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Financial democracy, Economic democracy


Banking and Finance Law | Law and Economics


This invited essay critically assesses a movement of which I consider myself to be part – the movement to “redemocratize” financial institutions in a manner that restores, to non-wealthy citizens, access to basic financial services comparable to those enjoyed by wealthy citizens. I argue that while financial redemocratization of this sort is necessary to the larger project from which it draws most of its meaning – viz that of redemocratizing access to the resources requisite to productive enterprise and meaningful citizenship more generally – it is far from sufficient to this task. We must therefore take special care not to permit our efforts on behalf of the one project to deflect our attentions from the other.

There is an intimate link, I suggest, between how we configure and conduct our enterprise and how we configure and conduct our finance. We cannot fully describe what an optimally inclusive and sustainable financial system would look like without also specifying what an optimally participatory productive culture and attendant mode of capital accumulation will look like. The steps pursuant to which we lost sight of the first – the steps pursuant to which the nonwealthy got “cut out of banking” – were accordingly likewise the steps pursuant to which we lost sight of the second. Because there is also an intimate link, I further argue, between how we configure and conduct our productive lives and how we configure and conduct our political lives, these also were steps, in a sense, pursuant to which we lost sight of ourselves.

The financial institutions that used to serve middle and working class Americans – thrifts, Morris Banks, even the U.S. Postal Savings System that we phased-out in 1966-67 – in this sense declined and fell for reasons far more fundamental than the usual suspects – financial excess and deregulation – alone. Indeed the latter developments themselves, along with financial disenfranchisement, are best understood as the products of but one “original sin.” That is our having lost sight of what I call our “productive republican” vision – the vision that once both determined and animated our economic and political arrangements alike.

The productive republican vision was resolutely opportunity-egalitarian in outlook and, just as importantly, understood opportunity in starkly material terms. Its aim was to ensure a broad distribution of the material resources, as well as a general inculcation of the capacities and dispositions, requisite to responsible agents’ independent cooperative engagement in both productive enterprise and political self-government. It prompted our very founding as a fully autonomous, no-longer colonial political-economy, and was explicitly articulated in both formulating and advocating all of the most quintessentially American policy measures about which our children once learned in our schools.

Since the late 1960s, I argue, we have gradually lost sight of the productive republican vision on which both our political economy and our financial system were founded. We will not again boast a broad franchise – or even mere functionality – where finance is concerned until we recover and once again act on our productive republican ideals. Restored yeoman finance pre-requires, even as it can help to rebuild, a restored yeomanry – a well-remunerated and resilient middle class that once again “owns” the economy and polity that remunerate and protect it. Postal savings, asset accumulation, and micro-lending plans will avail little until people have something to save, to accumulate, to micro-fund and to build, once again.

To return to that state of grace, I suggest, will be not only to restore and to redemocratize functional finance, but to redeem and to rematerialize citizenship itself.

Publication Citation

Published in: Emory Law Journal Online, vol. 63, no. 6 (2014).