The Problem of Property

The persistence of this simple structural parameter is strikingly durable. Indeed, were a social system to deviate from it, by definition it would cease to be a capitalist one. In his book Finance Capital, the Austrian economist and finance minister Rudolf Hilferding wrote, “The problem of property relations . . . attains its clearest, most unequivocal and sharpest expression at the same time as the development of finance capital itself is resolving more successfully the problem of the organization of the social economy.”

The finance-capitalist conjuncture raises the crises of capitalism in normal times to brave new heights. It is a deepening of capitalist contradictions. Our conjuncture is one which is, to draw from the philosopher Georg Lukács’s characterization of crisis, “no more than a heightening of the degree and intensity of the daily life” of normal capitalist societies. Finance capitalism, which maintains a shielded protection of private control over financial flows, compounds crises of debt and financial insecurity, underinvestment in socio-environmental goods, macroeconomic instability, and climate catastrophe.

Solving those crises, however, amounts to a world-historic financing challenge. We know that human flourishing requires financial security, safe housing, decent jobs, an ecosystem in relative balance, and decision-making power for the demos. Where will the money come from if competitive financing markets oriented around the bottom line continue to divert cash away from these goals? The short answer is democratic financial institutions.

Democratic Finance

Democratic finance is a way to steer investment flows toward goals that are determined through popular participation and deliberation rather than through the existing ecology of private institutions and individual investors whose principal aim is securing a financial return. The financial oligarchy will not save us; it will bury us.

With the backing of governments (who can raise funds through a mix of taxes and fees, voluntary contributions, fiat money creation, and other mechanisms), democratic finance creates the institutional capacity for imbuing finance with a socio-environmental purpose. There is no reason to anticipate the concrete decisions of a democratic process prior to actually running it. But we might imagine three plausible lending outcomes.

First, public finance could offset housing crises by investing in deeply needed affordable housing units. Such money flows might help finance new construction to increase the supply as well as finance low- and moderate-income mortgages to allow homebuyers to take advantage of the new supply of homes.

It might also be designed to finance public housing or housing cooperatives commonly owned and maintained by their residents. Or it might even lead to the creation of a public acquisition fund to purchase sites for the development of affordable housing. These are questions best left to the demos.

Second, democratic finance could be a means to financial justice through wealth creation for working-class communities that have been left out to dry. This is not a mere matter of financial inclusion, such as access to banking services like financial literacy coaching, credit lines, and savings accounts, which has often been the focus of postal banking advocates. Instead, our democratic bank might focus on genuine wealth building for working-class communities.

We might finance small cooperatively owned businesses as well as help convert viable businesses into worker-owned enterprises by financing the purchase of single-owner firms for the acquisition of their employees. Such efforts are already underway in places like Cooperation Jackson, Mississippi, which was founded in 2014 to help incubate and build out a solidarity economy.

Unlike our dominant financiers, democratic pools of finance might support cooperatively owned enterprises, helping them not only survive but thrive. We could thus have a program for targeted business loans that would help firms transition to being worker-owned and run.

It might also be a means to non-workplace wealth creation, such as capital investments into education, community centers and parks, and infrastructure upgrades. Again, in our shift away from atomistic approaches to finance, democratic finance might orient us toward collective and shared wealth, rooted in the organizations we participate in and the physical infrastructure we navigate.

Investing in Our Future

Third, and perhaps most pressing, reaching carbon neutrality is the most existentially urgent need for our planet, but finance capitalism offers no means for the large-scale investments in the new generation of clean-power sources and infrastructure that are needed anytime soon. And while welcome, the gestures in this direction from the emergence of the new industrial policy in the Inflation Reduction Act and the CHIPS and Science Act are a mere drop in the bucket.

Again, democratic finance offers one promising path if pursued at a robust scale. Democratic finance might allocate investments into community solar and wind projects that can replace dirty energy sources on the grid, it might prioritize the expansion of nuclear, or it might opt for some combination of all the above.

The particular composition of the energy matrix in a green transition is a highly debated issue within the environmental movement. It is one particularly well suited to the kind of deliberation mini-publics are conceived for. Let the demos decide.

Along these lines, a truly democratic system of global finance might be the funding mechanism needed to build a clean transnational energy grid. It might be used to gain control over key sectors that are highly reliant on fossil fuels in order to hasten a green transition through public ownership and control, invest in public systems of transit to wean ourselves off carbon-emitting vehicles, and create democratically mandated programs to provide funding for retrofitting buildings so that they are green.

Democratic processes and experiments themselves must be left to work out the details of the lending programs the different democratic financial institutions at different scales might pursue. Again, our ambition should not just be to create one democratic financial institution but a whole global network of them organized along the principle of subsidiarity.

We can — and should — come up with recipes for the cookshops of the future, but we can’t predict how people will decide which meals they want to make. The recipes offered up in this book, in any case, are premised on a commitment to not only the value of democracy, but also its promise in practical terms.

Democracy is worth defending not just in itself but also as a means to a better, less crisis-addled, life. Rule by the few has been part and parcel of the resource extraction and human dispossession at the center of our throes. It’s time we gave democracy a try and trusted in the deliberative judgements of ourselves and our peers.