It is a fact that income gaps have widened through time across and within most countries of the world. In Southeast Asia, data show that worsening income inequality is most manifest in the erstwhile most dynamic economies in the region, particularly Singapore and Thailand. The case of the US economy is particularly severe. Nobel Prize-winning economist Joseph Stiglitz recently wrote:
“The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent…. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent…. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall…. All the growth in recent decades—and more—has gone to those at the top.” Stiglitz’s article was titled “Of the 1 percent, by the 1 percent, for the 1 percent,” in an apt parody of what has become of the US economy, far from the democracy that Abraham Lincoln envisaged some one and a half centuries ago.
Such growing inequalities cannot be sustainable, and are bound to breed growing social tensions to the point of popular uprisings that could overthrow governments, as the world has witnessed in the Middle East and North Africa. Stiglitz warns that even the wealthy will come to regret the growing inequality in America. Occupy Wall Street could very well be the beginning of an escalating social unrest that could threaten the very order that sustains the currently prevailing economic system.
For a number of years now, well before Occupy Wall Street, there have been people around the world who have taken a quiet and more constructive approach to changing this economic system that has heightened divisions and widened disparities. Last week, Kuala Lumpur hosted a gathering of delegates from 33 countries around the world in the third biannual Asian Solidarity Economy Forum, first held in Manila in 2007. The forum drew hundreds of people from various cultural backgrounds and walks of life, all sharing a desire to find an alternative economic order to the one we know, where a few typically reap benefits at the expense of many others. As the name suggests, the economy they seek is one where all players work together toward a shared goal of uplifting the lives of all—that is, an economy built on solidarity rather than on competition and conflict.
But conflict and tension are inherent in the prevailing market economy. Consumers aim to pay as low a price as possible for the goods and services they buy, while sellers aim to obtain as high a price as possible for the same. Workers aim to receive as high a wage as possible from their employers, while the latter are out to pay as low wages as possible to keep costs low and profits high. Borrowers seek the lowest interest rates possible on the loans they obtain from creditors, while the latter are out to charge the highest rates possible. This basic conflict is seen many times over in the various kinds of transactions made in any market economy day after day. The market economy is in fact built on such diametrically opposing motives among its various players. For as long as there are large enough numbers of contending players on both sides and there is free competition among them, Adam Smith postulated that these tensions will comprise an “invisible hand” that automatically yields the right allocation of the economy’s resources and the goods and services they produce.
The problem is, “right” allocation here doesn’t necessarily imply that it’s fair or equitable. In the direct conflict of motives between buyers and sellers, workers and employers, and debtors and creditors, there is rarely a balance of power between the contending sides. One side or the other is bound to get the proverbial shorter end of the stick. In everyday transactions within a competitive economy, there are bound to be winners and losers; win-win outcomes are not the rule, but the exception.
Solidarity economy advocates believe that such an outcome need not be inevitable. Along with the basic instinct for pursuing self-interest, human beings also possess an instinct for altruism, that is, for caring and sharing. This same instinct leads us to value the common good and moves us to certain behaviors that may not necessarily promote our own best self-interest all the time. It is this instinct that could lead a banker to extend credit to smaller, struggling enterprises when dealing with fewer but larger borrowers would seem more profitable; an investor to deliberately put funds into a socially responsible enterprise over another that is clearly more lucrative but with possibly adverse social or environmental impacts; or an entrepreneur to opt to forego maximizing profits in favor of providing wider benefits for the firm’s workers or customers.
Yes, such bankers, investors and entrepreneurs do exist, and while still perhaps a rare breed, their numbers appear to be growing fast. The recent Asian Solidarity Economy Forum once again showcased real-world working models of such socially responsible finance, socially responsible investments and socially responsible enterprises from all over the world. Recognizing how Asia has become the new fulcrum of the global economy, the forum saw it as the region’s great challenge to lead the way to a new economic model built on the pursuit not only of profit, but of the welfare of people and the planet as well.
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E-mail: cielito.habito@gmail.com