Social Justice vs. the Cheap Sweater - Unsustainable Consumption and the Global Economy
by Juliet Schor
As globalization becomes more pervasive, cheap imports are getting even cheaper. While that may seem like a boon to the consumer, there are serious negative effects to be considered.
Thinking about the ecological impacts of the global economy, an image that comes to mind might be turtle-costumed protesters on the streets of Seattle. But sea turtles aren't the only bycatch in globalization's net. The ecological damage associated with global trade is widespread. Burning fuel to transport goods around the world is a major source of greenhouse gases. Falling commodity prices and the pressure to convert resource-rich landscapes to export-oriented monocultures degrade ecosystems and lead to severe declines in biodiversity. Globalization also encourages Faustian bargains by which countries are compelled to pay off crushing debts to Western banks and the IMF by selling precious natural resources such as forests and minerals.
Proponents of globalization respond that these are unintended consequences, or "externalities" (to use economists' jargon), which technological development and reform can manage. But there's another element of the global economy that is having an enormous effect on the environment, and this time it's because globalization is operating the way its proponents say it should. It's making products cheaper. Much cheaper. That in turn is leading consumers to buy more of them. The standard theory, and the conventional political wisdom, says that's a good thing. But from the point of view of the planetary ecology, and perhaps even from the point of view of consumers' welfare, it's a more complex picture.
The Consumer Buying Spree: Free Clothes and the $29 DVD Player In the last 10 years, consumers have been purchasing ever-larger quantities of imported goods in product categories such as apparel, footwear, toys, computers, software, cars, and consumer electronics. This is a well-known story. What's less well-known is that not only are the foreign imports cheaper than domestically-produced alternatives, but their prices have been declining over time.
Apparel is the paradigm case, and worth a closer look. By 2002, in all but three of the 19 primary apparel categories, imports accounted for more than 80 percent of domestic consumption. (Dresses, men's suits, and women's swimwear were the exceptions.) In 10 of these categories, the share of imports exceeded 90 percent.
A 10 percent decline in the price of apparel between 1993 and 2003 has driven this growth in imports. Clothes from countries such as China and Bangladesh are cheap, and they're getting cheaper. So cheap, in fact, that they're almost free. It's now possible to buy brand new shirts for 99 cents in stores like Old Navy. Even at my local mainstream department store, I've had shirts ring up at $3.50 after discounts. It's a similar story for pants, skirts, and sweaters. T-shirts are even given away free at concerts, sports games, and charity events.
Why have prices been falling? One reason is that the globalization of production makes it easy for firms to outsource to cheaper wage areas. The Asian financial crisis of the late 1990s was another factor - the resulting unemployment depressed wages throughout the region. It also reduced the demand, and hence the price, for second-hand clothing. That's because after we import new clothes from Asia, wear them, and discard them, we send the garments back to Asia to be purchased by consumers there. After the crisis, Asians couldn't even afford our cast-offs.
The Wal-Mart effect has also been important. Wal-Mart is the world's largest retailer of apparel and has used its unprecedented market power to drive garment wages down. The women who work in apparel factories in poor Asian countries typically earn below 25 cents an hour and are forced to work many hours of unpaid overtime in unsafe and stressful conditions. The hyper- mobility of capital makes it almost impossible for them to improve their wages and conditions.
Back at home the collapse of prices looks like a boon, and consumers are buying at record rates. Between 1996 and 2002 the number of pieces of imported apparel purchased by each American consumer rose 83 percent and the average American bought 48 new items of clothing that year. All that acquisition has led to a culture of "disposable clothes," dramatic increases in consumer discard rates, and mountains of perfectly wearable but economically valueless garments piling up all over the country.
Similar developments are occurring in other industries, where the globalization of production has kept wages at rock-bottom levels and environmental improvements to a minimum. Plastic Chinese toys made in dangerous sweatshops have taken over the market. Wages in Chinese toy factories range from 7 to 33 cents an hour and toy prices have declined even more than apparel - by 33 percent in the last 10 years. My conservative estimates find that the average American child is now acquiring 69 new toys per year. And, like t-shirts, there's a thriving business in toy giveaways.
Another example is computers. Since 1997, when the government began collecting data, the average price for personal computers has fallen by 81 percent. The growing affordability of computers is certainly welcome, but it has been accompanied by a dizzying rate of discard. In 2001, the latest year data are available, 22.76 million computers were consumed domestically, just about 3 million more than were discarded three years earlier. Estimates are that next year a
staggering 63 million personal computers will be "retired." The trends are similar for other electronics, such as televisions and cell phones. Last holiday season Wal-Mart offered a $29 DVD player, made famous by Patricia van Lester in Orange City, Florida, who was standing at the front of the line waiting to buy one and was trampled by other customers.
Perhaps the most telling set of numbers comes from the Bureau of Labor Statistics' index of department store prices. Department stores, a category which includes Wal-Mart and Bloomingdale's, are major outlets for imported manufactured goods and their prices provide a broad measure of the costs of these goods to the American consumer. The department store price index indicates that in all categories - soft goods, durable goods, and miscellaneous - prices have declined dramatically. Overall, the total store price index fell about 30 percent in the last decade, with durable goods prices declining a whopping 57 percent.
The Environmental Impacts of Cheap Imports Disappearing tigers and the loss of rainforest have gotten more publicity, but the dramatic upsurge in the consumption of manufactured products also places a heavy toll on local and global environments. The cotton used for all those free t-shirts is pesticide-intensive and depletes soil at a rapid rate. Textile dyes use carcinogenic chemicals, such as azo-dyes, which have been banned in Europe, but not the United States. Textile and computer chip production are extremely water intensive. Tanning (for shoes and leather goods) uses a number of highly toxic substances and is contributing to significant water pollution in regions with tanning industries, such as South Asia. Computer production involves the use of a large number of toxic chemicals, many of which are entering the waste stream. Toxics are also used in the production of plastic toys. Other effects are more complex - the demand for cheap cashmere has led to the expansion of herds, overgrazing, and ecosystem disruption in Central Asia. It's a series of events obscured by the standard discourse, which celebrates the $49 cashmere sweater.
And that brings us to the question of whether consumers are really better off because they've been snapping up clothes, shoes, accessories, bed sheets, TVs, computers, and toys at historically unprecedented rates. The fact that they're also discarding many of them almost as fast should give the proponents of cheap imports pause. And when we add into the equation the loss of domestic jobs, the exploitation of foreign workers, and the degradation of the environment locally and globally, the whole package looks a lot less appealing, and the failures of the global economy more glaring.
The accumulating evidence about the impacts of globalization suggests a number of necessary changes. American consumers must shift to purchasing fewer, higher-quality items which cost more and are used longer. This will require more durability and adaptability in products, and a revitalization of the economy of repair and reuse. Second, we must institute effective labor and environmental standards that will end sweatshop conditions and environmental hazards. If that can be achieved, poor countries can raise wages and support consumer demand in their own economies. Without a widespread sharing of "purchasing power" it will be impossible to create a just and healthy global economy. Environmentalists and consumer activists must be common cause advocates for peace and global justice.
Juliet Schor is Professor of Sociology at Boston College, and a best selling author. Her newest book, Born to Buy: Marketing and the Transformation of Childhood and Culture, will be released by Scribner in September.
Sidebar: Better Buying Resources
Environmental activist Donella Meadows once said, "It's so hard to do right in a world that expects you, rewards you, encourages you to do wrong." Fortunately, activists around the country are making it easier to find more responsible products. We can't change the global marketplace overnight, but we can reduce our appetite for throwaway products, use more second-hand items, and spend our hard-earned money on companies that work for global reform. Here are a few good places to start.
Wednesday, October 8, 2008
Ebay Case Study
Case Study: eBay thrives in the global marketplace
I recommend students researching eBay checkout the latest eBay statistics and business strategies from their SEC filings. The annual filings give a great summary of eBay business and revenue models. Alternatively filings are included in the eBay press releases which also have info on new company acquisitions.
SEC is the Securities and Exchange Commission (SEC) which is a government agency for which companies have to submit an open evaluation of their business models and marketplace conditions.
eBay also have a summary of their overall scale and range of categories they operate in on their UK company overview page
Information on the .com site shows the companies they have acquired and the countries they operate in.
Latest eBay business model news
eBay Neighbourhoods
eBay has introduced Neighbourhoods where groups can discuss brands and products they have a high involvement with. Read more about eBay Neighbourhoods in this Wired Magazine article
Skype 'write-off'
Although PayPal appears a sound acquisition that fits the eBay business model, this has not proved the case with Skype. Here the Times reports that alhough EBay bought Skype in 2005 for $2.6 billion it recently warned shareholders that it would have to take an impairment charge of $900 million (£450 million) because it had valued the group too highly two years ago.
Case study Context
It’s hard to believe that one of the most celebrated dot-coms has now celebrated its tenth birthday. Pierre Omidyar, a 28 year old French-born software engineer living in California coded the site while working for another company, eventually launching the site for business on Monday, 4 September, 1995 with the more direct name ‘Auction Web’.
Legend reports that the site attracted no visitors its first 24 hours. The site became eBay in 1997 and site activity is rather different today; peak traffic in 2004 was 890 million page views per day and 7.7 gigabits of outbound data traffic per second.
Today, if eBay was a country, it would have the 9th largest population with its 35 million eBayers and would be the 59th largest economy in the world according to revenue. 2005, the 135 million customers
eBay Mission
eBay describes their purpose as to ‘pioneer new communities around the world built on commerce, sustained by trust, and inspired by opportunity’
At the time of writing, eBay comprises three major businesses:
The eBay Marketplace (approximately 70% of eBay net revenues in 2007). The mission for the core eBay business is to ‘create the world’s online marketplace’. eBay’s SEC filing notes some of the success factors for this business for which eBay seeks to manage the functionality, safety, ease-of-use and reliability of the trading platform.
PayPal (approximately 25% of net revenues in 2007). The mission is to ‘create the new global standard for online payments’. This company was acquired in 2003?
Skype Internet telephony (approximately 5% of net revenues in 2007).
This company was acquired in 2005. eBay has suffered an “impairment charge” from valuing the company too highly, but more recently it has started to provide the service for MySpace users.
Advertising and other net revenues represented just 4% of total net revenues during 2007
This case focuses on the best known, the eBay Marketplace.
eBay Revenue model
The vast majority of eBay’s revenue is for the listing and commission on completed sales. For Paypal purchases an additional commission fee is charged. Margin on each transaction is phenomenal since once the infrastructure is built, incremental costs on each transactions are tiny – all eBay is doing is transmitting bits and bytes between buyers and sellers.
Advertising and other non-transaction net revenues represent a relatively small proportion of total net revenues and the strategy is that this should remain the case Advertising and other net revenues totalled $94.3 million in 2004 (just 3% of net revenue).
eBay Proposition
The eBay marketplace is well known for its core service which enables sellers to list items for sale on an auction or fixed-price basis giving buyers the opportunity to bid for and purchase items of interest. At the end of 2007 there were over 532,000 online storefronts established by users in locations around the world.
Software tools are provided, particularly for frequent traders including Turbo Lister, Seller’s Assistant, Selling Manager and Selling Manager Pro, which help automate the selling process; the Shipping Calculator, Reporting tools, etc. Today over sixty percent of listings are facilitated by software, showing the value of automating posting for frequent trading.
Fraud is a significant risk factor for eBay. BBC (2005) reported that around 1 in 10,000 transactions within the UK were fraudulent. 0.0001% is a small percentage, but scaling this up across the number of transactions, this is a significant volume.
eBay has developed ‘Trust and Safety Programs’ which are particularly important to reassure customers since online services are prone to fraud. For example, the eBay feedback forum can help establish credentials of sellers and buyers. There is also a Safe Harbor data protection method and a standard purchase protection system.
According to the SEC filing, eBay summarises the core messages to define its proposition as follows:
For buyers:
Selection
Value
Convenience
Entertainment
For sellers:
Access to broad markets
Efficient marketing and distribution costs
Ability to maximize prices
Opportunity to increase sales
In 2007, the sellers proposition is described slightly differently:
Access to broad markets
Cost effective marketing and distribution
Access to large buyer base
Good conversion rates
eBay stresses the importance of developing its “Value-Added Tools and Services” which are “pre-trade” and “post-trade” tools and services to enhance the user experience and to make trading faster, easier and safer.
In January 2008, "eBay announced significant changes to it’s Marketplaces business":http://investor.ebay.com/releasedetail.cfm?ReleaseID=290446 in three major areas: fee structure, seller incentives and standards, and feedback. These changes have been controversial with some sellers, but are aimed at improving the quality of experience. Detailed Seller Ratings (DSRs) enable sellers to be reviewed in four areas: (1) item as described, (2) communication, (3) delivery time, and (4) postage and packaging charges. This is part of a move to help increase conversion rate by increasing positive shopping experiences. Powersellers with positive DSRs will be featured more favourably in the search results pages and will gain additional discounts.
eBay Competition
Although there are now few direct competitors of online auction services in many countries, there are many indirect competitors. eBay (2005) describes competing channels as including, online and offline retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, classifieds, directories, search engines, products of search engines, virtually all online and offline commerce participants (consumer-to-consumer, busin
ta protection method and a standard purchase protection system.
According to the SEC filing, eBay summarises the core messages to define its proposition as follows:
For buyers:
Selection
Value
Convenience
Entertainment
For sellers:
Access to broad markets
Efficient marketing and distribution costs
Ability to maximize prices
Opportunity to increase sales
In 2007, the sellers proposition is described slightly differently:
Access to broad markets
Cost effective marketing and distribution
Access to large buyer base
Good conversion rates
eBay stresses the importance of developing its “Value-Added Tools and Services” which are “pre-trade” and “post-trade” tools and services to enhance the user experience and to make trading faster, easier and safer.
In January 2008, "eBay announced significant changes to it’s Marketplaces business":http://investor.ebay.com/releasedetail.cfm?ReleaseID=290446 in three major areas: fee structure, seller incentives and standards, and feedback. These changes have been controversial with some sellers, but are aimed at improving the quality of experience. Detailed Seller Ratings (DSRs) enable sellers to be reviewed in four areas: (1) item as described, (2) communication, (3) delivery time, and (4) postage and packaging charges. This is part of a move to help increase conversion rate by increasing positive shopping experiences. Powersellers with positive DSRs will be featured more favourably in the search results pages and will gain additional discounts.
eBay Competition
Although there are now few direct competitors of online auction services in many countries, there are many indirect competitors. eBay (2005) describes competing channels as including, online and offline retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, classifieds, directories, search engines, products of search engines, virtually all online and offline commerce participants (consumer-to-consumer, business-to-consumer and business-to-business) and online and offline shopping channels and networks.
BBC (2005) reports that eBay are not complacent about competition. It has already pulled out of Japan due to competition from Yahoo! and within Asia and China is also facing tough competition by Yahoo! which has a portal with a broader range of services is more likely to attract subscribers.
Before the advent of online auctions, competitors in the collectibles space include antiques shops, car boot sales and charity shops. Anecdotal evidence suggests that all of these are now suffering at the hand of eBay. Some have taken the attitude of ‘if you can’t beat ‘em, join ‘em. Many smaller traders who have previously run antique or car boot sales are now eBayers. Even charities such as Oxfam now have an eBay service where they sell high-value items contributed by donors online. Other retailers such as Vodafone have used eBay as a means to distribute certain products within their range.
eBay Objectives and strategy
The overall eBay aims are to increase the gross merchandise volume and net revenues from the eBay Marketplace. More detailed objectives are defined to achieve these aims, with strategies focusing on:
Acquisition — increasing the number of newly registered users on the eBay Marketplace.
Activation — increasing the number of registered users that become active bidders, buyers or sellers on the eBay Marketplace.
Activity — increasing the volume and value of transactions that are conducted by each active user on our eBay Marketplace. eBay had approximately 83 million active users at the end of 2007, compared to approximately 82 million at the end of 2006. An active user is defined as any user who bid on, bought, or listed an item during the most recent 12-month period.
The focus on each of these 3 areas will vary according to strategic priorities in particular local markets.
eBay marketplace growth is also driven by defining approaches to improve performance in these areas.
First, category growth is achieved by increasing the number and size of categories within the marketplace, for example: Antiques, Art, Books and Business & Industrial.
Second, Formats for interaction. The traditional format is auction listings, but it has been refined now to include the ‘Buy-It-Now’ fixed price format. Another format is the “Dutch Auction” format, where a seller can sell multiple identical items to the highest bidders. eBay Stores was developed to enable sellers with a wider range of products to showcase their products in a more traditional retail format. eBay say they are constantly exploring new formats for example through the acquisition in 2004 of mobile.de in Germany and Marktplaats.nl in the Netherlands, as well as our investment in craigslist, the US-based classified ad format. Another acquisition is Rent.com, which enable expansion into the online housing and apartment rental category. In 2007, eBay acquired StubHub an online ticket marketplace and it also owns comparison marketplace Shopping.com.
Finally marketplace growth is achieved through delivering specific sites localised for different geographies as follows: You can see there is still potential for greater localisation, for example in parts of Scandinavia, Eastern Europe and Asia.
Localised eBay marketplaces:
Australia
India
South Korea
Austria
Ireland
Spain
Belgium
Italy
Sweden
Canada
Malaysia
Switzerland
China
The Netherlands
Taiwan
France
New Zealand
United Kingdom
Germany
The Philippines
United States
Hong Kong
Singapore
In its SEC filing, success factors eBay believes are important to enable it to compete in its market include:
ability to attract buyers and sellers;
volume of transactions and price and selection of goods;
customer service; and
brand recognition.
It also notes that for its competitors, other factors it believes are important are:
community cohesion, interaction and size;
system reliability;
reliability of delivery and payment;
website convenience and accessibility;
level of service fees; and
quality of search tools.
This implies that eBay believes it has optimised these factors, but its competitors still have opportunities for improving performance in these areas which will make the market more competitive.
Risk management
The SEC filing lists the risks and challenges of conducting business internationally as follows:
regulatory requirements, including regulation of auctioneering, professional selling, distance selling, banking, and money transmitting
legal uncertainty regarding our liability for the listings and other content provided by our users, including uncertainty as a result of less Internet-friendly legal systems, unique local laws, and lack of clear precedent or applicable law;
difficulties in integrating with local payment providers, including banks, credit and debit card associations, and electronic fund transfer systems;
differing levels of retail distribution, shipping, and communications infrastructures;
different employee/employer relationships and the existence of workers’ councils and labor unions;
difficulties in staffing and managing foreign operations;
longer payment cycles, different accounting practices, and greater problems in collecting accounts receivable;
potentially adverse tax consequences, including local taxation of our fees or of transactions on our websites;
higher telecommunications and Internet service provider costs;
strong local competitors;
different and more stringent consumer protection, data protection and other laws;
cultural ambivalence towards, or non-acceptance of, online trading;
seasonal reductions in business activity;
expenses associated with localizing our products, including offering customers the ability to transact business in the local currency;
laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses;
profit repatriation restrictions, foreign currency exchange restrictions, and exchange rate fluctuations;
volatility in a specific country’s or region’s political or economic conditions; and
differing intellectual property laws and taxation laws.
eBay Results
eBay’s community of confirmed registered users, has grown from around two million at the end of 1998 to more than 94 million at the end of 2003 and to more than 135 million at December 31, 2004. It is also useful to identify active users who contribute revenue to the business as a buyer or seller. eBay had 56 million active users at the end of 2004who they define an as any user who has bid, bought, or listed an item during a prior 12-month period.
Sources: BBC (2005), SEC (2005)
BBC (2005) "eBay's 10-year rise to world fame"http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4207510.stm. By Robert Plummer Story from BBC NEWS. 2nd September 2005. Published: 2005/09/02
SEC (2005) United States Securities And Exchange Commission submission Form 10-K For the fiscal year ended December 31, 2004
I recommend students researching eBay checkout the latest eBay statistics and business strategies from their SEC filings. The annual filings give a great summary of eBay business and revenue models. Alternatively filings are included in the eBay press releases which also have info on new company acquisitions.
SEC is the Securities and Exchange Commission (SEC) which is a government agency for which companies have to submit an open evaluation of their business models and marketplace conditions.
eBay also have a summary of their overall scale and range of categories they operate in on their UK company overview page
Information on the .com site shows the companies they have acquired and the countries they operate in.
Latest eBay business model news
eBay Neighbourhoods
eBay has introduced Neighbourhoods where groups can discuss brands and products they have a high involvement with. Read more about eBay Neighbourhoods in this Wired Magazine article
Skype 'write-off'
Although PayPal appears a sound acquisition that fits the eBay business model, this has not proved the case with Skype. Here the Times reports that alhough EBay bought Skype in 2005 for $2.6 billion it recently warned shareholders that it would have to take an impairment charge of $900 million (£450 million) because it had valued the group too highly two years ago.
Case study Context
It’s hard to believe that one of the most celebrated dot-coms has now celebrated its tenth birthday. Pierre Omidyar, a 28 year old French-born software engineer living in California coded the site while working for another company, eventually launching the site for business on Monday, 4 September, 1995 with the more direct name ‘Auction Web’.
Legend reports that the site attracted no visitors its first 24 hours. The site became eBay in 1997 and site activity is rather different today; peak traffic in 2004 was 890 million page views per day and 7.7 gigabits of outbound data traffic per second.
Today, if eBay was a country, it would have the 9th largest population with its 35 million eBayers and would be the 59th largest economy in the world according to revenue. 2005, the 135 million customers
eBay Mission
eBay describes their purpose as to ‘pioneer new communities around the world built on commerce, sustained by trust, and inspired by opportunity’
At the time of writing, eBay comprises three major businesses:
The eBay Marketplace (approximately 70% of eBay net revenues in 2007). The mission for the core eBay business is to ‘create the world’s online marketplace’. eBay’s SEC filing notes some of the success factors for this business for which eBay seeks to manage the functionality, safety, ease-of-use and reliability of the trading platform.
PayPal (approximately 25% of net revenues in 2007). The mission is to ‘create the new global standard for online payments’. This company was acquired in 2003?
Skype Internet telephony (approximately 5% of net revenues in 2007).
This company was acquired in 2005. eBay has suffered an “impairment charge” from valuing the company too highly, but more recently it has started to provide the service for MySpace users.
Advertising and other net revenues represented just 4% of total net revenues during 2007
This case focuses on the best known, the eBay Marketplace.
eBay Revenue model
The vast majority of eBay’s revenue is for the listing and commission on completed sales. For Paypal purchases an additional commission fee is charged. Margin on each transaction is phenomenal since once the infrastructure is built, incremental costs on each transactions are tiny – all eBay is doing is transmitting bits and bytes between buyers and sellers.
Advertising and other non-transaction net revenues represent a relatively small proportion of total net revenues and the strategy is that this should remain the case Advertising and other net revenues totalled $94.3 million in 2004 (just 3% of net revenue).
eBay Proposition
The eBay marketplace is well known for its core service which enables sellers to list items for sale on an auction or fixed-price basis giving buyers the opportunity to bid for and purchase items of interest. At the end of 2007 there were over 532,000 online storefronts established by users in locations around the world.
Software tools are provided, particularly for frequent traders including Turbo Lister, Seller’s Assistant, Selling Manager and Selling Manager Pro, which help automate the selling process; the Shipping Calculator, Reporting tools, etc. Today over sixty percent of listings are facilitated by software, showing the value of automating posting for frequent trading.
Fraud is a significant risk factor for eBay. BBC (2005) reported that around 1 in 10,000 transactions within the UK were fraudulent. 0.0001% is a small percentage, but scaling this up across the number of transactions, this is a significant volume.
eBay has developed ‘Trust and Safety Programs’ which are particularly important to reassure customers since online services are prone to fraud. For example, the eBay feedback forum can help establish credentials of sellers and buyers. There is also a Safe Harbor data protection method and a standard purchase protection system.
According to the SEC filing, eBay summarises the core messages to define its proposition as follows:
For buyers:
Selection
Value
Convenience
Entertainment
For sellers:
Access to broad markets
Efficient marketing and distribution costs
Ability to maximize prices
Opportunity to increase sales
In 2007, the sellers proposition is described slightly differently:
Access to broad markets
Cost effective marketing and distribution
Access to large buyer base
Good conversion rates
eBay stresses the importance of developing its “Value-Added Tools and Services” which are “pre-trade” and “post-trade” tools and services to enhance the user experience and to make trading faster, easier and safer.
In January 2008, "eBay announced significant changes to it’s Marketplaces business":http://investor.ebay.com/releasedetail.cfm?ReleaseID=290446 in three major areas: fee structure, seller incentives and standards, and feedback. These changes have been controversial with some sellers, but are aimed at improving the quality of experience. Detailed Seller Ratings (DSRs) enable sellers to be reviewed in four areas: (1) item as described, (2) communication, (3) delivery time, and (4) postage and packaging charges. This is part of a move to help increase conversion rate by increasing positive shopping experiences. Powersellers with positive DSRs will be featured more favourably in the search results pages and will gain additional discounts.
eBay Competition
Although there are now few direct competitors of online auction services in many countries, there are many indirect competitors. eBay (2005) describes competing channels as including, online and offline retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, classifieds, directories, search engines, products of search engines, virtually all online and offline commerce participants (consumer-to-consumer, busin
ta protection method and a standard purchase protection system.
According to the SEC filing, eBay summarises the core messages to define its proposition as follows:
For buyers:
Selection
Value
Convenience
Entertainment
For sellers:
Access to broad markets
Efficient marketing and distribution costs
Ability to maximize prices
Opportunity to increase sales
In 2007, the sellers proposition is described slightly differently:
Access to broad markets
Cost effective marketing and distribution
Access to large buyer base
Good conversion rates
eBay stresses the importance of developing its “Value-Added Tools and Services” which are “pre-trade” and “post-trade” tools and services to enhance the user experience and to make trading faster, easier and safer.
In January 2008, "eBay announced significant changes to it’s Marketplaces business":http://investor.ebay.com/releasedetail.cfm?ReleaseID=290446 in three major areas: fee structure, seller incentives and standards, and feedback. These changes have been controversial with some sellers, but are aimed at improving the quality of experience. Detailed Seller Ratings (DSRs) enable sellers to be reviewed in four areas: (1) item as described, (2) communication, (3) delivery time, and (4) postage and packaging charges. This is part of a move to help increase conversion rate by increasing positive shopping experiences. Powersellers with positive DSRs will be featured more favourably in the search results pages and will gain additional discounts.
eBay Competition
Although there are now few direct competitors of online auction services in many countries, there are many indirect competitors. eBay (2005) describes competing channels as including, online and offline retailers, distributors, liquidators, import and export companies, auctioneers, catalog and mail-order companies, classifieds, directories, search engines, products of search engines, virtually all online and offline commerce participants (consumer-to-consumer, business-to-consumer and business-to-business) and online and offline shopping channels and networks.
BBC (2005) reports that eBay are not complacent about competition. It has already pulled out of Japan due to competition from Yahoo! and within Asia and China is also facing tough competition by Yahoo! which has a portal with a broader range of services is more likely to attract subscribers.
Before the advent of online auctions, competitors in the collectibles space include antiques shops, car boot sales and charity shops. Anecdotal evidence suggests that all of these are now suffering at the hand of eBay. Some have taken the attitude of ‘if you can’t beat ‘em, join ‘em. Many smaller traders who have previously run antique or car boot sales are now eBayers. Even charities such as Oxfam now have an eBay service where they sell high-value items contributed by donors online. Other retailers such as Vodafone have used eBay as a means to distribute certain products within their range.
eBay Objectives and strategy
The overall eBay aims are to increase the gross merchandise volume and net revenues from the eBay Marketplace. More detailed objectives are defined to achieve these aims, with strategies focusing on:
Acquisition — increasing the number of newly registered users on the eBay Marketplace.
Activation — increasing the number of registered users that become active bidders, buyers or sellers on the eBay Marketplace.
Activity — increasing the volume and value of transactions that are conducted by each active user on our eBay Marketplace. eBay had approximately 83 million active users at the end of 2007, compared to approximately 82 million at the end of 2006. An active user is defined as any user who bid on, bought, or listed an item during the most recent 12-month period.
The focus on each of these 3 areas will vary according to strategic priorities in particular local markets.
eBay marketplace growth is also driven by defining approaches to improve performance in these areas.
First, category growth is achieved by increasing the number and size of categories within the marketplace, for example: Antiques, Art, Books and Business & Industrial.
Second, Formats for interaction. The traditional format is auction listings, but it has been refined now to include the ‘Buy-It-Now’ fixed price format. Another format is the “Dutch Auction” format, where a seller can sell multiple identical items to the highest bidders. eBay Stores was developed to enable sellers with a wider range of products to showcase their products in a more traditional retail format. eBay say they are constantly exploring new formats for example through the acquisition in 2004 of mobile.de in Germany and Marktplaats.nl in the Netherlands, as well as our investment in craigslist, the US-based classified ad format. Another acquisition is Rent.com, which enable expansion into the online housing and apartment rental category. In 2007, eBay acquired StubHub an online ticket marketplace and it also owns comparison marketplace Shopping.com.
Finally marketplace growth is achieved through delivering specific sites localised for different geographies as follows: You can see there is still potential for greater localisation, for example in parts of Scandinavia, Eastern Europe and Asia.
Localised eBay marketplaces:
Australia
India
South Korea
Austria
Ireland
Spain
Belgium
Italy
Sweden
Canada
Malaysia
Switzerland
China
The Netherlands
Taiwan
France
New Zealand
United Kingdom
Germany
The Philippines
United States
Hong Kong
Singapore
In its SEC filing, success factors eBay believes are important to enable it to compete in its market include:
ability to attract buyers and sellers;
volume of transactions and price and selection of goods;
customer service; and
brand recognition.
It also notes that for its competitors, other factors it believes are important are:
community cohesion, interaction and size;
system reliability;
reliability of delivery and payment;
website convenience and accessibility;
level of service fees; and
quality of search tools.
This implies that eBay believes it has optimised these factors, but its competitors still have opportunities for improving performance in these areas which will make the market more competitive.
Risk management
The SEC filing lists the risks and challenges of conducting business internationally as follows:
regulatory requirements, including regulation of auctioneering, professional selling, distance selling, banking, and money transmitting
legal uncertainty regarding our liability for the listings and other content provided by our users, including uncertainty as a result of less Internet-friendly legal systems, unique local laws, and lack of clear precedent or applicable law;
difficulties in integrating with local payment providers, including banks, credit and debit card associations, and electronic fund transfer systems;
differing levels of retail distribution, shipping, and communications infrastructures;
different employee/employer relationships and the existence of workers’ councils and labor unions;
difficulties in staffing and managing foreign operations;
longer payment cycles, different accounting practices, and greater problems in collecting accounts receivable;
potentially adverse tax consequences, including local taxation of our fees or of transactions on our websites;
higher telecommunications and Internet service provider costs;
strong local competitors;
different and more stringent consumer protection, data protection and other laws;
cultural ambivalence towards, or non-acceptance of, online trading;
seasonal reductions in business activity;
expenses associated with localizing our products, including offering customers the ability to transact business in the local currency;
laws and business practices that favor local competitors or prohibit foreign ownership of certain businesses;
profit repatriation restrictions, foreign currency exchange restrictions, and exchange rate fluctuations;
volatility in a specific country’s or region’s political or economic conditions; and
differing intellectual property laws and taxation laws.
eBay Results
eBay’s community of confirmed registered users, has grown from around two million at the end of 1998 to more than 94 million at the end of 2003 and to more than 135 million at December 31, 2004. It is also useful to identify active users who contribute revenue to the business as a buyer or seller. eBay had 56 million active users at the end of 2004who they define an as any user who has bid, bought, or listed an item during a prior 12-month period.
Sources: BBC (2005), SEC (2005)
BBC (2005) "eBay's 10-year rise to world fame"http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4207510.stm. By Robert Plummer Story from BBC NEWS. 2nd September 2005. Published: 2005/09/02
SEC (2005) United States Securities And Exchange Commission submission Form 10-K For the fiscal year ended December 31, 2004
Time Bank
TimeBanks USA
What is Time Banking All About?
At its most basic level, Time banking is simply about spending an hour doing something for somebody in your community. That hour goes into the Time Bank as a Time Dollar. Then you have a Time dollar to spend on having someone doing something for you. It's a simple idea, but it has powerful ripple effects in building community connections.
Each Time Bank has a website where you list what you would like to do for other members. You look up Time Bank services online or call a community coordinator to do it for you. You earn Time Dollars after each service you perform and then you get to spend it on whatever you want from the listings.
With Time Banking, you will be working with a small group of committed individuals who are joined together for a common good. It connects you to the best in people because it creates a system that connects unmet needs with untapped resources. To see what happens each week when you are part of Time Bank is deeply fulfilling, especially if you are helping to make it run.
How does a Time Dollar exchange work?
What can I buy with Time Dollars?
What makes Time Banking so special?
Who starts Time Banks?
What have I missed (aka FAQ)?
How can I find out more about Time Banking?
Join our Discussion Group on Time Banking.
Our Mission: Strengthening communities through reciprocity
member login order contact us donate here
What is Time Banking All About?
At its most basic level, Time banking is simply about spending an hour doing something for somebody in your community. That hour goes into the Time Bank as a Time Dollar. Then you have a Time dollar to spend on having someone doing something for you. It's a simple idea, but it has powerful ripple effects in building community connections.
Each Time Bank has a website where you list what you would like to do for other members. You look up Time Bank services online or call a community coordinator to do it for you. You earn Time Dollars after each service you perform and then you get to spend it on whatever you want from the listings.
With Time Banking, you will be working with a small group of committed individuals who are joined together for a common good. It connects you to the best in people because it creates a system that connects unmet needs with untapped resources. To see what happens each week when you are part of Time Bank is deeply fulfilling, especially if you are helping to make it run.
How does a Time Dollar exchange work?
What can I buy with Time Dollars?
What makes Time Banking so special?
Who starts Time Banks?
What have I missed (aka FAQ)?
How can I find out more about Time Banking?
Join our Discussion Group on Time Banking.
Our Mission: Strengthening communities through reciprocity
member login order contact us donate here
Solidarity Economics
Other Economies are Possible!
Organizing toward an economy of cooperation and solidarity
Ethan Miller
This article is from the July/August 2006 issue of Dollars & Sense magazine.
Subscribe Now
at a discount.
Can thousands of diverse, locally-rooted, grassroots economic projects form the basis for a viable democratic alternative to capitalism? It might seem unlikely that a motley array of initiatives such as worker, consumer, and housing cooperatives, community currencies, urban gardens, fair trade organizations, intentional communities, and neighborhood self-help associations could hold a candle to the pervasive and seemingly all-powerful capitalist economy. These "islands of alternatives in a capitalist sea" are often small in scale, low in resources, and sparsely networked. They are rarely able to connect with each other, much less to link their work with larger, coherent structural visions of an alternative economy.
Indeed, in the search for alternatives to capitalism, existing democratic economic projects are frequently painted as noble but marginal practices, doomed to be crushed or co-opted by the forces of the market. But is this inevitable? Is it possible that courageous and dedicated grassroots economic activists worldwide, forging paths that meet the basic needs of their communities while cultivating democracy and justice, are planting the seeds of another economy in our midst? Could a process of horizontal networking, linking diverse democratic alternatives and social change organizations together in webs of mutual recognition and support, generate a social movement and economic vision capable of challenging the global capitalist order?
To these audacious suggestions, economic activists around the world organizing under the banner of economía solidaria, or "solidarity economy," would answer a resounding "yes!" It is precisely these innovative, bottom-up experiences of production, exchange, and consumption that are building the foundation for what many people are calling "new cultures and economies of solidarity."
Origins of the Solidarity Economy Approach
The idea and practice of "solidarity economics" emerged in Latin America in the mid-1980s and blossomed in the mid to late 90s, as a convergence of at least three social trends. First, the economic exclusion experienced by growing segments of society, generated by deepening debt and the ensuing structural adjustment programs imposed by the International Monetary Fund, forced many communities to develop and strengthen creative, autonomous and locally-rooted ways of meeting basic needs. These included initiatives such as worker and producer cooperatives, neighborhood and community associations, savings and credit associations, collective kitchens, and unemployed or landless worker mutual-aid organizations.
The Data Commons Project
The Data Commons Project is a collaborative effort between a diverse array of organizations in the U.S. and Canada who share a mission of building and supporting the development of a democratic and cooperative economy. The goal is to collectively develop an accurate, comprehensive, public database of cooperative & solidarity-based economic initiatives in North America as a tool for democratic economic organizing. The project is working to achieve this goal through two interrelated tasks:
Creating a shared "data commons" between multiple organizations, built from existing models of open information-sharing, and involving a merger of separate organizational databases into a commonly-shared data pool.
Launching a free, public web-interface to this data commons, as a tool that can be used by many organizations and individuals working for a cooperative economy. With such an interface, users will be able to run searches by initiative name, geographical location, type of initiative or business, and product/service, as well as to add and update directory listings themselves (thus being a "self-editing directory").
Current collaborators in this project include Grassroots Economic Organizing (GEO), the U.S. Federation of Worker Cooperatives (USFWC), North American Students of Cooperation (NASCO), Cooperative Development Institute (CDI), the Regional Index of Cooperation (REGINA), Southern Appalachian Center for Cooperative Ownership (SACCO), and worker-owners from Sligo Computer Services and the Brattleboro Tech Collective.
To learn more about the Data Commons Project, or to find out how you can get involved, please contact Ethan Miller, project coordinator, by phone: (207) 946-4478 or by email: directory-@-geo.coop.
Second, growing dissatisfaction with the culture of the dominant market economy led groups of more economically privileged people to seek new ways of generating livelihoods and providing services. From largely a middle-class "counter-culture"—similar to that in the Unites States since the 1960's—emerged projects such as consumer cooperatives, cooperative childcare and health care initiatives, housing cooperatives, intentional communities, and ecovillages.
There were often significant class and cultural differences between these two groups. Nevertheless, the initiatives they generated all shared a common set of operative values: cooperation, autonomy from centralized authorities, and participatory self-management by their members.
A third trend worked to link the two grassroots upsurges of economic solidarity to each other and to the larger socioeconomic con-text: emerging local and regional movements were beginning to forge global connections in opposition to the forces of neoliberal and neocolonial globalization. Seeking a democratic alternative to both capitalist globalization and state socialism, these movements identified community-based economic projects as key elements of alternative social organization.
At the First Latin Encuentro of Solidarity Culture and Socioeconomy, held in 1998 in Porto Alegre, Brazil, participants from Brazil, Mexico, Argentina, Peru, Nicaragua, Bolivia, Colombia, and Spain created the Red latinoamericana de la economía solidaria (Latin American Solidarity Economy Network). In a statement, the Network declared, "We have observed that our experiences have much in common: a thirst for justice, a logic of participation, creativity, and processes of self-management and autonomy." By linking these shared experiences together in mutual support, they proclaimed, it would be possible to work toward "a socioeconomy of solidarity as a way of life that encompasses the totality of the human being."
Since 1998, this solidarity economy approach has developed into a global movement. The first World Social Forum in 2001 marked the creation of the Global Network of the Solidarity Socioeconomy, fostered in large part by an international working group of the Alliance for a Responsible, Plural, and United World. By the time of the 2004 World Social Forum in Mumbai, India, the Global Network had grown to include 47 national and regional solidarity economy networks from nearly every continent, representing tens of thousands of democratic grassroots economic initiatives worldwide. At the most recent World Social Forum in Venezuela, solidarity economy topics comprised an estimated one-third of the entire event's program.
Defining Solidarity Economics
But what exactly is this "solidarity economy approach"? For some theorists of the movement, it begins with a redefinition of economic space itself. The dominant neoclassical story paints the economy as a singular space in which market actors (firms or individuals) seek to maximize their gain in a context of scarce resources. These actors play out their profit-seeking dramas on a stage wholly defined by the dynamics of the market and the state. Countering this narrow approach, solidarity economics embraces a plural and cultural view of the economy as a complex space of social relationship in which individuals, communities, and organizations generate livelihoods through many different means and with many different motivations and aspirations—not just the maximization of individual gain. The economic activity validated by neoclassical economists represents, in this view, only a tiny fraction of human efforts to meet needs and fulfill desires.
What really sustains us when the factories shut down, when the floodwaters rise, or when the paycheck is not enough? In the face of failures of market and state, we often survive by self-organized relationships of care, cooperation, and community. Despite the ways in which capitalist culture generates and mobilizes a drive toward competition and selfishness, basic practices of human solidarity remain the foundation upon which society and community are built. Capitalism's dominance may, in fact, derive in no small part from its ability to co-opt and colonize these relationships of cooperation and mutual aid.
In expanding what counts as part of "the economy," solidarity economics resonates with other streams of contemporary radical economic thought. Marxist economists such as Stephen Resnick and Richard Wolff, for example, have suggested that multiple "modes of production" co-exist alongside the capitalist wage-labor mode. Feminist economists have demonstrated how neoclassical conceptions have hidden and devalued basic forms of subsistence and caregiving work that are often done by women. Feminist economic geographer J.K. Gibson-Graham, in her books The End of Capitalism (As We Knew It) (1998) and A Postcapitalist Politics (2006), synthesizes these and other streams of thought in what she calls the "diverse economies perspective." Addressing concerns that are central to the solidarity economy approach, she asks, "If we viewed the economic landscape as imperfectly colonized, homogenized, systematized, might we not find openings for projects of noncapitalist invention? Might we not find ways to construct different communities and societies, building upon what already exists?"
Indeed, the first task of solidarity economics is to identify existing economic practices—often invisible or marginal to the dominant lens—that foster cooperation, dignity, equity, self-determination, and democracy. As Carola Reintjes of the Spanish fair trade association Iniciativas de economía alternativa y solidaria (IDEAS) points out, "Solidarity economy is not a sector of the economy, but a transversal approach that includes initiatives in all sectors." This project cuts across traditional lines of formal/informal, market/non-market, and social/economic in search of solidarity-based practices of production, exchange and consumption—ranging from legally-structured worker cooperatives, which engage the capitalist market with cooperative values, to informal affinity-based neighborhood gift networks. (See "A Map of the Solidarity Economy," pp. 20-21.) At a 2000 conference in Dublin on the "Third Sector" (the "voluntary" sector, as opposed to the for-profit sector and the state), Brazilian activist Ana Mercedes Sarria Icaza put it this way: "To speak of a solidarity economy is not to speak of a homogeneous universe with similar characteristics. Indeed, the universe of the solidarity economy reflects a multiplicity of spaces and forms, as much in what we would call the 'formal aspects' (size, structure, governance) as in qualitative aspects (levels of solidarity, democracy, dynamism, and self-management)."
At its core, solidarity economics rejects one-size-fits-all solutions and singular economic blueprints, embracing instead a view that economic and social development should occur from the bottom up, diversely and creatively crafted by those who are most affected. As Marcos Arruda of the Brazilian Solidarity Economy Network stated at the World Social Forum in 2004, "a solidarity economy does not arise from thinkers or ideas; it is the outcome of the concrete historical struggle of the human being to live and to develop him/herself as an individual and a collective." Similarly, contrasting the solidarity economy approach to historical visions of the "cooperative commonwealth," Henri de Roche noted that "the old cooperativism was a utopia in search of its practice and the new cooperativism is a practice in search of its utopia." Unlike many alternative economic projects that have come before, solidarity economics does not seek to build a singular model of how the economy should be structured, but rather pursues a dynamic process of economic organizing in which organizations, communities, and social movements work to identify, strengthen, connect, and create democratic and liberatory means of meeting their needs.
Success will only emerge as a product of organization and struggle. "Innovative practices at the micro level can only be viable and structurally effective for social change," said Arruda, "if they interweave with one another to form always-broader collaborative networks and solidarity chains of production-finance-distribution-consumption-education-communication." This is, perhaps, the heart of solidarity economics—the process of networking diverse structures that share common values in ways that strengthen each. Mapping out the economic terrain in terms of "chains of solidarity production," organizers can build relationships of mutual aid and exchange between initiatives that increase their collective viability. At the same time, building relationships between solidarity-based enterprises and larger social movements builds increased support for the solidarity economy while allowing the movements to meet some of the basic needs of their participants, demonstrate viable alternatives, and thus increase the power and scope of their transformative work.
In Brazil, this dynamic is demonstrated by the Landless Workers Movement (MST). As a broad, popular movement for economic justice and agrarian reform, the MST has built a powerful program combining social and political action with cooperative, solidarity-based economics. From the establishment of democratic, cooperative settlements on land re-appropriated from wealthy absentee landlords to the development of nationwide, inter-settlement exchanges of products and services, networks of economic solidarity are contributing significantly to the sustenance of more than 300,000 families—over a million people. The Brazilian Solidarity Economy Forum, of which the MST is a part, works on an even broader scale, incorporating twelve national networks and membership organizations with twenty-one regional Solidarity Forums and thousands of cooperative enterprises to build mutual support systems, facilitate exchanges, create cooperative incubator programs, and shape public policy.
Building a Movement
The potential for building concrete local, national, and even global networks of solidarity-based support and exchange is tremendous and yet barely realized. While some countries, notably Brazil, Argentina, Colombia, Spain, and Venezuela, have created strong solidarity-economy networks linked with growing social movements, others have barely begun. The United States is an example. With the exception of the Rural Coalition/Coalición Rural, a U.S.-Mexico cross-border agricultural solidarity organization, the United States has been nearly absent from global conversations about solidarity economics. Maybe it's harder for those in the "belly of the beast" to imagine that alternatives to capitalism are possible. Are alternative economic practices somehow rendered more invisible, or more isolated, in the United States than in other parts of the world? Are there simply fewer solidarity-based initiatives with which to network?
Web Resources
•www.socioeco.org/en: Alliance for a Responsible, Plural and United World, a workgroup on the Socioeconomy of Solidarity. Currently the most comprehensive source for material in English on solidarity economy theory and practice.
•www.communityeconomies.org: Community Economies Project, an ongoing collaboration between academic and community researchers and activists in Australia, North America, and Southeast Asia, developing theories and practices around the concept of "diverse economies."
•www.trueque-marysierras.org.ar/biblioteca2.htm: A website of one of Argentina's many barter clubs; a large, excellent library of Solidarity Economy articles in Spanish.
•www.ecosol.org.br: A cooperative website maintained by a number of supporters of solidarity economy; perhaps the best library of Brazilian Solidarity Economy material available online.
Perhaps. But things are changing. An increasing number of U.S. organizations, researchers, writers, students, and concerned citizens are questioning capitalist economic dogma and exploring alternatives. A new wave of grassroots economic organizing is cultivating the next generation of worker cooperatives, community currency initiatives, housing cooperatives and collectives, community garden projects, fair trade campaigns, community land trusts, anarchist bookstores ("infoshops"), and community centers. Groups working on similar projects are making connections with each other. Hundreds of worker-owners from diverse cooperative businesses across the nation, for example, will gather in New York City this October at the second meeting of the United States Federation of Worker Cooperatives (see p. 9). In the realm of cross-sector organizing, a broad coalition of organizations is working to create a comprehensive public directory of the cooperative and solidarity economy in the United States and Canada as a tool for networking and organizing.
It takes no great stretch of the imagination to picture, within the next five to ten years, a "U.S. Solidarity Economy Summit" convening many of the thousands of democratic, grassroots economic projects in the United States to generate a stronger shared identity, build relationships, and lay the groundwork for a U.S. Solidarity Economy Alliance. Move over, CEOs of the Business Roundtable!
Wishful thinking? Maybe not. In the words of Argentinian economist and organizer Jose Luis Corragio, "the viability of social transformation is rarely a fact; it is, rather, something that must be constructed." This is a call to action.
Ethan Miller is a writer, musician, subsistence farmer, and organizer. A member of the GEO Collective and of the musical collective Riotfolk (www.riotfolk.org), he lives and works at JED, a land-based mutual-aid cooperative in Greene, Maine.
SOURCES: Marcos Arruda, "Solidarity Economy and the Rebirth of a Matristic Human Society," World Social Forum, Mumbai, India, January 2004, www.socioeco.org; José Luis Corragio, "Alternativas para o desenvolvimento humano em um mundo globalizado," Proposta No. 72, 1997; J-K Gibson-Graham, The End of Capitalism (As We Knew It), Minneapolis: University of Minnesota Press, 2006; J-K Gibson-Graham, A Postcapitalist Politics, Minneapolis: University of Minnesota Press, 2006; Ana Mercedes Sarria Icaza, "Tercer Sector y Economía Solidaria en el Sur de Brasil: características y perspectives," www.trueque-marysierras.org.ar/BLES36.zip; Latin Meeting on a Culture and a Socioeconomy of Solidarity, "Letter from Porto Alegre," Porto Alegre, Brazil, August 1998, www.socioeco.org; Euclides Mance, "Construindo a socio-economia solidária no Brasil," Report from the First Brazlilian Meeting on a Culture and Socioeconomy of Solidarity, Rio de Janeiro, June 11-18, 2000; Ethan Miller, "Solidarity Economics: Strategies for Building New Economies from the Bottom-Up and the Inside-Out," Greene, Maine. May, 2002, www.geo.coop; Carola Reintjas, "What is a Solidarity Economy?" Life After Capitalism Talks, World Social Forum III, Porto Alegre, Brazil, 2003, www.zmag.org/carolase.htm; Harriet Fraad, Stephen Resnick and Richard Wolff, Bringing It All Back Home: Class, Gender and Power in the Modern Household, London: Pluto Press, 1994; Workgroup on a Solidarity Socioeconomy, "Exchanging Visions of a Solidarity Economy: Glossary of Important Terms and Expressions," November, 2005, www.socioeco.org.
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Organizing toward an economy of cooperation and solidarity
Ethan Miller
This article is from the July/August 2006 issue of Dollars & Sense magazine.
Subscribe Now
at a discount.
Can thousands of diverse, locally-rooted, grassroots economic projects form the basis for a viable democratic alternative to capitalism? It might seem unlikely that a motley array of initiatives such as worker, consumer, and housing cooperatives, community currencies, urban gardens, fair trade organizations, intentional communities, and neighborhood self-help associations could hold a candle to the pervasive and seemingly all-powerful capitalist economy. These "islands of alternatives in a capitalist sea" are often small in scale, low in resources, and sparsely networked. They are rarely able to connect with each other, much less to link their work with larger, coherent structural visions of an alternative economy.
Indeed, in the search for alternatives to capitalism, existing democratic economic projects are frequently painted as noble but marginal practices, doomed to be crushed or co-opted by the forces of the market. But is this inevitable? Is it possible that courageous and dedicated grassroots economic activists worldwide, forging paths that meet the basic needs of their communities while cultivating democracy and justice, are planting the seeds of another economy in our midst? Could a process of horizontal networking, linking diverse democratic alternatives and social change organizations together in webs of mutual recognition and support, generate a social movement and economic vision capable of challenging the global capitalist order?
To these audacious suggestions, economic activists around the world organizing under the banner of economía solidaria, or "solidarity economy," would answer a resounding "yes!" It is precisely these innovative, bottom-up experiences of production, exchange, and consumption that are building the foundation for what many people are calling "new cultures and economies of solidarity."
Origins of the Solidarity Economy Approach
The idea and practice of "solidarity economics" emerged in Latin America in the mid-1980s and blossomed in the mid to late 90s, as a convergence of at least three social trends. First, the economic exclusion experienced by growing segments of society, generated by deepening debt and the ensuing structural adjustment programs imposed by the International Monetary Fund, forced many communities to develop and strengthen creative, autonomous and locally-rooted ways of meeting basic needs. These included initiatives such as worker and producer cooperatives, neighborhood and community associations, savings and credit associations, collective kitchens, and unemployed or landless worker mutual-aid organizations.
The Data Commons Project
The Data Commons Project is a collaborative effort between a diverse array of organizations in the U.S. and Canada who share a mission of building and supporting the development of a democratic and cooperative economy. The goal is to collectively develop an accurate, comprehensive, public database of cooperative & solidarity-based economic initiatives in North America as a tool for democratic economic organizing. The project is working to achieve this goal through two interrelated tasks:
Creating a shared "data commons" between multiple organizations, built from existing models of open information-sharing, and involving a merger of separate organizational databases into a commonly-shared data pool.
Launching a free, public web-interface to this data commons, as a tool that can be used by many organizations and individuals working for a cooperative economy. With such an interface, users will be able to run searches by initiative name, geographical location, type of initiative or business, and product/service, as well as to add and update directory listings themselves (thus being a "self-editing directory").
Current collaborators in this project include Grassroots Economic Organizing (GEO), the U.S. Federation of Worker Cooperatives (USFWC), North American Students of Cooperation (NASCO), Cooperative Development Institute (CDI), the Regional Index of Cooperation (REGINA), Southern Appalachian Center for Cooperative Ownership (SACCO), and worker-owners from Sligo Computer Services and the Brattleboro Tech Collective.
To learn more about the Data Commons Project, or to find out how you can get involved, please contact Ethan Miller, project coordinator, by phone: (207) 946-4478 or by email: directory-@-geo.coop.
Second, growing dissatisfaction with the culture of the dominant market economy led groups of more economically privileged people to seek new ways of generating livelihoods and providing services. From largely a middle-class "counter-culture"—similar to that in the Unites States since the 1960's—emerged projects such as consumer cooperatives, cooperative childcare and health care initiatives, housing cooperatives, intentional communities, and ecovillages.
There were often significant class and cultural differences between these two groups. Nevertheless, the initiatives they generated all shared a common set of operative values: cooperation, autonomy from centralized authorities, and participatory self-management by their members.
A third trend worked to link the two grassroots upsurges of economic solidarity to each other and to the larger socioeconomic con-text: emerging local and regional movements were beginning to forge global connections in opposition to the forces of neoliberal and neocolonial globalization. Seeking a democratic alternative to both capitalist globalization and state socialism, these movements identified community-based economic projects as key elements of alternative social organization.
At the First Latin Encuentro of Solidarity Culture and Socioeconomy, held in 1998 in Porto Alegre, Brazil, participants from Brazil, Mexico, Argentina, Peru, Nicaragua, Bolivia, Colombia, and Spain created the Red latinoamericana de la economía solidaria (Latin American Solidarity Economy Network). In a statement, the Network declared, "We have observed that our experiences have much in common: a thirst for justice, a logic of participation, creativity, and processes of self-management and autonomy." By linking these shared experiences together in mutual support, they proclaimed, it would be possible to work toward "a socioeconomy of solidarity as a way of life that encompasses the totality of the human being."
Since 1998, this solidarity economy approach has developed into a global movement. The first World Social Forum in 2001 marked the creation of the Global Network of the Solidarity Socioeconomy, fostered in large part by an international working group of the Alliance for a Responsible, Plural, and United World. By the time of the 2004 World Social Forum in Mumbai, India, the Global Network had grown to include 47 national and regional solidarity economy networks from nearly every continent, representing tens of thousands of democratic grassroots economic initiatives worldwide. At the most recent World Social Forum in Venezuela, solidarity economy topics comprised an estimated one-third of the entire event's program.
Defining Solidarity Economics
But what exactly is this "solidarity economy approach"? For some theorists of the movement, it begins with a redefinition of economic space itself. The dominant neoclassical story paints the economy as a singular space in which market actors (firms or individuals) seek to maximize their gain in a context of scarce resources. These actors play out their profit-seeking dramas on a stage wholly defined by the dynamics of the market and the state. Countering this narrow approach, solidarity economics embraces a plural and cultural view of the economy as a complex space of social relationship in which individuals, communities, and organizations generate livelihoods through many different means and with many different motivations and aspirations—not just the maximization of individual gain. The economic activity validated by neoclassical economists represents, in this view, only a tiny fraction of human efforts to meet needs and fulfill desires.
What really sustains us when the factories shut down, when the floodwaters rise, or when the paycheck is not enough? In the face of failures of market and state, we often survive by self-organized relationships of care, cooperation, and community. Despite the ways in which capitalist culture generates and mobilizes a drive toward competition and selfishness, basic practices of human solidarity remain the foundation upon which society and community are built. Capitalism's dominance may, in fact, derive in no small part from its ability to co-opt and colonize these relationships of cooperation and mutual aid.
In expanding what counts as part of "the economy," solidarity economics resonates with other streams of contemporary radical economic thought. Marxist economists such as Stephen Resnick and Richard Wolff, for example, have suggested that multiple "modes of production" co-exist alongside the capitalist wage-labor mode. Feminist economists have demonstrated how neoclassical conceptions have hidden and devalued basic forms of subsistence and caregiving work that are often done by women. Feminist economic geographer J.K. Gibson-Graham, in her books The End of Capitalism (As We Knew It) (1998) and A Postcapitalist Politics (2006), synthesizes these and other streams of thought in what she calls the "diverse economies perspective." Addressing concerns that are central to the solidarity economy approach, she asks, "If we viewed the economic landscape as imperfectly colonized, homogenized, systematized, might we not find openings for projects of noncapitalist invention? Might we not find ways to construct different communities and societies, building upon what already exists?"
Indeed, the first task of solidarity economics is to identify existing economic practices—often invisible or marginal to the dominant lens—that foster cooperation, dignity, equity, self-determination, and democracy. As Carola Reintjes of the Spanish fair trade association Iniciativas de economía alternativa y solidaria (IDEAS) points out, "Solidarity economy is not a sector of the economy, but a transversal approach that includes initiatives in all sectors." This project cuts across traditional lines of formal/informal, market/non-market, and social/economic in search of solidarity-based practices of production, exchange and consumption—ranging from legally-structured worker cooperatives, which engage the capitalist market with cooperative values, to informal affinity-based neighborhood gift networks. (See "A Map of the Solidarity Economy," pp. 20-21.) At a 2000 conference in Dublin on the "Third Sector" (the "voluntary" sector, as opposed to the for-profit sector and the state), Brazilian activist Ana Mercedes Sarria Icaza put it this way: "To speak of a solidarity economy is not to speak of a homogeneous universe with similar characteristics. Indeed, the universe of the solidarity economy reflects a multiplicity of spaces and forms, as much in what we would call the 'formal aspects' (size, structure, governance) as in qualitative aspects (levels of solidarity, democracy, dynamism, and self-management)."
At its core, solidarity economics rejects one-size-fits-all solutions and singular economic blueprints, embracing instead a view that economic and social development should occur from the bottom up, diversely and creatively crafted by those who are most affected. As Marcos Arruda of the Brazilian Solidarity Economy Network stated at the World Social Forum in 2004, "a solidarity economy does not arise from thinkers or ideas; it is the outcome of the concrete historical struggle of the human being to live and to develop him/herself as an individual and a collective." Similarly, contrasting the solidarity economy approach to historical visions of the "cooperative commonwealth," Henri de Roche noted that "the old cooperativism was a utopia in search of its practice and the new cooperativism is a practice in search of its utopia." Unlike many alternative economic projects that have come before, solidarity economics does not seek to build a singular model of how the economy should be structured, but rather pursues a dynamic process of economic organizing in which organizations, communities, and social movements work to identify, strengthen, connect, and create democratic and liberatory means of meeting their needs.
Success will only emerge as a product of organization and struggle. "Innovative practices at the micro level can only be viable and structurally effective for social change," said Arruda, "if they interweave with one another to form always-broader collaborative networks and solidarity chains of production-finance-distribution-consumption-education-communication." This is, perhaps, the heart of solidarity economics—the process of networking diverse structures that share common values in ways that strengthen each. Mapping out the economic terrain in terms of "chains of solidarity production," organizers can build relationships of mutual aid and exchange between initiatives that increase their collective viability. At the same time, building relationships between solidarity-based enterprises and larger social movements builds increased support for the solidarity economy while allowing the movements to meet some of the basic needs of their participants, demonstrate viable alternatives, and thus increase the power and scope of their transformative work.
In Brazil, this dynamic is demonstrated by the Landless Workers Movement (MST). As a broad, popular movement for economic justice and agrarian reform, the MST has built a powerful program combining social and political action with cooperative, solidarity-based economics. From the establishment of democratic, cooperative settlements on land re-appropriated from wealthy absentee landlords to the development of nationwide, inter-settlement exchanges of products and services, networks of economic solidarity are contributing significantly to the sustenance of more than 300,000 families—over a million people. The Brazilian Solidarity Economy Forum, of which the MST is a part, works on an even broader scale, incorporating twelve national networks and membership organizations with twenty-one regional Solidarity Forums and thousands of cooperative enterprises to build mutual support systems, facilitate exchanges, create cooperative incubator programs, and shape public policy.
Building a Movement
The potential for building concrete local, national, and even global networks of solidarity-based support and exchange is tremendous and yet barely realized. While some countries, notably Brazil, Argentina, Colombia, Spain, and Venezuela, have created strong solidarity-economy networks linked with growing social movements, others have barely begun. The United States is an example. With the exception of the Rural Coalition/Coalición Rural, a U.S.-Mexico cross-border agricultural solidarity organization, the United States has been nearly absent from global conversations about solidarity economics. Maybe it's harder for those in the "belly of the beast" to imagine that alternatives to capitalism are possible. Are alternative economic practices somehow rendered more invisible, or more isolated, in the United States than in other parts of the world? Are there simply fewer solidarity-based initiatives with which to network?
Web Resources
•www.socioeco.org/en: Alliance for a Responsible, Plural and United World, a workgroup on the Socioeconomy of Solidarity. Currently the most comprehensive source for material in English on solidarity economy theory and practice.
•www.communityeconomies.org: Community Economies Project, an ongoing collaboration between academic and community researchers and activists in Australia, North America, and Southeast Asia, developing theories and practices around the concept of "diverse economies."
•www.trueque-marysierras.org.ar/biblioteca2.htm: A website of one of Argentina's many barter clubs; a large, excellent library of Solidarity Economy articles in Spanish.
•www.ecosol.org.br: A cooperative website maintained by a number of supporters of solidarity economy; perhaps the best library of Brazilian Solidarity Economy material available online.
Perhaps. But things are changing. An increasing number of U.S. organizations, researchers, writers, students, and concerned citizens are questioning capitalist economic dogma and exploring alternatives. A new wave of grassroots economic organizing is cultivating the next generation of worker cooperatives, community currency initiatives, housing cooperatives and collectives, community garden projects, fair trade campaigns, community land trusts, anarchist bookstores ("infoshops"), and community centers. Groups working on similar projects are making connections with each other. Hundreds of worker-owners from diverse cooperative businesses across the nation, for example, will gather in New York City this October at the second meeting of the United States Federation of Worker Cooperatives (see p. 9). In the realm of cross-sector organizing, a broad coalition of organizations is working to create a comprehensive public directory of the cooperative and solidarity economy in the United States and Canada as a tool for networking and organizing.
It takes no great stretch of the imagination to picture, within the next five to ten years, a "U.S. Solidarity Economy Summit" convening many of the thousands of democratic, grassroots economic projects in the United States to generate a stronger shared identity, build relationships, and lay the groundwork for a U.S. Solidarity Economy Alliance. Move over, CEOs of the Business Roundtable!
Wishful thinking? Maybe not. In the words of Argentinian economist and organizer Jose Luis Corragio, "the viability of social transformation is rarely a fact; it is, rather, something that must be constructed." This is a call to action.
Ethan Miller is a writer, musician, subsistence farmer, and organizer. A member of the GEO Collective and of the musical collective Riotfolk (www.riotfolk.org), he lives and works at JED, a land-based mutual-aid cooperative in Greene, Maine.
SOURCES: Marcos Arruda, "Solidarity Economy and the Rebirth of a Matristic Human Society," World Social Forum, Mumbai, India, January 2004, www.socioeco.org; José Luis Corragio, "Alternativas para o desenvolvimento humano em um mundo globalizado," Proposta No. 72, 1997; J-K Gibson-Graham, The End of Capitalism (As We Knew It), Minneapolis: University of Minnesota Press, 2006; J-K Gibson-Graham, A Postcapitalist Politics, Minneapolis: University of Minnesota Press, 2006; Ana Mercedes Sarria Icaza, "Tercer Sector y Economía Solidaria en el Sur de Brasil: características y perspectives," www.trueque-marysierras.org.ar/BLES36.zip; Latin Meeting on a Culture and a Socioeconomy of Solidarity, "Letter from Porto Alegre," Porto Alegre, Brazil, August 1998, www.socioeco.org; Euclides Mance, "Construindo a socio-economia solidária no Brasil," Report from the First Brazlilian Meeting on a Culture and Socioeconomy of Solidarity, Rio de Janeiro, June 11-18, 2000; Ethan Miller, "Solidarity Economics: Strategies for Building New Economies from the Bottom-Up and the Inside-Out," Greene, Maine. May, 2002, www.geo.coop; Carola Reintjas, "What is a Solidarity Economy?" Life After Capitalism Talks, World Social Forum III, Porto Alegre, Brazil, 2003, www.zmag.org/carolase.htm; Harriet Fraad, Stephen Resnick and Richard Wolff, Bringing It All Back Home: Class, Gender and Power in the Modern Household, London: Pluto Press, 1994; Workgroup on a Solidarity Socioeconomy, "Exchanging Visions of a Solidarity Economy: Glossary of Important Terms and Expressions," November, 2005, www.socioeco.org.
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