No Free Lunch

Progress on a compassionate economy

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MANY ARE unhappy at how economic growth around the globe, especially in dynamic Asia, is leading to widening gaps between the rich and the poor. The Asian Development Bank notes that out of 28 Asian countries with comparable data, 12 have seen worsening inequality—and these account for over 80 percent of developing Asia’s population. In contrast, Sub-Saharan Africa, Latin America and the Caribbean all saw inequality decline. Widening income gaps need not be a given with economic growth, then. The outcome has much to do with how the economy is organized and, for sure, changing this could change the kind of outcomes we are getting.

Some 300 people from different parts of the country and a sprinkling of Asian guests gathered recently at the Clark Special Economic Zone for the “Asian Solidarity Economy Forum-Philippines 2012.” The first such gathering of solidarity economy (SE) adherents happened in 2007 at the University of the Philippines Diliman campus, with barely over 100 in attendance. It’s a growing movement, to be sure, and the global network of its practitioners and advocates is expanding. It goes by different names in different countries—Malaysia has the “Masyarakat Economi,” while Indonesia has its “Mapalus Economy.” We had earlier adopted the term “Bayanihan Economy,” but prime mover Dr. Ben Quiñones observes that the term “bayanihan” has been misused and abused by certain people who take collective actions in pursuit of selfish gain. The preferred term is thus “Bayanihan Compassionate Economy.”

But what is solidarity economy? The term has come to be seen as loosely synonymous (and indeed has the same initials) with social enterprise. As the name suggests, the economy SE adherents seek is one wherein all players work together toward a shared goal of uplifting the lives of all—that is, an economy built on solidarity rather than conflict. The reality is, conflict and tension are inherent in the capitalist economy we all know. Consumers seek the lowest price possible as they buy goods and services, even as producers and sellers seek the highest price for the same. Workers seek the highest wage possible from employers, who are out to pay the lowest wages they could. Borrowers seek the lowest interest rates on loans from their creditors, but the latter want to charge the highest rates possible. This basic contradiction in motives is played out day after day in the various kinds of transactions made in any market economy. The modern economy, it seems, is built on such conflicting motives among its various players.

Such inherent conflict is useful, according to Adam Smith, as the combined actions of all players in the economy acting on the basis of each one’s self-interest gives rise to an “invisible hand” that yields efficient outcomes. But efficient outcomes don’t necessarily imply a fair or equitable one.  There is rarely a balance of power or information between buyers and sellers, workers and employers, and debtors and creditors; one side or the other is bound to get the proverbial shorter end of the stick. In the market economy, there will be winners and losers, and win-win outcomes are exceptional.

But in the conviction of SE adherents, such outcome need not be inevitable. We may indeed have a basic instinct for pursuing self-interest, but we also possess an instinct for kindness and altruism—that is, for caring and sharing. This instinct that values the common good moves us to certain behaviors that may not necessarily promote our own best self-interest all the time. This instinct prevails, for example, when a banker chooses to extend credit to small, struggling enterprises when dealing with larger and fewer borrowers seems more profitable. Or when an investor chooses to put her funds into a social enterprise over another that will clearly make more money, but could have adverse social or environmental impacts. Or when an entrepreneur opts to forego maximizing profits in favor of providing wider benefits for the firm’s workers or customers. These are the kinds of financiers, investors and entrepreneurs who are increasingly being drawn into the SE network.

Is SE gaining ground? In my closing remarks at the Clark gathering, I made four observations that suggest so. First, more new groups and individuals are now participating. The SE constituency is growing, and there is greater convergence among initiatives of different groups working in different contexts toward the same ideal of an economy where people and planet matter as much as profit. Second, many SE initiatives have deepened and/or widened, gaining stronger momentum and stability, and/or have grown in area coverage or reach, benefiting more communities. Third, adherents cite their own personal growth in the conviction for an alternative way of conducting our economic lives, gaining strength from shared experiences and initiatives with other like-minded (and like-hearted) people and groups. And fourth, many see a slow but sure transformation even in mainstream business, exemplified by Planters Bank that deliberately focuses on SMEs. A number have entered into mutually beneficial relationships with social enterprises as partners in their value chain, rather than taking full control of it through vertical integration—such as Jollibee deliberately sourcing potatoes from organized small farmers in Central Luzon. Some are even fostering the formation of SEs in the process.

Highly skewed as our income distribution may be, we can yet have an economy that is more compassionate. For this, we all need to make social enterprise and solidarity economy more contagious than it has been thus far.

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E-mail: cielito.habito@gmail.com

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