– Keynote Address, Good Economy Conference, Zagreb 2015
I want to speak today about a crisis that has gripped Europe, and the western democracies, over the last 30 years.
I describe the crisis as the inability of our governments to protect the interests of their citizens. It is a crisis of legitimacy that is undermining the foundations of liberal democracy. Its most recent manifestation is the doctrine of austerity, and the rapid destruction of democratic civic life.
These realities – the imposition of austerity, the end of national sovereignty, and the destruction of democratic accountability are the inevitable consequences of the neo-liberalism that commenced with Thatcherism over 35 years ago. Neo-liberalism is the return of the free market ideology that dominated economic thought at the end of the 19th century. With it, have returned the economic attitudes, social injustices, and inequalities, of that time. Especially, the class hatred against the poor.
At the heart of neo-liberalism is the demand that government remove itself from the market. The withdrawal of governments from a regulatory role in the economy was the end of the Keynesian experiment and a return to the free market ideology of the pre war era. And, if we take the long view, we can see now that the Welfare State – and the policies of public investments that made it possible – was an exception and a temporary detour on the road to the corporate capitalism we are witnessing today.
The control of societies through debt – the imposition of austerity, the privatization of public wealth, the destruction of democratic institutions, and the criminalization of dissent to these policies are all essential aspects of the new order that has spread across Europe and, increasingly, the globe. It has not gone unchallenged.
But how effective has the challenge been?
I come to you today from Greece where I have been living since last summer. I was invited there to help develop a national strategy for strengthening the social and solidarity economy as an alternative to the neo-liberal paradigm I have been describing
Debtocracy is the name of a Greek documentary on the origins of the debt crisis in Greece. But not only Greece. Argentina, Ecuador, and all the periphery countries of the European Union such as Portugal, Ireland and Spain are infected. Debtocracy is a powerful word. It describes a situation where a nation loses its sovereignty to its creditors.
Greece is the classic example of a debtocracy. The debt crisis in Greece and the attempt by Greece to challenge the roots and the rationale of this debt is a very visible drama that is being played on the European stage – but its implications are global.
For example, what will the results of this struggle mean for the creation of alternative visions for political economy? What role does the social/solidarity economy have to play? What is the role of the State? Can State and Civil Society find common cause, or must they always be at war? Does the reality of Europe today prevent such a possibility?
Having been in Greece during this time, I have also been asking myself what does this crisis means for social change in Europe? Or rather, is progressive social change even possible today? What would this change look like? What would it take?
The social economy and a mobilized civil society are central to this process. But so is a new conception of the State. The two are necessary and essential aspects of a single process. They are also crucial for a leftist movement to have any meaning and relevance for today. I will try to describe what I mean and use Greece as an example.
With Syriza’s rise to power, everyone is wondering what the future will hold for Greece. Whether disaster or deliverance, it is hard to ignore the potential for game-changing repercussions from a Syriza government.
The international media routinely describes Syriza as a far left radical party. This is false. Syriza’s proposals for economic and social reform are moderate and rational by any previous standard. But there are reasons why it is portrayed this way. One is a deliberate distortion for propaganda purposes. This is to discredit the party.
The second is because even a moderate left-of-centre party like Syriza must be portrayed as radical because all political discourse has shifted radically to the Right. The political spectrum has narrowed. Anything that challenges free markets and neo-liberal ideology in any meaningful way must be considered radical.
Like other parties of both the Right and Left in Europe, Syriza is paying attention to the role that the social & solidarity economy can play in the current crisis. This is natural when traditional polices and resources, such as taxation and public investment, are no longer available.
Even the Conservative Cameron government in the UK, has promoted the social economy as a sector with a role to play in job creation, in improving public services, and in reforming the role of government.
It all sounds very nice, until it becomes evident how little right wing governments understand, or care about, what the social economy is and how it functions. For the Cameron government co-operatives and the social economy became a cover and a way to promote public sector privatizations, for weakening job security, and for reducing the role of government.
Thousands of public sector workers have been coerced into joining pseudo-co-operatives to save their jobs. The same was happening in Greece with the last government through Social Enterprise Co-operatives.
This is a travesty of the nature and purpose of co-operatives whose memberships must always be voluntary, whose governance is democratic, and whose purpose is to serve their members and their communities for their common benefit – not the ideological aims of government. It’s a lesson that few governments understand.
For the Right, the social economy is often viewed as a refuge for the discarded of society and the victims of the capitalist economy. It is one reason why the Right always chooses charity as the proper response for the poor. Never solidarity or justice. Charity perpetuates dependence and inequality. Solidarity promotes empowerment and equality.
More recently, the rhetoric of the social economy has been used to expand the reach of capital into civil spaces. For these reasons co-operatives and social economy organizations in the UK, and elsewhere, have condemned the distortion of social economy principles for vested political interests.
But what are these principles?
The social economy is composed of civil organizations and networks that are driven by the principles of reciprocity and mutuality in service to the common good – usually through the social control of capital. It is composed of co-operatives, non-profit organizations, foundations, voluntary groups, and a whole range of associations that operate both inside the market, as many successful co-operatives do, or in non-market provision of goods or services. These include cultural production, the provision of health or social care, and the provision of food, shelter, or other necessities to people in need.
In its essence, the social & solidarity economy is a space and a practice where economics is at the service of social ends, not the other way round.
It is not hard to see why Greece today is experiencing an unprecedented growth in the size and diversity of its social economy. Here, as elsewhere, co-operatives and social benefit enterprises have arisen as a form of social self-defense against economic recession and austerity.
The co-operatives and solidarity organizations of today are playing the same role that co-operatives and mutual aid societies played at the beginning of the Industrial Revolution in the 1800s when capitalism was enclosing, dispossessing, and exploiting people and communities at that time. The rise of the social economy today is in part, a self-defense against the new enclosures. These include the privatizations of public goods and services and the theft of natural resources – land, water and minerals.
With the spread of globalization, the logic of enclosure, dispossession, and exploitation that was the basis of capitalism in the 18th century has become the basis of corporate capitalism today. And societies the world over are reacting in the same way – by creating co-operatives and other forms of solidarity economics to resist this process.
As elsewhere, the social economy in Greece is growing – but compared to other European nations, it lags behind. This weakness is due to many factors. One reason is the absence of institutional supports such as sources of social investment, of professional development and training, of organizations to unite, develop, and give voice to the sector. Inadequate legislation is another reason.
A third, more complex reason, has to do with the manner in which civil society and the state have evolved in Greece. Unlike other Western European nations, Greece remained relatively untouched by the Enlightenment and the Industrial Revolution while under Ottoman rule.
Today, Greece is still struggling to establish a political culture that has moved beyond the autocratic clientelism that characterized the political system after the Ottoman era. Autocracy breeds hierarchy, individualism, and relations of dependence, not mutuality and social solidarity. The emergence of a healthy civil society, of democratic civil institutions and a democratic culture, has been undermined by this fact.
Clientelism has been deadly in Greece and it has been catastrophic for the healthy evolution of the social economy, as has been shown in the case of its co-operatives. Just as the Right uses the social economy as a proxy for the promotion of capital and markets, so does the Left consistently view the social economy as a vehicle for the advancement of the aims of the state.
When a culture of clientelism is added, it is a recipe for failure on a grand scale. This is what happened during the 80s when state support and subsidization of co-operatives produced a corruption that not only failed to achieve legitimate economic ends, but also destroyed the image and reputation of co-operatives among the public.
Today, the work of promoting co-operation as a viable strategy for economic and social development has to fight this false and negative public image of co-operatives as inherently corrupt.
Greece is not alone in this. This has been the case everywhere “leftist” governments have tried to use the co-operative model to pursue government aims without regard to the purpose and nature of co-operatives as autonomous civil associations whose primary role is to serve their members and their communities.
Just as in Greece, the co-operative model has had to be retrieved from a ruined reputation in the former Soviet nations, in many nations of Africa, and throughout Latin America where governments see co-ops, and the broader social economy, as instruments and extensions of government power.
Ironically it is the Left, and “socialist” governments, in their manipulative “support” for the co-operative model that have done most to ruin the image and reputation of co-operatives in the minds of millions.
The reason for this is that the Left has often viewed the state as the sole legitimate engine of social and economic reform. It is the mirror image of the Right that sees legitimacy for economic and social development only in the market. Both views make the same mistake in ignoring or manipulating the institutions of civil society that are essential to realizing the radical changes that are needed if any alternative to the present paradigm is to succeed.
And this will be the true test of the character of Syriza in power. How will it relate to the broader civil society, and to the organizations and institutions of the social economy as it tries to rebuild the economic and political complexion of Greece? Will it revert to the statism of the Old Left, or will it seek to expand and re-imagine a new kind of leftist program for change that mobilizes the institutions of civil society and the social economy as meaningful partners in nation building?
Will it understand and utilize the social and economic principles of co-operation, of mutuality and the common goo to re-build the economy and society? Will the Greek government recognize and mobilize the vast potential of civil power in realizing a new vision? If it does, it will be the first in Europe to do so.
In Greece, as everywhere else, one of the things that distinguish political parties is their relation to the social economy. That the government is taking the social economy seriously is a good sign. The social economy represents one of the very few bright spots in Greece, with hundreds of new groups being formed to provide goods and services in a way that is entirely new.
Often rejecting organizational hierarchy, promoting inclusion and democratic decision-making, focusing on service over profit, these organizations see themselves as models for a new economic and political order. And they are.
But many of these groups want little or nothing to do with political parties, or the state. This is not good news for progressive parties, both inside Greece and across Europe as they struggle to articulate a vision and a method for a new political economy. They need a new approach if they are to build a progressive vision for a new age that moves beyond statism. The old ways of party and state control have been discredited and rejected.
The rejection of representative democracy and the withdrawal from formal politics by many social activists is understandable. But it is also a tragic mistake and a delusion. The only ones who will benefit from this attitude will be the status quo, and if things get bad enough, the parties of the extreme right.
You may be sure that if progressives don’t take part in politics, the fascists will. Golden Dawn in Greece, Le Front Nationale in France, UKIP in the UK, – they are all waiting for their chance at power. If they do win power, it will not be with tanks and truncheons – it will be through the ballot box.
Our task is to fashion a political vision, and a political narrative, that is a compelling answer to neo-liberalism and the ideology of competition, free markets, and the primacy of capital. We need a political economy of co-operation, of solidarity, of mutual benefit. And we need to show that it is only an economics of co-operation and shared benefit that can save Europe from its continuing decline in the face of Asian competition and the global race to the bottom.
This must be a vision that does not pit one region against another, Europe against the world. It must be an economics of co-operation, of sustainability, of local control, and of global collaboration and responsibility. If ruthless competition and corporate greed are destroying our planet, it is only co-operation and mutual responsibility for our common fate than can save it.
For a truly effective party of the Left today, the social economy represents a crucial resource and ally. The principles of economic democracy in service to the common good are practiced here. The most innovative, entrepreneurial, and socially productive young leadership is active here. The organizational forms and practices that have the potential to reform the closed, bureaucratic, dysfunction of government services are also being developed here.
This is where communities are learning to work together to recover what has been lost in these past years – of community clinics, of food markets and mutual help between farmers and consumers, of residents collectively preventing a neighbor’s electricity or water from being cut off. And this points to an unlooked for light in the midst of this crisis – that these hard times have sparked a renewal of community and genuine human connections between people. The social economy is where these connections are flourishing.
What then, must a progressive government do with respect to the social economy?
First, it must move beyond traditional statism to develop a role for government that understands how to democratize and share power with its citizens. This means understanding that the primary role of government in a new model is the empowerment and support of civil society for the production of social value – the creation of goods and services that place social needs ahead of private profit.
A vibrant and mobilized civil society is essential for this. We must learn from the experience of so-called progressive governments that came to power through the radicalization and mobilization of civil society, only to co-opt and destroy the leadership and organizations of civil society once they had political power. This is the familiar pattern of political events in Ecuador, in Brazil, in Venezuala – in fact everywhere civil society expects representative democracy, on its own, to change the patterns of power.
For this to be avoided, it means the creation of institutions, both legal and social, that can sustain the development and growth of the social economy and civil society – independently of the party that is in power.
This means the reform of co-operative and social economy legislation, the creation of financial instruments for the social and ethical financing of social economy organizations, the establishment of educational and training institutes for the study of the theory and practice of co-operation, reciprocity, and service to the common good that are fundamental for a new political economy and the advancement of a new social contract.
Third, it means the application of these principles beyond the non-profit sector to the support and development of the wider economy, in particular for the small and medium firms that form the bedrock of most national economies. The principles that animate the social economy are a framework for the recovery and reform of the whole economy.
And fourth, it means the reform of public services through the provision of control rights, transparency, accountability, and decision-making power to the citizens that are the users of these services. The insular, autocratic power of bureaucracy must be broken.
What we are talking about is a new conception: The idea of the Partner State. At its essence, the Partner State is an enabling state. It facilitates and provides the maximum space and opportunity for civil society to generate goods and services for the fulfillment of common needs.
It is a State whose primary orientation is the promotion of the common good, not private gain. And, in contrast to a view of the citizen as a passive recipient of public services, the Partner State requires a new conception of productive citizenship. Of citizenship understood as a verb, not a noun.
What is required is generative democracy – a democracy that is re-created constantly through the everyday mechanisms and decisions that go into the design, production, monitoring, and evaluation of the goods and services that citizen’s need to construct and live a truly civic life. For this, the organizational models of the social economy – the co-operative, reciprocal, and democratic organization of relationships and decisions – are the prototypes of a new political economy.
Greece, like the other indebted nations, has no option but to try new approaches to solve its social, economic, and political problems. At the macro level, the government must do everything it can to address the questions of debt restructuring, of trade relations and export policy, of taxing capital, and of addressing the humanitarian crisis.
The social economy can help.
But it cannot be an engine of recovery on its own. It needs the support of a government that understands its strengths – and limitations. The danger here is that false expectations of the social economy will set the stage for failure and disappointment.
In the past, unrealistic expectations arising out of ignorance of how social economy organizations work, and to what ends, have provided ammunition to those who like to criticize the “inefficiency” and “utopianism” of co-ops and the social economy when they fail to do what they were never meant to do. (They conveniently ignore the fact that the survival rate of co-ops is more than twice as high as that of private companies).
What the social economy offers are the ideas, the methods, and the models by which an alternative paradigm may be built. The social economy is the experimental ground of a new political economy, and its organizations are the social antennae of a possible, and more humane, future. Today, this prefiguring of another paradigm is perhaps the most important contribution that the social economy can make in Greece and elsewhere.
The building of social and solidarity economy institutions is crucial. This is true whether the new government succeeds in re-negotiating the debt, and even more so if it does not.
There are serious doubts whether the changes that Greece needs to make toward a more humane and socially responsible economics can be developed within Europe as it is currently structured. The ideological and institutional dogmatism of neo-liberalism is suffocating any prospects for reform.
Regardless, Greece can learn from the wealth of experience that has already been accumulated in other countries where the social economy has played an important role in advancing economic and social development – particularly in times of crisis. Greece is a latecomer to this field, but that has its advantages. Greece can learn from the experience of others.
In the region of Emilia Romagna in Italy, the principles of co-operation and mutual help are the reason why its small and medium enterprises have been able to flourish in a global marketplace. It is among the top ten performing economic regions in Europe. Italy’s 40,000 social co-ops have succeeded in remaking and expanding social care in that country while working in close partnership with local municipalities. They employ over 280,000 people.
In Argentina, following an economic crisis in 2001 that was almost identical to what Greece faces now, over 300 abandoned factories were taken over by their workers to restart production. Nearly all are still in operation. Schools, day cares, clinics, libraries, and community centres were also taken over and run by the people who use them. Even in Cuba, the archetype of state socialism, the government is supporting the growth of autonomous co-operatives to breath new life into its agricultural sector and to stimulate the growth of new enterprises and new services.
The reform of government is a central theme in this movement. In Brazil, Columbia, Spain, Italy, and a growing list of countries and cities around the globe, participatory budgeting, shared policy making, and civilian monitoring of budgets and public programs is a key role that the social economy is playing in reforming the way in which governments operate – making them more transparent, more accountable, more democratic, and more responsive to the real needs of citizens.
And this is the key point. The social economy is a model of political economy in which economic democracy places capital at the service of society.
Much has been written about the origins of the debt crisis in Greece. Some point to the availability of cheap money and unethical lending that followed Greece’s entry into the Eurozone. Some point to the lack of oversight and lax regulations. Some point to the role of corruption and the huge waste of public funds. All contributed to bringing Greece to the precipice. And exactly the same pattern has been evident in the other debtocracies – in Argentina, in Ecuador, in the countries of the European periphery. But few point to the fundamental lack of democracy and public accountability that has made all this possible.
What are most needed today are the building of democratic culture and the strengthening of civil institutions that generate and expand democracy – in politics, in social life, and above all in the economy. This is the role that an enlightened state should play, in partnership with civil power. It is a delicate and difficult role to get right. But that is precisely why it is so urgently needed. It is a way forward that won’t perpetuate the negligence and wrongdoing of the past.
This is why the policies of Greece’s masters, its servile political class and the European powers that have supported it, are so tragic and shortsighted. They are destroying the very institutions that are most needed to reform and remake Greece – its public and civil institutions. This is not accidental – the regrettable casualties of austerity. Their destruction is precisely the aim of austerity.
The point is, they don’t care. The destruction of public institutions and civil power suits our elites very well. The priority of social values or the wellbeing of people over those of capital doesn’t fit into their schema. In their schema what really matters is the perpetuation of a system that is working just fine for some – just not for people like you or me, or the vast majority of the citizenry that is now paying for the sins of others.
The dysfunction of western capitalism today, and the myopia of its free market ideology may have reached a point where it is no longer able to save itself. Having lost the capacity to freely exploit the resources and labour of third world colonies, having to face the growing competition of Asian state capitalism, western capitalism is now devouring its own foundations and returning to the ideas and practices of a time we had all thought was behind us. The Third World is being recreated in the heart of Europe. We are witnessing a form of cannibalistic capitalism.
In its thirst for short term profits, in its need for cheap and defenceless labour, in its dependence on unlimited access to natural resources, the public interest – and the role of governments in protecting that interest – must be destroyed. Ultimately, this is the end result of liberal democracy – a process that while achieving the democratization of politics was unwilling to sanction the democratization of economics.
In the end, the lack of democracy in economics will always destroy democracy in politics. This is the hard lesson that liberal democracy – and the modern age – is teaching us.
Today, the task of undermining democratic institutions is nearing completion. The criminalization of dissent and the introduction of pervasive surveillance under the guise of national security and anti-terrorism are essential tools in this process. With the decline of profits in the market economy, the enclosure, annexation, and colonization of the public economy is the next logical step. Governments, in the pay of capital, have become the maidservants in this process.
Unless this is stopped, the natural, social, and political foundations of capitalism itself will be consumed. And unlike what some would prefer to believe, what follows after its demise, in the absence of a humane alternative, could be far worse. Thankfully the models and the ideas already exist for a viable alternative, for a co-operative political economy in which capital serves the common good instead of the other way round.
The time has come for a convergence of movements to unite around a common agenda for a political economy of the common good.
The dynamics of such a movement have begun in the rise of Syriza, in the success of Podemos, in the growing resistance in Portugal, Italy, Ireland, and yes, even in Germany. Austerity is fueling a new radicalism. Austerity, and the anti-social ideology that drives it, means not only the destruction of democratic institutions and civic life – liberal democracy as we have known it – but very likely the destruction of capitalism itself.
What our radicalism needs is both a vision for a new political economy, and the political movement to implement it. And, besides a political economy that is capable of serving people and their communities instead of profit, the rise of civil power is necessary for saving capitalism as well. This is the strange irony of our times.
I would like to finish my talk by reflecting on the origins of democracy.
Everyone knows that democracy was invented by the Greeks in ancient Athens. But not everyone knows the relation of debt to the origins of democracy. In the 6th Century BC, debt slavery had become the condition for many poor Athenians who had to use themselves as collateral for the credit they needed to survive and to work their small farms. These unpayable debts were owed to wealthy landowners and the oligarchy that ruled Athens. Over time, unable to pay their debts, many small farmers became debt slaves, having sold themselves and their children into bondage.
But then the people rose up. A series of debtor revolts in Athens threatened the city with revolution. Fearful for their wealth and power, the oligarchs appointed Solon to devise a new constitution for the city. Solon was an aristocrat. But he surprised them. First, he cancelled all debts and abolished the practice whereby a person can make themselves a slave to someone else. Then, he gave political rights to the poorest of Athens’ citizens. This was the beginning of democracy.
Some things don’t change. The power of a small minority to enslave the majority through the control of credit, through the creation of unpayable debt, and through the monopolization of political power is the perpetual pattern of oligarchy and plutocracy.
It was true in ancient Athens in the 6th Century and it is true today. And just as in ancient Athens, what is needed for a rebirth of democracy today is a new form of debtor’s revolt.
This is what is happening in Greece today against the oligarchs and the plutocrats at home and in the boardrooms and government ministries of the centres of capital abroad.
The debtor’s revolt and the rise of democracy in ancient Greece spread and become the foundation for a new conception of politics in which people matter more than money. Civil power became the foundation of political power.
Perhaps the same can happen today.