ESR 11

Project: Counteracting peripheralization through local development? – The challenges and opportunities of social and solidarity economy initiatives in Hungary and Eastern Germany

ESR 11: Melinda Mihály (Host: SI)

Description: 

Current EU policy proposes social economy and “inclusive growth” as a solution for the economically most marginalised areas. On one hand, neoliberal (growth-oriented) policies produce peripherisation, on the other hand, there is a positive correlation between the strength of social enterprises and the local mainstream economy. For this reason, it is argued that the real potential of the social economy is its alterity to the mainstream economy (capitalism). I will use the term “community economy” to emphasise that I am looking at social enterprises as experiments to create an alternative to the market economy.
My research question is: To what extent can community enterprises in Hungary and Germany contribute to sustainable local development? To answer this question I will analyse case studies from “rural peripheries” in Germany and Hungary with in-depth, semi-structured interviews and participant observation. I want to understand what the community is and how it functions behind the enterprise.

Background:

High unemployment rates, the falling availability of public transportation, the shrinking quality of locally available education, local shops going out of business, the closing down of post offices, schools or kindergartens, and selective out-migration are manifestations of peripheralization, which particularly affects rural communities of Central and Eastern Europe (CEE). Even though rural settlements across CEE often struggle to find a development path that would allow them to reverse the polarization dynamics, which are the consequences of peripheralization, in some cases village-based initiatives aiming to counteract peripheralization emerge from these settlements.

Methodology:

The project focused on social and solidarity economy (SSE) initiatives that emerged in peripheralized areas of Eastern Germany and Hungary. The aim was to understand whether and if yes in what ways social and solidarity economy initiatives may counteract processes of peripheralization. A critical realist ethnography, including in-depth interviews with the key actors of the initiatives, participant observation and documentary analysis helped to better understand the 5 (2 from Germany and 3 from Hungary) case study SSE initiatives. Going beyond the economic dimension of local development this research aimed to better comprehend the interaction between the economic, social and environmental dimensions of local development projects in peripheralized rural areas.

Results:

The empirical findings of this research support the claims that organisations of the social and solidarity economy are hybrid organisations and do not rely solely on market-based income, but non-market and non-monetary resources are important for their economic sustainability. Based on the locally and through their networks available resources the case study social and solidarity economy initiatives balanced between market (their income from trading), non-market (the grants and subsidies they received from governments or private donors) and non-monetary (relying on the initiatives’ “social capital”) resources.

In terms of the social dimension, the governance of the initiatives have been studied, as well as their capacity to empower the inhabitants of peripheralized settings. Participative governance was an aim only in two cases out of the five case studies (G1 and H2 cases). Participative governance was practiced in the G1 case, which was set up in a moderately peripheralized setting and where the main actors of local development were middle-class families that moved to the village in search for a calmer, environmentally more sustainable life. These inhabitants consciusly followed the ideal of grassroots democracy and aimed to provide a platform to most of the stakeholders to participate in the decision-making. Participative governance was an ideal and was moderately practiced in the H2 initiative, which has emerged in a severely peripheralized setting and where families experiencing deep poverty are concentrated. Instead of the inhabitants of the village a local foundation has initiated a complex development program for the village and aims to involve the locals in shaping the directions of local development. The two case studies helped to highlight that the level of peripheralization in a village influences in what ways the inhabitants can be involved into the governance of local development projects. In severely peripheralized settings participative governance might be a long-term aim, but only moderately a present reality. To make the inhabitants of severely peripheralized settings capable of actively participating in the decision-making of the initiatives, emerging local development projects need fix non-market resources (funding on a statutory basis needs to supplement project-based funding). Furthermore, access to grants and subsidies needs to be more open as well. Initiatives that are independent from the local municipalities need to have access to public funding too.

The priority of environmental aims varied in the different case studies. The environmental considerations dominated those local development projects where the main actors, beneficiaries and inhabitants of the villages were middle-class families. In those cases where the inhabitants of the villages experienced poverty, the social aims dominated the local development projects.

In addition to internal discussions within the RegPol² project, international conferences provided a platform to share and discuss the interim results and to further develop this research:

• 5^th EUGEO Congress on the Geography of Europe, 2015 in Budapest, Hungary
• 5^th EMES PhD summer school 2016 in Glasgow, Scotland, UK
• Degrowth Conference 2016 in Budapest, Hungary
• Association of American Geographers (AAG) Annual Meeting 2017 in Boston, US
• 12^th Conference of the European Society for Ecological Economics 2017 in Budapest, Hungary