The Economic Logic of Resource-Scarce Communities: A Guide for Western Community Workers

By David Bartecchi

For western community workers (whether they be expatriates from a western country, locals raised in relatively affluent western educated families or settlers on colonized lands) the economic logic of resource-scarce communities can seem confusing, irrational and even counter to their own best interests.

If this profile fits you, you’ve probably asked yourself:

• Why do people seem so unwilling to save a little bit of money or contribute to the operation and maintenance of a well, pump or irrigation scheme?
• Why do people seem hesitant to improve their situation?
• And of course; Why does the community seem be causing problems for this person or family now that they are achieving some success?

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To begin this discussion I would like to define what I mean by “resource scarce-communities”. When I use this term I am generally referring to communities that do not have access to the resources and institutions available in the wealthier advanced capitalist states say in North America and Europe. I am purposely trying to avoid using terms that directly or indirectly cast judgement by using a word such as “poor” or “developing” because I don’t want to imply that moving in the direction of an advanced capitalist economy is by any means the “correct” path and certainly not the sustainable path. In many ways these communities demonstrate some of the most efficient and sustainable use of resources anywhere on the globe (a phenomena related to what will be discussed in this article). Furthermore, while often cash-poor, that does not necessarily mean they are poor in natural resources just that instead of producing for the market a larger percentage of production is for direct consumption or exchange. Furthermore, compared to their economically “richer” neighbors, these communities often demonstrate much greater social equality and may even rank higher in many standards of human well being. However, I should also point out that many communities that fit this category are not doing well, struggling against one form or another of social or economic exclusion. In fact, it has been argued that such communities, rather than being anomalies in an increasingly global capitalist system, are in fact promoted by capitalists because they offer the “lowest possible wage” (Wallerstein 1995) and the exploitation of “producers who work without wages” (Werholf 1984). 

Social Safety Nets

To begin understanding the economic logic of resource scarce communities we need to first understand how people in resource-scarce communities manage risk. Everyone, regardless of where they live is exposed to varying levels of risk whether it be a broken leg, an automobile accident, sickness, losing a job, failure of a crop, fire, flood or any countless ways our livelihood can be adversely affected. In wealthier countries, there exist various institutions (public, private and nonprofit) that help us reduce risk including health and life insurance, national welfare and food-stamp programs, unemployment insurance, home insurance, flood insurance, fire insurance, savings accounts, pawn shops, even credit cards and your AAA membership can be seen as tools to manage risk. Nonprofit institutions such as food pantries, soup kitchens, and shelters, housing and job training and placement programs also help us reduce risk by ensuring that people have the necessities for survival and can even help us get back on our feet. Along with institutional safety nets, there are also informal channels where the community steps-in and helps people  in times of need by giving or lending money, food, clothes, shelter from friends and family or possibly by giving us a job or referral.

Combined these institutional and communal responses make up the social safety net. As you might expect, social safety nets vary from country to country and community to community. As described above, they can be grouped into two broad categories; institutional safety nets and communal safety nets, defined below.

Institutional safety nets are social programs run by local and national government bureaucracies including social welfare (guaranteed income), food distribution, subsidized housing, health insurance, etc. But it also includes non-governmental actors such as church programs or non-governmental organizations, local food banks and shelters.

Communal safety nets are informal or culturally mediated responses to a crisis that occurs within communities, families, and between individuals and friends. Communal safety net responses might include giving or lending money/ food/ shelter/ land/ livestock/ childcare/ etc.

Both of these types of safety nets exist more or less simultaneously. As one might expect, the less developed a country’s institutional safety net, the more its citizens must rely on their communal safety net. In fact, according to the World Bank less than ⅓ of the world’s poor have access to some sort of institutional safety net. And on the other end of the spectrum, the more developed a country’s institutional safety net, the less its citizens must rely on communal responses and so they have a tendency to atrophy over time (read Robert Putnam’s “Bowling Alone” for a good discussion on this trend). And because of this, we in western countries have little appreciation for or understanding of communal safety nets.

Leveling Mechanisms

Leveling mechanisms are socio-cultural institutions and norms (a standard or pattern of social behavior that is typical or expected of a group) that function to distribute scarce resources among members of a community. Just like social safety nets, these mechanisms exist in both western industrialized economies as well as mixed and subsistence-level communities. Again, the primary difference is that in advanced capitalist economies, these mechanisms tend to be more integrated into the institutions of the state where in subsistence-level communities they tend to be more ritualized or normative. An example of a leveling mechanisms can be cultural or ritualized obligations such as the potlatch, a gift giving feast common among tribes in the Northwest North America or among the Shipibo people in Peru’s Amazon basin who would traditionally host feasts for the entire community whenever a large Paiche fish was caught.

In the India sub-continent there is a long tradition of community work days known as Shramadana. Organizations like the Sarvodaya Shramadana movement in Sri Lanka have incorporated this as a sort of philosophical foundation of their work.

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Leveling mechanisms can also be more normative, where there are a community expectations that those with more wealth are expected to share, this could be by hosting a feast or party, or paying for work done on the community well, or sharing extra food with their neighbor, or buying commodities from others in the community (even if they don’t necessarily need them).

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Leveling mechanisms are especially important in mixed economies where a greater percentage of exchanges are non-market (non-cash based). In such communities there is often a scarcity of cash yet there are certain vital commodities and services that require cash like gasoline, bus tickets, medicines, fertilizers & pesticides, motorcycle parts, radios, Coca-Cola, TVs, etc. The fact is, modern amenities are largely cash-based and the increasing desire for these things creates a greater demand for cash. When cash is scarce in a community, leveling mechanisms and norms can help spread out the available cash preventing it from being hoarded by any one person or business.

Alternative currencies are a powerful tool in cash-scarce communities that make it possible for people to convert their surplus labor into a relatively durable and exchangeable commodity. In the example above, my friend knew the person selling the beadwork needed the cash more than he did so he exchanged it for the beadwork – not for his own selfish need but for the benefit of the other person. In this case, the beadwork served as a form of alternative currency on the Reservation. Commodities like this can then be exchange for cash from the people who possess a surplus of it. On Pine Ridge, everyone knows the value of these alternative currencies and virtually everyone participates in this important informal economy because they too one day may be in a similar predicament and need to rely on others. By helping others out when you can you strengthen your status and reputation in the community. Another way to think about status and reputation is as a form of “social capital” which is a form of wealth that is interchangeable with economic capital. For example, by helping people in the community, it is possible to bank-away social capital to be expended at a later time, either in a time of crisis, lack of cash, or to buy influence in the community.

Managing Free Riders

Here’s where things get particularly interesting. For both safety nets and leveling mechanisms to function there has to be a way to mitigate the problem of free riders. Free riders are actors who derive benefits from a common property resource, in this case the safety net and the leveling mechanisms are the common property resources, without giving their fair share in return. With institutional safety nets, the problem is ensuring that everyone pays a fair share of the taxes and does not draw on benefits unless they truly meet the pre-defined criteria and enforcement is usually handled by the State social workers or tax collection agencies. For communal safety nets, the problem is ensuring that each person helps others when in need and draws benefits more or less to the same extent as other members of the community.

● But how does a community enforce this normative expectation so the problem of free riders doesn’t compromise people’s faith in the community and their own willingness to help others?

● What would happen if someone didn’t participate in the minga?
Well, I’m certain missing one minga wouldn’t dramatically affect your status and reputation in the community but missing multiple ones without an excuse might. And when it came time for you to rebuild your house, you might find it pretty difficult to get anyone to help.

As you might imagine these normative incentives and pressures can be a powerful mechanism of social control within resource-scarce communities. This is also how these mechanisms protect against the over-exploitation of natural resources. While there is a lot to be gained by maintaining a positive balance of social capital, there are also numerous ways these systems can restrict behavior – behaviors that a western community worker might feel are positive or necessary. For example, micro-entrepreneurs might find it difficult to save sufficient capital to start or grow a business because they’re torn between saving cash or maintaining their good standing in the community. Those who do find some success without sharing the wealth can expect a negative lash-back from the community in form of dirty looks, slanderous rumors, a strained ability to engage in social or economic transactions, unwillingness of community to allow you access to communally managed resources like land, water, hunting rights, etc. or in the worst case even outright attacks on your person and property.

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Principles for Understanding the Economics of Resource-Poor Communities

So, with all this in mind, let’s return to our opening questions.

Why do people seem hesitant towards improving their situation relative to others?

If you’ve been frustrated by what you can only interpret as a “lack of motivation or drive for success” then maybe you should consider more carefully the pressures that “success” creates for people in communities with high normative expectations for sharing and steep penalties for “free riders”. This might seem harsh or even “backwards” until you consider the extreme risk that people are exposed to in these communities. Their family and community might be their only assurance that they will not one-day fall into dire poverty and will be cared for into old age. Your project may be here for a few years but they will have to contend with their community for the rest of their lives. Placing too much emphasis on improving the situation for individuals or isolated families may be too narrowly focused and contain an inherent western bias. Notwithstanding, we should engage in a dialogue with communities to explore what degree the community safety net is a response to the failures, absence of, or exclusion from institutional safety nets and whether our energy would be better focused on making these institutions more comprehensive and/or inclusive.

Why does the community seem be causing problems for this person or family now that they are achieving some success?

A metaphor that is commonly used to describe this situation common in resource-scarce communities is “the bucket of crabs” which refers to when crabs are in a bucket and one tries to climb out the others immediately climb on its back trying to get out as well making them all fall back into the bucket. However, I would argue that this metaphor is only focused on the negative side of this. I would argue what is happening here is that this negative community response, while seemingly irrational and spiteful, is actually a very rational communal response to mitigate the problem of free riders and to ensure that limited resources are spread out. We have the same mechanisms in the west they just seem more rational because they are built into our judicial and tax system and not by community members taking things into their own hands. Discussing this openly in communities may help everyone understand the social and economic utility of these pressures and allow them to possibly create more constructive responses. Part of that discussion should explore the relationship between these responses and macro-level institutions. For example, the imposition of western state-level structures (e.g. laws, land tenure systems, political organization, etc) on indigenous cultures around the world did not simply replace what was there before, but instead, they created overlapping systems, one enforced by the institutions of the State and one enforced by cultural institutions and norms. As you might expect, this overlapping of cultural and western institutions can create a lot of tensions. For example, a person wanting to use some land to raise livestock or build a house, according to cultural norms that person might be required to ask permission from an elder. However, say another person who wants to use that same land might undermine that decision by gaining approval from the State. The responses to such cultural transgressions can be swift and brutal and can tear apart the seams of a community. An open discussion about these tensions should be approached with care but if successful, could be the start of a journey towards reconciliation and the forging of solutions.

Why do people seem so unwilling to save a little bit of money or contribute to the operation and maintenance of a well/pump/ or irrigation scheme?

As we discussed above, in resource poor communities it is common for there to be a scarcity of cash. In such situations, it makes little sense to hoard cash away when there exist other options such as saving an alternative currency that can be exchanged at a later time for cash OR simply relying on the community’s existing social safety net which is likely experienced in raising cash in a short period of time for things that have a high priority. If the community is unwilling to raise funds for the repair of a pump or tractor, it probably means they have more pressing needs for that cash. A clear reason why community workers must prevent themselves from imposing their own analysis and priorities on communities.

What steps can we take to design programs and policies that support and build upon these vital community systems?

1. Seek to understand how the social safety net and leveling mechanisms work in the community you are working in. Ask questions like:
   1. What would happen if someone broke their leg or if someone’s crop failed – how would they make ends meet?
   2. What the responsibilities do people have to care for their immediate family, extended family, band/tribe/clan, neighborhood, community?
   3. What happens if people don’t meet that responsibility?
   4. How are the elderly cared for?
   5. How do you know if someone is “poor” in this community?
   6. How do you know if someone is “wealthy” in this community?
   7. What happens when people are wealthy but they don’t help-out others?
2. Seek to understand how your programs might positively or negatively affect a person’s standing in the community (social capital)?
   1. How can we design this program so that other people/families/communities don’t become jealous or resentful.
   2. If you are successful at starting this business/farm/etc, how do you think people in your family or community will react?
   3. How can we ensure that other people don’t become jealous or resentful of your participation in this project?
3. If this pump/tractor/latrine needed a new part that cost $50, $200, or $500 how would you get that money?
   1. If you don’t think you need to save that money, are there other things we can make or collect that can be exchanged for cash in an emergency?
4. Build dialogue around the historical interaction between the local safety net and state structures.
   1. When does conflict emerge and how might this be mitigated?
   2. What institutional safety-nets do you have access to and how might you be better served by them?
   3. What actions can we take to make these institutions more comprehensive and inclusive?
5. Above all, instead of working against these important and deeply embedded cultural systems, find ways to make them an integral part of your strategy and programs.

For more on this topic check out the following online courses part of our Online Certificate Program in Sustainable Community Development: Community Mobilization, Micro-finance & the Role of Women, Social Entrepreneurship and Enterprise Development, Technology and Community Development, and Community Participation and Dispute Resolution.