The l980s witnessed critical changes in the Western industrialized economies. The ideological shift to the right which began towards the end of the l970s and global economic restructuring severely challenged the policy regime of the post-war period. Economic decline and high rates of inflation were largely disassociated from the structural changes underway and misinterpreted as the outcome of an adherence to state intervention and its alleged inherent inefficiencies.

The l980s were a decade of ideological rectitude and confusion--of rigid commitment to laissez-faire combined with poorly conceived improvisations on the part of states forced to respond to crises generated by the new policy regime. One recalls Karl Polanyi's analysis of l9th century liberalism which required legislation, regulation and the development of new institutions to install or impose the free market. These responses, Polanyi's "double movement," were predictable, wrote Polanyi in The Great Transformation in l944.¹ The market economy cannot function without the appropriate institutional framework to prevent social dislocation and market failure. The lessons of the l9th century were forgotten in the l920s and, once again, in the l980s when the attempt to impose the free market in developed industrial economies resulted in erratic and drastic ad hoc responses. The evangelical commitment to restore a free-market system (as though it had ever existed outside the imagination of its believers) deepened the economic crisis and led to severe distortions, misinterpretation of socio-economic phenomena and inappropriate policy implementation throughout the West. Paradoxically, a period of approximately six years of economic growth, as measured by increasing GNP from l983-l988 in the U.S., for example, concealed a swelling undercurrent of structural economic decline. Unbridled speculation assisted by the deregulation of financial markets, girded by high interest rates and an ever more precarious service economy produced this hollow growth. Policy makers were unprepared for the catastrophe they had helped to create by dogmatically adhering to a conservative monetarist agenda.

Despite the overwhelmingly negative results--and even some recanting among influential economists and public figures--the schism between this stark reality and the continued belief in the principles underlying conservative economic policy continues. The values, the moral philosophy of the l980s, have been universally adopted, even by its detractors. The enshrinement of individualism in economics and in contemporary moral philosophy continues to dominate the policy agenda. An economic scorecard is kept principally to track inflation. Although interest rates have come down, the real rate of interest in Canada, for example, remains very high. Economic growth is constrained by this perceived looming threat of unleashed inflation. Chronically high rates of unemployment have become normalized at least in so far as discretionary economic policy is concerned. The result is a combination of structural and endogenous policy-generated unemployment. Cyclical unemployment has virtually disappeared as a phenomenon as have the availability of discretionary tools to cope with this. As governments unravel the post-war social safety net, automatic stabilizers--unemployment insurance, social programs, income maintenance--are also slated to disappear. Not merely the welfare state but also the policy apparatus to mitigate the business cycle are now considered obsolete, part of a supposedly profligate period of prosperity now associated with waste and inefficiency.

It is in this climate that various uncoordinated and seemingly alternative economic strategies have emerged in regions and localities in the West to cope with economic and social decline. In Polanyi's formulation, we are observing several counter-movements--or, we could say, the double movement has been disaggregated to include new forms of intervention which, in many cases, are not state led but may include national, regional or local government as partners in these coping strategies. I deliberately use the term "coping" to distinguish these responses from genuinely alternative means to govern social and economic life which are also emerging and gaining political legitimacy, no doubt because of the repeated failure of governments to reverse economic decline and social decay rather than their genuine endorsement of these alternatives. I believe that this is above all a period of political expediency and that the need to build and consolidate new institutions to firmly ground these alternatives is urgent. They will otherwise remain fragile, marginal and vulnerable whenever their challenge to economic and political orthodoxy will be no longer tolerated.

For the time being, there seems to be an attitude that whatever works, works, and must be supported, if even reluctantly. This is especially true if states are let off the hook and are able to disengage fiscally, as these alternatives seek autonomy to develop democratic economic initiatives based within civil society. I believe it is critical to inject this observation into any analysis of what are otherwise salutary initiatives, which are nevertheless, in many ways, effectively undermining the prevailing approach to social and economic policy. Still, there is great danger in assuming that the alternatives which have emerged and are, indeed, multiplying, represent a transition to a new social order. This is most commonly expressed by those who were influenced by the French Regulation School and its analysis of the transition from Fordism to post-Fordism.² By assuming that a new and homogeneous social order is emerging, this analysis not only ignores the unbroken power of central governments, but, worse still, it implies that attention need not be focussed on the national agenda.

I will argue that the struggle to implement alternative economic strategies must be embedded within a sound macroeconomic framework which provides the appropriate economic environment for these initiatives to flourish. This means a continued and vigorous challenge to the prevailing economic agenda. To think globally and act locally as so many have advocated, is implicitly to condemn any democratic, decentralized alternative socio-economic strategies to being no more than an intermediate resolution of the crisis. But if these initiatives are rather viewed as part of a long transition process which will produce new social and economic relationships, they require institutional legitimacy going far beyond their current crisis management role.

FROM SOCIAL ENGINEERING TO NEO-CORPORATISM OR CONCERTATION

The economic crisis of the l980s produced many important responses within cities and regions throughout the West. Ironically, the promotion of free trade internationally was accompanied by many regionally based partnerships between the private sector, local or regional governments and trade unions, to rescue areas hard hit by deindustrialization and the absence of any coordinated industrial strategy. Many of these experiences were extensively documented both for their success as well as in particular for the unprecedented cooperation between labour and business. Better known examples in the U.S. were the effective bail out of New York City through the sale of municipal bonds, which involved the civic administration and city employees; a social pact (so to speak, since this basically involved the agreement by workers to a wage freeze) reached between Chrysler, the autoworkers and the municipality in Detroit to rescue the auto-maker and protect jobs. In Québec the largest trade union, the Québec Federation of Labour, established a solidarity fund in l983 (Fonds de solidarité des travailleurs (euses) de Québec) to invest in firms located in Québec to create jobs. It was established to provide a needed source of risk capital for small and medium size enterprises. To protect its investors, however, only 40% of the fund was designated as venture capital. It also provided attractive tax incentives for investors. In l993 the assets of the fund totalled $797.1 million of which approximately one half is invested in small and medium firms in Québec.

This initiative is significant because it marked a new epoch in capital-labour relations in the province of Québec. In contrast with the class antagonisms of the l960s and 70s which included the imprisonment of the leaders of the three major unions in the province, we were now witnessing "concertation"--a new dialogue between labour, capital and the state at the provincial level, to revitalize the Québec economy.

Although it is beyond the scope of this paper to enter into a detailed discussion of Québec, a few comments are necessary to situate these more current events in context. Unlike the U.S., Canada has a history of state-initiated development programs. Its better known marketing boards, for example, were established to protect the agricultural sector from price fluctuations, this being part of a panoply of income maintenance programs established in the post-war period. As is well known, even unemployment insurance has served to maintain income in many regions of the country where employment is largely seasonal. In Québec, as elsewhere in the country, regional development programs existed. To establish an industrial base in Québec, following the "Quiet Revolution" of the l960s, the government established a series of programs to promote Québec based enterprises.³

Before we discuss the l980s, the programs and events of the earlier period must be put in relief: when, at the same time that this government maintained a hands-off market image, it was actively engaged in economic development in the province. There was, of course, a difference from the government's previous position. These new programs were part of an industrial "supply side" strategy to create business opportunities which would then, it was assumed, help to reduce unemployment in the province. Moreover, it was also part of a punitive strategy consistent with the dominant neo-liberal agenda which viewed the unemployed as welfare dependents rather than as victims of the downturn. To be fair, personalities in the Québec government, certainly in the latter part of the l980s, came to distance themselves from free-market discourse and practice, and moved more towards a neo-corporatist program. Still, the central focus was on the need to revitalize the private sector.

This brief background will contribute to an understanding of the current policy agenda in Québec. On the surface, it appears highly complex and fragmented, but is, in reality, a continuation of a coordinated strategy to promote small and medium sized enterprises. To attain this objective, the Québec government has initiated and/or supported the almost exponential growth of investment funds in the province. These have largely been established by key players in the Québec economy, including local and/or provincial governments.⁴ What is interesting, from the perspective of this discussion, is the implementation of a credit-driven economic development strategy in which the state, the Québec government, plays a vital role both by contributing finance capital and in determining its allocation. However, an in-depth analysis of these funds reveals that, in many instances, the criteria for access to these funds--whether as equity, grants, loans or participating loans--in some cases are conventional estimates of rates of return without allowing for social benefits which may underestimate the projected return in some cases, or result in a positive estimate where a purely cost/profit calculation does not. Moreover, many of these funds provide additional opportunities for speculation, profit and tax breaks. As such, they cannot be distinguished from conventional investment instruments, even if their stated objectives are otherwise. What is also clear is that an inflexible approach to economic recovery, whatever form it takes, is destined to produce losses as well as gains. The brief history of these funds established to provide risk capital exclusively to small and medium business has documented many losses.⁵ Despite this, a credit-driven economic strategy based on partnership between the private and public sectors and the trade union movement has become a significant economic policy tool in Québec.

This particular relationship based on a "concertation" model in Québec is part of the differentiated intervention strategy which is increasingly to be seen in other regions and countries. As Egon Matzner and Wolfgang Streek point out in their Introduction to Beyond Keynesianism, current studies show that today different capitalisms are distinguished by the

...role and structure of the state and the way in which it intervenes in the economy. Not only do some states intervene more than others, but, perhaps more importantly, the styles and tools, if not the targets of intervention differ greatly, and so do the capacities of states with different institutional equipment to conduct particular policies and attain specific objectivesMoreover, the social networks with which effective institutional, or socio-economic intervention must link up are mostly located on the supply-side, or in the production sphere, where they typically generate and enforce social or communitarian obligations that constrain market individualism.⁶

I quote this at length to situate Québec in this larger context. Each case, of course, will produce different institutional relations grounded in particular cultures and histories. What is common, however, is an overwhelming commitment to the free market and competition despite the awareness that remedial institutional relationships are essential to guide the market, for better or for worse.

There are, however, other social networks which have emerged in the West during this period. This represents further disaggregation at the community or local level. In some cases, we simply observe an expanded role for existing community organisations now actively involved in economic issues. In other cases, new institutional relations have been created similar to the "concertation" model above but at an even more decentralized level. There is a significant difference here, however. Unlike the neo-corporatist relations observed in Québec and elsewhere, which have by and large replaced conflict with conciliation and cooperation, the economic agenda of communities, which are also examples of new partnerships, are, I believe, more vulnerable if the state assumes too prominent a role. In these cases, the struggle to build autonomous institutions becomes greater since the state regards itself as beneficent and, therefore, more prominent than in the concertation model where it more generally serves the private sector and its initiatives.

I turn to this now because the struggle for democratizing the market is being waged here. The issue is more than one of embedding the market in a new set of social relations which are basically market driven. It represents an economic strategy from below, determined and shaped by the needs and aspirations of communities and built on the capacities of their citizens. It is these experiences which, I believe, are relevant to economies in transition in Eastern Europe where market-driven economic strategies continue to produce severe hardship for many and risk destroying the creative potential of people discouraged by an approach which is prepared to accept deep economic and social insecurity as a necessary and inevitable cost of economic transformation.

WHAT IS THE LINK?

In a recent article, János Simon presents the results of a survey conducted in l989, l990 and l993 in Hungary on the meaning of democracy to the population.⁷ In l993, in addition to freedom, respondents added material well-being and a right to employment to their definition of democracy. Thus the meaning of democracy now includes a significant material dimension. The author concludes that without the implementation of a comprehensive social policy to improve the lives of Hungarians, social tensions will mount. This is certainly true. However, there are also possibilities within civil society which are rarely considered and which must be explored and encouraged, as well as relevant experiences in the West which may serve as helpful guides. The blueprint for democracy has thus far failed because it has been equated solely with the establishment of the free market. Similar failures abound in the West, witness rising rates of unemployment and poverty throughout the industrialized economies. The social damage has, to some extent, been contained because it is not easy to quickly dismantle the welfare state, thereby leaving a measure of social protection in place even if it is under attack. However, as the assault on these institutions in the West deepens, the number of disenfranchised individuals grows.

The West has spawned a new underclass, excluded from productive economic life. Neo-corporatist or industrial strategies will not reach this community in an environment committed to punitive social legislation at worst or to ad hoc labour market policies at best. The events of l989 across Eastern Europe and the former Soviet Union were to have resulted in convergence of both East and West towards a free market economy. Instead, there has been convergence of a different kind: in neither the East nor the West are markets free; social engineering has yielded to managed economies; both societies are faced with increasingly disenfranchised populations.

COMMUNITY ECONOMIC DEVELOPMENT: A DEMOCRATIC ALTERNATIVE TO "THE GRIM HYDRAULICS OF TRICKLE-DOWN ECONOMICS"⁸

I would like to return to the "whatever works, works" aphorism--the politics of expediency to which I referred earlier. I do so to explain why alternative economic development strategies are enjoying a new and widespread legitimacy throughout the West. However, even this must not be exaggerated. Community economic development in its various manifestations is receiving a great deal of attention, it is true. At the political level, it is being accommodated, at best. In this regard, the state does not act as a social partner; its role varies from providing beneficent ad hoc support--financial and/or institutional--to legislating new community-based institutions. I refer here especially to the recent establishment of community banks in the U.S. and government backed community investment funds in Canada (in the form of bonds or government guaranteed loans, for example). These are, indeed, significant initiatives on the part of governments which are recognizing the discrimination faced by communities unable to secure finance either through conventional bank loans or through the many new financial intermediaries (in Québec, for example) which are not available for small projects. In fact, a very interesting question arises in a comparative analysis of what we may call differentiated state intervention. Why would one region in Canada, for example, follow a neo-corporatist industrial strategy which largely ignores micro initiatives at the community level, while another develops the appropriate legal apparatus to serve these types of economic initiatives?

I believe the answer lies in what Matzner and Streek refer to as the "different institutional equipment" of regions, or what might be more broadly seen as different political cultures. Such a comparative analysis would assist in understanding why, in this environment of "whatever works, works," there remain priorities that can only be explained through culture and established institutions. The role of the state in regions embarking on new initiatives could then, to at least a limited extent, be predicted. Similarly, cohesive communities with a shared history would be more likely to develop a common economic development strategy. However, recent events have shown that this is not essential. The word "community" has been used rather loosely to mean many things. For example, community economic development is often interpreted as local economic development; community is used to spatially designate a geographic neighborhood. The sense in which I wish to speak of community does not necessarily imply a shared past or a common culture, though, of course, it includes these as basic and fundamental to what communities were in the past, perhaps still are in some cases and might become in the future.

The community we speak of emerges from a recognition that it can be constructed through a common strategy to revitalize neighborhoods, create employment and develop alternative economic institutions and programs. Of the many differentiated socio-economic interventions observable today, community-based economic development succeeds only by re-embedding the economy into society, by developing a social economy in which non-market criteria determine the allocation of economic resources. This is no longer an ideal or limited to a few rather well-known examples--Mondragon in Spain or New Dawn Enterprises in Cape Breton, Nova Scotia, for example. In fact, the examples are too numerous and scattered to document but sufficiently visible for it to be concluded that they are significant.

DEMOCRATIZING CAPITAL: EMPOWERMENT OR CRISIS MANAGEMENT?
LESSONS FOR EASTERN EUROPE

There is a very large and growing community investment movement in the West. It includes the establishment of social and ethical investment funds, community banking and revolving loan funds. I wish to focus on the latter for two reasons: first, unlike other financial innovations, revolving loan funds are democratically established and provide the greatest potential for community lenders. Second, I believe that there is an adequate enough social and economic base in Hungary for consideration to be given to the establishment of revolving loan funds as a much needed source of micro capital.

Revolving loan funds may be called social banks or quasi banks. They operate on the same principles of lending and borrowing; however, interest rates for both borrowers and lenders are negotiated. What distinguishes these from conventional banks, is their base in communities, low income communities, specifically. The growing disenfranchised population referred to earlier has been severely punished by job losses due to economic restructuring and the current political environment which considers the unemployed as a social burden. Because the skills and talents of laid off workers are not validated, there is no attempt to create an institutional framework which recognizes their potential input into an economic development strategy. Instead, they are considered an undifferentiated mass of trainable workers. Nor can they approach the banks for loans to establish small independent initiatives. They face the double burden of economic marginalization and the "redlining" practices of the commercial banks. The lives of a growing number of marginalized workers have become more contingent in this environment. The so-called "jobless recovery" has altered the attitudes of workers and policy-makers alike who were conditioned to expect jobs as the economy moved out of a slump.

Revolving loan funds provide micro credit to those who cannot re-enter the economy as productive workers. The fund defines economic development in socio-economic terms. Loans are made to individuals and/or groups for start-up capital, housing projects, or to assist projects underway which are considered high risk by the banks. They include loans to create new forms of social ownership such as community owned enterprise and community land trusts.⁹ Revolving loan funds have been referred to in the literature as part of a growing social economy movement. They are not only contributing to a re-embedding of the economy in the community but are, in significant ways, transforming property relations.

There is a history of alternative investment funds in the West. These include small credit unions and the more recent development of loan circles based on the highly successful Grameen Bank model in Bangladesh as well as barter networks such as the LETS system in Canada. Each of these, in varying ways, is built on social collateral. Each of these has emerged to fill an urgently needed source of risk capital. These funds are not created by governments; they are generated by loans made by individual lenders who support its socio-economic objectives. Since borrowers cannot, in general, guarantee their loans, their objectives and plans are very carefully evaluated. All projects which receive support are provided with extensive follow-up and technical assistance. There is an active movement to develop niche markets for local enterprises to break up global markets, for example. More than monitoring loans and repayment, this intervention reflects the underlying philosophy of these funds which actively participate as partners in the projects they support. The details of the operations of these funds are well documented.¹⁰ What is relevant to this discussion is that the establishment of alternative investment funds is crucial to a community economic development strategy which, to use the jargon, is "empowering." There is ample evidence to show that a top down strategy, even if it is earmarked for low income communities, is precarious. In other words, community development organizations which focus on feasibility studies, training programs and economic development, and are unable to establish autonomous community based investment funds but rely instead on government grants or subsidies, will be part of a government crisis management strategy which may shift its priorities and withdraw financial assistance or not renew it. A pool of community controlled risk capital is essential.

In fact, these independent funds are flourishing. In the U.S., for example, over 50 revolving loan funds exist and are coordinated by the National Association of Community Loan Funds in Washington. Such funds currently represent approximately $125 million. The success of these funds and the establishment of community banks in the U.S. led to the recent adoption of legislation to increase available capital for community banking. Of great significance, in this period of successive business failures and defaulting on bank loans, is the overwhelming success of the projects supported by these funds; they boast a loan loss ratio of just under l%. This is in sharp contrast to commercial lending and to the many bankruptcies among small and medium size enterprises eligible for the usual sources of funding--state, para-state and private.

Also of great interest is the emergence of networks of social investment funds and community economic development organizations--both national and international--to exchange experiences and share resources. As these are basically micro experiences, it is difficult to compile an inventory. However, the recent addition of electronic networks in Canada and the U.S. will assist greatly in developing "strategic alliances" within the alternative sector. In Europe, INAISE provides a network of European social investment. INAISE now collaborates with IRED, an international network of community/local economic development organisations. IRED representatives recently met with representatives in Eastern Europe who expressed great interest in learning more about these alternative financial instruments developed in other countries.

Another interesting development is the recent recommendation by the Bretton Woods Commission, a private U.S.-based multinational group of academics, business representatives and former government officials to the World Bank Group¹¹ to shift its funds to subnational governments and directly to private companies. Subsidiarity or decentralization has, of course, been an important part of the EEC (EU) agenda. Although our focus is on community based economic development funds, movement in this direction by international agencies is highly significant since it will open up opportunities to local governments which can participate as partners in these initiatives.¹² As long as community lending institutions are built on a democratic base, the participation of local governments is welcome. This differs from the neo-corporatist developments described above. We do not speak here of the establishment of a "development fund"; community-based revolving loan funds represent new socio-economic institutions.

LESSONS FROM EASTERN EUROPE

This section of the paper can be but speculative. I wish to pose several questions regarding the possibility to develop alternative community based economic programs in Eastern Europe. I refer to Hungary, in particular, although the same questions may be raised for other countries in the region. The first point to be made is that "the generalization of the market contract is not appropriate for all economic life." (Towards a New Sector, p.9). This is true for the West which has not been able to deal with growing poverty, unemployment and economic decline. These difficult conditions have led to a reconsideration and legitimation of alternative economic strategies. The situation is even more acute within transition economies which do not have the social infrastructure to assist in the radical social transformation underway.

The question raised here is whether factors in the present situation--the pre-communist social relations upon which successful small enterprises were established during the communist period, the legalized second economy (since l982), the former active local councils and the current existence of nearly 20,000 associations mobilized around social, cultural, economic and political issues in this post-communist period--provide a social basis upon which community based finance can be established. Despite the introduction of new instruments of credit and low interest rates for small enterprises, these continue to "redline" small borrowers. Banks resist long term repayment schedules. In fact, banks are more interested in equity investment, where the risks are lower. For small enterprise start-up capital, friends and families are relied upon. Social collateral from friends, family, co-workers, or "love money" is a key source of capital.

One asks where all the "private" initiative in rural communities and in the second economy under communism disappeared to. These experiences can surely be considered a foundation for new democratic initiatives today. Indeed, then as now, village economies were based on reciprocity, work sharing arrangements, borrowing and lending within the community. Have these social networks collapsed or is there an overwhelming cynicism which blocks any possibility to use these networks "against the market" so to speak, to mobilize capital? How useful would it be to actively engage in discussions of alternative economic strategies by illustrating their role in the West? I believe this is being done. Are these exchanges productive?

Iván Szelenyi wrote about "parking orbits" to refer to the embourgeoisement of the rural economy during communism. These entrepreneurs parked in villages to create productive local economies and became a "relatively autonomous civil society" within communist Hungary.¹³ Endre Sik¹⁴ wrote likewise about networks of independent "social economies" with a developed accumulation strategy as the "institutional solutions to organize the market itself" during the communist period. These networks were founded on mutual trust and a shared hostility towards the state. This distrust has grown in the current period as communities try to cope with economic crisis and economic insecurity. Might these defensive coping mechanisms which effectively mobilized communities not be transformed into autonomous development strategies today?

Trust and shared cultural identity have not been destroyed in the transition. Quite the contrary: these ties have deepened in the face of growing insecurity. Can new meaning be given to these social networks which acknowledges their potential to be self-determining and active economic agents in society? This question is not rhetorical. We spoke earlier of the absence of community in the West, in the sense of "a shared identity" and the challenge to establish a community regulated economy instead around a common socio-economic definition of community. In Hungary, a more traditionally defined community is already present in many areas which succeeded in establishing independent socio-economic institutions. Thus the social base which has to be constructed in the West is to be found there.

One hears of the wealth accumulated in the second economy, little of which has been reinvested in enterprises. Much of this wealth has instead gone into conspicuous consumption and personal savings. The distrust of the previous regime and the current transition crisis have discouraged reinvestment and have resulted in short-term planning. And so the second economy has played a passive and cautious role in the transition. Can this behaviour now be converted into a long-term investment strategy if the appropriate institutions are created, including, first and foremost, of course, the availability of credit? Can this behaviour be transformed with the introduction of an industrial strategy at the local level by autonomous local authorities? This is distinct from the international financial assistance which is currently available primarily through PHARE (EU) which supports Local Enterprise Agencies and the Hungarian Foundation for Enterprise Promotion. They neither provide micro credit nor are they widespread. There are only a few LEAs in the country and their availability is limited to their specific location. Economists had already proposed the establishment of community-based local financial institutions in response to inadequate state provision in the previous period.

Recent studies of villages and small towns and of new private enterprises confirm the persistence of social networks in the current economy. In fact, they suggest that these are as integral to the operations within enterprises, between enterprises and within communities today, as they were in the past. They emphasize the social endowments of today's entrepreneurs and the importance of "contact capital." These people were socialized under conditions of shortage and created these important links to struggle against economic constraints imposed by the system, with both borrowing and lending. So called "industrial districts" have been identified in Hungary which engage in the social regulation of economic processes. This includes the establishment of local funds and the retention of profits in the district.

There appears to exist a potential source of micro credit which may be built upon the strength of social solidarity present in many regions and communities. More comprehensive documentation is needed on "previously existing social networks," industrial districts, and new social formations. For example, when asking if informal finance existed within communities, I was told that there is no clear evidence of this, but that such arrangements surely do exist within the interstices of social networks. As noted above, there are attempts to compile an inventory of alternative savings and lending practices in the West. A comprehensive survey is needed here as well. Meaningless aggregates are inadequate to evaluate social and economic life; we need new tools of analysis.

CONCLUSION

There is growing awareness of and support for what might be called an alternative third sector. This differs fundamentally from previous references to a "third way." We are speaking here of the development and consolidation of new socio-economic institutions referred to as the "social economy." The focus has been on the question of finance and the democratization of capital. I believe this is central to a strategy which is otherwise contingent and vulnerable. The new focus on "managed economies" is, in fact, more often than not, devolution rather than genuine decentralization and democratization. Moreover, micro credit remains unavailable. However, there is growing evidence of successful community initiatives with access to community finance. These are not marginal; they are situated within those very localities hardest hit by irreversible structural changes. That they are gaining support is significant; that they are gaining autonomy is even more so. These lessons must be shared with economies in transition. In some cases, there exists a social base upon which these initiatives may be built. In others, the betrayal of the market may provide the foundation upon which to consider these alternatives.

NOTES

1. Karl Polanyi, The Great Transformation. New York: Rinehart, 1944.

2. See M. Mendell 1994 for a detailed critique of this.

3. For example, the Société générale de financement (SGF) was created in l962 followed by the Caisse de dépot et de placement in l966, which consists of public sector pension funds. The Société de développement industriel (SDI) was established in l971, the Société de développement des entreprises québecoises (SODEQ) in l976, the Régime d'épargne-action du Québec (REAQ) in l979, the Sociétés de placement dans l'entreprise québecoise (SPEC) in 1985 and the Coopératives des travailleurs actionnaires in 1985.

4. The key players in Québec are the Caisse de dépot et placements noted above, the Mouvement Desjardins (a cooperative federation of financial cooperatives in Quebec), the Banque Nationale, the Fonds de solidarité (see above) and the Québec government.

5. See Mendell, Levesque and Van Kemenade, l994. In a recent study in Québec, Jean Desrochers notes that the failure rate of new small and medium size enterprises is 80%. Jean Desrochers, "La gestion financière," in Pierre-André Julien (ed.), Les PME, bilan et perspectives. Québec et Paris: Presses Inter Universitaires et Economica, 1994, pp. 253-269.

6. Egon Matzner and Wolfgang Streek, Beyond Keynesianism. Introduction, pp. 7-8.

7. János Simon, "The Meaning of Democracy." (Hungary). Draft document presented to the author, 1994.

8. I borrow this phrase from Robert Fitch's "Explaining New York City's Aberrant Economy," New Left Review, No. 207, September/October 1994, 23. It seems we need a new metaphor. Or perhaps it is still appropriate since a trickle is insignificant anyway!

9. See Tim Crabtree, George McRobie and Andy Roberts, Towards a New Sector. Macro Politics for Community Enterprise. London: New Economics Foundation, 1992, for the extensive literature on community enterprise in the U.K. and Scotland. Community enterprises have emerged in the U.S. and in Canada as well.

10. See M. Mendell and L. Evoy, (eds.), Commuity Economic Development. In Search of Empowerment and Alternatives. 2nd edition. Montreal: Black Rose Books, 1997, pp. 110-129 for one example of a revolving loan fund in Montreal.

11. The World Bank Group includes the World Bank, the International Development Association, the Industrial Finance Corporation and the Multilateral Investment Guarantee Agency. Only the World Bank is obliged to lend through central governments.

12. See David Gisselquist, "How to Encourage Government Decentralization. Interesting Ideas for Redirecting Lending," Transition. Transition Economics Division. Policy Research Department. The World Bank. Vol.5, No.7, September 1994, pp.7-8.

13. Ivan Szelenyi, Socialist Enterprises: Embourgeoisement in Rural Hungary. Madison: University of Wisconsin Press, 1988.

14. Endre Sik and Agnes Czako, "The Role of the Network as a Resource in Economic Transacions in Post-Communism," in M. Mendell and K. Nielsen (eds.), Europe. Central and East. Montreal: Black Rose Books, 1995, pp. 224-247.

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