Contribution to GTI Roundtable "Limits to Investment"
John Fullerton’s contribution is both courageous and extremely important. If we are to deal in any serious way with the crisis we face, some form of public planning must guide investment decisions, especially of the largest economic institutions.
It was the conservative leaders of the Chicago School of Economics who stressed that many very large corporations (like the ones Fullerton identifies) simply cannot be regulated effectively. They understood better than liberal economists that “regulatory capture” was a routine practice, built into the institutional power dynamics. They also understood that, as with AT&T and the various components of Standard Oil, breaking up large corporations commonly lasted a very short time: given market and institutional dynamics, they all but inevitably regroup. The challenge put by the old conservatives, though not aimed at the growing ecological crisis, has its modern analogue—and question: Does anyone really believe that “regulation” can achieve what John Fullerton asks and what is self-evidently required—namely, serious public management of the investment decision?
Furthermore, the central dynamic of any private for-profit corporation that must go to Wall Street for financing is inherently one of growth. Staying within ecological limits, however, requires that investment decisions not be driven by such criteria. In other words, many such entities must essentially become not-for-profit “utilities” to achieve Fullerton’s goal.
Consequently, John Fullerton’s goal (and ours) can only be achieved by the selective transformation of certain critical corporations into public entities of one kind or another. Which firms and what forms then become questions of great importance.
In light of that conclusion, I’d like to raise four related points:
(1) Though Fullerton rightly defines the issue as global, inevitably the challenge comes down to earth in specific nations—the most important of which being our own. Consequently, we (and others in other countries) must develop explicit strategies that clarify the kinds of firms that are critical and how a de facto planning system would operate.
(2) This requirement, in turn, suggests the need to explicitly develop scenarios in specific nations that also build towards global solutions. Put another way, identifying the top 1000 global corporations would logically require as a second step scenarios in each important nation to move towards converging power relationships capable of achieving what Fullerton urges.
(3) If some form of genuine democratization of ownership is a necessary requirement, then building towards this idea in a meaningful way, nation by nation, is also a requirement.
(4) If a planning system capable of achieving what Fullerton urges is to be democratic in any nation (and most importantly our own), a thoroughgoing approach must also build from the bottom, so that citizen involvement is both possible and effective.
The spirit of such a vision can be traced back to Alexis de Tocqueville and John Stuart Mill, who best understood the importance of getting things right at the community level. Here is Tocqueville: “Local assemblies of citizens constitute the strength of free nations. Municipal institutions are to liberty what primary schools are to science; they bring it within the people’s reach, they teach men how to use and how to enjoy it.” And here is Mill: “We do not learn to read or write, to ride or swim, by being merely told how to do it, but by doing it, so it is only by practicing popular government on a limited scale, that the people will ever learn how to exercise it on a larger.”