Building a country for all: firmly strengthening popular economy

Far from being an enclosed fence to corner the poor or marginalized, popular economy is one of the founding pillars of a new course and way of functioning to replace the ignominious concentrating growth that punishes general wellbeing and the protection of the environment.

Those who dominate the world try to impose the notion that certain critical processes can only be developed in an unique way, such that allows them to reproduce the concentration of wealth and decisions. One of these impositions relates with the process of economic growth.

To sustain their privileges they promote as a dogma a single type of growth, the one they lead, claiming themselves to be the most capable or the only capable for that role. They do not make explicit that in such way the system that concentrates wealth and the consequent decisional power gets reproduced and, with that, also its tremendous consequences: inequality, poverty, environmental degradation, recurrent systemic instability, cultural submission, tax evasion and capital flight that sterilize domestic savings in their capacity of financing the investment required for obtaining full and equitable productive mobilization.

This trajectory of concentrating growth can only be sustained through trickery and repression as it is not possible to openly backup the interests favored by this particular way of growing. Of course, there are other very different modalities of growth orientated towards general wellbeing and protection of the environment, always belittled. In these options is where the critical variable of firmly strengthening popular economy is inscribed.

A dangerous reductionism

Neoliberalism does not pay attention to popular economy or, at most, it addresses it as a handout program unrelated with the macroeconomic policies that determine the course and way of functioning in our countries. That is, they maintain the concentration engines and, in an attempt to lessen their worst impacts, they promote such modest supports to popular economy that cannot remove it from the extremely hard situation in which it thrives for survival. It is not a solution that can revert the conditions that clutch popular economy.

On the contrary, this type of handout program is a supplier of residual technologies, nothing in terms of capitalization, thus perpetuating the small or micro scale; it ignores subordination and domination to which their punished members are subdued.

Popular economy is not an enclosed fence where the poor and marginalized are cornered but rather one of the founding pillars of a new course and way of functioning; a strategic space that generates equity and sustainability. It does not need scraps but rather the political commitment to be firmly strengthened. Within a political and macroeconomic change[1], this implies an action in two main levels. The first one relates with the economic and cultural context where popular economy develops and, the second one, refers to setting up an effective support system linked with the organizations that have been working with these populations and their small ventures.

Cultural and economic context of popular economy

It is worth beginning this section highlighting the critical work that social organizations do in popular economy communities. With an admirable commitment they do not cease to contribute to the clarification about what happens in the country and localities, why it is necessary to reinforce social collectives, to understand the complexity that is implied in having to relate with other economic actors and the State (sometimes open to them, others trying to manipulate them). From this web of power relationships, phases will emerge some where the need to resist these fateful moments will prevail and others where it will be necessary to learn how to seize better conditions for firmly strengthening the development of popular economy.

Popular economy communities are open to innovation and know how to adapt themselves to the changing circumstances of contemporary reality, while they uphold their values, traditions, and languages that shape their identity and self-esteem.

An unavoidable challenge is seeing how to be inserted in the productive fabric of the country and locality in which they operate. No one produces in a socioeconomic vacuum; there are no more completely autarchic spaces. Every actor, one way or the other, relates with a diversity of other actors. The issue that hurts is that in such relationship is where the limitations to access better opportunities and fully retain the value that producers from the popular economy generate take place. Other more powerful actors close growth paths while they appropriate a smaller or larger share of the result of their efforts.

To address these situations, it will be necessary for popular economy producers to enter promissory value chains and not those that are residual with no future and where the integration were of such nature that it could let them access cycles of expanded reproduction. A thorny question that relates with what follows in this section and the next.

Value chains are formed by diverse participants who distribute among them values that the entire chain generates. This distribution of results is made in terms of the relative power each participant holds. The largest power is exerted by leading enterprises of productive chains, what enables them to appropriate larger economic margins of their productive fabric as well as part of consumers’ income through the imposition of prices and brands. Lesser power, though by no means negligible, is held by medium enterprises that provide inputs for leading enterprises or buy intermediate goods produced by the latter. On their part, medium enterprises relate with smaller ones, which, in turn, tend to relate with informal ventures of self-employed workers.

This differential in relative power allows for diverse types of power abuse. In contexts of low economic regulation, this situation prevails in every market and value chain. In other contexts, power abuses can be, to a certain degree, contained through state regulations to ameliorate the cascades of value appropriation. Other innovative solutions can be explored, such as those proposed by Opinion Sur in relation with establishing spaces for negotiation of margins in the distribution of results within the own value chains, with the mediation of the State as regulator and leveler of such uneven forces.

A highly important aspect is to define where to concentrate when confronting with the market-power abuses. It would be economically and politically hardly feasible and equitable to concentrate just in the lower level of the appropriation cascade (that is between small and micro) because the margins there are very narrow. Rather, it will be much more effective to simultaneously tackle the whole process of value appropriation in the entire value chain. As was mentioned before, the larger appropriated margins take place at the level of leader enterprises and, in a smaller scale, medium enterprises and the rest of the chain. Therefore, the importance of establishing spaces for price negotiations and other conditions (such as payment terms, biases in commercialization, impositions regarding stockpile and transport) for the whole chain. Otherwise, if were only to consider claims between small actors, we could end up facing poor against poor, or poor against others less poor.

In any case, it is important to recognize that the power abuses that lead to inequity and many times to the incapacity of value chains to fully grow, is not something inevitable. On the contrary, it is inherent of certain relation of forces that can and should be transformed starting from the base itself of the value chains and going up to the political level and general directionality of the economy that social forces can establish from the State.

Possible components of an effective support system for the popular economy

A complementary level to the abovementioned is having an effective support system for the popular economy. Here the challenge is to get appropriate instruments that, at the same time, are not carriers of other fundamentalisms among the many that overwhelm us. These instruments should be of real usefulness for popular economy communities, embracing the diversity of cultural and economic circumstances that coexist in each social space. What is appropriate is to have these instruments available while communities and social organizations will know in each case if it is favorable for them to use them or if they can identify better ones.

With this warning, we point out two support instruments that, in our experience, can be very significant:

  • Developers of popular economy ventures

These developers should operate under the leadership of the organizations of the popular economy as instruments to support the strengthening of existent ventures and assist in the creation of new ones of larger scale based on the association of efforts. It is the task of each organization to define if it considers useful to have a developer and if so, which might be its profile, its scope and way of functioning.

Medium-size ventures facilitate the access to a progressive capitalization that, in turn, affects better management and enables access to more promissory markets. We are talking about management of excellence, appropriate technologies, retaining generated value to be applied to what venture participants decide. All these safeguarding values of solidarity, respect for the other, for the communities where they live and with which they relate, for the environment and a responsible participation in local and national affairs.

There is a great variety of associative modalities in the popular economy to address productive processes. Among other types, cooperatives; community traders; small-producers consortiums for purchasing supplies and providing services; community systems for stockpiling, processing, and transport; community holdings to integrate complementary ventures and explore opportunities for exporting; locomotive agro-industries; people based franchises; community supermarkets and new ones that may appear in the future according to new technological, political, and economic circumstances. Community talent is fecund and diverse its creativity; popular economies are open to innovation relying on their cultural and organizational traditions. It is senseless to constrict such diversity of communities and circumstances into some unique organizational form, insisting on the reductionism of preaching it as the best available option. It is not such the interest of popular economy that is permanently searching for experiencing new productive modalities.

In some cases of medium-size ventures, it could be advisable to hire experienced professionals in management, adoption of appropriate technologies, commercialization, logistics and stock management, among other fields of specialization. There, it will be of strategic importance to train community cadres that could work together in teams with hired professionals to promote own cadres of the popular economy at all levels.

  • Specialized Trusts

A necessary complement to developers of popular ventures is having resources to finance the startup and operation of those ventures. One modality, among others, that could serve this purpose is the establishment of trusts specialized in financing popular economy. Their functions might include an investment line in new ventures’ capital and another to assign resources to entities that provide credit for popular economy.

The capital of these trusts may come from diverse sources of financing depending on the prevailing circumstances in the countries and territories. What would be important is that non-commercial sources prevail because the criterion for assigning resources is not just profit but rather strengthening popular economy. Indeed, this does not imply granting resources as non-repayable because it is necessary to obtain modest returns to secure the sustainability and continuous operation of trusts. Capitalization of trusts can come from national and local public contributions, solidarity contributions from foundations and enterprises, foreign backups committed with equity and sustainability and, by all means, from the own operative results.

There should also be a relevant presence of representatives from organizations of the popular economy at the board level of these trusts.

A needed warning

It is not the intention of this article to provide recipes but rather to add perspectives to those who with a lot of effort work to strengthen popular economies that markets generally ignore or attack. Developers and trusts mentioned here are powerful instruments if properly conducted, but can also be the source of frustrations in the hands of the corrupt and dominators. Their contribution would even increase in a context of revision of value-extraction mechanisms that support and reproduce economic and decisional power concentration. That is, interventions should be taken to the level of public policies as an important factor that can contribute to reducing external vulnerability of the productive matrix while strengthening the support base of important value chains.

It is worth closing these lines reminding that the significance of the popular economy is not just at the strategic productive level. It is also part of the fight for overcoming the cultural and political submission that asphyxiates popular initiative and subtracts legitimacy from those who lead our captured democracies. The muddy substrate of present time demands conceiving other forms of being and living in society. To that end popular economy also contributes.

[1] . Contributions to the context change by Opinion Sur can be found in the books: Los hilos del desorden, Crisis global: ajuste o transformación y Democracias capturadas and in several articles such as Dismantle the concentration engines, A threatened world, And now what? What will happen next?, From inequality to systemic instability, Freeing captured democracies, What lies behind the fiscal deficit?

 

If you like this text, by filling up the form that appears in this page you can subscribe to receive once a month a brief summary of Opinion Sur English edition.

Leave a comment