Economic Alternatives for Iceland

Protest on Iceland

The 2008 financial crisis was more extreme and far-reaching in Iceland than elsewhere. As a result, many new grassroots organisations and political parties were formed. One of them was Alda – The Association for Sustainability and Democracy. Alda’s goal is introduce new ideas about how to deepen democracy and re-think the nature of the economy into public debate. What follows an interview with Hjalti Hrafn Hafthorsson, an elected member of Alda’s managing board. 

Alda’s board has seven elected members and two randomly selected members. The board manages administrative tasks and can take decisions in between monthly general meetings when absolutely necessary. Otherwise a board member has no status above the average Alda member. 

Why and when was Alda formed and what are its aims?

Alda was formed in 2009. This is in post-bank collapse Iceland, and in some ways Alda was formed as a response to the social awakening that happened after the bank collapse and the demands for political and economic reforms. There were very loud voices in Icelandic society that were critical of the whole political and economic infrastructure but very few proposed any changes. We set out to provide radical but viable alternatives to the current social organization. 

Alda is an association for sustainability and democracy. At the founding of Alda its aims were to promote an organization of society that empowers individuals and is sustainable in the long run. Environmental issues and democracy are still our main themes but we have, in the past three years, expanded to dealing with a whole range of other issues. Asylum seekers, shorter work day, gender issues, for example. 

The reason for this expansion lies in how Alda is organized and how that organization unexpectedly began to change how Alda could function. Being believers in direct and participatory democracy, we decided at the start that all Alda meetings should be open and anyone attending a meeting would have the right to speak and to vote on any statement put forth by the meeting. The first meetings we held dealt with new ideas (like economic democracy) and how they might work in Iceland. It turned out that by holding open meetings to brainstorm about political subjects was a very good idea. 

Now Alda functions very much as an open think-tank lobby group. Anyone who proposes an issue in a general meeting can start a topic group. Topic groups discuss the problem or idea at hand and come up with proposals for solutions. A general meeting then accepts the proposal as an official statement of Alda. This process we go through gives statements or proposals form Alda greater legitimacy than for example an individual writing the same thing. There is power in numbers and an association of many people coming up with ideas in an open, accessible, transparent process is something that is more difficult to ignore than an individual.  

How big is Alda?

I don’t have the member count but last time I heard we had around 400 registered members. I’d say there are about 50 who are actively participating in meetings.

What intellectual inspirations do you draw on?

I can honestly say that there are members of Alda reading anything from Marx to Friedman and everything in between. After Capitalism by David Schweickhart and Envisioning Real Utopias by Erik Olin Wright were two books that really inspired some of us to try to find and implement alternative social, political, and economic ideas. Those two books were very much discussed within Alda and have been read by many members. Personally I have drawn much from political philosophers like Hannah Arendt, Rawls, Habermas, Chomsky, Beauvoir, Foucault, Marx etc.

One of Alda’s core beliefs is that the economy should be democratised – corporations and companies should be governed by their employees of the basis of one person one vote. How would this new economic system be organised and what difference would it make?

Not just governed by employees but collectively owned by employees as well. We are essentially arguing for an economy of workers co-operatives rather than a capitalist economy. There are many issues in this picture that aren’t clear and there isn’t necessarily any one answer to the questions that arise. I don’t believe that an economic system can really be effectively organized from above so many of the issues in regard to organization would simply have to evolve as the system emerged. In Alda we have focused more on finding ways to help co-operatives form and help capitalist companies reform into co-operatives.

The difference is of course that we wouldn’t have capitalism anymore. Wealth would be more equally distributed, workers would have greater empowerment over crucial aspects of their lives, companies would have stronger ties into communities and emphasis might shift from pure profit to more substantial things.

Economic democracy, under your vision, would still be a market economy. Is that true?

Yes, democratic companies would produce commodities that are bought and sold on a regulated free market. Democratic companies fail if there is no demand for their commodities and new companies are started when new innovations appear or demand shifts. A democratic economy thus has the flexibility and drive towards innovation that a capitalist economy has. There is however a strong consensus within Alda that the market should be regulated. Trading commodities is fine, but we would see an end to derivative trading and finance markets and so on. Shares in companies could for example not be traded. The only way to own a share is to work in that company. 

But you argue that competition would no longer result in monopoly under economic democracy. Why is this?

That is one reason to regulate markets to a degree. One might also speculate that given the different social dynamic of democratic companies there would be less drive to form monopolies. Companies are today legally obligated to generate profit for shareholders and this creates a strong drive towards monopolies. Most people with a day job are more concerned with simply living a comfortable life - getting decent wages is one thing and profit at all costs is quite another. I tend to believe that if working people were voting on some of the decisions made by corporate executives today many of those decisions would be overruled because people in general have values that aren’t measured in dollars or pounds. 

“Economic Democracy” has been criticised from the Left on the grounds that all citizens have an interest in what enterprises do, the amount of investment they receive, their prices and their treatment of their workers, not just the current work-force. And the voices of citizens in general, under economic democracy, have no way to be heard. Do you think this is a valid objection?

Citizens in general have very limited means of being heard in the capitalist economy as it is. At least economic democracy empowers those people most affected by a company, its employees, to participate in decisions regarding their livelihood. For citizens in general to have influence over companies would require a very top down authoritative approach to the economy which I do not think would be beneficial and in the end not really conductive to the freedom, autonomy and well-being of anyone.  

Alda also believes in the achievement of “full employment”. Do you think, given technological advance and that many current jobs under present-day capitalism are ‘socially useless’ that full employment is realisable in a different economic set-up? What do you think of the idea of a basic income, payable unconditionally to everybody?

I think full employment may be achievable but it would require a shift from capitalist economy where the price of labour is driven down by having a certain degree of unemployment. A capitalist economy therefore always stabilizes at a certain percentage of unemployment. Most models for sustainable economy would avoid this. I don’t think, however, that work should necessarily be as big a part of our lives as it currently is. One of the most active topic groups in Alda is a group dealing with shortening the work day. There is also a topic group working on unconditional basic income proposals. Though Alda has not formally adopted suggestions for unconditional basic income I think I can safely say that we are in favour of it.

In politics, Alda promotes the concept of randomly selected citizen assemblies. I think you have argued part of the Icelandic Parliament should be reserved for randomly selected citizens. How would random selection work and what advantages does it have over conventional political parties and elected representatives?

A randomly selected group represents a cross section of a population. Studies show that randomly selected representatives are more likely to consider themselves to represent the interests of the whole population rather than the interests of a political party. It is also a way of getting individuals in minority groups involved in the political process, individuals who might otherwise not have stepped up. It could be used to equalize racial or gender ratios within a democratic assembly. I certainly think that it would shake up the very entrenched and corrupt party politics in Iceland if a third of the MPs were randomly selected. Also, random selection is simply a very incorruptible process, unlike elections which are usually won with money.

I suppose the story that’s emerged from Iceland since the crash of 2008 is that the state didn’t bail-out insolvent banks because it didn’t have the money, and as result the Icelandic economy is recovering and the depredations of austerity have been avoided. Is that an accurate summary or does it miss something?

The three big banks in Iceland were nationalized during the crash. Two of them were almost immediately given over to stake holders, no one seems to know who owns them today. There are plans to reprivatize the third one. The government took on a lot of debt but the bankers weren’t bailed out, at least not the high profile Icelandic bankers. Like I said, no-one seems to know who owns these banks today. There were considerable austerity measures; the recession has been felt by everyone. The government claims that the economy is recovering but since there have been no structural reforms in the economic model we are working in, all that really means is that the rich are again getting richer and the rest of us must wait for the money to trickle down.

There was a large-scale constitutional reform process in Iceland in 2012. Could you say a bit about that process and what Alda’s input was?

An elected committee of 25 individuals was given mandate to write a new constitution. The election was ruled to be illegal because of a technicality but the parliament chose to form the committee anyways. Alda turned in very detailed suggestions for constitutional reforms but it was very difficult to get feedback on whether they were even read by the comity. None of them made it into the constitution bill in any recognizable form. The new constitution bill is in many ways progressive but it is being opposed by some very powerful interest groups, namely the fishing industry, and now it seems likely that it will be held up in the parliament until elections come this spring.  Constitution changes need to be accepted by two parliaments so if the bill isn’t voted on before elections we can forget about any constitution reforms for at least 4 more years, probably just altogether.  

Alda wants a welfare system that maintains the foundations of civil society, offering equal access to education, health-care and a pension. What, in practice, does this involve?

Pretty much what it does involve now. People and companies paying taxes which are put to use running the infrastructure of a healthy society. Alda has a topic group working on reforming the education system in very fundamental ways and some of the versions of unconditional basic income we have talked about require comprehensive revision of the welfare system.

What advice would you give to people in other countries struggling against endless corporate bail-outs, government-imposed austerity and economic stagnation or collapse? What should they do?

Start where you are. Use what you have. Do what you can. I think the Alda model is good for promoting social change and I think it can easily be taken up pretty much anywhere. 

What does the future hold for Alda? What are your immediate aims?

We have a lot of projects going on. Elections are coming up, so we are holding a randomly selected citizens assembly to set the tone for the political parties on what the people want to see happen during next term. We are working on getting a bill through parliament about laws for co-operatives. We are working with the labour unions to get a shorter work day on the agenda. We are working two schools on democratic education programs. We are starting an eco-village in collaboration with other groups. We have more topic groups working than I can recall at the top of my head. In the future I hope we will do just what we have been doing, get people involved in finding solutions to problems and then agitate for those solutions.  

One recurring question is how current society will change. A large scale, oppositional movement seems indispensable. Do you have any ideas about what is necessary to build that movement?

It might take a large scale movement but I think change is better brought about by many smaller ones. There is a vast variety of groups and ideologies out there working on different fronts. That has great advantages as well as disadvantages. I am not sure that a unified big movement would be better, that kind of vision for change almost always involves heavy top down, authoritative organization. The spontaneous organization of smaller groups trying to influence and affect social change through diverse methods is more likely to lead to a happy society in the end.

There is also the question on how change should take form. Some believe that change cannot occur except in a sweeping revolution, others are content with any progress in the right direction. Both visions have merits and I think there must be a little bit of both. There is a lot of build-up to any revolution.