State ownership in itself is not necessarily a radical leftist proposition. For example, China’s financial sector is dominated by state banks, yet China still seems largely dominated by private capital working in conjunction with the state as protector. Wang Hui, for example, argues that the recent reform period has been dominated by a sort of Chinese neoliberalism. Chinese neoliberalism, then, can include a wide range of state-owned firms operating within a capitalist framework, something which might seem anomalous given that most neoliberal states are critical of state ownership.

A related issue is whether finance can be non-capitalist at all. I think there is a strong argument that any sort of economy centered on finance, public or private, can’t be considered fully socialist. If socialism involves the cooperative democratic administration of the economy, then ceding that control to competing private interests seems like it is problematic. Finance largely depends on commodity production, which is the cell form of capitalism.

This is not to say that an administered economy is a straightforward matter. There were massive economic problems, often creating logical absurdities, within actually existing socialist states. Their problems were often different from “standard” capitalist economies, which contributed to the idea that some hybrid of markets and state control might be possible that would solve the problems of both worlds.

Part of the issue seems to be whether a state, having socialized finance, can simply stop there and allow capital accumulation in other sectors. Essentially, social finance might simply become a reorganized sector that facilitates private accumulation elsewhere. The idea, promoted by many Marxists, is that holding at social finance would simply turn the state into a sort of master capitalist. Still, the problems associated with quickly subordinating the entire economy to collective control seem enormous.

One possible solution has been promoted by social-democrats in Canada around the idea of a state development bank backed by sectoral councils. While the idea is related to dirigisme more than dominant state ownership, the same basic ideas seem to apply. The idea is that the government would start a series of large development funds that could be dipped into by projects that had some sort of social purpose and regulatory guidance, as a counterweight to private finance. Beyond that, the state would set up sectoral councils that would coordinate broader stakeholders and promote issues such as unionization, innovation, productivity and so on.

The use of sectoral councils could be used as a sort of guiding structure for economic reforms. That is, broad sectoral plans could be drawn up and coordinated within democratic bodies. The aims of these sectoral councils would be varied, but in general they would seek to build public leadership over sectors that presently depend on either chaotic rivalry or monopolistic consolidation.

Of course, there are many problems with such a proposal, because it seems easy enough to freeze in systems that might work to the benefit of capital, blunting more radical changes. It doesn’t speak to any specific sort of policy, such as the right balance between rewarding private initiative and equalizing social outcomes under public ownership. What seems attractive about sectoral leadership and social finance, however, is that it gives tools to act today on many problems of reorganizing the economy without depending on a single extreme solution.

I think there are several problems with the engine metaphor. The most obvious problem is that it suggests a certain autonomy of a productive private sector. This engine metaphor is often used by conservatives, as well, in terms of ideas like “generating wealth”. That is, it speaks to deregulation and privatization, and frames the public sector as being a burden. It also tends to ignore that many public sector initiatives build the wealth of the private sector, even in obvious ways such as the enclosing of the commons, but also in terms of educated workers and various other public services.

One point is simply that it is probably wrong to counterpose representative democracy with direct democracy. One reason for this is that it seems unlikely that communities could regulate themselves entirely by direct democracy of either the assembly type or referendum type. Some level of delegation would be involved in any situation. This leads to the issue of delegation versus representation, in which case Bobbio suggests that the idea of “recall” being somehow central is mistaken. Bobbio argues that it is incredibly difficult to force representatives to be purely relays for opinion rather than acting on their own perspective, even in the presence of recall rules. He adds that ideas of nested councils and such are not very democratic in themselves, given that power will likely flow from the top down in such situations, despite being designed for the opposite.

Importantly, Bobbio is not suggesting that direct democracy, or functional representation (workers representing workers, for example), is somehow wrong in general. Obviously a socialist country would need to involve many aspects of direct democracy or functional representation in order to work well. It is more a question of emphasis and extent – rather than expecting direct democratic forms to deliver some huge new benefit, or insisting on them at the complete expense of representative democracy. That’s because representative democracy has many virtues that Bobbio believes are often overlooked by some sections of the left.

An example of the above would be the Red Guards during the early Cultural Revolution. They did not appeal to elections to make their point, but rather took direct action to denounce their opponents and sometimes seize power directly from them. This is not to say that they were against democracy per se, they simply refused to accept that modern revisionism was a tolerable outcome for any decision-making process.