Looking at South America for answers

South American countries are experimenting with the social and solidarity economy (SSE) model. It’s time for the West to learn from them, argues Milford Bateman.

The meltdown on Wall Street in late 2008 signified the beginning of the end of the neoliberal free market experiment that, from the late 1970s onwards, came to dominate the policymaking process right around the world. Today, however, Western governments and their supine policymakers in the main international development institutions can only reflexively mouth support for more of the same neoliberal policies that got the global economy into this mess in the first place – yet more privatization, yet more deregulation, yet more microfinance and more informal microenterprises, yet more reductions in state sector jobs, and yet more tax cuts for wealthy individuals and corporations.

The silver lining to all this bad news and extreme policymaker confusion, however, is that it has added to the momentum behind an alternative economic model to capitalism that is rapidly and justifiably gaining serious ground – the social and solidarity economy (SSE). With its origins in Latin America in the 1990s, the SSE model has begun to enthuse a new generation of progressive individuals, genuinely concerned policymakers and wider populations in the developing and developed countries (the 99% one might say). Backed up by increased royalties from oil and gas production, as well as high world prices, Venezuela, Bolivia and Ecuador have all begun to transform their traditionally elite-driven economies into a much more inclusive economic and social model, one that favours the 99% and not just the 1%. Notably, much policy and programme effort has been invested in building local institutional support for all forms of cooperative enterprises, especially in local government, which is the practical key to their expansion and ultimate survival.

Indeed, cooperatives are once again being recognized everywhere as the most economically and socially efficient enterprise format around, far better than investor-driven enterprise models that under-serve the community and added to the current global recession/depression with their job-shedding programs and wage reductions.

Other countries, notably Brazil, have quietly promoted a number of fundamental economic and social changes that would have been impossible as recently as ten years ago. Building the state capacities to promote fundamental change has been at the heart of the Brazil’s success. For instance, its powerful state development bank, BNDES, has focused not on making it easier for millions of informal microenterprises to do business, as Peruvian economist Hernando De Soto (2002) famously, but quite wrongly, claimed would resolve the poverty and under-development problem in Latin America, but on supporting smaller numbers of formally registered and innovative small and medium enterprises (SMEs). BNDES has by all accounts done this very efficiently, both through its direct loans to growth-oriented SMEs and also through the local content agreements attached to the loans it makes to the very largest enterprises. It is no wonder that so many developing countries are now looking to BNDES as their role model.

Moreover, with a Ministry for the Solidarity Economy, and veteran reformer Paul Singer in charge as Minister, Brazil has been promoting many important reforms at the local level. Notably agricultural cooperatives have been given special support, both directly in the form of financial support, but also through the ‘Zero Hunger’ programme that provides food to schools and community restaurants that is predominantly sourced at fair prices from local family farms self-organized into functioning agricultural cooperatives (Graziano da Silva, Del Grossi, Galvão de França (eds.) (2011).

Meanwhile, Argentina is pioneering a new generation of cooperatives in the form of the rafts of worker-recovered enterprises (WREs) that emerged from the mass failure of investor-driven enterprises that took place when the economy almost entirely collapsed at the end of 2001 (Lavaca collective 2007).

And even in supposedly hard-line neoliberal Chile, a wide range of local and regional state interventions and powerful local development institutions have helped the economy to grow fast and the rural poor have been usefully included into many growth sectors, such as salmon farming and soft fruits (Kurtz 2008).

All those concerned at the dramatic failures of market capitalism, and the opportunities now opening up for a historic transition to an economic and social model based on cooperation, fairness, inclusion and community, should welcome these and other similar developments in Latin America and elsewhere. Albeit sometimes imperfect, the SSE model is allowing communities all across the world to once more envisage a world built not on selfish individualism, aggressive competition and ‘winner takes all’ exclusionism, but on the much higher and more sustainable values of cooperation, inclusion, social justice and community (De Sousa Santos 2007).

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