An Impossible Marriage: Solidarity Economy and Monetary Economy

This is part of a series of think pieces by scholars and practitioners working on a broad range of issues within the field of Social and Solidarity Economy. The series is being published in conjunction with the UNRISD conference “Potential and Limits of Social and Solidarity Economy”. The conference took place on 6-8 May 2013 in collaboration with the International Labour Organization and the UN Non-Governmental Liaison Service.

Can a forest or a human life be reduced to a price? Can one hold, or balance, contradictory values? If not, then those who advocate a Social and Solidarity Economy must address the generally intractable conflicts between social and environmental values on the one hand, and monetary ones on the other. Markets create prices, or monetary values, on an entirely different logic to either shared social values, for example related to basic needs, or ecologically determined environmental values. So, doesn’t the Social and Solidarity Economy need to avoid the trappings of monetary calculation and capitalist markets?

Anitra Nelson, Associate Professor (Honorary) at the School of Global, Social and Urban Studies, RMIT University in Melbourne, Australia, is a widely published social and environmental activist-scholar with research interests in sharing economies, non-market socialism and sustainability.

Introduction

Social and Solidarity Economy generally refers to a series of movements that might be better characterized in terms of emergent models of distinctive kinds of economies. At this point the description and analyses of such distinctions is a significant challenge and task. I argue that framing or assessing these activities in terms of the extent and ways in which they integrate or avoid money, production for trade and market-based exchange as they operate in capitalist economies reveals the key characteristics of different social and solidarity economies. Most significantly, these strategic distinctions determine their potential and likelihood of future achievements.

Social and Solidarity Economy movements share the aims of establishing and prioritizing social and environmental values at the core of their economic activities. They are commonly embraced as alternative economies in contrast to mainstream capitalist activities oriented toward producing any goods and services that are readily marketable and profitable.

However, Social and Solidarity Economy movements are not homogenous. Many can be distinguished as prioritizing either social or environmental values. Few manage to integrate both aspects successfully except, say, traditional indigenous groups, who typically draw on centuries-old non-market practices using ecological knowledge and skills to meet their basic needs and replenish the bioregional natural resources on which they depend.

Radicals and reformists

Most significantly, there are sharp distinctions between radical and reformist movements in the extent and ways in which they either integrate with or avoid capitalist markets, the logic of which rotates around monetary values rather than social and environmental ones. Production for trade, meaning production for money, underpins capitalist economies. In establishing alternative economic structures and activities, Social and Solidarity Economy movements tend to either openly oppose and compete with the expansion and intensification of capitalist activities or move along complementary and supplementary paths. These contrasting tendencies are based on the extent to which members believe that money is a neutral tool, that monetary calculation makes sense, and that production for trade can fulfil—rather than challenge—social and environmental goals.

My approach gives critical significance to the ways in which monetary values, or prices, replace and contort environmental and social values (Nelson & Timmerman 2011). I suggest that non-market, non-monetary economies are more likely to be able to express social and environmental values and achieve social and environmental results through community-based governance, production for direct use and a focus on local exchange.

Markets and money: Avoiding or working within

Reformist movements work within relations of private property and markets, trying to apply processes to improve social and environmental goals within monetary systems. Fair trade and organic producers work within capitalist markets to try to advance fairer levels of remuneration for producers and healthier, less environmentally dangerous production practices. Examples of market-based reforms of production and trade include cooperative businesses integrating an ethic of social responsibility and concepts of social capital and natural capital. Typically they try to adjust prices and share profits to better express social and environmental values. They assume that monetary values and production for trade are fundamentally unproblematic, and even beneficial, so it is simply necessary for entrepreneurs and consumers to apply social and environmental values better to their daily activities.

Decision making within reformist movements centres on, or ends up being limited by, production for markets, use of monetary calculations and marketing. They can find themselves operating mainly in niche markets, accessible only to those elites who are better off and have the cash to pay higher prices. Other examples include carbon and water trading schemes that aim to achieve environmental results using market-based tools. In practice such schemes have had mixed results, where prices of environmental assets and credits have plummeted and the market has dictated environmental outcomes, rather than people directly limiting their consumption and waste (Coelho 2012).

In contrast, radical movements, including forms of buen vivir (good living) and décroissance (degrowth), actively avoid capitalist models of private ownership and control and associated market relationships. Examples of non-market production include squatter economies, and other models based on common ownership and shared control and use of property, with non-monetary, non-market exchanges to satisfy basic social and ecological needs.

Similarly, the internal economies of certain intentional communities—co-living on the basis of commonly held values and collective principles—run on labour credit systems or on giving according to abilities and taking on the basis of needs (Federation of Egalitarian Communities 2013). For instance, under the labour credit system at the Twin Oaks Community in Virginia (USA), members are obliged to work a certain number of hours per week on community-defined work in order to benefit from collective production to satisfy their basic needs. This direct approach requires sophisticated communal governance and so-called collective sufficiency to succeed, but enables social and environmental values to be directly expressed in decisions over production and exchange. By clearly delineating their activities from capitalist ones, radical Social and Solidarity Economy movements have the potential to create really different economies that successfully prioritize social and environmental sustainability and direct democracy.

Confusingly, many Social and Solidarity Economy organizations contain—or are fractured by—contradictions between radical and reformist approaches. Such activities include those referred to as collaborative consumption, which use sharing economy strategies to fulfil profit-making aims (Botsman & Rogers 2010). Thus small entrepreneurs integrate sharing or swap markets within their business strategy, such as a fashion business charging for space for periodic clothes swaps that also fulfil promotional purposes.

Initially an organization might pursue one strategy, only to change course should, for example, conflicts between monetary and social and/or environmental values become more obvious in practice. This often happens when the idealism of the culture of “free” faces the everyday realities of market costs and volunteerism. Members might profess certain social and environmental values but persist in compromising with market “realities” without due acknowledgement of the limitations this “mere strategy” implies, specifically as decision making becomes dominated by price calculations rather than social and environmental considerations.

Some Social and Solidarity Economy movements, such as Transition Towns, promote their own versions of money—local currencies, LETS, alternative currencies, community currencies linked with alternative banking systems—that aim to encourage and sustain production and exchange combined with better social and environmental values than monetary production in capitalism. Some see many dangers in capitalist money and financing and believe that monetary innovations such as interest-free credit might ultimately replace the national tender and the global financial system. Others believe that capitalist money and financial systems and alternative currencies can co-exist (Mellor 2012). Analyses of these alternatives need to address whether their monetary and financial innovations differ sufficiently from national currency and trade to produce beneficial results.

Strategic differences and their significance

At the core of the distinction between radical and reformist approaches is the role of monetary relations and monetary values, which radicals see as antithetical to social and environmental values and reformists see more as a means to further environmental and social values. The global financial crisis has complicated both narratives, as even mainstream economic analysts recognize deficiencies in the monetary creation and financial-banking sectors.

Reformists see the global financial crisis as a demonstration of the ways in which money can be misused. They emphasize that alternative monetary models, currencies and community banks will be safer and more effective and that banks just need to be in the people’s hands rather than run by financial elites (Mellor 2010). They tend to ignore the dynamics of capitalist markets, which mean that banks risk failure unless they lend to enterprises that make money. These dynamics revolve around the market, and people with money have the most power to drive decision making for profit, rather than for community and environmental values.

Radicals on the other hand see the crisis as monetary in form because money is the operating principle of capitalism and the basic unit and means by which markets exist. Monetary structures are fundamentally deficient because they are antithetical to social and environmental values, operate in socially divisive ways and encourage competitive rather than cooperative practices, which tend to damage natural resources. A profoundly Social and Solidarity Economy is at odds with a monetary economy, especially a capitalist economy. This point is central to the future of Social and Solidarity Economy movements, specifically for conceptualizing, measuring and appraising their organizations, the politics of change and how we define development.

Focusing on use values

Social and solidarity movements can benefit from employing the idea of use values. Money and prices express exchange values in contrast to use values. Use values are simply the qualities and purposes of a good or service, in contrast to the market value. For example, the use values of a tree are that it can bear fruit or nuts, provide shade and cover for other vegetation and animals that might live in its trunk and graze on its leaves, and reproduces freely in nature. Use values rather than exchange values are central to alternative economies. As this is more clearly acknowledged in Social and Solidarity Economy discourses and decision making there will be more chances for establishing and maintaining activities that express social and environmental values by satisfying people’s basic needs and supporting the replenishing powers of the Earth.

Use values as well as human and ecological potential and needs are central to planning and decision making by all stakeholders and to evaluating such provisioning. Only by assessing Social and Solidarity Economies in terms of the use values central to their aims can they be appreciated and clearly visible, and their success (or not) monitored on their own terms. The focus must be on direct democratic processes for enhancing economic planning and decision making in localized economies.

Radicals experiment with minimal production and production for direct use, achieving environmental sustainability through modest lifestyles that celebrate diversity. They focus on local community-based governance, production and exchange and on socially and environmentally appropriate technology. A key challenge for radicals today is to experiment with networking using non-monetary systems of exchange, trust and mutual assistance. We need to strengthen connections between localities, and develop deep community-based collectively sufficient communities to fulfil all their basic needs: goods and services, cultural activities and democratic technique.


REFERENCES

Botsman, R. and R. Rogers. 2010. What’s Mine is Yours: the Rise of Collaborative Consumption. HarperCollins: NYC.

Coelho, R. 2012. Green is the Color of Money: The EU ETS Failure as a Model of the ‘Green Economy’. Carbon Trade Watch: Barcelona. http://www.carbontradewatch.org/publications/green-is-the-color-of-money-the-eu-ets-faliure-as-a-model-for-the-green-economy.html, accessed on 25 March 2013.

Federation of Egalitarian Communities. 2013. Systems and structures. http://thefec.org/sns, accessed on 14 February 2013.

Mellor, M. 2010. The Future of Money: From Financial Crisis to Public Resource. Pluto Press: London.

Nelson, A. and F. Timmerman. 2011. Life Without Money: Building Fair and Sustainable Economies. Pluto Press: London.