By Julia Rone
Living in a world with an increasingly uncontrolled accumulation of power by big tech, what alternatives are there to privately owned enterprises that could ensure the tech sector better serves democratic society? Julia Rone reviews Andrew Cumbers’ new book ‘Reclaiming Public Ownership. Making Space for Economic Democracy’ and starts a conversation on how to apply his writing to the tech sector.
Every discussion we’ve had so far on regulating tech giants ends up with discussing whether regulation (be it anti-trust/regulating ‘recommending’ algorithms/treating big tech as public utilities) is enough.
As a colleague smartly noted last time, we have reduced our expectations of the state to a form of (light-touch) regulation to take place only in case markets fail. But as Mariana Mazucatto has famously shown in her spectacular book “The Value of Everything”, “the state” has in fact funded the fundamental science and tech development behind not only the Internet but also the technologies used in purportedly private companies’ successes such as the iPhone. The state has been a key driver of innovation rather than some clumsy behemoth lagging behind technology and poking its nose in people’s business.
The sad thing, of course, is that the value created with public funding has been subsequently privatized/appropriated by private companies – not only in monetary terms but also in symbolic terms. I’ve never had random strangers at parties telling me about publicly funded researchers, yet I have endured hours of men (it’s usually men) praising Elon Musk and Steve Jobs.
Now, we might think that this “forgetting” of the role of the state is innocent, a childish fascination with mythical entrepreneurial figures. But that’s not the case. The bad-mouthing of the state we see in tech industry is part of a much broader trend (neoliberalism?) of framing the state as incompetent, wasteful, bureaucratic and incapable of innovation.
This is why, when, as a reaction to the 2008 economic crisis, the British government nationalized (fully or partially) large parts of UK’s retail or banking sector, they were quick to appoint private executives, often from the very banks that had caused the crisis to begin with.
What nationalization amounted to, in this case, was the public sector absorbing bad debts to allow private capital to restructure and start accumulating profits again. Andrew Cumbers begins his brilliant book on public ownership with this example and dedicates the rest of the book to 1) explaining why even amidst the biggest crisis of capitalism private executives were considered more competent; 2) what alternatives are there to privately owned enterprises.
While the neoliberal bad-mouthing of the state and its reduction to light-touch regulator have been undoubtedly super influential, the question I would like to bring to the table, drawing extensively on Cumbers, is: should we uncritically rehabilitate the state? Is more state the panacea that will save us from the big bad tech giants? Or should we try to think of new forms of ownership and democratic management, in our case, of digital platforms? In the following paragraphs I will present Cumbers’ book in detail (maybe too much detail but it’s really a great book) before returning to these key questions at the end.
Historic experiences with nationalization in the UK – “neither socialization nor modernization”
What makes Cumbers’ book so brilliant is that he engages in depth with existing theories, empirical examples and critiques of public ownership but then he moves beyond this purely analytical exercise of discussing ‘who is right and who is wrong’.
Instead, he puts forward an alternative – a vision of public ownership that goes beyond the state, embraces diversity and heterodoxy, and puts at its center the core principle of economic democracy.
To begin with, Cumbers argues that nationalization and state planning have such a bad name partially because of the way they were instituted in practice. Talking about the British post 1945 experience with nationalization, Cumebrs argues it was “neither socialization, nor modernization” (p. 14). More radical agendas never penetrated the upper echelons of the Labour establishment: referring to the nationalization programme as “socialization” was mainly PR and the government “was deeply suspicious of anything remotely ‘syndicalist’ that might provide more grass-roots or shop-floor representation and influence on the councils of nationalized industries” (p. 15).
Management was top-down and the large bureaucratic structures produced “an alienating environment for the average worker”, creating a “significant democratic deficit” in industries that were owned and managed supposedly on behalf of the people. Nationalization in the UK played out as centralization significantly weakening the power and authority of local governments vis-a-vis the national government (p.21)
What is more, “nationalized industries, in their varying ways. provided large and continuous subsidies to the private sector, while being severely constrained in their own operations!” (p.20). In the socialist USSR, nationalization was similarly not a synonym of economic democracy, with workers councils in Yugoslavia being the exception rather than the common practice. So nationalization in these and other cases analysed by Cumbers basically meant making the state the capitalist-in-chief. Now, this turned out not to be particularly efficient (even though there is a big difference between industries in this respect). There were plenty of thinkers eager to explain why this was the case.
Hayek’s critique of nationalization and central planning
The centralization of economic power and decision-making, according to thinkers such as Hayek, led to the crushing of individual freedoms and democracy. Central planning, Hayek and other critics emphasized, furthermore creates several knowledge problems – how could central planners “have all the knowledge needed about the individualized demands of millions of consumers in advanced economies?” (p.64). What is more, knowledge is dispersed in society and not easily appropriated by central managers, especially considering that economies are dynamic and evolutionary, and therefore ever changing and unpredictable (p. 65). According to Hayek, “markets and private ownership can solve such knowledge problems, because they involve dispersed decision-making and experimentation […] It is precisely the anarchy of market order, which is the key both to innovation and to the preservation of more democratic societies” (p. 64). So far so good. But we’ve all heard this before – socialism failed because it was too centralized and incapable of innovating.
The market is the solution to all evils, seriously?
What makes the book “Reclaiming public ownership” interesting is that Cumbers doesn’t stop here. Instead, he moves the argument forward by, first of all, explaining why Hayek’s solution is not so appealing as it seems. To begin with, he notes some spheres of life should just not be marketized – think of romantic love, health or education. The absurdity of the marketization of education in contexts such as the US and the UK becomes painfully obvious when compared to the fully free public education in countries such as Austria. Competition and profit are not and should not be the only drivers of economic decision-making (p. 80):
“It is precisely the incursion and spread of ‘free market values’ and norms – through heightened commodification processes – into all areas of economic life that needs to be resisted and rolled back if wider social goals, such as environmental sustainability, decent and ‘choiceworthy’ lives and social justice, are to be achieved” (p. 75).
But beyond such normative discussions, the binaries markets/democracy and planning/authoritarianism just don’t hold empirically. Market economies exist both under democratic and authoritarian regimes, as do forms of central planning (p.76)- just think of how much central planning goes on in private corporations such as Amazon.
Capitalist exploitation rests upon three pillars: “the employment relation, private property and the market” (p. 77).
Real-existing socialism or nationalization attempts in the UK achieved state ownership but they were associated with highly unequal, top-down managerial decision-making and power structures. They were also inefficient.
Markets, purportedly solve efficiency and innovation problems, but they also come with horrible employment relations (think again of Amazon workers peeing in bottles or workplace bullying as seen in *every single TV series about the US corporate world”). What is more, markets can’t and should not govern every aspect of human relations. And finally, they often lead to situations of mass concentration of private property in which a few own a lot and the majority owns nothing but their ability and time to work.
So rather than replacing the state with the market, or vice-versa, what we need to do is to think of alternatives that address all three pillars of exploitation – “the employment relation, private property and the market”.
When thinking of alternatives, Cumbers is careful to urge us not to search for a “one-size fits all solutions” or an all-encompassing model or vision (p. 81). One of the most interesting authors quoted in the book is the associational socialist Otto Neurath, who “used the phrase ‘pseudo-rationalism’ to refer to scientists and philosophers who believed that there is always a possibility of discovering one theory or solution to any problem through rational inquiry” (p. 79). The real world is messy, solutions are always provisional and there are a lot of diverse cultural traditions in the world that should be explored.
Going back to the three pillars (the employment relation, private property and the market), at the core of Cumbers’ alternative vision is the idea that 1) not only should we go beyond marketizing everything, but also 2) the workers should be able to take part in decision-making about companies, that is the employment relations should be democratic and participative. 3) Third, when it comes to property, there is a strong case to be made for “reclaiming public ownership” conceived much more broadly than simply “state ownerhsip”, i.e. nationalization. .
Forms of ownership and the principles behind them:
Cumbers puts forward at least six different forms of ownership, all of which can and should exist together: full state ownership, partial state ownership, local or municipal ownership, employee-owned firms, producer-cooperatives, and consumer cooperatives (p.165). In promoting these diverse forms of ownersip, Cumbers is led by several key principles, among which:
- taking social justice as class justice: that is, essentially going beyond redistributive justice. i.e. distributing the surplus – or profit- that comes from the labour process through income taxation (not that we are scoring particularly well in this respect currently, anyway…). What is needed instead is to challenge the way the owners of capital control the labour process or “the wider decisions that make and shape economies” (p.146).
- a commitment to distributed economic power, but not necessarily in decentralized forms: combining diverse forms of public ownership should allow “different groups of citizens to have some level of participation and a stake in the economy, compared to the situation at present, where a small minority globally (the 1 per cent!) hold most of the key decision-making power” (p. 150). In short, there should be different institutional arrangements that “foster distributed and dispersed powers of economic decision-making against tendencies towards hierarchy and centralization” (p 150).
- tolerance, tradition and heterodox thinking: Traditional forms of collective ownership in fact can be crucial for articulating alternative ownership model. I am thinking here of indigenous communities fighting against corporations “patenting” uses of plants, etc. Another great example, that I encountered actually not in Cumbers’s book but in Xiaowei Wang’ Blockchain Chicken Farm, are Chinese Township and Village enterprises, a large share of which have been owned collectively and about which I will write soon. TVEs were among the key protagonists of China’s explosive growth, outperforming state-owned enterprises).
Not a utopia
The book then moves on from these more abstract principles to a situated analysis of different experiments with diverse forms of public ownership. Rather than being some utopian, never-tried out experiment, most of these forms of ownership are already present. Municipal-cooperative partnerships, for example, have been crucial for the boom of green energy in Denmark (Chapter 9). The state owned Norwegian Oil company has had a long period of intense parliamentary debates on its key decisions (Chapter 8). (This has changed showing that power battles over ownership and decision-making are ongoing and never settled completely.)
Finally, following strong contestation and opposition to water privatization in Latin America, multinational corporations have retreated with varying implications for ownership – in Bolivia, Venezuela and Uruguay operations have returned to the public sector; in Brazil and Chile a mix of private local and foreign capital remains (Chapter 5). But there have also been attempts to return water companies to municipal control – in Argentina, the Aguas Bonaerense (ABSA) public organization was created as a pubic-private partnership between the local authority and a workers’ cooperative (p.113).
So rather than inventing the hot water (or non-privatized water), we can learn from a number of best practices and try to think how different forms of public ownership can transform and democratize different types of economic activity, depending also on the scale of these activities: finance, utilities industries, public transportation, public services, consumer products, private services, consumer services clearly all operate on different scales.
Private ownership might actually be the best option for a small local hairdresser, state, local cooperatives or municipal ownership – for the management of water, and state or municipal ownership – for the management of railways or gas, etc. (p. 168).
Rather than a one-size fit all solution (“nationalize everything!”), thinking of alternatives should be open to combining different forms of ownership at different levels, with the ultimate goal of increasing participation – not of everyone in everything but of everyone at least in some respects and in what matters to them.
In short, Cumbers’ book is really interesting. Despite the long quotes I don’t think I have given it justice so just read it (there is also some fascinating critique of the concept of the commons inside). But why on Earth am I writing on this book in a blog for our very techie group?
Well, because I think when we criticize regulation as too light touch and want to rehabilitate the state, we should not forget that state ownership (or enterpreneurship) is not always the panacea. To be honest, I have no idea how exactly the argument in Cumbers’ book can be relevant for finding alternatives to the big tech giants.
In a previous post, I had argued that maybe what we need instead of Facebook, are public networks along national lines, with states owning the data of their citizens, using it for research and machine learning, instead of private companies doing this.
But could we instead think of citizens collectively owning their data? Or having citizen cooperatives managing interoperable networks?
Furthermore, what type of public ownership might be an adequate model for an alternative to Amazon? These are not easy questions. And I would love to discuss them with you.
The reason why I made such an extensive review of this book is because I think it might be relevant but it remains for us to explore how exactly. One thing I am certain of is that few things are worse than the current ownership model of big tech, with a few private corporations owning and exploiting all our data.
Going back to the three pillars outlined by Cumbers, when we think of how to reform big tech/find alternatives, we need to think of how to 1) change employment relations within tech firms allowing more participation in decision-making 2) change property relations – who owns the companies that own us? what forms of ownership might be adequate? 3) change the marketization of ourselves and our data – is this reversible in a world where we rent even our homes to strangers?
Each one of these three aspects should be considered and can be changed.
We just rarely frame the debate in these terms, and even more rarely think of all three aspects together. But this is precisely what we should do.