includes at present some 2,000 municipally-owned electric utilities. These locally-owned and -operated enterprises commonly provide services at lower costs and return greater revenues to the municipal government than their privately-owned counterparts. Together with electricity co-ops, these publicly-owned utilities now supply a quarter of all U.S. energy. In the conservative state of Nebraska, for instance, every single resident and business receives electricity from one of 121 publicly-owned utilities, 10 co-operatives, and 30 public power districts. Moreover, Nebraskans pay one of the lowest rates for electricity in the nation, and publicly-owned providers in the state are moving aggressively to increase their generation from wind and other renewable sources.

Most publicly-owned electric utilities are conventional in their operations, and under current traditional management approaches many have poor ecological records. On the other hand, all across the country publicly-owned utilities are at the forefront of city and state efforts to implement climate action plans and reduce greenhouse gas emissions. Particularly instructive is the successful ongoing activist mobilisation in Boulder, Colorado to municipalise the local electric utility in order to tackle climate change. Concerned that the existing private firm, Xcel Energy, derived more than 60 per cent of its energy from coal, a citizens’ campaign was launched to make the utility public. Despite the fact that Xcel outspent the citizens’ effort by more than ten-to-one, the initiative was approved, albeit narrowly, in a 2011 referendum. Two years later a new initiative backed by Xcel that would have crippled the municipalisation effort was overwhelmingly defeated – again despite huge imbalances in campaign spending.

In contrast to privatised Britain, in the United States over 80 per cent of all people receive water from publicly-owned systems at the local, municipal level. Attempts at water privatisation over the past few decades have generally been disastrous, and many have been reversed through public pressure. In Florida, for instance, an activist group called Friends of Locally Owned Water organised a successful campaign against the private water company Aqua America on the back of repeated rate increases and poor service. In 2013, the company bowed to citizen pressure and sold off most of its water systems to the publicly-owned Florida Governmental Utility Authority and other local governments. Today, efforts to privatise water systems are often met with concerted opposition from local residents. In 2013, residents in Bethel, Connecticut quickly mobilised against a proposal to sell the town’s water utility to Aquarion, a company controlled by an Australian bank. In the resulting referendum, more than 70 per cent of town residents voted against the sale.

One area that has experienced tremendous growth in recent years is local municipal ownership of high-speed internet systems. As of this writing, more than 450 communities have established full or partial publicly-owned networks, including 50 (across 19 states) with super-fast networks offering at least 1GB services. These publicly-owned systems commonly provide higher speeds, better service, lower costs, and updated infrastructure in communities often neglected by large for-profit cable companies. In Chattanooga, Tennessee, the city’s publicly-owned utility Electric Power Board (EPB) has been operating a fiber network since 2009, and was the first location in the United States to offer a 1 Gigabit service. The emergence of a municipal broadband network in the city has also forced the corporate provider, Comcast, to reluctantly invest in upgrading its service – even as EPB provides faster speeds and lower costs.

Another area of intense activist organisation is around local, publicly-owned banks. In Santa Fe, New Mexico, Mayor Javier Gonzales announced that his city would move forward with a study on how to create a public bank in late 2014 as an effort to keep municipal dollars local. As he explained, the city’s existing financial services provider, Wells Fargo, “take[s] city revenues, taxpayer dollars, and [uses] those dollars as part of a loan portfolio for folks outside of Santa Fe and New Mexico.” In late January 2015, the Santa Fe City Council approved a contract with a local firm to investigate the establishment of such a city-owned public bank. A year later, in January 2016, that firm released its findings, indicating that a public bank is indeed feasible and could provide an economic impact to the city of more than $24 million in just its first year of operations. A month later in Philadelphia, Pennsylvania, a hearing was held on a public bank proposal after being authorized unanimously by the city council.

Also emerging are a number of interesting new ideas and experiments around so-called “public-public partnerships” whereby publicly-owned enterprises and services partner with other municipalities, workers, non-profit organisations, unions, public pension funds, or community groups. In the Baltimore region, for instance, small local publicly-owned water systems have begun to pool their purchasing with the City of Baltimore in order to lower costs and provide better service. In Nashville, Tennessee, and Miami-Dade County, Florida, the local municipality has partnered with workers and their unions to cut costs and increase efficiency rather than resort to privatisation. In the case of Miami-Dade, the effort saved $35.5 million between 1998 and 2010, and led to increased service quality throughout the system. Similarly, some groups are beginning to focus on the vast potential of public and union pension funds to invest in and partner with public infrastructure projects. In 2011, several unions, including the American Federation of Teachers, pledged to dedicate $10 billion to investment in American infrastructure over a period of five years. (In 2014, it was announced that they had met this goal two years ahead of schedule.)

Municipal socialism revisited

Burlington, Vermont – the city where democratic socialist Presidential candidate Bernie Sanders was once mayor – is of course something of an outlier politically. But it offers an intriguing glimpse at the breadth of municipal ownership possibilities in the United States. The city’s waterfront, formerly a decaying industrial area, has been extensively redeveloped into a leisure and cultural centre after residents voted in 1990 to pursue a strategy of public ownership and control following the failure of previous private development proposals in the 1970s and 80s.

Today, the city’s publicly-owned electric utility, the Burlington Electric Department, is among the greenest utilities in the Unites States, announcing in late 2014 that Burlington had become the first city of substantial size in the nation to supply its residents with 100 per cent renewable energy. The city owns and operates the Church Street Marketplace, which operates on 100 per cent self-generated revenues and has less than a one per cent vacancy rate. Burlington also runs the Fletcher Free Library, the largest and busiest public library in the state. The city owns and operates 700 apartments for the elderly and people with disabilities, as well as 340 apartments for low-income residents. The publicly-owned Chittenden County Transportation Authority averages nearly 10,000 passengers a day. The Chittenden Solid Waste District owns and operates 10 solid waste and recycling facilities. The Winooski Valley Park District acquires natural land in and around Burlington for the purpose of conservation and permanent preservation. The Department of Public Works administers the city’s publicly-owned water and sewer systems. The city also operates and maintains public schools, parks, infrastructure, cultural programs, a community and economic development office, a community justice centre, community centres, and more. [10] While not public ownership in the traditional sense, its largest grocery store, City Market, is a consumer cooperative that serves more than 4,000 people per day, while the city is also home to one of the most advanced Community Land Trusts in the United States, the Champlain Housing Trust, formed when the Burlington Community Land Trust and the Lake Champlain Housing Development Corporation merged in 2006. Strolling the streets of Burlington, then, is reminiscent in many ways of the walk taken by Sidney Webb’s archetypal late-nineteenth-century Town Councillor – and a sad measure, in today’s Britain, of all that has been lost.

Which brings us full circle. It is to the traditions of municipal socialism, and not those of a defunct social democratic centralism, that we should be looking for inspiration and a political strategy capable of living up to Corbyn and McDonnell’s “new economics.” Labour councils, of course, are currently hamstrung by the edicts and fiscal constraints of a centralised state in Tory hands set on implementing a regime of unrelenting austerity. But to say that that there are severe constraints on what can be done is not the same as saying that nothing can be done. Enterprising councils like Preston in Lancashire are showing the way. Corbvn’s Labour should carry out an audit of all that may be possible at the local level, even under present conditions.

Such a strategy – of building support for the new socialist political economy from the ground up, in a way that is far less scary and more comprehensible in a municipal context than it can appear at the national level – need not wait for the conquest of state power and a Labour government to take office. Educational and organising campaigns could begin right away, based on real issues that are already present in ordinary people’s lives. The enthusiastic new Labour party members who could be called upon for such campaigns are legion, and they may be more energised by a call to aggressive community organising than by the routine banalities of the branch or constituency meeting. And who knows, it might even give the die-hard Corbynphobes something constructive they can do instead of their endless sour carping in the face of Labour’s promising new realities.

Notes:

[1] Andrew Cumbers, Public Ownership and the Economy: Constructing Institutions for Participation, Diversity and Democratic Control (Forthcoming). See also Andrew Cumbers, Reclaiming Public Ownership: Making Space for Economic Democracy (London: Zed Books, 2012).

[2] John Sheldrake, Municipal Socialism (Aldershot: Avebury, 1989).

[3] Ibid, pp. 21-22.

[4]. Robert Millward, Private and Public Enterprise in Europe: Energy, Telecommunications and Transport 1830-1990 (Cambridge University Press: Cambridge, 2005), p. 50.

[5]. Ibid, pp. 24, 18.

[6]. James Weinstein, The Long Detour: The History and Future of the American Left (Cambridge: Westview, 2004), p. 46.

[7]. Eric Foner, “Why Is There No Socialism in the United States?” History Workshop 17, No. 1 (1984).

[8]. Bruce Stave, ed., Socialism and the Cities (Port Washington: Kennikat, 1975), p. 5.

[9]. Ibid, pp. 5-6.

[10]. See https://www.burlingtonvt.gov/sites/default/files/Mayor/AnnualReports/AR-2014.pdf.

About the authors

Joe Guinan is a Senior Fellow at the Democracy Collaborative and Executive Director of the Next System Project.


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