how workers' cooperatives operate

Market and State Have Failed: Community to the Rescue?

Of society’s three potential steering mechanisms, market and state have each proved disastrous as the preponderant principle for allocating resources, production and power. The closer societies approximate the self-regulating market system, the steeper the costs. We see those costs today in the form of high inequality and insecure jobs, environmental destruction, economic volatility in the form of periodic booms and busts, the dilution of democracy, and the rise of right-wing populism in a context of widespread anger. The directive state, in the form of bureaucratic collectivism (communism and state socialisms), state capitalism and top-down social democracy, has also proved defective. The dominant state has, at the least, stifled civil society and market forces with its paternalistic embrace; at its worse, it has fostered a new class within a totalitarian system. Where do we look for a progressive alternative?

Can community/civil society – the third steering mechanism – come to the rescue? Since the 1990s, proponents of community or civil society have made strong claims that such overlapping projects as social commons, open-access regimes, deglobalization (and localization), the social economy and/or the solidarity economy constitute a viable radical alternative both to state ownership and the self-regulating market. To understand the range of alternatives on offer, refer to the studies and blog posts available at the P2P Foundation. However, my own reading of these studies does not leave me feeling sanguine. One finds a lot of fuzziness surrounding who belongs to the various related movements, what objectives they are pursuing, and how the goals, whether reformist or transformational, are to be achieved.

Solidarity/community should play a major role in extricating ourselves from the mess we’re in. But it won’t do so without much greater clarity and realism.

To provide some specificity, my discussion focuses on a recent book entitled Social and Solidarity Economy: Beyond the Fringe, edited by Peter Utting. This volume has the advantage of being solidly grounded in a major project of UNRISD, containing a wealth of country, regional and associational cases from around the world. But the book is equivocal on key questions.

  1. What is the Social and Solidarity (SSE) Economy?

Peter Utting (p.1) provides a definition that doesn’t dispel the fog: “forms of economic activity that prioritise social and often environmental objectives and involve producers, workers, consumers and citizens acting collectively and in solidarity.” Does that mean that profit or monetary considerations are necessarily secondary? Not judging by his examples. “Grant-dependent and service-delivery NGOs”, consumer and producer cooperatives, associations of informal-economy workers, “social enterprises”, “social entrepreneurs,” “digital crowdfunding schemes” and many “sharing schemes” must concern themselves with monetary/commercial issues. And what does the reference to “environmental objectives” imply? Are community-based initiatives naturally eco-friendly? If so, where is the evidence? Finally, what do these forms of SSE have in common with the others the editor mentions: mutual associations, community and other forms of volunteering, self-help groups, fair-trade networks, “solidarity finance” (microcredit institutions), and so on. Is this diverse set of civil-society organizations likely to move in the same direction?

2,   Is the social and solidarity economy best understood as a way of reforming a capitalist system currently beset by a variety of strains and contradictions, or is it (can it be) a counter-hegemonic project to displace capitalist logic with a logic of reciprocity, mutuality and cooperation?

In Utting’s Introduction, as in the literature more generally, one finds equivocation. Utting identifies both a reformist option -”embedded liberalism” – and the possibility of a post-capitalist option. Both alternatives fit into a “counter-hegemonic movement” to re-embed markets in “social and environmental norms” and re-invigorate “the role of communities and citizens in the economy and polity” (p.10). That sounds interesting. Yet an earlier reflection on the “mainstreaming of SSE” by the World Bank, OECD and others suggests the more likely outcome is co-optation. This mainstreaming “emanates from interactions among bottom-up contestation and claims-making, technocratic problem-solving and strategising on the part of bureaucracies and policy-makers, and the efforts of the political and economic elites to re-accommodate oppositional forces” (p.7).Clearly, neoliberalism remains dominant despite the world economic crisis of 2008.

Unfortunately, both in this book and in the commons approach more generally, one does not find much discussion of the nature of the state that will accompany an expansion of SSE or the role of markets. The state is always with us, in a world of 7 billion people, but how will it be democratized to fit with a community-based political economy? What kind of grassroots movement must emerge to underpin the rise of community and solidarity? Utting, to his credit does discuss the important role that local governments can play in “scaling-up” solidarity organizations. But can they play a positive role if the national government is unsympathetic? Doubtful. And it is also doubtful in the extreme that markets will just wither away. If they persist, what kind of markets will they be, and how will they interact with the SSE? A tendency to romanticize community does not advance the agenda.

3.  How will the SSE sector avoid cooptation by commercial interests, national states and programs organized by the World Bank and other international organizations?

Cooptation is the major danger. Marx long ago, in the Critique of the Gotha Programme, pointed to this pitfall. Associations of producer cooperatives could play an important part in the road to socialism, he observed, but only if they were independent from government and the bourgeoisie. To the extent that these enterprises are dependent on government for finance and other assistance, they will obviously be vulnerable to capture — if not by a left-of-centre government, then by the conservative one that electorally succeeds it. And if SSE enterprises, not just cooperatives but also mutual associations, solidarity banking, associations of informal-economy workers and social enterprises, have to compete with capitalist firms, they will either fail or mimic the behavior of these firms. For instance, a recent study by Caroline Hossein of Politicized Microfinance: Money, Power and Violence in the Black Americas documents how microfinance fell into scandals in various countries soon after Muhamad Yunis received the Nobel Peace Prize for his work with the Grameen Bank. Unscrupulous individuals coopted “solidarity finance” by dropping its commitment to providing investment finance to poor people in favour of commercial bank lending whose aim was to generate profits. Hence, the key issue: how will SSE survive within the context of a largely capitalist economy and a state unsympathetic to radical movements?

Conclusion

In light of the disasters initiated by movements that lionized the self-regulating market or the collectivist state, it was inevitable that community/civil society would be next in line as the progressive answer. Unfounded optimism and wishful thinking abound. But communities are not necessarily progressive; fascists too believe in community and many religious and “traditional” communities are incubators of patriarchy, autocracy and exclusion. Furthermore, progressive solidarity initiatives are often coopted to play by the prevailing rules of the game or are crushed. The reality is that any progressive movement that focuses predominantly on any single societal steering mechanism is doomed to fail. A balanced combination of state, market and civil society is the only realistic alternative, one in which each steering mechanism counteracts the intrinsic weaknesses and dangers of the others. But what that means must await a later post.

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About Richard

I am a Professor Emeritus of Political Science at the University of Toronto. I am currently interested in understanding how the humanistic tradition of the left can be adapted to fit the realities of the 21st century. I am particularly concerned with how we can deal equitably with the deadly challenge of climate change and live with globalization. My most recent academic research has focused on the Left’s experience in the Global South and on counter-hegemonic globalization. Africa has been the major site of my field work; I have also travelled widely in Latin America and Asia. My most recent books include Reinventing the Left in the Global South: The Politics of the Possible (2014), a revised and expanded edition of Civilizing Globalization: A Survival Guide (co-editor and co-author, 2014), and Social Democracy in the Global Periphery: Origins, Challenges, Prospects (co-author, 2007).

One thought on “Market and State Have Failed: Community to the Rescue?

  1. caroline hossein

    You are right on the mark here. Equivocation is the best term to sum this part of the social economy fixated on SSE. Within the social economy not all forms are working together. Many self help and mutual groups that are informal in nature do not (and do not want to) fit with the fakey fake SSE that tends to be coopted!!!

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