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Robert Borosage, Mathew Lawrence, James Meadway

Congressional Progressive Caucus gets a lesson in ‘Corbynomics’

Isaiah J. Poole

Isaiah J. Poole

Editorial Manager, The Next System Project more

Democratic Ownership

It’s one thing to offer a standard progressive attack against austerity with promises to increase spending to alleviate the pain caused by a deeply flawed economic system. But, as a group of staff members for progressive members of Congress heard recently, the more consequential challenge their counterparts in the United Kingdom’s Labour Party have taken on is to fundamentally change the system causing the pain.

A core proposal toward that end is Labour’s inclusive ownership fund, which would ultimately give workers in medium-sized and large companies at least a 10 percent ownership stake in the companies they work for. James Meadway, a former advisor to British Shadow Chancellor John McDonnell, and Mathew Lawrence, a research fellow at the Institute for Public Policy Research, explained the proposal April 10 at a Capitol Hill briefing cosponsored by the Congressional Progressive Caucus Center and the Democracy Collaborative. Both are Democracy Collaborative research fellows.

McDonnell unveiled the proposal in the fall of 2018 as a major component of.what is often called “Corbynomics,” the set of ideas put forward by Labour Party leader Jeremy Corbyn to create “an economy for the many, not the few.”  The major themes of Corbynomics include undoing the privatization of such once publicly operated services as utilities, railways, and the postal service; creating a network of public banks, in part to spark economic revitalization of struggling communities; and encouraging the creation of co-ops and other worker-owned enterprises, using public sector procurement to help support them.

In a British economy plagued with extreme wealth inequality, falling real wages for average workers, and cuts in public services that have had serious—and sometimes even fatal— consequences for low-income Britons, for the Labour party “the big challenge is what do you do to change how the economy operates,” Meadway said. “It’s not just, ‘We win, we increase spending.’” It’s how to make the economy work for everyone  “not just for the next four or five years we are in office, but permanently.”

The inclusive ownership fund once implemented “will dramatically shift the balance of power in the ownership of companies”—with effects that will reverberate through the political fabric of the country as well as the economy.

The proposal is to require corporations above a certain size to place a 1% equity share each year into an inclusive ownership fund that is controlled collectively by the employees of the company, until that equity share totals at least 10%. Through that equity stake, workers would be entitled to dividends as well as a voice in decisions about the direction of the company.

“What we’re trying to do with the inclusive ownership fund is to democratize capital at scale,” Lawrence said. Corporations would not be able to decide to, for example, close a plant or outsource some of its operations without the workers, through the ownership fund, having a say. Once the fund reached the 10 percent threshold, in many corporations the fund would be the single largest shareholder.

The two shared polling data from YouGov that Lawrence said showed that “the scale of popularity is very striking for such a bold policy.” Overall, 54% approved of the idea and only 17%t opposed in a September 2018 poll. Among Labour voters, the favorable rating rises to 70 percent, but even among Conservative party voters, more support (39%) than oppose (34%).

What this shows is that returning economic and political power to people—in other words, democratizing the economy—is a politically potent issue.

Isaiah J. Poole

Isaiah J. Poole

Editorial Manager, The Next System Project more

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