Defining the Social Economy

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Defining the Social Economy

• Theory of the Social Economy Module BAM450

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Structure of the presentation

• Legal EU definition
• Brief history of development
• Outline of three competing definitions
• Moving forward social enterprise or an economy
  of solidarity?

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The formal EU definition

• Since 1989 the social economy has been the
  responsibility of the Commissions Employment and
  Social Affairs DG which defines it as including
• Cooperatives
• Mutuals
• Associations
• Foundations

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Vaguely analagous alternative terms for the
social economy

• Non-profit sector cannot make profits
• Not-for-profit sector can make profits but not
  primary motivation
• Solidarity economy in support of the poor, e.g.
  fair trade
• Alternative economy motivated by, e.g. concern
  for the environment
• Third system otherwise third sector

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History and background of the term

• French term economie sociale first used by
  Charles Dunoyer in 1830 in his paper called
  Nouveau traité déconomie sociale.
• This was a paternalistic notion based in a
  Catholic attempt to counteract class conflict
• (Westlund, 2003).

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What was happening in Paris in 1830?
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Anthropology of human societies

• Side by side with family housekeeping, there have
  been three principles of production and
  distribution
• Reciprocity
• Redistribution
• Market
• Prior to the market revolution, humanitys
  economic relations were subordinate to the
  social. Now economic relations are now generally
  superior to social ones.

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Root of social economy in workers movements

• Various traditions--socialist, Christian, liberal
  (Owen, Saint-Simon, Fourier, Proudhon).
• Context was industrialization, proletarianization
  and pauperization
• Multifunctional associations aiming to create a
  micro-social space of solidarity and to step in
  as actors in the area of economic organization,
  both at the level of production and at the level
  of distribution.
• Made some use of traditional types of solidarity
  (families, corporations), but grounded in
  principles of liberty and equality between
  members.
• (Nyssens, 1997 178-9).

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Social economy as the third way

• In the conflict between capitalism and socialism
  which characterized twentieth century Europe, the
  social economy became a "third" way. (Westlund,
  2003 1193).
• State involvement in social services ended the
  multifunctionality of the third sector.
• mutual benefit societies specialized in social
  protection
• cooperatives confined their activities to
  consumption
• trade unions turned to the workers struggle.
• Dissociation between the economic (the sphere of
  the market) and the social (the sphere of the
  state). (Nyssens, 1997 179).

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Nyssens definition

• Essentially seeing the social economy as filling
  gaps left by the private and public sectors
• Generates three poles of economic activity

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Evolution of social economy in three stages

1. Network-based associations with various functions
   arising to solve specific problems, with both an
   economic and a political identity.
2. Integration into a modernization project that
   favoured the market-state synergy
   marginalization.
3. A revitalization following the crisis of the
   market-state relationship

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• In the South, the popular economy turns out to be
  not only a means of survival in the face of
  economic adversity, but also a means of
  political, social and cultural resistance,
  particularly via a rekindling of the associative
  flame. . . In the North, the burgeoning of
  nonprofit organizations producing goods and
  services at the community levels appears as a
  particular response to the crisis in employment
  and the welfare state

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Westlunds definition

• Revolves around the nature of relationships
• Reciprocity can be described in terms of
  give-and-take in a relationship between actors
  who, to a certain extent are equals. . .
  Mutuality is often used as a synonym for
  reciprocity. . . Reciprocity of social relations
  creates mutuality of economic relations, but
  mutuality in economic transactions is no
  guarantee of reciprocity in social relations.

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• Like the family economy the social economy is
  based on reciprocity unlike the family economy
  kinship is not involved
• The market economy and public sector are based on
  monetary exchange the social economy is not
• The public sector is based on official
  legislation, whereas the social economy is based
  on commonality of interests and values
• The market economy and public sector are based
  primarily on material capital whereas the social
  economy is based primarily on social capital.

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Pearces definition

• Complex and based on 'systems
• It attempts to include all the different types of
  organization that exist in a modern economy,
  which is a strength as well as a weakness
• Inclusion of the level, from local to global, is
  useful
• It does not deal adequately with coops

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WIRC definition

• A pragmatic, operational definition
• Our defining scalpels are ownership and control
• The following dimensions are significant
• Ownership
• Control
• Values
• Product
• Source of finance

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Ownership Control Product Finance Values
Tower Colliery Workers Workers/management Economic Employees/private Mutualistic
OMSCO (organic milk suppliers cooperative) Joint/workers ? Economic Private/ members Mutualistic (organic)
Local ESOP? Worker/shareholders Managers Economic Employees/private Market
Glas Cymru Trust? Managers Public good Private Mutualistic? No
Community enterprise Workers Employees? Committee? Social Public Mutualistic
Newtown Credit Union Members Members Financial Members Mutualistic
Foundation hospital State? Members Social Public Market?
Ty Hafan childrens hospice Non-profit Managers Social Charitable Philan-thropic
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The future? Social enterprise or an economy of
solidarity?

• Social enterprise originated in the US
• A form of mutual activity acceptable within a
  market economy?
• A useful tool for politicians wishing to reduce
  the role of the state? E.g. social housing

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Social enterprise

• referring to market-oriented economic activities
  serving a social goal. The social enterprise is
  then viewed as an innovative response to the
  funding problems of non-profit organizations,
  which are finding it increasingly difficult to
  solicit private donations and government and
  foundation grants. (Defourney and Nyssens, 2006).

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Criteria for a social enterprise pace WISE

• A continuous activity, producing and selling
  goods and/or services
• A high degree of autonomy
• A significant level of economic risk
• A minimum amount of paid work
• An explicit aim to benefit the community
• An initiative launched by a group of citizens
• Decision-making power not based on capital
  ownership
• A partipatory nature, which involves the various
  parties affected by the activity
• Limited profit distribution

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An economy of solidarity?

• The projects of an economy of solidarity have a
  tendency to reunite that which has long been
  separated and to question some presuppositions of
  the market-state synergy the separation between
  the economic and the social, the sharp dividing
  line between paid work and leisure, the states
  monopoly on solidarity, the market-state
  dichotomy, and so on.

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Characteristics

• Bottom-upwhat we might have called mutualism
• Anti-capitalist? At least anti-globalisation
• Importance of the locallevel of control
• Reduction of consumption and respect for the
  planeta partially new concern

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An economy of emancipation and co-operation

• Why produce only as a function of an unjust
  market that depletes and exploits, denying us the
  chance to manage both the production and the
  economy for our own service, for the service of
  all citizens, and of all peoples of the planet,
  as well as for future generations? Our proposal
  is a socioeconomy of solidarity as a way of life
  that encompasses the totality of the human being,
  that announces a new culture and a new form of
  producing to fulfill the needs of each human
  being and of the entire humanity.