Kerala, a state in southwest India with over 31 million inhabitants, shows how a web of more than 11,000 cooperatives, combined with high unionization, public finance and state support, can succeed in fostering strong human development. Kerala’s state-wide Kudumbashree (meaning ‘prosperity for the family’) programme, which has been running for 20 years, is impressive with 4.3 million economically marginalized women participants. Its farming sector, in which 320,000 women earn a livelihood, is especially inspiring. Working in small neighbourhood collectives, women choose a piece of land and receive low-interest loans, farm machinery, subsidized seeds, and also training and technical support. This helps them to cultivate rice, fruits and vegetables to feed their families and to sell any surplus in the village markets.
The strong driving force behind Kerala’s social solidarity economy is the organizing power of the Left Democratic Front (LDF), a coalition of various left-wing parties – in and out of power – as well as a flourishing network of people’s movements. The LDF, which is currently in government, has recently started another ambitious project to set up a state-wide Cooperative Bank in order to overcome fiscal restraints imposed by the central government and to strengthen Kerala’s existing 980 cooperative banks and its 1,647 agricultural cooperative credit societies. Together they have deposits of more than US$1 billion.16
Procurement is another source of revenue that can build resilient local economies, especially since public procurement accounts for 15 to 20 per cent of global GDP.17 The anchor institution strategy, developed in part by the US-based Democracy Collaborative, creatively expands the potential of procurement through working with large public and non-profit anchor institutions, such as hospitals and universities, in order to maximize their social contribution through spending, employing and investing locally. This strategy captures, circulates and builds community wealth. In the US city of Cleveland, it has led to the successful Evergreen Cooperatives network.
The strategy was also picked up by the city of Preston in the UK. In 2013, local spending by seven anchor institutions in the area (including a university, two colleges and the Preston City Council) was just £38 million in the city and £292 million in the county of Lancashire, where Preston is located. By 2017, after development of the Preston Model, local spending grew to £111 million for the city and £486 million for the region. The city is now advancing the model to develop cooperatives and to create a regional, cooperative bank that would target finance for smaller businesses and people on low incomes.18
In Spain, progressive municipalities, such as Madrid, Pamplona and Zaragoza, have been supporting the ‘social and solidarity economy’ with the goal to democratize the economy. Alongside public procurement, these cities have provided cooperatives and other democratic enterprises with land, buildings, low-interest loans and other services so that the economy is making society flourish, and not the other way around.
In the space of just four years, Barcelona has boldly revived public owner- ship: by setting up a municipal dentist, energy supplier and funeral company, and preparing for a participatory water model that will be implemented as soon as they oust Agbar, a subsidiary of the French multinational, Suez. The city is also experimenting with providing hundreds of residents with a citizens’ income, part of which is paid out in social currency that can be spent in 85 local businesses.19
Community wealth needs to be built on every level. Stewart Lansley of Bristol University and Duncan McCann of the New Economics Foundation developed a proposal for transforming private wealth into public wealth through the creation of citizens’ wealth funds. These permanent, citizen- owned investment funds could be financed through higher taxes for corporations and the wealthy and by gradually transferring corporate ownership shares to these funds. Citizens’ wealth funds would socialize private capital and build popular support for social spending in favour of greater equality and future generations.20
Argentina: an example of how foreign investors use investment protection agreements to bring claims against countries in crisis.
Investor-state disputes “often follow economic, financial, or other crisis.” Lawyers from Debevoise & Plimpton
In 2001, Argentina underwent the worst economic and social crisis in its history. To mitigate the effects, the Argentine state adopted measures such as debt restructuring and freezing public utility tariffs. The “aggrieved” foreign investors brought 43 claims related to the crisis. The vast majority (77%) were settled in favour of the investor, either through a tribunal award or an agreement between the parties. Argentina was ordered or agreed to pay investors a total of at least US$ 3.3 billion. Despite the devastating social situation, in 11 of the 14 cases in which Argentina made use of the necessity defence, the arbitration tribunals rejected the argument.3
Other law firms specializing in international arbitration, such as Dechert, wasted no time in identifying “impending sovereign bond disputes”.
“The protections offered by international investment law may provide creditors means of recourse against a State […] following sovereign debt defaults or restructurings – even when they are necessary or unavoidable.” Dechert law firm4
Although Argentina has avoided these “impending” claims for the moment, the bondholders’ threat to use them is an effective intimidation tactic and presumably influenced the government to concede and make a more favourable offer.