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GRECO Report Summary

Project ID: 323743
Funded under: FP7-IDEAS-ERC
Country: Spain

Mid-Term Report Summary - GRECO (Grassroots economics: Meaning, project and practice in the pursuit of livelihood.)

The project proposes a bottom-up approach to economic dynamics. It seeks to understand the effects of the economic crisis and of structural adjustment policies in the livelihoods of Southern European ordinary people. Four Southern European countries –Portugal, Italy, Greece and Spain— have been strategically selected as research sites due to their relevance in the current crisis.
In Southern Europe promises of wellbeing and social mobility have become increasingly elusive since 2008. As a result of structural adjustment measures and recession prospects, the middle class horizon of social mobility as a project of the laboring classes has grown improbable. Economists and policy makers have provided analyses and advised on political action to end the economic crisis, but this has resulted in greater precarity and inequality producing social protest as well as nationalistic and xenophobic reactions. The ‘technical’ models that inform these policies show little grounded knowledge about how real people make decisions within social and cultural environments that set the framework for their actions. The Grassroots Economics project proposes a major shift in perspective in the understanding of economic processes, one that takes into account real life possibilities and strategies for making a living. The project investigates the models and theories about economic processes that ordinary people develop through reflecting on their experiences and evaluating their opportunities against the backdrop of state policies and expert discourses that saturate the social field. This observation of ordinary people’s everyday practices and understandings of economic constraints and opportunities will provide a better picture of the existent coordination of economic agents. Research questions are based on the premise that we need to understand how ordinary people’s projects and those of the economic elites and institutional power holders are co-determined. Acknowledging grassroots economics and comparing it with expert models of the economy will open new theoretical ground that will shed light on present-day economic insecurity and its effect on the political stability of European political communities.
Preliminary findings point to the effects of rent seeking procedures at the different scales of social interaction. Faced with the failure of the competitive market and the democratic state to provide a decent livelihood, people respond to the effects of monopoly closure expressed in elite corruption and capital concentration by claiming citizenship rents, kinship rents and proximity rents. In an analogous move to that of transnational firms’ tax avoidance schemes that result in profit accumulation without investment, ordinary people –in particular the growing mass of self-employed—adopt strategies of petty tax avoidance in order to survive. Both developments endanger the fiscal sustainability of the state threatening public provisioning of basic goods (infrastructures, health system, education, and housing) that are entrenched in democratic polities as citizenship entitlements. This situation further widens common citizens’ breakdown of trust both in competitive capitalist models and in the liberal democratic state, exerting pressure towards institutional realignments.

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