The Social and Solidarity Economy: between palliative role and alternative model

Summary:

– The term « social and solidarity economy » is polysemous, and its definition and the criteria for belonging to the SSE are open to debate.

– The social and solidarity economy is often associated with other concepts, such as the social economy, the solidarity economy, the popular economy, and social entrepreneurship.

– The SSE is defined by its objectives (economic, social, and solidarity-based); by its internal operating logic (democracy, autonomy, limited profitability, hybridization of resources, etc.); and by its institutional and statutory frameworks.

– Contrary to a restrictive view that limited it to a strictly palliative or transitional role, it is increasingly asserting itself as an alternative economic model.

Introduction

The economic and social crisis has prompted a profound re-examination of how the economy works in most countries around the world. Today, the state seems incapable of tackling rising unemployment, persistent poverty, and environmental degradation on its own. The functioning of the market economy, for its part, creates significant disparities, social and territorial inequalities, and the exclusion of certain populations. This situation has led to the emergence, almost everywhere in the world, of another sector, that of the social and solidarity economy, which provides solutions by (re)placing people at the center of economic and social development.

However, like the economy itself, the term « social and solidarity economy » has multiple meanings (see a previous article by BSI Economics on the subject). The definition and criteria for belonging to the Social and Solidarity Economy (SSE) are open to debate and may vary from one country to another. As a concept, the SSE can be understood either as an enrichment of political economy, as a critique and substitute for political economy, or as a complement to pure economics. There is a general trend towards a more inclusive view of the SSE, defined less by the status of entities (cooperatives, associations, mutual societies, etc.) and more as an alternative mode of production.

1. Definition and historical evolution of the concept

The social and solidarity economy encompasses a plural reality and is often associated with other concepts, such as the social economy, the solidarity economy, the popular economy, and social entrepreneurship. These concepts are linked to different theoretical contexts and have diverse geographical origins. A quick overview of these associated concepts helps to clarify the contours and added value of the SSE.

The social economy

The term « social economy » appeared at the end of^{the 19th century}, when voluntary associations were established by workers to deal with the consequences of the spread of industrial capitalism in France. The term resurfaced in the 1970s when French cooperative, mutualist, and associative movements gained greater institutional recognition. The social economy is mainly associated with cooperative or mutualist organizations and associations. Defined largely by the status of its actors, it is characterized by several principles such as the primacy of people and work over capital, freedom of membership, independence from public authorities, democratic management, etc. There are some differences with regard to the redistribution of profits: cooperatives allow the redistribution of cash surpluses to their members, while associations and mutual societies prohibit this.

The solidarity economy

The solidarity economy has its roots in the social economy and developed during the 1970s in a context marked by crisis and rising unemployment. It aims to meet the needs of vulnerable populations through alternative and solidarity-based modes of production, placing greater emphasis on reducing inequalities than on accumulating profit. The term is widely used in France, Latin America, and Quebec. Solidarity is the essential characteristic defining this type of economy, which contrasts with the traditional vision of the capitalist economy. The solidarity economy seeks to highlight innovative, more participatory, and often smaller-scale initiatives. Solidarity economy organizations are more locally based. They often operate on a reciprocal basis and seek to finance themselves through hybrid resources: monetary and non-monetary, market and non-market, paid jobs and volunteer work. Solidarity economy organizations aim to respond to current social issues, such as childcare and eldercare, environmental challenges, sustainable agriculture, etc.

The solidarity economy shares a common historical root with the social economy and the goal of offering an alternative model to capitalism. However, there are differences in terms of:

-Economic weight: the social economy represents a larger share of GDP due to the place of the mutualist movement in the insurance system, the financial importance of banking cooperatives, and the growth of the associative movement. The solidarity economy, on the other hand, is a set of much more modest initiatives (the best-known sector in Europe is fair trade).

-Relationship to productivism:when it was first established in law, the social economy sought to produce goods and services in a different way, but the equation « more production = more collective wealth » was not questioned. On the other hand, the critique of productivism (which gave rise to the concept of sustainable development) is shared by the solidarity economy.

-The relationship to the market principle:from the most radical perspective of the solidarity economy, democratizing the economy means replacing the market principle as the best factor for allocating resources with public deliberation on the price, quality, and quantity of goods or services (as in fair trade or local exchange systems). According to some leading authors in the solidarity economy movement, the market economy leads to capitalism, which is itself a denial of democracy (Karl Polanyi [1983][1], Alain Caillé [2005][2]).

-The purpose:One of the key elements that characterizes the social economy is the « dual membership principle » (the producer and beneficiary of the goods and services are members of the organization), and decisions are therefore made in the collective interest. The purpose of a solidarity economy organization is not the collective interest, but the general interest (this difference can be seen in environmental issues, for example), and consists of extending and deepening democracy.

The popular economy

The term « popular economy » comes from Latin America, where it was conceptualized by Luis Razeto (Chile)[3]and Jose-Luis Corragio (Argentina)[4in the 1980s. This economy refers to organizations set up by the most vulnerable actors (belonging to the working class) in order to respond to the economic and social subsistence problems they encounter. These are most often groups that share common living conditions, belong to the same communities (religious, political, etc.) and seek to solve everyday problems through awareness-raising and practical solutions implemented collectively.

From a conceptual point of view, these self-managed organizations rely mainly on non-monetary resources (labor, organizational capacity, mobilization, creativity, strong mutual aid). This form of economy is also considered an alternative economic and political model to the dominant (neo)liberal economy.

The popular economy is closely linked to the informal economy. According to the ILO: « The term ‘informal economy’ refers to all economic activities of workers and economic units that are not covered—by law or practice—by formal provisions.  » It is therefore mainly a survival economy with little capital accumulation, limited financial resources, and a preference for hiring strategies within community groups. Until the late 1970s, the popular economy was largely overshadowed by the rhetoric of modernization and the issue of informality. It was not until the 1980s that a turning point was observed in terms of both macroeconomic regulations and the perception of the popular economy, particularly in Latin America.

The popular economy thus encompasses different types of entities corresponding to increasing sizes and degrees of organization: individual initiatives by self-employed workers; family micro-enterprises; and groups or associations bringing together a larger number of people. We can therefore speak of a popular and solidarity-based economy, insofar as these groups or associations are based on interdependencies that are sought after and recognized as such by their members. However, not all popular economy entities are necessarily solidarity-based: solidarity is not a distinctive feature of the popular economy, but an attribute of some of its entities. (Razeto, 1996)[5]

Social entrepreneurship

The concept of social entrepreneurship emerged in the 1990s in the United States, notably with the Social Enterprise Initiative research and teaching program launched by Harvard Business School in 1993 and soon followed by other major universities (Columbia, Yale, etc.) and various foundations.

In Europe, social entrepreneurship remains linked to the social economy and its cooperative tradition. New entrepreneurial dynamics with a social purpose emerged in the 1990s in several European countries. Social entrepreneurship is the result of private initiatives carried out in the collective interest. It is associated with the idea of social innovation and is fully integrated into the market economy, while considering that profit is not an end in itself, but rather a means to serve a social and/or participatory project. In its international analyses, the OECD has highlighted the central role played by social entrepreneurship in combating social exclusion, reintegrating vulnerable groups into the labor market, and revitalizing disadvantaged regions.

It is a fundamental global movement that is helping to renew traditional economic models—financialized market economy or state dominance—by creating a third way. It seeks to put economic efficiency at the service of the public interest. Regardless of their legal status, social enterprises aim to be economically successful in order to effectively solve social and environmental problems to which neither the state nor the market has provided satisfactory answers.

2. International comparison

In recent years, many national and regional governments have developed policies that explicitly refer to the social economy, either in certain aspects or in its entirety. There is a wide variety of international experiences regarding the scope of public policies, how they are implemented, the legislative framework put in place, and whether or not specific institutions have been created to oversee this sector. In general, many countries have developed sectoral policies that make formal references to the social economy, but these remain incomplete and lack national coordination. This diversity of policies and the disparities in their implementation can be explained mainly by the political, economic, historical, social, cultural, and institutional context specific to each of the national and regional situations in which they are designed. More recently, we have seen the emergence of specific social economy policies defined by framework laws. A framework law is a law that defines general principles in a way that leaves it up to the executive branch to determine the terms of application using its regulatory power. In most cases, it establishes a definition of the social and solidarity economy, determines the actors involved, the support institutions where they exist, and the public policy pursued by the state in this area.

The definitions cover the entire range of concepts developed above, but three main aspects are present in most definitions:

– The primacy of social utility, formulated in different ways: service to the community or to members, primacy of people and social objectives, priority of individuals and work over capital

– Internal management principles: democracy, management autonomy, independence, transparency, autonomy, limited profitability, hybridization of resources, etc.

– An institutional and statutory framework: cooperatives, mutual societies, associations, and in some cases social enterprises

The SSE thus appears to be an attempt to synthesize the social economy, the solidarity economy, and more recent trends such as social entrepreneurship. This definition remains flexible in order to do justice to the diversity of SSE actors and the many facets of social utility.

Analysis of the definitions reveals two trends: on the one hand, a vision of the SSE as a palliative to the market economy, a system aimed at reducing injustices and redistributing wealth among actors; on the other hand, a vision of the SSE as an alternative model of production, integrated into the market economy. The differences between these two visions are particularly evident in the treatment of social enterprises. The first vision focuses on the historical core of the social economy, where the identified actors are associations, mutual societies, and cooperatives. Some recent framework laws remain close to this logic, as is the case in Latin America, for example. A summary table of the different measures by country is available in the appendix below.

In Europe and Anglo-Saxon countries, on the other hand, there is increasing convergence between the social and solidarity economy and social entrepreneurship. Through the Social Business Initiative, launched in 2011, the European Commission has committed to building an ecosystem to promote social enterprises. A package of eleven measures has been proposed with the aim of facilitating access to finance for social enterprises, harmonizing current regulations at European level, and better anchoring social entrepreneurship in the economy through easier access to public procurement. In January 2014, the European Commission organized the first conference entitled « Social Entrepreneurs: Have Your Say. » In France, the framework law on the social and solidarity economy was adopted in 2014. This clearly defines the scope of the SSE by including social utility enterprises, provided that they comply with specified management principles (profits mainly devoted to maintaining or developing the enterprise’s activity, mandatory reserves that cannot be distributed, etc.).

Conclusion

The SSE is currently undergoing a period of change. New players are emerging and new activities are taking shape. The traditional forms of the social economy (cooperatives, mutual societies, associations) are being challenged by the emergence of informal, sustainable groups (de facto associations) and by a shift over time towards a craft-based approach (appropriation around a quasi-family organization), public logic (parapublic associations), and financial logic (valuation of individual capital, creation of subsidiaries, etc.).

One of the major difficulties facing the social and solidarity economy today in terms of its development and structure, both among the actors that make up the SSE and among political institutions, lies in the vision of the role it should play in society. Contrary to a restrictive vision that limited it to a strictly palliative or transitional role, it is increasingly asserting itself as an alternative economy with its own objectives, specificities, and role in the socio-economic relationships that structure society.