Understanding the Social Economy

1. Understanding the Social Economy Paul A Jones Research Unit for Financial Inclusion Liverpool John Moores University

2. The week • Tuesday • Course overview and assignment requirements • Social enterprise - theory and practice • Thinking about the presentation • Wednesday • British credit unions and their role in tackling financial exclusion • Discussion on Defourny paper • Thursday • Case study – The Co-operative Bank • What’s a social entrepreneur? How useful is the concept? • Discussion on the Yunus paper • Friday • Catch up and assignment preparation • Presentations (part of the course assessment)

3. Reshaping the Global Economy • The global economy isn’t always working • Huge gaps between the rich and the poor • The reality of social and financial exclusion • Not always being tackled effectively by the private or public sectors. • A strategy sought to create jobs, to combat social exclusion, to foster social cohesion and to encourage community participation

4. What’s the Social Economy? • “The social economy promotes an economy which, through its activities, contributes to the reinforcement of the social fabric; a "citizens'" economy in that it is based on a desire to achieve social justice through the actions of entrepreneurs and of networks of developers which do not have as their only aim a return on investment” • CHARTE DE REVESRESEAU EUROPEEN DES VILLES ET REGIONS DE L'ECONOMIE SOCIALE (REVES) • http://www.revesnetwork.eu

5. UK Government • “businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or community, rather than being driven by the need to maximise profit for shareholders and owners”. • Social Enterprise: A strategy for success, 2002 • Download a copy

6. Charter of Principles of the Social Economy 2002 • The primacy of the individual and the social objective over capital • Voluntary and open membership • Democratic control by membership (does not concern foundations as they have no members) • The combination of the interests of members/users and/or the general interest • The defence and application of the principle of solidarity and responsibility • Autonomous management and independence from public authorities • Most of the surpluses are used in pursuit of sustainable development objectives, services of interest to members or the general interest • CEP-CMAF - Conférence Européenne Permanente des Coopératives, Mutualités, Associations et Fondations now Social Economy Europe • Social Economy Europe

7. A definition- CIRIEC 2007 • CIRIEC website • The set of private,formally-organised enterprises, with autonomy of decision and freedom of membership, created to meet their members’ needs through the market by producing goods and providing services, insurance and finance, where decision-making and any distribution of profits or surpluses among the members are not directly linked to the capital or fees contributed by each member, each of whom has one vote. • Note distinction – the market or business sub-sector and the non-market producer sub-sector

8. EMES European Research Network • Economic criteria • Continuous economic activity • High degree of autonomy • Significant level of economic risk • Minimum amount of paid work • Social criteria • Aim to benefit the community • Initiative launched by group of citizens • Decision making not based on capital ownership • Focus on participation • Limited profit distribution • Defourny 2004

9. Social Enterprise includes: • retail co-operatives (for example, community shops, catering co-operatives, coffee bars, food co-operatives, craft workshops); • co-operative services (for example, community launderettes, print shops); environmental groups (for example, landscape gardeners); • co-operative leisure and arts projects (for example, theatre companies); finance organisations (for example, credit unions); LETs;

10. Social Enterprise includes:- • agricultural co-operatives; • manufacturing enterprises (for example, furniture recycling schemes); care and childcare groups (home care co-operatives, crèches, after school clubs, nursery provision); • co-operative property businesses (for example, managed work spaces); community development trusts; co-operative development agencies and training organisations.

11. Examples • FRC Group Liverpool • Artisans du Monde • Hackney Community Transport • Dairygold Ireland • The Co-operative • Manchester Credit Union

12. Organisational types • Social economy includes: • Co-operatives • Mutual societies • Voluntary organisations, associations and foundations • Social firms • Social enterprises • Housing associations

13. The role of Co-operatives • A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. ICA definition

14. Rochdale pioneers 1860

15. Toad Lane

16. ICA Co-op values • Self-help • Self-responsibility • Democracy • Equality • Equity • Solidarity.

17. ICA Principles • 1st Principle: Voluntary and Open Membership • 2nd Principle: Democratic Member Control • 3rd Principle: Member Economic Participation • 4th Principle: Autonomy and Independence • 5th Principle: Education, Training and Information • 6th Principle: Co-operation among Co-operatives • 7th Principle: Concern for Community

18. International Co-operation • International Co-operative Alliance • “It seems reasonable to include all co-operatives that demonstrate OMOV member ownership and control as social enterprises” (Somerville 2007)

19. Scale of the Social Economy in EU • In the EU-25, over 240,000 co-operatives were economically active in 2005 • 4.7 m. employees and have 143 m. members • Health and social welfare mutuals provide assistance and cover to over 120 million people. Insurance mutuals have a 23.7% market share. • In the EU-15, in 1997, associations employed 6.3 million people (CIRIEC, 2000) • SE 10% of all European companies and 10% of total employment (CEP-CMAF 2002) • Cf 6.4% Europe 15 and 3.2 % new members (CIRIEC 2005)

20. THE SOCIAL ECONOMY IN THE UNITED KINGDOM

21. Table 6.2. Paid employment in Social Economy compared to total Paid employment. European Union (2002-2003) THE SOCIAL ECONOMY IN FRANCE * Working population aged between 16 and 65 years, Eurostat, 2002.

22. Central and Eastern Europe • Unlike Western Europe, social enterprise growth slow • Transition to the free market • Negative perception of co-operatives • Tied to the old regime? • Some major failures • When created, highly dependent on donor funds and often linked to funding strategies • Lack of legal frameworks • Lack of confidence in community and solidarity movements

23. What SE are good at? • A new form of social entrepreneurship • New products and services • New methods of organisation • Mobilising volunteers • New forms of enterprises

24. Social enterprise and inclusion • “meeting social needs, using business success to address social or environmental challenges such as regeneration and social inclusion” • “Providing opportunity and skills for marginalised groups – and in some cases a potential route off Benefits” (UK Gov Action plan 2006) • SOCIAL FIRMS • Social Firms are social enterprises that are set up specifically to create good quality jobs for people severely disadvantaged in labour market. • Social Firms UK

25. UK Government Policy • Central Government • PAT3 – Enterprise and Social Exclusion 1999 • New Commitment to Neighbourhood Renewal • Social enterprise – a strategy for success 2002 • Social enterprise action plan 2006 • The Office of the Third Sector was created in May 2006 (includes social enterprise unit) • Phoenix Fund • RDA’s and Local Government

26. Policy Action Team 3Enterprise and Social Exclusion 1999 5.3 The social economy can be effective at developing services which may be unattractive or inappropriate for the private sector, or cannot be delivered effectively by the public sector. It can be also be valuable in engaging local people in economic activities in ways that public agencies have found difficult. The social economy does not simply provide substitutes for real jobs and services where there has been market failure. It also helps develop a stronger sense of community. 5.4 Social enterprises, which together make up the social economy, are in most ways like any other private sector businesses, but they are geared towards social regeneration and help, rather than simply the generation of profits. As such social enterprises do not fall within the standard definitions of private or public sector enterprises. (PAT 3)

27. Social enterprise – a strategy for success 2002 • Successful social enterprises can play an important role in helping deliver on many of the Government’s key policy objectives by: • helping to drive up productivity and competitiveness; • contributing to socially inclusive wealth creation; • enabling individuals and communities to work towards regenerating their local neighbourhoods; • showing new ways to deliver and reform public services; and • helping to develop an inclusive society and active citizenship.

28. Social Enterprise Strategy Scaling new heights 2006 • The actions are divided into four themes, which aim to: • foster a culture of social enterprise, especially by inspiring the next generation to start thinking about the social impact of business • improve the business advice, information and support available to social enterprises • tackle the barriers to access to finance that restrict the growth of social enterprises • enable social enterprises to work effectively with government to develop policy in areas of expertise

29. Office of the Third Sector • http://www.cabinetoffice.gov.uk/third_sector/social_enterprise.aspx

30. Social Economy in Europe • Social Economy Europe • Enterprise and Industry - European Commission • The Social Economy is important because it: • contributes to efficient competition in the markets • offers the potential for job creation and new forms of entrepreneurship and employment • is largely founded on membership-based activities • meets new needs • favours citizen participation and voluntary work • enhances solidarity and cohesion • contributes to the integration of the economies of the candidate countries. • Social economy report - Centre international de recherches et d’information sur l’économie publique, sociale et coopérative (CIRIEC)

31. Advantages Benefits to community Job creation Service provision Public relations advantage for local authorities (Enabling Community Enterprise 1998) Disadvantages Image of community/social enterprise Long term commitment Intangible benefits Uneven availability of resources Concerns about sustainability Identifying “real” community interest UK Local Government AssociationAdvantages and Disadvantages of support

32. The case against! Schofield • Social enterprise – an ambiguous concept • Inherent tensions • Social versus private purpose • Trading for a profit and providing a local service for disadvantaged communities • A political enterprise? Linked to the Third Way. A top down driven initiative • The bandwagon effect • Funding led – ERDF and community economic regeneration • Question financial viability and scale – dependence on external public or other funding

33. Social entrepreneurs? • What we need right now is not the heroic entrepreneurial individual who performs miracles on a shoestring budget and against insurmountable odds but a cadre of solid citizens, well-educated public servants that could run important, properly funded local public enterprises efficiently and with a public sector ethos

34. Threats to co-operative identity • Social enterprise and member democracy • the degeneration thesis • Abandoning the principle of member ownership • Weak exercise of internal democracy (Somerville 2007) • An important challenge for the future is to identify forms of co-operative that: can make inroads into the private and public sectors; fairly incorporate the concerns of producers, consumers and the general public; and are or can be embedded in effective projects for economic, social and political transformation. Somerville 2007

35. The case for SE

36. Towards a theory of social enterprise • The SE pole of social utility • Potential to generate social added value • “SE forms a space that regulates the system in the interests of achieving a more balanced model of social and economic development (CIRIEC 2007) • Social cohesion, employment, generating and maintaining the social and economic fabric, the development of democracy, social innovation and local development. • CIRIEC – download the report

37. EMES theory of SE • EMES "l'émergence des entreprises sociales en Europe". • Focus on innovation • Multi stakeholder organisations • Resolving tensions • Market and non-market goals • Serving members and serving the public • Unifying attraction of SE • EMES website

38. “Social entrepreneurs tackle some of the toughest and most intractable challenges around” Harding 2004

39. Social Enterprise London • Social Enterprise London

40. Some questions