Post-third Way Experimentation


The advent of globalization has so far failed to introduce a consistent economic doctrine that is universally recognized as the best possible mechanism by which the global economy can operate effectively, and which is capable of silencing questions as to its validity. Since the downfall of command economies based on central planning, everyone has accepted the notion of a market economy, but most people admit that it is more liable to deepen the gap between rich and poor, privileged and marginalized, than the opposite.

There has been much talk about the need for a ‘social corrective’, a social dimension which, while not necessarily compatible with the rules of the market economy, is absolutely imperative to prevent the worst of the latter’s negative effects. The question is how to make two incompatible ingredients, the ‘free game’ of the market economy, and the constraints and limitations imposed by the social dimension, operate in tandem with minimum friction between them. How to build a viable, consistent system which would include these two mutually exclusive elements together?

Western politicians like Tony Blair and other proponents of the theory that free enterprise and social solidarity can be made to co-exist peacefully, have proposed a formula by which capitalism can be given a ‘human face’. They are asserting their belief in a Third Way which, with the shrinking of the planet under the globalization process, will be neither traditional capitalism nor traditional socialism as practiced under the former bipolar world system. This so-called Third Way, however, is still the subject of much debate as made clear by the violent “anti-capitalist” demonstrations that erupted in London and elsewhere in Europe on May Day this year.

Many believe this Third Way will be no easier to realize under the conditions of a uni-polar world order than it proved to be under the previous bipolar world order.

However, some interesting experiments aimed at giving capitalism a social dimension have been launched in the last few years. One of the best known and most successful has been the one introduced by Bangladesh’s Grameen Bank.

Breaking away from established banking practice, Grameen has adopted the revolutionary concept of advancing loans without collateral to the poorest sections of the population, thereby allowing individuals (mainly women) to set up small enterprises that can provide them with a minimum standard of decent living. The underlying idea behind this experiment is not charity, but the conviction that the human factor can be more effective than the established rules of the capitalist economy. Giving the social dimension precedence over the economic, the Grameen experiment counts on the need of the poor to keep the project alive and successful, whatever the hardships required to comply with the borrowers’ obligations. Not repaying their debts would undermine the only institution able to help them overcome their ordeals.

Another experiment, in a totally different context, is an ingenious idea put forward by a young Egyptian entrepreneur, Mustafa El-Guindi. El-Guindi founded the ‘Tourism for Development’ association, a registered NGO whose purpose is to establish national funds in countries active in the field of tourism financed by part of the profit margin of hotel owners (1 per cent, to a maximum of one dollar, per overnight stay), the proceeds of which will be allocated to development projects in such vital areas as drinking water, nutrition and housing. The hotel owners who contribute to these funds benefit from the right to display the logo ‘Tourism for Development’.

The image of the logo is promoted by the association in partnership with professionals in the field of tourism: travel agents, tour operators, car rental companies, insurance companies, airlines, etc. The idea is to raise the social awareness of the consumer by requiring him to sign a ‘Traveler’s Charter’ in which he asserts his freedom to travel in security, demands that part of the sum he spends during his travels be redistributed to the most deprived population of the country he is visiting and undertakes to give priority to select establishments displaying the ‘Tourism for Development’ logo and which respect this principle of mutual aid.

The concept is entirely original in that it is not based on international charity but on a redistribution of part of the profits realized in the country itself. The ‘consumer-traveler’ is not required to pay money but only to demand by a simple signature that part of the money he spends goes towards ensuring better living standards for the population of the host country and, by so doing, enhances its stability, which is a necessary prerequisite for the flourishing of tourism.

El-Guindi’s project has now acquired an international status. The principle is supported by tourism associations in various countries of the world, particularly in France, where its originality has been widely publicized. It now extends to Tanzania, Ireland, Brazil, Dominican Republic and elsewhere.

In the project, two contradictory considerations are made complementary. Without tourism (or any similar endeavor), the funds gathered would not exist; without the funds, and their contribution to promoting social stability, there would be no guarantee that tourism can flourish. Of course, this does not imply that allocating a percentage of the revenues generated by tourism to development projects is an indispensable element in the commercial success of touristic enterprises, but some form of correlation has been established. A capitalist enterprise has served a social cause and vice-versa.

A generalization of the rules deduced from the Tourism for Development experiment raises a number of interesting questions. For example, does it use the social dimension to serve capitalist profit-making or the opposite? Does it signal a whole new approach to capitalism, going beyond its traditional image as a mechanism for the generation of surplus value into making surplus value an incentive for building projects that go beyond the capitalist beneficiaries to benefit society as a whole?

But first it is necessary to define the nature of the ‘social dimension’ here. Does it involve the redistribution of profits along lines that remain within the rules of profit and thus of capitalism, or does it carry within it the potential for developments surpassing capitalism?

China, for instance, though categorically denying that it has departed from its socialist path, has introduced economic reforms based on the notion of a ‘socialist market economy’ and is said to have reaped spectacular results in consequence. Can ‘socialism’ and a ‘market economy’ be made compatible? Can a market economy exist without generating surplus value? Can surplus value be reduced to the status of an instrument, an incentive to encourage entrepreneurial risk-taking, or is it bound in any case to get the upper hand?

The El-Guindi experiment raises important theoretical questions touching on the very essence of the economic problems of our time, where neither the traditional models of socialism and capitalism have proved satisfactory, nor, for that matter, the attempts so far to launch a Third Way.

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