2019 Jan 11

The Solidarity Economy

Exploring alternative models of economic organization and behavior that promote the concept of solidarity economy.

Prof. Dr. Cielito Habito

The modern economy is characterized by diametrically conflicting motives among its key players, and conflict lies at the core of the market system. Mainstream economics, it would seem, is built on tension and conflict. Consumers seek the lowest prices for the goods and services they buy, while producers/sellers want to obtain the highest prices they could. Workers seek the highest wages, while employers want to pay the lowest wages possible. Debtors want the lowest interest rates, but lenders want to charge the highest interest rates that they could. To Adam Smith, the father of modern economics, such conflict is natural, even desirable or necessary for the economic system to work. With large numbers of players operating in an environment of free competition, market forces will automatically yield the “right” allocation of resources, goods and services. But does “right” allocation here mean a fair or equitable allocation? This, unfortunately, is where Smith’s “invisible hand” fails. In the direct conflict of motives between buyers and sellers, workers and employers, and debtors and creditors, there is rarely a balance of power between the contending sides, and one side or the other is bound to get the proverbial shorter end of the stick. In everyday transactions within a competitive economy, there are bound to be winners and losers; win-win outcomes are not the rule, but the exception.

 

Solidarity economy advocates believe that such outcomes need not be inevitable. Along with the basic instinct for pursuing self-interest, human beings also possess an instinct for altruism, that is, for caring and sharing. This same instinct leads us to value the common good and moves us to certain behaviors that may not necessarily promote our own best self-interest all the time. This instinct comes into play, for example, when a banker or financier chooses to extend credit to smaller, struggling enterprises when dealing with fewer but larger borrowers would appear to be more profitable. Or when an investor deliberately chooses to put funds into a socially responsible enterprise over another that is clearly more lucrative but with possibly adverse social or environmental impacts. Or when an entrepreneur opts to forego maximizing profits in favor of providing wider benefits for the firm’s workers or customers.

 

This session will explore alternative models of economic organization and behavior that promote the concept of solidarity economy. Solidarity economy goes beyond social enterprise, but examines the system of relationships across the different players in the economy: socially responsible financiers, socially responsible investors, and socially responsible enterprises.

Suggested Readings

  1. Emily Kawano. 2018. Solidarity Economy: Building an Economy for People & Planet
    https://www.solidarityeconomy.coop/wp-content/uploads/2017/06/Kawano-E.-2018_Solidarity-Economy.pdf [or see attached PDF File]

     
  2. Jean-Louis Laville (translated by Karen Bennett). The Solidarity Economy: An International Movement
    https://journals.openedition.org/rccsar/202 [or see attached PDF file]

     
  3. Esteban Kelly. 2018. Why transforming the economy begins and ends with cooperation
    https://www.opendemocracy.net/transformation/esteban-kelly/why-transforming-economy-begins-and-ends-with-cooperation

     
  4. Adam Parsons. 2014. The sharing economy: a short introduction to its political evolution
    https://www.opendemocracy.net/transformation/adam-parsons/sharing-economy-short-introduction-to-its-political-evolution

     
  5. Peter Utting. 2013. What is Social Solidarity Economy and Why Does It Matter? From Poverty to Power
    https://oxfamblogs.org/fp2p/beyond-the-fringe-realizing-the-potential-of-social-and-solidarity-economy/

     
  6. Eli Feghali. 2018. Where next for the New Economy movement?
    https://www.opendemocracy.net/transformation/eli-feghali/where-next-for-new-economy-movement
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