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30/11/2011 02:03Social economy - Wikipedia, the free encyclopedia

of 6http://en.wikipedia.org/wiki/Social_economy

Economic sectors

Three-sector hypothesis

Primary sector: raw materialsSecondary sector: manufacturing

Tertiary sector: services

Theorists

Colin Clark · Jean Fourastié

Additional sectors

Quaternary sector · Quinary sector

Sectors by ownership

Business sector · Private sector · Public sector ·

Voluntary sector

Social economyFrom Wikipedia, the free encyclopedia

Social economy refers to a third sector in economies between the privatesector and business or, the public sector and government. It includesorganisations such as cooperatives, non-governmental organisations andcharities.

Contents

1 History of the social economy2 Social economy: a third sector in economies3 Controversy

3.1 The Social Enterprise Compass4 International comparisons

4.1 In France

4.2 In Spain4.3 In Latin America4.4 In the European Union4.5 In the United Kingdom4.6 In New Zealand

5 See also6 External links7 Further reading

History of the social economy

See also: History of the cooperative movement

...

Social economy: a third sector in economies

Economies may be considered to have three sectors:

1. the business private sector, which is privately owned and profit motivated;2. the public sector which is owned by the state on behalf of the people of the state;

3. 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 betweenfamily and friends.

The third sector can be broken down into three sub-sectors; the community sector, the voluntary sector and the socialenterprise sector:

The community sector includes those organisations active on a local or community level, usually small, modestlyfunded 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 Organisations describes the voluntary sector as including thoseorganizations 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 "arebusinesses with primarily social objectives whose surpluses are principally reinvested for that purpose in thebusiness or in the community, rather than being driven by the need to maximise profit for shareholders andowners". 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 besocially, economically or environmentally based) and to satisfy the needs of members and users which have been ignored orinadequately 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 valuablerole 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 policyobjectives 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; andhelping to develop an inclusive society and active citizenship.

Controversy

Defining the limits of the social economy sector is made especially difficult by the ‘moving sands’ of the political andeconomic 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 consciouslyavoided trying to introduce a tight definition for fear of causing more problems than they solve.

The Social Enterprise Compass

One solution can be to locate organisations in the Social Enterprise Compass. The Social Enterprise Compass locatesenterprises and organisations in the field between the business private sector and the public sector.

The social enterprise compass is easily illustrated:





The horizontal axis

On the horizontal axis each enterprise / organisation is categorized by its ownership. On the left side the ownership lies withthe public authorities whereas on the right side the ownership lies with private people. So the distinctive feature is theownership of the enterprise.

Is it private? Def.: The term “private industry” contains all economic activity that deals with the capital of one or many

private owners with a view to making profits. The capital owners bear the risk.

Or is it public? Def.: The term “public authorities” contains all economic activity where the public authorities possess thecapital on either European, federal, regional or local level. That includes all nationalised and public industries.

The vertical axis

On the vertical axis, each enterprise / organisation is categorized by the primary objective of the enterprise. The dimensionsrange between social purpose on the top and commercial purpose at the bottom of the axis.

On the vertical axis an organisation reaches the top, i.e. the social purpose is the primary objective of the enterprise, if youfulfil the following criteria:

A Ethical concept





(core definition for enterprises / organisations of the social economy)This core definition is the ideal of an enterprise / organisation. Only these enterprises / organisations belong to the socialeconomy whose ideal is a clearly defined ethical concept.

B Mission

(key identification)The primary objective of the enterprise is the improvement of the life situation and the chances of disadvantaged people aswell as social cohesion and support.

C Social economic creation of value and appropriation of earnings

(qualitative key identification)The profits and the resources are verifiably reinvested for the benefit of disadvantaged people.

If the criteria A, B and C are totally fulfilled, an organisation can locate itself on top of the vertical axis.

There is one last criteria which is not definitional but a describing feature:

D Intermediary function

Social economical enterprises / organisations have an intermediary function between public and private.

If none of the criteria above is fulfilled or the primary object of the enterprise is the commercial purpose then an enterprise /organisation is located on the bottom of the vertical axis.

Location between social and commercial purpose

If the criteria above are only partly fulfilled the enterprise is located between the top and the bottom of the vertical axisaccording to its self-definition.

International comparisons

In France

The term social economy derives from the French économie sociale, a term first recorded in about 1900. There, the sector isusually taken to comprise four families of organisations: co-operatives, mutuals, associations (voluntary organisations) andfoundations (which in France must be recognised as being of 'public utility'). In France, social economy is a major sector, itrepresents 12% of employment and also 12% of GDP.

In Spain

In Spain, the concept of economía social is well recognised in the academic, political and economic fields. There is anational confederation of social economy enterprises named CEPES, that includes worker-owned companies or

cooperatives and mutualities.In Spain, social economy is a major sector, it represents near than 9% of employment. This is dealing with government. Thefirst Law of Social Economy in Europe is going to be approved in the early 2011

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 Venezuelaby strictly controlling or nationalising large firms and creating new legal forms for private enterprise that are moreaccessible 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.

In the European Union

At the European level, the French definition tends to hold sway. In 1989, the Delors Commission established a 'SocialEconomy Unit' to come to terms with this movement at European level, but following opposition or miscomprehensionfrom 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. In Ireland, for example, the social economyis well respected and heavily funded. A strong example would be the establishment of rural transport schemes, to assistsocially disadvantaged in isolated locations.

The European Economic and Social Committee has recently published a study, drawn up by CIRIEC - International Centreof Research and Information on the Public, Social and Cooperative Economy (http://www.ulg.ac.be/ciriec/) on The SocialEconomy in the European Union, available in the 21 official languages of the Union.

In the United Kingdom

Scotland thinks more readily in terms of the social economy than social enterprise.

In New Zealand

In New Zealand, there is an Office for the Community & Voluntary Sector; however, a research programme is in progressunder the banner of the Study of the NZ Non-Profit Sector. (http://www.ocvs.govt.nz/work-programme/non-profit-study.html#/)

See also

Civil Society

Cost the limit of priceSocial innovationVoluntary sectorVolunteerism

External links

CIRIEC-International - Centre International de Recherche et d'Information sur l'Économie Publique, Sociale etCoopérative (http://www.ulg.ac.be/ciriec/)European Social and Economic Committee (http://www.eesc.europa.eu/groups/3/index_en.asp?id=1405GR03EN) - Study: The Social Economy in the European Union

Social economy enterprises, section of the European Union(http://europa.eu.int/comm/enterprise/entrepreneurship/coop/)The Social economy network (http://www.socialeconomynetwork.org/)Social economy Bristol (http://socialeconomybristol.org/)Canadian Social Economy Hub (http://www.socialeconomyhub.ca/)BC Social Economy Roundtable (http://www.socialeconomy.ca/)Association for Social Economics (ASE) (http://www.socialeconomics.org/division.php?page=ase_membership)

Related Articles

The Co-operative Movement and the Social Economy Traditions: Reflections on the Mingling of Broad Visions

Further reading





For All The People: Uncovering the Hidden History of Cooperation, Cooperative Movements, and Communalism

in America, PM Press, by John Curl, 2009, ISBN 978-1-60486-072-6

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