Sector: business

Book Review by K. Sabeel Rahman in the Boston Review:

“In the years since the financial crisis, the realities of rapid economic recovery for some and stagnant wages for most has made increasingly clear that we live in a new Gilded Age: one marked by growing income inequality, decreasing social mobility, and concentrated corporate power. At the same time, we face an increasingly dysfunctional political system, apparently incapable of addressing these fundamental economic challenges.
This is not the first time the country has been caught in this confluence of economic inequality and political dysfunction. The first Gilded Age, in the late nineteenth century, experienced a similar moment of economic upheaval, instability, inequality, rising corporate power, and unresponsive government. These challenges triggered some of the most powerful reform movements in American history: the labor and antitrust movements, the Populist movement of agrarian reformers, and the Progressive movement of urban social and economic reformers. These reformers were not perfect—their record on racial and ethnic inequality is especially glaring—but they were enormously successful in creating new institutions and ideas that reshaped our economy and our politics. In particular, many of them were convinced that to address economic inequality, they had to first democratize politics, creating more robust forms of accountability and popular sovereignty against the influence of economic and political elites….
With his new book, White Collar Government: The Hidden Role of Class in Economic Policy-Making (2013), Nicholas Carnes argues that there is a third, even more important source of elite political influence: the dominance of upper class individuals in the composition of legislatures themselves. Despite the considerable external pressures of donors, constituent preferences, parties, and interest groups, legislators still possess significant discretion, and as a result their personal views about economic policy matter. Legislators of different class backgrounds, Carnes demonstrates, have distinct views on everything from labor to welfare programs and anti-poverty policies, to the very idea of government itself. On unemployment, labor rights, tax policy, and corporate protections, many of the central economic policy issues of our time involve a cleavage between wealthy and working class interests. The underrepresentation of the working class results in an underrepresentation of working class interests, exacerbating income inequality. “Whether our political system listens to one voice or another depends not just on who’s doing the talking or how loud they are,” writes Carnes; “it also depends on who’s doing the listening.”….
In The Promise of Participation: Experiments in Participatory Governance in Honduras and Guatemala (2013), Daniel Altschuler and Javier Corrales focus similar questions to those animating Carnes’ account: What institutional contexts enable ordinary citizens—especially poorer ones—to expand their representation in decision-making? What expands their knowledge of issues, their political networks, and their willingness to participate more broadly to advocate for their interests? To gain traction on this question, they undertook the first large-scale study of participatory governance, examining the nation-wide community-managed schools program in Honduras and Guatemala. These programs operated in areas that conventionally might be considered inhospitable to participatory governance: poor, rural districts. These programs engaged parents by giving them management and administrative duties in the daily activities of the school. In both countries, the programs were established to both address pervasive disparities in educational attainment, and to improve the accountability of government officials in delivering basic services to the poor….
In Making Democracy Fun: How Game Design Can Empower Citizens and Transform Politics, Lerner takes a practitioners’ look at participatory governance. Lerner is the Executive Director of the Participatory Budgeting Project, a non-profit dedicated to adapting participatory budgeting systems and implementing them in cities such as New York, Chicago, and Boston. Where Altschuler and Corrales are primarily concerned with the macro-institutional contexts that make participatory governance systems work well, Lerner’s insights revolve around the micro-practices of how to make participation effective at the face-to-face level….
Our recent experience of economic inequality has fueled the rise of a new social science of economic inequality and oligarchy, most recently and famously captured in the debates over Thomas Piketty’s Capital in the Twenty-First Century. But we also need a constructive account of what a more responsive and representative democratic politics looks like, and how to achieve it. Reformers coming out of the Gilded Age of the late nineteenth century similarly located the roots of economic inequality in political inequality. The era of Standard Oil and J.P. Morgan (the man, before the firm), and of widening income inequality was also the era of dysfunctional machine politics and a conservative Supreme Court that stymied social reform. These challenges fueled reform movements that struggled to restore popular sovereignty and genuine democracy—proposing everything from antitrust restraints on corporate power, to the first campaign finance systems, to new procedures for popular elections of Senators, party primaries, and direct democratic referenda. It was during this period that state and federal governments experimented with antitrust laws, rate regulation, and labor regulation. Many of the economic ideas first developed out of this ferment came to fruition in the New Deal.
Today we see the echoes of this zeal in the debates around campaign finance reform and the problem of “too-big-to-fail” banks. But reviving genuine democratic equality to address economic inequality requires a broader view of potential democratizing reforms. Carnes reminds us that the identity of who governs matters as much for class and economic policy as for any other dimension of representation. But Altschuler, Corrales, and Lerner suggest as well the importance of looking outside legislatures. Governing involves more than writing statutes; it is solving disputes, administering social services, implementing directives at the local level. And these are spaces where the prospects for greater political power—especially on the part of economically marginalized groups—may even be greater than at national scale legislatures. The proliferation of open government efforts in the United States—from governmental transparencyto engaging citizens to report potholes—suggests a growing reform interest in creating alternative channels for participation and representation. But too often these efforts are more limited than their rhetoric, focusing more narrowly on making existing policies well known or efficient, rather than empowering participants to challenge and reshape them. These books underscore that genuine democratic reform requires actually empowering ordinary citizens to drive the business of governing.”