The Emerging Paradoxical Possibility of a Democratic Economy

Abstract

This paper considers what happens in advanced industrial economies like that of the US, where traditional redistributive economic policies and programs have fallen out of favor, yet forces of crisis, which radicals once predicted would usher in a new, more egalitarian and democratic era, are well attenuated. It is argued that, paradoxically, as the growth potential of corporate capitalism declines and traditional redistributive mechanisms weaken, new spaces are opening up in which new, democratized forms of ownership and control of wealth are slowly emerging. After describing these developments, the paper explores the long-run possibilities and prospects their evolution may entail.

Keywords:

• democratization
• institutional innovation
• community wealth
• state
• municipal and local governments and economies

ACKNOWLEDGEMENT

This is a revised version of a Keynote Address to the Association of Social Economics, at the 2011 annual meeting of the Allied Social Science Association (January 6, Denver, Colorado).

Notes

Figures from US Government, Office of Management of the Budget (2010: 34–36).

Thus, for example, the share of income accruing to the top 10% of households fell from 44.5% in 1939 to 31.6% in 1944 (Alvaredo et al. 2011).

Figures from the Bureau of Economic Analysis, National Income and Product Accounts, as of 4 April 2011.

Illustrations included in this part draw on materials continuously collected by the Democracy Collaborative at the University of Maryland. See www.Community-Wealth.org.

It is also possible that a more dangerous corporate form of state might emerge, although the substantial stability of a decaying system is likely to work against formal systemic change in the direction of an American form of semi-fascist organization—what the late Bertram Gross termed “friendly fascism.”

The public rescue of General Motors and Chrysler was not unprecedented. Similar problems occurred with regard to Chrysler in 1979–1980, Lockheed in 1971, Franklin National Bank in 1974, Continental Illinois in 1984, the savings and loan institutions in 1989, and the airline industry in 2001, and similar problems are likely to occur in future. In the recent case, the public held 61% of General Motors in 2009 (with a minor ownership share by the United Auto Workers), as a result of very large taxpayer investment.