Neoliberalism, Austerity and Participatory Democracy


It is often argued that the period in which we live is not suitable to the struggle for participatory democracy. After decades of neoliberal reforms that have privatized the public sector, weakened workers’ rights, and deregulated financial markets, the welfare states in Europe and North America stand in a very weakened position. What remains of earlier welfare reforms have been put under enormous pressure by the current economic crisis, particulary in countries such as Ireland, Spain, Greece, the US and Great Britian, where ”austerity measures” have been adopted that threaten the extinction of the welfare state itself.

Our choice today is not between welfare capitalism on the one hand, and a participatory democratic "socialism" on the other (as may have been the case in the 1960s & ’70s). Rather, our choice lies between a reinforced welfare state on the one hand, and a brutal dictatorship of financial markets and giant corporations on the other. In light of the current situation, we must postpone our aspiration for a direct and participatory democracy, including our "revolutionary" dreams of life beyond capitalism. Instead, we must work for immediate reforms to strengthen the state vis-á-vis the business and financial sector, in order to renew and expand workers’ rights and welfare programs.

At least that is how the argument goes more or less. But is it really the case that our present situation renders participatory, democratic politics impossible? Is there truly an inherent contradiction between fighting for welfare rights on one side and participatory democracy on the other? Do our attempts to achieve immediate reforms to regulate the economy necessarily preclude the revolutionary goals of a post-capitalist society?

I don't think so. In fact, I believe the best way to meet the threat of complete domination of capital in our societies is to struggle for change in the direction of participatory democracy. In this post, I will present several of what I consider to be the most important reasons which refute the argument above; reasons that make the case for participatory democracy – even in an age of austerity.

1. There is not an inherent contradiction between fighting for reforms that will improve people’s everyday lives and struggling for a long-term vision of a participatory democratic society.

One of the main problems of the argument presented above is that it rests on the erroneous assumption that there exists a necessary antagonism between fighting for reforms that would improve the living conditions and rights of people today, and fighting for the more distant goal of a participatory, democratic society. This assumption is often presented as a highly simplistic opposition, "reform or revolution", where the one is thought to exclude the other. Curiously, one would have to dig quite deeply in order to uncover any advocate of participatory democracy who would claim that reforms such as free education or a universal health system would, by themselves, distort the struggle for a participatory democratic society. On the contrary, any movement with revolutionary aims will be seen as hopelessly idealistic and blatantly irrelevant by the general populace if it does not participate in campaigns to enforce workers’ rights, improve education and healthcare, restrict the financial sector and extend environmental legislation.

The question, therefore, is not whether advocates of participatory democracy should involve themselves in struggles to reform the existing "system," but rather how they should go about it. There is of course no one, universal answer to this question. For any given situation, the answer will depend on several factors, such as the type of issue at hand and the unique circumstances of the country or region where the struggle takes place. 

Nonetheless, there have been several attempts to think systematically about how to relate to reforms and immediate issues with the struggle for far-reaching changes. Noam Chomsky, for example, describes reforms as demands that potentially "expand the floor of the cage". Michael Albert, the main theoretician of participatory economics, favors so-called ”non-reformist” reforms, whereas social ecologist Chaia Heller argues for the practice of "illustrative opposition."

These are just some of the wealth of proposals on how to deal with the question of reforms. Personally, I think there is the most ground to be gained by a programmatic approach. This has a long tradition on the Left, and has been elaborated in other articles on the New Compass webpage. In The Communalist Project, for example, Murray Bookchin distinguishes between minimum demands which fulfill immediate needs "such as improved wages and shelter or adequate park space and transportation" and a ”maximum program” which presents the elements of a future participatory democratic society. Between minimum demands and maximum program, he writes, are transitionary demands that "provide the springboard for escalating demands that lead toward more radical and eventually revolutionary demands." Transitional demands aren't necessarily revolutionary in themselves, but they open "pathways, politically, to revolutionary forms of ownership and operation – which, in turn, could be escalated to achieve the movement’s maximum program."

2. The historical basis for our present (or previous) welfare rights are powerful labor unions and social movements with strong grassroots organization.

In their arguments for the inherent contradiction between welfare rights and direct democracy, critics of participatory democratic politics consistently overlook that the rights we already possess have come to us as the result of the struggle of grassroots organizations such as labor unions and social movements.

Civic rights that are currently in the process of being destroyed (or have already been destroyed) by neoliberal reforms and austerity measures were primarily the result of intense pressure from ”below”, not parliamentary negotiations or social-democratic/liberal statecraft. Indeed, the balance of power among capital and labor that makes the welfare state possible in the first place, would not have been feasible without popular movements that were able to push for these developments ”from below."

Let us take, for example, the Nordic countries, which today are among some of the most stable European welfare-states. In Sweden, the 8 hour work-day did not come about because a group of parliamentarians suddenly decided on such legislation, but rather because labor unions threatened parliamentarians with the prospect of massive strikes and even revolution if the parliamentarians did not pass said law. In Norway, the labor movement which essentially built the modern welfare state, came to power gradually through what was, at least in part, a municipalist strategy that consisted of winning support municipality by municipality and initiating welfare arrangements at a local level. A similar story can be told of the United States and indeed has been outlined in detail by author Howard Zinn in A Peoples’ History of the United States.

Although the institution of the welfare-state has pursued a mixture of different initiatives in different countries, (consistently drawing policies from pressures both above and below) it has always relied on the participation of large numbers of people in political activities in between elections. In other words, the welfare-state itself rests on many of the same necessary preconditions of a participatory democracy; a strong, organized, and diverse civic body that is actively engaged in their communities, work-places, etc. The important distinguishing factor among critics of participatory democracy and its proponents is that its critics typically embrace a top-down welfare state, whereas its supporters advocate the creation of a welfare society, where political decisions are organized around directly democratic political institutions and other self-managed entities.

3. The growth of neoliberalism, subsequent economic crisis, and ”austerity measures”, have each arisen due to the absence of participatory democracy.


If our welfare rights were made possible through pressure applied by grassroots-based unions and community organizations, the dismantling of these rights in recent times has been made equally possible by the absence of this type of political participation. This pattern relates to the political structure of the welfare state itself, wherein the general populace have little control over the actions of their representatives – no more than the ability to remove them during periodic elections. While an apparatus of professional politicians and administrators are supposed to be consistently making the best choices on our behalf, the rest of us are expected to mobilize and express our opinions only when voting in elections.

We have grown so accustomed to a passive position as tax-payers and voters, that we have forgotten what it means to be active citizens. In this process we have become absent-minded, while our officials have handed over increasing powers to the market. Ironically, the social democrats in Europe or the liberals in the US – who have been credited in the past for establishing the welfare state in the first place – are now at the forefront in the processes of deregulating financial markets, privatizing public infrastructure and previously state owned industries, and commercializing huge chunks of the welfare sector. At the heart of this massive power shift lies a democratic deficit, as well as the naive belief that it could be possible to uphold our rights without a participatory political structure. Thus, rather than sidetracking reforms that are necessary to prevent the tyranny of capital, a participatory democratic politics is perhaps one of the best guarantees we have for such reforms being realized and honored in the political system.

4. Some of the most innovative examples of welfare reforms today contains strong elements of participatory democracy.

There is no reason to assume that the welfare society of the future will automatically contain the same kinds of centralized and bureaucratic systems of government that have characterized the welfare states of the past. In fact, some of the most innovative welfare reforms that are being conducted today contain strong elements of participatory democracy. Most notable of these is participatory budgeting, a practice being carried out in cities all over Brazil and increasingly in Europe, elsewhere in South-America and even North America. Generally speaking, participatory budgeting consists of popular assemblies in neighborhoods where budget priorities are made and project proposals put forth. The motions agreed upon at the assembly are then handed to elected delegates who have a mandate from their neighborhood to negotiate and design the implementation of the budget at a city-wide level.

Participatory budgeting is devised from the insight that welfare arrangements are best protected through systems of citizen participation, and that the distribution of public resources is most fairly handled by the inhabitants themselves. So far it has been very successful. In Brazil, municipalities that make their budget in this manner have seen an extensive redistribution of municipal funds to poor and precarious districts, and the number of public projects and local welfare programs have increased significantly. Participatory budgeting is of course not the whole answer to issues such as workers’ rights or environmental protection, but it shows how participatory democracy creates a dynamic that enforces egalitarian policies and the public good as opposed to private accumulation of wealth.

5. The central demand in all of the new mobilizations and uprisings against neoliberalism and austerity policies around the world, has been the demand for real and participatory democracy.


The argument that there exists a contradiction in between a participatory democratic politics and the struggle against austerity and neoliberalism is further defied by the reality of these struggles themselves. In Spain, Greece, Portugal, Israel, Ireland, Iceland, England and several other countries, the most central demand of the new movements of so-called "indignants" have been real and participatory democracy. As increasing numbers of people realize that the unaccountable (and sometimes highly corrupt) politicians have sold out the public good to private industry, and chosen to protect the wealth of the bankers instead of the rights of their people, camps have been erected on the main squares of cities and countless neighborhood assemblies have convened to discuss political issues. In Madrid alone there were roughly 120 such popular assemblies before the summer vacations commenced, and participants are already discussing how to develop these assemblies into the shell of a more humane society.

These developments confirm that the most important opponents of neoliberalism and austerity measures have not found a contradiction between fighting for welfare rights and participatory democracy, nor that the endeavor of immediate economic reforms rules out working for a vision of a different society. Many questions remain as to how to achieve this balance in practice – "indignants" all over the world are grappling with questions on which demands to put forth and how to gain support from broader segments of society. Nonetheless, their activities show that there is actually widespread belief that the struggle for a dignified existence and fundamental changes in the political and economic power structures are in fact complementary. 

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