Capital and the Debt Trap (eBook)

CLAUDIA SANCHEZ BAJO has a PhD in development studies (ISS, The Hague). She is Chair in Co-perative Enterprises within the Faculty of Business and Economics at the University of Winnipeg, Canada. She has lectured in The Netherlands, Germany, China and Latin America. She has published The Political Economy of Regionalism – Business Actors in Mercosur in the Petrochemical and Steel Industrial Sectors (2001), and contributed to The Political Economy of Regions and Regionalisms (2005).   BRUNO ROELANTS has a Master's in labor studies. He is Secretary General of CICOPA, the sectoral organization of the International Cooperative Alliance for industrial and service coperatives. He has worked on development projects in China, India and Eastern Europe, and coordinated the cooperative negotiating group on ILO Recommendation 193 on the Promotion of Cooperatives. He has lectured on cooperatives and local development in Italy and is co-author of Cooperatives, Territories and Jobs (2011).

Cover 1
Half-Title 2
Title 4
Copyright 5
Title 6
List of Boxes, Figures and Tables 10
Foreword by Ian MacPherson 11
Acknowledgements 14
Introduction 16
1 The Mother of All Crises? 20
Introduction 20
How it began: the sub-prime housing market in the USA 21
Danger ahead 23
Bursting the global bubble 27
Wealth destruction 34
Homes and pensions 36
Jobs and plants 37
Trade and investment 41
Curbing the crisis 44
State aid to banks: solvency and nationalization 45
Stimulus packages 47
State spending and solvency 48
Governments face a public debt crisis 50
Which strategies have been attempted to restart growth? 52
Technology and industrial policy 53
Regionalism and deleveraging 54
Investing in commodities and SMEs 54
Regulation to contain the worst excesses by banks and lenders 55
Conclusion 57
2 Causes and Mechanisms: The Crisis as a Debt Trap 60
Introduction 60
Hypotheses concerning the causes of the crisis 60
The individualistic hypothesis 60
The monetary hypothesis 63
Problematic business models 64
The systemic reproduction hypothesis 68
The three traps 69
The consumption trap 70
The liquidity trap 78
The debt trap 86
Conclusion 92
3 Shifting Control versus Ownership 94
Introduction 60
The relevance of discussing the organization of economic entities 95
Ownership and control 97
The evolution of the concepts of ownership and control 97
Financialization 99
Technification 100
Control versus ownership in key economic functions 102
The investor function 102
The producer function 106
The consumer function 112
Conclusion 115
4 Cooperatives: Importance, Resilience and Rationality 116
Introduction 116
Critiques of cooperatives 117
The economic and social importance of cooperatives in the world 120
Economic importance 120
Social and employment importance 123
Economic and social contributions that cannot be measured by conventional methods 124
The resilience of cooperatives to the crisis 120
Understanding the essence of the cooperative rationality 129
The international cooperative standards 129
The first layer in understanding the cooperative rationality: the international definition 131
The second layer in understanding the cooperative rationality: the operational principles 134
Cooperative values 141
Mutuals, a very similar type of economic organization 142
A political economy approach to cooperatives 143
5 Natividad Island Divers’ and Fishermen’s Cooperative, Mexico: Managing Natural Resources to Generate Wealth 145
Introduction 145
The evolution of the cooperative 145
Internal organization, impact of the crisis and partnerships 147
Managing natural resources 148
Conclusion: combining long-term environmental, economic and social interests 149
6 Ceralep Société Nouvelle, France: David and Goliath in the Global Economy 151
Introduction 151
Evolution of Ceralep up to 2003 152
The petition for bankruptcy 154
From liquidation to the establishment of the cooperative 155
Community mobilization and fund raising 157
The Ceralep Société Nouvelle cooperative 160
Main lessons from the Ceralep experience, as viewed by the participants 163
Absentee investors versus real economy producers 163
How Ceralep was transformed into a cooperative 164
On the cooperative model 165
Conclusion 166
7 The Desjardins Cooperative Group: A Financial Movement for Québec’s Development 167
Introduction 167
Desjardins’ first steps 168
The Great Depression: an opportunity for the Desjardins network to grow 170
The post-war period, the 1960s and 1970s: the debate on consumption patterns 171
The 1980s and 1990s: the North American free trade agreement and globalization 174
The internal debate on the group’s restructuring in the 1990s 178
Between 2000 and the global crisis: Desjardins’ big transformation 183
The global crisis and the future 186
Conclusion 189
8 The Mondragon Cooperative Group: Local Development with a Global Vision 191
Introduction 191
The first stage: education and research, self-finance and entrepreneurial development (1943–79) 193
The very first steps 193
Basic characteristics of a Mondragon cooperative 194
The birth and development of the group’s support institutions 195
How the bank was involved in the creation and early development of the cooperatives 200
The second stage: economic crisis, entry into the EU, globalization (1980–91) 202
The crisis of the early 1980s 202
Entry into the EU and the beginning of the Mondragon group’s restructuring 206
The third stage: the development of the Mondragon corporation (1991–2008) 209
Implementing the restructuring process 209
Expansion and internationalization 210
New financial mechanisms 210
Evolution in the distribution sector 211
Exploring new activities: social services 212
Education and academic research 213
R& D
The fourth stage: managing the crisis (2008–10) 215
Impact of the crisis on Mondragon 215
What the group is doing to counter the effects of the crisis 216
Conclusion: main lessons from the Mondragon group 222
The effort to create sustainable jobs 222
Strong emphasis on education and training, leading to a societal project 224
Solidarity and cooperation among enterprises, combined with a rigorous entrepreneurial approach 224
Equilibrium and adaptation to change 225
Is the Mondragon model replicable? 226
9 The Global Crisis: Mother of All Warnings 227
Introduction 227
Stepping off the trodden path 228
The direct contribution of cooperatives to the economy 230
Systemic contribution 230
Incidence in key economic activities 231
Creating shared wealth 233
The indirect contribution of cooperatives to the economy as a source of inspiration 235
Change may well be on the horizon 237
Notes 239
List of Interviewees 274
Bibliography 276
Index 285