Inclusive competitiveness

An inclusive competitiveness that is part of a sustainable development process requires a combined effort of public policies backing the national productive apparatus that are redistributive in nature, including the involvement of small producers in value chains were their productive effort is rightfully compensated. The economic system is one of several mechanisms a society relies on to materialize the chosen development course; it is not, should not be, the social functioning’s steering wheel nor its purpose. The people’s wellbeing and happiness, in the diverse ways each nation or community defines them, are-should be those that guide the development trajectory defining accordingly how the social, productive and spiritual energy is applied as to satisfy longings and needs. In this perspective, the economic system, same as every other system (educational, judicial, political, security, scientific and technological, among several others), must be subordinated to the achievement of the common good.

This orientation of the economic system towards the common good is entirely compatible with the search for effectiveness in the productive effort. Every productive initiative can improve its capacity to cover longings and needs by deploying its creativity and learning from the way other better organized efforts are implemented. This is a field where the concepts of competitiveness, collaboration and emulation can converge.

The historical experience, enlarged by the contemporary global crisis, shows that a competition left to an unbridled greed that brush aside all others strangles potentialities, weakens the systemic course, leads to the concentration of wealth, incomes and decisions and, consequently, to the problems and sufferings derived from it. On the opposite, a constructive collaboration and emulation that involves in terms of efforts and results all those who directly or indirectly participate in the productive process, constitutes an indispensable factor to face the common good.

Several economic fundamentalisms sustain that the motivation to produce and improve results would falter if a way of functioning that was not driven by individual interest and free market competition was adopted. However, we have learned (i) that that freedom to act is usually valid only for some and leads to an economic licentiousness that promotes greed, selfishness, indifference to other people’s suffering, alienation and loss of existential meaning; (ii) that this is so because the perfect market only exists as a conceptual reference and that reality is expressed in markets with different levels of imperfection (the standard is imperfection); (iii) that with that market structure a large share of the national productive capacity is sterilized since when more powerful actors concentrate the results of the collective effort abusing other more vulnerable ones they deny or deprive these latter of their capital formation capacity and therefore to fully develop; (iv) that what is really at stake and needs to be defined in each historic phase is what sort of country, society and individuals we wish to promote and from there on, and only then, how the economic system’s structure and way of functioning can be adjusted in order to move forward with that course.

On its part and on the opposite end, the concentration of decisions in the hands of “enlightened” individuals who consider themselves more illustrated than the rest leads to other fundamentalisms and evils. The issue is there is no known substitute for the responsible action of society as a whole; an action capable of generating spaces for millions of wills to look after themselves, their families and communities in the context of sustainable development trajectories. This convergence of multiple initiatives and interests associated to the materialization of the common good requires public policies capable of turning the economic dynamic into a pillar of the chosen course. Thus the importance of counting with leaderships committed to the needs and longings of all actors and not only to the privileges of a few; leaderships that are chosen in full democracies without the representation traps currently affecting its credibility [[[Democratic traps : solving them by deepening democracy->http://opinionsur.org.ar/Democratic-Traps-Solving-them-by].]].

Competitiveness and inclusion in a globalized world

Economic activities reach greater effectiveness as of productive scales that enable improving management capacity and access to markets, which does not imply nor cannot be reduced to promoting enormous companies that in their march absorb or subdue other large, medium and small companies. On the contrary, the goal is to optimize the actions of groups of actors that have different scales, abilities and knowledge. They are no longer isolated companies the ones competing in the global markets but productive systems integrated in clusters and value chains with the interventions of diverse enterprises, their workers, the National State, local governments, credit institutions, the educational system, science and technology, Justice, the media, among others.

In many cases, value chains are structured and operate in such a way that the results are overwhelmingly concentrated in the companies leading them; this happens because the different actors’ power of negotiation is extremely uneven. In these cases the State through public policies and regulations can promote the convergence of the leading companies’ interests with those of the rest of their value chain and of society as a whole. However, the State is often controlled or conditioned by economic powers with the consent of part of the political system, the media and the justice system. Therefore, it is not surprising that in order to overcome this concentrative dynamic it is also necessary to act simultaneously at a political and media level while seriously revising the way the national and local law operates.

Since the privileges they wield cannot be openly defended, hegemonic groups sustain a diversity of arguments to justify the legitimacy of their interests, among them, a particular perspective on ‘the’ competitiveness. It is presented as if there was only one possible type of competitiveness when, in fact, several types of competitiveness of very different nature can be promoted. From the one that reduces competitiveness to an enterprise’s capacity to impose itself upon others to maximize results and market shares for its own benefit, to conceptions associating competitiveness to a productive system’s strength to successfully participate in domestic and international markets achieving results that are fairly shared among all actors who produced them. This last definition is what we call inclusive competitiveness, a systemic competitiveness that demands complementing efforts, coordinating actions, aligning interests and drawing together different actors through a common project that develops synergies and guarantees a fair distribution of results.

Concentration and malfunctions

It has been pointed out that in a value chain there are large companies leading and many other medium and small ones accompanying them by contributing value through their productive effort; so does the National State and the local governments who are responsible for regulating economic functioning, investing in social and productive infrastructure, developing science and technology, watching over security, providing justice. Actually, in the course of the productive process all actors interconnect whether as producers, consumers, promoters or regulators.

These actors and their interests are present and fight over spaces of participation and results within the value chains. It has been stated that the decision power and incomes tend to concentrate in the leading companies since due to their scale and strategic position they have the capacity to retain for themselves a large share of the value generated in the chain: they establish prices, choose suppliers, defining the commercial strategy, payment conditions, and qualities, presentation and delivery standards. By doing so they manage to increase their capital accumulation partly at the expense of the other members of the value chain they lead. The medium-scale companies, especially if they play a strategic role in the development of the value chain, are able to defend certain levels of accumulation although constantly facing challenges related to being replaced by others more efficient or willing to sacrifice profit margins. Those who due to the vulnerability burdening them see their capital formation and, therefore the possibility to develop in the context of an expanded reproduction regime, deeply restricted are the small producers. The handful of producers that manages to overcome their circumstances only confirms the enormous difficulties faced by the hundreds of thousands that do not.

Towards an inclusive competitiveness

An inclusive competitiveness that is part of a sustainable development process requires a combined effort of public policies backing the national productive apparatus that are redistributive in nature, including the integration of small producers in value chains where their productive effort is fairly compensated. To accomplish this there is available an extensive set of instruments, some of macroeconomic scale such as public expenditure in social and productive infrastructure, a reform of the tax system to introduce greater progressiveness, democratizing access to credit and capital markets, just like others equally critical of mesoeconomic range (the space of productive networks and linkages) such as encouraging that the scientific and technologic system supports small and medium producers more directly, granting credit and tax facilities to value chains that promote the capital formation of their small and medium size members, prioritizing in public biddings consortia of companies that intensively use small producers as subcontractors, adjusting fiscal and functioning regulations to the circumstances in which the small and medium-scale production operate in.

A special mention deserves an innovative promotional initiative regarding the establishing of a certain number of inclusive venture developers [[See their description in [Inclusive venture developers->http://opinionsur.org.ar/Inclusive-Venture-Developers?lang=en].]]. Its rationality is based in that it is critical to elevate the small producers’ operational threshold since their reduced scale severely conditions their viability (difficult management, null or low capitalization, technological backwardness, poor access to information and opportunities, etc.). While a segment of small producers will keep operating at a reduced scale, another can participate in new inclusive ventures that make use of modern organizational engineering such as franchise systems, export consortia, trading companies, locomotive agro industries, cooperative holdings, service centers, among others. These productive organizations need to be backed with promotional measures in order to develop effective management models and become integrated into promising value chains. A system of inclusive venture developers that will cover a country’s different regions constitutes an effective way of doing so.

We can also consider another specialized type of developers oriented to integrate in the same value chain small and medium actors from neighboring countries such as, among others, those of Mercosur in South America and those from the Southern African Development Community (SADEC) in Southern Africa, which would aim to take advantage of the complementarities and opportunities beyond national borders [[[See a brief presentation in International opportunities developers->http://opinionsur.org.ar/International-opportunities?var_recherche=developers].]].

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