Great Minds Thinking Alike Department: Public Venture Capital

I see that Dani Rodrik has made a proposal that echoes mine: he would have a publicly owned and administered fund that provides startup capital to entrepreneurs and gives workers a share in the returns; I would have coops contribute to a venture capital fund that helps new coops form and provides the higher-risk, higher-return portion of a balanced coop portfolio.  Same idea, different venues.

As a means to fundamentally reset the distributional structure of modern capitalism, public venture capital depends on the numbers.  How much capital are we talking about?  How large would be the individual worker’s expected revenue stream?  And how would the volatility of such a fund, even on a society-wide basis (think dotcom), be buffered through other shared assets?

Moreover, while defenders of an egalitarian capitalism, like Rodrik, have always looked to expanded participation in ownership, this strategy can only go so far.  My real world benchmark is Germany, where the majority of assets in the financial system are already held in public and cooperative institutions.  On its own, this is an achievement, one worth defending (from Brussels especially).  But many other institutions exist there to embed capital in a wider social matrix, including co-management and other worker representation channels, public-private coordination on industrial policy, which includes an extensive role for public education, and even industry associations which, while devoutly capitalist, provide public goods and are relatively transparent.  Nevertheless, even such a system is seriously biased in terms of wealth and power.  There is a compact capitalist class in Germany that wields extensive power, and income inequality is a serious problem that’s growing worse.  The moral is that, if you want to really transform capitalism, you have to do as much as Germany and then do more.  (I leave aside the large problem that Germany, as a surplus country,  exports some of its problems, like credit risk, to its trading partners and basks in an ideology according to which this state of affairs proves Germany’s virtue and its partners’ vice.)

But let’s not be negative.  Public capital in many forms, decentralized and even competitive, is the way to go.  Venture capital is, as they used to say, part of this nutritious breakfast.  If there’s still a political left out there, the core of its strategy should be socializing capital.