Solidarity Economy Roads

Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5, Chapter 6, Chapter 7, Chapter 8, Chapter 9, Chapter 10, Chapter 11, Chapter 12

Translated by Matt Noyes

(Thanks to Emi Do and Leo Sammallahti – MN)

[In this chapter Razeto examines a question that has been central for the vast majority of people in the world: the question of development. Like many before him, Razeto questions the meaning of development and the objectives sought, opposing an alternative “desirable development” to the dominant model centered on industrialization, capital accumulation, and structural inequality. Arguing that the dominant model is impossible in both technical-economic and ecological terms (the latter being the subject of the next chapter), Razeto shows how solidarity economy, with its focus on meeting the basic needs of all, its emphasis on participation, self-management, and solidarity, and its superior efficiency in the use of labor power and other economic factors can serve as the “nodal point for any strategy” for another, desirable, development. The climate crisis, which brings the ecological impossibility of our current patterns of development to the global north, makes this an argument with relevance beyond the “developing world.” - MN]

Chapter 7

The Road of Alternative Development

The need for a new concept of development

A sixth road of solidarity economy emerges out of the question of economic development. Since the consolidation of the division of the world into highly industrialized countries on the one hand, modern and at the center of the global economy, and less industrialized countries on the other, peripheral and backward, the identification and implementation of a path or strategy of development has been the principal question of interest to economists and the leading sectors of our societies generally. Differentiation defines our situation: the standards and quality of people’s lives, the degrees of importance of countries on the international scene, the ability to face the great challenges of the future of humanity, all are stratified. It is a situation in which, as His Holiness John Paul II noted in his encyclical Sollicitudo Rei Socialis, “the unity of the human race...is seriously compromised.”1

The question of economic development has given rise to various foci and options but it has been centered above all on the problem of the means, models, and strategies needed to achieve it. Different emphases have been proposed with respect to the type of economic organization capable of most effectively promoting development, the sectors which can serve as its “motors” or drivers, the roles to be played by the state and the private business sector, and the preeminence to be given to education, technology, production, services, health, etc. But, generally speaking, there has been no significant discussion of the meaning and principal contents of development which is, after all, the goal to be achieved. Instead, it is assumed, implicitly and a-critically, that the goal is the situation achieved in the countries and regions considered as developed.

For some time, though, the need for “another type of development,” an alternative development, has been discussed, raising with greater emphasis the question of the meaning and end of the development we seek.

That an alternative development strategy is needed in our countries is obvious, given the utter failure of the many and various strategies that have been tried. What needs to be elucidated, though, is not only an alternative strategy, model, and way of reaching it, but also the goal and concept of development itself.

The search for a new concept of development, a new understanding of the objective to be achieved, derives from a variety of very serious considerations. In the first place, from the fact that the development already achieved by the advanced countries implies and presupposes an international division of labor and terms of international exchange that makes great regions of the world structurally subordinate and dependent. They have become subordinated markets providing primary materials, labor power, low cost inputs and products, which contribute substantially to the development of the advanced countries and continue to sustain them to a great extent. If this is so – and we have abundant evidence that it is – it is not possible for all of the world to carry out the same type of development. To make their development possible and sustainable the underdeveloped countries would require the existence of yet another world, dependent on them; obviously, no such world exists.

But the necessity of another conception of development arises not only from this impossibility – which we can call a technical-economic impossibility – but also from a consideration of what would happen if all countries were to develop to the level of the existing advanced industrial nations. Simply, such a state of affairs would be ecologically unsustainable. The quantity of natural resources, energies, and products processed in an entirely industrialized world would have to be multiplied many times with respect to existing levels, with ensuing exponential damage to the environment and increasing disequilibria in ecological systems. This is the origin of the decisive question of “ecologically sustainable development,” which can only signify a type of development qualitatively different from the one we know.

Another important reason for seeking a different type of development from that followed by the industrialized countries comes from the growing awareness of the dissatisfaction development has provoked in societies and people who, after much effort, have reached it. They have achieved a unilateral type of development that, although it leads to something that can be seen as a high standard of living, is not oriented to the satisfaction of the integral needs and aspirations of the human being and thus fails to assure true quality of life. The insufficiency and limitation of this type of development has been expressed in terms that are profound, exact, and strong by His Holiness John Paul II in the aforementioned Sollicitudo Rei Socialis: “in today's world, including the world of economics, the prevailing picture is one destined to lead us more quickly towards death rather than one of concern for true development which would lead all towards a ‘more human’ life.”2 This situation is related to “an erroneous and perverse idea of true human development.”(n25) Warning us that “development is not a straightforward process, as it were automatic and in itself limitless, as though, given certain conditions, the human race were able to progress rapidly towards an undefined perfection of some kind” (n27), Pope John Paul tells us,

“...the mere accumulation of goods and services, even for the benefit of the majority, is not enough for the realization of human happiness… On the contrary, the experience of recent years shows that unless all the considerable body of resources and potential at man's disposal is guided by a moral understanding and by an orientation towards the true good of the human race, it easily turns against man to oppress him.

“A disconcerting conclusion about the most recent period should serve to enlighten us: side-by-side with the miseries of underdevelopment, themselves unacceptable, we find ourselves up against a form of superdevelopment, equally inadmissible. because like the former it is contrary to what is good and to true happiness. This super-development, which consists in an excessive availability of every kind of material goods for the benefit of certain social groups, easily makes people slaves of ‘possession’ and of immediate gratification, with no other horizon than the multiplication or continual replacement of the things already owned with others still better. This is the so-called civilization of ‘consumption’ or ‘consumerism’, which involves so much ‘throwing-away’ and ‘waste.’…

“All of us experience firsthand the sad effects of this blind submission to pure consumerism: in the first place a crass materialism, and at the same time a radical dissatisfaction, because one quickly learns - unless one is shielded from the flood of publicity and the ceaseless and tempting offers of products - that the more one possesses the more one wants, while deeper aspirations remain unsatisfied and perhaps even stifled.”3

The objectives of a desirable development

How, then, has development been understood in our countries and in what ways have people sought to achieve it? What is the conception of development that we should critique and replace? The type of development that can be observed in regions of high industrial concentration has been adopted as the general model of economic development, leading to the idea, widespread in our countries, that development basically consists of a process of massive industrialization, presupposing and implying a substantial accumulation of capital driven by the business class or the State (or some combination of both) who are understood to be the organizing agents of the principal and most dynamic productive activities. In its concrete reality (as seen in the developed countries) development is more than this and has been reached with different policies than those described; but this summarizes how development has been understood in countries that do not have it and the ways they have sought to reach it.

Given this conception of development, it has been thought that in order to achieve development four things are needed: a) industrialization, especially the creation of large industries to which the majority of resources are directed even if this means taking them from other sectors, for example agriculture or services; b) special efforts to accumulate capital, implying the containment of demand and the accumulation of savings that can be utilized for investment in major projects, especially in the industrial sector; c) an economic, juridical, and tax environment that stimulates the economic activity of owners and the State in various ways, with maximum guarantees of profitability on their investments, facilitating the generation of high earnings; and d) incentives, especially for the sectors of activity considered most dynamic, i.e., those that use the most advanced or “cutting edge” technologies.

How to overcome a conception that is so widespread and deeply rooted? More importantly, what other model of development do we have to offer? Economics, focused more on the study of means than ends, doesn’t seem to be the science that can clarify the objective of development. Perhaps healthy natural reason and common sense can show us what it is we should pursue. Without entering into a complicated discussion of terminology about what development is or is not, we choose to think instead about what it is that we desire, the goal and ideal of society seen in terms of its economic potential; this is what we call development.

Everyone probably shares the desire for a society in which the basic necessities of all are adequately met. But we do not stop there, we desire also the satisfaction of other more refined and superior needs and aspirations, which differ with the different motivations and tastes of groups and persons. Our hope is that there will be no forced unemployment, but instead a full and efficient use of human and material resources, and that people be liberated from the most oppressive forms of work. We think of a society in which social relations have an integrating character, in which the exploitation of some by others doesn’t exist and there is no excessive social conflict. But all of this is still insufficient, we want high levels of education, the best health, an excellent system of social communications, the most complete social and ecological equilibrium, and a superior quality of life. Finally, we will not consider ourselves to be developed if the satisfaction of all these needs and aspirations remains subject to external factors out of our control; to that end we aspire to control our own conditions of life, which implies the development of our own capacities to satisfy our needs.

It will perhaps be said that these goals are excessively ambitious and beyond our reach. But this is not the problem, because when trying to define the goal or objective to be reached what counts is to identify the direction in which to advance. In regards to each of the aspects mentioned above much is lacking, but some elements are already in our possession and development consists of advancing in their achievement, reaching greater degrees of realization with respect to each of the desired objectives. Once we identify the objectives and the direction to follow in the process, the question then becomes how to make better progress, how to move more surely and rapidly in their direction.

Development is not achieved through industrialization, nor through the concentration of capital

Doubts persist with respect to the degree to which industrial societies have reached the objectives we have discussed, still, we in the underdeveloped countries must ask ourselves if we might possibly approximate their realization through the prioritized direction of available resources to the acceleration of a process of industrialization, the accumulation of capital, and the privileging of the business groups considered most dynamic. Reality shows us that such roads take us further away from the type of development we have identified as desirable, not closer. We can see this in relation of each of the desired qualities of development we have noted.

Industrialism has not been oriented to the fulfillment of basic needs but to the satisfaction of the most sophisticated needs of high income social groups who consume artifacts of elaborate and complex fashioning. A politics oriented to the satisfaction of basic needs should prioritize branches of the economy like farming, ranching, home construction, and services, so as to satisfy the needs of the entire population for food, housing, health, education, and communications. Industrialism acquires meaning once these basic needs of all have been reasonably satisfied.

If the objective is a well-fed, educated, population in good health, in communication with others, and living in decent homes, production and economic activity have to be directly oriented to this goal. Waiting for them to “trickle down” as side effects of industrial development is not realistic, above all if, in order to accelerate that industrial development, resources have had to be transferred from the country to the city and from other sectors to industry.

We can add to this that due to mass production and the standardization of industry, it is difficult to adequately attend to the great variety of needs, aspirations and tastes that people have, let alone to their needs of a superior character: cultural and relational. Modern artisanal production implemented with good technology and a distributed structure of services tightly connected to the setting in which people live and create their local communities can do this much more successfully.

Nor is industrialization an efficient path for creating employment and making full use of human resources and materials. Still less if we prioritize the sectors considered most dynamic and technologically advanced. Of all sectors, large industry engages the smallest proportion of labor power per unit of capital. On the contrary, it is those sectors which are more directly oriented to the satisfaction of basic needs and the generation of fundamental services that employ human labor most intensively.

In societies where capital is scarce and labor power is abundant, prioritizing activities that are capital intensive and employ little labor power is an inefficient use of resources. This is true also for the technology factor because in an economy to privilege one sector is to sacrifice others. Privileging the most sophisticated and cutting edge technology implies basing development in the knowledge and information possessed by very small groups of highly specialized people and inhibiting, or squandering, the utilization of the wisdom and knowledge of the majority of the population.

Concentrating productive activity in large business units also implies that decisions are made by only a few subjects. The organization of the processes on which the lives of all depend is controlled by a small number of people. The immense majority remain subject to the opportunities offered to them by the organizers of large economic units; their basic incomes depend on employers who may or may not be able to or want to offer them employment. This is as far as it can be from that self-reliance, the control of one’s conditions of life, which we reach through exercising our capacity to satisfy our own needs.

Analyzing the other elements of the type of development we seek leads to similar conclusions. Experience teaches us that industry is not a source of social integration of community life, since it provokes massification and elevated levels of conflict between social groups. Industrialization does not eliminate exploitation of labor and industrial societies are distinguished by severe imbalances, ecological, demographic, and social. These phenomena are even more serious in underdeveloped countries where the effort to accelerate industrialization leads to the concentration of masses of people in a few gigantic cities. Nor, generally speaking, can we legitimately associate modern industrialization with development of education, health, culture, communications, and better quality of life.

Just as we need to dissociate development from industrialization, we need to distinguish development from the accumulation of capital, with which it is customarily identified. The association of development with capital accumulation follows from the identification of development with industrialization which requires consistent levels of accumulation and concentration of capital, whether in the hands of private business owners or the State, in order to effect its large and costly investments.

In the limited space of this exposition we can not spend too much time on the analytical argument needed to specify the relation between development and capitalization. We will limit ourselves to noting that it is not because a society disposes of abundant capital that it is developed, but because it has managed to expand the potential of the economic subjects who form it. Concrete economic goods are required, as are an adequate supply of material and financial resources; but what matters most is that the subjects who make use of the available social resources develop their human capacities, learn the ways to make things, acquire the knowledge needed to organize and manage processes and the available scientific and technological know-how. The degree of diffusion of that know-how in the society, the accumulation of increasingly complex information, and the efficient organization of activity are also important.

Certainly, financing and capital are necessary in order to develop all of this; but not concentrated in few hands, rather they must be socially disseminated throughout the society, distributed in small amounts among numerous subjects – people, associations, communities – that possess creative, organizational, and entrepreneurial capacity. In those cases where capital is concentrated in few hands and productive activity is undertaken by preference in large industries much of that capacity remains inactive.

More than capital, development requires the formation of new behaviors, of determinate habits and conducts, of increasing degrees of social organization required by the multiplication of information and the growing complexity of structures. The expansion of the capacities of all requires that all have access to the requisite financial resources for realizing their projects and initiatives. In other words, development requires capital to be placed at the disposal of people, and not that the people be oriented by the needs of capital accumulation, often sacrificing their own needs and aspirations for perfection. This said, we are now in a position to comprehend the very special support that solidarity economy can contribute to development.

Solidarity economy and the prospect of desirable development

Another development signifies another economy. Let us examine, then, in what sense and in what way the solidarity economy can constitute another economy, the spread of which will lead to the development we desire.

Alternative development implies, first of all, the development of the least developed social sectors, but also that of the society as a whole along the lines suggested by the concept and the objectives of desirable development. We will see how in both senses the solidarity economy presents itself as an appropriate road for those seeking to make a contribution that is substantial, indispensable, and efficient. Let us proceed by comparing the rationality and characteristics proper to the solidarity economy with those elements that define the direction and objectives of desirable development, or vice versa, deducing from the objectives and elements of the development we desire those modes of doing economy that most directly will lead to its realization.

Satisfaction of the basic needs of all requires a just and equitable distribution of riches that can only be achieved there where we find the broadest participation of all in production. In any case, there will always be particular persons and organizations that do not have the chance to participate effectively in production, but they should not for all that be excluded from the benefits of the economy for this reason, they too have the right to live, after all.

On the other hand, in order for the basic needs of all the population to be assured it is necessary that a large proportion of activity be oriented to the production of those goods and services that satisfy them, which in turn requires that people be able to convert their needs into effective demands which impact decisions made about what to produce and for whom. None of this can be optimized if the economic agents decide and act exclusively based on their own individual benefit and interest. The satisfaction of the basic needs of all demands, on the contrary, that the economic subjects be able to assume as their own the needs of others, especially those of the poorest.

A consistent dose of solidarity in production, distribution, consumption and accumulation is thus necessary, as much at the macroeconomic level as in particular units and in the behavior of the various economic agents. To this end, one can draw on the experiences of those who take on the task of overcoming poverty through the deployment of the capacities and resources of the very groups that confront serious problems of subsistence.

The objective of satisfying other needs, differentiated according to the aspirations and desires of various people and groups, and especially the higher needs – conviviality and relation with others, participation and community integration, holistic human development, and spiritual and cultural perfection – also places demands for solidarity on the economy. These needs can be met, in great part, through the communitarian and associative performance of work, of management, of consumption, and of other economic activities.

On the other hand, as it is necessary that the economy provide those goods and services apt for the satisfaction of the differentiated needs and aspirations of people, the producers need to define what which they will produce and for whom in concert with the needs of the people, and not impose standardized products defined in order to maximize profitability of invested capital. The ideas of “working for your bread,” “working for a brother or sister,” and “work performed in friendship” which expressively convey the sense of an economy in which solidarity is substantial, are also indicative of the search for this dimension of desired development.

Another element of development to which alternative economic forms that are characterized by solidarity can make a significant contribution is the increased availability of resources, in particular the generation of rising levels of employment of labor power and the other economic factors. An interesting quality of an economy centered on solidarity and labor consists precisely in its capacity to mobilize inactive resources, particularly labor power. This becomes a key to economic viability because solidarity organizations operate with lower factor costs and because their members can contribute and obtain other types of values and benefits which increase productivity and form part of the overall benefit created.

These economic units put into play creative, organizational, and management capacities that are socially disseminated and have never been economically exploited. Popular know-how and creativity are a source of appropriate technology that meets the requirements of solidarity economy, and their use expands the organizational and management capacities that people and associative groups naturally possess. Solidarity economy also makes use of a special factor called “Factor C” the cooperation, comradeship, community and solidarity present in factories that increases their overall productivity through an effect of collaboration in labor, fluid exchange of information and knowledge, participatory decision-making, commitment to the enterprise, the feeling of belonging to a community of work that is one’s own, etc.4

All of this makes solidarity economy a nodal point for any strategy of development insofar as that strategy, as A.O. Hirschman affirms, “depends less on knowing how to find the optimal combinations of given resources and factors than on obtaining for purposes of development those resources and capacities that are hidden, disseminated, or mis-used.”5

Another objective of development is the integration of social relations based neither on the exploitation of some by others nor the generation of excessive social conflict. This is something so consubstantial with solidarity economy that there is little to add other than to note that any increase in solidarity in the various phases of the economic process implies social relations that are naturally superior and more harmonious.

As far as the achievement of greater levels of education, health and social communication are concerned, it is worth noting that it is precisely in regards to the production of services necessary for satisfying these needs that the solidarity economy has special comparative advantages. These needs have the very special quality of being satisfied through involvement of the community in which people participate, and which consequently are better satisfied in communities and groups than individually.

Education is normally a group process not just in that it is done in groups, but also, more profoundly, in that the group in which it takes place is itself part of the educational process. As human beings we develop each other mutually, each contributing the qualities, knowledge, and skills they have most broadly or deeply practiced.

A similar thing occurs when it comes to health: the good health of each depends on the good health of those with whom they live, and on community and environmental hygiene; inversely, each person collaborates in the health of the rest, at the same time and usually with the same means with which they take care of themselves.

As far as the need for communication, by definition this has to do with something that is satisfied in the relation between people, which perfects itself when those relations are established in solidarity and community.

In other words, as much in the production of the means to satisfy these social needs, as in their use and consumption, solidarity economy presents important comparative advantages with respect to the other sectors. Moreover, the practice of solidarity and community has the very special characteristic of expanding and deepening the needs and aspirations of the people and their communities, which can be expected to stimulate the production of the goods and services needed to satisfy them, through the development of economic forms in which solidarity is present in a meaningful way.

The objectives of ecological equilibrium and a superior quality of life also demand the presence of increasing levels of solidarity and greater community integration; a theme we will examine fully in the next chapter.

The final element to consider in our concept of desirable development has to do with autonomy in the satisfaction of needs, which is achieved to the extent that we develop our own capacities for satisfying them. Such independence with respect to external factors and the consequent control of our own conditions of life finds an significant possibility of realization in the solidarity economy. The economy of solidarity and labor involves people and communities as protagonists of their own development.

This takes on special relevance for social groups that are less economically developed, because the most efficient way to confront the problems of the poorest people is to promote the emergence of popular organizations and economic units centered on work and solidarity, in which those affected by the problems of subsistence seek the satisfaction of their basic needs through the organization and deployment of initiatives that are creative and community-based. State-provided benefits for unemployment, housing, health, and food make use of resources in a way that is not very efficient and does not personally involve those who receive the benefits in the overcoming of their problems. It is better to privilege solutions that are participatory and communal, in which the people in need draw on their own creative energies in the solution of their problems, taking control of their own destinies and meeting their needs through their own effort, growing in humanity and effectively integrating themselves into the life of the society.

In this way solidarity economy converts people, associations, and membership groups into fundamental agents of alternative development. Once this “other” development becomes our guiding concept, the idea that development requires specific privileged subjects which, like motors, will need to be provided with greater resources as a function of their supposed greater efficiency, disappears. Plenty of evidence shows that nearly all the benefits of development fall back into the hands of those who carry it out; but if development is authentic only if it involves the whole of society; if development signifies, as in the aforementioned Encyclical, the “development of the whole person and of every human being,” then it can not be accomplished without the participation of all the relevant economic actors.6 This is precisely the main orientation of solidarity economy. Those who seek this type of development, having understood that it is the only one that is effective and appropriate for our societies, will find in solidarity economy a road and a means well suited for people hoping to contribute to its realization.

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