Popular economy, strategic space for a more equitable economic order

Far from being a reserve to corner the poor and marginal, popular economy can be a strategic space to generate a more equitable economic order. If achieved, it would help change the course and concentrating way of functioning that infringe upon general wellbeing and environmental protection.

Those who dominate in the world, try to impose the notion that certain critical processes can only be developed in a unique way, the one that lets them reproduce the concentration of wealth and decisions. They take care not to explicit their tremendous consequences: inequality and poverty, environmental degradation, systemic instability, cultural submission, in addition to large tax evasion and capital flight that sterilize good part of domestic savings and prevents financing the needed investment for a full productive mobilization. This domination can only be maintained with lies and repression.

Neoliberalism does not defend popular economy; at most, it conceives it as a social-aid program separate from macroeconomic policies, which are those that determine the course and way of functioning of the country. While concentration engines are maintained intact, they tolerate popular economy as a way to lessen the disastrous effects of the established economic order. They are not concerned with solving the harsh conditions in which popular economy ventures develop, they operate with earnest, though rudimentary, productive structures, undercapitalized, without access to credit, with residual technologies and a vulnerable insertion in value chains.

Popular economy needs firm support, not breadcrumbs. Otherwise, it cannot develop with similar standards as those of the rest of the national productive apparatus. Therefore, it will be necessary to address various critical dimensions, some related with the economic and institutional context that oppresses them and others with the imperative need to count on a comprehensive support system based on their own organizations.

Economic and institutional context of popular economy

Those who participate in popular economy know the difficulties to solve, including the complexity of relating with other economic actors and the State (sometimes open to them, others trying to manipulate them). They have resisted fateful times and in times of searching for new courses, they can take advantage of better options and opportunities.

Given that nobody produces isolated from the economic system, an unavoidable challenge for the popular economy is finding better ways of insertion into productive fabrics. Its present weakness makes them vulnerable to submission by other actors. Therefore, the needs for counting on support measures and the mediating intervention of the State. Without them, it will be quite difficult to integrate into promissory value chains instead of the residual ones that preclude them from accessing cycles of expanded reproduction.

Value chains comprise diverse participants that distribute among themselves the results that the whole chain generates. This distribution depends on the relative power of each participant. The largest power is exercised by enterprises that lead productive chains, maximize their profits through imposing prices and conditions to suppliers and consumers. A smaller, though not negligible, power is held by medium enterprises that provide supplies to leading enterprises. They relate with other of smaller size, which in turn are linked with informal micro-ventures.

This differential in relative power makes possible for diverse types of power abuses. Power abuse that generates inequality and compromises full development of value chains is not something inevitable. On the contrary, it corresponds to a certain correlation of forces that can be transformed. In contexts of low economic regulation, power abuse prevails in every market and value chain. In other contexts, the State intervenes with regulations to avoid power abuses and ameliorate the cascades of value appropriation. One way of doing it is through establishing negotiation spaces for margins of distribution of results within value chains, acting the State as regulator and leveler of so dissimilar forces. Other measures include integrating to value chains assisted by developers with experience in markets and insertion modalities in productive fabrics, normative simplification adjusted to particular circumstances of popular economy, programs for associating and capitalizing suppliers, new commercialization channels, and assistance from the science and technology system.

It can be stated that the development of popular economy depends on the own effort, on the economic and institutional context in which it works, and on whether it has (or not) a comprehensive support system, issue that we will deal with in the following part.

Structuring a comprehensive support system for the popular economy

To fully develop, popular economy would benefit from adding to the own effort a complement of expertise, management, and funding. Because it is not simple to equip themselves with an effective productive structure, having appropriate technology, good management cadres, insert into promissory value chains and access the required funding. This group of factors does not tend to be available to popular economy.

A first support element could be, among other options, establishing developers of popular-economy ventures. In them, experts would team up with local cadres.

The central objective is to overcome the small scale establishing medium-size associative ventures with capacity to capitalize themselves retaining the full value of what they generate; and doing so while safeguarding values of solidarity, respect for their communities and the environment, without isolating themselves from the national and local march.

Organizations of the popular economy assisted by developers could evaluate different associative ways choosing those that best serve them. Among many, there are first and second-level cooperatives, community traders, consortiums for buying supplies and services, stockpile and logistics associations, export consortiums, locomotive agro-industries, popular franchises, community supermarkets.

Of course that assistance offered by developers needs to complement with the access to resources for funding starting up and operation of those ventures. A modality to serve this purpose could be to create trusts specialized in funding popular economy. Their functions would include: (i) a line to invest in the capital of new ventures (permanent or transitory until it can be acquired by own producers or their organizations) and (ii) assigning resources to entities that provide credit for the popular economy.

These trusts can be capitalized by going to diverse funding sources depending on the circumstances of each country. It would be preferable to converge public, private, and development organization sources to preserve in time the focus on and respect for the popular economy. Representatives of contributors together with those of organizations of popular economy would form the management level of these trusts. Trusts are very well known instruments, though this type of trust specialized in popular economy should use promotional criteria for assigning resources. This does not mean contributing as a grant as it is fundamental securing the sustainability of trusts in time.

Closing these lines, it is worth mentioning the transcendence of the popular economy is not limited to the strategic productive level. It also includes multiple clarification efforts that the organizations are already doing to understand what tends to sterilize and delegitimize popular initiative, as well as the determination on finding solutions to overcome the overwhelming restrictions in which they live and work. There are not only punctual issues to solve but also many others that are systemic. Therefore, a decisive instance is to help establishing political coalitions capable of conceiving new, diverse, an innovative forms of producing, being, and living in society. Without a doubt, the practice of popular economy contributes to such search.

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