When a crockery store in mid-town Manhattan advertises its wares as “Gifts for the 99%”, you know that the Occupy Wall Street movement has achieved extraordinary cultural impact. At UN climate negotiations, the most vulnerable island states have talked about “occupying” Durban. Even Republicans are now talking about inequality.
But as winter draws in, and Zuccotti Park has been emptied of its occupiers, the movement faces difficult choices: what comes next? For certain, there will be more marches, and imaginative protests, but will protest, ultimately, be enough to shift an entrenched status quo?
Few in the movement believe that conventional politics can respond effectively to their concerns about rising inequality, or re-engineer a political and economic system that benefits a minority above all others. But it is conventional politics that still runs the country, and as the Presidential election approaches, attention is likely to drift back towards it.
Instead, OWS can set itself to the task, monumental but plausible, of building a new and better economic system, and indeed democracy. Rather than rely upon a corrupted system to reform itself, the movement should instead construct a new one.
This requires not the storming of police barricades, but something quieter but ultimately more sustainable. The contours of a new system are already evident in the movement itself. Occupy’s “General Assembly” is a model, still imperfect but perfectible, of inclusive participatory democracy, where all can have a say in decisions.
This echoes ancient Athenian democracy where citizens, not politicians, took turns to decide the city’s affairs. Today, examples of mass participation in government have produced more equitable and durable decisions in New Orleans, Brazil and in many cities around the world. Participatory democracy is workable, and it is more transparent and less corrupt than the ailing “representative” systems, which – or so we are told – constitute democracy today. Where everyone gets a say in decisions, then the decisions benefit all, and not the minority.
Likewise, in the economy, cooperative companies share ownership among their workers, but without sacrificing competitiveness, as Britain’s successful John Lewis partnership has shown in the ferocious retail market. These are not idealist visions; they are proven alternatives to an iniquitous status quo.
Within the Occupy movement there are working groups developing these ideas, largely unreported by a press over-eager to pigeon-hole what is in fact a highly eclectic phenomenon. One group may set up an Occupy cooperative.
Another, which I am part of, is exploring an alternative bank that, like a credit union, is owned by its customers, and includes the poor, who are often today excluded. But in addition, the bank would be a competitive alternative to the for-profit banks, offering services attractive to businesses and individuals. It would by the manner of its operations, and perhaps by mutualizing its assets, be more stable than the for-profit banks whose profit-driven frenzy of concealed credit has done such damage to the world’s economy, and the poor in particular.
One group is discussing the very fundamentals of our economy, and whether a currency can be established that is not produced by creating debt, as the dollar is today, and offers independence from both for-profit banks and government, a peer-to-peer system, if you like. These groups are forums for informed and sophisticated debate, but they are working towards practical outcomes. Our intention is to construct these alternatives, not merely demand them.
This will not be easy. But Occupy has released enormous pent-up frustration about a political system poisoned by money, and an economy that is failing the majority. And it has also liberated hope, and an inspiring sense of common purpose. In our banking group, there are professors, currency traders and Wall Street bankers who share these aspirations, and have put their energy and considerable expertise to creating something better.
One beauty of Occupy is that it is many things, not one thing, just as no one can claim to be its leader, or speak for it. It may spawn a hundred if not a thousand new initiatives, many of which may fail, but some of which may succeed, and in transformative ways.
This note was shared with members of the Alternative Banking working group of Occupy Wall Street (New York) today. It reflects our discussions in recent weeks.
The Commons: A Good Bank
This note has been prepared by the alternative banking working group of the Occupy Wall Street (OWS) movement. The note is for discussion with the OWS movement and more broadly.
The purpose of this note is to describe the characteristics of an ideal bank that embodies the values of the OWS movement. The current banking system lies at the heart of our current economic crisis of increasing volatility and inequality. To change that system, we need to replace it with a better bank. What would be the characteristics of this bank?
None of these features is new, and many are already evident in credit unions, community banks and “mutuals”. But our purpose is to imagine something that might have a broader reach and impact – that might transform the banking system, and thus, by its example and through its operations, potentially create an economy that is fairer, more inclusive, democratically managed and stable.
1. Democratic – all customers would own the bank, and have an equal say in its governance, regardless of the amount of money in their accounts. Employees – or rather partners - might be co-owners of the bank, forming a co-operative.
2. Accessible – the bank’s services would be accessible to all, and in particular the poor, who are often excluded from today’s banking system, thus making them vulnerable, for instance, to predatory lending. Ideally, the bank would be available to anyone in the country, and perhaps one day, the world.
3. Stable – the bank would eschew the risky practices of the for-profit banks that have damaged the world economy (affecting particularly the poor) and perpetuate systemic risk. Instead, it would operate in a way to minimize risk, for instance by mutualising all its liabilities in a manner suggested in Laurence Kotlikoff’s concept of “Limited Purpose Banking”.
4. Non-profit – the bank would be run for the benefit of its customers and employees. Any profit would be returned to customers in the form of cheaper loans or other services, or pro bono services – such as interest-free loans - for those in dire need. Without the need to generate profits or maintain a high stock price, the bank could offer more competitive services than the for-profit banks, thereby contributing to the next characteristic.
5. Competitive – the bank would offer services to individuals and businesses that would be as good as or better than those offered by for-profit banks. This objective is plausible if the bank is non-profit, and has a “light” infrastructure, perhaps by essentially operating as a “clearing house” to match lenders and borrowers (similar but not identical to “peer-to-peer” services). We also note the abysmal quality of current banking services in the US, in contrast for example to those offered in many European countries.
6. Transparent – the opacity and unintelligibility (even to those working in finance) of the financial system have contributed to the “credit crunch” collapse. The operations of this bank would by contrast be wholly transparent, thus again helping minimize any risk caused by its operations.
7. Equal – no partner or employee in the bank would be paid more than a certain multiple of the lowest-paid worker, for instance no more than eight or five times that number. In this way, the bank would promote greater equality and would encourage this characteristic in the economy more widely. This would also contribute to the competitiveness of the bank.
In establishing the bank, the principles embodied in the characteristics outlined above should be followed as much as possible (“the means are the ends”). One possibility to consider too is that, like the Grameen Bank, the bank might operate upon trust rather than legal contract with its customers, thus helping rebuild this scarce social commodity.
If there is general consensus within OWS and perhaps more broadly on the desirability of such a bank, the Alternative Banking group will set itself to the design and perhaps construction of the bank, drawing on the examples and experience – and perhaps the assistance – of similar such banks around the world. But there is no monopoly here: anyone is free to take inspiration from these ideas and embark upon the same challenge.
New York City
November 24, 2011