Economy, Globe, Latin America, United Kingdom

Social economy vs. open economy

In Ecuador, the clash between two different economic models continues unabated. The first, the open economy model, is based on the assumption that private business and the free market are guarantors of modernisation and progress.


Juan J. Paz y Miño Cepeda*


The other is based on the idea that the State plays a leading role in driving the social economy, since the State can guarantee workers’ rights, promote social rights, deliver a whole host of services for the benefit of citizens (education, healthcare, social security) and look after strategic natural resources that would otherwise be at the mercy of voracious private interests.

In this sense, the 2008 Constitution represented a continuation of the progressive Constitutions of 1929, 1945 and 1979 and overturned the business-oriented model of the last constitution, that’s to say, the one created in 1998. Under the principles and institutions of the 2008 Constitution a further advancement was made by positing the ideal society as one founded upon the values of Buen Vivir (sumak kawsay in Quechuan, “good living”), and by proclaiming Ecuador a Plurinational State, something shared only by the Constitution of the Plurinational State of Bolivia.

Of course, from a clear-eyed sociological and historical perspective it is ultimately not so much a confrontation of two economic “models” but rather a clash (in Marxist terms, a “class struggle”) between the economic vision and private interests of the wealthy classes, the upper echelons of the business world and sectors connected to this concentration of power, and the more “social” and collective vision, for the benefit of the working classes and many popular sectors of the country.

It is a struggle about building this model in reality whether it be a “savage capitalism”, subject exclusively to the supposed law of the market, or a “social capitalism”, as a transitional point on the way to a post-capitalist society, which, at the moment, would be similar to the social economies in the European market or to the modern socialisms of Canada and the Scandinavian countries.

Ecuador and Latin America’s experiences of the corporate model (savage capitalism) have been historically disastrous for societies in the region, due to it generating awful standards of living and of work, concentrating absolute wealth into certain hands, and establishing profound inequality.

This state of affairs could be perceived in the final decades of the twentieth century and is perpetuated today in the countries who have followed the path, littered with fallacies, of neoliberal ideology.

Recent events in Ecuador show that the construction of a new economy or society does not happen through submission to capital, neoliberal slogans or the IMF. With two “models” in conflict that are the expression of two types of social forces equally in conflict, the construction of the corporate model tries to validate itself by liquidating the State’s capacities, by weakening fiscal systems entirely and by destroying the human conquests hardwon through the creation of laws relating to work, society and the environment.

Now, under a new cycle of conservative governments in Latin America, the imposition of this model has blown life into and brought to the surface an old trait, becoming ever more visible: the turn towards authoritarianism, dictatorial control of resources, and repression.

Against this historical backdrop, the rising up of indigenous and popular groups that has happened in Ecuador has shaken up the experiences we were used to. It has challenged precisely those models of development and has changed the vision of the future imposed until now.

At the tip of the iceberg, this uprising would seem to question only one issue, the deregulation of fuel prices by decree number 883. But this alone was enough to lead to the rupture of the country’s agreement with the International Monetary Fund (IMF), under which Lenin Moreno’s government had adopted this economic measure and many others which went on to cause the flare-up of social unrest.

It is above all the indigenous movement that has challenged the powerful elite, to use a concept used by the North American sociologist C. Wright Mills. It was the indigenous movement that gained a populist win against a State set on guaranteeing the power of the elite. And it was the indigenous movement that brought onto the political scene the need to create a Plurinational State, incomprehensible to those elites whose classist and racist hate had been pushed to the surface.

The indigenous and popular uprising achieved a historic triumph in Ecuador. It brought attention to the fact that the building of a new economy and a new society is not achieved through submission to the power of capital, neoliberal slogans or agreements with the IMF. But rather, the creation of social harmony, peace and democracy depends upon a valuation of the people’s interests and subsequent implementation by the State.  (PL)

*Juan J. Paz y Miño Cepeda is an Ecuadorian analyst with a PhD in Contemporary History from the University of Santiago de Compostela. He is Dean of the Communications, Arts and Humanities Faculty of the Universidad Tecnológica Equinoccial (UTE), Quito. Juan J.Paz y Miño Cepeda wirtes for Prensa Latina.

 (Translated by Elizabeth Dann – Email:

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