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Gar Alperovitz

Gar Alperovitz

Distinguished Next System Fellow more

Public Planning Democracy & Governance

Why is investment in the current system fundamentally undemocratic and unsustainable?

Investment decisions in the current system are driven largely by considerations of maximum financial return, without regard for the externalized consequences of these decisions on communities. While socially responsible investing offers a way for conscientious individuals and well-meaning institutions to screen out the worst corporate actors from their portfolio (for instance, through carbon divestment strategies), the fact remains that a system in which profit maximization serves as the central structural principle to guide and shape investment activity will tend to produce inequitable and unsustainable outcomes in many areas.

The problem facing union pension funds illustrates some of the challenges. These funds, in the US, total $1.6 trillion in assets.1 However, current regulatory principles of risk and what constitutes “prudent” financial governance designed to facilitate private investment and profit-taking from such funds too often mean that this capital is used against the interests of workers themselves. In some cases, union pension funds have even been invested in companies that displace union workers, such as the Los Angeles union pension fund that invested in an Embassy Suites hotel that fought union organizing efforts.2 Subject to effective democratic control such funds could be a powerful force for investing in the creation of good jobs, essential infrastructure, and, critically, democratically-owned firms following Pluralist Commonwealth principles. The potential power of “workers’ capital” in a modern economy is enormous, especially if combined with the power of public funds like state and city deposits, and with the endowments of non-profit entities with public missions like universities and hospitals.

How would a Pluralist Commonwealth democratize investment?

In the Pluralist Commonwealth a key design principle is the development of democratic control over major investment decisions, combined with the creation of effective pipelines for community-based investments and a range of smaller scale and more free-ranging local investment approaches. While MARKET discipline is an important backstop against corruption and inefficiency, three essential conditions must be met. First, the pursuit of returns that allow larger aggregations of capital to grow must be contained within a PLANNING system that prioritizes community-sustaining outcomes. Second, the OWNERSHIP of capital in the pluralist commonwealth must be exercised in ways that insure collective control over investment dollars is not ceded to the corporate and financial sector as it is today. Third, and above all, investment of large scale capital must work to insure local community stability and equity, on the one hand, and ecologically sustainable outcomes on the other.

At the state and local level, public banking can play an important role in general and via the carefully targeted investment of government deposits to support a more localized economy and to help develop democratized and ecologically sustainable enterprises. Providing effective mechanisms that combine fiduciary discipline with creative, values-driven investment in a democratic economy could also help private and public pension funds better use the capital they hold in trust for workers. Similar investment patterns can be established for nonprofit institutions, and compliance with local impact investing minimums can be established through conditions on renewal of tax-exemption status. A $38 billion hedge fund like Harvard University should not get to avoid paying taxes just because it offers a few classes on the side.3

At the national and ultimately regional level, public planning decisions ultimately come down in large part to decisions about how and where national scale capital is invested. The Pluralist Commonwealth model builds steadily in the direction of participatory forms of planning, recognizing the need for experimentation, testing, and new strategies that increasingly meet goals of democracy, equality, and ecological sustainability as transitional steps are made away from the current system and towards the build-up of the key institutions of the new system.

Where is investment managed in more democratic directions today?

Though rarely discussed in the press, in fact, numerous states, including conservative ones like Texas, operate “sovereign wealth funds” which use the revenue from investments (financed, for instance, by profits made from oil and other resources on public lands) to fund education and other public services. The celebrated state owned Bank of North Dakota, noted above and founded nearly a century ago, has consistently demonstrated the role government financial deposits can play as the anchor of a system supportive of farmers, cooperatives, and other small businesses that provide the backbone of local communities. Several states—notably California and Alabama—invest public pension funds partly following criteria that prioritize local economic development and historically underserved markets as opposed to Wall Street financial criteria.4 . The state of Alaska currently guarantees every resident of the state a flow of income from profits generated in the oil sector (a family consisting of two parents and three children received more than $10,000 in 2015, for instance).5

Closer to the community level, hundreds of community development financial institutions (CDFIs) across the country work to leverage federal support and channel private investment into projects benefitting low-income communities. Networks of revolving loan funds like Shared Capital Cooperative (formerly the Northcountry Cooperative Development Fund) and The Working World focus directly on advancing economic democracy. In 2014, Shared Capital Cooperative made $3.1 million in loans to cooperatives in 31 states, with 88 percent of those loans in low-income communities.6 The Working World, meanwhile, has provided “non-extractive finance”—meaning that firms don’t have to go into debt or put down collateral, while their loan repayment amounts are based on their success—to over 210 worker cooperatives with a repayment rate of 98 percent.7

See also:


Further reading

David Schweickart, After Capitalism: Second Edition (New York, NY: Bowman & Littlefield Publishers, Inc, 2011).

Tom Malleson, After Occupy: Economic Democracy for the 21st Century (New York, NY: Oxford University Press, 2014).

Gar Alperovitz

Gar Alperovitz

Distinguished Next System Fellow more

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Principles of a Pluralist Commonwealth: Introduction

If the design of corporate capitalism is unable to sustain values of equality, genuine democracy, liberty, and ecological sustainability as a matter of inherent systemic architecture, what systemic ‘design’ might ultimately achieve and sustain these values? read more


Why are current approaches to trade problematic? How would the Pluralist Commonwealth approach trade? What existing efforts point toward a sustainable and just trade regime? read more


How do modern researchers understand the deeper sources of economic abundance and technological change? How should the fruits of our common technological inheritance be distributed now and in future? How would the Pluralist Commonwealth deploy management of new technologies in new ways? read more


Why consider long term regional devolution of power? How might long term devolution to regionalist patterns operate in the Pluralist Commonwealth? What are some on-the-ground developments that suggest possibilities for the future of regionalism? read more


Why must the United States confront its long history of systemic racism? How would the Pluralist Commonwealth begin to promote racial equality? What on-the-ground efforts can be seen working towards our future of collective liberation? read more


Why are new forms of public economic institutions important at certain critical levels of scale in the Pluralist Commonwealth? What are the key challenges for public ownership? Where are communities organizing elements of public ownership in the economy? read more


Why is the idea of prehistory important for thinking about systemic change? Are we in the prehistory of genuine systemic change, the prehistory of a Pluralist Commonwealth? read more


Why is pluralism an important value for systemic design? What makes a pluralist commonwealth “pluralist,” and why are more complex forms sometimes important? Where can we see pluralism in action today? read more


What is the role of planning in our present economic system? How would planning function in the Pluralist Commonwealth? Where are new models of decentralized and more participatory planning being explored today? read more


Why is ownership a key determinant of system structure? How does the Pluralist Commonwealth democratize ownership? Where is ownership being transformed in the direction of a Pluralist Commonwealth today? read more


How is money created in the current system? How is money created in the Pluralist Commonwealth? Where can we see key elements of a new approach to monetary policy emerging today? read more


What’s wrong with markets, and why do we still need them? How does the Pluralist Commonwealth use markets to sustain communities? Where are examples of markets that remain subject to democratic control operative today? read more


What is liberty? Why must liberty be a central part of the design for the pluralist commonwealth? Where is a renewed conception of liberty being developed on the ground today? read more


Why must we factor gender equity into the institutional design of the next political and economic system? What kinds of structures would a Pluralist Commonwealth use to support true gender equality? Where are important elements of a more gender equitable system being built today? read more

Evolutionary Reconstruction And Displacement

How do evolutionary reconstruction and displacement of corporate power differ from “countervailing” strategies of containment and regulation? Why are evolutionary reconstruction and displacement key strategic approaches in the building of a Pluralist Commonwealth? read more


Why is equality a key part of the Pluralist Commonwealth? How is movement towards equality achieved in the Pluralist Commonwealth? What examples prefigure equality as envisioned in the Pluralist Commonwealth? read more

Economic Growth

Why is growth a challenging problem? How Would the Pluralist Commonwealth Manage Growth? Where can we see on the ground efforts to tackle the growth question today? read more
Economic Change

Economic Change

How does economic change really occur locally and nationally? How, specifically, can we build upon the ways cities and states already foster the local economy to create the Pluralist Commonwealth? What are some examples of shifts toward greater democracy? read more

Ecological Sustainability

Why is pluralism necessary to guarantee ecologically sustainable ends? What are the key strategies for environmental protection in the Pluralist Commonwealth? What are some promising on the ground developments that point toward an ecologically sustainable Pluralist Commonwealth? read more


What is democracy? How does the Pluralist Commonwealth build stronger foundations for democratic life? Where are more participatory systemic directions being prototyped and developed today? read more


Why is decentralization a key principle of system design? What are the limits of decentralization? What are some contemporary developments in the direction of decentralization? read more


Why is culture a key part of the pluralist commonwealth? What are the most important strategies for building such a culture? What are some examples of the development of the cultural transformations toward democratic society at work today? read more


What are cooperatives? What role do cooperatives play in a Pluralist Commonwealth? Where else is this systemic direction for cooperatives being prototyped and explored today? read more


Why is community important to the pluralist commonwealth? What are institutional mechanisms aimed at undergirding rather than undermining community in a Pluralist Commonwealth? What current developments point towards the restoration of community as a central category? read more


What does it mean to hold wealth in common? Why is wealth held in common and democratized at various scales, so important for the design of a next system? What are some examples of how “common wealth” builds a “commonwealth” today? read more

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What are the challenges presented by global climate change? How does the Pluralist Commonwealth tackle ecological threats such as climate change? What are some promising on the ground developments that point toward an ecologically sustainable Pluralist Commonwealth? read more


Why is bureaucracy problematic? What can be done in a pluralist commonwealth to minimize necessary bureaucracy? What contemporary interventions or potential interventions illustrate democratic control of large-scale entities? read more


Why is the Pluralist Commonwealth an American system? What resources for a Pluralist Commonwealth can be found in the American tradition? read more