Yet, 2012 finds progressives without any such unifying vision to mobilize a broad-based reform movement, let alone to define the debate about the economic future. Instead, by some still-puzzling turn of events, the Tea Party infused political right has capitalized on the crisis produced by already radically deregulated “free-market” financial capitalism to promote an even more radically right-wing agenda based on the argument that what we need now is more of the same—further tax cutting, deeper spending cuts, more deregulation and the eventual elimination of what remains of social welfare and labor rights. Right-wing activists have also reclaimed the moral high ground by framing their agenda as a crusade to save capitalism and political freedom from the threat of liberal “big government,” albeit by resorting to the decidedly low-road tactics of blaming the Great Recession on overly-generous entitlements, organized labor and the “undeserving” poor. For the time being, this is the narrative that is setting the terms of the debate in Washington over what the post-recession economy should look like.

Still, there is reason for hope. From Wisconsin to Wall Street, grassroots movements have resuscitated flagging reform momentum, organizing to defend the rights and dignity of labor, to protest the rise and concentrated power of “the 1 percent,” and to make deeper, decades-in-the-making issues of inequality the center of a campaign to renew representative democracy. Whether and how this translates into a more concrete reform program — and whether it will be able to displace the still locked-in logic of austerity and retrenchment  —remains to be seen.

Hope can also be found in the enduring salience of an older tradition of progressive economic reform. From the late 19th century through the New Deal, similarly fraught moments of economic crisis and inequality were used to frame a series of public debates about the rise of industrial and finance capitalism, and the hazards it introduced. Chief among these were the problems of inequality and concentrated economic power that marked the decades around the turn of that century as what, until very recently, was our first and only Gilded Age.

Indeed, that era’s skewed patterns of wealth and income distribution were much like our own. They stemmed from deliberate,  ideologically slanted policy choices and industry practices in a political system dominated by the interests of big corporations and the wealthy. They reflected vast imbalances of power when it came to controlling wages, prices, working conditions and the broader fate of the economy. For the great majority of citizens, the material risks and consequences of these imbalances were palpable, and never more so than in the sequence of mass unemployment, falling property values, foreclosure and deepening depression that periodically gripped the economy in the wake of the financial panics endemic to unregulated industrial capitalism.

The moral and political hazards of Gilded Age capitalism were palpable as well, inspiring a language of protest most recently echoed in anti-Wall Street demonstrations in Zuccotti Park. Then as now critics protested the “evils” of inequality and wealth concentration as akin to plutocracy, predation, malefaction, economic oligarchy and outright theft. They worried about the corrupting influences of a financial sector that had grown too large and of the speculative pursuit of profit for its own sake.

But the progressives of yesteryear voiced their concerns in the name of more positive, traditionally republican principles as well: principles grounded in ideas about socially productive labor as the source of true economic value and civic virtue; about the need to balance the public interest against the overreaching claims of narrow private economic interests; about the importance of free (that is, autonomous and independent) and fairly compensated labor that were rapidly being undermined by the work conditions of industrial capitalism. While hardly uncontested, and by no means applied equitably across the lines of race, ethnicity and gender, these principles stood in sharp contrast to Andrew Carnegie’s self-justifying Gospel of Wealth and every-man-for-himself Social Darwinism. They provided the basis for framing Gilded Age inequality as a violation of traditional republican values, and for justifying such measures as anti-trust legislation, labor and environmental protections, the progressive income tax, and financial reform. The true radicals, in this narrative, were the proponents of laissez faire.

Over the course of several decades, a wide and by no means unified array of political actors — labor unions, farmer alliances, consumer groups and policy intellectuals as well as elected officials from both major political parties — would draw on these principles and values to build a case not only against the “evils” of wealth concentration and oligarchic control but for a political economy that represented the worth and served the interests of  the people. Few issues absorbed as much public attention — or have as much contemporary relevance — as the Congressional investigations of Wall Street and the banking industry conducted in response to the system-shaking financial panics of 1907 and 1929.

The first of these investigations was conducted in 1912-13, and was aptly dubbed “the hunt for the money trust” in a series of riveting blow-by-blow articles by renowned investigative journalist Ida B. Tarbell. It also produced the well-known broadside by lawyer and future Supreme Court Justice Louis D. Brandeis, who published a series of articles in Harper’s Weekly in 1913, soon after collected in a book with the memorably aphoristic title “Other People’s Money, and How the Bankers Use It.” The articles, illustrated with caricatures of overfed plutocrats, used evidence from the “money trust” investigations to track the system of “interlocking directorates” that had allowed a small coterie of investment bankers to establish monopoly control over the nation’s credit, and hence over the economy writ large. Worse still, they financed their riskiest and most personally profitable ventures by using bank deposits — the modest savings of the average citizen — appropriating the people’s capital and putting it to self-enriching but otherwise unproductive speculative use. Brandeis looked to the state for regulation, suggesting, among other things, that banks be regulated as public utilities, entrusted as they were with safeguarding so much of the nation’s wealth. But in “Other People’s Money,” he offered a complementary strategy as well. Banking, he urged, could be by and for the “the people” if the millions of farmers, workers and clerks who entrusted their savings to the big banks would put it in credit unions and banking cooperatives — the financial instruments of industrial democracy — instead.

Although it would take another two decades — and a more massive financial collapse — to pass meaningful financial regulation, Brandeis’ basic formulation continued to serve as a powerful touchstone for reform throughout the New Deal. In 1933, the Senate instigated the well-known Pecora investigations of the Wall Street money trust and its role in the stock market crash of 1929. (Congress soon after passed the Glass-Steagall Act to prevent the very abuses that would lead once again to reckless financial speculation in the wake of its 1999 repeal.) Echoes of “Other People’s Money” could be heard in letters to Ferdinand Pecora, the chief counsel for the investigation,  urging him to “bring all these crooks to their knees, and make them repay us decent and honest people” for the life savings they had lost.

In 1938, countering the ill-advised austerity measures that had led to the deep “Roosevelt recession” the previous year, progressives in the administration pushed a vacillating president to step up the battle against the monopoly practices that, they suspected, were stifling the recovery.  After three years of research, the eventual recommendations of the Temporary National Economic Committee were fairly tepid, nor did the committee find evidence of the suspected capital strike.  But by then FDR had used the TNEC’s creation to turn the tables on his conservative critics.  The true threat to liberty came not from an elected and publicly accountable government, as detractors charged, but from “a concentration of private power without equal in history.” He also joined a host of other political activists and reformers in recognizing the necessity, indeed the imperative, of a government prepared to hold private industry accountable to the standards of democracy.  “[T]he liberty of a democracy is not safe,” the president argued, “if its business system does not provide employment and produce and distribute goods in such a way as to sustain an acceptable standard of living.”

Though articulated in immediate response to the looming threat of economic oligarchy, these principles of reform and regulation were embedded in the more expansive idea of the economic and  political rights of citizenship — and the role of government in protecting them — that had become the cornerstone of New Deal reform. FDR enumerated these as a “second,” economic bill of rights in his 1944 State of the Union address. Among them were the right to a job with a fair wage, a decent home, a good education and healthcare as well as the right to an equitable playing field and to protections against the power of organized wealth. Underlying these rights, FDR declared, was an even more basic and “self-evident” — republican — economic truth: True freedom rested on economic security and prosperity for all. This principle would be embraced by generations of civil rights, women’s rights and labor movement activists as they struggled to make the country live up to that promise.

It is against this historical backdrop that the convergence of Wisconsin and Occupy Wall Street can be seen as an opportunity to articulate some core principles of a progressive vision for the 21st century economy: jobs at living wages for all who want them; equal opportunity regardless of race, class, gender, religion or sexual orientation; universal access to social goods such as health, education, decent housing and economic security; a fair distribution of wealth and income; a democratic system of finance; respect for human dignity in the workplace and the public sphere; a  market regulated by representative government rather than left to its own devices. These, at a minimum, are a starting point for an economy that creates the  conditions within which modern-day democracy can thrive.

At a time when even the most modest healthcare and financial reform measures spur charges of “European-style social democracy,” it may be tempting to conclude that these expansive ideals are simply too far outside the realm of political possibility to be relevant. But that logic, decades in the making, has already exacted a devastating political price. We see it in the failure, after nearly 40 years of falling wages and rising inequality, to make full employment that sustains decent standards of living a standard-bearer for economic health. We see it in the absence — public outrage over Wall Street bailouts and “too big to fail” aside — of any real challenge to the logic and power that continues to sustain our modern-day money trust. We see it in the inability of progressive individuals, organizations and movements to connect to create an economy that works for the benefit of a democratic polity rather than the other way around. And we see it in the right’s enduring monopoly on the politics and the rhetoric of economic values and reform. It’s high time for progressives to reclaim that too-long neglected territory, lest we do ourselves the injustice of forgetting a vital part of our past.

The urgency is striking. Instead of being fundamentally discredited, the oligarchs and plutocrats who crashed our economy are raking in record profits and acting even more aggressively to bury the American labor movement once and for all. Over the last year, several labor leaders have told me that they believe unions have only about five more years left if they don’t figure out some kind of breakthrough strategy.

The complete collapse of unions would have devastating consequences. The labor movement has played a crucial role in advancing economic justice in the workplace and in politics. Union membership raises median weekly earnings and reduces race- and gender-based income gaps, and union workers are much more likely to receive health care and pension benefits than workers who are not members of a labor union. The decline of organized labor is directly linked to the rise in economic inequality over the last 40 years and the onset of a “Second Gilded Age.” The decline in union density coupled with the decline in the real value of the minimum wage explains one-third of the dramatic growth in wage inequality since the early 1970s.

Over the past 30 years, American employers have become even more aggressive at violating their workers’ rights to organize under a toothless and outdated labor law regime. Contrary to the intent of the 1935 National Labor Relations Act, which made it national policy to encourage and promote collective bargaining, the NLRA now provides incentives for employers to break the law routinely and ignore any compulsion to negotiate collective agreements. When there is little outrage for the daily violations of workers’ liberty (employers fire workers illegally in 1 in 3 union campaigns for attempting to exercise freedom of association), our democracy is in peril.

As worker power has eroded in the workplace, the labor movement’s political clout has also declined. Measured by both members and money, unions are  still the most influential and resourceful left-wing constituency in American politics. Organized labor also remains the most powerful core of the national Democratic Party by several measures, including campaign contributions, grassroots mobilization efforts, lobbying and setting the party’s legislative agenda. Indeed, the labor movement spent a record amount of money to help get a Democrat elected to the White House in 2008.

With a labor-friendly White House and a Democratic Congress, organized labor began strategizing about how and when to push for its No. 1 priority, the Employee Free Choice Act (EFCA). Labor law reform would not only help the flagging movement survive but also offer an indirect solution to our growing problems of economic inequality and the catastrophic Great Recession. By leveling the playing field between workers and employers, higher union density decreases wage inequality in the American labor market while increasing purchasing power of consumers.

But the move to pass EFCA failed, revealing just how weak organized labor has become. Now, with no hope for labor law reform in sight, is the time to rethink the role of the labor movement in the 21st century. Progressives need a strong and vibrant labor movement that focuses not just on workers’ rights, but can also act as a democratizing force advancing social justice and expanding worker, citizen and resident power in the workplace and in their communities.

The labor movement is the critical anchor and enabler of democracy grounded on a notion of freedom. Most people have an intuitive understanding of what democracy means: rule by the people (as opposed to rule by the few or an elite). Yet, as Corey Robin so eloquently points out in his book on fear, Americans give up their individual freedom and democratic voice every single day they walk into work. The workplace is an authoritarian dictatorship, and we accept this as legitimate.

Now is the time to challenge that feudal relationship. We need to call into question the assumption that Americans believe democracy stops at the workplace door. If we would not stand for a despot to rule over us with impunity, why do we let the boss do so every day of the workweek? Any progressive advance needs a strong labor movement to achieve a fully free and democratic workplace and society. This vision of freedom and democracy manifests in two domains: the workplace and the southern region of the country.

First, labor’s role must be made much more central at the workplace and in the economy more broadly. Labor can, and should, be a governing co-partner with business and government in the economy. What labor brings to the table is a vision of growth with equity. And there are already examples of this kind of union and worker organizational influence in the economy at the regional level. The Los Angeles Alliance for a New Economy (LAANE) and Working Partnerships USA, both in California, have shown how labor can become a governing partner in economic decision-making at the regional level.

Another aspect of centralizing labor’s role in the economy and advancing workplace democracy is to expand workers’ voice and power at the bargaining table.  A 21st century vision of the American labor movement is one that destroys the divide between labor and community that has long governed the politics and practices of unions. What the emergence of new forms of worker organizations have taught us is that workers are also residents in communities, while residents are also workers, and there are organizational models available that take all workers’ identities into account.

While labor law constricts the scope of issues that unions can negotiate at the workplace, it doesn’t prevent worker organizations from bargaining in the political arena for affordable housing, equitable development, local, regional and national economic policy, criminal justice, or the wide range of issues that affect poor and working class people. Stephen Lerner, among others, has outlined what a wider scope of collective bargaining might look like. Imagine, for instance, that the United Auto Workers could negotiate over the environmental standards of the cars they produce instead of just wages and benefits. Such a vision requires a far-reaching campaign to redefine the scope of collective bargaining and workers’ voices at work. This is a 10- or 20-year effort to be sure, but one that will be crucial to any future the labor movement has in the U.S.

Directly related to expanding labor’s role in the economy and expanding the scope of collective bargaining is advancing freedom in the workplace. In short: democracy, over autocracy, at work. This would go beyond the softer slogan of the AFL-CIO’s “voice at work.” This is an admittedly long-term project. But several concrete demands arise out of the broad notion of a workplace democracy. For instance, the Employee Free Choice Act would have allowed workers a modicum of political liberty at the workplace; it aimed to restore workers’ rights to freedom of association. But a deeper and even more controversial demand proposes an end to management prerogative over all workplace decisions. Workplace democracy means truly giving workers a “voice” at work. Whether through work committees or required seats for employee representatives on the company’s board of directors, a deeper vision of workplace democracy enables workers’ voices to have a real impact.

The second domain for a 21st century labor movement is geographic: finally democratizing the South through the building of a Southern labor movement. After the CIO’s Operation Dixie failed to organize Southern workers in the late 1940s, with a few exceptions mostly in the public sector, organized labor gave up on the South. We’ve been suffering the consequences ever since. The Southern, Walmart model of low-wage labor markets is being imported to the North. We only have to look at the attack on public sector workers in Wisconsin and Michigan and the recent passage of Right-to-Work legislation in Indiana to understand that Northern governors and the Republican Party are trying to turn their states into Yankee versions of Southern Right-to-Work (for less) states.

Instead of retreating to a defensive posture, organized labor should launch an ambitious and bold campaign to organize the South. A Southern labor movement would galvanize workers in the region who, contrary to popular belief, would like to become dues-paying union members. Given the dramatic demographic changes occurring in the South involving increased migrations of people of color who tend to be the most pro-union and pro-worker organization (see the Coalition of Immokalee Workers’ recent victory over Trader Joe’s), the opportunity for organizing and building a Southern labor movement is greater today than even 60 years ago under Operation Dixie. This effort would not only transform the low-wage economic model of the South, it would prevent the race to the bottom from North to South, and most important, it would transform the politics of the region and fundamentally the country.

What grounds this vision of a 21st century labor movement is the core idea of extending what Americans claim to cherish in politics and civil society to the workplace: democracy, liberty and freedom. The consolidation of income, wealth and political power by the 1 percent over the last several decades is directly related to the decline of workers’ voice and power. Rebuilding a truly countervailing (and democratic) power, as the labor movement did in the 1930s and 1940s, will require a bold and convincing vision of workplace democracy and freedom. Workers and their organizations have historically played this anchoring role for progressive politics throughout American history. Now is the time to reclaim this historic charge for the 21st century.

Despite the ambiguity of their goals, the Occupy protests have made one point abundantly clear: The mainstream Democratic alternative is paltry stuff. For the most part, Democrats disagree that tax cuts and deregulation are the solution, and instead argue that the state should be used to guarantee equal opportunity. For instance, cheap, publicly available education, job training and affirmative action are all justified on the grounds that each American should have the skills to compete and the labor market should treat everyone equally.

Yet, the two parties differ only on means, not ends. While Republicans profess a more abiding faith in a self-regulating economy, Democrats believe carefully tailored state interventions are needed to ensure equal opportunity.

The question becomes: Equal opportunity for what? For both parties, opportunity basically means a market-oriented ideal where individuals are given the chance to fight over a limited supply of high-status jobs. As it turns out, the end that each party agrees on is largely same: the equal opportunity to become unequal.

Most Democrats and Republicans share a commitment to an inegalitarian, early 21st-century version of social mobility first articulated in the United States by Thomas Jefferson. In a famous letter to John Adams, Jefferson argued that there is a “natural aristocracy amongst men” who are marked by “virtue and talents.”

According to Jefferson, the natural aristocracy was “the most precious gift of nature for the instruction, the trusts, and government of society.” He distinguished this natural aristocracy from the “artificial aristocracy founded on wealth and birth, without either virtue or talents.” The latter won its power through circumstances and laws that protected the privileges of birth – like laws of primogeniture, or hereditary political positions. Jefferson’s view was seemingly egalitarian: Inherited status, wealth or power is undeserved. But at its heart, this view – let’s call it meritocracy – remained deeply inegalitarian. It favored a society in which the majority were deferential to, even subject to, the power and authority of the naturally talented few.

Republicans and Democrats each pay tribute to this Jeffersonian vision of meritocratic decision-making and political leadership. If anything, Democrats are often even more intent that Republicans in promoting expert authority and professional management.

More generally, both parties agree that equal opportunity means the equal opportunity to rise into the few positions of social power and prestige, or perhaps more broadly, into the economically secure, high earning professions. Call them the 20 percent who control 67 percent of the income and, even more importantly, 85 percent of the wealth.

The apparent egalitarianism of the meritocratic society is a thin veil indeed. The reality of rising poverty and declining social mobility underscores that in practice our “meritocratic” order is hardly fluid. Rather than individuals easily entering and exiting the upper classes based on personal skill, professional status has become an inherited privilege – reproduced from one generation to the next.

But even at its purest, stripped of race or sex-based barriers to advancement and in a setting of fluid inter-generational change, the meritocratic ideal is still aristocracy by a different name. After all, meritocratic success is a zero-sum game. Professional respectability and high-status positions are inherently exclusive domains. For every one person who rises into the top 20 percent, there are four others who by definition fail to make it. In fact, according to the Bureau of Labor Statistics, of the 20 occupations projected to grow rapidly over next decade, just five require an associate’s degree or more. Just two require a doctorate or professional degree (hat tip Doug Henwood). As a model for society, Jefferson’s “natural aristocracy” does not challenge the permanence of social hierarchy, but instead seeks simply to rearrange its membership.

Still, there is another possible interpretation of equal opportunity that  we can look to. Just before the Civil War, Abraham Lincoln articulated an alternative account of economic improvement: “The prudent, penniless beginner in the world, labors for wages awhile, saves surplus with which to buy tools or land, for himself; then labors on his own account another while… [This] is free labor.”

Lincoln imagined social mobility as the transition from dependence to independence, or in his terms, from wage-labor to free labor. An economy consistent with this idea had to be organized so that everyone could become economically independent. One person’s success was not another’s failure, because ideally everyone could rise together.  Moreover, this was an ideal of freedom applied not just to politics but to economics. The thought was that a person ought to be free from domination in all spheres of life. As Corey Robin recently put it, Americans have a “visceral hostility to – individual forms of domination.”

This Lincolnian vision is truly egalitarian and highlights precisely what is troubling about the current crisis of social mobility. The problem is not just that we do not to live up to the ideal, but that the underlying ideal is hierarchical, and fails to grasp the way in which we ought to be making it possible for everyone to escape relations of dependence and control.

Today we barely know how to make sense of Lincoln’s vision of social mobility. The thought is not entirely foreign — it haunts our economy in the dream of self-employment or workers cooperatives. But mainstream debate has too quickly accepted Jefferson’s theory, the meritocratic ideal, and argued only about how to realize it. By focusing primarily on the means of social mobility we put the cart before the horse. We argue about the social and economic policies that promote equal opportunity before we figure out what kind of opportunities are important in the first place.

A change in perspective forces us to look differently at wealth and income inequality, and social stagnation. If what we care about is economic independence for all, then we have to think not just about the (very important) topic of wage levels, but above all about social power.

Making such power broadly available rests on two key elements. First, individuals have to possess enough material and cultural resources to be secure from potential destitution. And second, they must have opportunities to make decisions about the most important economic and political issues.

So, minimally, expanding the social power of most Americans means investing in programs like universal health care, which secure citizens from the vicissitudes of nature and the market. But it also means going beyond the politics of social welfare in order to ensure that workers have control over their own activities.

Employees must not only be able to provide for their basic necessities, but also to shape the terms of their work. This latter — equally fundamental — goal is a major reason why “the primary economic objective of the Democratic Party” for decades was once the commitment to full employment. The purpose behind guaranteeing everyone a job was not simply to provide Americans economic security; it was to elevate the overall bargaining power of employees. In an America wherever everyone could find work, employees would have infinitely more control over the structure and rules of the workplace. The shadow of this idea still lingers in proposals like the Employee Free Choice Act and public works programs.

Ultimately, if the market is doing such a bad job at supplying employment in which most Americans can enjoy real economic independence, then it may well be time to look elsewhere. Progressives have a responsibility to think again and more expansively about ideas like workers’ cooperatives and how to promote broader democratic control over investment (for instance, by restructuring corporate governance). Experimentalism should be the order of the day, not cautious reaffirmation of tired nostrums.

But instead, the consensus, bipartisan framework of social mobility primarily offers a language of elite advancement, rather than a vision for widespread independence and social power.  This means that what makes equal opportunity such a mirage is more than just a failure to institute the right policies or to live up to society’s basic principles. We are facing a failure of principle itself. Recent events give us at least some hope that this failure can also become an opportunity to reimagine what equal freedom means in America.

For too long progressives have been content to work within an economic discourse largely set by conservative principles, hostile to state action while idolizing free markets and corporate power. Indeed, the last time a sitting Democratic president launched a reelection campaign with his State of the Union address, it was Bill Clinton, who declared proudly that “the era of big government is over.”

Sixteen years and one economic meltdown later, America is facing an election that is about more than candidate personalities, or even policy platforms; it is about the war of ideas, and at stake is nothing less than our collective political and economic future. Progressives can only win this long-term battle by finally articulating a deeper and more coherent vision of progressive political economy, one that sharply contrasts with conservative ideals.

- – - – - – - -

At its core, the conservative economic vision rests on a three elements. First, it views freedom as “noninterference” — we are only free to be left alone, and the state is limited to protecting basic liberties. Second, it sees individuals as equally situated such that market activities — bargains, transactions, the starting of a business — reflect each individual’s creativity, innovation, agency and merit. Finally, this vision sees markets as the most efficient way to run a society. Because markets aggregate millions of individual transactions into metrics like prices, they appear more able to incorporate a wide diversity of preferences and beliefs into a smoothly-functioning system than centralized “elite” policymakers in Washington.

These elements form the basic building blocks of conservative economic policy: a preference for free markets, willful blindness to the inequalities of opportunity that arise in a market economy, and hostility to taxes, government regulations and social safety nets.

This conservative account is compelling because it is more than just ideology. It is also a moral vision of the good society, and it tells a clear story about what went wrong and who is to blame: The fault is the government’s, and the solution is to deregulate everything from the new Consumer Financial Protection Bureau to the social safety net.

But this is not the only way to envision a modern economy — and for progressives, it is certainly not the best possible vision.

First, freedom for progressives means more than just being left alone; to really be free, we each need protections from not only the power of the state but also the power of powerful private actors like big corporations. Further, each of us needs some basic capabilities — from healthcare, to minimal income and sustenance — in order to experience genuine freedom. Free individuals are those who have full moral standing and the capacity to act effectively in society.

Second, the conservative view of market freedom ignores background inequalities of power and wealth. Markets are not purely arenas of equal exchange fairly earned, but instead are often domains of power and politics, where rents are extracted through regulatory arbitrage or outright fraud, and profits may be just as easily the product of exploitation or malfeasance as of innovation and merit.

Third, market freedom ignores the degree to which politics can be more than a space of corruption and ineffectiveness, and instead can serve as crucial arena for freedom and creativity as citizens engage in the project of making a more just and desirable society.

- – - – - – - -

What does this mean for 2012?  This critique of the conservative vision suggests a constructive, alternative progressive vision for the economy. To overcome the conservative economic vision, progressives must offer more than a policy agenda or campaign rhetoric, but instead a vision of what a progressive economy looks like, and how to get there.

Progressives must be unabashed in their critique of the existing economy and the mistake of seeking the answer in “free markets,” by highlighting the dangers of concentrated wealth and corporate power, rampant economic inequality, and a nation with declining social mobility. These are the kinds of economic problems that demand response – and that give purpose to government itself.

Progressives must also own the project of reforming government, not to privatize or deregulate, but rather to democratize. Transparency is a start, but progressives must do more to foster citizen participation, thereby making government more responsive and accountable. Finally, progressives need to speak in a more openly moralizing language, appealing to core values of freedom and fairness in linking these values to particular policies.

This progressive vision has to rekindle a sense of empowerment, possibility and urgency among citizens themselves. Particularly in the current economic crisis, it is easy for citizens to feel disempowered, buffeted by titanic forces beyond their control, faced with a political system they cannot trust, engage or reform. Under these conditions, it is no wonder that the conservative vision of naturally “free” and corrupt government suffuses political rhetoric. In response, progressives need to articulate their own constructive vision of how citizens can be empowered politically, and how this political power can be used to reshape our economic future.

Economic vision and economic realities do not arise out of thin air.  Rather, they depend on the efforts of activists, thinkers and citizens to be articulated, developed, refined — and attempted. The current economic crisis caught progressives off guard. After decades of willfully absorbing conservative criticisms of the welfare state and defenses of free markets, progressives had let their own alternative values and vision atrophy. Until it remedies that failure, progressive politics will continue to fall short, despite particular electoral or policy victories. If progressives succeed in doing so in 2012, then the repercussions will last well beyond this one election.

The first essay in the 99 Percent Plan series is about the dangers of privatization. You can read it here.

Privatization is one of the few political projects that enjoys bipartisan support: Conservatives cheer the rollback of the state, and liberals like to claim that the virtues of the free market are being used towards the egalitarian ends of public policy. The fraud and waste that often come with outsourcing these services has been well-documented. The private management in Iraq and the aftermath of Hurricane Katrina, and the lobbying efforts of corporate prisons have all provided horror stories of what happens when cronyism guides decision-making on behalf of the state. But privatization as standard government practice has problems that go far beyond the abuses of any single incident.

Rather than solving problems with government, privatization often amplifies those issues to new extremes. Instead of unleashing market innovation, it often introduces new parasitic partners into the decision-making process. Instead of providing a check on the power of the government, it allows the state to circumvent constitutional and democratic accountability measures by merging with the private sector. And ultimately, the practice replaces the set of choices and constraints found in democracy, with another set found in the marketplace. Today’s political conversation is blind to these problems out of a mistaken faith in the efficiency and fundamental equality of markets, contrasted to the ineffectiveness and corruptibility of the state.

What advocates miss is that the logic of markets creates private-sector coalitions capable of extracting just as much from taxpayers as the state. Corporations, lobbyists and other market actors can have just as much political agency as the government, and privatization can mobilize businesses to rewrite market practices.

This political process plays out in the quality of the services provided and the structure of the companies providing them. Privatization has sometimes meant that the most lucrative and easiest parts of these government obligations go into private hands, creating private profit, while the most difficult and dangerous parts remain with the public. This can range from the “privatizing the gains, socializing the losses” of various parts of the financial sector to the “cream-skimming” that goes on in many other industries.

If privatization is meant to put a check on the size and power of the state it often backfires, as the practice can be used to circumvent normal mechanisms that exist to hold the state accountable. A whole array of transparency laws and constitutional checks don’t carry over when the government outsources its responsibilities and activities to independent businesses.

Privatization as a way of avoiding constraints and accountability measures has two particularly troubling consequences. First, the government can use independent agents to do things that they themselves cannot do, betraying the whole point of keeping government in check. Especially in the world of surveillance, this practice can act as a way to get around constitutional protections enjoyed by citizens.

Second, accountability measures that have evolved through decades of public law are jettisoned when a service leaves the public sector, allowing companies to do the government’s work in a network of secrecy. Ways the public keeps a check on the government, from the Freedom of Information Act to the Administrative Procedure Act to whole regimes of other transparency laws, do not bind outside businesses.

The Constitution prohibits the delegation of significant state powers, but the Supreme Court currently puts few constraints on the government to outsource many of its important duties. What today’s discourse ignores is an understanding of the liberal conception of what public and democracy itself is good for — as a way to check private and government power, and promote accountability and responsiveness.

These blur into dark scenarios where private-public relationships give public agents maximum discretion in exchange for giving private agents advantages over their competition. For example, after FedEx’s CEO announced that his company would be cooperating with the government following the Sept. 11 terrorist attacks, the firm received a number of rewards. Ranging from special access to security databases, to a prize seat on a regional terrorism task force (the only private company represented) and special state licenses, these benefits amplified the firm’s power in the marketplace over noncooperative competitors like UPS, all in exchange for amplifying the power and reach of the state.

Defenders of privatization also argue that the marketplace creates innovation. Competition, the profit motive and the “creative destruction” of the market system can be deployed to increase the efficiency and effectiveness of government services. But what this outsourcing really does is move constraints from one space to another. It transforms the strengths and weaknesses, the limits and the constraints, from government to the market.

Privatization replaces the democratic role of citizens finding solutions to collective problems and transforms it into consumers trucking and bargaining in a marketplace. Finding solutions in a public space emphasizes accountability, voice, transparency, rules and claims through reasoning that goes beyond the self.  The market emphasizes cost-benefit thinking, profit-seeking strategies, bargaining and the satiation of individuals’ wants; good things in many circumstances, but not necessarily when it comes to the powers of the state.

A regime of privatization shifts the debate away from the functions of government towards the allocation of those functions. For all the talk about innovation by outside contractors, what privatization largely does is preserve the scope of government services while looking for efficiency gains. And since the scope of what the government does is held constant, the real gains come from minimizing costs.

Take prisons, for example. With the addition of privately run prisons, the debate narrowly focuses on how much to spend on prisoners. Minimizing costs here will often be the result of simply providing less of a good at a worse quality, and the debate will focus on the optimal extent of these privatization contracts. Meanwhile, the greater question of when the state should imprison people fades to the background.

What’s actually public about these responsibilities disappears from the conversation. Privatization assumes that cost quantifying solutions are more fundamental to government than any discussion of ethics or values. The move away from democratic accountability is particularly worrisome because in many of these fields, the ultimate motivator of private markets, the profit motive, is in direct conflict with the public administration. The basic values, concepts and institutions of liberal democracy — political participation, elections, equal distribution of individual liberties, checks on concentrated power — do not work towards economic competitiveness.

The ideology that the government is just one among many providers of goods and services is a seductive one in this age of markets. But the government isn’t simply just another agent in the market, and firms that are empowered to carry out the role of the state can be as abusive as the worst bureaucracy.

We need new arguments for the government, with all its strengths and weaknesses, to be allowed to do its jobs knowing that it won’t always be perfect. The alternative is government by cronyism, delegated marketplace winners exploiting what works about markets with none of the normal checks we expect on a functioning democracy.  There are no doubt weaknesses in the current functions of government, but for those who resist privatization, that is a call to political reform rather than one of abandoning the public arena altogether.