Social economy
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Social economy refers to a third sector in economies between the private sector, or business, and the public sector, or government. It includes organisations such as cooperatives, non-governmental organisations and charities.
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[edit] Social economy: a third sector in economies
Economies may be considered to have three sectors:
- The business private sector, which is privately owned and profit motivated;
- the public sector which is owned by the state;
- the social economy, that embraces a wide range of community, voluntary and not-for-profit activities.
Sometimes there is also reference to a fourth sector, the informal sector, where informal exchanges take place between family and friends.
The third sector can be broken down into three sub-sectors; the community sector, the voluntary sector and the social enterprise sector:
- The community sector includes those organisations active on a local or community level, usually small, modestly funded and largely dependent on voluntary, rather than paid, effort. Examples include neighbourhood watch, small community associations, civic societies, small support groups, etc.
- The UK's National Council for Voluntary Organizations describes the voluntary sector as including those organizations that are: formal (they have a constitution); independent of government and self-governing; not-for-profit and operate with a meaningful degree of volunteer involvement. Examples include housing associations, large charities, large community associations, national campaign organisations, etc.
- According to the UK government's definition, the social enterprise sector includes organisations which "are businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners". Examples include co-operatives, building societies, development trusts and credit unions.
The social economy spans economic activity in the community, voluntary and social enterprise sectors. The economic activity, as with any other economic sector, includes: employment; financial transactions; the occupation of property; pensions; trading; etc.
The social economy usually develops because of a need to find new and innovative solutions to issues (whether they be socially, economically or environmentally based) and to satisfy the needs of members and users which have been ignored or inadequately fulfilled by the private or public sectors.
By using solutions to achieve not-for-profit aims, it is generally believed that the social economy has a distinct and valuable role to play in helping create a strong, sustainable, prosperous and inclusive society.
Successful social economy organisations can play an important role in helping deliver many key governmental 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 public services; and
- helping to develop an inclusive society and active citizenship.
[edit] Controversy
Defining the limits of the social economy sector is made especially difficult by the ‘moving sands’ of the political and economic context. Consequently organisations may be ‘part in, part out’, ‘in this year, out the next’ or moving within the social economy’s various sub-sectors.
There is no single right or wrong definition of the social economy. Many commentators and reports have consciously avoided trying to introduce a tight definition for fear of causing more problems than they solve.
[edit] International comparisons
[edit] In France
The term social economy derives from the French économie sociale, a term first recorded in about 1900. There, the sector is usually taken to comprise four families of organisations: co-operatives, mutuals, associations (voluntary organisations) and foundations (which in France must be recognised as being of 'public utility'). In France, social economy is a major sector, it represents 12% of employment and also 12% of GDP.
[edit] In Spain
In Spain, the concept of economía social is well recognised in the academic, politic and economic fields. There is a national confederation of social economy enterprises named CEPES, that includes worker-owned companies (sociedades anónimas laborales, SAL and sociedades limitadas laborales, SLL) or cooperatives (sociedades cooperativas, S. COOP) and mutualities.
[edit] In Latin America
In other Spanish speaking countries the concept of economia social is largely accepted, as in Argentina, Venezuela or Cuba.
The government of Hugo Chávez believes that the informal sector can be absorbed into the social economy of Venezuela by strictly controlling or nationalising large firms and creating new legal forms for private enterprise that are more accessible to the poor. Wage labour is viewed as a source of exploitation, and the government hopes to reduce or eliminate it by promoting democratic corporate governance, family and cooperative businesses, and by restricting labour contracts. The government plans to provide technology, training, finance, and exclusive contracts to these small enterprises so that they can survive in the national marketplace.
[edit] In the European Union
At the European level, the French definition tends to hold sway. In 1989, the Delors commission established a 'Social Economy Unit' to come to terms with this movement at European level, but following opposition or miscomprehension from some other Member States and movements, official texts adopted the cumbersome term 'Co-operatives, Mutuals, Associations and Foundations' (or 'CMAFs' for short). More recently, the term 'social economy' has regained respectability, and is one of the nine themes of the €3 billion 'EQUAL' Community Initiative.
[edit] In the United Kingdom
Within Britain, Scottish and Ireland (both north and south) think more readily in terms of the social economy than social enterprise.
[edit] In New Zealand
In New Zealand, there is an Office for the Community & Voluntary Sector; however, a research programme is in progress under the banner of the Study of the NZ Non-Profit Sector.
