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  • Posted April 14th, 2019

    The role of the state and the market in building the new economy: interview with Hilary Wainwright of Red Pepper

    The role of the state and the market in building the new economy: interview with Hilary Wainwright of Red Pepper

    Today, we’re talking with Hilary Wainwright – an academic, activist, editor of Red Pepper magazine, and a fellow of the Transnational Institute (TNI).

    Hilary, what’s your main focus at the moment, and why?

    Well, I’ve got two main ones. They’re not in tension, but they are in terms of my time. Initially, my focus this year was on trying to make concrete this idea of popular, democratic control of public industries. So taking up John McDonnell’s challenge of bringing water, railways, post, energy back into public ownership. But also, they’re going to run public industries in a completely different way from the old Fabian, top-down structures. In particular, he said that we really recognise the knowledge of front-line workers and communities, which is really my theme around practical knowledge. I thought I needed to rise to that challenge and show what forms of organisation can share that knowledge and give it some real power and efficacy for the public good.

    So I was going to do some research, with the backing of the TNI, in Uruguay, where they’ve brought lots of infrastructure into public ownership, and they’re beginning to think about democratisation. So I was working from actual examples. There’s no real example of democratic public ownership, but at least they’re thinking about it.

    So I planned a research visit with trades unionists there. Then Brexit prospects got worse and worse, and I was trying to influence the Labour party, as a journalist, to try to persuade Corbyn and McDonnell that Labour could lead a process of change in Europe, so they could go beyond the awful choice between a free-market Brexit and a neoliberal EU, and instead, project a vision of a democratic, socialist Europe. I wrote an article on that for the Guardian, which had some impact among party members, but didn’t really influence the leadership. So I thought that a good example might be Portugal, where there’s an anti-austerity government that’s in the EU but very critical of it. So I’m going to go there next week and write about the experience, to try to get it into the debate. Brexit has so paralysed alternative thinking – I felt I had to address it head-on.

    John McDonnell also said that they’d double the size of the co-operative sector, which I found attractive.

    Yes, there are a lot of possibilities with McDonnell as the shadow economy minister. I worked with him at the GLC and he really gets it – the importance of a new kind of state that supports grassroots activities rather than presumes that the state can do it all. We’ve all got to rise to that challenge and prepare for a government that will be responsive to all the kinds of mutual credit, participatory democracy ideas that your members and activists are part of.

    We can’t rely on a change of government though, can we? We have to build something that’s going to work, whatever the government.

    Yes, though I do think we need state support, but not state management – just facilitation. We do have to campaign for a supportive government, but also provide examples to show that an alternative is possible.

    I don’t know if you heard Radio 4 this morning. We’re coming from an ecological perspective, and on the radio this morning there was a very short item that said scientists are now telling us that in 100 years time, if current trends continue, there will be no insects left.

    Yes, I did hear that.

    People might think ‘so what?’, but insects are the pollinators, the soil builders, the base of the food chain. From an ecological perspective, that’s terrifying. If there are no insects, there are probably no humans. Lots of environmental organisations focus on individual actions – which is great, but nowhere near enough, in an economy that has to constantly badger people to consume more and more. We need wider change, especially in the economy. So I just read your book, A New Politics From the Left. We’ve talked about this meeting we’re having in March (NB: it’s happened – will report soon) – with people who are building what you called a ‘mutualised economy’. We’re talking about federating this new economy. There’s lots in your book about that, and I’d like to talk about some of them. You mentioned decentralised, networked organisations sharing knowledge horizontally, rather than being condensed into giant corporations. Why the focus on knowledge when it comes to building a mutualised economy?

    Because I feel that ultimately all value comes from human creativity, and that value is extracted, appropriated and privatised. But the value is inherently social. It’s the product of social collaboration, so I feel an alternative has got to start from that level – inside the production process rather than from the state. The idea of state control was well-intended – that the state represents the public through a political process, therefore a social economy must go through the state. I’d say the problem is that the state is not a creative institution. It can support creativity, but it’s an hierarchical institution, inevitably, because it’s an organisation with an overview, looking down, issuing commands and setting regulations. I’m not denying that we need that for certain purposes – for health and safety for the railways and the energy grid – but it should always be a facilitating and limiting framework, with the creativity coming from the people. But I’m arguing that this creativity is not just about science, that can be made public and turned into laws that can be easily publicised and centralised. It’s about people’s tacit, practical knowledge, that’s not necessarily explicit.

    The best writer on this topic is Michael Polanyi, who talks about things we know, but cannot tell. Whether it’s designing an amazing piece of energy-conservation machinery, or cooking something delicious. His brother, Karl, is better known (author of The Great Transformation). Michael wrote a book called The Tacit Dimension. He says that science depends upon this tacit dimension – the hunches, the intuitions etc. This was important in the women’s movement. We built consciousness-raising groups through which we shared our experiences – of unease in our relationships, or in the way women were treated – knowledge that was embedded in emotion and daily experience. Out of that came new institutions – around health care, institutions for women who’d been victims of male violence, and so on. We need new types of organisation that can share that knowledge. These organisations preceded the internet, and were based on collaboration rather than electing a top hierarchy. They could collaborate across localities. They stressed initiative – doing things now rather than passing a resolution about what should be done by a future government. The key principle is collaboration.

    And how do you see that collaboration (between organisations)? I’ve always argued that it should be federation rather than consolidated growth of large units. Keeping the units relatively small and federating them. It seems to me that the Co-op Group – if you walk into one of their stores and ask the staff about co-ops, they often don’t even realise that they’re working in a co-op. It’s just a job for them, run by management. And then you have the Co-op Bank, which was absorbed into the corporate sector, because it stumbled. But in a federation of small units, if any one unit fell over, it wouldn’t damage the entire network.

    Yes, it’s very much about experimenting and learning as we go, so I think some sort of collaborative federation and shared institutions. The famous example of Mondragon – I wouldn’t romanticise it, but there are elements of it, like their bank, that are important innovations. The key thing was that it was meeting a need shared by all members of the federation. Federation is only one concept in an ecology – a set of institutions.

    Yes, you mentioned ecology in your book. I thought that was a really interesting idea – to picture it as an ecology, a net of different organisations.

    Because you might need a shared bank, or educational institutions, distribution. So when thinking about federation, be fairly open-minded about what kinds of institutions, rather than a federation of one certain kind of organisation.

    Yes, there are lots of different kinds of non-extractive institutions, including self-employment. But it sounds as if, from what you were saying, that you agree with the labour theory of value?

    I agree with the foundation of it – the idea that the source of value is human creativity. There are ideas that flow from this that are contentious, and nature can produce sources of value. Bees, for example, are clearly creating value. You can’t reduce it just to humans.

    You’ve said that this new mutualised economy could be an alternative to the free market and to the centrally-planned command economy. So this is a genuine question: why wouldn’t a mutualised / co-operative economy be free? The capitalist economy is anything but free. The state gives huge concessions to multinational banks and corporations in return for money and jobs, and it gives them direct subsidies, doesn’t collect tax from them properly, it builds infrastructure for them, protects their patents, it gives banks monopoly control of the money supply. It’s not a free market. Whereas if it was an entirely mutualised market, it seems to me that that would be a much freer market.

    I think there’s nothing per se wrong with a market, which is just a means of exchange. The problem is the dynamic of the market and what frames the market. There’s a historian called Fernand Braudel, who had a theory of the history of capitalism and the market, to do with the private ownership of the means of production, and the fact that to survive, companies had to grow, until a few of them became oligopolistic and monopolistic. He considered that to be anti-market, which I agree with. But then you’ve got to think about how we frame the market in order that it doesn’t develop that competitive, and ultimately oligarchic tendency. Then we have to think about collaboration between collaborators, or mutualism between mutuals. Then it becomes not just about the market, but about the social relations that frame the market. So I don’t think ‘free market’ is an adequate concept, because you have to take into consideration the social context in which a market is embedded, and as you say, a capitalist market isn’t ‘free’.

    The reason I said that is that I was involved in a public debate organised by our local Transition group. The subject was whether there’s a realistic alternative to capitalism, or whether we should try to tweak capitalism because there’s no alternative. They asked me to put the ‘replace’ rather than the ‘reform’ position. I found during the debate that my pro-capitalist opponent was involved with community-supported agriculture and community energy schemes. I wondered why we were arguing at all. He thought those schemes were a flavour of capitalism, but I saw them as something very different. I was talking to a group of libertarian city traders in the bar afterwards, who said they’d come specifically to barrack me, because they thought I’d be a statist, but I was actually talking about a free market. This stopped them opposing me.

    Because of the Soviet experience, and the Cold War, the word socialism has been hijacked to mean a centralised command economy, whereas socialism can be seen as on the same spectrum as mutualism, which is decentralised and not planned.

    I think the problem is that people on the right only see the word socialism as meaning the Soviet Union. They don’t see any other kind of socialism.

    Yes, the Cold War is still an important legacy.

    So yes – using that word tends to scare them because they don’t understand it.

    That’s why I called my book A New Politics From the Left, but I don’t think I was emphatic enough. I should have been a bit more polemical against the Cold War notions of socialism.

    Yes. Whenever I talk with someone who describes themselves as on the right, they really don’t understand the nuances within the word socialism. They only see one kind of socialism. So I tend not to use that word, because it just scares them. Whereas mutualism – they might not know what it is, but they grasp the meaning, and they don’t find it scary. The non-extractive nature of it pleases the left, and the free-market aspect of it pleases the right. I wanted to ask you about that – your book is about a politics from the left, which is obviously going to put off people who consider themselves right. They won’t even consider it. So I wondered why you chose to put the word left in the title.

    I suppose because I believe that the politics of mutualism and co-operativism did originate on the left. But we need to be an open left, so that we’re not defining ourselves in ways that exclude people who identify as on the right, but we do come from a tradition – a left/right distinction that goes back to the French Revolution. The left is an emancipatory tradition, but it’s been distorted and hijacked. So I was using the term left to appeal to people who identify with the left, and have been searching for a new left, maybe since 1968. Maybe you’re right. I was thinking of doing another edition, and I do like to take ideas from people, so maybe it could be called a new politics of mutualism or something similar.

    Have you come across Kevin Carson?

    Yes – in the US?

    Yes – he wrote Studies in Mutualist Political Economy.

    Some friends in California recommended him, and lent me something by him that brings together lots of different examples of the mutualist economy. I think I need to study him a bit more.

    His slogan is ‘free-market anti-capitalism’.

    Does he look at the knowledge question?

    Not that I can remember. His approach is to point out that capitalism is nothing to do with a free market – in fact it destroys any truly free market. His approach is neither left nor right, and he really doesn’t see the solution as coming from the state, because he believes that the state is in bed with the corporate sector.

    It is, but it’s also where democracy was fashioned. It’s been hijacked by the corporate sector, but if you think about elections and the right to vote, no taxation without representation etc., the state has been the site of democratic struggle, and the question is how to combine that struggle with struggles over the economy – and I think you do need both sides of it. So we need to mutualise the state, in a way.

    It might be starting slowly with local authorities. What’s happening in Preston is really interesting.

    Yes – community wealth building. But back at the GLC, I helped to co-ordinate something called the popular planning unit. We had an economic strategy and key to it was popular participation, as well as support for co-operatives. So we were trying there to transform the state, which is what they’re doing in Preston, mainly through procurement.

    You talked about power as transformative capacity rather than power as domination, which I really liked. Slowly, there’s the beginnings of a non-extractive infrastructure being built, around food, energy, housing, IT – and we’re bringing together people building those things.

    I wish I could have a helicopter to get me there.

    I’m sure we’ll have other meetings.

    We could use Red Pepper as a place where some of these ideas are exchanged.

    That would be great. I also love your ideas about ecologies of ownership – there are many ways to own things that are not extractive. The challenge is to network them.

    Hopefully you’ll develop some of those ideas.

    You also mentioned Mary Mellor’s ideas – and I think they’re also Positive Money’s ideas – about money and banks as public utilities. We’re building a mutual credit network for the UK – the Open Credit Network. So we’re taking the more direct route, rather than the state route.

    Well I think you need both, probably. I didn’t elaborate on Mary’s ideas, but I think they’re important. Her book really needs to be discussed a lot more. But I think she would see a need for both. Banks as public utilities, facilitating decentralised forms of finance like mutual credit, and supporting local businesses.

    One of the things we’ll be looking at is Stafford Beer’s viable system model (VSM).

    Oh yes, I was inspired by that.

    We’re looking at it as a tool to assist federation, because federation is notoriously difficult. You actually mentioned VSM directly in your book – the cybernetic system in Chile, pre-Pinochet.

    Such a pity he’s no longer with us, because he also understood the knowledge theory. I’m not sure how he’d deal with tacit knowledge, but he at least built into his system an interactive process of gathering knowledge and information. Knowledge and information are different things, but gathering info about production from local factories, and then co-ordinating and sharing that. So it was a sharing, rather than a top-down notion of planning. It would be good to work on that with you, to see how that can be built on a bit more.

    We’ve got a VSM specialist on board, and maybe you could interview him for Red Pepper.

    Yes. Where’s he from?

    He’s based in the UK – in the south-west, but he’s in India at the moment – he’s gone there to help develop some organisations (schools) using VSM. His name’s Trevor Hilder.

    Let’s talk later about various links we could make.

    I interviewed Trevor a few weeks ago, so I’ll send you a link to that interview. So – you also talked about people finding the rhythms that suit them, without having to go to hundreds of meetings, if we start to collaborate and federate. I read Murray Bookchin’s ideas about libertarian municipalism, as well as Michael Albert’s Parecon, and that’s exactly the problem I found with those two ideas – that most people are not going to want to go to that many meetings.

    I read Parecon and felt the same. I didn’t feel it was organic enough. Murray Bookchin I’ve skimmed, but I haven’t read enough to understand how his system would work. I think the knowledge thing is crucial here because the theory is that meetings are about sharing information and decision-making. But a lot of that can happen in practice, as you actually produce things. I once went to an institution founded by the women’s movement, in Stockholm. It was a women’s folk high school – a school for adult women, based on their values of democracy and participation. My aim was to see this participatory democracy in practice – and it wasn’t just about meetings. It was about flows of knowledge and relationships, built into how the school was managed, how the teachers shared knowledge informally, how classes were run. It didn’t see democracy as separate from the process of production – of delivering a service. Similarly, I think co-operative production isn’t about meetings, it’s about ways of organising work. If you look at Suma or a really good co-op like that, I’m sure you’ll find that the participation is in the process, more than about meetings. There need to be meetings, of course, but it will be more about how work is organised and practical knowledge is shared.

    Also, I don’t know much about liquid democracy, but I do understand the concept of giving your vote about something to someone who you know knows more about that subject than you, and who you know and trust.

    And you can call them to account.

    Yes – you can switch your vote if they start to do things you don’t like. I do like that idea, rather than have everyone constantly going to meetings.

    You’ve given me a reading list already.

    And you me. And you also mentioned the importance of not having a blueprint for a new system, which I think is essential. We’re just talking about federating non-extractive units to see what emerges. We’re not trying to impose a blueprint.

    You need to experiment, and then reflect on the results of the experiment.

    Yes. And I loved your idea of propaganda of practice as well. In other words, don’t lecture people, just do things and show people that they work.

    Exactly. I really believe that.

    Finally, I’d like to talk about the likelihood of a party being elected anywhere in the West that would support this kind of federation, and how long they could hang on to power in a corporate-dominated world. If they refused to roll out the red carpet for the corporate sector, how long would they last? I’m sceptical about the parliamentary route to real change, although obviously I’d love any help from that direction, but I’m not holding my breath.

    I share that scepticism, but the key thing is what we create. Corporations only have power because they have a monopoly on material production. If co-ops and mutual organisations are producing food and the other necessities of life, then corporations won’t have that power. So we have to create that material base for a different kind of state. So when an alternative government is elected, it’s not just up against the corporate sector, it’s resting on an emerging alternative. So there’s a (possibly corny) natural analogy, where you have a butterfly emerging from a chrysalis. A mutualist government could facilitate the shedding of the empty structures of corporate power, so that the new economy could emerge.

    It’s a nice vision. From other interviews, it seems that the state is blocking the growth of the non-extractive sector at the moment, rather than helping it. The planning system is a thorn in the side of the Ecological Land Co-op; the licence for a community energy scheme to provide the electricity that they generate to their members locally is the same licence that global corporations require (and therefore unaffordable), so they have to sell their electricity to the national grid for 4p per unit, then the local members have to buy it back for 17p per unit; and Duncan McCann at the New Economics Foundation is trying to build a platform co-op alternative to Uber, and the licence to do that in London went from £2.5k to £2.5 million overnight, which pushed him out of London, and now he’s trying to do it in Brighton. So everywhere I look, the state is not helping.

    You need to take over the state, and re-orient it; and you need to specify in advance what you think needs to change.

    I don’t think it’s the regulators – often, the regulators don’t understand. They listen to corporate lobbyists – they get to hear the corporate arguments, but they don’t often get to hear our arguments. But when they do, they’re quite open to them.

    Exactly. I think we have a lot of allies.

    I think you’re right, and that we have a lot of allies in politics, amongst the regulators, and with the general public. I’ve talked with bankers who are completely onside, and who know how evil this system is, because they work in the city. But they’re stuck, because they have to earn that kind of money to pay a London mortgage.

    Exactly – we have to talk about how we break that vicious circle.


    1. Ultimately all value comes from human creativity, and that value is extracted, appropriated and privatised. But the value is inherently social. It’s the product of social collaboration, so an alternative has got to start from that level – inside the production process rather than from the state. It’s about people’s tacit, practical knowledge, that’s not necessarily explicit.
    2. There’s nothing per se wrong with a market, which is just a means of exchange. But you have to take into consideration the social context in which a market is embedded, and a capitalist market isn’t ‘free’.
    3. Corporations only have power because they have a monopoly on material production. If co-ops and mutual organisations are producing food and the other necessities of life, then corporations won’t have that power. So we have to create that material base for a different kind of state. So when an alternative government is elected, it’s not just up against the corporate sector, it’s resting on an emerging alternative.

    The views expressed in our blog are those of the author and not necessarily lowimpact.org's


    • 1weavingtheseisles April 14th, 2019

      Yes, yes and yes.

      It’s funny to consider yourself a leftie and find yourself arguing to free the markets, isn’t it, I very much sympathise! It’s so great to find that common ground with the right and erase the polarities – as it is great to read like mindedness here, thank you Hilary and Dave. (I’m glad to hear my sense of McDonnell confirmed, too.)

      My understanding is that the (well meaning among the) right (and centre) pursue extractive capitalism as they still believe that the terrible price of it, and the incredibly meagre trickle down, is the right/only way to keep everyone with at least a minimum — or to ‘lift’ people out of poverty into our planet-guzzling way of life so that nobody is ‘left behind’ (uuurgh!).

      I haven’t read Fernand Braudel, but it seems that Positive Money’s debt analysis is the missing piece in almost every critique of capitalism, because it explains the locking mechanism which keeps individuals, businesses, organisations and goverments all enslaved alike to a mathematically inevitable, extractive growth dynamic. So positive, sovereign money and/or citizens currencies are a pre-requisite to maximising positive impact of all other initiatives if we still wish for the freedom and cultural wealth that markets *should* bring — markets that are *genuinely* redistributive, and marketplaces that are open and level.

      Mutualist. Go us!

    • 2Dave Darby April 17th, 2019

      Yes – mutualism is based on the labour theory of value, which receives a lot of criticism, usually along the lines of ‘yes, but labour doesn’t produce all value, because ……… blah blah’.

      But – capital is embodied labour – if you trace it back, someone worked to produce it at some point.

      And yes, nature gives us value for free – rain, sunlight, pollination etc.

      And land ownership – well, how and why did the land end up in the hands of individuals in the first place? It was rarely because the ancestors of the big landowners ‘mixed their labour with it’ in Lockean terms.

      But rather than tying ALL value to human work / creativity, I’d just turn it around. just say that the value that IS created by humans should be retained by the humans who created it.

      The subtitle to Kevin Carson’s book ‘Studies in Mutualist Political Economy’ is by Benjamin Tucker: ‘the natural wage of labour is its product’ and I think that’s absolutely spot on.

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