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Understanding the Social Economy

Understanding the Social Economy. Paul A Jones PhD Research Unit for Financial Inclusion Liverpool John Moores University 2 ND to 5 th April 2013. The week. Tuesday Course overview and assignment requirements Social enterprise - theory and practice Wednesday

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Understanding the Social Economy

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  1. Understanding the Social Economy Paul A Jones PhD Research Unit for Financial Inclusion Liverpool John Moores University 2ND to 5th April 2013

  2. The week • Tuesday • Course overview and assignment requirements • Social enterprise - theory and practice • Wednesday • British credit unions and their role in tackling financial exclusion • Discussion on the Social Economy in the EU and Defourny papers • Thinking about the presentation ( group planning time – 1 hour) • Thursday • Case study – The Co-operative Bank and its ethical policy • What’s a social entrepreneur? How useful is the concept? • Discussion on the Yunus and Cukier papers • Thinking about the essay ( group planning time) • Friday • Revisiting the theory of the social economy • 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. Third Sector and Civil Society • Informal and formal associations outside the public and private sector that advance "freedom of association" • Associations that advance public debate on economic and social issues • Associations that advance the idea of the 'good society'. • Civil Society: Edwards (2004) • The Civil Society Almanac…advances these perspectives through acknowledgement of the contribution of voluntary organisations, charities and co‑operatives and housing associations to civil society. This perspective theorises the third sector as a group of non-state, non-capitalist organisations committed to advancing one or more aspect of civil society.

  6. Social enterprise • “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

  7. First System Private Market-driven Profit oriented Second System Public Service Planned provision Non-trading Third System Self-Help Mutual Social Purpose Pearce (2003)

  8. Locating the Third Sector Public Sector Justice System Defence Social Security Infrastructure Planning [Social Care] [Education] [Health] [Transport] [Power] Third Sector Campaigning Groups Welfare & Human Rights Religious Organisations Trade Unions [Arts / Museums / Cultural] [Credit Unions] [Community Development] [Social Care] [Education] Civil Society State Public Sector Third Sector Market Private Sector Business Ventures (mining, manufacturing, business services, consumer retailing) Organisations that depend on trading (rather than taxation, state or grant funding) Private Sector

  9. 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

  10. 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

  11. Bottom up, democratically controlled, trading • “…private, formally organized enterprises, with autonomy of decision and freedom of membership, created to meet their members’ needs through the market by producing goods and 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. The Social Economy also includes private, formally organized organisations with autonomy of decision-making and freedom of membership that produce non-market services for households and whose surplus, if any, cannot be appropriated by the economic agents that create, control or finance them.” • Monzon and Chaves (2008:557)

  12. 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 http://www.emes.net/index.php?id=2

  13. 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;

  14. 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.

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

  16. Examples • Turning Point • South Shropshire Furniture Scheme • Hackney Community Transport • Nový Prostor • Artisans du Monde • Dairygold Ireland • The Co-operative • Manchester Credit Union

  17. Why social enterprises are succeeding • BBC report - February 2012 • 57% of social enterprises are predicting growth in the next 12 months, compared with 41% of Small and Medium-sized Enterprises (SMEs) • 39% of all social enterprises are working in the most deprived communities in the UK, in comparison to 13% of SMEs • Social enterprises are more likely to be led by women and young people • One in seven of all social enterprises in the UK is a start-up • FIGHTBACK BRITAIN REPORT

  18. Discussion Groups • Identifying the third sector • First system • Second system • Third system • Page 18 – Understanding social enterprise

  19. 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

  20. Rochdale pioneers 1860

  21. Toad Lane

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

  23. 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

  24. 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)

  25. Scale of the Social Economy in EU • The main conclusion to be drawn is that the social economy in Europe is very important in both human and economic terms, providing paid employment to over 14.5 million Europeans, or about 6.5% of the working population of the EU-27 and about 7.4% in the 15 ‘older’ EU Member States. In countries such as Sweden, Belgium, Italy, France and the Netherlands it accounts for between 9% and 11.5% of the working population. • The second noteworthy conclusion is that, with certain exceptions, the social economy is relatively small in the new EU Member States in comparison to the 'older' 15 Member States. • The third conclusion is that the social economy has increased more quickly than the population as a whole in 2002-03 and 2009-10, increasing from the 6% of the total European paid workforce to the 6.5%, and from 11 million jobs to 14.5 million jobs. • The fourth conclusion is that associations, foundations and other similar types are the main social economy ‘family’, comprising most of the social entities / enterprises and about 65% of the employment in this social sector, including both paid and voluntary work. The social economy in the European Union 2012

  26. Social economy concept • Countries in which the concept of the social economy is widely accepted: In Spain, France, Portugal, Belgium, Ireland and Greece, The first two countries stand out: France is the birthplace of this concept, and Spain approved the first European national law on the social economy in 2011. • Countries in which the concept of the social economy enjoys a moderate level of acceptance: These include Italy, Cyprus, Denmark, Finland, Luxembourg, Sweden, Latvia, Malta, Poland, the United Kingdom, Bulgaria and Iceland. In these countries the concept of the social economy coexists alongside other concepts, such as the non-profit sector, the voluntary sector and social enterprises. In the United Kingdom, the low level of awareness of the social economy contrasts with the government's policy of support for social enterprises. • Countries where there is little or no recognition of the concept of the social economy: Austria, the Czech Republic, Estonia, Germany, Hungary, Lithuania, the Netherlands, Slovakia, Romania, Croatia and Slovenia, a group which mainly comprises Germanic countries and those which joined the EU during the last round of enlargement. The related terms non-profit sector, voluntary sector and non-governmental organisation enjoy a relatively greater level of recognition • The social economy in the European Union 2012

  27. 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

  28. 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

  29. 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

  30. 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

  31. 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)

  32. 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.

  33. 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

  34. UK Government Office of the Third Sector (ARCHIVED) • http://webarchive.nationalarchives.gov.uk/20100416132449/cabinetoffice.gov.uk/third_sector.aspx The Big Society • http://www.cabinetoffice.gov.uk/news/building-big-society The Office of Civil Society • http://www.cabinetoffice.gov.uk/resource-library/office-civil-society-structure-finalised

  35. Social Economy in Europe • Social Economy Europe • Social entrepreneurship and social enterprise • 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 2012 - Centre international de recherches et d’information sur l’économie publique, sociale et coopérative (CIRIEC)

  36. 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

  37. 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

  38. 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

  39. 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

  40. The case for SE http://www.muhammadyunus.org/

  41. 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

  42. 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

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

  44. Social Enterprise London • Social Enterprise London • http://www.socialenterprise.org.uk/ • Social Enterprise

  45. Trail Blazers • Make your mark: change lives

  46. Some questions • What can SE contribute to society? • How does SE relate to the private (commercial) and public sectors? • What difficulties do you see in the promotion of SE? • Should Governments promote SE? • Should the Czech Government promote SE?

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