Time to make the switch

There may be a case for one last hurrah for the old model: a technological shift that resembles the Second World War’s military Keynesianism. In 1941, the US turned the entire civilian economy around on a dime: within months, car manufacturers were producing planes, tanks and ammunition. A determined government could do something similar in response to climate breakdown: a sudden transformation, replacing our fossil economy. But having effected such a conversion, it should, I believe, then begin the switch to a different economic model.

The new approach could start with the idea of private sufficiency and public luxury. There is not enough physical or environmental space for everyone to enjoy private luxury: if everyone in London acquired a tennis court, a swimming pool, a garden and a private art collection, the city would cover England. Private luxury shuts down space, creating deprivation. But magnificent public amenities – wonderful parks and playgrounds, public sports centres and swimming pools, galleries, allotments and public transport networks – create more space for everyone, at a fraction of the cost.

Wherever possible, I believe such assets should be owned and managed by neither state nor market, but by communities, in the form of commons. A commons in its true form is a non-capitalist system, in which a resource is controlled in perpetuity by a community, for the shared and equal benefit of its members. A possible model is the commons transition plan commissioned by the Flemish city of Ghent.

Land value taxation also has transformative potential. It can keep the income currently siphoned out of our pockets in the form of rent – then out of the country and into tax havens – within our hands. It can reduce land values, bringing down house prices. While local and national government should use some of the money to fund public services, the residue can be returned to communities.

Couple this with a community right to buy, enabling communities to use this money to acquire their own land, with local commons trusts that possess powers to assemble building sites, and with a new right for prospective buyers and tenants to plan their own estates, and exciting things begin to happen. This could be a formula for meeting housing need, delivering public luxury and greatly enhancing the sense of community, self-reliance and taking back control. It helps to create what I call the Politics of Belonging.

But it doesn’t stop there. The rents accruing to commons trusts could be used to create a local version of the citizens’ wealth funds (modelled on the sovereign wealth funds in Alaska and Norway) proposed by Angela Cummine and Stewart Lansley. The gain from such funds could be distributed in the form of a local basic income.

And the money the government still invests? To the greatest extent possible, I believe it should be controlled by participatory budgeting. In the Brazilian city of Porto Allegre, the infrastructure budget is allocated by the people: around 50,000 citizens typically participate. The results – better water, sanitation, health, schools and nurseries – have been so spectacular that large numbers of people now lobby the city council to raise their taxes. When you control the budget, you can see the point of public investment.

In countries like the UK, we could not only adopt this model, but extend it beyond the local infrastructure budget to other forms of local and even national spending. The principle of subsidiarity – devolving powers to the smallest political unit that can reasonably discharge them – makes such wider democratic control more feasible.

All this would be framed within a system such as Kate Raworth’s doughnut economics which, instead of seeking to maximise growth, sets a lower bound of wellbeing below which no one should fall, and an upper bound of environmental limits, that economic life should not transgress. A participatory economics could be accompanied by participatory politics, involving radical devolution and a fine-grained democratic control over the decisions affecting our lives – but I will leave that for another column.

Who could lead this global shift? It could be the UK Labour Party. It is actively seeking new ideas. It knows that the bigger the change it offers, the greater the commitment of the volunteers on which its insurgency relies: the Big Organising model that transformed Labour’s fortunes at the last election requires a big political offer. (This is why Ed Miliband’s attempts to create a grassroots uprising failed).

Could Labour be the party that brings the long 20th Century to an end? I believe, despite its Keynesian heritage, it could. Now, more than at any other time in the past few decades, it has a chance to change the world.