Global social economy: An introduction
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Global social economy: An introduction book
Social economics investigates the social economy. The term “social economy” originated as a way of referring to the third sector in mixed market economies seen as distinct from the more familiar private and public sectors. With the development of national market economies in the eighteenth and nineteenth centuries, along with the development of capitalist market economies, it became apparent that there existed a significant amount of economic activity that neither reflected the standard logic of markets, nor that was part of the activities of the state. As there already existed an understanding of the institutions and economic functions of the market and the state, much of the early interest in this third sector was directed toward explaining the nature of its distinctive institutions and the social-economic structures. The principal forms originally identified remain those generally emphasized today, albeit in terms of a more contemporary vocabulary: cooperatives, not-for profit organizations, mutual associations, and voluntary activities and community organizations of various kinds. These institutions were argued to also possess their own distinctive set of motivating principles understood as a specific set of social values. These are less easy to summarize, but can perhaps be best associated with community, democracy, cooperation, equality, and the dignity and autonomy of individuals and social groups. These twin foundations – the institutions and social values of the social economy – constitute the primary basis on which social economics has developed to the present. One might suppose, then, that as the market and the state dominate economic activity in the world today that social economic values and institutions play a subordinate role in modern economies. Yet we find at the beginning of the twenty-first century that they have in fact come to play a surprisingly important role in the global economy. Consider two quite different ways in which this has occurred. First, key supra-national economic organizations in the world today, such as the European Union, the North American Free Trade Association, the Asia-Pacific Economic Cooperation organization, the World Trade Organization, and many other regional economic associations, clearly function as cooperative associations that create shared rules for trade and investment for member countries. Indeed it is now widely agreed that the remarkable extension of trade and investment links between countries over the last quarter-century is very much
due to a long record of post-war success in establishing these supra-national economic communities. In effect, the ideals of community as developed on a small scale basis within national economies in the past have been transferred in new form to the larger stage of the global economy. Of course, the principles of the market and state economic development still obtain, but they are now increasingly framed by international and regional cooperative agreements. Second, a key new actor in the post-war economy is the international non-governmental organization (NGO). These not-for-profit organizations are not only transnational in scope and mission, but they also explicitly value individuals and social groups for themselves; that is, they invest all individuals and social groups with an inherent dignity and the right to a relative autonomy simply as members of the world community. This goes beyond both the more traditional emphasis on freedom associated with market social values and the citizenship values of the state. Indeed, in keeping with their respective missions, NGOs value people irrespective of whether their nations do and whether or not they are successful in the marketplace. Thus social economics today is in the process of acquiring a new subject of investigation: the global social economy. A little post-war history offers us clues as to why social economic values have come to have this new meaning. Consider what has brought about our globalized economy. The post-war global economy was effectively inaugurated in 1973 with the collapse of the Bretton Woods exchange rate system, the United States’ abandonment of the dollar-gold exchange system, and the world’s adoption of free floating exchange rates. One very important consequence of these developments was the opening of nations’ capital accounts, the resulting free flow of capital across national boundaries, the migration of multinational firms to all parts of the world, and the attendant emergence of international banking as a dominant form of cross-country finance. Until the Asian Crisis of 1998, then, the dominant values associated with this quarter-century of development were those of the free market neoliberal “Washington Consensus” which called for privatizing public property and liberalizing markets everywhere (Williamson 1989). However, the Asian Crisis created serious doubts about the stability of a global economy developed on this basis, and this in turn led to further doubts about the desirability of neoliberal values. In fact these doubts had been building for many years. The World Bank estimates that from the 1970s to the end of the century there were more than 100 important national financial crises with significant impact on economies and people’s well-being and livelihoods (World Bank 2001). But it was only in the aftermath of 1998, that many began to search for alternatives to the Washington Consensus world view and its social values. Thus the world-wide crisis that began in late 2008 is now widely seen as confirming evidence that the institutions and values of free markets are inadequate to the needs of people and nations. At the same time, it is also now widely believed that nations will be unable to address the crisis each on their own. Accordingly as policy-makers struggle to deal with the financial crisis and the economic downturn, it seems to have become consensus opinion that the way
forward depends on devising new forms of cooperation and joint burden-sharing across countries that respects the interests and traditions of people everywhere as members of one world community. Remarkably, then, social economic values have emerged as an alternative foundation for thinking about the global economy. The sense many have today is that people all have an inherent dignity and equality irrespective of their economic prosperity and material success in life. This conviction is often defended under the banner of human rights. But why have human rights become so visibly important in the thinking of so many at this time in history? Prior to globalization, individual rights were mostly believed to be the liberal democratic rights of speech, political participation, religion, and thought – that is, essentially national citizenship rights. But globalization not only made these traditional rights the ambition of people everywhere, but with many countries’ tremendous development needs, it has also put social and economic rights on the agenda as the necessary concomitant of the former. Yet social and economic human rights, not having national foundations, have as their ultimate rationale simply that all people are members of a single world community. That is, they are human rights and indeed social economic values par excellence in virtue of valuing the inherent dignity of people irrespective of their locations, cultures, origins, or goals. Nonetheless, these universal social values, despite their immense appeal in the world today, must still be seen as having a very fragile place in the global economy, particularly in the face of an increasingly disordered economic process that puts so many people at risk and threatens the whole idea of shared community. Indeed, whereas the social values of the Washington Consensus were paired with established economic institutions of open markets and free movement of capital, the social values of cooperation and community lack a comparable institutional basis in the international economy. A special difficulty they face is that historically these social values arose in national settings within the interstices of mixed capitalist economies, and were consequently generally local in nature with limited cross-national reach. Indeed one of the foundations of the idea of community is the sense of personal connection, as made possible by local proximity and ease of contact, in contrast to the sense of impersonal ties that operate in global markets that has motivated neoliberal social values. This makes the recent emergence of social economic values in the global economy all the more paradoxical. Why should people feel a sense of community and a desire to cooperate with people with whom they not only have no personalized contact but who are also likely to be dramatically different in background, culture, and experience? The answer can only be that these social values are more versatile than we have had reason to believe in that they are able to root in institutional settings far different from those in which they historically developed in modern market economies. But there is still much to understand about how this new vision of the world economy is coming about. If the values of cooperation and human dignity are being adopted as the basis for an emerging global social economy, what institutional forms and arrangements exist that provide a basis for their development?