In this post Adrian Bua continues CURA’s third book debate by replying to Gianpaolo Baiocchi and Ernesto Ganuza’s first post outlining the argument in their recent book “Popular Democracy: the Paradox of Participation”.
Popular Democracy deals with an important question for contemporary debates on democratisation – what is the democratic potential of participatory governance in a context of deepening neo-liberalism? To answer this the book develops a history of changes in public administration theory and practice, and then focuses specifically on the origins and travel of Participatory Budgeting (PB) from Porto Alegre in Brazil to Cordoba in Europe and Chicago in North America. In doing so, the authors draw on years of research into participatory governance including ethnographies in the European and North American case studies.
On one hand, Popular Democracy tells a story of the neo-liberal usurpation of what was originally a radical and innovative attempt to revive the socialist project in the context of disillusionment with the pseudo-socialist regimes of Eastern Europe and elsewhere. However, as is clear from the author’s first post, as PB travelled the globe, it became disconnected from its original attempt to provide a collective space for the pursuit of distributive justice, to one oriented towards the individual expression of preferences (for an overview of this process of disconnection see here). On the other hand, the book also tells a more positive story about possibilities opened up by PB. In this post I invite the authors to elaborate upon the implications of their arguments for (a) the potential and limits of institutional design, and (b) the relationship between social struggle and participatory governance, and the role of the former in generating opportunities for empowerment.
First, a key argument of the book is that institutional design matters. Thus, as Ernesto and Gianpaolo argue in their initial entry, if participation is to be a genuinely democratising force, it should be clearly linked to binding decisions of state administration, which itself must adopt a participatory ‘modus operandi’ to accommodate participatory inputs. For reasons I won’t repeat here, but have summarised in another review, this was achieved in Porto Alegre – which turns minds to the claim that processes and institutions can be designed by elites to empower citizens. This is a key tenet of “top-down democratisation”. I would like to ask the authors, firstly, to what extent is success down to the technicalities of getting the institutional design “right”, or is it more to do with politics? The second question is about how far institutional design can go – to what extent can a well-designed Participatory Budget influence fundamental questions about political economy, including how resources are distributed; where economic power lies? The challenge here might be that there is space for participatory governance in times of plenty, but it hits the buffers when resources are scarce and there is more conflict over both the size of budgets and distribution.
International research into collaborative governance led by us at CURA broaches the question of what happens to collaborative practice and ideology during capitalist busts – in times such as the present one, of low growth and austerity. Our cases vary. To give two examples, in the UK it is clear that participatory governance has lost the normative power it once had amongst local state actors. It has become a tool for the local state to manage the consequences of, and adapt to, austerity and scarcity – a far cry away from the empowering and democratising claims associated with it in earlier times. However, in Barcelona, municipal government is experimenting with radicalised forms of participatory governance. Although hopeful, this experiment is severely limited. It is a crosscurrent, even if a strong one, to a hostile Spanish state which continues to deepen neo-liberalism. Still, the fact that such experiments are taking place in various Spanish cities indicates a more generalised ambition for a more participatory democracy and an alternative, more socially just, political economy.
The experience in Barcelona, and Spain more broadly, is rooted in the oppositional and pre-figurative politics of post-crash social movements based around the 15-M demonstrations. The influence of PB upon these social movements is alluded to in the book, which argues that despite their clear limitations, the experience of US and Spanish PB ignited a radicalism which lived on in mass mobilisations such as occupy in the US and the indignados in Spain. It evoked new political subjects and expanded social imaginaries beyond the boundaries of representation in ways that contributed to the alternatives proposed by these movements. This is an interesting argument because critics of elite democracy promotion (or ‘governance-driven democratisation’ for others) argue that it forecloses, and diverts energy away from, more critical and bottom up forms of participation and struggle which have historically been perhaps the main democratising force. Given the different outcomes observed in our own research, at which point, and why, do the authors think that the demands they made translated into this substantive reform agenda within formal political institutions? At the level of direct participants this seems counter-intuitive – surely, taking part in the kinds of individualised, zero-sum processes the authors describe in their initial post must be a disappointing and disempowering experience? I would like to ask the authors to expand on how is it that more radical and democratic subjects emerge from this, particularly in light of the much-discussed diminution out of the Porto-Alegre model?
This question brings me to my final point. Ernesto and Gianpaolo’s account points to a non-dichotomous, even complementary, relationship between top-down and bottom-up spaces of participation. Municipal governments like Barcelona en Comu and Ahora Madrid evidence this kind of relationship – they are rooted in grassroots oppositional politics, but now engage in institutional design and policy making. Their move into the state means a move “from protest to proposition”. At the end of the book the authors argue that the challenge for the future is to make the most of the critical energies summoned by participatory experiences like PB. I would like to close by asking what advice the authors have for radical administrations currently experimenting with participatory governance. Do they think that this participatory milieu in urban governance can be shored up and avoid neo-liberal co-option – and what is the role, if any, for critical and oppositional forms of participation and social struggle in this?
One respondent from the fieldwork in Barcelona (see p. 17 here), put the contextual challenges faced by this project well:
“The tools are very tiny and the expectations are great. How can the City Council of a city that is globally located on the map of the relevant cities in the world, which attracts migratory flows, capital flows… how can it manage a power that it does not have? The City Council does not have the power of the city. It is a very small portion of power”.
Adrian Bua is a researcher and a core member of CURA.
How the world’s first Social Impact Bond drained public resources, and why the market model fails forward
In 2009, when governments took on enormous debts to rescue the crumbling financial sector, they sought to address the fiscal crisis by slashing funding to the public sector in the turn to austerity. The conservatives called for a “Big Society” to fill the gap for scaled-back social protections, but quickly realising that nothing comes for free, sought to link the resource-weak social sector to capital markets ‘awash with liquidity’ (IMF), through the Cabinet Office’s new “social investment bank”, Big Society Capital. Private surpluses, could be ‘mobilised’ to offset government funding gaps, through loans to civil society groups coping with deepening social crises. In the ‘age of austerity’ (Cameron), the Social Investment Market is a magic bullet: It should offset fiscal problems by securing new pools of capital, address social problems by expanding the social sector, and make capitalism responsible by directing investors towards products with societal benefit. So were the praises sung by the father of venture capitalism, Sir Ronald Cohen, now involved in Big Society Capital, the Social Finance organization, and a host of ‘impact’-oriented initiatives.
Central to this broad policy initiative is the Social Impact Bond, a mechanism to address three interlinked problems, namely, to create ‘inclusive growth’ and ‘shared value’ as a new economic model, to offset public fiscal deficits with private investment, and to ‘solve society’s most intractable social problems’ by expanding preventative services. This experiment was tested in Peterborough as the world’s first SIB, bringing together market, government, and societal actors seeking to ‘break the cycle of reincarceration’. Investors provided £5 million as working capital for organisations, who adapted an anti-recidivism programme by St. Giles Trust , to reduce reconvictions of people released from short-term sentences at the local prison. If it reduced reconviction by 7.5% compared to a control group, the Ministry of Justice anticipated related reductions in its budget. It hoped that lower court, police, prison, and other criminal justice expenses could amount to up to £90m. If the project succeeds, a portion of these savings would be used to repay investors plus dividend. If it missed its mark, investors risked losing their capital. The idea was that this would “transfer the [financial] risk to the investors”, as Social Finance writes.
A central pillar of SIBs is the fiscal argument. As project manager of the Peterborough project and major driver of U.K. SIBs, Social Finance describes as a “precondition of a successful [SIB]”, that the savings are larger than the service intervention costs. In a time of fiscal constraint, the SIBs were meant to ‘do more with less’, downsizing prisons, and in doing so, ‘paying for themselves’. They were sold to the electorate under the mantra of presenting “no risk to the taxpayer”. In fact, without such fiscal pressures, one might ask whether this policy would have gotten off the ground at all, let alone accelerate an international diffusion of nearly 90 projects in 19 countries in the value of £300, according to Social Finance.
The final results for the Peterborough project came in this week achieving a 9% reduction in recidivism among its 2,000 person target group. In their statement, Social Finance praised the reductions in reoffending and the repayment of investors. The Ministry of Justice played the same tune and Gordon Brown praised the project in the same manner. Yet, as advocates were patting themselves on the backs, they were also moving the goal posts, with negative implications for the public. The new storyline neglected any reference to fiscal issues. This covered up the inconvenient truth that the Peterborough project would not pay for itself, as Rand wrote in a report for the Ministry of Justice. Absent savings, investors would effectually be paid through new expenditure, from tax payer dollars in the Ministry of Justice’s budget, and public money from the Big Lottery Fund, who rescued the project with a multi-million pound subsidy. While the project was supposed to allow government to ‘mobilise private capital for public good’, the Peterborough experiment appears to inverse this, compelling the government to “fill the funding gap for UK social impact bonds”, when they fail to create expected savings. This fiasco is just the latest example of a blunders associated with the uncritical approach to market-style governance.
While mistakes are common in policy innovations, there appears little concern to reassess the project. Instead, new efforts are being made to shore up the model despite its problems. Anticipating future failures, the Cabinet Office and the Big Lottery Fund conjured up £60 million of special “outcome funds” to subsidise investor returns when SIBs fail to create anticipated efficiency gains.
But now one really has to ask what the fiscal logic is for these projects. If SIBs were partially designed to help government out of a fiscal jam, now they’re placing more pressure on the budget, simply to pay investor returns on projects they’ve contributed no social value to. One wonders why the government should continue a project meant to reduce fiscal pressure, when it is now increasing expenditure with no added value?
So long as the government continues to cut public resources, and refuses to draw in revenue through taxation of concentrated private wealth, we’ll likely see more of such unhelpful market governance schemes, with attractive language but poor outcomes.
While many supporters of SIBs view them sympathetically, they do so because they would like to see more investment in social protections, more market actor involvement in societally beneficial endeavors, and more private contribution to the rebalancing of public finances. But the Peterborough problems show that joining market governance to ‘public responsibility’ are a weak compromise, they can inhibit these goals, and may produce contradictory results. The shortcomings of the Peterborough pilot require more than a tinkering with existing market governance models, and instead an honest rethinking of broader policy directions, asking how the economy may be more adequately ‘re-embedded’ in structures of public accountability.
Robert Ogman is a member of CURA and a doctoral researcher at the Department of Politics and Public Policy at De Montfort University.