When Scott Brown was elected to the Senate in January, President Obama noted, “Here’s my assessment of not just the vote in Massachusetts, but the mood around the country: The same thing that swept Scott Brown into office swept me into office.” The public is unhappy with the status quo and is looking to new people and new modes of political organization that can embody and effect democratic change. Clearly the traditional models—oriented around the state or the market—have been incomplete. Participatory democracy offers us a solution that goes beyond the traditional dichotomy.

Through much of the 20th century, individuals and groups that were committed to social justice tended to orient their campaigns around the issue of economic redistribution. There was a strong sense that poverty and extreme inequality were detrimental to citizens’ participation in social life. In terms of this dimension of social development, theorists and policy-makers over the last generation have debated the role of state versus market-oriented development.

One of the arguments used by the advocates of market deregulation has been that the level of economic output has to increase in order to have enough goods to re-distribute. This line of reasoning continues with the assertion that since state intervention was presumed to distort market activity, there was a need to substantially reduce regulation in all sectors. It goes without saying that the limitations of this argument have come to the foreground in the context of the recent financial crisis.

In contrast to both the state administrators supported by traditional Keynesians and the entrepreneurs favored by economic libertarians, contemporary innovators of redistribution emphasize the role of the public as a third actor in shaping economic life. One example that they often point to is the participatory budgetary process of the city of Porto Alegre in Brazil. The process, which was first implemented in 1989, encouraged all citizens to take part in constructing the city’s budget. Over the past two decades, thousands of citizens have participated annually in formulating the municipality’s economic priorities.

The city has utilized the participatory budget process since 1989, and there have been clearly progressive social effects: The number of schools has quadrupled since 1986; Porto Alegre’s health and education budget increased from 13 percent in 1985 to almost 40 percent in 1996; sewer and water connections in the city of Porto Alegre went up from 75 percent of total households in 1988 to 98 percent in 1997. The number of participants in the budget process grew from less than 1,000 per year in 1990 to more than 16000 in 1998 and is presently around 40000.

Additionally, the influential Brazilian business journal “Exame” has regularly nominated Porto Alegre as the Brazilian city with the best quality of life based on the following indicators: “literacy, enrollment in elementary and secondary education, quality of higher and postgraduate education, per capita consumption, employment, child mortality, life expectancy, number of hospital beds, housing, sewage, airports, highways, crime rate, restaurants, and climate.” The success of this innovative budget process has made Porto Alegre a model for an alternative form of economic distribution.

The proposal for a participatory budget process destabilizes the standard conception of the political debate: Conservatives who advocate for more market versus progressives who advocate for more state. The participatory budget process implicitly suggests that both the market and the state have to be supervised by the broader public. Simply having the market discipline the state or the state regulate the market does not solve the more profound need for the public to have the capacity to shape social decisions without those choices distorted by the excesses of economic shortsightedness or bureaucratic centralization. Participatory budgeting offers us a solution that goes beyond the traditional dichotomy.

This novel methodology is also innovative at a personal level: Participatory democracy in Porto Alegre is “expressive” in the sense that it gives each individual the opportunity to collectively articulate his or her own original contribution to society. Rather than imagine democracy simply as a rationalized process, the citizens of the city perceive democracy to be a form of self-fulfillment: The public is given the opportunity to express its ingenuity, experience, and knowledge by tackling the most important questions that society faces. The implicit philosophy is that through the process of public deliberation each individual embodies his or her desire to be an agent, not a spectator in social life; participation in political life expresses the innate desire in every individual to play a role in shaping their society. This new generation of Harvard graduates has the opportunity to expand our democratic imagination by learning from the achievements of Porto Alegre and finding new ways of directly engaging the public in political and economic life.

Thomas Ponniah is an Assistant Director of Studies for the Social Studies Program, Lecturer on Social Studies, and Faculty Associate for Harvard’s Project on Justice, Welfare, and Economics.