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Who’s Afraid of Public Ownership?


Jay Clayton (@Jay_HClayton) is a recent graduate of the University of Chicago Law School.

After a long period of dormancy, interest in public ownership is growing. Recent proposals for municipal control of utilities echo New Deal-era interventions like the Tennessee Valley Authority, while calls to nationalize major industries and companies—from fossil fuel companies, to Wal-Mart, to supermarkets—raise the spectre of Soviet-style governance.

Despite this, the nascent Law & Political Economy movement seems to have relatively little interest in public ownership. This is not to say that none of its adherents have advocated in favor of public ownership in one case or another, but these tend to be isolated examples or half-hearted proposals that express unease with granting more power to national governments. More worryingly, some LPE scholars seem, if not openly hostile to public ownership, then at least to view it as a distraction from more important debates. For example, in his introduction to the Blog’s symposium on socialist constitutionalism, William Forbath takes care to insist that an emphasis on public ownership, while not “exactly wrong,” failed to capture “the core meaning of socialism.” Sanjukta Paul, too, has expressed dissatisfaction with proposals for more public ownership, arguing that the left should focus on what corporations do rather than who owns them.

This lack of interest is misplaced. Without advocating for public ownership, the LPE movement will be unable to challenge the failure of capitalist markets in a wide variety of sectors, and it will run the risk of being left behind as other groups on the left prioritize nationalization and municipalization campaigns. More to the point, public ownership’s critics are misguided. Public ownership can be more than just another tool in the policy toolbox—it can be an answer to pivotal questions of what democracy and the economy should look like. The LPE movement should look to the lessons of mid-century socialist debate to call for forms of public ownership that reach beyond traditional industries like energy, manufacturing, and transport, as well as ensure robust democratic and worker participation. In short, it should embrace public ownership as part of the foundation of a new, more democratic economic order.

Public Ownership and the Left Imagination

Recent proposals in favor of public ownership have displayed remarkable innovation, promising to help the left move forward from previously stalled and counter-productive debates. Consider municipal utilities, where debate has largely centered on the merits of antitrust policy versus public utility regulation. Regulation proponents not unreasonably charge that the new “Brandeisian” antitrust approach can be more concerned with abstract notions of market competition than reliable public service. But proponents of antitrust can also justifiably retort that public utility regulation can have the effect of immunizing private monopolistic profits against public outcry. Small wonder that private companies have often welcomed—or even bribed legislators to win—the exclusive charters associated with public utility regulations. Public ownership, by contrast, neither fetishizes competition nor engages in naked protectionism of existing private companies. Of course, no policy tool is a silver bullet. But public ownership unites rather than divides the left by achieving multiple policy goals at once, whether one is primarily concerned with providing reliable service or with curbing exorbitant private profits.

The current debate in housing policy circles is even more destructive. Without social housing on the menu, the left is faced with two bad options: to support private development, and thereby embrace developers and landlords who are hostile to helping the unhoused and treating housing as a human right; or to oppose private development, and thereby join wealthy homeowners who seek to protect their own slice of suburbia from the poor and persons of color. This “YIMBY” vs. “NIMBY” debate can turn ugly. In California, for example, some purportedly left-wing YIMBY groups have prioritized housing development above all else by endorsing politicians who oppose rent control, support crackdowns on the unhoused, and, in at least one case, personally evicted tenants. The beauty of social housing is that it elides this internecine debate altogether by ensuring that new housing is both affordable by default and, because it is built and owned by the public, need not be profitable in order to be built. The left can and should unite under the banner of neither NIMBY nor YIMBY, but “PHIMBY.”

By advocating for public ownership in areas that empower workers and communities, the left will also begin to redeem government action in the eyes of a skeptical public. At its worst, public ownership has been used as a tool to respond to failed industries—a bailout provision, so to speak—that simply socializes the losses and privatizes the profits associated with capitalist markets. For instance, in the wake of the 2008 financial crisis, governments around the world—even in the United States—assumed full or substantial ownership of the hardest-hit companies to save them from total collapse. These temporary measures were, however, explicitly designed to wipe away debt and preserve market stability. Within a few years of becoming the majority shareholder of GM, the U.S. government had sold its shares at a loss. Perhaps worse, as temporary owner of GM, the government acted much like a private owner. Rather than use its power to pursue pro-worker changes in governance or other socially beneficial policies, it pursued profits above all else and found itself frequently at odds with the United Auto Workers.

When public ownership serves only as a bailout, it fuels accusations that government and private industry are partners who serve each other’s interests at the expense of the public—and, far more worryingly, that government action is incapable of serving the public interest. Thus the rallying cry of the Occupy Wall Street movement was not that the public should own and run the banks, but that “too big to fail” meant “too big to exist” and so the banks should be broken into smaller, less destructive—but still private—entities. This stance can allow the populist right to blur the issues and appear like the true opponents of an elite policy consensus. While there is little evidence that the Tea Party was, as some conservative figures have claimed, born out of opposition to bailouts of “large financial institutions, banks, and eventually Chrysler and GM automakers,” because the right was able to hit upon a fundamental truth—that the government had spent enormous sums of money to keep large companies profitable while doing little to help working people—it was able to mobilize against a very limited, very flawed form of public ownership to serve right-wing goals.

Beyond Market Failures

Few LPE scholars would object to the above. And indeed, if the movement’s only problem were a failure to adequately consider public ownership in specific policy arenas, then it would only need a minor course correction at most. Rather, the problem is that public ownership should not merely be one tool among many, but a fundamental component of a left vision of the future. The LPE movement has admirably placed at the center of its agenda a vigorous defense and expansion of democracy, not only at the ballot box but in the workplace and throughout civil society. But a crucial implication of this position is that it does matter who owns major institutions, including corporations. Even if progressive economic regulation alone were capable of meaningfully constraining capital—a dubious prospect—it should strike us as intolerable that the entities that form the backbone of the economy are so divorced from democratic decisionmaking.

The disagreement I describe above—whether we should understand nationalization as simply a tool for achieving limited policy ends in certain domains where private markets have failed, or whether we should conceive of it as an essential component of a truly democratic society—was a frequent topic of debate during the post-war era in Europe, where public ownership was more common. The more thoroughgoing proponents of nationalization warned that merely treating nationalization as a limited policy tool would pave the way for an aggressive counterattack by the forces of capital. They were proven right, and we have been living in the world created by that counterattack ever since.

Perhaps the best example of this debate can be found in the United Kingdom. After the Second World War, Labour governments nationalized key industries like energy, rail, healthcare, and steel. Like some LPE scholars today, “modernizers” within the Labour Party contended that this was sufficient, and that nationalization was at best a tool and at worst a distraction from what private industries did. This approach, popularized by Labour member of Parliament Anthony Crosland, formed the core of the party under Prime Ministers Harold Wilson and James Callaghan. But others objected. Marxist scholar Ralph Miliband charged that “the main emphasis” of the time was “Government partnership with private enterprise, and more commonly of Government subsidies to private firms.” Later, he would describe the key debate on the left during this time as

[B]etween those who saw the issue [of public ownership] in purely “pragmatic” and “empirical” terms as one weapon not wholly excluded . . . to be used most sparingly and for the sole purpose of ensuring greater efficiency in an industry or firm unable to survive on a private basis; and those who saw the nationalization of a predominant part of economic power as a condition for the creation of a new sort of order in industry and in society.

One member of the latter camp was Tony Benn, a Labour MP and minister in both Wilson’s and Callaghan’s governments. He lamented their limited approaches, as well as the fact that nationalized industries were being run with an eye toward profit maximization and shareholder compensation and that government oversight boards were controlled by industrialists and aristocrats rather than workers—much like the U.S. government’s brief ownership of GM. He also recognized that a failure to prioritize truly transformative public ownership would empower right-wing forces, and so even after Margaret Thatcher’s victory in 1979, he continued to call for more, not less, emphasis on public ownership. Famously, he would demand that the government nationalize the two hundred largest corporations. But Benn lost his battles within the party, and Thatcher’s reign continued: by the time Labour returned to power nearly twenty years later, it, like the Democratic Party in the United States, had fully embraced the neoliberal vision of the economy and of society.

Benn’s lesson for the left of today is not necessarily that embracing public ownership will be rewarded at the polls. But it should illuminate the risks of a more limited approach. To combat right-wing forces, the left must advance a real alternative vision of what society should look like, including who owns and operates the means of production. Moreover, the left cannot simply regulate private capital out of a complacent belief that capital will tolerate a more progressive status quo—it must break the power of capital so that it cannot mount counterattacks like the neoliberal turn of the 1970s and ‘80s.

This will not be easy. In addition to the tremendous political and economic difficulties in challenging private industry, there are also likely to be severe legal and constitutional roadblocks—at least in the United States, where the Takings Clause of the Constitution has recently been read to require compensation for mere pro-worker regulations, let alone nationalizations. But this is where the LPE movement can shine. Without dismissing the possibility that creative scholars will find a way around these roadblocks, it is highly likely that this vision of public ownership will require fundamental changes to the Constitution and/or the judiciary in order to succeed. If so, then we need to begin laying the groundwork to justify them. Uprooting long-standing notions of property and state power is challenging work, and it will take time to turn what once might have been unthinkable into a rallying cry for the U.S. left. Better to get started now.