THE SOCIAL ECONOMY: FINDING A WAY BETWEEN THE MARKET AND THE STATE

Nancy Neamtam
What is today called the social economy, or social entrepreurship, includes some very old organizations such as credit unions, agricultural co-operatives, and the YMCAs. In this article, Nancy Neamtam describes an emerging cohort of young social entrepreneurs who are combining social goals and entrepreneurial strategies with brio. In Quebec, the social economy which includes local and community economic development organizations; and the womens, social housing, labour, and environmental movements accounts for over 10,000 organizations, employs over 100,000 workers and has sales of over $4.3 billion. Yet public policy has a way to go to fully embrace this diverse sector, which is still seen largely as philanthropic and outside the economic sphere, says Neamtam. The social economy is a manifestation of positive and active citizenship that governments need to recognize and support. Ce qui est aujourdhui qualifi dconomie sociale, ou dentrepreneuriat social, rassemble des organismes aussi anciens que les caisses populaires, les coopratives de crdit agricole et les YMCA. Selon Nancy Neamtam, une cohorte grandissante de jeunes entrepreneurs combinent aujourdhui avec brio objectifs sociaux et stratgies dentreprise. Lconomie sociale qui regroupe des organismes de dveloppement conomique local et communautaire ainsi que des associations fministes, syndicales, cologiques et de logement social totalise au Qubec plus de 10 000 organisations, emploie quelque 100 000 personnes et enregistre des ventes de 4,3 milliards de dollars. Mais les dcideurs tardent soutenir pleinement ce secteur trs vari, encore largement peru comme une uvre philanthropique hors de la sphre conomique. Lconomie sociale est une manifestation de citoyennet constructive que les gouvernements doivent reconnatre et soutenir.

or many experts in the area of public policy, the social economy represents a totally new vocabulary. For some, it is simply a trendy word for more social programs. For others, it represents a new perspective on social and economic development. I am one of these others. The introduction of this concept in Quebec and Canada is part of an international trend that has emerged in European, Latin American and African countries. Its contribution to social innovation has been discussed in forums as diverse as the OECD and the World Social Forum. It is not associated with a specific political formation, nor is it limited to a specific geographical area. On the contrary, the social economy is a pragmatic response to the economic and social challenges of globalization. It contributes to the renewal of positive and active citizenship locally, nationally and internationally, and to the process of redefining relations between the state, the market and civil society.

The term social economy refers to all forms of organizations or enterprises involved in the production of goods or services (i.e., having an economic activity) that are not private, for profit or public. This definition therefore includes some very old organizations, such as some credit unions, agricultural co-operatives, and the network of YMCAs. It also includes very new initiatives such as the many nonprofit recycling businesses that are springing up across Canada, parent-run day care centres, worker- and consumer-owned cooperatives, social enterprises offering jobs to the marginalized, community radio, community-based social tourism projects, cooperative and nonprofit housing, and thousands of other initiatives.

he social economy has been part of the Quebec reality for over one hundred years, but it officially entered the public policy discourse only in 1996, when the Quebec government convened the Summit on the Economy and
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ments have been mobilized to carry the establishment of new training Employment, in which a wide range out the initiative. and funding tools. of civil society organizations major The innovative approach of the corporations, employers associations, social economy working group capunions, municipalities, educational he first challenge in integrating tured the imagination of summit parand cultural networks, representatives the social economy into public ticipants. In the years following the of important social and community policy is to agree to a common definisummit, the action plan became a movements, student associations and tion. This challenge is both simple and reality as volunteer, private and pubthe Church participated. complex. lic resources across Quebec were In its effort to find a way out of a The definition adopted in Quebec mobilized. In the years after the sum12 percent unemployment rate in the reflects both the diversity of the sector mit, the initiative was co-ordinated context of a crisis in public finances, and its common objectives. The social directly through the ministre du the government challenged the prieconomy enterprise: Conseil excutif. In 2001, the finance vate sector and Quebec civil society to q aims to serve its members or the minister, also responsible for economcome up with strategies that would community, rather than simply ic development, was given the social stimulate economic renewal and job striving for profit economy portfolio, and the Bureau de creation. In order to prepare the disq is independent of the state lconomie social was created within cussions for the 1996 summit, the q establishes a democratic decisionthat ministry. government thus proposed that severmaking process in its statutes and Five years later, the social econoal working groups on employment code of conduct, requiring that my made its way onto the federal poland economic development be estabusers and workers participate icy agenda in the context of the lished including a group on the q prioritizes people and work over Throne Speech in February 2004, social economy led by actors from capital in the distribution of revwhen a parliamentary secretary to the the private sector. enue and surplus minister of social development with a In the six-month period leading q bases its activities on principles special emphasis on the social econoup to this event, the working group on of participation, empowerment, my was named. the social economy gathered a wide and individual and collective The first stage of the federal govrange of civil society actors (including responsibility ernments commitment to the social community organizations, unions, coThis definition can be traced economy was announced in the foloperatives, local development organiback to the so-called new social lowing budget. It committed to zations) and presented an ambitious economy, which emerged approxiinvesting $17 million over two years and innovative action plan to create mately thirty years ago. The developfor capacity building, $100 million thousands of new jobs and services ment of this dynamic social through the nonprofit and co-operative sectors. In Quebec, even without considering its institutionalized The plan presented components (the Desjardins movement and the two largest a clear definition of the agricultural co-operatives), the social economy accounts for social economy; underlined its historic role in over 10,000 collective enterprises and community Quebec; and proposed a organizations that employ over 100,000 workers and have series of sector-by-sector sales of over $4.3 billion. strategies that would for the creation long term investallow for new economic activity and entrepreneurship picked up speed as ment capital funds and $15 million respond to social, economic, environcivil society became more and more over five years for collaborative commental and cultural needs. The plan involved in local and regional develmunity-university research related to also identified the conditions under opment over the past twenty years. the social economy. It also commitwhich the social economy could As community activists, environmented to breaking down the regulatory flourish. These ranged from a formal tal groups, womens organizations barriers preventing social economy recognition of its role, to the integraand anti-poverty groups chose the enterprises from accessing small and tion of support for collective or social path of economic development to try medium-sized enterprise (SME) proentrepreneurship in local and regionto respond to social and environmengrams. It created the national Social al development policies, to equal tal needs, social entrepreneurship Economy Roundtable, engaging civil access to the development incentives was the logical next step. society leaders from across Canada. offered to traditional enterprise, to In the rest of Canada, the social Conceived as a horizontal file, legislative changes that would allow economy is more closely associated diverse partners from several departfor the creation of co-operatives and with a territorial approach known as

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The social economy: finding a way between the market and the state

Courtesy of Chantier de lconomie sociale

Training for the social economy: young social entrepreneurs are combining social goals and entrepreneurial strategies with brio.

community economic development (CED). It involves a wide range of practices in quest of a common goal of improving economic and social development for marginalized communities and individuals. The Canadian Community Economic Development Network has described CED as action by people locally to create economic opportunities and enhance social conditions in their communities on a sustainable and inclusive basis, particularly with those who are most disadvantaged. CED is a communitybased and community-directed process that explicitly combines social and economic development and fosters the

economic, social, ecological and cultural well being of communities.

n Quebec, even without considering its institutionalized components (the Desjardins movement and the two largest agricultural co-operatives), the social economy accounts for over 10,000 collective enterprises and community organizations that employ over 100,000 workers and have sales of over $4.3 billion. Statistics are not available for the rest of Canada, though a recent survey of the voluntary sector demonstrated that over a million Canadians are now working in nonprofit organ-

izations. This statistic is a clear illustration that the so-called voluntary sector is far from being simply an accumulation of volunteers but, on the contrary, represents an important part of the Canadian economy.

ver the past decade, the social economy has been at the forefront of new and innovative ways to create wealth, produce goods and deliver services, while integrating social or environmental goals into the very act of production. A growing cohort of social entrepreneurs is emerging, particularly among youth, who are combining social goals and
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decade are numerous and pose new challenges for public policy. The first and most fundamental issue is the need for a formal recognition of the social economy as an integral part of the socio-economic landscape of modern societies. This implies breaking with the vision of the nonprofit and co-operative sectors either as marginal or outdated realities and a realignment of this vision to acknowledge the growing strength and relevance of the sector. At a time in modern history when citizens cynicism toward government has reached dangerous levels, the social economy is a concrete manifestation of posiAt a time in modern history when citizens cynicism toward tive and active citizenship. government has reached dangerous levels, the social This is a tremendous asset economy is a concrete manifestation of positive and active for any society, and there is citizenship. This is a tremendous asset for any society, and much to gain in supporting these initiatives. there is much to gain in supporting these initiatives. But this will require the design of appropriate public policy. people living with intellectual or physMost importantly, we will need to break ment networks, and the large social ical disabilities. Today they employ with the silo approach to development movements. over 4,000 people, including approxiand integrate social and economic Among the Chantiers early innomately 3,000 disabled people. These parameters into public programs to vations was the creation of a new finanenterprises can be found in a variety of support the social economy. While cial instrument called the Rseau industries including printing, packagsocial development experts are required dinvestissement social du Qubec ing, manufacturing, recycling, security to deal with investment issues, invest(RISQ). This institution, which currentand office supplies, and they generate ment experts need to search for tools to ly has $10 million available for investrevenues of over $135 million. evaluate social profitability and enviment in social economy initiatives, is Recycling is another economic ronmental regulators are called upon to the result of contributions from the sector with a large and increasing develop initiatives to support environpublic and private sectors, including number of social economy enterprises. mental entrepreneurship. the major banks, Alcan, Jean Coutu, Environmental activists have formed a Another challenge for policyand the Cirque du Soleil. The RISQ is network of ressourceries (recycling makers is the scope of the issue. The administered by a board, the majority businesses), which works closely with social economy cannot be defined simappointed by the Chantier. Over the municipalities across Quebec to reduce ply as a program or single policy inipast seven years, RISQ has made over waste and find new avenues for the tiative; it must be integrated into a 350 investments through modest nonrecycling and reutilization of tons of wide range of public policy initiatives, guaranteed loans to co-operatives and material previously destined for waste for it requires a broad series of measnonprofit enterprises across Quebec. sites. Over 1,000 jobs have been creatures to assure a proper environment And its success rate is remarkable in ed, offering employment to many for its development. In this sense, it is comparison with investment funds in unskilled workers in communities no different from the private sector, more traditional enterprises. across Quebec. These enterprises have which benefits from a wide range of Another example is the creation of an educational function as well as a support for things such as access to a network of nonprofit and co-operacommercial mission, responding to capital and new markets, networking, tive home care businesses across environmental, economic and social and various sectoral strategies. Quebec. This network of enterprises challenges. employs 6,000 people, half of whom were previously unskilled welfare recipublic policy in support of the ients. By offering over 5.6 million hours social economy can be classified he lessons learned from the of home care services to over 76,000 into four major categories: Quebec experience over the past entrepreneurial strategies with brio. One example is the Chantier de lconomie sociale, an organization that emerged out of the temporary working group created at the time of the summit in 1996. It held its first general assembly in April 1999, and elected a board of directors, which consists of 28 individuals, elected by different electoral colleges in order to represent the diverse realities of the social economy. Today, the membership and board of directors includes representatives of co-operative and nonprofit enterprises, local and community economic developclients, the majority of whom are over 75 years old, these organizations have created jobs, taken pressure off public sector services, delayed institutionalization for many elderly people, reduced the welfare rolls and assured access to home care services in record time to all communities across the province. The Quebec network of 44 Centre de travail adapts (adapted workplaces), which offer employment to productive but non-competitive individuals, is yet another case of innovation. Unique in Canada, the socio-economic mission of these nonprofit businesses is to create jobs for

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The social economy: finding a way between the market and the state
q

social economy enterprise plays an basis of the social economy the inteTerritorial policy: Social economy important role in structuring cergration of economic and social initiaenterprises emerge from commutain unstructured markets or tives is a clear illustration of the nities that are mobilized to proresponding efficiently to needs for need to rethink the way social and ecomote development. Public policy certain types of goods and services. nomic policy has been defined over that supports local communities Policies that support the emerthe past 60 years. in the creation of networks, strategence or strengthening of certain Indeed, the limits of the traditiongic planning processes and collececonomic sectors (including the al silo approach to economic and tive projects is a primary environment, personal services, social policy have become evident over component in support of social housing, new technologies, comthe past decades. Despite increased entrepreneurship. An example is munications, tourism, food servicwealth and economic growth, the gap the tripartite support for commues and culture) are important between the rich and the poor has nity economic development corinstruments for the development grown. Entire regions, particularly in porations in most Quebec cities. of the social economy. rural communities, have been left on These nonprofit, citizen-based the margins of development. In urban organizations have been the birthq Targeted policies: Social economy areas, the situation in many poor place for some of the most original enterprises play an important role neighbourhoods continues to decline and successful social economy iniin providing access to employand threatens the development of tiatives. Similar initiatives have ment and certain services to marhealthy cities. developed over the years in severginalized groups. Rather than In that regard, insufficient effort al Canadian cities. Private sector investing only in income prohas been made to redefine the parampartners have been mobilized to grams, investing in the social eters of social and economic developcollaborate in these initiatives. economy opens up possibilities for ment. There is still a strong tendency integrating citizens who are conGeneric tools for enterprise developto see the world in a binary and simsidered unproductive into the ment: As is the case for all SMEs, plistic way and the economy as a work force. Many European counsocial economy enterprises must space where there are only two major tries have invested heavily in suphave access to suitable investplayers: the private sector, which porting the socio-economic ment tools, adequate markets, works in the market place, creates integration of target groups research and development, and wealth, makes our economy run and (youth, the disabled, new immiinstruments to ensure efficient management. Many of the programs and It has become increasingly clear also that governments can no policies that have longer govern with wall-to-wall programs, not so much been made available to SMEs over the because they cost too much, but because they are too often past two decades inefficient. Citizens do not get good value for their dollars, and require only slight communities do not get the quality of services they deserve. adaptation to Nor can charities continue to pick up the pieces where respond to the needs of social enterprises. government and the market are failing, because there are just The federal initiative too many pieces to pick up! to support the crefurnishes tax revenues to government; ation of long term investment grants, etc.). In some countries, and the state, which redistributes capital funds and to open up SME the social economy is an integral wealth and offers uniform public servprograms to social economy part of labour force development ices and programs for the common enterprises is a good illustration strategies. For example, in Italy, good. The extensive work being done of an enabling public policy. public purchasing has been used by community organizations and the as a strategy to encourage social Sectoral policies: Certain economic products and services being produced co-operatives, which in return sectors represent tremendous by the nonprofit or co-operative sechave to hire at least 30 percent of potential for social entrepreneurtor are basically seen to be charitable their labour force from identified ship. Social enterprises often and philanthropic, and outside the marginalized groups. emerge in response to needs that economic sphere. neither the market nor governBut this paradigm has not only ment can satisfy. By combining he development of the social become unworkable but also offers litmarket resources, voluntary contrieconomy has major ramifications tle hope for the future. The world has butions and public support, the for economic development. The very

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changed; the economy has changed. Taylorism is a thing of the past as modes of production have been transformed. Globalization and new technologies have made flexibility and innovation the new requirements for success. These transformations have had many positive but also many negative impacts. Poverty and marginalization are affecting a larger and larger portion of our population, and our communities and governments are hard pressed to respond to this disturbing phenomenon. It has become increasingly clear also that governments can no longer govern with wall-to-wall programs, not so much because they cost too much, but because they are too often inefficient. Citizens do not get good value for their dollars, and communities do not get the quality of services they deserve. Nor can charities continue to pick up the pieces where government and the market are failing, because there are just too many pieces to pick up! local and regional development, to the creation of jobs for marginalized groups, and to the production of efficiently delivered services is no longer in question. Increasingly, public policy experts will be obliged to take this growing reality into account and better understand and support it for the important contribution it can make to the health and well being of Canadians. The recent policy initiatives by the Quebec and Canadian governments are only the first steps on the long road toward citizen-based economic and social renewal. Nancy Neamtam is CEO of the Chantier de lconomie sociale.

he social economy presents the need to define a new paradigm with which to approach economic and social development. It forces a broader analysis of the economy, embracing a vision of a pluralistic economy in which the public sector, the private sector and the social economy have a role to play. The contribution of the social economy to

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