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Home , Communalism

The foundations of alternative economy

Wael Gamal

About the Writer: Researcher, translator, and trainer. Former editor of Mada Masr worked in press for 20 years, during which he moved between print, audio and visual media. He holds a BA in Economics and Political Science from Cairo University in 1993. He holds a postgraduate diploma in political science from the same university in 1994 and a postgraduate diploma in investment and finance from Middlesex University in London in 2002 with a grant from the British . He co-authored with Salma Hussein the translation of Thomas Piketty‘s ―Capital in the Twenty-First Century‖ (published by Dar Al Tanwer in June) and editor of ―Egyptian Economy in 21st Century‖ Published by Al Maraya in December 2016

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This publication is an outcome of a seminar, non- periodical and sponsored by the Stiftung with funds of the Federal Ministry for Economic Cooperation and Development of the Federal Republic of Germany”. The content of this publication is the sole responsibility of the author and does not necessarily reflect a position of AFA or RLS.

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Publishers: Arab Forum for Alternatives and Rosa Luxemburg Foundation

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Translation: Sonia Farid

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Introduction: The Arab region was, like the rest of was never a real effort to formulate a the world, swept by the global comprehensive vision of alternative neoliberal model that was economy, one upon which actual continuously promoted as the only projects can materialize. option even after its policies were Prevalent binary approaches: dealt a serious blow with the uprisings that took place in 2011. In August 2015, The Economist Those uprisings did, in fact, published an article called ―What‘s highlight the failure of such policies the alternative‖2 that contained a and demonstrated the urgent need review of John Plender‘s book for alternative ones, yet this was a : Money, Morals and temporary phase that was followed Markets3. The article argues that by an aggressive comeback of capitalism is losing supporters and in the region. that its detractors are expanding to include figures like Pope Francis and Supporters of an alternative the inequality and injustice it triggers economy are usually criticized for are giving rise to several movements two main reasons that contradict such as Occupy Wall Street. The each other, each of which is cited article quotes Plender as saying that in a different context. On one capitalism might face another crises, hand, alternative economies are yet it will still survive since it, as the seen as general theories that title of the article suggests, ―better cannot be translated into projects than other systems,‖ which is on the ground and are deemed equivalent to the main argument upon populist. On the other hand, when which neoliberalism is based: that tangible demands and practical there is no alternative. projects are put forward by social movements and labor unions, The ―there is no alternative‖ their initiators are accused of discourse is founded on a number of lacking an overall vision that pivotal principles governed by a takes into consideration regional number of binary approaches: the and international contexts. technocratic versus the political and the ideological, the pragmatic versus Alternative economic policies the idealistic, and the versus proposed across the Arab region corporates. before and after the uprisings ranged between , self- management, tax reform, and anti- Tunisia, September 2016). Cairo, the corruption legislations as well as Arab Forum for Alternatives and initiatives by officials in several Rawafed, 2016. 2 public sectors such as healthcare, "What‘s the alternative? Capitalism education, and transport1. But there is not perfect. But it‘s better than other systems.‖ The Economist, 15 August 2015: https://goo.gl/BqJLRG 1 Mohamed al-Agati, ed. Alternative 3 John Plender. Capitalism: Money, Economy in the Arab Region: Morals and Markets. London: Concept and Issues. (Workshop in Biteback Publishing, 2015 3

American economist Joseph Stiglitz choices involved would indeed be describes the first approach: purely ‗technical‘‖6. ―Developing countries are often This approach not only reduces the advised (or instructed) to undertake efficiency of economic policies reforms recommended by ‗experts‘ through sidelining alternatives, but who are called ‗technocrats‘ and are also serves the interests of specific often backed by the IMF. Opposition groups at the expense of others. For to the reforms is usually dismissed as example, neoliberalism attributes ‗populist‘‖4. The term ―technocrat‖ poverty to lack of knowledge and was coined in the early 20th century expertise, therefore deals with to refer to the rule of experts. This poverty as a technical issue, which in perspective robs economic policies turn endows the state or the entity in of any social considerations and charge of these ―technicalities‖ with presents them as purely technical more legitimacy, as William while condemning alternatives as Easterly7 argues. Easterly links this biased and unscientific. discourse to what he calls ―Technocrats can, of course, make ―authoritarian development,‖ which an electricity plant work better - to means that ―what used to be the produce electricity at as low a price divine right of kings has in our time as possible. This is mostly a matter become the development right of of engineering, not . dictators. The implicit vision in Economic policies are usually not development today is of well- technocratic in this sense,‖ Stiglitz intentioned autocrats advised by adds5. According to Stiglitz, each technical experts‖8. economic policy has its advantages and its disadvantages, hence those This binary approach is always who benefit from it and those who accompanied by that of the are harmed by it: ―some may lead to pragmatic/realistic versus the higher inflation but lower idealistic/unrealistic. Neoliberalism ; some help investors, poses itself as the only viable option others workers. Economists call that can actually be implemented on policies where no one can be made the ground because it is purely better off without making someone technical and devoid of any else worse off ‗Pareto efficient‘. If a ideological reference. ―Over the past single policy is better than all others thirty years, capitalist realism has for everyone, it is said to be Pareto successfully installed a 'business dominant. If choices among policies ontology' in which it is simply were purely Paretian - ie if no one obvious that everything in society, was made worse off by choosing one including healthcare and education, policy as against another - the should be run as a business,‖ says

4 Joseph Stiglitz. ―Don‘t trust 6 Ibid. technocrats.‖ The Guardian, 16 July 7 William Easterly. The Tyranny of 2003: Experts: Economists, Dictators, and https://www.theguardian.com/politics the Forgotten Rights of the Poor. /2003/jul/16/globalisation.economy New York: Basic Books, 2015. 5 Ibid. 8 Ibid. 4

Mark Fisher9. Capitalist realism in peasants, the European working its dominant neoliberal form has class, the poor everywhere? We expanded in an unprecedented live in a contradiction: a brutal manner that made attempts at state of affairs, profoundly finding alternatives an unrealistic inegalitarian—where all existence effort. In fact, the kind of is evaluated in terms of money atmosphere neoliberalism managed alone–is presented to us as ideal. to create makes finding alternatives To justify their , the quite hard: ―It is more like a partisans of the established order pervasive atmosphere, conditioning cannot really call it ideal or not only the production of culture wonderful. So instead, they have but also the of work and decided to say that all the rest is education, and acting as a kind of horrible11. invisible barrier constraining thought American economist and Nobel and action‖10. It is noteworthy that Laureate Elinor Ostrom tackles the neoliberal realism itself seemed case of as an example of impossible decades ago. It was an economic alternative that would impossible, for example, in the be rejected by neoliberalism. 1960s to anticipate that global wave According to Ostrom, the fact that of that has been taking commons had in many cases place in the few past decades. survived for thousands of years French philosopher Alain Badiou refutes claims by supporters of explains how the atmosphere created neoliberalism that it is a failing by neoliberalism keeps obstructing . Ostrom also the emergence of any alternatives analyzes the reasons for the failure and eliminating any that get the of the system of commons in some chance of seeing the light and how cases and developed a of micro- neoliberalism offers its own level theories that explain how explanation of different social commons can be efficient12. problems. The third binary approach limits the In truth, our leaders and choice between corporates and an propagandists know very well authoritarian state that controls the that liberal capitalism is an economy through a bureaucratic inegalitarian regime, unjust, and public sector. This approach, unacceptable for the vast therefore, assumes the absence of a majority of humanity. And they third option such as cooperatives, know too that our ―‖ is an illusion: Where is the power 11 of the people? Where is the ―On Evil: An Interview with Alain Badiou‖: political power for third world http://www.cabinetmagazine.org/issu es/5/alainbadiou.php 12 Elinor Ostrom. Governing the 9 Mark Fisher. Capitalist Realism: Is Commons: The Evolution of There No Alternative? London: Zero Institutions for Action. Books, 2009. Cambridge: Cambridge University 10 Ibid. Press, 2015. 5 self-administration, commons, adopt better policies in dealing with communal , and others. environmental issues. This plan will Such approach makes it much harder not succeed if it is not preceded by a to come up with an alternative since major economic crisis that results it creates a market that cannot take a from a catastrophic damage equal to third option, which was shown in the that of World War Two if not more 2008 global financial crisis and the powerful so that a drastic change can way the market is structured in take place in capitalist policies14. general as well as the prevalence of Because of how far-fetched Plan B . is, De Angelis highlights the necessity of searching for a third Crisis and reactions: Plan C alternative—a Plan C. The 2007-2008 global financial The crisis led to the emergence of crisis shook the three afore- several economic theories that aimed mentioned binary approaches. at looking for alternatives to the According to professor of political current system. Among those economy at the University of East theories were three main trends London Massimo De Angelis, categorized under what Jane Hardy reactions to the crises were divided of the University of Hertfordshire into three categories, each of which calls ―radical economics‖15. offering a plan that can be According to Hardy, ―Radical implemented to deal with the crisis. economics is a loose collective term Plan A consolidates the neoliberal for those who are critical of the system and overlooks all attempts at method and prescriptions of a fair redistribution of . This neoclassical economics. plan will, naturally, be in the best This school of economics dominates interest of the rich13. De Angelis teaching in universities, provides the warns that if this plan is not met with ―theory‖ and justification for enough resistance, all remaining neoliberalism and underpins the rights will be eliminated and more policies of global financial measures will be taken towards an institutions such as the World Bank even stronger dominance of and International Monetary Fund‖16. neoliberalism. The global financial crisis, however, led several The first trend is represented by to think of Plan B, in radical economists in the United which the state works on a fairer States such as Paul Krugman and distribution of resources in an Joseph Stiglitz who criticize ―deficit attempt to eliminate inequalities and subjects banks and the finance sector 14 to relative that would Ibid. 15 Jane Hardy. ―Radical economics, strike a better balance as well as Marxist economics and Marx‘s economics.‖ International , 13 Massimo De Angelis. Omnia Sunt issue 149, January 2016: Communia: On the Commons and the http://isj.org.uk/radical-economics- Transformation to Postcapitalism. marxist-economics-and-marxs- London: Zed Books, 2017. economics/ 13 Ibid. 16 Ibid. 6 hawks and debts hysterics‖ and call Alternative economy between the for more government spending. macro and the micro: They have been labelled the The process of looking for ―modern avatars of Keynes‖ by alternative economic policies is not James Galbraith. The second trend is confined to economists. In fact, represented by economists who are many alternative economic policies eclectic in their criticism of the crisis proposed in the past years were and economic stagnation such as inspired by movements initiated on Nobel Laureate Robert Shiller who the ground by producers and takes into consideration the role of consumers. For example, the cultural and psychological factors in privatization of several public determining how the market works. services such as energy, healthcare, The third trend is comprised of post- and water led to the emergence of Keynesian economists such as Philip several movements that called for Arestis and Jan Toporowski who restoring the role of the state. The expanded Keynes‘s theories to book called Making Public in a include inequality and finance based Privatized World, edited by David on a theoretical framework that sees McDonald, examines this global capitalism as an unstable system by movement and its manifestation in definition, yet one that can still be different part of the world18. rescued17. The book tackles different Those trends can be categorized experiences such as reinventing under Plan B according to De public water in Colombia, garbage Angelis‘s classification since they collection in Brazil and India, public aim at dealing with the problems of health for indigenous people in inequality while improving growth Guatemala, remaking public banks in rates and restoring the role of the Turkey, and local services in the state in the economy after it was . These experiences sidelined by neoliberal policies. At inspire the criteria based on which times, those trends propose alternatives can be sought such as alternative policies that seem too far- equal access to public services, fetched in the current political , efficiency, accountability, context. These include a universal participatory activities, and basic income, imposing a wealth tax, environmental consideration. These or regulating tax havens. For De criteria stand in stark contrast to the Angelis, the ability of these trends to priorities of neoliberal policies such effect a real change will remain as reducing budget deficits and limited since the policies they accumulation of profit, which lead to propose require a direct more poverty, soaring prices, confrontation with the hegemonic deteriorating services, and inequality. social and political class and this requires of a totally new alternative framework. 18 David McDonald, Making Public in a Privatized World: The Struggle for Essential Services, London, Zed 17 Ibid. Books, 2016. 7

Such movements also led to the international financial institutions, on emergence of cooperatives, self- top of which are the World Bank, the management initiatives, and International Monetary Fund, and proposals for alternative policies, the World Trade Organization, many of which materialized after the called for cancelling Third World 2011 uprisings in several Arab debts, and promoted the countries such as Egypt, Tunisia, restructuring of global economic Algeria, and others. Several North system as well as slammed the African countries also witnessed a hegemony of corporates on number of protest movements that economic policies and warned of the focused on environmental justice and consequences of neoliberal policies the distribution of public resources19. especially privatization. Experience on the ground in the Arab However, neoliberalism kept world demonstrate the link between consolidating its power, which in turn movements that aim at led to the emergence of more combating neoliberalism on one hand movements or the restructuring of and the general rules that can be already existing ones especially those inspired by those movements and related to Marxist economics or the which can constitute the core of of capitalism as well as alternative economic policies. That is environmental justice, feminist why attempts at formulating a Plan C, economics, and participatory according to De Angelis, came into economics (Parecon)20. being as a result of actual initiatives that proved viable on the ground. Such initiatives can inspire strategies that address particular issues in which Principles and objectives of alternative policies can be utilized— alternative economy: on the micro level—as well as According to , strategies that can offer an overall (Parecon) alternative to the capitalist system— ―provides a new logic including new on the macro level. institutions with new guiding norms The anti-capitalism, also called anti- and implications. But parecon is also globalism, movement that started in a direct and natural outgrowth of hundreds of years of struggle for 1999 was a major inspiration for economic justice as well as many alternative economy contemporary efforts with their initiatives. This movement was accumulated wisdom and lessons. founded on criticism of the major What parecon can contribute to this heritage and to today‘s activism will 19 Hamza Hamouchene and Mika Minio-Paluello, eds. The Coming in North Africa: The Struggle for Climate Justice. Platform (London), Rosa Luxemburg 20 Derek Wall. Economics After Foundation (North Africa), and Capitalism: A Guide to the Ruins and Environmental Justice North Africa a Road to the Future. London: Pluto (EJNA), 2015. Press, 2015. 8 be revealed, one way or the other, in general framework upon which any coming years‖21. alternative economy should be founded. Parecon theorist Robin Participatory economics is an Hahnel identifies four main economic system the is based on objectives of an alternative shared ownership of production tools economy: as well as the participation in the decision making process of all 1- People‘s role in the decision- members of a given community in a making process should be way that guarantees a balanced proportionate to the impact allocation of both production and decisions have on them. consumption as an alternative model 2- The outcome should be both fair to that provided by the state or the and efficient. central authority. , 3- Procedures should enhance on the other hand, is a system that solidarity. does not stop at reforming existing 4- Plans should be environmentally drawbacks, but rather offers an sustainable22. alternative vision that replaces the Hahnel describes those objectives in current system and creates a totally the title of his book Of the People, new world in which welfare extends By the People: The Case for a to all the community and not to a Participatory Economy23. minority. American Marxist sociologist Erik Olin Wright calls First: : this system ―real .‖ Alternative economy refutes the Utopian socialism is similar to foundations of conservative participatory economics in , a type of supporting communal ownership of freedom that is confined to contracts production tools, but the former uses and private ownership, and replaces the market in the allocation of it with a different vision that resources for production and liaising surpasses that traditional definition between producers and consumers as of democracy as the ruling of the well as combines different types of majority to become the participation ownership—state, market, in the decision-making process of all . , on the those affected by different decisions. other hand, is an economic system in This can be done through self- which members of a community management as a means of share and control all resources and achieving economic democracy24. manage all production processes Supporters of communalism favor a through a horizontal work structure. vertical, de-centralized system that operates from the bottom-top as far Despite the difference between various trends of alternative 22 economies, there are certain Robin Hahnel and Erik Olin common traits they share as a Wright. Alternatives to Capitalism: Proposals for a Democratic Economy. London: Verso, 2016. 21Michael Albert. Parecon: Life After 23 Ibid. Capitalism. London: Verso, 2003. 24 Ibid. 9 as decision-making is concerned and initiated by environmental is based on self-management and the movements. According to this redistribution of resources. This principle, it is better to resort to system aims at countering the effects precautionary measures when taking of the top-bottom structure upon a given action might, but is not which the capitalist system is based certain to, cause harm. Here, two and at substituting the ruling of the types of are identified: majority with participation25. the first is ―weak‖ sustainability in which future generations are left Second: Economic justice: with a total of natural and human This concept deals with the (produced) capital that equals what distribution of the burdens and we have at the moment; the second benefits of economic activity among is ―strong‖ sustainability in which members of a given community. the total capital is equal to what we There are four criteria according to have at the moment while which this distribution can be maintaining the value of the natural determined: first, the financial and capital27. The second means making human capital each individual sure that natural resources do not contributes; second, human capital; decline. third, human effort; and fourth, to Fourth: Efficiency: each according to his need. The first represents the way conservatives The concept of efficiency is always view economic justice, the second used in the neoliberal discourse to represents liberals, the third justify economic injustice and represents the majority of supporters promote capitalism as the best of economic justice, and the fourth system. However, efficiency in represents a vision of a better world alternative economy assumes that if in which solidarity becomes a a certain procedure would make the priority26. Parecon combines the total benefits some or all people get third and the fourth so that members more than the cost of these benefits of the community are compensated then this procedure should be based on their effort and/or need. implemented. This replaces the main consideration in capitalism, which is Third: Sustainability: whether this procedure is profitable Alternative economies are based on or not. That is why the criterion of full awareness of the dangers of efficiency here compares between climate change and the issue of the different levels of satisfaction sustainability and adopts the among different echelons of society ―precautionary principle‖ that was and takes this satisfaction into consideration when deciding upon 28 25 procedures to be taken . David Bollier. Think Like a Commoner. Gabriola Island (Canada): New Society Publishers, 2014 26 Robin Hahnel. Of the People, By the People: The Case for a Participatory Economy. Oakland: AK 27 Ibid. Press, 2012. 28 Ibid. 10

Fifth: Solidarity: with. They ought to address how to combine their efforts and the Solidarity revolves around focusing resources and tools they access to on the welfare of all members of the generate worthy outputs that other community. While in prevalent people will benefit from. They ought economies, welfare is seen as an to be directly in touch with the external matter that needs to be dynamics of production and with its explained and justified, while in implications for themselves and alternative economy it is part and others. And they ought to weigh parcel of the system. their direct understanding of their Sixth: Economic diversity: production situation and preference about it against their choices‘ Diversifying tools of production is implication for those who consume both an aim and a means. Because 30 their product . alternative economy acknowledges the diversity of communities, hence In those councils, every human needs, it focuses on the member has a vote, therefore takes necessity on diversifying production part in the decision-making process. activities29. Alternative economy is Each vote should have actual against stereotyping human needs. leverage so that it is not obstructed by other entities. That is why it is Institutions and mechanisms: important that the decision-making In alternative economy, the process is linked to actual work on community gives councils and labor the ground. In this regard, two types unions the right to take part in a of committees are established in participatory process which each of those councils: committees guarantees that benefits are fairly that determine the compensation distributed among all members of based on effort and job balancing the community. committees to distribute jobs/tasks. According to Hahnel, each workers‘ council will determine its own 1- Councils: procedures for assigning tasks and Michael Albert describes councils as evaluating work, which becomes the follows: basis of consumption in consumers‘ Economics is conducted by and for councils. Job balancing committees workers and consumers. Workers make sure that workers are create the social product. Consumers empowered: ―We argue that as long enjoy the social product. In these as some workers sweep floors all two roles, mediated by allocation, day, every day, while others attend people conduct economic life. To do meetings of various kinds all day, their jobs responsibly, workers ought every day, formally equal rights to to consider what they would like to participate at worker council contribute to the social product, both meetings will not translate into truly by their own efforts and in equal opportunities to influence firm association with those they work

29 Ibid. 30 Michael Albert. 11 decisions‖31. Some market socialists produced good and service, and the criticize the job balancing concept damage caused by every pollutant33. on the basis that it violates the Participatory planning was criticized principle of efficiency as well as on the basis that if production and people‘s economic freedom, yet this consumption plans are to be efficient, concept is agreed upon by supporters people need to know in advance what of parecon and utopian socialism. they will be consuming throughout the year not only in terms of the 2- Participatory planning: quantity of the products, but also their Participatory planning is meant to different specifications, which is replace markets: ―Here the distinction impossible according to the detractors between a long-run goal and a of this approach. Erik Olin Wright transition strategy is crucial. I have argues that if the plan is based on never been under the illusion that we predictions and what happened the can replace markets with participatory year before then the markets can play planning immediately32 This planning a role in this system. Other critics is part of an investment plan that believe producers and consumers determines the commodities to be ―cannot together respectfully arrive at produced for the year and how they ‗instructions‘ that they mutually carry will be distributed in a way that will out without any central agency and boost the performance of different without and commodity sectors by the end of the year. exchange, except with horrible Workers‘ councils or consumers‘ repercussions34.‖ Michael Albert unions are in charge of this process: responds to this criticism: ―Nove Only worker councils and consumer Notes that no links other than councils and federations participate horizontal or vertical exist. But this in the annual planning procedure. ignores that there may be means other Each worker and consumer council, than markets for horizontal relations and each federation of consumer unless one assumes, by necessity, that councils participates by submitting a markets are the only horizontal proposal for what that council or allocation system possible. Nove federation wants to do, i.e. councils asserts that there can be no third way. and federations make what we call Alternatives are logically impossible. ―self-activity proposals.‖ There is a But he gives no reason why this must single ―iteration facilitation board‖ be so other than complexity35.‖ (IFB) that performs one, very simple Albert examines different ways of function. The IFB announces current working in participatory planning estimates of the opportunity costs of such as evaluation of prices and work using each kind of ―capital‖ – through committees and which makes natural, produced, and human – the participatory decision making easier. social cost of producing every

33 Ibid. 34 Michael Albert analyzes criticism by British economist Alec Nove and 31 Robin Hahnel and Erik Olin responds to this criticism in Life After Wright. Capitalism. 32 Ibid. 35 Ibid. 12

The problematics of transition: are often punished for having done Reform or revolution? so. For this reason markets act like a cancer that undermines efforts to Is it possible to establish alternative build and deepen participatory, economy institutions without political equitable cooperation36.‖ change? Is it necessary to target the state first and foremost? And until this The question is when and how can happens, what will be the status of markets be replaced and capitalism be emerging protest movements? Can surpassed? There are several answers capitalism coexist with a democratic to this question, which has been alternative founded upon the afore- posed since the crisis took place. mentioned principles? In an attempt to Some proposed a gradual change answer such questions, it is noteworthy such as Paul Mason37 while others that there are three possible strategies insist that a social revolution is the for the establishment of an alternative only way to fight the current system economy: first, severing all ties with which will do all what it takes to the current system through a revolution preserve its network of interests. In or a radical political change; second, fact, an alternative economy such as infiltration through allowing resistance parecon or communalism cannot pockets to penetrate the current system achieve its goals as far as economic until it can impose its own rules; third, justice or environmental sustainability lobbying through putting pressure on are concerned without surpassing the state and the current system to capitalism. This does not mean that change their policies. nothing can be achieved until then because emerging initiatives can still Wright argues that it is impossible to achieve results on the ground until the replace the market, yet history proves entire system is replaced. ―I believe that the market and neoliberalism there is a social revolution in the only work with their own terms. That making that, if recognized and able to is why the establishment of attract more energies from people cooperatives, for example, in the around the world, could give us a presence of the market is quite chance to embark on a process of problematic since those cooperatives transformation towards postcapitalist will start giving in under the pressure society,‖ says Massimo De Angelis. of the dominant economy and the This social revolution is to emerge class system. An example is Credit from and be guided by the different Agricole which started as a French emerging movements that would farming cooperative then over the gradually form an alternative system. years ended up as a commercial bank that is totally dominated by market rules. The same applies to the Mondragon, which almost turned into a multinational. ―When a division of labour is coordinated by markets 36 Robin Hahnel and Erik Olin those who take advantage of others Wright. are often rewarded while those who 37 Paul Mason. Post Capitalism: A behave in socially responsible ways Guide to our Future. London: Allen Lane, 2015. 13