Going Greek: On Not-So-New Social and Solidarity-Based Economic Systems

Going Greek: On Not-So-New Social and Solidarity-Based Economic Systems

Marlyne D. Sahakian, SSPP European Blog Correspondent

This week marks the introduction of a new feature for the SSPP Blog. Regular SSPP blogger Ethan Goffman has been doing yeoman’s work for the last several months delivering a new and insightful column each week. In need of some time to catch his breath, Ethan has agreed to surrender one week per month so that we can bring you the perspectives of our new European blog correspondent, Marlyne Sahakian.

Marlyne is based in Switzerland and recently completed a PhD at the Graduate Institute Geneva. She is starting a post-doctoral research position at the University of Lausanne and in the Philippines. Her inaugural posting highlights how newly imposed austerity policies are encouraging Greeks and others to meet their basic needs in novel ways while at the same time fostering new social relationships. Welcome aboard, Marlyne! ---   Maurie J. Cohen, Editor 

It may be the start of a new year and the end of a holiday season in Europe, but the Grinch is still lurking in a region that remains mostly paralyzed by the economic slowdown. In Greece, while national and European Union representatives continue to negotiate plans for resolving the country’s mind-boggling debt crisis, some enterprising local residents have taken matters into their own hands. As reported in international media channels, different community-level activities based on solidarity and a real need for alternatives to the existing system have emerged after two years of pay cuts, layoffs and rising taxes.

During November, the Associated Press reported on the “Citizens of Veria,” a Greek activist group that illegally reconnects to the grid households that are unable to pay their electricity bills—with the full support of the city’s mayor—and claims social solidarity toward those in need as the group’s primary mission. In the same period, two United States-based news organizations, National Public Radio (NPR) and The New York Times reported on the establishment of a new barter system in Volos, a fishing village in central Greece.

Under the headline “Modern Greeks Return to Ancient Systems of Barter,” the NPR story explained how this barter system uses a currency called Local Alternative Unit or TEM in Greek, with one TEM equal in value to one euro. The system encourages the exchange of goods and services, such as language classes, babysitting, or fresh produce from local markets. Within a year, the TEM system grew from a few dozen users to more than five hundred members, with many local stores accepting both currencies and offering discounts for payments in TEM. This is just one of scores of similar initiatives that have emerged throughout Greece since the start of the crisis.

In Patras, a network named after an ancient Greek form of currency, the Ovolos, was founded in 2009 to include a barter system that encompasses services including medical care. Such efforts have not gone unnoticed: the Greek government passed national legislation late last year to grant nonprofit status to these entities.

While press coverage claims that such initiatives are based on “ancient” trading systems, there seems to be no recognition of how these economic efforts are part of a larger movement for “social and solidarity-based economies,” more commonly known by the acronym ESS (économie sociale et solidaire) in French-, Spanish,- and Portuguese-speaking countries. To better reflect on the emergence of similar alternative economic systems in Greece, and to best understand their potential, it is worth reviewing how these efforts have come about in the past.

Most researchers agree that solidarity-based economic systems first became popular in Europe during the early days of industrialization. The Welsh social reformer Robert Owen (1771–1859) is credited with founding the cooperative movement and initiating new forms of barter among factory workers. In 1832, Owen created a “labor exchange” where products made by cooperatives were traded based on the number of labor hours that went into each item. Improvements in living standards championed by labor and women’s rights movements during the first half of the twentieth century prompted a downturn in these worker-driven initiatives after World War II. It was not until the Reagan-Thatcher era that neoliberal policies, and more generally a “crisis of values,” prompted a return to these types of social economic systems in the 1980s and 1990s.

An exchange system similar to the one implemented by Owen came to light in British Columbia in the 1980s, under the label Local Employment and Trade Systems (LETS). In the decades that followed, so-called Systèmes d’échanges locaux (SEL) multiplied across Europe and Latin America, with city and national-level entities created as platforms to aggregate the various community efforts. For example, a group called Réseau Intercontinental de Promotion de L’Économie Sociale Solidaire (RIPESS) has begun to map such initiatives (presenting an inverted map of the world with North America and Europe at the bottom) and to connect different groups as part of this overall movement.

So what are “social and solidarity-based economic” activities? In the first instance, they can take many legal forms—from cooperatives to associations to mutual companies. According to the French researchers Laurent Fraisse, Isabelle Guérin, and Jean-Louis Laville, solidarity in economic systems can be defined as “all production, exchange, saving and consumption activities that contribute to a democratization of the economy based on the engagement of citizens.” What these projects have in common are the core values they promote.

One main principle is that economic activity is not solely for the purpose of generating, or indeed maximizing, profits, but rather for providing some type of benefit to members, workers, or society at large. It therefore follows that it is people and the social realm that are more important than capital, which results in a variety of innovations such as the redistribution of any profits equally among all members, the minimization of wage differences across employment categories, or the donation of profits to social causes. This approach also emphasizes the self-management of such initiatives by engaged citizens (as opposed to governmental services offered by civil servants) so that each member plays a participatory role in the democratic management of the program (the principle of “one person, one vote”). An English version of the charter (translated by yours truly), developed by the Chambre de l'économie sociale et solidaire (APRES-GE), Geneva’s social and solidarity-based economic association, is available and provides details on some of these values which include social well-being but also, in the Geneva charter at least, a respect for the natural environment.

This brief overview of ESS raises a few questions that merit further exploration. First, are such systems being proposed as “alternatives” to the existing economic order? According to Jean-Michel Servet, an expert on social and solidarity economies at the Graduate Institute in Geneva, they should be seen as complementary: the goal is not to replace the dominant economic system, but to offer an additional layer that engages with people from different socioeconomic groups in an inclusive manner. As the currency specialist Bernard Lietaer put it, it would be wiser for economic systems to run on two wheels rather than one, or that two currencies—such as the euro and the Greek TEM—would be favorable to just the euro, a point with which the villagers of Volos would no doubt agree. In a recent book with Stephen Belgin entitled New Money for a New World, Lietaer argues that many of the global issues we are facing today would benefit from reconsidering “the monopoly of our centuries old monetary system.”

Second, how could such systems be maintained as complementary, even in times of economic growth? It seems that alternative systems tend to appear during moments of crisis and then fade from view as recovery becomes manifest. During the Argentine economic collapse of the late 1990s, several local currencies were created, such as the Argentino, the Patacon and the LECOP. The Crédito, for example, was a currency that emerged as one of many barter systems (mercados de trueque) during that period. An estimated 2.5 million people used the Crédito between 2001 and 2003, starting with the newly impoverished middle classes and spreading over time to all socioeconomic strata, including the least affluent. The system fizzled out, however, once the national economic emergency passed.

Switzerland , however, provides a counterexample: local exchange systems have existed over several decades and, while Geneva has yet to feel the brunt of the European economic slowdown, local associations, and indeed politicians, have actively promoted ESS efforts. The same is true for Luxembourg, which has a government minister and official department devoted to “solidarity in economic systems.” Bringing ESS into policy making is not a challenge when it involves social services, such as the reinsertion of the unemployed into the active workforce, but local currencies do pose at least one political issue: they are part of informal economies and therefore circumvent the redistribution of funds through state taxation (for example, one does not contribute to alleviating public debt in Greece by using the TEM). According to Lietaer, the system could conceivably be organized in ways that enable public treasuries to collect some tax payments in the alternative currency, as well as the dominant unit of exchange.

Third, can such initiatives be scaled up or can they only succeed on a small scale with relatively few members? There are not many examples of large-scale enterprises that function based on social and solidarity-based economic principles. Cooperative banks such as Raiffeisen in Austria or supermarket chains such as Migros or Coop in Switzerland started as small operations and continue to promote membership as a form of participation. Unfortunately, these organizations long ago ceased to uphold solidarity values, at least in their daily operations. One notable exception is the Mondragón cooperative, founded in 1956 in the Basque region of Spain. This consortium operates over two hundred enterprises, many of which are engaged in heavy industrial production (as well as finance and retail). At least half of the 83,000 employees are also shareholders, and the organization continues to be driven by the principle of “one person, one vote” under a model called “People and the Sovereignty of Labor,” which is designed to promote solidarity among workers and communities. Mondragón is today one of the largest companies in Spain in terms of asset turnover. This type of venture is an exception for social and solidarity-based systems where smaller entities tend to prevail, and the relationships to “sustainable development” in a broader sense, including environmental considerations, is less clear.

Finally, what are the linkages between those concerned with social and solidarity-based economic systems, and the sustainability community at large? One main hurdle appears to be a simple matter of communication: those working in the area of ESS seem to be mostly French-, Spanish-, and Portuguese-speakers and there is very little literature in English about their experiences. But even more than the language barrier, some of the main ideas behind these initiatives are quite complex and hard to explain. As Christophe Dunand, one of the founders of APRES-GE, conveyed to me, “I have yet to meet someone who can explain how complementary monetary systems function in less than fifteen minutes.” Within the ESS community—and this is perhaps a striking difference with earlier social movements of the nineteenth century—there are efforts to bridge environmental and social concerns.

The APRES charter, for example, includes a section on “respect for the environment.” Also, the Dictionaire de l’autre économie describes Nicolas Georgescu-Roegen’s concept of bioeconomics (and discusses the notion of décroissance, or degrowth, which is another debate where French-speaking countries seem to be taking the lead as of late). Social and solidarity-based economic systems do not gain much coverage in English-language sustainability conferences and journals, at least in terms of what I have seen and read.

More effort certainly could be made to include treatment of complementary economic systems in “sustainability” debates, particularly in light of the ongoing and recurring economic crises of recent decades. Examples from Greece are excellent starting points, yet they can only be understood as part of broader, institutional efforts to place people, and not profits, at the heart of economic activity once more—promoting what the Hungarian political economist Karl Polanyi famously called the social embededdness of economic systems. Recognizing the biophysical dimensions of social, and indeed planetary, life is another important step, and one that is also reflected in innumerable efforts to reduce the material and energy intensity of everyday life in communities around the world. It seems that the seeds of solutions to our economic, social, and environmental crises exist in different forms and are scattered about like so many precious pearls. Stringing them together is a challenge that might require reviving one or two Greek gods to help guide the way.

Marlyne Sahakian received in 2011 a PhD in development studies from the Graduate Institute of International and Development Studies in Geneva. Her research in Metro Manila, the Philippines, was focused on household energy use, using social and cultural approaches to understand consumption. She also devotes time to a community-driven effort in Smokey Mountain, a former squatter community in Metro Manila, to promote sustainable livelihood opportunities. Her research interest is in understanding natural resource consumption patterns and drivers, in relation to environmental promotion and social equity, and identifying opportunities for transitions toward more sustainable societies.