“An incredibly important and timely collection of essays, offering a detailed diagnosis of the issues afflicting modern financialized economies and a vision of a future beyond neoliberalism. Required reading for all those involved in the project to build a new economy.” - Grace Blakeley, research fellow at the Institute for Public Policy Research and economics commentator at The New Statesman “This thought-provoking series of essays reminds us of a truth often denied: there is no shortage of money for transformation of the economy away from addiction to fossil fuels. The questions tackled by the authors are this: who controls the monetary system and how can the wider public regain control over a) their own savings and b) a great public good - the monetary system.” - Ann Pettifor, director of Policy Research in Macroeconomics (PRIME) and author of The Production of Money “The dominant narrative today is that financial and private capital, will lead – at some distant date – to public good. Increasingly, even public infra- structure is being handed over to big capital. We urgently need a global movement to rein in global finance and safeguard our future. This impor- tant book provides us with the compelling evidence that this is not only necessary but also possible.” - Prabir Purkayastha, founder and chief editor at www.newsclick.in “Here is yet another major contribution from TNI to our understanding of the complex world of high-finance. TNI has gained an international reputation for its extraordinary work on helping us understand the real world machinations of the high-level investment world of financiers.” - Saskia Sassen, Columbia University and author of Expulsions: Brutality and Complexity in the Global Economy “The stark reality is that the world stands on the brink of another crash owing to the failure to reform a global financial system dominated by private banking behemoths. Public finance that is accountable to citizens and the community is the answer, and nowhere is this truth presented more convincingly than in this volume. This is the reimagination of finance that the world so desperately needs.” - Walden Bello, State University of New York and author of Paper Dragons: China and the Next Crash “The shape of our economy and the texture of our lives within it is deeply affected by financial flows. Finance is a creative force, but our current set of financial institutions are like a toxic old guard painting a bleak and unequal future. This book showcases a palette of vibrant, people-powered and radically empowering public alternatives that we can use to break the dull and destructive forces of the status quo.” - Brett Scott, journalist and author of The Heretic’s Guide to Global Finance: Hacking the Future of Money Public Finance for the Future We Want www.tni.org/publicfinance Edited by Lavinia Steinfort and Satoko Kishimoto Copy editing by Madeleine Bélanger Dumontier Proof reading by Christopher Simon Design and infographics by Karen Paalman The editors would like to thank Nick Buxton and David Sogge for their help- ful feedback on the manuscript. Amsterdam, June 2019 Published by Transnational Institute (TNI), The Democracy Collaborative, Change Finance, Focus on the Global South, New Economics Foundation, Fairfin, MOBA Housing Network, Tellus Institute. ISBN 978-90-70563-70-7 Copyright: This publication and its separate chapters are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 license. You may copy and distribute the document, in its entirety or separate full chapters, as long as they are attributed to the authors and the publishing organisations, cite the original source for the publication on your website, and use the contents for non-commercial, educational, or public policy purposes. Public Finance for the Future We Want EDITED BY Lavinia Steinfort and Satoko Kishimoto Content Introduction: Public finance for a better future by Lavinia Steinfort 7 Chapter summaries 23 Part I The power of public money for people and planet 33 Chapter 1 Money for people by Mary Mellor 34 Chapter 2 Citizens’ Wealth Funds: A powerful new economic and 47 social instrument by Stewart Lansley and Duncan McCann Part II Cooperative finance to build community wealth from the 61 ground up Chapter 3 Towards community-owned and controlled finance for 62 local economic development by Milford Bateman Chapter 4 Kerala’s web of cooperatives: Advancing the solidarity 78 economy by Benny Kuruvilla Chapter 5 Community wealth building and resilient local economies: 92 The role of anchor institutions by Thomas M. Hanna Chapter 6 The social and solidarity economy and the rise of new 107 municipalism in Spain by Ana Álvaro, Adrián Gallero, Miguel Ángel Martínez, Fernando Sabín and Sandra Salsón Chapter 7 Building bottom-up finance solutions for cooperative 121 housing in Central and Southeastern Europe by Agnes Gagyi Part III The potential of public finance and banking 135 Chapter 8 Democratizing nationalized banks by Frank Vanaerschot 136 Chapter 9 Public banking on the future we want by Thomas Marois 150 Chapter 10 Public investment for financial system change, not 165 climate change by Oscar Reyes Chapter 11 Boosting investment: Breaking the straitjacket of the 180 Eurozone by Ludovic Suttor-Sorel Chapter 12 A public buyout to keep carbon in the ground and 196 dissolve climate opposition by Carla Santos Skandier Conclusion: Tools for transformation 213 Organizations 222 Get involved & Read more 226 Introduction PUBLIC FINANCE FOR A BETTER FUTURE Lavinia Steinfort Public finance for a better future finance fora better Public 7 Do you wish to see regenerative, equitable and democratic economies, built with collective power? We believe it is not only necessary but also very possible. Today’s economic system, fuelled by an extractivist logic and prone to crises, has reignited and enflamed old monsters of racism, misogyny and other forms of fear and hate. Economic alternatives are needed now more than ever. This book is about financial alternatives, drawn from real-world examples. It highlights the kinds of models that could become the new nor- mal, building the basis for a democratically organized and life-sustaining future. Before the 2008 global financial crisis, the mantra was ‘there is no alter- native’ to the extractive economic model that has fostered excessive inequality and ecological destruction. Post-crisis, big banks were rescued and the blame misdirected to public spending. This justified evermore harsh austerity measures, reinforcing the story that the public sector must rely on private finance to solve these ‘collaterals’. More than 10 years later, we know that private finance has not only failed to address these problems, it has intensified them. Civil society needs to unite behind systemic solutions before another financial bubble bursts. Public finance for a better future finance fora better Public A broad-based coalition calling on NYC to divest from Wall Street and establish a public bank. Credit: New Economy Project 8 The failure of private finance Three decades ago, in 1989, the International Monetary Fund (IMF), the World Bank and the US Treasury agreed on 10 policy prescriptions on how countries should respond to an economic crisis. The so-called Washington Consensus required poorer countries to accept cuts in social spending, the privatization of public services and the opening of their markets to inter- national competition in exchange for financial assistance. The application of such austerity measures throughout the world resulted in increased debt, social and economic instability and growing poverty levels.1 After 2008, European countries such as Ireland, Greece, Spain and Portugal faced a sim- ilar treatment. Most politicians and policymakers argued on reducing public spending and investing the remaining funds on facilitating corporate, often foreign, capital. More recently, the assumption that private finance is the only way to realize desirable outcomes has dominated discussions on how to implement the Paris Agreement on climate change and the Sustainable Development Goals (SDGs) set forth by the United Nations. ‘Blended’ finance, for example, is presented as the silver bullet for financing the SDGs investment gap of US$2.5 trillion annually by using public funds, such as official development aid, to mobilize private investments. Research by the Overseas Develop- ment Institute points out that, between 2012 and 2016, the blended finance strategy mobilized no more than US$20 billion annually. The vast majority future finance fora better Public of this finance concentrated in middle-income countries and only US$728 million (3.6 per cent) reached the low-income countries that need it most.2 Moreover, these discussions frequently ignore how private finance facili- tates the extraction of wealth from the public sector to the private sector, benefiting primarily a small, rich elite. A 2018 study that re-examined IMF data on global tax evasion by multinational corporations calculates losses by the public sector to be roughly US$650 billion annually.3 This disproportionately hits poor and post-colonial countries as they face the highest levels of natural resource 9 extraction by multinationals. Since public spending on essential services is key to redistributing wealth, people with lower incomes, and women in particular, end up footing the bill for corporate tax evasion. Eurodad, the European Network on Debt and Development, found that for every US$1 that flows into a low-income country, more