The Making of a Democratic Economy: A conversation with economist Marjorie Kelly

Economist Marjorie Kelly, vice president and senior fellow at The Democracy Collaborative, was in Boston last Thursday evening to discuss her new book, The Making of a Democratic Economy, which is about the possible transformation of our economy from one of extraction to one based in democracy. In their book, Kelly and her co-writer Ted Howard, co-founder and president of
Photo for The Making of a Democratic Economy: A conversation with economist Marjorie Kelly

Published on July 29, 2019
By Steve Ahlquist

Economist Marjorie Kelly, vice president and senior fellow at The Democracy Collaborative, was in Boston last Thursday evening to discuss her new book, The Making of a Democratic Economy, which is about the possible transformation of our economy from one of extraction to one based in democracy.

In their book, Kelly and her co-writer Ted Howard, co-founder and president of The Democracy Collaborative, outline seven principles towards an economy that serves the common good. These principles are community, inclusion, place, good work, democratic ownership, sustainability and ethical finance. Kelly maintains that the first principle of our present system is capital bias, “the core of the capital-ist system that serves the interests of the wealthy few.”

Marjorie Kelly

In a previous book, The Divine Right of Capital (2001), Kelly showed that “that the corporate drive to maximize shareholder profits at any cost is not only out of step with democratic and free-market principles, but is detrimental to the long-term health of individual companies and the economy as a whole.” In today’s economy where a minuscule fraction of the population controls more than half of all wealth, Kelly’s ideas are more important than ever.

I attended Kelly’s book event in Boston, and recorded the entire interview, conducted by Chuck Collins, from the Institute for Policy Studies in Massachusetts. The first video is mostly introductory in nature.

“My first book, The Divine Right of Capital, is really about the corporation and how it’s designed around capital in the same way the monarchy was designed around divine right,” said Kelly.” I broadened the inquiry to look at how would you design things differently, how do you do ownership differently? Here, we take on the whole economy. It’s the question that the whole economy is really designed for the 1 percent.”

Most people know that the economy is rigged against them, maintains Kelly.

“In the book we unpack how is it rigged and how could you actually unrig it and that’s work that is going on,” said Kelly. “There’s thousands of people doing this work all over the country.”

Since 2001, continued Kelly, “I’ve been amazed at how sophisticated and pervasive this work has become. Impact investing has grown up. Socially responsible investing… investing for social impact as well as financial returns has become tremendously sophisticated. And there’s a whole movement for worker coops now which we didn’t used to have. So there’s a lot that has happened, I think, in terms of this space becoming more sophisticated and yet conditions have gotten worse and worse… One of the things that we’re trying to do with this book is to say we need to get serious and not just be a little project over here or this little thing over here, but no, we are the next economy and let’s get serious about that…”

In Kelly’s 2012 book Owning the Future, she sets talks about our current economic situation in terms of an “extractive economy” or “extractive capitalism.”

“We’re living in a particular flavor of capitalism that seems to be you know hoovering up the wealth of the commons, the wealth of the community, labor, etc.” said Collins. “Juxtapose [that] with the idea of a regenerative economy… In terms of language, come in on this idea of a democratic economy, your reflections on language and how does that connect to a wider conversation, because we have the ‘new economy,’ we have ‘solidarity economy,’ there’s a revived discussion about socialism…”

“As a journalist I’ve been tracking this whole space for about thirty years and I would say 80 percent of the work is about language,” said Kelly. “How do you language this in a way that it makes sense to people, that it’s intuitive, that it seems like your own. I think what many people are trying to do is language ‘What is the next economy, how do you name that?’

“In the book we contrast the extractive economy with the democratic economy and I’m deliberately avoiding the words capitalism and socialism. I think that those are very limiting. Those are 19th century constructs. We are trapped, for some reason, in this idea that we have a binary choice. It’s either corporate capitalism or state socialism and those are the choices.

“When many young people say they’re socialists, what they’re what they’re saying is, ‘I definitely don’t want capitalism.'” opined Kelly.

“I do think that socialism is a word that might fly in Europe more than here. I know Jeremy Corbyn is using it in the UK and he could well be the next, next prime minister, and he uses that word. He also uses the [term] ‘a democratic economy.’

“I personally think that when you use the word socialism you basically have hung a sign on your back that says, “kick me.’ It’s just not gonna fly in the United States. I think the concepts are great. We talked in the book about publicly owned banks. A lot of socialism is about public ownership and one of the models I love to point out is Bank North Dakota. It’s been around a hundred years, it’s owned by the people that state. Its purpose is to serve the people of the state… not to extract money from them.

“There’s a movement around the country now for state and city owned banks,” continued Kelly. “The new governor of California [Gavin Newsom] was partly elected on a platform calling for a state owned bank. Just to finish up the socialism point, public ownership is sometimes appropriate, but there are also are other forms of private business that can also be socially responsible and B Corps and employee ownership, which I think is not part of the socialism frame…”

“A lot of the challenge of writing about economics is trying to make it not quite so boring. So what we do here is we tell stories of places that we’ve worked in that we admire around the country,” said Kelly.

She then went on to tell some o the story of the Pine Ridge Indian Reservation in South Dakota, and how new work there exemplifies the principle of community.

Talking in more detail about the seven principles of a democratic economy, Kelly said, “We call them a new common sense. They’re not rocket science. Community and sustainability, those are the Alpha and Omega We’re in this together, we have to have a sustainable planet, you got to start there.

“Ethical finance. You still need money and lending and investing but it needs to be ethical.

“Democratic ownership… needs to be broad-based.

“Inclusion is very important,” continued Kelly. “More than half the examples in the book are about people of color because our nation will very soon be majority people of color and you don’t want this work to be just a bunch of white people with their big ideas, so we deliberately talk about inclusion and forefront that…”

“Boston is really a hub of this activity,” said Kelly, who checkmarked a few organizations implementing new economic thinking.

Kelly introduced Paul Bradley from ROC USA (Resident Owned Communities USA). According to the ROC USA website, in a resident-owned community, “homeowners form a non-profit business called a cooperative. Each household is a Member of the cooperative, which owns the land and manages the business that is the community. Members continue to own their own homes individually and an equal share of the land beneath the entire neighborhood.”

The Democracy Collaborative is a research and development laboratory “for the democratic economy,” said Kelly. The cofounder of the Democracy Collaborative, Gar Alperovitz, “has been talking for many years about [how] the problem is in the system. We have to get serious about talking about the different kind of economic system, which is different than just wrapping regulations around the system that we have.

“We work in both theory and practice to help build a democratic economy. We did the Evergreen Cooperatives in Cleveland, we helped design and launch three worker owned cooperatives there. They’re helped by anchor institutions. We work a lot with anchor institutions. These are nonprofit hospitals and universities and colleges. We call them anchors because they’re anchored in place. They’re not going to get up and leave.

“Cleveland is a place that lost more than half its population. Businesses fled, white people fled, and those who were left in the heart of Cleveland there were a lot of these anchor institutions [such as] Cleveland Clinic [and] Case Western Reserve University, and they said how can we use our resources to benefit our own community?” continued Kelly. “They helped start the three evergreen coops…”

Quantitative Easing for the Planet

“You have an interesting chapter in the book that is about a new approach to climate and the climate crisis that I think would just be fun to put out there…” said Collins.

“We have a project at the Democracy Collaborative called the Next System Project and their job is basically is to sit around and dream up big ideas,” said Kelly. “One of the big ideas they have dreamed up is called ‘quantitative easing for the planet.’

“The idea is yeah, we want public ownership, we want locally owned banks, but we don’t have time for all that that little stuff to grow at scale. [When it comes to climate change,] we’ve got to do something fast.

“So what if we just bought out the 25 largest fossil fuel companies and wound them down? You’d have to buy 51 percent and we calculated in the year 2018 it would cost 700 million dollars. That’s not a small sum but spread over seven years that 100 billion a year,” continued Kelly.” It starts to seem a little more reasonable. It’s it’s just a fraction of the $1.5 trillion that Trump away in tax breaks. It’s also a small fraction of what we’re spending on the Iraq war, which is probably going to be multiple trillions…

“So, how would you how would you finance that? Well, the idea, and this was of Gar’s conception, is you can use quantitative easing. This is the same way that we bailed out the big banks in 2008 and 2009… When you add up all the quantitative easing the United States did it adds up to trillions, and Europe did very much the same. [We spent] trillions and trillions of dollars in bailing out the guys who caused the crisis in the first place.

“So then the question becomes, what counts as a crisis? If the bank’s failing, that’s a crisis. You get trillions of dollars in the blink of an eye…no one’s going to quibble about that about that. The planet at risk of catastrophe that could go on forever, that doesn’t count as a crisis.

“That’s an example of capital bias. What happens to capital, that’s what matters, that’s really important. What happens to everybody else and all life on Earth? It’s just off the radar screen,” continued Kelly. “One of the things I like about the quantitative easing the planet is, even as as a thought experiment, it tells you what it would mean to have an economy worldwide first? It would mean that we would bailout the planet just as fast as we would bail out the big banks.”

Collins noted that many of the ideas of a democratic economy are finding favor in the UK. “Some of the ideas of the democratic economy are part of the Labour Party manifesto,” said Collins. “We have Boris Johnson [as Prime Minister] now. There’s like a Reagan/Thatcher Trump/Boris Johnson thing going on here…

“What are you seeing in the UK and is there anything that we can learn from that from a social movement point of view as well as sort of a
politics?” asked Collins.

“The final story that I tell in the book is really amazing. What’s going on in the UK is there’s a fellow, Matthew Brown, who is a city councilor in the town of Preston, England. Preston, at one time was the birthplace of the Industrial Revolution and the spinning wheel was invented there.

“This city was really hit hard after the 2008 downturn. They were going to use their money and attract a big corporation, but that fell apart and they were they were down and out as Rust Belt City. They were a lot like Cleveland, very beat-up. It had dubbed the suicide capital of England, that’s how bad things were.

“There was this half time city councilperson, that’s all the City Council job was, was half time, and Matthew Brown started looking on his computer and he stumbled on the Democracy Collaborative and he came upon the Evergreen Coops in Cleveland,” said Kelly.

Under the advice of the Democracy Collaborative, Preston declared themselves a living wage city. Then they looked at investing their pension system money locally. They started buying locally instead of sending their money out of the City. They they started supporting worker coops. They’re working on a public Bank. They’re starting a non predatory payday lender, so if you are desperate for money and you need that little bit of money to get by, this lender is non-predatory. They’re not going to raise your interest rates…

Best of all? “It seems to be working,” said Kelly. “It’s catching on. Preston was recently named … the most improved city in the UK. Unemployment has gone down, poverty has gone down, and Preston was named by Price, Waterhouse and Cooper a better place to live than London…”

Invited to the discussion was Lucas Turner Owens from the Boston Ujima Project. Ujima is a Swahili Kwanzaa word for the principle of “collective work and responsibility.” The Boston Ujima Project seeks to organize Boston area workers, business owners, and investors to “create a community-controlled economy.”

The rest of the videos below are from the audience.

Here’s the full presentation, not cut into chucks:

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