As I see it there are three fundamental issues underlying capitalism that make it both unsustainable and irresponsible.

1. It assumes homogeneity “Progress/achievement” is looked upon as the ultimate goal, we are always to be moving forward, using more and innovating. The measure of a country’s success is its growth, aka quantity of consumption. Then as capitalism has become the ruling model in the world (historically eliminating others by force) it not just assumes similarity but it imposes it.

2. Its consuming nature on a finite planet

• This point gets most to the core of the sustainability issue. As the ultimate goals are progress and consumption, the fact that the earth can’t last forever is ignored. Even using basic logic, it doesn’t follow that something finite can be used indefinitely, it has its limits. Then there are the environmental concerns to be had. Pollution has already wreaked havoc on our planet and as things like anthropogenic climate change come about we will see that capitalism is very ineffective in curbing environmental degradation.

• A common capitalist response to this problem would be that innovation will resolve the problem when it becomes pertinent, which does have some level of validity, but even so, how is one to solve problems that are beyond a solution point; such as a destroyed ozone layer, having no remaining drinking water or air pollution having eliminated all the clean air. The fact of the matter is that capitalism is about the short term, administering surface level action when needed, but ultimately putting off dealing with the root causes of the issues. I’m inclined to believe at some point it will catch up with us.

3. Lack of proper checks and balances

• The economic powers seem to defy governments and could be argued to be the real power holders in society. One could say that legislation such as monopoly laws exist, but what if the monopoly is not just one entity, but a class of individuals or a group of businesses, what is the rest of the world to do? Furthermore, since governments are national and corporations are international, it becomes much more challenging to regulate them.

• Similarly, as the capitalist economic powers have little regulation there is no reason for them to serve interests other than their own. As such, there is an ever-increasing wealth disparity with those outside of the power structure being continually marginalized. Perhaps for this reason, even Bill Gates, the most prolific capitalist this world has seen, has spoken out against the failure of capitalism in this very sense. Coining the term ‘creative capitalism’ he acknowledges who capitalism really serves and seeks to find a solution.

Given these underlying problems, what are the implications for one who is interested in doing solidarity work that addresses economic problems within an environment that necessarily involves economic/capitalist systems? Well, if the premises are unfounded it kind of complicates the effectiveness of working within the system, which is where I would argue approaches like carbon credits, microcredit or ´creative capitalism´ fall short. It’s not to say they are ineffective, but one must recognize what they are a product of.

At the level of the individual, if dire poverty is present, any tactic that alleviates this poverty is helping, whether it’s blatantly playing into the system or not. The fact of the matter is that the system is reality, a daily reality, and while it would be great to work outside of the system and start a revolution or something of the sort, it’s just not practical for the individual. Recognizing these two conflicting dynamics, the goal as I see it, then becomes to learn the rules of the game, work within the system benefiting from it as much as possible, all the while establishing sustainable systems that could still flourish outside of it.

So then what’s the deal with this microcredit business? Funny you should ask! I’ve heard a lot of rhetoric on the topic, one side arguing it’s the solution to global poverty, the other lauding it as an ineffective extension of imperialism, so isn’t it possible an appropriate analysis lies somewhere in between? Microcredit in and of itself is a very vague term; it generally means giving out small loans, usually for entrepreneurial efforts and to those with limited access to economic resources. So I think the important question to ask then is, whose interests are being served?

Often the measure of success as purported by the microcredit companies themselves is the rate of return on microloans, instead of, say, any number of possible indicators shining light on improved conditions for those receiving the micro-loans. Take for example Finca, an international non-profit microcredit institute that consistently receives the highest rating possible from multiple charity watchdog organizations. It only takes a brief glance at their website to see that their chief concern is on the business side of things, offering very sparse concrete information on how the individuals participating actually benefit from their microcredit programs.

Furthermore, while Finca is non-profit, a look at their financial records shows they pull in about 25 million dollars annually, so again I ask, whose interests are being served? The interest rates being charged by different microcredit organizations also vary tremendously, I’ve seen anywhere from 20%-120% annually. In one sense, high interests rates can actually be a little deceiving as loans are often given out on a monthly basis and the turn around time on a loan can be a week in some cases, but nonetheless a 10% monthly interest rate is going to help much less than a 2% monthly interest rate, particularly for individuals already at the bottom of the economic totem pole.

Other thoughts to consider would be whether or not there are other social services imbedded in the microcredit programs; such as technical training, contributions to community projects or needs, help with initiating individual projects, etc. One criticism I’ve heard is that people question whether or not the women actually benefit, citing that generally the men and children do so much more. This may have some validity, but I don’t think enough data really exists to make generalizations. Furthermore, if the families are benefiting, the communities are then benefiting and the women are also in turn benefiting. While people shouldn’t be valued for their money-earning capacity, some women in communities I work with have found increased respect from their partners for bringing home extra income.

Ok, how about cajas de ahorro (aka Cajas Populares)? Cajas de ahorro could be thought of as community credit unions. They are internally and democratically run, serving their constituents by providing needed financial services. Similar to microcredit organizations, many of these cajas de ahorro provide microloans. So then we return to the question, whose interests are being served? Cajas de ahorro are more than simply a bank, the business aspects are necessary to keep the caja functioning, but a much greater emphasis is put on community involvement and fair and just running. As such, the interest rates are usually considerably lower, only charging enough to cover basic administrative costs.

Also, one of the principle ideas is to encourage financial security through increased savings. Consequently, the caja de ahorro (community credit union) then functions as a trustworthy 3rd party to hold those savings. Since these cajas de ahorro are usually on a local level, many of the goods and services being generated through microcredit programs stay within the community, serving to increase the stand of living at a local level. There do exist challenges of creating and maintaining a successful caja de ahorro, however they are certainly not out of reach. Not having the resources of a large national or international bank, it can be difficult to develop the necessary administrative skills to run one’s own caja de ahorro.

Additionally, like any democratic system, there are bound to be differences of opinion, thus, establishing democratic governance that functions well and lets every voice be heard can be initially a hurdle to overcome. So what’s the bottom line? Well, as one can see, it’s not exactly cut and dry. For starters, both cajas de ahorro and traditional microcredit are working within the system of capitalism, encouraging potentially detrimental risk-taking, further proliferating capitalist ideals and encouraging a reliance on capitalist markets.

As argued earlier, the system of capitalism as we know it today has fundamental problems that make working so overtly within it a dangerous option. That being said, I return to previously stated goal of solidarity work in the economic context, to learn the rules of the game, work within the system benefiting from it as much as possible, all the while establishing sustainable systems that could still flourish outside of it.

Microcredit organizations often are based outside of the community and have profit making as a central goal. There is always apparent a power dynamic that lies outside the hands of the people being served. It would follow then that it is not a sustainable system and its priorities are not with the people and their communities. Nonetheless, some benefits can certainly be experienced. It’s no answer to global poverty, but it’s also not completely terrible.

Community credit unions, cajas de ahorro, on the other hand, are administered locally and are run by the people themselves. If the world around them collapsed they could still function at an internal level. The interests are also clearly in line with community needs, making it in my opinion a solid option. Yes, there are the capitalist problems, but within that model, I see cajas de ahorro (community credit unions) as about as good as it gets in terms of creating sustainable, community-based economies.

David Sudar has been working in Oaxaca for five months with FomCafé, a local non-profit dedicated to the overall improvement of economic, social and environmental conditions in coffee communities throughout Oaxaca. We administer several different income diversification projects, including cajas de ahorro. Next month I’ll take a closer look into the organization itself, its projects as much as its successes and shortcomings.