Projects

Facing the crisis: for a responsible, plural and solidarity economy

The financial and economic crisis is providing a clear demonstration of the breakdown of neoliberal globalization which, since the 80s, has failed to keep its promises of universal prosperity. It highlights the systemic risk run by populations and countries that have for many years found themselves excluded from the accumulation of capital and are now its main victims of the crisis.

Economic financialization, trade liberalization and commoditisation of an increasing number of goods and services have brought in their wake increased inequalities in incomes and assets, without any notable improvements in the living conditions of the most destitute. On the contrary, the gap between rich and poor is being widened by alarming restrictions on populations’ access to such essential public assets as land, food, water, housing, education and health. The obsession with economic growth as a necessary condition for social welfare is at odds with ongoing ecological damage, of which climate warming and the energy crisis are emblematic examples. The production and consumption of goods, energy and natural resources have far exceeded the planet’s capacity.

In addition, the race for immediate profitability in financial markets contributes to an increased economic instability, fed by the series of financial crises, from the Internet to the subprime one. Applying the speculative investment approach to food, commodities and energy can only reinforce the volatility of the prices of essential goods that directly affect the income, employment and access to goods of the humblest members of society.

The crisis is forcing states and international institutions to improvise by building economic governance via methods other than creating new markets, where self-regulation has proved to be a dead end. The responses that aim to spread the borders of financialization and the market ever further as a solution to global economic and ecological crises only skim the surface of the problems without grasping the collective risks involved in extending speculative principles to other goods and services.

There is now an urgent need to change the paradigm and found a responsible, plural and solidarity economy. Responsible through the anticipation of the long-term social and ecological consequences of economic practices. Plural through the recognition of the diversity of the ways of producing goods and services to answer needs in the face of a dominant vision of the economy that reduces the act of entrepreneurship to the search for profit, legitimate productive organization to capital-based business, the efficiency of the allocation of resources to the market, and the development of businesses to increasing GDP. Solidarity-based through the integration of the principles of mutual help, reciprocity and cooperation in the purposes and organizational mechanisms of economic activities.

Whilst organized civil society has been working over the last few decades to pressure key political and economic actors for policy and institutional change, states have taken the main role in attempting to curb the crisis by backing up the banking system and announcing multiple recovery plans. It is clear that the issue of counterbalancing social and ecological needs against the billions of dollars and euros lent or injected into the system, as well as the necessary rethink of international economic governance, require citizens to be vigilant and active at the international level. A change of economic paradigm is essential, and cannot be limited to cooperation between superpower governments; rather, the economy has be democratised if it is to repair the failure of the main financial and economic decision-makers’ financial and economic expertise.

From WSSE to ALOE: from solidarity-based initiatives to a new paradigm

By promoting and supporting the creation of networks of solidarity economy initiatives (fair trade, solidarity finance, social money, economic actors’ social responsibility, etc.), actors and practices with different, often complementary, views and cultural backgrounds, the Workgroup on Solidarity Socio-Economy (WSSE) has made its own contribution to this citizen-based reappropriation of the economic issues of globalization (economic governance, ecological debt, etc.). After 10 years of existence and growth, the WSSE network – (www.socioeco.org) - has decided to become the Alliance for a Responsible, Plural and Solidarity Economy – ALOE.

ALOE develops collective strategies and proposals to create innovative socio-economic alternatives to the present economism and irresponsible governance, as well as innovative socio-economic transformations. ALOE is a forum for action-led research that seeks to link conceptual deliberations and professional and activist experiences in order to develop socio-economic innovations and changes, involving researchers as well as innovators, entrepreneurs, activists and decision-makers.

ALOE’s first call is an invitation to all those seeking to build a responsible, plural and solidarity economy to take advantage of this historic crisis in capitalism to put forward proposals for tackling the human and ecological consequences and, most especially, to lay down the foundations of a new economic system. Proposing new regulations that help initiatives rooted in the responsible, sustainable and solidarity economy to create a new form of development, focusing on people and in harmony with nature, is crucial if their role is to evolve beyond micro-economic innovation and not merely to take on the social redress of globalization.

Four principal axes

As ALOE sees the economic activities as a dimension inserted in the social and environmental relations that lead to a human and sustainable development, it favours a systemic and transversal approach of the socio-economic and ecological innovations and transformations. The questions presented below may serve as a guideline for project proposals, but many others are relevant which can be focused for research, reflection and interchange.

Four domains will constitute the framework of elaboration of transversal projects:
1 – Integrated and global vision of a responsible, plural and solidarity economy
2 – Global economic governance and increased decision-making capacity of actors and institutions on economic challenges.
3 – Environmental justice, law and responsibility, and sustainable development.
4 – Alternatives and innovations based on solidarity and giving rise to socio-economic change.

1 – Integrated and global vision of a responsible, plural and solidarity economy

All over the world multiple innovative economic initiatives have bloomed, that take different names: solidarity economy, social economy, solidarity socio-economy, human economy, popular economy, economy of proximity, economy of work, ecological economics, etc. In the short-term, the objective of these practices is to nurture the production and reproduction of life, and to improve its quality for millions of people all over the world. In the long term, the goal is to show that economic activities that place the values of democracy, solidarity and sustainability at the heart of their practices provide highly efficient methods for producing, trading and consuming that can be applied to the entire economy.

The current crisis and its consequences demonstrate the failure of an economic system that has made a virtue of the values of individual success and maximizing profit, private appropriation of wealth and accumulation of materials goods, financial innovation and speculation, competition and unlimited growth.

However, it is not certain that the call for increased regulation will result in promoting the values of responsibility, solidarity and democracy for the economy. Reforms may just as well produce individualism, nationalism, the return of authoritarian practices and the development of warlike strategies and identity crises.

• How can we assess the impact of the current crisis on changes in prevailing representations of and collective beliefs in wealth and the economy? What conditions are necessary to overturn the hierarchy of values and behaviour linked to the economy? How can we curb strategies based on power and competition, the wish for appropriation and boundlessness, the obsession with rarity and optimisation, the cult of efficiency and consumption, the desire for power and domination and show the need and utility of economic practices that encourage responsibility, moderation, cooperation, sharing, deliberation and satisfaction.

• Responsibility. How to make the most powerful economic actors, banks and financial institutions, transnational enterprises and international institutions responsible and make them accountable to the world community regarding the long term social and ecological consequences of their economic decisions?

• Democracy. How can we create the conditions for a public debate and citizen control over decisions affecting allocation and distribution, as well as counterbalancing the billions of emergency euros and dollars injected to save the international system against social and environmental needs? Do not the guarantees offered by states, that rely on the tax payers’ and future generations’ capacity to pay, require a democratic reappropriation of finance in the face of the failed expertise of financial agents and institutions?

• Plurality. Faced with the single-minded economic policy generally promoted by the multilateral institutions and establishment economists, how to recognize and promote the plurality of modes of production, categories of goods, forms of exchanges, in others words a plural economy as a principle for a diversity of local solutions to global common challenges?

• Solidarity and justice. How to transform growing social and ecological interdependences between countries, enterprises and people into new global principles of solidarity, a condition not only for solidarity-based commitments, but also for a fair redistribution between countries and generations? The partial socialisation of financial losses and the guarantees of tax payers and future generations to secure the banking system raise the question of a shared and equitable effort between the north and south in the face of the inequitable economic, social and ecological consequences of the crisis. The principles and conditions of a form of international solidarity in proportion to the responsibilities of the different economic leaders and institutions in terms of their participation in an unstable financial system need to be laid down.

• Durability, moderation and justice. Solutions to environmental problems will not be created solely by the market internalisation of environmental costs and goods or technological innovations, but mainly by a change in economic behaviour. How can we encourage substantial change towards less polluting lifestyles and lower energy consumption whilst providing more equitable access to income and natural resources between countries and generations? What new interpretation and objective in terms of development and progress as well as the creation and use of knowledge involve ecological limits on economic growth?

2 - Global economic governance and increased decision-making capacity of actors and institutions on economic challenges

The crisis has revealed Bretton Woods institutions’ limited capacity to curb the global and systemic risks inherent in the financialisation of the world economy. By making access to capital and income, consumption and basic public necessities (health, housing, food, natural resources) for a growing number of populations and countries dependent on financial innovations, credits and high risk securities and speculative bubbles, the liberalisation of financial markets has made the international economic system structurally unstable, without allowing a fair allocation of resources dedicated in particular to the less developed countries.

The recurrent and recent financial, energy and food crisis confirms the failure of a global governance based on pretended self-regulation by the markets and independent agencies. Meanwhile, the mission, legitimacy and efficiency of the multi-lateral institutions are ever more contested.

• What new international financial and trade architectures are needed to prevent systemic crises whilst allowing fair allocation and distribution of resources at the international level? How do we make investment and access to capital less dependent on financial markets? How do we deal with the problem of tax havens? -* How can we rework the social banking contract between financial institutions and citizens? How do we guarantee transparency and enable savers to monitor how the banks are using their savings? As a number of counties nationalise their banks, to what extent can collective assets and democratic governance, historically promoted by mutual benefit banks and cooperatives, guarantee deposits and provide the right to monitor how savings are used, the conditions for granting credit and bank fees?
• How can we make solidarity finance a central element of a renewed banking and financial system? To what extent should the guarantees provided by states and multi-lateral institutions for the international banking system be founded on risk management based on long-term local relationships, mutual commitment and a collective guarantee providing less wealthy households with access to credit, rather than risks being diluted down an endless chain of by-products?
• How can we separate corporate governance from the pressure of financial markets? Do we need to subject companies whose governance mainly aims to create values for shareholders – with all its consequences in terms of directors remuneration (stock options and golden parachutes) — to the same tax and regulatory regimes as companies that recognise the legitimacy of other stakeholders (workers, unions, NGOs, local authorities, etc.) and give them legal and practical rights?
• On what scale should we facilitate the creation of mutual credit systems in the form of companies based on complementary or local currencies (like the WIR system) that can avoid credit drying up for a great many businesses? How do we make it easier to introduce regional currencies supported by local authorities that will encourage mutual exchanges and help tackle social problems?
• How can truly democratic economic governance and trade be established at the local, national, regional and global levels? What rules of governance should be established so that the opinion and interests of the most vulnerable countries and populations are taken into account in the setting up of a new international monetary and financial system? How can we collectively redefine the conditions for the international organisation of trade that take into account the unequal impact of the crisis and recovery plans on different countries? How can we draw on the principles and practice of fair trade to create a fair and equitable world trade organisation?
• Under which conditions and for which purposes can an international fiscal tax be the base for an efficient implementation of the principle of solidarity and the sustainability in the global economic governance?

3 - Environmental justice, law and responsibility, and sustainable development.

Sustainable development aims to meet the needs of present-day generations without comprising the capacity of future generations to meet their needs. According to the principle of environmental justice, all people have the right to enjoy a healthy environment and must share the natural resources of the planet in a just and sustainable manner. Making social and environmental justice real requires that natural resources are managed and redistributed in such way as to guarantee equal opportunities between countries and generations concerning economic activity and well-being.

Ecological debt is, essentially, a new way of looking at past and present relations between countries and between social classes. It offers: (1) a new political perspective: the North as debtor, the South as creditor. In the North as in the South, ecological debt is a tool of campaign as well as a political tool; (2) a new economic perspective: it focuses on the ecological consequences of overconsumption, production and trade activities; (3) a new ethical perspective, based on the responsibilities and the rights concerning the environment; (4) a new ecological perspective: it shows the impossibility to maintain the lifestyle of the rich countries and to export this lifestyle to the countries of the South; (5) a new legal perspective: it aims at the recognition of the ecological damages and the unequal appropriation and inadequate use of the global goods and resources.

To measure the application of these concepts, we need tools that are broader then the traditional economic indicators focused on growth of profitability and the GDP as the only objectives of economic activity. Indicators of sustainable development, or well being and happiness are being introduced in a growing number of countries, and are inducing a reconfiguration of the economy in socially and ecologically sustainable ways. Examples like the ecological footprint, the ISEW (Index for Sustainable Economic Welfare) and the GNH (Gross National happiness index) are well known.

We also need adequate juridical national and international frameworks, with laws that make sustainable social and ecological justice a legal criterion to guide individual, community, enterprise and State behavior. A sustainable world will not be the result of economic and technological measures only, but will arise mainly from cultural changes in individual and collective values, attitudes and behavior regarding consumption, production and waste.

• How to integrate the science of ecological economics in policymaking, traditional economic visions (universities) and concrete activities in the field?
• What set of indicators can best support development planning and the evaluation of results of sustainable development policies and practices, in the industrialized countries, as well in the impoverished countries?
• How to make the concept of ecological debt, measured in monetary and other terms, an instrument to guide policy, legislation, and regulation towards change of the global patterns of consumption, production, trade and finance?
• How to make effective at the global level the responsibilities of enterprises and governments regarding the ecological short and long term economic damages of theirs decisions?
• How to establish an international oil legacy fund, paid by taxes on the profits of oil and gas companies and managed by an world environmental institution as a tool for regulating fuel prices and for supporting poorer countries’ investment in innovative energy solutions face to confront the climate change?
• What strategies can be developed to transform payments of ecological debt into investments in socially responsible enterprises in developing countries?

4 - Alternatives and innovations based on solidarity and giving rise to socio-economic change

On all continents, creative and solidarity-based initiatives have bloomed and continue to multiply in the whole of the economic chain, from production to trade, finance, consumption and even money. Anchored in their respective cultural and historic contexts, they answer in an individual and/or collective way the forced marginalization of whole sections of society.

Their locally- and solidarity-based roots, modest size, the social purpose of their production, their democratic governance and collective assets make them a force for resistance in the face of the crisis. But do they have the potential to constitute alternatives that can go beyond local innovations to transform the economy? The current crisis is doubtlessly an historic opportunity for solidarity-based companies and initiatives to promote their values and practices, but also to upscale so they can meet the urgent challenges society currently poses. Over and above the recognition of alternative methods of doing business, trading and consuming, the challenge is to incorporate the values of responsibility, democracy and solidarity into the mechanisms of economic governance..

• How can the solidarity economy respond to the economic and social consequences of the current crisis in terms of a plural system of property and appropriation of productive goods, access to credit and the collective management of risks, access to employment and the fight against insecurity, access to basic necessities (health, housing, food, etc.) at an affordable price, the development of production and consumption methods more respectful of the ecological and solidarity-based needs of future generations ? How can it evolve beyond the role of social safety net for crisis situations?
• How can we switch from a policy of socio-economic innovation to a policy of investing in and developing the solidarity economy? What strategies are needed to democratise the economy and the public finance?
• How and on what scale can we build networks, business development centres and distribution channels for products and services offered by the responsible, plural and solidarity economy (RPSE)? What strategies are needed for disseminating and up-scaling socio-economic alternatives and innovations?
• How can we give a social and ecological framework to markets in order to promote companies with responsible, solidarity and sustainable production practices?
• Under which conditions and using which mechanisms could business recovery based on responsible and sustainable consumption be envisaged?
• How can we built a development policy for a responsible, plural and solidarity economy which takes account of the benefits and drawbacks of the national and local social and solidarity economy policies already in place?

The ALOE Coordination and Facilitation Committee:
Ben Quinones
Laurent Fraisse
Leida Rijnhout
Marcos Arruda