Socio-Cultural Economic Abundance from Community-owned Industrialization
Introduction
The concept of self-reliant community economies (people-centered, people-empowered, people-owned) comes out of the frustration of ordinary citizens and the masses over the past and prevailing economic experience wherein they are inconsequential players, often victims, of a system dominated by government, the elite and transnational corporations. The emergence of attempts at creating community economies is both a form of self-defense against injustice in the system, and a determination to free oneself and entire collectives from dependence on the system that in general does not work in their favor. A system, moreover, that needlessly perpetuates sub-human conditions.
In building an alternative economy we do not entertain the delusion that the alternative will displace the dominant system that has become so entrenched and consolidating even more power every day. All we aspire for is to create space where people can build a more just and compassionate system solid enough to withstand or reject the impositions of the dominant system. But since numerically the poor outnumber the rich, their experience of a more caring economy where they have a say and future, will eventually be the widely accepted system, and which will attract and convert others away from the once dominant system. Since socio-political reality is created by the choices people make, the dream of community economies consolidated by stakeholder assemblies on a national, regional and global scale should not be long in coming, given the growing level of awareness, dissent, frustration, and disgust among the citizenry.
We envision the alternative economy to be community-based and community-owned, manifested through industrialization that is powered by socio cultural economic abundance at the core of community, and enhanced by internet technology, establishes the requisite connective mechanisms that will open the path to an alternative socio-political order, for this country and the world.
A DIFFERENT TAKE ON THE ECONOMY AND INDUSTRIALIZATION
A casual scanning of how traditionally economic activity has been done easily yields the following observation:
- The process is essentially competition for resource, where the strong necessarily have the advantage. The bottom line may be profit, but the top line is power over others.
- The advantage of the strong is well protected and consolidated, and pressed to further advantage without regard for the consequences on the majority who are weak. The resulting disparity has been pictured to be something like 20 percent of the population controlling 80 percent of total wealth; whereas 80 percent of the population have to fight over the measly 20 percent of the wealth.
- Resources being finite, the crisis of scarcity is inevitable. And the cruel response of those who are in control, and have consolidated power, is to raise prices, worsening the rich-poor gap, and exacerbating hunger and poverty in numbers and in degree.
What then can be the reverse situation?
Well, economic activity where…
- The process is essentially placing the highest value on ordinary people and the collective development of their productive capacity from which they will draw their community power,
- Where the creation and distribution of opportunities and resource is for the purpose of attaining equity, (and not the advantage of a few). Where access and claim by the poorest on opportunities and resource is prioritized and protected, in order to guarantee everything necessary for survival, and to suitably enable everyone to advance along an upward spiraling path from survival, to sufficiency, to surplus.
- Because resources are finite, a provident and caring culture has to prevail at the core of the process—to moderate consumption (and any residual greed), so that provident abundance, in terms of kagihawaan, katiwasayan and kasaganaan, may be shared and enjoyed by all.
Differences between the two systems:
The major difference between the traditional economic model and the alternative we seek to establish is that the effect of the former is to concentrate resource and wealth at the center controlled by a few, while in the latter opportunity and resource is widely distributed at the grassroots so that wealth is likewise widely distributed. In the former, the few owners of big capital control the process and outcome; in the latter, communities of stakeholders democratically control process and outcome, and provide the capital.
The spirit that animates the traditional capitalist mode is advantage and competition, or competition for advantage. Greed, individualism and corporate toughness are the values fostered. In contrast, the spirit that animates the alternative is cooperation and complementation. The foundational values fostered are sharing, mutuality and compassion.
The structure and mechanisms of the capitalist economy include mergers and buy-outs that further the consolidating process. Rules and policies favoring those already having advantage are imposed. This control is globalized through transnational capital.
Can the alternative put up a parallel structure? Is there need to?
The nature and structure of “community”.
When we use the term “community” we do not merely mean people taken together in one or another form of collective, not just people of a neighborhood, not a formalized association. We refer to a confluence of specific meanings of the word, The first meaning is when we refer to people as themselves, as human beings, as citizens, in contrast to the social institutions and hierarchies that have been created by them. Or into which they may be organized, as say the family, state, business, church, academe, and media. By distinguishing community from institution, we seek to focus on a dynamics that emanates from the interior self (loob) of everyone, that when inter-active, as ka-loob results in the reciprocal magnanimity and collective wisdom (kalooban ng pamayanan). We mean specifically people who, accepting their common humanity, and giving value to the capacities and potential of everyone, connect with one another to bring their collective wisdom, creativity and resources to bear fruit in abundance for the enjoyment of all.
It is in this specific sense/experience that we use the term community. It is this community sense/experience that we need to tap when we construct community economies. People who reawaken to this sense of common humanity, of accepting the fact that people need one another, need to be able to depend on one another, to be able to count on one another, that it is best that they optimize the resources they have between them, making them available to one another, and applying them to attain the goals of their communal economy and to its management.
The dominant dynamics here is mutual reinforcement flowing from reciprocal valuing. Connectivity (relationships and communication) ensure flow of energies and complementation of functions as in an ecosystem. And with the application of ICT, connectivity and flow is enhanced by speed, that will bring about greater economy, greater efficiency, overall effectiveness, and excellence. These qualities and hallmarks of success are rigorously pursued in the highly competitive corporate capitalist economy. But the ultimate results are different, and the qualitative difference must be noted. For corporate capitalism has always been accompanied by social exclusion and inequity. Whereas, in community economies these unfortunate outcomes are deliberately rejected. Each community economy at whatever scale, remains open to the other communities on the same, or different, scale, because all are part of one ecosystem for mutually assured survival, self-sufficiency and surplus.
The above propositions point to the development of a sector of the economy whose primary interest is not profit, but work opportunity and wellbeing for the many (and not just a few). It is also grassroots-based protection and advancement of the common environmental and economic resource base, cultural and social patrimony. This is possible under a regime of reciprocal valuing and value adding.
To best capture this spirit and underlying cultural core, we pick on the experience of boat people out in the turbulent open seas. Bound together by the shared peril, we need to manage our dwindling resources and optimize manpower. The concern for survival drives us to aim for collective efficiency through reciprocal reinforcement in various ways. And because of the precariousness of the situation we come to value whatever it is each one can contribute, and thus to value one another. This is what we refer to as the balanghai experience; which produces the high sensitivity of the self committed to the rest. A tending to be for one another. A historian has said this is the experience of our sea faring ancestors that was ingrained in our culture, manifested as bayanihan. This regime of reciprocal valuing is rooted in our culture. It is a critical factor that we must reclaim as we build our community economies.
Our word for this regime is TANGKILIKAN.
After the preceding clarifications on perspective, let us now move to how we plan to promote Tangkilikan.
Assumptions about Community-based Industrialization.
It is customary to take industrialization (technology-led prosperity) as the measure of a country’s development. It is a state toward which third world nations are expected to move. It is a goal of the national economy. It is part of the vision and process of modernization, We shall use industrialization as such a measure but with a big difference. In the light of environmental damage, expansion of poverty and routine social exclusion of the masses caused by industrialization that is powered by greed, we cannot take industrialization as it has been carried out in the past. We must insist on industrialization that is green, sustainable and community-owned. These three imperatives are intrinsically intertwined. The alternative we establish must vindicate this social truth.
Let us now proceed to outline the premises for industrialization in our alternative economy:
- Industrialization must be a communal achievement, initiated at the grassroots, and communities having authentic claim to co-ownership. It should not be the privileged domain of an industrializing elite.
- Industrialization must be the means for attaining economic, social, and political equity and justice in our public lives. It may not be monopolized by cronies of those in power.
- Industrialization must be the means of empowering the ordinary citizen, the common tao, individually and collectively. It must provide the bridge of opportunity to farmers, laborers, office workers and professionals, the unemployed and especially the poor. They should consciously play the role of movers of the process in various capacities.
- Industrialization must be done in such a way as to be the means not only of ensuring the resources that future generations will need are protected, but that new technologies, in harmony with nature, will sustain the ever expanding requirements of the succession of generations.
- Industrialization must be shaped and propelled both by technology and culture, not driven simply by profit motive. It must draw out the best people can be; introduce and engage them, and expand their capacities in the new knowledge economy.
- Industrialization must accomplish not just economic prosperity.
It must be imbued with social responsibility not as a PR function but driven by genuine concern for one another, ethics and the environmental imperatives.
- Industrialization must be tamed and managed in its unfolding as one of many dimensions of the complex process of nation building, intertwined with the process of attaining political maturity as a people.
THE TASK ON HAND: HOW DO WE PROCEED?
How do we create that space for an alternative economy, in the midst of the dominant system? How will the subscribers to this alternative economy come together to form this community economy? How do we gather and hold together the people who will opt to participate in this alternative? How do we attract the rest? What values and ethical standards do we set and agree on? What mechanisms do we need to install?
These are but some of the many questions that need to be reflected on and answered. We shall try to cover a few.
Industrialization as a Community Agenda
The process of industrialization involves the development and growth of specific strategic industries where the nation or the community has relative advantage. Innumerable businesses, can be expected to emerge both upstream and downstream in relation to any of the strategic industries. People who work to earn a living are involved in these gamut of enterprises, big and small. And the rest who are unemployed are desperately trying to get into these enterprises. The owners of these enterprises, function as producers, service providers, suppliers, traders and retailers, all part of a complex that outputs goods and services to satisfy the needs of the population.
At the present people pursue their livelihood or run their enterprises independently of one another, in an open market as they say. There is no overarching community agenda to hold their respective endeavors together which will help them see how they can move as one and mutually reinforce one another. With the tangkilikan process they will be subscribing to a modified way of looking at and doing business according to a set of values, policies and procedures different from what they have been used to. Participation will be on two plains: as business owners and as consumers.
The consumers are seen as distinct from the enterprises. They are the buyers and end users. They are at the receiving end of the supply chain, which starts with producers and capitalists, down a series of distributors and retailers till the goods finally get to the consumer. However, in community economies, the consumers will become integral part of the enterprise, in their new capacity as co-investors.
Through the role of business owner/investor and consumer/investor, participation will be wide open to people in every community. Social enterprise will find expression in many forms of partnering between and among businesses, between businesses and workers and between businesses and consumer networks. Participation will take these many forms. The industrialization prospect will truly be a people’s agenda.
Participation through Work Contribution
Priority is given to this form of contribution as this is the only means available to the very poor and unemployed and have not yet set aside some savings. Lack of money should not be a hindrance. Every person of working age and not incapacitated can initiate his/her participation by putting in time for some work or service. Work contribution is the basic resource considered in worker cooperatives and is the primary basis for their membership and share of the revenues generated by the cooperative business. Through work for a certain duration, one can earn points that may be used in exchange for food and other goods, or credited as savings.
Participation through Share Capital
Another avenue to participation is through capitalization of enterprise by putting in share capital. We apply the share capital concept from cooperatives, rather than corporate stocks in a corporation, as the way that is compatible with the community economy. While labor, or work contribution is given greater importance than capital, it is availability and adequacy of capital that ensures the viability and growth of a business. Continuous capital build up is therefore essential. In community economies which cannot count on large capital stocks at the start, small savings are aggregated and converted into a stream of micro-investments to match the amount needed for specific enterprises.
Participation through Social Ownership
Ambagan, Tayaan, Bigayan.
Under the present system, the industries are owned by the rich. The workers, some as high up as intermediate management are merely hired labor. The system of ownership is either sole proprietorship, partnership or corporate. These are individualistic forms of ownership.
An alternative model is a system of social ownership where larger numbers share ownership of an enterprise, as is practiced by cooperatives. However, collective ownership has to overcome constraints on efficiency and accountability. Social ownership derives from the fact that one has been accepted as a member and co-owner of the enterprise. This acceptance is not bought by one’s work contribution or share capital, and much less by membership fee. The social acceptance into membership is of a personal value, of one’s worth and dignity as a person deserving of trust and thus of co-ownership and membership. This element is one of many intangibles that form part of social capital. It adds to work contribution and sharing in capital. It should be clear then that social ownership does not substitute for, nor suppress, individual, group, cooperative or corporate ownership. Social ownership has to be understood as a gratuity, a free gift by the rest of the members, providing a common ground and enriching each of the other forms of ownership. It does not compete, but rather enhances and adds value. Yet, it is not just an add-on.
Patrimonial Gratuity
Social ownership, implies that there is a resource that is common and available for everyone’s use but that it may not be broken up and claimed by individuals or groups. Rather it has to remain common, and honored and protected as such. By social ownership we do not merely mean that as many people share ownership of an enterprise. We mean that as a matter of principle and on the most basic claim, no one may be excluded from social ownership. That the community guarantees this as a birthright and a patrimony. This however is a gratuity and comes from the provident role of community. So it is not claimed as a right. It is yours before you ask for it; before you got into any of the other ways of ownership.
Essential to the concept of social ownership, specifically for the tangkilikan paradigm, is the element of a resource that is patrimonial and is a birthright of every person. Nature provides the foundation for the principle, but the human community has to establish its equivalent in terms of provident allocation of a (re)source reserved for everyone. That resource would have to be inexhaustible, available to all generations to come. To be inexhaustible, it would have to be and remain for all times indivisible. It is available for all to use but no one person or group should claim it. Neither should it be distributed.
Patrimonial Gratuity Converted into a Fund
To enable the community economy to concretize the patrimonial gratuity as a functional element in the business and industrialization process, a common fund will need to be established with the particular features required of it as representing patrimonial gratuity. That common fund has to be well utilized and well guarded. Let us call it the patrimonial fund
The patrimonial fund is made a principal and independent partner in the social enterprises within the tangkilikan paradigm, as the means by which opportunity for all may be guaranteed, and benefits are not monopolized by a few. Through the participation of the patrimonial fund, the accumulated profits of the fund can be available to programs that serve the least and the weakest. However, the fund retains the nature of a Trust Account, which is used to generate revenue to be used as capital in enterprises. The fund serves an enabling function and is guaranteed from loss; or if loss is inevitable, scheduled replacement is automatically implemented.
Reciprocating Patrimonial Gratuity
Social ownership of a common resource is not just the claim to access the common resource, it requires the individual first and foremost to make a contribution to that resource, to surrender that contribution to the community unconditionally and no longer withdraw it, or expect a return. Aside from the characteristic of indivisibility, it obligates everyone to make a contribution to keep the fund intact, protected and growing, with the understanding that what one has added to the patrimonial fund becomes forever part of the indivisible. This is how each one can reciprocate and pay forward, in return for the magnanimity and providence that community has bestowed. This is how one can manifest and give proof of loyalty to the community and its mission.
Katangkilik and Tangkilikan Community
As a consequence of the acceptance of social ownership, the numerous and varied enterprises have investments in one another and are thus interconnected and complementary (not in competition or hostile) with one another. The opportunities created by each are open to all who subscribe to the paradigm of community economy.
Both the owners of enterprises and the consumer-investor subscribing to the alternative economy are referred to as katangkilik, and collectively as tangkilikan community.
HOW DO WE GET STARTED?
Constructing a Scaffold of Opportunities
As a first step there is need to identify strategic industries present in the community on which the local industrialization process can be anchored. Then local support, by way of patronage, manpower supply or capitalization should be generated from within the community. Industries that may not be present in a specific community but provide direct opportunities for residents should also be included in the line up of enterprises to be promoted and endorsed to the community. This combination of local industries and others accessible from outside (also through the internet) are presented as investment opportunities, as well as opportunities for work and business replication, by interested groups.
Second, selected enterprises that have the potential for rapid and large patronage, and where the terms provide for a big margin of savings will be specifically promoted for rapid capital build-up. Small savings groups and the existing business groups and cooperatives can put in investments by installment alongside the business they are directly operating. This savings-into-investment scheme is intended to accelerate the local savings rate and small local investments. In effect this makes aggregated mico-investments as the means by which ordinary people participate in the capitalization of social enterprises at the different scales of magnitude.
Third, individuals with similar livelihood would be encouraged to form worker cooperatives to take advantage of economies of scale and variety of skilled manpower that can be pooled. These worker cooperatives operating different businesses will be linked for mutual reinforcement. Participation in a cooperative will not preclude the operation of a personal or family –based business. Cooperatives generate their internal capital which they invest in the business they run. At the same time several cooperatives can place small investments with one or more of the identified strategic industries. The group enterprises constitute a business builders network.
A fourth component is the consumer network. This networks agree to buy Filipino products provided and available through the tangkilikan network. Patronage rebates would be pooled as savings to be invested in the various enterprises in the business builders network. The consumer networks will undertake voluntary savings-for-investment campaign. A consolidation of consumer rebates/savings converts them from consumers-into-investors.
Consumers invest in the micro- enterprises in their community, thus helping them to become stable. The micro-enterprises invest in selected small enterprises that have good potential. The micro-and small enterprises invest in the strategic industries, to get the lift they need. The system as designed constitutes some form of scaffold of multiple opportunities by means of which the micro and small enterprises can support one another in up-scaling their operations and by being connected and linked to strategic industries. They become, in effect engaged in the industrialization process as business owners. And they are collectively investors and co-owners integral to the industrialization in progress.
It is important to from the very start that people see this scaffold of opportunities they are helping to build and by which they will be reinforcing one another. The opportunities and mechanisms are laid out and are available, forming a path along which they can travel, moving up gradually from where they are to a better future. That for as long as they stay part of this system, they can live with more hope and overcome the stagnation that has been their lot in the past.
Counting everyone in from the very start.
Why is this important?
Accounting for every one implies starting from the total population. This is simply respecting everyone’s right to participate in livelihood and industrialization. The poor, in particular, need to be motivated and show that doing business is not as intimidating as it seems. Accounting for everyone is a tedious thing if we are thinking of some central bureaucracy. Instead we install a mechanism that allows and attracts everyone to get himself/herself enlisted for participation. Since every person ought to work and earn a living, the workplace, in its many forms and locations, provides the equalizing element.
The home must be experienced as the first workplace from which economic activity emanates., where the drive to earn a living must be cultivated, where the preference for entrepreneurship, rather that be merely looking for employment should be nurtured. ,
For any given community, the numerous needs of individuals and families and other institutions require expert personnel. Meeting those need adequately and with quality service opens a vast field of opportunities for work. The community’s total manpower is awesome. We could do an inventory of how many are working within the municipality or city; compare this with how many are working outside the municipality/city; how many are working abroad, Then we could inventory the skills for possible exchange of service for manpower.
In any given community there are numerous business establishments of all types and sizes including micro-business in the informal sector.
A few of these are thriving and these can be good candidates to serve as anchor for implementing the but most will be just surviving on very modest ROI. The expansion of existing ones and the potential emergence of new businesses in various sectors provides a sufficiently wide net for everyone in the community to be gainfully employed. Skills upgrading opportunities have to be opened because qualified applicants are lacking for many available jobs, On the other hand, for the less demanding jobs there are too many applicants. This only means that more people should disabuse themselves from seeking regular employment, since competition for jobs is high. Also, more people should go for independent entrepreneurship or cooperative self-employment. However, young people hesitate for lack of vision and drive,
If, moreover the workplaces and businesses are interlinked as a value chain system within the community, they would be reinforcing one another rather than competing; and if aided by modern information technology, would have markets and suppliers beyond the community. With the potential of interlinked businesses in place, the resistance to early involvement or engaging in business will crumble.
Starting with whatever it is people are presently engaged in to survive,
Everyone who is alive has some means of living. For the poor this be a very modest one, like gathering and selling scraps, cigarette vending, Selling streetfood or accepting laundry. However small one’s earnings might be, one can save a little amount each day. If people take the habit of daily savings even of small amounts they can be part of a group that will generate a continuous stream of capital that can earn every time it is used. Applying a paluwagan pattern the savers can take turns in availing of the savings to finance their respective projects or something they jointly support.
Even the jobless should get their chance to apply for emergency work so they can earn something and become part of the basic savings-into investment scheme. At this level the savings group should be investing in a product they themselves are involved in distributing,
Mobilizing to get everyone gainfully employed.
Work contribution- work opportunities
In any given community, the population of working age, are divided between those employed locally, those working abroad, those who are self employed and running a business, those looking for a job, those who have just lost their job, small entrepreneurs who have just closed shop, those who have been idle for a long time, those who do not bother to find a job or take up a business. The crisis situation is an occasion for all of these to be part of a grand scheme.
All those who are not presently gainfully employed, and are not for immediate hiring, can get down to business immediately under a social partnering plan. In general, the reason fewer people go into business in that they lack experience and are afraid to venture on a business, they lack capital, contacts and market, communication and negotiating skills, etc. The answer to all these is not to think of doing it alone. Start by working with a group which is part of a much wider network, Here the limitations of some will be answered by others. The worker cooperation model should be promoted to cover the entire working population of a geographic area.
The lack of capital has to be acknowledged as a common limitation and basis for inaction. But the cooperative system overcomes this individual limitation. A slow but steady pooling of small savings will eventually generate capital for bigger ventures.
Generally the business opportunity will be in sales of products from existing suppliers, small scale food service of different type and scale, skilled service of many types, crafts and small manufactures, community service paid with public funds. While many small businesses are operating in an area, such as sari-sari store and carinderia, most can stand improvement. This is one opening for new entrants who will give better products and better service, forcing the inferior ones to upgrade. New businesses have to be created continuously.
The individual entrepreneur who is part of the network can participate in all the businesses within the network. At least a number of these are already operational, and more will be added.
Multiple participation open to everyone.
Sales, production work and capital contribution in several ventures.
Every member-worker has to put in capital contribution into the coop capital; at the same time, through work must set aside part of income to invest in any number of products of his/her choice. Thus every member worker has his/her personal business (retailer) and corresponding capital from continuing savings. This is the portion he manages personally. At the same time he has an investment, also by installment, in a group dealership, or a second project which involves a group. Member deposits by installment share capital in the cooperative where one is a direct worker and earns at this second level. Then he has an investment at a third level of the enterprise (the business center or wholesale) and also earns from this level.
Moreover, at any time he can participate through work, referral, sales or direct participation in any number of other ongoing businesses.
Resources Simultaneously Amplified and Economized
Exchange using merit points: Venture capital scheme
Capital when invested in a joint venture by two partners, can be designed in such a way the equity of each progresses according to a reciprocal inverse scheme, where the equity of one increases as the equity of the other decreases. The purpose is to accommodate the smaller partner and provide stability. As the smaller partner grows in capacity, its equity is increased, while that of the bigger partner is correspondingly decreased. For instance, a family enterprise may start a project with Coop fund as partner. The Community Fund can then be involved as a third party, so that the returns are distributed to more than just the immediate partners.
There could be a Venture Capital Scheme managed by each Cooperative. Aside from giving out loans, to tried and tested borrowers, the Coop can operate a separate account as venture capital. Here the Coop through the fund is an industrial partner of the business with a capital sharing plan that may start at 50-50 or with the Coop having a bigger exposure at the start. And every year the Coop equity can be diminished and that of the partner business increased. This arrangement makes the fund grow faster and available to more start-up groups. This is also a way of coaching new business until they become stable and viable with minimum risk since the fund is a majority partner at the start.
Using long existing Coops as anchor for the new transactions will avoid risks and ensure accountability. But the tankilikan initiative to devise new ways has to be independent and unhampered. The tankilikan fund generated from this venture capital scheme and the consumer rebate fund may then be co-managed by a local board of trustees drawn from the several Coops managing the fund.
The participation of the tankilikan fund as a third party providing resource and sharing in the profit is meant to ensure the collective or community orientation, and replaces a purely two party transaction that will only benefit them exclusively. Tangkilikan fund participation means the two partners are also supporting the program of creating opportunities for many others.
Community as Market and Sales Force.
Up to this point we have looked at the operation and expansion of workplaces that taken together and in interaction with one another provide the venue to absorb every able bodied citizen of working age. The people, are producers and service providers. But the same people form the households and consumers residing in the community. Transaction is limited to paying for the purchased goods or service.
But they in fact do much more. They help advertise the products, they might as well be agents and earn commission. Since consumers ultimately are the ones who pay for the cost of production when they purchase goods or pay for services, they might as well also be investors.
Small businesses need assistance in several areas. In market, technology and finance. A marketing group can be organized to promote all the products that are registered with the tangkilikan network. They are also advertised on line. And the marketing group can handle web orders, or directly to the business concerned. The marketing group could have a division on inputs and technical assistance which they can coordinate. The financial support will be not in terms of loan by through a venture capital arrangement as shown above.
Consumer as Investors: Turning Discounts into Investments
At the supermarkets, gasoline stations and power suppliers, the consumers are given discounts for certain level of purchase. The discounts may either earn them certain items for free, discount on future purchases, or tickets to raffles for special prices, and so on.
In Tangkilikan, the discounts are withheld by agreement and aggregated into micro-investments at any level needed or appropriate. Consumer networks are formed to study the prospects of accelerating savings and investments, in order to make up for lost time and because many new ideas and opportunities will continually be created.
A key feature of the community economies model is the integration of three levels of capitalization and investment. One is that of the individual or family; the second is that raised by a group as in a cooperative, where the fund is owned by the members of the specific group. The third is when several groups or cooperatives pool resources for a specific venture to undertake; or they might invest in a strategic already existing industry.
Modifying the Traditional Supply Chain
The capitalist model of the supply chain is efficient because it distributes total profit across the chain from the producer to the consumer. Unfortunately the many levels of traders, distributors and retailers unavoidably increases the cost, and particularly so in remote areas where money is very limited. Where a direct link between grower and consumer is established the function of forwarding the goods need not entail a trading profit, only a service charge. But only one trader capitalist should come in between who will supply the growers deficit in capital, But is this function can be transferred to the consumers via the investment intermediating service, then the capitalist may participate in capitalization for a modest interest, but lower than a traders mark up on goods.
As a matter of principle, the farmer or grower should be able to finance his own production and not depend on a trader to lend him the money or inputs. If on one hand the grower has attained this stature of self-finance capability, and the consumers put up capitalization, and forwarding is just transport cost, then the supply chain is shortened to the benefit of grower and consumers. And what should the former ladder of retailers do for a business? They can grow and produce new products.
New Business Patterns for Community-based Industrialization.
A modification of traditional ways of doing business will have to be made. These adjustments will yield new patterns of business participation intended to result in shared benefits.
The most common system for the distribution of goods is the pyramid created by the wholesaler/distributor or business center at the top, the dealer/sub-dealer in the middle and the retailers at the base. The three layers are independent businesses as far as ownership is concerned. Applying social ownership, we could have all the retailers the co-owners of the dealership for a given area. And all the dealerships collectively own the top function. Thus the ownership, of the business of distributing is communalized. The operator group at any of the levels is a partner of the community, represented by the patrimonial fund. In the distribution pyramid cited above, the partners are: the (1) the individual retailers who capitalized the dealerships, (2) the communities operating the dealerships and who put up part of the capital for the wholesaler function; the operators (from a worker cooperative) designated to do the wholesale function with their counterpart, and (4) the patrimonial fund.
From this basic pattern, many other business arrangements can be constructed:
Something that has already been tried is the consolidation of sari-sari stores where they benefit from volume discounts from having a common purchasing agent. This set up can be enriched by adding the mechanism of consumer rebates and the patrimonial fund.
Sales of a fast moving commodity can be supported combining the consumer rebates, outlets run by a worker cooperative, small savings groups participating in daily capitalization, and again the patrimonial fund.
Where production is involved, the producer can directly team up with a marketing network of consumers, a network of suppliers also a worker/producers cooperative, a savings-into investment network (not a lending program), and again the patrimonial fund.
Where the participation of a lending intermediary may be necessary, in the bigger enterprises and strategic industries, the following may be the appropriate conglomeration: the strategic industry needing capital; investors; the lending intermediary which receives the investments and passes on to the enterprise (not treated as borrower); a third party auditing group; the marketing and consumer networks and again the patrimonial funds.
Out of all the possible arrangements for the most beneficial partnering, the specific objectives and activities common to the enterprises would have to be undertaken the tangkilikan way;
One is to increase local sales by existing establishments so that with increased revenue, savings can be reinvested in accelerating growth and expansion of the enterprises that have attained stability. These enterprises serve as the anchor for accelerating the industrialization process in a particular community. Linkages and all possible forms of B2B transactions will be promoted in order to mutually reinforce the different businesses. Some investment in consumer education and critical intervention in advertising will also be included. But the most important will be the rapid expansion of small businesses. This growth and acceleration does not preclude outsourcing production or sourcing supply from, and selling outside the community. What is essential is that the local market is consciously being nurtured. In addition to a loyal domestic market we will also have to go after the export market.
The second concern is to promote the local market into more than casual buyers. They must become stakeholders in the business, In the light of the competition from the deluge of imported goods, this entails an appeal to patriotic spirit to patronize local products. Moral and patriotic or economic justification will further have to be accompanied by an incentive system. We need to develop something more than just loyal buyers through discounts and prizes. We need to introduce the concept of buyer as investor. Which brings us to the third task, capitalization.
The capitalization function is the third element that has to be developed from within the community so that as wide as possible a base of ownership in the various enterprises is achieved. This can start with small investments in the micro-to-small enterprises. Groups in the form of worker cooperatives or simply savings and investment cooperatives are formed to provide local capital corresponding to the need of an enterprise. Users of a product are the logical group to capitalize their purchases. But even non-users can provide capital through an arrangement designed for the purpose. Even individuals not directly using a product can participate. To build confidence in the micro-investment groups, a version of a common fund to serve both as counterpart funding for a business and as guarantee should be established. A small group of advocates will have to do some pre-work on this before embarking on a full scale campaign on the alternative economy.
From investing in micro-ventures, the investor groups, along with the workers in the specific business, based on the outcome of their capital build up (CBU) will then invest in another venture bigger than what they are operating. In this way they can earn from another source. Finally, both the original venture workers/investors and the second enterprise they have jointly established or invested in, will likewise invest in the strategic industries that have become stable and profitable.
New technologies and products constitute the fourth area of the task. This will open opportunities for new sets of workers and investors. New technologies on fuel, energy, low cost housing, soil rehabilitation, bio-detergents, organic industrial cleansers for the electronic and computer hardware industries are some of the possibilities already on the pipeline. And the participation of communities in these prospects is guaranteed because their work will be essential in generating the supply of the raw materials. R&D on new products and processes and technology transfer activities complete the support system.
These four elements of sales, market, capital and technology will be consolidated, facilitated and speeded up through the modern IT technology applications. The deliberate infusion of cultural content makes them techno-cultural solutions.
THE BUILD UP TO INDUSTRIALIZATION
Community economies organized according to the lines indicated above are in a position to participate in, support and claim industrialization. As a sizable portion of domestic market they can agree to support Filipino products, and to avoid buying cheap imported goods. By patronizing local products, they are helping to protect the local industries. But a way has to be made to make them co-investors in the industry and earning some return, even if initially as a network and not as individual buyers. To do this a tangkilikan retail outlet would have to be community owned instead of owned by a single retailer-entrepreneur. It will definitely be managed by a team of able sales professionals but co-owned by the local consumer network who are subscribers of the tangkilikan strategy.
Part of the income can go to community programs or to health and child nutrition and lowering of child mortality rate or the local environmental program. Income from community retail stores may also go to human resource development for diverse capability building opportunities that will supply skilled workers for the partner industries. The claim to the funds will be their patronage of Filipino products, from the all Filipino product outlets.
In the case of capital intensive industries, the corporations are the key players. But bigger collectives of low wage earners can pool resources so that they can link to the portion of the industry that will be served by more modest facilities and smaller capital. As the small businesses grow they can pool bigger capital to enter into a bigger-sized investment. These groups, once stabilized and earning can pool resources and go into joint venture with the tangkilkan fund. And groups of medium enterprise can pool resources so that they put up a matching investment to augment the tangkilikan fund.
All this suggests a mechanism where business and financial partnering involves four players: the small group venture; the pool formed by several small ventures which will do a bigger enterprise, so that the small units are partners of the collective they put up; the strategic industry with its links and the tangkilikan community in the area (city or municipality) as the fourth party. All four share in the profits. The small ventures earn more and save for expansion. The collective earnings go into expanding the business and generate investment capital for new projects. The strategic industries anchor the whole industrialization growth into bigger enterprises .The patrimonial fund so it will be growing and in a position to offer counterpart fund to make sure opportunities for the weakest are available and no one is excluded.
The build up in industrialization will ultimately call for partnerships also between the urban communities and enterprises as market with the rural farming and fisheries and forestry communities as suppliers of raw materials. As to products produced in the urban centers, the rural communities become the market. This reciprocity of roles, enhanced by the tangkilikan strategy will propel the community-based and owned unfolding of industrialization into kaginhawahan, katiwasayan, kasaganaan —socio cultural economic abundance by, for and of the people.
by Dr. Ernie Gonzales
by Tony Cruzuda