Economic Democracy

Strolling through theories

Ladislau Dowbor
Revised and updated, 19 March 2011
Economic Democracy
Strolling through theories
Introduction
1 A broader outlook 1!
2 Seeking results 1"
! Measuring results 1#
$ %he &inancial takeover 22
' (ro) speculation to sociall* use&ul invest)ent 2"
" +cono)ic and political po,er !1
- .onsu)er ,oes !'
# .o))ercial harass)ent !9
9 +cono)ic in&ra/structure $#
10 0ocal develop)ent '1
11 +cono)ics o& kno,ledge '"
12 +cono)ics o& social services "'
1! %he econo)ics o& ti)e "9
1$ %he econo)ic theor* o& sustainabilit* -'
1' Macroecono)ic politics #2
1" %heor* o& ,orld econo)ics 91
1- %he paradig) o& collaboration 100
1# +cono)ics o& civil societ* organi1ations10"
19 +thics in econo)ics 111
20 +cono)ic de)ocrac* 119
.onclusions 12"
Re&erences 129
Creative Commons - Ladislau Dowbor - http://dowbor.org
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2
Negative Balance
To pluck one hair off an European hurts much more
than to amputate, in cold blood, the leg of an African.
A Frenchman with three meals a day goes hungrier
than a Sudanese with one rat a week.
A German with flu is much sicker
than an Indian with leprosy.
An American with dandruff suffers much more
than an Irai woman with no milk for her children.
It is more per!erse to cancel the credit card of a "elgian
than to rob bread from the mouth of a Thai.
It is much more serious to throw a paper on the ground in Swit#erland
than to burn down an entire forest in "ra#il.
The chador of a $uslim is more intolerable
than the drama of a thousand unemployed in Spain.
The lack of toilet paper in a Swedish home is more obscene
Than lack of drinking water in ten Sudanese !illages.
Shortage of gasoline in %olland is more unconcei!able
than that of insulin in %onduras.
A &ortuguese without a mobile phone is more re!olting
than a $o#ambican without books to study.
A dried up orange tree in a %ebrew kibbut# is sadder
than the demolition of a &alestinian home.
A little English girl without a "arbie is more traumatic
than to see the assassination of the parents of a 'ganda boy.
And this is not poetry( these are liabilities
in an account still ignored by the )est.
Fernando Correia Pina, Portuguese poet
!
In a truly free economy, payment of wages should be optional,,,
$
INTRD!"TIN
1
3e are all adverse to catastrophis) 3e do not ,ant to look like prophets o& doo) ,ho
onl* paint a bleak &uture %he .lub o& Ro)e ,ent so)e ,a* to,ard turning us against
alerts that see)ed pre)ature %oda* ,e are starting to evaluate the realis) o& these
predictions in a )ore rational ,a* 3ith in&or)ation easil* e4changed, the generali1ation
and i)prove)ent o& )odels, online accessibilit* to the )ost varied scienti&ic data, allo,ing
&or the co)parison o& results &ro) innu)erous research centers, the &uture is no longer a
vague threat, a ,avering outline In a ,a*, and in our consciousness, the &uture has alread*
arrived
In this brie& introduction, ,e shall &ocus on ,hat see) to be &our )a5or trends that de&* us,
in the long ter) 3e have to save the planet, to reduce ine6ualities, to ensure access to
decent 5obs and to correct production priorities %oo big a challenge7 3e are not concerned
in reducing our &all &ro) the 20
th
to the 1'
th
&loor 3e are concerned ,ith not destro*ing
ourselves
# threatened planet
%he chart ,e sho, belo, constitutes a su))ar* o& )egatrends during the historic period
&ro) 1-'0 until the present da* %he scales had to be )ade co)patible and so)e lines
represent the processes &or ,hich ,e have onl* )ore recent &igures 8ut as a ,hole, the
chart sho,s the co)ing together o& areas traditionall* studied separatel*, such as
de)ograph*, cli)ate, auto)obile production, paper consu)ption, ,ater conta)ination,
e4tinction o& ocean li&e and others %he s*nerg* o& the process beco)es obvious, as does
the si1e o& the environ)ental challenges
1
%his introduction is based on a paper 5ointl* prepared ,ith Ignac* Sachs and .arlos 0opes, Crisis and
Opportunities in times of Change, 2010, http://dowbor.org/fmt7crisesandopportunities.doc
'
Source9 :e, Scientist ;1# <ctober 200#, p $0=
%he :e, Scientist co))ent regarding these )egatrends &ocuses directl* on our o,n
concept o& econo)ic gro,th9
Science tells us that i& ,e are serious about saving the +arth, ,e )ust reshape our econo)* %his, o& course,
is econo)ic heres* >ro,th to )ost econo)ists is as essential as the air ,e breathe9 it is, the* clai), the onl*
&orce capable o& li&ting the poor out o& povert*, &eeding the ,orld?s gro,ing population, )eeting the costs o&
rising public spending and sti)ulating technological develop)ent not to )ention &unding increasingl*
e4pensive li&est*les %he* see no li)its to gro,th, ever In recent ,eeks it has beco)e clear 5ust ho, terri&ied
govern)ents are o& an*thing that threatens gro,th, as the* pour billions o& public )one* into a &ailing
&inancial s*ste) A)id the con&usion, an* challenge to the gro,th dog)a needs to be looked at ver*
care&ull* %his one is built on a long standing 6uestion9 ho, do ,e s6uare +arth?s &inite resources ,ith the
&act that as the econo)* gro,s, the a)ount o& natural resources needed to sustain that activit* )ust gro, too7
It has taken all o& hu)an histor* &or the econo)* to reach its current si1e <n current &or), it ,ill take 5ust
t,o decades to double
2

%he convergence o& tensions generated &or the planet beco)es evident 3e cannot
congratulate ourselves an*)ore &or the increased &ishing catches ,hen ,e are
e4tinguishing li&e in the oceans or ,hen the increase in crop production is eli)inating the
a6ui&ers and conta)inating the planet?s &resh ,ater resources :ot to speak o& auto)obile
production and the e4pansion o& other production chains ,hich generate cli)ate change
2
:e, Scientist, <ctober 1#, 200#, p $0@ to Access the chart on/line go to http9AAdo,bororgAarAnsdoc@ the
co)plete dossier can be consulted at ,,,ne,scientistco)Aopinion @ the support tables and pri)ar* sources
can be seen at http9AAdo,bororgAarA0#BnsBoverconsu)ptionpd&@ contributed ,ith the dossier9 %i) Cackson,
David Su1uki, Co Marchant, Eer)an Dal*, >us Speth, 0i1 +lse, Andre, Si))s, Su1an >eorge and Fate
Soper
"
%he solutions have to be s*ste)ic %his broader vie, can and it is onl* a possibilit*
trigger pro&ound changes as ,e raise the overall level o& a,areness o& the challenges
%he dile))a is clear9 ,hat develop)ent do ,e ,ant7 And &or this develop)ent, ,hat kind
o& State and regulator* )echanis)s ,ill be necessar*7 %here is no ,a* to )ini)i1e the
si1e o& the challenges 3ith - billion inhabitants and -' )illion e4tra per *ear ,ho
adopt a steadil* e4panding level o& consu)ption and utili1e )ore and )ore po,er&ul
technolog*, our planet sho,s all its vulnerabilit* And ,e, our irresponsibilit* or
helplessness
The scandal of ine$uality
%he eono)ic e4pansion o& recent decades has been &ed on the earnings &ro) productivit*
that ne, technologies have brought about %he distribution has been radicall* unbalanced
It is not the place here to stud* this process, but it is i)portant to re)e)ber that the
concentration o& inco)e on the planet is reaching absolutel* obscene li)its
!

Source9 Eu)an Develop)ent Reports ;1992, p !' e 200' p !-=
%he i)age o& the cha)pagne glass is e4tre)el* e4pressive because it sho,s ,ho gets ,hat
o& the overall content, and in general people are not a,are o& ho, critical the dra)a is %he
richest 20G get #2-G o& the inco)e %he poorest t,o thirds have access to onl* "G In
!
%here is i))ense literature on the sub5ect %he chart attached, kno,n as the H.ha)pagne glassI is &ro) the
Jnited :ations 1992 Eu)an Develop)ent Report@ &or an update in 200', see Eu)an Develop)ent Report
200', p!- %he .ha)pagne glass has onl* narro,ed the bottleneck, there ,ere no signi&icant changes An
e4cellent anal*sis o& the recent aggravation o& these nu)bers can be &ound in the Report on the 3orld Social
Situation 200', The Inequality redicament, Jnited :ations, :e, Kork 200'@ %he 3orld 8ank docu)ent,
The !e"t # $illion, esti)ates that $ billion people do not have acces to ,hat is 6uali&ies as Hthe bene&its o&
globali1ationI I(. The ne"t # $illion, 3ashington, 200-@ ,e are talking about al)ost t,o thirds o& the
,orld population
-
19"0, the inco)e earned b* the richest 20G ,as -0 ti)es the e6uivalent o& the poorest
20G@ in 19#9 it ,as 1$0 ti)es )ore %he concentration o& inco)e is absolutel* scandalous
and &orces us to &ace the ethical 6uestion o& 5ustice, and social and econo)ic dra)a o&
billions o& people ,ho could not onl* be living better, but also contributing to sustainable
develop)ent %here ,ill be no stabilit* on this planet ,hile the econo)* is organi1ed
around the interests o& one third o& the ,orld?s population
%his un5ust concentration is not due onl* to &inancial speculation, but its contribution is
signi&icant and, above all, it is absurd to divert the capital &ro) obvious planetar* priorities
%he +cono)ist brings strong &igures concerning econo)ic gro,th, generated essentiall* b*
technological progress in the production area, but appropriated b* the so called H&inancial
services industr*I9 H%he &inancial/services industr* is conde)ned to su&&er a horrible
contraction In A)erica the industr*?s share o& total corporate pro&its cli)bed &ro) 10G in
the earl* 19#0s to $0G at its peak in 200-I
$

A clear gap is generated bet,een those ,ho generate technological innovations ,ith the
potential o& producing sociall* use&ul goods and services the engineers o& the process, so
to speak and the &inancial inter)ediaries ,ho take over the surplus and li)it the options
to short ter) pro&it )a4i)i1ation %he engineers o& the process create i)portant
technological advances, but their use and co))erciali1ation are handled b* &inancial,
)arketing and legal depart)ents ,hich do)inate co)panies and take over their &inal
destination It is a s*ste) ,hich has generated a deep divide bet,een those ,ho contribute
to ne, potentials and those ,ho take over the surplus
3hen putting both charts together, the one &ro) :e, Scientist concerning historic
)egatrends and the Hcha)pagne glassI &ro) the Eu)an Develop)ent Report, ,e reach a
ver* obvious conclusion9 ,e are destro*ing the planet &or the bene&it o& one third o& the
,orld?s population %his is the basic re&erence ,hich guides our &uture actions9 revert the
)arch o& the destruction o& the planet and reduce accu)ulated ine6ualit*
It is i)portant to stress that our )ain instru)ent to )easure progress, >ross Do)estic
Lroduct ;>DL=, )easures neither one nor the other It does not take into account the
planet?s natural capital reduction, and in realit* onl* sho,s us the national average intensit*
o& the use o& the production )achine, not ,hat is produced, &or ,ho) and at ,hat costs
And the )ain )otivator o& private invest)ents, pro&it, acts against both9 it has ever*thing to
gain &ro) the )a4i)u) e4traction o& natural resources and e4ternali1ing pollution costs,
and has nothing to gain &ro) producing &or those ,ho do not have )one* to spend %he
&antastic possibilities that ne, technologies open to us are si)pl* ,asted
The challenge of access to decent %obs
Ine6ualit* and sustainabilit* are directl* linked to the i)balances o& inclusion in the
production process Manpo,er, our i))ense unused production capacit*, looks )ore like a
proble) than an opportunit* In the present &or) o& use o& production &actors and
technologies, the productive inclusion is an e4ception In 8ra1il, ,ith a population o&
roughl* 200 )illion, less than $0 )illion are &or)all* e)plo*ed in the private sector As a
,hole, a huge )ass o& people are classi&ied under the vague concept o& Hin&or)al sectorI,
)easured at '1G o& the econo)icall* active population b* IL+A ;Institute o& Applied
$
%he +cono)ist, % &pecial 'eport on the (uture of (inance, Canuar* 2$th 2009, p 20
#
+cono)ic Research= %he stud* underlines that Hthe e4istence o& this portion o& ,orkers on
the edge o& the s*ste) cannot, under an* circu)stances, be seen as a solution &or the
)arketI ;IL+A p !$"= %his HportionI represents hal& the countr*
'

%he essential &act &or us is that the present )odel under/utili1es hal& o& the countr*?s
production capacit* And to i)agine that the gro,th centered in )ultinational co)panies,
huge plantations o& so*a beans ;200 hectares to generate one 5ob= or even in a h*pothetical
increase o& public 5obs, ,ill allo, it to absorb this )anpo,er is not realistic %o evolve to
alternative &or)s o& organi1ation beco)es absolutel* necessar*
%he dra)a in 8ra1il is representative o& a broader universe9 HIn&or)al e)plo*)ent
accounts &or bet,een one hal& and three 6uarters o& non/agricultural e)plo*)ent in the
)a5orit* o& developng countries %he share o& in&or)al ,orkers in the non/agricultural
labour &orce ranges &ro) $#G in :orth A&rica and '1G in 0atin A)erica and the
.aribbean, to "'G in Asia and -#G in sub/Saharan A&ricaI
"

In this ,a*, the ine6ualit* dra)a seen above does not onl* constitute a proble) o& &air
distribution o& inco)e and ,ealth9 it also involves the productive inclusion o& the )a5orit*
o& the population that is une)plo*ed, under/e)plo*ed or trapped in di&&erent t*pes o&
in&or)al activities %he I0< proposals concerning decent 5obs, the 3orld 8ank concerns
about the $ billion that are e4cluded &ro) the Hbene&its o& globali1ationI, and the nu)erous
initiatives centred on local develop)ent belong to the sa)e dra)a9 econo)ic gro,th that
leaves a huge part o& the population out o& the process is not sustainable 3e are talking
about al)ost t,o thirds o& the ,orld?s population to ,ho) ,e block the access to &inance,
technologies, and the right o& each individual to provide &or his &a)il*
Deformation of &riorities
%he table belo,, e4tracted &ro) the Eu)an Develop)ent Report 199#, represents the
de&or)ation o& priorities o& the the use o& our production capacit* %he reading is si)ple9
,e cannot obtain the supple)entar* " billion to universali1e basic education, but ,e can
obtain # billion &or cos)etics in the JSA, and so on %he values are lo, because the* are in
dollars ,hich ,ere ,orth )ore at the ti)e, but the contrast is evident %he -#0 billion
dollars spent on the )ilitar* alread* added up to 1' trillion in 200# And i& ,e think about
the trillions o& dollars o& public resources trans&erred during the 200# &inancial crisis, ,e
,ill have a real idea o& the absurd disregard &or hu)an and environ)ental priorities
T'E (RLD)* &RIRITIE*+
'
IL+A $ra)il, the state of the nation * labor mar+et, ,obs and informality IL+A, Rio de Caneiro 200"
HIn its )ost direct &or) o& e4pression, the in&or)al sector is treated as a generator o& 5obs ,ith lo, 6ualit*
and inco)e, ine&&ectiveness and additional econo)ical costs, constituting a distortion to be &oughtIIIn1992
the in&or)alit* percentage ,as '1,9G, reached '!,9G in 199#, returning to '1,-G in 200! and &alling to
'1,2G in 200$I %he data is practicall* ver* si)ilar &or the totalit* o& 0atin A)erica ;pp !!- and !!9=
"
J: The Inequality redicament, :e, Kork, 200', p !0
9
(Annual Expeniture) in Dollars



Basic Education for all


$6 billion*
Cosmetics in the USA $ billion

Water and sanitation for all

$9 billion

!ce-cream in "urope

$## billion

Reproductive health for all o!en

$"# billion

$er%umes in "urope and the USA

$#& billion

Basic health and nutrition

$"$ billion
$et 'oods in "urope and the USA

(usiness "ntertainment in )apan

Cigarettes in "urope

Alcoholic drin*s in "urope

+arcotic drugs in the world

,ilitar- spending in the world


$#. billion

$ /0 billion

$ 01 billion

$ #10 billion

$ 211 billion

$ .1 billion

M +sti)ated additional annual cost to achieve universal access to baisc social services in all developing
countries
Source9 +uro)onitor 199-@ J: 199-g@ J:DL, J:(LA and J:I.+( 199$@ 3orld,ide Research, Advisor*
and 8usiness Intelligence Services 199-
In9 -uman .e/elopment 'eport 0112, :e, Kork, p !-
In realit*, ,hat needs to be e4panded in the ,orld toda* are basic services &or the billions
,ho barel* survive, )uch )ore than diversi&ied and &anc* consu)er goods So)e things
should be accessible to ever*one %he planet produces al)ost a kilo o& grain per da* per
inhabitant and ,e have )ore than one billion people going hungr* %he ten )illion
children ,ho die o& hunger, no access to clean ,ater and other absurd causes constitutes
an unbearable scandal 8ut &ro) the private invest)ent point o& vie,, solving essential
proble)s generates no pro&its, and the orientation o& our production capacit* is radicall*
de&or)ed
In ter)s o& econo)ic, social and environ)ental )egatrends, ,e are dri&ting 3e are
destro*ing the planet in &avor o& a )inorit*, in order to increase the suppl* o& goods
,ithout an* other criteria than )onetar* capacit*, creating advanced technologies ,ithout
10
spreading access, thereb* reducing, instead o& &ostering, the capacit* o& people to )ake a
living %he level o& accu)ulated i)balances is e4ceeding the bearable li)it And ,e have
as a background the huge task o& organi1ing the transition to another productive energ*
paradig), the post/petroleu) era %here ,ill al,a*s be people ,ho e4pect an invisible
hand to solve these challenges 3ho are the drea)ers here7
3e have included this brie& su))ar* o& a &e, o& our )a5or dra)as in order to provide a
background picture to the theories ,e discuss in the )ain te4t In a ,a*, ,e have tried to
give the reader a &eeling o& the urgenc* o& building )ore responsible &or)s o& )anaging
our planet and our societ* It )a* be strange to de)and urgent solutions &or old proble)s
8ut the ,orld is changing Leople are )ore conscious 3here ,e once had the hu)ble
peasant or slu) d,eller, ko,/to,ing to authorities, ,e no, have a gro,ing nu)ber o&
people ,ho are in&or)ed, and &eel revolted &or not having a )edicine &or their child or an
opportunit* to )ake a living, ,hile being bo)barded ,ith )edia )essages pro)oting
lu4ur* goods Leople are ,aking up in 0atin A)erica, in the Arab ,orld, and, one )a*
suspect, even in the rich ,orld
A ne, ,orld is being born And ,e need the science to understand and to organi1e the
trans&or)ations %he inherited )ainstrea) theories have little to sho,, so ,e have to look
at ,hat is loo)ing on the hori1on
SNo Laulo, 1" March 2011
11
Economic Democracy
*trolling through theories
34/olution of the power structures in ad/anced capitalism
eludes the theoretical framewor+s we inherited from the past5 *
. (urtado +) busca de novo )odelo La1 e %erra, 2002, p 9
3If economists could manage to get themsel/es thought of as
humble, competent people, on a le/el with dentists, that would be
splendid65 * Fe*nes, +cono)ic Lossibilities &or our
>randchildren, 19!0
%he econo)ic and social realit* is undergoing pro&ound changes As such it is natural that a
signi&icant instru)ent &or its interpretation, econo)ics, should also undergo deep change
%he rules o& the ga)e ,ere di&&erent in the agrarian societies, ,here the )ain re&erence ,as
control o& the land, or in industrial societ*, ,here the line o& discussion and political stri&e
,as o,nership o& the production )eans 3hen kno,ledge, social services and other
HintangiblesI beco)e the central issues in the econo)*, not to speak o& the environ)ental
predica)ent, can ,e uphold the sa)e &ra)e,ork &or anal*sis7
Recentl*, reading a s)all but e4tre)el* engaging book b* .elso (urtado, H4m $usca de
!o/o 7odelo5 ;In Search o& a :e, Model=, I reali1ed to ,hat e4tent the points o&
re&erence had changed, ho, badl* ,e need other concepts, a &resh outlook Eence the idea
o& doing a kind o& revie, o& recent, international, econo)ic literature seeking an ans,er to
a basic 6uestion9 could a ne, outlook be in the )aking7 Is a ne, econo)ic science, )ore
attuned ,ith current issues, closer to the needs o& societ* in general, no, e)erging7
<& course, it is not a )atter o& bro,sing through the recent &loods o& econo)ic literature in
general %heoretical and econo)etric 5uggling that endeavors to 5usti&* the &ortune o& the
,ealth*, e4cuse povert* o& the poor or triviali1e the environ)ental traged* assailing the
planet, si)pl* are o& no interest here (urther)ore, )ost o& these e&&orts belong )ore to
cos)etics than to econo)ics, tr*ing to )ake the picture look better 3hat )atters here are
the proposals that seek realistic and decent alternatives to the surrounding econo)ic and
political )ess
%aken as a ,hole, this approach )a* be su))ari1ed in the concept o& econo)ic
de)ocrac* Lolitical de)ocrac*, the idea that po,er over societ* )ust be ,ielded
according to a social pact and in a de)ocratic ,a*, ,as an i)pressive progress, i& the
relative historical pro4i)it* o& kings ,ho ,ielded absolute po,er b* Hdivine rightI is taken
into account It is good to re)e)ber that colonial e)pires date &ro) onl* a &e, decades
12
ago, &or)al apartheid dates &ro) *esterda*, ,hile various &or)s o& dictatorships still
survive In )an* countries de)ocrac* is still a ver* &ragile construction, and ,e should
certainl* protect each tre)bling &la)e o& de)ocratic rule
%his ver* &ragilit* deserves to be better understood So)e people are )issing in the
de)ocratic process9 the $ billion poor in the ,orld have little sa*, although ,e hear the
volcano gru)bling@ the &utre generations are not here to protest the overconsu)ption o&
non/rene,able natural resources, but ,ill have to bear the conse6uences@ nature has no
voice, and is silentl* being destro*ed, altough here too the gru)bling is beco)ing evident@
and )ost o& all, &or a )*sterious or not so )*sterious reason, de)ocrac* stops at the
gates o& the corporate ,orld
+cono)ic de)ocrac* still see)s a rather un&a)iliar concept 8ertrand Russell, ho,ever,
described a parado4 in the &orties9 ,e consider as re)ote past a ro*al &a)il* ,aging
absolute po,er over a countr* as ,ell as besto,ing a region ,ith inhabitants and all to a
nephe,, but ,e &ind it absolutel* nor)al that &a)ilies or corporate groups should ,ield the
econo)ic and political po,er the* hold, and bu* or sell enterprises ,ith ,orkers and all as
i& the* ,ere personal &ie&do)s %oda*, ,ith $!' &a)ilies in the ,orld )anaging, as the*
please, )ore resources than the inco)e o& the poorer hal& o& the globe?s population, and
steering the planet through increasingl* irresponsible paths according to their ,hi)s, it
beco)es legiti)ate to e4pand Russell?s intuition and start to &ocus on a central the)e in
econo)ic science9 the econo)* could use so)e &or)s o& de)ocratic )anage)ent,
corporations could go about their business ,ith so)e transparenc*, and banks ,ho pla*
around ,ith our )one* could be held responsible &or the i)pact o& their initiatives In a
,ord, econo)ic activities )ust be de)ocrati1ed
-

1 A broader outlook
<ne o& .elso (urtado?s )ost i)portant legacies ,as his e&&ort to )ake econo)ic theor*
HstickI to realit* %his is evident in the citation that opens this essa* as ,ell as in the direct
evaluation o& ,hat the econo)ics student learns9 Hthe student ,ill have read, in a non/
s*ste)atic ,a*, e4tensive )aterial about econo)ic develop)ent, though not al,a*s having
&ound a clear connection bet,een these readings and realit*I
#
%his Hnot al,a*sI is pure generosit* on the part o& the econo)ist9 ,e all have sensed the
,idening gap bet,een ,hat ,e stud* or teach in econo)ics, and ,hat happens in the
econo)ic ,orld %here is little doubt that theor* no longer sho,s the ,a* :evertheless
things are co)ing to light and, responding to .elso (urtado?s challenge, ,e decided to
-
H3e accept the principle o& heredit* in relation to econo)ic po,er ,hile ,e re5ect it concerning political
po,er %he political d*nasties have disappeared, but econo)ic d*nasties surviveI 8ertrand Russell The
-istory of 8estern hilosophy, p "22
#O
.elso (urtado 4m busca de no/o modelo * 'efle"9es sobe a crise contempor:nea ;In &earch of a !ew
7odel * 'eflections about the Contemporary Crisis< La1 e %erra, Rio de Caneiro 2002, p "9
1!
s*ste)ati1e so)e recent inputs, looking in a ,a* at ,hat is appearing on the hori1on o&
econo)ic theories in various countries and concentrating on authors ,ho, up to a certain
point, tend to bridge the gap
%Pnia 8acelar introduces .elso (urtado as a Hle&tish Fe*nesianI, Ricardo 8ielschovski
vie,s his )ethod as Hhistorical/structuralI
9
8oth 6uali&ications are un6uestionabl* correct,
but do not &ull* enco)pass the vision o& this )an ,ho aggregated social concerns, ethical
posture and a theoretical open/)indedness, and prag)aticall* used ke* concepts &ro) the
)ost diversi&ied trends and scienti&ic areas (or hi), ,hat )attered ,as the e4planator*
value o& the theories, and the de&inition o& realistic alternatives Lerhaps, one o& .elso
(urtado?s )ore i)portant traits, in ter)s o& his theoretical legac*, is the re&usal to &orce
realit* to &it into preconceived theories %he &ocus is on realit*, in all its richness and
co)ple4it*, seen against a background o& basic values o& social 5ustice, econo)ic
&easibilit* and, particularl* in his )ore recent ,orks, environ)ental sustainabilit* and
cultural change %heor*, in this sense, again beco)es an instru)ent &or hu)an progress,
leaving behind an archipelago o& theoretical acade)ic havens and in&le4ible ideologies
Realit* is stubborn, and tends to give theories little i)portance Rethinking our theories is a
necessar* e4ercise, and a per)anent one, i& ,e ,an to to keep pace ,ith the evolution o&
realit*
<ne ,a* to &ace this theoretical gap is to have a look at ho, the di&&erent traditional
theoretical schools have been &aring %his is done, &or instance, in the special issue o& the
(rench publication %lternati/es 4conomiques
0=
, that sho,s the evolution o& Fe*nesians
to,ards neo/Fe*nesianis), o& liberalis) to,ards neo/liberalis), o& the trend o&
institutional econo)ics to,ards neo/institutionalis), ,ith the &re6uent addition o& post/neo
and the like %he HneoI or HpostI parts o&ten represent the )ore recent trends in theoretical
&aceli&ting %his is co)&ortable because it builds a s)all bridge bet,een inherited theor*
and a realit* that insists on &ollo,ing along a direction not &oreseen b* theor* Eo,ever, it
gives us a certain &eeling o& using patches, ,here perhaps ne, outlooks )a* be needed
Indeed, &ro) HneoI to HpostI ,e have been building so)ething that increasingl* looks like
a 6uilt ,ith o&ten too visible stitches, and traditional lines )a* &urther)ore even i)prison
the atte)ps at original thinking b* the historic ,eight the* carr*
Another approach is to co)e to ke* proble)s ,ith a &resh )ind, in a ,a* looking &or the
basic data o& econo)ic and social realit*, enhancing the e)pirical approach and tr*ing to
describe, as clearl* as possible, the various trans&or)ations that are going on, such as the
do)inance o& &inancial interests in the overall econo)ic activit*, putting aside &or later the
broader theori1ing and eventual labelings
9O
%Pnia 8acelar de AraQ5o H.elso (urtado9 econo)ist e cientista socialI ; .elso (urtado9 econo)ist and
social scientist= Teoria e .ebate ;Theory and .ebate<, (ebruar*AMarch 200', p !# &&
10O
%lternati/es 4conomiques, >a science ?conomique au,ourd@hui, special nu)ber 200!, !rd tri)ester,
presents a general vie, o& current trends in econo)ic thinking ,,,alternatives/econo)i6ues&r
1$
%here is no doubt that ,e all &eel a little like orphans :ot orphans o& values, since the 6uest
&or ,hat Laulo (reire used to call 6uaintl* Ha less evil societ*I keeps us )oving, or at least
those o& us ,ho have not &orgotten 8ut orphans o& a generation o& thinkers taken &ro) us,
.elso (urtado and also Laulo (reire, (lorestan (ernandes, Darc* Ribeiro, Milton Santos
and other giants ,ho ,ere our points o& re&erence in 8ra1il In the absence o& the great
)asters and &acing ever increasing dra)atic challenges ,e are &orced to pursue a
per)anent reconstruction o& our capacit* to understand the ,orld and detect viable
alternatives
In the 20
th
.entur* things see)ed si)pler 3hether ,e ,ere rightists or le&tists there ,as a
relativel* straight HroadI, theoretical avenues one 5ust had to &ollo, %o the le&t, the road
,ould be nationali1ation o& production )eans, central planning and a redee)ing class, the
proletariat %o the right, another straight road, privati1ation, )arket )echanis)s and
another redee)ing class, the bourgeoisie %hus s*))etricall* ,ere de&ined the institutional
re&erence o& o,nership, the do)inant regulator* )echanis) and the social &oundation o&
po,er In vie, o& the co)ple4 societ* ,e are &acing, these )odels shriveled %he statism o&
the le&t si)pl* disappeared &ro) the hori1on, albeit the pendular )ove)ent to the right has
,eakened the State to a point o& concern, generating increasingl* chaotic tendencies And
the pri/atist vie, o& the right, su))ari1ed in the capitalistic e6uivalent to the 0ittle Red
8ook, the 3ashington .onsensus, ,as sustained not b* theoretical credibilit*, but b*
serving do)inant interests %hese ideological clashes ,ar)ed our guts, led to )uch
violence, but brought little responses, and ,e rightl* &eel the) as hopelessl* outdated
11

%he &act is that ,ith global ,ar)ing, soil erosion, destruction o& biodiversit*, devastation
o& )arine li&e, generali1ed polari1ation bet,een the rich and the poor, there is a progressive
loss o& governance and there&ore, o& actual capacit* to put things in order, and ,e are
6uickl* heading to,ards dra)atic structural i)passes, in the literal sense and not in the
acade)ic sense o& the ,ord <nl* those unin&or)ed, )entall* con&used or privileged b* the
present s*ste) have &ailed to notice ,hat is at stake 3e are living ,hat ,as aptl* called a
Hslo, )otion catastropheI
%he outlook ,e advocate is that )an* punctual anal*ses o& concrete processes o& change
are contributing to design a ne, theoretical con&iguration %his is not a )acro theor* such
as that o& Mar4 &or the second hal& o& the 19
th
.entur*, but a set o& studies rooted in ,hat is
happening in di&&erent sectors o& the econo)*, graduall* contributing to erect another still
ill de&ined 8eltanschaung, ,hose outlines are 5ust appearing Jn6uestionabl*, these are
theories do)inantl* e)erging in the area o& the traditional le&t, ,hich has su&&ered enough
setbacks to be the &irst to sound the ,ake up call and to 6uestion &or)er si)pli&ications
8ut ,e can also see an increasing nu)ber o& theoreticians o& the Hs*ste)I, ,ho are
11
.o))enting on the 3ashington .onsensus, the Director o& the IM( Strauss/Fahn is 6uite candid9 H%he
global &inancial crisis has shattered the illusion o& stabilit*I %he %riple .o)eback, >eneva, Dece)ber #,
2010
1'
abandoning the boat that carried the) to success, no, a,are o& the absurdities created on
the planet It is no longer a )atter o& another HneoI stitched to &or)er theories, but o&
contributions that, although still scattered and punctual, belong to the construction o& a
di&&erent architecture
+ach one o& us has a di&&erent reading e4perience A,are that it is strictl* i)possible to
keep abreast ,ith all the scienti&ic production published, even in relativel* speci&ic
scienti&ic do)ains, ,e have endeavored to identi&* so)e o& the ne, re&erence points In a
certain sense, ,e are conde)ned to a )ethodolog* o& sketching, or that o& impressionism,
as in a painting b* Renoir, ,here ,e see nu)erous )eaningless dots Moving a,a* &ro)
the painting a shape beco)es apparent %he theoretical vision is onl* starting to e)erge
2 Seeking results
<n a )ore general level, as a guiding instru)ent &or politics, econo)ics need to be
rehabilitated .elso (urtado e4plains this ver* clearl*9 Hdevelop)ent policies have to be
&or)ulated based upon an e4planation o& the substantive ends ,e seek to achieve and not
based upon the logic o& the )eans set &orth b* the accu)ulation process controlled b*
transnational enterprisesI
12
In )ethodological ter)s this point is central 0atel* ,e have
vie,ed econo)ics onl* &ro) the standpoint o& the rate o& gro,th, &orgetting to think about
what is gro,ing, at what costs and for whom. <r else, asserting a &alse ob5ectivit*, ,e li)it
ourselves to )ake up )odels per)itting to &orecast on the value o& the di&&erent co)odities,
,hether the dollar is going up or do,n, or i& the last bo)b in Ira6 is going to a&&ect oil
prices Eere, ,e have to rescue an obvious issue9 the econo)* is a )eans to be used &or the
balanced develop)ent o& hu)anit*, and econo)ics as a science should help us select the
)ost positive solutions, and avoid the )ost dangerous deadlocks
%he i)portance o& the appearance in 1990 o& the Jnited :ations Report on Eu)an
Develop)ent
1!
is note,orth* as it suggests a si)ple, but po,er&ul &or)ula9 ,e have to
pursue an econo)icall* viable societ*, sociall* balanced and environ)entall* sustainable
Inso&ar as this blending o& ob5ectives is being ,idel* accepted, ,ith the availabilit* o& an
annual ,orld report that enco)passes the three approaches and not ,ithstanding the
li)itations o& general studies, then ,e have a re&erence, a H:orthI o& so)e signi&icance In
the acade)ia, ,e still &ace di&&iculties, because so)e scienti&ic areas stud* the social issues,
others the econo)* and still others the environ)ental aspects, ,hen all initiatives have to
be vie,ed si)ultaneousl* &ro) all three angles Seg)entation is beco)ing )ore clearl*
contested since it hinders a s*ste)ic vie, o& the process And in this tripple botto)/line
approach, the de)ocratic decisions/)aking process that )ust acco)pan* the
trans&or)ations has had little voice <ur approach here, o& course, ,ill be that the process
12O
. (urtado, <p .it p !"
1!O
Reports prepared b* the Jnited :ations Lrogra) &or Develop)ent, L:JD, are available at
http9AAundporgAhdro
1"
o& change ,ould be )ore stable ,ith &our legs, instead o& three 0et us call the) &our
pillars, as ,e have the) &or education, even i& &or elegance?s sake
Eo,ever, the ke* to overco)e a tradition o& )ake/believe ob5ectivit* in econo)ics, as i& it
,ere onl* restricted to )odeling ,hat is happening, is to read through the concerned
interests9 econo)ics o&ten see)s so co)plicated because di&&erent intepretations )erel*
serve di&&erent interests and ,e &ace contradictor* anal*ses bacause the interests are
di&&erent %he (ederation o& 8anks sa*s, 5udging b* pro&its, that 8ra1il has a solid s*ste) o&
&inancial inter)ediation It does not sa* that this solidit* is nurtured b* the borro,ers?
&ragilit* and especiall* that o& the productive sector o& the econo)* <&ten the reader sees
scienti&ic chaos ,here there is onl* a de&ense o& diverging interests ,ith each o& the parties
introduced as Hscienti&icI
%he econo)ist ,ho on %R or in a paper interprets realit* &or us, is &re6uentl* using a
la,*er?s tie, elegantl* presenting not realit*, but interests And *et ,e do have econo)ists
,ho insist on e4plaining the interests and seek overall co))on good be*ond the narro,
interests :arro, interests, it )ust be undertood, are al,a*s presented as the best interest o&
ever*one, ,hich adds to the con&usion 0a,*ers at least sa* Hthis is the best &or )* clientI,
,hile econo)ists tend to sa* Hthis is the best &or ever*bod*I
An e4cellent vie, o& this co)ing back o& econo)ics to a nor)ative outlook centered on the
construction o& our ob5ectives as hu)anit* is the book b* Eer)an Dal* and Cohn .obb Cr,
3(or the Common Aood: redirecting the economy towards community, the en/ironment
and a sustainable futureI.
1$
According to these authors, ,e )ust ackno,ledge the
boundaries o& the inherited )echanis)s9 H%he change ,ill i)pl* correction and e4pansion,
a )ore e)pirical and historical attitude, less pretension to be a HscienceI, and the ,ill to
subordinate the )arket to purposes it is not e6uipped to set &orthI %his change ,ould result
in a loss on the part o& the )arket o& its basic capacit* to allocate scarce resources a)ong
alternative uses H+cono)ists identi&ied three )a5or categories o& proble)s ,ith the
)arket9 ;1= a tendenc* o& the co)petition to be sel&/eli)inating@ ;2= the corrosive e&&ect o&
sel&/interest, i)plicit in the )arket, on the )oral conte4t o& the co))unit* and ;!= the
e4istence o& public goods and o& e4ternalitiesI
1'
%his outlook appears in recent reco))endations o& Jnited :ations studies9 ,e should
concentrate Hon e4plicit policies to avoid the negative e&&ects o& globali1ation on social
develop)ent as ,ell as ne, threats b* re&or)s &ocused on )arkets A deliberate action
)ust be carried out to ,arrant that cultural, religious and ethnic identities and rights are
e4plicitl* protected in international agree)ents and national and local legislation %his
protection )ust be de&ined in a code o& conduct that can be i)ple)ented b* national and
1$
Eer)an + Dal* and Cohn 8 .obb Cr, (or the Common Aood * 8eacon Lress, 8oston 199$, p '!$
1'O
Dal* S .obb, op cit, pp # and !$
1-
transnational corporations as ,ell as private interests operating under national
5urisdictionI
1"
3hen ,e speak o& He4plicit policiesI and Hdeliberate actionI, ,e alread* do not restrict
ourselves to obe*ing H)echanis)sI In other ,ords, it is not su&&icient to create a &avorable
environ)ent &or the )arket, the econo)* )ust be steered to,ards ,hat societ* e4pects o&
it H%he co))on goodI see)s to be a satis&actor* de&inition o& ,hat ,e ,ant, as ,e
understand better ever* da* that to steer the econo)* in &unction o& the do)inant
)inorities, generates proble)s &or all o& us %his idea, o& rescuing econo)ics as an
instru)ent &or the construction o& the co))on good, as si)ple as it see)s, is i)portant <&
course, ,e have di&&erent vie,s o& ,hat is Hco))on goodI, but at least ,e can start
)easuring the di&&erent outco)es
3 Measuring results
I& ,e ,ant to steer the econo)*, rationall* channeling our productive e&&orts to,ards
results o& interest to us, ,e )ust &ashion tools &or the assess)ent o& these results .elso
(urtado uses the concept o& Hsocial outco)eI, that states the essential, but )a* lead us to
con&use the )acro/econo)ic productivit* approach ,ith that o& sectors ,e usuall* identi&*
as HsocialI, as education, health, etc Ma*be the concept o& systemic producti/ity ,ould be
)ore e4plicit
1-
%he basic logic is si)ple9 ,hen a large producer o& so*beans e4pels &a)il* &ar)ers to the
urban &ringe o& the region, ,e )a* perhaps sa* that the production o& grain per hectare has
increased, and so has the productivit* o& the rural area %he entrepreneur ,ill sa* that he
has enriched the co))unit* Eo,ever, i& the costs generated &or societ* are counted in,
,ith the shant*to,ns, ,ith ,ater pollution, &or instance, or the disco)&ort o& the &a)ilies
e4pelled &ro) their land, in addition to une)plo*)ent, the costAbene&it evaluation ,ill be
di&&erent 3hen calculating the increase in so*beans production but putting aside indirect
costs generated &or societ*, the s*ste)ic balance ,ill be si)pl* ,rong +4ternalities )a*
be e4ternal &or) the point o& vie, the corporation?s costs, but belong ver* )uch to the
sa)e territor* +4ternalities have causes and conse6uences, 5ust like ever*ting else %hat is
to sa* ,e )ust advance to,ards an accounting that e4plains results in ter)s o& overall
results, outcomes and not 5ust ouputs,and )easuring genuine social progress
1"O
J: The Inequality redicament: 'eport on the8orld &ocial &ituation B==C Jnited :ations, :e, Kork,
200', p 1!'
1-
+ver*one is groping &or a concept that )ore &ull* e4presses socio/econo)ic results e4pected Si)ple
econo)ic productivit* is too restrictive to re&lect social ob5ectives CTrg Me*er/Sta)er uses systemic
competition in his ,ork on &trategies of >ocal and 'egional .e/elopment@ ;4strat?gias de .esen/ol/imento
>ocal e 'egional<D The 4conomist uses the concept o& Hsocial returnI to calculate the i)pact o& social
invest)ents that )ake the greatest possible contribution to societ*?s needs (or a technical note on the
sub5ect, see our roduti/idade sistEmica do territFrio, B010, $ p, http9AAdo,bororgA09produtividade
G20siste)icaG20doG20territoriodoc
1#
0ike,ise, ,hen a countr* sells its natural resources, this appears in our accounts as an
increase o& the >DL, ,hen in &act the countr* is selling inherited natural resources it did
not have to produce and ,ill be unable to replace %here&ore it is eating its capital b*
increasing the i))ediate ,ealth in detri)ent o& the &uture
3hat ,e inherited in ter)s o& )ethodolog* is a s*ste) o& national accounts dra,n up in
the !0?s, set up still in the &i&ties in the Jnited :ations &ra)e,ork, ad5usted in 199!, that
give us the &a)ous >DL, the su) o& values and costs o& goods and services produced,
restricted as such, to the area o& co))ercial activities and govern)ent costs 3e are not
going to describe here once again the li)its o& this )ethodolog*, no,ada*s 6uite obvious
1#
It is i)portant that as &ro) 1990, ,ith the ne, trends sti)ulated b* A)art*a Sen
19
and the
)ethodolog* o& human de/elopment indicators ;-.I=, a radical inversion took place %he
hu)an being is no longer seen as an instru)ent to serve the enterprises at the ti)e the
3orld 8ank used to sa* that education ,as good because it ,ould suppl* corporations ,ith
)ore productive ,orkers and our si)ple 6ualit* o& li&e no, begins to be seen as the
)a5or goal to be achieved In other ,ords, the social area is no longer a )eans to assure
econo)ic goals, conversel*, the econo)ic aspect begins to be seen as a )eans to i)prove
ever*one?s ,ell being A li&e ,ith health, education, culture, leisure, sa&et* is ,hat ,e
,ant +cono)ics )ust be at the service o& these social goals, the prosaic 6ualit* o& li&e
Lurchasing goods certainl* is an i)portant part o& the process, but d,indling as basic
con&ort is attained <ne thing is not suppressing the other, but the balance is changing
<& course, 6ualit* o& li&e is )ore di&&icult to )easure than the sales value o& an enterprise or
the cost o& running a public school, not to speak o& the econo)ics o& volunteers and
,o)en?s house chores %he truth is that until ,e adopt accepted and generali1ed &or)s o&
)easuring the end value, the results, o& our activities, ,e ,ill have no ,a* to evaluate
public or private policies %oda*, b* pro&iting &ro) and going be*ond the EDI
)ethodologies ,e have gone a long ,a* %he book b* Cean >adre* and (lorence Can*/
.atrice, H>es nou/eau" indicateurs de richesseI ;%he ne, indicators o& ,ealth= presents an
e4tre)el* ,ell organi1ed s*ste)ati1ation o& the ne, conceptual &ra)e,ork o& national
accounts that is being shaped
20

1#
In this regard, see our % 'eproduGHo &ocial ; &ocial 'eproduction<, +ditora Ro1es, LetrUpolis, 200!
http9AAdo,bororg @ notes on the Stiglit1, Sen and (itoussi report on ne, >DL )ethodologies ;2009= can be
&ound in the sa)e site, as ,ell as a technical note I$: estamos fa)endo a conta errada, http://bit.ly/eyII"2
19
%he basic book b* A)art*a Sen, .esen/ol/imento como >iberdade ;.e/elopment as (reedom<, ,as
published b* .o)panhia das 0etras, SNo Laulo, 1999, editora2co)panhiadasletrasco)br
20
Cean >adre* and (lorence Can*/.atrice, >es nou/eau" indicateurs de richesse ;The !ew 8ealth
Indicators<, +d 0a DVcouverte, Laris 200', ,,,editionsladecouverte&r / see )ore details about the book
at http9AAdo,bororg under HDicas de leituraI %he 8ra1ilian edition is b* Senac, 200", editora2spsenacbr @
another e4cellent publication is the book b* Latrick Riveret, 'econsiderar a 'ique)a ;'econsidering 8ealth<,
+d J:8, 8rasilia, 200"@ an e4cellent online co)pendiu), &ustainability Compendium of !ations, can be
&ound at http9AAbitl*Aes:kW4
19
%hus, be*ond the evaluation o& ouputs, ,e are starting to )easure the &inal results in ter)s
o& social values, outcomes@ econo)ic, social and environ)ental indicators are being
brought together@ the ob5ective indicators ;&or instance, in&ant )ortalit* rate= and the
sub5ective ;achieved satis&action= converge to bring a )ore co)plete picture@ )onetar* and
non/)onetar* indicators are vie,ed as co)ple)entar* s*ste)s o& evaluation A series o&
coherent s*ste)s are e)erging, such as <sberg and Sharpe?s economic well being inde",
the inde" of sustainable economic well being ;I&48$<, the genuine progress indicator
;>LI=, the genuine sa/ings indicator o& the 3orld 8ank, the -appy lanet Inde", Aross
!ational -appiness inde4 and others
%he )ethodolog* adopted b* the HCal/ertJ-enderson Kuality of >ife Indicators: a new
tool for assessing national trends5
21
is o& special interest, an authentic balance o& national
accounts applied to the Jnited States Instead o& continuing in the su) o& the )onetar*
product, it distributes indicators over 12 areas, including inco)e but also hu)an rights,
public sa&et*, 6ualit* o& the environ)ent and so &orth %he outco)e is that &or the &irst ti)e,
A)ericans have an instru)ent to assess ho, and in ,hich areas the countr* is i)proving
;or losing ground= It is interesting that neither ne, indicators nor ne, research ,ere
necessar*@ the* started &ro) e4isting data, b* selecting the )ost reliable, and si)pl*
grouped the in&or)ations intelligentl* according to )a5or lines o& practical results e4pected
b* the population
%he 3orld 8ank itsel& is &inall* rethinking its )ethodologies In the 3orld Develop)ent
Indicators 200!
22
, on chart !1' that assesses savings, tree &elling is presented not as a
positive &igure ;increase o& >DL= but as reducing the countr*?s capital 8* the sa)e logic,
countries that e4port oil are sho,n as spending their natural capital, presenting negative
savings accounts In car production, additional e4penses ,ith health due to pollution ,ere
taken into consideration 8ecause the 3orld 8ank )ethodologies have a po,er&ul
in&luence, this i)prove)ent is certainl* late but ,elco)e
Moreover, there are 6uite practical creative solutions In SNo Laulo, the Rede :ossa SNo
Laulo )ove)ent has organi1ed, ,ith the participation o& the civil societ* organi1ations,
1!0 ke* indicators concerning the 6ualit* o& li&e in the cit* And a la, ,as approved
)aking the )a*or accountable according to 6uanti&ied results As a )a*or, he does not
)anage Hhis progra)I but the progra) the cit* ,ants %hese are &irst steps, but the*
represent an i)portant botto) up de)ocratic process that has alread* been adopted b* !2
di&&erent cities in 8rasil
2!
Leople can vote according to actual results &or their lives and not
according to ,ho distributes )ore %/shirts %he innovation did not de)and )a5or
econo)etric calculations since data alread* e4isted, but it signaled a )ost i)portant
political change9 in&or)ation is organi1ed for the population and data are collected
21
Ea1el Eenderson, Con 0icker)an and Latrice (l*nn ;editors= Cal/ert -enderson Kuality of >ife
Indicators: a new tool for assessing national trends ,,,calvertgroupco)
22
3orld 8ank 8orld .e/elopment Indicators B==I, 3ashington, 200!, pgs 1-$&&
2!
See ,,,nossasaopauloorgbr
20
according to the greatest i)pact on the 6ualit* o& li&e o& these people %hat is to sa*,
econo)ic accounting beco)es a tool o& citi1enship, and initiatives o& the various public and
private agents ,ill be assessed in ter)s o& &inal results &or societ*, and at the local level,
,here people can participle )ore easil* in the decision )aking process
3hat ,e are pointing out is that the change o& approach to econo)ic accounting is
essential A bank that diverts our savings to )ake speculative &inancial invest)ents and
presents high pro&its increases the >DL, but reduces our s*ste)ic productivit* ,hen it
decapitali1es co))unities and reduces productive use o& our savings %he >er)an s*ste)
&or &inancial inter)ediation, based upon s)all )unicipal savings banks, does not present
high pro&its, but channels savings to,ards sociall* use&ul invest)ents, generating better
living conditions &or all, and the pro&its end up sho,ing in other areas
2$
Jnder this
approach, Hpro&itI has to be social and productivit* has to be s*ste)ic %hat econo)ic
calculations progress to,ards this integral accounting and go be*ond the su) o& )icro/
econo)ic co))ercial transactions is a signi&icant step in the right direction
2'

>enerall* speaking, an i)portant advance &or econo)ic e)po,er)ent is the radical change
about ho, the in&or)ation on the achieved results is organi1ed 3hile the su) o& the values
o& the enterprises? production and costs o& public services ,as the onl* )easure)ent, ,e
,ere naturall* led to believe that the entrepreneurial pro&it ,as the onl* ,a* to progress,
and that public services ,ere a burden As ,e begin to s*ste)aticall* assess results &or
societ* as a ,hole, the necessar* policies &or real progress tend to beco)e )ore obvious, or
at least less co)plicated Eo, can ,e e4pect to achieve good results i& the ,a* ,e )easure
results is biased7 +cono)ics is certainl* pointing to ne, directions in this area
Much o& our &eeling o& helplessness in the &ace o& the econo)ic &orces co)es &ro) the &act
that ,e si)pl* do not have tools to evaluate the contributions o& various activities to our
,ell being %he al)ost h*sterical outcr* &or an additional percentage point o& >DL gro,th
is understandable 3hen >DL goes up, so does e)plo*)ent, and a great part o& our silent
night)ares is linked to the possibilit* o& not being able to support our &a)il* %his is
natural, but it takes our &ocus a,a* &ro) the pri)ar* goal that is the 6ualit* o& li&e in our
societ* %he econo)* )oving &aster is good, but )oving in the right direction is 5ust as
i)portant 3hen outdoors ,ere &orbidden in SNo Laulo, a&ter having covered the ,hole cit*
,ith rubbish, there ,as an outcr* that 5obs ,ould be lost (ro) this point o& vie,, even
2$
%he data about savings )anage)ent in >er)an* can be &ound in The 4conomist, Cune 2"th 200$, p --
The 4conomist naturall* la)ents that >er)an regional legislators Hre&use to authori1e the sale o& savings
banks, ,hich are the propert* o& local co))unities, to purchasers in the private sectorI %he 200# &inancial
crisis clearl* sho,s ,h* this ,as ,ise, although the speculative high &inance s*ste) did breach the ,hole
s*ste) In the JS the ,hole s*ste) ,as graduall* taken over b* the big &inance speculation s*ste)
2'
(or a discussion o& the role o& in&or)ation in this citi1en?s e)po,er)ent over econo)ic polic*, see our
article InformaGHo para a Cidadania e o .esen/ol/imento &ustentL/el ;Information for Citi)enship and
&ustainable .e/elopment<, http://dowbor.org , under HArtigos <nlineI It is i)portant to )ention here the
)ethodological approaches such as those o& Ipea, ,ith Marcio Loch)ann, or studies on the territiorial
distribution o& ,ealth in 8ra1il ,ith the H)aps o& e4clusionI b* Aldai1a Sposatti Ipea papers can be &ound on
,,,ipeagovbr
21
cri)e is positive, as it generates lots o& 5obs in the production o& better locks, ne, 5ailing
capacit*, )ore police %he ,a* ,e see econo)ic activit* )ust start to )ake sense again
%he ,a* it is, people 5ust &eel lost, and ,hen a s,eeping crisis takes our savings or pension
&unds, ,e look &or the guilt* gu*s %here are no guilt* gu*s, the* all sa* the* do ,hat
ever*one else is doing in their area And i& this is the case, the ,orkings are ,rong .an ,e
a&&ord to have a huge &inancial inter)ediation s*ste) ,hich is not accountable to an*one,
and not even e4pected to produce in&or)ation on ,hat it is doing7 %here is no econo)ic
de)ocrac* ,ithout ade6uate in&or)ation on the trul* i)portant d*na)ics and outco)es In
this sense the building o& ne, indicators o& ,ealth is an especiall* i)portant line o&
action
2"
4 Financial takeover of economics
(inancial speculation gained a central role in the econo)*, and also in econo)ics
+ver*one is tr*ing to understand ,hat happens ,ith &inancial inter)ediation .uriousl*, the
prevailing theoretical research is not concerned ,ith )aking our savings )ore productive,
but ,ith generating )ore advanced instru)ents to pro&it &ro) &inancial invest)ent
%hereupon, the &inancial area began to be anal*1ed apart &ro) its conse6uences and
econo)ical use&ulness %hat is, untill it crashed %he (rench &inance )inister co))ented
brie&l* that Hthe &inancial s*ste) is supposed to provide &inancial services, rather than serve
itsel&I 3ith i)pressive ,isdo), the IM( director concludes that Hthe idea that it ,as
possible to rel* solel* on the )arket to ensure strong, sustainable gro,th has lost
credibilit* %he crisis sho,ed that this ,as ,rongI
2-

Coel Furt1)an?s book HThe .eath of 7oneyI continues to be ver* ti)el* As )one*
beca)e an electronic notation traveling at the speed o& light on virtual ,aves, the ,orld has
beco)e a global casino More i)portant &or us, pro&it and po,er generated b* &inancial
speculation have led econo)ics to concentrate obsessivel* on this area %he list o& so/called
econo)ics :obel ,inners, ,ith ver* rare e4ceptions such as A)art* Sen, is essentiall*
co)prised o& specialists on behavior o& the &inancial )arket
%he situation is ,orsened b* that &act that the :obel in econo)ics is not reall* a :obel
Lri1e, but an a,ard &ro) the 8ank o& S,eden Leter :obel, grandson o& Al&red :obel ,ho
2"
It see)s the ,orld is ,aking up to this obvious gap in the ,a* the econo)* ,orks, the in&or)ation gap
:e, trends can be &ound at %he $eyond A. )ove)ent in the <+.D reports, the studies o& the Stiglit1/Sen/
(itoussi .o))ission, http9AA,,,stiglit1/sen/&itoussi&rA Cohn >ertner has produced an e4cellent overvie, in
the :e, Kork %i)es http9AA,,,n*ti)esco)A2010A0'A1"A)aga1ineA1">DL/tht)l7BrX1 A short account o&
the >DL ,oes can be &ound in our paper I$: 4stamos fa)endo a conta errada, http://bit.ly/es!+M"
2-
Strauss/Fahn, >eneva, # Dece)ber 2010 %he idea that econo)ics is essentiall* about speculative )arkets
has deep penetration An e4cellent presentation o& ho, the &inancial s*ste) has been de&or)ed can be seen in
the &il) Inside Nob, 2010, b* .harles (erguson, 8est Docu)entar* <scar a,ard
http9AA,,,i)dbco)AtitleAtt1"$'0#9A %he (rench &inance )inister co))ent on the banking s*ste) is in the
&il)
22
instituted the a,ard, e4plains the con&usion purposel* created b* a peculiar arrange)ent o&
a peculiar group o& econo)ists9 HIn Al&red :obel?s correspondence there never ,as an*
)ention o& a :obel Lri1e in econo)ics %he 8ank o& S,eden put its egg in the nest o&
another highl* respected bird, and thus violates the trade)ark :obel %,o thirds o& the
a,ards o& the 8ank o& S,eden ,ere granted to A)erican econo)ists &ro) the .hicago
School, ,hose )athe)atical )odels serve to speculate in the stock )arket in the opposite
direction o& Al&red :obel?s intentions, ,ho ai)ed to i)prove the hu)an conditionI
%here&ore, the )one* does not co)e &ro) the :obel &und and the criteria &or granting the
a,ard co)e &ro) the sa)e &inancial area that thus assu)ed, b* &raud, a respectabilit* it
does not have %hat the &inancial area succeeded in granting the a,ard at the sa)e
cere)on* in S,eden, contributes to the con&usion, but not to the ethics o& the process
2#
Another e4pression o& the po,er o& this seg)ent o& the econo)* is that o& the risk
assess)ent agencies All our ne,spapers )ake 6uite a &an&are about the latest ratings
concerning 8ra1il 8ut even the highl* conservative The 4conomist beco)es indignant ,ith
the )ight gained b* the oligopol* o& three groups Mood*?s, Standard SYLoor ;SSL= and
(itch H,ho in recent *ears &ace heav* criticis)s, because the* ,ere )istaken about the
+nron, 3orld.o) and Lar)alat crises %hese errors, the gro,ing i)portance o& agencies,
the lack o& co)petition bet,een the) and the absence o& e4ternal scrutin* are beginning to
)ake so)e people nervousI The 4conomist &urther argues that the assess)ent agencies are
paid b* those issuing the &inancial papers, and not b* investors ,ho take the risk, ,ith a
clear con&lict o& interests %he outco)e is that Hthe )ost po,er&ul &orce in the capital
)arkets is devoid o& an* signi&icant regulationI
29
In &inancial speculation the essential aspect is that it entails accu)ulating ,ealth ,ithout
needing to produce an*thing In practical ter)s, these are people ,ho live at the e4pense o&
others, in a ga)e ,here ,hat one earns corresponds to so)enone else?s loss Coseph
Stiglit1 understood this and ,rote a &orce&ul book, H>lobali1ation and its DiscontentsI
I=
,
sho,ing ho, countries in di&&icult* need )ore capital to balance their econo)*, and that is
precisel* ,hen speculative capitals &lees, and the countr* goes broke Stiglit1 illustrates his
point o& vie, o& the role o& liberali1ation o& capitals ,ith the case o& Southeast Asia, but the
2#
In this regard see the article b* Ea1el Eenderson in >e 7onde .iplomatique, (ebruar*, 200', p 2# %he
&or)al na)e o& the H:obelI pri1e in econo)ics is the HLri1e o& the 8ank o& S,eden in +cono)ic Sciences in
Me)or* o& Al&red :obel,I a na)e ,hich &acilitates the &raud9 the econo)ists onl* use the &irst and the last
,ord %he pri1e is not paid &or b* the :obel (oundation 3ikipedia presents the &acts9 H%he 8ank o& S,eden
Lri1e in +cono)ic Sciences in Me)or* o& Al&red :obel, so)eti)es re&erred to as the :obel pri1e in
econo)ics, ,as not a part o& :obelZs ,ill It ,as instituted in 19"9 b* Sveriges Riksbank, the 8ank o&
S,eden Since this pri1e has no re&erence in :obelZs ,ill, and is not paid &or b* his )one*, it is technicall*
not a :obel Lri1e Eo,ever, it is a,arded ,ith the o&&icial :obel pri1esI It is signi&icant that Kunus, one o&
the )ost innovative econo)ists o& the present da*, has been a,arded the :obel Leace Lri1e
29
The 4conomist, CreditJrating agencies: &pecial 'eport * 2" March 200', p "-&& %he last citation is b*
>lenn Re*nolds, &ro) an independent credit research &ir), in the sa)e article 3e are ,ell be&ore the
&inancial crisis here, and ,hen the )a5or &inancial institutions cru)bled in 200#, the* ,ere still rated as
double or triple A
!0
Coseph Stiglit1, Alobali)ation and its .iscontents, 33 :orton S .*, :e, Kork , 2002
2!
sa)e rationale applies, &or instance, to Argentina at the )o)ent o& HcorralitoI, and
obviousl* to capitals presentl* leaving +urope and the JS to seek better luck in .hina or in
8ra1il
!1

%he o&&icial theor* o& the International Monetar* (und, ,idel* publici1ed during so )an*
*ears, sounds al)ost as a 5oke at present9 H%he &unda)ental bene&its o& &inancial
globali1ation are ,ell kno,n@ ,hen channeling &unds to )ore productive ends, it )a* help
developed countries as ,ell as those developing to attain higher levels o& li&eI
!2
8ut it ,as
not H,rongI in scienti&ic ter)s, because it ,as not intended to be right It si)pl* de&ended
the &inancial co))unit*?s interests, stating the* correponded to our o,n interests
%he real process is 6uite di&&erent %he productive sector, the govern)ent, the co))unities
and the consu)ers are decapitali1ed 0iberali1ing capital &lo,s, ,hich theoreticall* should
Hchannel &unds to )ore productive usesI, on the contrar*, tends to drain resources &or
speculative purposes ,hich &orces enterprises to seek sel&/&inancing, generating a &inancial
&eudalis) in ,hich productive sectors seek sel&/su&&icienc*, losing precisel* the capacit*
&or savings b* so)e to nurture invest)ents b* others %he e&&ect is rigorousl* the reverse o&
,hat the (und i)agined or at least declared, but rigorousl* coherent ,ith co))on
econo)ic sense
(or us it is interesting to note that these are not ob5ective econo)ic )echanis)s or la,s, o&
the H)arket reactionsI t*pe@ this is a conscious asse)bl* o& an econo)ic and &inancial
process o& destabili1ation, involving gigantic pa*o&&s and articulation o& a net,ork o&
&riends in the A)erican govern)ent, 3all Street, in )ultilateral &inancial organi1ations and
in large enterprises :o conspirac* or dark cloaks are needed9 their co))on interests 5ust
pull the) together Market )echanis)s7 (ree )arket7
3e )a*, o& course, attribute ugl* na)es to this process, but in &act the* are )echanis)s o&
political and &inancial )anipulation that are not &ound in traditional co)pendiu)s and that
authors such as Stiglit1 graduall* Hdisasse)bleI in a kind o& re/erse engineering,
e4plaining Hho,I a given seg)ent o& econo)ic activities H,orksI, based upon e4a)ples
,itnessed, and not on .hicago School co)pendiu)s
%he e4tent o& )isin&or)ation on such an ele)entar* &act as that &inancial speculation,
,hich banks like to call in/estment, lead to the enrich)ent o& )iddle)en, ,ithout
generating ne, assets, is a)a1ing Also ignored is the &act that these &ortunes gathered
,ithout the stressing activit* o& production, allo, their o,ners to purchase real products
(urther)ore, this enrich)ent ,ithout corresponding production, an appropriation o& third
!1
Stiglit1 anal*ses, in the case o& Asia, ,hat he calls Hthe naked sel&/interest o& &inancial )arketsI and
observes that Hcapital &lo,s out o& a countr* in a recession, precisel* ,hen the countr* needs it )ost, and
&lo,s in during a boo), e4acerbating in&lationar* pressures Sure enough, 5ust at the ti)e the countries
needed outside &unds, the bankers asked &or their )one* backI ;Stiglit1, op cit p 100= (or the case o&
Argentina, see our %ltos ,uros e descapitali)aGHo da economia ;-igh Ta"es and Ondercapitali)ation of the
4conomy<, http9AAdo,bororg under HArticles <nlineI
!2
(inance P .e/elopment, IM(, March 2002, p 1!
2$
part* production, is done ,ith our )one* and not ,ith that o& the )iddle)en %hese are
conservative people ,ho detest risk, and certainl* e4pect govern)ents to bail the) out in
un&ortunate )o)ents
!!
Do ,e teach this7 %he econo)ics ,e teach does not teach us the essential, ho, to set up
ob5ectives &or develop)ent in the ne, conte4t o& technological change, deregulation and
institutional change, to use the three categories o& change adopted b* the IM( %he
transition in anal*sis b* the (und is )oving In 200', it ,as beco)ing )ore care&ul ,ith
the globali1ation issue9 H3hile it is hard to be categorical about an*thing as co)ple4 as the
)odern &inancial s*ste), it?s possible that these develop)ents are creating )ore &inancial/
sector induced proc*clicalit* than in the past %he* )a* also create a greater ;albeit still
s)all= probabilit* o& a catastrophic )eltdo,nI
!$
%he international &inancial casino ;,ith its national di)ensions= thereb* generates a process
o& decapitali1ation o& the econo)*, leading to an a)a1ing subutili1ation o& one o& the )ain
&actors o& econo)ic sti)ulation that are our savings And here it is appropriate to sa* our
savings, because the casino ga)bles ,ith the )one* o& the pension &unds, the )odest
&a)il* savings o& our deposits 8anking still sounds as a serious na)e Actuall*, the* are
5ust &inancial )iddle)en, ,ho do not have, and are not paid to have, an* idea about the real
econo)* And the* boldl* sail on the e4pectations o& so )an* o& us that ,e can )ake a
good buck ,ithout ,orking &or it, b* putting our savings in good hands
In &act, a culture has been generated %he area o& credits cards is a curious illustration o&
ho, at the sa)e ti)e the* &leece us and sho, us ho, ,e )a* appear i)portant, ,hen
pa*ing &or dinner ,ith a girl&riend ,ith a Hgold cardI %he looks on the &aces in the
co))ercial leave no doubt about ,ho is going to be dined, but ,ho is proudl* &leeced is
obviousl* the credit card o,ner %he card si)pl* i)poses &ees on all transactions, charging
the establish)ent as ,ell as the consu)er, and hoping the custo)er ,ill de&ault, ,hich
generates huge interest on late pa*)ents, in addition to the rent o& the e6uip)ent involved
>eneral +lectric, &or instance, has alread* issued "# )illion cards, $0G in developing
countries It is one )ore corporation that discovered there is )ore eas* )one* in pla*ing
,ith other people?s )one* than in &acing the di&&iculties o& productive processes %he
average A)erican proudl* sho,s o&& an average o& eight credit cards and lives in debt,
!!
A discussion o& this sub5ect )a* be &ound in our O que ? capitalQ ;8hat is CapitalQ<, editora 8rasiliense,
SNo Laulo, 200$, 10
th
ed revised and e4panded Also our paper 4conomic Crisis with no 7ysteries, 2009,
http9AAdo,bororgA09crisisno)*ster*doc @ &or an a)using sarcastic ;but technicall* correct= description o&
ho, this s*ste) ,orks, see the # )inute &il) on *outube, The >ast >augh. http://bit.ly/NlRf
!$
Raghura) Ra5an, director o& the research depart)ent o& the IM(, (inance and .e/elopment, I7(,
Septe)ber 200', p '$, under the title HRisk* 8usiness9I rocyclicality, in the 5argon o& the IM(, re&ers to the
pheno)enon identi&ied b* Stiglit1, o& capital &leeing precisel* ,hen the econo)* is in di&&icult*, at the
)o)ent it is )ost needed, accentuating the unbalanced situation %hese are the institutions &ed trillions in
public )one* a&ter the 200# )eltdo,n, ,ith the declared e4pectation that the ne, )one* ,ould not &eed
)ore speculation, but lead to invest)ent in the real econo)* 3e are obviousl* still ,aiting &or that to
happen
2'
,orking a great part o& his li&e to pa* )iddle)en And the* both happil* charge
govern)ent and high ta4es &or their ,oes
.uriousl*, %he +cono)ist considers that 8ra1ilians are a)ong the &e, ,ho are s)art9 Hthe
nu)ber o& credit cards in 8ra1il &or instance, gre, an average o& 1-!G a *ear bet,een
1999 and 200$, according to 8ain S .o)pan*, another consulting enterprise Eo,ever,
8ra1ilians tend to settle their bills )onthl* because o& the high interest rates ;#/11G per
)onth=, also because the* ,ould rather use cards as a convenient ,a* o& pa*)ent, rather
than a &or) o& loan %here are other cheaper loans available, sa*s Rodol&o Spiel)an) &ro)
8ain %his )a* e4plain ,h* 8ra1ilian?s *earl* e4penditures ,ith credits cards have
dropped $1G a *ear, discounting in&lation, bet,een 1990 and 200$I
!'
As one sa*s in the land o& .elso (urtado, this is parading around with another man@s hat.
8* the ,a*, .elso (urtado likes to be clear9 H:obod* ignores the &antastic concentration o&
po,er present toda* in the so/called &inancial )arkets ruled b* speculative e4change
activitiesI
!"

3e are ,ell a,are o& ho, the ,orld auto)otive industr* is structured, but ignore ho, the
groups that appropriate our savings are structured and ho, the* organi1e their political
po,er 3e see pages in all ne,spapers ,ith all the stock )arket nu)bers, but not a ,ord
about ho, the process is )anaged %o ga)ble at the tables o& the casino is allo,ed ;in &act
,e bring our savings to institutional investors ,ho ,ill ga)ble &or us=, but to kno, ho,
the tables are )anaged, ,hat the chances are and ,ho ,ins, ho, )uch, is out o& our grasp
It is a huge area ,here econo)ics could shed so)e light Innu)erable econo)ics nobels
;so)e prefer ignobels= devise &or)ulas to i)prove our roulette per&or)ances, but onl* a
&e,, like Stiglit1, &or instance, have li&ted the corner o& the veil, and addressed the resulting
process o& political/&inancial po,er 3ouldn?t a little de)ocrac*, i& not regarding control,
but at least concerning in&or)ation, be ,elco)e7
5 From speculation to socially useful investments
<bviousl*, not all &inancial activities a)ount to speculation %he casino is curiousl*
producing its o,n antidotes 3hile the prevalent theoretical trend and the bulk o&
resources strengthen the speculative activities, another trend is e)erging, seeking to
respond to the prosaic re6uire)ents o& &inance o& the s)all and )ediu) si1ed enterprises,
!'
The 4conomist, Canuar* 1$th 200", p -$
!"
.elso (urtado, O capitalismo global, +d La1 e %erra, Rio de Caneiro 199#, p -@ the s*ste) o& electronic
operations, such as algorithmic trading, re6uires i)pressive invest)ents in in&or)ation techonolog*, an
esti)ated 2"$ billion dollars onl* in 200' b* groups o& A)erican speculators S)aller or ,eaker countries
are all &ree to tr* to keep up %his is &ree )arket It reall* is a global s*ste) o& e4propriation o& savings b*
those ,ho have the )eans to do)inate these resources See The 4conomist, (ebruar* $th 200", p "# about
H%echnolog* and +4changes,I also see the e4planation o& the econo)ic s*ste) on the ,orld level in Trade
and .e/elopment 'eport 0112, &ro) J:.%AD, one o& the &e, international institutions to realisticall*
address the proble), at the ti)e ,hen it ,as headed b* Rubens Ricupero
2"
&a)il* agriculture and civil societ* organi1ations %he basic &act is that a great deal o&
)one* in a &e, hands tends to generate chaos, ,hile a little )one* in the hands o& )an*
generates i)pressive results in ter)s o& econo)ic and social progress (ro) a strictl*
econo)ical perspective, &or those ,ho have al)ost nothing, a s)all a)ount o& )one*
)akes a huge di&&erence in ter)s o& health, schooling &or the children, better production
conditions, social and econo)ic outco)es Kunus? ideas on ho, credit can ,ork have
hugel* contributed to our understanding o& ho, the econo)* can be &ed
!-

%he subJprime )ess has obviousl* been sho,n as the result o& getting )one* to the poor,
not a result o& ga)bling ,ith the resulting credit &lo,s, trans&or)ed into Structured
Invest)ent Rehicles ;SIRs= %he poor apparentl* have a natural tendenc* to being guilt*
8ut in a less speculative environ)ent the approach is sound, and ,orking in 8rasil
Ade6uatel* orienting credit )a* prosaicall* support our develop)ent Stiglit1 correctl*
stresses the i)portance o& the 19-- Community 'ein/estment %ct .RA / in the Jnited
States, ,hich obliges &inancial inter)ediation institutions to invest at least part o& the
resources in co))unit* develop)ent, since the co))unites a&ter all are the o,ners o&
these resources %he (ederal Register o& Cul* 19, 2001 speci&ies the ,arrant* that &inancial
agencies Hco)pl* ,ith continued and a&&ir)ative obligations in an e&&ort to )eet needs &or
credit b* the local co))unities ,here the* are certi&ied (urther)ore, .ongress instructed
agencies to assess per&or)ance o& the &inancial institution in satis&*ing credit re6uire)ents
o& the ,hole co))unit*I%his ,as positive
!#

3hat ,as less positive is the Hassess per&or)ance o& the &inancial institutionI part, taken
over b* the global casino %he present ga)e is to tr* to shi&t the responsibilit* o&
speculation ,ith debt &ro) the speculators to the co))unities (unding housing in the
co))unities, through HobligationsI and Ha&&ir)ativeI actions, )akes people live better and
creates 5obs %hro,ing these papers around in the global &inancial )arket does not belong
to HobligationsI, but to the &reedo) o& &inancial )iddle)en o& )erel* speculating ,ith
third part* resources
Stiglit1 also describes the i)portance o& the .hinese s*ste)9 H.ities and villages channeled
their precious resources to the generation o& ,ealth and there ,as strong co)petition &or
success .it* and village inhabitants could see ,hat ,as happening ,ith their &unds %he*
kne, i& ne, 5obs ,ere being created and i& inco)e had increased +ven though there is no
de)ocrac*, there is responsibilit* In .hina, ne, industries ,ere located in rural areas
%his helped to reduce social tension that inevitabl* co)es ,ith industriali1ation %his is the
.hina that launched the &oundations o& a :e, +cono)* on top o& the e4isting institutions,
)aintaining and strengthening its social capital ,hile in Russia it ,as erodedI
!9

!-
Moha))ad Kunus, $anqueiro dos pobres ;$an+er to the oor<, [tica, SNo Laulo, 2000@ Kunus ,as
a,arded the :obel Leace Lri1e in 200", not in econo)ics Ee ,orks ,ith s)all )one* and lots o& people
!#
(ederal Register, Lroposed Rules, vol "" :o 1!9, Cul* 19, 2001, p !-"0! /
http9AA,,,&&iecgovAcraAaboutht)
2-
>er)an* o&&ers another interesting e4a)ple, in a 6uick overvie, %he gigantic )ass o& the
countr*?s &a)il* savings is not entrusted to the so/called Hinstitutional investorsI &or
speculation It is )anaged b* s)all saving banks &ounded in each cit* or village The
4conomist in&or)s that )ore than hal& o& the >er)an savings is ad)inistered this ,a* %he
)aga1ine considered, o& course, that this is a )atter o& back,ardness, because the )one*
,ould be invested in a )ore d*na)ic ,a* i& savings ,ere )anaged b* so)e international
groups
$0

%his is not seeing the ,ide range o& s)all/scale initiatives that ,ell capitali1ed localities
)a* take, bringing about s)all enterprises, t*pical restaurants, processing o& local
agricultural products not ever*thing has to go to McDonalds or to a h*per)arket chain
in a process that is not )erel* econo)ical, it is cultural and associative It )akes a region
be the Ho,nerI o& its territor*, ,ith its o,n creative initiative <ne )ust recall that '$G o&
the Jnited States enterprises, e)plo* ' people or less and that the countr* has 2" )illion o&
)icro and s)all enterprises %he )atter here is a signi&icant gap in econo)ic theor* that
considers the s)all enterprise productive onl* ,hen it is reduced to being an outsourcing
instru)ent &or a corporate giant
I& theories ignore the crushing o& individual and associative econo)ic initiatives in
globali1ed capitalis), on the level o& applied econo)ics ver* interesting things sur&ace
%he book >es placements ?thiques is a kind o& s)all handbook &or those ,ho ,ant to do
use&ul things ,ith their )one*, instead o& putting it in the bank
$1
3ithout )uch theor*, the
book starts &ro) the principle that real li&e people ,ant to balance various interests, such as
having a reasonable re)uneration &or their )one*, as ,ell as sa&et*, li6uidit* i& the* need it
!9
C Stiglit1 >lobali1ation / %he .RA is detailed on page -0 as a reaction to the gap bet,een savings and
the needs o& develop)ent %he .hinese option is on pp 1-$ and 1-' Stiglit1 also )entions the case o& the
.1ech Republic9 HIt had created a capital )arket ,hich did not raise )one* &or ne, invest)ent, but allo,ed a
&e, s)art )one* )anagers ;)ore accuratel*, ,hite/collar cri)inals / i& the* did ,hat the* did in the .1ech
Republic ,hen in the Jnited States, the* ,ould be behind bars= to ,alk o&& ,ith )illions o& dollars o& )one*
belonging to others?I Stiglit1?s vie, o& the &e, success&ul cases o& &inancial politics is interesting9 H<ne
attribute o& the success cases is that the* are Hho)egro,nI, designed b* people ,ithin each countr*, sensitive
to the needs and concerns o& their countr*I;p 1#"= Eis vie, that the s)art )one* )anagers ,ould be behind
bars in the JS, or in +urope, is obviousl* opti)istic %he* ,ere barel* touched in their bonuses
$0
The 4conomist, <ctober 1'th, 200$ H%he public sector banks 11 regional ,holesale >andesban+en, a
&e, develop)ent banks and nearl* '00 savings banks account &or !"G o& >er)an banking assets and )ore
than hal& o& savings deposits (or *ears the* have been protected b* la,s and state guarantees &ro) the &ull
&orce o& the )arketI ;p -!= The 4conomist is strongl* biased and conducts a ca)paign In its Dece)ber 1!,
200! issue, there ,as alread* this indignant note 9 H.onsider the '00/odd )unicipal savings banks that hold
hal& o& the )one* in >er)an savings accounts :one o& these banks has ever been privati1ed, even though
private/sector banks, ,hich have onl* 1'G o& the savings deposits, ,ould like the chance to bu* so)eI %he
article la)ents the e4istence in >er)an* Ho& the three/pillar structure o& private, public and co/operative
banks that stulti&ies the banking s*ste)I ;p "9= It is ,hat has partl* protected >er)an* in the &ace o& the
crisis
$1
Alternatives +cono)i6ues >es placements ?thiques : comment placer son argent ;In/estment 4thics: -ow
to In/est Sour 7oney* ,,,alternatives/econo)i6ues&r , Laris, 200!, 1-" p @ in addition, in (rance the
various local s*ste)s o& public savings )anage)ent ;0a Loste, .aisse d?\pargne, .rVdit Mutuel= ad)inister
$0G o& (rench savings, according to The 4conomist, Dece)ber 2$
th
200'/Canuar* "
th
200" double/issue, p
99
2#
une4pectedl*, and also a &eeling that their )one* is being use&ul Jse&ul &inancial
invest)ents presented in the book relate speci&icall* to (rance, but open overall
perspectives
In practical ter)s, it is a s)all handbook that has on each page an ethical &und ,ith
indications o& the invest)ent?s average interest rate, li6uidit* ;so)e &unds re6uire a
)ini)u) period o& invest)ent=, sa&et* ;there are options ranging &ro) invest)ents
,arranted b* the State up to those o& risk in the stock )arket= and the Hethical surplus/
valueI, ,hich describes in detail the kind o& sociall* or environ)entall* use&ul activit* that
is involved %he process consolidated in (rance because, in addition to popular interest, the
local banks co))unit* or state began to guarantee invest)ents )ade in initiatives o&
the social econo)*, engendering a per&ectl* sa&e process in &inancial ter)s and o& high
s*ste)ic productivit*
Invest)ents t*picall* include enterprises in the so/called social econo)* &or instance,
*our )one* ,ill be invested in a s)all enterprise that organi1es transportation &or the
handicapped in the cit*, an initiative too punctual to attract traditional entrepreneurial
groups or traditional enterprises that ,ere screened b* a series o& criteria such as respect
&or labor la,s, respect &or the consu)er, green econo)* and so on %here are &unds that
&urther)ore e4clude )an* notorious anti/social enterprises, such as those that produce
ar)s, tobacco or alcoholic beverages
%his re6uires a set o& criteria to assess entrepreneurial success that go &ar be*ond pro&it
%hat is ho, various institutions that s*ste)aticall* &ollo, up various sectors o& activit* and
enterprises ca)e into being, so that a person investing in a &und )a* e&&ectivel* kno, the
end/use o& the )one* 3e are all accusto)ed to indicators such as H8ra1il riskI, ,hich
describes the risk o& a given countr* or enterprise &or &inancial investors Eo,ever, the
indicators o& social return o& enterprises al)ost never appear, and never the risk for 8ra1il,
&or instance, o& speculative activities b* the international &inancial co))unit* (or us, this
concept is o& great i)portance, because contrar* to >er)an*, ,here s)all )unicipal banks
are predo)inant and the population )a* reasonabl* &ollo, ,hat is being done ,ith its
)one*, nor)all* ,e have not the &aintest idea o& ,hat is happening in the private and the
public do)ain
$2

%he s*ste) set up in (rance is )ature and rather sophisticated It involves a legal
&ra)e,ork that allo,s certain &inancial invest)ents to be treated di&&erentl* b* the &iscal
authorities, a notation s*ste) o& enterprises b* the assess)ent institutions, a large
participation b* civil societ* organi1ations, unions and local po,ers, resulting in a regular
in&or)ation s*ste) &or the stockholder or &inancial investor %he s*ste) is e4panding at a
20G *earl* rate %here are civil societ* organi1ations that alread* )anage )ore than #00
)illion euros
$2
3ith regard to co)panies, it is ,orth,hile &ollo,ing the progress o& initiatives b* the +thos Institute and its
indicators o& corporate responsibilit* ,,,ethosorgbr
29
In theoretical ter)s, success o& such e4periences is o& ut)ost i)portance because it i)plies
that, in the end, people do not )erel* ,ant )a4i)u) return and sa&et* o& their )one*
Leople reall* ,ant to do sociall* use&ul things, i& given the opportunit*, and this
opportunit* is being organi1ed An introductor* note b* Eenri Rouille d?<r&euil, sets the
tone9 Hthe ob5ectives are clear Solidarit* is being introduced %hat is to sa*, a concern &or
co))on good in the heart o& econo)ics itsel&, so that gro,th leads to social progress and
sustainable develop)ent &or enterprises to beco)e sociall* and ecologicall* responsibleI
$!

%his alternative line o& &inancial inter)ediation is under attack b* large speculative groups
and is scorned b* the )ainstrea) o& econo)ics :evertheless, ,hen Ea1el Eenderson and
others created the ethical )arket place, literall* the H)arket o& ethical invest)entsI, the*
discovered a huge social interest that is )ateriali1ing in an i)pressive &lo, o& resources
Lresentl*, the speculative &inancial groups and large banks are opening niches o& sociall*
responsible activities, even i& onl* to i)prove their i)age
$$

It is interesting &or all o& us to see that ,hile )arket )echanis)s are being taken over b*
transnational or national giants that )onopoli1e ,ide sectors o& the econo)*, )anipulate
the &lo,s and restrain access to in&or)ation, alternative &or)s o& econo)ic regulation are
arising, based upon values and direct participation o& the citi1en .o))unit* develop)ent
banks in 8ra1il are spreading a ne, &inancial culture in 8ra1il, ,ith local )one* alread* in
so)e '0 regions o& the countr*
3e al,a*s considered the practice o& politics as an activit* &ocused on votes, on the part*,
on the govern)ent 8ut civil societ* organi1ations ,hich traditionall* have been concerned
,ith health, education, environ)ent and the like, are paving the ,a* to a )ore responsible
allocation o& resources %hereb*, econo)ic activit* oriented b* values, b* political outlooks
in the broader sense is beco)ing clearer and taking shape Leople are discovering that the*
)a* Hvote ,ith their )one*I :e, activities have e)erged in 8ra1il, sti)ulated b* Laul
Singer and others, in the line o& the +cono)ia Solid]ria ;solidar* econo)*= %he )icro/
credit initiatives, particularl* through the 8anco do :ordeste, solidar* credit, :><s &or
credit ,arrant* and other initiatives are )ushroo)ing
%his is an area ,here e4cellent descriptive studies have appeared, along the line o& Hho, it
,orksI ,ithout a great deal o& econo)ic theori1ing Also e)erging is a generali1ed
practice o& se)inars and con&erences ,here those ,ho ad)inister these ne, &or)s o&
)anaging our savings encounter social scientists and build ne, visions
$'

$!
RouillV D?<r&euil, Eenri , H(inances solidaires9 changer d?VchelleI* in >es lacements ?thiques,
%lternati/es 4conomiques, Laris, 200!, p 1# ,,,alternatives/econo)i6ues&r
$$
See ,,,ha1elhendersonco) and ,,,ethical)arketsco)@ %he &cientific %merican ;Dece)ber, 2002=
had an interesting article about Coan 8avaria, head o& %rilliu) Asset Manage)ent, ,ith an evaluation that
Hthe ,orld co))unit* o& social investors controls )ore than ^2 trillion in applicationsI p $0 In 8ra1il,
the portal ,,,)ercadoeticoco)br ,as launched in (ebruar*, 200-, ,ith si)ilar ob5ectives
$'
(or a s*ste)atic account o& so)e tendencies in 8ra1il, see the ,ork b* SVrgio Roschel, 7icrocr?dito no
$rasil, ;Microcredit in 8ra1il= and the recent stud* o& co))unit* develop)ent banks b* (l]vio (oguel, both
described at http9AAdo,bororg under HLes6uisas cone4asI See also in&or)ation &ro) the 8ra1ilian Association
!0
Eere, a short digression should be )ade <ur vie, o& econo)ics is still &ocused on the
industrial i)age o& the 20
th
.entur*, ,ith a recent takeover b* studies o& &inance Eo,ever,
the e)ergent sectors in the econo)* are not &actories, the* are health net,orks, education
s*ste)s, research and organi1ation o& kno,ledge, cultural activities and so &orth Leople are
surpri1ed to &ind that total industrial activities represent 1$G o& the >DL in the Jnited
States and 10G o& e)plo*)ent and in rapid decline, ,hile health represents 1-G o& the
>DL and gro,ing I& ,e add education, cultural and securit* services, ,e ,ill be reaching
so)ething like $0G o& >DL
<n the other hand, the econo)* is less and less based upon &i4ed capital ;)achines,
e6uip)ent, buildings= and )ore and )ore on organi1ation and kno,ledge %hat is, the
e)erging econo)* no longer needs gigantis) to be e&&icient Indeed gigantis), in these
areas, generates disecono)ies o& scale, due to bureaucrac* and )onopoli1ed control o&
access to essential services
$"

In other ,ords, there is a convergence to be built bet,een e)erging ne, sectors o&
activities and the corresponding re6uired &or)s o& &inancing 3hen econo)ic activities o&
the social area, such as health, education, culture and others beco)e prevalent in our
production process, the concept o& &inance changes %he huge &inance corporations )a*
operate ,ell ,ith gigantic health insurance corporations9 in this case, ,e have an absurd
alliance o& speculative interests ,ith the industr* o& disease 8ut, i& a social polic* ,ith
results in ter)s o& 6ualit* o& li&e is desired, &inancial )anage)ent innovations, in the line o&
various &or)s o& credit that e)erge, prove the)selves 6uite coherent and econo)icall*
)uch )ore productive %hese are the capillar* activities that ad5ust ,ell to the s*ste)s o&
net,ork &inancing
Eere, ,e are suggesting that there is a ne, econo)ic theor* in the )aking, perhaps ,ithout
our being a,are o& it, as ,e are too bus* re&uting neo/classic theories or Ricardo?s la, o&
co)parative advantages 3e are not speaking here o& a sociall* charitable and
econo)icall* )arginal d*na)ic It is an i)portant space being taken over b* ne, &or)s o&
organi1ation and )anage)ent 3e do not have to ,ait &or a good govern)ent that ,ill do
the things that please us 3e can take our )one* out o& the bank and invest our savings in
use&ul things %aking control our o,n savings arises as a structuring thrust o& social
d*na)ics, and the right to control our )one* and to de)and accountabilit* in the &inancial
area is per&ectl* de)ocratic
!conomic and political po"er#
o& Microcredit .o)panies, lavorato2abcredorgbr
$"
3e cover this sub5ect in )ore detail in the article AestHo &ocial e TransformaGHo da &ociedade, ;&ocial
7anagement and the Transformation of &ociety< see http9AAdo,bororg under HArticles <nlineI, 2000, p1#
!1
Another ,a* o& looking at things is being built +cono)ics is not a science that should
suppl* )ore sophisticated instru)ents &or anal*sis o& the situations to orient speculators9 it
has, once again, to concentrate on the outco)es the Hsubstantive ai)sI ,e ,ish to
construct, especiall* those o& a viable societ* not onl* in econo)ic ter)s, but social and
environ)ental as ,ell %he H:orthI de&ined b* these ob5ectives )ust, in turn, rene,
econo)ic accounting, the calculation o& results, and it is to,ards these results that once
again )ust be channeled the savings o& the people, ,ho a&ter all o,n this )one*, but are
deprived o& its control %his e4propriation, )oreover, is the outco)e o& econo)ic po,er
structures that are also changing
Returning to .elso (urtado?s te4t9 Ha develop)ent polic* )ust be &or)ulated based upon
e4planation o& the substantive ai)s ,e hope to achieve and not based upon the logic o&
)eans i)posed b* the accu)ulation process orchestrated b* transnational corporationsI
0ater, (urtado co))ents that Haction o& corporations o& a planetar* scope is a )a5or
)utation in the evolution o& the capitalistic s*ste), as it displaces to a subaltern position
the social &orces that ,ere ascending, and substantiall* changes the role o& the national
StateI
$-
%he transnational corporation de&ines its o,n ends the highest pro&it in the shortest ti)e,
but also the corresponding po,er structures and it beco)es a ke* &actor o& political
po,er, ,ithout needing to be elected %heir sheer &inancial )uscle, the a)ount o& )one*
the* pour into the election process, the &act the* can )ove &ro) countr* to countr* ,hile
regulations are national, the per)anent threat o& &inancial destabili1ation the* can scare
govern)ents ,ith, the i)age building capacit* the* have through )edia control ;directl* or
through advertising=, the gro,ing control o& the 5udiciar* b* corporate la, &ir)s ,e are
&acing a convergence o& &actors that trans&or) our &ragile de)ocracies into corporate
&ie&do)s
David Forten is toda* probabl* the one ,ho best did his Hho)e ,orkI, in ter)s o&
e4plaining ho, the po,er o& large corporations is organi1ed and articulated Author o&
H8hen Corporations 'ule de 8orldI , this 6uiet o&&icial o& JSAID, a&ter *ears o& social
,ork in Asia, ,as convincedthat the con&lict bet,een the declared ob5ectives pro)ote the
,ell/being o& populations and the practices b* corporations had reached the li)it,
rendering insigni&icant other kinds o& e&&orts to,ards social pro)otion Eis e&&ort consists
)ainl* in la*ing bare the )echanis)s o& corporate po,er
$#

%he book beca)e a classic In part because o& the e4cellent s*ste)ati1ation o& in&or)ation
and capacit* o& anal*sis, in part because it discloses the i)pressive gap created bet,een the
i)portance that transnational enterprises assu)ed in econo)ic and increasingl* political
)anage)ent o& societ* and ho, little in&or)ation ,e have about ho, the* &unction %he
$-
. (urtado, 4m busca de no/o modelo ;In &earch of a !ew 7odel<, op. cit. pps !" and '0
$#
David Forten 8hen Corporations 'ule the 8orld published in 8ra1il b* +ditora (utura, under the title
Kuando as corporaG9es regem o mundo
!2
onl* e&&ective center o& research on transnational enterprises, that operated in the Jnited
:ations under the na)e o& Jnited :ations .enter &or %ransnational .orporations
J:.%., ,as dis)antled in the 1990?s
%his progra))ed opacit* ,as rein&orced b* the )echanis)s that sustain the )edia
,orld,ide %oda*, the advertising costs are included in the price ,e pa* &or products %his
private ta4 according to the 199# L:JD costs us about $!0 billion dollars and according to
0a,rence 0essig in 2001, about one trillion dollars Since this advertising is )ainl*
&inanced b* large corporations and is the basis o& the econo)ic survival o& the )eans o&
in&or)ation ,e have, these tend to present onl* pleasant i)ages o& those ,ho ensure their
survival %he outco)e is that ,hen the +nron, 3orld.o), Lar)alat and other scandals
broke out, ,e ,ere taken b* surprise 8ut ,hat is reall* surprising is that these econo)ic
giants and their proble)s ,ere co)pletel* absent &ro) the )ainstrea) )edia, e4cept &or
the s,eet looking ladies trans)itting so&t spoken )essages Eo, ,as it that high level
technical ,arnings o& the &inancial risks that led to the 200# )eltdo,n never reached the
)edia7 Eo, is it that such a corporate &riendl* regi)e as +g*pt had, all o& a sudden is
discovered to having been a dictatorship7 %he* )a* even discover that Saudi Arabia is not
de)ocratic, and ,onder ,h* Fhadda&i had all these tanks, airplanes and bo)bs supplied b*
the ,ar industr*
%hese are co))on procedures %op e4ecutives, ,hen caught in so)e careless oversight
that beco)es public, onl* shrug their shoulders and co))ent that Hever*bod* does itI
Cohn Lerkins in his HConfessions of an 4conomic -itman,I sho,ed ho, the indebtedness
o& politicall* &ragile countries is literall* rigged .hie& econo)ist o& the Main enterprise
;.has % Main Inc, consultants ,ho ,ork in the line o& in&rastructure like +nron, 8echtel,
Ealliburton and other &a)ous ones= he signs a &orecast o& kno,ingl* e4aggerated econo)ic
gro,th i& the countr* invests large su)s in in&rastructure 3ith this report and in vie, o&
the ;&raudulent= &orecasts o& gro,th that )ake the later pa*)ent o& loans plausible, the
enterprises negotiate ,ith the 3orld 8ank and other &inanciers, and the corresponding
loans and contracts &or e4ecution, o& course, go to enterprises that helped to pressure &or the
loan, such as those )entioned above +nterprises beco)e ,ealth* ,ith the contracts,
gro,th does not take place ;there is no )iracle= and the countr* e4ceeds its capacit* &or
indebtedness %hat is ,hen the second )echanis) co)es into the picture, ,hich is the
renegotiation o& contracts &or oil e4ploration and other resources, taking advantage o& the
resulting &inancial &ragilit* %he )echanis) is nor)all* re&erred to as aid to poor countries
and these, in general, are not at libert* to turn do,n a &riendl* hug

Ministers and
governe)ents do &all Most do take bribes %he procedure has been used in Saudi Arabia,
+cuador and )an* others
$9

$9
Cohn Lerkins Confessions of an 4conomic -it 7an 8errett/Foehler, San (rancisco 200$ It beca)e a
best/seller in the JS@ a &ull page revie, can be &ound in the edition o& April 2, 200" o& (olha de &Ho aulo
Lerkins took nearl* t,o decades to decide to publish his account More recentl*, ,e got to kno, through
3ikileaks ho, Shell organi1ed the control o& ke* )inistries in :igeria9 the political agenda o& corporations is
!!
Another ver* interesting stud* is that b* Coel 8akan, 3The Corporation: the pathological
pursuit of profit and powerI
'0
%he author begins ,ith so)ething evident but &orgotten9 the
la, that created the Hlegal personI ,as intended to protect people, but ,as e4panded to
enterprises that began to bene&it &ro) rights as i& the* ,ere hu)an beings <& course, as
sa*s the author, ,hile an individual )a* be put in 5ail, this does not happen ,ith a legal
entit* And a legal entit* ,ith a great deal o& )one*, legions o& la,*ers, control o& )edia
and per)anent sel&/&inancing o& the practice o& po,er &or ,hich ,e pa* ,hen purchasing
their products or pa* their interest rates progressivel* gains )ore po,er Eo,ever, ,hile
an individual has various &acets, diversi&ied interests, ethical concerns, b* la, the
corporation is onl* obliged to )a4i)i1e pro&it, thereb* satis&*ing shareholders 8* its ver*
legal &ra)e,ork the* restrict their accountabilit* to a ver* li)ited public and a ver* li)ited
scope It is onl* ,hen public outrage hits pro&its as ,ith the &ast/&ood and so&t/drinks
invasion o& schools that the corporations )ove to so)e higher )oral grounds
In this ,a* a pseudo/person is created, ,ithout scruples ;a)oral, not i))oral= and ,ith
i))ense po,er Eo, corporations begin to do)inate us is 5udged b* the sa)e criteria that
health uses to classi&* ps*chopaths9 lack o& social interest, absence o& ethical &eelings and
so on A group o& persons had the idea to )ake a )otion picture o& this book that is an
innovative )ethodolog*9 instead o& reading ,hat Leter Drucker has to sa* on a given issue
in 6uotes in the book, the citation beco)es an audiovisual ,here ,e see Leter Drucker
e4plaining his opinion on the screen %he set o& opinions grouped in cine)atographic
HchaptersI ends b* generating an e4cellent scienti&ic docu)ent on the behavior o&
corporations Argu)ents are narrated b* i)ages and speech and not on pages %he outco)e
is e4tre)el* convincing, these are people talking, and it points to a )ore d*na)ic and
livel* )anner o& presenting econo)ic anal*sis
'1
:ot,ithstanding the per)anent advertising harass)ent o& the large corporation, the illegal
di)ension o& corporate activities is slo,l* sur&acing Interesting reading along these lines is
HThe Citi)en 4conomyI b* Eenri RouillV d?<r&euil9 H(iscal havens that pla* the double role
o& legal cache &or capitals seeking to avoid &iscal and social obligations and o& an inter&ace
,ith the econo)ics o& cri)e ,hose gross product is evaluated at one trillion dollars b* the
IM(, &ro) 2 to 'G o& the planet?s >DL / assess)ents are obviousl* nos precise the*
thereb* pass through launderers that clean the dirt* )one* (ran_ois Wavier Rershave, ,ho
studied so)e o& those lab*rinths, likes to state Hthat soon onl* the poor and i)beciles ,ill
a centerpiece o& their strateg* :obod* has voted &or Shell %he >uardian, # Dece)ber 2010,
http9AAisgdAirK+d Coan Alier o& the 8arcelona Jniversit* published an e4cellent stud* o& .hevron %e4aco
)anage)ent in +6uador, http9AAbitl*A&b$'E5 , 2011, 1! p
'0
Coel 8akan The Corporation: The athological ursuit of rofit and ower Ree Lress, :e, Kork, 200$
'1
%he scienti&ic docu)entar* The Corporation is available at ,,,thecorporationco) %he <scar given to
Al >ore?s &il) %n Incon/enient Truth, sho,s a strong inclination to,ard intelligent and non/elitist &or)s o&
e4pression, as ,as the <scar given to Inside Nob on the 200# &inancial crisis .reating )ulti)edia products
that e&&ectivel* co))unicate and e4plain i)portant issues be*ond the speciali1ed scienti&ic sphere is essential
&or de)ocrac*
!$
pa* ta4es? %he Cudge Cean de Maillard also )akes a clear and clean 5udg)ent9 `%his
globali1ation o& cri)inal econo)ics co)es together ,ith a cri)inali1ation o& global
econo)ics and both )ove to,ards a co))on logic %he )erger bet,een the legal
econo)* and the cri)inal econo)* see)s to have been carried out?I
'2
David Forten, Coel 8akan, Cohn Lerkins, a)ong others, are authors ,ho stud* the po,er o&
transnational enterprises, but do not dra&t general theories9 rather the* stud* ,hat is going
on and ho, >raduall*, ho,ever, regularities trends and )echanis)s appear %hus are
dra&ted the outlines o& theories that ,ill have to be con&ronted ,ith other e)pirical studies,
and studies in other scienti&ic areas
%he 200# &inancial crisis gives us an e4cellent e4a)ple o& the po,er &inancial corporations
,ield %he co)pletel* irresponsible &inancial speculation and the &raudulent accounting had
been approved b* the auditing &ir)s, and trillions o& dollars ,ere &ound overnight, thro,ing
a nu)ber o& nations into deep public de&icit +ven the bonuses keep on being paid
<nce )ore, the ,a* the &acts are presented is contradictor*, and our tendenc* ,ill be to
believe ,hat satis&ies us9 heads o& corporations ,ill point to attractive ne, technologies,
the e&&icienc*, the creative po,er@ others ,ill point to environ)ental disasters, inco)e
concentration, une)plo*)ent, in&or)ation )anipulation and destructive po,er 8oth are
obviousl* true %he contradiction is not resolved ,ithin the econo)ic sphere but b*
introducing the broader outlook9 po,er ,ithout control to degenerate +cono)ic science
has to vie, itsel& as another piece in the )osaic, that onl* beco)es co)prehensible in its
,ider di)ension And the broad picture is beco)ing obvious9 a ,idespread political po,er
e)erges, but ,ith an econo)ic &ace, and there&ore is not sub)itted to political controls,
since it ,ould be controlled b* the H)arket &orcesI As a )atter o& &act, it is not controlled
b* an* outside &orce, it is the &orce
$ %&e %&eory of 'onsumption
'2
Eenri RouillV D?<r&euil 4conomia CidadH9 alternati/as ao neoliberalismo ;4conomic Citi)enship:
alternati/es to neoliberalism< +ditora Ro1es, LetrUpolis, 2002, p !# It should be noted that our bankers
are neither poor nor i)beciles Cean de Maillard, cited above, is a (rench 5udge ,ho investigates illegal
&inancial transactions and )ade an interesting atlas o& )one*9 On monde sans loi. >a criminalit? financiTre
en images ;% 8orld without >aw: financial criminality in images<, +d Stock, Laris, 199#, 1$0 p %he book is
dedicated to the 2" )agistrates assassinated ,hile investigationg these transactions Most certainl* it is not a
,orld o& %lice in 8onderland In a )eeting ,e had ,ith de Maillard in (rance, he e4plained that one o& the
)ain proble)s in the repression o& econo)ic cri)inalit* is that there is never a clear division bet,een the
cri)inal and the entrepeneur, but rather a gradual variation o& cri)inal densit*, &ro) the great entrepeneur
,ho Hcould not kno,I up to the the &ront line o& corruption, passing b* the la,*er ,ho dresses up cri)inal
activities in elegant legal ter)s Coel 8akan dre, up a list o& cri)inal allegations and conde)nations o&
>eneral +lectric Cack 3elch, &or)er president o& the co)pan*, in his classic ,hite book &traight from the
Aut, ,hich can be &ound in an* airport bookstore in 8ra1il, )entions the ,ord HethicsI on ever* third page
:ot a ,ord about &raud M* son elo6uentl* calls the book Hstraight &ro) the buttI
!'
0et us return to the )ethodological line ,e are &ollo,ing in this short essa* %his is not a
theoretical revie, in the sense o& anal*1ing the )a5or schools o& thought and seeing to ,hat
e4tent their instru)ents still have an e4planator* potential 3e are looking at )a5or trends
o& change, those ,e think are having structural i)pact on ho, realit* is )oving, such as the
po,er o& transnational corporations, or &inancial do)ination o& the econo)ic activities and
so &orth 3e then suggest readings that help clari&* the )echanis)s, &ollo,ing in a &ree
,a* ideas suggested b* readings o& .elso (urtado, particularl* in his stud* HIn &earch of a
!ew 7odel5.
%his b* no )eans underesti)ates the classics %he* deserve to be studied, but ,ithin their
re&erence &ra)e,ork, ,hich re6uires a good historical kno,ledge o& the realit* the*
endeavored to e4plain %o 6uote the great )asters, ,ithout an e&&ort to de)onstrate to ,hat
e4tent an idea continues valid in the current conte4t, is )erel* borro,ing authorit*
H8ecause the behavior o& econo)ic variables )ostl* relies on these para)eters ;non/
econo)ic= that are de&ined and evolve in a historical conte4t, it is not possible to separate
studies o& econo)ic pheno)ena &ro) their historical &ra)e,orkI
'!

In a conte4t that trans&or)s itsel&, econo)ic science has to trans&or) itsel& as ,ell H%he
value o& an econo)ist?s ,ork, as ,ell as that o& an* researcherI, ,rites .elso (urtado, His
the outco)e o& the co)bination o& t,o ingredients9 i)agination and courage to risk, in
6uest o& the uncertainI Moving a,a* &ro) consensus, the econo)ist H,ill perceive that
paths beaten b* others are o& little valueI, and H,ill soon lose reverence &or ,hat is
established and &ound in co)pendiu)sI
'$

<nce this point is )ade ,e ,ant to approach another Hline o& realit*I, ,hich is
consu)ption H%he consu)erI, (urtado tells us, Hhas an essentiall* passive role Eis
rationale consists in Hcorrectl*I responding to each sti)ulus to ,hich he is sub)itted%he
individual )a* surround hi)sel& ,ith a )*riad o& ob5ects ,ithout having contributed at all
to their creation Invention o& such ob5ects is subordinated to the process o& accu)ulation
that &inds po,er&ul leverage in ho)ogeni1ation o& consu)ption standardsI %he outco)e is
that )an is no longer the sub5ect o& the process In the setting o& Hinstru)ental rationalit*I,
H)an is identi&ied as the ob5ect susceptible to be anal*1ed and progra))edI
''

%he ideal anti/te4t here is obviousl* the ,ork b* Milton (ried)an, &ro) the .hicago
school, ,ho ,ith the daring o& one ,ho does not have to ans,er to realit*, but the
corporation, ,rote the classic H(ree to .hooseI I al,a*s thought that (ried)an o,es his
&a)e and his pseudo/nobel less to his capacit* and )uch )ore to disse)inating ideas that
de&end the s*ste) Eis thinking is coherent, but based on ,rong pre)ises %his gives us
'!
. (urtado 4m buscaUop cit p -2
'$
. (urtado Capitalismo Alobal ;Alobal Capitalism<, p 10
''
. (urtado 4m busca...op cit p "0 and "1
!"
good )ental e4ercise, but no ans,er to the real ,orld Most o& all, the s*ste) can be
generous
'"

Cohn F >albraith certainl* does not belong to Hthe s*ste)I (urther)ore, he ,rites
)aster&ull* (or)erl*, )aster&ul ,riting i)plied co)ple4 sentences and re&ined
e4pressions In the st*listic desert o& conte)porar* econo)ics this )eans, above all, to
,rite in a si)ple and straight&or,ard ,a* 3hen reading HThe 4conomics of Innocent
(raud5 ,e can &eel ho, )uch >albraith clearl* en5o*ed ,riting it It is the pleasure o&
putting ideas in good order, as ,hen ,e en5o* a 5ob ,ell done
'-
.orporate po,er dresses in a respectable ,a* %he corporation is no longer a )onopol* or
oligopol*, but is called the H)arketI
'#
%he o&&icial version built around this )arket,
according to >albraith, &its into one paragraph9 HIn the )arket s*ste) the ulti)ate po,er,
to repeat, is held to be ,ith those ,ho bu* or choose not to bu*@ thus, ,ith so)e
6uali&ications, the ulti)ate po,er is that o& the consu)er .onsu)er choice shapes the
de)and curve As the ballot gives authorit* to the citi1en, so in econo)ic li&e the de)and
curve accords authorit* to the consu)erI %he proclai)ed )echanis) is 6uite clear, but has
so)e proble)s ,ith the reall* e4isting econo)ic ,orld
Realit* is ,hat >albraith calls the Hcorporate s*ste)I, ,hich relies on the )onopol* or
oligopol* and drasticall* centrali1es econo)ic po,er in the ,orld o& the large enterprise,
eroding the space o& co)petition, leaving the consu)er ,ithout options <n the other hand,
the gigantic s*ste) o& consu)er )anipulation through advertising induces the corporate
s*ste) itsel& to de&ine the pro&ile o& de)and In turn, in the corporation, po,er is no longer
diluted a)ong a large nu)ber o& shareholders but concentrated in the corporate
bureaucrac*, ,hich is )ade clear b* the astrono)ic salaries that the* attribute to each
other, or the si1e o& the bonuses in high &inance recentl* disclosed 8ecause oligopoli1ation
per)its )anipulation o& prices, costs o& corporate brand identit* and i)age building are
included, closing the circle %he )arket )echanis) has been replaced b* a )echanis) o&
po,er
In another stud*, >albraith is even )ore e4plicit, co))enting that the concept o&
capitalis) is out o& &ashion9 H%he approved re&erence no, is to the )arket s*ste) Instead
'"
Milton and Rose (ried)an, (ree to Choose, Earvest 8ooks, :e, Kork, 1990
'-
Cohn Fenneth >albraith The 4conomics of Innocent (raud: Truth for Our Time J Eoughton Mi&&lin .o,
:e, Kork, 200$, p "2
'#
An i)portant distinction )ust be )ade here <riginall*, ,hen ,e spoke o& the )arket in econo)ics, ,e
,ere re&erring to )echanis)s o& co)petition that ,ould allo, thousands o& econo)ic agents to co)pete on
an e6ual basis in an arena o& co))ercial activities A kind o& a &air ga)e 8ecause o& the inviting nature o&
this approach, ,ith its i)plication o& de)ocratic )echanis)s, large econo)ic groups appropriated the ter)
and toda* H)arketI re&ers )ore and )ore to the groups o& large corporations that do)inate the )arket,
substituting i)personal co)petition b* )echanis)s o& control, the so/called H)anaged )arketI More
recentl*, ,ith the strength o& the &inancial speculation groups, I)arketI has co)e to designate a nucleus o&
large institutional investors %his is ,hat is understood toda* in the speciali1ed press, ,hen reported, &or
e4a)ple, in the &ace o& great volatilit*, that Hthe )arket is nervousI In general it is the nervousness o& a ver*
select group o& people
!-
o& capital o,ners in control, ,e have the ad)irabl* i)personal role o& `)arket &orces? It
,ould be hard to think o& a change in ter)inolog* )ore in the interest o& those to ,ho)
)one* accords po,er %he* have no, a &unctional anon*)it*I
'9

Another line o& >albraith?s reasoning, concerns another &raud, ,hich takes place ,hen
interpreting the )acroecono)ic situation H%he &alse and palatable reputation o& the (+D
has solid &oundations9 there is the po,er and the prestige o& banks and o& bankers and the
)agic po,er attributed to currenc* %he* go together and support the (ederal Reserve and
its )e)bers that is to sa* banks that belong to it In the case o& a recession the interest
rate is reduced b* the central bank, banks that are a&&iliated should pass on the reduced rate
to clients, thereb* encouraging the) to ask &or loans Lroducers ,ill then produce goods
and services, the* ,ill no, be able to bu* industrial plants and )achiner* ,ith ,hich the*
,ill earn )one* and the consu)ption &inanced b* cheaper loans ,ill increase %he
econo)* ,ill react and the recession ,ill end I& then, a Hboo)I takes place ,ith a threat o&
in&lation, a higher cost o& credit also pro)oted b* the (ederal Reserve and i)posed to the
a&&iliated banks ,ill raise the interest rates %his ,ill restrict entrepreneurial invest)ent and
loans &or consu)ption, it ,ill reduce e4cessive opti)is), balance prices, protecting us
&ro) in&lationI %he di&&icult*, states >albraith, His that this highl* plausible process, that
receives &ull agree)ent, onl* e4ists in the ,ell established econo)ic belie& and not in real
li&eI
"0

HIn realit*, according to the author, interest rates are a detail, ,hen sales are bad
+nterprises do not ask &or loans nor e4pand production that has no ,a* to be sold %he &act
re)ains9 ,hen ti)es are good, higher interest rates do not reduce entrepreneurial
invest)ent %he* do not )atter )uch9 the perspective o& a higher pro&it is ,hat )atters
And in the recession or the depression, the controlling aspect is a perspective o& lo,
pro&itsI
"1
According to >albraith, H%he one ,holl* reliable re)ed* &or recession is a solid
&lo, o& consu)er de)andI
"2
And the best ,a* to guarantee this &lo,, is not to reduce
ta4es o& the rich ,ho save and speculate, but to increase the inco)e o& the need&ul, ,ho
consu)e
%hus, ,e live in the real) o& science &iction9 H+cono)ics and larger econo)ic and political
s*ste)s cultivate their o,n version o& truth %his last has not necessaril* a relation to
realit*I
"!
3hat re)ains o& the consu)ption theor*, central in the traditional outlook o& econo)ics, i&
the enterprises do not need to co)pete &or prices increasingl* ad)inistered b* oligopolies,
i& the consu)er has no in&or)ation or is too heavil* bo)barded b* advertising to have an
'9
C F >albraith H(ree Market (raudI * The rogressi/e, Can 1999, "! ;1=@ in Mar5orie Fell*, The .i/ine
'ights of Capital, 8errett/Foehler, :e, Kork, 2001, p -"
"0
>albraith, op cit p $$
"1
Ide), p $' and $-
"2
Ide), p "1
"!
Ide), p 4
!#
option o& rational consu)ption, and i& the State?s regulating capacit* beco)es irrelevant in
&ace o& the globali1ation process7 Rer* little, o& course, and this is going to re&lect on the
absurd de&or)ation o& priorities o& econo)ic develop)ent
%he HReport on Eu)an Develop)ent 199#I e4a)ines consu)ptions proble)s &ro) the
point o& vie, o& people?s needs, a daring innovation %his outlook is essentiall* a call &or
realit*9 H%he ,orld has )ore than enough resources to accelerate hu)an develop)ent &or
all and to eradicate the ,orst &or)s o& povert* on the planet %o pro)ote hu)an
develop)ent is not an e4orbitant task (or instance, it is esti)ated that the total additional
*earl* invest)ent needed to achieve universal access to basic social services ,ould be o&
appro4i)atel* ^$0 billion, 01G o& the ,orld inco)e, a little )ore than a statistical
rounding %his covers the accounts o& ele)entar* education, health, nutrition, reproductive
health, &a)il* planning and access to ,ater and sanitation &or allI
"$

Jnder the title HLriorities o& the 3orld7I, and to illustrate, the Report co)pares needs not
covered b* lack o& resources and resources o& 6uestionable priorit* (or instance, the *earl*
added invest)ent necessar* to guarantee ele)entar* education &or all ,ould be o& ^"
billion, that are not provided, ,hile in the JSA ^# billion are spent on cos)etics@ to
guarantee sa&e ,ater and sanitation &or all, ,ould re6uire ^9 )ore billion, ,hile in +urope
^11 billion are spent on ice/crea)9 universal reproductive health ,ould re6uire a
supple)entar* ^12 billion a *ear, the sa)e as spent on per&u)e in +urope and the Jnited
States@ health and basic nutrition &or all ,ould re6uire a supple)entar* ^1! billion per *ear
and ^1- are spent on pet &ood in +urope and the Jnited States (urther)ore, ^!' are spent
in entertain)ent &or e4ecutives in Capan, ^'0 billion in cigarettes in +urope, ^10' billion in
alcoholic beverages in +urope, ^$00 billion in narcotics ,orld,ide and ^-#0 billion in
)ilitar* e4penses in the ,orld
"'
As such, the si)ultaneous degradation o& the )arket?s regulator* capacit* and the s)aller
role o& the State lead to a de&or)ation o& consu)ption 3hen the ulti)ate interest o& the
consu)er is no longer decisive, production processes are ,arped %he ,orld ,e have
inherited &ro) this process is increasingl* surrealistic 3hat is happening, indeed, is that
,e are appl*ing outdated regulator* s*ste)s to a ne, realit* %heoreticall* ob5ective and
de)ocratic )arket )echanis)s are used to e4plain d*na)ics that belong to articulated
po,er )echanis)s that, in turn, bring about a surrealistic culture o& econo)ic behavior that
has ver* little in co))on ,ith ,hat ,e ,ant o& our lives
%he ver* )echanis) o& consu)ption is changing <ur e4penses correspond less to
purchasing a product and )ore to ac6uiring a right to access %his is true in health plans, in
telephones, in cable %R, in the condo)iniu) and )an* other consu)ption s*ste)s ,here
"$
/ J:DL -uman .e/elopment 'eport 0112, :e, Kork, 199#, p !- 3e are not concerned ,ith
updating &igures in this broad vie, o& structural trends, seeking a kind o& precision in absurdit* (or a ti)e
re&erence consider that narcotics are no, nearer to one trillion, ,hile )ilitar* e4penditures have reached 1,'
trillion in 2010
"'
/ id ibid, p !-, %able 112
!9
our choice is e4tre)el* restricted
""
Jrbani1ation led to an e4pansion o& collective
consu)ption that also involves &e, options 3e are clients o& a bank because our enterprise
)ade an agree)ent to Hsuppl*I it ,ith a given nu)ber o& accounts o& e)plo*ees and not
because ,e chose it@ &urther)ore, ,ith carteli1ation the re)aining options are 6uite si)ilar
Fno,ledge is a )erchandise bet,een 6uotes, since it onl* beco)es a source o& pro&it i& an
enterprise can charge a toll &or its use %hese are the ne, realities And ,hat is capitalis)
,hen the )ain regulator* ele)ent that ,ould be the &inal de)and, no longer pla*s this
role7
%o the e4tent that )arkets in the original )eaning o& the de)ocratic regulator*
)echanis) o& nu)berless econo)ic agents ceases to operate, or rather is con&ined to less
signi&icative and li)ited areas, the s*ste) evolves to di&&erentiated pools o& organi1ed
articulation o& interests, var*ing according to sectors, regions and inherited econo)ic
cultures %o understand these subs*ste)s ,e need innovative e)pirical studies %he )arket
under control o& large groups is beco)ing increasingl* less de)ocratic and in realit* less o&
a )arket As the divorce bet,een our needs and the corporate acco)plish)ents gro,s
deeper, )an* corporations adopt tr* to uneasil* adapt, )i4ing the botto) line ,ith social
and environ)ental responsibilit* 8ut it is a di&&icult )arriage, still based on green,ashing
and social )arketing, and also i)portant e4a)ples o& real change Is this H)arketI7
In the age o& corporations, ,hen the econo)* is no longer ruled b* e&&ective co)petition
nor b* de)ocratic )echanis)s, an ungoverned space is generated 3here a &e, *ears ago
it ,as &ashionable to re&er to reengineering and Hlean and )eanI e&&icienc*, di&&erent ,inds
are blo,ing +cono)ic de)ocrac* has beco)e a necessit*
"-
( 'ommercial &arassment
In the absence o& ade6uate regulator* s*ste)s, and ,ith the erosion o& the )arket?s
regulator* capacit*, the &ree &or all prevails, ,here the ,inners are si)pl* the bigger ones,
,ith )ore capacit* to bu* advertising ti)e, a deeper pocket to &ight the &inancial or price
,ars 3e have al,a*s been taught that co)petition is good %here is a tacit condition
behind the argu)ent b* ,hich enterprises ,ould be co)peting to serve us better 3ouldn?t
it be right to think that enterprises co)pete to serve the)selves better7 And that &inding
co))on a co))on ground o& understanding a)ong the) ,ould )ake sense7
""
See in particular Cere)* Ri&kin?s e4cellent The %ge of %ccess ,hich details the change taking place
"-
An avalanche o& te4ts grope &or ne, ideas %he Vision B=C= signed b* )a5or ,orld corporations is an
interesting atte)pt b* the 3orld 8usiness .ouncil &or Sustainable Develop)ent http9AAdo,bororgA,pA7
pX2'9$ @ Leter Senge?s The !ecessary 'e/olution, Doubleda* :e, Kork 200# brings e4cellent ideas@ Alvin
%o&&&lerIs 'e/olutionary 8ealth, Doubleda* 200" is also ver* interesting %he co))on ground is that things
have to change, although the trends are naturall* di&&erent, depending on the ideolog* and even )ore on the
econo)ic areas the authors are concerned ,ith
$0
%he )ere ,ar bet,een enterprises is not necessaril* ,aged &or our good Increasingl* ,e
ask ,hat is the role ,e reall* pla* in the process 3hen, a&ter a hal& hour spent on the
telephone tr*ing to get a hu)an being to ans,er and solve our proble), the telephone is
suddenl* bus*, ,e learned onl* one phrase b* heart because it ,as endlessl* repeated9
HKour call is ver* i)portant &or usI And as people are o&ten led to abusive language, ,hen
an outsourced enterprise &inall* ans,ers, be&ore the personali1ed attention ,e hear H(or
*our sa&et*, this call is being recordedI <& course, &or our sa&et*, but also &or the
attendant?s )other reputation
<ur dail* relationships involve contacts ,ith enterprises or people ,ith ,ho) ,e share no
personal interests, but econo)ic interests %hese are the s)all negotiations in our dail* li&e
Increasingl* ,e &eel like ,arriors ,ith slingshots in our hands, &acing the cannons o&
entrepreneurial giants ,ho have scores o& outsourced attendants and po,er&ul la, &ir)s
%he &act is that the corporation increasingl* &eels like traditional state bureaucrac*
:e, technologies allo, us to do things at a distance9 co))unications )ove our dail*
issues around instantaneousl*, ,hen be&ore ,e had to )ove around ,ith the papers and
&olders %his ne, culture is e4tre)el* positive and rapidl* pervades bureaucratic
procedures Eo,ever, ,hen oligarchic s*ste)s such as banks, telephone corporations or
others take over the process, it is the consu)er ,ho is being outsourced In an a)using
article, the %he +cono)ist co))ents9 HMan* people co)plain about enterprises that
outsource ,ork to lo, ,age countries9 but ho, )an* notice that enterprises are
increasingl* outsourcing ,ork to their o,n consu)ers7 3ho has not *et been trapped b*
endless nu)erical )enus7 this )a* enrage and alienate clients In their ,ish to cut costs,
)an* enterprises deliberatel* hinder access to a hu)an operatorI
"#
%he line is cut o&& ,hen
*ou are ,ust about to reach so)eone ,ho could solve *our proble)
Do ,e have an* choice7 %he article in %he +cono)ist con&ir)s that because all banks
adopt the s*ste), the consu)er has no ,a* to Hvote ,ith his &eetI b* going to another
bank And the various institutions are increasingl* penali1ing personali1ed access even b*
telephone 3e have not been hearing about banks reducing &ees 3e pa* &or a service that
,e do ourselves According to the )aga1ine, Hperhaps *ou )a* not have noticed, but *ou
are no, also ,orking &or *our bank or telephone co)pan*I In the e4a)ple given, Hthe
online sel&/service )a* reduce the cost o& a transaction up to a )ini)u) o& ^010,
co)pared to ^- &or the sa)e transaction in a call centerI
"9

%he anger ,ith unsollicited advertising in our co)puters, like,ise re&lects the gro,ing
&eeling o& helplessness In the Jnited States, la,s to li)it H5unk &a4ingI are being
introduced, since the advertise)ent is our &a4 ter)inal and printed on paper and toner ,e
bu*
-0
%he &a4 )achine, it is true, is going, and the illegalit* is a little late 8ut spa) is
"#
The 4conomist, Septe)ber 1#th 200$, p 1"
"9
The 4conomist page 1" o& the H%echnolog* auarterl*I inserted in the above issue
-0
Id, ibid, p 11
$1
co)ing Advertising agencies &ind this cheaper %he streets o& our cities are graduall* being
covered ,ith out/doors, assailing us ,ith un,anted i)ages Is there an ethical li)it7
Another article in %he +cono)ist, tells about the .oca/.ola, Lepsi and others in a ,ar
against ,ater and )ilk in schools9 in e4change &or installing the so&t/drink vending
)achines, the schools are granted scholarships, so&t,are, sports e6uip)ent and so on
-1
It is interesting to perceive another di)ension o& this crossing o& the centrali1ed corporate
econo)ic po,er ,ith the capillarit* o& ne, technologies 3hen the co)puter o& an
enterprise can send, at virtuall* no cost, 10 )illion )essages that land in our ho)e or
o&&ice, econo)ic relationships change In addition, the sa)e )echanis) per)its, &or
instance, to add a s)all &ee to ,hat ,e are pa*ing, ,ithout our noticing 8usiness 3eek, in
a special report on the sub5ect, concluded that the Jnited States, that ,ere the >and of the
(ree, are 6uickl* beco)ing the >and of the (ee, that is o& Hhidden chargesI
-2
%he article sho,s, &or instance, ho, the A%S% co)pan*, b* adding a )odest Hcharge &or
regulator* assess)entI o& 99 cents per )onth to the account o& its clients &or long distance
calls, raised so)ething like $-' )illion dollars Discreet charges to consu)ers ,ho pa*
their bills online bring to the banks, pro&its esti)ated at JS^2 billion According to the
article Henterprises cannot raise prices ,ithout losing business, so the* are bur*ing higher
charges in the &ine printI According to Stephen 8robeck, director o& the .onsu)er
(ederation o& A)erica Hit is )uch easier to raise prices through obscure charges and
surcharges than to boost sale pricesI A 5udge o& the .ali&ornia Supre)e .ourt &orced
Master.ard and Risa to rei)burse ^#00 )illion &or hidden charges on purchases )ade in
&oreign currenc* %he article considers that Hcharging o& &ees is out o& control <ne o& the
,orst violators is the teleco))unication industr* that advertises cheap plans &or long
distance calls and thro,s in e4tras that add an average o& 20G to the bill o& the client?s
)obile phoneI
%he ruling ethics o& Hever*bod* does itI prevails9 the spokesperson &or A%S% e4plains that
Hi& *ou publish higher rates based on *our e4penses and *our co)petitors publish lo,er
rates but add various e4tras at the botto) o& the page, ,hat are *ou going to do7I %he the
8usiness 3eek report &urther &inds that Hnobod* can surpass the credit card industr* in
-1
The 4conomist, Dece)ber 1! 200!, p 1' 3&ur/ey of (ood5 It is interesting to observe that the gro,ing
indignation is beginning to bear &ruit .oca/.ola discontinued selling so&t/drinks in ele)entar* schools in
8elgiu) %here the local .oca/.ola co))unications director %o) Del&orge e4plained that Hin the last t,o
*ears the co)pan* has introduced a ne, code o& conduct in ,hich ,e have established that the school is not a
co))ercial environ)entI %his is onl* true &or the (rench/speaking portion o& 8elgiu), and onl* &or
ele)entar* schools (olha de &Ho aulo, Canuar* ', 200' In the Jnited States, the A)erican 8everage
Association decided in Ma*, 200" to begin to re)ove .oca/cola, Lepsi and Sch,eppes &ro) the schools,
according to !ew &cientist o& Ma* 1!, 200" (or a )ore co)plete evaluation o& the process, see the article
HResgatando a I)portPncia da In&or)a_No Lublicit]ria,I ;Rescuing the I)portance o& Advertising
In&or)ation= b* Eelio Silva and 0adislau Do,bor, 7eio P 7ensagem, Ma* 9, 200', p $9
,,,)eioe)ensage)co)br
-2
$usiness 8ee+, Septe)ber 29, 200!, .over Stor* H(eesb (eesb (eesb Jnable to raise prices, co)panies
are hitting consu)ers ,ith hundreds o& hidden charges %hat?s creating stealth in&lation and &ueling a popular
backlashI
$2
their abilit* to invent e4tra chargesI %he list o& banditr* is e4tensive and involves )an*
large corporations %hese s)all legal the&ts involve, &or instance, the ti)e ,e are rela4ed,
o&&guard, such as ,hen renting a DRD at 8lockbuster A good na)e, considering its recent
histor*
%he airline co)panies discovered that the* )a* invent &ines because the passenger had to
change his &light schedule, in addition to attracting passengers pro)ising )ileage &or ,hich
there is not al,a*s a seat Mostl*, those are s)all add/ons to larger e4penses and the
consu)er sighs but pa*s
-!
In the Jnited States anger and outrage led to the e)ergence o&
nu)berless civil societ* institutions 8ut the &ight is tough, because the ever*da* citi1en
has no ti)e or resources to &ace outsourcing b* the large corporation, ,hich has per)anent
legal advisors to de&end itsel& &ro) collection, agencies that calculate risks and bene&its,
and public relation agencies that so&ten the consu)er and engage )illionaire Hi)ageI
ca)paigns to de&lect pressure
-$

%he overall result is that ,hen various econo)ic trans&or)ations are put together, like the
&or)ation o& a universe o& corporate giants, carteli1ation that per)its )anipulation o&
prices, generali1ation o& invasive advertising that at our e4pense shapes our consu)er
pro&ile, the ease o& corporate entr* into our ho)es b* co)puter, charging s)all &ees on
ever*thing ,e are doing and even )aintaining the)selves in&or)ed about ,hat ,e are
doing b* )eans o& inserted HcookiesI, all these things create a ne, universe ,here
traditional concepts are no longer convincing In&or)ation on the process is scarce, because
these are corporations that the )edia vie,s as clients, bu*ers o& advertising space It is a
ne, system that de)ands re&or)ulation o& the traditional categories and above all the
accu)ulation o& e)pirical studies that per)it theoretical advances closer to realit*
.elso (urtado vie,s consu)ption as a central &actor in the chain o& events that shape the
s*ste) governing us and sho,s that in our case, o& less developed econo)ies that adopt
practices o& the rich, de&or)ation beco)es )ore severe9 HAdoption b* the ruling classes o&
consu)ption patterns o& countries ,ith )uch higher accu)ulation standards than ours
e4plains the high inco)e concentration, the persistence o& social heterogeneit* and the
penetration into international trade %he independent variable is, ulti)atel*, the &lo, o&
innovations in the consu)ption pattern that spread &ro) the high/inco)e countries Ket, the
counterpart o& this cultural )i)icr* is the pattern o& inco)e concentration ,e are a,are o&
%o &ree ourselves &ro) the e&&ects o& this perverse cultural i)perative, the consu)ption
pattern )ust change, ,ithin the settings o& a broad social polic* and, at the sa)e ti)e,
substantiall* increase savings, co)pressing consu)ption o& the high/inco)e groupsI
-'

-!
%he scale o& action that the ne, technologies per)it has beco)e essential A corporation, ,ith tens o&
)illions o& clients, can dilute rates in an e4tre)el* cheap )anner an insertion in the s*ste) and the
custo)ers nor)all* ,ill either not reali1e, or not have the ti)e to spend on each variation o& the innu)erable
hits
-$
%he $usiness 8ee+ report cites as e4a)ples ,,,saveonphoneco), ,,,ripo&&reportco),
,,,co)plaintsco) and others In 8ra1il, the ID+. provides i)portant services at ,,,idecorgbr
-'
.elso (urtado O Capitalismo Alobal ;>lobal .apitalis)= +d La1 e %erra, Rio de Caneiro 199#, p "0
$!
%he logical circle closes I& the large corporations can shape consu)ption, satis&*ing the
consu)er has a di&&erent )eaning In &act, ,e begin to satis&* the enterprise An He4ecutive
health planI o&&ers care in a lu4ur* house ,ith e4pensive chairs and &ragrant receptionists
%he )edical service &alls short, not because o& the ph*sicians but because it is regulated b*
the 5ust/in/ti)e logic o& &inancial interests applied to health Marketing surve*s sho, that a
client ,ith health proble)s &eels unprotected, insecure9 let us give hi) the i)pression that
he is going into a &our star hotel As &or treat)ent, ,hich is )ore e4pensive than the *oung
ladies, that is not ,hat clients co)e &or %he healthcare service thus beco)es an industr* o&
disease b* the si)ple rationalit* o& pro&it %he* have able health personnel, but the logic o&
the s*ste) is dictated b* &inancial and )arketing specialists, ,ho run the sho,
-"

%here is a ne, generation o& studies on consu)ption %his is, clearl*, not a ne, sub5ect It
is ,orth,hile to read again the so)e,hat sarcastic %horstein Reblen, ,ho ,rote about
ostensive consu)ption alread* in 1#999 HSince consu)ption o& these lu4uries is a proo& o&
,ealth, it beco)es honorable 0ike,ise, the &act o& not consu)ing the) in the due 6uantit*
and 6ualit* constitutes a )ark o& in&eriorit* and ble)ishI
--
3e also have the studies b*
3right Mills, Rance Lackard, the school o& (rank&urt and others 8ut ,orks such as those
b* Robert Futtner or Culiet Schor, bring a vision o& ne, 6ualitative e4pansion o& this
co))ercial invasion Eenri6ue Rattner, in his recent O 'esgate da Otopia -%he Rescue o&
Jtopia= si)pl* states9 Hthe ,orld is not a )erchandiseI %he phrase translates ,ell this
di&&use &eeling that ,e all have o& broken boundaries
-#

%he introduction o& Futtner?s book su))ari1es the approach ,hen denouncing Hthe chain
o& circular argu)ents and o& co)ple4 )athe)atical )odels that ignore the conditions o& the
real ,orld and disregard values and goals that cannot be easil* trans&or)ed into
co))odities It so happens that these values and goals are ,hat A)ericans still consider an
integral part o& the national identit*9 5ustice, &reedo), &aith, leisure, &a)il*, charit*, loveI
3hen people are vie,ed as consu)ers and not as citi1ens, the s*ste) stresses e&&icienc*
&or the production o& useless things As the process is not ruled b* the people?s needs but b*
the purchasing, ine6ualities deepen In addition to loss o& the 6ualit* o& li&e &or all,
-"
H%he onl* ,a* is up &or JS healthcare %he nation has &inished botto) o& the pile in a surve* o& health
provision in si)ilarl* developed countries;=8ased on a series o& nu)bers designed to assess healthcare
6ualit*, e&&icienc*, ease o& access, e6ualit* and the pro)otion o& a long and health* li&e, the JS sho,ed the
biggest roo) &or i)prove)ent, even though it spent ^-290 per person on healthcare in 200- %he ,inners
,ere the :etherlands, ,ho achieved the best results despite spending 5ust ^!#!- per personI O& last in
healthcare test, :e, Scientist 2" Cune 2010
--
%horstein Reblen The Theory of the >eisure Class J Dover Lublications, :e, Kork, 199$, p $"
-#
Eenri6ue Rattner O resgate da utopia: cultura, polWtica e sociedade * Lalas Athenas, SNo Laulo, 200', p
19" / The 4conomist presents a balance o& the econo)* o& &aith, and the e4pansion o& ,hat A)ericans call
Hpassion dollars9I H%he reconciliation bet,een the evangelical A)erican and Disne* is the latest e4a)ple o& a
)a5or trend the reconciliation bet,een religious A)erica and corporate A)erica Man* o& the largest
A)erican )edia co)panies are entering the religious )arketI Kou can bu* dieting books that ask H,hat
Cesus ateI .o))enting that Hthe large corporations onl* recentl* discovered >od,I the article anal*1es the
&orce o& Rupert Murdoch, Rando) Eouse, %i)e/3arner, Son* and others %he `pro&it )otive? has beco)e
the `prophet )otive?9 I The 4conomist, Dece)ber !rd 200', p "1
$$
ine6ualities generate a lo, s*ste)ic productivit* %hus, )icro/econo)ic e&&iciencies
generate a )acro/econo)ic ine&&icienc*9 H:egative social conse6uences o& ine6ualit*
surpass b* &ar the gain o& allocative e&&icienc*I
-9
Culiet 8 Schor is a ,ell organi1ed researcher She ,rote a book o& great international
i)pact, HThe O/erwor+ed %mericanI, in ,hich she anal*1ed ho, A)ericans relate to
,ork %he &act is that A)ericans reall* started to live &or ,ork, e4hibiting, &or instance
and ,ith pride holida* and leisure ti)es that are )uch shorter than ,hat is kno,n in
other countries Is this advantageous7 A&ter all ,hat do ,e live &or7
A&ter sho,ing that A)ericans are literall* enslaved b* their ,ork the &il) A)erican
8eaut* co)es to )ind, naturall* Schor carried out another e4tensive surve* to see i& at
least ,hat the A)ericans do ,ith their )one* is ,orth the e&&ort %his second book, 3The
O/erspent %mericanI, anal*1es obsessive consu)ption as ,ell as the distress o& A)erican
&a)ilies per)anentl* in debt b* their purchases, ,ho spend 1#G o& their inco)e ,ith the
service o& debt
#0
<& course, the process is ver* &ocused on the li&est*le )arketing, in the
creation o& consu)ption behavior clusters
3hat interests us is the )echanis) A longer citation that e4plains it is ,orth,hile H%he
intensi&ication o& co)petitive spending a&&ected )ore than &a)il* &inances %here is the
boo)erang e&&ect on the public purse and collective consu)ption As pressures on private
spending escalate, support to public goods and pa*)ent o& ta4es beco)e eroded
+ducation, social services, public sa&et*, recreation and culture are being s6uee1ed %hen,
deterioration o& public goods leads to an even greater pressure &or private spending Leople
respond to inade6uate public services b* enrolling their children in private schools, bu*ing
sa&et* s*ste)s and spending )ore ti)e in the Discover* cone, than in the local leisure
space Lersonal &inancial pressures have also reduced the A)ericans? ,illingness to support
trans&er progra)s o& resources to the poor or near poor .oupled ,ith dra)atic decline o&
resources, the outco)e has been a substantial increase in povert*, the deterioration o& poor
neighborhoods, and alar)ing levels o& cri)e and drug use Leople ,ith )one* tr* Hto
spendI their ,a* around these proble)s 8ut that is not a solution &or these social illsI
H<ne proble) ,ith the national discourse is its &ocus on co))ercial e4changes, instead o&
6ualit* o& li&e, or social health >ross do)estic product is the god to ,ho) ,e pra* 8ut
>DL is an increasingl* poor )easure o& ,ell/being9 it &ails to &actor in pollution, parental
ti)e ,ith children, the strength o& the nationZs social &abric, or the chance o& being )ugged
,hile ,alking do,n the streetI %he `indicator o& genuine progress? a )easure that
ad)ittedl* is still crude but co)prehensive o& 6ualit* o& li&e has, increasingl* and
negativel* diverged &ro) the >DL since 19-! %he `social health inde4? another alternative
-9
Robert Futtner 4/erything for &ale: the /irtues and limits of mar+ets Al&red A Fnop&, :e, Kork, 199#,
p #"
#0
Culiet 8 Schor / The O/erspent %merican: why we want what we don@t need * Earper Lerennial, :e, Kork
199#, p 199 HDebt service as a percentage o& disposable inco)e no, stands at 1#G, even higher than during
the recession in the earl* 1990sI
$'
)easure, also dropped dra)aticall* since 19-", re)aining at a record lo, level in the
nineties 3hen ,e consider not onl* our inco)e but also the tendencies o& &ree ti)e, public
sa&et*, environ)ental 6ualit*, inco)e distribution, adolescent suicides and child abuse, ,e
discover that things have been getting ,orse &or )ore than t,ent* *ears, even though
consu)ption has gro,nI
#1
It is 6uite evident that killing onesel& ,ith ,ork to purchase useless things and then to ,ork
even )ore because o& the indebtedness generated b* these purchases )a* see) positive
&ro) the corporation point o& vie, Ket &ro) a citi1en?s point o& vie,, it a)ounts to a
regret&ul idioc* 3ose logic should the econo)* serve7
A third surve* b* Culiet Schor )erits )entioning9 she decided to stud* ho, the process
a&&ects children in a ver* po,er&ul book, H$orn to $uyI.
2B
%he s*ste)atic anal*sis o& the
advertising universe &ocused on the child sho,s that the bulk o& advertising co)es &ro) a
s)all nu)ber o& corporations, that ,ork a relativel* s)all set o& products that also belong
to large corporations In the )edia those are Disne*, Riaco), Murdock and A<0 %i)e
3arner Lroducts are &ro) Mattel and Easbro in the area o& to*s ;HA)erican >irlI etc=@
:intendo, Son* and Microso&t in the area o& electronic ga)es@ .oca/.ola and Lepsi in the
area o& so&t drinks@ McDonald?s and 8urger Fing in the area o& &ast/&ood and so &orth
HIn the ,orld o& products &or children, )arkets are ruled b* so)e po,er&ul enterprises %his
is i)portant &or )an* reasons <ne is that ,ith )onopol* co)es uni&or)it* %he econo)ic
theor* &oresees that ,hen t,o opponents &ace each other, the ,inning strateg* &or both
leads the) to be al)ost identical 3hat this )eans &or consu)ers is that it beco)es
di&&icult to &ind genuine variet* and diversit* o& products Should *ou be interested in a
&att* pi11a, so&t drinks, plastic to*s and violent progra)s &or *our children, no proble)
3hat?s )issing are the other thingsI
#!

(or the child, on the average e4posed to the )edia &or !# hours per ,eek, the i)pact is
po,er&ul 8esides the indirect i)pact o& publicit* directed to the adult ,orld, an i)pressive
advertise)ent industr* no, addresses children up to three *ears old, to those a little older
called Ht,eensI because the* are bet,een the s)all ones and the teens, and o& course, to the
adolescents the)selves .ontent is &ocused on relativel* &e, products, essentiall* &ast
&oods and so&t drinks, to*s and clothes
%he philosoph* trans)itted is that the child needs to &eel that ,ithout a given product it is
an outsider In the ,ords o& :anc* Shalek, president o& the Shalek Agenc* Hadvertising
reaches the ideal ,hen it is )aking people &eel that ,ithout this product *ou are a looser
.hildren are ver* sensitive to this I& *ou tell the) that the* have to bu* so)ething, the*
resist 8ut i& *ou tell the) that i& the* don?t, the* ,ill be dorks, the* pa* attention Kou
#1
Id, ibid, p 21
#2
Culiet 8 Schor $orn to $uy: the Commerciali)ed Child and the !ew Consumer Culture * Scribner, :e,
Kork, 200$
#!
Id, ibid, p 2#
$"
access their e)otional vulnerabilit* and that is eas* ,ith children because the* are )ore
vulnerable e)otionall*I
#$

Culiet Schor anal*1es this universe, sector b* sector, in a ,ell docu)ented approach %here
is an industr* o& the so/called H8ig (oodI, large &ood enterprises characteri1ed b* high/&at,
high sodiu), high/sugar that generate an epide)ic o& obese children, to ,ho) in turn is
o&&ered esthetical surger* that allo,s the) to eat )ore &ood %his battle includes the &ight
against )ilk and ,ater, to be replaced b* so&t drinks ,ith high sugar content
8attalions o& ps*chologists are researching ,ith children to de&ine ho, to achieve a point
o& co)plicit* bet,een corporations and children %he ideal is to drive a ,edge bet,een the
parents ;old, boring, &ull o& natural 5uices, )ilk, vegetables, &ruit and other old &ashioned
idiocies= and the cool kids, )uch s)arter
<bviousl* there is a struggle &or insertion o& advertising ;and products= in schools using
even the class schedule Much o& the i)pact results &ro) the vie, children have that i&
these things are legal, authori1ed b* the parents and trans)itted in schools, the* )ust be
legiti)ate Lenetrating in schools is done in the )ost obvious ,a*, as schools are al,a*s in
desperate need o& &unds, and the enterprises e4change help ;co)puters etc= &or the right to
enter the school, the classroo) and even the schoolbook content
%he author uses i)pressive argu)ents to support the econo)ic vie, (irst, the state)ent
that television is &ree9 HLopulation pa*s &or advertising and progra)s ,hen it pa*s higher
prices &or the products presented %he &act is that i& *ou are a consu)er, *ou pa* &or the
%R, ,hether *ou ,atch it or notI %he idea is that advertising pro)otes co)petition and
there&ore leads to better products is another nonsense9 H3ith toda*?s )onopoli1ed
industries, the high cost o& publicit* ca)paigns )aintains the giants in control and keeps
out ne,co)ers I& ,e reall* ,anted to )a4i)i1e innovation and i)prove)ent o& products,
,e ,ould organi1e the s*ste) so that advertising ,ould be less e4pensive and essentiall*
in&or)ativeI
Another argu)ent is that advertising increases de)and and there&ore production and 5obs
H8ut )ost econo)ists disagree ,ith this logic %he* see advertising as a&&ecting the choice
o& a brand and not the global volu)e o& purchasesI %here is also the argu)ent that
advertising itsel& generates 5obs, a last resort argu)ent b* the president o& one o& the largest
advertising agencies, &rustrated ,ith his &eeling o& having dedicated his li&e to pro)ote bad
&ood to the detri)ent o& culture and local traditions According to Culiet Schor, H,hen
children are involved, this instru)entalit* is )uch )ore 6uestionable Indeed, there is little
5usti&ication to produce advertising &or children )erel* to guarantee the pro&it o& the
agenciesI
#'
#$
Id, ibid, p "' It is i)portant to re)e)ber that in our )arketing courses ,e teach *oung people to )aster
these techni6ues
#'
%he various citations above are on pp 1#1 and 1#2 o& the book cited
$-
+6uall* po,er&ul is the eternal argu)ent that Hever*bod* does itI Schor intervie,s an
advertising e4ecutive ,ho openl* states that she pushes products that she ,ould not let her
o,n children use %he ke* to the issue is that Hin the agencies people are a&raid to con&ront
clients In the enterprises there is a si)ilar absence o& accountabilit*@ on the ,hole, pressure
to )ake )one* overco)es the need to )ake good things &or the childrenI According to
Schor, enterprises are tied to the s*ste)9 HAs the level drops, the individual enterprises are
caught in the d*na)ics I& co)petitors do it, pressure to go along is strongI
#"
%he author is particularl* in&or)ative ,hen she describes the alternatives9 ensuring part o&
the advertising &unds &or cultural in&or)ation progra)s on advertising itsel& and on the
products@ &acilitate creating local and co))unit* broadcasting stations and %Rs ,ith
progra)s &or children and teenagers ;there are )an* success&ul e4a)ples=@ retrieving the
right o& children to pla* a,a* &ro) ho)e, instead o& re)aining con&ined in &ront o& a %R
set ;S,eden reduced b* one hal& the nu)ber o& accidents ,ith children in the streets b*
)eans o& so)e si)ple )easures=@ generating cultural d*na)ics ,ith collaboration &ro) the
children the)selves, and so &orth
In the Jnited States there is a ,ave o& protests that is gro,ing each *ear and the perception
o& ,a*s in ,hich parents are organi1ing &or e4a)ple, prohibiting in the state o& .ali&ornia
school books donated b* enterprises, ,here children learned to read and ,rite using
corporate advertising is especiall* use&ul In &act, the basics o& econo)ics should be
taught in school, &or kids to understand ho, things ,ork in the reall* e4isting ,orld
#-

Indeed, given the a)ount o& ,ork that ,e dedicate to produce useless things , given the
a)ount o& things that ,e ,aste, given the environ)ental i)pact o& unsustainable
consu)ption, leading us to ,idespread i)passes, given the additional costs to treat our
obesit* and other diseases generated b* irrational consu)ption, given the social isolation
that brings about the individual accu)ulation o& goods, given the e4penses ,ith sa&et* and
general disco)&ort that results &ro) ine6ualit* and social elitis) the inade6uac* o& our
anal*tical instru)ents, and the theories ,e teach leave us ,ith the gro,ing &eeling o&
arti&icial and useless theoretical constructions 3rong 6uestions and ,rong ans,ers %he*
point to the freedom of choice ,ithout )entioning the idiotic choices to ,hich ,e are
reduced, the* put >DL on the altar ,ithout re&erring to what and &or whom ,e produce,
the* calculate the enterprise pro&itabilit* ,ithout re&erring to the practical outco)es in
ter)s o& 6ualit* o& li&e o& societ*, the* point to a gro,ing consu)er curve ,ithout dra,ing
a parallel to the decapitali1ation o& non/rene,able resources
%he truth is that ,e are ,orking )ore and )ore to produce things that )ake less and less
sense And graduating pro&essionals to render this process )ore He&&icientI does not )ake
the slightest bit o& sense +cono)ic de)ocrac*, in this essential area o& consu)ption,
#"
Id, Ibid, p 1## and 19!
#-
%he book is also ,orth,hile &or its e4cellent bibliograph* and &or the Internet sites ,here docu)entation
can be &ound about the )ost varied aspects o& the proble) ;on pp 21' &&=
$#
consists o& respecting each one?s right to seek in&or)ation that is o& interest ;logic o&
de)and= instead o& intruding in the person?s ti)e and private space, ,ith products that are
)eant to be pushed on consu)ers and &ail to respond to the basic ob5ective o& i)proving
our lives
) !conomic infrastructure and e*ternal economies
It is a)a1ing to ,hat e4tent the stud* o& econo)ic in&rastructure is so scarce in econo)ics
%here are, un6uestionabl*, people researching energ*, others stud*ing solutions &or
logistics and transportation, still others the proble) o& co))unications or o& ,ater It is in
general a &ield &or engineers, seeking solutions &or speci&ic issues Is the stock )arket )ore
i)portant &or econo)ic develop)ent than good solutions &or transportation7 3e do not
have a Reuters &or e&&ectivel* i)portant issues
<ne thing is the operation o& the econo)ic )achine, its da*/b*/da*, its &aster or slo,er
rh*th) according to the situation Another thing is the structure o& the )achine itsel&9 in
this sense, in&rastructure options tend to organi1e our options in )an* other areas o& the
econo)* %he rail,a* and shipping in&rastructures have been dis)antled in 8ra1il9 there is
no other option &or persons or individual &ir)s then using cars or trucks A ship arriving in
Rotterda) is o&&loaded in hours, at ter)inals speciali1ed b* t*pe o& cargo, it goes directl*
&ro) the ship to the train ,agon, ,ith electronic labels that per)it the entrepreneur to
&ollo, the e4pected cargo In I)peratri1, in the north o& 8ra1il, consu)ers bu* products
transported b* lorries over )ore than 2000 kilo)eters, ,asting diesel, e)itting carbon
dio4ide
In another essa*, ,e developed a stud* on ho, the large in&rastructure net,orks, that
per)it productive activities to develop e&&icientl*, can be planned to i)prove s*ste)ic
e&&icienc* and ensure a better 6ualit* o& li&e
##
Eere, ,e are not interested in eventual
solutions &or transportation or energ*, but in the necessar* intensi&ication o& studies o& the
in&rastructure in econo)ics, in order to understand the overall e&&icienc* o& the s*ste), or
s*ste)ic productivit*
%radition ,ants that in econo)ics ,e concentrate on productive processes, on the
corresponding &inancial and co))ercial &lo,s, but less on the ph*sical in&rastructure that
enables production %he 3orld 8ank uses the good i)age that in&rastructures represent Hi&
not the engine, then the ,heels o& econo)ic activit*I 3e )a* also use the i)age o& the
bod*9 to &unction, the bod* has organs like the liver, heart, brain 8ut the s*ste)ic 6ualit*
o& the bod* depends on the nervous s*ste) that conve*s in&or)ation, the bloodstrea) that
##
0adislau Do,bor % 'eproduGHo &ocial: propostas para uma gestHo descentrali)ada ;&ocial
'eproduction: roposals for .ecentrali)ed 7anagement< +ditora Ro1es, LetrUpolis 200!, !d +dition
revised, see in particular vol II
$9
,arrants internal transportation, the skeleton ensuring structure and articulations In &act, to
have good enterprises and inade6uate in&rastructure reduces s*ste)ic productivit*
#9

0arge in&rastructures re6uire a strong presence o& the State, since these are ver* signi&icant
invest)ents and a long ter) pa*out o& no interest to private investors %he private sector in
general pre&ers that the State be burdened ,ith the large e4penditures and that cheaper
energ*, transportation and ,ater result in e4ternal savings &or their production %he report
)entioned, b* the 3orld 8ank, anal*1ing 200 billion dollars o& invest)ent in
in&rastructures in the developing countries, &ound that onl* 1$ billion dollars ,ere private, -
per cent
90
8ut there is an even stronger reason &or the presence o& the State in the area9 ,hile industr*,
&or e4a)ple, develops its activities in geographicall* located entrepreneurial units,
in&rastructures, b* their nature, are essentiall* net,orks and there&ore )ust &ollo, a
s*ste)ic and long ter) outlook o& territorial develop)ent 8oth re6uire planning capacit*,
an activit* that has practicall* vanished &ro) the hori1on o& the econo)ists? ,ork, buried
under the nonsense o& the .hicago School theoretical si)pli&ications and )athe)atical
rubbish
%he practical outco)e &or the countr* is that the capacit* o& the the State to act in this area
,as drasticall* restricted, ,hile the private sector does not have the capacit* &or signi&icant
intervention or pursues narro, interests A governance gap is generated, since planning has
been abandoned as a co))unist conspirac*, and the )arket is o& little use to regulate the
area
3hen the private sector beco)es interested, it does so b* seeking punctual solutions that
reduce its costs and not the i)ple)entation o& an integrated net,ork able to revitali1e a
region %he so*beans &ar)s o& the 3est are interested in a rail,a* that links their
plantations to the ports o& Laranagu] or Santos, the Capanese are interested in a railroad that
connects .ara5]s to the nearest port, SNo 0uis, &or the alu)inu) and iron e4ports, and so
on %his is ,hat took place in A&rica, ,here railroads are part o& outlets &or large groups
;)ining or )onoculture= al,a*s linking the port and a speci&ic region in the interior,
instead o& connecting the various regions %he* are in&rastructures ,hose logic is to drain
,ealth a,a* and not to integrate econo)ic spaces o& the region and the ,hole In +urope
good e4a)ples can be seen, ,here a net,ork in the shape o& a ,eb interlinks all signi&icant
centers and un&olds in secondar* branches &or each s)all productive region, generating a
s*ste) that operates in the large a4es as ,ell as in the capillarit* o& support to local
production Eigh speed train net,orks, ;%>R= in turn, o&&er co)&ortable and rapid trips
bet,een capital cities, reducing dependence on private cars and planes, inco)parabl* )ore
#9
%he 3orld 8ank 8orld .e/elolpment 'eport 011#: Infrastructure for .e/elopment J 3ashington,
<4&ord Jniversit* Lress, 199$ HRecent studies in the Jnited States suggests that the i)pact o& in&rastructure
on econo)ic gro,th represents startingl* high rates o& return ;up to "0 percent=,I p 1'
90
<p .it, p 10
'0
e4pensive, thereb* generating savings &or all involved Llanning connected to public
interest is si)pl* )ore e&&icient &or ever*one
In ter)s o& econo)ic studies this is not a )atter o& developing ne, territories but o&
recovering a technical capacit* ,e once had .elso (urtado co)es &ro) t,o interesting
in&luences9 .epal, ,hich sought to retrieve the )acro/econo)ic outlook and create
conditions to activel* pro)ote develop)ent, and )ore so (rance ,here studies &or urban
and regional planning ;am?nagement du territoire= and corresponding in&rastructure ,ere
al,a*s present in econo)ics %hese in&luences produced a )ore realistic anal*sis o&
regional unbalances and o& the need to generate econo)ies e4ternal to the enterprise but
coherent in the territor*
%erritorial stud* is 5ust about absent &ro) the econo)ic )ainstrea) anal*ses that endeavor
to solve econo)ic proble)s b* creating a continuous global planetar* space, ,here the
)arket ,ill solve proble)s b* so)e )agic e&&icienc* o& resource allocation 0ooking at
ho, the &inancial s*ste) allocates resources and generated the 200# crisis, this vie, is
pathetic In the anal*ses, the i)portant issues o& local develop)ent, and o& the overall
territorial balanced develop)ent &all so short that ,e have to resort to Milton Santos, a
geographer, to understand the &unction o& space in econo)ic activities
91

%he results are critical In a )etropolitan region such as SNo Laulo there is no institution
that studies and pro)otes land rationali1ation and planning o& the in&rastructures +)plasa,
the sole planning agenc* created &or this purpose, survives pro forma, ,hen it should have
an essential role In this largest and )ost )odern )etropolis o& 0atin/A)erica, ,e do not
even have a stud* or research center &or the cit* +&&orts to establish an o&&ice &or
)etropolitan a&&airs re)ain in the li)bo %he results are that over a )illion people live in
,atershed areas@ local rivers and ,atersheds are irresponsibl* polluted ,hile the ,ater is
pu)ped &ro) the basin o& Liracicaba 1'0 kilo)eters distant@ se,age treat)ent stations in
la)entable conditions, causing disease &or ,hich a cure de)and )ore resources than the
cost o& prevention@ dail* )illions o& Hpaulistanos? take their o,n car to re)ain stuck in the
e4press,a*, patheticall* ,atching se,age spe,ing into the %iete River %he average speed
o& the auto)obiles in SNo Laulo reaches 1$ kilo)eters per hour, the speed o& ,agons at the
da,ning o& the last centur*@ the collective net,ork boasts o& a ridiculous "0 kilo)eters o&
sub,a*, a prehistoric )a*or invents the Helevated e4press,a*sI and tunnels ,ith the help
o& large contractors pretending to solve transportation proble)s b* overlapping la*ers o&
private cars instead o& investing in public transport
92

91
Milton Santos O 4spaGo .i/idido: Os dois circuitos da economia urbana dos paWses subdesen/ol/idos
;.i/ided &pace: The two circuits of the urban economy of underde/eloped countries< * (rancisco Alves
+ditora, Rio de Caneiro 19-9@ see also the e4cellent 4spaGo, CiEncia e T?cnicas ;&pace, &cience and
Techniques<.
92
%he cit* o& 8oston recentl* dis)antled its last elevated high,a*s, these )onu)ents to technical stupidit*
and to the disregard o& urban 6ualit* o& li&e According to the :ossa SNo Laulo 2010 statistics, the average
,orker in SNo Laulo spends 29$! hours a da* in tra&&ic, a ti)e ,here he does not rest or ,ork, but spe,s
pollution into the air ,,,nossasaopauloorgbr
'1
.onsidering the countr* as a ,hole, things do not see) an* better 0ooking at the )ap, ,e
see that al)ost all econo)ic centers, ,ith the e4ception o& the 8elo Eori1onte region, are
ports or se)iportuar* regions, &ro) Manaus to 8elV), as ,ell as (ortale1a, Reci&e,
Salvador, Rio de Caneiro, Santos/SNo Laulo, Laranagu]/.uritiba, (lorianUpolis, Lorto
Alegre An obvious solution are policies strongl* centered on the )oderni1ation o& ports
and the develop)ent o& shipping along the coast, associated to the develop)ent o& an
integrated inland rail,a* net,ork, ,hile trucks should be used onl* &or short distance,
distributed cargo 3asting asphalt, oil and tires to transport large bulk* )erchandise on
high,a*s the )ost e4pensive option in ter)s o& costs per tonAkilo)eter is surrealistic
%ransport o& so*beans leaving Mato >rosso do Sul to be shipped in Santos, &or instance,
absurdl* raises the costs o& the product %o re)ain co)petitive, producers then co)pensate
,ith lo, ,ages, ,hich reduces the internal )arket
%he result is that ever*thing gets )ore e4pensive &or ever*one In a )etropolis, a )orning
is lost to resolve a si)ple proble), *oung people die like &lies in )otorc*cle accidents,
since as i& it ,ere not enough to clog the streets, no, the* &ill the spaces bet,een the lines
o& cars <nl* in the cit* o& SNo Laulo, there are )ore than 1'0 thousand bikers that carr*
docu)ents and s)all orders through the paral*1ed cit*, creating a ne, generation o&
paraplegics and 6uadriplegics Koung H)otobo*sI are d*ing at the rate o& 1,' a da* in the
cit* alone %he in&rastructure options are &ar &ro) neutral or innocent
Media and econo)ic 5ournals talk onl* about in&lation, e4change rates, &inancial papers,
)ergers, trade balance %he structural proble)s are le&t ,ithout e&&ective studies, onl* the
anal*sis o& short/ter) trends re)ains, or the &ascinating abstract econo)ic c*cles Eere ,e
)ust retrieve a tradition and reorgani1e the planning capabilit*, leading to the construction
o& a s*ste)ic and long ter) outlook o& our develop)ent Mean,hile, ,ith the
in&rastructures ,e have actuall* created in 8ra1il, ,hat ,e have are not e4ternal
econo)ies, but e4ternal diseconomies, overcosts, brought about b* an irrational )atri4
In&rastructures have a deep i)pact on the spatial design o& econo)ic activities Intelligent
solutions do not re6uire reinventing the ,heel, but re6uire a serious e4ercise o& co)parative
econo)ic studies to understand the solutions that have been proven in various countries as
,ell as an e6uall* serious stud* o& the interaction potential o& di&&erent options at various
territorial levels <ur universities do not even stud* their o,n regions, ,hen the* could
beco)e scienti&ic ar)s &or the )obili1ation o& regional resources
3hat are talking about, in realit*, is the retrieval o& the structuring role o& the public sector,
through planning and invest)ent capacit*, on the overall and long ter) options that have
disappeared &ro) the hori1on o& econo)ics 3e do not have to go back to Aosplan
centrali1ed planning +cono)ic planning and structural anal*sis are i)portant de)ocratic
instru)ents, and obviousl* de&or)ed in an authoritarian regi)e %he lack o& de)ocrac* is
,rong, not the planning activit* itsel& 3hen there is planning and a co)prehensive vie, o&
the ob5ectives, the* )a* be sub)itted to societ* that )a* pronounce itsel& 3ithout
'2
planning, the faits accomplis co)e to the sur&ace %here is no de)ocratic option, onl*
business
1+ ,ocal development
Is it &easible to think o& the cit* as a capital accu)ulation territor*7 3e can, o& course,
think o& an enterprise as an accu)ulation unit, and the )anagers o& an enterprise have
available an arra* o& techni6ues to guarantee that resources available are &ull* utili1ed, that
the di&&erent entrepreneurial activities &or) a coherent cluster, that processes and rh*th)s
o& the di&&erent depart)ents be co)patible %hat is to sa*, the enterprise declares the
invisible hand, but onl* out there <n the inside rules a so)eti)es oppressive rationalit*,
so)eti)es h*pocritical, so)eti)es corrupt and ver* o&ten si)pl* e&&icient, but on the
,hole nobod* denies the need &or rational )anage)ent
.an a territor* such as a )unicipalit* be rationall* )anaged7 .it* hall itsel& is a )anaging
unit, and renders accounts 8ut can a cit*, ,ith or ,ithout its rural environ)ent, be seen as
a space o& coherent, articulate and integrated processes ai)ing &or high s*ste)ic
productivit*7 Jntil recentl* the issue ,as not so relevant, since in the 19'0s, &or e4a)ple,
the )a5orit* o& the population lived in a scattered rural environ)ent %he outco)e ,as that
govern)ent onl* e4isted in the &e, capital cities, ,here ,ealth* &a)ilies controlled both
econo)ic and political activities %oda*, urban population 8ra1il is #$G, and the ','"'
)unicipalities have beco)e the building blocks o& the nation, the basic units o& political,
econo)ic, social and cultural organi1ation %he 19## .onstitution granted autono)* to the
)unicipalities .an the rationalit* o& the ,hole the countr* be considered, ,ithout
rescuing the internal coherence o& the basic units, the )unicipalities7
%his outlook is a change o& perspective In a ,a*, ,e no longer see the )unicipalit* as the
distant place ,here central govern)ent pro5ects or initiatives o& the large enterprises )ust
arri/e, but consider the )unicipalit* as the basic building block o& the ,hole .ould an
econo)* &unction ,ell i& its enterprises ,ere )anaged in a chaotic ,a*7 Adopting the
sa)e reasoning &or the nation, ,e can ask ourselves i& a national coherent develop)ent is
possible ,ithout rational )anage)ent at the local level
Moreover, ,hen a large part o& develop)ent initiatives is displaced to local level, the
decision is closer to the space ,here the citi1ens )a* genuinel* participate, especiall*
&acing the issue o& urban &ringes that beca)e the do)inant )ani&estation o& our social
traged*
Cohn (ried)ann clearl* establishes that this shi&t o& &ocus in ter)s o& ob5ectives, as ,ell as
the corresponding regulator* )echanis)s, re6uires territoriali1ation9 H%he )ainstrea)
)odel o& econo)ic gro,th e4presses the *earning o& the global capital &or an econo)*
`,ithout &rontiers? in ,hich there are no organi1ed interests nor po,ers )ediating the
corporate decision centers on the one side and individual ,orkers and consu)ers on the
'!
other In the ideolog* o& capital, this t*pe o& econo)* is called `&ree? It reduces territorial
interest to a )ini)u) o& `la, and order?, such as assuring respect &or contracts and keeping
order in the streets %his outlook &urther brings about the e4pectation that the territorial
States ,ill deal as ,ell as the* possibl* can ,ith the social conse6uences o& private
invest)ent and productive decisions, such as scarce resources, une)plo*)ent,
pauperi1ation, pollution, de&orestation and other issues o& the `co))ons? %erritorialit*
calls our attention to the ph*sical environ)ent9 the local econo)ic resources, the esthetical
value o& traditional landscapes and the 6ualit* o& li&e in the built environ)ent ,here all our
actions take place and that directl* and i))ediatel* a&&ect our li&eI
9!
(ried)ann stresses the understanding that besides entrepreneurial and govern)ental
regulation there is a gro,ing regulation process at the roots o& societ*, starting &ro) the
place ,here people live, along the line o& ,hat he called participative govern)ent HAn
alternative develop)ent is centered on people and their environ)ent )ore than on
production and pro&it Cust like the dog)atic paradig) addresses the issue o& econo)ic
gro,th under the enterprise perspective, ,hich is the basis o& neoclassical econo)*, an
alternative develop)ent based, as it should be, upon the space o& li&e o& civil societ*,
addresses the issue o& i)prove)ent o& the conditions o& li&e and o& e4periencing in the
perspective o& the ho)eI
%hese ob5ectives lead us to the concept o& local e)po,er)ent, articulation o& local
regulation ,ith the po,er o& the State HAlthough it points to,ard a locall* rooted polic*,
an alternative develop)ent re6uires a strong State to i)ple)ent its policies A strong State,
ho,ever, does not need to be ,eight* on the top, ,ith an arrogant and hard bureaucrac*
An agile State ,ould be better, one that responds and renders account to its citi1ens %his is
a State that heavil* leans on an inclusive de)ocrac*, ,here po,ers to ad)inistrate
proble)s ,ill ideall* be locall* )anaged, returning to local governance units and to the
people, the organi1ation o& their co))unitiesI
9$

%hat is ho, co))unit* participation, through direct involve)ent in )atters o& rational
)anage)ent o& locall* available resources, appears as a co)ple)entar* regulator*
)echanis), adding itsel& to the )arket that constitutes the prevailing regulator* )echanis)
o& the entrepreneurial sector and to the public )anage)ent regulations that rule the action
o& state agencies %hus the co))unit*?s 6ualit* o& li&e de)ands beco)e a relevant
organi1ing )echanis) &or the outco)e e4pected &ro) develop)ent, 5ust as de)and o& the
individual consu)er ,as &or the traditional productive processes
In this respect, the ,orks b* Robert Lut)an brought signi&icant advances because the*
sho,ed to ,hat point participative )echanis)s not onl* co)ple)ent the state and the
9!
Cohn (ried)ann 4mpowerment: the politics of alternati/e de/elopment 8lack,ell, .a)bridge 1992
.itations ,ere taken &ro) pps !1 and !'
9$
Ide) It )a* be noted that although (ried)ann ,orks ,ith the concept o& local develop)ent, it is &ro) the
perspective o& articulated territorialities ;see p 1!! &or corresponding de&initions= 3e have )oved be*ond
H&mall is beautifulI, ,hich continues to be hugel* relevant
'$
)arket regulation, the* &urther are an i)portant condition &or the e&&icac* o& these
)echanis)s %he social capital appears as an i)portant &actor o& the governance 6ualit* o&
a given territor* %he stud* about Ital* has beco)e a classic, but it is above all in the
anal*sis o& the Jnited States that Lut)an discloses the signi&icance o& organi1ational
capacit* o& societ* in ter)s o& its interests the participative di)ension o& econo)ic and
political regulation as a ke* ele)ent o& develop)ent?s rationalit*, in general
9'

(ro) the standpoint o& econo)ic theor*, the process itsel& is interesting, as societ*
beco)es )ore co)ple4, ,e have graduall* passed &ro) the concept physical capital that
still pla*s the central role in H%he .apitalI o& Mar4, to an understanding o& the )a5or role
o& the financial capital evolving to,ards the recent a,areness o& the i)portance o& the
natural capital that ,e are depleting on the planet, the broader understanding o& the human
capital ,hich has beco)e crucial ,ith the technological breakthroughs and o& the social
capital that represents in a )ore a)ple )anner the )aturit* and cohesion o& the social
&abric that supports the ,hole %his progression re&lects, at the sa)e ti)e, the broader
scope o& econo)ics and the articulation o& econo)ic science ,ith other social sciences %he
concept o& social capital is certainl* &ashionable no,, but indeed the i)portant thing is to
understand is the need to organi1e rational allocation o& capital in a )ore co)ple4 sense
9"

%he traditional outlook ,ould be that )unicipalities are the botto) o& a p*ra)id, and this
theoretical Hverticalit*I is deepl* rooted in our convictions In &act, ne, guidelines point
to,ards the hori1ontal articulation o& social actors ,ithin the )unicipalit* and &or the inter/
)unicipal &or)s o& )anage)ent ;&or instance, inter/)unicipal health consortia, ,ater
basins co))ittees, regional develop)ent councils, net,orks o& sister/cities= per)itting
co)ple4 regional articulations %he result is that co))unities are no longer Htoo s)allI to
beco)e viable, since the* can creativel* interact ,ith the diverse territorialities %he ke*
point here is local initiative, the &eeling o& appropriation o& policies, ,here people can
directl* participate, because the* are ac6uainted ,ith the realit* and the decision scale
)atches their hori1on o& kno,ledge
%his changes pro&oundl* ,hat could be called the develop)ent culture A co))unit* is no
longer a passive receptor o& re)ote decisions o& the state that ,ill HdonateI a healthcare
center or o& an enterprise that ,ill arrive and HgiveI 5obs Develop)ent is no longer a thing
patientl* a,aited@ it beco)es so)ething that is carried out, even &ro) the aspect o&
organi1ing the reception o& e4ternal inputs %hus political citi1enship is co)ple)ented b*
econo)ic citi1enship and a &eeling o& social o,nership o& policies is rescued
9-

9'
Robert Lutna) $owling %lone: the collapse and re/i/al of %merican community J Si)on S Schuster,
:e, Kork, 2000@ 7a+ing .emocracy 8or+ is his stud* about Ital*.
9"
It is the vision that ,e develop in our HThe &ocial 'eproduction,5 starting &ro) the co)prehension that
reproduction of capital constitutes onl* one seg)ent albeit central o& the process o& develop)ent 3e go
on to see develop)ent as an articulation o& the various &or)s o& capital in di&&erentiated and co)ple)entar*
&ields
9-
An interesting aspect o& this plan is that o& 8runo (re* and Alois Stut1er, ,hose stud* about happiness and
the econo)* insists on the relative i)portance o& the process b* ,hich ,e co)e to econo)ic results %he
''
An i)portant di)ension o& this process is the change o& the co))unication paradig)
HSpace is deadI co))ents an A)erican editor, seeing the instantaneous planetar*
connectivit* o& those ,ho ,ork ,ith &inancial invest)ents It is an obvious e4aggeration@
people still live in a concrete cit*, look at the sunset on a concrete river bank 8ut the &act
that in&or)ation is instantl* available in an* part o& the planet changes drasticall* our
universe o& thought %he )unicipalit* o& Lirai, in the countr*side o& the state o& Rio, created
a public s*ste) o& broadband access to the internet &or all It ,as a s)all public invest)ent,
but represented a )a5or productivit* &actor &or local enterprises and co))erce, that started
to relate ,ith suppliers and consu)ers on a )uch larger scale %he slightl* higher &ee paid
b* the entrepreneurs generali1ed broadband access to the poorest neighborhoods &or !'
reais ;less than 20 dollars= a )onth %he i)pact o& digital inclusion ,as strong, but it is
note,orth* that e4tended connectivit* allo,ed i)prove)ent in productivit* o& all the
)unicipalit*?s social actors, o& the schools, o& the healthcare s*ste)s and so &orth %he
e4perience is a po,er&ul illustration o& ho, global, regional and local spaces )a* be
articulated through )odern &or)s o& connectivit*, in a process ,here the co))unit* o,ns
its process o& develop)ent, instead o& ,aiting &or a )ultinational to open a touris) resort
and dress the local population in Ht*picalI costu)es.
12

%oda*, the 3i/(i or 3i/Ma4 technologies are being used in urban spaces, enabling people
to ,ork and stud* an*,here It is the co)puter version o& the )obile telephone, covering
an entire urban space, converging ,ith the s)art phones internet capacit* %here is a race
bet,een cities to set up rela*s so that the entire urban space is covered b* the signal It is
called H)unicipal )esh 3i/(i net,orkingI According to a stud* published in the :e,
Scientist, HLublic net,orks o& 3i/(i ,ill also have an i)pact on the 3i/(i in ho)es,
schools, bookstores and ca&eteriasS*ste)s that cover an entire cit* connect a cluster o&
3i/(i points to &or) a )esh ,here the broadcast signals received at one point 5u)p &ro)
antenna to antenna until the* &ind so)eone connected to the netI
99

As o& no,, the technolog* that per)its connectivit* o& the entire urban space is cheap (or
instance, in the cit* o& Lhiladelphia in the Jnited States Habout $000 posts in the !20 s6uare
kilo)eters o& the cit* ,ill have 3i/(i antennas that ,ill cover the cit* ,ith ,ireless
broadband signals %he pro)ise is an internet access o& 1 )egab*teAsecond &or less than 10
dollars per )onth, co)pared ,ith the $' dollars &or toda*?s cable connectionI %he cit* o&
%aipei in %ai,an is spreading the s*ste) at an overall &ee o& 12 dollars a )onth Seoul and
&eeling o& appropriation, o& being a creative sub5ect o& the process, &re6uentl* constitutes a )otivation )ore
i)portant than the sole output in the sense o& econo)ic advantages 8runo S (re* and Alois Stut1er,
-appiness and 4conomics, Lrinceton Jniversit* Lress, Lrinceton 2002
9#
%he Digital Lirae Lro5ect resulted &ro) a partnership bet,een the )unicipalit* and the (ederal (lu)inense
Jniversit*, and ,as organi1ed b* Lro& (ranklin .oelho %oda* various cities o& the region are &ollo,ing this
e4a)ple and creating an integrated digital regional hub %his &ocus on )aking all o& the social actors )ore
productive through public service initiatives, generating e4ternal econo)ies in the territor*, is studied in a
s*ste)atic )anner b* .arlos %rigiglia, in his &/iluppo >ocale, +d 0ater1a, 200'
99
Laul Marks, !ew &cientist, 2' March 200" H.ities race to reap the re,ards o& ,ireless net &or allI
'"
Singapore are other e4a)ples It is not a s)ooth road9 cellphone corporations are &ighting
this &ree access ,hich the* see as a threat to their oligopol* And *et &ree circulation o&
in&or)ation on the ,aves should be as obvious as &ree circulation o& persons in the street
(ree streets do not prevent econo)ic activities, on the contrar* (ree access to in&or)ation
like,ise generates econo)ic opportunities, through innovative use o& the in&or)ation, but
not through placing tollbooths on ever* corner o& in&or)ation &lo,s
%he theoretical convergence )entioned thus points to,ard an arra* o& studies centered on
the various vectors that build )odernit* 3orks b* Manuel .astells on the networ+ society
indicate that local regulation is )ade easier b* using hori1ontal connectivit* o& all the
social actors sharing the develop)ent process Studies b* Lierre 0Vv* on collecti/e
intelligence give a gli)pse o& social e&&ort s*nerg* through convergence o& in&or)ation and
o& kno,ledge in a territorial co))unit* articulated ,ith virtual co))unities %he ,orks b*
Ignac* Sachs, starting &ro) the concern ,ith sustainabilit* o& the develop)ent process,
disclose the i)portance o& underutili1ed resources inheritance o& the discussions on
econo)ic planning in socialist Loland, ti)es o& 0ange and Falecki &ound in each
localit*
100
Eere ,e return, in a ,a*, to our starting point, to the outlook that .elso (urtado?s brought
us, o& a propositive econo)ic science that points the ,a* to the construction o& the desired
outco)es, instead o& losing ourselves in prognoses on ho, 5itter* are speculators on the
&inancial )arket <& course, the outco)e )ust be our prosaic 6ualit* o& li&e, in a
sustainable environ)ent %he i)age o& 6ualit* o& li&e takes us back to a pleasant
neighborhood, ,ith reasonable prosperit*, health, cultural ,ealth, e6uit* and sa&et*9 )ost
o& these things are locall* organi1ed, and to have an econo)* )anaged b* results i)plies
that these results be in their )a5orit* established b* the creative and di&&erentiated
co))unities that ,e have and not b* reproducing a standard )odel decided at the top As
such, ,hen ,e associate local develop)ent ,ith the concept o& develop)ent culture ,e are
looking to,ards a reconciliation bet,een political de)ocrac* and econo)ic de)ocrac*
%his possible other ,orld ,ill also de)and another econo)ic science that e)bodies these
di)ensions It ,ill concern not Hecono)icsI, but the econo)ic di)ensions o& social
trans&or)ation, ,ith its obvious co)ple4it* and interactions
101

100
Manuel .astells The 'ise of the !etwor+ &ociety 8lack,ell, <4&ord 199"@ Lierre 0Vv* >@intelligence
collecti/e +d 0a DVcouverte, Laris, 199$@ Ignac* Sachs InclusHo &ocial pelo Trabalho +d
>ara)ondASebrae, Rio de Caneiro, 200! Sach?s studies are particularl* use&ul in his understanding o&
planning as a de)ocratic process In bureaucratic planning, the bureaucrac* it the proble) not the planning
101
An e4tre)el* rich dossier about the econo)ic, political and cultural di)ensions o& the construction o&
alternatives can be &ound in our Changer le 7onde ;To Change the 8orld<, nu)ber #! ;<ct/:ov 200'= b*
Manifre de Roir, published b* >e 7onde .iplomatique, ,hich brings together essential articles about a
particular the)e ever* t,o )onths %,o articles in particular, b* .laude Culien and CosV Sara)ago, &ocus on
the relations bet,een econo)ics and politics, and sho, to ,hat point our race to )ake politics &unction
through di&&erent electoral legislations, ,ithout &acing the great econo)ic po,er that over,hel)s politics,
inclusivel* through the &unding o& electoral ca)paigns, si)pl* doesn?t solve the proble) In our vie,,
reviving the econo)ic potential o& local )anage)ent not onl* involves e&&icient )anage)ent, but also places
a great part o& the econo)* on a scale ,here people have greater control, thus also recovering control over
'-
11- %&e !conomics of .no"ledge
%he sa)e technologies that &avor globali1ation )a* like,ise &avor local spaces,
participative di)ensions, de)ocratic connectivit*, cultural diversit* (or )ultinationals,
ne, technologies i)pl* in a higher p*ra)id ,ith the central po,er o& a )ega/corporation
e4tending longer &ingers to )ore &ara,a* places, thanks to the po,er o& connectivit* to
trans)it orders and reports ,orld,ide It also i)plies the possibilit* o& a stronger planetar*
presence o& electronic control, ne, &or)s o& repressive po,er, control o& cultural
production e4changes, citi1en control through credit card use and internet pro&iling, the
e4plosion o& places ,here ,e are pleasingl* in&or)ed that ,e are being &il)ed, &or our
securit* S)ile :ot al,a*s in&or)ed, o& course
8ut &or us )ortals, these technologies open a hori1on o& opportunities &or a ,ider, )ore
hori1ontal net,ork, ,here each localit* can cross the speci&icit* o& local interests ,ith the
potential o& planetar* collaboration 0onger &ingers o& these sa)e corporations do not
decentrali1e an*thing@ the* onl* )ean that the sa)e hand has a longer reach, that
)anipulation takes place on a larger scale 0ocal appropriation o& the connectivit* potential
represents ne, opportunities &or a )ore de)ocratic societ*
.hanges in in&or)ation and co))unications technologies that open these ne, options,
ho,ever, are linked ,ith broader technological changes that are raising the kno,ledge
content o& all productive processes and reducing the relative ,eight o& )aterial inputs that
once ,ere the backbone o& production
Is kno,ledge a production &actor7 Eo, does the theor* that .astell calls the Hne, socio/
technical paradig)I develop7 .astells introduces the interesting categor* o& informati/e
production factors that leads us to a basic 6uestion9 is kno,ledge ade6uatel* regulated
through )arket )echanis)s as, &or instance, the goods and services in the setting o& an
industrial econo)*7
102
3hat beco)es o& ,hat ,e have inherited in econo)ic theor* ,hen its raison d@Etre, the
rational allocation o& scarce resources, has to &ace resources that are not onl* not scarce, but
&reel* accessible and easil* )ultiplied throughout the planet7 Displace)ent o& the )ain
paradig) o& the value &or)ation &ro) concrete ti)e and natural resources consu)ing goods
and services such as shoes and cos)etic services, to kno,ledge ,hich can be &reel* shared
to )illions, co)pels us to )ake an in depth revie, o& the production concept itsel& AndrV
their o,n lives An econo)* that is )ore o,ned b* citi1ens opens )ore space &or authentic political
citi1enship (or an e4cellent presentation o& the &unding o& political ca)paigns, see Ea1el Eenderson, The
best congress your money can buy, 2010, ,,,ethical)arketplaceorg
102
M .astells The rise of the networ+ society, vol I, p -' .astells considers that this ne, &actor o&
production re6uires State intervention9 HDeregulation and privati1ation )a* be ele)ents o& states?
develop)ent strateg*, but their i)pact on econo)ic gro,th ,ill depend on the actual content o& these
)easures and on their linkage to strategies o& positive intervention, such as technological and educational
policies to enhance the countr*?s endo,)ent in in&or)ational production &actorsI ;id, ibid, p 90=
'#
>or1 states that Hproduction )eans have beco)e liable to appropriation and susceptible to
being shared %he co)puter sur&aces as a universal instru)ent, accepted ever*,here b*
,hich all the kno,ledge and all activities )a*, in principle, be sharedI
10!
%he econo)* o& kno,ledge is 5ust being born 0a,rence 0essig) in The (uture of Ideas,
brings a s*ste)atic and balanced anal*sis o& this )a5or challenge ,e are &acing toda*9
)anage)ent o& in&or)ation and kno,ledge 0essig?s book, precisel* &ocused on ho, to
develop planetar* connectivit*, brings up each issue that o& appropriation o& the ph*sical
trans)ission )eans, that o& access code control, as ,ell as )anage)ent o& content at a
level per)itting a realistic assess)ent and &or)ulation o& practical proposals Eis previous
book, H.odeI, ,as alread* a re&erence point The (uture of Ideas is si)pl* brilliant in
ter)s o& ,ealth o& sources, o& si)plicit* in the e4position and organi1ation o& ke*
argu)ents and issues
10$

3e are all so)e,hat slo, in the understanding o& these ne, d*na)ics, s,inging bet,een
bleak visions o& the 8ig 8rother or an id*llic vision o& )ultiplication o& sources and )eans
leading to general de)ocrati1ation o& kno,ledge As in so )an* issues, the truth is that
si)pli&ication does not su&&ice and that ,e should do our ho)e,ork and stud* ,hat is
going on
0et us start &ro) the &act that toda*, ,hen ,e pa* &or a product, 2'G o& it is to pa* &or the
)aterial inputs and ph*sical ,ork, ,hile -'G is &or research, design, )arketing strategies,
advertising, la,*ers, accountants, public relations, the so/called HintangiblesI that >or1
calls the Hi))aterialI It is a vague &igure, but reasonable, and ,e are not interested in
precision here 3e are interested in the &act that the added value o& a product is ever )ore
in the incorporated kno,ledge %hat is to sa*, kno,ledge and organi1ed in&or)ation
represent a production &actor, a &irst class econo)ic capital
Eo,ever, the econo)ic logic o& kno,ledge is di&&erent &ro) that governing ph*sical
production 3hen a person delivers a ph*sical product it no longer belongs to this person,
,hile kno,ledge passed to another person is not trans&erred, but shared9 it continues ,ith
the person ,ho shares it, and ,ill )oreover sti)ulate in the other person ne, ideas that
,ill generate )ore kno,ledge and innovations %here&ore, in social ter)s, the societ* o&
kno,ledge does not get along ,ell ,ith private appropriation9 it is a ,ealth that is
)ultiplied ,hen shared %he value added to a product b* incorporated kno,ledge onl*
turns into price and conse6uentl* into greater pro&it ,hen access to this kno,ledge is
10!
AndrV >or1 O Imaterial: conhecimento, /alor e capital ;The Immaterial: Rnowledge, Value and Capital<
+d Annablu)e, SNo Laulo, 200', p 21 %he original in (rench, >@immat?riel, ,as published in 200! A
basic introduction to ,hat ,e ,ould call the value theor* o& the kno,ledge econo)* can be &ound in >ar
Alperovit1 and 0e, Dal*, On,ust .eserts, 2010@ .la* Shirk* has published a ,ander&ul book, Cogniti/e
&urplus, Lenguin 8ooks, :e, Kork 2010, stressing that in the kno,ledge econo)* era, connecting the
accu)ulated kno,ledge and &ree ti)e o& all hu)anit* represents a gigantic capital &or creativit*, ill )anaged
b* restrictive co)petition )easures %he sub/title, Creati/ity and generosity in a connected age, sa*s it all
104
The (uture of Ideas: the (ate of the Commons in a Connected 8orld Rando) Eouse, :e,
Kork, 2001, !$0 p
'9
restricted %he struggles o& the 20
th
.entur*, centered on o,nership o& the production
)eans, evolved in the 21
st
centur* to,ards the control o& kno,ledge
<ur societ* is evolving to,ards a kno,ledge econo)*, but it is governed b* la,s o& the
ph*sical product era In the classical e4a)ple, i& t,o individuals e4change the apple each
one has, the* continue having one apple each I& these individuals share each an idea, the*
have gained ideas .onsu)ing bread reduces the loa& .onsu)ing ideas does not reduce its
stock 3hen kno,ledge beco)es a ke* &actor o& value, sharing it )akes ever*bod* richer
%hus it is essential that kno,ledge be inde&initel* shared 8ut &ro) a )icroecono)ic point
o& vie,, ideas onl* generate )one* ,hen appropriated / usuall* b* inter)ediaries and
dul* gated (or those ,ho tr* to control access to kno,ledge, it beco)es valuable onl* i&
scarcit* is arti&iciall* arranged b* la,s and repression and not b* econo)ic )echanis)s
8* the )ere technical nature o& the process, to appl* reproduction la,s o& the industrial era
to the era o& kno,ledge reduces access .uriousl*, to hinder the &ree circulation o& ideas
and o& creative activities, corporations de)and &or greater State intervention %he sa)e
interests that led the corporation to globali1e the territor* to boost &ree circulation o& goods,
lead it to &rag)ent kno,ledge and )ake its sharing )ore di&&icult
%he central issue o& ho, ,e produce, use and distribute kno,ledge involves a dile))a9 on
the one hand, it is &air that he ,ho struggled to develop ne, kno,ledge, be paid &or his
e&&orts <n the other hand, the appropriation o& ideas as i& the* ,ere )aterial products
reduces the i)pact o& innovative e&&orts 0essig reports the e4a)ples o& )oving picture
directors in the Jnited States ,ho toda* &il) ,ith la,*ers on the tea)9 to shoot a street
take ,here per chance there is an outdoor )a* i))ediatel* induce the advertising agenc*
to de)and co)pensations %o shoot the roo) o& a teenager re6uires e4tensive legal anal*sis
because each banner, poster or picture )a* involve i)proper use o& the i)age, bringing
about other disputes Eas intellectual property no li)its7
In an A)erican universit*, ,ith the ac6uisition o& scienti&ic 5ournals b* large econo)ic
groups, a pro&essor ,ho distributed copies o& his o,n paper to his students ,as considered
guilt* o& pirac* Ee could, i& an*thing, de)and that his students bu* the 5ournal ,ith his
article +ver*one is a,are o& the absurd patent A)a1on tried to register, &orbidding other
co)panies to use the Hone/clickI &or purchases A co))on sense reason is that i& the Hone/
clickI is good, it )ust have been pro&itable &or A)a1on ,hich is the nor)al &or) o&
retribution &or an innovation and not b* preventing others &ro) using a process that ,as
alread* in the public do)ain Indeed, ,e are blocking disse)ination o& progress, instead o&
)aking it easier
0essig?s standpoint e4plicit in the A)erican .onstitution is that the e&&ort o& developing
kno,ledge )ust be re)unerated, but kno,ledge itsel& is not a Hpropert*I in the co))on
)eaning o& the ,ord (or instance, )an* cop*rights are the propert* o& enterprises that &or
"0
so)e reason are not interested in using or developing the corresponding kno,ledge, and as
such it re)ains &ro1en In other countries, the principle o& Huse it or lose itI prevails, so that
a person or enterprise cannot paral*1e, b* patents or cop*rights, a &ield o& kno,ledge, ,hen
it has a social &unction M* car continues to belong to )e i& I &orget it in the garage 8ut
ideas are di&&erent, the* cannot be locked up, their develop)ent b* others )ust not be
stopped
%his standpoint is based upon the idea that kno,ledge is not born alone +ver* innovation
relies upon thousands o& advances in other ti)es, in other countries, b* di&&erent
institutions, and in &act &unda)ental research is )ainl* done in so )an* public institutions
8ut ,ith gro,ing legal traps, research &re6uentl* involves so )an* legal co)plications,
people 5ust give up or leave it to big business ,ith their a,eso)e legal depart)ents
Innovation, the creative ,ork, is not onl* an output, it is also an input that begins ,ith
innu)erable e&&orts o& di&&erent people and enterprises It needs an open collaborative
environ)ent Innovation is a sociall* built process and there )ust be a li)it to its
individual appropriation
%he issue ,orsens drasticall* ,hen not onl* ideas but vehicles o& trans)ission are
controlled 3hen a Eoll*,ood producer controls not onl* production o& contents ;o& the
)otion picture= but also the various distribution channels and even )ovie theaters, the end
result is that &ree circulation o& ideas beco)es radicall* i)balanced 0essig &inds that in the
Jnited States &oreign )ovies represented, a &e, *ears ago, 10G o& the bo4 o&&ice, and
toda* represent 0'G, generating a culture dangerousl* isolated &ro) the ,orld 3ith the
progressive control o& the three levels ph*sical in&rastructure, codes and contents the
&reedo) o& ideas to circulate, even on the internet, is rapidl* being curtailed 0arge
enterprises continuousl* ru))age in our co)puters b* )eans o& HspidersI or HbotsI to see
i& per chance ,e do not )ention, ,ithout the due sanction, the na)e o& a group o& protected
ideas
A te4t o& 1#1! b* %ho)as Ce&&erson, 6uoted in the book, is in this sense ver* elo6uent9 HI&
nature has )ade an* one thing less susceptible than all others o& e4clusive propert*, it is the
action o& the thinking po,er, called an idea%hat ideas should &reel* spread &ro) one to
another over the globe, &or the )oral and )utual instruction o& )an, and i)prove)ent o&
his condition, see)s to have been peculiarl* and benevolentl* designed b* nature, ,hen
she )ade the), like &ire, e4pansible over all space, ,ithout lessening their densit* at an*
point, and like the air in ,hich ,e breathe, )ove, and have our ph*sical being, incapable o&
con&ine)ent, or e4clusive appropriation Inventions then cannot, in nature, be a sub5ect o&
propert*I
10'
An enterprise that installs one o& the i)portant in&rastructures that is the cable, is the o,ner
o& this cable Eo,ever, )a* it dictate ,ho )a* or ,ho )a* not have access to trans)it on
this cable7 An enterprise )a* &ind econo)ic incentives to )ake agree)ents ,ith other
10'
0essig, op cit p 9$
"1
enterprises, ensuring e4clusivit* Disne*, &or e4a)ple, &ought a hard battle to achieve this
t*pe o& e4clusivit* %he brutalit* o& these entrepreneurial disputes on this level, leaves little
space &or the ulti)ate end o& the ,hole process, so ,ell e4pressed b* %ho)as Ce&&erson,
that is the social use&ulness o& the circulation o& ideas >overn)ent )a* even privati1e
)aintenance o& a high,a* and authori1e tolls, but it guarantees its public character, no
concessionaire )a* prevent &ree access o& an* person to this high,a* And ho, does it
,ork in the infoway7 In )an* A)erican cities like .hicago, .it* Eall is placing public
cables to guarantee that users can receive and trans)it ,hatever the* ,ant, reducing
pressure &ro) private enterprises to )ake agree)ents o& e4clusive access &or a given t*pe
o& client In .anada, the process is spreading, as a reaction to controls that enterprises are
i)posing Cust as high,a*s, in&o,a*s )ust constitute the so/called co))ons, co))on
spaces that allo, private spaces to co))unicate and interact &reel*
Detailed anal*sis o& the use o& broadcast and %R ,ave spectru) is in this sense, ver*
signi&icant In practice, the A)erican govern)ent concedes spectru) bands to
co))unication giants as ,e do in 8ra1il, virtuall* eli)inating the possibilit* o& each
co))unit* to have its co))unication )eans, toda* a per&ectl* &easible and lo, cost
technical a&&air 3hat ,e hear over and over again is that the spectru) is li)ited and
there&ore )ust be assigned to so)e and these, o& course, )onopoli1e access
%he &irst &act is that lo, po,er radio service is per&ectl* possible and )ust not be
conde)ned as pirac* %he second, )ore i)portant, is that the idea o& the li)ited spectru)
is de&ended b* enterprises, but it is true onl* because the* use technologies that ,aste the
spectru)9 because the* detain the )onopol*, the* are not interested, &or e4a)ple, in the
sharing o& bands ;so&t,are de&ined radios= &or use o& ,aves, as in other )eans, using the
HsilencesI and sub/utili1ation o& the spectru) to &acilitate various si)ultaneous
co))unications, as takes place toda* in an* telephone line 0essig takes a tough stand ,ith
this over,hel)ing ,aste o& such an i)portant and natural resource not created b*
an*one, so )uch so that it is granted b* public license as is the electro)agnetic spectru)9
HLollution is precisel* ho, ,e should vie, these old ,a*s o& using the spectru)9 large and
stupid to,ers invade the ether ,ith po,er&ul e)issions, i)peding s)aller, less nois* and
)ore e&&icient alternatives to &lourish .o))ercial %R, &or e4a)ple, is an e4traordinar*
,aste o& the spectru), in the )a5orit* o& conte4ts@ the ideal ,ould be to trans&er it &ro) the
air to ,iresI
10"
0essig is a prag)atist (or instance, he proposes that in each seg)ent o& the spectru) a &ree
access band be e4panded to balance private appropriation In the various anal*1ed areas, he
seeks solutions that allo, all to survive, but his concern is clear H3ith these la,s,
technolog* no, pro)ises an al)ost per&ect control over the content and its distribution
10"
0essig, op cit, p p 2$!
"2
And it is this per&ect control that threatens the innovation potential that the Internet
pro)isesI
10-

Ri&kin anal*1es the sa)e process &ro) another standpoint, highlighting especiall* the &act
that the econo)* o& kno,ledge changes our relationship ,ith econo)ic progress in
general %he basic argu)ent is that ,e are )oving &ro) an era o& producers and bu*ers to
an era o& suppliers and users %he change is pro&ound In practice, ,e no longer bu* a
telephone ;or the purchase is s*)bolic= 8ut ,e pa* ever* )onth &or the right to use this
ite) o& co))unication 3e also pa* to have access to )ore decent television progra)s
3e no longer pa* &or a )edical consultation, but ,e pa* )onthl* &or a health insurance to
have the right to access a healthcare service <ur printer costs a tri&le@ the i)portant is to
trap us into the regular purchase o& an e4clusive toner
10#

%he e4a)ples are endless Ri&kin de&ines this tendenc* as characteri1ing Hthe era o&
accessI In our H% 'eproduGHo &ocialI ;%he Social Reproduction= ,e alread* anal*1ed this
trend that ,e characteri1ed as Htoll capitalis)I Cust look at the nu)ber o& &ees ,e pa* to
have the right to banking services, or ho, condo)iniu)s on the beach block the access to
stretches o& sea ,hile the ads Ho&&erI the) to us, as i& the* had invented the eighth ,onder
o& the ,orld (ree access to the sea does not &ill an*one?s pockets 0et beaches be enclosed
%hat?s ho, capitalis) generates scarcit*, since scarcit* raises prices According to this
logic o& the absurd, ,hen &e,er goods are available, the* beco)e )ore e4pensive, together
,ith their potential value &or those in control %here is nothing like polluted ,ater to induce
us to bu* bottled ,ater Leople 5ust don?t stop to think about it9 ,e are bu*ing ,ater
As such, all &ree spaces are going to disappear and ,e are )ore and )ore tied to a race to
increase our )onthl* inco)e, in order not to be deprived o& a series o& essential services,
including participation in the culture around us 0i&e is no longer a stroll or a construction
that belongs to us, but turns into a per)anent struggle &ro) toll to toll 3here previousl*
people en5o*ed pla*ing an instru)ent, toda* the* pa* &or the right to access the )usic,
,here be&ore people pla*ed &ootball in the streets, toda* the* ,atch a sports spectacle ,hile
)unching snacks on a so&a, all thanks to the pa*/per/vie,
%he theoretical shi&t is signi&icant %he o,ner o& the production )eans had the ke* to the
&actor*, a ph*sical good that )eant a concrete propert*, toda* he is the o,ner o& a process
10-
Ide) p 2$9
10#
Cere)* Ri&kin The %ge of %ccess Lenguin 8ooks, :e, Kork, 2001@ published in 8ra1il as % 4ra do
%cesso, Makron 8ooks, 2001 %his need to pa* a toll &or ever*thing ,e do, can be oppressive Man* invest
their savings in their o,n house &or the securit* o& having a place to live that doesn?t depend on a variable
capabilit* o& pa*ing the rent %oda*, ever*thing depends on innu)erable Hrentals,I and ,e see no perspective
on the hori1on o& living )ore cal)l* A person, ,ho &or so)e reason loses his source o& inco)e, sees hi)sel&
rigorousl* e4cluded &ro) a co)bination o& services that re6uire regular pa*)ents %he situation, particularl*
dra)atic &or lo,/inco)e retirees, has to be vie,ed &ro) this perspective toda*, but in realit* ,e are all
&eeling increasingl* trapped
"!
and charges &or its use And as processes beco)e increasingl* per)eated ,ith in&or)ation
and kno,ledge, the intellectual propert*, patent and cop*rights assu)e greater i)portance
As kno,ledge constitutes a good that still belongs to so)ebod* a&ter going on to another
and ,e are in the era o& technolog* and connectivit* ease o& disse)ination beco)es
i))ense and private appropriation generates barriers %hus, ,e see the ,eight o& >or1?s
suggestion that Hthe production )eans beco)e susceptible o& appropriation and o& being
sharedI :o ,onder that the %RILs ;%rade Related Intellectual Lropert*= negotiation has
beco)e the )ain debate o& the 3orld %rade <rgani1ation and is the core o& the struggle &or
a &reer societ*
HInnovationI, ,rites Stiglit1, His the core o& a )odern econo)*?s success %he issue is ho,
best to pro)ote it %he developed ,orld care&ull* constructed la,s that give innovators the
e4clusive right to their innovations and to the pro&its that ensue &ro) the) 8ut at ,hat
price7 %here is a gro,ing &eeling that so)ething is ,rong ,ith the s*ste) that controls
intellectual propert* %he &ear is that the &ocus on pro&it &or the rich corporations represents
a death sentence &or the )an* poor in the developing ,orldI
109
(or instance, e4plains Stiglit1, Hthis is particularl* true ,hen patents take ,hat previousl*
,as o& public do)ain and privati1e itI ,hat attorne*s o& the Intellectual Lropert* have
called the ne, enclosure )ove)ent Latents on 8as)ati rice ;that the Eindustanis thought
the* kne, &or hundreds o& *ears= or healing properties o& turmeric ;ginger= are good
e4a)plesI
According to the author, Hdeveloping countries are poorer, not onl* because the* have less
resources, but because there is a kno,ledge gap %hat is ,h* access to kno,ledge is so
i)portant 8ut ,hen strengthening the stranglehold on intellectual propert*, the IL rules
;called %RILS= o& the Jrugua* Round reduced access to kno,ledge &or part o& the
developing countries %RILS i)posed a s*ste) that ,as not ideall* designed &or an
advanced industrial countr*, but it ,as even less ade6uate &or a poor countr* I ,as a
)e)ber o& the +cono)ic .ouncil o& Lresident .linton ,hen negotiations o& the Jrugua*
Round ,ere co)ing to an end 3e and the <&&ice o& Science and %echnolog* Lolic*
opposed %RILS 3e believed that it ,as bad &or A)erican science, bad &or the ,orld o&
science, bad &or the developing countriesI
It is an i)portant standpoint, at a ti)e ,hen it is proper to respect intellectual propert*
,ithout people noticing that ,e are essentiall* respecting their )onopoli1ation and
stranglehold b* inter)ediaries 3e need )ore &le4ible and )ore intelligent rules and,
above all, to reduce the absurd dela*s o& decades that radicall* e4trapolate the ti)e re6uired
b* an enterprise to recuperate invest)ents on ne, technologies As &or licensing natural
resources o& poor countries, to therea&ter charge ro*alties on traditional production, it is
plain e4tortion Lirac* in this case, co)es &ro) the top
109
Coseph Stiglit1 / % $etter 8ay to Crac+ it * :e, Scientist, 1" Septe)ber 200", p 20
"$
%hus, econo)ics o& kno,ledge sketches out a ne, international division o& labor bet,een
the countries that concentrate on the intangibles research and develop)ent, design,
la,*ering, accounting, advertising, control s*ste)s and those that continue ,ith tasks
centered on ph*sical production 3here &or)erl* ,e had production o& ra, )aterials on
one side and industrial products on the other, toda* ,e have a division )ore strongl*
centered on partition bet,een )aterial and i))aterial production
<& especiall* interesting reading is the book b* .hang Ric+ing %way the >adder that sho,s
ho, toda* developed countries have appropriated kno,ledge generated in an* part o& the
,orld b* cop*, the&t or sp*ing, ,ithout the slightest concern at the ti)e ,ith intellectual
property %he* used the ladder to go up and no, kicked it aside, stopping others &ro)
&ollo,ing the) 3hat ,ould have happened to Capan or Forea i& &orced to close their e*es
on the innovations in the rest o& the ,orld or to pa* all the ro*alties7 .hang?s book is ver*
,ell docu)ented and sho,s ho,, be&ore the Asians, the Jnited States had alread* adopted
the sa)e practices, as ,ell as 8ritain %he &ree access o& poor countries to kno,ledge, an
essential condition &or their progress and &or planetar* rebalancing is toda* s*ste)aticall*
blocked, ,hen it should be &avored and subsidi1ed to reduce social and environ)ental
tragedies
110

At another level, the change in the nature o& production generates ne, relations and
displaces the issue o& labor re)uneration %o )easure labor hours ,orked, at this level o&
activit*, beco)es )uch less signi&icant .reative contribution ,ith innovative ideas ,ill
not necessaril* be proportional to the ti)e ,e spend sitting in the o&&ice >or1 cites a report
&ro) the Dai)ler/.hr*sler )anager o& hu)an resources9 the contribution o&
Hcollaborators,I as he kindl* calls the), H,ill not be calculated b* the nu)ber o& hours
present but based upon the targets )et and the 6ualit* o& results %he* are entrepreneursI
111
%hus, ,orkers are pro)oted to entrepreneurs and ,h* not, according to >ro1, to
business)en9 HInstead o& one ,ho depends on the salar* there should be the entrepreneur o&
the labor &orce, ,ho provides his o,n 6uali&ication, i)prove)ent, health plan, etc %he
person is an enterprise Instead o& e4ploitation co)es sel&/e4ploitation and sel&/trading o& `I
Inc? that brings pro&its to the large enterprises that are the clients o& the sel&/
entrepreneurI
112
3hat ,e are tr*ing to outline here is not a set o& replies, but theoretical 6uestions that
challenge us as econo)ists and that are the direct outco)e o& the broad tendenc* that ,e
110
/ Ea/Coon .hang Ric+ing %way the >adder:.e/elopment &trategy in -istorical erspecti/e, Anthe)
Lress, 0ondon, 2002@ in 8ra1il, Jnesp edition 200!@ in another book Alobali)ation, 4conomic .e/elopment
and the 'ole of the &tate, .hang presents results o& various studies about the i)pact o& protectionis) thus
generated b* developed countries and concludes9 H3e have de)onstrated that there is no theoretical basis &or
supporting the argu)ent that strong protection o& private intellectual propert* rights is necessar* &or
technological progress and even &or econo)ic develop)ent, particularl* &or developing countriesI %he Hcui
bonoI here is clear9 9-G o& the patents in the ,orld are issued to developed countries ;p 29!=
111
A >or1, O Imaterial, X >@immat?rielY, op cit p 1-
112
A >or1, op cit, p 10
"'
call kno,ledge econo)ics %he )ain road to the appropriation o& the surplus value )oves
&ro) control o& a &actor* or a piece o& &ar)land to the control o& intellectual propert* As
production relations change, the content and re)uneration in the international e4changes
are altered %hese are lines o& thought that de)and ne, instru)ents &or anal*sis and the
6uoted authors are opening visions ,orth &ollo,ing
Jnder these circu)stances, 8ra1il &aces a peculiar situation, since b* internali1ing the
:orth/South relationship ,ith the setting up o& a large transnational pole in the
Southeastern region, it &aces the )ost advanced contradictions created b* the kno,ledge
econo)*, as ,ell as the precarious 5obs econo)* generated b* outsourcing, coe4isting ,ith
the pri)itive relations o& production inherited &ro) previous econo)ic c*cles
%he challenge o& de)ocrati1ation o& econo)ics takes on an interesting di)ension, since
access to kno,ledge, as a ne, &actor o& production, )a* beco)e a privileged vector o&
productive inclusion o& the )asses o& underprivileged As ,e sa,, once produced,
kno,ledge )a* be disse)inated and )ultiplied at a ver* li)ited cost
3e do not pa* &or ,alking or driving around in the streets, event i& streets are e4pensive to
build and to )aintain Eaving to pa* &or a stroll ,ould be absurd 8ut that does not har)
shopkeepers to )ake business on these streets <n the contrar*, the &ree streets )ake good
business possible (ree broadband access and &ree non/co))ecial access to in&or)ation
and kno,ledge ,ork like streets and avenues &or the kno,ledge econo)*, and it does not
prevent creative people &ro) using the in&o,a*s &or econo)ic products that ,ill be sold
De)ocratic access to kno,ledge is a co))on sense concept, 5ust as open streets are an
obvious solution &or a productive societ* %he right to access kno,ledge thereb* beco)es a
central issue &or the econo)ic and cultural de)ocrati1ation o& our societies
12 %&e economics of social services
Another line o& thought that is changing the ,a* ,e look at econo)ic theor* concerns the
content itsel& o& econo)ic activities, )eaning the pro&ound change in the inter/sectorial
co)position o& production processes %o take the big picture, i& ,e look at the A)erican
e4a)ple, agriculture currentl* involves less than !G o& the labor &orce and the
)anu&acturing industr*, in 200', less than 10G
11!
11!
H(or the &irst ti)e since the industrial revolution, &e,er than 10G o& A)erican ,orkers are no, e)plo*ed
in )anu&acturing And since perhaps hal& o& the ,orkers in a t*pical )anu&acturing &ir) are involved in
service/t*pe 5obs, such as design, distribution and &inancial planning, the true nu)ber o& ,orkers, )aking
things *ou could drop on *our toe, )a* be onl* 'G Is this a cause &or concern7 <ur &igure o& 10G co)es
&ro) dividing the nu)ber o& )anu&acturing 5obs 5ust over 1$), sa* the latest &igures b* an esti)ated total
,ork&orce ;including the sel&/e)plo*ed, part/ti)ers and the ar)ed &orces= o& 1$-) In 19-0, around 2'G o&
A)erican ,orkers ,ere in )anu&acturing Most people toda* ,ork in services9 in A)erica, as )an* as
#0GI / The 4conomist, <ctober 1
st
200', p "9 It is interesting to re)e)ber that Manuel .astells predicted,
in The 'ise of the !etwor+ &ociety in 199', that industrial labor in the Jnited States ,ould drop to 1$G in
200' In &act, as usual, things go &aster than ,e i)agined ;L 22! o& vol I, 8lack,ells, <4&ord 199"=
""
%he )a5orit* o& our occupations have been called HservicesI as i& the label ,ould be sel&/
e4planator* .astells is indignant and 5ustl* so9 HJnder the ter) services are du)ped
together )iscellaneous activities ,ith little in co))on e4cept being other than agriculture,
e4tractive industries, utilities, construction, and )anu&acturing %he `services? categor* is a
residual, negative notion, inducing anal*tical con&usionI
11$
Adopting Coachi)
Single)ann?s )ethodolog*, the author proposes a distinction o& production support
services ;in&or)atics, &inances=, distributive services ;transportation, co))unication
and trading= social services ;health, education etc= and personal services ;restaurants,
catering, do)estic=, and suggests that ,ith the greater co)ple4it* o& econo)ics, the old
.olin .lark paradig) that divided econo)ic activities into pri)ar*, secondar* and tertiar*
sectors be abandoned According to .astells, Hthis distinction has beco)e an
episte)ological obstacle to understanding o& our societiesI
11'
%he truth is that as the kno,ledge content o& the diverse activities advances, the traditional
classi&ication beco)es )ore precarious 3hat is o& particular interest &or us here is the
con&usion that arises &ro) the e4cessivel* general concept o& services obscuring an
i)portant pheno)enon, the gro,ing presence o& social services in the overall econo)ic
activities Above, ,e brie&l* )entioned this cluster o& activities Eere, ,e are concerned
,ith so)e characteristics that a&&ect production relations o& the sector and there&ore the
econo)ic conceptuali1ation
11"

Above all, ,e )ust keep in )ind that this &ield o& activities is the one that e4pands the
)ost As ,e sa,, health in the Jnited States ;adding public and private= represents toda*
the largest econo)ic sector o& the countr*, ,ith 1-G o& the >DL and gro,ing, ,hile
industrial production represents 1$G and is decreasing .astells re&ers to a Hdra)atic
increase o& 5obs ,ith healthcare and in a lesser scale o& 5obs ,ith educationI
11-
I& ,e add
health, education, culture, local police and the like, ,e have so)ething like $0G o& the
5obs %here are large variations according to countries and classi&ications are 6uestionable,
but the &act re)ains that ,e have a giant gro,ing and generating ne, production
relationships
Social activities are capillar* health )ust reach ever* person and education ever* child in
the &or) o& personali1ed assistance, ,hich entails production relationships that di&&er &ro)
those in a &actor* ,ith )achines and ,orkers, producing, &or instance, shoes, sent to distant
super)arkets Eealth is not stored on shelves or sent in containers aualit* o& education
does not rest onl* upon the school, it also relies on the cultural cli)ate generated ,ithin the
countr*, a)ong others, b* the television progra)s (or)s o& social organi1ation generated
11$
.astells, op cit p --
11'
.astells, op cit p 20"@ Anita Fon presents various atte)pts at classi&*ing services in her 4conomia de
&er/iGos, +d .a)pus, Rio de Caneiro, 200', pp 2#&&@ the classi&ication b* Single)ann, and a su))ar* table
)a* be &ound on p !12 o& .astells? stud*
11"
3e approach this sector o& activities in a s*ste)atic )anner in Rol II o& our % 'eproduGHo &ocial, and in
the article H>estNo social e trans&or)a_No da sociedadeI, http9AAdo,bororg ;Artigos <nline=
11-
.astells, op cit p 229
"-
b* such activities are di&&erent &ro) those that e)erged ,ith )anu&acturing And the social
activities are end/activities Eealth, education, culture, sa&et* and ti)e to en5o* the)
that is ,hat ,e ,ant &ro) li&e HLroductionI or, &or that )atter, HservicesI are too general
concepts to de&ine an*thing use&ull* in a co)ple4 )odern societ*
Jn6uestionabl*, there is a capitalist ,a* o& rendering social services Results, ho,ever, are
that instead o& health, the industr* o& disease sur&aced, in the case o& education, the diplo)a
industr*, in the case o& culture, the entertain)ent industr*, and so on In theoretical ter)s, i&
there is a reasonable appro4i)ation bet,een the pro&it ob5ective and social satis&action, &or
instance in the case o& )aterial production Ada) S)ith?s e4a)ple o& the baker is al,a*s
present in the case o& social policies the t,o ob5ectives seldo) coincide
Jsuall* the outco)es are disastrous Lresident Ricardo 0agos, o& .hile, opened the
International .ongress o& the 0atin/A)erican .enter &or Develop)ent o& Ad)inistration
;.0AD= in 200' la)enting the rupture bet,een privati1ed and lu4urious social services &or
a )inorit* and poorl* e6uipped public social services &or the great )ass o& the population
%hese are areas that, to operate ade6uatel*, )ust be public, decentrali1ed and ,ith a
participative control b* the co))unities %he* involve collective consu)ption
)anage)ent, and strongl* depend on a countr*?s overall level o& scienti&ic culture It is to
no avail i& the rich have a lu4ur* )edical attention i& there is no generali1ed social s*ste)
o& vaccination &or disease prevention :either )icrobes nor )os6uitoes heed the si1e o& the
bank account
In ter)s o& productive use o& resources, there is little doubt about the ,idespread ,aste
caused b* privati1ation An interesting correlation can be )ade here :or,a* spends ,ith
health 9"G o& the >DL, ,ith #G in the public sector and 1"G in the private@ .anada also
spends 9"G ,ith health, '-G in the public sector and 29G in the private (or the Jnited
States &igures &or 2002 are respectivel* 1$"G, "'G and #0G :or,a* ranks &irst in the
EDI and .anada &i&th, the Jnited States co)es in 10th place In the health co)ponent o&
EDI the Jnited States are in !!
rd
place In the Jnited States, in 2002, e4penditures ,ith
health ,ere ',2-$ dollars per person, in .anada the* ,ere 2,9!1
11#

Indeed, this area relies heavil* on collaborative &or)s o& social organi1ation 3hen an
A&rican countr* did not vaccinate children against polio)*elitis, an al)ost &ull* controlled
disease broke out again +ducation relies on an environ)ent rich and dense in in&or)ation
throughout the territor*, ,ith libraries, theaters, intelligent television ;*es=, and intense
cultural li&e .ulture itsel&, trans&or)ed into entertainment industry, generates passive and
11#
J:DL -uman .e/elopment 'eport B==C * pps 219 and 2!", %able I re&ers to the IDE in general and
%able " re&ers to health policies <n page '# there is an interesting note about health in the Jnited States, in
,hich it is observed that the Jnited States leads the ,orld in health e4penditures, but since 2000 the tendenc*
to Hin&ant death rates &irst slo,ed and then reversedI <& non/elderl* A)ericans, $' )illion are ,ithout a
health plan According to the 'eport, those lacking insurance have no regular acco)pani)ent, and present
greater chances o& being hospitali1ed, generating health proble)s and spending )uch greater than i& the* had
coverage
"#
unin&or)ed spectators Sa&et* trans&or)ed into industr* o& ar)s and drugs, takes no,here9
the Jnited States have 2' )illion people in 5ail, ever*bod* has ,eapons, and cri)inalit* is
high
%he central role o& social services in societ* is recent Appl*ing production relations t*pical
o& the industrial era to social areas )erel* leads to ,aste, ine6ualities and violence %hese
areas de)and public, decentrali1ed and participative )anage)ent Lrivate institutions that
,ork are non/pro&it &oundations such as, &or instance, )an* large A)erican universities
%he private ones operating &or pro&it, such as Lhoeni4, turns out )an* diplo)as and little
science It is interesting to co)pare the &or pro&it universities or the health insurance
controlled b* &inancial institutions ,ith the HLastoral da .rian_aI ;.hildren?s Lastoral=
,hich toda* acts in over !,'00 )unicipalities o& 8ra1il, is responsible &or '0G o& the in&ant
)ortalit* decrease &or an #0G decrease in hospital ad)issions in their territories o& activit*
%he )onthl* cost per child is o& 1-0 reais, roughl* one dollar %here is no health plan / nor
an* private enterprise that achieves these cost/bene&it results %hus, the )ost co)petitive
undertaking in 8ra1il is not based upon co)petition, but on a net,ork o& non/pro&it
collaboration units %he Lastoral e4a)ple can be &ound in big business publications, as an
e4a)ple o& e&&icienc* and o& ne, hori1ontal collaborative net,orking It si)pl* ,orks
better
%he theoretical e4ercise i)posed is the s*ste)ic anal*sis o& sectors that co)prise the area
o& social services %he* de)and di&&erente technical relations o& production ;usuall* not
adapted to )ass production, &or e4a)ple= and other t*pes o& social interaction ;like the
densit* o& social net,orking involved= In a ,a*, 5ust as Mar4 anal*1ed in the 19
th
.entur*
ho, the technical relations o& industrial production a&&ected the social relations o&
production, involving &or e4a)ple integrated )echanical processes, the &actor* units and
the rental o& ,orking hours toda* ,e have to anal*1e ,hat t*pe o& social organi1ation is
being built b* social policies As econo)ists, ,e are &ar &ro) ans,ering this challenge
In 8ra1il, in particular, ;,ith honorable e4ceptions= an episte)ological rupture took place
bet,een econo)ists on the one hand, serious people ,ho deal ,ith interest rates, e4change,
in&lation and the like and, on the other hand, so&t hearted people ,ho deal ,ith the social
area %he large banks ,hich block develop)ent and burden all our activities and charge
absurd tolls on access to our o,n )one*, are presented as gro,th &actors, ,hile the social
areas that directl* respond to ,hat ,e ,ant &ro) li&e health, sa&et*, culture, etc are
presented as HcostsI In this vie,, the ta4es McDonald pa*s allo, us to spend )ore on
obesit* )edicine It is an upside do,n ,orld
119

119
In the book % 4conomia &ocial no $rasil ;The &ocial 4conomy in $ra)il<, 200! b* +ditora Senac, b*
Sa)uel Fils1ta5n and the collaboration o& a series o& authors ,e tried to open )ore channels bet,een the
absurdl* separated econo)ic and social areas In the entrepeneurial area itsel&, the co)prehension o& this need
is beco)ing clearer
"9
%he &act is that private &or pro&it enterprise ,orks ,ell &or the production o& shoes, &or
e4a)ple, ,hich can be sent b* containers, put on shelves, sold, and the )one* goes back to
its origin &or another c*cle +ducation, health, or co))unit* sa&et* are not o&&/the/shel&
products And the )one* c*cle envolved is )ore co)ple4
(or us the )ain point is that the )echanis)s that govern the social areas are still on the
&ringe o& the )ainstrea) o& econo)ic anal*ses, like ad5uvants o& the process, ,hen this is
an area that t*picall* enco)passes both in 5obs and econo)ic value the double or triple
o& the activities that produce ph*sicall* )easurable goods 3here social services are
ade6uatel* )anaged, considering their capillarit* and character o& collective consu)ption,
the* generate decentrali1ed and intensel* participative &ra)e,orks and there&ore are a
po,er&ul social organi1er, enriching ,ith econo)ic and social de)ocrac* our &or)s o&
social organi1ation Lrivati1ation o& the social areas lead to high costs and lo, productivit*,
in turn leading to an overall high cost econo)* such as ,e have in 8ra1il %he corporate
,orld is entering ,ith a heav* hand to this area, s*ste)aticall* &ighting de)ocratic access
to health, education and culture 3hen there is de)ocratic access there is a lot o& social
gain, but little short ter) pro&it
13 %&e economics of time
%i)e is our pri)ar* not rene,able resource %he ,aste is )onu)ental &or practicall*
ever*bod* 3e are all a,are that ti)e is )one*, but &e, o& us think about ,hat is being
bought %i)e is the ti)e o& our li&e Mone* lost )a* be recuperated, *et li&e
Fe*nes had a ver* s*)pathetic vie, o& the love &or )one*9 H%he love o& )one* as a
possession as distinguished &ro) the love o& )one* as a )eans to the en5o*)ents and
realities o& li&e ,ill be recogni1ed &or ,hat it is, a so)e,hat disgusting )orbidit*, one o&
those se)i/cri)inal, se)i/pathological propensities ,hich one hands over ,ith a shudder to
the specialists in )ental diseaseI
120
Ee ,rote this in the thirties It is di&&icult to escape the
i)pression that these are the kind o& people ,e trust our )one* to, and ,ith our )one*
the* run the rest
3e are &ull* a,are o& the econo)ic value o& ti)e An* entrepreneur keeps a rigorous
account o& the ti)e o& his e)plo*ees because this ti)e is his )one* Futtner reports the
visit he )ade to a tele)arketing center ,here the girls are allotted onl* t,o seconds
bet,een one call and the ne4t9 once the t,o seconds are over, the salar* starts going do
do,n %he docu)entar* The Corporation sho,s enterprises ,here leading brands keep
score o& even hundredths o& seconds o& the operations o& sea)stresses
3aste o& our ti)e is probabl* one o& the )ore po,er&ul e4ternalities o& capitalis) 3hen a
bank reduces the nu)ber o& attendants and ,e ,ait in the line, it reduces the ti)e o& ,ork
120
Cohn Ma*nard Fe*nes4conomic ossibilities for our Arandchildren* ;01I=<, in 4ssays in ersuasion,
33 :orton, :e, Kork, 0ondon, 19"!, p !'#&&
-0
o&&ered that represents cost and increases the ti)e lost b* the clients that does not cost the)
an*thing It 5ust has to )ake sure that other banks are doing like,ise, to avoid a bad na)e
%he bus co)pan* pre&ers to have the bus ,ell &illed, i)proving its pro&its per
passengerA)ile even i& this entails ti)e lost b* the riders ,aiting at the bus stop 3hen ,e
call a telephone service and ,ait &or an eternit* listening to ho, i)portant our call is &or a
)*sterious HusI, un6uestionabl* our ,aiting ti)e represents a cost &or ourselves, but not
&or the other HusI 3hen ,e ,ait at ho)e &or the call o& a technician or &or a deliver*, ,e
,ere in&or)ed that ,e should be at ho)e during business hours, at an* )o)ent o& the da*
<& course, as ,e have nothing to do, ,e ,ill ,ait because ,e need the service %he
enterprise does not co))it to a pro)ised schedule because &le4ibilit* allo,s it to save
ti)e 8asicall*, it is believed that an enterprise?s ti)e is valuable ,hereas the consu)er?s
ti)e is useless
%o have ti)e to do pleasant things, is probabl* the )a5or ob5ective o& ho, ,e organi1e
ourselves as a societ* %hat is to sa*, ,e )ust advance &ro) the econo)ics o& ti)e as a
)icro/econo)ic concern, ,here the enterprise calculates our seconds, to,ards a social
point o& vie,, assessing the e&&icienc* o& our social organi1ation according, in great part, to
the &reedo) ,e have o& choosing ho, ,e use our ti)e
%he standpoint is 6uite evidentl* connected to the ,orks o& A)art*a Sen, ,ith the
understanding that povert* is not necessaril* being deprived o& the right to certain products
but also privation o& a right to options And the option o& ho, ,e )ake use o& our scarce
ti)e o& li&e is essential
In a ,ork b* Marcelo %raldi, a 6uestionnaire about the use o& ti)e b* )iddle class &a)ilies
led to interesting things, such as the &act that a pro&essional classi&ies as leisure hours the
ti)e ,hen, sitting co)&ortabl* at ho)e, he reads a good technical book %he sa)e activit*
in the o&&ice ,ould be classi&ied as ,ork or even a sacri&ice
121
3e inherited &ro) the Ce,ish/.hristian tradition the virtue o& sacri&ice %he )ore our li&e is
sacri&iced, the )ore ,e are ,orth* o& so)e kind o& re,ard in this or the ne4t li&e In realit*,
doing a good 5ob, e4ercising our creativit* or si)ple abilit*, ,as never a sacri&ice 8usiness
3eek is surprised, in a cover article on 0inu4, ,ith the nu)ber o& people ,ho contribute to
the construction and i)prove)ent o& &ree so&t,are, &or the si)ple pleasure o& creating
so)ething good and being use&ul <n the other hand, an une)plo*ed person )a*
un6uestionabl* &eel desperate and this is especiall* true o& the *oung &or not
contributing, not participating, not belonging to a social process And it is not onl* a
6uestion o& inco)e
%he econo)ics o& ti)e does not e4ist as a scienti&ic area but it is essential It rests upon a
basic pre)ise9 ti)e as an econo)ic categor* is not li)ited to the paid productive activit*
121
Marcelo %raldi (onseca ara onde /ai o nosso tempoQ 4studo e"ploratFrio sobre a utili)aGHo do tempo
li/re ;8here .oes Our Time Ao< * Master?s Dissertation in Ad)inistration, LJ./SL, 200$@ see
http9AAdo,bororg under HLes6uisas .one4asI
-1
Intelligent use o& our ti)e, in its diverse co)ponents, o& sleep that recoups our strength, o&
entertain)ent that retrieves our inner balance, o& the care ,ith our children, the &lo,er
planted in the garden, chatting ,ith &riends, doing so)ething use&ul in a ,ork environ)ent
that respects us, all co)prise the end/target, the 6ualit* o& li&e ,e seek
0et us get back to Fe*nes? te4t +valuating, in 19!0, ,hat ,ould be the li&e o& his
grandchildren, ,ho ,ould have the intelligence to pro&it &ro) the technolog* and
productivit* progress, he suggests Hthree/hour shi&ts or a &i&teen/hour ,eek )a* put o&& the
proble) &or a great ,hile (or three hours a da* is 6uite enough to satis&* the old Ada) in
)ost o& usI@ <& course, there ,ere technological breakthroughs that he ,as unable to
&oresee and surpass ,hat he could i)agine :evertheless, ,e are killing ourselves ,ith
,ork, and even proud o& it
122
%here is a surrealistic di)ension in the irrationalit* involving a poor distribution o& our
e&&orts Lart o& societ* is desperate because o& ,ork overload and the other because it has
no access to ,ork A )ini)u) o& co))on sense in the distribution o& e&&orts is, in this
sense, one o& the central ob5ectives o& social )anage)ent In ter)s o& regulation o& the
econo)* o& ti)e, one reaches the conclusion that the )arket is a structurall* inade6uate
)echanis) &or ,ork resource allot)ent9 ,e need s*ste)ic solutions %here is nothing ne,
in this &inding 8ut &ro) the standpoint ,e are suggesting here, ,hen ,e attribute an
econo)ic value to social ti)e, une)plo*)ent is no longer seen onl* as a regret&ul situation
o& despair, li)ited to the poor devils that did not get diplo)as and hence He)plo*abilit*I
status, but a cost &or societ*9 the value o& the ti)e ,asted )a* be )uch higher than the cost
o& )easures o& organi1ation that ,ould use&ul 5obs &or all
12!

Another di)ension o& the econo)ics o& ti)e involves the irrationalit* o& the accu)ulation
process I& ,e vie, ti)e as an econo)ic categor* and there&ore ,aste o& social ti)e as a
cost, ,e )ust think, &or instance, about ho, to solve our transportation s*ste) 3e ,ork
hard to earn )one* to bu* a car In the cit* o& SNo Laulo, because o& a dra)atic shortage o&
public transportation, ever*bod* tries to o,n a car %he practical result is, as ,e have seen
above, that ,e travel at an average speed o& 1$ kilo)eters per hour 3e pa* &or the car and
are tied to the recurring e4penses ,ith &uel, insurance, repair, parking, hospitals, not to
speak o& the &ines and eventuall* the ps*choanal*st and the tran6uili1ers he reco))ends
3hen ,e con&use )eans and ends, ,e )i4 up use o& our ti)e ,ith a perenniall* postponed
happiness %he )ain target, the real value ,e pursue, it is 6ualit* o& li&e &or the greatest
nu)ber, including our children and grandchildren %his 6ualit* o& li&e involves, &or
e4a)ple, being able to use a s,i))ing pool or to rest during the ,eekend in a countr*
house and so on 8ut do ,e reall* need to be the sole o,ners o& these in&rastructures7 %he
122
Fe*nes, op cit%he old Ada), o& course, is ,ho earns the bread ,ith the s,eat o& his bro,
12!
%he classic ,ork about the the)e is b* >u* A1nar, >a r?/olution du temps de tra/ail OH%he Revolution in
3ork %i)eIg/ pre&aced b* AndrV >or1 in ersonnel, / Laris :h !$#, (ebruar* 199$, p #/-', (uturibiles,
O8or+ing >ess &o That %ll Can 8or+g Fe*nes had alread* )ade a point about Hthe enor)ous ano)al* o&
une)plo*)ent in a ,orld &ull o& needsI
-2
truth is that ,e spend endless *ears o& ,ork to pa* &or the) and ,e al,a*s underesti)ate
the recurring e4penses in the guise o& )aintenance, ta4es and others I& ,e calculate the
ti)e o& ,ork destined to bu* the), the ti)e o& ,ork spent to keep the) up and ho, little
,e use the) precisel* because ,e have no ti)e ,e ,ill see that it is )uch )ore
practical to rel* on social solutions
%oronto, &or instance, has )an* public s,i))ing pools@ &urther)ore, the school sport
&acilities are open to the general public Residents do not need to re)e)ber the ,ater?s pE,
i& chlorine ,as bought, i& the pool )aintenance gu* ,as paid he onl* takes his shorts and
bike and goes to the s,i))ing pool ,here he can )eet &riends, ,here the children )a*
s,i) at ease as there is )unicipal surveillance and protection and so &orth 3hat is the
intelligence o& looking at *our o,n e)pt* s,i))ing poolthe* are so seldo) usedand
bearing the &ull cost, not to speak o& the ,aste o& ,ater and )os6uito nets7
3hen ,e dilute the leisure in&rastructure costs a)ong all citi1ens, the* beco)e ver* lo,
8ut above all, ,e do not constantl* lose our ti)e and )one* to organi1e the pleasant use o&
our ti)e in the &uture It is not a )atter o& disparaging consu)ption, but to consu)e in an
intelligent ,a* 3ith the inclusion o& social ti)e as an econo)ic issue, the logic o& social
invest)ent changes 3hen ,e &ollo, the li&est*le o& an average )iddle class couple, it is
re)arkable ho, there are periods o& killing onesel& ,ith ,ork to purchase all these things
and then a struggle to get rid o& these sa)e things to retrieve the right to the )one* and
ti)e lost along the ,a*
%he cit* o& SNo Laulo )a* provide us here ,ith a good illustration SNo Laulo has 11
)illion inhabitants %he cit*?s >DL is !20 billion reais Dividing the >DL b* the
population gives us a per capita >DL o& 29 thousand reais, roughl* 1- thousand dollars a
*ear %his is clearl* a ver* high a)ount 8ut ,hat is o& interest &or us here is that based
upon this &igure ,e can calculate the value o& the hour per capita Dividing 29 thousand
reais b* #,-"0 hours, ,hich is the nu)ber o& hours in a *ear, ,e reach the value o& !!0
reais, about 2 dollars %his ,ould be the )ean value o& the SNo Laulo citi1en?s hour, in
general ter)s
12$

%o de&ine a basic value &or the ti)e o& the HpaulistanoI allo,s us to reach a )uch )ore
realistic outlook o& the econo)ic accounts +ssentiall* it is a practical ,a* o& allocating an
e6uivalent )one*/value to a set o& activities ,e do not account &or, si)pl* because the* do
not cost )one* nor bring about a register o& )onetar* e4changes Eere, the issue is not to
replace the concept o& the >ross Do)estic Lroduct, but to give econo)ic visibilit* to a set
o& activities not accounted &or, but ,hich are ti)e consu)ing activities I& ,e use a general
12$
Data &ro) Seade (oundation , ,,,seadegovbrAprodutosAper&ilAper&ilphp, erfil 7unicipal,;7unicipal
rofile< &Ho aulo %here are various approaches to this calculation, but the point is to beco)e a,are that our
ti)e is not &ree and that ,hen so)ebod* ,astes it, this ,aste has to be taken in account See our technical
note The 4conomic Value of (ree Time, 2010, http9AAdo,bororgA10ti)evalue5un2010doc
-!
)one* e6uivalent to our ti)e, ,e can have a )ore realistic >DL, not to speak o& other
possibilities
12'

It is ,idel* kno,n that ti)e lost in tra&&ic is a ,aste (ro) the point o& vie, o& the >DL
gro,th, the &act that so )an* are obliged to bu* a car and use it per)anentl* due to the
precariousness o& public transport services appears to be a positive %he production o&
cars, &uel consu)ption, in&rastructure invest)ents, accidents and hospital bills all i)prove
>DL Starting in 200!, the 3orld 8ank began to discount in the calculation o& the
contribution o& car production to the >DL, costs generated ,ith healthcare In our case, in a
broader approach ,e shall consider that the si4 )illion people in the econo)icall* active
population o& the cit* are penali1ed b* losing ti)e in transport )eans ,here the* do not
rest, produce or invest ;e4cept those ver* &e, ,ho &or instance pro&it &ro) tra&&ic 5a)s to
stud* languages and si)ilar activities= <ne hour lost b* si4 )illion active persons )eans
si4 )illion hours lost I& ,e calculate the value o& the lost hour at !!0 reais, these add up to
19, # )illion reais lost per hour, a little over 10 )illion dollars
According to surve*s o& the !ossa &Ho aulo !etwor+, the average active citi1en o& SNo
Laulo ,astes t,o hours and &ort* )inutes in tra&&ic each da* %his )eans a ti)e/cost o&
'2# )illion reais per da*, representing the e4tent o& the losses caused to the cit* b* the
ine&&icienc* o& transport options Another ,a* o& approaching this calculation relates to
invest)ent policies I& Sao Laulo loses, in round nu)bers, 20 )illion reais per hour o&
ti)e lost in tra&&ic, this )eans i& invest)ents in the sub,a* and bus corridors ,ould save
hal& an hour per da* o& our ti)e, this ,ould add up to 10 )illion reais gained per da* Since
a kilo)eter o& sub,a* costs 200 )illion reais, in appro4i)ate values, this )eans that in
the calculation o& return on invest)ents ,e should take into account not onl* ho, )uch
people ,ill pa* &or the tickets, but also the di&&use savings &or societ* as a ,hole 3ith 10
)illion saved per da*, this alone ,ould alread* pa* &or a kilo)eter o& sub,a* ever* 20
da*s
:ot to include this calculation in the evaluation o& invest)ents is to )ake decisions ,ith
the ,rong nu)bers (ro) a )icro/econo)ic standpoint it is even correct since those ,ho
invest believe that ,hat interests the) is onl* the )one* &ro) the tickets9 savings )ade b*
the population as a ,hole do not &ill their pockets 8ut &ro) the standpoint o& the s*ste)ic
productivit* o& the territor*, the overall rationalit* increases, because as people ,aste less
ti)e and )one* in transportation, ever* one ,ill be better o&& And the overall
transportation costs ;&uel per person per kilo)enter and the like= ,ill &all Inco)plete
accounting is ,rong accounting It is i)portant to re)enber that the )ost costl* option is
the )ost pro&itable &or car )akers, gas providers etc, i& users agree to pa* And i& there is
no decent public transportation, the users have no option, and pa*
12'
%he >DL itsel& is being reevaluated in the )ost varied 5urisdictions About the shortco)ings o& the >DL
see our .ebate sobre o I$: estamos fa)endo a conta errada A. ;3e are )aking the ,rong calculations=
http9AAdo,bororgA09Bpibesta)os&a1endoacontaerradadoc
-$
Eere ,e have a proli&eration o& studies ,here the idioc* o& ,asting the principal non/
rene,able resource o& our li&e beco)es )ore evident Robert Lut)an, regrets that Hone o&
the inevitable a&ter)aths o& ho, ,e organi1ed our lives in ter)s o& space is that, ever* da*
,e spend )ore ti)e to )ove ourselves around in )etal bo4es bet,een the vertices o& our
private triangles According to the Lersonal %ransportation Depart)ent Stud*, adult
A)ericans spend an average o& sevent* t,o )inutes per da* at the steering ,heel %hese
studies on dail* use o& ti)e indicate that this represents )ore than ,hat ,e spend to cook
or eat, and )ore than double ,hat parents spend, on the average, ,ith the children
%ravelling in private cars represents )ore than #"G o& all trips in A)erica, t,o thirds o&
car use is &or single persons and the &raction continues to cli)bI
12"
An indirect i)pact o& this process is the gro,ing isolation in ,hich ,e live Lut)an insists
on the dis5oining i)pact o& social interaction brought about b* co))uting <n one side, he
states that Hever* additional 10 )inutes spent dail* b* co))uting reduces co))unit*
involve)ent b* 10G less participation in public )eetingsI, etc <n the other, Ha &urther
curious &act is not onl* the ti)e spent in the car, but also the spatial &rag)entation bet,een
ho)e and ,ork place, ,hich is bad &or co))unit* li&eI 3e are &a)iliar ,ith this
pheno)enon in 8ra1il, ,ith the spreading o& the dor)itor* to,ns and all their i)pacts in
ter)s o& cultural povert*, cri)e and others And a)ong these others, so)ething ,e call
happiness
%he process in itsel& is 6uite interesting <nce ,e think o& &ree ti)e as a social econo)ic
categor*, ,e enter into a )odern vie, o& econo)ics, centered on the outco)es, on the
6ualit* o& li&e In econo)ic ter)s, this )eans ,e assign a value to the ti)e not directl*
hired b* an e)plo*er and that enterprises consider &ree to s6uander as it does not burden
the) as ,ell as to ti)e devoted to sociall* use&ul activities, not pertaining to the
)onetar* circuit, such as &a)il* care, tending our garden etc In 8ra1il it is curious that the
,orking da*s are called `use&ul da*s? ;dias Qteis= 3e are losing touch ,ith ,hat is reall*
use&ul
%he invasion o& our conscious ti)e is also note,orth* %he cost o& advertising, &or
e4a)ple, onl* accounts &or the e4penses ,ith di&&erent )edia that publici1e advertise)ents
%he advertise)ent that invades the progra) I?) ,atching, &orcing )e to H1apI a)ong a
pile o& nonsense on di&&erent channels, is a loss o& ti)e 3ho pa*s &or this ti)e, &or the rest
that I a) not en5o*ing7 %he advertising entrepreneurs, o& course, ,ill tell )e that the* are
Ho&&eringI )e a progra) As people get lost in the econo)ic e4planations, onl* a &e,
understand the process, and the argu)ent holds Eo,ever, advertising costs are in &act
included in the prices o& a ,ide range o& products 3hen a co)petitor uses advertising on
his products, other co)petitors &ollo, suit, so as not to lose )arket share In the ensuing
cacophon* no one pa*s an* attention, but no one can escape %his is the traditional stor*
12"
Robert DLutna) $owling %lone: the Collapse and 'e/i/al of %merican Community Si)on and
Schuster, :e, Kork, 2000, p 212
-'
about Hsit do,nbi that &ootball &ans shout, since those sitting do,n alone are unable to see
the ga)e As )entioned in Culiet Schor?s e4a)ples, ,hat is ,asted in the process, in
addition to our )one*, is our ti)e
Invasion o& our conscious ti)e, ,hen ,e are doing so)ething ,e like or ,e chose to do &or
so)e reason, is a cost In so )an* cities, ,e do not see houses or landscapes, ,e &ind
ourselves in a corridor o& outdoors I& ,e ,ant to en5o* a )ini)u) o& tran6uilit*, listening
to )usic, our attention is constantl* distracted b* advertising 3e could ignore the ads, but
this is not our nature9 ,e are )ade to pa* attention to ,hat is going on around us, ,hich &or
e4a)ple )a* help us avoiding an accident %he outco)e is a tension bet,een ,hat ,e
consciousl* ,ant to do and the incessant invasion o& inter&ering )essages 0iterall*, this is
garbage ,e have to thro, a,a* ever* )o)ent %he process is tireso)e, and has been
studied as Hsensorial overloadI It costs )one* to all o& us, generates onl* &atigue and an
overall at)osphere o& obsession &or consu)ption Is it ,orth,hile pa*ing &or7 And it costs
the loss o& our conscious ti)e
It see)s as though people are slo,l* beco)ing a,are %here is a nice book b* +duardo
>ianetti, called H(elicidadeI ;Eappiness= 3ho ,ould i)agine an econo)ist thinking about
this7 %he book b* 8runo S (re* and Alois Stut1er, -appiness and $usiness, is e4cellent
reading Also particularl* interesting is the ,ork b* %i) Fasser, The -igh rice of
7aterialism, ,hich presents )an* surve*s on the relation bet,een the level o& satis&action
,ith li&e and orientation to,ards the accu)ulation o& )aterial ,ealth Rosiska Darc* ,rote
a &ine book, % 'eengenharia do Tempo ;%he Reengineering o& %i)e=
De)ocrati1ation o& econo)ics stands &or )uch )ore than political balance9 it represents a
retrieval o& the )eaning o& things, a re/encounter bet,een econo)ic instru)ents and
hu)an ob5ectives %here is obviousl* a psychopathology of e/eryday economics that Milton
(ried)ann &orgot to ,rite about, ,hich can be seen in the apoplectic &ace o& one driver
cursing another, or on the tired &ace o& a ,o)an ,ho &aces a triple shi&t 5ourne* and is
supposed to look happ* and, i& possible, se4* 0i&e need not be as idiotic as it is
<ur purpose here is not to enu)erate the gaps o& econo)ic science, but to sho, that ,hen
the values ,e ,ish &or na)el* the 6ualit* o& li&e are added to the core o& econo)ic
outco)es, areas that nor)all* are not taken into account e)erge as econo)ic categories
8* retrieving the 0a&argue, Russell and )ore recentl* De Masi tradition o& leisure studies,
,e begin to shape a content &or our aspirations as hu)an beings Assigning an econo)ic
value to &ree ti)e is a practical ,a* to charge the econo)ic agents &or the ti)e the* )ake
us lose +cono)ics are but a )eans, the ob5ective is li&e %o sub)it corporations to our
hu)an ob5ectives, instead o& being i)pelled b* the) into a senseless race, )akes )ore
sense and is certainl* &ar )ore de)ocratic
14- %&e !conomics of sustainability
-"
It see)s rather absurd, but the essential econo)ic theor* ,ith ,hich ,e ,ork does not take
into account the planet?s decapitali1ation In practice, in do)estic econo)*, it ,ould be as
i& ,e could survive b* selling the &urniture and silver,are, and believed that ,ith this
)one*, li&e ,ould be good and there&ore, ,e ,ould be )anaging our ho)e ,ell 3e are
destro*ing the soil, the ,ater, the li&e in the seas, the green canop*, the oil reserves, the
o1one la*er, the cli)ate itsel&, but ,hat ,e are accounting &or is onl* the gro,th rate
Stiglit1 uses a ver* good i)age9 ,e are driving this planet looking onl* at the speed, the
percentage o& >DL gro,th, ,ithout bothering to think o& ho, )uch gas is le&t
Above, in the ite) HMeasuring ResultsI, ,e sa, the various initiatives o& changing
accounting to portra* the decapitali1ation o& natural resources and other issues Eere, ,e
are interested in the distortion o& econo)ic theories and in the necessar* changes
+cono)ics has &ocused on the diverse )echanis)s that )ake the econo)ic )achine ,ork
&aster, i& possible avoiding short ter) disasters %he ke* variables are the rates o&
invest)ent, interest, in&lation, 5obs, the balance o& pa*)ents, the debt level and the
conse6uent gro,th rate According to the resulting gro,th nu)bers, ,e have either a bull
or a bear )arket
(or so)e reason, stud*ing these correlations and eventual causalities has been called a
science 8ut brought do,n to earth, the co)ple4it* is roughl* the sa)e as )* anal*sis that,
given the resources I have, I )ust choose bet,een bu*ing a ne, car and &i4ing the roo&,
bet,een consu)ption and invest)ent, ,hat a)ounts to rational allocation o& resources,
translated as good use o& )one* %he )echanis)s o& &inancial speculation )a* look ver*
sophisticated, but the* a)ount to )aking )one* ,ithout having to ,ork &or it, an obvious
result ,e have been re)inded o& in the recent &inancial crisis 3e )a* not necessaril*
understand the Hho,I, but the ver* si)ple &act is that our pockets are being picked
%he gro,th rate is indeed i)portant, because i& the econo)ic )achine is not )oving ahead,
,e ,on?t be going an*,here Eo,ever, a gro,ing nu)ber o& people ask the obvious
6uestion9 ,here are ,e going7
<nce again, ,e )ust have a long ter) and s*ste)ic vision %he )ainstrea) o& econo)ics
has banned the long ter) ;nothing is ver* sure, least o& all the unpleasant issues, and ,e
shall all be dead an*,a*=, and desperatel* tries to avoid &acing issues o& the structural
i)pact o& ho, and &or ,ho) ,e are ,asting our li)ited resources Ada) S)ith ,ith his
division o& labor, Malthus ,ith the anal*sis o& de)ographic trends, Mar4 ,ith the anal*sis
o& the trans&or)ation o& production &orces, Schu)peter ,ith the anal*sis o& the d*na)ics o&
technological rene,al, .astells ,ith the stud* o& the net,ork societ* anal*1ed realit* b*
placing structuring or re/structuring ele)ents o& econo)ics in the center their studies %he*
)a* have been right or ,rong in their conclusions, but the categories used led the) to look
at the structural i)pacts
--
<ne o& the richest innovations, ,hen rene,ing econo)ic science, is the &act that a large
group such as the .lub o& Ro)e, even )aking in&lated pro5ections, has put the long ter)
vie, on the table again %housands o& researchers have thro,n the)selves into the
organi1ation o& the correct &igures And the )ain thrust o& theoretical enrich)ent in this
direction ,as un6uestionabl* the concern ,ith deterioration and in various areas,
destruction o& the environ)ent 0et us that recall the reaction to the environ)ental issues
in the corporate ,orld and )ainstrea) econo)ics consisted until recentl* in ignoring the
proble), pointing to the gla)our o& consu)ption, and suggesting other opinions ca)e &ro)
so)e headstrong bores ,ho re&used to en5o* li&e Lerhaps, one o& the )ost tragic &eatures o&
neoliberal econo)ics and )ost childish &ro) the scienti&ic point o& vie,, is that it sees
production ;gro,th o& the >DL= pretending not to see the costs ;decapitali1ation o& the
planet, polari1ation bet,een rich and poor, generali1ed ,aste o& resources, social
disarticulation= 3hen ,e restrict our anal*ses to a 6uantitative co)parison ,ith the
previous 6uarter and ,ith the e6uivalent 6uarter o& the previous *ear, o& the outputs o&
goods and services, indeed one can ignore a lot o& things Kou thro, collateral da)age out
o& *our accounting, call it He4ternalit*I and the trick is done
It is not a 6uestion o& ignorance .orporate )anagers are a,are that &orests are
disappearing, that the eas*/oil era is ending, that ocean resources are being depleted %he
traged* is that conscious people in corporations are li)ited in their options Industrial
&ishing enterprises co))ent that in the rush &or ,hat re)ains, pro&it goes to ,hoever gets
to the resources &irst And the resources ,ill disappear an*,a* %hus co)petition in an
environ)ent o& scarce resources beco)es counter/productive &or ever*one, and generates
disaster on the long ter)
It is i)pressive ho, the 8rundtland Report continues to be ti)el*, over t,ent* *ears a&ter
its release %his is not onl* due to the accurac* o& the anal*sis but also because structural
issues do not change &ro) one da* to the ne4t HSeen &ro) space, the +arth is a s)all and
&ragile ball, )astered not b* the ,ork o& )an but b* the ordered arra* o& clouds, oceans,
vegetation and soils %hat hu)anit* is unable to act according to the natural order, is
&unda)entall* changing the planetar* s*ste)s Man* o& these changes are li&e threatening
%his ne, realit*, &ro) ,hich there is no escape, has to be ackno,ledged and &acedI %his
is our long/ter) starting point
12-
Regarding the long ter) and structural i)pacts, the Report is elo6uent H3e borro,
environ)ental capital &ro) &uture generations ,ithout the slightest intention or perspective
o& returning it +&&ects o& this current dissipation are rapidl* curtailing the options o&
&uture generations Man* o& those responsible &or decisions taken toda* ,ill be dead be&ore
12-
J:.+D ;Jnited :ations .o))ission on the +nviron)ent and Develop)ent= Our Common (uture J
(>R, Rio de Caneiro, 19##, p 1 / %he stud* is also kno,n as the 8rundtland Report, &or >ro 8rundtland ,ho
coordinated it (or a recent overvie,, see 0ester 8ro,n, lan $ #.=, 2010 (or so)e reason the author
considers that our HLlan AI is not ,orking %he stud* is available online &ree
-#
the planet begins to &eel the )ore severe e&&ects o& acid rain, o& earth ,ar)ing, o& o1one
la*er reduction, o& generali1ed deserti&ication or e4tinction o& speciesI
In this enco)passing and long ter) overvie, o& our little planet, the authors ,ere naturall*
led to include in the anal*ses the social di)ension o& the econo)ic processes9 HLovert* is
one o& )ain causes and one o& the )ain e&&ects o& the ,orld?s environ)ental issues
%here&ore, it is useless to approach these issues ,ithout a broader perspective that
co)prises the &actors underl*ing global povert* and international ine6ualities +colog*
and econo)ics are increasingl* intert,ined at local, regional, national and ,orld levels in
an interactive net,ork o& cause and e&&ectI
12#

It is there&ore interesting to see ho, the environ)ental theor* and the outlook o&
sustainable develop)ent )a* restore econo)ic science to its bearings <verco)ing the
narro, econo)ic outlook, ,e are led to the process o& social change and ho, it relates to
our s)all planet .oncepts such as eco/develop)ent and eco/econo)ics are gaining
ground <nce ,e take the long ter) vie,, the structural i)plications as ,ell as the
historical outlook appear 8oth the s*ste)ic approach and the long ter) vie, inevitabl*
lead us to the nor)ative level i)plicit in econo)ic options, the values the* support or
destro*, the purpose o& the ,hole process In turn, the values and social ob5ectives tend to
shape the e)inentl* political guidelines, sub5ect to de)ocratic decision Eoping )arkets
,ill solve our proble)s is ,ish&ul thinking, and &re6uentl* sel&/serving ideolog* Eaving to
invent the &ield o& eco/econo)ics, as i& there could be econo)ic science not taking the issue
o& e4isting resources into consideration, is ridiculous :othing to do ,ith science
+d,ard 3ilson?s book The (uture of >ife is, &irst o& all, beauti&ul All data about our
environ)ental dra)a are there, the te4t &lo,s s)oothl*, and the author succeeds in both
in&or)ing us and )aking us appreciate the sub5ect %he resulting i)age, an overvie, o& our
environ)ental issues, is ver* rich
3ilson is not a drea)er, an ene)* o& technolog* :evertheless he is a,are o& issues that
this technolog* generates, and that it has to help us solve the) <ne o& the issues )entioned
is our H&ootprintI9 to survive, the hu)an being occupies space o& d,elling, o& agriculture
and others, adding up to 21 hectares per person, as a ,orld average %he A)erican, a little
)ore de)anding, needs 9" hectares I& one ,ere to &ollo, the A)erican )odel, toda* ,e
,ould need &our +arths It took us a long ti)e to beco)e a,are o& the &i4 ,e got ourselves
into9 HEu)anit* has so &ar pla*ed the role o& planetar* killer, concerned onl* ,ith its o,n
short/ter) survival3e kno, ,hat to do, perhaps ,e ,ill act in ti)eI
129

%he environ)ental issues lead us to the basic 6uestion, once again, o& values9 ,hat is this
all about7 Sho,ing o&&7 Eaving a bigger car7 HAs in the case o& all )a5or decisions, the
issue is )oral Science and technolog* are part o& ,hat ,e can do, )oral is ,hat ,e have
12#
Ide), citations taken &ro) pages $ and # o& the Report
129
+d,ard < 3ilsonThe (uture of >ife*Al&red A Fnop&, :e, Kork 2002 p 102
-9
agreed ,e should or should not do +thics, the source o& )oral decisions, is a standard or
re&erence o& behavior that supports a value, ,hich in turn relies on the ob5ectives
<b5ectives, ,hether personal or global, originated &ro) our conscience or engraved in
sacred scriptures describe the i)age ,e have o& ourselves and o& our societ* In short,
ethics evolve step,ise &ro) the sel&/i)age to,ards the ob5ective, to,ards values, to,ards
ethical precepts and )oral reasoningi
1!0
3e are back to the core o& .elso (urtado?s thinking, o& values in the center o& the ,a* ,e
look at econo)ics 3ilson keeps in )ind the econo)ic theor* but is a,are o& ho, &ar it has
stra*ed &ro) realit* HIn an anal*sis published in 199#, :or)an M*ers and Cenni&er Fent
&ro) the <4&ord Jniversit* esti)ated the *earl* subsidies in the ,orld bet,een !90 and
'20 billion dollars &or agriculture, 110 billion &or &uels and nuclear energ* and 220 billion
&or ,ater %hese and other aggregated subsidies increase to )ore than 2 trillion dollars, a
good part o& the) da)aging our econo)ies as ,ell as our govern)ents %he average
A)erican pa*s t,o thousand dollars a *ear in subsidies, bel*ing that the A)erican
econo)* operates ,ith a reall* &ree co)petitive )arketI
1!1
%he process is particularl* perverse, because ,hen corporations e4tract the capital ,e
received &ro) nature, the* bear onl* the e4penses o& e4traction and distribution, although
the* call it HproductionI :o one ,ill de)and that the* replace the natural capital Much to
the contrar*, ,e still subsidi1e the), generating as a ,hole an environ)ent o& e4orbitant
pro&its that allo,s the) to occup* a gro,ing space o& political po,er, a)ong others to
politicall* negotiate access to nature?s riches
1!2
%he environ)ental issue thereb* induces us to reconsider the econo)ic paradig)s At an
international se)inar on ,ater )anage)ent, the issue arose 6uite neatl*9 ,ater is a &ree
good, and is )erril* s6uandered until it beco)es scarce 8ut it is an essential good &or
direct hu)an consu)ption as ,ell as &or production processes %hose ,ho pollute ,ater
reduce access &or all and render appropriation )ore pro&itable, generating a vicious circle
%he A)erican corporation 8echtel, ,hich through political pressure obtained )onopol*
over ,ater in .ochaba)ba, )ade it illegal even to store rain,ater %he scarcer the better
%he* &aced violent protests and had to back out %he ver* idea o& )aking )ore )one* b*
reducing access sounds as an epitaph &or the s*ste) %he evident solution lies in
collaborative processes, in the building o& a rational evaluation o& priorities and pricing
Market )echanis)s are absolutel* not a solution, ,e need a corresponding polic* 3hich
1!0
ide), p 1!0
1!1
ide) p 1#$ %he 6uoted stud* b* :or)an M*ers and Cenni&er Fent is er/erse &ubsidies: -ow Ta"
.ollars Can Ondercut the 4n/ironment and the 4conomy, 3ashington, Island Lress, 2001 / 3ilson, looking
at the behavior o& corporations, clearl* takes sides9 iAt the risk o& see)ing politicall* correct, I ,ill no, close
,ith a tribute to protest groups %he protest groups are the earl* ,arning s*ste) &or the natural econo)*
%he* are the living ,orld?s i))unological response %he* ask us to listeni ;p 1#$=
1!2
3ikileaks )anaged a peek at ho, Shell controls ke* )inistries in :igeria, in a candid anal*sis b* the
A)erican A)bassador, 3ikileaks, Dece)ber 2010@ also see the e4cellent paper b* Coan M Alier, 4l caso
Che/ron Te"aco en 4cuador, 2011, http9AAbitl*A&b$'E5
#0
does not )ean that )arket )echanis)s do not ,ork in other areas 3e are too co)ple4 a
societ* &or a Hone si1e &its allI solution, the di&&erent pro or anti/)arket &unda)entalis)s
8asic rounded &igures sho, the &ollo,ing9 to produce one kilo o& grain de)ands a thousand
liters o& ,ater, one liter o& )ilk re6uires t,o thousand, a kilo o& sugar three thousand, a kilo
o& rice up to &ive thousand %o produce the cotton &ound in a shirt costs si4 thousand liters,
one big ha)burger, eleven thousand, one kilo o& co&&ee, t,ent* thousand, according to (red
Learce H%he ,orld produces t,ice as )uch &ood as one generation ago, but spends three
ti)es as )uch ,ater &or its cultivation %he International 3ater Manage)ent Institute
;I3MI= esti)ates that in India 2'0 cubic kilo)eters o& ,ater are e4tracted &ro) the
ground,ater, about 100 cubic kilo)eters )ore than is replaced b* rainI %he practical
outco)e is that i))ense ,ater reserves accu)ulated during centuries are rapidl* running
out 3here &or)erl* there ,ere pri)itive ,ells, no, s)all pu)ps are used that pull ,ater
&ro) ever increasing depths 3here open ,ells used to &ind ,ater at 10 )eters depth, toda*
the* have to go do,n $00 )eters and even so the* dr* out S)all )odern pu)ps that
individual &ar)ers bu* in India dra, 12 cubic )eters per hour Multipl* this b* )illions o&
&ar)ers
1!!
%he s*ste) has a relentless logic An intervie,ed &ar)er co))ents9 HKes, I a) ,orried
that the ,ater ,ill disappear, but ,hat can I do7 I have to live and i& I don?t pu)p the
,ater, )* neighbors ,illI Learce states that Hall have &ull access to the e6uip)ent and
overe4ploitation is al)ost unavoidable It is a classic case o& traged* o& the co))onsI
%ushaar Schah &ro) I3MI, Hesti)ates that India, .hina and Lakistan together pu)p
probabl* about $00 cubic kilo)eters o& underground ,ater per *ear, about t,ice as )uch
as that replaced b* rainII In addition to Asia, si)ilar revolutions are taking place in
overcro,ded countries such as Me4ico, Argentina, 8ra1il and Morocco +ven the Jnited
States is e4hausting precious underground ,ater reserves to cultivate grain and bee& &or
e4portI
%he international di)ension is beco)ing evident9 H3ithout being a,are, a large part o& the
,ealth* ,orld is i)porting harvests generated b* overe4ploitation o& underground ,ater
reserves cotton &ro) Lakistan, rice &ro) %hailand, to)atoes &ro) Israel, co&&ee &ro)
+thiopia, even oranges &ro) Spain and sugar &ro) AustraliaI %his radicall* changes the
,a* ,e calculate our ,ater consu)ption HA t*pical 3esterner ,ith his carnivorous habits
and ,aste o& )ilk consu)es up to one hundred ti)es his ,eight in ,ater ever* da*I
Is there an alternative7 .uriousl*, it entails going back a little In other ti)es, the
Eindustani dug innu)erous s)all da)s to hold the ,ater in the valle*s, ,hich boosted
in&iltration into the soil and replenished ground,ater %he s)all basins thus created ,ere
1!!
(red Learce 8hen 'i/ers 'un .ry 8eacon Lress, :e, Kork, 200", !20 p ;in !ew &cientist, 2'
(ebruar* 200", p !"=@ %he !ew &cientist can be accessed at ,,,ne,scientistco)@ see also the studies b*
0ester 8ro,n about the H,ater bubbleI that is going to burst ,ith the over/e4ploitation o& ,ater ,,,eartth/
polic*orgAindicatorsA,aterA200"ht) , as ,ell as lan $ #.=, 2010, :e, Kork, :orton 2009
#1
called tan+a, a na)e the 8ritish adopted in the &or) o& tan+ and ,e 8ra1ilians trans&or)ed
it in tanque. %he process ,as rena)ed `,ater harvestingI9 HIn parts o& Delhi ,here old
tan+s and ,aterholes ,ere cleaned and ,aste re)oved, the ,ater collected is replenishing
the ground,ater %he capital cit* could obtain one third o& its ,ater b* collecting rainI
%he process obviousl* involves co))unit* organi1ation According to Schah, Han
i)portant &actor in India is co))unit* control (e, individual &ar)ers can success&ull*
catch their ,ater and store it underground it ,ould 6uickl* dissipate into the larger
a6ui&er 8ut i& an entire village does it, e&&ects are o&ten spectacular >round ,ater levels
rise, dried out strea)s &lo, again and there is )ore ,ater &or irrigation, i)proving
productivit* o& the &ieldsI
According to Schah, the )ove)ent to collect rain ,ater His )obili1ing social energ* on a
scale and intensit* that )a* turn it into one o& the )ost e&&ective responses to an
environ)ental challenge an*,here on the planetI %his vie, also serves to recall the
pioneer e&&orts o& ASA HSe)iarid AssociationI, about a thousand organi1ations o& civil
societ* &ighting drought through &a)il* cisterns that collect rain,ater &ro) roo&s
1!$
In ter)s o& econo)ic theor*, the e4a)ple ,ater e4a)ple is i)portant In the econo)ic
)ainstrea) ,e are stuck ,ith the eternal i)age o& Ada) S)ith?s baker, ,ho, to )a4i)i1e
his o,n advantages, should produce )ore bread, o& good 6ualit* and &or a good price, or
other bakers ,ill appear %hus, each one seeking his o,n interest ,ill bring about a greater
co))on good %he reasoning is certainl* valid &or the case o& the baker and &or that ti)e
In the case o& the Indian &ar)er seen above, ho,ever, the sa)e reasoning brings about
other results %he basic argu)ent is that he has to &eed his &a)il* and that an*,a* his
neighbors also catch ,ater &ro) the sa)e ground,ater %hat is to sa*, as each one cares &or
his o,n interests, the outco)e is a general i)passe %he basic rationale o& )ainstrea)
econo)ics is here totall* inverted Solutions arise in the co))unit* initiative o& protecting
the co))on good, privileging the paradig) o& collaboration over that o& co)petition %he
,a*s have changed 8e*ond the traged* o& the co))ons, ,hat ,e have here is the traged*
o& private initiative, ,ith po,er&ul technologies and ne4t/6uarter/pro&it glasses
3ith - billion inhabitants ,ith a rising level o& consu)ption, scarce goods are beco)ing
the rule %hus ,e &ace a ,idening gap in econo)ic theor* 3e do not have a &e, issues o&
co))ons such as ,ater, ,e have the issue o& a co))ons planet In the introduction o& a
book about ,ater )anage)ent, ,e e)phasi1ed these ne, challenges H3e kno, ho, to
)anage an enterprise that produces shoes or cars@ ,e kno, ho, to organi1e a )inistr* 8ut
as innu)erable public goods, the co))ons, beco)e increasingl* threatened and scarce, ,e
have to start the discussion about innovative &or)s o& )anage)ent that si)ultaneousl*
,arrant econo)ic &easibilit*, balanced access and environ)ental sustainabilit*I
1!'
1!$
about the initiatives o& ASA in the 8ra1ilian :ortheast, see ,,,asabrasilorgbr
1!'
0adislau Do,bor and Renato A %agnin ;<rgs= %dministrando a Lgua como se fosse importante
X7anaging water as if it were importantY * Senac, SNo Laulo, 200', p 12
#2
Another good reading on econo)ics and sustainabilit* is Eer)an Dal* In his $eyond
Arowth, Dal* presents &our ob5ectives9 gro,th has to be sustainable, that is to sa* it has to
respect a scale that in the long ter) the planet can support@ this in turn i)plies that ,e
respect the outlook o& sufficiency, because it is i)possible to &orever increase our
consu)ption ,ithout destro*ing the bases o& reproduction@ ,e have to ensure efficiency in
the use o& resources to )ini)i1e the i)pact and reduce the over,hel)ing ,astes o& our
current ,a* o& econo)ic organi1ation@ and ,e )ust ,arrant the equity o& distribution,
so)ething )arket )echanis)s do not ensure
1!"
%raditionall*, theories concerned ,ith e4ploitation and ine6ualit* have centered on the
distribution proble) %his point is certainl* essential9 capitalis) as ,e kno, it is a
reasonable allocator o& resources &or production, but does not kno, ho, to distribute, on
the contrar*, there is a tendenc* to concentrate po,er that rein&orces concentration o&
inco)e %hat is to sa*, the s*ste) is structurall* inco)plete, since it is distribution that
closes the c*cle o& reproduction through consu)ption Moreover, ,e have to go &urther In
Dal*?s ,ords, H%he )arket?s inabilit* to solve the proble) o& 5ust distribution is ,idel*
recogni1ed, but its si)ilar inabilit* to solve the proble) o& opti)al or even sustainable
scale is not as ,idel* appreciatedI %hus Hdecisions a&&ecting sustainable develop)ent
should be open and per)it in&or)ed participation o& the a&&ected and interested partiesI
1!-

8ob >oud1,ard and Earr* de 0ange e4pand this vision o& Hopti)al scaleI@ it is
increasingl* obvious that e4pansion o& consu)ption leads us to an i)passe in ter)s o&
environ)ental e4haustion o& the planet, o& ine6ualities, o& social and political disruption
An i)portant and ver* si)ple concept e)erges9 ,hat is enoughQ %hese authors begin ,ith
the &act that Hbecause o& our collective thrust to,ards )ore and )ore, ,e directl*
5eopardi1e our o,n ,ellbeing 3e need another outlook on li&e, an outlook ,here the ,ord
HenoughI pla*s a positive role I)ple)entation o& such an outlook ,ill disclose ne,
possibilities &or neighborliness, to de)onstrate care ,ith our surroundings, to have )ore
ti)e available in our &ast paced lives Such an outlook ,ill help to &ree not onl* the poor
but the rich as ,ell H<ne )ore lost evident idea )ust be recovered9 people are not )ade
&or production but production &or the peopleI
1!#

3e are not endeavoring here to su))ari1e so)e environ)ental issues 3e are tr*ing to
clari&* the i)portance o& environ)ental issues on ho, ,e reconstruct econo)ics <nce
again, ,e &ind that studies starting &ro) concrete proble)s such as sustainabilit* lead to a
reconstruction o& econo)ics on )uch )ore solid bases, because centered on the real threats
that appear, on the results that ,e ,ant, on the values that endorse the) and on the
1!"
Eer)an + Dal* $eyond Arowth: the economics of sustainable de/elopment / 8eacon Lress, 8oston,
199" see in particular pages '0 and 22$
1!-
Ide) p '0
1!#
8ob >oud1,aard and Earr* de 0ange $eyond o/erty and %ffluence: towards an economy of care J
3.. Lublications, >eneva, 19#", p 1'9 e -$@ %he book contains a pre&ace b* Maurice Strong, ,ho
coordinated +co/92 in Rio de Caneiro@ see also the e4cellent stud* H8hat !e"tQ,5 in .e/elopment .ialogue,
Cune 200", Dag Ea))arsk5Tld (oundation
#!
)echanis)s re6uired to )ateriali1e the) %he s*ste)atic incorporation o& the
environ)ental di)ension in the stud* and research in econo)ics and no longer as a light
touch o& green in so)e optional discipline leads to the understanding o& co)ple4
interactions, out o& the theoretical tunnel econo)ics has got itsel& into
Fenneth 8oulding su))ari1es the issue in si)ple ,a*9 HIn order to believe in unli)ited
gro,th in a li)ited ,orld, one has to be either a &ool or an econo)istI
1!9
.o))on sense
indicates that on a planet ,ith li)ited resources, )ere co)petition, ,here each one runs to
grab as )uch as possible, is an absurd s*ste) Cust as ,e are pain&ull* learning that politics
re6uire covenants to balance di&&erent interests, access to the scarce resources o& the planet
de)ands covenants that respect the needs o& all In other ,ords, ,e )ust e4tend the
concepts o& de)ocrac* to control the resources that, a&ter all, belong to all o& us
15 -Macroeconomic politics
Macroecono)ics constitutes an area, a)ong all the others, shrouded in )*steries
:evertheless, the process does not di&&er basicall* &ro) the )anage)ent o& our household
I& ,e ,ant to invest in a ne, kitchen ,e have to save I& ,e invest ,ithout the
corresponding savings, ,e ,ill be indebted 3hat ,e spend ever* *ear )ust correspond to
,hat ,e )ake, to ,hat ,e bring ho)e in the &or) o& ,ages, o& pro&it or even our pension
I& so)ething is le&t over ,e have savings I& so)ething is )issing, in the ne4t *ear ,e ,ill
have to pa* or take out a loan %hat is to sa*, the accounts have to )atch Macroecono)ics
si)pl* relate to the countr*?s accounts and, increasingl* so, to our planetar* account
In the various production c*cles, ever*thing has to )atch because ,hat re6uires e&&orts
represents a cost 3hen ,e sa* that public schooling is &ree ,e )ean that pa*)ent is not
direct, it is through ta4es %hus, part o& ,hat ,e produce as a societ* is redistributed &or
direct e4penditure in the &or) o& pro&its and salaries and &urther in an indirect &or) as
public services I& ,e are interested in co))ercial in&or)ation on cars and ,e bu* a
speciali1ed )aga1ine, the e4pense is direct I& ,e are sho,n advertise)ents about
auto)obiles on %R, the cost is part o& the advertising budget ,e pa* on the various
products Since ,hat ,e pa* is diluted in the di&&erent products ,e bu*, ,e have the
i)pression that it is &ree, and enterprises certainl* pre&er us to see it that ,a*9 the* are
grace&ull* o&&ering us a &ootball )atch or ,hatever, and ,e ,ill grate&ull* bu* the products
and pa* &or the advertise)ent %hat is to sa*, ,e pa* in a direct or indirect &or) but ,e pa*
+ach social product re6uires e&&ort, and the basic ob5ective o& )acroecono)ics is that this
e&&ort be intelligentl* directed to,ards ,hat ,e technicall* call Hrational allocation o&
resourcesI
1!9
In H>Tran 8ackstrand and 0ars Ingelsta), Alobal challenges and responsible lifestyles, 3hat :e4t7I
.e/elopment .ialogue, Cune 200", p 12'
#$
Is it ,orth,hile to allocate resources on technolog*7 <& course, because technolog* )akes
our e&&orts )ore productive In this sense, both )achiner* and education represent
invest)ents because the* are going to *ield )ore in ter)s o& intelligent &or)s o& ,ork %he
)achine represented progress since, &or e4a)ple, to )ake clothes in a )ore e&&icient ,a*
)ade our e&&orts H*ieldI )ore %elephones or the internet )ake us *ield )ore, since instead
o& transporting our bodies in cars or buses ,e transport in&or)ation, instantl* and in a
cheaper ,a* 3e )ake bits travel &or us %hus, our s*ste)ic productivit* increases, the
econo)* gro,s &atter, and ,e begin to have greater invest)ent capacit* and are able to
obtain )ore products and services It is ,orth,hile to allocate resources so that the*
generate )ore use&ul goods and services %he basic rule is to tr* to allocate resources ,here
the* ,ill be )ore use&ul in ter)s o& societ* in general %his constitutes, or should
constitute, the heart o& )acroecono)ic policies
>oods and services are the products o& e&&orts b* the )ost diverse econo)ic agents
I)pacts on develop)ent ,ill be di&&erent according to ,ho takes o,nership o& the largest
volu)e o& ,ealth produced A &inancial speculator?s accrued ,ealth tends to curb activities
b* sterili1ing savings, besides thro,ing us all, non/speculators included, in a general )ess
<n the other hand, )ore )one* in the hands o& s)all producers, &or instance, ,ill
invigorate 5obs and the internal )arket Macroecono)ic polic* essentiall* regulates, &or
good or &or bad, ,ho ,ill get ,hat out o& the general econo)ic e&&ort
%he )acroecono)ic )echanis) is not co)ple4 in itsel& As ,e have seen, one part o& the
product goes directl* to the &a)ilies in the &or) o& ,ages, pro&its or other inco)es
allocated to &inal consu)ption Another part ,ill pass through the hands o& the govern)ent
and turn into indirect &a)il* consu)ption as public services, education, health, sa&et* etc
A signi&icant part o& the resources ,ill be ,ill trans&or)ed into public and private
invest)ents allo,ing &or the e4pansion o& the overall production capacit* Spending )ore
or less than each econo)ic agent had ,ill result in debts and savings that ,ill generate
&inancial returns based on interest rates Lla*ing around ,ith the papers that represent other
people?s debts and savings generates huge private returns but no product It is called
speculation, since so)eone has to pa* &or the purchasing capacit* the* get, not ,ith papers,
but ,ith real products, those that )ust be e&&ectivel* produced
1$0
3ho deserves )ore products7 %here is an ethical di)ension to this process, connected to
the need o& ensuring a )ini)all* balanced access o& all to the social product (or instance,
a person cannot be le&t ,ithout access to a ph*sician because he is poor or a child be le&t
,ithout )ilk ,ith the e4cuse that the econo)ic la,s do not ,ork this ,a* +cono)ic la,s
are a )arvelous invention, the* clear us all o& guilt, the Ratican ,ould not have invented a
better solution <n the other hand, good initiatives )ust be allo,ed to )ake )one*, so that
1$0
The 4conomist used to generousl* call the involved corporations HinvestorsI A&ter the 200# debacle, the*
hesitated to call the) b* their technical &unction, ,hich is speculation, and invented a ,onder&ul e4pression
Hspeculative investorsI The 4conomist, :ove)ber 1', 200#, p #9 See our The 4conomic Crisis with no
7ysteries, http9AAbitl*Ab-5de
#'
the* can rene, the econo)ic c*cle and be co)pensated 8ut overall e4cess o& ,ealth in
so)e hands also constitutes an ethical proble), because it onl* partl* relies on e&&ective
contribution, and )ost o& all because it is trans&or)ed into a political po,er that changes
the rules o& the ga)e and tends to perpetuate advantages and to accentuate ine6ualit*
+4cess o& ,ealth, 5ust as e4cess o& povert*, is pathological &or an* societ* 3e shall co)e
back to this in the last chapter o& this essa*
In the econo)ic di)ension itsel&, it is considered appropriate that people be paid according
to their contribution to societ*, thus re,arding the best e&&orts and sti)ulating the) %he
heart o& our dra)a is that so)e persons or social groups produce little and appropriate a
great deal In general so)e people get )uch )ore, not because the* produce )uch )ore,
but because the* &ind the)selves in a strategic position ,here the* can take )uch )ore
8alancing the situation and eventuall* &i4ing the )echanis)s o& access to ,ealth is at the
core o& )acroecono)ic policies
%he basic distinction is that an econo)ic agent )a* get rich generating ne, ,ealth or get
rich b* appropriating ,ealth generated b* third parties In our O que ? capitalQ ;3hat is
capital7= ,e used this i)age9 i& a person invests and builds several houses, but &or so)e
reason goes broke, ,e ,ill sa* he lost )one* 8ut the practical results ,ill be the e4istence
o& ne, houses ,here concrete people ,ill be able to live, and social ,ealth increases 8ut
,hen ,e bu* dollars &oreseeing that the* ,ill gain in )arket value against other currencies,
and the dollar indeed gains value, the )one* ,e earned corresponds to a reduced
purchasing capacit* o& ,ho sold the)9 it is a trans&er o& purchasing capacit* &ro) one
person to another, societ* did not gain or lose an*thing (inancial )iddle)en, &or instance,
insist on de&ining speculative activities as Hinvest)entI, ,hen it is onl* a &inancial
transaction %echnicall*, invest)ent is that ,hich intends to increase societ*?s production
capacit*
1$1
%hat is to sa*, in )icro/econo)ic ter)s, the person ,ho )ade )one* bu*ing dollars at the
right ti)e beca)e richer Ee ,ill be able to bu* real goods and services, ,ithout having
had to produce the) or contributing to their production 3ealth o& the countr*, ho,ever,
did not increase b* one cent, so his consu)ption is e6uivalent to less consu)ption b*
others %he purpose o& )acroecono)ics is to allocate resources in the )ost intelligent
possible ,a*, i& possible to those econo)ic actors that contribute to i)prove the ,ell/being
o& the population as a ,hole
Speculative gains do take lots o& space in )aga1ines, but should not i)press econo)ists
%he* )ainl* constitute disruptive activities 8ra1il su&&ered during a long ti)e speculative
pro&its based on high in&lation rates, and a&ter the 199! stabili1ation o& prices the sa)e
1$1
In Lortuguese ,e distinguish Hinvesti)entoI &ro) Haplica_No &inanceiraI, such as in Hdinheiro investidoI
and Hdinheiro aplicadoI 8ut &inancial inter)ediaries in 8ra1il do their best to present ever*thing as
Hinvesti)entoI Since in +nglish there is onl* one ,ord, productive invest)ent and speculation get lu)ped
together, and the con&usion is co)plete, ,hich certainl* is use&ul &or speculators
#"
groups s,itched to &inancial pro&its based on high interest rates9 both processes added
,ealth to )inorities, e4panded a class o& &inancial inter)ediaries, but the econo)* earned
nothing <n the contrar*, building a p*ra)id o& inter)ediaries, all o& the) collecting
inter)ediation &ees and interest, tends to deprive productive activities o& necessar* &unding
%here is little )*ster* in the process, once ,e understand that &inancial )echanis)s
essentiall* constitute inco)e trans&ers bet,een groups o& interest %he basic )acro/
variables, such as interest rates, in&lation rates, e4change rates, the structure o& the ta4
burden and the distribution o& public )one* through the budget, the public debt structure
all these ele)ents &inall* )ean )ore or less )one* in the hands o& di&&erent econo)ic
agents According to ,hich agents ,ield )ore po,er in the process, so)e activities ,ill be
sti)ulated, others ha)pered %he outco)e ,ill be a corresponding co)position o&
invest)ent, production, inco)e, consu)ption and 5obs
<ur ai) here is not to present a theor* o& these policies, but to e4plain the need &or
transparenc* in the ties bet,een )acroecono)ic decisions and the interests o& concrete
econo)ic agents that pro&it &ro) the) %he essential in )acroecono)ic polic* is that,
ulti)atel*, it deals ,ith instru)ents &or distribution o& the social product %hat is to sa*, its
abstract stud* )a* interest builders o& )odels, but these seldo) help us understanding
realit* and certainl* do not give us the instru)ents to trans&or) it In general, the use o&
)odels essentiall* helps )anagers give an i)pression o& pro&ound technical co)ple4it*,
and ob5ective decision )aking, ,here in &act the botto) line consists in &inding the )odel
that ,ill 5usti&* &avoring chosen econo)ic agents %he interests re)ain in the shado,s,
,hich contributes little to de)ocrac*
%he &rantic reshu&&ling o& private and public )one* during the 200# &inancial crisis actuall*
)ade this 6uite transparent Euge &inancial &ortunes ,ere )ade ,ithout the corresponding
production o& goods and services %he gap ,as &illed ,ith public )one* In turn, this
generated a public de&icit, ,hich in turn led to a ver* righteous )ove)ent based on the
concept o& austerit*, ,hich basicall* )eans trans&erring the huge public de&icit into
)illions o& s)all private de&icits, such as the pensions o& retirees And ,hen these protest,
,e thro, di&&erent versions o& tea parties, painting the )one* grabbing process in patriotic
colours Macroecono)ic )odels
Insu&&icient understanding o& the political di)ension o& the )acroecono)ic process
generates con&usion 3e are sold the vision o& a non/political space ,ith technical
decisions based on econo)ic theor*, seriousl* re&erring to the autono)* o& central banks,
,hich ca)ou&lages the d*na)ics that reall* e4ist, based essentiall* on corporate pressures
%hus, decisions o& an econo)ic nature are taken &or political reasons and according to
po,er ,ielded b* people ,e never voted &or, ,ithout the corresponding )echanis)s o&
de)ocratic decision, or even in&or)ation on ,hat is happening Since this sphere is
#-
essential &or the overall econo)ic regulation process, political de)ocrac* beco)es rather
)eaningless
1$2

A ver* concrete e4a)ple is in&lation .elso (urtado innovated b* shi&ting the &ocus o& the
issue Instead o& dra&ting a)ple theories about the d*na)ics o& prices, he si)pl* asked who
gets the benefits, the &a)ous cui bonoQ %hereupon he &ound that those ,ho have &i4ed
inco)es, such as e)plo*ees and retirees, or even the s)all enterprises ,hich do not have
the clout to in&luence prices, see their revenues shrinking as prices rise 8ut corporations
,hich &ace higher prices o& their inputs, &or e4a)ple, i))ediatel* trans&er the burden to the
consu)er b* raising their o,n selling prices %he* do not have to strike or protest in the
streets and ,ait )onths &or a raise %he* have variable *ields, the* are price/)akers :ot
too )uch at a ti)e, o& course, and having a look at the co)petition, or eventuall* having
lunch ,ith the co)petition %he* are al,a*s ahead o& the tide o& prices %he practical
outco)e is that in&lation constitutes a trans&er o& inco)e &ro) the poor to the rich
8* stud*ing ,ho pro&its &ro) the process, one can usuall* also see ,ho causes it %he era
o& h*perin&lation 8ra1il under,ent during decades is a scandalous process o& inco)e
concentration in the hands o& the ,ealthiest +ven productive &ir)s, not onl* bankers,
understood at the ti)e that )aking )one* ,ith )one* ,as not onl* )ore pro&itable, but
also created a certain gla)our o& being the s)art gu*, one ,ho literall* )akes )one* ,ith
other people?s e&&orts In the board )eetings, the &inance )en got to lead decisions
%his basic orientation, the cui bono, constitutes an essential approach In general, ,hat the*
tell us toda* is that the purpose is co))on good through econo)ic stabilit* It is a
po,er&ul argu)ent &or so )an* people insecure about their econo)ic &uture A stable
process ,here econo)ic results ,ill regularl* go to the sa)e pockets, )akes us, o& course,
,ar* about ,hat kind o& stabilit* it is9 stabilit* &or ,ho)7 And o& course, a&ter the recent
crisis, it beca)e ver* clear ,ho ,ill deserve stabilit*, and ,ho ,ill have austerit* 3e can
do a si)ilar e4ercise ,ith interest rates
%he period o& interest rate e4plosion in 8ra1il, &ro) 199$ to 2002, ,as a phase curiousl*
labeled as HstableI It begins ,ith a public debt o& so)e 1'0 billion reais and ends ,ith a
public debt o& )ore than #00 billion %hat is, so)ething happened to "'0 billion reais, a
radical increase o& the public debt It is public debt, not 5ust the govern)ent?s, ,hich )eans
it &alls on ever* one o& us 3here did this )one* go7
At that ti)e the basic .entral 8ank interest rates, ,hich is ,hat our ta4 )one* pa*s private
banks &or keeping our )one*, ranged &ro) 20G to !0G, having even reached $'G %hese
are not the interest rates practiced in the )arket o& private &inancial )iddle)en ;particularl*
in the select cartel o& large banks= but interest paid b* the govern)ent to &inancial
)iddle)en Since the interest rates that banks pa* )ere )ortal o,ners o& private savings
1$2
%he <scar ,ining docu)entar* Inside Nob, 2011, gives an e4cellent description on ho, the 200# crisis
)echanis) ,orked, sho,ing the links bet,een the &inancial interests and the )acroecono)ic decision
process in the JS
##
are ver* lo,, the process o& earning )one* b* banks beco)es e4plicit9 the* take our
savings, pa*ing us, &or instance, 10G a *ear, and invest this )one* in govern)ent papers at
20G or )ore %he govern)ent has to pa* these interest rates to the banks, )aking use o&
the ta4es or increasing indebtedness 8oth things ,ere done9 ,ith an increase o& ta4es,
astrono)ic interest rates ,ere paid to the &inancial )iddle)en and large investors, and as
there ,as no possibilit* to pa* all the interest, ,hat re)ained unpaid ,as added to the
stock/o&/debt
%he &inancial pro&it had to co)e &ro) govern)ent, there&ore &ro) ta4es, ,hich ,e paid
%he bankers thus created a s*ste) ,hereb* ,e paid the) to have our )one* At the
)o)ent 0ula?s govern)ent takes over, banks t*picall* paid their clients under 10G on
their deposits, and the govern)ent paid the) 2$,'G on the sa)e )one* as the* bought into
the public debt papers .lear and neat Jn&ortunatel*, the s*ste) beca)e so popular ,ith
the rentiers, that 0ula had no choice, be&ore getting elected, but to sign the &a)ous Cune
2002 declaration that he ,ould Hrespect contractsI, and thus be H)arket &riendl*I In 2010,
the overall public debt reached 1' trillion reais, roughl* 900 billion dollars 3e are pa*ing
around $G o& >DL in interest, on a gro,ing debt %his )one* goes to speculation, not to
build schools or railroads :o, this is so)e econo)ic )odel
Since ta4es levied on us ,ere not su&&icient to cover at the sa)e ti)e the public
ad)inistration, the di&&erent services provided and the debt service, an increase in the ta4
burden ,as inevitable It ,ent &ro) 2'G in 199$ to !- in 2002, an increase o& 12
percentage points %his represents, in the &inal stage, a *earl* bill in the order o& 2$0 billion
reais <& this a)ount, 1"0 billion reais represent the )one* that ta4pa*ers paid the
govern)ent to allo, &or pa*)ent o& interest rates to bankers and large &inancial investors
on our savings 3hat the* used to gain ,ith in&lation, the* no, began to gain ,ith interest
rates, but the )one* ,ent to the sa)e persons %he )echanis) is nicel* called Hthe
)arketI in 8ra1il And the (inance Minister ,as congratulated &or )aintenance o& the
stabilit* %o look at the cui bono, in ,hose pro&it, is an essential &ocus and should continue
to be an essential ele)ent o& ho, econo)ic science looks at )acroecono)ics More
i)portant still, it should contribute in )aking societ* a,are o& ,ho takes over ,hat share
o& the social product
Debt is not necessaril* bad I& the additional )one* raised ,as invested, &or instance, in
updating technolog* o& the s)all and )ediu) enterprises and ensuring broad/band access
in schools, or in pro)oting &a)il* agriculture, ,e ,ould have a )a5or i)pact in ter)s o&
econo)ic gro,th, thereb* generating )ore resources than the debt created %hat is ho, an*
person ,ho ,ants to open an enterprise reasons, and rightl* so Ee borro,s )one* and
returns it ,ith the additional inco)e generated b* the enterprise
In the case o& our public debt, ho,ever, there ,as no increase in invest)ents b* the public
sector, and the general invest)ent rates stagnated :either did e)plo*ees? salaries increase
%here&ore a large share o& resources trans&erred under the &or) o& ta4es ,as not
#9
appropriated b* the govern)ent %hat is to sa* the )a5or part o& the debt served as
enrich)ent ,ithout a productive counterpart In other ,ords, &inancial )iddle)en and
rentiers ,ere strengthened and productive invest)ent stagnated %his in turn e4plains the
absence o& econo)ic gro,th (urther)ore production o& goods and services ,as
negativel* sti)ulated, since )an* enterprise )anagers decided to invest in govern)ent
papers, ,ell re)unerated and less risk*, instead o& investing in productive processes
1$!

As &or the ta4 burden, the situation o& the various social actors is di&&erent +)plo*ees have
their ta4 deduced &ro) their salar*, and the e)plo*er is interested in declaring ever* penn*
o& the salaries, to reduce his o,n ta4es An increase o& the ta4 burden thus had a direct
i)pact on e)plo*ees, ,ho sa, their participation in the countr*?s revenues, and there&ore
consu)ption, &all &ro) $' to !-G during the period (inancial )iddle)en, on the other
hand, pa* ver* little ta4es %hus, the increase o& the ta4 burden ulti)atel* results in a
trans&er, via govern)ent, o& ,orkers? )one* to bankers and rentiers
Eere ,e are talking o& a "'0 billion increase o& the debt in the 199$/2002 period and o&
trans&ers o& )ore than 100 billion reais per *ear in )ost recent *ears there&ore, o& a
radical and pro&oundl* regressive shi&t o& the )acroecono)ic polic* (inancial )iddle)en,
,ho previousl* )ade tons o& )one* ,ith in&lation began to earn )one* in this ne, ,a*
Inco)e concentration in the countr* is not onl* a proble) ,e inherited &ro) the past9 it is
an e4tre)el* )odern d*na)ic Ine6ualit* is being rebuilt at ever* instant
In parallel, there ,as an intensi&*ing process o& privati1ations involving )ore than 100
billion reais Mone* co)ing in did not serve to reduce the debt, and not even to increase
public invest)ents, ,hich stagnated 3here did this )one* go7 It ,as, to a large e4tent,
appropriated b* those ,ho )ade &inancial applications, e4panding the po,er o& rentiers and
&inancial )iddle)en 3e are not )entioning here that privati1ations represented in general
&abulous deals &or those ,ho ac6uired public goods at lo, prices 3e are re&erring to the
&act that in addition to generating a debt o& additional "'0 billion reais, o& having paid loads
o& )one* in the &or) o& interest ,hile ta4es and debt increased, the State ,as decapitali1ed
in its stock o& assets So)e stabilit*
%hus a )ass o& the countr*?s public and private resources ,as directed to,ards the area o&
&inancial inter)ediation, hindering productive processes and setting a gigantic &inancial
trap &or the inco)ing govern)ent
Eo, ,as this suspicious deal sold to the countr*7 %his is a ver* interesting process and
sho,s the articulation o& the econo)* ,ith overall politics %he countr* ,as sur&acing &ro)
trau)atic in&lation rates 3ith the end o& h*perin&lation in 199!, people ,ere i))ensel*
relieved An* anti/in&lation argu)ent ,ould be accepted %he high interest rate ,as elected
the hero in the &ight against in&lation %he argu)ent sho,s ho, old/&ashioned argu)ents
1$!
Rubens RicQpero, ,hen at J:.%AD, sho,ed ho, a si)ilar )echanis) operates on the international
level See Trade and .e/elopment 'eport 0112, &ro) J:.%AD
90
even though per&ectl* orthodo4 in econo)ic theor* can be used &or ne, situations, ,hich
in scienti&ic ter)s is a &raud, but ,orks 6uite ,ell political ter)s
3hat are the real relations bet,een interest rates and in&lation7 A)ir Fhair sho,s toda*,
,ithout an* di&&icult*, that in the era o& globali1ation, ,ith the opening o& )arkets to
co)petition ;the .hinese in particular= there is no longer a threat &or the HdragonI o&
in&lation to co)e back, even though it arises threateningl* in all the )aga1ines and %R
ne,s Moreover, as the e4change appreciates the Real, )aking i)ports cheaper, there is no
,a* &or enterprises to raise prices on the internal )arket ,ithout e4posure to i)ports %hus,
in the globali1ation era, things have changed9 ,e do not need high interest rates to curb
in&lation, because international co)petition pla*s a decisive role
Another reason, presented b* Laul Singer, sho,s that the ver* high cost o& private interest
rates ;sti)ulated b* the high o&&icial interest rate= tends to increase the production cost and
there&ore &avors in&lation instead o& controlling it
A third signi&icant )echanis) results &ro) the globali1ation o& the &inancial speculation
s*ste)9 at the ti)e o& h*per/in&lation, it ,as unviable &or 8ra1ilian &inancial )iddle)en to
participate in the globali1ed s*ste) o& &inancial speculation since the currenc* &luctuated
dail*, and the 8ra1ilian )one* ,as not convertible 0o, in&lation ,as re6uired &or the
participation o& &inancial )iddle)en ;8ra1ilian or transnational= in the ,orld,ide &inancial
casino (inancial )iddle)en have thus beco)e interested in the stabilit* o& prices, and
stopped &eeding in&lation Eigh in&lation is no longer a threat, but presenting high interest
rates as a necessar* sacri&ice to protect the people &ro) in&lation still ,orks
1$$

%he outco)e is that this i)pressive trans&er o& savings o& the population to the &inancial
sector is presented as an initiative ,ith the highest o& purposes %he resulting poor gro,th
,ould be presented as the bitter price ,e pa* &or stabilit* %he process is considered legal,
although the 8ra1ilian constitution de&ines the &or)ation o& cartels as a cri)e against the
econo)* In 8ra1il apparentl* it is legal &or &inancial groups to organi1e in the &or) o& a
cartel and appropriate the)selves o& public policies o& &inancial regulation Jntil 2010, the
8ra1ilian .entral 8ank ,as headed b* a &or)er private banking institution )anager It is
called Hautono)*I o& the .entral 8ank
(urther)ore, the )edia ,as a po,er&ul all* in this process %he ,orkings are reall* not
ver* co)ple4, i& one ,ants to understand the )echanis) 8ut during the .ardoso
1$$
A &act curiousl* unnoticed in 8ra1il is that in 199! there ,ere around $0 countries ,ith co)parable
in&lation, such as Israel, Argentina, :icaragua and others E*perin&lation &ell in all these countries during the
199!/199$ *ears, as can be seen in the IM( &inancial statistics or in co))entaries o& The 4conomist9 HMan*
countries rightl* co)plain that no )atter ho, lo, their in&lation drops, the (und al,a*s ,ants to lo,er it
)ore %he (und?s bias probabl* )ade sense in 1992, ,hen $$ countries had in&lation rates over $0G, but it
)akes &ar less sense toda* ,hen onl* a couple o& countries still have ver* high in&lationI The 4conomist,
Cul* 2$th 200$, p "'@ the &act that h*perin&lation ,as de&eated in do1ens o& countries si)ultaneousl* clearl*
indicates that in 8ra1il there ,as also not a )iracle (inancial globali1ation cannot live ,ith currencies that
change their value dail* and ,ould there&ore not be convertible
91
ad)inistration this era ,as presented as an era Ho& econo)ic/&inancial stabilit*I, an
argu)ent dail* ha))ered in the ne,s
%he case here is not to speak ill o& one ad)inistration, particularl* since the &ollo,ing
govern)ent ,as caught in the trap and could do little to change it, e4cept graduall*
reducing the o&&icial interest rate to prevent the process o& e4ploding I)portant &or us is to
understand ho, the interest rate, the public debt, in&lation, e4change rates, invest)ent and
econo)ic gro,th are articulated 3e have to stud* ho, these )acro/variables rein&orce
one another in the econo)ic process, and ho, the political &orces and the )edia
in&or)ation strengthen the i)balance
%his i)plies ,e need to stud* )acroecono)ic policies not b* )eans o& co)ple4 econo)ic
)odels on ho, a )*sterious personage convenientl* called Hthe )arketI )ight react, but
b* stud*ing ho, the inco)e o& each one o& the econo)ic agents the bene&iciaries
evolve in the period %his ,ill e4plain ho, the )acro/variables ,ere altered as a &unction
o& these interests
In econo)ics there are no )iracles %he dra)atic enrich)ent o& &inancial )iddle)en o& the
countr* had e6uall* dra)atic costs in other areas As it is enrich)ent b* trans&er, no ,ealth
,as generated 3hat happened is called sterili1ation o& savings
%o sa* that the econo)* is doing ,ell or badl* entails kno,ing ,ho is doing ,ell and ,ho
is doing badl* in the econo)* And i& those ,ho are doing better have po,er ,ith the
)edia in general, the overall i)pression is that HthingsI are going ,ell <ver ti)e,
ho,ever, the gaps tend to sho, (or instance, ,ho is going to pa* this debt7
%he necessar* )easures are not ver* )*sterious9 ,e have to reduce the o&&icial interest
rate, ta4 speculative gains, increase the earnings &ro) salaries ;particularl* the )ini)u)
salar*=, open credit lines to the productive sectors through o&&icial banks and so &orth %he
govern)ent does have the po,er to reduce the strength o& the private banking cartel b*
restoring co)petition through reduced interest rates in the o&&icial banks
:e, theories7 %here is no need &or co)ple4 theories or ne, )odels in this area Moreover,
econo)etric ga)es ,ith big nu)bers essentiall* a)ount to ,hat >albraith called the
econo)ists? Hs)all &raudsI, giving the i)pression o& deep technical considerations ,here
,hat ,e have is si)pl* a set o& 5usti&ications &or the resource appropriation b* certain
econo)ic agents %he s*ste) )irrors relationships o& po,er )uch )ore than econo)ic
rationalit* And ,hen &aced b* the co)ple4it* o& calculations, the deprived groups i)agine
that there is a pro&ound rationalit* ,here, in general, there is c*nical appropriation In
realit*, ,hat ,e need is not ne, theories concerning ,hat .elso (urtado 6uali&ies as Hthe
)eansI, but si)pl* a honest anal*sis and transparenc* concerning the advantages and
disadvantages o& the di&&erent stakeholders, presenting in an organi1ed ,a* the
participation o& the diverse econo)ic agents in the social product In this sense, the
)ethodological reorientation consists essentiall* in presenting the accounts correctl* It is
92
essentiall* a proble) o& honest* and transparenc*, and obviousl* o& political and corporate
po,er, not one o& econo)ic theor*
>enerall* speaking, as this is essentiall* an issue o& ,ho takes ,hat part o& the product o&
societ* as a ,hole, to )ake this accounting transparent is vital &or the de)ocratic process to
)akes sense Eere it is probabl* ,here econo)ic de)ocrac* and political de)ocrac*
beco)e one
16 Theory of world Economics
(or )an*, globali1ation is an old stor*, but this ignores the e4tent o& recent
trans&or)ations %he revolution in kno,ledge technolog*, in the )achine o& advancing
kno,ledge itsel&, is boundless %his entails structural trans&or)ations ,ith i)plications that
,e are onl* beginning to understand 8e*ond planetar* connectivit* o& the internet
ever*bod* in instantaneous contact ,ith ever*bod* the productive processes are
beco)ing inco)parabl* denser in kno,ledge and in&or)ation, leading to a convergence o&
the )eans and the ends %hus, the po,er o& the large corporation beco)es at the sa)e ti)e
global and capillar*, ,ith a strong ,orld,ide political presence and the possibilit* to
suppl*, &or instance, )ini/bottles o& .oca/.ola to the poor in the re)otest corners o& India,
having access to the last little coin >enerating a global econo)* is not )erel* going
be*ond national boundaries9 it is a trans&or)ation o& the ti)e and space &ra)e,ork o& the
econo)ic activities as a ,hole, ,eakening national govern)ents, strengthening the
potential o& local econo)*, ;particularl* the so/called non/tradeables=, opening the ,a* &or
ne, solutions in a net,ork o& civil societ* organi1ations 3hat ,e su) up as globali1ation
constitutes in realit* a dra)atic si)pli&ication o& the co)ple4 redesigning o& territorial and
ti)e &unctions taking place
1$'

3e are &looded b* theories on globali1ation 8ut here too it is &ro) the stud* o& concrete
)egatrends that relativel* clearer, albeit still &rag)ented, i)ages arise (inancial
do)ination, &or instance, as ,e sa, above, constitutes an i)portant re&erential +6uall*
i)portant is the shi&t o& a signi&icant part o& econo)ic activities to,ards ,hat ,e have
called the kno,ledge econo)* and, in a broader sense, the do)inance o& HintangiblesI in
the productive process .ulture also started pla*ing a ke*/role in the ,orld/scale econo)*,
,ith the shaping o& the planetar* di)ension o& the entertain)ent industr*, rapidl* tending
to,ards global pasteuri1ation on the cultural level as ,ell as on the level o& consu)ption
habits %hese shi&ts are &urther)ore going to de&ine another international division o& labor,
a ne, Hune6ual speciali1ationI at the ,orld level
1$'
3e are not going into detail here about the reordering o& spaces o& econo)ic develop)ent, ,hich ,e
presented in .esafios da Alobali)aGHo ;Challenges of Alobali)ation<, +d, Ro1es, LetrUpolis, 199#@ see also
our .a Alobali)aGHo ao oder >ocal: a no/a hierarquia dos espaGos,;(rom Alobali)ation to >ocal ower: a
new hierarchy of spaces< 199' at http9AAdo,bororg, under Hartigos onlineI
9!
%he dra)atic e4pansion o& planetar* connectivit* generated a ne, global econo)ic,
political, and )edia po,er that are the large corporations %his po,er, in turn, is generating
environ)ental i)pacts directl* through overe4ploitation o& resources and generation o&
unsustainable consu)ption )odels, and indirectl* through the ine6ualities created ,here
&or the &irst ti)e, inertia o& the d*na)ics created b* &ar surpasses the rh*th) and capacit*
o& course corrections %hings are getting out o& hand, huge engines enable the econo)* to
suck up produced or natural riches, but ver* little has changed in regulation capacit* 3e
have created a po,er&ul truck ,ith ver* little control po,er, not to speak o& brakes
So)eti)es, on a steep slope, onl* running &aster keeps us &ro) &alling
In this process, ti)e is not on our side A series o& planetar* changes, such as global
,ar)ing or the rupture o& &ood chains in the oceans advance at such a pace that ,hen ,e
beco)e a,are o& the irreversibilit*, the point o& no return ,ill have passed %ipping point
theories are popping up in various sectors %he )o)ent o& political co)prehension o& the
gravit*, ,hich is ,hen govern)ents and other social actors succeed in abandoning
passivit*, ,ill be ,ell be*ond the ti)e hori1on &or corrective action
Cust listing a &e, )egatrends )akes us a,are o& the e4tent o& trans&or)ations, the
prodigious HshrinkingI o& our s)all planet It is a ne, ,orld that e)erges, not built as a
positive pro5ect o& ,hat ,e ,ant &or societ*, but as the outco)e o& uncontrolled and
separate d*na)ics %he concept o& globali1ation, a gigantic blanket that ai)s to enco)pass
the cluster o& trans&or)ations, is too general &or the understanding ,e need o& ,hat is
happening
An interesting ,a* to approach a proble) that is too ,idespread and di&&erentiated &or a
s*nthetic presentation is, instead o& tr*ing so)e kind o& Theory of 4/erything in the
econo)ic and social trans&or)ations, to tr* to identi&* the contradictions that sur&ace
3hen ,e talk about the a)a1ing acceleration o& histor*, &or e4a)ple, ,e &orget that hal& o&
the ,orld population still lives on &a)il* agriculture, that about a third still cook ,ith ,ood
stoves, that hundreds o& )illions people still survive &ro) traditional coastal &ishing
>lobali1ation is not a uni&or) process, )uch to the contrar* It generates a deep chas)
bet,een a )inorit* o& countries and their net,ork o& transnational corporations that
change at an increasing pace, speeding up to the rh*th) o& ne, technologies, and an
i))ense )ass o& global population deprived o& the traditional &or)s o& subsistence but that
has no access to the )eans needed to participate in the ne, d*na)ics .oastal populations
o& the planet no longer &ind &ish in the seas, or )uch less, neither do the* have access to
5obs or to the revenues o& the )illionaire predator* &ishing industr* Lopulations o& the rural
A&rican ,orld sa, their traditional survival conditions destro*ed b* )onoculture,
de&orestation and the violence o& )odern ,ars, and cluster in cities ,here the past no
longer protects the) and the present does not e)brace the)
9$
%o i)agine, in this ever shrinking planet and ,ith the de)ographic tendencies that ,e
kno,, that the rich countries ,ill be able to live co)&ortabl* in a kind o& closed planetar*
condo)iniu), preventing attacks on the A)erican global do)inance s*ste), building
,alls in Israel and in Me4ico, repressing revolts in (rance, taking do,n illegal i))igrants
on the borders, supporting dictators in the Arab ,orld, &orbidding access to ne,
technologies and occasionall* bringing the >/# or the >/20 together to pardon so)e debts,
is part o& toda*?s blatant blindness
1$"

Another contradiction arises in the tension bet,een the pace o& ne, technologies and the
inco)parabl* slo,er pace o& cultural and institutional change Should hu)an beings be
cloned or not7 Is electronic surveillance o& e)plo*ees in enterprises legiti)ate7 Should
genetic engineering, ,hich is beco)ing generali1ed, be controlled ;assu)ing ,e have the
po,er to do so=7 Is the sale o& in&or)ation about our D:A b* hospitals or laboratories
acceptable7 In &act, generali1ation o& kno,ledge o& &ine che)istr*, biolog* and ph*sics
)ade it possible to produce in an* back*ard or little )ore than that drugs that destro*
)illions, ,hile their control continues to &unction in the old &ashioned ,a* Russia and the
Jnited States are &looding the planet ,ith ar)s to then sell )easures against terroris)
1$-

%he issue is central and involves particularl* the environ)ental destruction o& the planet
since the technological capacit* to e4tract riches is radicall* e4panding think o& industrial
&ishing ,ith the aid o& the positioning s*ste) ;>LS= ,hile our control s*ste)s re)ain in
prehistor* and are opposed as a breach o& econo)ic &reedo)
A si)ilar tension arises &ro) the di&&erent i)pacts o& ne, technologies on 5obs, and ,hen
,e talk about 5obs ,e are talking about social insertion, about the rights to access social
policies and, increasingl* so, about basic &a)il* survival In the &ra)e,ork o& ,hat the
Jnited :ations has 6uali&ied as ,obless growth, une)plo*)ent e)erges no longer &ro)
absence o& gro,th but &ro) gro,th itsel& (or the )ore advanced countries, technological
advance shi&ts 5obs, &or instance, &ro) the production lines to design, )anage)ent,
advocac*, accounting, )arketing activities the so/called intangibles partiall* balancing
the process In the developing countries and in the ,orld in general, the d*na)ics are
reversed, because not onl* people have little access to the li)ited seg)ent o& state o& the art
5obs generated b* ne, and ,ell sa&eguarded technologies, but also the local enterprises
su&&er &ro) a &lood o& global products generated ,ith a great deal o& technolog* and little
1$"
An IM( publication on the de)ographic trends o& the planet &orecasts an average increase o& -" )illion
people per *ear roughl* +g*pt 9'G o& ,ho) ,ill be born in poor regions IM(, (inance and
.e/elopment, Septe)ber 200" 3e should probabl* reach 9 billion in 20'0
1$-
In the period bet,een 2000 and 200$ Russia ,as responsible &or a !2G o& the e4port o& ,eapons ;selling
o&& old stocks=, the Jnited States &or !1G, (rance #G, +ngland 'G@ together the* ,ere responsible &or three
&ourths o& the e4ports declared .hina represented onl* 2G %he 'eport on -uman .e/elopment B==C, ,hich
carries these nu)bers ;p 29!, %able 2!=, includes an alert to the large volu)e o& unregistered e4ports %he
illegal econo)* constitutes an i))ense sector, poorl* studied, ,hich easil* )aneuvers in the uncontrolled
global space Lseudo/legalit* also &lourishes9 Capan and Iceland kill ,hales on the prete4t o& stud*ing the)
&or their protection %here has never been so )uch ,hale/stud*ing
9'
labor, ,hich substitute local production %he production process o& :ike in the Jnited
States is ver* in&or)ative in this sense9 a &e, sophisticated 5obs in the JS, precarious 5obs
in Indonesia and an invasion o& i)ported products that generate une)plo*)ent in the shoe
industr* in the cit* o& (ranca, 8ra1il to cite an e4a)ple
%he cu)ulative i)pact o& these trends generates another ver* ,idespread tension, indeed
rather ,ell studied on the planet9 the distance bet,een the rich and poor %he )a5or
)ani&estation is, o& course, that ,hile the capacit* &or ,ealth e4traction and inco)e b*
large corporations e4pands ver* 6uickl* ,ith the ne, technologies, the &e, instru)ents &or
inco)e redistribution and social policies &ind the)selves dis)antled 3e have ver*
po,er&ul ,orld,ide corporations to e4tract inco)e but ,e do not have a ,orld,ide
govern)ent to redistribute it
1$#

As*))etr* o& technological breakthroughs in the ,orld, negativel* a&&ecting )uch o& the
globe?s population, the disrh*th)ia bet,een corporate progress and develop)ent o& the
corresponding regulator* )echanis)s, the deepl* une6ual i)pact on 5obs, generating a ne,
hierarch* bet,een state o& the art 5obs, precarious 5obs, in&or)al and illegal activities
these three )egatrends converge to the gro,ing ine6ualit* bet,een countries as ,ell as
bet,een rich and poor in each countr*, ,ith &e, e4ceptions %he Jnited States, ,ith
ine6ualit* back to pre/1929 levels, is going do,nhill as ,ell
An e4cellent balance sheet is &ound in The Inequality redicament prepared b* the J:
Depart)ent o& +cono)ic and Social A&&airs ten *ears a&ter the .openhagen 3orld Su))it
%he presentation goes &ar be*ond the concept o& povert*, co)prehensivel* e)bracing
H:on/econo)ic indicators o& ine6ualit*I
<n the econo)ic ine6ualit* level, the result is that Hanal*ses o& the standards o& ine6ualit*
suggest that inco)e and consu)ption ine6ualit* bet,een countries have re)ained
relativel* stable during the last '0 *earsI, ,hich in itsel& is i)pressive, given the i))ense
strides in the technical )eans available in this period %here ,as an i)prove)ent in the
situation o& the poorest part o& the population H(irst, the largest share o& better inco)e
distribution in the ,orld )a* be e4plained b* the rapid econo)ic gro,th o& .hina and, to a
lesser degree, o& India, ,ith )uch o& the change re&lecting gains o& the poorest seg)ents o&
societ* at the e4penses o& average inco)e groups in both countries Second, participation o&
1$#
.orporate pro&its have been attributed to the e&&icienc* o& their )anage)ent, ,hich has generated a
positive i)age %he stud* o& the sources o& corporate pro&it constitute another area o& e4panding research %he
e4traction o& a barrel o& oil in Saudi Arabia costs ^2 and co)panies sell it &or ^100 It is not e&&icient
)anage)ent that is the ke* here, but political and )ilitar* )uscle %he pro&its o& large institutions ,ith
&inancial speculation are directl* linked to the control o& technological processes and the ease o&&ered b* &iscal
o&&/shores Ea))ering ,orld population ,ith the idea o& lu4ur* brands allo,s )an* corporations to sell
products tens o& ti)es the cost o& production <ther activities generate pro&it b* taking advantage o& the
&ragilit* o& legal s*ste)s In the absence o& global governance, global corporations set sail practicall* ,ithout
control (or those ,ho do not understand the )echanis), the tendenc* is to think that those ,ho earn a lot o&
)one* )ust be good The Corporation gives us a ,ell/organi1ed and sobering i)age 3ikileaks in&or)ation
on the behavior o& Shell in :igeria is another %he )ess created in the Middle +ast to control oil is a traged*
9"
the ,ealthiest 10G o& ,orld population increased &ro) '1"G to '!$G o& total global
inco)e %hird, ,hen ,e e4clude .hina and India &ro) the anal*sis, data sho,s an increase
o& the inco)e ine6ualit* due to the e&&ects o& greater inco)e disparities a)ong poor
countries ,ith an adverse distributive e&&ect o& the &aster population gro,th in the poorest
countries As &or the inco)e gap bet,een richer countries and poorer, it ,idened in recent
decadesI
1$9

<n the level o& internal econo)ic ine6ualit* o& countries, data o& the 3orld Inco)e
Ine6ualit* Database ;3IID= sho, that internal inco)e ine6ualit* o& countries decreased
during the 19'0, 19"0 and 19-0 decades in the )a5orit* o& developed and developing
econo)ies, as ,ell as those o& central planning Since the eighties, ho,ever, this decline
slackened or stabili1ed and ,ithin )an* countries ine6ualit* is rising again >ro,th o&
econo)ic ine6ualit* is also increasing in developed countries9 HA stud* o& the evolution o&
econo)ic ine6ualit* in nine countries o& the <+.D con&ir)ed in general that signi&icant
shi&t is taking place in the inco)e distribution in all the countries anal*1ed, ,ith the
possible e4ception o& .anadaI
1'0
0atin A)erica continues to be ,ell represented9 H<ne characteristic that distinguishes
the pattern o& internal ine6ualit* in 0atin A)erica &ro) other regions is the
participation o& 10G o& the ,ealthiest &a)ilies in the total inco)eI H%he largest gap
is in 8ra1il ,here per capita inco)e o& the ,ealthiest 10G o& the population is !2 ti)es
that o& the poorest $0G 0o,er levels o& inco)e ine6ualit* )a* be &ound in Jrugua*
and .osta Rica ,here the respective per capita inco)es o& the ,ealthiest 10G are ##
and 12" ti)es higher than that o& the poorest $0GI
1'1
An e4cellent stud* published b*
+.0A. ;+cono)ic .o))ission &or 0atin A)erica and the .aribe= in 2010 presents
the overall dra)a and the ke* policies being adopted %his is applied econo)ics at its
best
1'2

3herever progress ,as &ound, it ,as thanks to progra)s co)bating povert*, rather than
)arket )echanis)9 HAt global level a considerable progress ,as )ade &or povert*
reduction during the last t,o decades, )ostl* as the outco)e o& highl* &ocused anti/povert*
progra)s and policiesI HLrogress )ade in .hina and India contributed substantiall* to a
positive i)age at global level As these t,o countries represent !#G o& the ,orld
population, the rapid e4pansion o& their econo)ies led to signi&icantl* decrease the nu)ber
o& people living in absolute povert* in the ,orld@ &ro) 1990 and 2000 this decreased &ro)
12 billion to 11 billion In .hina, those living on less than 2 dollars a da* dropped &ro)
1$9
J: Depart)ent o& +cono)ic and Social A&&airs The Inequality redicament: report on the world
social situation B==C J Jnited :ations, :e, Kork, 200', p $$ %he supporting %able sho,s that in the
period bet,een 19"0/19"2 to 2000/2002, per capita >DL o& the 20 ,ealthiest countries increased &ro)
^11,$1- to ^!2,!!9 ;dollar as o& 199'=, ,hile the e6uivalent average &or the 20 poorest countries rose
&ro) ^212 to ^2"- ;%able III2, p $'=
1'0
Ide), p $#
1'1
Ide), p $9/'0
1'2
.+LA0 >a hora de la igualdad * Santiago, 2010 ;&ull te4t online=
9-
##G to $-G bet,een 19#1 and 2001, and the nu)ber o& people living ,ith less than 1
dollar a da* dropped &ro) "!$ )illion to 212 )illion In India, those ,ho live ,ith less
than 2 dollars a da* dropped &ro) 90G to #0G and the nu)ber o& those ,ho live in
e4tre)e povert* ,ent &ro) !#2 )illion to !'9 )illionI %he )ain positive i)pact there&ore
is clearl* due to .hina
1'!

Eere, our )ain interest, )ore than the &igures and their respective tragedies, is that the*
clearl* portra* the need &or organi1ed, a&&ir)ative interventions to &ace povert* Since
toda* ine6ualit* is the )ain proble) together ,ith destruction o& the environ)ent
econo)ics has to concentrate )ore ,idespread e&&orts in the understanding o& active
policies to &ight povert* (ighting povert*, not the poor@ building bridges, not ,alls
,ould be a nice change
A second point is that it is not su&&icient to look at the econo)ic )echanis)s since
ine6ualit* constitutes a )uch broader process HLerhaps )uch )ore i)portant than the
increasing levels o& povert* is the e)ergence and entrench)ent o& ne, patterns o& povert*
in )an* countries :ote,orth* changes include a gro,ing tendenc* to,ards rotation o&
people in and out o& povert*, an increase o& urban povert* and stagnation o& rural povert*
as ,ell as an increase in the nu)ber o& in&or)al ,orkers a)ong the urban poor and a
)a5orit* o& une)plo*ed poor<& all ine6ualities ,ithin and a)ong nations, the
i)possibilit* o& a gro,ing part o& the ,orld population that seeks 5obs to succeed in &inding
the) has perhaps the )ost pro&ound i)plicationsI
1'$

%he above data re&er to inco)e distribution %he 3ID+R ;8orld Institute for .e/elopment
4conomics 'esearch=, o& the Jnited :ations Jniversit* points to another catastrophic
trend, the concentration o& accu)ulated ,ealth In &act, the t,o )ethodologies are linked,
since the higher inco)e o& the ,ealthier per)its the accu)ulation o& )ore houses, land,
lu4ur* ite)s and &inancial papers, ,hile the poor use their little )one* to bu* &ood or
shoes %hus, accu)ulated ,ealth ;Hnet ,orth9 the value o& ph*sical and &inancial assets less
debtsI ,hich is e6uivalent to ,hat the report de&ines as Ha co)prehensive concept o&
household ,ealthI=, tends to &urther polari1e societ* and there&ore leads to &or) gigantic
&ortunes that have little connection ,ith the contribution these people or households have
given to the production o& social ,ealth
1''

Accu)ulated household ,ealth is esti)ated at 12' trillions dollars &or the *ear 2000,
e6uivalent to 1$$ thousand dollars per person in the JS, 1#1 thousand in Capan, 1,100
1'!
Ide), p '1
1'$
ide), p '$/''
1''
Ca)es Davies, Susana SandstrT), Anthon* Shorrocks, and +d,ard : 3ol&& / The Alobal .istribution of
-ousehold 8ealth / 200", II ,,,3iderunueduAbe,sletterAne,sletter :or)al people have no idea o&
,hat a billion )eans A si)ple e4a)ple presented b* Susan >eorge, helps9 a billion invested in papers that
*ield 'G a *ear nothing &anc* )eans the billionaire gro,s richer b* 1!- thousand dollars a da* Since
even a billionaire can onl* absorb a given a)ount o& Saint \)illion ,ine and caviar, his )one* &actor* ,ill
gro, b* the da*, to )uch )ore than 1!- thousand %his is supposed to sti)ulate production and 5obs, and
according to serious/looking econo)ists, is essential to &reedo)
9#
dollars in India, 1,$00 in Indonesia %his appropriation o& ,ealth outlines geo/econo)ics o&
the HAlphaville/AlphavellaI ;Scarsdale/Shant*to,n= t*pe Regional distribution o& asset
holdings sho,s a heavil* concentrated ,ealth in :orth A)erica, +urope and Asian
countries ,ith a high inco)e that together represent al)ost 90G o& global ,ealth Although
:orth A)erica has onl* 'G o& the adult ,orld population, it has !$G o& household ,ealth
It is natural that accu)ulation o& ,ealth inside the countries &ollo,s the sa)e trend, since
the ,ealthier &a)ilies tend to accu)ulate )ore %he countries? internal gap, there&ore,
deepens H%he share o& the ,ealthier 10G ranges &ro) $0G in .hina to -0G and )ore in
the Jnited States and so)e other countriesIH<ur results sho, that in the *ear 2000, the
top decile o& ,ealth o,ned #'G o& the ,orld ,ealth %he 2G o& ,ealthiest adults o& the
,orld held )ore than hal& o& the globe?s ,ealth and the 1G o& ,ealthiest had )ore than
$0G o& the entire household ,ealth %he lo,er hal& o& the adult ,orld population had
)erel* 1G o& the global ,ealth %he >ini value &or global ,ealth ,as esti)ated at 0,#9, the
sa)e >ini value ,ould be achieved i& 100 dollars ,ere distributed a)ong 100 persons so
that one person ,ould receive 90 dollars and the re)aining 99 persons, 10 cents each
.uriousl*, ,hen talking about inco)e distribution, about ta4es on &ortunes, about ta4es on
inheritance, the )edia speaks about populis) and de)agog* Dail* ha))ering b* opinion
)anipulation institutes )ade ta4es a bad ,ord, and pro&iteering a s*)bol o& e&&icienc* :ot
to see the gro,ing threats ,ith the current d*na)ics is to be dangerousl* blind And not
seeing ,ho the big press and si)ilar institutions belong to is to be doubl* blind
1'"

:ot onl* ,e )ust approach social d*na)ics ,ith a broader vie,, ,e also have to give
central i)portance again to the organi1ation o& participative decision processes9 the agenda
o& decent wor+ ai)s to &ace innu)erous challenges that arise &ro) globali1ation, including
loss o& 5obs, un&air distribution o& bene&its and the disruption that is caused in the li&e o& so
)an* people A response to such challenges de)ands participation o& stakeholders at all
levelsI
1'-

%he biggest challenge continues 6uite close to ,hat Sa)ir A)in alread* presented decades
ago9 the econo)* is globali1ed ,hile the regulation instru)ents continue to be national
%he international regulator* institutions such as the J:, IM( and others, are still
instru)ents conceived to &ace proble)s bet,een nations ,e have nothing rese)bling a
,orld govern)ent (or)ation o& blocks is a palliative on the road to a ,ider construction
%he Jnited States clearl* presented the)selves as candidates to H,orld regulatorI but &or
1'"
An e4cellent stud* b* Ca)es Eogan, Climate Co/erJup: the Cru)ade to .eny Alobal 8arming, Rancouver,
2009, sho,s ho, public opinion on ke* issues such as cli)ate change, but also tobacco, ar)s,
phar)aceuticals, health re&or) and others is built Eis area is public relations, he kno,s the institutions and
ho, the* ,ork
1'-
The Inequality redicament, p '# %he Report has no doubts about the need &or organi1ed political
intervention9 H%he global )arket operates ,ith advantages &or the ,ealthiest countries, the poorest countries
have less opportunit* to bene&it &ro) globali1ation and are )ore vulnerable to their risks and )istakesI ;p
$!=
99
one nation to order the others around is clearl* not the solution Since 200# the* have
beco)e a little )ore )odest
An interesting line o& alternatives arises in the set o& initiatives b* the 3orld Social (oru)
It is the &irst planetar* endeavor to build a s*ste) &or planet protection and reorgani1ation
o& develop)ent directions, and involves tens o& thousands o& civil societ* organi1ations
,ith gro,ing although still &ragile presence in the decisions o& their respective countries
and international organi1ations 3hat has appeared in the press in general is the annual
event, and greatl* distorted, but the truth is that an e4tre)el* agile interactive net,ork o&
rights protection, o& denouncing )edia )anipulation, o& environ)ental in&or)ation the
list is endless is being &ashioned, generating a ne, space &or global articulation
<n another level, there is research on the construction o& an interactive planetar* net,ork
in the )ost varied areas9 toda*, an* average hospital has agree)ents o& ph*sicians
e4change, universities are creating net,orks o& scienti&ic cooperation the SNo Laulo
Lonti&ical .atholic Jniversit* ;LJ.= in one *ear undertook 1,"00 actions o& international
cooperation cities are &or)ing net,orks that per)it e4change o& )anage)ent innovations
and so on %hus, even i& our attention in the area o& ,orld econo)ics continues to
concentrate on >20 )eetings, &oreign a&&airs )inistries, international trade, transnational
corporations and )ultilateral organi1ations, )odern connectivit* is generating an e4tre)el*
dense global econo)ic &abric o& )icro international net,orking originated in )illions o&
institutions
An anal*sis o& this evolution is presented in the book H'eJimagining olitical CommunityI
that &ollo,s the line o& the political theor* o& cos)opolitan de)ocrac*
0C2
(irst o& all, ,e
have the )a5or issue o& absence o& international and de)ocratic decision )echanis)s9
H+ven i& de)ocrac* has achieved signi&icant results in the process o& State governance, it is
still not applied to )anage)ent o& relations bet,een States regarding regional and global
issuesI %he proble) o& global governance e)erges as a central issue9 I%oda*, the
international co))unit* desperatel* seeks to reach a ne, global political balance (or
so)e, the ideal ,ould be a ,orld order ,here so)e hundreds o& large enterprises ,ould
dictate the rules intended to advocate their o,n interests to a panel o& strong and po,er&ul
States %he balance o& po,er has shi&ted in &avor o& capital, in relation to national
govern)ents as ,ell as national labor )ove)ents %here&ore, the autono)* o&
de)ocraticall* elected govern)ents has been increasingl* restricted b* sources o&
econo)ic po,er that are not representative or electedI %he authors 6uote a state)ent b*
the head o& .oca/.ola on this Hshi&t o& po,erI9 H%o state it candidl*, I believe that this shi&t
,ill lead to a &uture ,here, b* &ar, enterprises ,ill be the )ore in&luential institutionI It is
the corporation assu)ing its role o& do)inant political po,er
1'9
1'#
%he stud* ,as organi1ed b* Daniele Archibugi, David Eeld and Martin FThler 'eJimagining olitical
Community: &tudies in Cosmopolitan .emocracy, Stan&ord Jniversit* Lress, .ali&ornia 199# %he citations
are essentiall* taken &ro) the contributions o& David Eeld and Ca)es Rosenau
1'9
Ide), p 1# and $2
100
%he authors set their hope on the potential o& connectivit* o& the i))ense diversit* o&
e4isting institutions9 HIssues set &orth b* the rapidl* increasing co)ple4 interconnections
and inter/relations o& States and societies and b* evident intersection o& national and
international &orces and processes, continue largel* une4ploredI and the 6uestion is Hup to
,hat point )a* the state/nation continue in the center o& de)ocratic reasoningI
%his vie, points to de)ocratic processes built &ro) the base o& societ*9 Since the needs
and desires o& the population are )ore e&&ectivel* e4pressed b* organi1ed action, the
organi1ational e4plosion o& our ti)e is no less i)portant than the de)ographic e4plosion
Lroli&eration o& organi1ations penetrates all levels o& hu)an activit* &ro) the
neighborhood organi1ations, co))unit* groups, regional net,orks, national States and
transnational regi)es up to international s*ste)sI
%hus appears another philosoph* &or the arrange)ent o& institutions9 HIn order to ac6uire
the legiti)ac* and support the* need to endure, success&ul )echanis)s o& governance are
)ore likel* to evolve out o& botto)/up than top/do,n processes As such, as )echanis)s
that )anage to evoke the consent o& the governed, the* are sel&/organi1ing s*ste)s,
steering arrange)ents that develop through the shared need o& groups and the presence o&
develop)ents that conduce to the generation and acceptance o& shared instru)ents o&
controlI %he authors consider that this d*na)ic re6uires organi1ed support
1"0

%he theoretical agenda o& ,orld econo)ics thus leads us to the issue o& planetar*
de)ocratic governance, b* dra,ing up pro/active institutional design, and &acing the )ain
)egatrends ,hich are the environ)ental crisis and ine6ualit*, strongl* interconnected %he
ke* ele)ents o& the globali1ation process &inanciali1ation o& the econo)*, hierar6ui1ation
o& ,ork, corporate po,er, concentration o& global control o& in&or)ation and others )ust
be ,orked over in this line o& reconstruction o& the critical lines o& survival %he ,eakening
capacit* o& the J:, especiall* at this stage o& gro,ing global threats, and ,hen ,e vitall*
need de)ocratic decision processes, is si)pl* &earso)e
3ith globali1ation o& the econo)* ,ithout the corresponding globali1ation o& the
de)ocratic decision )echanis)s, an i))ense portion o& econo)ic activities escapes an*
control %he e4pansion o& civil societ* organi1ations that act in planetar* space and seek to
articulate the social interests and the ad hoc >20 )eetings according to the last bubble,
onl* in partco)pensate the institutional vacuu) created
1$ %&e paradigm of collaboration
%he )ost i)portant seis)ic shi&t in econo)ic theor* re&ers to the gradual e4haustion o&
co)petition as the )ain instru)ent o& econo)ic regulation %he si)plistic approach o&
1"0
/ p !!
101
econo)ic )echanis)s and hu)an )otivation has brought )ainstrea) econo)ics to its
present irrelevance
%he inherited vie, is that i& ,e all do our best to achieve the )a4i)u) o& personal
advantages in the econo)ic race things ,ill, as a ,hole, progress )uch &aster .o)bining
Ada) S)ith?s vie, on the su) o& individual advantages, Cere)* 8entha)?s and Stuart
Mills? on utilitarianis) and .harles Dar,in?s on survival o& the &ittest, ,e have created a
kind o& ,ar o& all against all %his is ,hat the A)ericans call the global rat race, ,hich is
reaching e4haustion as a regulator* )echanis) and ,hich is, &urther)ore, leading us to
increasingl* dangerous planetar* deadlocks
3hat appears ,ith increased strength is that i& ,e are to survive, ,e are doo)ed to develop
intelligent ,a*s o& coordination bet,een the various econo)ic, social, environ)ental and
cultural goals, and there&ore intelligent ,a*s o& collaboration bet,een the various actors
,ho participate in the social construction o& these goals %he seis)ic shi&t consists in a
ne, balance bet,een the paradig)s o& co)petition and collaboration
Ea1el Eenderson tells ho, she HenteredI the &ield o& econo)ics In :e, Kork, apart)ent
buildings ,ere e6uipped ,ith s)all incinerators It solved individual proble)s but the
outco)e ,as dirt* clothes on all the clothe lines, dirt* children in the park ,here black soot
deposited, respirator* diseases etc 3hen she protested to the authorities, she ,as told that
incinerators generated 5obs, boosting the econo)* Ea1el ,as ba&&led9 to build ,ith great
e&&ort useless and no4ious things is good because it boosts the econo)*7 And the e&&ort o&
)others that ,ash clothes and the e&&ect on children is not a cost because it is not eas* to
account7 It ,as not the econo)ic )achine that ended ,ith the incinerators but a )ove)ent
o& )others organi1ed to de&end their interests
Ea1el beca)e an econo)ist, graduall* reaching the standpoint that toda* she presents in
her book $uilding a 8inJ8in 8orld, aound the no, popular concept o& ,in/,in
0Z0
%he
basic idea is si)ple and illustrated b* the popular i)age o& t,o donke*s tied together,
pulling in opposite directions &or each to reach his ha*stack, and that discover the obvious9
the* eat together the &irst one and then together the second According to Ea1el, H%he
net,orks o& toda*?s in&or)ation era, &unction better based upon principles ,here all ,in
;,in/,in=, but are still ruled b* the paradig) o& global econo)ic ,arI
H8uilding a `3in/3in 3orld? e4plores the scenario and )aps the collision bet,een the
paradig) o& econo)ic gro,th, e4ternall* &ocused and technologicall* triggered, that
cul)inated in a globall* unsustainable econo)ic ,ar and the ascension o& global popular
concerns in the e)erging paradig) and in the )ove)ent in &avor o& sustainable hu)an
develop)ent A s*ste)ic change o& the paradig) o& )a4i)i1ing global econo)ic
co)petition and gro,th o& the gross do)estic product to,ards a paradig) o& )ore
cooperative sustainable develop)ent ,hich in earlier ti)es ,ould have de)anded
1"1
Ea1el Eenderson $uilding a 8inJ8in 8orld, 8errett/Fohler, :e, Kork, 199-
102
hundreds o& *ears is at least possible in the interdependent global s*ste) and in the
current rapid evolution I
1"2
%here is a di)ension that goes be*ond ethics in the process9 collaboration to create ne, or
)erel* use&ul things is one o& the )ost i)portant sources o& pleasure (urther)ore, the
)odern concept o& leadership evolved &ro) the notion o& a boss giving orders to that o& a
coordinator that organi1es the collaborative processes A tea) that &inished a 5ob ,ell done
has a ver* strong &eeling o& &ul&ill)ent
1"!

%he ,orld, o& course, is not a bed o& roses, and tends to &avor the stupid cunning o& he ,ho
sees in the collaborative processes an opportunit* to increase his o,n advantages9
collaboration, &or these people, )eans )aking others collaborate &or their o,n pro&it %he
standpoint o& struggle &or survival o& the &ittest is un6uestionabl* generali1ed It per)eates
the school ,ith their struggles to rank &irst or &or the best grade@ co)petition &or survival
seen in the college acceptance test, it is on ever* %R sho, %he idea is to H,inI over the
others, even i& the battle is &utile and results poor &or all
David Forten brings a &resh vie, to this, in his book The ostJCorporate 8orld Forten
begins b* sho,ing the li)itations o& the biological vision o& the ,orld as solel* a place o&
co)petition &or the survival o& the species9 in &act, the bird that eats the &ruit spreads the
seed, the root that is born needs )icroorganis)s to assi)ilate the nitrogen and so on %hat
is to sa*, the collaborative di)ension is clearl* do)inant in the process and assures that li&e
on the planet ,ill develop in a s*ste)ic ,a* .o)petition, ,hich is real, is not to be Hput
a,a*I9 it is a )atter o& understanding the larger collaborative di)ension
(ro) Forten?s standpoint, the )arket, ,ithin ver* precise conditions, )a* &ashion an
environ)ent o& s*ste)ic collaboration, but that is not ,hat happens in the real econo)*
HMarkets &or) a re)arkable hu)an institution to aggregate the choices o& )an* individuals
to achieve an e&&icient and &air allocation o& productive resources &or the purpose o&
)eeting hu)an needs Eo,ever, its &unction relies on the presence o& )an* critical
conditions Ackno,ledging the po,er o& the )arket?s ideal, capitalis) puts on a rhetoric o&
the )arket 8ut it seeks onl* its o,n gro,th and thus its institutions endeavor to
s*ste)aticall* destro* the )arket?s health* &unctions %he* eli)inate the regulations that
protect hu)an and environ)ental interests, re)oving econo)ic boundaries to place
the)selves out o& the State?s reach, the* den* consu)ers access to essential in&or)ation,
seeking to )onopoli1e bene&icial technologies, and use )ergers, ac6uisitions, strategic
1"2
Eenderson, ibid, pps 19, 2$
1"!
%he previousl* cited te4t b* (re* and Stut1er develops this sub5ect9 HLeople have a tendenc* to &eel happ*
not onl* as a result o& but also b* their o,n processScitovsk* proposed that `the di&&erence bet,een liking
and not liking ,ork could be )ore i)portant than the di&&erence in econo)ic satis&action generated b* the
disparities in our inco)e? Leople could also &eel )ore satis&action b* acting correctl* and being honest,
independent o& the results%hus utilit* is reaped &ro) the decision/)aking process itsel&, over and above the
outco)e generatedI -appiness and 4conomics, op cit, p 1'!
10!
alliances and other antico)petitive practices to under)ine the )arketZs abilit* &or sel&/
organi1ationI
1"$

%he truth is that the econo)* is changing, in general, &aster than our abilit* to organi1e it
%oda*, activities have beco)e )uch broader, co)ple4 and interactive, so the econo)ies o&
cooperation, )ateriali1ed in the social capital, are increasingl* i)portant In large
enterprises generall* this need has been understood, leading to a decreased hierarchical
p*ra)id, to organi1ation in tea)s and so on A&ter the eighties, understanding o& the need
&or collaboration ,as disse)inated, not onl* within the enterprise, but a)ong enterprises,
creating openings &or concepts such as Halliance capitalis)I, Hcollaborative clustersI
bet,een enterprises, )anaged )arket and so &orth
At the enterprise level, the book that )arked a theoretical shi&t is %lliance Capitalism b*
Michael >erlach, ,ho anal*ses the trul* e4isting &or)s o& inter/entreprise collaboration,
especiall* in Capan, and suggests that Hecono)ic theor* can and )ust &ace li)itations o&
ato)i1ed and anon*)ous )arkets, to e4plain institutional &or)s that developed in )odern
econo)ies to overco)e these li)itations Larticularl* interesting has been the role o& long/
ter) contracts and corporate organi1ation as alternatives to co)petitive )arkets .apitalist
)arkets and enterprises are, thus, no longer seen as isolated entities that &ollo, their o,n
logic, but as co)ple4, institutional clusters included in the legal order o& societ* and in the
basic rules b* ,hich the actors operateI
1"'

In the H%hird Ital*I an understanding ,as &or)ulated that, in addition to the collaborative
process bet,een enterprises, it is i)portant to sti)ulate collaboration ,ith public initiatives
and the third sector %his tends to generate econo)ies that are e4ternal to the enterprises but
internal to a region, )aking ever*oneZs ,ork )ore productive %he book b* .arlo %rigilia,
&/iluppo >ocale 6uoted above, is a good e4a)ple o& this understanding o& the territor* as a
space &or the building o& collaborative clusters Robert Lutna)?s stud* on social capital in
Ital* have opened a rich vein
%his trend has been rein&orced b* the structural change in the co)position o& &actors o&
production, na)el* the central role o& kno,ledge in producing value As ,e have seen
above, shared kno,ledge does not reduce its stock, on the contrar*, it )ultiplies %hus the
process o& ,ealth creation, in this aspect, tends to rel* )ore on sharing and collaboration,
rather than locking production in a 5ungle o& patents and prohibitions <pen collaborative
environ)ents, as seen &or e4a)ple in the case o& 0inu4, 3ikipedia, or health services as in
the Lastoral da .rian_a ;Lastoral o& the .hild= 8i+inomics, b* Don %apscott and Anthon*
3illia)s bring inu)erous e4a)ples o& ho, entreprises discover the advantages
1"$
David Forten The ostJCorporate 8orld 8errett/Foehler, San (rancisco, 1999, p "2
1"'
Michael 0 >erlach %lliance Capitalism * Jniversit* o& .ali&ornia Lress, 8erkele*, 1992, p !9 >erlach
observed that the e4changes properl* based on the anon*)ous )arket space Hin practice beco)e rare and
li)ited to a relativel* straight path o& routine transactionsI ;p $1=@ also see the ,ork o& Ca)es + Austin, The
Collaboration Challenge, published b* Drucker (oundation, as ,ell as the vie, o& the institution b* Douglass
. :orth, Institutions, Institutional Change and 4conomic erformance, .a)bridge Jniversit* Lress, 1990
10$
A neat illustration co)es &ro) the robot industr*, ,here co)peting corporations, tired o&
,riting so&t,are &or robot )ove)ents that had alread* been created b* a co)petitor,
decided to 5oin on an open operating s*ste) and open their attain)ents %he result is that
instead o& devoting a great part or their e&&orts on reinventing the ,heel, all are ,orking on
ne, &ields, and the s*ste)ic productivit* ,as increased .a)pbell Mac>regor Robots to
get their o,n operating s*ste) %he ,ar based on ithis is )inei is counterproductive ,hen
dealing ,ith kno,ledge, but subsists becaused our la,*ers and )anagers keep their heads
in the sa&er 20
th
centur* hard goods econo)*
1""

Another d*na)ic that enhances collaboration is connectivit*9 it is so eas* to collaborate
even a)ong distant agents that the )edieval idea o& the lone standing and sel&/su&&icient
castle beco)es increasingl* ridiculous, 5ust as the li)ited vision o& the enterprise ,ith its
icaptainI entrepreneur, &ighting against all, locking up secrets, beco)es increasingl*
restricted In this sense, the inter/universit* collaboration net,orks are sho,ing )ore
intelligent and )odern ,a*s, though the bulk o& the acade)ic ,orld also tends to protect
itsel& in to,ers
A third d*na)ic is related to our basic &or) o& de)ographic organi1ation, the cit*, ,ith its
rural surroundings 3e are no longer scattered rural populations and even the rural spaces
belong to a HrurbanI )oderni1ation process, as researchers &ro) Jnica)p have de&ined it
In this sense, as ,e sa,, each cit* ,ith its surroundings constitutes a unit o& econo)ic
accu)ulation, ,hich as a s*ste) ,ill be )ore or less productive depending on ho, it
)anages to beco)e organi1ed in a collaborative and coherent space ,ithin its territor* and
region
(inall*, a &ourth d*na)ic that ,e also sa, above is linked to the shi&t o& inter/sectorial
co)position o& econo)ic activities, ever )ore &ocused on social policies such as health,
education, culture, in&or)ation, leisure and others %hese activities, )ore than industrial
production, involve intense collaborative processes, are not ade6uatel* governed b* pro&it,
and vitall* depend on the &or)ation o& social capital and participator* decision processes
%he resistance to )ore )odern &or)s o& )anage)ent is natural Kears ago, there ,ere
)a5or struggles against )andator* vaccination o& children, in the na)e o& individual
&reedo) to decide according to pre&erences <bviousl*, vaccinating onl* part o& the
population does not eradicate an* disease
%hese &our )egatrends to,ards kno,ledge econo)*, connectivit*, urbani1ation, and social
services as the )a5or econo)ic sphere o& activities, lead us to a ne, approach to the ,hole
process o& social reproduction %he old practices that &avor co)petition, secrec*, the closed
clubs, la,*ering at ever* corner, sni&&ing out possibile pirates at ever* corner o& the
internet, are si)pl* the application o& an out)oded econo)ic ideolog* that does not &it the
1""
Intellectual propert* discussions usuall* )ove our guts rather our brains, and the ideological responses do
not help Rather than 5ust taking sides, ,e )ust )ove to,ards setting up ne, rules, &or it is a ne, ga)e
Ma4i)i1ing regulations and corporate control is counterproductive
10'
ne, realities In other ,ords, the paradig) o& collaboration not onl* constitutes an ethical
approach )ore rooted in the values o& people ,ho ,ant to en5o* a decent li&e li&e, ,ork
intelligentl* and use&ull*, instead o& having to Hkill a lion each da*I but also sho,s us the
,a* to econo)ic co))on sense in ter)s o& results &or societ* as a ,hole.
>oing back to the beginning, to ,hat .elso (urtado called Hsocial productivit*I,
collaboration has beco)e a ke* approach to )eet si)ple goals &or rational allocation o&
resources centered on i)proving the social 6ualit* o& li&e
3e are not drea)ing o& a cute and nice little ,orld here .ollaboration can generate 6uite
di&&erent results %he large phar)aceutical corporations have collaborative arrange)ents
bet,een the) allo,ing )assive pro&its b* restricting &ree access to the )anu&acture o&
drugs, ,hich in turn per)its the) to rise prices 8ankers in 8ra1il collaborate intensel* to
)aintain a s*ste) o& credit restrictions, high interest and e4pensive &ees, to drain )uch o&
the ,ealth generated b* societ*, ,ithout needing to contribute to produce it %he large
)edia groups collaborate ,ith the large enterprises that bu* advertising and ad5ust the
content o& in&or)ation to suit entrepreneurial interests %here is no shortage o& e4a)ples o&
inside groups acting in &avor o& such )inorit* interests
Lutna) presents the argu)ent issue in his alread* )entioned $owling %lone, re)inding us
that the Fu Flu4 Flan is an organi1ation o& civil societ*, but ,hose goal is to e"clude a
seg)ent o& societ*, instead o& including, in a balanced )anner, diverse interests %his is not
collaboration@ it is corporativis) at its ,orst In other ,ords, the construction o&
collaborative processes re6uired b* a )odern econo)* has to &ace the various t*pes o&
bul,arks that consist o& cartels, trusts and other clubs o& the rich that unbalance
develop)ent %here is no escaping the active pursuit &or )ore de)ocratic, decentrali1ed
and participative econo)ic processes
David Forten, a&ter describing the )ess generated b* )ultinationals in his 8hen
Corporations 'ule the 8orld, shi&ted his attention to the potential o& local develop)ent,
,here the di&&erent stakeholders can )eet and build collaborative s*ste)s H%o resolve the
crisis depends on the )obili1ation o& civil societ* to retrieve the po,er that corporations
and global &inancial )arkets have usurped <ur greatest hope &or the &uture relies on
appropriate econo)ics locall* )anaged that are predo)inantl* supported b* local
resources to ans,er the needs o& local li&e o& its )e)bers in ,a*s that )aintain a balance
,ith the land Such a shi&t in institutional structures and priorities )a* open the ,a* &or the
eli)ination o& scarcit* and e4tre)e ine6ualit* o& hu)an e4periences, i)ple)enting a true
de)ocratic citi1enship and liberating a potential &or individual and collective gro,th and
creativit* no *et &ul&illedI
1"-

%here are no si)ple solutions in this area, but the paradig) o& collaboration un6uestionabl*
opens a rene,ed outlook Markets are necessar*, but are &unctional in restricted areas o&
1"-
/ Forten, op cit p -
10"
activities, such as s)all enterprises >oing be*ond our ideological clashes bet,een those
,ho clai) all po,er to the state, and the &ree )arket &unda)entalists, ,e )ust understand
that the )odern co)ple4 societ* )ust rel* on a variet* o& )anage)ent s*ste)s, a)ong
,hich de)ocratic public planning, local participator* )anage)ent, inter/entrepreneurial
articulation and also, traditional )arket )echanis)s ,here the* are still &unctional :e,
)echanis)s are clearl* necessar*, &or e4a)ple, to bring so)e order to the )ess created b*
the global &inancial speculation s*ste), and the caos o& co))odit* prices %hus, i& ,e go
be*ond the idea that a new world is possible, ,e have to sho, that a new management is
possible. .learl*, the solutions are to be &ound in &le4ible articulations o& di&&erent
)anage)ent s*ste)s, based on their &unctionalit* rather than rusted ideologies 3hat ,e
are &acing is not &ree )arket versus state control, but a )ess* corporate control over the
state, and an overall loss o& governance
1"#
<ur si)pli&ied intuitions those une4plained but po,er&ul argu)ents that lurk so)e,here
deep do,n in our guts, but ,hich ,e like to present as brain* suggest that politics is not
&unctional, and that )arket econo)*, setting the sa)e rules o& the ga)e &or all econo)ic
agents, continues to be the best regulator* )echanis) %he truth is that politics itsel& is
changing, evolving to,ards a participator* de)ocrac*, ,hile )arket )echanis)s survive
in increasingl* li)ited areas o& traditional econo)ics, replaced b* ruthless corporate po,er
,ars in politics and the ,orld econo)* +cono)ic de)ocrac* is a necessar* co)ple)ent
that )a* strea)line politics as ,ell as econo)ics
1( !conomics of civil society organi/ations
%he paradig) o& collaboration has )ateriali1ed especiall* in civil societ* organi1ations, in
the so/called ithird sectori, an area that enco)passes a set o& behaviors that are not de&ined
b* traditional paradig)s o& the 6uest &or pro&it or state authorit*
3eakness o& the conceptual de&initions in this area begins ,ith the na)e Hcivil societ*i
3e shall not address this debate, because the huge diversit* o& activities under this label
de&ies precise de&inition Su&&ice it to sa* that ,e re&er to civil societ* organi1ations, :><s,
co))unit* organi1ations and so on Indeed, ,e continue to de&ine the entire area b* Hnoni,
,hether in the J: ter)inolog* ;non/govern)ental= or in the A)erican ter)inolog* ;non/
pro&it, there&ore not entrepreneurial=, or *et in the concept o& ithird sectori ;ie neither
State nor enterprise= Jntil these various areas o& activit* that are e)erging ,ith vigor gain
a clearer &or)at, the* shall be de&ined according to the entities that ,e understand in a
&airl* clear )anner the State and the enterprise even i& onl* b* e4clusion
(or econo)ists, this area is a nuisance %he State has a logic de&ined b* the ad)inistrative
public la, Its product is accounted &or b* ho, )uch it costs +nterprises have another
1"#
/ %he argu)ent &or di&&erent )anage)ent solutions and decision/)aking processes in the ne, co)ple4
societ* can be &ound in our % 'eproduGHo &ocial, vol II ;&ull te4t online at http9AAdo,bororg=
10-
logic, ho,ever 5ust as clear, that is to )ake )one*, the* are governed b* co))ercial la,,
and their contribution is appraised b* the added value %he %hird Sector perturbs this logic
Actions spring &ro) the spontaneous )ove)ent o& a group o& people concerned ,ith a
social proble) that has no apparent solutions in either the State or the enterprise, ,ho
beco)e organi1ed to &ind an ans,er, and usuall* tend to put pressure both on the State and
the corporations
%his area has a ver* &ragile legal de&inition9 it relies on a legislation pertaining to nonpro&it
associations, in so)e cases in 8ra1il takes the &or) o& <S.ILs ;.ivil Societ* <rgani1ations
o& Lublic Interest=, in others it )a* take the &or) o& a cooperative, or *et o& a sel&/)anaged
enterprise, in line ,ith a ne, line that has been called the solidar* econo)*
1"9
%o add up
their costs is not al,a*s indicative &or the* rel* heavil* on volunteering, various &or)s o&
donations %o assess their product is even )ore co)ple49 >reenpeace pla*s an i))ense
role in environ)ental protection, but since ,e do not )oneti1e the environ)ent, ,e ,ould
not even kno, ho, to set a value on ,hat ,as saved :obod* counts the contribution o&
the Lastoral o& the .hild to the >DL, and nevertheless, i& ,e add up the da*s o& ,ork that
&a)ilies no longer lose, )edications the* do not have to bu*, or hospitali1ations avoided,
,e ,ould have an i)pressive contribution to s*ste)ic productivit* in )an* regions %he
hu)an rights organi1ations pla* a vital role against the irresponsibilit* ,ith ,hich
govern)ents or corporations violate the), but nobod* kno,s ho, to account &or their
contributions
At the heart o& the issue is that non/organi1ed rights do not )ateriali1e %he State, as ,ell
as the corporation, are structured entities .ivil societ* can be ver* large but it is scattered
in ter)s o& diverse and di&&use interests A re&erendu) on the preservation o& the A)a1on
al)ost certainl* ,ould achieve national unani)it*, but the punctual and organi1ed interest
o& a lu)ber )ill or so*bean producer prevail, and the &orest is destro*ed %he ver* strong
but di&&use interest o& the population does not lead to a concrete action, unless people
interested in a speci&ic issue have so)eone ,ho ,ill represent the), do the corresponding
research, publici1e the proble)s in the )edia, and )ake a 5udicial noti&ication %hus the
possibilit* o& creating entities to help us organi1e interests that, albeit di&&use are essential,
beco)es vital &or the &unctioning o& societ*
%he political contribution o& such institutions has been critici1ed An enterprise that
develops an activit* that ,ill create 5obs, even ,hile generating signi&icant environ)ental
destruction, believes that it has no accounts to render 3ho elected the environ)entalist
association that decided to protest7 Indeed, the strength o& civil societ* organi1ation is that
their sole strength co)es &ro) the social support it generates Its pro5ection does not
depend on &inancial strength or threat o& a &ine, but on the respect it deserves In this sense
1"9
Laul I Singer IntroduGHo [ 4conomia solidLria ;Introduction to the &olidary 4conomy<J SNo Laulo, +d
Lerseu Abra)o, 2002
10#
it is a pro&oundl* de)ocratic instru)ent, an essential co)ple)ent to the traditional
)echanis)s o& social )anage)ent
0ester Sala)on &ro) the Cohn Eopkins Jniversit* &aced the arduous task o& s*ste)ati1ing
data on the nonpro&it sector, conducting an international research ,hich is the basic stud*
that orients us toda* %he &irst point to be )ade is the relative ,eight o& these activities that
)an* still vie, as )arginal9 in developed countries it accounts &or -G o& the ,ork&orce,
and i& ,e add voluntar* ,ork it reaches 10G It is e6uivalent to the total industrial
,ork&orce in the Jnited States, &or e4a)ple, that no, e)plo*s less than 10G o& the
,orkers In 0atin A)erica, the sector is still ,eak, representing respectivel* 22G and !G
In 8ra1il, the corresponding &igures are 22G and 2'G
1-0
(or )an*, the activities o& civil societ* si)pl* e4e)pt the State &ro) its obligations, to
others it is a iband/aidi &or corporate e4cesses %here&ore, its econo)ic Hnon placei also
represents a political Hnon placeI %hese si)pli&ications are related, in &act, to the &act that
,e still pro5ect our ideological ,ar o& the 20
th
.entur* on the ne, processes9 on the one
hand ,e cling to the State?s co))it)ents, ,ithout thinking about their &easibilit*, on the
other, as in Milton (ried)an?s vie,, this is a diversion o& )one* that should go into the
pockets o& corporate e4ecutives and shareholders As a )atter o& &act, the sources o& inco)e
o& civil societ* organi1ations in 8ra1il are around 1''G &ro) the public sector, 10-G
&ro) corporate philanthrop* and -!#G &ro) their o,n resources, derived &ro) pa*)ents
&or services provided
1-1

%he productive contribution o& .S<s is underesti)ated because their contributions are
largel* in the area o& non/)onetar* econo)ics, and there&ore is part o& the distortion that
occurs in the )easure)ent o& results 3hen ,e broadl* address 6ualit* o& li&e and not onl*
>DL gro,th, i)pacts are i))ediatel* visible Returning to e4a)ples given above, the
Lastoral o& the .hild is able to raise a li)ited a)ount o& resources, but i& ,e esti)ate the
concrete results &or the children and their &a)ilies, including )onetar* e4penses avoided,
the i)pact is ver* large@ the pressure o& a co))unit* &or a clean river is re&lected in leisure,
disease reduction, and e4pressive savings because preventive actions are )uch cheaper than
the cost o& re)ediation
In developed countries, the e4tent o& co))unit* activities is &ar )ore enco)passing, as ,e
have seen, and the StateZs participation is also )uch greater As an order o& )agnitude, the
public sector contributes $0G o& the &unding o& .S<s, and pa*)ent &or services rendered is
'0G, private contribution is roughl* the sa)e as in 8ra1il, about 10G o& the total, there&ore
ver* )arginal A strong public sector participation in &unding .S<s in developed countries
is directl* related to evidence o& e4ceptional s*ste)ic productivit* that these organi1ations
acco)plish
1-0
0ester Sala)on et al, Alobal Ci/il &ociety: dimensions of the nonprofit sector, p !#- and &&, data &or
199' the chapter about 8ra1il, led b* 0eilah 0andi), is particularl* interesting
1-1
Ide), p $0$ and $0'
109
In the e4a)ple seen above o& &inancial inter)ediation .S<?s, the &act that these
organi1ations are rooted in co))unities and controlled b* the), )akes the use o& these
resources )uch )ore rational and in tune ,ith local needs In )an* cases, ,hen a
co))unit* raises &unds &or an initiative considered i)portant, the State contributes ,ith a
counterpart, since it kno,s that ,hen a co))unit* decides to take )one* &ro) its o,n
pocket, the initiative is reall* necessar* %he outco)e is that public )one* thus e)plo*ed
beco)es )uch )ore productive in ter)s o& practical results &or the co))unit*
<ne o& the i)portant points in this area o& econo)ics is the &re6uent di&&icult* to assess
results A cultural progra) to support *oung people )a* see) a ,aste o& )one* Eo, does
one assess i)prove)ent o& social capital, &eelings o& sel&/estee) or avoided costs7 Along
the line ,e sa, in .hapter !, ,hen )easuring a territor*?s s*ste)ic productivit*, ,e )a*
assess results +ssentiall*, toda* it is understood that 6uantitative )easure)ents are not
su&&icient %he idea that concrete results are the ones that can be )easured and translated
into nu)bers is si)pl* &oolish Mi4ing 6uantitative and 6ualitative assess)ents ensures a
)ore realistic standpoint Man* technicians eager to put nu)bers on their reports to render
account, &or e4a)ple, o& a cultural initiative, could si)pl* ask people o& the co))unit* i&
the* are satis&ied Satis&action o& the co))unit* is the best )easure)ent o& the correct use
o& resources, not re6uiring co)ple4 calculations o& pro&itabilit*
%o achieve a high productivit* o& societ* initiatives the )ost practical ,a* is to develop
social in&or)ation s*ste)s &or the co))unit* itsel& Ea1el Eenderson provides an
interesting rationale starting &ro) a &a)iliar e4a)ple9 the tra&&ic 5a) 3e can let the
invisible hand solve the proble), ie, let each one do ,hat he thinks best %he result ,ill
probabl* be a second large tra&&ic 5a) according to the )ost obvious solutions &or tra&&ic
alternatives <r ,e can close streets and direct tra&&ic b* )eans o& police authorit* <r, ,e
can let the alternatives open, but ensure that there is good in&or)ation on the radio about all
the tra&&ic in each region %his last option leaves the initiative up to the citi1en, but ensures
that he can )ake the best choice, ,ell in&or)ed, and not blindl*
%he &irst option creates chaos, and represents 6uite &aith&ull* the liberal s*ste), ,here each
seeks to )a4i)i1e bene&its ,ithout being ade6uatel* in&or)ed about the initiatives o&
others (or e4a)ple, it generates a herd behavior in the &inancial area, ,here a variation in
the ru)ors )akes all speculators run in the sa)e direction, e4acerbating the i)balances
&ro) ,hich the* are tr*ing to protect the)selves %he second, central planning, generates
an order ,here the diversit* o& interests o& the protagonists is not taken into account and
,here the citi1en loses initiative It generates bureaucratic s*ste)s as ,e sa, in +astern
+urope, ,ith a lot o& order and little initiative
%he third s*ste) has the advantage that the in&or)ed citi1en ,ill kno, ho, to take
initiatives that )atch his speci&ic interest ,ith the s*ste)ic logic o& the process In other
,ords, appropriate and ,ell/disse)inated in&or)ation is both an instru)ent o& citi1enship
and o& rationalit* o& develop)ent Modern societies are too co)ple4 to be ruled b* a
110
authoritarian super/po,er And the technological tools ,e )anage are too po,er&ul to
a&&ord to )aintain an Han*thing goesI culture9 in the use o& energ* or ,ater conservation or
in ,a*s o& cultivating a &ield +ver* public institution, private enterprise or civil societ*
organi1ation )ust have an overall vie, o& ,hat is taking place
%he role o& planning )ust obviousl* be restored in this process In the above e4a)ple o&
tra&&ic 5a)s, the ,hole proble) ,ould have been avoided i& transportation in&rastructure
had been planned, and ade6uate public transportation sti)ulated And having plans and
de)ocraticall* discussed long ter) visions &or a cit*, &or e4a)ple, is )uch )ore
de)ocratic than decisions negotiated b* constructors behind closed doors, and the H&aits
acco)plisI ,e have been accusto)ed to &ace 3hat ,e have no, is neither &ree )arket,
nor participator* planning, and cities reduced to i))obilit* b* an e4cess o& )eans o&
)obilit*
In 8ra1il ,e can count on our &ingers the )unicipalities that have a reasonabl* reliable
)anage)ent in&or)ation s*ste) In traditional areas o& production, such as shoes or bread,
price still represents an i)portant ele)ent o& rationali1ation A producer o& ver* e4pensive
tennis shoes ,ill have trouble selling the), and there&ore ,ill have to ad5ust In )uch )ore
di&&use areas related to s*ste)ic productivit* o& a territor*, such as ine6ualit*, cri)e,
environ)ent and the like, organi1ed in&or)ation beco)es the regulator* instru)ent that
price represents in the traditional sectors In the huge sectors that are e)erging such as
education, health, culture and the like, ,e &ace a si)ilar situation +nviron)ent i)pacts
obe* still less to pricing signals %he striking &act here is that ,e do not have territoriali1ed
and integrated in&or)ation to orient social action in the territor* or to evaluate s*ste)ic
productivit*
%here is no intention here to su))ari1e the ,ide range o& initiatives opening along the line
o& the social and kno,ledge areas o& the econo)*, ,hose di)ensions are *et to be
understood, and that clearl* obe* regulator* )echanis)s di&&erent &ro) both the traditional
State as ,ell as o& private enterprise And i& ,e look as civil societ* organi1ations, that is
,here the* thrive
I& ,e associate the e4pansion o& these activities ,ith the structural d*na)ics that underpin
the paradig) o& collaboration seen above urbani1ation and e4pansion o& collective
consu)ption@ in&or)ation technolog* and social connectivit*@ e4pansion o& social policies
that pro)ote decentrali1ed and participator* )anage)ent@ the increasing kno,ledge
content o& the production processes@ the huge predica)ent o& environ)ent issues ,e tend
to vie, in a ne, ,a* the di)ension o& co))unit* based )anage)ent, civil societ*
organi1ations and the overall role o& partnerships and alliances to build a better 6ualit* o&
li&e in ever* cit* and surroundings 8et,een the bureaucrac* o& the centrali1ed state and
truculence o& corporate interests, there is roo) &or intelligent li&e
111
In a stud* o& hundreds o& success&ul local develop)ent practices in 8ra1il, ,e &ound that
the vast )a5orit* involve not onl* organi1ed civil societ* but also partnerships bet,een
these sectors and the traditional public and private sectors In other ,ords, civil societ*
organi1ations are a po,er&ul social articulator serving as ballast o& co))on sense and
rationalit* &or a )uch ,ider range o& activities 3hen *ou associate people to the
initiatives, their interests tend to be )ore present
1-2

3hen ,e look at the e4periences o& social organi1ation that are clearl* success&ul, &ro)
ver* poor Ferala to ver* rich S,eden or .anada, the co))on deno)inator is organi1ed
and de)anding civil societ* &orcing the State to account &or the use o& resources, and
creating an environ)ent ,here private enterprises are obliged to respect social and
environ)ental interests o& the region ,here the* are located <rgani1ations o& civil societ*
in this sense are increasingl* essential %he top do,n econo)*, ,hich is ho, central
govern)ent and corporations tend to ,ork, ,on?t be responsive to people?s interests unless
these interests get organi1ed 8otto)/up is not the alternative, it is the necessar*
co)ple)ent &or balanced develop)ent
In ter)s o& econo)ic de)ocrac*, paraticipation is crucial It is )uch easier to )anipulate
individuals, even i& the* are )illions, than organi1ed social interests As the )echanis)s o&
)arket co)petition are replaced b* oligopolies, cartels and the like ,ith global po,er a
large part o& the leading econo)ies ,orld,ide toda* are enterprises, not countries, ,ith
boards no one elected the organi1ed e4pression o& societ*?s interests is beco)ing
essential to the &unctioning o& the econo)* itsel&
1) !t&ics in economics
%he ethical basis o& the co)petition era is si)ple9 ,hoever ,ins deserves to ,in, as long as
he has co)plied ,ith the rules o& the ga)e +thics in the era o& co)petition ,ould be
contained in the actual production process9 he ,ho ,ins the co)petition is naturall*
entitled to the bene&it, and this advantage ,ould be legiti)ate, a right o& the ,inner %he
su) o& individual advantages ,ould give the )a4i)u) o& social advantage %,o radical
si)pli&ications in that have co)e to do)inate our ,orld o& ideas %he proble) is that the
big ,inners have beco)e strong enough to change the rules, strengthening the)selves even
&urther It is no longer a legiti)ate ga)e, ,hen the strongest also i)pose the rules
I& ,ho ,ins auto)aticall* deserves ,hat he ,on, the ethical issue o& the &inal result is
circu)vented 8ut i& in a ga)e the house al,a*s ,ins, there is so)ething ,rong ,ith the
cards And ,hen ,e look at the outco)e o& the econo)ic ga)e, ,here the planet is literall*
plundered, and al,a*s &or the bene&it o& the sa)e, so)ething is reall* ,rong +cono)ics
get rid o& the ethical issue b* separating econo)ic processes &ro) results I& 2' )illion die
&ro) AIDS, and cannot a&&ord the drug, it is their proble), ,h* don?t the* beco)e
1-2
See in particular the (>R/SL AestHo \blica e Cidadania research progra), headed b* Leter Spink
112
organi1ed to get rich and pa* &or the icocktaili o& drugs7 (our )illion children die ever*
*ear because the* lack access to clean ,ater7 3ell, the rules o& the ga)e are that the &ittest
,in %oda*, $!' &a)ilies add up to a &ortune greater than the inco)e o& !,' billion people,
the poorest hal& o& the ,orld population Are the* s)arter7 Do the* deserve it7 Did the*
produce ,hat the* no, control7
%he signi&icance o& the discreet &raud that the bank o& S,eden co))itted ,hen it decided
to assign the :obel na)e to its a,ards is that the real :obel is associated ,ith science, ,ith
discover* o& la,s, o& itruthsi %his )akes econo)ics see) to be ob5ective in the &ullest
)eaning, according to hard )echanis)s such as the la,s o& che)istr* or ph*sics %he ne4t
step, o& course, is that an* barbarit* can be 5usti&ied because it does not depend on an*one?s
lack o& ethics@ it is a la, And econo)ists are no, introducing the)selves as scientists ,ho
understand the la,s, priests ,ho see clearl* ,here others &eel con&used I& several priests
have a contradictor* interpretation, it does not )atter9 it 5ust goes to sho, ho, deep and
co)ple4 the sub5ect is
%he truth is that there is nothing co)ple4 about a child ,ho dies o& hunger, or lack o& clean
,ater 3e have the kno,ledge, resources and organi1ational capacit* to re)ed* it in a
short ti)e, but this ,ould in&ringe on the rules o& the ga)e, because in the vie, o& the
,inners, the losers have to take care o& the)selves, ,ork their ,a* up the ,a* the rich did
%he &act that ,e have so)e $ billion lost at the botto) o& the p*ra)id, those ,ho the 3orld
8ank concedes the* have no access to Hthe bene&its o& globali1ationI, does not see) to
)ove the top &ortunes to an* concern Moreover, an* help )a* lead the poor to idleness,
,hich the rich &ind revolting.
+cono)ists are not scientists researching the la,s o& nature@ the* are people ,ho stud*
)echanis)s based on social practices that are established because o& the di&&erent econo)ic
agents? political po,er %he econo)* operates according to certain rules o& the ga)e, but
the rules are agreed upon in ter)s o& une6ual po,er %here is no econo)ic la, that 5usti&ies
that pri)ar* teachers in public schools earn ,hat the* earn in 8ra1il, or that &inancial
)iddle)en in a given historical )o)ent are &illing their pockets to the sa)e e4tent that
the* ha)per the econo)* %he onl* la, that ,orks here is the la, o& the 5ungle And as
econo)ic activities escape an* de)ocratic decision/)aking, the gul& gro,s deeper
:o Hla,sI in econo)ics7 <& course, there are things that ele)entar* co))on sense
teaches, and that should be taught and respected I& there is a higher inco)e in the poor
seg)ents o& the population, there ,ill be greater de)and &or basic goods I& a person is ver*
poor, he ,ill not have access to education, there&ore ,ill not get a good 5ob, and ,ill
re)ain poor, ,ith the e4ception o& the &e, percent that b* so)e outstanding skills or
opportunit* ,ill be able to rise in li&e, and ,ill be the sub5ect o& )idia reports to sho, that
all *ou have to do is ,ork hard I& there is a poor harvest o& rice, there ,ill be less rice on
the )arket, enabling )iddle)en to raise prices because the interpla* o& suppl* and de)and
e4ists, and &urther)ore, e4isted long be&ore capitalis) in an* +astern )arket
11!
Stud*ing such interaction, identi&*ing correlations, is interesting, but there is nothing ver*
ne, to idiscoverI in these processes Stiglit1 ,on the i:obeli in econo)ics because he
sho,ed that econo)ic agents have une6ual access to in&or)ation, ,hich is true, but is not
e4actl* a discover* 0a,*ers also stud* in depth the legal co)ple4ities, the* understand
things that co))on )ortals do not, reach opposite conclusions according to interests o&
those ,ho pa* the), but no one invented a :obel Lri1e &or la,*ers, even i& so)e reach a
degree o& subtlet* in the interpretation o& the la, that the* should deserve one
%he entangle)ent o& contradictor* e4planations &ound in econo)ics is )ore the outco)e o&
diverse interests, than o& the co)ple4it* o& the pheno)ena the)selves %he union o& bank
e)plo*ees in 8ra1il e4plains )echanis)s adopted b* banks to generali1e e4orbitant
interest rates in the countr*, and gives sound nu)bers %he econo)ist &ro) (ebraban the
8ra1ilian bankers? &ederation replies ,ith an i)pressive list o& di&&iculties in providing
credit, using precisel* the reverse reasoning, also presented as ob5ective econo)ic anal*sis,
and su)s the argu)ent up stating it is the &ault o& the heav* ta4es the govern)ent burdens
the) ,ith %he govern)ent ,ishes to keep the unspoken pact bet,een bankers, the .entral
8ank and the Ministr* o& (inance, because he needs the votes in .ongress, and so e4plains
that all this is reall* to protect the 8ra1ilian population &ro) a ne, in&lationar* surge
1-!
<n the scienti&ic side, Laul Singer, a decent econo)ist, sho,s that ,ith this level o& interest
rates production processes beco)e )ore e4pensive and there&ore these rates, instead o&
reducing in&lation, sti)ulate it A)ir Fhair sho,s that in this era o& open econo)ics, and
,ith products &ro) .hina at our doors, the threat o& in&lation cannot be brandished %he
banking e)plo*ees? union continues to co)plain, the banks clai) that their solid pro&its
sho, that the )one* o& our deposits is in able hands, the govern)ent is satis&ied ,ith the
votes auite a &e, econo)ists clai) that this is a scandal, but the* are not on the side ,here
the )one* is, ,hich is supposed to )ean the* are not good econo)ists >ood econo)ists
are at SSL and si)ilar institutions, giving out AAAs to bankrupt institutions And
s,i))ing in bonuses 3here do the econo)ic la,s co)e in7 3ell, the la,s
3hat is reall* relevant here is that the ,a* the ga)e is pla*ed the planetZs resources are
s6uandered, and an i))ense )a5orit* o& the population is e4cluded &ro) decent 5obs and a
digni&ied li&e, and that both gul&s are gro,ing deeper And a ne, &actor is beco)ing
crucial, na)el* that the poor in the ,orld, be it in the Arab ,orld, in 0atin A)erica or
elese,here, are beco)ing ,iser as to their rights, to the lost possibilities &or their children,
to the c*nicis) o& the ,hole ga)e
3e are going through a stage in ,hich &or )one*, an*thing goes An*thing indeed, the
electronic church, the teacher/student relationship, the &a)il* relationship, the lover?s
relationship and the political relationship +nterprises that pollute rivers )ake an econo)ic
1-!
(e, non/specialists ,ould believe it, but the average consu)er credit interest rate in 8ra1il in (ebruar*
2011 is 122,$" per cent See the di&&erent rates at http9AA,,,ane&acco)brALagesALageasp47
te)aX#SidX1#0-
11$
calculation, 5ust as it is taught in econo)ics9 ,hat is the probabilit* o& ,aste thro,n into
the river being detected, )ultiplied b* the si1e o& the &ine@ this co)pared to ,hat it ,ould
cost to install a ,ater pre/treat)ent process, distributed a)ong the products? volu)e
Jsuall*, it ,ill be good business to thro, the ,aste into the river %he calculation does not
account &or ho, )an* people ,ill get sick, ho, )uch nature is destro*ed in the rivers, ie,
the end result &or societ* %he calculation is strictl* econo)ic@ the unit o& calculation is the
enterprise itsel&, not the overall process 3hat happens outside the enterprise is e4cluded
&ro) the calculation, and ,hoever pa*s the &ine is ,ithin the la, And i& the* ,ant to
increase the &ine, there are lobb*ists to keep the &ine at its ridiculous si1e, or even to repeal
the la, itsel& And i& control is e4panded, ,e ,ill hear righteous protests o& big govern)ent
hurting our &reedo)
<n the theoretical level ,e al,a*s have a Milton (ried)an and )an* &ollo,ers, e4plaining
that it is not ,ithin the legiti)ate hori1on o& a corporation?s concerns to think about ethics,
but i& individuall*, people ,ho co)prise the enterprise ,ish to be charitable, it is their
privilege %o engage a legal entit* to ,orr* about the social and environ)ental, e4plains
the o,ner o& a i:obelI Lri1e o& +cono)ics, His certainly not democraticI
1-$
%he rationale is not co)plicated 3hen a condo)iniu) or an enterprise du)ps ,aste into a
river, and a&ter,ards the environ)ental agenc* has to carr* out re)ediation, costs are &ar
higher, and as ever*thing has a cost, citi1ens ,ill pa* through ta4es It is a stupid solution
because it is )ore e4pensive &or ever*one, although &or the enterprise that built the
condo)iniu) it ,as cheaper (or an advantage to an enterprise o& 100, societ* bears the
cost o& '00 spread over all ta4pa*ers .osts distributed a)ong )an* people are less
noticeable .ontractors ,hich ,ill cleanse or desilt the river ,ill also pro&it, and ,ill
support the s*ste) %he e4tra costs generated at various levels ,ill be accounted as >DL
gro,th, giving an i)pression that ,e have a higher le/el of life ;read >DL per capita= %he
&act that the quality of life has su&&ered does not enter the calculation
1-'

%he &act that ,e consider it nor)al that ethics is included in the curriculu) o& )edical
courses but is )arginal in the courses o& econo)ics, is astounding Ma*be it avoids
discouraging the students, not to )ention the teachers %he prevailing theor* placed ethics
outside the scope o& the discussion b* )eans o& a radical si)pli&ication9 i& enrich)ent ,as
reached b* illegal )ethods, that?s ,hat 5ustice and the police are &or and there&ore it is a
cri)inal issue And i& it ,as achieved b* legal )ethods, it is legiti)ate, and there&ore not
an ethical issue
1-$
Intervie, ,ith Milton (ried)an in the docu)entar*, The Corporation ,,,thecorporationco)
1-'
3hen trans&ering the costs to the State, the co)pan* beco)es )ore lucrative and presents this argu)ent as
proo& o& e&&icienc* %he State, ,hich picks up the bill the e4ternalities ,ill be presented as Hless e&&icientI,
since the govern)ent costs ,ill have increased >overn)ent bashing has beco)e a &avorite sport a)ong
those ,ho generate its costs Mentioning &reedo) usuall* adds a touch o& ethics to ,hat consists essentiall* o&
)one* grabbing
11'
%here is abundant literature on the sub5ect, starting ,ith Ada) S)ith, going through the
utilitarians and reaching the nonsense o& (ree to Choose b* Milton (ried)an %his entire
theoretical &ra)e,ork, ho,ever, is based upon pre)ises that no longer e4ist %he basis ,as
the )arket )echanis), ,ith &ree co)petition, in other ,ords, ,ith no actor su&&icientl*
do)inant to i)akei the )arket, ,ith &ree &lo, o& &actors, ,ith transparenc* o& in&or)ation,
,ith the e4changes taking place openl* in the H)arketI In &air pla*, results also ,ould be
&air And a regulator* state ,ould ensure that all respect the rules o& the ga)e
3e have, o& course, so)e proble)s ,ith this reasoning (irst, because one believes that the
rules o& the ga)e are ,ritten b* a legiti)ate political representation, ,ithout inter&erence
&ro) econo)ic groups As in realit* representation is established toda* is b* elections
,here )one* reigns, the la, that the enterprise ,ants is sanctioned %he &act that the la, is
biased )a* be vie,ed as a non/econo)ic )atter, but this points to,ards another issue9
econo)ics tends to li)it the ethical vie, to the econo)ic activit*, isolating itsel& &ro) the
e&&ects caused in other areas such as politics %o practice politics in a s*ste)ic and
organi1ed )anner spending large a)ounts o& )one*, ,hose source is included in the
price the consu)er pa*s &or the product ,hile at the sa)e ti)e negating responsibilit* &or
,hat is done b* the politicians their )one* elected, is evidentl* co)plicated
1-"

It )ust be re)e)bered that enterprises ,ill trans&er the )one* ,e pa* &or goods
purchased to politicians, in order to t,ist de)ocrac* in their &avor It is a private ta4 ;there
is no ,a* to avoid this use o& our )one* under current rules= that provides &or the
appropriation o& politics b* econo)ic groups I& ,e choose public &unding o& ca)paigns,
e4penses ,ill not undergo an* change, the* ,ill, ho,ever, be e4plicit, and the politicians
less dependent on corporations
<n the other hand, productive processes the)selves generate various t*pes o& social and
environ)ental i)pacts that cannot be ignored, and are no, studied as ie4ternalitiesi, as i&
there ,ere an*thing ie4ternali to econo)ic processes A producer o& short/barrel revolvers
e4plains in an intervie, that it is not hi) ,ho pulls the trigger %he gun dealers on the
planet, ,ho no, &lood A&rica, &or e4a)ple, ,ith )illions o& sub/)achine guns, report that
the* onl* sell a product, )eet the de)and %he cigarette producers e4plain the* onl* sell
cigarettes, and that govern)ents have to ,orr* about health Lhilip Morris ,ent so &ar as to
report to the govern)ent o& the .1ech Republic that the sale o& cigarettes ,ould reduce
their e4pense on retire)ents, b* shortening the li&e o& the elderl* In other ,ords, ,e ,ould
have a positive e4ternalit*.
1-"
Kves De1ala* is seen here occup*ing an i)portant void b* stud*ing the do)ination o& the industr* o& la,s
b* corporations that toda* control large groups suppl*ing legal services9 >es 7archands de droit: la
restructuration de l@ordre ,uridique international par les multinationales du droit ;The 7erchants of >aw: the
restructuring of the international legal order by law multinationals= (a*ard, Laris, 1992, a thesis ,ritten
under the guidance o& Lierre 8ourdieu An e4cellent paper b* Ea1el Eenderson e4plains the ne, ,orkings o&
political ca)paigns &unding9 The $est Congress your 7oney Can $uy, 2010, ,,,ethical)arketsco)
11"
Rhodia and Jnion .arbide got rid o& the highl* to4ic organochlorides in the Santos
lo,lands b* isellingi the poison to truck o,ners in the region ,illing to du)p these to4ics
an*,here, in the Rale dos Liljes a)ong other places9 thereb* these enterprises considered
that b* presenting signed receipts the* ,ere e4e)pt o& responsibilit* %he* ,ere not the
direct cause +cono)ic ethics &ocuses on lengthening the chain o& responsibilit*, thus
diluting it, to reach the ideal toda* c*nicall* e4pressed as plausible deniability.
Stiglit1 ,as so i)portant because he called attention to another )echanis) that co)pletel*
distorts the rules o& the ga)e, ,hich is the ine6ualit* on the level o& in&or)ation o& various
econo)ic agents Eo, can ,e kno, ,hat e&&ect can a drug have on our health, ,hen it is
pushed b* illegal )arketing7
1--
%his is as true &or so )an* industrial products, the
che)icalia in &ood and cos)etics, &inancial inter)ediation, the ,a* our phone bill is
calculated, legal &ees and and so )an* others
%he )ere )uscle o& a large corporation, ,ith its &inancial resources, la, &ir)s, access to
the )edia and the 5udiciar*, radicall* upsets the balance o& po,er %hus the )echanis)s o&
H)arketi beco)e conscious processes o& organi1ation o& privileges, ,ith political pacts,
agree)ents bet,een enterprises, )edia control, purchasing scienti&ic papers in universities,
control o& political parties and seg)ents o& the 5udiciar* and so on %he organi1ed po,er o&
large corporations is inco)parabl* superior to that o& ordinar* citi1ens, or s)aller and
scattered enterprises An*one ,ho has tried to ter)inate the agree)ent ,ith a telephone
co)pan* is a,are o& his insigni&icance &acing the co)pan*
More i)portant perhaps, is the &act that the prevalent technological processes are
increasingl* )ore po,er&ul, and generate a radicall* ne, scale o& i)pacts %he &act that ,e
are losing control o& regulation )echanis)s has increasingl* severe conse6uences %his is
the case o& the )entioned industrial ocean &ishing, the destruction o& rain&orests and so
)an* others A curiosit*9 the )ovie ,ith the little &ish :e)o has created a cra1e &or
A)erican children to have a si)ilar pet &ish At other ti)es, there ,ould be no proble)@ the
&ather ,ould bu* so)e gold&ish %oda*, ,ith ne, technologies, co)panies are catching the
poor little &ish on an industrial scale in the Laci&ic, to isuppl*i the childrenZs )arket,
)aking :e)o liable to e4tinction in no ti)e It ,as esti)ated that -! )illion sharks ,ere
killed in 200', because Capanese like the &ins %echnologies allo, us to do things on a scale
that generates i)pressive pro&its, but also irreversible processes %he sheer scale o&
intervention &acilitated b* ne, technologies breaks the )arket balancing )echanis)s
;through co)petition= and nature?s restoration o& resources
%his helps us understand ,h* pro&it as a rationali1ing s*ste)ic ele)ent o& econo)ics
beco)es, accordingl* to the case, insu&&icient, ine&&ective or counterproductive 3hat
1--
A si)ple e4a)ple is L&i1er?s 2! billion settle)ent ,ith the JS govern)ent over charges o& illegal drug
)arketing, :e, Scientist, 1 Ma* 2010 Marcia Angell?s book, The truth about the pharmaceutical industry, is
a beauti&ul description o& ho, )uch in the dark ,e are in the &ace o& the health corporate ,orld In 8ra1il it is
increasingl* being called HindQstria da doen_aI
11-
)atters, ulti)atel*, is the practical outco)e %he chas) bet,een rich and poor is
dra)aticall* ,idening, the seas are being destro*ed, ,e are losing the green ground cover
and la*ing entire regions barren, ,e are creating global ,ar)ing and cli)ate chaos In
particular, this s*ste) does not kno, ho, to distribute, because the po,er generated in the
production process e)phasi1es the ine6ualit* bet,een actors, )ultipl*ing privileges, and
generating political loss o& control De)ocrati1ation o& the econo)* is not 5ust a nice idea,
it is a vital necessit*
.ollaboration econo)ics is based on co)pacts, and a co)pact that does not )ention
results, the process? sustainabilit* and product distribution, ,ould be )eaningless And as
,e introduce distribution ,hen de&ining the rules o& the ga)e the for whom issue ,e
also introduce the debate on what ,ill be produced, as ,ell as the how we produce issue,
,ith all the social and environ)ental i)pacts (ro) this standpoint, ethics in the econo)ic
process ,ill no longer rel* on the la, o& the strongest and ,ill be governed b* the greater
s*ste)ic interest %his, in turn, b* generating a )ore balanced societ* and )aintaining an
environ)ent )ore &avorable to li&e, ,ill e4pand our options and result in greater individual
&reedo) Is this all &easible7 3ell, it is necessar*, and the onl* di&&erence is ,hether ,e
start the corrections no,, ,hen the rising ,ater is reaching our bell*, or in a decade ,hen it
,ill be reaching our throats
+ach o& us, as an individual, parent, teacher, entrepreneur, e)plo*ee, union )e)ber or
,hatever, )ust have as a guideline a reasonable balance bet,een our o,n interests,
per&ectl* legiti)ate, and the co))on good +ver* si)ple act in our dail* li&e can be
appraised &ro) the point o& vie, o& our personal or &a)il* ;or business= best interest, and
&ro) the point o& vie, o& the global i)pact Introducing the ethics o& the co))on good
into our decision )aking process is a )a5or shi&t It )eans )easuring success not onl* &or)
the point o& vie, o& ,hat share o& social production ,e )anage to la* hands on, and
sho,ing it o&&, but also looking at the contribution ,e have )ade %he proble) o& the
traditional corporation is its di&&icult* to include the co))on good in their goals 3e )ight
think o& creating increasingl* stringent la,s 8ut in realit*, as the above/)entioned
)echanis)s ,orsen, ,e ,ould be s)othered b* rules and prohibitions A culture o& ethics,
based on the understanding o& the natural li)itations o& a s)all planet, is not a li)itation o&
&reedo), it links to the satis&action o& doing so)ething good, as ,hen ,e &i4 so)ething in
our ho)e %his is our ho)e, and the onl* one
3e are all looking &or i)prove)ent, groping, tr*ing to rebuild the bridges bet,een
econo)ic activit* and ethics i8ringing values back to econo)ic li&e is inevitabl* part o&
our 6uest &or li&e a&ter capitalis),i sa*s David Forten i%he )ore deepl* the values de&ined
b* these rules beco)e assi)ilated into popular culture as a necessar* and accepted
bench)ark o& econo)ic li&e, the less ,ill be the need &or ,eight* public controli
<n this level, advances are beginning Man* enterprises toda* alread* have progra)s o&
social and environ)ental responsibilit* It is true that )an* do so )ore &or cos)etic
11#
reasons, to have a clean na)e, than to i)prove their real social value as an enterprise 8ut
on the ,hole, the process is advancing because societ* is beginning to de)and results in
ter)s o& 6ualit* o& li&e, and is beco)ing )ore a,are, thanks especiall* to civil societ*
organi1ations, and a ne, ,orld,ide set o& values that is co)ing o& age
A)art*a Sen has pla*ed a pri)ar* role, b* &ocusing the discussion on the issue o& &reedo),
,hich in turn introduces the central proble)s, ,hich are ine6ualit* and environ)ental
destruction, ,hich link ,ith the political issue o& active citi1enship, the right o& ever*
citi1en to build his options As the povert* deepens and it is not onl* a 6uestion o& ho,
poor and ho, )an*, but also ho, deep the indignation per)eates societ* options also
beco)e restricted as do the people?s abilit* to take initiatives on their o,n li&e And the
&eeling o& helplessness generates despair, particularl* i& ,e kno, the resources are there
3e )ust not co)plain i& desperate people react in desperate ,a*s It is an ele)entar* dut*
o& those ,ho ,ield econo)ic and political po,er to )ake sure the ke* issues are adressed
(or Sen, it is essential to ipro)ote creation o& conditions in ,hich people have real
opportunities to 5udge the kind o& li&e the* ,ould like to live +cono)ic and social &actors
such as basic education, ele)entar* healthcare and secure 5obs are i)portant not onl* as
such, but &or the part the* pla* in providing people ,ith the opportunit* to &ace the ,orld
,ith courage and &reedo) %hese considerations re6uire a broader in&or)ation base@
especiall* &ocused on people?s abilit* to choose the li&e the* have reasons to valueI
1-#
%his leads Sen to re&ute the theoretical &raud )eant to 5usti&* peoples? )iser* as an
inevitable sacri&ice on the ,a* to econo)ic e&&icienc*, an argu)ent so &a)iliar &or
econo)ists o& the )ilitar* dictatorship9 H%he 6ualit* o& li&e can be greatl* i)proved,
despite the lo, inco)e levels, through an appropriate progra) o& social services %he &act
that education and healthcare are also productive &or econo)ic gro,th strengthens the
argu)ent in &avor o& stressing the social provisions in these poor econo)ies without having
to ,ait to `get rich? &irstI
1-9
In other ,ords, to )eet the )ost pressing needs o& the poor releases their abilit* to choose
and their o,n productive initiative, reconciling ethics and econo)ics %his standpoint
ac6uired a base o& e)pirical kno,ledge through the 'eports on -uman .e/elopment, as
seen above, but also paved the ,a* &or a ,ealth o& theoretical papers that again take up
econo)ic anal*sis in line ,ith priorit* o& the right to options b* the )ass o& deprived
people on this planet
1#0

1-#
A)art*a Sen .esen/ol/imento como >iberdade O.e/elopment as (reedomg .o)panhia das 0etras, SNo
Laulo, 1999, p #2
1-9
id, ibid, p ""
1#0
.& &or e4a)ple, in .arlos 0opes, CooperaGHo e .esen/ol/imento -umano: a agenda emergente para o
no/o milEnioXCooperation and -uman .e/elopment: the emerging agenda for the new milleniumY, Jnesp,
SNo Laulo, 200'@ see also Latrick Riveret, 'econsiderando a 'ique)a X'econsidering 8ealthY, J:8,
8rasilia, 200", and the ,ork o& Cean >adre* )entioned previousl*
119
%he ethical challenges are )ultipl*ing %his relates, &or e4a)ple, to the right o& &uture
generations ,ho ,ill su&&er ,ith our ,aste and s6uandering o& nonrene,able resources
these generations are not here to co)plain to irresponsible )anipulation o& li&e, the
surrealis) o& iintellectual propert*i ;even o& our poor rapadurab=, our right to kno, the
content o& the products or the environ)ental costs and so on
%he ke* &or us here, is to )ake clear that the rules o& the ga)e )ust change, that ethics in
the econo)* )ust operate ,ith a broad vie, o& the develop)ent process, no longer ,ith
punctual results and isolated &ro) conse6uences It is no longer a )atter o& kindness, it is
ele)entar* co))on sense <ver and above the output issue, ,e are concerned ,ith the
outcomes
In theoretical ter)s, the utilitarian paradig) ,hich is the ethical basis o& the current
econo)ic )ainstrea) should be inverted (ro) an outlook ,here the interest o& each
,ould result in best possible social acceptance the su) o& egois)s so)eho, leading to a
viable altruis) the changes under ,a* point to,ards a s*ste) ,here collaborative
processes centered on our 6ualit* o& li&e and the co))on good bring about greater potential
o& individual achieve)ent, a &eeling o& initiative and &reedo) o& choice Ma4i)i1ation o&
individual interests, in this ,orld ,here individuals are no longer people o& &lesh and bone
but giant legal entities, leads to the crushing o& individual choices 3e have to start
building social and environ)ental conditions ,here individual interests can e&&ectivel* be
at the center o& the econo)ic decision process
2+ !conomic 0emocracy
+cono)ic de)ocrac* there&ore begins ,ith the ethics o& outco)es It does us no good to
kno, that corporate directors are ,ell intentioned, that the* contribute to schools in poor
areas i&, as a ,hole, the result is deeper ine6ualit* and environ)ental destruction
De)ocrac* is central in the process, since ,hen there are participative &or)s o& decision/
)aking, involving as such di&&erent interests, the outco)e tends to better balanced
Jnrepresented interests do not a&&ect decision/)aking, ,hich leads to greater proble)s, as
the* ,ill be )ani&ested ,hen the losers have reached the threshold o& despair +cono)ic
de)ocrac* there&ore consists in inserting into the decision/)aking process the various
interests, particularl* those ,hich are )ost likel* to be har)ed Eere too, it is less a )atter
o& kindness than o& institutional intelligence Reaping one/sided advantages looks s)art to
the ,inner, but is not intelligent
In S,eden, &oreign ,orkers, although not citi1ens, are entitled to vote ,here the* are
residents A priori, this see)s strange, because the* are not citi1ens o& the countr* %he
reason given b* the S,edish authorities is interesting9 the* are the people )ost likel* to
have di&&iculties, and there&ore it is particularl* i)portant to ensure that their proble)s
sur&ace so the* can be addressed 3hat is re6uired toda* o& political and corporate leaders
120
is to be a little less clever in accu)ulating bene&its &or their partners, and a little )ore
intelligent in econo)ic and social ter)s
<verall, at the level o& institutional solutions, ,e are clearl* )oving to,ards the need &or a
double enrich)ent in relation to the traditional centralit* o& the nation/state9 on one hand, a
strengthening o& planetar* governance, because the discrepanc* bet,een the globali1ation
o& the econo)* and the &rag)ented 192 national regulation s*ste)s generates a governance
vacuu), increasingl* dangerous, and certainl* not covered b* ad hoc >20 )eetings@ on the
other hand, )ore decision autono)* should be given to local govern)ents, ,hich is ,here
participator* de)ocrac* can best be put to ,ork 3ith )odern technolog* and the
planetar* conectivit*, ,e can envision the strengthening o& a net,ork o& interactive cities,
thereb* rein&orcing de)ocrac* at the base 3hether these or other paths are to be taken, it
is essential that ,e stud* the possible institutional di)ensions o& the decision/)aking
processes, ,hich urgentl* need to be )ore de)ocratic in the econo)ic sphere
1#1

+cono)ic de)ocrac* )ani&ests itsel& in the 6ualit* o& inclusion in the production process,
in the balanced access to the results, and in access to in&or)ation that ,arrants the right to
in&luence choices
%he inclusion in the producti/e process is central, and has been underesti)ated, inso&ar as
in general onl* ,ealth or povert* are evaluated, that is to sa* access or not to goods and
services resulting &ro) the production process
%he region o& SNo Coa6ui), in the southern state o& Santa .atarina, ,as a poor region, o&
s)all producers ,ith no prospects, and ,ith the lo,est hu)an develop)ent indicators in
the state 0ike other regions o& the countr*, SNo Coa6ui), and neighboring )unicipalities,
,aited &or develop)ent Hto arriveI &ro) the outside as invest)ent b* a large enterprise or a
govern)ent pro5ect In recent *ears, several residents decided the* ,ere not going to ,ait
an* longer and chose another ,a* to solve their proble)s, to &ace the) on their o,n %he*
identi&ied the various characteristics o& the local cli)ate and &ound that it ,as e4ceptionall*
&avorable &or gro,ing &ruit %he* organi1ed the)selves, and ,ith the resources available,
&or)ed partnerships ,ith research institutes, i)ple)ented cooperatives and opened
)arketing channels so as not to depend on )iddle)en, and toda* it is one o& the )ost
rapidl* developing regions %he* do not depend on a large corporation that can leave the
region at an*ti)e9 the* rel* on the)selves
1#1
%he idea o& having to consult, to in&or) or even ,orse to listen to others is a hair/raising issue &or
traditional corporate )anagers, the so called captains o& industr*, the lone co,bo*s %he &act o& having little
de)ocratic space in the decision/)aking process ,ithin co)panies and in the di&&erent spheres be*ond the
co)panies? boundaries is essential, as it generates an authoritarian and e4cessivel* hierarchical corporate
culture %he consensus building process, so i)portant in the best e4a)ples o& e&&icient develop)ent such as in
+)ilia Ro)agna in Ital* or in the Scandinavian countries, generates another culture <n the de)ocrati1ation
o& corporate )anage)ent, see the e4cellent book b* Robert A Dahl, % reface to 4conomic .emocracy,
Jniversit* o& .ali&ornia Lress, 19#'
121
%his change in attitudes, that ,e can be )asters o& our o,n econo)ic and social
trans&or)ation, that one does not ,ait &or develop)ent but 5ust goes about it, represents
one o& the )ost pro&ound changes occurring in the countr* It is a cultural shi&t &ro) an
attitude o& critical spectators o& a govern)ent al,a*s inade6uate, or &ro) pessi)istic
passivit* It gives back to the citi1en the understanding that he can take destin* in his o,n
hands, as long as there is a local social d*na)ic that &acilitates the process, and an overall
&avourable econo)ic and political environ)ent, generating s*nerg* a)ong the various
e&&orts
%he I0< has recentl* evolved to the concept o& decent ,obs. In line ,ith this concept and
,ith studies b* Ignac* Sachs, ,e can envisage that develop)ent o& a productive initiative
cannot be )easured onl* b* product output, because the 6ualit* o& the production process,
in ter)s o& satis&action generated &or an*one ,ho participates in the process and the general
outco)e, is part o& the evaluation %he people o& SNo Coa6ui) )ight have been getting
)ore apples per hectare i& the* had been coloni1ed b* so)e Jnited (ruit, but less 6ualit* o&
li&e %he enterprise ,ould ensure larger returns &or its shareholders in the Jnited States 8ut
is this the target7 %he &ruit gro,ers o& SNo Coa6ui) proudl* receive visitors ,ho co)e to
appreciate their acco)plish)ents, and &eel the outco)e as a result o& their capacit* Is
satis&action ,ith the ,ork, the &eeling o& o,nership o& the process, not part o& the outco)e7
:o,ada*s, the large corporation behaves increasingl* as the State does, as the giant ,ho
HgivesI 5obs or tries to )ake us &eel participants o& an elite group because ,e use its brand
3e can no longer ignore that ,e have a group o& )ega/corporations ,hose product is )ore
than that o& )ost countries ,orld,ide and that this econo)ic po,er has ac6uired a political
di)ension so signi&icant that a gro,ing nu)ber o& people in the ,orld think traditional
politics is progressivel* less relevant, provoking its decline %he &act that political leaders
o& the )ost divergent tendencies appl* the sa)e econo)ic polic* is not the outco)e o&
these leaders? )ediocrit* or &alsit*, but o& the &act that politics, as put so ,ell b* <t]vio
Ianni, has Hchanged placeI
1#2
+volution to,ards kno,ledge econo)ics, the e4pansion o& social policies in relation to
)anu&actured goods in the econo)* and gro,ing urbani1ation open ne, spaces &or
e)po,er)ent o& the di&&erent stakeholders in ever* region %he revolt in .ochaba)ba
against the 8echtel corporation ,hich tried to )onopoli1e access to ,ater, sho,s ho,
deepl* ske,ed can corporate decisions be, taken b* intelligent and ,ell trained people, but
,ho ,ere trained to )a4i)i1e unilateral advantage, not to i)prove the co))on good And
,ell blanced interests pave the best ,a* to reach econo)ic sustainabilit*
%he stud* b* >u* A1nar, Tra/ailler moins pour tra/ailler tous ;,ork less so that ever*one
,orks= is characteristic in this sense9 a division o& ,ork in ,hich part o& societ* is on the
verge o& nervous breakdo,n &ro) over,ork ,hile another part is desperate &or ,ork is
1#2
<ctavio Ianni HA poletica )udou de lugarIO HLolitics has changed placeIg * chapter b* 0 Do,bor et al,
;<rgs=, .esafios da Alobali)aGHo, ;Challenges of Alobali)ation<, +ditora Ro1es, LetrUpolis, 200!
122
senseless Rationali1ation o& the process needs, &or e4a)ple, de)ocratic intervention on the
organi1ation o& the ,orking da* ,ith decisions involving not onl* the eternal
Hco)petitivenessI argu)ent but the outcome &or the population in ter)s o& social balance,
environ)ental sustainabilit* as ,ell as the prosaic 6ualit* o& li&e
%his ,a* o& looking at things, that planetar* ine6ualit* is not solel* linked to the
reproductive c*cle?s distributive seg)ent, but to the poorl* balanced inclusion o& people in
the production processes itsel&, is essential It opens space &or integrated local develop)ent,
and sti)ulates the &eeling that our &uture depends on us, not on re)ote transnational
)eetings %hat so)e enterprise, or a distant bureaucrac*, does things that are for our good
is not su&&icient. 3e )ust give back to people the chance to take care o& their o,n destin*,
to be protagonists
A second line o& de)ocrati1ation o& econo)ics re&ers to balanced access to the product o&
our e&&orts <ur capitalist s*ste), ,e )ust &ace it, )a* kno, ho, to produce, but does not
kno, ho, to distribute Since the c*cle o& reproduction involves both production and
distribution, hence consu)ption o& the product, the s*ste) is structurall* inco)plete
It is no, increasingl* clear that a personZs re)uneration relies less on the e&&ort or
,illingness to ,ork and )ore on ho, the person &its into the production process
1#!
%he
production process is increasingl* a social process %he universities that graduate
individuals contribute to social productivit* as )uch as the enterprise that ,ill e)plo*
the), but ,age levels are dra)aticall* une6ual %he ,orld has generated corporate circles,
,here so)e support the privileges o& others, and the outco)e is surrealistic, leading, a)ong
others, to the nu)erous co)plaints about the co)pensation o& e4ecutives o& large
corporations
In &act, ,hen so)e people are earning tens o& )illions dollars a *ear, their ob5ective is not
)ore access to lu4ur* goods %he* seek higher inco)e because )one*, be*ond a certain
level, does not i)prove 6ualit* o& li&e but provides )ore po,er And obviousl*, po,er is
,ielded on other people (or so)e reason, a )ini)u) o& social intelligence led us to
&orsake autocratic &or)s o& political po,er, and build de)ocracies %oda*, this econo)ic
po,er, trans&or)ed into political po,er, is out o& control@ it is ti)e to think about it
In this sense, a stud* b* Sa) Li11igati is 6uite challenging H%he corporate e4ecutives o& a
generation ago could not possibl* i)agine ho, &ortunate their successors ,ould beco)e In
19-', Reginald Cones, then .+< o& >eneral +lectric and regarded as the )ost talented
e4ecutive in the nation, took ho)e '00 thousand dollars, a su) that e6ualed !" ti)es the
inco)e o& a t*pical A)erican &a)il* A 6uarter o& a centur* later, in 2000, >eneral +lectric
.+< Cack 3elch took 1$$' )illion dollars, a su) e6ual to !,'00 ti)es the t*pical inco)e
o& a &a)il* that *ear In 200$, Kahoo .+< %err* Se)el cleaned up 2!' )illion in the &irst
1#!
In the Jnited States the process ,as studied in ter)s o& the concepts 8hat you +now and 8ho you +now.
In career advance)ent it has been &ound that the H,ho *ou kno,I has greatl* surpassed the H,hat *ou
kno,I
12!
10 )onths o& the *ear Such re)unerations are calling out &or radical revision &ro) the
business co))unit*, in particular b* Richard . 8reeden, &or)er ad)inistrator o& the S+.
;Securities and +4change .o))ission=, the agenc* that regulates 3all Street In 2002, a
&ederal 5udge appointed 8reeden to develop a plan to straighten out 3orld.o), the
teleco))unications giant riddled b* scandals 8reedenZs plan, later adopted, co)pletel*
dis)antled the structure o& generous incentives &or e4ecutives a structure, 8reeden
accused, that encouraged a reckless pursuit o& ,ealth 8reedenZs solution ,as to put a
ceiling on total co)pensation &ro) all sources &or e4ecutive o& M.I, the co)pan* that
arose &ro) the ashes o& 3orld.o) 8reeden set this at no )ore than 1' )illion dollars,
6uickl* adding that the board o& M.I ,ould be &ree to i)pose a lo,er &igure In realit*,
8reeden had established the &irst H)a4i)u) ,ageI in the conte)porar* histor* o& the
Jnited StatesI
1#$

%echnical solutions are di&&erentiated (ranklin Roosevelt, in 19$2, had re6uested a 100G
ta4 on earnings that e4ceeded 2' thousand dollars, e6uivalent toda* to !00 thousand
dollars At the ti)e, he )anaged to approve a level o& 9$G above 200 thousand dollars
Since then, the ta4 paid b* the ,ealthiest has been dropping and no, is 1-'G o& total
inco)e &or &ederal ta4 A bill under discussion in the A)erican congress ,ould prohibit ta4
deductions on e4ecutive co)pensation in e4cess o& 2' ti)es the lo,est salar* o& ,orkers
HIdeas o& this kindI, sa*s Li11igati, Ho& course never catch on in the Jnited States 3e )a*
continue to go do,nhill to reach a greater ine6ualit* in the co)ing decades I& so, ,hat ,ill
li&e be like in an even )ore une6ual Jnited States7 <ne need onl* look to 8ra1il to &ind the
ans,erI
An anecdotic di)ension o& this co))ent is that 8ra1il, &a)ous &or being the last to abolish
slaver* in the ,orld, continues ,ith a solid reputation o& having a prehistoric ruling class
8ut the )ain point is si)ple9 too )uch ,ealth, as ,ell as insu&&icient inco)e, are
pathologic conditions in ter)s o& societ* %he ver* rich co)e to do)inate politics, and i&
the* ,iosh to be elected the* ,ill purchase a seat, but in general the* ,ill 5ust bu*
politicians An*,a*, the outco)e is a radical distortion o& de)ocrac* Moreover, the ver*
poor are unable to secure representation, to get organi1ed or to beco)e in&or)ed, actuall*
beco)ing )arginali1ed %o call the outco)e de)ocrac* is pure good ,ill (ortunatel*,
0ula?s 8ra1il did start the necessar* )easures, continued b* Dil)a, in spite o& strong
corporate resistance
1#'
In practical ter)s o& econo)ic de)ocrac*, it is ,orth ,orking ,ith a ceiling o&
accu)ulated personal ,ealth ,e can i)agine a &igure o& '0 )illion dollars, ,ith ,hich it
is assu)ed that even a de)anding capitalist )a* survive and ,ith a *earl* inco)e ceiling
o& 1' )illion dollars as accepted b* JS courts &or M.I In ter)s o& personal &ortune, the
1#$
Sa) Li11igati, H%he Rich and the Rest9 the gro,ing concentration o& ,ealthI The (uturist, Cul*/August
200', p $1 ,,,too)uchonlineorg
1#'
A description o& the 0ula govern)ent econo)ic and social polic* can be &ound at $ra)il: an %genda for
the .ecade, 2010, !2 p, http9AAdo,bororgA10agendaG20&orG20bra1ilG20anotherG20leveldoc
12$
,ealth ta4, as applied in (rance, associated ,ith the inheritance ta4, should graduall*
provide a )ini)u) o& social e6uilibriu), although, increasingl*, large &ortunes are )oving
to the )ore than '0 &iscal havens scattered over the planet
In ter)s o& inco)e, the )ost interesting aspect is the linkage o& the )ini)u) inco)e and
)a4i)u) inco)e, &or e4a)ple b* setting that the )ini)u) &a)il* inco)e ,ould serve as
a re&erence &or the )a4i)u) inco)e )ultiplied b* '0 In &act, according to Li11igati?s
data, in developed econo)ies 9-G o& people ,ith inco)e are included in a li)it o& 1 to 10
%here&ore, the )a5or issue is the o,ners o& large &ortunes, the so/called <ne Lercent In
political ter)s, the calculations disclose that the* ,ould be the onl* ones to lose ,ith a
)a4i)u)A)ini)u) ratio o& this t*pe Eo,ever, the great )a5orit* ,ould be interested in
increasing the )ini)u), because it ,ould raise the )a4i)u) In the proposal, above the
)a4i)u), the ta4 ,ould be 100G
1#"

It is stupid to tie a high re)uneration ,eZre talking about lavish re)unerations such as
that o& +isner at 3alt Disne* ,hose earnings ranged in hundreds o& )illions, or the
&antastic earnings o& the &inancial ,orld speculators to so)e kind o& )iraculous
productivit* b* the super/e4ecutive %his is 6uite ridiculous, and closer to :iet1sche?s
]bermensch than to an* econo)ic rationale %i) 8erners/0ee invented the 3eb, our ,,,,
one o& the ke* develop)ents o& the )odern ,orld, and did not charge a cent 0ouis Lasteur
gave us the vaccine not because he had a surrealistic salar* Lrogress is pri)aril* linked to
,hat Madalena (reire called Hthe passion &or kno,ing the ,orldI rather than the actions o&
superhu)an e4ecutives
<n this sub5ect, Mar5orie Fell* produced a particularl* interesting stud*, entitled HThe
di/ine right of capitalI 0ooking at the stock )arket in the Jnited States, Fell* notes that
the i)age o& enterprises being capitali1ed through the sale o& shares is nonsensical because
the process is )arginal9 HDollars invested reach corporations onl* ,hen ne, shares are
sold In 1999 the value o& ne, shares sold in the )arket ,as 10" billion dollars, ,hile
value o& shares traded reached a )assive 20$ trillion %here&ore, o& the entire volu)e o&
shares negotiated on 3all Street less than 1G reached the enterprises 3e can conclude that
the )arket is 1G productive and 99G speculativeI 8ut o& course, people pro&it &ro) the
shares, and so there is an out&lo, o& resources9 HIn other ,ords, ,hen *ou look at the t,o
decades &ro) 19#1 to 2000, there is no net input o& )one* &ro) shareholders, onl* net
out&lo, Since 19#1 the net out&lo, &or ne, issuance o& stocks ,as negative b* '$0
billionI H%he net out&lo, has been a ver* real pheno)enon and not a statistical trick
Instead o& capitali1ing enterprises, the stock )arket is un&unded (or decades, investors
have acted as a huge drain on corporations %he* are the deadest o& dead ,eights
1#"
Assuring a )ini)u) inco)e )akes co)plete ethical sense so)e things can?t be denied to an*one and
also econo)ic sense, since the e4cessive costs o& povert* b* &ar e4ceed its prevention +4tensive international
literature on the sub5ect )a* be &ound in the ,orks o& +duardo Suplic*, &or e4a)ple, in his s)all but e4cellent
'enda $Lsica de Cidadania,;% Citi)en@s 7inimum Income< 0SLM, Lorto Alegre, 200" %he i)portant
concept o& ma"imum income is still )oving ahead ver* slo,l*
12'
(urther)ore, to re&er to shareholders as in/estors is ine4act because in realit* the* are
e"tractors. 3hen one bu*s stocks one is not contributing ,ith capital, but bu*ing the right
to e4tract ,ealthI
1#-

%his reasoning is ver* interesting because it points to the )odern )echanis) o& ,ealth
e4traction9 at the base is the great i)prove)ent in productivit* ,arranted b* the ne,
technologies Eo,ever, these gains are not appropriated b* ,orkers and societ* in general,
since the* beco)e &abulous )anage)ent salaries and e4cellent re)unerations &or
shareholders in a collusion o& interests in ,hich one protects the enrich)ent o& other %hus
the technological advance, ,hich should allo, a digni&ied and peace&ul li&e &or all, ends up
concentrated in a &e, hands, contributing to obscene &ortunes
It is interesting to cross Fell*?s reasoning ,ith that o& Robert Dahl, )entioned above, about
the absolute absence o& de)ocrac* ,ithin the enterprise %he enterprise?s internal
authoritarianis) ensures i)pressive reproduction o& privileges and generates levels o&
enrich)ent co)pletel* out o& proportion to the e&&ective contribution o& the personages to
econo)ic gro,th HI& de)ocrac* is 5usti&ied to govern the state, Dahl ,rites, then it is also
5usti&ied to govern econo)ic enterprisesI
1##

At the other end o& the spectru), so)e ! billion people live on less than ^ 2 per da*
Jndernourished children, &or ,ant o& a s)all support, such as the i8olsa (a)iliarI ;&a)il*
subsid*= current in 8ra1il, ,ill not be ver* productive &or the rest o& their li&e and burden
hospitals %he teenagers lost in the big cities, no school or 5ob, generate huge public
securit* costs, and o&ten die in the process 3ho bene&its &ro) this7 %he econo)ic truth is
that it is )uch cheaper to li&t people out o& povert*, than to be burdened ,ith the
conse6uences %o uphold ine6ualit* is one o& the biggest blunders o& our econo)ic
theories And in ter)s o& 6ualit* o& li&e, the huge ,orld,ide losses and su&&ering are
certainl* not balanced b* an* particularl* i)proved 6ualit* o& li&e o& a billionaire ,ho
earns an e4tra )illion %his is not a 6uestion o& anti/rich ideolog*, but o& co))on sense in
the use o& our co))on resources
%he third line o& econo)ic de)ocrac* is access to information and +nowledge %his is
obviousl* linked to the e4istence o& a vast )ass o& the ,orldZs poor that lack access to
ade6uate education, the &actual in&or)ation, technological kno,ledge, to the )ini)u) set
o& instru)ents that )a* constitute ,hat ,e ,ould call a precarious ladder to go up in li&e
%o ensure econo)ic opportunities is a starting point &or an* econo)ic de)ocrac* And this
is organi1ed b* de)ocrati1ing access
An e4cellent te4t on this approach is still the Declaration o& .oco*oc, 19-$9 H3e call on
leaders o& public opinion, on educators, on all interested bodies to contribute to an
increased public a,areness o& both the origins and the severit* o& the critical situation
1#-
Mar5orie Fell* The .i/ine 'ight of Capital * 8errett/Foehler, San (rancisco, 2001, pgs !! and !'
1##
Robert A Dahl % reface to 4conomic .emocracy * Jniversit* o& .ali&ornia Lress, 8erkele*, 19#'
12"
&acing )ankind toda* +ach person has the right to understand &ull* the nature o& the
s*ste) o& ,hich he is a part, as a producer, as a consu)er, as one a)ong the billions
populating the earth Ee has a right to kno, ,ho bene&its &ro) the &ruits o& his ,ork, ,ho
bene&its &ro) ,hat he bu*s and sells, and the degree to ,hich he enhances or degrades his
planetar* inheritanceI
1#9

%he &act is that innu)erous &or)s o& e4ploitation that have developed on the planet toda*
go through &inancial and )onetar* )echanis)s that are unclear to )ost o& the population,
thereb* allo,ing i)pressive atrocities
3e have seen here proposals along the lines o& institutions and the production process,
inco)e distribution and access to in&or)ation and kno,ledge %hroughout the te4t ,e have
seen all kinds o& proposals that arise, and solutions loo)ing on the hori1on %he practical
realit* is that ,e have the &inancial and hu)an resources, the skills and kno,ledge to
re)ed* in a short ti)e this double dra)a o& ine6ualit* and environ)ental destruction %he
arrogance o& e4ecutives in Davos, s)iling s*)bols o& success, una,are o& the planetar*
traged* that un&olds, is si)pl* regret&ul <nce again, the* re)ind us o& the unconscious
brilliant gatherings in the Rersailles palace be&ore the (rench revolution 8rilliant e)pt*
headed people, ,ith cha)pagne &i11led brains
+ssentiall*, the econo)ic )echanis)s are insu&&icient &or the necessar* balance In
political ter)s, despite all li)itations, our evolution to,ard so)ething approaching
de)ocratic processes ,as a huge step &or,ard +cono)ic processes have co)e to do)inate
politics ,ithout sub)itting to it A president o& +44on, ,ith all the political po,er he had
on the JS president, cal)l* stated that to ,ork ,ith energ* alternatives is a ,aste o& ti)e
Did so)eone elect hi) &or this7 3hat characteri1ed the econo)ic rules a&ter the de)ise o&
Fe*nesianis) in the 19-0s, is si)pl* a global rat race %he ti)e has co)e to spread the
de)ocratic blanket to cover ne, areas
'onclusions
In this brie& ,ork ,e dialogued at various )o)ents ,ith the .elso (urtado?s search &or a
ine, )odeli o& econo)ic interpretation 3ithout having been no)inated to a :obel Lri1e
in disguise, during his ,hole li&e he de&ended in a coherent )anner the interest o& those
,ho need a decent econo)ic integration It is an outlook that never beca)e trapped b* an*
ideolog* or HschoolI, ,hich understood econo)ics in the richness o& its relations ,ith other
areas o& kno,ledge, &ocused on structural change, and sought in a rather prag)atic ,a*
and theoreticall* ver* sound ans,ers to )eet the needs o& the countr* +thical soundness,
1#9
The Cocoyoc .eclaration, in South .entre, The &outh and &ustainable .e/elopment Conundrum, >eneva
2002 J In this regard, see practical proposals in our HIn&or)a_No para a cidadania e o desenvolvi)ento
sustentavelI / http9AAdo,bororg under `Articles <nline?
12-
)ethodological rigor, historical kno,ledge, &ocus on central proble)s, and a health*
disregard &or the )an* di&&erent i/is)si that restrict the hori1on
And he also had an argu)ent ,e )entioned 6uite earl* in this essa* a critical vie, on
the e4planator* capacit* o& the inherited conceptual apparatus %o 6uote hi) once )ore,
H,e live in one o& those ti)es ,hen the inade6uac* o& the conceptual &ra)e,ork to sei1e a
rapidl* changing realit* is notoriousI
190
3hat &irst co)es to )ind, ,hen endeavoring to conclude this reasoning, is that econo)ics
has to be researched and even taught in a di&&erent ,a* %hat is to sa*, instead o& isolating
econo)ics &ro) other social sciences, seeking Hidentit*I, and slicing up this identit* in
disciplines, ,e should ,ork ,ith ke*/issues and assign to the) econo)ic concepts, an
historical outlook and the kno,ledge needed &ro) other scienti&ic areas
%he goal ,ould be, &or e4a)ple, to ,ork in an intelligent and interdisciplinar* &or) over
the reasons &or such a )onu)ental interest rate in 8ra1il %his ,ould &orce us to understand
the process o& concentration o& banks, the political po,er o& &inancial groups, the
)echanis)s o& public resources trans&er to private groups, use and )isuse o& econo)ic
theories, ho, co)pound interests &unction, ho, the legal &ra)e,ork &or credit is
organi1ed, ho, the )edia presents the issue to the population and so &orth Instead o& a
certi&icate in &inance, ,e ,ould have an understanding o& ho, things actuall* ,ork
%his is but an e4a)ple 3e )ust start &ro) the proble)s considered crucial toda*, and
organi1e scienti&ic kno,ledge on the needed diagnosis and responses +cono)ic science
)ust be validated, bringing replies to the ke*/proble)s that trul* challenge hu)anit*
%his approach is particularl* i)portant in econo)ics, because the central di&&icult* is not to
understand the concepts, but to understand ho, the concepts relate to the proble)ati1ation
and understanding o& a realit* Such a reorientation o& research ,ould i)prove )otivation
o& the students ,ho toda* &ace a )a5or di&&icult* to relate ,hat is taught ,ith the real
,orld and also o& teachers, ,hen delivering the) &ro) the co)&ort o& the sectorial
handouts and challenging their creativit*, in addition to de)anding, &or instance, 5oint
e&&orts ,ith researchers &ro) other areas to co)prehend the s*ste)ic logic o& the process
under stud*
191

8ut even )ore i)portant, this approach, b* e4plaining in a co)prehensive ,a* the
decision )aking process underl*ing an econo)ic d*na)ic, ,ould lead to a better
understanding o& ho, to )ake such a process de)ocratic A si)ple negative e4a)ple is
the ,a* the issue o& interest rates ,as &aced in 8ra1il, b* including in the 19## .onstitution
a 12G li)it %his is t*picall* a blind )ove, since it is not according to the .onstitution that
190
.elso (urtado / O capitalismo global ;>lobal .apitalis)=* La1 e %erra, SNo Laulo 199#, p 21
191
A characterestic e4a)ple is the lack o& kno,ledge on the part o& econo)ists regarding legal aspects o& the
econo)*, ,hile 5udges are usuall* una,are o& the econo)ic )echanis)s ,hich the* are &re6uentl* called
upon to rule
12#
actions regarding interest rates are taken +cono)ic de)ocrati1ation )ust co)e &ro) the
trul* e4isting econo)ic )echanis)s
%o approach econo)ics b* )eans o& ke*/proble)s or structural )egatrends should allo,
us to research and stud* ,hat reall* )atters In the above te4t, ,e privileged so)e points
that )a* be considered critical because o& their i)portance &or our survival, or the strength
o& their s*ste)ic i)pact %here are )an* others, o& course 8ut our e&&ort has been to go
be*ond the ,ide/spread tendenc* people have to concentrate on great ideological
argu)ents, as i& the si)ple belonging to the right or the le&t ,ould legite)atel* allo, us to
re)ain above the e)pirical ground,ork And the ground,ork, the e4ercise de)anded &ro)
us, is to take the ke* critical trends in )odern societ*, to collect in&or)ation and anal*1e
realit* in its diversi&ied aspects seldo) purel* econo)ic la*ing bare the )echanis)s
and the po,er relations that sustain the)
%o turn *our back on politics &eels con&ortable ItZs easier to sa* that econo)ics overlooks
the discourse and &ocuses on practical achieve)ents9 the enterprises build &actories, provide
5obs, &inance roads, ,hile politicians discuss %his ,a*, the econo)* ,ould be nice and
progressive, the politics distaste&ul or corrupt Si)pli&ications seldo) *ield good results,
*et the* satis&* our instincts Re)e)ber, it ,as the great political )ove)ents, regularl*
branded subversive in the initial stage, ,hich in their ti)es achieved the abolition o&
slaver*, the end o& colonialis), the rights o& the e)plo*ee, the political inclusion o& ,o)en
and toda* continue to struggle against econo)ic ine6ualit*, against the destruction o& the
environ)ent, &or rescuing the cultural richness o& our lives, against the s*ste) o& &inancial
speculation, &or access b* all to basic goods such as ,ater, &ood, education and health %he
de)ocrati1ation o& the econo)* )a* ,ell beco)e an a4is &or building a )ore hu)ane li&e
%o e4tract oil )ore 6uickl*, to sell out the A)a1on )ore e&&icientl*, ,ill lead us ,here7
%oda* ,e have all possible econo)ic, technical and organi1ational )eans available to
ensure a digni&ied li&e &or all It is the )ain challenge that ,e &ace %his challenge ,ill not
be )et ,ithout an active participation o& the &orces that toda* control econo)ics, )ainl*
large corporations And corporations ,ill have to get to ,hat Leter Drucker e4pressed
si)pl*9 i8usiness cannot thrive in a sick societ*i
%he ob5ectives are kno,n9 the* are no, presented as the Millenniu) >oals, previousl* it
,as the +arth .harter and Agenda 21 and still be&ore, the :e, International +cono)ic
<rder or the e4cellent .oco*oc Declaration 3hen revie,ing the te4ts, ,e perceive that the
the)es are al,a*s the sa)e, rene,ed ,ith di&&erent na)es to i)print a ne, spirit, ,ith
so)e di&&erences in e)phasis, but ,ith re)arkable coherence
192

<verall, these declarations have )anaged to dra, up a political H:orthI, as a result o& so
)an* e&&orts and scienti&ic studies9 ,e need a societ* that is econo)icall* viable, sociall*
192
Rarious e4cellent te4ts, including the .oco*oc Declaration, can be &ound in the book The &outh and the
&ustainable .e/elopment Conundrum *(rom &toc+holm 017B to 'io 011B to Nohannesburg B==B and $eyond
* South .entre, >eneva, 2002 ,,,southcentreorg
129
5ust and environ)entall* sustainable, because ,e are all children o& >od and have onl* one
planet %o this so/called triple botto) line, ,e )ust add that this has to be reached through
de)ocratic decision )aking (our pillars are )ore stable
%hose are goals that )ust be co))on to all activities 3hat ,e presentl* have is the
political right de&ending econo)ic results, the le&t )ore )oved b* the social aspects, green
parties de&ending the environ)ent, and ever*bod* speaking in the na)e o& de)ocrac* 8ut
all stakeholders )ust be held responsible &or the &our pillars In particular, the tragic
Htrickling do,nI theor*, a ,a* to sa* that HletZs solve the econo)ic proble)s, and the rest
,ill co)eI, )ust be put aside as the blunder it is
3e are also reaching a reasonable understanding o& the social co)ple4it* o& the )odern
societ* %he era o& Hredee)ing classesI is over, or at least overtaken b* co)ple4
interdependent and intere,oven social and econo)ic relations %he issue is not 5ust bashing
one sector or another, but a better understanding o& ho, the di&&erent interests can be
balanced in the pursuit o& the overall results In particular, the public di)ension o& the state
is to be rescued, and civil societ* brought to adult participation in the decision )aking
process
As to the econo)ic decision process, it is not going to be either the )arket or state
planning, but a co)bination o& di&&erent )echanis)s that include, in addition to )arket and
state planning, also inter/enterprise coordination, participator* local develop)ent sche)es,
strong involve)ent o& social )ove)ents and s*ste)s o& rene,ed international co)pact
building 3e are too co)ple4 a societ* &or si)pli&ied ideological credos
%he concept o& de)ocrac*, in this sense, has beco)e essential 3e consider public sector
transparenc* as a natural de)and 8ut ,hat about corporate transparenc*7 3e &ind it a
scandal that political leaders have salaries o& 20 thousand reais, because it is the )one* ,e
pa* through ta4es, our )one* 8ut ,e &ind it natural that the private sector )anager earns
20 )illion, though his salar* is included in the prices ,e pa* &or goods, a discrete and
i)plicit ta4 3ho does this )one* belong to7
%hus, the ob5ectives, the political basis and decision/)aking process o& econo)ic and
social develop)ent are slo,l* shi&ting 3e are building another societ*, although as an
une4pected result o& processes that ,e onl* understand in part %he challenge o&
econo)ics, as a science at the service o& societ*, not o& do)inant econo)ic groups, is to
reinvent itsel&, and to redee) its use&ulness
<verall, the threats loo)ing in the social and environ)ental levels give us a li)ited
,indo, o& ti)e to act %he survival o& the &ittest culture in the econo)ic ,orld, ,hen ,e
,ield technologies that have a planetar* i)pact, and billions o& outcasts, is leading us to a
gri) &uture 3hen the successive bubbles turn into a tsuna)i, there ,ill be the usual
saviors in the &or) o& authoritarian regi)es %he big dile))a is ,hether ,e ,ill regain
control b* building de)ocratic processes right &ro) the botto) o& societ*, or i& the order,
1!0
the so/called order, ,ill co)e &ro) above, ,ith all the barbaris) that these kinds o&
solutions represent %here ,ill be no shortage o& candidates
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Bac8 cover
A,areness about global ,ar)ing, inco)e concentration, destruction o& li&e in our seas,
petroleu) depletion and other threatening catastrophes can no longer be avoided, ,e need
)ore e&&icient &or)s o& econo)ic and social organi1ation +cono)ic po,er has beco)e the
central ele)ent o& political decision )aking and the po,er o& the )edia also relies on
corporations Jnder these conditions, to li)it de)ocrac* to its political e4pression is
beco)ing increasingl* less realistic, rendering us even )ore skeptical (or politics once
again to )ake sense, ,e have to evolve to a )ore de)ocratic concept o& the econo)* itsel&
%his essa* presents in a si)ple ,a* the various theories about econo)ic alternatives in
international literature and dialoguing ,ith .elso (urtado?s ,ork, sho,s that there is a ne,
outlook under construction that is ,orth,hile kno,ing 3e &ace toda*, the central issue o&
governance, o& the ,a* ,e organi1e ourselves to )ake societ* ,ork <n the political level,
de)ocrac* ,as a )a5or stride &or,ard, since, at least &or)all*, each person has the right to
vote and ,e are no longer barbarians :evertheless, in the econo)ic ,orld ,e still en&orce
rules that are b* no )eans de)ocratic
.laps
1!!
+cono)ic de)ocrac* )a* see) to be a strange concept 3e have learned to value political
de)ocrac*, vital &or our &reedo) 8ut, ,hen econo)ic po,er do)inates all the areas
including politics ,e )ust rethink the general balance o& the decision )aking processes
that toda* are called governance Leriodical elections o& political representatives are not
su&&icient ,hen essential decisions about our lives, our values and our &uture evade the
political sphere and are taken b* gigantic corporations, over ,hich ,e do not have the
slightest control .orporations toda* )anage budgets larger than those o& )ost
govern)ents :o one elects their leaders In the )ain production chains, a restricted group
o& enterprises do)inate the )arket, i)pose prices, and b* )eans o& advertising and )edia
control build a positive i)age o& itsel& 3h* should de)ocrac* stop at the doors o&
corporations7 3h* can?t ,e even get in&or)ation on ho, the )one* o& our deposits is
used7 3h* can?t even govern)ents ensure disclosure on speculation sche)es that pla*
,ith ,hat ,ould be our pensions7
+cono)ic theories ,e inherited &ro) the past are reall* unable to account &or ,hat is going
on %his essa* endeavors, in di&&erent alternative lines o& thought to identi&* a broader
tendenc* to regain control b* the citi1ens o& the direction o& our develop)ent %his is not
)erel* an acade)ic e4ercise >lobal ,ar)ing is at our doors and ,e perceive that
obsessive consu)ption based upon e4ploitation o& a cheap and &inite resource, petroleu), is
si)pl* taking us to an i)passe %he ,ater s6uandered and polluted in an irresponsible ,a*,
results in the death o& $ )illion children b* conta)ination ever* *ear 0i&e in the seas is
being literall* destro*ed and this is the largest reserve o& li&e on the planet <nl* 2G o& the
&a)ilies concentrate hal& the ,orld?s ,ealth@ the poorest '0G o& the population have onl*
1G <nl* the oblivious or dishonest are una,are o& the spreading adversit*
%he solutions take us be*ond traditional si)pli&ications .ivil societ* organi1ations oblige
us to surpass the traditional dichoto)* bet,een enterprises and the State %he kno,ledge
societ* that is e)erging has as the )ain production &actor one asset kno,ledge that )a*
be disse)inated &ree and beco)es a )eans &or de)ocrati1ation o& develop)ent %he stock
o& kno,ledge is not di)inished ,hen ,e use it %hose are outlooks about an e)erging
,orld, at the sa)e ti)e threatened and &illed ,ith potential, but above all ne, and
de)anding up/to/date approaches o& stud* and interpretation
#bout the author

Ladislau Dowbor, is a LhD in +cono)ic Sciences &ro) the .entral School o& Llanning and Statistics o&
3arsa,@ a tenured pro&essor at LJ., SNo Laulo, and consultant &or various agencies o& the Jnited :ations
Ee is the author o& H%he 8roken Mosaic9 &or an econo)ics be*ond e6uationsI, published b* ced 8ooks, In
Lortuguese, % 'eproduGHo &ocial, HSocial ReproductionI, Tecnologias do Conhecimento: os .esafios da
4ducaGHo, 3%echnologies o& Fno,ledge9 the .hallenges &or +ducationI, all b* publisher +ditora Ro1es, as
,ell as O que %contece com o TrabalhoQ H3hat has happened to 3ork7I , &ro) +ditora Senac and co/editor
o& the collection 4conomia &ocial no $rasil H%he Social +cono)* in 8ra1ilI also &ro) +ditora Senac Eis
1!$
nu)erous ,orks about econo)ic and social planning, including a list o& use&ul sites &or the proposals above,
are available in the site http9AA,,,do,bororgA
.ontact ladislau2do,bororg
1!'