Socioeconomic Catalysts in Transforming Policies

To transform economic reality and solve situations of inequality and poverty it is not enough to establish good macroeconomic and sectorial policies; it is also necessary to add critical socioeconomic catalysts as we go. What are those catalysts and how to integrate them into the transforming trajectory?

With hard work, several countries are going through trajectories in pursuit of transforming the prevailing concentrating order. To accomplish that, it was necessary to work at the political level so that new governments with a popular base could secure from the State a new course and the consequent public policies that guided and regulated the activities of economic actors.

A wide spectrum of socioeconomic measures was needed to account for changes in the macro, meso, and micro levels. Progress has been made as some incipient and other consolidated results attest to that. Of course mistakes and forced improvisations were also there as one thing is to keep doing what has been always done based on existing institutions and working arrangements (even if they had led to systemic inequality and poverty) and another different thing is to face powerful resistances when changes transforming course and ways of functioning are introduced.

Thus, though it is worth celebrating what was accomplished, it is also needed to secure the sustainability of the transformation by emending mistakes and improving the course taking into account what emerges from gained experience. This is a critical point in any process of transformation: those who lead such process know that with each achieved goal (and even more with those that are not met yet) new and always singular challenges arise. If those challenges are not adequately faced considering the circumstances in which they developed (that are not the same as those from the beginning of the transforming process), sustainability of what is already achieved might be compromised.

Therefore, each new generation of difficulties has to be identified; restrictions that hinder or impede the full transforming realization. It is a permanent and sensitive requirement, as the course should be sustained while introducing changes within changes. To that end, there might be several ways to intervene but one with great potential is to add certain driving factors into the existing public policies; factors that, for lack of a better denomination, we call them socioeconomic catalysts.

These catalysts can vary in nature and applicability but they all point to energize and add sustainability to the transforming process. Their function is to unlock the many operational knots that appear in every process of change, unfolding the capacity of diverse actors to advance towards the chosen direction. Therefore, there will be as many catalysts as strategic areas of operation there exist, and it should not come as a surprise that those catalysts must also need to be renewed or adjusted depending on the changing circumstances.

For the purpose of the present article and as an example, we will focus on some possible catalysts of a particular field of action: the highly wasted contribution that popular sectors have to offer to a country development and, particularly, to the transformation of its productive matrix.

Vulnerabilities in the Productive Matrix

Each country has its own singular productive matrix though some similarities among them can be identified, such as the productive matrix becoming an economic structure functional to the concentrating process and having a strong primary export profile. The latter does not exclude the existence of industrial activities and services; rather it highlights that the primary sector plays a crucial role as supplier of the needed foreign currencies to address imports and foreign debt requirements.

If for some reason (fall in prices, exports retention, disproportionate rise in imports, bulky weight of external debt payments, tax evasion or elusion by exporting sectors, capital flight, among others) available foreign exchange reserves became scarce for the economic requirements, there might be bottlenecks that if not resolved could have severe consequences in terms of instability and recurrent crises.

In some countries, the productive matrix is not able to secure energy sovereignty; in others, food sovereignty, commercialization of exports sovereignty, education and cultural sovereignty, among diverse and various types of sovereignty. This does not mean that autarchy is needed in every economic aspect however, what is indispensable is to eliminate major vulnerabilities that compromise development. These sovereignty deficiencies, added to inequalities derived from situations of poverty and imbalances, feed the requirement for transformation.

The productive matrix is formed by high, medium, and low productivity sectors that operate in concentrated markets where a few actors have the power to set prices and regulate supply. This generates a highly heterogeneous economic universe where much different accumulation rates, differentiated salary conditions, and unequal capacity to influence public policies overlap.

Popular sectors tend to concentrate in residual sectors of certain value chains, such as it happens in some countries with poorly capitalized family agriculture, various unqualified services, and shaky manufacturing microenterprises. Nonetheless, popular economy supports a vast fraction of the economically active population providing them with the needed income to subsist, however few times accessing a regime of expanded reproduction. The counterpart of this productive matrix is the aforementioned appalling inequality, which, far from diminishing, does not cease to grow.

It is true that redistributive policies contribute to enhance education, health, sanitation, and social emergency assistance. However, these policies not always acted with the same effectiveness to promote a productive transformation that would solve (and not just soften) the concentration of wealth and incomes. That is to say, it ends up been quite difficult to integrate popular sectors productively in promising value chains, particularly assuring fairly returns by retaining the value they contribute to generate. Therefore, a still pending challenge is to facilitate the productive inclusion of popular sectors without trap them in an exploitive subordination.

Conditions for an Appropriate Productive Inclusion of Popular Sectors

It is not easy to transform a productive matrix that has been shaped by a diversity of circumstances where external and internal big economic groups’ interests dominate. This productive matrix is part of a functioning and accumulation dynamic that tends to preserve its own reproduction, overlooking popular sector needs.

The traditional productive matrix requires a weak state that does not interfere with the hegemony that concentrated groups exercise and that only intervenes in critical situations to help them circumvent consequences that might affect their interests. On the contrary, the transformation of a productive matrix requires a strong state, non-arbitrary in its regulatory capacity but determined to change the concentrating logic by another dynamic that would let the full and fair mobilization of the productive capacity of the whole population. To achieve that, multiple actions in different levels are required, several of which were presented in previous publications of Opinion Sur [1].

In matters specifically related with promoting productive inclusion of popular sectors, selected subject for these lines to focus on, it is necessary to generate certain conditions that make it possible, such as the following:

1. Political decision to move forward

This is an indispensable factor to set in motion and guide an appropriate productive inclusion of popular sectors. As was indicated before, it is not just one action, one measure or one policy what will enable generating the conditions for that productive inclusion to take place. It will be necessary to make every economic, social, and environmental policy to converge, as well as the regulations and controls that could secure its full implementation; and this requires a clear political decision by the highest levels of government. In many of our countries, such decision exists, thus, already having met the first strategic condition.

2. Favorable macroeconomic conditions

A country that has generated a sustainable dynamic of development will present favorable macroeconomic conditions to include popular sectors productively. It is also feasible, though much more uphill, to force this inclusion even during difficult phases while complicated internal and external contexts unfold. In recent past, except for brief decelerating phases, many of our countries have managed to develop adequate conditions in their macroeconomic variables.

3. Willingness of involved actors

Critical condition to face a productive inclusion process of popular sectors is willpower and determination of those actors to take initiative to seize the opportunities that might appear and to sustain the effort all the time that might be needed. This implies a strong work to clarify issues and provide information to sectors that had historically been left aside or manipulated by the economic power. This leading role of popular sectors is latent and strongly emerges any time opportunities arise.

4. Availability of knowledge and resources

Even though popular sectors have talent and determination to address solutions that might benefit them, they not always have at their disposal the technical and managerial knowledge required for leading or being part of modern productive ventures, neither the necessary financial resources. The challenge is to orientate knowledge and resources towards popular sectors through diverse organizational arrangements adjusted to their circumstances. This knowledge and resource flow exists and is available to be used.

If these and other conditions were present, one might believe that there should be an appropriate productive integration of popular sectors; however, this does not necessarily happen. The conditions exist but certainly, some factors are missing to make the process feasible and secure its sustainability. In contexts where favorable conditions exist, though not enough to include popular sectors productively, the use of certain socioeconomic catalysts are of strategic importance.

Catalysts to Mobilize the Productive Capacity of Popular Sectors

To roundup these lines, we will mention three specific catalysts that Opinion Sur has been working with to facilitate an appropriate productive inclusion of popular sectors (of course there are other catalysts equally valid). We will just enunciate them as their description can be consulted in other published articles [2] .

(i) One very important catalyst action is to implement a program to train social movements, scientific and technological institutions, development organizations, local governments, among others, so that they can take initiative in identifying and promoting inclusive ventures with transforming potential.

(ii) In support of such effort, a second catalyst is to establish developers of inclusive productive ventures in each region or locality.

(iii) A third catalyst action is to create and set in motion trust funds at national or regional levels dedicated to inclusive ventures with transforming potential.

These catalysts add up to the transforming policies and regulations in order to overcome obstacles that the favorable, general conditions do not manage to eliminate; they do not secure by themselves the transforming goal but they help materialized it. By including them, critical aspects of the inclusion process get solved, such as:

- They promote the conformation of medium-size productive structures that let overcome scale restrictions combining the participation of popular sectors with selected strategic partners. These productive ventures may adopt different organizational modalities such as workers’ enterprises; people base franchises, cooperative holdings, communal trading facilities, export consortiums, service centers for small ventures, and locomotive agro-industries.

- They secure the availability of initial investment and operational funding, as well as technical and managerial knowledge, contacts with suppliers, clients, and other similar experiences.

- They facilitate the integration of these inclusive ventures with transforming potential in promising value chains in fair conditions.

- They aim at generating productions with aggregated value, that are knowledge intensive, with low import requirements, local culture and environmentally friendly, that energize regional economies, that locally reinvest their results and help abate market power abuses.

- As the aim is not to mobilize the productive capacity of popular sectors to pool them with the prevailing dynamic and to reinforce the logic of concentrating growth, the catalyst actions also strive for disentangle the reasons behind the segregation suffered and to promote values and attitudes of solidarity towards their community and the country they are part of.

This leading role of popular sectors, exercising new rights and obligations that they acquire throughout the process of productive inclusion, ultimately, strengthens the democratic process.

Leave a comment

Your email address will not be published. Required fields are marked *