CHAPter: 5 -
Free market economy and solidary economy

By Mr. Philippe De Woot,
Professor at the University of Louvain la Neuve

Work group « Solidary Economy» at the ICO’s conference
Brussels - 20 October 2004


Free market economy and solidary economy


One can sense the systemic and general evolution of the free market economy.

 
The solidary economy carries a number of merits for the future, one of which is sustainable development.  It is possible to highlight actual links between a liberal economic system and the solidary economy’s vision of the world.

How is the world evolving?
The free market economic system is accelerating.  It is gaining power and losing regulations.  Working hypothesis:  this system is unacceptable and has to be changed.  The free market economy is being generalized:  globalization is more and more powerful and ruled by financiers.

 
Why is this system becoming stronger?  It has powerful new weapons:  it has taken over science and technology.  Competition makes us replace old by new:  it’s known as « creative destruction ».     The utilization of science helps free market economy and vice versa.  Creative destruction breaks thousands of companies. 

New Space
The domain is enormous, planetary.  The true globalization players are the multinationals, large and small.  The domain is very open.  Following the Chicago school, the world has entered an area of deregulation, privatization.  The world economic space is not legally or politically regulated although individual countries and the European Union are over-regulated.  This results in the large multinationals having a clear coast.  They can do almost anything they like.  Even the WTO isn’t enough to regulate them.  It’s a known fact that these economic actors work in a nearly total ethical void.  The logic is instrumental:  the system is good since it works, since it generates profit.  No one is questioning the system.  Its players limit ethics to integrity:  don’t lie, steal or kill too much.  Real ethics don’t exist and are not taught in management schools. Efficiency and productivity are.  There is no workshop on « meaning ».

 
One performance element is growth and it is considered an asset on its own.

 

 

 

 

 

 

 

 

 

Today’s model is untenable.

 -        It is accelerating.  The danger:  leaving behind the immigrants, poor countries, etc, followed by dehumanization.  The system is inhuman.
-        Its super resources are directed based on solvent needs.  Only those who possess goods order the market, leaving behind those who can’t pay.  Investments are not made in poor countries, research for orphan drugs is not financed, etc.
-         The invasion of non-market by market.  For example, culture conditioned by advertising and audience ratings.  Multimedia groups run culture.  Cultural diversity is therefore destroyed.   This is also true of education.  Even in our democracies we witness a two-speed education.
-         By covering the world, the economic system destroys the ancient structures like peasantry and traditional society.
 
The system is untenable regardless of some of its very positive aspects (as it creates riches for a large number).  We should direct the efforts of civil society organizations (NGOs) towards the humanization of our free market economy rather than towards its destruction.

 
The free market economy is an efficient and creative system.  It should, however, be directed towards the needs of humanity rather than the profit of a few.
 
Can this system evolve?
I have an optimistic vision of the future.  It is doable.  It is possible to make this system evolve under the following 2 conditions:

-         entrepreneurs must accept their responsibility in the areas of pollution and poverty
-         the world needs world governance and regulations.  Not a world government – that would be utopic, but elements of world governance.

 
Many company heads are realizing this and they are open to finding solutions.
 
What I recommend:
Company purpose must be restated.
Financiers and the Chicago school say:  profit is for the shareholder only.
Company heads have much more complex answers as they are aware of the areas impacting the company:  public service, municipality, environment, personnel, social institutions, etc.

 
They have a new company vision:  economic and technical progress.  Innovation.  To help people increase their standard of living.

Slowly, company heads must be brought to question the meaning of their actions.  Material progress is not wrong as such, but it doesn’t automatically imply the other progress (social, intellectual, spiritual, etc.).  It is important to question the myth of Prometheus (mythological character representing the entrepreneur) who was a titan and a hero but was also cursed:  material progress is ambiguous.  And this is never taught in management schools.
 
We must work towards a political evolution
            In Europe there is a fairly moderate social dialogue.  Company heads know how to speak to unions.  This dialog must be opened to others, specifically NGOs.  Open up companies to face the consequences of their actions.  Using GMOs as an example:  they are not dangerous for our health – but what about the environment?
The world of NGOs is different -- more virulent – and company heads remain apprehensive.  They must learn to communicate with one another.

 
The social economy
It is based on the concept that everyone participates.
The Grammed Bank: clients and local authorities communicate with the persons responsible.  Everyone’s interest is represented in the discussions.

 

Ethics must cover the future and not only today.
There are many integrity statements in today’s business world.  The USA’s most complete ethical code used to be Enron’s!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Solidary companies believe in their moral values as they are built upon these values.  They worry about the future:  what kind of world do we want to build together?  This is a vital question for them.  The free market economy considers that this is the business of the state.
The ethics of the future.  Today you no longer see suffering – the terminated employee, the African dying of AIDS.  NGOs call attention upon human suffering and so do the media.
This new movement of sharing will develop if the political world manages to move on a worldwide scale.  In Europe, leftist parties and unions are influent and open-minded.  The system has to adjust to the workers rather than to the shareholders.
 
This is urgent.  Is our vision sufficient?  What would really impact the world would be concrete examples such as the Grameen Bank.  We must make commitments in a larger process.  We will make progress by error.  Cumulative processes will have a snowball effect.
This process must be based on paradox management – it has to be free market economy AND (rather than OR) solidary economy.
 
Is globalization in danger because of a lack of plurality?  There are different types of globalization – scientific as well as the globalization of civil society networks.  The World Social Forum counters liberal globalization and we are starting to test the limits.
 
The concept of a solidary economy is a preparation for the evolution of the free market economy.  One deals with solidary economy in order to attain results that satisfy all.
In many of today’s companies there are three types of balance sheets:  financial, social and ecological.
The process concept:  render a service, produce a useful item.  The process communication:  a dialog or a debate before launching a product.
Ethics are represented by the commitment towards the building of a world.  The different interests can be reconciled.
 
Using water in the countries of the South as an example:  NGOs regroup people.  They fight for the message that water at low cost for all is vital.  They have political weight.  They can elaborate a project that is compatible with the interest of the people.  Specialists can be called upon.  International aid will support the project.  Water companies can accept the project and bring their support.
 
There are 4 areas in which collaboration is possible between the liberal and solidary economies:

 
            Water
            Housing
            The fight against hunger and agriculture

            Education and Information
 
There should be a very close cooperation between the solidary economy which is close to the field and the free market economy bearing technical and management experience.  But this only happens through international aid.

Our dream: a competitive economy located next door to a cooperative economy.

Under 4 conditions:

Job creation on the projects which are locally useful to the country.  The project must respond to the needs and competencies of the country.

Education: the middle to long term condition to job creation:  the specialized worker will find a job.

Foreign investment: a multinational to invest in the country.

Self development by the country’s own associations.

 
The role of the church and its organizations

 

The vocation of ICO’s is to be the acting presence of the church.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
The Social Doctrine of the Church - A recent document of COMECE (Commission of the Bishops’ Conferences of the European Community).

 

The intersection between economy, politics and civil society is highly positive.  The church is universal and has the rare privilege of being internationalized and having a global vision.  Wouldn’t it be a good idea for the organizations of the church and the UN organizations to deepen their common vision of reality in order to defend coherent positions at the meetings they participate in?  Wouldn’t the use of networks and Internet be helpful?  Sustainable development is a part of the church’s social doctrine.

Do we have an actual communication policy as well as media presence?  A public relations policy needs to be developed.  You also need to work more with the universities.  Young university students as well as young researchers could use their competencies and enthusiasm to serve the action of your ICO’s.

 
Why don’t you promote an Encyclic on sustainable development: what world can we build together?

 
There is a school of thought that has a thesis on unfinished creation:  La Chénose. God would have created an unfinished world so that we could humanize creation:  let’s not be surprised by the imperfections of our world but rather let’s work on correcting them.

In the Genesis, before creation, there was not darkness but chaos.  Creation put order into the chaos.  We must find meaning and purpose as well as transform violence into gentleness.

Question and answer:

What elements make up international governance?

The actors:  Human Rights, important UN conferences, UN institutions, the church

The actions: Global contact on the part of Kofi Anan, World Social Forum, the Club of Rome, the Lisbon Group, the European Union, etc.


UNESCO is working on the ethics of science and technology.