The Potential & Limits of Social and Solidarity

EconomyPeter Utting

Focus

• The contemporary development challenge

• SSE: What is it? Definitions, trends & potential

• Tensions and challenges• Ways forward

The need to rethink development & liberalization

• A growing consensus– World Social Forum– Rio+20– Post 2015 (MDG) agenda

• Beyond the post-Washington Consensus & poverty reduction strategies

The 21st century development problem

– Informalization, underemployment & indecent work

– Rising inequalities– Women’s double burden (paid and unpaid

work)– Environmental costs of industrialization,

high-input agriculture & consumption patterns

– Climate change– Recurring crises (finance, food, fuel) &

heightened risk

What worked in the 20th century?

• Welfare states: Europe

• Developmental states: East Asia

• Decent work enterprises

Partial gains, major limitations• High growth, full (male) employment, high

formal sector absorptive capacity of surplus labour

• Comprehensive social protection & welfare regimes, including social security through the workplace

But …. 1. Social and environmental

consequences: gender inequality, women’s unpaid care work; waste, pollution & global warming

2. Unravelling of the welfare & decent work model with globalization, neoliberalism & financial crises

Vulnerable employment: salient facts (ILO 2013)

• Unemployed: 200 million & rising• Regions that have halted the decline, have

experienced decline in job quality• Vulnerable employment: 1.49 billion workers in developing countries (56%)• Informal employment:

• South Asia: 82% of (non-farm) employment• SSA: 66%; East & SE Asia: 65%; Latin

America: 51%• % share of IE in women’s employment is higher• Impact of (high) growth in reducing IE is limited

Current orientation of mainstream development

policy: economic empowerment of

individual producers via market access & microcredit, and SME development

focus on the individual citizen or for-profit enterprise

focus on safety-nets & human capital formation

The need for another approach

• One that recognizes principles and importance of:

• Cooperation & collective action

• Solidarity• Basic needs provisioning• Redistributive justice and

comprehensive social policy

SSE Organizations and Enterprises

What is SSE?

SSE comprises organizations and enterprises that produce goods and services and that:

1) have explicit social objectives (e.g. basic needs provisioning; employing the unemployed)

2) involve co-operative and associative relations3) practice solidarity by using resources and

surpluses to benefit others4) practice democratic self-management

ILO: Social & Solidarity Economy: Our Common Road Towards Decent Work, 2011.

What SSE is not

Not primarily for profit & returns to investors

Not state-owned or controlledNot a hierarchical organizationNot unorganized informal or own

account workers & producers

Potential of cooperation & collective action:

– Economic empowerment & enhanced capacity to deal with market failures:• improves access to information, training, &

credit; pooling skills, economies of scale, bargaining power

– Political empowerment & enhanced capacity to exert claims; improves access to policy processes, social dialogue, capacity to contest; advocacy

SSE facts & figures

An expanding field:

• Nearly 1 billion cooperative members• Revival of cooperatives in Africa and Latin America• Big coop: e.g. Mondragon, Amul, Desjardins• Mutual associations: health and social protection

coverage for 170 million people• Rise of social enterprise in Europe and Asia• 2.5 million WSHGs in India• Growth of fair trade markets• Unionization of urban own account workers• Globally networked: e.g. RIPESS, Via Campesina, Global

Alliance Wastepickers, Homenet, Streetnet

Major challenges

• Weak initial conditions (poverty, inequality & disempowerment)

• Lack of state support• Lack of autonomy when state gets

involved• Unsustainability of SSE organizations• Problematic gender relations & working

conditions within SSE organizations• Elite capture• Shifts towards profit and financial

orientation

Enabling policies (1)

• SSE ministries & national secretariats: e.g. Brazil, Colombia, France, Nicaragua and Luxembourg

– The Brazilian Secretaria Nacional de Economia Solidária (SENAES), through their Programa de Desenvolvimento Regional, Territorial Sustentável e Economia Solidária (2012-2015), offers technical assistance to SSE organizations, promotes local development, solidarity-based finance and aims to organize a national system of fair trade among other goals (Morais 2013)

• Programmes, e.g.– India: Kudumbashree enhancing local economic development and

women’s social standing and capabilities in the state of Kerala– Nicaragua: “Hambre Cero” providing poor rural women organized in

groups with livestock & tools for food & livelihood security: e.g. seeds, chickens, cow, pigs, roofing

– Argentina: Manos a la Obra finances and supports projects that strengthen the social economy

– Uganda: National Co-operative Development Plan

Enabling policies (2)• Laws

– Ecuador: SSE part of the constitution– Portugal, Spain, Greece, Mexico, Quebec: framework laws that recognize

SSE as a sector, beyond regulations targeting specific types of organizations, e.g. coops

– France: new bill on SSE focuses on amplifying financing for SSE organizations and enterprises, increasing worker empowerment and control, creating regional employment, consolidating the economic model of SSE businesses, integrating SSE public policies for long term stability

– Philippines: the Social Enterprise Bill, currently proposed before Congress, promotes social enterprises as a tool in the government’s poverty reduction program

• Policies– Brazil: participatory budgeting and procurement policies– Decentralization & “local developmental states” (Bateman)– US: In Indiana, using state deposits to lower interest costs to employee-

owned companies– Denmark energy policy: Government funding 30 per cent of all investment

in new wind turbines (1980 -1990), “Energipakken” compelled electricity distribution companies to purchase a certain quota of energy supply every year from renewable producers, local and collective ownership of turbines was encouraged

– Other types of SSE policies include credit/subsidies, trade fairs, fiscal, education and training, CCTP and other social policy and programmes

Ongoing challenges in SSE-state relations

• Only certain types of organizations are recognized & supported, e.g. coops

• Poverty reduction & social assistance versus enhancing capabilities, infrastructure & distributive justice

• Sub-contracting service provisioning• Top-down policy design & implementation• Party policy or state policy• Weak decentralization (local authority without

resources)

Agricultural cooperatives: tensions & challenges

Tensions:• Between social and business functions

– e.g. balance between equity and efficiency

• Between membership homogeneity and external links– Membership homogeneity reduces coordination costs, but face disadvantages in

creating extra-group links

• Between keeping coordination costs low and achieving economies of scale

– Economies of scale increase countervailing power vis-à-vis others in the value chain, yet coordination costs and chance of principal-agents problems increase with group size

• Between external financial/capacity/policy support and autonomy• Between meeting standards and satisfying members

– Higher standards are often achieved through hierarchical decision making structures

• Between the different functions of a cooperative– e.g. negotiating good prices for members, providing information and advice to

members, facilitating access to financial services, enhance the level of market integration (commercialization)

“The intermediate transaction cost hypothesis”: farmers with middle-sized holdings, producing cash crops/perishables, and will some access to

roads/infrastructure derive greater benefits from cooperation than small and larger farmers

Source: Muradian (2013)

Argentina’s Community Currency System (El Trueque)

• Social capital: transactions within SSE depend on trust and common values. Personal exchange facilitates social capital

• As SSE expands there is a transition from personal to impersonal exchange, social capital is strained

• Trust needs to be allocated to impartial institutions that can enforce rules

• As El Trueque scaled-up (to 2.5 million households) such institutions and rules did not work and the system contracted

Source: Georgina Gomez 2013

Governance matters

• Fair trade- Increasing voice & vote of

small producers within Fairtrade International (FLO)

- Different actors & interests in governance structures of Transfair USA

- Diverging interests: split within the movement in 2011

-- United Students for Fair Trade splits from Transfair

-- Some Latin American producer associations announce they will also develop their own labels

Self-help groups (South Asia)

• Women’s participation & gender equality – Under-represented in governance

structures– Numbers matter (Bina Agarwal)– Gaining voice through deliberation– Traditional norms & division of labour

– Homogenous versus heterogeneous membership

Does an SSE movement and vibrant civil society exist?

Argentina: populist approach; social movements lack autonomy

Brazil: co-construction; partial bureaucratization of social movement activism

Ecuador: active social movements; SSE seen as part of societal transformation

The need for strong & representative intermediary organizations

Multi-scalar activism & coalitions

Organizing beyond the local level

e.g. Community forestry in Nepal,Via Campesina, Streetnet, Global Alliance of Waste Pickers, International Cooperative Alliance (ICA)

NATIONAL

STATE/PROVINCE

DISTRICT

COMMUNITYGROUPS

COMMUNITY FOREST INITIATIVES

SELF-HELPGROUPS

Potential Lateral and Vertical Alliances – South Asia

- Associations, Federations Source: Based on Agarwal, 2013

Ways forward

• Co-construction of policy• Participatory governance within SSE

organizations• Multi-scalar advocacy & broad-

based coalitions• Transformative (comprehensive)

social policy

Transformative Social Policy

• 4 functions of social policy:Not only social assistance & services human capital formation

(education/training)But also social reproduction (care of elderly &

children) redistributive policies (progressive

taxation and land reform)

For further information:

www.unrisd.org/sseutting@unrisd.org

Thank you