by Daniel Chavez

This article is available in Spanish here.

The Frente Amplio (Broad Front) government of Uruguay, one of the most stable, fruitful and serene experiences of the “new Latin American left”, is going through a very dramatic electoral process with likely profound impacts in the country and in the region. Daniel Chavez appraises the results of the Uruguayan experience and suggests what might be relevant for other counter-hegemonic processes in the region and the world.

Of all the governments of the so-called pink tide that transformed the social and political scene of Latin America over the last two decades, the Uruguayan case is also one of the least debated internationally and the only one that has received praise both from the progressive camp and from the main institutions of the world’s political and economic orthodoxy.1 While the media attention and left and right discussions focused on the processes led by Lula da Silva and Dilma Rousseff in Brazil, Hugo Chávez and Nicolás Maduro in Venezuela, Evo Morales in Bolivia, Rafael Correa in Ecuador and Néstor Kirchner and Cristina Fernández de Kirchner in Argentina, the three periods of government by the Frente Amplio in a very peaceful Uruguay have rarely drawn the attention of activists, journalists, or political leaders in other countries of the world.

On 24 November 2019, Uruguayan citizens will elect their new President. The second round of the presidential election will occur at a very particular moment in the history of Latin America. In Chile, a popular insurrection is shaking the foundations of neoliberalism and authoritarianism. In Bolivia, after several days of violent protests following disputed election results, the police and the military forced the resignation of the president in a new kind of coup d’état. In Argentina, the right has been defeated in an election derived from a very serious economic and social crisis. In Ecuador, popular organisations negotiate with a weak government the resolution of a very complex political crisis. In Peru, the recent institutional crisis remains unresolved, with the Parliament still closed. In Colombia, within the framework of the peace agreements violated by the government and dissident fractions of the guerrillas, the results of the recent municipal elections provide some good news, while the murders of popular leaders continue. In Venezuela, the government and the opposition widen the political gap while the population suffers a terrible social and economic crisis, and the threat of a foreign intervention. In this regional context, the very peaceful and regulated Uruguayan presidential election seems almost an anomaly.

Uruguay is, in many ways, an atypical country in Latin America. In 1920, an American journalist referred to this country as “the Switzerland of Latin America”, giving rise to a comparison that became an oft repeated catchphrase, either on the country’s own merits or as an image that the governments of the day tried to portray. Beyond possible questions about the past or current relevance of this analogy, the empirical data show that Uruguay reached early levels of institutional development and welfare comparable to those of European countries. It was one of the world’s first advanced democracies — including the extension of free, mandatory and secular education at the end of the 19th century, divorce in 1917 and the granting of the right to vote to women in 1927, then suffered a serious setback during a military dictatorship (1973–1984) and two decades of resistance to neoliberalism (1980s and 1990s) and, finally, in the last 15 years it has undergone profound social, political and economic transformations made possible by the left in the government.2

Uruguay’s electoral legislation requires gaining more than half plus one of the votes to access the presidency. If no candidate obtains a majority in the first round, a run-off takes place, in which only the two most voted participate. Thus, Uruguay is now immersed in a very polarised electoral campaign that could substantially alter the political history of the country and generate relevant lessons for the left in the region and in other parts of the world. After three lustrums of progressive rule and despite having won the first round unquestionably on October 27th, the Uruguayan left faces the possibility of a defeat in the second round. If on November 24th the election confirms the results the polls predict today, the right will celebrate its return to power. The country that has historically taken pride in its civic culture, its democratic coexistence and its track record of consensus in the design and implementation of state policies, today faces a campaign without a foreseeable result, including the entry into Parliament of a brand new far right party, Cabildo Abierto (loosely translated into English as “Open Assembly”), with an electorate that could become the arbitrator of the November election.

The panorama that the Uruguayan left faces today is very problematic. The election of October 27th resulted in the loss of the parliamentary majority both in the Senate and in the Chamber of Deputies. The leftist militancy had bet, hopefully, on a last-minute comeback, as had happened in the 2014 election, but the result was more adverse. The Frente Amplio achieved 39.2 percent of the votes, the National Party 28.6, the Colorado Party 12.3 and Cabildo Abierto 10.9. The remaining votes were distributed among five minor parties — including the Partido Independiente (Independent Party) and two conservative groups that enter Parliament for the first time: the Partido Ecologista Radical Intransigente (Radical and Intransigent Environmentalist Party) and the Partido de la Gente (People’s Party), which do not alter substantially an arithmetic fact: the sum of the votes to the right bloc today is larger than the left bloc by 10 percentage points as the starting position to face the second round.

Definitely, the Frente Amplio faces an uphill battle towards the run-off election of November 24th, but there is still room for hope. Despite the historic strength of the Uruguayan party system (atypical in Latin America), it is unlikely that the voters of the opposition parties will uncritically accept the voting indications of the leaders. It is foreseeable that a significant percentage of Colorado Party voters will reject the offer of a coalition that includes Cabildo Abierto, a reactionary party led by a retired army general perceived by many Uruguayans as a pasteurised version of Jair Bolsonaro in Brazil. On the other hand, the sudden irruption of Cabildo Abierto into the Uruguayan political scene, having been founded this year, just eight months before the election, indicates that its electorate includes many former voters of the Frente Amplio that could be “recovered” by the left for the second round of November.

Unlike the demagogy, violence or dirty tricks that characterise elections in other countries of the region, fair play and civilized contrast of candidates and electoral programs have prevailed in Uruguayan politics in recent decades. Even so, the second round of the presidential election is seen as crucial and is becoming increasingly emotional, with heated and passionate debates on social media and a toe-to-toe battle in public spaces for each single vote. In contrast to previous elections, this year’s voting is marked by strong ideological and programmatic differences that reflect the classic but very live distinction between left and right. This election also reflects changes in the political behaviour of different social classes that can be directly related to the outcomes of progressive rule in Uruguay and in other Latin American countries.

The Frente Amplio’s long political march

Unlike the recent progressive governments of Argentina, Brazil, Bolivia, Ecuador or Venezuela, the Uruguayan experience has been less dependent on individual leadership and reflects a long process of political accumulation that began in March 1971 with the creation of the Frente Amplio.3

Uruguay has one of the world’s oldest and strongest party systems. For a century and a half, Uruguayan politics was hegemonised by the so-called “traditional parties”: the National or White Party and the Colorado Party. These parties emerged simultaneously to the creation of the country as an independent entity in the 1830s. The references to the colours white and colorado (red) in their names allude to the currencies used by its members in the civil wars of the nineteenth century. Historically, the two parties have integrated a wide internal diversity of ideological currents, but in recent decades both formations have tended to converge in a conservative arc that oscillates between the centre and the right.

The unification of the left in 1971 questioned the hegemony of traditional parties. Conceived as the space for the convergence of various left or progressive parties and movements with a common democratic, popular, anti-oligarchic and anti-imperialist profile, the founding of the Frente Amplio was the culmination of a long process of amalgamation. The unification of the left had been preceded in the ’60s by the formation of a unified trade union centre and other spaces of confluence of popular struggles, in a framework of acute social and political conflict that would lead to a military dictatorship backed by the United States and the regional and global right between 1973 and 1984. With the restoration of liberal democracy in 1985, the Frente Amplio reaffirmed its identity as the common space for virtually all ideological families of the heterogeneous Uruguayan left, composed of socialists, social democrats, communists, former guerrillas, trade unionists, progressive intellectuals and social militants with very diverse doctrinal or party roots. From its foundation in 1971 to the present, the Frente Amplio constitutes one of the most successful and longest experiences of convergence of the left, almost unique worldwide. Despite being formally a coalition — constituted by more than 20 parties and movements — in practice it operates as an integrated party, with a common programme and candidates for the presidential elections.

The Frente Amplio’s first national government began in March 2005. The administration led by Tabaré Vázquez (who had been Mayor of Montevideo during the first governmental experience of the left, between 1990 and 1994) had to face the sequels of the deep economic crisis of 2002. Unlike the other left governments of the region, the first period of the Frente Amplio in national office was much more predictable and moderate in its ambitions, focused on the implementation of social policies to combat poverty and the attraction of foreign investment to boost economic growth. The arrival of new investments, in parallel to the increase in exports of primary products facilitated by the international commodities bonanza, allowed the deployment of social assistance programmes to the most vulnerable sectors and the improvement of the income and consumption levels of the majority of the population.

One of the most symbolic elements of the first government of the Frente Amplio was the installation, on the banks of the Uruguayan River, of a cellulose production plant run by the transnational corporation Botnia (currently UPM, controlled by Finnish capitals), which consolidated the expansion of the industry forestry that had begun in the previous decade and generated strong reactions from environmental organisations in Uruguay and Argentina. The installation of two other pulp mills (one already under way and one in process), the government’s support for a large mining project (later cancelled due to the fall of the price of iron and other minerals in the international market) and the increase of soybean plantations and other monocultures, indicate that the Frente Amplio has adopted the same extractivist development model applied in the other countries of the region regardless of the ideological profile of their governments.

Both in its economic and social orientation and in its mode of relationship with the opposition, the first government of the Frente Amplio (and the two successive ones) had more characteristics in common with the European social democratic left than with the eclectic and charismatic leadership style of other progressive governments of the region. Even though Tabaré Vázquez exercised his quota of personal leadership and made use of the power granted by the Uruguayan presidential system, his political roots imposed limits on him. This was evident in the withdrawal of his proposals to sign a free trade agreement with the United States (which would also have meant the breakdown of Mercosur, the customs union formed by Uruguay, Argentina, Brazil and Paraguay) and Uruguay’s integration into the Trade in Services Agreement (TiSA), in consideration of the opposition from the trade union movement and the resistance generated within his own Frente Amplio.

The Frente Amplio’s second period in government began with the irrefutable victory of José Pepe Mujica in the presidential elections of October and November 2009. In the second round, the former Tupamaro guerrilla achieved an advantage of almost 10 percentage points (52.4 percent against 43.5 percent) against the candidate of the National Party, Luis Alberto Lacalle, who had already been President in the previous decade. Immediately after his victory, Mujica proposed to agree with the opposition long-term state policies in the areas of education, public safety, environment and energy.

The third presidential victory of the Frente Amplio took place in November 2014. Tabaré Vázquez was once again elected President after obtaining 47.8 percent of the votes in the first round, in October, securing the parliamentary majority. He reaffirmed his triumph in the run-off of November with a 53.6 percent win against the candidate of the National Party, Luis Lacalle Pou (a lawyer with patrician family roots, the son of Luis Alberto Lacalle, the candidate defeated by the Frente Amplio in the previous election). The left achieved the biggest electoral victory since Uruguay introduced the current two-rounds voting system in 1996.

The Uruguayan economy, like that of other Latin American countries, benefited from the growing demand for food and other commodities from China and other emerging markets, so that for a long period the government of the Frente Amplio was able to take advantage of favourable international winds and resist the worst impacts of the global crisis that exploded in 2008. The first government of the Frente Amplio had started immediately after the very serious regional crisis of 2002, when the country suffered the contagion of the Argentine debacle. The Uruguayan recovery during the first two governments of the Frente Amplio produced a significant increase in consumption and the improvement of the main economic and social indicators. Uruguay also received new foreign investments. Even publications as far from the left as The Economist or the Financial Times praised the legal security, the institutional quality and the macroeconomic stability of the country with the Frente Amplio in government. In March 2018, The Economist argued that the governments of the left “stuck with the orthodox economic policies they inherited and with practices that make the country attractive to investors, such as keeping taxes low and the judiciary independent of political influence”.4

A quick review of some basic indicators shows that the Uruguayan economy and society have effectively improved with the left in government, enabling the country to exhibit today a noticeably higher level of per capita income and lower levels of poverty and inequality. The gross domestic product has been growing above 3 percent per year for more than a decade. Under the left’s rule, poverty was also significantly reduced, falling from 40 percent of the population in the first year of the Frente Amplio in government to less than 10 percent today. Indigence or extreme poverty affects today less than 1 percent of the population. Uruguay has also positioned itself as the country with the lowest inequality in Latin America: while the region’s Gini index is 0.467 in Uruguay it is 0.397.

Other achievements of the Frente Amplio in government include having positioned Uruguay as the Latin American country with the greatest coverage of social security and the best employment conditions. While the average real salary in the region increased 20 percent between 2005 and 2015, in Uruguay the rise exceeded 54 percent.

In terms of infrastructure, Uruguay also displays obvious improvements. Uruguay today occupies first place in Latin America for speed, price and coverage of broadband Internet, resulting from the extension of the fibre optic network to every corner of the country. This was carried out by the state-owned telecommunications company Antel — the same company that holds the largest market share in mobile telephony, despite having to compete with two large transnational corporations. Uruguay also occupies first place in the world in the transition to renewable energies, having changed its electricity mix with rapid (beginning in 2008, with the left in government) and massive investments in wind power, currently providing almost half the electricity consumed in the country. The energy transition has also increased the country’s sovereignty by reducing the costs of power generation and reducing imports of fossil fuels.

In the social arena, the Frente Amplio governments implemented a structural reform focused on the creation of the National Integrated Health System (SNIS), which guarantees coverage and universal access to the entire population. One of the most visible results of this reform has been the sharp drop in the rate of infant mortality between 2004 and 2018, with a reduction of more than 50 percent, from 13.2 to 6.5 per 1,000 live births. In the educational field, Uruguay was world news a decade ago with the launch of the Ceibal Plan, being the first country to give a free computer or tablet to all students and teachers of primary and secondary schools — and then also to lower income pensioners — reducing the digital divide and promoting positive externalities in science and technology. The budget for education was also expanded, rising from 3.2 percent of the gross domestic product in 2004 to 4.8 in 2013, in addition to improving the real salary of teachers and expanding the scholarships for low-income university students.

The Frente Amplio’s governments also managed to consolidate Uruguay’s position as the most stable and advanced democracy in the region, as well as the country in which the most new generation rights have been recognised. The most recent annual report issued by the Freedom House places Uruguay in first place in Latin America and sixth in the world in terms of political rights and civil liberties5, while The Economist Democracy Index highlights that Uruguay is the only country in the region included in the select group of the 20 “full democracies”.6 At the national level, the Frente Amplio has also been the only party that, on acceding to national office, has responded to the long-postponed demands for truth and justice around human rights violations during the military dictatorship, including the search for the remains of desaparecidos in army barracks.

Nevertheless, despite the good or very good economic, political and social indicators that the Frente Amplio can showcase as achievements of its governments, there are still reasons for discontent. In the last three years the pace of economic growth has stagnated and the fiscal deficit has increased, raising doubts about the continuity or expansion of social policies. For example, despite the greater investment of financial resources in public education, the construction of new schools and the expansion of educational coverage at all levels, some results in this field are still bad or very bad. Only 40 percent of students complete secondary education, well below what would be expected in a country with the level of social and economic development that Uruguay exhibits in other areas. It is very unlikely that if the right reconquers the government it will perform better than the left in this area, but all right-wing candidates have used the bad results in the field of education as electoral ammunition to attack the left.

The social gap has narrowed significantly during the 15 years of the Frente Amplio in office, but socio-spatial segregation remains visible in the country. The housing conditions of the most vulnerable population have improved. The number of so-called cantegriles (the term equivalent to favelas in Brazil) has been visibly reduced, but hundreds of families have not yet benefited from the programmes of eradication of informal settlements and other governmental housing policies. Urban informality in peripheral neighbourhoods has been reduced, but the map of Montevideo and other cities still shows “red zones” in which crime and violence rates have worsened. Drug addiction and drug trafficking ravage the inhabitants of some low-income neighbourhoods. Here, evangelical churches proliferate and in this year’s election campaign the electoral posters proliferate of Cabildo Abierto and other candidates who promise an iron fist approach to crime.

In this context, on the same day of the first presidential round, the citizenry was called to decide on a constitutional reform that would have enabled substantial changes in public safety. Making use of a legal mechanism that facilitates the organisation of citizen-enabled legislative initiatives, a right-wing fraction of the National Party had gathered signatures throughout 2019 to enable a vote on the Vivir sin miedo (“Live Without Fear”) proposal. The proposed constitutional reform included a series of modifications to the current legislation, including the authorisation of night raids by the police and the creation of a National Guard as a special crime fighting branch of the military, in addition to life sentences without parole and increased prison terms for violent crimes. The initiative did not have the explicit support of any of the presidential candidates. It did, however, obtain 1.1 million votes, equivalent to 46 percent of the electorate although this was insufficient to be passed into law (more than 50 percent was required).

Despite the defeat of the reform at the polls, the candidate of the National Party announced his intention to include two of the proposals in the immediate legislative package to be implemented by his potential government: the life sentences for very serious crimes and the strengthening of the Republican Guard, the existing paramilitary regiment of the Uruguayan police. Paradoxically (or not so much), the candidate of the left also pledged a few days later to strengthen the Republican Guard.

The strategies of the left and the right for the second electoral round

Luis Lacalle Pou, the candidate of the National Party, is today the favourite for the November run-off, although his party’s vote in October was below the 30 percent recorded in the 2009 and 2014 elections. The strategy formulated by Lacalle Pou is focused on the creation of what he defines as a “multi-coloured government”, meaning a parliamentary and governmental coalition composed of the two traditional parties (National and Colorado) and including Cabildo Abierto, the Independent Party and the People’s Party.

If victorious, Lacalle Pou would rely on a parliament with a majority of legislators willing to execute its ambitious agenda of neoliberal reforms, with adjustments in the public budget and repression of the foreseeable resistance posed by trade unions and other social movements. The parliamentary majority that would support Lacalle Pou include senators and deputies who openly vindicate the “fight against subversion” during the last military dictatorship, in addition to an enlarged evangelical bloc of legislators dispersed among the three main conservative parties.

In the first round, the electoral strategy of the Frente Amplio was focused on publicising the social and economic achievements of its governments, highlighting the marked reduction in poverty and sound economic management that has secured three decades of uninterrupted growth, unprecedented in national history. In its campaign slogans, the left proposed Uruguayan voters No perder lo bueno, hacerlo mejor (“not to lose what’s good, doing it better”), while the message of the National Party already anticipated a possible unification of the right for the run-off, winking at the whole arch of the opposition with its slogan Lo que nos une (“What unites us”).

At the time of writing, the electorate on the left seems to have assimilated the bad news of the October coup and the militancy of the Frente Amplio has enthusiastically engaged in a renewed campaign for the run-off. The strategy to win the November election tends towards building bridges towards those who did not vote for the left in the first round, trying to recover votes that might have been captured by the various opposition parties and recognising current problems in public safety and other areas on which the right focused its criticisms. The discourse of the presidential candidate Daniel Martínez (an engineer with extensive experience in public office, having served as a Senator, Minister of Industries, and Mayor of Montevideo until April of this year) and other figures of the Frente Amplio has also become more confrontational with the right, emphasising the internal contradictions between the parties that make up the opposition coalition and affirming that they could not agree on how to run a coherent and effective government.

The electoral command of the Frente Amplio has defined that the winning strategy in the few days remaining until the November 24th election will be based on a “vote by vote” mobilisation, including the widest deployment of Frente Amplio militants and tours of the presidential candidate and the entire leadership of the left throughout the neighbourhoods of Montevideo and every other city.

One of the recent moves of the left has been the distribution of a document entitled Tres cartas para un país (“Three letters to a country”). The first of the letters is addressed to left-wing voters, inviting them to be optimistic, since “it is certainly viable to win” and reminding them that the Frente Amplio remains “the country’s largest political force”. The letter argues the existence of “two models in dispute”: the one of the left, with “clear advances, a real self-critical perspective and well-founded proposals” based on 15 years of good governance, and a “neoliberal project with authoritarian roots, that anticipates budget cuts and austerity shocks and setbacks in social rights”, as well as “impunity assured for military violators of human rights”. The text also compares the proposals of the Uruguayan right with the regional situation, asserting that Chile, Brazil and Argentina constitute “clear examples of the failure of the neoliberal model and the increase in poverty and violence they generate”. The second letter is addressed to undecided voters, reminding them that Jair Bolsonaro expressed his explicit support for Lacalle Pou. The letter to the undecided also argues that the promises of “lowering taxes, cutting millions in public spending, getting rid of 50,000 state workers” while building “hundreds of new high schools and hospitals” are not credible or viable. The last letter is addressed to those who would not be willing to vote for the left, stating that “together we will find the best ways to solve problems and democratically resolve our discrepancies”.

The radicalisation of the political parties’ discourse would seem to make little sense in a country historically allergic to conflict and prone to the search for negotiated solutions (the novels of the internationally famous Uruguayan writer Mario Benedetti are highly illustrative of the nation’s political culture, as they provide useful insight into the afflictions and aspirations of a very extended middle class). Furthermore, as explained above, national and international statistics confirm that in the almost 15 years of Frente Amplio governments the social gap has continued to shrink. Nevertheless, as in Brazil, Bolivia and other countries where leftist governments raised a significant portion out of poverty, part of the “new middle class” tends to rebel against the ruling party and questions the transfer of resources and social policies towards the poorest. At the same time, other voters who had previously opted for the left nowadays criticise the alleged mismanagement of the state, the deterioration of education, and a few isolated and highly visible cases of corruption (magnified by the right-wing media), while demanding greater attention from the government to public insecurity (Uruguay remains one of the safest countries in the region, but police statistics indicate a sharp increase in crime in recent years, including more homicides and violence linked to drug trafficking).

In the first phase of the 2019 electoral campaign, the polls indicated that many voters disenchanted with the left would support the candidacy of the Colorado Party, led by Ernesto Talvi, an economist trained in the United States and who paradoxically vindicates the legacy of former President José Batlle y Ordóñez (1856–1929), the main historical figure of his party and founder of the social democratic development model that characterised Uruguay for much of the last century, based on strong state intervention in the economy. Talvi tried to present himself as a “progressive liberal”, despite the fact that his academic training and professional career correspond to the classic image of the neo-liberal economist, including multiple public statements of exaltation of the model applied by the so-called Chicago Boys in Chile during and after the dictatorship led by Augusto Pinochet.

As the electoral campaign progressed, the opinion polls indicated that the Colorado Party’s candidacy deflated simultaneously with the growth of Cabildo Abierto. The results of the first round confirmed a marked transfer of votes from the Colorado Party and even the Frente Amplio to the new far-right party. On the other hand, the displacement of the ruling party towards the centre did not generate positive results, despite not having suffered a loss of left votes, since the Popular Unit, the small party formed by radical left groups that had split from the Frente Amplio in the previous election, lost its only representative in Parliament in this year’s October election.

In the October 2019 election, the Frente Amplio lost a fifth of its electorate (almost 200,000 votes) compared to the first round of 2014. The reasons for such a loss are multiple and diverse. On the one hand, there are disenchanted leftists who criticise the alleged abandonment of the historical banners of the left once it accessed national office. This minority of voters that the Frente Amplio did not retain, and which would have chosen to vote for the Radical Intransigent Environmental Party, Popular Unity, the Green Animalist Party or the Workers’ Party (the last three parties did not reach the minimum votes to enter Parliament) includes those who criticise the benefits granted by the government to transnational capital, the primarisation of the economy, land grabbing by transnational agro-business, the deterioration of the environment, or the absence of a coherent industrial policy. There are also disenchanted voters in the centre of the political spectrum, who reflect the anger of the middle classes and the growing support for parties that promise less taxes, less state intervention and more or better capitalism. This group also includes critics of the position of neutrality or of alleged support by the Frente Amplio to the government of Nicolás Maduro in Venezuela. But there is also a significant percentage of votes that the left did not retain, which are difficult to quantify, that do not vote along specific ideological positions and that reflect the unmet needs and demands of a portion of the popular sectors (the so-called “Uruguayan subproletariat”, using the concept coined by Óscar Bottinelli, a local political analyst), which in previous elections supported the fractions of the populist right of traditional parties and that in October 2019 would have voted for Cabildo Abierto.

Any reader of statements issued by the opposition leaders in the weeks leading up to the first round would have expected the unification of right-wing forces for the run-off to be a much more difficult process. In particular, the questionable democratic credentials of Cabildo Abierto and the radical positions of the new far-right party towards the agenda de derechos (“rights agenda”) promoted by the Frente Amplio governments. These are new laws focused on the decriminalisation of abortion, homosexual marriage, protection of transgender people, sex education in schools, and the legalisation of marijuana consumption, production and distribution, which have divided the waters on the right. The Colorado Party candidate had publicly ruled out any alliance with the leader of Cabildo Abierto — an admirer of Bolsonaro and leader of a party with a visible presence of army officials nostalgic for the dictatorship and members of neo-fascist organisations — and declared that he was not opposed to the decriminalisation of abortion or same-sex marriage. The candidate of the National Party also gave assurances that he would not modify the rights agenda, despite the fact that his party has a strong presence of ultraconservative evangelical pastors who put pressure in the opposite direction. A few minutes after the announcement of the results of the first round, however, both the candidate of the Colorado Party and the leader of Cabildo Abierto announced their willingness to join forces for the run-off and announced that they would actively campaign for the candidate of the National Party.

Towards November and beyond…

The social, political and economic disasters caused by the return of regressive forces to national office in neighbouring countries confirms that the much discussed distinction between the left (beyond its ideological purity or degree of radicalism) and the right is not irrelevant. It is enough to look at the legacy of the governments led by Mauricio Macri in Argentina, Jair Bolsonaro in Brazil or Sebastián Piñera in Chile to anticipate the possible impacts of a right-wing coalition ruling in Uruguay, with very foreseeable cuts in both the quality of life of the majority of the population and in the possibilities of expression and mobilisation of popular organizations to resist the neoliberal offensive.7

It is clear that the final result of the presidential election will not cause a systemic change in the politics or economic of Uruguay. Very few — if any — of those who celebrated the rise of the Frente Amplio to national government almost 15 years ago (including the author of this text) expect that a victory of the left will generate new perspectives to radicalise its political project towards socialism or towards the establishment of a more participatory, more democratic or more ecological types of governance. The expectations of many leaders and voters of the Frente Amplio are limited to sustaining the process of economic growth or at least to face as well as possible the impending international crisis, which will surely be more serious than the one that exploded in 2008, as well as maintaining the purchasing power of wages and ensuring the continuity of current social policies and the quality of public services.

In the long march of the Frente Amplio through the state institutions, much of the original programme on the left has been relegated to the drawer of history. Many of those activists, who 15 years ago believed that the project of the left would be more radical today, are more aware of both the limits imposed by external conditions and the lack of will or courage on the part of the leadership of the Broad Front to face the hegemony of transnational capital or to overcome the normative tools that protect it. For example, many leaders of the left who previously opposed free trade or investment protection treaties, considering them instruments of subjugation of the countries of the South, this year applauded the signing of a trade agreement between Mercosur and the European Union with very few benefits for Uruguay or other members of the bloc.

If the right wins in the second round of November 24, we already know that the new government that will take office in March 2020 will be very different from the current incumbent. This is not an ideological or biased statement: Luis Lacalle Pou himself has announced that immediately after assuming the presidency he would send to Parliament an “emergency law” that would include hundreds of articles aimed at dismantling many of the achievements of the left in government. Its specific contents have not been announced (clearly to hide the real intentions, since a more precise enunciation would scare away undecided voters) and Lacalle Pou himself has announced that they will not be explained until after the run-off, but the antecedents of government of the conservative parties anticipate cuts in public spending and wages very similar to the structural adjustment programmes imposed by the International Monetary Fund and the World Bank in the 1990s.

Nevertheless, regardless of who is the winner in the run-off of November 2019, the political project of the Uruguayan left will no longer be the same. The loss of the parliamentary majority and the emergence of an extreme right party are clear signs of both the exhaustion of the style of government developed by the Frente Amplio in Uruguay and the crisis of progresismo (“progressivism”) in Latin America and the world more broadly. The uncertainty lies in the sense of the incoming change, in consideration of the contradictory ideological lines that coexist within the Uruguayan left: while some components of the Frente Amplio propose radicalising the left project and going back to its founding ideological roots, other components propose to accentuate and accelerate the movement towards the centre. Both trends have co-existed in the Frente Amplio since its own foundation, but in any case, either in a scenario of defeat and loss of the government or in one of victory and continuity of the government, it is unlikely this tension will be resolved.

The regional and global scene of today is very different from that of 15 years ago, when the Frente Amplio first took national office. Hugo Chávez and Néstor Kirchner have died. Evo Morales has resigned, forced by the army and the police after a strong social mobilisation of the right and the far right. Rafael Correa is semi-exiled in Europe. Donald Trump continues to occupy the White House. A neo-fascist politician, Jair Bolsonaro, rules in Brazil, and one of his fans leads a new party in Uruguay. The demand for commodities that had fed the public coffers of Latin American governments has slowed down. A global economic and financial crisis more extensive and more devastating than the one that erupted in 2008 is increasingly imminent. On the international level, the Uruguayan left — in government or in opposition — will have to face a strong conservative offensive in the region and in the world. At the national level, it will have to respond to the demands of cutting public spending posed by the advocates of national and transnational capital, to the mutilation of social rights demanded by an empowered far-right in Parliament, and to the demands and mobilisations of labour, housing cooperatives, student unions and other popular organisations that will not passively accept the reversal of the conquests achieved by the popular movement in the past 15 years.

About the author

Daniel Chavez, a TNI fellow, specialises in left politics, state theory and public services. His latest books include Repensar lo Público: Estado, sociedad y servicios básicos en América Latina (Icaria, 2019; co-edited with Susan Spronk and David McDonald); Venezuela — Perspectives from the South (CLACSO, 2017, co-edited with Mabel Thwaites Rey and Hernán Ouviña); and The Reinvention of the State: Public Enterprises and Development in Latin America and the World (TNI, 2016, co-edited with Sebastián Torres).

Notes

1. For an overview of the rise and expansion of the “pink tide” see Chavez, D., Barrett, P. and Rodríguez-Garavito, C. (eds) (2008) Utopia Reborn — The New Latin American Left. London: Pluto Press.

2. For an updated and succinct introduction to the country’s history and its unique characteristics in the Latin American context, see Caetano, G. (2019) Historia minima del Uruguay. Mexico City: El Colegio de México.

3. A political scientist and senator for the Frente Amplio, Constanza Moreira, has just published a detailed analysis of the path of the Uruguayan left towards national power and its trajectory in government, within the broader framework of the progressive governments of the region: Moreira, C. (2019) Tiempos de democracia plebeya — Presente y futuro del progresismo en Uruguay y América Latina. Montevideo: Banda Oriental, Consejo Latinoamericano de Ciencias Sociales (CLACSO) y Transnational Institute (TNI).

4. Uruguay’s record-setting economic growth streak”, The Economist, March 28th, 2018.

5. Freedom House (2019), Freedom in the World 2019: Democracy in Retreat. Washington, DC: Freedom House.

6. The Economist Intelligence Unit Democracy Index 2018: http://www.eiu.com/topic/democracy-index

7. The five leaders of the opposition have signed a programmatic document that announces some of the policies that the right-wing coalition would implement in government. The document only collects the less “scary” proposals, and does not mention some of the most controversial ideas defended by them during the first round of the electoral campaign. The document, entitled Compromiso por el País (“Commitment for the Country”) can be downloaded from this link: http://lacallepou.uy/compromiso.pdf.

It may not be a new idea, but the speed with which the Green New Deal has gained traction in the US is remarkable. Potential presidential candidates are already embracing the call and it’s firmly on the agenda for the new Congress, with 40 Democratic members demanding a firm plan be drawn up.

But what is remarkable is not its popular resonance but the growing political acknowledgement that the government has the power to create the necessary trillions of dollars to not only address the climate crisis but also tackle inequality and transform the economy.

It is hard to overstate the significance of this. Before the 2008 financial crisis, the mantra was that there is no alternative (TINA) to rising inequality, corporate greed and environmental destruction. After 2008, the story became that there is no more public money to pay for the alternative so we must rely on private finance.

The Green New Deal turns that on its head. As its most famous spokesperson, newly elected Congresswoman Alexandria Ocasio Cortez says, the framework has the potential to replicate ‘the Great Society, the moon shot, the civil rights movement of our generation’.

The assumption that private finance is the only way to advance social and environmental policy dominates discussions on how to implement the Paris Agreement and the Sustainable Development Goals (SDGs). They frequently ignore how private finance facilitates the extraction of wealth from the public sector to the rich.

A 2018 study that re-examines data from the International Monetary Fund (IMF) on global tax evasion by multinational corporations (MNCs), for example, calculates losses to the public sector to be around US$650 billion, disproportionately hitting people in poor (and plundered) countries.

Another study suggests that from 1995 to 2015 the City of London cost the UK population £4.5 trillion in resources, skills and investments that benefited the financial sector rather than going to society’s more productive activities, as well as the vast wealth that evaporated to the wealthiest in the 2008 financial crisis.

The current ‘yellow vests’ protests in France is another example where people have in part taken to the streets against a so-called ‘ecotax’ because the Macron government was trying to make its population — rather than the polluters — pay for climate change. This happened after it transferred €14 billion from the poor to the rich and another €41 billion to French companies, including MNCs.

When it is deployed — even for productive or progressive purposes — private finance often ends up being more expensive. The UK National Audit Office calculated that when public projects — for example, the building of schools — are privately financed it is 40 per cent more expensive than using public financing.

This is because of the profits that the private investors and shareholders demand; the accounting rules that hide the real costs of private finance until they show up as debt at the end of a project; and the interest rates for borrowing, averaging 7–8 per cent for the private sector and only 3–4 per cent for governments.

A study of 835 cases of public services around the world … has shown that privatised corporations don’t bring better quality of service, lower prices and more investments.

Decades of intellectual efforts have tried to make us believe that the public is dependent on private finance and that there are very few public banks left to finance public services and infrastructure, even though these have proven essential to redistribute wealth more evenly across populations.

Figures produced by the World Bank and the Organisation for Economic Co-operation and Development (OECD) misrepresent the value of public finance by pretending that public banks have only US$2–5 trillion in assets. With the many trillions that are needed to finance the climate infrastructure needed to combat the climate crisis and bring about the energy transition, this amount would be a drop in the ocean.

However, research undertaken by Thomas Marois of the School of Oriental and African Studies (SOAS) at the University of London, shows that there are 693 public banks worldwide which own assets worth US$37.72 trillion.

This public money is urgently needed to directly finance the fight against adverse climate change and for democratic, socially-just and renewable energy systems. Most governments, however, limit themselves to incentivising private companies to invest in the transition to renewable energy by supporting privatisation and Public–Private Partnerships (PPPs).

Keep reading…

Lavinia Steinfort is a critical geographer and political activist. As a researcher at the Transnational Institute (TNI) she is working on public alternatives such as (re)municipalisation of public services, a just transition towards energy democracy and transforming finance for the 99%. She wrote the chapter, ‘The 835 reasons not to sign trade and investment agreements’ for the book Reclaiming Public Services by the TNI and co-authored the article ‘Communal Performativity — A Seed for Change’ on the solidarity of Thessaloniki’s social movements in the diverse fights against neoliberalism (Antipode, 2017).

Originally published at longreads.tni.org.

Walden Bello reflects on what we have and have not learned ten years after the 2008 financial crisis, and the challenges to come.

It is now clear that financial crises are not discrete events but are linked phenomena that have been unleashed on the globe ever since the financial markets were liberalized during the Reagan-Thatcher era in the early 1980’s.

To take just the three most prominent crashes, surplus capital that could not find profitable domestic outlets after the Japanese bubble burst in the late eighties found its way as speculative capital into Southeast Asia, where it contributed to the Asian financial crisis in 1997–98; and the Asian crisis, in turn, helped generate Wall Street’s implosion in 2008 owing to the Asian countries’ channeling their financial reserves — accumulated to protect them from a repeat of 1997 — into the US, where they helped fuel the subprime real estate boom.

The turbulence that hit global stock markets last February, causing much fright and a paper loss of 4 billion dollars, was a reminder that the next big implosion may be just around the corner. A just concluded study by the Transnational Institute reveals that in 10 critical areas where major reform is needed, few to no measures have been taken to prevent a recurrence of 2007.i These areas range from shadow banking to fractional reserve banking to international financial governance to central bank accountability.

Skating on Thin Ice Once More

So, not surprisingly, current indicators show that the world again is skating on thin ice.

First, the “too big to fail” problem has become worse. The big banks that were rescued by the US government in 2008 because they were seen as too big to fail have become even more too big to fail, with the “Big Six” US banks — JP Morgan Chase, Citigroup, Wells Fargo, Bank of America, Goldman Sachs, and Morgan Stanley — collectively having 43 per cent more deposits, 84 per cent more assets, and triple the amount of cash they held before the 2008 crisis. Essentially, they have doubled the risk that felled the banking system in 2008.ii

Second, the products that triggered the 2008 crisis are still being traded. This includes around $6.7 trillion in mortgage-backed securities (MBS) sloshing around, the value of which has been maintained only because the Federal Reserve bought $1.7 trillion of them.iii

US banks collectively hold $157 trillion in derivatives, about twice global GDP. This is 12 per cent more than they possessed at the beginning of the 2008 crisis. Citigroup alone accounts for $44 trillion, or 50 per cent more that its pre-crisis holdings, prompting a sarcastic comment from one analyst that the bank seems “to have forgotten the time when they were a buck a share,” alluding to the low point in the bank’s derivatives’ value in 2009.iv

Third, the new stars in the financial firmament, the institutional investors’ consortium made up of hedge funds, private equity funds, sovereign wealth funds, pension funds, and other investor entities, continue to roam the global network unchecked, operating from virtual bases called tax havens, looking for arbitrage opportunities in currencies or securities, or sizing up the profitability of corporations for possible stock purchases. Ownership of the estimated $100 trillion in the hands of these floating tax shelters for the superrich is concentrated in 20 funds.

Fourth, financial operators are racking up profits in a sea of liquidity provided by central banks, whose releasing of cheap money has resulted in the issuance of trillions of dollars of debt, pushing the level of debt globally to $325 trillion, more than three times the size of global GDP.v There is a consensus among economists across the political spectrum that this debt build-up cannot go on indefinitely without inviting catastrophe.

China: Epicenter of the Next Big Bang?

It is hard to predict where the next financial implosion will take place. There are, however, several candidates. One of them is China. A close examination of this country’s financial state would show that there is cause to worry.

Conventional wisdom holds that China is on the ascent and the United States is in decline, that China’s economy is roaring with raw energy and that Beijing’s “Belt and Road” mega-project of infrastructure building in Central, South, and Southeast Asia is laying the basis for its global economic hegemony.

Some question whether Beijing’s ambitions are sustainable. Inequality in China is approaching that in the United States, which portends rising domestic discontent, while China’s grave environmental problems may pose inexorable limits to its economic expansion.

Perhaps the greatest immediate threat to China’s rise to economic supremacy, however, is the same phenomenon that felled the US economy in 2008 — financialization, or the channeling of resources to the financial economy over the real economy. Indeed, there are three troubling signs that China is a prime candidate to be the site of the next financial crisis: overheating in its real-estate sector, a roller-coaster stock market, and a rapidly growing shadow-banking sector.

The Real Estate Bubble. There is no doubt that China is already in the midst of a real-estate bubble. As in the United States during the subprime-mortgage bubble that culminated in the global financial crisis of 2007–09, the real-estate market has attracted too many wealthy and middle-class speculators, leading to a frenzy that has seen real-estate prices climb sharply.

Chinese real-estate prices soared in so-called Tier 1 cities like Beijing and Shanghai from 2015 to 2017, pushing worried authorities there to take measures to pop the bubble. Major cities, including Beijing, imposed various measures: They increased down-payment requirements, tightened mortgage restrictions, banned the resale of property for several years, and limited the number of homes that people can buy.vi

However, Chinese authorities face a dilemma. On the one hand, workers complain that the bubble has placed owning and renting apartments beyond their reach, thus fueling social instability. On the other hand, a sharp drop in real-estate prices could bring down the rest of the Chinese economy and — given China’s increasingly central role as a source of international demand — the rest of the global economy along with it. China’s real-estate sector accounts for an estimated 15 percent of GDP and 20 percent of the national demand for loans. Thus, according to Chinese banking experts Andrew Sheng and Ng Chow Soon, any slowdown would “adversely affect construction-related industries along the entire supply chain, including steel, cement, and other building materials.”vii

A Rollercoaster Stock Market. Financial repression — keeping the interest rates on deposits low to subsidize China’s powerful alliance of export industries and governments in the coastal provinces — has been central in pushing investors into real-estate speculation. However, growing uncertainties in that sector have caused many middle-class investors to seek higher returns in the country’s poorly regulated stock market. The unfortunate result: A good many Chinese have lost their fortunes as stock prices fluctuated wildly. As early as 2001, Wu Jinglian, widely regarded as one of the country’s leading reform economists, characterized the corruption-ridden Shanghai and Shenzhen stock exchanges as “worse than a casino” in which investors would inevitably lose money over the long run.viii

At the peak of the Shanghai market, in June 2015, a Bloomberg analyst wrote that “No other stock market has grown as much in dollar terms over a 12-month period,” noting that the previous year’s gain was greater “than the $5 trillion size of Japan’s entire stock market.”ix

When the Shanghai index plunged 40 percent later that summer, Chinese investors were hit with huge losses — debt they still grapple with today. Many lost all their savings — a significant tragedy for individuals (and a looming national crisis) in a country with such a poorly developed social-security system.

Chinese stock markets, now the world’s second-largest, according to some accounts, stabilized in 2017, and seemed to have recovered the trust of investors when they were struck by contagion from the global sell-off of stocks in February 2018, posting one of their biggest losses since the 2015 collapse.

Shadow Banking’s Long Shadow. Another source of financial instability is the virtual monopoly on credit access held by export-oriented industries, state-owned enterprises, and the local governments of favored coastal regions. With the demand for credit from a multitude of private companies unmet by the official banking sector, the void has been rapidly filled by so-called shadow banks.x

The shadow-banking sector is perhaps best defined as a network of financial intermediaries whose activities and products are outside the formal, government-regulated banking system. Many of the shadow-banking system’s transactions are not reflected on the regular balance sheets of the country’s financial institutions. But when a liquidity crisis takes place, the fiction of an independent investment vehicle is ripped apart by creditors who factor these off-balance-sheet transactions into their financial assessments of the mother institution.

The shadow-banking system in China is not yet as sophisticated as its counterparts on Wall Street and in London, but it is getting there. Ballpark estimates of the trades carried out in China’s shadow-banking sector range from $10 trillion to more than $18 trillion.

In 2013, according to one of the more authoritative studies, the scale of shadow-banking risk assets — i.e., assets marked by great volatility, like stocks and real estate — came to 53 percent of China’s GDP.xi That might appear small when compared with the global average of about 120 percent of GDP, but the reality is that many of these shadow-banking creditors have raised their capital by borrowing from the formal banking sector. These loans are either registered on the books or “hidden” in special off-balance-sheet vehicles. Should a shadow-banking crisis ensue, it is estimated that up to half of the nonperforming loans of the shadow-banking sector could be “transferred” to the formal banking sector, thus undermining it as well. In addition, the shadow-banking sector is heavily invested in real-estate trusts. Thus, a sharp drop in property valuations would immediately have a negative impact on the shadow-banking sector — creditors would be left running after bankrupt developers or holding massively depreciated real estate as collateral.

Is China, in fact, still distant from a Lehman Brothers–style crisis? Interestingly, Sheng and Ng point out that while “China’s shadow banking problem is still manageable…time is of the essence and a comprehensive policy package is urgently needed to preempt any escalation of shadow banking NPLs (nonperforming loans), which could have contagion effects.”xii Beijing is now cracking down on the shadow banks, but these are elusive, and unless there is a fundamental reform in its national credit system to end the virtual monopoly by the export-oriented economic complex of the banking system, there will always be a strong demand for these sub rosa entities.

In sum, finance is the Achilles’ heel of the Chinese economy. The negative synergy between an overheating real-estate sector, a volatile stock market, and an uncontrolled shadow-banking system could well be the cause of the next big crisis to hit the global economy, rivaling the severity of the Asian financial crisis of 1997–98 and the global financial implosion of 2008–09.

While most of the players in China’s real estate and stock markets are mainly Chinese, a speculative earthquake there is likely to have a major impact on China’s vast holdings of US treasury bills and on China’s real economy, which has become tightly integrated into the global economy. Thus a major impact of such an event on the global economy is inescapable. In 2008, China was not a significant buyer of Wall Street’s mortgage-backed securities and other complex derivatives. Though it escaped the immediate consequences of the collapse of these Wall Street instruments, it was still hit indirectly, when the real economy of the US contracted, greatly reducing Chinese exports to the US and leading to a significant reduction in China’s GDP growth in 2008 and 2009. Today, with China being a major consumer of raw materials and agricultural products from developing countries and agricultural and advanced technological imports from the US and Europe, much of the rest of the world would be negatively affected by a crash of China’s real economy triggered by a crisis in its financial sector.

The gyrations of global finance continue to pose a threat to the world economy, and the continuing absence of effective regulation means speculative bubbles may build up in different nodes of the world economy. Today the bubble could be building up in China. Tomorrow it could be in Germany. When bubbles grow, then interact with other economic factors and even geopolitical ones, great uncertainty ensues, much like the anxiety that gripped the world when stock markets began spiraling downwards in February 2018, resulting in the loss of four trillion dollars in paper wealth. The 2018 stock market turmoil passed, but the next one may not pop without a bang.

What is to be Done?

In the recently completed TNI study, the rationale is laid out in detail for 10 major imperatives for the global financial sector. These are: 1) Restrict operations of hedge funds and close tax havens; 2) Ban mortgage-backed securities and derivatives; 3) Move towards 100 per cent reserve banking; 4) Nationalize financial institutions that are “too big to fail”; 5) Reinstitute the Glass Steagall Act that placed a Chinese wall between commercial banking and investment banking; 6) Place drastic limits on executive pay; 7) Phase out credit ratings agencies; 8) Convoke a new Bretton Woods Conference to set up new institutions and rules for global financial governance, end the dollar’s monopoly as the world’s reserve currency, and establish new, fair arrangements for development and climate finance; 9) Make central banks accountable; and 10) Move towards full political, fiscal, and monetary union in the Eurozone countries or exit from the euro.

The aforementioned proposed measures, it must be pointed out, constitute a “minimum program,” that is, a set of moves that strengthen the world’s defenses against another financial crash while not eliminating the possibility of such an event. Capitalism as a system is structurally prone to generate financial crises, and the program outlined above assumes a global economic system that continues to function under the rules of capitalism. The successful implementation of these reforms will be a giant step in a longer process of transformative change. That change cannot, however, take place without addressing in a fundamental way all other key dimensions of capitalism, especially its engine: the insatiable desire for greater and greater profits.

Reformed Capitalism or Post-Capitalism?

Ultimately it is the dynamics of the real economy that are the real determinant of developments in the financial economy. This is not a novel insight. From the perspective of Marxist economists, the gyrations of the financial economy are a result of the deep-seated contradictions of the real economy, in particular the tendency towards overproduction, or supply outstripping demand owing to the persistence of great inequality.

If weak demand in the real economy brought about by inequality is the problem, then it is obvious that the measures taken over the last few years by financial authorities, such as quantitative easing and negative interest rates, can only bring very limited and temporary relief to an economy in crisis and may in fact deepen the crisis in the medium term. Indeed, without addressing the crisis of demand in the real economy, a reformed financial sector would find it difficult to resist for long the intense pressures for capital to seek profitability in finance rather than in a stagnant productive sector.

For some, the most urgent need is the reform of capitalism. A program of financial reform would have to be integrated into a more comprehensive program of reform of capitalism. This enterprise would have to seriously address the lack of demand rooted in increasing inequality. It would have to bravely acknowledge its roots in the unequal power relations between capital and labor, how this unequal power translates into increasing inequality, and how inequality translates into anemic demand that acts as a brake on the expansion of production.

For others, capitalism’s constant search for profitability is a fundamental source of instability that will ultimately undermine all efforts to reform it — as happened to post-war Keynesianism in the late 1970s. Moreover, what must be addressed is not just socio-econmic inequality but the productive system’s drive to grow at the expense of the biosphere. What is needed, they say, is a post-capitalist program, one that is made all the more urgent by the climate catastrophe that is already unfolding.

One thing is certain. Calls from establishment reformers for a renewed commitment to capitalist globalization in the wake of resistance to neoliberal reforms are out of the question. These calls are rooted in a childlike faith that, in the long run, these measures will lead to the best of all possible worlds. The way forward, it is increasingly clear, will be largely determined by the outcome of a political struggle between two post-globalization camps.

The first espouses a defensive program that involves state management of the economy but leaves the capitalist mode of production largely intact (along with its class inequalities), though with discriminatory privileges for whole communities based on ethnicity, blood, and race (i.e., whitedom) and with borders sealed to migrants.

The second espouses stronger state and civil society management of the economy, one that moves it beyond capitalism, with a strong dose of radical income and wealth redistribution, while welcoming migrants and protecting democratic processes.

One would not be far off in characterizing this confrontation as between fascism and social democracy.

Walden Bello is an associate of the Amsterdam-based Transnational Institute and the international adjunct professor in sociology at the State University of New York at Binghamton and the author of 21 books, including the soon-to-be-published The Fall of China?: Preventing the Next Crash (London: Zed Books 2019), on which this article is based.

Notes

i This study, done by the author under the auspices of the Transnational Institute, will soon by published by Zed Books, under the provisional title of The Fall of China?: Preventing the Next Crash. This article is drawn from this book.

ii Nomi Prins, Collusion: How Central Bankers Rigged the World. New York: Nation Books, 2018), p. 2.

iii See Wolf Richter, “The New Fed Looks Like It’s Ready to Dump Mortgage-backed Securities,” Business Insider, May 19 2018. Available at: http://www.businessinsider.com/the-new-fed-looks-like-its-ready-to-dump-mortgage-backed-securities-2018-5. Accessed June 24, 2018).

iv Quoted in B. McLannahan, “US Banks Derivatives Book Larger since Rescue of Bear Stearns,” Financial Times, March 16, 2018. Available at: https://www.ft.com/content/201bce0c-289b-11e8-b27e-cc62a39d57a0. Accessed June 21, 2018.

v Prins, p. 2.

vi See, among others, “How China’s Going to Try to Control its Massive Housing Bubble,” Bloomberg News, Nov. 28, 2017, https://www.bloomberg.com/news/articles/2017-11-27/china-s-war-on-bubbles-means-homes-sales-set-to-fall-in-2018. Accessed July 30, 2018. See also Keith Bradsher, “China’s Housing Market is Like a Casino. Can a Property Tax Tame It?,” New York Times, Jan. 22, 2018, https://www.nytimes.com/2018/01/22/business/china-housing-property-tax.html. Accessed July 30, 2018.

vii Andrew Sheng and Ng Chow Soon, Shadow banking in China (Chichester: John Wiley, 2016), p.151.

viii Wu Jinglian, quoted Anthony Kuhn, “Chinese Markets ‘Worse than a Casino,’” Los Angeles Times, March 29, 2001, http://articles.latimes.com/2001/mar/29/business/fi-44137. Accessed July 30, 2018.

ix “China’s stock market value exceeds 10 trillion for the first time,” Bloomberg News, June 15, 2015, https://www.bloomberg.com/news/articles/2015-06-14/china-s-stock-market-value-exceeds-10-trillion-for-first-time. Accessed June 25, 2017.

x Sidney Leng, “Firms Sucked into Black Hole of Shadowy Debt,” South China Morning Post, July 18, 2018.

xi Sheng and Soon, p.xxiv.

xii Ibid., p.xxix.

For other perspectives check the work of Whitney Milam, Claire Connelly or @JanWeirLaw

Here are 12 struggles that inspire us to act in 2018.

1. El Salvador bans mining

This small Central American state became the first country in the world to ban metals mining, defeating one of the largest transnational mining corporations. Farmer communities led the struggle when they came together in 2004 to save the Lempa River watershed. They built a national coalition in the face of massive repression (including the assassination of several activists), formed alliances internationally, took on the Canadian corporation OceanaGold and finally secured a mining ban in March 2017.

2. #metoo campaign challenges impunity for sexual harrassment

Revelations of Hollywood mogul Weinstein’s repeated sexual abuses prompted 1.7 million #metoo tweets in 85 countries, highlighting the prevalence of sexual harassment and prompting many more women to come forward publicly to denounce sexual harassment. Decades of tireless campaigning by women’s organisations worldwide led us to this moment, hopefully a watershed in the fight for equality.

3. French law on multinationals

After a four year popular campaign and in the face of corporate opposition, France approved a new law recognising the responsibility of parent companies for human rights violations committed by subsidiaries, subcontractors and providers. This is a major step forward in the fight against impunity of transnational corporations (TNCs), addressing the legal complexity of TNCs that has made it so difficult for affected communities to get justice. The law also gave a boost to ongoing efforts to create an international binding treaty on TNCs at the United Nations.

4. Privatisation defeated in Colombia

A local public sector workers union in Cali succeeded in defeating the proposed privatisation of the municipal owned telecommunications company, after it exposed the city’s plans. The union used TNI research on Lazard, a global financial advisory firm hired by the city to develop its plans. The union then helped to set up a public-public partnership (PuP) with a Uruguayan national public enterprise to facilitate reform in the public interest. Cali’s workers’ defense of a municipal service is part of a pattern, with more than 835 communities worldwide bringing their public services back under public control in recent years.

5. Trump’s agenda faces massive popular resistance

From the very first day of office, Trump’s presidency has faced unprecedented popular resistance. In the first week, his blanket ban on Muslims from six nations was met with spontaneous protests at more than 20 major international airports across the USA — and has been blocked repeatedly by courts ever since and is now only temporarily enacted. Popular movements involved in fighting the white supremacy, corporate greed, and militarism that the Trump regime represents have reported a massive surge in engagement and support.

6. Brazil’s biggest ever general strike

35 million people from Brazil’s largest unions and popular movements took to the streets to oppose labour and pension reforms imposed by the deeply unpopular Temer government that won power through a coup. The general strike succeeded in bringing Brazil’s biggest cities, São Paulo, Rio de Janeiro, Porto Alegre and Brasilia to a halt and was evidence of growing popular opposition to Temer.

7. Gambia autocrat overthrown

Military ruler, Yahya Jammeh, who ruled Gambia with an iron fist for 22 years was forced to step down after he lost the 2016 election. Jammeh predicted he would rule for a billion years, but young Gambians came out in large numbers and used social media to mobilise votes for his opponent, Adama Barrow. Jammeh tried to overrule the election results, but fierce opposition from trade unions, professional associations and pressure from outside states forced Jammeh to relinquish power.

8. Farmer rebellion in India

In November, tens of thousands of peasants and rural labourers from 20 states representing more than 180 peasant organisations gathered in Delhi for an unprecedented show of strength against the reactionary Modi Government. Facing rising production costs, increased droughts and falling incomes, the farmers demanded debt relief, better prices and effective crop insurance schemes. While the government did not immediately respond to their key demands, the united platform is likely to have an impact as it takes its campaign across the country in 2018 and 2019.

9. Supreme Court in Indonesia rules in favour of public water

Thanks to the tireless campaigning of citizen groups in Jakarta, Indonesia’s Supreme Court ruled in October that privatisation of water is a violation of human rights and annulled an agreement between city-owned water operator PAM Jaya and two private companies. The court prohibited private partners from running tap water services and agreed that privatisation had deprived poorer citizens of access to water. Jakarta is one of more than 235 cases of communities worldwide that have brought water back under public control in recent years.

10. Zambian farmers’ court case victory against Vedanta

Zambian farmers overcame an appeal by UK mining giant Vedanta, allowing them to proceed with a legal case in the UK. The farmers are demanding remediation and compensation for the devastating pollution of the river Kafue by their subsidiary Konkola Copper Mines (KCM) that caused sickness and devastation of livelihoods.The judgment is an important precedent for holding transnational companies legally responsible for the actions of their subsidiaries.

11. Almost two-thirds of Australian voters say yes to marriage equality

Australian voters overwhelmingly voted in favour of changing the definition of marriage to include same sex relationships in an advisory referendum. Australia’s parliament then approved a bill almost unanimously, becoming the 25th country to legally embrace marriage equality. 20 years ago, there were none.

12. Guatemala rises up against institutionalised corruption

Since 2015, a series of mass protests against corruption have rocked Guatemala. These came to a head in September when President Jimmy Morales attempted to expel a Colombian investigator of the U.N.-backed International Commission Against Impunity in Guatemala. Indigenous communities have played a leading role in the protests and are also in a fight with Congress to approve a constitution that would recognise greater indigenous autonomy.

More inspiring stories from 2017

• Over 4000 civil society leaders meet in Harare to develop proposals for a transition to democracy in Zimbabwe
• Oslo brings waste services back under city control after 20 years
• UK anti-arms campaigners acquitted for preventing greater crime after attempting to disarm military jets intended for Saudi Arabia
• Turin becomes second biggest city after Naples to remuncipalise water
• Colin Kaepernick, US football quarterback, whose kneeling protest has put racism in the public debate is named GQ Man of the Year
• Young people in 140 cities in Poland protest government attempts to take over judicial system
• Pilots stop 222 asylum seekers being deported from Germany by refusing to fly
• Seattle and Portland in the US pass resolution that bans new fossil fuel infrastructure
• Ende Gelande shut down part of massive lignite mine in Germany during UN climate negotiations
• Digital opposition campaigners find way to win majorities in 30 of Moscow’s 125 local district councils
• Women’s mobilisations lead to abolition of law in Lebanon and Jordan that allowed rapists to avoid prosecution by marrying their victims

What were your favourite moments in the struggle for social and environmental justice in 2017? Let us know your suggestions on our Facebook page or tweet them to @TNinstitute using the hashtag #inspiredtoact.

“Some activists are afraid that if we acknowledge victory, people will give up the struggle. I’ve long been more afraid that people will give up and go home or never get started in the first place if they think no victory is possible or fail to recognize the victories already achieved. Marriage equality is not the end of homophobia, but it’s something to celebrate. A victory is a milestone on the road, evidence that sometimes we win, and encouragement to keep going, not to stop.”

– Rebecca Solnit

One might recollect the numerous attempts to scrutinise the Sustainable Development Goals (SDGs) when they were first rolled out in September 2015. They were extolled as socially inclusive and transformational; they were subject to scathing criticism; their revolutionary nature was questioned and probed. Since then the dust has settled, cementing a predominantly positive view of the global goals. The two-year anniversary affords an opportunity to reflect on the progress of the SDGs thus far, examine the future trajectory of global development, and test the unquestioned optimism of the SDGs.

Governance of the SDGs follows the path created by the Global Redesign Initiative that was proposed by the World Economic Forum (WEF) in Davos in 2012.

The SDGs are the main reference points for global development experts. Along with 169 targets and 230 indicators, they have been embraced by all UN member countries in their policy-making agenda as an ambition to reshape the world by 2030. Their predecessor, the Millennium Development Goals (MDGs), pale in comparison to the SDGs. The latter incorporates such pressing challenges as climate change, gender equality, and urban development in a kaleidoscope of issues to be addressed. However, the true ethos of the SDGs slips through the cracks of the global buzz and is usurped by empowering messages expressed in the goals’ headlines. Consequently, the direction in which the SDGs are steering global development reinforces and propagates the hegemony of neoliberalism — the ideology of market fundamentalism which is at the root of challenges the goals are designed to solve in the first place. This article attempts to analyse various dimensions of the SDGs and the agenda behind them.

Governance of the SDGs

A seemingly insurmountable task — managing the implementation of the goals — has been preemptively explained in Sustainable Development Goal 17, which aims to “strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development”. This goal envisions an all-hands-on-deck approach, with multi-stakeholder partnerships established across several sectors. Such partnerships facilitate “collaboration between government, business (and other private sector actors), civil society and/or UN and other multilateral agencies to address development challenges”. This innocuous and ostensibly democratic initiative urges businesses to the fore of development; the SDG on Water and Sanitation is a prime example of a business-led agenda. The potential consequences of this goal have been outlined in a letter by the Global Water Justice Movement to the UN. The letter raises concerns about the panel convened by the World Bank to implement the goal, as well as private financing to meet the goal’s targets. It decries the lack of accountability of private sector actors in contrast to the public sector: private developers do not bear legal responsibility for failing to offer sanitation and water systems services. The Global Water Justice Movement also points out that while the World Bank previously concluded that private participation is “inherently limited in scope for financing urban infrastructure for the wide array of non-commercial infrastructure services cities need… Local governments need good sources of public finance to fund those services,” it nevertheless persists in enforcing the same old model.

Governance of the SDGs follows the path created by the Global Redesign Initiative that was proposed by the World Economic Forum (WEF) in Davos in 2012. As explained by Harris Gleckman, Senior Fellow at the University of Massachusetts in Boston, “the initiative is the most coherent representation of a post-nation state governance system. The main premise is that multilateralism should be replaced by multistakeholderism, which for the WEF is primarily corporate-centered”. The Global Redesign Initiative has set forth an agenda to transform the UN into a public-private partnership, with institutions promoting market values influencing formal policy advice and financial contributions into the domain of global governance on par with states. This trend comes with a number of pitfalls, notes Fiona Dove, Director of the Transnational Institute: “It is worrying because you get people with a very particular sense of what constitutes success responsible for whether or not SDGs are successful. Secondly, the influence of the UN is being undermined. <…> With businesses in the driving seat of the process, there is a reason to be concerned. They are trying to dress it up as something democratic which it is not.”

Therefore, governance of the SDGs is a window-dressing exercise in democracy. The multistakeholder model dilutes boundaries of accountability and is not representative of the needs of the many; on the contrary, it serves the interests of the privileged minority advocating for the neoliberal world order.

Financing of the SDGs

In the case of the MDGs, aid funds and debt relief were the primary funding instruments. The SDGs, with their highfalutin outreach and towering ambition, require an estimated $3 trillion a year for their implementation. To meet this challenge, their enactors decided to emulate public-private governance partnerships and apply them to the financing of the SDGs. Consequently, the goals have become an enticing magnet for private finance. The architects behind the funding model have confirmed their intention to catalyse private investment: “A significant share — likely more than 50 per cent — of this financing can and should be mobilised by the private sector”. Moreover, they believe that governments should reorganise existing policy frameworks to attract private investments. The trend of turning away from public-sector financing did not emerge only with the SDGs: it is estimated that financing from development finance institutions (DFIs) focusing on the private sector has grown from US$10 billion in 2000 to almost US$70 billion in 2014. This seismic shift has profound consequences on the implementation of the SDGs and the redesign of the development industry.

Relinquishing financial responsibility in favour of the private sector suggests the defeat of the public sector in addressing pressing needs, allowing the private sector to further engage in the field of development. It automatically elevates the private sector to the level of the development agent. This trend triggers another risk: as it is positioned at the helm, the private sector is set to execute its own idea of development. This idea is likely to disrupt the accountability paradigm between the Global North and the Global South. According to Fiona Dove, “[Financing mechanism that pertains to SDGs] rips the rug from under the previous paradigm when the Global North was held responsible to help the Global South for historical reasons. Countries in the Global South will be forced to accept private investment from the Global North.”

It is worth examining what private finance primarily focuses on and the implications for development. It has been concluded that private-sector financing mostly revolves around “large-scale projects in mining, energy, transport, water and communications”. Moreover, the World Bank Group prioritised investments in the financial sector over other forms of investments, making up half of all investments, which is 50 per cent more than investments in the health sector and three times more than the loans provided for education.

Consequences of this regressive trend are reflected in the review of projects performed by the World Bank’s private sector arm, the International Finance Corporation (IFC), between 2000 and 2010. It found that only 13 per cent of projects had benefited the poor.

Not only does private finance in its current shape and form have little impact on development, it can also wreak havoc on local communities. Investigations carried out by Inclusive Development International have demonstrated the link between the IFC’s investments and forced evictions, the economic displacement of tens of thousands of people, environmental pollution, child and combat labour, land grabs, and even the killing of activists.

“The influence of the UN is being undermined… With businesses in the driving seat of the process, there is a reason to be concerned. They are trying to dress it up as something democratic which it is not.” Fiona Dove, Transnational Institute Executive Director

Therefore, further checks and balances are required for the private sector’s financing of the SDGs. Failing to do so will encourage opportunistic profit accumulation disguised as development, at the expense of those who need it most.

SDG Indicators

Indicators have been hailed as a silver bullet for monitoring compliance with the ideals espoused by the SDGs. In theory, 230 of these indicators should capture the specifics of measuring each goal’s performance. However, it has been noted that the proposed framework is flawed in terms of country coverage, methodologies, and updates. If these criteria are applied, only 39 indicators might be viable for all three standards.

Furthermore, the SDGs indicators encapsulate the neoliberal world order so clearly visible in the governance and financing components discussed above. As such, to reduce inequality within and among countries, goal 10 refers to the neoliberal playbook. It suggests that reallocation of resources through trade will create a level playing field for the least developed countries, and includes trade liberalisation measures in one of its targets: “Implement the principle of special and differential treatment for developing countries, in particular least developed countries, in accordance with World Trade Organization agreements”. This target is in tune with another trade-promoting mechanism outlined in goal 17 on revitalising global partnerships for sustainable development which aims to increase exports from developing countries (Target 17.11). Neither of these measures addresses the asymmetries within global economic governance whereby developing countries are silenced by the more powerful Global North.

Not only do the indicators fail to reflect the legal and institutional reforms that are needed for long-term sustainable change, they also erect barriers for this change to materialise. Global Policy Watch documented the manner in which calls for structural change have been stymied or reversed during negotiations. For instance, under Target 10.5, to improve the regulation and monitoring of global financial markets, the proposed indicator advocated for the adoption of a global financial transaction tax (Tobin tax). The Tobin tax applies to all payments converted from one currency to another in order to stabilise the movement of funds between foreign currency exchanges. In theory, the tax should generate revenue for governments and safeguard financial stability. Instead, the indicator’s premise has been altered to Financial Soundness Indicators, which were developed by the International Monitory Fund (IMF).

Another illustration of how the SDGs indicators are skewed in favour of corporate power is the elimination of tax paid by multi‐national corporations to host countries. This indicator was designed for Target 17.3 — to mobilise additional financial resources for developing countries — but was excluded from the final framework.

Consequently, the dynamics exhibited in the governance and financing of the SDGs, as well as the indicators, highlight the view that international development has been co-opted by neoliberal economics. It signifies a fundamental restructuring of the development mechanisms and the power dynamics within them. As the latter are in favour of private and corporate actors, development becomes a one-way street with little space to accommodate democracy, accountability, and justice. By removing all discussions about power from their agenda, the SDGs reinforce the status quo of socio-political relations. Two years since their official inception, one might ask, do the SDGs transform the world? They certainly do. The question is, who benefits from this kind of transformation?

Top Illustration by Evan Clayburg for State of Power 2016: There are millions of small-scale farmers who produce most of the world’s food but are now squeezed onto less than 25 percent of the world’s farmland.
A corporate-led multistakeholder approach is leading to a plethora of self-
appointed groups at international level, developing proposals and investing
in projects that worsen these trends.

ABOUT THE AUTHOR

Katerina Gladkova graduated with a master’s degree in International Development from the University of Amsterdam in 2016. In her field work research she delved into governance and climate change. Presently Katerina’s interests are in topics of ecological and environmental justice.

For more perspectives on the Sustainable Development Goals see Daniel Christian Wahl , Joe Brewer , Michael Haupt , WillSarni , Alex Evans or Graham Brown-Martin

Commons include not only the gifts of nature,like water and land, but also shared assets or creative work, such as cultural and knowledge artifacts. Commons are a shared resource, co-governed by its user community, according to the norms of that community. Considering the historical depths of the Commons, it’s difficult to agree on one definition that encompasses its full potential for social, economic, cultural and political change. The Commons is not the resource, the community that gathers around it, or the rules of how is is managed, it's the evolving interaction between all these things. Why is the Commons steadily gathering attention as a concept and practice? And what happens next?

The hollowing out of the welfare state has resulted in an increased mistrust in political parties and representative democracy in many parts of the world. On one extreme, the void is being filled by far-right narratives that satisfy the disillusioned by offering over-simplified analyses and demonisation of the “other”, the most vulnerable and least privileged among us, often refugees and marginalized peoples. In contrast, a barely reinvigorated left has seen many of its potential solutions proven unworkable, whether through bureaucratic excess, institutional blockages, or a simple lack of popular commitment.

Meanwhile, the institutional crises of our time persist. Our current world system also suffers from a deeply counterproductive logic. This system, based on infinite growth within the confines of finite resources, was enabled by the false concept of abundance in the limited material world. A second false concept of scarcity in the infinite immaterial world gave rise to legal and technical restrictions on social innovation through the use of copyrights, patents, etc. Overturning these false principles will be key priorities for a sustainable civilization. To this end, we must recognize that our natural resources are indeed limited, and base our physical economy in this recognition to achieve a sustainable, steady-state economy, and at the same time facilitate free, creative cooperation by reforming copyright and other restrictive regimes.

The livelihoods of roughly two billion people worldwide depend on some form of commons, yet many of these commons remain unprotected and vulnerable, in danger of privatization or sale. Similarly, it is not unconceivable to expect that an analogous number of individuals are co-creating shared resources online. These potentially massive affinity networks lack a common identifier or unifying vision, yet we recognise the logic of commoning as a shared thread.

We use the phrase “Commons transition” to describe a process of facilitating open, participatory input across society, prioritizing the needs of those people and environments affected by policy decisions over market or bureaucratic needs. The protection and empowering of existing commons, along with the creation of new ones, are keystones. A Commons transition will also require the creation of a commons-centric economy within the existing capitalist system, but seeking to transcend it with commoners at the helm. This implies uniting the forces which support the commons, generative and ethical markets, and the development of an enabling and empowering state which enables the social production of value, ie: “commoning”. It also means discovering synergies among the prefigurative forces that create the new economy, finding political expressions for them, and enabling them to act at the political level along with other emancipatory social and political forces.

A broad societal transition, different from the classic left narratives of previous centuries, is possible through the integrative strategy of a Commons transition. Why would this strategy be effective?

History shows that political revolutions do not precede deep reconfigurations of power, but rather complete them. New movements or classes and their practices precede the social revolutions that make their power and modalities dominant. How does that relate the idea of a Commons transition? There is ample data to support the kind of prefigurative existence of a growing number of commoners who could form the basis of a historical subject at the forefront of this phase transition — a very strong start.

Factor in the changing cultural expectations of millennial and post-millennial generations, and their requirements for meaningful engagements and work, which are hardly met by the current regime. The increasing vulnerability of work under neoliberalism drives the search for alternatives, and the cultural force of P2P self-organizing and corresponding mentalities fuels the growth of commons-oriented networks and communities.

Also, commons-based peer production is a model that could create a context of truly sustainable production. It is almost impossible to imagine a shift to sustainable circular economy practices under the current intellectual property driven, privatizing regime. The thermodynamic efficiencies needed for sustainable production may be found in the systematic applications of the principles inherent in the commons-centric economy. The watchwords are free, fair and sustainable, the three interrelated elements needed for a shift to more reasonable economy, polity and, ultimately, culture.

Finally, the crisis of the left itself, now relegated to the management of the crisis of neoliberalism itself, points to the vital need of renewing the strategic thinking of the forces that aim for human emancipation and a sustainable life-world. All of the above form a strategy for a multi-modal commons-centric transition, offering a positive way out of the current crisis and a way to respond to the new demands of the commons-influenced generations. The Commons and the prefigurative forms of a new value regime already exist. The commoners are already here, and they’re already commoning; in other words, the Commons transition has begun.

This article is an extract from A Commons Transition and P2P Primer, a short publication from the P2P Foundation and the Transnational Institute examining the potential of commons-based peer production to radically re-imagine our economies, politics and relationship with nature.

Written by Michel Bauwens, Vasilis Kostakis, Stacco Troncoso, Ann Marie Utratel for the P2P Foundation. The P2P Foundation (officially, The Foundation for P2P Alternatives) is a non-profit organization and global network dedicated to advocacy and research of commons oriented peer to peer (P2P) dynamics in society.

Michel Bauwens, co-founder and core team member of the P2P Foundation, is a Belgian Peer-to-Peer theorist. An active writer, researcher and conference speaker on the subjects of technology, culture and business innovation, he is the Vision Coordinator for the P2P Foundation.

Vasilis Kostakis is the founder and coordinator of the interdisciplinary research hub P2P Lab that investigates the socio-economic and political impact of free and open-source technologies. He was the Research Coordinator and is now a core team member of the P2P Foundation.

Stacco Troncoso is a core team member and Advocacy Coordinator for the P2P Foundation. A co-founder of Guerrilla Translation, his work in communicating commons culture extends to public speaking and relationship building with prefigurative communities, policymakers and potential commoners worldwide.

Ann Marie Utratel is a core team member of the P2P Foundation working in advocacy and infrastructure. She is also a co-founder of Guerrilla Translation and contributes narrative storytelling and collaborates in strategic alliance building for the larger P2P/Commons ecosystem.

For more perspectives on the Commons see Ferananda Ibarra, Andy Williamson, Mike Essig, Keith Parkins, Tíscar Lara, Ksenia Chabanenko, Alina Siegfried, or Creative Commons

The persistent myth that public services are by nature more expensive and less efficient is losing its momentum. Citizens and users do not necessarily have to resign to paying increasingly higher tariffs for lower standard services. The decline of working conditions in public services is not an inevitability.

And the ever larger role private companies have played in public service delivery may at last be waning. The remunicipalisation movement — cities or local authorities reclaiming privatised services or developing new options — demonstrates that cities and citizens are working to protect and reinvent essential services.

The failure of austerity and privatisation to deliver promised improvements and investments is part of the reason this movement has advanced. But the real driver has been a desire to meet goals such as addressing climate change or increasing democratic participation in service provision. Lower costs and tariffs, improved conditions for workers and better service quality are frequently reported following remunicipalisation. Meanwhile transparency and accountability have also improved.

Where remunicipalisation succeeds, it also tends to inspire other local authorities to make similar moves. Examples are plentiful. Municipalities have joined forces to push for renewable, climate-friendly energy initiatives in countries like Germany. Public water operators in France and Catalonia are sharing resources and expertise, and working together to overcome the challenges they meet.

Outside Europe, experiments in public services are gaining ground too. Delhi set up 1,000 Mohalla (community) clinics across the city in 2015 as a first step to delivering affordable primary health care. Some 110 clinics were working in some of the poorest areas of Delhi as of February 2017. The Delhi government claims that more than 2.6m of its poorest residents have received free quality health care since the clinics were set up.

Local authorities and the public are benefiting from savings too. When the Nottingham City Council found out that many low-income families in the city were struggling to pay their energy bills, they set up a new supply company. The company, Robin Hood Energy, which offers the lowest prices in the UK, has the motto: “No private shareholders. No director bonuses. Just clear transparent pricing.”

Robin Hood Energy has also formed partnerships with other major cities. In 2016, the city of Leeds set up the White Rose Energy municipal company to promote simple no-profit tariffs throughout the Yorkshire and Humberside regions. In 2017, the cities of Bradford and Doncaster agreed to join the White Rose/Robin Hood partnership.

Meanwhile, campaigners with Switched on London are pushing their city to set up a not-for-profit energy company with genuine citizen participation. The motivations in these diverse cities are similar: young municipal companies can simultaneously beat energy poverty and play a key role in achieving a just and renewable energy transition.

Remunicipalised public services often involve new forms of participation for workers and citizens. Remunicipalisation is often a first step towards creating the public services of the future: sustainable and grounded in the local economy. Inspiration can be found in the European towns and villages aiming for ‘zero waste’ with their remunicipalised waste service, or providing 100 per cent locally-sourced organic food in their remunicipalised school restaurants.

Public services are not good simply because they are not private. Public services must also continuously renew themselves, grow, innovate and recommit to the public they serve.

The push for remunicipalisation in Catalonia, for example, has come from a movement of citizen platforms. For them, a return to public management is not just an end in itself, but a first step towards the democratic management of public services based on ongoing civil participation.

Evidence is building that people are able to reclaim public services and usher in a new generation of public ownership. The momentum is building, as diverse movements and actors join forces to bring positive change in communities around the world.

You can read the Transnational Institute report, “Reclaiming Public Services: How cities and citizens are turning back privatisation”, on its website. A version of this story originally appeared on the New Statesman's Citymetric site.

Commons are a shared resource which is co-governed by its user community, according to the rules and norms of that community. Commons include not only the gifts of nature, such as water and land, but also shared assets or creative work, such as cultural and knowledge artefacts. The Commons is a concept and practice that has been steadily gathering increased attention. Deeply rooted in human history, it’s difficult to settle on a single definition that covers its broad potential for social, economic, cultural and political change.

The Commons is neither the resource, the community that gathers around it, nor the protocols for its stewardship, but the dynamic interaction between all these elements. An example is Wikipedia: there is a resource (universal knowledge), a community (the authors and editors) and a set of community-harvested rules and protocols (Wikipedia’s content and editing guidelines).

So how do we bring about a Commons transition?

1. Pool resources wherever possible

Commons-based peer production communities and their contribution-based technical systems of production can be characterized as open contributory systems, mediated through a number of filters to ensure high quality contributions. This allows commoners to freely contribute to one or more commons of their choice.

Pooling both immaterial and material resources is a priority. This capacity to pool productive knowledge is a key characteristic to obtain both “competitive” and “cooperative” advantage. Pooling — or in other words “the commons” — should be at the heart of the productive and societal system.

2. Introduce reciprocity

The mutual coordination characteristics of commons-based peer production have proven quite successful in the production of digital commons, but their inherent non-rival status (i.e. non- depletable, easy to reproduce and distribute) does not carry over to physical production, which is characterized by depletable assets, including human labor. To ensure the wellbeing and continuation of these assets, material production demands the principle of reciprocity, and the way to ensure it is by advocating for Open Cooperativism. Like an ecosystem, an economy does not work in isolation. Open Cooperativism seeks to enfranchise all participants in the economic value chain, not just those within the cooperative’s membership. This includes affective and reproductive labor, the creation of commons, and other forms of currently “invisibilized” work. This can be achieved through open contributory accounting systems, open supply chains and collaborative planning, as well as through the pooling of physical resources, mediated through special property regimens (where all contributors are participants in, and owners of).

3. Shift from redistribution to pre-distribution and empowerment

We need something beyond the welfare state’s logic of redistribution; we need a state that would create the conditions for the creative autonomy of its contributing citizens. This would require pre- distribution of resources rather than redistribution after the fact. The commons-based peer production ecosystem, as described above, comprises productive communities, coalitions of entrepreneurs, and for-benefit associations as the “management” or “governance” institutions. Broadened to the wider society, this structure gives a vision of a productive civil society which contributes to the commons. This would be supported by a predominantly generative market creating added value around the commons and protected by a partner state, where public authorities play a sustaining role in the direct creation of civil value.

The partner state, as well as being the guarantor of civic rights, would also facilitate the contributory capacities of all citizens. It would empower and enable the direct creation of value by civil society through creating and sustaining infrastructures for commons-based peer production ecosystems. Such a state form should be one that would gradually lose its separateness from civil society, by implementing radical democratic and even rotational procedures and practices.

While capitalism takes inequality as the cost of doing business and leaves its mitigation to an inefficient state, a commons approach builds in fairness from the start. The aim is to incorporate distributive actions in the generative enterprises and through their direct relation to the commons.

A partner state approach would transcend and include, not oppose, the welfare state model. It would retain the solidarity functions of the welfare state, but eliminate bureaucracy in the delivery of its services to citizens. The social logic would move from ownership-centric to citizen-centric, and the state should de-bureaucratize through the commonification of public services and public-commons partnerships.

4. Subordinate capitalism

Under capitalism, the markets are dominant and everything tends to be commodified. Capitalism is an extractive, profit-maximizing relationship. It exploits workers and gorges on the free labor of free and open-source software and open design workers, while cannibalizing the gifts of nature. But is the intention to get rid of markets altogether? Markets would continue to exist in a commons-oriented society, but they would be predominantly generative as opposed to extractive. By this we mean that markets would serve the commoners. Commons-based peer production participants today struggle to create livelihoods as they produce commons. While they could be supported by a partner state through basic income and subsidies, commoners can also create new market entities to facilitate the sustainability of their contributions and allow them to keep contributing to the commons.

One way to achieve this is through the use of CopyFair Licenses. In this approach, the free sharing of knowledge — the universal availability of immaterial commons — is preserved, but commercialization is made conditional on reciprocity between the sphere of the capitalist market and the sphere of the commons. This approach would enable the ecosystems of commons-oriented entrepreneurial coalitions to pool immaterial (and ultimately even material) resources to benefit all participants.

Commons Based Reciprocity Licenses (or “CopyFair” licenses) provide for the free use and unimpeded commercialization of licensed material within the Commons while resisting its non-reciprocal appropriation by for-profit driven entities, unless those entities contribute to the Commons by way of licensing fees or other means. A first working example of a CopyFair license is the Peer Production License, in effect a fork of a Creative Commons Non-Commercial License which permits worker-owned cooperatives and other non-exploitative organizations to capitalise the licensed content, while denying this possibility to extractive corporations.

5. Organize at the local and global levels

Progressive coalitions at the urban, regional and nation-state levels should develop policies and laws that increase the capacity for the autonomy of citizens and the new economic forces aligned around the commons. These pro-commons policies should be focused not just on local autonomy, but also on the creation of transnational and translocal capacities, interlinking the efforts of their citizens to the global commons-oriented entrepreneurial networks currently in development.

Historically, commons have had a problematic relationship with conventional law, which generally reflects the mindset and priorities of the sovereign (monarch, nation-state, corporation) and not the lived experiences and practices of commoners. Still, in grappling with political, economic and legal realities, commoners often find ways to secure control over their common wealth, livelihoods and modes of commoning. It is also what is spurring many commoners today to invent creative new types of policy and law — formal, social, technological — to protect their shared interests, assets and social relationships.

The number of civic and cooperative initiatives outside the state and corporate world is rapidly increasing. Most of these are locally oriented, and that is absolutely necessary.

Today, there are movements operating beyond the local, using global networks to organize themselves. A good example is the Transition Town movement, and its use of networks to empower local groups. But this is not enough. A further suggestion is the creation of translocal and transnational structures that would aim to have global effects and change the power balance on the planet. The only way to achieve systemic change at the planetary level is to build counter-power, i.e. alternative global governance. The transnational capitalist class must feel that its power is curtailed, not just by nation-states that organize themselves internationally, but by transnational forces representing the global commoners and their livelihood organizations.

The Commons is now demonstrating its power as a “key ingredient” for change in diverse locations and contexts around the world.

This article is based on A Commons Transition and P2P Primer, a short publication from the P2P Foundation and the Transnational Institute examining the potential of commons-based peer production to radically re-imagine our economies, politics and relationship with nature.

For more perspectives on the Commons see Ferananda Ibarra, Andy Williamson, Mike Essig, Keith Parkins, Tíscar Lara, Ksenia Chabanenko, Alina Siegfried, or Creative Commons