The government's partial nationalization of major banks is an emergency measure aimed at preventing an economic disaster. But having taken this step, we urgently need a discussion on the left about what we see as the possible long-term significance of this shift to public share-holding. Is this to be seen only as an emergency measure? Or is this an opportunity to think strategically about our political economy and new possibilities of democratizing the ownership and control of capital?
On a day when the new Nobel Prize winner in economics, Paul Krugman, has been announced, it is perhaps fitting to recall the ideas of another Nobel laureate economist, James Meade. Meade served in the post-war Labour government, was close to the Labour revisionists in the 1950s/60s and was later an influential economic thinker in SDP/Liberal/Lib Dem circles. Over a long career, Meade developed an account of an ideal 'partnership economy' which would combine 'liberty, equality and efficiency'.
At the heart of Meade's model lay the idea of public shareholding. In an ideal 'liberal socialist' economy, he envisaged the state owning 50% of the nation's productive capital. The state would not seek to own and run specific firms and industries, but would seek to build up a portfolio across various firms and industries. Funds for the development of the portfolio might come from a capital levy or a scheme of capital dilution in which firms would be required to issue new shares each year to a public scheme of this kind. Through such a fund, the state would enjoy part of the return on capital, plus capital gains, providing funds for public spending over and above those from taxes on labour incomes. Labour toyed with the idea in the 1950s, as did the SDP and Lib Dems in the 1980s. (Would that the Lib Dems were so radical today....)
More recently, Robin Blackburn has revived the idea of creating a public share fund by means of capital dilution as a way of developing a second pension scheme to complement existing public pension programs which operate on a PAYG (Pay As You Go) basis. More so than Meade, Blackburn stresses the idea that management of these funds could be put in the hands of fora which include representatives of unions, community groups, and so on. Combined with a democratization of existing occupational pension schemes, so as to bring these schemes more under the control of their ultimate owners, Blackburn sees potential here for the gradual development of a system of 'complex socialism' in which the ownership and control of capital is democratized (see www.havenscenter.org/realutopias/2004) .
My grasp of economics isn't good enough for me to say how the emergency measures taken by the government might or might not be linked over the long-term to the sort of perspectives we find in Meade's and Blackburn's work. But I do think we need a discussion about how they might be linked. The point of the left, after all, is not simply to save capitalism from its excesses but to develop an alternative political economy that can better deliver on the aspirations to distributional equality and democratic sovereignty.