By Will Beaman
Employment ordinarily appears in an employer’s accounts as a cost of doing business. Yet the institutional capacities sustained through employment receive no corresponding financial recognition. This creates a perverse asymmetry, where an institution can improve its financial position by eliminating jobs or suppressing wages, even when doing so diminishes its capacity to serve the public. A labor-side approach to accounting would recognize employment as a social infrastructure whose stewardship and maintenance deserve financial support.
This problem is especially consequential for public employers and worker-owned cooperatives. These institutions can organize production around public needs, democratic participation, and the maintenance of good jobs, yet their financial viability is largely evaluated according to the same criteria as investor-owned enterprises. Public services face pressure to cut staffing and contain labor costs, while worker cooperatives compete with firms whose profitability may depend on reducing employment and wages. The financial system thus places the continued maintenance of these social capacities in tension with institutional solvency.
Public banking offers a way to capitalize employment as a continuing institutional capacity. From a Democratic Public Finance perspective, capitalization and leveraging are historically constituted banking practices that often localize financial capacity in discrete institutions, obscuring the wider relations that sustain them. The aim here is to work through these familiar financial arrangements to change their implications: making employment itself a basis for public and cooperative financial strength.
Imagine a system in which qualifying public employers and worker-owned cooperatives held accounts with public banks authorized to create a new class of financial assets corresponding to their employment capacities. Much as central banks issue reserve balances that serve particular institutional purposes, public banks could issue employment capacity balances that recognize the ongoing maintenance of jobs as a basis for capitalization. These balances would recognize an institution’s capacity to sustain employment, with their continued recognition contingent on that capacity being exercised through the maintenance of filled positions.
These assets could remain on an employer’s balance sheet for as long as the qualifying employment is maintained, establishing a permanent foundation for institutional liquidity. Their value could support access to payment balances, with the corresponding financial obligation residing with a public authority. Legislation would also establish their valuation, convertibility, and conditions of continued recognition or impairment. Making these assets financially operative would open up new sites of political struggle over public banking, central bank settlement, and federal finance, creating opportunities to transform the terms of interinstitutional coordination.
Restricting these privileges to public institutions and genuinely worker-governed cooperatives would create a deliberate financial advantage for democratic and public forms of production. These privileges would reveal so-called market discipline as a product of public financial arrangements that can be contested and reconstructed. The maintenance and development of good jobs would become an affirmative source of institutional financial strength.
This architecture could also accompany a broader shift from public loans to public grants. Grants could establish financing relationships organized around qualitative returns: accessible services, dignified employment, social usefulness, and the development of collective capacities. Workers, service users, and communities could participate in defining and evaluating these obligations, making public finance a means of democratic institutional development.
The proposal is an intermediate institutional design, intended to operate across an uneven landscape of existing public authorities, banks, and cooperative enterprises. By creating new financial privileges for public and cooperative production, it would transform what capitalization means through what it does, while opening these institutions to further democratic reconstruction.
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