For 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 pro- grams. 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 specif- ic 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 ”œsocial 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, agricultur- al co-operatives, and the network of YMCAs. It also includes very new initiatives such as the many nonprofit recycling busi- nesses 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.
The 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 gov- ernment convened the ”œSummit on the Economy and Employment,” in which a wide range of civil society organizations ”” major corporations, employers’ associations, unions, municipalities, educational and cultural networks, representatives of important social and community movements, student associations and the Church ”” participated.
In its effort to find a way out of a 12 percent unemployment rate in the context of a crisis in public finances, the government challenged the pri- vate sector and Quebec civil society to come up with strategies that would stimulate economic renewal and job creation. In order to prepare the dis- cussions for the 1996 summit, the government thus proposed that sever- al working groups on employment and economic development be estab- lished ”” including a group on the social economy ”” led by actors from the private sector.
In the six-month period leading up to this event, the working group on the social economy gathered a wide range of civil society actors (including community organizations, unions, co- operatives, local development organi- zations) and presented an ambitious and innovative action plan to create thousands of new jobs and services through the nonprofit and co-operative sectors.
The plan presented a clear definition of the social economy; underlined its historic role in Quebec; and proposed a series of sector-by-sector strategies that would allow for new economic activity and respond to social, economic, environ- mental and cultural needs. The plan also identified the conditions under which the social economy could flourish. These ranged from a formal recognition of its role, to the integra- tion of support for collective or social entrepreneurship in local and region- al development policies, to equal access to the development incentives offered to traditional enterprise, to legislative changes that would allow for the creation of co-operatives and the establishment of new training and funding tools.
The innovative approach of the social economy working group cap- tured the imagination of summit par- ticipants. In the years following the summit, the action plan became a reality as volunteer, private and pub- lic resources across Quebec were mobilized. In the years after the sum- mit, the initiative was co-ordinated directly through the ministé€re du Conseil exécutif. In 2001, the finance minister, also responsible for econom- ic development, was given the social economy portfolio, and the Bureau de l’économie social was created within that ministry.
Five years later, the social econo- my made its way onto the federal pol- icy agenda in the context of the Throne Speech in February 2004, when a parliamentary secretary to the minister of social development with a special emphasis on the social econo- my was named.
The first stage of the federal gov- ernment’s commitment to the social economy was announced in the fol- lowing budget. It committed to investing $17 million over two years for capacity building, $100 million for the creation long term invest- ment capital funds and $15 million over five years for collaborative com- munity-university research related to the social economy. It also commit- ted to breaking down the regulatory barriers preventing social economy enterprises from accessing small and medium-sized enterprise (SME) pro- grams. It created the national Social Economy Roundtable, engaging civil society leaders from across Canada. Conceived as a horizontal file, diverse partners from several departments have been mobilized to carry out the initiative.
The first challenge in integrating the social economy into public policy is to agree to a common defini- tion. This challenge is both simple and complex.
The definition adopted in Quebec reflects both the diversity of the sector and its common objectives. The social economy enterprise:
- aims to serve its members or the community, rather than simply striving for profit
- is independent of the state
- establishes a democratic decision-making process in its statutes and code of conduct, requiring that users and workers participate
- prioritizes people and work over capital in the distribution of rev- enue and surplus
- bases its activities on principles of participation, empowerment, and individual and collective responsibility
This definition can be traced back to the so-called ”œnew” social economy, which emerged approxi- mately thirty years ago. The develop- ment of this dynamic social entrepreneurship picked up speed as civil society became more and more involved in local and regional devel- opment over the past twenty years. As community activists, environmen- tal groups, women’s organizations and anti-poverty groups chose the path of economic development to try to respond to social and environmen- tal needs, social entrepreneurship was the logical next step.
In the rest of Canada, the social economy is more closely associated with a territorial approach known as community economic development (CED). It involves a wide range of prac- tices in quest of a common goal of improving economic and social devel- opment for marginalized communities and individuals. The Canadian Community Economic Development Network has described CED ”œas action by people locally to create economic opportunities and enhance social con- ditions in their communities on a sus- tainable and inclusive basis, particularly with those who are most disadvantaged. CED is a community- based and community-directed process that explicitly combines social and economic development and fosters the economic, social, ecological and cul- tural well being of communities.”
In Quebec, even without consider- ing its institutionalized compo- nents (the Desjardins movement and the two largest agricultural co-opera- tives), 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 sur- vey of the voluntary sector demon- strated that over a million Canadians are now working in nonprofit organizations. This statistic is a clear illus- tration that the so-called ”œvoluntary” sector is far from being simply an accumulation of volunteers but, on the contrary, represents an important part of the Canadian economy.
Over the past decade, the social economy has been at the fore- front 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 entrepreneurial strategies with brio. One example is the Chantier de l’économie 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 mem- bership and board of directors includes representatives of co-opera- tive and nonprofit enterprises, local and community economic development networks, and the large social movements.
Among the Chantier’s early inno- vations was the creation of a new finan- cial instrument called the Réseau d’investissement social du Québec (RISQ). This institution, which current- ly has $10 million available for invest- ment in social economy initiatives, is the result of contributions from the public and private sectors, including the major banks, Alcan, Jean Coutu, and the Cirque du Soleil. The RISQ is administered by a board, the majority appointed by the Chantier. Over the past seven years, RISQ has made over 350 investments through modest non- guaranteed loans to co-operatives and nonprofit enterprises across Quebec. And its success rate is remarkable in comparison with investment funds in more traditional enterprises.
Another example is the creation of a network of nonprofit and co-opera- tive home care businesses across Quebec. This network of enterprises employs 6,000 people, half of whom were previously unskilled welfare recip- ients. By offering over 5.6 million hours of home care services to over 76,000 clients, the majority of whom are over 75 years old, these organizations have created jobs, taken pressure off public sector services, delayed institutionaliza- tion 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 adaptés (adapted work- places), which offer employment to productive but non-competitive indi- viduals, is yet another case of innova- tion. Unique in Canada, the socio-economic mission of these non- profit businesses is to create jobs for people living with intellectual or phys- ical disabilities. Today they employ over 4,000 people, including approxi- mately 3,000 disabled people. These enterprises can be found in a variety of industries including printing, packag- ing, manufacturing, recycling, security and office supplies, and they generate revenues of over $135 million.
Recycling is another economic sector with a large and increasing number of social economy enterprises. Environmental activists have formed a network of ”œressourceries” (recycling businesses), which works closely with municipalities across Quebec to reduce waste and find new avenues for the recycling and reutilization of tons of material previously destined for waste sites. Over 1,000 jobs have been creat- ed, offering employment to many unskilled workers in communities across Quebec. These enterprises have an educational function as well as a commercial mission, responding to environmental, economic and social challenges.
The lessons learned from the Quebec experience over the past decade are numerous and pose new challenges for public policy.
The first and most fundamental issue is the need for a formal recogni- tion of the social economy as an inte- gral 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 con- crete manifestation of posi- tive and active citizenship. This is a tremendous asset for any society, and there is much to gain in supporting these initiatives.
But this will require the design of appropriate public policy. Most importantly, we will need to break with the silo approach to development and integrate social and economic parameters into public programs to support the social economy. While social development experts are required to deal with investment issues, invest- ment experts need to search for tools to evaluate social profitability and envi- ronmental regulators are called upon to develop initiatives to support environmental entrepreneurship.
Another challenge for policy-makers is the scope of the issue. The social economy cannot be defined sim- ply as a program or single policy ini- tiative; it must be integrated into a wide range of public policy initiatives, for it requires a broad series of meas- ures to assure a proper environment for its development. In this sense, it is no different from the private sector, which benefits from a wide range of support for things such as access to capital and new markets, networking, and various sectoral strategies.
Public policy in support of the social economy can be classified into four major categories:
- Territorial policy: Social economy enterprises emerge from commu- nities that are mobilized to pro- mote development. Public policy that supports local communities in the creation of networks, strate- gic planning processes and collec- tive projects is a primary component in support of social entrepreneurship. An example is the tripartite support for commu- nity economic development cor- porations in most Quebec cities. These nonprofit, citizen-based organizations have been the birth- place for some of the most original and successful social economy ini- tiatives. Similar initiatives have developed over the years in sever- al Canadian cities. Private sector partners have been mobilized to collaborate in these initiatives.
- Generic tools for enterprise develop- ment: As is the case for all SMEs, social economy enterprises must have access to suitable invest- ment tools, adequate markets, research and development, and instruments to ensure efficient management. Many of the programs and policies that have been made available to SMEs over the past two decades require only slight adaptation to respond to the needs of social enterprises. The federal initiative to support the creation of long term capital funds and to open up SME programs to social economy enterprises is a good illustration of an enabling public policy.
- Sectoral policies: Certain economic sectors represent tremendous potential for social entrepreneur- ship. Social enterprises often emerge in response to needs that neither the market nor govern- ment can satisfy. By combining market resources, voluntary contri- butions and public support, the social economy enterprise plays an important role in structuring cer- tain unstructured markets or responding efficiently to needs for certain types of goods and services. Policies that support the emer- gence or strengthening of certain economic sectors (including the environment, personal services, housing, new technologies, com- munications, tourism, food servic- es and culture) are important instruments for the development of the social economy.
- Targeted policies: Social economy enterprises play an important role in providing access to employ- ment and certain services to mar- ginalized groups. Rather than investing only in income pro- grams, investing in the social economy opens up possibilities for integrating citizens who are con- sidered unproductive into the work force. Many European coun- tries have invested heavily in sup- porting the socio-economic integration of target groups (youth, the disabled, new immi- grants, etc.). In some countries, the social economy is an integral part of labour force development strategies. For example, in Italy, public purchasing has been used as a strategy to encourage social co-operatives, which in return have to hire at least 30 percent of their labour force from identified marginalized groups.
The development of the social economy has major ramifications for economic development. The very basis of the social economy ”” the inte- gration of economic and social initia- tives ”” is a clear illustration of the need to rethink the way social and eco- nomic policy has been defined over the past 60 years.
Indeed, the limits of the tradition- al silo approach to economic and social policy have become evident over the past decades. Despite increased wealth and economic growth, the gap between the rich and the poor has grown. Entire regions, particularly in rural communities, have been left on the margins of development. In urban areas, the situation in many poor neighbourhoods continues to decline and threatens the development of healthy cities.
In that regard, insufficient effort has been made to redefine the param- eters of social and economic develop- ment. There is still a strong tendency to see the world in a binary and sim- plistic way and the economy as a space where there are only two major players: the private sector, which works in the market place, creates wealth, makes our economy run and furnishes tax revenues to government; and the state, which redistributes wealth and offers uniform public serv- ices and programs for the common good. The extensive work being done by community organizations and the products and services being produced by the nonprofit or co-operative sec- tor are basically seen to be charitable and philanthropic, and outside the economic sphere.
But this paradigm has not only become unworkable but also offers lit- tle hope for the future. The world has changed; the economy has changed. Taylorism is a thing of the past as modes of production have been trans- formed. Globalization and new tech- nologies have made flexibility and innovation the new requirements for success. These transformations have had many positive but also many negative impacts. Poverty and mar- ginalization 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 communi- ties do not get the quality of services they deserve. Nor can charities contin- ue to pick up the pieces where govern- ment and the market are failing, because there are just too many pieces to pick up!
The 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 con- tribution of the social economy to local and regional development, to the creation of jobs for marginalized groups, and to the production of effi- ciently delivered services is no longer in question.
Increasingly, public policy experts will be obliged to take this growing reality into account and better under- stand 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.