Redefining Democracy: Has the Time Come for a Democratic Economy?

The United States prides itself on being a bastion of democracy in the world. It is woven into the foundation of our country and some would even argue it is our most important export. Our history and political system place democracy as a value we as Americans constantly strive to uphold, if not just nationally, worldwide. But democracy is not only a political value, it can and should extend to the economy, though whether our country is doing so is quickly falling into question.

It seems each day we are moving towards an increasingly unequal and unsustainable system. One which disadvantages marginalized groups and benefits a handful of the wealthy while jeopardizing our planet. It has never been clearer than now, as we are seeing remarkably higher death tolls for POC reflect the unequal nature of economic and health disparities, as well as our reliance on these communities who more often serve as essential workers. It is now becoming obvious that our current economic order is breathing what may later be seen as its last breaths, the first blow to the current neoliberal order occurring in 2008 and now again 2020. It is time we now ask ourselves, how will we create a democratic economy for the future of all American people?

Supporters of “solidarity economics” believe they are developing the system for the future. With such a brazen claim, it is certainly worth examining. As defined on the associated website, the Next System Project, the solidarity economy is “An evolving framework as well as a global movement comprised of practitioners, activists, scholars, and proponents.” A grassroots economic movement may at first seem elusive, yet the transformation is already underway, building a parallel system of finance, distribution and exchange, production, governance and consumption within the existing one.

The solidarity economy can perhaps be called subversive, and it certainly contrasts with much of the current system. Contrary to modern economic thinking it turns to neither individuals within markets nor the intervention of the government to fix our economy but rather grassroots efforts. And as the current neoliberal order disintegrates, the emerging grassroots system is being built in a process of strengthening integration.

The blueprint, or rather framework, of the solidarity economy is (in contrast to many theoretical economic models) derived from the research and experiences of academics. The resulting framework suggests that “The economy is a social construction, not a natural phenomenon, and is shaped by the interplay with other dynamics in culture, politics, history, the ecosystem, and technology,” as per The Next System Project. The people within this structure are complex, interconnected individuals driven by their solidarity and mutuality, and they are part of an economy embedded in natural and social systems.

According to proponents of solidarity economics, if we are to change the system, the necessary transformation must extend beyond the economic into the social and political structures of society, which are inextricably intertwined. The emerging economic system should encourage these qualities of mutualism rather than create tug-of-war between emblazoning and taming self-interest, and it should prioritize harmony with each other and nature over profit and growth. And beyond the theory, it insists on creating systemic change.

While economics is generally an isolated field that seldom promotes intersectional work, solidarity economics puts collaboration with contemporary social movements at the center of creating this change. Leading thinkers of solidarity economics have even interviewed a diverse group of community leaders and movement actors in building their framework. The movement also aims to create a global network of aligned solidarity economy institutions that can create their own global value chains. In fact, the change is already occurring and there is a growing foundation of this theory in practice, however, it is largely invisible as “the various practices— worker cooperatives, credit unions, social currencies, and community land trusts, etc.—operate in their own silos,” developing in a “atomized fashion.”

Typology of Solidarity Economics Practices

The ultimate aim of the movement, as stated by the Next System Project, is to facilitate “People collectively finding ways to provide for themselves and their communities...Rather than a redistributive welfare state, the goal is to create a system in which everyone has enough to live well.” The result would be an economic, social and governance system that emphasizes the role of communities and human interconnectedness, integration of economic activities with the ecosystem, and the importance of the informal sector and unpaid care and household work in economic life. Described by historian and economist Gar Alperovitz as a future “pluralist commonwealth,” he envisions a set of institutions that put “community over profit, cooperation over competition, and planning over unchecked growth.”

The idea certainly seems utopian, but it is already in practice. The city of Maricá in Brazil follows solidarity economics practices and has been known for its remarkable resilience during the current global pandemic, and USC Sociology Professor Manuel Pastor believes California shouldn’t be far behind in experimenting with solidarity economics for ourselves. In a recent interview with the Institute for New Economics Thinking, Pastor explained that America’s current situation of anti-immigrant hysteria and economic uncertainty is not dissimilar to the situation of conservative California of the 90s. He sees California as “America but sooner” and since California’s changing narrative of environmental and racial justice, and progressivity are twenty-five years in the making, it makes sense that we are poised to experiment with the new economic practice.

With the onset of the COVID-19 crisis and its impact on all sectors of the economy, it seems there may be a new willingness and need for such a system, as the inadequacy of our current system becomes exposed. Experts predict that as boomer businesses come up for sale ($10 trillion in business assets will change hands over the next 5-20 years) an oversupply of these businesses may necessitate employee-owned cooperatives. What may sound bold at first could quickly become the only sensible path forward in a time when the limits of neoliberal capitalism will inevitably come under scrutiny, from both the private and public sectors. It seems that the end of our neoliberal system is looming closer as it finds itself unable to withstand the gale of a global health emergency, perhaps it is time we consider alternative methods.

Written By Katia Arami, Undergraduate Economics and International Development Student

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