Recession & Job Loss In Globalized World: Rebuilding Community Economics Through Social Enterprise

By some reports a whopping 200 million people had lost jobs by June 2021 in the silent job crash as much of the world stayed shut down and locked out in panedimic induced solitary confinement. The only visible cues , if one ever noticed was a steadily growing “open to work” tagged people popping up incessantly on professional networking apps . I too dismissed these desperate online shout-outs as echo from some faraway universe . Nevertheless it did made me feel a bit guilty of getting along too cosy on extended 'work from home' life, as millions faced layoffs and jobless existence in outside world battling first millinal economic meltdown due to global pandemic. The news of mass terminations being handed out over the zoom video calls by so called responsible corporates,during such critical times further muddled  this dull picture. The grinding office routine, with all the trappings of precarious work life balance that I recented once now seemed comparatively desirable, making me recall face of perennially friendly sounding HR manager forever lipsynced with comforting job reassurance to the valuable employees. 

Till couple of years back things seemed all fine. I was so damn sure of my stable corporate career having unlimited bragging rights on my Watsapp MBA alumni group,enlightening everyone about 'extraordinary times we are living in' with a booming global economy, raising GDP, a digital e-commerce revolution in making... when

in summers of 2020 my own business development division in the company suddenly got shut down during the lockdown!!

It really felt like a rude shock least expected to put it mildly despite the subtle realisation of omnious signs of  eventual crisis over the past years. "We regret taking this decision due to COVID induced financial crisis" was only line of explanation mailed, now by not so friendly, but alien and unresponsive HR,to each of us who got fired during lockdown. Many senior colleagues who had given many years of service to organisation just couldn't come to terms with it for a long, for me it took couple of gritty & anxious ' job haunting' months and some pragmatic monetory introspection to latch on to the next .

 Since then much water has flown down the Yamuna in the last two pandemic years and like many other things in life ,my corporate world view just no longer fits with lots other things that are happening around the world. My google literate mind squirms for possible answers like a clueless backbencher when I read about successive collapse of one national economy after other, millions of desperate immigrants  crossing borders seeking refuge from poverty and unrevealing natural disasters of unseen magnitude taking place world over. With each passing day mind is filled with growing disillusionment for a world that is more engrossed with trending billion dollars start ups news and "million likes viral videos"while being immune to overwhelming disparity and mass consumerism at one hand and  blindsided to looming climate change disasters on other like a enchanted cult of sucidal wealth worshippers. 

 The existential 'WHY' like a piece of rusted  sharpnel of past, is stuck in my psyche  and keeps nailing my 'move on' mindset on same damning questions.

"WHY is this happening...WHY despite such immensely developed, technologically advanced and prosperous world, people at far end of economic growth spectrum are in front line to losse jobs, face bankruptcy and dislocation from native land  for every damn economic disruption? "If a liberal globalized economy and consumerism in the new world, is causing so much poverty & environmental deprivations then HOW its constantly celebrated and promoted ...WHAT is wrong with living in a stand-alone self-contained local economies? ...

I thought I need to unlearn the ways I understand money, wealth and free market and find out the reasons why this global libral economy treats communities as collateral damage for the greater economic objectives . 

1989 Opening the walls : 

"Globalization" I first heard of this word, one winter night, as the days teathered  restlessly on the edge of the year before it hit the new blazing nineties. The state run television news beamed clueless commentary lamenting demise of erstwhile socialist USSR, trying to make sense of the estatic crowds pulling down the Berlin wall dividing East and West  in Germany (yes they were two different countries) played onn.

Neither the rejoicing Germans, or the bored news anchor nor me knew " the falling walls" were opening the flood gate to whole new economic era, which will change the world forever.

Year 1990: Globalisation, deregulation and liberalisation of the world markets became a dominant theme during the 1990s. The fall of the Berlin Wall in 1989 marked the end of the cold war, and heralded the beginnings of a new world order. In commerce, the momentum of change was further supported with the foundation of the World Trade Organisation (WTO) in 1994 and subsequent treaties on trade liberalisation, which made markets more accessible and opened up entirely new markets to international competition.

This was not a sudden change,exactly five decades before after fighting a long and bloody second world war, representatives of world major economies huddled together at Mount Washington Hotel, and had worked out a mutual consensus between the various countries over the basic idea that from now political ideologies and national government will stay out of international trade and commerce undertaken by MNC business entities. Be it a democracy or  socialist political system , governments around the world, within their own political ideologies, will accept and honour global/regional trade agreements and allow trade among these business entities to invest in their countries and exploit the local resources. 

Over the coming decades gradually as per the vision of this conference a global system of free trading came into existence ushering era of unrestricted movement of capital and profits that local government promoted and participated. As a bargain developed countries got access to cheap raw materials and new markets, while offering easy credit terms to poor countries to develop their infrastructure.

"If you export what you produce cheapest and import everything that you get at least cost, all nations will operate at their best economic potential. " This the first rule of globalisation playbook. The entire new liberal market economy is based on a philosophy in which every one is either a consumer or seller. Not only countries but also individuals. Our net worth as an individual is derived by a market on basis of our buying capacity as a consumer or our ability to create higher market demand, as a seller, for what we produce in competition with others who sell the same. If your offer is not relevant to market or your net worth is low ,you are considered economically poor, and socially weaker class...a net losser. Weather it's your financial capacity to buy latest car or your own ability to market your start-up idea so people put their money on it or value of your professional skills for finding a good job, the whole game is pivoted on what you can buy (consume) more or how best you can sell ( demand) yourself or your services to market. The market defines you, me and our social perception of sucess and failure.

 Maximum profit- lowest cost that is the only way to create wealth and stay competitive in 'market' : So US tech giants outsource Indian tech engineers, while Bangladesh with its cheap labour makes it manufacturing hub for UK & Europe's textile brands. China's huge trading and manufacturing base is ground zero for most of the world's industrial production.

This whole Global market economy, is pivoted on a monetary algorithm of profit maximization i.e mass consumption and mass production. But to do so on global scale, you need extraordinary giant organisations, who are a select club of MNC monopolies which due to their sheer scale of  technologies & financial capital can do such continuasally at lowest cost year after year and still sustain its high rate of profitability for people who invest in their shares. This system works on optimum value creation out of all the resources by converting them into monetory wealth. 

But what exactly is idea of wealth: Let me share with you a hypothetical story of "Red Rice Famers"; They were farmers living in one remote village, cultivating a local variety of red rice which is offered in exchange for local village produce between the community. The red rice is a local value denominator for exchanging commodities and services among villagers . Overall the small community is self sufficient. In strict monetory terms they are all poor and underdeveloped. Later local population in this area, gave up farming  and start working in newly a opened mall that offers money wages and attained simbalance of financial growth. With money wage  so earned they switched to eating food items purchased from market including cheaper rice taken from same super market,giving up red rice as upgrade to better lifestyle. This transition to money based economy not only effects the 'traditional self sufficiency of village farmers  symbolised by 'red rice'and their local wealth but also the new monetory income so generated is exhausted in buying  food products from market. They earn wages but gradually as they replace all their daily need with market products they spend all they earn on buy them. They quickly reach a point when they are cought in never ending 'earn spend earn' cycle,as expenses become equal to earned wages. The community is now food dependent from being food producers. To further maximize the profit ratio , the mall increases the prices of food products, expands it chain by buying out more land and lays off extra men power to enhance productivity. So the village now is faces raising unemployment, increasing inflation and shrinking land for cultivation. To survive the villagers sell their lands to gain from increased rates and migrate to urban centres to get better wages. 

As big corporations become omnipresent and rich by being able to sell their products everywhere from big cities to small towns, smaller businesses and local artisans perish, with no ability to compete, community to community exchange of goods and services is ceased due compulsions of money based transaction ; money can only be earned as wages worker.  As more people leave farms to migrate to industrial centers to earn income in form of “wages” and their consumption shifts from self-sufficiency to market offered goods & services. This form of market dependent consumption results in widening of expense/income gap , driving large number of local communities into debt & poverty. But people continue to buy more things from market and industries make more products in absence of any alternative. This is “Gross Domestic Product” or GDP often proclaimed sign of economic growth. 

If economist are to be believed,  a country that produces and sells more goods & services, has high GDP, and which means it prosperous. So you too can have high GDP but does it also mean people are happy? Spending more money doesn’t always mean life is getting better. Often it means things are getting worse.They spend more but buy less things or they work more to earn less.

With more industrial output then the number of buyer having money to buy, “Recession” erupts in global economy at regular intervals. Wall street crash 1930” , Great Depression 1940, Oil price crisis1970, Black Day stock crash1980, Asian financial crisis in 1990,Dot com crash 2000,EU crisis 2010 and COVID crisis 2020 all are financial disruptions of global scale which took away lifelong earnings of billions of people across world . This is corrected, amusingly, by banks reducing interest value of small savings; corporate by lay off of workers and governments by giving large portion of tax collection to write off the industrial bad debts. Strange economics!

 Even if not directly to be blamed, the globalization negatively impact the local communities by increasing dependency on industrial production and exposing local community of small farmers, artisans, and traders to massive unequal global competition.

 So when economic recessions due to any global event like COVID or 9/11 hit a major financial sector it creates a domino effect that in absence of any social safety mechanism or local substitution, results in immediate job loss, production cuts and austerity measures –  increasing taxes and making welfare spending cuts in economies around the world. 

What is a good economic system?

Nations and the economic system is not entirely the sum total of consumption of various products & services or various possibilities of consumption in an open market but also a social system consisting of local communities of people. Even in absence of any formal economy, there exist intrinsic ecosystems, of social exchange in every community that creates value not always in term of financial gains but does provide self-sufficiency that is sustainable and aims for expansion of common welfare. It can be farming, handicraft, culture, history or local know how.

Community operated solar micro grids

The idea is not to advocate the economic isolation or to criticize free market, but to reinforce and support social business that is inclusive and collaborative toward those stakeholders who are don’t fit within free market system or economies of scale, but are relevant at community scale services. 

Community library network in 
Arunachal Pradesh  India

This is best explained by Dani Rodrik, Professor of International Political Economy at Harvard University says “Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, nor do sometimes markets and states undermine them."People seem to be becoming increasingly interested in moving away from a focus on globalization and towards an emphasis on “localized” economies. “

Grameen microfinance social banking

The critical idea is that we need to empower, reinforce and fulfill the full economic potential of home grown industries and open up for calibrated globalization in sectors which can benefit from it.

This can be enabled by a innovative form of creating product and services such as social economics or community economics. When combined with entrepreneurial spirit and social welfare mission , it reproduces outcome which promotes local wealth creation, sustainability and  inclusive shared consumption of resources without bias of class or gender. It embodies the best of innovative  and Eco-friendly entrepreneurship , driven by social mission  but on strength of a self sustaining surplus generating business model. There are no free lunches or aid dependency like non profit or charity but a dynamic start up model that utilizes community partnership, clean sustainable technology, and no frill marketing to generate value that can be shared among all stakeholders beyond monetary constraints. This business model can function both ways either by employing local manpower and local resources to create sustainable sale-able products to empower them economically or providing them extremely affordable alternatives to out of reach services to improves their quality of life. Or it can be both.  

Social business and community enterprise could be critical block chains to reinforce the free market economic model. It may not be the final word ,or magical prescription for all the ills that globalized economy has but its well intended optimism that comes from gradual replication and its positive impacts seen till date. Lets for once consider it as another attempt to re-design human endeavor  to improvise and innovate economic growth, through a experimental business models which accepts reality of economic poverty, by offering modified social-economic commodities that exclusively caters to and contributes toward fulfilling unresolved needs of under privileged section of society . 

To conclude lets get back to first point where we started- job loss in globalized world. Isn't this disruption indicative of our own social disinterest and herd mentality to blindly follow rat race careers while surrounded by extreme poverty . Somewhere in our minds we know time is ripe to start responding in a responsible ways to issues of wealth inequality,environmental degradation, and social exclusion.These are the gaps causing economic breakdowns which affect us all, then why don't we  try to be part of solution by undertaking projects to reduce these gaps. To be honest,writing this long essay is my way to introspect on this issue for which I claim no expertise but I feel I am part of the larger picture and just like you, seek to bring about the change in situation . 

Harish Hande runs SELCO a social business offering
extreme affordability solar appliance

“Human creativity is unlimited. It is the capacity of humans to make things happen which didn’t happen before. Creativity provides the key to solving our social and economic problems."

  Muhammad Yunus, Founder of Grameen Bank and pioneer of microfinance