Grassroots response to the global crisis:

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Grassroots response to the global crisis The
social economy Nancy Neamtan CERIUM Capitalism
in crisis July 2 2010
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The social economy

• Why?
• What?
• Where?
• How?
• Which way forward?- Enabling conditions
• - The challenges

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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

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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

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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

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The social economy what?

• A variety of terminologies for a common
  realityCommunity-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

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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

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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

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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)

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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

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The social economy what?

• The social economy as a plural economy
• Our economy is not binary (public and private)
  it is plural
• private 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
• .

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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)

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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)

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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)

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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

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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

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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

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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)

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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

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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 NGOs and international
  bodies (PNUD)

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The social economy where?

• Africa
• ILO conference in Johannesburg (October 2009)
• Africas 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

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The social economy where?

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

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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)

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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)

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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

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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

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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

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Meso (Institutional) Perspective

• Negotiation, collaboration and partnerships
• Working across boundaries
• Dialogue between stakeholders, including
  government
• Intermediary public space Chantier de léconomie
  sociale - horizontal, intersectoral network of
  networks - representation and development -
  democratic, distributed governance
  (inter-sectoral and multi-stakeholder board of
  directors regional poles)
• Social innovation Co-design of innovative
  strategies for socio-economic transformation
  (plurality of market and non-market actors)

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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-prodit
• Tourism and recreation fasting growing sector
• Environment (waste management etc)
• Alternative agriculture and forestry
• Culture
• Financial services 671 credit unions,
• Worker cooperatives
• Worker-shareholder cooperatives
• Community real estate

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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

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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

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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

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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 léconomie 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

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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

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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

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The Social Economy in QuebecAn Integrated System
of Social Innovation
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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

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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

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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

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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)

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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

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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
• .

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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

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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 measurement
• New curricula in management, economics etc.

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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)

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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
  perspective
• Shift from needs-based (deficiency) to
  asset-based approach individuals/communities as
  sources of wealth generation

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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
  NPOs, cooperatives, access to private capital,
  etc.)
• . Knowledge mobilization including collaboration
  with international organizations

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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
  NPOs, cooperatives, access to private capital,
  etc.)
• . Knowledge mobilization including collaboration
  with international organizations

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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

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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
• .

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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
• .

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• Thank you!