The National Catholic Review
Can a protest movement find a path to economic democracy?
Image

City governments around the nation have driven Occupy Wall Street demonstrators into the streets—sometimes with unusual force—depriving “Occupiers” of a physical claim on ongoing protest in public space. But the movement no longer depends on privileged sites of occupation. It may be on its way to becoming something much more—a force for economic democracy, a contemporary vision of society and economic justice that has deep roots in Catholic and Protestant social ethics.

It was not a coincidence that the Protestant social gospel, the modern Catholic tradition of social teaching, various socialist movements, the fields of social ethics and sociology and the ideas of social structure and social justice all arose during the 19th century. They were all cultural products of the clash between corporate capitalism and a rising trade union movement. A call for the common good and economic democracy, the social gospel was a response to the story of its time.

The story of our time is that the common good has been getting hammered for 30 years. Today’s debates about busting public unions, cutting Medicaid and privatizing Medicare are the culmination of three decades of economic globalization and of massive structural, and to some degree politically engineered, inequality. Social contracts have vanished under threats of obsolescence and ruin, while the global market exploits resources, displaces communities and sets off wealth explosions in wild cycles of boom and bust.

Every recent trade deal signed in Washington has resulted in well-paying jobs leaving the United States. Partly as a result of such free trade commitments, wages have been flat for 35 years and wealth inequality has accelerated dramatically. In the 1980s the United States cut the marginal tax rate from 71 percent to 28 percent and the capital gains rate from 45 percent to 20 percent. Since then the share of U.S. income held by the top 1 percent has more than doubled. The top 10 percent of the U.S. population holds more than 70 percent of the nation’s wealth; the top 1 percent alone commands an astonishing 39 percent share. Meanwhile the bottom 50 percent can claim just 2 percent. The United States needs economic democracy now more than ever.

The global integration of two radically different models of growth—debt-financed consumption and production-oriented export and saving—created a wildly unstable world economy featuring asset bubbles and huge trade imbalances. During this period nearly every manufacturing-oriented society not only outperformed the United States in income growth; they did this with more equitable distribution of income. Why didn’t the United States do the same?

Double Vision

For over two centuries, our nation has debated two fundamentally different answers to the question of what kind of country the United States should be. The first envisions a society that provides unrestricted liberty to acquire wealth. The second envisions a “realized democracy,” in which rights over society’s major institutions are established.

In the first view, the right to property is lifted above the right to self-government, and the just society minimizes the equalizing role of government. In the second view, self-government is considered superior to property; and the just society places democratic checks on social, political and economic power. Both of these visions are ideal types, deeply rooted in U.S. history, that reflect inherent tensions between classic liberalism and democracy. Both have limited and conditioned each other in the American experience. But in every generation one of them gains predominance over the other, shaping the terms of the debate and telling the decisive story of its time. Today an extreme version of the first of these two views is being asserted aggressively. According to this perspective, a great people is stymied by a voracious, intrusive federal government; Americans are overtaxed; and government is an incompetent, even malicious social force.

Claims of this sort have deep cultural roots; the Tea Party did not invent them. But this ideology finds no endorsement whatsoever in the modern Catholic and ecumenical Protestant traditions of social ethics. That ethical system begins with the acceptance of mutual obligation and a firm belief in the common good.

From this standpoint, three practical points should be made about contemporary debates over tax policy and social inequity:

1. Americans are not overtaxed. In 2011 the total burden on U.S. taxpayers reached the lowest point since 1958. In 1999 Americans per capita directed 28 percent of their income to federal, state and local taxes; today the number is 23 percent. As a percentage of gross domestic product at 14.8 percent American taxation is at its lowest level since 1950.

2. The shift to lower taxes is a major reason the United States fell so deeply into debt. If the United States had followed the revenue and spending track set at the end of the Clinton administration, the national debt today would be negligible to nonexistent. Instead, U.S. total debt exploded. Why? Because during the Bush years the marginal rates on income taxes and capital gains taxes were sharply reduced at the same time the nation launched an expensive new drug prescription benefit and two wars. These vast expenditures and deep tax cuts were not offset by new revenue or spending cuts. They doubled the nation’s debt in seven years. The costs associated with that fiscal recklessness keep mounting, accounting for three-fourths of the new debt that has accumulated during Barack Obama’s presidency.

Today the wealthiest Americans pay minimal income taxes, owing to favorable tax policies in Washington. Investment managers earning billions a year are allowed to classify their income as “carried interest,” which is taxed at the same rate as capital gains, 15 percent. A tax system that serves the common good would create additional brackets for the highest incomes, as the United States once did. It would lift the cap on the Social Security tax, taxing annual salaries above $102,000 or, at least, creating a “doughnut hole” that adds a Social Security tax for individuals earning more than $250,000.

3. Tax rates are not the most important contributor to economic growth. Creating a healthy and productive workforce, educated for 21st-century jobs, is more important than fluctuations in tax rates. Investing in research and technology is more important. Sustaining a middle class that buys goods and services is more important. Developing a strong infrastructure (the United States ranks 23rd in the world) and saving for investment (most Americans have no savings) are at least as important as tax rates.

Building a Movement?

How can the nation begin to shift direction toward that contested path to economic democracy? It may already be happening. Occupy Wall Street hardly represents the kind of force many progressives imagined would arise to promote significant economic and social reform, but it is building a social movement that prizes radical democracy and radical hospitality and measures a distinct blend of nonviolence and outrage. It is committed to an egalitarian, autonomous, leaderless process governed by consensus. It has nurtured a powerful sense of community, building a global protest community that is transformative in the lives of those who are joining it.

The Occupy movement is no left-wing counterpart of the Tea Party. The Tea Party, from its beginning, identified with the Republican Party and tried to take it over. To a significant extent it has done so. The Occupy movement has no similar relationship to the Democratic Party. To many occupiers, President Obama is a bigger obstacle than a President Romney or a President Gingrich would be, because loyalty to Mr. Obama restrains many progressives from breaking with the system.

The movement has been clear about what it is against. The O.W.S. New York City General Assembly declared that it is against allowing corporate economic power to run the government. It is against predatory banking and foreclosures, the bailing out of megabanks, the perpetuation of inequality and discrimination based on race, sex, age, gender identity or sexual orientation or age. It is against monopoly farming and the poisoning of the food supply, the abuse of animals, unsafe working conditions, the outsourcing of labor, the legal status of corporations as persons, lack of health coverage, the erosion of privacy and the abuse of military and police power.

Can the movement figure out what it is for?

Becoming a force for economic democracy seems a sensible direction to take. Here are some positive positions worth consideration:

1. Support the creation of public banks. The nation spent trillions of taxpayer dollars bailing out banks and eating the toxic debt of the insurance conglomerate American International Group and “too big to fail banks,” like Citigroup. It ought now to establish public banks at the state and federal levels that could finance startups in green technology and provide financing for worker cooperatives that traditional banks spurn.

2. Support real bank reform. In 1999 the Gramm-Leach-Bliley Act repealed the Glass-Steagall Act of 1933, tearing down the New Deal wall between commercial and investment banking and opening the door to the megabank empires of the Bush years. Today seven banks control 66 percent of the nation’s assets. The government, by paying off the very people who created the mortgage meltdown, has made these banks more powerful than ever. The big banks are already back to gambling in the credit swaps market. They fought every reform in the Dodd-Frank financial reform bill and spend $50 million each quarter to obliterate the minimal reforms that did pass, like the bill’s watered down and overly complex Volcker Rule, named for the former Federal Reserve chairman Paul Volcker. The measure was intended to prevent banks from making risky trades for their own profit in securities, derivatives and other financial products, but industry groups have campaigned for broad exemptions and now the rule’s regulatory impact is unclear. A social counterforce could push back to protect common sense reforms.

3. Support alternative production models. Can we imagine and invest in real-world alternatives in the nation’s diminished manufacturing sector that move beyond the traditional dualism of worker and capitalist? People work harder and more efficiently when they have a stake in a company. In Spain, the Mondragon network of worker-owned manufacturing cooperatives is spectacularly successful; in the United States there are already 14,000 firms with worker-ownership plans, and approximately 1,000 companies are fully worker-controlled.

Economic Democracy

The nation’s political leaders in this time of grave crisis may opt for muddling through another lost decade. They may savage public sector unions and slash Medicaid and Medicare, hoping that austerity and limited social and political expression for workers will somehow restore national vitality. An alternative approach would be to renew the country by investing significantly in a clean energy economy and rebuilding our crumbling infrastructure. Labor, equipment and capital costs will never be lower. A bet on human capital and the nation’s future, rather than retrenchments aimed at restoring its past, could offer a payoff well in excess of its economic impact.

Most of our traditions in social theory and Christian social ethics have operated with unitary ideas of capitalism and socialism, as though each were only one definitive, mutually exclusive whole. Economic democracy must be built from the ground up, piece by piece, breaking from the universalizing logic of state socialism, taking seriously the idea that there are different kinds of capitalism. Economic democracy is about building up institutions that do not belong wholly to the capitalist market or to the state. Economic democracy extends the values and rights of democracy into the economic sphere, encouraging the development of environmentally sustainable economies.

Economic democracy features mixed forms of worker, community and mutual fund or public bank enterprises. It begins by expanding the sector of producer and consumer cooperatives, community land trusts and community finance corporations. Factors of production do not trump everything, but those who control the terms, amounts and direction of credit play a huge role in determining the kind of society everybody lives in.

The Occupy movement will soon have to raise its voice on important policy decisions like these. All Americans would benefit if the movement were to become a voice for economic democracy. But whatever course it sets, Occupy Wall Street represents a large-scale social force that can make a difference. In one month it spread from lower Manhattan to more than 900 cities and four continents. Coalitions are forming that were not possible six months ago. There is opportunity here for religious communities to play a significant role as well.

Wall Street is by far the most commanding force in the nation’s economic and political life. It requires a certain stubbornness and moral passion for any movement to set itself against something that powerful. Can these stubborn occupiers move from seizing public sites to seizing this moment in history to begin building a better social order?

Gary Dorrien answers questions on the Occupy movement.

Gary Dorrien is the Reinhold Niebuhr Professor of Social Ethics, Union Theological Seminary, and a professor of religion at Columbia University in New York. His two latest books are Kantian Reason and Hegelian Spirit: The Idea

Comments

James Conniff | 4/23/2012 - 4:37pm

When the institutional church sets more compelling example in re Christ's poor its ministers and princes do their damnedest to avoid, endless leftwing pitches like this may begin to make dents where dents are long overdue - among the wealthy those ministers and princes suck up to as if they were the same source of Spiritual Life Blood as Christ remains as the source for the rest of us.


The "anti-sex club" as Commondweal called those guys decades ago beats working for a living. To its own patent disadvantage even as a club.


 


Jim Conniff

Chester Buras | 3/14/2012 - 5:44pm
Why don't you start with the premise that we have the best government in the world to which millions of immigrants will attest.  Then point out to the  OWSers the many failures in the socialist movement such as Great Britain which embarked on this course after WWII, led by Clement Atlee.

Then point out that voters have the government which they deserve by the votes which are cast, and then commence a Voter101 program on how to delve into ascertaining facts about what is occuring behind the curtain in Washington.

Don't blame Wall Street, their business is to make money. If it was done illegaly as in the mortgage crisis, the Street was aided and abetted by the reps and senators in Washington. Wall Steet doesn't enact laws but they lobby and contribute to our representatives who put their welfare and party ahead of our country. 

A socialist government will be staffed by men who have the same goals as those who are in office at this time; namely, power, sex and money. So what will we have gained?
J Cosgrove | 3/6/2012 - 11:52pm
"The shift to lower taxes is a major reason the United States fell so deeply into debt. "


This is so far from the truth that it alone makes anything said here suspect.  It is a wonder that this myth gets repeated time and time again.  A major reason why the budget was in a surplus for a short time in the late 90's was primarily due to a tax cut in capital gains so how could one in good faith argue against lower taxes and then use them to make one's point.  Also the Bush tax cuts in 2001 and 2003 actually generated more tax revenues which Mr. Dorrien fails to note.  He repeats false Democratic party talking points.


So one has to take with a grain of salt anything that Mr. Dorrien says as a prescription for anything to do with economics. He seems interested in scoring  political points only rather than presenting honestly what has happened.  For  example, he makes the following statement above

"In 1999 the Gramm-Leach-Bliley Act repealed the Glass-Steagall Act of 1933, tearing down the New Deal wall between commercial and investment banking and opening the door to the megabank empires of the Bush years."  


So it sounds like this was something to blame George Bush for.  The prime movers of this change were Clinton's own secretary of the Treasurer, Bob Rubin and a major Democrat contributor, Sandy Weill who was running Citibank as well as Mr. Clinton himself.  Mr. Rubin got rewarded with an extremely high paying job at Citibank.  And while this is true, I have to say this, no one has shown that this act contributed much at all to the financial crisis.  Why it is here in this article can be for only one reason, someone saw an opportunity to make a false accusation and then took it.


The financial meltdown was caused by a lot of things but the main culprits was Fannie Mae and Freddie Mac and the lax mortgage lending standards pioneered by them.  Mr. Dorrien also fails to mention that the big banks which he abhors were the major contributors to our current president, Barack Obama in 2008.  Mr. Dorrian seems to have convenient lapses of memory or maybe it is lapses in good judgment and as such what he says is suspect.


May I suggest to Mr. Dorrien, if you want to help the poor, look to what has created economic activity which then creates jobs and eventually employs the poor and provides them with real self esteem.  I also suggest to Mr. Dorrien that he learn about the advantages of free trade and how it helps the poor at both sides of the economic exchange to rise out of poverty.  Protectionism hurts the poor wherever it is practiced and helps the poor wherever it is eliminated.
Chris Forte | 3/4/2012 - 9:49pm
I hope you condemn the Occupy movement's tactics and actions....it are those that really upset many Americans like myself, not so much their message, when we find out what it is.
C Walter Mattingly | 3/2/2012 - 10:01pm
There are a few points here which, if adumbrated, could be substantive.
One is that America is undertaxed, and that it is a major cause of the deficit. That is certainly arguable. What he misses, of course, is that excess spending is the major cause of the deficit, and will be in the future if not addressed.
It is amazing to see the old class warfare, the attempt to portray the Divided States of America, withthe well-to-do don't pay enough money on their income tax line, when half the country pays zero income tax. What a tired and thoroughly discredited canard. Not only is that a blatantly obvious distortion, totally inadequate to the situation if inacted, but the genuine solution to the problem that was identified by the hard work of the Bowles Simpson commission includes doing away with so many of the destructive deductions for insurance, mortgage interest, and various corporate and union boondoggles, but also the necessary control of rocketing growth in spending. It was genuine, it was bipartisan, and unlike the soak the rich divisive distraction, it was adequateto the task of restoring confidence.
Wouldn't it have been nice if the president had supported his own effective bipartisan plan? Since he won't, a genuine alternative would be to find a new one who will.
Bush's prescription drug plan should have been funded as stated, yet let's not neglect the lesson learned there. The plan, which emphasizes competition among drug companies, has cost 40% less than projected, an amazing cost savings, especially in the medical field. The key issue is competition. We have a bipartisan medical plan before us right now that would also emphasize competition to a considerable degree. It is called the Weydan/Ryan health plan. And it is out in the open, not hidden and concocted behind closed doors. Nor is it filled with bogus cost numbers.
Another point of the article is to support alternative production models. I agree with this. There is a better alternative to the union dominated manufacturing processes that have so damaged America's once-great auto industry, steel industry, etc. One need look no further than to the two former great manufacturers of heavy equipment and automobiles in the US, Caterpillar and GM, both totally dominant world-wide, both threatened by up and coming Japanese competition. The unions saw a vulnerability and struck hard. Caterpillar, with great difficulty, withstood the strike. GM caved. The result? Caterpillar continously has been and is the greatest heavy machinery manufacturer in the world, paying taxes from its profits year in and year out. GM has gone bankrupt and owes the country billions of dollars. It's pretty clear which alternative manufacturing mode is preferable.
It's true that President Bush added almost as much deficit in 8 years as Obama has in just under 4. No pride in that performance; Bush was a big spending liberal on economic issues. But Mr Dorrien must realize that the tax cuts of which he speaks are Obama's tax cuts; the wild and uncontrolled spending are Obama's spending, the failure to support his own bipartisan plan is Obama's failing, we are no longer in Iraq in Bush's War, but still in Obama's War, having just ended Obama's Libya War. Keeping the president wrapped in diapers by attempting to blame Bush for his bad decisions and failures is not going to do anyone any good. That dog won't hunt. The American public has heard President Obama and his apologists cry wolf several too many times.
And so it goes.

 
Mike Evans | 3/2/2012 - 1:42pm
Thanks to Vince for pointing out that this deregulation of financially responsible institution was the primary cause of our current situation. The wild charges that the root cause of the financial meltdown was the Community Reinvestment Act and Fannie Mae & Freddie Mac is the most inaccurate and vicious lie that keeps being repeated. So sensible economies in other countries are deprecated and denied credance because they involve a bit of central planning and overall consensus of what serves the common good. We have seen enough of selfish greed and worship the idol of individualism. Pure market forces are inherently evil. A christian is not a monopoly player, winning salvation by bankrupting everyone else. Freedom without moral responsibility is not a virtue worth pursuing.
Vince Killoran | 3/2/2012 - 1:11pm
I wonder if Frank fancies the USA becoming like Canada, Australia, et a.?  They've avoided the financial meltdown and yet the government plays a larger role than the US government in addressing social and economic inequality? Neo-liberalism and market populisim are not the answer.
LEONARD VILLA | 3/2/2012 - 11:29am
This is just an appeal to Statism/socialism. There is a reason thousands and thousands came to the US from oppressive governments with high taxation and over-regulation by the State: freedom which includes economic freedom. The government tends to screw up everything it touches. Compare the Post Office with private interprise. You should also be alarmed that almost 50% of the country pays no taxes!!! The biggest contributor to the financial meltdown was Fannie May and Freddie Mac government run enterprises!!! The perps of this malaise all liberal Democrats have gotten a pass on this by you and others while you agaitate against Wall Street and banks which are not blameless but let's give the whole picture. Programs like the Great Society have been colossal failures while eating up myriads of cash. The first social principle you should remember is subsidiarity. The solution to all ills is not the default position of liberals: the Federal government. The whole occupy Wall Street movement is an idological contrivance funded by guys like Soros. We have not had and will not have in the future laissez-faire capitalism. The menace is from Statists posing as crusaders for the poor and disadvantaged. All they do is create more poor and disadvantaged dependent on government. I don't fancy the US becoming like Greece!