SocialEconomy & Solidarity Economy Transformative concepts for unprecedented times? By Mike Lewis & Dan Swinney “Community economic development,” “economic Exploring the Conceptual Terrain democracy,” “worker ownership,” “co-operative economy,” “fair trade,” “sustainable community The social economy can be understood to lie within what John development,” “social economy” – a range of move- Pearce calls the“third system” of the economy, as opposed to the “first” (private/profit-oriented) and“second” systems (public ments currently challenges the way North America service/planned provision). This third system also includes the lives and works. voluntary sector, a range of associations, and the family economy. In addition to a tremendous body of talent and They share an orientation to self-help, to reciprocity, and to practice, they share a range of concepts, accumulated realizing social purpose through various types of organization experience and, to a lesser extent, related research. and association. (See Diagram 1,“Three Systems.”)1 All seek to reinsert social goals into the heart of our economic life, an agenda contrary to the economic Diagram 1: Three Systems of the Economy model of the last four decades. Many have roots in the 19th century struggles of people relegated to the Market-driven Planned Economy margins by the industrial revolution. Others have Trading Non-trading grown out of the modern“margins,” where the BlackBl Economy First System GLOBAL Second System Private PublicService ack Economy failures of “free market” orthodoxy have created ProfitOriented Planned Provision enclaves in which people have few options other NATIO NAL / than to invent economic alternatives. REG ION AL “Social economy” and“solidarity economy” are two frame- works for understanding the economic alternatives springing up DIST RICT / L OC around the globe. In parts of western Europe, Latin America, AL and Africa, these terms are commonly applied to a range of NE IGH socio-economic-cultural development strategies, activities, BO U Small and Small and R H European and structures, ranging from the small and local to the large Multinational Large Medium Micro O Community O Local National and Union Corporations Businesses Enterprises Businesses D Councils Authorities Regional and global. They are less familiar in North America, Government United Nations v e s Nuclear a t i Family outside Québec. To some their meaning is uncertain. To p e r o o e s s ’ C t i v k e r e r a Grey Economy others, it is unimportant. Are they not just two more o r p Community Y W o oC ’ C Social M e r s O Enterprises Economy o r k M Firms O additions to our“alphabet soup” of terminology? W M N Social U Clubs O N Time Banks C S Businesses I We don’t think so. Both frameworks deserve close T E Y O Y LETS P E L M C Credit C E Mutuals O H Diaspora O consideration, especially by those working in the field. I N O F - A Unions M Y S E L N L O E Murky conceptualization will not serve us well, particularly Fair Trade Voluntary Voluntary C N E T Companies Organizations Organizations E and Charities Charities Y given the major trends that are cutting a swath across all R L S P that trade Unions I O R M segments of human society (Peak Oil and climate change I S A C E F I S International most prominently). They present us with unprecedented A Charities Informal L S N E V Formal I O demands for thoughtful, energetic, and broad-based societal C O L A T O U N N I Z N T A R Y O R G A action. One has to wonder if these rapidly shifting realities are O M outstripping many of the conceptual formulations we use to guide Y and explain our work. It is with this concern in mind that we explore Third System the conceptual boundaries we live within, challenging their probity Self-help Mutual and relevance to the risks we and our planet face in the decades ahead. Social Purpose makingwaves volume 18, number 4 9 In this context, the social economy involves the use of market- and foundations, service associations, community enterprises, based trading activities to meet social goals. It represents a broad and social enterprises that use market mechanisms to pursue s social consciousness within civil society where the interests of explicit social objectives. It includes only those collectively- p poor, immigrant, worker, and women’s groups are explicitly owned for-profit enterprises whose surpluses are shared by a recognized and integrated into production settings through members, and no government or private businesses of any kind. various types of social enterprise, including co-ops. How useful are these definitions of social economy? When i There are different perspectives on the role of the social applied to the real world of community revitalization, do they s economy in social change. Reformists generally focus attention on clarify or obscure? Profiles of two prominent social economy securing resources to better support marginalized constituencies. organizations, one in Montréal and the other in Chicago, may d Radicals, however, look upon the social economy as a means for shed some light here. p transformation. It is a construction site for building strategies, a tools, and institutions that can challenge neo-liberal hegemony in RÉSO: Revitalizing Southwest Montréal p the market and the state. Pearce draws firm boundaries between the private, the public, Southwest Montréal suffered industrial decline from the 1960s G and the third sector. John Restakis2 argues that the private, public, through the early 1990s. By 1984, 40-50% of the residents of u and social economy sectors are animated by distinct economic the formerly solid working-class neighbourhoods lived below c principles. While the boundaries between them may be perme- the poverty line. That was the year organizations in the A able to some degree, there is no changing the logic that animates neighbourhood of Point St. Charles began to mobilize in a each of them. opposition to deindustrialization and gentrification. In 1989, these efforts culminated in the formation of RÉSO (Regroupement pour la relance économique et sociale du sud- ouest de Montréal), a unique partnership committed to the economic and social renewal of Point St. Charles and four D Pearce draws firm boundaries between the private, other poor neighbourhoods. the public, & the third sector. Restakis argues that RÉSO evolved into a membership-based organization. Its p the private, public, & social economy sectors are board comprises elected representatives from five member o animated by distinct economic principles.... How categories: the community movement (four directors), trade C unions (two), big business (one), small business (one), and a useful are these definitions of social economy? individual members (one). Today, RÉSO has 300 organiza- When applied to the real world of community tional members and 1500 individual members. p revitalization, do they clarify or obscure? Owing to the comprehensive nature of its mandate, RÉSO i has taken action on a vast range of issues relating to human resource development, business retention and development, land use, infrastructure, and local promotion. It directly provides and brokers training and job development services for The focus within the private sector is the exchange of goods up to 1500 people each year. It also has assisted hundreds of C and services for commercial gain. Ownership is determined by the training businesses over the years to customize their invest- private control of capital. The primary purpose is to maximize ments to the needs of local business and the capabilities of A returns on investment to shareholders. Capital controls labour. residents. An early warning system alerts RÉSO to the a The key aim of the commercial exchange is the economic potential closure of local businesses. o principle ofefficiency . The operations of the public sector focus on The synergy created by this approach is illustrated by the a the redistribution of wealth and the provision of public goods for actions of the largest manufacturer in southwest Montréal, the purpose of promoting the economic principle ofequality . CAD Railway Industries. A RÉSO board member, CAD’s R The economic principle that animates the social economy is CEO became convinced that the company had to re-orient its t reciprocity. The primary purpose of social economy organizations business to contribute more significantly to neighbourhood s is the promotion of mutual collective benefit. The aim of revitalization. It maximized local purchases in the company’s n reciprocity is human bonding orsolidarity . In contrast to the $70 million annual procurement budget. Another more s private sector, reciprocity puts labour, citizens, or consumers in dramatic example is that of a Spanish supplier who opened a control of capital. business in the area in order to keep the $5-6 million annual M In Restakis’ view, the social economy includes all co-operatives supply contract it had enjoyed for several years. The result was r and credit unions, nonprofit and volunteer organizations, charities 65 new jobs to local people referred by RÉSO. t makingwaves volume 18, number 4 10 In the mid-’90s, RÉSO launched a community venture capital fund in partner- Résumé : Économie sociale et ship with the Québec Solidarity Fund, and with support from the federal and économie solidaire provincial governments. By means of this $5 million fund, RÉSO can directly invest as a business owner to create jobs and diversify its financial base. Le pic pétrolier et les changements By the mid-1990s, Statistics Canada reported that the decline in manufacturing climatiques nous imposent des demandes sans précédent pour de l’action sociale réfléchie, in southwest Montréal had stopped. Between 1998 and 2003, RÉSO helped some 40 énergique et à portée large.