Defining the Social Economy

Theory of the Social Economy Module BAM450

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?

The formal EU definition Since 1989 the social economy has

been the responsibility of the Commission’s Employment and Social Affairs DG which defines it as including:

Cooperatives Mutuals Associations Foundations

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]

History and background of the term French term ‘economie sociale’

first used by Charles Dunoyer in 1830 in his paper called ‘Nouveau traité d’économie sociale’.

This was a paternalistic notion based in a Catholic attempt to counteract class conflict

(Westlund, 2003).

What was happening in Paris in 1830?

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,

humanity’s economic relations were subordinate to the social. Now economic relations are now generally superior to social ones.

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).

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).

Nyssens’ definition

Essentially seeing the social economy as filling gaps left by the private and public sectors

Generates three poles of economic activity

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

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

Westlund’s 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.’

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.

Pearce’s 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

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

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 children’s hospice

Non-profit Managers Social Charitable Philan-thropic

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

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).

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

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 state’s monopoly on solidarity, the market-state dichotomy, and so on.

Characteristics

Bottom-up—what we might have called mutualism

Anti-capitalist? At least anti-globalisation

Importance of the local—level of control

Reduction of consumption and respect for the planet—a partially new concern

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.