Chapter 1 The Social Economy: Core Perspectives and Concepts

Introduction

Economies are fundamentally shaped by the values, goals, and assumptions underpinning economic activities. Mainstream economic models prioritize growth, individualism, and efficient allocation driven by self-interest. But across history, groups marginalized or disillusioned by the status quo have imagined and constructed alternative economic systems centered on different values like cooperation, sustainability, democracy, and community benefit. The social economy encompasses these diverse experiments striving to organize economic activities to better serve human and ecological well-being.

This chapter provides an introductory overview of the social economy, spanning its historical evolution, core concepts and values, contemporary models and debates, and transformative possibilities. It aims to empower readers to engage critically and creatively with alternatives to dominant capitalist paradigms.

What is the Social Economy?

The social economy refers to organizations and enterprises oriented toward social goals and community benefit rather than profit maximization. It includes cooperatives, mutual associations, foundations, social enterprises, certain public programs, community groups, and non-profit initiatives motivated by social missions and ethical values, not just revenue. These organizations address issues like healthcare, education, housing, job training, social services, cultural activities, ecosystem restoration, fair trade, microfinance, food security, worker rights, and community development. They aim to meet common needs, spread benefits equitably, and nurture sustainability and solidarity.

The social economy has roots stretching back to cooperative and mutual aid movements that emerged in Europe and North America alongside industrialization in the late eighteenth century and nineteenth. As capitalist markets created dislocations and inequities, cooperative banks, worker cooperatives, social clubs, friendly societies, trade unions, and self-help groups formed to pool resources and provide mutual social insurance lacking under laissez-faire policies.

Over the twentieth century, the social economy continued evolving with the welfare state, rise of non-profit organizations, social activism spurring community-based initiatives, public-private partnerships, and creative social enterprises combining business methods with social missions. It came to be seen as a "third sector" distinct from private enterprise and state apparatus.

The global financial crisis of 2008 and ongoing ecological crises have spurred new interest and experimentation in the social economy, seen as providing more ethical, sustainable, and democratic economic models. Momentum has grown around concepts like the solidarity economy, sharing economy, collaborative economy, circular economy, and green economy, aiming to re-embed markets and capital within social (and ecological) values.

Key Values and Principles

Certain core values tend to motivate and shape organizations within the social economy:

• Cooperation-collective, democratic coordination of efforts and resources to meet shared needs, in contrast to competition.

• Solidarity-bonding within and across groups that enables unified action despite differences. Builds social capital.

• Sustainability and regeneration-stewarding ecological, social, economic, and cultural capital holistically to maintain balance across generations.

• Mutuality-voluntary reciprocal exchange of knowledge and resources on the basis of mutual benefit and shared interests.

• Equity-spreading benefits, wealth, and decision-making power broadly rather than concentrating it. Commitment to social justice.

• Ethics-embedding transparent, democratic accountability and moral values like honesty and sustainability into governance and operations.

• Pluralism-supporting a diversity of organizational models and enterprise types.

These values shape behaviors of sharing, cooperation, and collective action motivated by the public good. They spur innovations in economic organization and help build solidaristic cultures, enabling grassroots agency.

Key Organizational Forms

The social economy encompasses a mosaic of organizational forms hybridizing aspects of for-profit, non-profit, cooperative, and public enterprises. Some key models include:

• Cooperatives-member-owned and governed businesses that generate member and community benefit through democratic participation. Prevalent across sectors like agriculture, finance, retail, utilities, housing, healthcare, arts, and education.

• Mutual associations-member-owned and governed organizations providing insurance, finance, benefits, or professional services without external shareholders. Examples include credit unions, mutual insurance firms, and guilds.

• Social enterprises-organizations using business techniques to achieve a social mission while generating revenue to become self-sufficient. Often combine aspects of non-profits and businesses.

• Peer-to-peer platforms-online platforms enabling decentralized, peer-to-peer economic activities like crowdfunding, sharing, and collaborative production using virtual social networks.

• Community development organizations-local organizations owned by and serving disadvantaged communities through vehicles like housing cooperatives, land trusts, social programs, community centers, job training, and commercial development.

• Solidarity economy-networks of grassroots initiatives aimed at transforming capitalism based on principles of cooperation, equity, ethics, democracy, and ecological sustainability. Generally locally based.

These models enable collective economic action that diverges sharply from the institutional norms of impersonal commodity markets and shareholder corporations.

Transformative Possibilities

Proliferation of social economy organizations applies transformative pressures on mainstream capitalism in several ways, including by:

• demonstrating possibilities for embedding social values like transparency, sustainability, and democracy into economic structures

• promoting pluralism and diversity of enterprise types, diluting monolithic corporate dominance of markets

• circumventing profit-maximizing logics by orienting production and exchange to fulfill social needs

• generating surplus under stakeholder control rather than siphoning it to external shareholders

• redistributing resources and control more equitably through democratic participation mechanisms

• re-personalizing economic transactions based on reciprocity and ethics instead of impersonal commodification

• cultivating solidaristic cultures and social capital underlying risk-taking, collaboration, collective action, and grassroots innovation

A thriving social economy thus fosters the capabilities, norms, expectations, behaviors, and relationships needed to transform capitalism from within toward more ethical, sustainable, and democratic systems centered on social welfare.

History of the Social Economy

The social economy refers to economic activities oriented toward social goals and community benefits rather than solely toward profit maximization. It encompasses organizations and enterprises with social missions, such as cooperatives, mutual organizations, associations, foundations, and social enterprises (Moulaert & Ailenei, 2005). While the social economy has existed in various forms throughout history, it has gained increasing prominence and attention over the past few decades (Defourny & Develtere, 2009).

The roots of the modern social economy can be traced back to the cooperative movements that emerged in Europe and North America in the eighteenth and nineteenth centuries (Quarter, Mook & Richmond, 2003). As the Industrial Revolution brought rapid urbanization and often exploitative working conditions, groups of workers, farmers, and consumers began forming cooperatives to provide goods and services in a more equitable manner. Some of the earliest cooperatives were consumer food cooperatives started...