Plebeian Finance

Alan Thomas is Professor of Philosophy and Head of Department at the University of York in the UK. Educated at Cambridge, Harvard and Oxford he was previously a professor of ethics at Tilburg University in the Netherlands and a senior lecturer in philosophy at the University of Kent. He has held visiting positions at the ANU, St Louis University, Tulane University and the University of British Columbia. His primary research interests are in political philosophy, political economy and moral philosophy. His publications include Value and Context and Republic of Equals, both published by Oxford University Press.


Plebeian finance represents a new approach to the regulation of the financial sector. Forty years of inequality have seen democratic theorists such as John McCormack and Jeffrey Green argue that we need to revive the democratic models of Ancient Rome. Its plebeian class had second class status: plebeians were able to vote, but their votes counted for less than those of the Senatorial and Equestrian classes. Yet the plebeians had distinctive democratic institutions with which they oversaw the elite classes of the republic via a public veto, regulation by publicity, and by placing disproportionate burdens on their elites. What would be the upshot of applying this radical democratic model to finance? If we understand finance as the dispensing of the sovereign public’s full faith and credit, this new approach gives a novel underpinning to the separation of investment from other banking, a financial transactions tax, and regulation by exposure to public scrutiny. An inter-disciplinary combination of approaches from economics, law, political economy and political philosophy, the project of plebeian finance dispenses with the standard picture of the sector as made up of private agents whose activities would be disrupted by “red tape” – to the point where regulation might see the supply of credit “dry up”. Most money creation is private and multiplicative: the micro-informational perspective of banks leverages the macro-informational perspective of a nation-state’s central bank. The privilege of dispensing the “full faith and credit” of the sovereign public can reasonably be accompanied by democratic regulation given that it is constitutive of the operations of the financial sector that it is granted permission to “create” money privately. This project extends novel approaches in democratic theory to a field where regulation is politically contested and in constant danger of being rolled back to “light touch” regulation.

The Research Idea

This research project explores what radical democratic options there might be for oversight of the financial sector. The plebeian class of Ancient Rome had “second class” status: they could vote, but could not hold high office and the votes of higher classes counted for more. Yet the plebeian class had “compensatory” institutions that channeled their class-based resentment into political action. Political philosophers John McCormick and Jeffrey Edward Green have (independently) argued that current democratic theory should recover this plebeian model to protect democracy from the unwarranted power of elites. [McCormick, 2011; Green, 2010, 2016] How might we apply this democratic proposal to the finance sector?

Robert Hockett and Saule Omarova have argued that finance is a public-private franchise arrangement. [Hockett & Omarova, 2017] A franchise arrangement authorizes private actors – banks – to play an allotted role in dispensing a commonly held resource – the “full faith and credit of the sovereign”. If this is correct, then this privilege can legitimately be subject to conditions imposed by the democratic citizenry who constitute “the sovereign”. The research project develops a model for the class-based regulation of governing elites that holds them to account beyond the orthodox institutions of representative democracy. Plebeian finance is structured by the principle that those who disproportionately benefit from a license to operate for the common good can reasonably be placed under disproportionate burdens (especially, but not only if, those benefits are unfair). Examples include class-based surveillance and oversight, a public veto and a disproportionate taxation regime.


The limitation of current research on these topics is not in content; rather, in the complete theoretical disconnection between conceptualizing the nature of finance and democratic theory. Innovative options in both fields are developed in independence of each other. To some extent this is a product of the intellectual division of labour: political economists such as Ann Pettifor and lawyers such as Tamara Lothian, Robert Hockett and Saule Omarova work in relative independence from democratic theorists such as Donatella Della Porta, Green and McCormick. This project unifies these disconnected bodies of research while going beyond it to proposes a novel framework for the democratic control of the finance sector.

Banks located in the private sector are franchise holders who use their micro-informational advantages to extend a sovereign people’s right to extend credit. They implicitly draw on the backing of the nation-state’s central bank that operates with its distinctive macro-informational perspective. Plebeian finance understands this model as follows: a democratic people – a “principal” – appoint a central bank as their “agent”. That bank, in turn, stands to all private banks as franchisor to franchisee. This explains: (i) why financial institutions are well-placed to extract rents while simultaneously trying to reduce their franchise fee; (ii) the pervasive and endemic risk of fraud; (iii) the dangers of misallocation of the public’s full faith and credit by franchisees; (iv) the risks attendant on the entire sector operating with a public backstop. This project develops plebeian finance as a unified approach to these challenges.

The Focus

What practical institutional reforms would result from applying the conception of plebeian finance to the finance sector? The sector ought to be subject to a public veto, regulation by publicity, and face disproportionate burdens.

A public veto would underpin the functional distinction between banking activities and capital markets that was fatally undermined by Gramm-Leach-Biley in 1999 as an essential precursor to the financial crisis. Plebeian finance gives it a democratic rationale: it ought to be viewed as a public veto on commercial exploitation of the public backstop to the finance sector.

Regulation by publicity. Given the public interest in all financial activities, commercial privilege ought to be no obstacle to a suitably empowered body representing the public interest. Given the technicalities of financial regulation, there is a (limited) role for technocratic governance, but it must be supplemented by a contestatory micro-forum (such as a panel of suitably briefed non-experts – as in a legal jury).

By disproportionate burdens, plebeian finance implies five policies: first, that the costs of regulating the financial sector should be met wholly by the sector. Second, that a financial transactions tax (a Tobin tax) symbolically express that all transactions are conducted via the license of a sovereign people. Third, given the opportunity to extract rents, excess financial sector profits are liable to windfall taxation. Fourth, the lodging of pre-“haircut” collateral by investment banks with the central bank. [King, 2016] Fifth, the suspension of limited liability for shareholders in banks. [King, 2016]

Theoretical Novelty

Banking is not advanced money lending, where private agents save resources that are then, via an intermediary (a bank) made available to other private agents for a fee. As Schumpeter, Minsky, Hockett and Omarova have made clear, credit is a “zero-to-many” multiplicative relationship in which money is “created”. The origin of finance is publicly underwritten credit with the consequence that the state that does not externally regulate the activities of private agents (lenders, banks and borrowers) “exogenously”, as the interests of the sovereign constitutively shape this franchisor to franchisee relationship.

The standard response to the democratic interest in finance is a regime of regulation: the project of plebeian finance would go further than current orthodoxy.  The key idea here is that, as Hockett and Omarova put it, a franchisor who is an “absentee landlord” is worse than no franchisor at all. That which McCormick describes as “class-based animosity” is the symbolic basis for extensive control in the public interest by the range of policies I have described. 

The novelty of the approach is two-fold: it takes up the understanding of finance developed by so-called “modern monetary theorists” and integrates it into a conception of democratic theory that is, in turn, a response to current political conditions. Inequality in capital holding (not income) is not a temporary aberration in the affluent democracies of the West, but a persistent condition. We need an effort of historical and political imagination to recover the policies that can address it. [McCormick, 2011; Green, 2016]


This research project brings together the fields of economics, political economy, law,  political philosophy and democratic theory into an interdisciplinary matrix sufficiently complex to address the the subject matter. Financialisation is central to our advanced economies, yet even sophisticated commentators and political philosophers incautiously make remarks that suggest they do not fully understand its nature and operations.

Minsky supplies the background understanding of finance as an economic phenomenon. [Minsky, 2008] Turner and Pettifor contribute an understanding of finance from the perspective of political economy. [Turner, 2008, 2015; Pettifor, 2017] Lothian and Hockett & Omarova contribute an understanding of the legal conceptualization of the institutions of finance. [Lothian, 2017; Hockett & Omarova, 2017] The present author contributes an understanding of the sources of domination and inequality in elite unaccountability. [Thomas, 2017] 

In working out a response to this the project develops the normative framework of contemporary theorists of democracy. [Della Porta, 2013; McCormick, 2010; Green, 2010, 2016] The research project is a novel synthesis of these approaches to develop a unified normative framework for policy.

As in the normative disciplines of ethics and political philosophy the methodology deployed is that of Rawlsian reflective equilibrium. [Rawls, 1971/1999; Thomas, 2006, chapters six and seven] Reflective equilibrium begins from considered judgements in which we have confidence; articulates principles that reflect them, only then mutually to adjust judgements to principles. Reflective equilibrium has become the standard methodology for normative disciplines that develop sets of regulatory principles.

Work Plan

The project would be divided into three work packages each lasting four months. Work Package 1 would consist in preliminary research (January 1 – April 30); Work Package 2 (May 1 – August 30) would correspond to the first work output (paper 1); Work Package 2  (September 1 to December 31) to papers 2 and 3. The material to be covered would include, but not be limited to:

Della Porta, Donatella [2013] Can Democracy Be Saved, Polity Press.

Green, Jeffrey Edward [2010] The Eyes of the People, Oxford University Press.

Green, Jeffrey Edward [2016] The Shadow of Unfairness, Oxford University Press.

Hockett, Robert & Omarova, Saule [2017] ‘The Finance Franchise’, Cornell Law Review, vol. 102, pp. 1143-1218.

King, Mervyn [2016] The End of Alchemy, Little, Brown.

Lothian, Tamara [2017] Law and the Wealth of Nations, Columbia University Press.

McCormick, John P. [2011] Machiavellian Democracy, Cambridge University Press

McMahon, Christopher [2012] Public Capitalism, University of Pennsylvania Press.

Minsky, Hyman [2008] Stabilizing an Unstable Economy, McGraw Hill.

Pettifor, Ann [2017] The Production of Money, Verso Press.

Schumpeter, Joseph [1981] The Theory of Economic Development, Transaction Publishers.

Schweickart, David [2002] After Capitalism, reprint edition, Rowman & Littlefield.

Thomas, Alan [2006] Value and Context, Oxford University Press.

Thomas, Alan [2017] Republic of Equals, Oxford University Press.

Turner, Adair [2015] ‘The Case for Monetary Finance: An Essentially Political Issue’, seminar paper IMF Jacques Polak Research Conference, November 5.

Turner, Adair [2017] Between Debt and the Devil, rev. ed. Princeton University Press.


The aim of this research is, over the calendar year 2019, to produce three papers for publication in academic journals.  Over the longer term, the goal is to continue to research in this field and to take into account feedback on that initial published work. The longer-term aim is the production of a short monograph (80,000 – 100, 000 words) that would further develop the argument. The longer monograph would address a self-imposed limitation of the current project: it addresses only domestic control of sovereign finance within a single nation-state. The larger project would be extended to consider, for example, the exorbitant privilege of the US dollar or other hegemonic currencies. The Principal Investigator has a long-standing relationship with Oxford University Press and would, in the first instance, submit any manuscript to OUP. The PI’s home department has a study leave policy of granting a sabbatical leave after six terms; the one term of leave due in 2019-2020 would allow time for the completion of the monograph.

This is blue skies research that falls outside the ambit of existing funding to a philosopher based in a UK Arts and Humanities department: neither the Leverhulme Trust nor the British Academy is likely to fund the cross-disciplinary work drawn upon in this project. The ISRF is uniquely placed to fund this project. The application is for a calendar year of teaching relief to allow for the synthesis and development of an original project that crosses disciplinary boundaries.