Returning to Reciprocity: Reconceptualizing Economics and Development Through an Indigenous Economics for the Twenty-First Century

  Stephen M. Sachs, IUPUI
Christina A. Clamp, Southern New Hampshire University 1

This is the second of two papers on the theme of what contemporary societies would be like if they functioned according to traditional economic values. The first paper, on politics and government, given at the 2014 Western Social Science Association Southwest Popular/American Culture Meeting was published in revised form as, "Expanding the Circle: Developing an American Indian Political Theory for Living Well in the Twenty-First Century," in Indigenous Policy, Vol. XXV, No. 2, Fall 2014, Some topics on economics were developed in that paper, and thus are only covered briefly here, with reference to the first paper.

Returning to Reciprocity

Many of the world's current major problems are directly related to the narrow, reductionist 2 approach of much of mainstream economics (particularly neoclassical economics), with the focus on economics as profit and loss mostly of the individual firm or economic actor, with inadequate concern for public goods or externalities (though some economists, including many macro-institutional, environmental and certain socialist economists, do much better). 3 This is particularly the case concerning the environmental crisis (as developed in “Climate Change, Environmental Decay, and Indigenous People: An Indigenous Approach to Reclaiming the Circle of the World,” given at the 2008 Southwest Popular/American Culture Meeting). But it is also the case with much of the suffering and violence troubling the world. Failure to develop and maintain adequate, balanced economies providing high levels of employment and fulfilling human needs in a sufficient and relatively equalitarian manner has produced and worsened many damaging developments, though there are also other causes.

For example, much of the turmoil in the Middle East since 2000 has economic causes and accelerants. The Arab Spring in Tunisia, and across the region, for instance, arose in part from very high youth unemployment and other economic problems. 4 Similarly, the Syrian Civil War was triggered by the government's failure to deal with the huge number of impoverished people forced off their farm land by the agriculture destroying drought, 5 an impact of global warming induced climate change. This environmental crisis resulted largely from business and government economic values that focused primarily on profits with little concern for externalized costs and public goods, and a development model which emphasized the maximizing of unending growth, measured largely in terms of gross national product (GNP), emphasizing increasing income (especially corporate profits) and jobs, but little else. Similarly, racism, has become much more serious because of economic inequities, as when jobs, and/or good jobs, are hard to get, many people feeling threatened look for someone to blame, and all the more so if they are viewed as competitors for jobs. 6 This can be seen in western Europe in 2014, suffering from a tenuous economy and high unemployment, in the rising feelings against Middle Easterners and North Africans (mostly Muslims), as well as East Europeans coming to their countries either directly or indirectly in large part for economic reasons. 7.

From a Native viewpoint, as previously discussed, economics needs to be about relationships, and working to maintain, and recreate a balanced web of relations among people, and with all beings including the Earth. Thus economics is primarily a sociology 8 that includes not only relations among people, but with the environment of which it is becoming clearer and clearer that human beings are a part, and have to take into account for their own welfare. American Indian societies, and Indigenous nations around the world, have generally done quite well in creating and maintaining such balances. Out of necessity, they have refrained from taking more from their environment than needed, and have undertaken long term, as well as short and medium term, planning in their decision making, taking into account their relations with the environment, and amongst the members of their band, tribe or confederacy. Similar short, medium and long term planning is needed in contemporary societies.

Moreover, as developed in the previous paper, decision making about economics as well as other aspects of public policy needs to be participatory. That requires an informed citizenry and transparent governmental and economic processes. Further, from the point of view of pragmatic Indigenous peoples, policy approaches, and the policies themselves, need to be based on principles and factual findings long observed as being correct and viable (today one would say based on sound science): aimed at appropriate ends and in fact designed to attain, or at least sufficiently move toward, them. As is developed here, much of mainstream economic policy meets neither standard, and an alternative approach is much needed.

An important factor in the socio-economic success of most traditional tribal societies has been that assisting others, particularly those less well off, and the nation as a whole has been highly honored, while advancing one's own interest at the expense of the community, including accumulating without sharing, was considered dishonorable. In tribal and band societies, community pressure - positive and negative - generally has been sufficient incentive to keep almost all community members advancing community interests in the course of furthering their own interests. This was partly so because as a practical matter in labor intensive communities people need the cooperation and support of each other. Indeed, a major aspect of being tribal is identifying with the community to he extent that one feels good about oneself largely in terms of one's ability to contribute to and assist the community and its members.

At the current stage of societal evolution, such moral and public opinion incentives are helpful, but insufficient to achieve socially beneficial behavior, particularly in what is normally considered economic activity. Today, significant economic incentives quite often are necessary as a major instrument to keep individual economic and business behavior socially beneficial, and to keep society in balance. Mainstream market economic theory, going back to Adam Smith, John Locke and their colleagues, claims to achieve this through competition in the market, but because of a combination of the failure of current economic incentives to adequately take into account externalities and public goods, combined with imbalances in the economy, resulting from and contributing to, great differences in market power, the contemporary market in current capitalist societies too often divisively promotes private interest over the public good. Thus, as some socialist critiques of capitalist markets assert, instead of promoting the general welfare, too often the concept of the invisible hand of the market is a cover for the dirty hand of the antisocially behaving economic actor. 9

Creating, Maintaining and Restoring Economic Balance

Economic systems, whether they are market based or take some other form, are human creations, put into effect by governments. These systems operate following the decisions and non-decisions made consciously or unconsciously by those who create, maintain and modify them. The outcomes of the interactions within an economic system, as within a game, are determined by the actions (and non-actions) of the participants - including those who are supposed to carry out or enforce the "rules" of the system or game, in given circumstances. This includes how perceptive and creative participants are in understanding and acting upon their opportunities. Economic systems will function differently according to the circumstance, and may be modified or transformed either by changes in circumstance, or by conscious or unconscious actions or inactions by those who govern the system. For example, a market system often tends to concentrate wealth over time in fewer and fewer hands, as those with some advantage or good fortune gain market power, which allows them to further increase their share of market power and wealth. Consequently, an equalitarian "free" market may be transformed into an oligopolistic or monopolistic economic system with no change in governance. But changes in governance - in the rules that actually apply - may also change, or prevent a change, in the operation of the system.

As developed at length in the previous paper on politics, Native societies generally functioned quite well for almost all their members because they operated in a participatory equalitarian fashion on the basis of mutual respect, dispersing and essentially equalizing power, including economic power and wealth. To obtain equivalent benefits for citizens of communities today, the same equalitarian values need to be applied to create, maintain and renew participatory societies. In the economic sphere this requires establishing and maintaining relatively equal distribution of wealth and of control of  economic institutions, and, indeed, of economic, as well as all other sources of power. 10 This can only be attained and maintained in a fully participatory society, with a participatory economy, in which virtually all institutions, including economic institutions are participatory. Such an economy, except for very small enterprises, would be composed of democratically operated worker cooperatives, and supporting participatory institutions, such as the Mondragon Cooperatives, briefly considered in the preceding paper on politics, and discussed more fully below.

But, just having an economy of democratically run business and related institutions is not sufficient. For instance, in the case of Yugoslav self-management, as was shown in the preceding paper, without adequate antitrust laws and other regulation and balancing actions, in what some called " laissez faire socialism, the market moved rapidly toward a quite oligopolistic economy. Movement toward oligopoly and monopoly is a multifold problem. As discussed in the politics paper, concentration of power undermines political democracy. It also is an economic aberration, first because it skews the market towards the interests of the larger firms that can use their market power for their own economic interest over others, so that market forces no longer function for economic efficiency. For example, a large firm with more resources can hold out longer in a price war than a more efficient smaller one that may be able to offer better products at a lower cost. If the larger firm can drive enough of its competition out of business through temporarily sustaining losses by selling at below cost prices, then, in the absence of effective competition, it can raise prices as high as the market can bear.

In addition, larger firms have advantages of economy of scale that increase their market power over smaller ones. For example, a large firm may receive discounts for purchasing in larger quantities, than a small firm, leading to lower costs. In addition, a large firm can attract more customers through a greater ability to advertise, than a smaller firm offering the same product with higher quality, even at a lower price. Thus, larger less efficient firms can gain monopoly positions allowing them to charge more than properly operating market forces allow, and to readily sell lower quality or less desirable products to consumers, who due to the absence of meaningful competition have little or no choice.  Moreover, there are diseconomies of scale. For instance, beyond a certain point, the larger an organization becomes, which at least potentially gives it more power, the less efficient it becomes, as the Mondragon cooperatives, discussed below, discovered. 11

A major problem for the effectiveness and economic efficiency of firms as they grow is the increase in communication and coordination costs. In hierarchical organizations this leads to increasing numbers of managers with a rising ratio of managers to productive workers in an increasing number of layers of organization. As discussed in the previous paper, this increases the cost of communication and lessens the accuracy of information on which higher-level decisions are based, while lowering the accuracy of understanding of decisions as the communication distance grows. Democratic organizations have a similar rise in communication cost with growth. Either teams become unwieldy as they grow, or as the firm enlarges the number of teams expands, requiring additional coordinating teams, and more time discussing issues. In both the case of hierarchical and democratic organizations, the larger the organization becomes, often above 200 - 300 members, the less people know and understand each other. Like everything else, this has some advantages, but these tend to be outweighed by the disadvantages. A partial solution to the problems of size is decentralizing the firm to become a federation. In the postmodern world of great complexity, this well may be the best practical approach to balancing the needs of organizational and economic efficiency with other aspects of effectiveness, but it is important to note that it does not fully minimize economic and organizational cost related to size.

One aspect of the problem of size was the subject of a study of the financial sector in the United States by Stephen G Cecchetti and Enisse Kharroubi, the Bank for International Settlements, "Why does financial sector growth crowd out real economic growth?," in February 2015. 12 The authors found that financial sector "growth disproportionately harms financially dependent and R&D-intensive industries." large banks, in order to protect their investments, tend to invest in firms that have sufficient collateral, often in real property. But these are often the less entrepreneurial organizations than those that are researching and making new developments that in the medium and long term contribute more to the economy. Thus large financial institutions underfund research and development, and developers of new ideas and products often need to seek funding from smaller venture capital organizations. But as money becomes more concentrated in large financial organizations, less funding becomes available for venture capital. In addition, as financial institutions grow and become a larger portion of the economy, they attract an increasing number of talented people who otherwise would apply their brainpower and productivity in organizations directly producing and developing products and services. Moreover, as the financial sector has grown in the United States, it has more and more been found to act for its own and not society's advantage. Further, the financial sector accounted for 15 to 25 percent of the overall increase in wage inequality from 1980 to 2006. 13

Thus government must be vigilant in foreseeing, and seeing and correcting developing imbalances in market power, and other misbalancing forces and practices, that naturally will occur quite frequently, employing whatever means are appropriate. This can include such measures as changes in: regulations, taxes, subsidies, services, government interventions in purchasing, ease of obtaining credit, and so forth. But this also requires strategic planning to harmonize public and private interest and power for the public good. 14

The "Economic" advantages of a Democratic Economy

It needs to be noted that in general, an economy well balanced in terms of equality of wealth, and economic and market power tends to be more efficient, productive and stable than one hierarchically structured in terms of wealth and power. 15 To begin with, the basis of a modern economy is "bottom up". Experience has shown that "trickle down" economic policies produce less total wealth. When money is available at the bottom and middle of the economy it is more quickly spent in the community, particularly in socially more valuable items, and recirculated with a multiplier effect, than is the case with money at the top of the economy. Thus, the same amount of wealth has a greater power when it is more evenly distributed in a society than when it is concentrated in fewer hands. Similarly, with higher employment, more people are contributing to the economy, and fewer who are simply taking from it.

Thus austerity policies which try to balance government budgets, by lowering spending, have the negative effect of lowering employment and making less money available to consumers. This reduces consumer spending and economic activity. This in turn tends both to deflate prices as well as sales, lowering tax income, and hence government income. The result tends to be a continuing downward spiral, as has occurred in the Great Recession beginning in 2008 in Spain, 16  Portugal, 17 and Greece (where the economy shrank 25%), 18 and in Germany in the 1930s, helping to bring Hitler to power. 19 By contrast in the Great Depression of the 1930s in United States, the New Deal spending on programs and people stopped the collapse, and expanded the economy while investing in infrastructure of many kinds and assisting people, largely by putting them to work in rebuilding the economy, but also increasing education and training which in an expanding technological age is essential for individual and societal economic advancement. But when the government cut back on spending in 1937, the recession increased, until returning to more public spending again decreased it. 20 The economist J. M. Keynes advocated governments spending money and increasing public debt in the downturn of economic cycles, and balancing that by increasing taxes relative to spending in strong economic times to pay off public debt and build up a surplus, while curbing inflation. 21

The approach of cutting taxes, particularly on the wealthy, rather than increasing government spending, has been a much less effective means of stimulating the economy. Government spending significantly increases the amount of money going to low and middle income people, who spend most of it, giving the economy a boost. By contrast, with tax cuts, people of low to moderate incomes receive a relatively smaller amount of money, which may increase their spending, but only to a limited extent (or may not increase spending, to the extent people use the additional money to pay bills or reduce debt).  Meanwhile, only a small portion of the larger amount of money that tax cuts give to wealthier people gets spent. And while the well to do may be more able to make investments that would lead to more job creation, there is no incentive to do so if there is little or no demand for additional products of services. 22 Thus during the recent Great Recession, many large firms simply sat on large amounts of saved capital, and much unneeded money held by wealthy individuals went into speculative spending, which contributed very little to the economy. Indeed such speculation often creates bubbles, which when they break, bring economic downturns, which can be deep recessions or depressions. This has happened repeatedly in U.S. history, 23 including the real-estate collapse triggering the stock market crash that began the Great Depression, the 1980s Savings and Loan Scandal, and the insecure mortgage scandal of the early 2000s that brought on the Great Recession. 24

Consequently, there have been calls by some for highly graduated income taxes, which tend to promote equality of wealth and discourage speculation, as well as small transaction taxes on sales of securities that also tend to discourage speculation. Indeed, the great economic collapses in modern economies have generally taken place when income disparities and concentration of wealth have been quite great, in large part because of the factors discussed here. (It is important to note in dealing with actual situations, that many factors are always involved and one needs to look at the uniqueness of each situation in order to have a good understanding of it, something that is too often missed in the reductionist over simplification of neoclassical economic theory).

A society or an organization that supports all its members is making a financial investment that reaps considerable economic reward, in the traditional sense, for the whole society, in addition to improving the overall quality of life. Social research makes this very clear. For example, on the basis of surveying the literature in the field, the 2007 GAO Report to Congressional Requesters , Poverty in America: Economic Research Shows Adverse Impacts on Health, Status and Other Social Conditions as well as on the Economic Growth Rate, found,

Economic research suggests individuals living in poverty face an increased risk of adverse outcomes, such as poor health and criminal activity, both of which may lead to reduced participation in the labor market. While the mechanisms by which poverty affects health are complex, some research suggests that adverse health outcomes are due, in part, to limited access to health care as well as exposure to environmental hazards and engaging in risky behaviors. For example, some research has shown that increased availability of health insurance such as Medicaid for low-income mothers led to a decrease in infant mortality. Likewise, exposure to high levels of air pollution from living in urban areas close to highways can lead to acute health conditions. Data suggest that engaging in risky behaviors, such as tobacco and alcohol use, a comparatively sedentary life-style, and a low consumption of nutritional foods can account for some portion of the health disparities between lower and upper income groups. The economic research we reviewed also points to links between poverty and crime. For example, one study indicated that higher levels of unemployment are associated with higher levels of property crime. The relationship between poverty and adverse outcomes for individuals is complex, in part because most variables, like health status, can be both a cause and a result of poverty. Regardless of whether poverty is a cause or an effect, the conditions associated with poverty can limit the ability of individuals to develop the skills, abilities, knowledge, and habits necessary to fully participate in the labor force.

Research shows that poverty can negatively impact economic growth by affecting the accumulation of human capital and rates of crime and social unrest. Economic theory has long suggested that human capital—that is, the education, work experience, training, and health of the workforce—is considered one the fundamental drivers of economic growth. The conditions associated with poverty can work against this human capital development by limiting individuals’ ability to remain healthy and develop skills, in turn decreasing the potential to contribute talents, ideas, and even labor to the economy. An educated labor force, for example, is better at learning, creating, and implementing new technologies. Economic theory suggests that when poverty affects a significant portion of the population, these effects can extend to the society at large and produce slower rates of growth. Although historically research has focused mainly on the extent to which economic growth alleviates poverty, some recent empirical studies have begun to demonstrate that higher rates of poverty are associated with lower rates of growth in the economy as a whole. For example, areas with higher poverty rates experience, on average, slower per capita income growth rates than low-poverty areas. 25

People who feel supported, generally feel good about themselves and the community that empowers them, and though other factors are involved, generally achieve more and contribute more to their communities. Moreover, providing quality education and training to all who have the ability to succeed in education appropriate to them is essential for the high quality workforce necessary for an economy to function well. Those who may have difficulties in achieving in educational processes, if properly supported, usually can succeed and ultimately contribute significantly to society. Conversely, people who do not have educational opportunity or necessary support may not be employable, or may only be minimally employable. Thus, society loses their contributions to the economy and the quality of life in the community, while they become economic drags on society. If there are many such people, the failure to make the relatively small investment to support their development has a high cost to society.

In addition, social services impact productivity. For example, people who are supported by adequate healthcare and other services are more likely to participate in the workforce, and contribute consistently and well. Those lacking health and other services they need, usually will participate in the workforce at a lower rate, and will more often perform less well, or inconsistently. For example people who are working, but have physical or mental health problems for which they do not have adequate, or any, treatment, are more likely to miss work, to work unevenly, make more mistakes and cause more accidents than those who are healthy or have adequate treatment. This may also lead to higher turnover in organizations, bringing additional costs to employers and ultimately the economy as a whole. 

The Need for Adequate Measures and Policy Driving Research

In the multifaceted world of today, maintaining a society providing a high quality of life for all of its citizens, which is well balanced in all of its internal and external relations, as well as with the environment, not only for the moment, but into the near and more distant future, requires appropriate, 26 adequate measures and institutions to research them, with careful nonpartisan analysis to make well-crafted policy proposals. In a complex and continually changing world, in which there are always unintended consequences of actions, as well shifting conditions and needs, review of ongoing policy and its application, along with developing policy requirements, needs to be continually undertaken and reported.

Examples of the kinds of research institutions which are needed include the Congressional Budget Office (CBO) which advises the U.S. Congress on the past and likely future outcomes of existing and proposed policies, as well as on the problems and alternative means of improvement in the operation of government agencies. 37 Similarly, The Governmental Accountability Office (GAO), "the audit, evaluation, and investigative arm of the Congress, exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. We examine the use of public funds; evaluate federal programs and policies; and provide analyses, recommendations, and other assistance to help the Congress make informed oversight, policy, and funding decisions." 28 Such high quality nonpartisan research groups are likely needed at every level of government, and in every field of concern, to advise those public entities and the public about relevant issues and developments. In a participatory society, policy related research needs to be aimed at enhancing public discussion, through such vehicles as are discussed in the preceding politics paper, with private research organizations contributing to the discussion, while the findings of public think tanks are readily available to the citizenry, restricted only by appropriate protections for privacy and security.

Such measures and research ought to be aimed at instituting and adjusting policies continually to provide good quality of life for all citizens, so as to empower people to develop and unfold who they are. This should be undertaken to provide the maximum meaningful positive choices that are personally and socially beneficial in a continually changing world. In traditional economic terms, this means investing in people and their development. The research to do this properly involves advising on what services and regulations are, and are not, required, and how to undertake and revise them as needed. This means ending programs that are no longer useful, beginning new efforts where required, and adjusting all that is done to changing needs and conditions. This also means allowing individuals and private organizations to do for themselves and each other whatever they are able to do well, and, when appropriate, empowering them with well constituted incentives (e.g. tax deductions for charitable contributions, and tax credits for investing in solar panels to generate electricity). It means, as is discussed in the politics chapter concerning "reinventing government," deciding when it is better for a public service to be carried out by government organizations, and when it is best to contract out the work of achieving public ends. This also encompasses deciding when regulation is best undertaken directly setting and enforcing standards, and when it is more effective and beneficial to regulate indirectly through an incentive system, to make the regulation process as economically efficient as possible (such as reducing global warming producing carbon dioxide pollution through a carbon trading program, if properly undertaken, which most have not been). 29

Thus ongoing research is needed to continually reinvent government, debureaucratizing it as much as possible, making it as effective and efficient as practicable in terms of attaining its objectives, while minimizing costs and keeping the administrative process as participatory as possible. 30 Just as participatory businesses find it increases their effectiveness to use as many relevant qualitative and quantitative measures of their operation and performance as possible, so it is with government.

Some Examples of Appropriate Measures

In order to make good public decisions in a participatory society, and keep all its many dimensions and aspects in balance, a great many qualitative and quantitative measures need to taken and appropriately analyzed covering every aspect of society. Traditional mainstream economic statistics are relevant for some of the technical aspects of keeping the economy moving appropriately - such as looking at the rates of inflation and employment. However, it is important to put a heavy emphasis on quality of life indicators, which are most directly related to the ends of society, and to realize that those measures are ultimately, and often directly, impacted by all the others - and that interrelationship needs to be kept in mind.

Several organizations in the United States have developed sets of measures that are suggestive of what needs to be undertaken. Measure for America, a Project of the Social Science Research Council, provides "easy-to-use yet methodologically sound tools for understanding well-being and opportunity in America and to stimulate fact-based dialogue about issues we care about: health, education and income. 31 The Measure of America 2013–2014, applies the Human Development Index and other data to produce national, state and major urban area reports on how people in the U.S. are faring in the three areas. 32 Similarly, Opportunity Nation tabulates the Opportunity Index, "an annual composite measure at the state and county levels of economic, educational and civic factors that foster opportunity and is designed to help identify concrete solutions to lagging conditions for opportunity and economic mobility. From preschool enrollment to internet access, from volunteerism to access to healthy foods, expanding opportunity depends on the intersection of multiple factors. The Opportunity Index was jointly developed by Opportunity Nation and Measure of America, and measures 16 indicators, scoring all 50 states plus Washington DC on a scale of 0-100 each year. In addition, more than 2, 600 counties are graded A-F, giving policymakers and leaders a useful tool to identify areas for improvement and to gauge progress over time." 33

   Indicative of some of the many other concerns is the National Index of Violence and Harm (NIVAH), "developed in 2000 by a team of researchers at Manchester College. The goals of this project are to quantify levels of violence and harm done to people in the United States and identify trends over time. The initial version of the Index, spanning the years 1995-98, was released in December, 2000." 34 NIVAH measures both personal and societal violence and harm relative to the baseline year 1995. The personal index encompasses measures of both interpersonal and intrapersonal violence and harm, with the interpersonal foci: homicide, sexual offenses, battery, robbery, and reckless behavior) and the intrapersonal variables: suicide/self-injury and deaths from substance abuse (smoking, alcohol, and other drugs). The societal index includes institutional and structural indicators. Institutional violence is violence caused by the action of societal institutions and their agents carrying out their institutionally defined roles, in government - in this case by law enforcement and correctional institutions - and by corporations - consisting of air pollution, injuries from products, and occupational injuries - and by the institution of the family - covering domestic violence and child abuse/neglect. Structural violence is violence that arises from the structure or hierarchies of United States society. This encompasses several items.

Social negligence represents basic human needs which are left unaddressed by society at large. We have defined “basic” needs to include food, housing, health care and education, and have incorporated related measures of unmet need. Infant mortality and life expectancy, while not direct indicators of structural violence, provide general indicators the quality of life and health care that is provided through the overall organization of society. Hate crimes occur due to prejudice and enmity between various social and ethnic groups. Employment discrimination is a measure of active bias on the part of those with economic/decision-making power against groups with lesser power. Poverty disparity measures imbalances in the poverty levels between different sub-populations such as racial, age, and gender groups. Gang membership is used as a marker for those who are deprived of basic family and community resources (or are otherwise disenfranchised from the mainstream culture) and are thus less likely to benefit from societal improvements in education, employment, health care, economics, etc. 35

Measures Concerning the Environment and Its Relationship to the Economy

Measures relating to the environmental conditions and related public policy are always important, but have become most essential in the current set of environmental crises. Dealing with environmental issues involves complex short, medium and long term questions involving numerous aspects of relations between people and the physical environment, especially concerning human economic activity, from the local to the regional, national and international levels. A great deal of data analysis and projection of alternative futures depending on how people and governments respond to environmental problems is already being undertaken by a variety of scientific and policy organizations and networks. Most notable is the international Intergovernmental Panel on Climate Change (IPC), which regularly reports on the extent of global warming induced climate change, its likely progression including its impacts on human beings depending on what action is taken to slow and possibly eventually stop it. 36 This includes statements of targets needing to be attained if global warming is not to reach extremely disastrous levels. Various private and governmental agencies have been applying this, and other scientific data to propose and make environmental policies, such as the U.S. Environmental Protection Agency's fuel economy standards for automobiles, 37 or existing state and proposed U.S. policy for requiring percentages of electricity generation to be by other than global warming increasing burning of fossil fuels. 38  Similar research and science based policy proposal has been taking place on other environmental issues. While some more scientific research related to the environment is desirable, the primary current problem is to develop the political will to act appropriately on available information, in the face of resistance by wealthy fossil energy interests seeking to maintain and increase profits, and by other business interests desiring to keep their costs low by having less regulation. 39

Some further development of measures linking environmental quality and the environment would be quite useful, however. Faced with growing serious environmental degradation stemming from stressing narrowly defined economic development regardless of other costs, China has come up with a system for linking environmental and economic policy, that may be valuable in itself, and is suggestive what else might be done about balancing economic development with maintaining environmental quality.

In September 2015 the Chinese government initiated the Circular Economy (CE) policy linking environmental and economic policy. 40 It will be somewhat unclear just what the system actually involves and how appropriate and effective it really is until it has been sufficiently put into effect. At the outset, it includes a multilevel system for accounting of natural resources and environmental ecosystem services, ecological compensation and market based instruments for environmental management. CE is intended to function with a new business model in which resource use is optimized through waste prevention, reuse and recycling. It is to include industrial ecosystems, closed loop supply chains, broad-based recycling and waste recovery. The idea is to increase resource use efficiency (using less and polluting less) to prevent and reduce urban and industrial waste through requiring and encouraging exchange and reuse networks and behaviors, so that economic activity and growth may continue while reducing environmental degradation and increasing the quality of life. An important element is to shift from quantitative to quality oriented development, reducing consumption and resource use while increasing the quality of living. The plan shifts from an emphasis on degradation or partial reclamation at the end of extraction, manufacturing and transporting, to a focus on holistic transformation aimed at improving the quality of life, while dealing with environmental issues. The problems of making CE work in practice are complex and challenging, so that as of mid-2016, it remains to be seen how useful and suggestive CE will turn out to be.

Thoughts on the Needed Measures

   The specific measures to be used to assist all areas of public policy related research need to be chosen to properly fit the particular circumstance and need to be sufficiently accurate and detailed to provide all the relevant information (while avoiding irrelevant information that tends to cloud comprehension), making appropriate changes as new concerns and conditions develop or are discovered. In improving and otherwise changing measures, however, care needs to be taken to provide consistent reporting across time so that long term developments and policy impacts are clear. This may mean adding rather than replacing measures in some instances. Among the aspects of having sufficient detail, so that important variations are not missed amidst averages or larger groupings, is to be sure to include breakouts of all the relevant populations and subgroupings. In terms of populations, this means including all the geographical, socio-economic, ethnic or other categories of people who may need particular consideration. In the United States, for example, American Indians and Alaska Natives are an important set of populations with specific concerns and policy needs. Although the situation is improving, census and other data often has not included Native Americans as a separate category, and at times when it has done so, has not done so consistently over time. In addition, there has been the difficulty of obtaining sufficient and accurate data, particularly relating to people who have been socially marginalized. Finally, it essential to insure that the measures used, and the data collection process, are impartial, and are not subject to political manipulation. 41

Qualitative information also needs to be considered, because Quantitative indicators need to be reconsidered as well as related qualitative information since they may not be fully accurate or considerably in error.  Such indicators are indicating that there is measurable and significant change but they are not necessarily a causal explanation of what we are studying.   They cannot present a full picture of what they are intended to measure and are subject to interpretation as to their meaning.. Moreover, especially in a participatory society, all data must simply be one input into a discussion with the people concerned as to what real situations are, and what needs to be undertaken. 42

   All of the above, and the many other, indicators are simply information, which then needs to be subject to analysis and problem solving debate as to what the causes are, and what the alternative courses are for improvement with the full range of their costs and benefits over time, including side effects. Such an approach provides a necessary basis for discussing and deciding what the best courses of public and private action are.

   Concerning the policies and actions of businesses, including corporations, it needs to be kept in mind that, while they have instrumental goals of bringing in income and making reasonable profits, they should be operated with reference to providing public goods and avoiding doing harm. Thus, businesses should be guided by practical ethics, and regulated to the extent necessary and proper for their acting consistently with public purposes.

Rethinking "Development"

All of the above relates to rethinking “development” as not being ever increasing economic growth, with the goals of endlessly increasing income and jobs. Rather, it is a process of human and community development aimed at improving the quality of life efficiently - minimizing costs in terms of money, resources, the environment, and people. To achieve human development, income and jobs are a necessary means, but they are not the ends. Similarly, this approach includes moving away from an emphasis on people obtaining more and more new things, to maintaining and advancing the quality of life, which in an age of rapid technological advancement encompasses updating and acquiring, at a reasonable rate, items that improve the quality of work, and life more broadly.

Examples of undertaking development as personal and community development quite successfully are to be found among quite a number of American Indian tribes, 43 an instance of which is discussed below. This largely involves the application of traditional values, though the long history of physical and cultural genocide have, to varying degrees, reduced the extent of their being followed in different communities. Because most Native nations were first denied the right to govern themselves, and then were limited to having inappropriate forms of representative government, many Indian nations have been struggling to return to more traditional, participatory decision making. Their development efforts, though generally quite good, have not been carried out in as democratic a manner as was traditional, nor are they appropriate for a contemporary participatory society. 44 

An important point is that once colonization occurred, American Indian economic development was not very successful until Native nations gained sufficient self-determination to have at least a major say, if not control, of the development process. 45 Imposed development, however well intended, generally failed to take account of tribal values, culture and local conditions. Not deeply understanding the people and conditions in question, and not involving the concerned population in the development process, has been a general failing of much of western development, Often there has not been sufficient understanding that good general principles need to be applied according to the specifics of each place, and that different situations and locations require different approaches.

Narrow Attempts at Development

An illustrative example, involves U.S foreign aid to Afghanistan, shortly after World War II. 46 At the beginning of the Cold War, the U.S. Government decided that the world would shortly become bipolar, with all nations allying either with the U.S. or the USSR. On the basis of this miscalculation, it was decided that it was important for the United States to try to win over all non-aligned nations, including Afghanistan. The foreign aid question was whether to pave the streets of the Afghani capital or build a dam in the back country, that few would see, but which would provide flood control, irrigation for agriculture and electricity for eventual economic development. Only U.S. economists were asked for advice, and no discussions on the details of the alternative proposals or the local conditions were undertaken with Afghanis. The economists correctly pointed out that Afghanistan had little motorized traffic that would benefit from paving the streets, and that once paved, the streets would be costly to maintain, as this would require new capital investment. Therefore, the economists advised building the dam as a step toward long-term economic development, and the U.S. constructed the dam. The Russians, then paved the streets of the capitol. Since the Afghani government could now say they were becoming a modern nation, as everyone could see that the streets of Kabul were paved, the Russians won whatever prestige or benefit was to be gained in the foreign aid competition.

The U.S. then decided that building roads was the way to win influence, and proceeded to construct a series of highways across Afghanistan, that did not connect to road systems in any other country, in a land locked nation with extremely few motor vehicles. For the second time, the aid providers failed to take into account the wishes or the culture of the recipient people. Where paving the streets of the capital had significant symbolic value, creation of a paved rural road system did not, and there was little benefit to the Afghans from building the roads, which soon would deteriorate if the government did not invest in maintaining them.

Moreover, the decision makers failed to research the history, geology and geography of the area. Providing irrigation water was useless for the area in question, since earlier irrigation had carried salt into the fields so that agriculture was no longer practical. Furthermore, rivers in the region carry large quantities of silt as they rush down the mountains, which then settles out on the river bottoms when the waters slow as they reach relatively flat valleys. This causes the river bottoms to rise, so that every few years these rivers overflow their banks and shift their course. This happened soon after the dam was built, leaving it with no water behind it!

Another example involved a group of international agricultural experts who were involved in developing a new variety of cotton that was much hardier and produced a greater quantity of cotton than existing varieties. They went to a village in India where they asked the inhabitants if they would like to try the new cotton. The agriculturists explained the plants advantages, but never discussed with the villagers what their agriculture involved or what they used the cotton plants for. Most of the villagers tried the new variety of cotton. However, when the agricultural experts returned five years later, they found that only a small percentage of the cotton grown in the village was the new variety. It was only then that the agriculturalists discussed with the villagers how and why they undertook farming, in the course of which the agriculturalists learned that the villagers grew cotton plants partly for their cotton, and partly for their stalks to use as fuel. The stalks on the new variety did not burn very well.

In any case, but especially in a participatory community, development needs to be undertaken in a participatory manner. Whether local or outsiders, experts and providers need to act as facilitators and resource providers (whether on information, funding or materials) helping people decide what to do within relevant guidelines, rather than deciding for them. 47 This is not only important for the success of the project itself, but for carrying out its important empowerment function of building and maintaining strong community relations. The best builder and maintainer of good participation, is high quality participation, which in turn is a major element in effective development.

While not fully participatory, the successful American Indian development work has been facilitated and led by tribal leaders, with significant community participation. One of many good examples is that of the Mississippi Choctaw.

Mississippi Choctaw Economic Development in Collaboration with Their Neighbors

The Choctaws who remained in Mississippi after the tribe was removed to Indian territory, now Oklahoma, in the 1830s, had to persist in a difficult struggle for survival as a people and as individuals. 48 With the United States government failing to fulfill its treaty obligation to provide allotments to most of those remaining in Mississippi, many tribal members were reduced to share cropping on what had been their own land, for $.50 a day. Thus, amid poverty and harsh living conditions the Nation's population declined to just over 1200 in 1910. In 1918 the federal government finally acknowledged its responsibility and established the Choctaw Agency with a few minimally funded programs. In 1921 the federal government created a dispersed reservation with the purchase of 17,000 scattered acres. By 2013 the tribe had acquired more land than in the original purchase, expanding the reservation to 35,000 acres, comprising seven communities. Yet in the early days of the reservation, conditions remained so dire that it was not until the 1960s that the birth rate began to exceed the death rate, with the new federal policies of, first, the War on Poverty, and then, Self-Determination, empowering the tribe to begin its own process of holistic development, including building an economic base. Business efforts began with the sale of tribal timber, allowing the tribe to hire one of its members as a business manager.

By the late 1960's the Choctaw had established a construction company, building and renovating homes, and an 80-acre industrial park, that by the late 1980s contained six manufacturing plants, three of which were owned by the nation. One of these, Chata Greeting Enterprises (now American Greetings), before the end of the '80s became the fourth largest producer of greeting cards in the world, by volume. The plant was financed primarily under a compact with the city of Philadelphia, MS, through the city passing the first industrial bond issue in the United States used for Indian economic development.

A second Choctaw firm, Chata Enterprises, began supplying General Motors with wire harnesses for automobile instrument panels in 1983. The plant was expanded to become the fourth largest employer in the state with many non-tribal workers, again in collaboration with the city of Philadelphia, passing a bond issue. In 1999 Chata Enterprise opened a plant in Sonora, Mexico. In 1985, the Choctaw set up a credit union to provide much needed banking services to tribal members and three years later completed the Choctaw Shopping Center housing a bank, a grocery store, a restaurant, a barber and beauty shop, a gas station and other businesses. As of 2003, the nation owned and operated a broad portfolio of manufacturing, service, retail and tourism enterprises throughout Mississippi, the Southeast and into Mexico, including two casino resorts with hotels, golf courses, a water theme park, and two lake recreation areas. The nation also ran a number of festivals and other events that attracted tourists.

The Choctaw, in 1985, provided more than 8,000 permanent, full-time jobs, 65% of which were held by non-Indians. With an annual payroll of more than $123.7 million, the Choctaw Nation had become one of the 10 largest employers in Mississippi. In addition, tribal revenues had helped the Choctaw to reinvest more than $210 million in economic development projects in Mississippi. Some tribal enterprises, such as the Choctaw Farmers Market, provided non-economic as well as economic benefits to tribal members, in this instance, enhancing nutrition in the course of increasing tribal farmers' incomes.

By the end of 2013, while the United States, and particularly Mississippi and some of its neighboring states, were still recovering from the Great Recession that began in 2008, the Mississippi Choctaw Nation remained among the ten largest employers in Mississippi, though the number of its employees had dropped to around 6000. By that time the nation's investment in economic development in the state had exceeded $500 million.

On this economic base, the Choctaw have funded tribal, and broader community development, in collaboration with surrounding localities and governments, for mutual benefit. Before the end of the 1980s, this already included an education program from pre-school through high school and a training and vocational center for adult education. This provided learning in a culturally appropriate manner along with Choctaw culture, which had led to more than 60 tribal members earning college degrees by late in that decade. By 2013 education on the reservation had grown to run the largest unified reservation school system in the United States, with 1,700 - 1,800 students, with newer programs including child care, post-secondary education and all levels of post-secondary education counseling, scholarships and student support services.

In 2013, the education program included ECCC Integrated Technologies Training Center (ITTC), a partnership between East Central Community College and the MS Band of Choctaw Indians (MBCI), which featured short-term technical classes, five levels of an Industrial Maintenance Technician Apprenticeship program, capacity to earn Industrial Maintenance Technician Apprenticeship credentials, access to an on-line technical training library for Industrial Maintenance technicians, and financial assistance options for those interested in these training sessions.  The Nation operated a museum and offered a variety of Choctaw culture and language programs, to preserve and revitalize the traditional culture and knowledge and to enhance tribal member competence in traditional activities, arts and crafts. Revitalizing Choctaw culture has been important to tribal members knowing who they are, and feeling good about themselves and the nation. This has provided personal confidence for success, and enhanced tribal solidarity. 49

The Choctaw Department of Agriculture and Rural Development, in 2013, was operating a number of programs that provide assistance and education to farmers and gardeners, along with education for homemakers. The tribe also was offering agricultural programs in partnership with the Mississippi State University (MSU) Extension Services,

The department's conservation, nature and education programs, in 2013, combined with those of the tribe's Environmental Program Office to manage and protect the reservation environment and provide for sustainable development. The nation received consulting from the U.S. Department of Agriculture Natural Resource Conservation Center (NRCS) on good stewardship of its lands and wild life habitats. The tribe monitored air and water quality and ran its own water treatment plant for drinking water and undertook solid waste treatment. Core tribal government had also become well financed by 2013, with its expansion including a court system, corrections and a police and fire department.

During the '80s, the health program encompassed a 40 bed hospital with three satellite clinics, a 120 bed nursing home, mental health and substance abuse programs, an ambulance service serving nearby communities as well as the nation, a community nursing and training program, and monitoring of sanitation and water quality. As of 2013, the health center averaged 100,000 patient visits per year. The rural clinics averaged approximately 3,000 visits per year. The health center has provided full service to tribal members and residents of the reservation, and emergency care to reservation residents and reservation visitors. In 2015, the nation completed construction on a new comprehensive health care center. Health services have been enhanced with a dental clinic, a Diabetes Management Center, dietary and nutrition programs, non-emergency medical transportation, a Women's Health Center and a WIC (Women, Infants and Children) program.

The Choctaw Housing Authority, by 2013, was providing general maintenance, emergency maintenance, housing placement, resident services and the holistic Drug Elimination Program. Community Services came to encompass a full range of programs, including Child Welfare Service, Foster Care, Handicapped and Elderly Services, Pathway House, S.T.O.P. Domestic Violence, food and emergency services, and behavioral health programs.

The nation, in 2013, ran a number of youth programs including Boys and Girls Clubs, 4 H, and Boy, Girl and Cub Scouts, as well as recreational activity including the Native American Sports Association (NASA), which promoted "a standard of excellence in the performance among Native American players and coaches," and enhanced "good sportsmanship, honesty, integrity, sobriety, and a good relationship with Native America." Big Brothers Big Sisters program involved Choctaw high school volunteers providing successful mentoring relationships for children 5 to 15 years old, wishing to participate, who could benefit from a positive role model in their lives.Mentoring activity included such things as helping a child with school work, teaching Choctaw basket weaving or beadwork, reading together, conversing, playing on the playground , eating lunch together at the school, and playing basketball. The volunteer's main role was to be a friend and a role model.

Over all, the Mississippi Choctaws' business success has allowed the tribe to be more self-reliant (it continues to receive federal Indian and other funding), and to make significant economic contributions to the surrounding non-Indian communities with whom it enjoys largely collaborative relations. Indeed, the Choctaw undertaking of development as tribal and member development, often in collaboration with neighbors, has improved relations both within the tribe and with surrounding communities. Much of the success of Choctaw enterprises follows directly from its supporting its members with income, education, health and other services. This has served as a direct empowerment while enhancing their bond with, and concern for, the community. This is much the same as what has made collaborative enterprises successful, as is further developed in the discussion, below, of the Mondragon federation of worker cooperatives. This begins to give a picture of what a cooperative economy might look like, which is developed in more detail in the case of Mondragon.

II. The Example of The Mondragon Cooperatives

The Mondragon Cooperative Corporation (MCC), a system of worker cooperatives located in the Basque country of Spain, is considered to be one of the most significant models of worker ownership and participatory community economic development, in the world. The Mondragon Cooperative Corporation (MCC) is a highly complex federation of cooperatives bound together by much more than a formal contract of association. Currently, the MCC is comprised of 257 businesses of which 110 are cooperatives and 147 are subsidiaries. MCC employs 74,060 people. 50

Today, Mondragon adheres to ten principles: (1) open admission, (2) democratic control; (3) sovereignty of labor; (4) participation in management; (5) instrumental and subordinate nature of capital; (6) wage solidarity; (7) inter-co-operation; (8) universality; (9) social transformation and (10) education. 51 There is clearly an influence and overlap with the cooperative principles as articulated by the International Cooperative Alliance. 52

Open admission means that there is no discrimination in hiring for anyone who accepts the cooperative principles.  This includes adherence to a principle of ideological neutrality including adherence to a secular identity. In the first 15 to 20 years, the co-operatives had a strong influence of Catholic social doctrine that informed the leadership of the cooperatives.  In recent years, a more pragmatic, economic and secular identity has replaced it. 53

The cooperatives adhere to a principle of one worker, one vote. There are 4 types of cooperatives in the Basque country: consumer cooperatives; credit unions; educational cooperatives; and, research and development cooperatives.  The Mondragon group incorporates elements of these.  Eroski, the consumer cooperative includes two classes of members – consumer and worker – and includes both groups in the governance of the firm.  Caja Laboral Popular (the federation’s development bank) has worker members but in the governance provides greater control to the borrowing member firms. In the university and educational centers, governance is shared between faculty, staff and students. 54

Sovereignty of labor means that workers are the highest authority in the firms through the power of the general assembly.  The participation of workers in management provides the means of insuring systems of participation, transparency, consultation and negotiation that includes the voice of rank and file workers. It recognizes that workers are essential to the profitability of the firms. In turn the cooperative should provide opportunities to all its members. 55

Capital is subordinated to labor through the 5 th principle which prioritizes the creation and provision of jobs over the marginal return on investments.  Compensation should be just and sufficient to allow for savings and to meet members’ needs.  The members contribute an initial purchase of a membership share, additional obligatory capital investments and other voluntary investments.  The cooperatives need to balance compensation of workers against the capital requirements to insure the ongoing well-being of the firm. 56

Wage solidarity establishes a ratio of no more than 1;6 times between the lowest and highest paid workers. In the early years, the ratio was 1:3 for lowest to highest paid members.  Over time, it was necessary to widen the range in order to attract and retain more highly skilled members, 57

Inter-co-operation refers to the principle of working cooperatively with other co-ops.  The Mondragon cooperatives recognized the importance of this early on in their history.  It is key to their success. It has allowed them to experience greater stability in economic downturns.  The firms share the benefits and losses at the level of the groups.  In the early years the groups were regional and then later became sectoral groups. As they entered into global markets, the institutional cooperation as MCC gave them the ability to adapt to changing markets.

Universality refers to the value of working with all who are working to promote economic democracy.  Through the investment of resources in Otalora (focusing on education, training and co-operative dissemination), the foundation Mundukide and the university, the Mondragon cooperatives have served as inspiration and a resource for the creation of other worker cooperatives. 58

  The 9 th principle reflects the commitment of the co-ops to support and invest in social change.  The social change priorities have been the promotion and preservation of Basque language and culture and the revitalization of the Basque language as a national language; community development; the promotion of a cooperative system of solidarity and responsibility; and the advancement of the Basque working class. 59

Lastly, the 10 th principle reflects a commitment to transmit the cooperative experience and its values to its members and especially in elected positions; and, professional education especially for those in the boards of directors to insure that they understand their responsibility for and accountability to the workers. The education principle also reflects a commitment to provide education for new generations of cooperators starting with social formation of the children. 60

The adherence to these values serve the cooperatives well.  They served to guide them in rebuilding after the civil war and continue to do so. 

A Brief History of the Mondragon Cooperative Experience: Setting the Stage

 The Mondragon story actually begins not with the industrial cooperatives but with a dedicated group of young men and a young priest committed to building a better community out of the ashes of the Spanish Civil War. The Basques are an ethnically and linguistically separate people located on the French and Spanish border on the Cantabrian coast of Spain. In this first phase, it was the local and national environment which dominated in the structuring of the first cooperatives.  The postwar period left Mondragon with shortages of food and fuel. According to José María Ormaetxea, one of the founders of the Mondragon cooperatives. The Basque region suffered for the role it had played in the Civil War because it sided with the Republican government in opposition to Franco. The valley of Alto Deva was a battle field from September 1936 to April 1937.  Military installations in Mondragon were bombed as were other parts of the Basque region. Many basic goods such as wheat, cooking oil, and coal were rationed. Indigence and tuberculosis were serious problems. 61

Heiberg, in The Making of the Basque Nation (1989: 92), described this as a period of political and cultural humiliation for the Basques, due to their alliance with the Republic in the Civil War. Vizcaya and Guipuzcoa were declared traitorous provinces after the war.  This resulted in the revoking of their fiscal autonomy, which had been assured under the foral regime, local laws and customs dating back to the thirteenth and fourteenth centuries, 62 Most important of these laws were the fueros, which were guarantees of exemption from state imposed taxation and Spanish custom duties. The fueros continued to be honored by the Franco government in Navarro and Alava, the two other Basque provinces because of their allegiance to Franco during the war. 

Drawing inspiration from the Catholic Action Movement, and having researched guild socialism and the cooperative movement (discussed in Chapter 3, Section 6), Don José María Arizmendiarrieta, a 26 year old priest and journalist, began in 1941 to form study circles with youth from the community of Mondragon to identify local problems that they could work to resolve.  Catholic Action was a social movement that originated in Belgium, and was dedicated to social reform, guided by Christian social doctrine. Franco sought through the repression of Basque culture, and especially the language, Euskera, to remove the Basques as an organized threat to the Spanish government. This external source of repression only served to strengthen and focus the efforts of the founders of the Mondragon group to develop the cooperatives.

Basque culture was historically based on bonds of universal nobility and egalitarianism and formalized in the fueros for Vizcaya in 1526 and Guipuzcoa in 1610. 63 Heidberg’s understanding of these values are documented in the work of Manuel de Larramendi, a Jesuit priest in his Corograf í a de Guipuzcoa. “The traditional baserritar cultivating the land and governed by the rural values of austerity, social harmony and egalitarianism in social relations was for Larramendi, the original Basque in a state of grace. 64 According to Heidberg, 65 these are baserri values.  She found them expressed by nationalists in her anthropological study of Elgeta, a village outside of Mondragon as: the dignity of work, religion, honesty, egalitarianism and individual autonomy. Nuñez, in his book, Clases sociales en Euskadi further reinforces this connection:

the philosophy of the Mondragon cooperatives is imbued with the values of the farmers and above all the workers and artisans of the industrialized rural and semi-urban zones of Guipuzcoa and Vizcaya (excluding the capitals).  There it nurtured and grew dynamically and creatively, with initiative and entrepreneurship, aligned with work, valuing the organization and discipline, a spirit of saving and in opposition to all wastefulness, with a collective feeling of love of the Basques, and appreciation of work well done, skeptical of a top down Socialism . . . 66

The Mondragon group had strong local labor roots, a democratic internal ideology but without a confrontational approach to capitalism and the terms of market economies.  Nuñez observed that “they are mindful of the efficient functioning of the cooperative enterprises and the welfare of the workers relies on their ability to function within the norms of the market economy.” 67  These values were key to the social form of entrepreneurship that emerged in the Mondragon cooperatives.

The Launching of the Cooperatives

The Mondragon Cooperative Corporation founded its first enterprise, Ulgor (Fagor Electrodomesticos) in 1956, as a maker of portable cook stoves, It was soon joined by three other cooperatives, in a growing federation supported by a bank (Caja Laboral Popular), a set of consumer and housing cooperatives, educational institutions and a research and development cooperative. Several aspects of the federation contributed to its success, demonstrated in its rapid expansion from one cooperative of four members in 1956, to 123 cooperatives in 1978, and 170 in 1986 employing over 20,000 members. Meanwhile, Ulgor grew to become Spain’s leading manufacturer of stoves, refrigerators and other household appliances. 68

Caja Laboral played a central role as an investment bank and business incubator for the cooperatives. It gained capital as a result of the economic system of the cooperatives. With some similarity to employee stock ownership plans (ESOPs) in the United States, if a worker cooperative made money, a share would go into each of its workers’ accounts in the bank, on which a small amount of interest was paid. These were essentially retirement accounts, as in most cases money could only be withdrawn from them by the worker when the member left the cooperatives. This gave members a financial stake in their coops and an economic incentive to be good workers. As in the early days the membership was mostly young, capital collected quickly as few members left. The accounts also provided some financial insurance to the cooperatives, for if they lost money, funds would be withdrawn proportionally from the accounts of workers of that coop to help cover the loss. As the cooperatives were very successful for many years, little money went out and capital grew for investment, including in starting new cooperatives and expanding existing ones.

A key aspect of the bank was that it researched carefully before making an investment in a new cooperative enterprise, and then incubated it via a group of advisors, called the god fathers, until it was decided the new venture was ready to go on its own. The bank also would help cooperatives in difficult times with low interest loans and technical assistance. After 1987, the incubator section of the bank, which also assisted cooperatives experiencing difficulties, became a separate consulting cooperative, LKS.

The Mondragon cooperatives also, early on, launched educational cooperatives – including Mondragon University and training entities - a research and development division, and a number of service and consumer cooperatives. The latter included establishing housing cooperatives, as there was not enough housing in Mondragon to meet the needs of the rapidly expanding worker cooperatives. Later, constructing housing for members became no longer necessary, and this effort ended. Similarly, later on, with free Spanish educational institutions available, many of the educational functions were discontinued by the federation. The research and development cooperative has remained an important asset, providing crucial research that the individual cooperatives could not afford to undertake on their own. For example, as manufacturing developed early on, the research cooperative was able to design robots to keep fabrication comparatively productive and efficient. In addition to serving the worker cooperatives, the federation also supported the wider community, including through its consumer cooperatives and supporting Basque culture and language activities.

Largely because of their somewhat participatory worker ownership (though other factors including Basque pride and solidarity played a role), the cooperatives were highly successful, at least in the early years returning about 25% more return on investment than conventional businesses in Spain. Moreover, no co-op failed, at least through the 1980s, which is remarkable, especially for new businesses. 69 Moreover, the democratic and financial structure of the federation made it quite innovative and flexible in meeting changing circumstances. This was especially evident when the serious recession of the late 1970s - 1980s hit Spain and the rest of Europe. Some business, particularly Ulgor, met the loss of domestic business by shifting 25% of their sales to the international market, especially in Latin America. Meanwhile, a combination of low interest loans from the bank (some of which were not repaid), money to help cover losses from worker accounts at the bank, some reduction of pay, switching workers from cooperatives that did not momentarily need them to those that did, and sending unneeded workers back to school, largely for work related training, kept the cooperatives functioning without layoffs until economic conditions improved.

The Mondragon federation also learned from experience. For example, a rapidly growing Ulgor after a few years developed strained labor relations which broke into the only strike the federation experienced in the early period. Two changes came out of the experience to seek to insure good cooperative relations, and satisfied members. The first was the decision that Ulgor had become too large for good community communications, and no cooperative would henceforth be allowed to exceed 300 members. If an enterprise were still expanding when it reached that size, rather than let it continue to grow in members, a new coop would be started. The second was the establishment of a member elected Social Council, operating in each cooperative, serving some of the functions of a union, giving members ongoing input into enterprise decision making and a vehicle for raising concerns. As in the 1980s and 1990s the Social Council was not always very active in many cooperatives. A number of cooperatives experimented with various forms of employee involvement. While what is best will vary with the circumstances, cooperative organizations only function well if they operate fully inclusively, with all members views and concerns heard, and their interests represented. To achieve this, in most instances an appropriate form of team process is necessary, as is discussed in the proceeding chapter, “Applying American Indian Principles of Harmony and Balance To Renew the Politics of the Twenty First Century.”

The Developing Structure of the Federation

Thus the Mondragon group has grown significantly since its initiation and been economically able to adapt and respond to the development of the global marketplace.  The formal organizational structure of the inter-cooperative relationship has also grown more complex over time. The structure of the Mondragon Cooperative Corporation has evolved in response to the needs of the cooperatives and in response to external factors. The basic building blocks of the system have not changed dramatically since the inception of the first cooperatives, but the superstructure of the group has.

One of the adaptations was to take geography into account as the cooperatives spread to new places. The first group of 4 cooperatives was created in and around Mondragon in 1965.  The period 1975-1985 was one of profound economic crisis in Spain. The Mondragon Group expanded with new cooperatives across the Basque country. Faced with a major economic crisis in Spain, between 1974 and 1985, the cooperatives decided to develop regional cooperative groups which would provide some security against market downturns through solidarity in their allocation of labor’s earning’s, as well as adding an element of local control. Between 1978 and 1986, thirteen additional regional groups were created.

The further spread of the federation around Spain and internationally brought new inter-cooperative communication issues, particularly for scattered enterprises in the same field, Thus, in 1991 a congress of the cooperatives moved to replace the regional cooperative groups with sectoral groups of cooperatives in related economic activities. It was also decided to further integrate federation operations in the creation of the Mondragon Cooperative Corporation.

The structure of the federation developed in stages, over time. In the beginning inter-cooperative relations were either informal, in piecemeal agreements, or centered on ties to the bank. As early as 1982, the Mondragon group had begun to explore other means for increasing the intergroup solidarity. In that same year, the group began to develop plans for greater intergroup solidarity. A cooperative congress was convened in 1984 for the purpose of developing the elements of a constitutional superstructure for the cooperatives. The cooperative congress was convened again in 1987. At this second congress, the group established policies governing basic principles, compensation of managers and the norms for social capital and the establishment of an Intercooperative Solidarity Fund designed to help cooperatives in crisis.

The Governance Structure of Mondragon

Today, the group operates as a large multinational with both worker members and nonmember workers. The superstructure is formalized through a cooperative congress which is the equivalent of a general assembly in the base cooperatives. The assembly has 650 representatives.  Each cooperative is entitled to one representative per ten co-op members and the remaining seats are allocated with a maximum of 2 per cooperative. There is also a delegate for each of the divisions (financial area, 12 industrial sectors; distribution; education and research). The cooperative congress meets annually to address issues of cooperative norms and overseas the central operational departments such as budgeting; admission of new cooperatives and the division structure. 70

The permanent commission has delegated authority from the cooperative congress. It meets during the period when the congress is not in session.  It is comprised of elected representatives designated by the ruling board of the divisions, who must be members of a cooperative to serve. The industrial area has 14 seats and 12 votes. Distribution has 4 seats and 4 votes. Finance has 2 votes and 2 seats. Education and Research has 1 seat and 1 vote. 71

The third managerial unit is the general council which serves as the board of directors for the cooperatives. It is comprised of a president, 8 vice-presidents from the various divisions, 2 directors from the central offices; and the secretary general of the group who has a voice but not a vote. The congress president may also attend and speak but has no vote. This body provides strategic oversight for purposes of coordination and control. This body provides institutional leadership in promotion of new innovations and in the advancement of political priorities of the group. In instances where intervention is needed into an individual cooperative as in the case of the failure of Fagor Electronica, the general council determines the nature of the intervention to be taken. 72

Contrast this with the structure prior to their global investments.  In 1982, the system was comprised of one hundred and seventy cooperatives with a common historical experience, cultural identity and social and economic goals. Instead of divisions by business sector, the cooperatives were organized into cooperatives by location. The regional divisions shared profits and losses to support one another during economic downturns. Ninety percent of all workers in the cooperative group were worker members and became worker members within three to six months after a probationary period. 73

As of 2016, each cooperative had a governance model in which workers vote to elect the governing council, the social council and the audit committee members. The governing council in turn hires the CEO. The CEO handles the administration of the cooperative.  The organizational structure is summarized in figure #1:

Cooperative law allows for a maximum of 20% nonmember workers. There is not necessarily the same common bond felt by all workers, since 1 in 5 may not be members of the cooperatives. The cooperative structure was intended to insure that ultimate authority would always remain in the hands of the members of each individual cooperative while the creation of the superstructure intended to provide them the benefits that can be realized by the economies of scale of larger firms. When the cooperatives entered global markets, the acquisition and joint ventures did not incorporate cooperative ownership and principles, usually because of local law or practice, or the structure or wishes of the partner firm. Had Mondragon been dealing with other cooperative firms in its joint ventures – as would be the case within a fully cooperative society – the cooperative principles would have been maintained.  Mondragon subsidiaries account for the rest of the nonmember employees. As of 2008 only about one third of the workforces were members of the cooperative. 74

The system of cooperatives has become more complex, the skills and training requirements of managers have increased and the strong local ties while still present play a lesser role in the operation of the cooperatives. The superstructure gives the cooperatives a stronger presence in global markets through Mondragon International.   Mondragon does not have to take all business decisions at the level of the individual cooperatives. This is critical to their ability to work effectively in a global business environment. On the downside, it has resulted in greater distance of strategic governance and decision makers from the members of the base cooperatives. 

The Sovereignty of Labor Principle & the Challenges in Practice

One of the core principles of Mondragon is a belief in the sovereignty of labor. One of the policies that reflects this principle is the commitment to limits on pay differentials. There is a pay differential restriction that limits the pay of a manager to no more than six times the salary of any worker in the co-op and no more than 38 percent greater between the highest and lowest paid within the entire group of cooperatives, according to Josu Ugarte, the president of Mondragon International. 75

Early on the coop members realized that they could not commit to 100% worker ownership and remain sustainable in a market economy. In the early years, they maintained no more than 10% nonmember worker employment. 76 They also had a strong commitment to create employment in the Basque country for the Basque people out of ethnic pride.  They were concerned that extending a share of ownership to workers employed outside of the Basque country could dilute this control or result in plants seceding from the group. 

Given the significant role of various industrial cooperatives in the automotive industry, Mondragon had to go where business opportunities took them. As they grew and expanded outside of the Basque country, this led them to consider how to address the place of non-Basques workers in the cooperatives. Overseas, all workers are managed based on the norms of the country where the plant is located. Workers and managers in the overseas firms are typically not membership track employees of the MCC. This has been the source of one of the most enduring conflicts of values and practice for the group. Copreci, a manufacturer of components for household appliances has had a factory in Mexico for many years.  They developed a program to bring workers from the Mexican plant to work and shadow cooperative members in the cooperative as a way to socialize them into the cooperative work culture.

The MCC’s goals of local control and ownership of resources coupled with a commitment to the cooperative principles resonate with the desire to create greater democracy in the workplace and better quality jobs that would not disappear when the corporation sought cheaper labor pools elsewhere.  The conflict of values led Mondragon to develop plans to incorporate greater numbers of workers into cooperative ownership. This policy ground to a halt with the Great Recession of 2008. MCC reports the following data regarding the current number of members and nonmember employees:

By the end of 2008, the average number of employees at MONDRAGON was 92,773. 39.7% of these employees work in the Basque Country, 44.2% in other parts of Spain and 16.1% work abroad.

As a result of the rapid growth experienced over the last few years… only somewhat less than a third of the Corporation’s workers are cooperative members at present. The non-members mainly work in the distribution sector outside the Basque Country and at the industrial plants that are also based outside the Basque Country, either in other parts of Spain or abroad.

This percentage of worker-members will have substantially increased … when Eroski has completed its cooperativisation process for all its non-member employees, who work mainly outside the Basque Country and Navarra. When this process is complete, the percentage of cooperative members in the Corporation as a whole could be over 75%. 77

The Cooperative Approach to the Great Recession

The Great Recession of 2008, which was especially debilitating in Spain, was difficult for the Mondragon group as well. But they have a history of setting aside reserves in good times for weathering tough times.  In the machine tool sector, they had 2 years of reserves going into the recession and weathered the recession well.  Most affected were the firms involved in consumer durables and retail operations, in particular Fagor Electronica and Eroski. 78 By 2011, with the Spanish economy still in tatters, Fagor Electronica, the largest and first of the cooperatives along with two other smaller firms, Ortza and Egurko failed.  Eroski which is a retail cooperative with stores throughout Spain is now the largest of the cooperatives.  It had bad years in 2014 and 2015.

In 2011, the oldest and largest of the cooperatives, Fagor Electrodomesticos declared bankruptcy.  The co-op made a strategically bad decision when it purchased a French firm, Brandt.  The severity of the 2008 recession halted all new housing construction in Spain which was Fagor’s strongest market.  As the losses increased, the co-op continued to pay its members instead of implementing cuts in compensation.  The co-op continued to produce products till they simply ran out of funds and materials. The group did invest funds in an effort to save Fagor and concluded a second bailout would not resolve the problem.  There have been other failures in the past but none of the scale of Fagor.

The failure of Fagor illustrates both the role of solidarity in the group and the challenges to sustaining a democratic ownership culture in larger firms. The other co-ops attempted to save the co-op with a bailout. There were individuals who also made voluntary investments in the firm.  Some were retirees and others were individuals with other co-ops. Workers in Fagor did not cut their anticipated earnings at the same rate that workers in other firms were accepting to contribute to the bailout of Fagor. All those funds cannot be recouped with the bankruptcy. The workers who lost their jobs received two years of benefits which ran out in October 2015.  Other cooperatives absorbed workers from Fagor as they were able. For example, the bank, Laboral Kutxa, hired 150 of the Fagor workers. As of June 2015, there were 150 workers who were still unemployed. They were typically older workers with limited education and physical limitations or mental health issues. An outside firm bought some parts of Fagor that were profitable and hired some of the Fagor workers. Those with greater education and higher skill levels had a much easier time in securing new positions.

Moving into the Future

As of 2016, Baserri values are not as strong as they once were. The communitarian orientation has been displaced by an increasingly individualized orientation as people have become more integrated into mass culture. Had Mondragon existed in a collaborative economy and society, this almost surely would not have occurred. Forerunners often become diluted by the problems of the society they are attempting to overcome. The years of prosperity have also led workers to be less willing to accept austerity and to make sacrifices, according to one MCC representative. There is much reflection and discussion occurring within the Mondragon cooperative group as they attempt to move forward after the failure of Fagor Electrodomesticos. The cooperatives are considering how they can best proceed strategically.  They see three options.  They can proceed as they have without policy changes.  They can adopt greater centralization and integration to allow for intervention and more oversight of capital requests. The third option would be to increase the autonomy of the individual co-ops and with it reduce the centralized role as it currently exists within the Mondragon cooperatives.

Regardless of which strategic option the cooperatives choose, the group sees its future not in sunset industries, but in new technologies and knowledge based sectors. Staying at the forefront of innovation is their strategy for maintaining jobs in the Basque Country.  Blue collar work was the focus of their efforts in job creation when they began in 1955.  Today, they see the need to develop a highly educated workforce that can lead in fields such as alternative energy, mass transit and tourism and knowledge sectors of the economy. Ten percent of Mondragon’s investments are in new co-operatives, new investments and greater internationalization; 8% is in research and development; and, 21.4% is in sales in the industrial area for new products and services that did not exist five years previously.  

The importance of the Mondragon Model

Why is Mondragon still an important model?  Mondragon’s cooperatives ability to work together is key to their strength.  The co-ops contribute 10% of net profits into the Central Fund for Inter-cooperation and Laboral Kutxa contributes up to 20%. 79 They also treat labor as a fixed cost. This is only feasible because of their intercooperative agreements. The co-ops are able to do this due to 3 policies: the recycling of workers between co-ops that are countercyclical; the commitment to preserve good jobs in the Basque Country while emphasizing engineering innovation; and their social insurance program which is funded based on a 2% contribution from workers earnings. The social insurance program gives workers economic security in hard times.  The intercooperative agreement provides another layer of security. When workers need to be furloughed, there are three avenues for them.  Blue collar workers are given the option of working in another co-op or attending community college or university. Public universities are free (€1200 fees). If workers are furloughed, they can receive compensation but will be asked to make up the hours at a later time.  If workers are laid off, they receive 80% of their wages. Unemployment benefits are paid by Lagun Aro, the social insurance program which is funded by 2% of workers earnings in 146 of the cooperatives. This covers 30,000 workers in the group. The fund contribution changed in 2010 from 1% due to the higher costs during the recession.  When workers are transferred to another firm, they receive a differential if their job in the other plant would be paid at a lower rate than they were paid in their co-op.  The social insurance also pays the cost of any retraining. 80

Although it is not perfect, Mondragon continues to serve as an impressive example of successful cooperative and community development for a number of key elements. To begin with, it was developed in a hostile political environment and without government subsidies in the early years. More important, it has been a good, if not complete example of participatory organization extending from the individual workplace to the federation of businesses, serving the community, not only by providing jobs and generating income, but through providing services to the community (though not as extensively as in the case of the Mississippi Choctaw). The cooperatives and the federation have attempted to operate inclusively and democratically internally, with the exception of foreign and joint ventures where they have been constrained by local law and business practice. They have worked to adopt that democracy to changing geographical, business and economic circumstances. The model could be improved, particularly by a higher degree of participation in workplaces, including the utilization of appropriate forms of full team process, as exemplified by such firms as Gore Associates, discussed in the proceeding chapter.

Particularly notable is, that largely because of its collaborative process, and consistent with the usually high performance of participatory work places, the Mondragon cooperatives have been strikingly successful economically. They produced a significantly higher return on capital than conventional businesses in Spain. With the assistance of their development bank they were able to grow rapidly, adopt to new conditions easily, and weather harsh economic times, usually without layoffs and without business failures. It was exceptional, that in the extremely deep Great Recession, they were forced to close three enterprises and layoff some workers with benefits. It is notable that during the period after the 2008 recession, the Basque region has had a rate of unemployment consistently below that of the rest of Spain. Youth unemployment while high was also significantly less than the rest of Spain for the period 2008 to 2010. 81 Overall, the extent of success, and the dearth of failures has been phenomenal.

Significantly, with the Mondragon cooperatives, the Basque country continues to be a region dominated by locally owned and controlled businesses with a strong cooperative ownership of the firms, providing benefits for the local community with which it has collaborative relations. Moreover, the federation is a good example of how more democratically and organizationally effective small enterprises can have the economy of scale of large organizations, but with more flexibility and democracy than is usually possible in large firms. For these reasons, it has had tremendous appeal as a model for building local economies, and as basis for large scale participatory economy. 

Implementing The Cooperative Federation Model

Just how the Mondragon model, improved by making it fully participatory from the shop floor or office to the center of the federation, would apply elsewhere would vary according to the circumstances. Indeed, one of the strengths of Mondragon has been its flexibility in adapting to new conditions. Application would involve applying the following principles appropriately to the specific conditions at hand, as they exist at the outset, taking into account projected needs for future developments.

First, and most important, as discussed in the politics paper, individual enterprises or organizations and their sub units need to be structured as flat, equalitarian (as opposed to hierarchical), team process entities with full participation decision making from the shop floor, office, sales, or service unit to the center. Decisions would be made by those who are impacted by them. Thus, issues involving a single unit or team would be decided by its members. Issues involving two or more units or teams would be jointly decided by them, or by an inter unit team or committee, with input from the members of the concerned teams who would have the opportunity to review and check, and perhaps have to approve, the final decisions. Issues involving an entire division, or the whole organization would be decided at those levels in a similar fashion. Thus, an organization would operate as a network of participatory teams. In turn, individual organizations would network participatively with each other, and where appropriate be parts of highly democratic federations. If and as appropriate, an enterprise could be involved in multiple networks and possibly more than one federation, for different purposes, so long as the basic principles of participatory economy were preserved in balance. For example, a firm making computers might be part of a local business federation or network; an industry network or collaborative organization for research and development, and perhaps political representation; and possibly separate networks or cooperative organizations for purchasing supplies, obtaining certain services, and marketing. Also, as appropriate, it might be advisable to mix organization member participation with customer or community input, as occurs, for example, in consumer cooperatives that have employee participation. The simplicity or complexity of organization and participation structures should depend on circumstances, and change with them, consistently with the basic principles.

Second, the system of incentives or rewards needs to be appropriate to engage members meaningfully as owners while, enhancing the goals of the organization and wider public goods. 82 Participation in decision making, when it is genuine and of good quality, is rewarding, providing a feeling of ownership and solidarity with the unit, the organization and fellow workers, and tends to promote good organizational behavior. Collaborative education, good respectful and collaborative standards of behavior and treatment, and other moral incentives may also have an important role. This can include awards or statements of praise for good work or behavior, and penalties or reprimands for inappropriate or inadequate actions. But like other incentives, to promote solidarity with the group and organization, they need to function in a fashion that team members consider fair and appropriate. Otherwise they create dissention, even if they attain some of the intended behavior.

Also important are concrete rewards which can be in money, services and material commodities (e.g. food, housing, use of vehicles or equipment) sufficient to make members be and feel fairly treated by the organization. These need to be structured so as to promote good work as a team member, and member of the organization as a whole. Thus team or unit awards for productivity increases or cutting costs, and organization profit or income sharing are generally appropriate, while individual piecework payments are not, except in limited amounts for special purposes, as they tend to promote competition rather than collaboration among team members. It may also be desirable to have financial rewards that are either, or both, immediate incentives and/or promote long term concern for the organization. As immediate feedback often makes incentives more effective, rewards for productivity increases or profit sharing over short periods, for example for the month or quarterly, may be advisable. At the same time long term commitment to the organization can be promoted by such practices as payments into retirement accounts, such as the workers accounts at Mondragon, or U.S. 401k and employee stock ownership plans (ESOPS) retirement accounts.

Another consideration is structuring incentives to give team members a sense of reasonable security. This can be accomplished by having a sufficiently high basic wage, with other variable rewards or compensation above that. The ultimate key is to have the appropriate balance of rewards and incentives that fit the circumstances. To promote solidarity and organizational commitment in a cooperative organization, this means limiting the earnings differential between the highest and lowest compensated team, organization or federation member, as has been done at Mondragon. Also, as discussed above, for a participatory society, it is important to have a reasonably equal distribution of wealth, which can be accomplished both through a limited range of compensation or income and a progressive tax structure that is sufficiently steep at its high end.

Third, to properly mix the needs of humanly small individual enterprises and other organizations with economy of scale and adequate provision of member and organization needs, a number of services need to be provided by the cooperative federation itself, external organizations including other federations, or by government, as illustrated by the case of Mondragon. One of the strengths of the federation has been having its own bank and business incubation. Similarly, the federation has been indebted to having its own research and development cooperatives, while it created housing and educational cooperatives, until sufficient housing was otherwise available and the Spanish government provided much of the needed free university education.

It is important to note that cooperatives are a flexible form, and that all kinds of cooperatives are possible, including adopting them to new and changing conditions. In addition to what we have already discussed, are producer cooperatives, as have been used by artists, artisans and small farmers to market their products. 83 The internet and cell phones with apps have recently spawned platform cooperatives in which individual producers market over the internet. 84 Services can be cooperatively provided over the internet with aps, along the lines of taxi and limousine service as carried out by firms like Uber, linking drivers to rides. In the cooperative version of such services, the drivers or other service providers would own the cooperative, as is the case with Union Cab in Madison Wisconsin. 85

Finally, as the goal of a collaborative economy is to provide a well working society for all its citizens, it is important that individual participatory enterprises and cooperative federations have good collaborative relations with the larger communities of which they are a part. This has been achieved, in part, at Mondragon, not only by providing needed employment and income in the community, but in such things as launching consumer cooperative stores and restaurants, while sponsoring Basque clubs and cultural activities. Similarly, in the instance of the Mississippi Choctaw, a considerable amount of economic development was undertaken jointly by the tribe and the nearby municipality, creating employment both for tribal members and citizens of neighboring communities. Meanwhile, among other things. the tribe has provided ambulance service both for its members and people in the surrounding community. This is all part of the aim of a collaborative society with a participatory economy to honor and enjoy the benefits of diversity in the context of a fully integrated society of friendly relations and mutual support, living harmoniously with its neighbors and the physical environment.

III, Transnational Economic Relations

The relationship of communities to each other, as we have seen, is extremely important for their wellbeing. It has been shown, in the Mississippi Choctaw case, that collaborative relations between communities within a nation are extremely beneficial to the concerned communities, though even in the best of relationships there are always conflicts. However, it was shown in the discussion of restorative justice in the politics paper, that to the extent possible, it is beneficial for everyone involved for the parties to see a conflict as an opportunity to undertake collaborative problem solving for mutual advancement. This is equally true internationally.

For the purpose of this discussion, there are two areas of the very complex field of transnational economics where it is important for nations to maintain as much balance as is practicable: in having appropriate tariffs and regulations on imports, and in moving to equalize wealth and quality of life among nations, so far as possible, in a world in which what happens anywhere already has significant impacts everywhere, and this is more and more the case, where independent actions impact on an international stage.

Maintaining an Appropriate Balance in Trade

Neoclassical economists often assert the great value of tearing down tariffs and international trade barriers, and moving to "free trade." Experience tells us that just as they like to tell us that "there is no such thing as a free lunch," in pointing out that everything has costs as well as benefits, these economists need to realize, "there is no such thing as free trade." One nation almost always benefits at the expense of the other under so called "free trade." Thus for at least one nation it will always be "expensive trade." While different people gain or lose differently in any trade arrangement, over all, beginning with the North American Free Trade Agreement (NAFTA), instituted in 1994, among the United States, Mexico and Canada "free trade" agreements have been very costly for the United States. Indeed the overall impact of NAFTA was negative to all three countries, with the major beneficiaries, a small group of multinational corporations and their stockholders.

Prior to the institution of NAFTA, the agreement's supporters predicted that the U.S. and Canada would gain far more jobs than would be lost from NAFTA's implementation. 86 At least through 2001, the reverse was true, particularly in manufacturing. Analysis shows that, overall, the net impact was a loss of jobs in the U.S., and a slowing economic development in Mexico. Particularly telling in Mexico was the impact upon agriculture, where a few producers, particularly of grains, gained, while many others have suffered considerable losses. International food imports into Mexico from the U.S. often sold below Mexican small farmers production costs, driving them out of business. This was particularly the case with the import into Mexico from the U.S. of U.S. government subsidized corn, which sold in Mexico at lower prices than indigenous people could produce it. This triggered the Zapatista revolution, leading to increased repression of the Indigenous communities involved by the government and paramilitary groups. 

There are substantial food exports from Mexico to the U.S., but predominantly by large farmers, most especially by multinational corporations. 87 This tends to concentrate wealth, as most of the income to the business goes to owners and upper level managers, and less to the lower level workers who are by far the largest part of most of these workforces. One of the difficulties is that free market arrangements such as NAFTA tend to drive wages (and hence living standards) down in the developed world, when what needs to be done is to focus on bringing wages and living standards up in the underdeveloped world, an issue to be discussed below. In general, the primary gainers from NAFTA have been top management and stockholders of a group of large multinational corporations, at an overall cost to the U.S., Canada and Mexico as a whole.

NAFTA and the other essentially similar free trade agreements are only part of much larger economic problems across and between nations caused by neoliberal approaches to the globalization that is sweeping the world. These problems need to be overcome by a broader approach which aims at creating and maintaining balance in various dimensions. The larger free trade problem indicated by the agricultural problems that arose from NAFTA in Mexico is shown more fully by what happened to manufacturing in the United States, and to other aspects of the U.S. economy with the application of neoliberal economics, including free trade, beginning with the Reagan administration in 1980. 88

Beginning with Alexander Hamilton's eleven point plan in 1791 to build manufacturing in the United States, until the Reagan administration in 1980, U.S. economic policy was to protect and enhance the growth of industry in the country with tariffs. Numerous factors were involved, but this and related assistance to industrial development policy played a major role in the United States becoming, and for some time remaining, the world's largest manufacturing country. In 1980 the U.S. was the world's largest creditor nation, related to the fact that it was the largest importer of raw materials and exporter of manufactured goods. In the 1960's about 37% of the U.S. labor force worked in manufacturing. 89 That declined somewhat to about 30% by 1980, because of the ongoing combination of improving productivity in industry and rising demand for services, plus increasing foreign competition, especially from East Asian nations working very actively to build and protect manufacturing, including exports. 90 This has generally continued, but after 1980 became a minor factor, when President Reagan began vetoing tariff legislation and undertook other free trade action. Bill Clinton and later Presidents then expanded the free trade policy with participation in the international trade agreements such as the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), 91 and with NAFTA and later trade agreements. Almost entirely as a result, the United States had so much of its manufacturing move oversees that by 2012 it had been transformed into the world’s largest debtor, as the balance of trade reversed, and the United States now had become the world's largest exporter of raw materials and the world's largest importer of manufactured goods. For a huge number of products made in the United States prior to 1980, it is virtually impossible to find any in stores in 2015 that are U.S. made. During the 2000-2010 decade, alone, 50,000 manufacturing plants closed down in the U.S. at a loss of 5 million jobs. Many of these jobs have been replaced by service jobs, but these generally were considerably lower paying. Moreover, with the neoliberal reduction in tax rates on higher incomes and reductions in corporate taxes, begun under Reagan, since 1980, U.S. wages which had been rising along with productivity, have essentially remained level. At the same times, productivity, along with top executive compensation and corporate profits largely going to the wealthy and institutions, have continued to increase. 92

International trade agreements have also increased environmental problems, and had other negative side effects for people. For example, firms have often moved to locations where there are less environmental, labor and other regulations. For example, NAFTA was supposed to include environmental protections, but only continued environmental decline. This was particularly so in the free trade zone in Mexico where numerous companies built or moved, where environmental enforcement was less than in the United States, and where considerable pollution further degraded the local, and some times more distant and even world environment. 93

Mexico's problems from trade agreements, have also been related to, and made worse by, other internationally imposed neoliberal policies.  This began with Mexico's agreement with the International Monetary Fund (IMF) to restructure its massive foreign debt in 1982, which preceded the creation of NAFTA. 94 When the drop in the price of oil, a major Mexican export, left Mexico unable to keep up with foreign debt payments, it agreed to a "structural adjustment program (SAP)" with the IMF in order to restructure the debt. SAP was intended to make Mexico more competitive in the world economy and thus more able to pay its debt, by cutting government expenditures and reducing regulations and tariffs, making Mexico more open to the international market. The result was just the opposite, however. Mexico's ability to pay its foreign debt became weakened as many sectors of the economy were undermined, while under the terms of the agreement with IMF, the government was less able to act to create economic development or to assist those who were suffering from economic decline. NAFTA exacerbated the situation by further reducing tariffs and the government's ability to regulate. Thus, at the end of NAFTA's first year, Mexico was suffering economic collapse with the peso suddenly losing half its value. In the following year, over 2 million people lost their jobs in Mexico, 1.8 million peasants and indigenous farmers were forced to leave their homes, the purchasing power of the average wage declined by 54% as inflation, in 1995, soared 50%. One third of Mexican businesses declared bankruptcy in the first nine months of that year, and the Gross Domestic Product declined by 7%.

East European Problems with Neoliberal Economics and Free Trade

Similar problems with the adoption of neoliberal economic policies were experienced by former Soviet block East European countries on their exit from communist economies after 1989. While numerous neoliberal economic policies contributed to the East European post-communist economic and quality of life decline, one piece of the transition to the market program adopted by all nine countries is particularly relevant for this discussion.95 This was the combination of rapidly privatizing state owned enterprises, without making any investment to improve their ability to produce marketable products, while ending subsidies and eliminating tariffs and other import barriers. Among other ill effects, this led to potentially viable firms being unable to compete with imported products, leading to drops in production, increasing unemployment, and a worsening balance of payments, as sales of imports rose, while the sale of domestic products declined. A better strategy would have been to invest in the improvement of potentially viable firms, prior to privatizing them, and selectively and progressively lowering import duties as domestic enterprise productivity and efficiency rose, as a stimulus to continued growth in competitiveness. From 1968-1975, Hungary made significant gains with just such a policy for liberalizing its communist economy.96 Similarly, the economic advancement, since World War II, achieved by a number of East Asian nations, was accomplished by a careful process of incubation in which governments played a major role, in contrast to the neoliberal approach.97

However, the very aggressive approach of a number of east Asian nations, doing anything they could get away with to keep foreign competition out of their home markets, while taking excessive action to gain market share abroad, at almost any cost (often by "dumping", selling products at a considerable loss, often with government financial support), goes too far to the other extreme from free market policies. An appropriately balanced import policy would follow the principles of Hungary's example: for mature industries, setting tariffs and import restrictions just high enough to make up for a foreign nation's lower labor cost; government subsidies and lower costs because of lack of regulation, in order to keep domestic firms competitive, while pressuring them to operate efficiently and effectively. With developing or transitioning industries, an appropriate policy would be just what Hungary did, setting tariffs and import regulations (or conversely, providing offsetting levels of subsidies or other incubation assistance) progressively lower to match increases in productivity of developing domestic firms. In addition, foreign firms could be penalized by higher tariffs or import regulations for their own or their nation's improper actions, such as inhumane labor practices or contributing to environmental degradation. 98 

Appropriately achieving such balanced policies is often politically difficult. However, in a sufficiently equalitarian participatory nation, there is likely to be a sufficient diffusion of power and balance of interests so that with good participatory problem solving processes, reasonable solutions should be achievable balancing the interests of industries and their employees in sufficient tariff and regulation protection on the one side, with consumer interest in low prices and product availability.  Moreover, since finding such a balance is generally in the long term economic interest of most people, there is a common interest in finding that balance that is encouraged to come to the fore by the kinds of good participatory processes discussed in the preceding chapter.

Moving Away from Harmful Neoliberal Globalization Toward a Balanced World Economy

The neoliberal globalization which has been in progress in the world through the World Bank, the World Trade Organization and a growing series of treaties, plus the policies of some nations, has caused considerable problems for numerous nations, and generally favored the concentration of wealth in a few individuals and multinational corporations, at the short run expense of most everyone else. Because neoliberal policies tend to cause long range harms, such as the increase of global warming induced climate change, and other serious instabilities, in the longer term these measures are against everyone's interest. Much of the problem with neoliberal economics is that, with its very narrow focus, it suffers from a serious reductionism, that includes failing to take into account numerous externalities and essential public goods – particularly concerning social costs - as well as failing to include, or properly understand, important factors that are central to its concerns. This is made clearer by considering, briefly, a few more aspects of neoliberal globalization.

Among other problems, Neoliberal globalization has encouraged the development of crops for export at the expense of food self-sufficiency. This often involves reducing agricultural diversity (in itself an ecological concern) in order to produce one or a few crops for export. While there are benefits of foreign trade, there are also risks, especially when food self-sufficiency is reduced, because international prices for agricultural produce (and raw materials where economic development focuses upon extracting minerals for export) often fluctuate widely. For example, the Americas Program reported in March 2004 that coffee, which is not indigenous to Mexico, had evolved into a central aspect of economic, social and cultural life with 320,000 growers, 65% of whom are indigenous, mostly on small farms in twelve states, employing over 3 million people, in rural areas directly effecting 25% of the population economically. 99 84% of Mexico's coffee growing townships had high or very high levels of poverty, in 2004. 85% of Mexico's coffee was exported. International prices paid to producers dropped severely over the preceding years, with Mexican growers receiving record lows in 2002. At that time, coffee growers were unable to break even, but the lack of other options kept them trapped in a downward spiral. Producers were left few defenses in the neoliberal global context, with neoliberal economic polices having brought the Mexican government to dismantle the national production-processing-marketing board (Mexican Coffee Institute-Inmecafe), in 1989. Thus most growers were left to function on their own, without the resources or infrastructure to deal effectively with the buying oligopoly.

A major difficulty has been the increase of large multinational corporations taking part in a variety of large scale economic projects that force local, often Indigenous, people off their land and/or do huge damage to the environment, often making it no longer a viable place for the inhabitants of the surrounding area to live, and often causing massive serious health problems. 100 Such projects have included mining and drilling for oil, building dams to produce electric power - sometimes for export, and constructing large farming operations, particularly for palm oil. While the World Bank and the International Monetary Fund have been funding some of these mass development projects (but have become more conscious of the harm some of them cause), and several aspects of neoliberal economic policies facilitate them, the problems of extraction and large scale development extend beyond neoliberal approaches. Perhaps no nation has done as much damage to its environment and people with its large scale efforts at development, as China, in its aggressive nationalist economics mode, 101 and other nations whose economic policies are less easily classified, have also undertaken destructive development, failing to realize the need to define it as human and community development, as laid out above

  An overview of the problems of neoliberal globalization fostered by the U.S., government, the World Bank and the International Monetary Fund was published in 2002. A global network of over 1000 nongovernmental organizations (NGOs), The Structural Adjustment Participatory Review International Network (SAPRIN), completed a four year review, in 2002, of the impact of the World Bank's structural adjustments program (imposing austerity measures on governments and encouraging privatization of public services) with the aim of improving national economic performance and reducing external debt. The report, "The Policy Roots of Economic Crises and Poverty," concludes that structural adjustment measures have significantly increased poverty, inequality and social exclusion in the 10 countries studied. This resulted in loss of domestic productive capacity and jobs; a reduction in small farm agriculture which brought on food insecurity; diminishing real wages, workers rights and job security; and reduced access to affordable quality services.102 Following the imposing of structural adjustment policies, some reduction in the rise of external debt did occur. However, since the economies were weakened by the structural adjustments, those policies cannot be credited with the small reduction in the increase of external debt (and even if they were the entire cause, the cost would hardly be worth the relatively small gain).

A little over a decade later, many of the negative trends noted in the SAPRIN study were found to have significantly worsened, though changes in the politics and policies of some of the nations in that study, particularly in Latin America, had shifted, achieving much improved economic and human results. The Organization for Economic Cooperation and Development (OECD) 2014 study, " How Was Life? Global Well-Being Since 1820," used historical data from eight world regions to present "systematic evidence" of trends in areas such as health, education, inequality, the environment, and personal security over the past 200 years. 103 The report found that great strides had been made in some areas, including literacy, life expectancy, and gender inequality, noting that "People's well-being has generally progressed since the early 20th century across a large part of the world," However, while income inequality, as measured by pre-tax household income among individuals within a country, fell between the end of the 19th century until around 1970, it began to rise markedly at that point, perhaps in response to globalization. The study noted, "The enormous increase of income inequality on a global scale is one of the most significant—and worrying—features of the development of the world economy in the past 200 years. It is hard not to notice the sharp increase in income inequality experienced by the vast majority of countries from the 1980s. There are very few exceptions to this." OECD secretary-general Angel Gurría, noting the impacts of the still present Great Recession, called on world leaders to "strengthen our efforts to reduce inequality. The financial and economic crisis has exacerbated rising inequality and fueled a social crisis. In OECD countries the income of the top 10 percent of the population is 9.5 times that of the bottom 10 percent, up by more than 30 percent in 25 years. Anchored poverty has increased by approximately 2 percentage points between 2007 and 2011, with much larger increases in countries that have experienced the deepest and longest downturns. The number of those living in households without any income from work has doubled in Greece, Ireland, and Spain. And worryingly for our future, the youth have now replaced the elderly as the group experiencing the greatest risk of income poverty."

An Overall Approach to Appropriate Globalization

To restore balance and harmony to the world, an approach to international economics is needed that avoids the extremes of neoliberal globalization, with its "leave everything to the market" and "free trade approaches" on the one side - which allow almost free reign to extremely wealthy multinational corporations, and on the other of aggressive nationalistic policies found in some East Asian nations. 104 What is needed are policies that respect each nation and all their inhabitants, along with the world environment, and all its local ecosystems, while working to bring balance among the nations of the world. This is an Indigenous approach, and indeed, since Indigenous people have in many instances been suffering the worst impacts of both neoliberal globalization and national neoliberal polices, and in some cases of aggressive nationalist policies, some of them have been organizing and networking in participatory processes to work toward putting an Indigenous face on golbalization. 105

The main thrust of such an approach to globalization would involve countries having fair trade levels of tariffs and import regulations just to the point of putting their own businesses on an even playing field with foreign firms, as developed above, and a respectful system of collaboration and assistance to facilitate less developed nations and communities in raising their living standards to equivalents of those of the more developed world. This would require a transformation of international institutions, including the World Bank and the International Monetary fund, to function transparently following this approach, focusing on raising everyone up, rather than moving toward equalization by pulling nations down - which is a net effect of many of the current approaches - but which are in fact increasing disparities.

This would involve appropriate participatory consulting with all the people involved in a target area, in the course of providing funding, appropriate technology transfer, and technical assistance according to the wishes of the receiving people, and within the guidelines of the assistance project. Appropriate transfers of capital and technology are needed, taking into account long run impacts, especially concerning the environment. 106 In the face of the huge dangers, and already occurring damage, of global warming induced climate change, technology moves to safe renewable energy and other green development, with financial transfers to put them into effect, are essential. Currently, just as financial disparities are causes of many tensions within nations, so they are between nations. Thus steps must be taken, and vehicles put in place, to reduce the disparities appropriately. Where resources, such as water, are in short supply, collaborative transnational problem solving is needed on how best to conserve and share them, taking into account the interest and input of everyone concerned. So far as possible, the world needs to become more participatory and collaborative, selecting policies that in practice are for the long term good of all.

End Notes

1. Considerable thanks are due to Donna K. Dial, Professor of Economics Emeritus, IUPUI. in helping develop this paper. Dial provided and suggested readings and sources for researching this paper, and made numerous helpful comments and suggestions for developing and improving it.

2. Reductionism is the narrowing of concern to the specific factors that appear most relevant. This can be a powerful tool, as has been the case in western science, but often fails to address many factors that may be extremely important, leading to false understandings and actions producing unintended, sometimes quite serious, side effects. As is developed below, this has been a serious shortcoming of much of mainstream western economics. For a further discussion of reductionism see the opening of the next chapter, "Indigenizing the Greening of the World: Applying an Indigenous Approach to Environmental Issues."

3. Ladislov Rusmich and Stephen M. Sachs, Lessons From the Failure of the Communist Economic System (Lanham: Lexington Books, 2003). Also that traditional, and some non-traditional economics too narrowly considers human nature, see Albert O., Hirschman, The Passions and the Interests Princeton: Political Arguments for Capitalism before Its Triumph (Princeton University Press, 2013) and Essays in Trespassing: Economics to Politics and Beyond (Cambridge University Press, 1981). For a good overview of the main streams of economic theory, with discussion of many of the central debated issues, see Ernesto Screpanti and Stefano Zambagni, An Outline of the History of Economic Thought (Oxford: Oxford University Press, 1995).

4. The causes of the Arab Spring (and lack of it in some Arab countries) are complex, as shown in the discussion, that after some focus on the role of media, briefly looks at other causes, showing among them, several important economic factors: Muzammil M. Hussain and Philip N. Howard, "What Best Explains Successful Protest Cascades? ICTs and the Fuzzy Causes of the Arab Spring ." International Studies Review, Vol. 15, No. 1, March 2013, A similar but somewhat different analysis, also showing economic conditions among the causes is Filipe R. Campante and Davin Chor, "Why was the Arab World Poised for Revolution? Schooling, Economic Opportunities, and the Arab Spring," The Journal of Economic Perspectives, Vol. 26, No. 2 (Spring 2012), pp. 167-187,

5. Peter H. Gleick, "Water, Drought, Climate Change, and Conflict in Syria," Weather, Climate, and Society, Vol. 6, No. 3, July 2014,; and Francesca De Chantel, “The Role of Drought and Climate Change in the Syrian Uprising Untangling the Triggers of the Revolution,” Middle Eastern Studies, Vol. 50. No 4, January 18, 2016.

6. Michel Reich, A Political Economy of Racism (Princeton: Princeton University Press, 1981); and Charles W. Mills and Tom Mills, "Racism and the Political Economy of Dominion, New Left Project, first published: 1 April 12, 2012,

7. For example, see Andrew Higgins, "Populists’ Rise in Europe Vote Shakes Leaders," The New York Times, May 26, 2014,, reported, "An angry eruption of populist insurgency in the elections for the European Parliament rippled across the Continent on Monday, unnerving the political establishment and calling into question the very institutions and assumptions at the heart of Europe’s post-World War II order. Four days of balloting across 28 countries elected scores of rebellious outsiders, including a clutch of xenophobes, racists and even neo-Nazis. In Britain, Denmark, France and Greece, insurgent forces from the far right and, in Greece’s case, also from the radical left stunned the established political parties. President François Hollande of France, whose Socialist Party finished third, far behind the far-right National Front, addressed his nation on television from the Élysée Palace on Monday evening, giving a mournful review of an election that he said had displayed the public’s 'distrust of Europe and of government parties.' He added: 'The European elections have delivered their truth, and it is painful.'”  

8. From an Indigenous point of view, a proper economics is a "sociology," because it is about social relationships, including with the environment and all beings, in contrast to most of contemporary mainstream western economics, which primarily focuses on monetary matters, often in terms of such things as: profit and loss; monetary costs and benefits; efficiency and productivity in the use of resources, particularly from a monetary point of view; and so forth. All of these concerns are important in an Indigenous economics, as they effect relationships, but it is the relationships and the condition of the relating parties that is the primary concern.

To say that an Indigenously oriented economics is a "sociology" is not to say that such an economics, or "sociology," necessarily uses the methods and concepts of any school of past of present western sociology. It is just to point out its concern is primarily about the full set of relationships among people, and with the environment (encompassing all beings including the Earth), and with the condition of all entities. In this broad sense, the current western disciplines of anthropology and sociology are both "sociologies," though they each use somewhat different concepts and methods, which has made difficult some attempts to merge them into a single discipline (For example see, "What are Sociology and Anthropology?" Gustavus Adolphus College,, accessed May 26, 2015; and Edward L. Kain, Theodore C. Wagenaar, and Carla B. Howary, "Models and Best Practices For Joint Sociology-Anthropology Departments," A project of the ASA's Academic and Professional Affairs Program, 2006, Some might prefer to say that all the disciplines named above are social sciences. From an Indigenous viewpoint, however, much of contemporary western economics is an asocial science because it does not sufficiently concern itself with social (and in terms of human beings alone, trans-social) relationships.

For a discussion of an Indigenous view of economics from an Amazonian Native perspective with contemporary application, see Fernando Santos-Granero, Ed., Images of Public Wealth or the Anatomy of Well-Being in Indigenous Amazonia (Tucson: University of Arizona Press, 2015);

9. Rusmich and Sachs, Lessons From the Failure of the Communist Economic System, p. 126. That the "invisible hand" of the market fails to have the beneficial effect of aligning private with public interest that Laissez Faire economists claim for it, but instead leads to increased concentration of wealth and inequality of wealth, in the course favoring private over public interests, while encouraging a low level of needed research and development activities, see John Kenneth Galbraith, The Affluent Society (Boston: Houghton Mifflin, 1958), The New Industrial State (Princeton: Princeton University Press, 1967), and Economics and Public Purpose (Boston: Houghton Mifflin, 1973).

10. Rusmich and Sachs, Lessons of the Failure of the Communist Economic System, Part II. J.K. Galbraith discusses one aspect of keeping economies in balance through countervailing government power, in, American Capitalism: The Concept of Countervailing Power (Boston: Houghton Mifflin, 1952).

11. In addition to the discussion here, and below in relation to the Mondragon Cooperatives, Barry Stein, Size, Efficiency, and Community Enterprise (Madison: The Center for Community Economic Development, 1974) provides some interesting consideration of the size of an organization and efficiency, relating to its function.

12. Stephen G. Cecchetti and Enisse Kharroubi, "Why does financial sector growth crowd out real economic growth?," Bank for International Settlements, February 2015, The report is discussed in Grecthen Morgenson, "Smothered by a Boom in Banking," The New York Times, February 28, 2015,

13. Grecthen Morgenson, "Smothered by a Boom in Banking," The New York Times, February 28, 2015,, referred to in the Morgenson article: refers to, on financial sector Behavior: Luigi Zingales, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity(New York: Basic Books, 2012); On portion of financial sector wage inequality: Thomas Philippon and Ariell Reshef, "Wages and Human Capital in the U.S. Financial Industry, 1909-2006," National Bureau of Economic Research, Working Paper 14644, January 2009,

On this and other issues of major systemic problems in the U.S. economy and what can be done to correct them, see Joseph E. Stiglitz, Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity (New York: W.W. Norton, 2015).

14. John Kenneth Galbraith, The Nature of Mass Poverty (Cambridge: Harvard University Press, 1979), and The Anatomy of Power (Boston: Houghton Mifflin, 1983).

15. Thom Hartmann, The Crash of 2016 (New York, Twelve, 2013), Ch. 4, particularly pp. 65--66.

16. Landon Thomas, Jr., "Europe Fears Bailout of Spain Would Strain Its Resources," The New York Times, May 30, 2012,; and Andrew Higgins, "Europe Facing More Pressure to Reconsider Cuts as a Cure," The New York Times, April 26, 2013,

17. Raphael Minder, "Bailout Is Over for Portugal, but Side Effects Will Linger," The New York Times, May 5, 2014,

18. Paul Krugman, "Europe’s Greek Test," The New York Times, January 30, 2015; and The European Debt Crisis, The New York Times,, accessed February  22, 2015.

19. "Hitler's rise to power," Bitsize,, p. 1, accessed February 22, 2015.

20. Timeline of the Great Recession,, visited February 22, 2015.

21. John Maynard Kaynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936 and 2007).

22. Paul Krugman, The Return of Depression Economics and the Crisis of 2008 (New York: W.W. Norton Company Limited, 2009); Paul Krugman,  "How Much Of The World Is In a Liquidity Trap?," The New York Times, March 17, 2010,; and Janet L. Yellen, "A Minsky Meltdown: Lessons for Central Bankers," Federal Reserve Bank of San Francisco, April 16, 2009,

23. Hartmann, The Crash of 2016, Ch. 1. and Yellen, "A Minsky Meltdown: Lessons for Central Bankers." A listing with brief discussion of the depressions and recessions in U.S. history is in, San Jose State University Department of Economics, The Economic History of the United States, applet-magic,, accessed February 23, 2015.

24. On the savings and loan scandal: "Savings and Loan Scandal," In the 80s,, accessed February 22, 2015; T. Curry, and L. Shibut, "The Cost of the Savings and Loan Crisis;" FDIC Banking Review, Vol. 13, No. 2, 2000, pp. 26-35; and G.A. Akerlof, and P.M. Romer,  (1993). "Looting: The Economic Underworld of Bankruptcy for Profit". Brookings Papers on Economic Activity Vol. 2, 1993, pp. 1–73. On the Great Recession: Hartmann, The Crash of 2016, Ch. 1. and Ch. 6; and David B. Grubsky, Bruce Western and Christopher Wimer, eds., The Great Recession (New York: Russell Sage Foundation, 2011).

25. United States Government Accountability Office (GAO), Report to Congressional Requesters, Poverty in America: Economic Research  Shows Adverse Impacts on Health Status and Other Social Conditions as well as the Economic Growth Rate, January 2007,, "Results in Brief.

26. We emphasize “appropriate” because too often the measures taken do not really measure what is needed to be known, just as to often actions are not “appropriate” because they do not take into account everything significant in the circumstances, as western culture and science often fails to realize the extent of difference in different locations (in time or geography) or circumstance.

27. The Congressional Budget Office,, accessed February 21, 2015.

28. The Government Accountability Office: GAO Missions and Operations: GAO: Summary of Performance and Financial Information Fiscal Year 2014, GAO-15-2SP: Published: February 17, 2015. Publicly Released: Feb 18, 2015,

29. Some of the problems with existing carbon trading and similar programs are discussed in REDD Declaration (Reduced Emissions from Deforestation and Degradation), FYI, “Protecting the World's Forests Needs More Than Just Money” (2008). Indigenous Policy, Vol. XIX, No. 1, Spring 2008. See also the statements of Indigenous and Environmental groups on the proposed World Bank Carbon program in the same issue of IPJ in “Ongoing Activities: International Activities.” In addition, see Kanter, James (2008). “The Trouble with Markets for Carbon,” The New York Times, June 20, 2008, pp. C1 and C5. Some well working examples of this kind of program are discussed in Citizens Power. 18/2, Fall 1992, published by Citizens Action Coalition, 3951 N. Meridian St., Suite 300 Indianapolis, IN 46208, which contains several articles on this topic. Osborne and Gaebler (1992), pp. 299-395 touches on this issue in environmental regulation and discusses some other incentive based approaches to environmental regulation.

30. Osborne and Gaebler, Reinventing Government.

31. Measure for America a Project of the Social Science Research Council,, accessed February 19, 2015.

32. The Measure of America 2013–2014, Measure of America, June 19, 2013,, offers PDFs: Full Report, Key Findings, Media Releases, Download of Data Tables, Methodology Note, and MP THE DATA.

33. Opportunity Nation,, accessed, February 20, 2015.

34. National Index of Violence and Harm (NIVAH), a project of the Manchester College Peace Studies Institute and the Bentley Alliance for Ethics and Social Responsibility, December 18, 2007,

35. The 2007 National Index of Violence and Harm — a project of the Manchester College Peace Studies Institute and the Bentley Alliance for Ethics and Social Responsibility — released on December 17, 2007,

36. The Intergovernmental Panel on Climate Change,

37. "Fuel Economy: Regulations and Standards," EPA: United States Environmental Protection Agency,

38. "Renewable Energy Standards," SEIA: Solar Industries Association,

39. For example, Nika Knight, "New Report Details Big Oil's $500 Million Annual Climate Obstructionism," Common Dreams , April 7, 2016,, reported, "'While the world came together in Paris to embrace climate action in 2015, Exxon was doubling down with Big Tobacco tactics and obstruction'

 The dark channels through which corporations influence legislation are notoriously hard to trace, but a new detailed report estimates that the world's largest fossil fuel companies are spending upwards of $500 million per year to obstruct climate laws.

Published Thursday by the UK-based non-profit InfluenceMap, the report (pdf) looked at two fossil fuel giants (ExxonMobil and Royal Dutch Shell) and three trade lobbying groups, discovering that all together the five companies spend $114 million dollars a year to defeat climate change legislation.

More significantly, InfluenceMap says, 'Extrapolated over the entire fossil fuel and other industrial sectors beyond, it is not hard to consider that this obstructive climate policy lobbying spending may be in the order of $500m annually.'

'It's remarkably useful to see exactly how much Exxon and its brethren are still spending to bend the climate debate,' responded (pdf) Bill McKibben of in a statement. "There's a shamelessness here that hopefully will be harder to maintain in the full light of day.'

Photo: InfluenceMap

The group drew particular attention to the sinister lobbying group American Petroleum Institute (API), 'one of the best funded and most consistently obstructive lobbying forces for climate policy in the United States,' as InfluenceMap notes:

With a budget in excess of $200m, we estimate, through a forensic analysis of its IRS filings and careful study of its lobbying, PR, media and advertising activities, that around $65m of this is highly obstructive lobbying against ambitious climate policy. We estimate that ExxonMobil and Shell contribute $6m and $3m respectively to API's obstructive spending of $65m. Its CEO Jack Gerard received annual compensation of just over $14m in 2013, probably one of the world's highest paid lobbyists. In the run up to COP21 last year, he dismissed the Paris process as a 'narrow political ideology'.

InfluenceMap created the report to help concerned investors see how fossil fuel corporations were obstructing legislation to combat climate change. Since the #ExxonKnew scandal broke last year, such tactics have been under increased scrutiny from shareholders. 'So far in 2016 alone," the non-profit said, "there have been over 15 shareholder resolutions filed by investors in the US with fossil fuel companies on the issue of influence over climate policy.'

In addition, the 'sheer fuzziness of corporate influence prompted the project,' wrote Bloomberg. 'Nations hold companies to different standards—or none at all—for disclosures of how they are trying to influence public policy and what it costs. '

Bloomberg explained the study's methodology:

To come up with its numbers, Influence Map first had to define what 'influence' actually means. The researchers adopted a framework spelled out in a 2013 UN report written to help companies align their climate change policies with their lobbying and communications strategies. It's a broad approach to understanding influence that includes not only direct lobbying, but also advertising, marketing, public relations, political contributions, regulatory contacts, and trade associations.

Unfortunately, though, because of poor regulatory standards the 'new report excludes so-called dark money, or money spent on think tanks and institutes, as identified by Drexel University sociologist Robert Brulle in 2013,' Bloomberg said, because 'the researchers were unable to determine how these groups are funded.'

'We now know that Exxon knew about climate change impacts for decades, and kept the public in the dark while they lobbied to prevent meaningful action,' Vermont Gov. Peter Shumlin pointed out. "This report shows that while the world came together in Paris to embrace climate action in 2015, Exxon was doubling down with Big Tobacco tactics and obstruction. We cannot change this corporation by engaging with it, we must instead bring change from the outside by using economic pressure and divesting from Exxon.'"

40. Yong Geng, Joseph Sarkis and Sergio Ulgiati, "Sustainability, Wellbeing, and the Circular Economy in China and World Wide," Pushing the boundaries of scientific research: 120 years of addressing global issues, a Sponsored Supplement to Science (Washington, DC: Science/The American Association for the Advancement of Science, 2016), pp. 73-76.

41. The problem of having adequate data, including having sufficient consistency across time, is illuminated in by the case of American Indians and Alaska Natives as discussed in Harris, Sachs and Morris, Recreating the Circle, Ch. 2. Similarly, this has been a sufficient problem for Indigenous peoples, world wide, that the issue has been discussed repeatedly by the United Nations Permanent Forum on Indigenous Issues (UNPFII), including at a session devoted to the topic at the UNPFII annual session in April and May 2015 (, in the 8th and 9th meetings, April 24, 2015, This is also reported in the discussion of the UNPFII 2015 session in "International Developments," in Indigenous Policy. Vol. XXVII, No. 1   Summer 2015,

One set of examples of the problem of politics interfering with making correct data and information available for the discussion of public issues has been several states, controlled by Republicans in the United States, not allowing scientific reporting of dangers to health and wellbeing related to carbon energy production to be reported publicly, because of lobbying by extracting and energy producing industries. This is discussed in Marcia McNutt, "Integrity - not just a federal issue," Science, Vol. 347, Issue 6229, March 27, 2015,

42. There is some useful discussion on measures and indicators, including the problems involved in working with them, in "Equal Access Participatory Monitoring and Evaluation Toolkit,", accessed June 28, 2015, and in Garry M. Klass, Just Plain Data Analysis: Finding, Presenting, and Interpreting Social Science Data (Lanham, MD: Roman and Littlefield, 2008). The issue of quantitative v. qualitative research is considered, to an extent, at Explorable,, accessed June, 29, 2015.

43. A partial, but fairly extensive, sampling of successful tribal development by a number of Indian nations is in the economic development section of Harris, Sachs and Morris, Recreating the Circle: The Renewal of American Indian Self Determination, Ch. 5, Section 1.

44. Ibid., especially Chapter 2, giving an overview of continuing impacts of physical and cultural genocide (continued in each following section on an area of renewal work), and in Chapter 4, "Harmony Through Wisdom of the People: Applying Traditional Principles To Develop Appropriate and Effective Indian Tribal Governance."

45. Ibid., Ch. 5, Part 1.

46. This Afghani case was discussed in Professor Morton Kaplan’s introduction to international politics class at the University of Chicago in the spring of 1961, and confirmed and elaborated upon in Stephen Sachs discussion with an Afghani who had lived near the dam site.

47. Harris, Sachs and Morris, Recreating the Circle: The Renewal of American Indian Self Determination, Ch. 6.

48. Harris, Sachs and Morris, Recreating the Circle: The Renewal of American Indian Self Determination, Ch. 5, Part 1, which also develops additional examples of American Indian economic development as tribal and member development; Sharon O'Brien, American Indian Tribal Governments (Norman: University of Oklahoma Press, 1989), Ch. 1. For updates on Choctaw tribal affairs, including economic development, go to the tribe’s web site:, which was used in this report. See also, Mississippi Band of Choctaw Indians, Choctaw Industrial Park (Philadelphia, MS: Mississippi Band of Choctaw Indians, 1982); and John H. Peterson, Jr., "Three Efforts at Development Among the Choctaws of Mississippi," in Walter L. Williams, Ed., Southeastern Indians Since the Removal Era (Athens, GA: University of Georgia Press, 1979); and "Indian and Indigenous Developments: U.S. Developments: Economic Developments", Indigenous Policy, Vol. 14, No. 2, Fall 2003.

49. Stephen M. Sachs, "Renewing the Circle: Thoughts on Preserving Indigenous Traditional Knowledge," Proceedings of the 2015 Western Social Science Association American Indian Studies Section, in Indigenous Policy, Vol. XXVII, No. 2, Fall 2015.

50. “Frequently Asked Questions, ”Mondragon Cooperative Corporation website (Accessed January 7, 2015). Note that the background to the writing of the Modragon section of this chapter is that its principal author, Christina Clamp, has been a long time researcher of the Mondragon cooperatives, who has made numerous visits to Mondragon and interviewed many of its members. Stephen Sachs, who contributed to this section visited the cooperatives at Mondragon for ten days in 1984, on a group study tour of worker cooperatives in Europe, and has spoken with a number of researchers of Mondragon ove the years about its development.

51. Larraitz Altuna Gabilondo Ed., La experiencia cooperative de Mondragon (Eskoriatza: Lanki, 2008) pp. 265-288.

52. The principles that overlap with the International Cooperative Alliance are open membership; democratic control; interco-operation; education and a concern for community which is embedded in the social transformation principle (

53. Larraitz Altuna Gabilondo Ed. La experiencia cooperative de Mondragon (Eskoriatza: Lanki, 2008) p. 267.

54. Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008) p. 270,

55. Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008) p. 271.

56. Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008) p. 273.

57.  Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008) p. 278,

58. Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008) pp. 284-285.

59. Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008), pp. 282-283.

60. Ibid., La experiencia cooperative de Mondragon. (Eskoriatza: Lanki, 2008), pp. 265-288.

61. José María Ormaetxea The Mondragon Cooperative Experience ( Mondragon: Mondragon Corporacion Cooperativa, 1993),  pp. 31-32.  In the early years of published work, Ormaetxea used the Castilian spelling of his name (Ormaechea) but later shifted to the Basque spelling.  I have used the Basque spelling in deference to how his work is cited in Gabilondo’s book.

62. Marianne Heiberg The Making of the Basque Nation ( New York: Cambridge University Press),  pp. 20-23.

63. Ibid., The Making of the Basque Nation.( New York: Cambridge University Press),  p. 26.

64. Ibid., The Making of the Basque Nation.( New York: Cambridge University Press),  p. 33.

65. Ibid., The Making of the Basque Nation.( New York: Cambridge University Press),  p.185.

66. Luis Nuñez Clases sociales en Euskadi (San Sebastian, Ed. Txertoa, 1977), p. 124.

67. Ibid., Clases sociales en Euskadi (San Sebastian, Ed. Txertoa, 1977), p. 125.

68. Lucas Marín, unpublished paper, 1988; and Henk Thomas and Chris Logan, Mondragon: An Economic analysis (London: George Allen and Unwin, 1982). On the earlier periods of the Mondragon cooperatives, see also, Alastair Campbell, et al Worker Ownership: The Mondragon Achievement (London: Anglo-German Foundation for the Study of Society, 1977); Terry Mollner, Mondragon: A Third Way (Shutesbury, MA: Trustee Institute, Inc., 1984); A. Gutierrez-Johnson and William Foote Whyte, “The Mondragon System of Worker Production Cooperatives," Industrial and Labor Relations Review, 31: 1, October 1977, pp. 18-30; A.  Gutierrez-Johnson, “Compensation, Equity and Industrial Democracy in the Mondragon Cooperatives," Economic Analysis and Workers' Self-Management, Vol. 12, 1977, pp. 267-289; Robert Oakeshott, “Mondragon: Spain's Oasis of Democracy," in Jaroslav Vanek, ed, Self-Management: The Economic Liberation of Man (Baltimore: Penguin Books, Inc,. 1975}, pp. 290-296; and Germal Medanie, "Mondragon: Your Add Is About to Run Out," Grassroots Economic Organizing Newsletter, No. 10, September/October, 1983.

69. No cooperative at Mondragon failed through at least the end of the 1980s once it had completed incubation. One conventional farm business facing shut down because of financial problems applied to become a coop at Mondragon during this period, and was incubated long enough to determine if it could be resurrected. When the god fathers determined that it could not become viable, it was allowed to shut down. Also during this period, a fishing business became a Mondragon cooperative, but was spun off, despite its financial viability, because it refused to follow cooperative principles and rules.

70. Larraitz Altuna Gabilondo Ed. La experiencia cooperative de Mondragon (Eskoriatza: Lanki, 2008), pp. 214-215.

71. Ibid, La experiencia cooperative de Mondragon(Eskoriatza: Lanki, 2008), p. 217.

72. Ibid., La experiencia cooperative de Mondragon (Eskoriatza: Lanki, 2008), p. 217-218.

73. Ulgor Estatutos Sociales (Mondragon, January, 1975), p. 5.

74. Mondragon Cooperative Corporation website Accessed January 7, 2016) .

75. Sam Pizzigati, Too Much (Retrieved from Institute for Policy Studies: manufactures-inequality/ (Accessed June 1, 2015).

76. Christina A. Clamp, Managing Cooperation at Mondragon (Boston: Boston College Doctoral Dissertation, Sociology Department, 1986), p. 157.

77. Mondragon Cooperative Corporation website (Accessed January 7, 2015).

78. Material for this discussion of the recession is based on interviews with leaders in the Mondragon cooperatives in June and July 2015.

79. Larraitz Altuna Gabilondo Ed. La experiencia cooperative de Mondragon (Eskoriatza: Lanki, 2008), p. 219.

80. Information on the intercooperative agreement and the social insurance program is based on a presentation by Lagun Aro staff in Mondragon, May 19, 2011.

81. Maite Martínez-Granado, Patxi Greño, and Mercedes. 2012. "The Basque Country, Spain: Self-Evaluation Report." OECD Reviews of Higher Education in Regional. Accessed July 24, 2015.

82. The structure of incentives is briefly discussed in Chapter 5. For a more detailed consideration, see Paul Bernstein, Workplace Democratization: Its Internal Dynamics (New Brunswick, NJ: Transaction Books, 1980), Especially Ch. 5; Alan S. Blinder, ed., Paying for Productivity: A Look at the Evidence (Washington, DC: The Brookings Institution, 1990); and Edward E., Lawler III, Susan Albers Mohrman and Gerald E. Ledford, Jr., Employee Involvement and Total Quality Management: Practices and Results in Fortune 1000 Companies (San Francisco: Jossey-Bass Publishers, 1992).

83. "Producer Cooperatives," Grassroots Economic Organizing,, accessed March 30, 2016; "Types of Cooperatives," Nebraska Cooperative Development Center,, accessed March 30, 2016; and the Producer Cooperative Association,, accessed March 30, 2016.

84. Tom Ladendorf, "Worker Co-ops? There's an App for That," In These Times, April 2016.

85. Union Cab Coop: A Worker Cooperative,, accessed April 8, 2016.

86. Sarah Anderson and John Cavanaugh, and David Ranney, NAFTA's First Two Years: The Myths and Realities (Washington, DC: The Institute for Policy Studies, 1996); and Timothy A. Wise and Kevin P. Gallagher in Foreign Policy in Focus, October 24, 2002.

87. Wise and Gallagher in Foreign Policy in Focus; and pp. 40-41; and Ginger Thompson, "Nafta to open Foodgates, engulfing Rural Mexico" The New York Times, International, December 19, 2002.

88. Hartmann, The Crash of 2016, pp. 82-91. Except where otherwise indicated, the sources and references for information discussed below concerning the shift in U.S. trade policy and its results are from Hartmann.

89. Louis D. Johnston, "History lessons: Understanding the decline in manufacturing," MinnPost, February 2, 2012, This piece while making a very important point about long term trends in shifts from manufacturing to service in the U.S. economy, is a good example of the reductionism of neoliberal economics, particularly in regard to free trade, in focusing almost entirely on one pair of factors, increasing productivity and rising demand for services, while briefly mentioning another, rising competition from China and Japan (failing to mention the slowness of much of American manufacturing to meet foreign competition, particularly in automobiles, to shift sufficiently, and quickly enough to meet it in terms of improving quality and productivity, and meeting consumer wants), while saying nothing of the major factor, discussed below, the impact of neoliberal free trade policies. Indeed, with no examination of them, the article simply dismisses trade policy as not relevant: "New ideas for reviving American manufacturing seem to appear every day. Many of these notions have merit, but most are built on a flawed premise: that the decline in U.S. factory jobs is a recent occurrence, one that can be reversed through tax cuts or trade policy."

90. For example: "On the government role in guiding business development in Asian economies: Economic Development in East Asia, The Saylor Foundation, 2013,; and James Fallows, Looking at the Sun: The Rise of a New East Asian Economic and Political System (New York: Vintage Books, 1995). Concerning barriers to imports by Asian governments (while promoting exports), "3. Barriers to trade,", 2006,, lists a variety of barriers to imports to Japan reported by Chinese companies. See also: Glen S. Fukushima,  "Removing Japan’s barriers to trade and investment," East Asia Forum, November 17, 2012,; and Jae Wan Chung, The Political Economy of . U.S. Trade :U.S. Trade Laws, Policy, and Social Cost (Lanham, Lexington Books, 2006), particularly Ch. 8. Report From the Commission to the European Council: Trade and Investment Barriers Report 2014, March 12, 2014,, by giving a list of negotiations and actions taken in 2013 concerning trade barriers in various countries gives some idea of what some of these have been.

91. GATT Digital Library: 1997-1994,; and World Trade Organization,

92. Hartmann, The Crash of 2016, pp. 77-87. Note that the neoliberal economics begun by Reagan in the U.S., but accelerated by Clinton, also brought about reductions in investment in human capital, including cuts in support for education and training, and reductions in the safety net, along with moves to privatize as much of government as possible (pp. 22, 43, and 51).

93. Anderson, Cavanaugh, and Ranney, NAFTA's First Two Years: The Myths and Realities, p. 1; and Elliot Spagat (Associated Press), Power sites in Mexico under fire: Critics' suit claims plants at border that sell power to West coast avert U.S. controls," Indianapolis Star, June 15, 2003, P D1, D6.

94. Anderson, Cavanaugh, and Ranney, NAFTA's First Two Years: The Myths and Realities.

95. For an analysis of the transition to the market programs in East Europe, see Rusmich and Sachs, Lessons from the Failure, Part III, particularly Ch. 11.

96. Rusmich and Sachs, Lessons from the Failure, p. 264, N 42.

97. Rusmich and Sachs, Lessons from the Failure, pp. 300-301; and John B. Judis, "World Bunk: Japanese officials think Western austerity measures are the wrong medicine for Eastern Europe," In Theses Times, December 13, 1993, pp. 14-15.

98. For example, see, Stephen M. Sachs, "We Need International Pressure On Climate Change," Indigenous Policy, Vol. XXV, No. 3, Winter 2014-15,, which argues that higher tariffs and or other penalties ought to be assessed against nations that refuse to do their share in lowering global warming causing emissions in the pursuit of economic development, as an incentive to undertake development responsibly (i.e. sufficiently penalizing them to remove the economic incentive to pollute destructively).

99. Americas Program,, also reachable through Z-net:

100. The problems of large projects destructive to people and the environment are discussed in the "Environmental Activities," "International Activities," "Environmental Developments," and "International Developments" sections of every issue of Indigenous Policy, at least since 2008, at The problems of extractions impacting Indigenous Peoples have been discussed at every annual session of the United Nations Forum on Indigenous Issues, with reports of the meetings and access to forum reports, including on extraction, available through:

101. China has been suffering from a variety of serious environmental problems as a result of undertaking a series of very large projects, including building a large number of dams, and from engaging in a rapid industrialization program involving building and utilizing a large number of coal power plants. Among the many reports on the resulting problems are, Edward Wong, "Cost of Environmental Damage in China Growing Rapidly Amid Industrialization," The New York Times, March 29, 2013,; Beina Xu, "China's Environmental Crisis," Council on Foreign Relations, April 25, 2014,; V, Smil, Environmental Degradation in China (Armonk: Zed Press, 1984); and Mara Hvistendahl, "China's Three Gorges Dam: An Environmental Catastrophe? Even the Chinese government suspects the massive dam may cause significant environmental damage," Scientific American, March 25, 3008, It should be noted that in more recent years, China has become increasingly concerned about the environmental degradation that its policies have been causing, and slowly has been taking steps to enact and enforce environmental regulation ("Environmental Developments," Nonviolent Change, Vol. XXX, No. 2, Winter 2015,

102. See Chris Strohm, "Deaf Ears: No Thanks, World Bank says to critical study," In These Times, June 24, 2002, pp.  5-6. The countries studied included Bangladesh, Ecuador, Hungary, Mexico and Ghana. Also worth looking at is the United Nations Conference on Trade and Development (UNCTAD) Trade and Development Report 2003, which in October, found unequivocally that neoliberal economic policies of globalization, leaving development to the market (with minimal government services and regulation) for two decades has left subSaharan Africa in an economic wasteland, while declining shares of manufacturing output and employment ("deindustrialization") have accompanied rapid liberalization in many Latin American nations. Under neoliberal economic policies,  "enclaves" of industrialization linked to international production chains have dotted this landscape, without in most cases translating into more broad-based investment, value added and productivity growth. The study reports an urgent need for global economic institutions and governments rethink policies and return to carefully designed, vigorous government intervention to provide necessary economic stimulus and guidance, and to create and preserve an appropriate climate for development. The report concluded that the policies pursued to eliminate inflation and downsize the public sector have often undermined growth and hampered technological progress. As a result, "the current economic landscape in the developing world has an uncanny resemblance to conditions prevailing in the early 1980s", when many countries slipped into deep crisis. The target level of investment for catch-up growth - estimated by the Report to be in the range of 20-to-25% of GDP - has eluded most countries undergoing rapid market reforms. By contrast, active state participation in the economy in East Asia after the debt crisis produced a strong investment performance, growing manufacturing value added and employment and a rising share of manufacturing exports, with productivity and technology gaps with leading industrial countries rapidly closing.. Elsewhere, the Report finds a less encouraging record: Industrial progress has halted in much of the developing world; only eight of 26 selected countries succeeded in raising the share of manufacturing value added in GDP between 1980 and the 1990s, together with a rising share of investment; In economies with lagging industrialization and a declining share of investment, the share of manufactures in total exports has also been stagnant or falling, while exchange rate depreciation and wage restraint have been the basis for bolstering trade performance; The production structure in much of Latin America and Africa has seen a notable shift away from sectors with the greatest potential for productivity growth towards those producing and processing raw materials; and Where trade and investment have risen in the context of international production networks, the tendency has been for an apparent increase in the technology content of exports without a similar increase in domestic value added. Similarly, a study released in January 2004 found that, when taken as a group, all of the less-developed countries that depend on exporting oil, have seen the living standards of their populations drop--and drop dramatically ("World Developments," Nonviolent Change, Vo.l XVIII, No. 2, Winter 2004).

103. Deirdre Fulton, "Global Inequality Reaches Levels Not Seen in Nearly 200 Years: Growing wealth gap 'one of the most significant—and worrying—features of the development of the world economy' since early-19th century, OECD says," Common Dreams , October 02, 2014,

104. There are numerous cases where this aggressive nationalism has involved internal imperialism and conflict. For example China has been carrying out an internal imperialism against non-Han Chinese groups, exemplified by its Tibetan and Uighar policies, which have lead to demonstration by the ethnic population, followed by Chinese government repressiom, moving into ongoing conflict. Overviews of China-Tibetan relations can be found at: "Tibet profile: A chronology of key events," BBC News, November 13, 2014,; and "Chronology of Tibetan-Chinese Relations, 1979 to 2013," International Campaign for Tibet, 2015, An example of the conflict with the Uighars in the Chinese provance of Xinjang is, Michael Forsyth, "Suicide Bomber Kills Up to 8 in Xinjiang, Radio Free Asia Reports," The New York Times, February 17, 2015, The government of Myanmar is currently involved in similar conflict with a number of ethnic groups. For example, it was reported that Fighting erupted between the Army of Myanmar and an ethnic Kokang force, the Myanmar National Democratic Alliance Army, February 9, 2015, near the Chinese border, which by February 17 had left at least 47 government troops and 26 Kokang soldiers dead, as the President of Myanmar declared a three month period of martial law in the area ("Myanmar: Martial Law Imposed in Area Near China," The New York Times, February 17, 2015, And there are other examples.

105 96. Stephen M. Sachs, "Circling the Circles: Indigenous Movements Towards An Alternative, Apropriate Globalizationn," Indigenous Policy, Vol. XV, No. 2, Summer 2004. One of these organizations is Advancement of Global Indigeneity (AGI), founded by Americans for Indian Opportunity (AIO) and Advancement of Maori Opportunity (AMO), Americans for Indian Opportunity,; and Harris, Sachs and Morris, Recreating the Circle, Ch. 6, Section 1.

106. Much of the less developed world has been rushing to develop, causing huge pollution problems for people and the environment at home, and beyond, including increasing global warming and climate change. To a significant extent, these nations have refused to heed calls from the west to cut back on using fossil fuels, especially coal, which have been fueling their development. A number of analysts are calling for a different approach to curbing global warming while allowing for development in poorer nations and regions. They call for international investment in solar panels and nuclear energy with increased safety in developing nations. They assert that poorer countries will not stop development and cease using coal and natural gas to obtain it unless they are given a viable alternative. The proponents argue that carbon free methods do not require much land, needed for food production, and that with international investment, solar and nuclear power present a viable alternative to increasing carbon fueled power production. Discussing these environmental proposals, Eduardo Porter, "A Call to Look Past Sustainable Development," The New York Times, April 14, 2015,  reported,

The average citizen of Nepal consumes about 100 kilowatt-hours of electricity in a year. Cambodians make do with 160. Bangladeshis are better off, consuming, on average, 260.

Then there is the fridge in your kitchen. A typical 20-cubic-foot refrigerator — Energy Star-certified, to fit our environmentally conscious times — runs through 300 to 600 kilowatt-hours a year.

American diplomats are upset that dozens of countries — including Nepal, Cambodia and Bangladesh — have flocked to join China’s new infrastructure investment bank, a potential rival to the World Bank and other financial institutions backed by the United States.

The primary reason for this is the west's development limiting environmental policies.

While the authors of this book do not favor expansion of nuclear power, because of its extreme dangers, we find assisting development through clean energy and low power technology an important policy approach.


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