Solidarity Economy and Social Business

If the problems that we are facing today are often caused by the failure of the market mechanism, in which individuals are separated from each other, the problems may be solved by reconnecting people, which means solidarity among people, whether they call it solidarity or not. There are many types of activities for this purpose from local groups such as microcredit in developing countries to fair trade at the global level. The ways to connect people can be classified into two: One is the face-to-face relationship and the other is the labels that convey the information of the other party. In either case, the information takes important roles to achieve better conditions. This point was emphasized by Amartya Sen in his book (The Idea of Justice. Harvard University Press, Cambridge, 2009). Solidarity has an intrinsic value for human life because it will improve our health and happiness. But it has a more important role for justice. As Sen argued, we need more information about our life in order to make our life better. The capability approach is a way to widen our informational base to various aspects of our life. Another point is that we do not assume human beings are selfish. We are human beings who care for other people suffering from poverty. However, we cannot neglect the market mechanism. In order to make the solidarity economy sustainable, we need business methods. And the social business is one of the solutions, various types of which are shown in this book.

The Grameen Bank of Bangladesh is one of the largest and most successful microcredit organizations. Its success in poverty alleviation comes from the human and organizational principles based on the philosophy of its founder, Muhammad Yunus. These Principles are embodied in Grameen Bank’s organizational structure, the emphasis of weekly Center meetings, and above all the people-centered Sixteen-decisions. The meetings have served as education, communication, information, and social training for the poor who have never had such opportunities. Social business has been advocated and promoted as the mechanism to generate IGAs for the poor to use the microcredit. Social business and microcredit have been shown to be effective for the economic independence of the poor. Microcredit organizations pioneered earlier have led the development in this area in increasing financial access to the poor of the world, and various other financial activities, such as saving accounts, deposit accounts, insurances, and pension plans. Recent development from microcredit has evolved into inclusive finance, responsible investment, and assistance to the variety of social business.

The Foundation ICO Microcredit Pilot Project is a Spanish microcredit institution based on the Grameen model. The purpose of this project is to alleviate social exclusion and financial exclusion, and to enhance social inclusion through the microcredit program. Before the banks offering loans merged, this project functioned quite well. This indicates that the Grameen model can be successfully replicated by microfinance institutions in Spain and address the needs of Spanish people. After the bank mergers, this project lost support from the banks that offered new loans to the project members, causing the project to struggle with continuing its rate of success.

Low cost, renewable energy technologies introduced by Grameen Shakti to remote Bangladeshi areas appropriately suit the energy needs of rural Bangladeshis. Technologies that even the poor can access are highly sustainable and adaptable. Development of new technologies has clearly improved people’s quality of life. First, due to these developments people can enjoy access to environmentally friendly renewable energy, as well as opportunities to generate more income. Second, demonstrations on how to use these new developments play an eco-educational role in society by creating awareness among the local people. Third, the new technology reduces the burden on women’s lives, thus improving their quality of life. Moreover, training women both as engineers and as technology-users has empowered them tremendously.

The production, distribution, and sales of yogurt by Grameen Danone Foods have improved people’s quality of life in Bogra. First, it has created new jobs and employment opportunities in the region as well as expanded previously established business. Second, awareness of Shokti Doi’s nutritional value and its importance to people’s diets has been promoted among local people. Grameen Danone Foods has been successful in creating this awareness due to the network of Grameen borrowers, workshops, and the weekly meetings held at the centers. The practical knowledge of the region’s resources and of creating successful human networks is a result of Grameen Bank’s successful practices over these three decades. As a result, rural Bangladeshi villagers enjoy the health benefits from Shokti Doi because of these socially conscious programs. And finally, because of this grass-roots program, nutritional education has been brought to rural regions, where healthier nutrition practices are much needed.

Bangladesh has the largest population at risk of arsenic poisoning in the world. The groundwater in about 90 % of Bangladesh’s 64 districts is contaminated with arsenic. In order to supply safe drinking water to the poorest communities of Bangladesh, Grameen Veolia Water launched a water treatment and distribution business. This company constructed a plant with 4 km of pipelines, and has been distributing safe drinking water by treating surface water drawn from the local river. This company has introduced a marketing strategy tailor-made to the needs of the plant’s locale, and maximizes the Grameen network to create and spread awareness of the value of safe drinking water. Local women play an essential role in building social networks at the water tap locations.

Since the early 1980s a number of different designs for local currency system have been experimented with in the world. Some were quite successful in that a large number of people participated and some designated targets were fulfilled as a result of active exchanges of goods and services. At the same time, another large number of groups had tried, failed, and disappeared. Funding is one of the quite serious problems for many organizations. How to procure the necessary funding has not been an easy problem to solve. Who takes the initiatives in organizing the system, and for how long a period the organization should exist, are other really important issues that deserve serious consideration. It is worth while to point out some of the basic issues for successful local currency practices that can be observed from past experiences. The first point is about government involvement. It can be said that public administration should not be directly involved in local currency because this is based on initiatives and activities of private citizens. Public administration either local or national should play a supportive role if asked. The second point is to make the major purpose of the system clear from the beginning. In order to have the system of local currency run well for certain long periods of time, a clearly defined purpose and easy-to-see targets are vitally important. Not only should embracing the purpose and target be clear but communicating and widely disseminating them among the members is one of the key elements for a well-run organization. The third and final point is that it is important to realize among the participants that nothing comes automatically without spending lots of time and sweats by the people. Local currency mechanism is a system in which citizen’s initiative and active participation are essentially important. Also important is the recognition of the fact that local currency is not a panacea for social ill or market failure, though it is an effort on the side of people to make the community in which they live more enjoyable to live together than today’s globalized, isolated, and cold-hearted market economy.

In this chapter we see how organic agriculture depends on solidarity between farmers and consumers. The purposes of protecting environment and human health cannot be achieved without a healthy society in which people know the situation of each other and the impact of their conducts on the environment and their neighbors. On the other hand, modern technology such as chemical fertilizers and pesticides deprived us of our understanding of environment and society. Many people are now interested in organic agriculture but the basis is our concern for a healthy society and therefore solidarity. Organic agriculture is a holistic system which promotes and enhances ecosystem, health, food safety and local environment etc. Organic agriculture can be roughly divided into two types, maintaining face-to-face relationships and the certification type found in Japan. In Korea, these days market of certified products is becoming more and more competitive, so that farmers with less competitiveness turn towards direct relationships with local consumers. In the Northeastern Thailand, many groups are performing organic agriculture already and these days local government has been promoting the organic agriculture.

During the Coffee Crisis in the early 2000s, consumers in developed countries enjoyed cheap coffee while coffee farmers in developing countries suffered from poverty. Thus globalization disconnected the farmers in developing countries and consumers in developed countries. Farmers are interested only to increase the production volume and they do not care for what kind of coffee the consumers may prefer. On the other hand, the consumers are looking for cheap coffee products and do not care the impacts of their behavior on the environment and the life of the farmers. After the Coffee Crisis, consumers began to know this relationship and some of them tried to help the poor farmers by buying at higher price as is the case of Fair Trade. In the same way, some of them who are interested in environmental protection and willing to pay more to avoid environmental destruction supported other certified coffee such as Rainforest Alliance. It is not easy for consumers to contact directly with farmers and we need intermediaries to connect them. In the case of coffee this role is taken by the certificates such as Fair Trade. Even though the percentage of certified coffee may be small, its influence is widespread. With the development of information technology, the role of such intermediaries will be more and more important.

In Korea, the participation of social enterprises is actively practiced through enacting the Social Enterprise Promotion Act of 2007. To be a social enterprise, an organization must be certified by the Minister of Employment and Labor according to the Social Enterprise Promotion Act. The Korean government promoted making the Social Enterprise Promotion Ordinances appropriate to each locality by each local government based on the Social Enterprise Promotion Act. Heuksalim is promoting several social activities such as the urban agriculture project to strengthen the solidarity with urban consumers and traditional seed preservation as a local resource.