The rapid flow of money around the world is good for almost no one. More specifically, capital – the money skimmed by our employers from the value of the work we do – has been misused. Rather than being invested productively in our communities, it has increasingly been handed to financiers who send it off to join the ‘electronic herd’(1) – thundering around the globe to bet on the changing values of whichever financial products are bubbling this week.  The turbulence the stampede creates crashes currencies and inflates prices. In 2008, it crushed the global economy. So, how do we corral this herd?

When Britain’s welfare state was built, it was universal: services were not means tested. It is no coincidence that countries with welfare states solely for the poor have poor welfare states. If only 10 per cent use something, the other 90 per cent won’t understand it, so they will allow it to wither away. If everyone depends on a service, everyone will work to defend it: job seekers’ allowance is attacked, whilst we demand weekly bin collection. Universalism made almost everyone – Labour and Tory – a social democrat.

But Mrs Thatcher found a way to break that bind. She gave a generation the ‘Right to Buy’ council houses. Nationalised industries were sold, and more and more people became shareholders – became capitalists. She called it ‘property owning democracy’. Whereas people used to have a stake in public and civic institutions, now they had a stake in the market – if house or share prices went up, they’d feel richer. If they collapsed, they’d feel poorer. And so the middle moved to the right because they believed their interests now aligned with the wealthy.

Similarly, she introduced a more ‘flexible’ labour market. People moved more from job to job, becoming less and less likely to know their neighbours. We were turned from citizens to consumers, encouraged not to look after each other, but to covet gizmos. She removed significant powers from local councils so that we would make fewer decisions as communities, and unleashed record inequality which ripped us apart from each other. If the welfare state is how we organise our love for each other, then Thatcher demanded divorce. She declared there was no such thing as society, then attempted to make it so.

In 2008 Thatcherite economies collapsed. In the following wave of protests around the world, demands varied. But as well as the macro-economic demands you would expect, one call was consistent: ‘real democracy’. And it is perhaps through true participation that we can re-build not just our economies, but also the sense of social solidarity severed by neoliberalism.

Latin America, ‘socialism for the twenty-first century’ and participatory budgeting

If there is anywhere in the world that might claim to be moving towards such ‘real democracy’, then it might be the city of Porto Alegre, Brazil. Perhaps here we can begin to understand how we can rebuild the society that Mrs Thatcher worked so hard to abolish, and how to ensure that surplus value left from our work remains rooted in our communities. And perhaps here too we can begin to find ways to build a system which protects itself – a system which ensures that people have the faith, and the understanding, to fight for it.

Porto Alegre’s $200 million budget is written not by the mayor, but by its citizens. Each year, thousands gather in January at events across the city to begin the process of discussing priorities and allocating funds. Everyone is welcome. They listen to each other, and to various experts. They consider options. And then, after discussion, delegation, reflection and negotiation, they decide between them how to spend their taxes. They’ve gone through this process every year since 1989.

Over the last two decades this example has been taken up across Latin America. Today, millions of people in thousands of cities come together to similarly work out how to allocate their resources. The rapid expansion perhaps speaks for itself – it is so popular because it is remarkably successful. People, if they put their minds to it, are intelligent and creative. They are the experts in their communities, so they make better choices about their communities.If we look only at policy outcomes, then the success is remarkable. A World Bank study into Porto Alegre’s budget process showed real success in tackling the deep poverty in the city.(2)

But the decisions made through this process are not its only outcome. Because intrinsic to it is a process of education and of empowerment: as people come together with their community to discuss their respective needs and priorities, they get to know each other. They learn about how and why various services are delivered. They build bonds of social solidarity.
In 2005, Josh Lerner and Daniel Schugurensky conducted in depth interviews with forty people from the Argentinean town of Rosario, which uses participatory budgeting processes.(3) They wanted to find out what the impact had been not on the decisions that were made, but on the people making them. The following quotes are from those interviews:

“Before I thought: why should I care about some traffic light if I knew my thoughts wouldn’t count? Now, because I think my idea will be considered, I’m more motivated to pay attention to problems in the city and see what I can do about them. For example, now if I’m driving alongside a sidewalk in bad repair, I see the sidewalk as a problem to fix.” (Simona)

“I learned that there are all sorts of neighbourhoods, with very different needs.” (Carlos)

The academics conclude that the process very clearly created more socially conscious, ‘better’ citizens, aware of the needs of those around them, better able to articulate their own.

In the UK in 2008, the Sun reported a poll in which people voted ‘benefit scroungers’ the most annoying thing in Britain (4). Whilst much of the perception of mis-claimed benefits is driven by the political right and the tabloid media, it is also made possible by a society in which those paying taxes and those claiming benefits don’t know each other. And a key way  for people to find out which of their perceptions are accurate and which aren’t is through learning – as Carlos did – about the needs of their neighbours. And once these lessons have been learned, perhaps it would be harder for budgets to be cut. People who have a conception of why each pound is needed by someone, why it all matters – as opposed to people who are passive consumers of public services, being asked to stand up and defend organisations they don’t really understand – are much more likely to protect expenditure. So, just as Thatcher dismantled society and gave us all a stake in the market, perhaps we need to re-build society by giving ourselves a stake in each other?

But whilst it is there that it has had most success, participatory budgeting isn’t unique to Latin America.

Leith is the old dock on the edge of Edinburgh, famous as the set of the film Trainspotting. In 2010, the local community managed to persuade the Edinburgh City Council to hand £16,600 of development funding over to them. They held an event – ‘£eith Decides’. Hundreds of local people came, pitched community project ideas, and voted on who would receive what.

Many great projects received welcome cash. But perhaps more significantly, the community understood why the cash was needed – how it would benefit everyone to spend it in this way. As one attendee said afterwards:

“Many of the projects – African drumming for unemployed youths, cookers for drug addicts – are the sorts of things the Daily Mail would lambast. But no one left complaining about them – once they had had the need for these projects explained in detail, they left wishing they could have given them more.”

Of course, this was only a small amount of money. But it showed that when given control over such decisions, people are more likely to support such expenditure – to see the need.

And it is perhaps heading north from Edinburgh that we find the UK’s most exciting examples of community empowerment.

Community land ownership, community renewables, and the Highlands of Scotland

The population of the Highlands of Scotland have for centuries suffered at the whim of their landlords and of the global markets. In the eighteenth century Robert Burns intervened, writing to the Earl of Breadalbane, as Beelzebub, ‘congratulating’ him on his murderous ways:

They, an’ be damn’d! what right hae they
To meat, or sleep, or light o’ day?
Far less – to riches, pow’r, or freedom,
But what your lordship likes to gie them?
(from ‘Address of Beelzebub’, Robert Burns, 1786)

By the 1880s, a campaign of crofters’ civil disobedience put the issue of land rights centre stage, and five MPs from the Crofters’ party were elected; they managed to secure the Crofting Act of 1886.

But their problems didn’t go away, and in 2003, the Scottish Parliament passed the Land Reform Act. Among other things, this finally gave crofting communities some right to buy their land – as a few already had.

Perhaps the most famous example is the first community buy-out – the Island of Eigg. In 1997, the inhabitants of this Small Isle managed to mobilise enough support and funds to oust their absentee landlord, and buy their mountain in the sea. The best known book about the buy-out, written by one of the founder members of the Eigg Trust, Alastair McIntosh, is tellingly called “Soil and Soul – people versus corporate power” (5). In it McIntosh draws clear links – as the people of Rosario in Argentina did – between economic control and the re-building of community values.

If you visit Eigg, it’s easy to see this for yourself. When I was there in summer 2009, the entrance to the community café had a large display drawn by local children. It explained that the sea-birds were disappearing because the fish were going; and that the fish were going because the sea was getting warmer; and that the sea was getting warmer because of carbon emissions; and so, it explained, this might be a small community on the very corner of the British Isles, but it would do its bit. The building is shadowed by a row of wind turbines. The burns on the island each have micro-hydro power, and between 2008 and 2010 they reduced their carbon emissions from domestic fuel by 45 per cent. In their shop, nestled between bright white bread and tins of baked beans, you find jars of Fairtrade Palestinian olives – an expression of solidarity.

The café, the wind turbines, the hydro-power – all have been investments since the buy-out. In simple economic terms, it has been a success. But while communities across the Highlands are opposing wind turbines thrust upon them, the people of Eigg have, through the process of coming together and planning together, taken on broader global needs. And so they have insisted that they will lead Britain’s low carbon revolution.

And this is not an isolated example. Look at almost any of the Highland community buy-outs, and you will find exciting, outward-looking projects – almost all powered with community-owned renewables. The process of bringing communities together to make real economic decisions together seems to do something: it seems to help us remember what communities are about – to rebuild our love for one another.

But both cases help with another problem: what to do with our ‘electronic herd’. After the Great Depression, a series of international regulations were introduced to stop another crash. But a key failure of these regulations was political – there was no organised group who would prioritise defending them. And so they were slowly frittered away.

They must be restored, but we surely need to find another way to protect our children from a bankers’ crash. And so, what if instead of just regulating, we also say this: we don’t hand the capital from our work to a small elite and then try to stop them gambling with it too much. We give it roots – we build communities with the capacity to discuss and decide where to invest next, and then watch as those communities demand that the value created by their work is invested as they wish. Because if there is a lesson from the credit crunch, it is surely that we cannot trust elites to invest our wealth. And if the lessons from the Highlands, and the lessons from Latin America, teach us anything, it is surely this: when communities come together, they make wise choices, they stand up for each other, they learn from each other. Because we are humans, and we love each other.

Of course, the barrios of Rossario and the Highlands of Scotland may seem remote to the average Westerner. But if we are to re-build an economy trashed by decades of individualism, then we must first re-build community and society. After Bolivian social movements had finally ended decades of enforced neoliberalism, one activist discussed the process they went through to re-build their country. They didn’t just have to develop better institutions and create fairer laws. They had to ‘glue society back together from the bottom up’. That, surely, is the challenge we now face.


  1. Thomas Friedman, The Lexus and the Olive Tree, Farrar, Straus and Giroux 1999.
  5. Alastair McIntosh, Soil and Soul: people versus corporate power, Aurum Press 2001