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After OccupyBattle for democracy IS the struggle against inequality

As millions around the world take to the streets to demand real democracy, Tom Malleson’s After Occupy: Economic Democracy for the 21st Century is timely says Gerry Gold

“The umbrella revolution won’t give Hong Kong democracy. Protesters should stop calling for it. This is about inequality, not politics, so democracy can't fix the problem.”  

That’s the view of Eric X. Li, both a venture capitalist and political scientist in Shanghai, clearly worried that the campaign could weaken Hong Kong’s pivotal role in the global financial system.

Li’s insistence on the separation of inequality and politics is more than an article of faith. For him and every other adherent to capitalist social relations it’s as fundamental as the “doctrine of the two kingdoms” promoted by Martin Luther during the Protestant Reformation, which led to the separation of the church and the state.

Hong Kong students’ democracy demonstrations, joined by Occupy Central, began in September, too late to be included for consideration in Canadian researcher Tom Malleson’s After Occupy. Malleson’s argument is the polar opposite to Li’s. Malleson is arguing for democracy to be deepened, by extending its reach into economics – the system of production and finance.

Li is in league with Thomas Piketty and all those who view the rapid rise of inequality with trepidation. He says the mounting dissatisfaction is connected with the wealth gap in Hong Kong, and of course he’s right about that.

Half the population live in overcrowded and crumbling public housing. One-fifth live below the poverty line. More than 170,000 “working poor” live in cage- or coffin-like, subdivided flats. The stacked wire “dog crates” are 6 feet long by 3 feet high and wide, with 30 crates to a room. The city has no minimum wage, nor pension plan.

As millions around the world take to the streets to demand real democracy, Malleson’s book, subtitled Economic Democracy for the 21st Century, is a timely challenge to societies, which he says are “fervent about their democratic credentials”. In posing the “democratic paradox”, he asks how it is that they exclude decisions with massive social and public consequences from the democratic process.  

From a manager’s decision to lay off a thousand workers, to corporate investment in deep sea oil extraction, to bankers’ decisions to provide (as it turned out) risky sub-prime mortgages and resell them as complex debt instruments, no matter what damage they may do, none of these are subject to anything more than the whims of profit-hungry hedge funds in search of yield.

Malleson focuses our attention on the major parts of the economy in which he says democracy could, should and in some places does already operate: the workplace, the market system, finance and investment. For each we’re offered theoretical arguments asking whether they should be democratised, and practical examples, with an overview of pros and cons.

That’s a welcome change from the many books unpicking the development and alleged causes of the continuing crisis without offering an alternative beyond an impossible return to regulation. It also takes us a long way beyond the criticisms of Occupy’s negativity, providing an answer to those who say Occupiers make no proposals of their own.

Malleson attempts an even-handed view of differing political traditions and their positions on democracy in the sphere of economics, from the classical liberalism of Milton Friedman, the left liberalism of Keynes and John Rawls’ social democracy, through a variety of interpreters of Marx to the anarchists like Proudhon, Bakunin and Bookchin.   

But take care, because Malleson’s ambitious reach leads him to rely perhaps too much on second or even third-hand readers and commentators on the original texts. A glaring example is to be found in his denunciation of Engels who, says Malleson, “famously ridiculed the idea of workplace democracy, thus starting a tradition of contempt for workplace democracy that orthodox Marxists would follow consistently, largely on the grounds that it risked undermining state control.”

Of course he’s right to counter pose the so-called “orthodox Marxism” of Kautsky and the adherents of the Second International to any real notion of economic democracy. But to blame Engels on the basis of a piece entitled On Authority is entirely misplaced. 

The original Engels article is, as it says, a polemic about “authority”, not democracy. Engels is arguing that as the social organisation of production becomes more extensive and more complex – such as in the railways – even in a socialist society, “the first condition of the job is a dominant will that settles all subordinate questions, whether this will is represented by a single delegate or a committee charged with the execution of the resolutions of the majority of persona interested. In either case there is a very pronounced authority. Moreover, what would happen to the first train dispatched if the authority of the railway employees over the Hon. passengers were abolished?”

Authority is both necessary and, says Engels, can be established by democratic means. Once established it must be respected if production is to continue. That’s quite a different proposal from Engels than the one Malleson accuses him of. So it becomes important not to take everything Malleson says as gospel. You’ll need to check the sources and understand their historical context before nodding in agreement or doing the reverse.

That said, Malleson does excellent work in contrasting the successes of workplace democracy such as those demonstrated by the co-operatives of Mondragon in Catalonia and La Lega in Northern Italy, to the fundamentally undemocratic structures of the giant transnational corporations.

His proposals for democratising the market system are thought-provoking for sure. But this is surely the least persuasive section of the book in which he seeks to minimise the impact of corporate globalisation so that he can talk up the potential impact of states to raise taxes and control capital. 

Invocation of the 1990 US Acid Rain Act to establish a cap-and-trade market in sulphur emissions as a success, raises eyebrows in the light of the ongoing failure of the global markets in cap-and-trade to reduce let alone eliminate greenhouse gas emissions. We should all be watching China’s recent initiatives in that direction. 

Neither does his admiration of the success of the Nordic countries use of the welfare state to reduce inequality sustain credibility in the light of the reversal in Sweden, for example. Maybe things aren’t so bad in Canada, but his statement that “the welfare state is manifestly not being undermined” is simply astonishing from a UK perspective. His ability to suggest that “a country wishing to deepen its welfare state (or pursue economic democracy) retains substantial fiscal room to manoeuvre and can acquire even more ability to do so throug ... tariffs and capital controls” is surely undermined by transnational negotiations such as the Transatlantic Trade and Investment Partnership.

It is surprising that the author finds no space to even acknowledge the potential use of web-based technologies in democratising the market and operating a global financial system, because this is surely a key input to the discussion about systemic economic alternative that the evidence presented seeks to stimulate.

We can certainly agree that “we need to spend more energy and effort conceptualising alternatives to current forms of capitalism, including a questioning of social democracy”, but we need to go further than that – beyond capitalism itself.

With the struggle for democracy in full flow, despite its faults, Malleson’s work helps to begin to imagine a different future.

27 October 2014

After Occupy: Economic Democracy for the 21st Century, OUP £19.99

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