Grassroots response to the global crisis:

The social economy

Nancy NeamtanCERIUM

Capitalism in crisisJuly 2 2010

The social economy

Why? What? Where? How? Which way forward?

- Enabling conditions - The challenges

The social economy: why? A new development paradigm is emerging

as the limits of traditional economic strategies become evident

Civil society is spearheading innovative approaches, combining market, state and voluntary resources to respond to needs of communities

The social economy: why? The models emerging are rooted in the

need for sustainable development: social and environmental concerns are embedded in the process of wealth creation

Governments are increasingly interested because of their growing incapacity to progress within traditional frameworks of market or direct government intervention

The social economy: what? A variety of terminologies to describe the new

reality:

- social economy- solidarity economy- social enterprise- social innovation- community economic development- third sector- non-profit and cooperative sector- community enterprise- social entrepreneurship- collective entrepreneurship- sustainable development

The social economy: what? A variety of terminologies for a

common reality:Community-based enterprises (principally cooperatives, non-profits, mutuals) producing goods or services with a social and economic mission

Independent of the State Democratic control and transparency Primacy of people over capital Distribution of surplus to members and/or the

community

The social economy: what? Quebec definition of the social economy

A collectively owner enterprise producing goods or services that has emerged from the community and has a social and economic mission. Independent of the State and democratically run, it depends both on individual and collective participation. Capital and money are viewed as tools to benefit the community or its members

The social economy: what? The social economy includes a wide variety of

enterprises and organisations that produce goods and services with the expressed goal of maximising social, environmental or cultural impact

A broad definition of the social (solidarity) economy includes community economic development institutions, solidarity finance and other collectively owned economic instruments

The social economy: what? The social economy is used in some countries to

describe the ‘old’ or institutional cooperative, mutual and non-profit sector

The solidarity economy is used by the emerging social economy often in conflict with the established sector

A variety of relationships exist between the emerging and institutional components depending on the historical context (Latin America, Europe, North America, Africa)

The social economy: what?

Some statistics . Europe: over 11 million paid

employees in the social economy (6% of the working population)

Canada: over 1 million paid employees in the non-profit sector

The social economy: what?

The social economy as a plural economy:Our economy is not binary (public and private); it is pluralprivate – public – collective

A plural economy:. allows for choices between private, public or collective

control of production and distribution. avoids creating a hierarchy of forms. recognises the specificity of each form of enterprise. an economy with a market vs a market economy.

The social economy: where? The social/solidarity economy is emerging as a

global movement National, regional, continental and inter-continental

networks are building from the bottom up Governments in many countries are developing

policy initiatives International institutions are tracking this growing

phenomenon (OECD, ILO, PNUD)

The social economy: where?

Europe: United Kingdom: New Conservative government

focuses on social enterprise to reduce the public sector, Social enterprise coalition, Social enterprise Unit within government, diverse policies (promotion,investment, procurement)

France: social and solidarity economy embedded in regional structures, diverses policies (investment, procurement, networking, promotion)

The social economy: where?Europe: Belgium: accent on social economy as a strategy

for social inclusion Italy: (15,000 enterprises, 350,000 employees, 15

billion$ in social cooperatives supported through positive procurement policies, accent on community services and social inclusion)

Spain: strong historic presence in certain regions (Catalonia, Andalousia), strong networks, national and regional policy, Law on social economy (2010)

The social economy: where?Europe: Poland: new movement of social co-

operatives and non-profits supported by public policy (Act on Social Co-operatives 2006, Act on Public Benefit Activities and Voluntary Movement 2003,Act on social employment 2003)

Emerging interest in other eastern European countries

The social economy: where?Mondragon:

- A federation of worker cooperatives in the Basque region of Spain

- First cooperative created in 1956 (paraffin factory,technical college)

- 2008 93,000 member-workers, 256 cooperatives, 4 sectors: industry, finance. retail, knowledge

- Innovative system that creates growth from within and responds to individual and collective needs

The social economy: where?

Major breakthroughs in Latin America Brazil: strong civil society network, Solidarity

Economy Secretariat, inter-ministerial support, involvement of a broad range of social movements, regional and municipal policies, new national policy initiatives (procurement, legal framework)

Bolivia, Venezuela: emerging civil society networks and several major public policy initiatives

Argentina: strong movement of worker owned factories (post-crisis), policy initiatives, emerging networks

The social economy: where?

Latin America: Mexico: national network, recognition by national

government, legislative initiative in 2007 Ecuador: new constitution adopted by referendum

in 2008 establishes the primacy of the social and solidarity development model and recognizes the plurality of the economy (public, social, private)

The social economy: where?Brazil: Emerged from diverse social movements: agrarian reform,

factory takeovers, liberation theology, union movement 22,000 solidarity economy enterprises (30% informal) National Council on the solidarity economy Brazilian Solidarity Economy Forum: structured on a local,

regional and national level Networks within the Mercrosur for commercial exchanges From fair trade controlled by the north to national fair trade

standards concentrating on local or national markets

The social economy: where?Africa: Emergence of solidarity economy networks in

several countries in west Africa and north Africa New policy initiatives emerging in a few countries:

cooperative or broader social economy perspective Morocco: major policy initiative to create

employment and fight poverty Increased support from NGO’s and international

bodies (PNUD)

The social economy: where?Africa: ILO conference in Johannesburg (October 2009)

Africa’s response to the global crisis: The social economy

Action plan adopted by the ILO: social economy as part of the decent work agenda, transition toward the formal economy

The social economy: where?Mali:

2800 functionning coops (82% agriculture), 118 mutuals (health), 97 microfinance institutions, 8200 associationsSocial and solidarity economy identified as a development strategy by national governmentA process of coproduction of new public policy with RENAPESS (National network for the promotion of the social and solidarity economy)

The social economy: where?

Asia: Emerging practices with different

vocabularies Strong emphasis on micro-credit approaches Social enterprise policy initiatives in South Korea Important cooperative initiatives in Japan (30,000

enterprises classified as social economy)

The social economy: where?Japan:

• Seikatsu Club: started as a voluntary association in Tokyo in 1965 by 200 women who wanted to ‘reform their lives and local communities as well as society’

• 2010: 350,000 members, turnover 839 million$ US, accumulated funds 290 million$ US (

• Original mission: collective purchase of organic food• Network of producers: In return for asking farmers to use fewer

chemicals, they purchase a contracted amount of produce and agree to overlook physical imperfections if they exist and to assist farmers in planting and harvesting when their labor is necessary

• Created and owns a network of milk factories• Expanded to development of workers’ collectives, day service

centers, and social welfare corporations (44869 users)

The social economy: where?United States :

Long history of community economic development, community finance, worker ownership, non-profit sector involvement in community revitalisation (New Deal)

Long history of public policy to leverage private investment for social purpose (Community Reinvestment Act),

Creation of White House Office for social innovation, CDFI funding doubled, new legal structures

Historic agreement between US Steelworkers and Mondragon for the implantation of worker cooperatives in the manufacturing sector

The social economy in Quebec: economic, social and institutional perspectives

Social economy has been an integral part of the socioeconomic infrastructure for over a century

New impetus to its development in 1996 based on a new compromises between government, cooperative movement, labour movement, social movements at the Socio-Economic Summit

The Social Economy in QuebecMicro, Macro and Meso (Institutional) Perspectives

Micro Perspective The enterprises: integration of social, economic,

environmental objectiveswealth creation (production of goods and services); job creation, poverty reduction; local/community development; social profitability (social utility)

Macro Perspective The social economy as a partner in social and

economic developmentnot only as a sector based in civil society; recognizes the social and economic value of citizen-based initiatives

Meso (Institutional) Perspective Negotiation, collaboration and partnerships Working across boundaries Dialogue between stakeholders, including government Intermediary public space

Chantier de l’économie sociale- horizontal, intersectoral network of networks- representation and development- democratic, distributed governance (inter-sectoral and multi-stakeholder board of directors; regional poles)

Social innovationCo-design of innovative strategies for socio-economic

transformation (plurality of market and non-market actors)

Social Economy in Québec 7 822 enterprises (3 881 cooperatives and 3 941 NPO)

estimated in 2002 present in a variety of economic sectors

Services: homecare services (7000 employees), parent-controlled daycare (35,000 employees), funeral cooperatives, health cooperatives, multiservice solidarity cooperatives,

Housing: cooperative and non-proditTourism and recreation: fasting growing sectorEnvironment (waste management etc)Alternative agriculture and forestryCultureFinancial services: 671 credit unions, Worker cooperativesWorker-shareholder cooperativesCommunity real estate

Social Economy in Québec

- Recognition as an integral part of the socio-economic infrastructure (1996)

- Diverse sectoral and territorial policy initiatives or inclusion in broader policies (1997-2007)

- Government action plan for collective entrepeneurship 2008

Social Economy in Québec Quebec government action plan: (2008) Response to the priorities defined at the Summit on the social

and solidarity economy (November 2006) an economic strategy based on a local and regional

development perspective 8 ministries engaged in specific actions in collaboration with

social economy actors Interministerial and intersectoral approaches coordinated by

the Ministry of municipal affairs and regional development The result of a process of co-construction

Social Economy in Québec - New financial instruments and

products: RISQ, Fiducie, Investissement Québec, FLI, Solides, Filaction…

- New alliances with municipal governments and social partners

- Beginnings of push back from traditional private sector

Six series of measures were key to the development of the social economy in Quebec, particularly since 1996

Recognition of social economy actors as agents of socio-economic development and transformation

Networking of social economy actors:• Chantier de l’économie sociale

Development of Collective Tools• Funding of the social economy- new financial architecture;

- Debt (RISQ) and equity (quasi-equity) instruments; innovation - development of secondary markets (la Fiducie)

• Training - CSMO (labour market); RISQ (finance);• Chantier (development of sectors and services to sectors;

communications strategies for sectors; regions, etc.)• Multi-layered intersection of actors/development tools/

inter-sectoral innovation

Six series of measures were key to the development of the social economy in Quebec, particularly since 1996

Research - participatory and collaborative research

ARUC en économie sociale - dissemination; collective learning; impact on public policy (federal, provincial and most recently, municipal)

Research networks (international) - CRISES, CIRIEC, EMES, ISTR, ARNOVA, ReCo, among others

Six series of measures were key to the development of the social economy in Quebec, particularly since 1996

Enabling institutional context• Fiscal• Legal• Institutional (regulatory)• Innovation in public policy: shift from “silo” approach to horizontal policy making

and co-construction of public policy including participation of stakeholders (codification of tacit knowledge)

• Key moments - Quebec, 1996; Canada, 2004;- Government of Quebec Action Plan for the Social Economy, 2008)

• Recognition of the role of intermediaries• Reconfiguration of market, state and civil society relations

New social architecture debated at macro level based on realities of local initiatives

Citizen participation- new political spaces - voice

The Social Economy in QuebecAn Integrated System of Social Innovation

Integrated System of Social Innovation

Finance Training P UBLIC

POLICY

sectoral territorial

Co-construction

Chantier de l’économie sociale

generic targeted

PUBLIC

POLICYEnterprise ResearchServices provincial

federal municipal

expanded from B. Levesque, 2001, p.7 .

The Social Economy: Comparative advantages

Capacity to identify emerging needs (environment, personal services, culture, social services)

Capacity to respond to aspirations (youth, indigenous, social movements)

Durability: higher survival rate than traditional SME

Financial and social return on investment

Wealth redistribution embedded in the process of wealth creation

The Social Economy: Comparative advantages

Capacity to combine public, private and non-market (voluntary) resources

Builds social cohesion

Mobilizes untapped entrepreneurial capacities within social movements

Rooted in communities and contributes to local development

The Social Economy: Major contributions to economic recovery

. Job creation

. Creation of new services

. Urban revitalisation

Rural development

Social integration

Sustainable development

Formalisation of the informal economy

The Social Economy: Advantages for government

. Internalization of externalities: a reduced commitment for government (but not the transfer of existing public services)

Multiplier effects of social economy activity (fiscal benefit)

Reduced transactions costs for policymakers (proximity)

The Social Economy: How to move forward

. The social economy is more than enterprise development: it is a manifestation of new relations between the market, the public sector and civil society

. Requires new spaces for dialogue (intermediaries) and new forms of partnership between government and civil society

The Social Economy: How to move forward

Enabling conditions:

.Recognition and legitimacy: social partners, public policy, not an economy for the poor but another form of economy

.New forms of governance – within the enterprise, within networks, within relationships between civil society and government, within government

.

The Social Economy: How to move forward

Access to capital : . Collective ownership and social mission creates

barriers to access traditional capital markets. New strategies are emerging to channel private

captial for social purpose. Encouraging results: low loss rates. Reasonable

financal returns, high social returns. Regulatory environments can increase access to

capital with positive impact on public finance. Need for secondary markets

The Social Economy: How to move forward

Research and development within new processes of knowledge creation (community-research partnerships, knowledge commons)

Need to better understand the dynamics of the emerging social economy

Investment in social innovation vs technological innovation

Need for new tools of evaluation and measurementNew curricula in management, economics etc.

The Social Economy: How to move forward

Policy innovation based on:. Recognition of social embeddedness of the

economy Economic activity with triple bottom line objectives Meets societal goals of well-being and sustainability Contributes to a more responsible and responsive

economy

Government engagement understood as investment in the social economy with high rates of social and economic return (vs. expenditure and/or subsidy logic)

The Social Economy: How to move forward

Policy innovation. Vertical linkages between micro, meso and macro

policy environments. Horizontal linkages: policy spaces for inter-sectoral

dialogue and policy formulation.Shift from output and target driven, short-term

perspectiveShift from needs-based (deficiency) to asset-based

approach: individuals/communities as sources of wealth generation

The Social Economy: How to move forward

Policy innovation

. Shift from understanding social cohesion exclusively as a desirable output to its role as an input in socio-economic transformation

. Enabling legislation: new legislation for NPO’s, cooperatives, access to private capital, etc.)

. Knowledge mobilization including collaboration with international organizations

The Social Economy: How to move forward

Policy innovation

. Shift from understanding social cohesion exclusively as a desirable output to its role as an input in socio-economic transformation

. Enabling legislation: new legislation for NPO’s, cooperatives, access to private capital, etc.)

. Knowledge mobilization including collaboration with international organizations

The Social Economy: How to move forward

The key challenge:. The social economy as a component of

economic and social transformation and as a contribution to a new model of development

OR. The social economy as a strategy to reduce

the negative impacts of (and thus reinforce) the existing model of development

The Social Economy: How to move forward

To meet the challenge:

. The role of civil society is fundamental

. The need to understand the social economy at a micro (enterprise), meso (policy and national environment) and macro (global transformative vision) level

.

The Social Economy: How to move forward

• In 2011, Quebec will host an important international event on the theme of public policy, partnerships and dialogue to support the social/solidarity economy

• For more information:• www.chantier.qc.ca• economiesocialequebec.qc.ca

.

Thank you!