from corporate control - global justice

Another economy is possibleFrom corporate control to economic democracy

September 2014

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The financial crisis of 2008 made the greed, recklessness and inequality at the heart of our economy clear for all to see. But since 2008, the banks and financial institutions that caused the crisis have grabbed even more power over our society.

Meanwhile, governments have slashed hard-won regulations and social policies designed to protect our rights and wellbeing. And the very basics of life – our health, our education, our environment – are being turned into products for sale and transferred to corporate hands.

The ideology of corporate power that has come to be known as neoliberalism is alive and well. At its heart, neoliberalism is about transferring power from public to private hands by privatising state enterprises, reducing public spending, and removing social and environmental regulations and standards.

Reclaiming our economy

The aim, primarily, is to secure the position of the ‘1 per cent’: the tiny wealthy elite that have taken hold of the vast majority of the world’s wealth, resources and decision-making power.

To do this, neoliberalism relies on eliminating the idea that alternative economic and political arrangements are possible. The object, in other words, is to defeat hope.

But the tide might be turning. From Ecuador’s refusal to pay illegitimate debt to the people of Paris taking back their water supply, people everywhere are resisting corporate rule to fight for and create economic alternatives. By learning about these different ways of doing things, by spreading the word and inspiring belief in a different world, we start to challenge the rule of the 1 per cent.

Policies and reforms that could redirect the economy towards the needs of the many, not the few, are out there. But we can’t expect the banks and corporations that currently call the shots to give up without a fight. If we want an economy that works for the common good, it must be owned in common, by all of us. We have to take back control. By introducing forms of economic democracy that put power in the hands of people, not big business, we can create an economy that works for us.

Joe Zacune/Critical Information Collective

4 World Development Movement • Another economy is possible

It may have been the banks that caused the crisis, but it is us that are being made to pay. In just a few years, so-called advanced economies in Europe morphed from apparent prosperity to relentless austerity with drastic cuts to public spending, diminishing wages and escalating unemployment.

Britain might recently have seen a return to economic growth, but this has been achieved on the back of risky increases in household debt, a key contributing factor to the financial crisis a few years ago. Meanwhile, the longest sustained decline in living standards since records began shows no sign of ending, with real incomes for most still stagnant or in decline. Around Europe, the situation is even more bleak. Over one million jobs have been lost in Greece (population: 11 million) since October 2008, with Greek unemployment in March 2013 standing at a record 27%.

The UK government tells us that austerity measures are necessary to pay off debts incurred by ‘irresponsible’ government spending. But in reality Britain’s public debt is not at worrying levels: it is roughly equivalent to that of Germany’s and no higher than it has been for most of the last 300 years.

Alternatives to austerity

Eduardo Santillan Trujillo / Presidency of the Republic

Top: Ecuador 2011: the Domínguez family survey their new home in an new ecological development on Santay Island. Previous page: Occupy London protest outside the Bank of England.

World Development Movement • Another economy is possible 5

In fact, the bulk of the UK’s debt burden arises from the private sector: the debt held by UK banks and financial institutions stands at an astonishing 219% of GDP (up from just 47% in 1987 and 122% in 2000). The answer to this kind of private debt crisis is measures to reign in the power of finance, not making people suffer through austerity.

In fact, history shows that government spending is the way out of a recession. When firms and households are cutting their spending others are earning less, and so the whole economy is pulled backwards. When this is happening, as in a recession, it is foolish for government to behave likewise.

Austerity isn’t working for us – but it is working for the 1 per cent. Inequality has spiralled, with the rich getting richer while the rest of us pay the price. In the US, 95% of all gains in wealth since the start of the crash have gone to the richest 1% of the population.

We do not have to accept this. Activists in Europe must now learn from countries in the global south who have fought back against years of austerity policies forced on them by multinational institutions like the IMF and World Bank.

ArgentinaBetween 1976 and 1983, Argentina’s brutal military dictatorship was lent $21 billion, largely from private banks (and also from the UK government). This resulted in a severe debt crisis and subsequent recession.

To pay these debts, Argentina accepted loans from the IMF and World Bank, conditional on implementing privatisation and austerity measures. But austerity only served to deepen Argentina’s dire economic situation. Between 1986 and 2002, the numbers living on under $2 a day rose from less than 100,000 to 9 million. In response, people took to the streets.

In 2001, instead of making the further spending cuts prescribed by the IMF, Argentina decided to devalue its currency and to default on its public debt of $144 billion, meaning a decision to simply stop paying this debt back (in 2005, Argentina agreed a deal with its creditors to pay back 35p in every pound it owed).


Ecuador Ecuador followed the example of Argentina when, in 2008, President Rafael Correa announced that the country would default on US$3.2 billion of ‘illegitimate and illegal’ debt. Ecuador ended up clearing around a third of its foreign debt by defaulting, and then bought back the remaining at around 35 cents to the dollar, clearing the debt entirely.

Correa then focused on ramping up public spending on access to health, infrastructure, housing and other social initiatives with the Economist labelling him as “incorruptible” as a result. Correa also focused on numerous reforms to the financial services sector. The transfer of private debt to public hands, which happened across Europe in response to the economic crisis, was made unconstitutional.

The result of all these reforms has been remarkable. Even though demand for oil, Ecuador’s most important export, dropped dramatically as a result of the world recession, Ecuador weathered the storm. Between 2006 and 2012, poverty fell by 27%, and unemployment dropped to around 4% — the lowest level in 25 years. Ecuador’s economy is also growing faster than Brazil’s, and it has a low debt-to-GDP ratio of 18%.

Time and again, austerity has proven a failed economic strategy for the majority. Latin America shows us another way. Governments can refuse to sacrifice their people to pay illegitimate debts. They can divert money towards socially useful enterprises instead of debt repayments. And, crucially, the rule of finance over our lives can be resisted.

Despite predictions of economic doom from mainstream economic commentators, Argentina’s default (the largest sovereign debt default in history) was its first step toward economic recovery. After the default and devaluation, Argentina was able to boost public spending on socially useful enterprises, resulting in seven years of impressive levels of economic growth and recovery. Today an estimated 800,000 live on under $2 a day, compared to the 9 million people in 2002.

Argentina is still suffering attacks from financial markets for daring to put people before their profit. But despite difficulties, the country’s actions prove it is possible to resist the control of debt and finance.


Sinistradigoverno.wordpress.com

An economy owned in commonAs the previous cases of countries in Latin America show, there are many tried and tested economic reforms and policies out there with a successful track record of reducing poverty and tackling inequality. But as important as these reforms are, they are not enough.

In the case of Argentina, for instance, defaulting and ramping up public spending was a successful route out of recession. But bold as these reforms were, they did not undo years of neoliberal restructuring: rights at work remained under attack, utilities and key services were still under private control and the power of the financial sector largely went unchecked. According to Argentine economist Alan Cibils, this failure to make a wholesale departure from neoliberalism was the key factor in Argentina’s return to economic problems in 2007.

Until people themselves take back control of the economy, governments will always have to balance our interests against the power of the 1 per cent. If we want an economy that works for the common good, it must be owned in common. This means taking back our economy from corporate hands and introducing measures to democratise control so that our interests are fully represented.

Top: In 2011 the Italian acqua bene comune (water for the common good) movement won a referendum victory that defeated the government’s attempt to privatise the public water company.


Reclaiming the commons

“Water, land, health, education, transport, social care, facilities and training for young people and all the resources and services on which living well depends should be organised as commons, whether natural or social, to which access and involvement is a human right.”

Hilary Wainwright, The Tragedy of the Private the Potential of the Public

The commons are elements of nature, culture and public goods that all members of a society need and share. Traditionally the commons referred to natural resources such as grazing land, forests and water that were not privately owned but held in common for all to use. Today the commons can also mean cultural commons such as arts, literature and the internet, common human resources like our capacity to care and look after each other, and common services or public goods such as education and healthcare.

The history of Britain and much else of the world has seen the basic elements of life – land, food, energy, shelter, healthcare, education – increasingly turned into commodities to be bought and sold. Access to these common resources is no longer seen as a right, but depends on our ability to purchase them in the marketplace. But people across the world are fighting back to reclaim these lost commons.

Before the market-based reforms of Margaret Thatcher’s government in the 1980s, much of Britain’s economy – from the railways, to energy and water, to finance – was under state control. The privatisation of utilities and services has largely meant declining quality, increased costs and the transfer of power into the hands of a few supremely wealthy, unaccountable private companies. However, our previous model of public ownership was very top-down and often gave workers and ordinary people little chance to participate in the running of the services they worked in and used.

Reimagining public services and resources as a commons shifts us away from this form of top-down state control. Common ownership is about both access to a resource as and when people need it, as well as involvement in managing and owning this resource. An economy owned in common is a democratic economy grounded in participation and control for workers and ordinary people.


New experiments in public ownershipAs has been documented extensively by Glasgow academic Andrew Cumbers, there are many interesting examples of forms of public ownership grounded in participatory democracy and control for workers and ordinary people.

One trend along such lines is the remunicipalisation of public services: taking services out of private hands and shifting ownership to city and regional governments. Germany’s transition away from fossil fuels towards renewable energy is being led by the creation of new municipal not-for-profit energy companies. And the government of Paris took the decision to remunicipalise its water supply in 2010. The city’s water supply is now run by a board including representatives of workers and the general public, under the supervision of scientists and public officials. Water prices fell by 8% after the first year of remunicipalisation and are now 40% lower than in the outskirts of the city where water is still privatised.

Suez – the water company kicked out of Paris – now looks set to lose its contract in Jakarta, Indonesia after failing on its obligation to extend and improve water supply. After years of hard campaigning from residents, unions and civil society organisations, the governor of Jakarta last year announced his intention to terminate Suez’s contract and transfer power back to city government control.

Meanwhile, people across the world are taking control of public spending decisions through participatory budgeting. In Porto Alegre, Brazil, open regional assemblies decide on spending priorities for the city and elect citizen delegates who take responsibility for putting these priorities into practice.

Mauricio Rocha

Participatory budgeting in action in Brazil.

From top: A newly opened branch of Eroski, the supermarket chain owned by Mondragon; A worker at the Giovani Rilegatori print shop in Emilia Romagna, a social co-op that provides work for people with disabilities; Workers’ co-op Suma is the UK’s largest independent wholefood wholesaler/distributor.


This has brought impressive results. Sewer and water connections increased from 75% of total households in 1988 to 98% in 1997. Since 1986, the number of schools has quadrupled, while the health and education budget increased from 13% in 1985 to almost 40% in 1996. Participatory budgeting is now used in 1500 municipalities across the world, including the UK, where regions within several major cities including Edinburgh, Bradford and Manchester have trialled this system.

Co-operatives One hundred million people around the world are employed by co-operatives, while nearly 1 billion are members. A co-operative is a form of organisation that is run by and for its members on a democratic basis.

In workers’ co-ops, workers themselves control their workplace and all profits go back to the workers’ instead of shareholders. Mondragon Corporation is a federation of almost 300 workers’ co-ops based in the Basque reason of Spain, whose enterprises include banking, manufacturing, retail and education. Mondragon shows how co-operatives need not be small scale. It employs 80,321 people with a revenue of almost ¤15 billion, making it the tenth largest business in Spain.

Mondragon co-operatives agree pay ratios between the lowest and highest paid, ranging from 3:1 to 9:1, with an average of 5:1. But some workers’ co-operatives go further, with equal pay for all employees. Fábrica Sin Patrones (meaning “factory without bosses”) is a ceramic tile factory in Argentina, and one of a number of co-operatives established in the wake of Argentina’s economic crisis in 2001.

tulankide.comdept.kent.edu

suma.coop

Fábrica Sin Patrones workers celebrate the 10 year anniversary of gaining control of the factory.


Following the closure of the Zanon tile factory, workers occupied and resumed production without management. Fábrica Sin Patrones is now legally recognised as a worker-controlled factory and has inspired the establishment of other worker-controlled enterprises across the country.

In the Emilia Romagna area of Italy, care services are provided by 14,000 ‘social co-ops’, which employ over 400,000 people. Social co-operatives, which also operate in Quebec and Japan, are owned and run by care sector workers alongside people who use care services, the families and support networks of these service users and members of the broader community.

Housing co-ops are also on the rise as a response to high accommodation costs. There has been a wave of students organising housing co-ops recently in places such as Birmingham, Sheffield and Edinburgh. The latter has launched a 106-bed building for the 2014 autumn term. They join a variety of existing housing co-ops and similar ‘co-housing’ projects beyond the student sector.

The crisis of the Co-operative Bank in the UK illustrates the difficulties facing co-operatives trying to operate within the context of an economy driven by competition and profit. Indeed, the coalition government in the UK have used ‘mutualising’ public services as a way of introducing the market by the back door. Co-ops, then, are no silver bullet solution – but this is not to deny their potential as one of many organisational forms with a role to play in economic democracy. The key is for co-ops to stay grounded in broader movements for social transformation and to stay true to their egalitarian and democratic ideals.

rnma.org.ar


Above: Pernambuco, Brazil 2013: Cuban medical professionals provide healthcare services to disadvantaged communities.

International collaboration,not competitionThe move towards economic democracy must happen at the global, as well as the domestic level. The drive to open new markets and secure supplies of natural resources dominates current international relationships to such an extent that concerns about trade and economics are impeding other crucial intergovernmental negotiations, such as those on climate change and biodiversity.

However, a new dynamic has been emerging, again from Latin America and the Caribbean. Initiated by Venezuela and Cuba, the Bolivarian Alliance for the Peoples of Our America (ALBA) was established in 2004 and supplemented with a Peoples’ Trade Treaty in 2006. ALBA now includes Venezuela, Cuba, Bolivia, Nicaragua, the Commonwealth of Dominica, Antigua and Barbuda, Ecuador, Saint Vincent and the Grenadines, and Santa Lucia.

Pan American H

ealth Organization PAHO/flickr


ALBA prioritises solidarity, justice and cooperation, so that all the countries participating in it will benefit from the alliance and collectively defend their interests on the world stage. It explicitly differentiates itself from the neoliberal model: “ALBA does not harbour commercial criteria or selfish interests related to business profits or national benefit to the detriment of other peoples.” In other words, ALBA is based on the idea of working together for the common good, not on competition.

In 2008, for example, courtesy of Cuba, 30,000 doctors provided free services to the poor throughout Latin America and the Caribbean; 70,000 students received training as health professionals, and 600,000 people had their sight restored including through free surgical operations.

Participating countries are developing a common approach to the way they run their domestic economies too. In terms of food and agriculture, ALBA countries favour returning the means of production to the people through the redistribution of land and co-operatively run farms and food-processing factories. They also consider food as a basic human right rather than simply a commodity for profit. International trade is not vetoed, but it does need to be based on policies and practices that should work in favour of small-scale farmers. Indeed, trade should be carried out when it benefits the poorest and help create a more equal and sustainable society.

Venezuela also provides credit to Caribbean countries to offset part of the costs of buying Venezuelan oil. By 2008, Venezuelan state oil company Petrocaribe, which manages the project, was the largest provider of concessionary finance to the recipient countries, exceeding flows of development assistance from the EU, USAID, the IADB and the World Bank.

Of course, not everything is perfect in these countries. There is a big debate around the use of fossil fuels to fight poverty because some believe the use of these fuels locks economies into system that makes democracy, equality and sustainability harder to achieve in the long-term. Indeed, progress is a result of on-going struggles between social movements, organised workers and governments. But what has been achieved in this part of the world is proof that international relationships need not succumb to the neoliberal dynamic of competition, self-interest and unsustainable resource extraction. By working together across borders, countries can create new, mutually beneficial relationships that mean a better deal for ordinary people and the environment.


An economy that works for usThrough the measures to democratise the economy explained in this booklet, we can start to make decisions, collectively, about what goals and functions our economy should serve.

Free market proponents have always promised that wealth would ‘trickle down’. They have even managed to rebrand the process of the rich getting richer as something that sounds positive for all of us – economic growth.

Economic growth, measured in GDP (Gross Domestic Product) is the process of increasing an economy’s potential to produce goods and services. Growth has become the fundamental goal of economic and political decision-making. We are told that it is essential for maintaining a decent standard of living and alleviating poverty. But between 1990 and 2001, for every $100 worth of growth in the world’s per person income, just $0.60 contributed to reducing poverty below the $1-a-day line.

The growth economy has, in fact, seen the lot of the wealthy increase to unparalleled highs at a severe cost for the rest of us. The process of increasing economic production and consumption has required the relentless exploitation of natural resources, saddling us with environmental crisis and the threat of runaway climate change.

Rather than being geared towards profit and the interests of big business in the name of ‘growth’, we need an economy that works to meet our needs and aspirations – an economy that supports good lives for all while respecting the environment we all rely upon.

There are more than enough resources for everyone in the world to enjoy a decent life while respecting the environment that supports us. The question is: who has control over these resources and in whose interests are decisions about the distribution of resources made?

Through taking back control over our economy, we can create an economy that works for us.


Join the movementDecades of neoliberalism have seen a tiny wealthy elite gain tremendous levels of wealth and power through the ruthless exploitation of people and the environment. The 1 per cent need us to believe that there is no alternative: without a belief in something better, we have little reason to fight back against business as usual.

But people everywhere, from Buenos Aires to Berlin, are proving that there are other ways of doing things. Through reimagining our economy as a commons – by giving all access to the basics of life and ensuring that all can participate in their management – we can take back power and remake our economy so that it works for us.

There are many ways that you can get involved, from getting active in your local anti-cuts group to setting up a workers’ co-op, from campaigning in your city to take water and energy back into public hands to organising for better pay and conditions at work.

Another economy is possible. Together, we can make it happen.

wilberareciodavila.blogspot.co.uk

Above: ‘People’s power’ in Venezeula. Community Council members outside one of 42 new homes built in Táchira State, 2011.

Part of the Exploring Alternatives pamphlet seriesAnyone campaigning for change will regularly come across the question ‘so what is your alternative?’

It’s a question that often throws us. We have lived through 30 years of ‘free market’ mantra in which corporate power, the efficiency of the private sector, and the need to appease financial institutions are never questioned. It is difficult for us to imagine, let alone express, what a different world might look like.

This series of short booklets is an attempt to help activists answer the question. It doesn’t give a prescription for what another world would like look. Rather, it draws on current struggles around the world to show that alternative models are being built right now.

The alternatives in this series give us a glimpse into a different sort of society. They are intended to provoke and inspire – to wake us from the nightmare of a world economy that revolves around profit and loss, so that we might imagine a world truly fit for human beings.

Produced by the World Development Movement (WDM) as part of the Economic Justice Project. WDM works in solidarity with people in the global south to fight the causes of poverty and inequality. It is one of the organisations which is part of the Economic Justice Project. See www.wdm.org.uk and www.economicjusticeproject.org.uk

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Above: Occupy DC protest. Front: A representative from the Fábrica Sin Patrones factory in Argentina visiting a factory under worker’s control in Greece, 2013. Photo: raulgodoyzanoneuropa.wordpress.com

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