Participatory Budgeting in the Age of Fiscal Austerity

By Giulio Caperchi

A Crisis of Legitimacy

Following the financial crisis, the ensuing bailouts and the passing of austerity measures, American and European voters increasingly feel alienated by their political representatives. The Tea Party in the US rails against politicians they believe to be incompetent, far removed and corrupt. Similarly, the Occupy and Indignados movements see their elected representatives as catering to the corporate elite, lobbyists and the so-called 1%. A recent Gallup poll (12-2011) reports that the approval rating for the US congress is at an all time low: only 11% of Americans think it is doing a good job while a whopping 86% believe they are performing abysmally[1]

Both our elected representatives and our economic institutions are facing a serious crisis of legitimacy. Notwithstanding our politicians’ talk of balanced budgets, fiscal responsibility and austerity, most of us -on both sides of the aisle- are angry at how our political system has handled the “great recession” and its aftermath. Many feel betrayed by the so-called experts which head the Federal Reserve, the European Central Bank and other such financial institutions which for years have glorified the self-regulating virtues of unfettered markets.

This resentment highlights a fundamental flaw in our political systems, namely the lack of democratic control over the economic policies which affect our lives. As our politicians fail to stop Wall Street’s “irrational exuberance” from spilling into Main Street we cannot but ask ourselves: how may we, as citizens, control the excesses of twenty first century capitalism?

Participatory Budgeting

An initial answer is suggested by an increasingly popular idea practiced at the level of local governance. Participatory budgeting is a democratic instrument through which members of a community collectively decide on how to spend part or all of the community’s budget. It was first experimented in the city of Porto Alegre, Brazil in 1989 and now occurs in well over a thousand cities worldwide including New York and Chicago[3]. Participatory budgeting allows for ordinary citizens to engage in a deliberative process through which they may propose and debate projects on which to spend public money. In this way, discretionary power over the allocation of public resources is delegated from the elected representatives directly to citizens[4]. It is an instance of direct and participatory democracy through which the citizenry is empowered and rendered responsible for its own fiscal governance.

In most participatory budgeting processes neighborhood and thematic meetings are held monthly, where citizens along with elected officials propose ideas on how to spend public resources. For example, the citizens of the 49th Ward of Chicago decided to spend their $1.3 million budget on projects related to public safety, parks, the environment and transportation[5]. South of the equator, high in the Peruvian Andes the citizens of tiny Condebamba spent their town’s budget on micro-reservoirs for rural irrigation[6]. And still, on the other side of the Atlantic in the Tower Hamlets neighborhood of London, citizens used £2.4 million to improve local public services such as street lighting and education[7].

The positive effects that participatory budgeting engenders are worthy of notice. First of all it ensures transparency: the steps of project formulation, ratification and oversight occur in open and inclusive public assemblies. This reduces instances of corruption and clientelism afflicting local governments in many parts of the world. With transparency comes accountability: citizens know who is responsible for a given public project and who is responsible for its implementation[8].

Another positive effect of participatory budgeting is its ability to restore confidence in governmental institutions. Once citizens experience more control over their elected administration, public institutions are perceived as more trustworthy and accountable thereby garnering increased legitimacy. In fact, there are many cases in which tax revenues increase after participatory budgeting processes are implemented[9].

Above all however, participatory budgeting offers a deliberative space through which to democratize decision making processes. As such it allows for the inclusion of previously marginalized groups in the running of their towns and neighborhoods. Many participatory budgeting processes, particularly in Latin America, have empowered women, children, indigenous groups and the rural poor, thereby breaking negative cultural inertias such as machismo, paternalism and racism[10].

A lesson to be learned

Participatory budgeting is ultimately a democratic instrument which works best at the local level. It requires the active participation of citizens and time for lengthy deliberative assemblies. However, does it not highlight major problems within our national and international governance institutions? The lack of public oversight over financial decisions taken by unaccountable supranational institutions is a major source of contemporary popular discontent. The lack of transparency over incomprehensible financial instruments such as “collateralized debt obligations” and the unfathomable ramifications  of the derivatives market is another undeniable problem. The trends towards unelected technical governments such as Italy’s and Greece’s highlight the same issue: increasingly citizens are losing democratic control and oversight over vital economic and financial decisions.

However small and local, participatory budgeting teaches us that public oversight over fiscal policy is necessary. It restores legitimacy to those institutions which many feel have betrayed their trust as citizens. Participatory budgeting shows us that transparency and accountability are sacrosanct attributes and absolute prerequisites for any functioning democracy. And yet, increasingly we have neither: deals are still being made behind the closed doors of G8 summits.

Participatory budgeting’s fundamental lesson is that when the “experts” guiding our financial institutions -along with the politicians who appointed them- fail, we must ultimately rely on our own capabilities as citizens to set our nations’ priorities straight once more. Its renowned success as a democratizing practice teaches us that, at least locally, citizens are capable of fiscal self-determination. Only increased democratic participation in our economic and political institutions will restore the legitimacy which they dangerously lack today. Continuing on the path our politicians are presently following will increasingly alienate citizens from the political process and drastically reduce confidence in our democratic institutions. And this is a dangerous path indeed.

Bibliography


[3] Participatory Budgeting Project

[4] UN Habitat 2004

[5] Moore 2010

[6] Lindemann & Llambí 2010

[7] Participatory Budgeting Unit UK 2009

[8] Wampler 2000

[9] UN Habitat 2004

[10] Cabannes 2004

1 Comment

Filed under democracy, Participatory Democracy

One response to “Participatory Budgeting in the Age of Fiscal Austerity

  1. Pingback: Participatory Budgeting in the Age of Fiscal Austerity « Demokrati og glede

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