Social Economy in Europe: Hour of change

The economic term ‘Social Economy’ may sound familiar to EU citizens’ ears. Social initiatives and/or projects are blooming in most of the countries after a period of a harsh financial crisis and a following refugee one which shook them up. The main object of this text is to present the main theoretical approaches related to the Social Economy concept and to identify public policies related it at a European level in the period 2010–2016. SocialPolis Coin as the one of the kind cryptocurrency to support Social Economy could not be ignored in this context.

The 2012 Report of the European Economic and Social Committee provides an accurate and rather explanatory definition of the Social Economy that also fits in with the national accounts system:

‘The set of private, formally-organized enterprises, with autonomy of decision and freedom of membership, created to meet their members’ needs through the market by producing goods and providing services, insurance and finance, where decision-making and any distribution of profits or surpluses among the members are not directly linked to the capital or fees contributed by each member, each of whom has one vote, or at all events are decided through democratic, participatory processes. The social economy also includes private, formally-organized entities with autonomy of decision and freedom of membership that produce non-market services for households and whose surpluses, if any, cannot be appropriated by the economic agents that create, control or finance them’.

The main principles of Social Economy, can be summarized to the following:

-Primacy of the individual and the social objective over capital

· Voluntary and open membership

· Democratic control by the membership (does not concern foundations as they have no members)

· The combination of the interests of members/users and/or the general interest

· The defence and application of the principle of solidarity and responsibility

· Autonomous management and independence from public authorities

· Most of the surpluses are used in pursuit of sustainable development objectives, services of interest to members or the general interest

Moving to the main theoretical approaches related to the Social Economy, they are not only various but more importantly, they differ with regards to their origins.

The Non-Profit Organization (NPO) concept

This concept was spearheaded by John Hopkins University (Baltimore, USA) in the early 1990s by an international research project. The modern concept of non-profit sector was specified by its size and structure and was analyzed by its development prospects and finally was evaluated by its impact on society.

The organizations that this project examines are those that meet the five key criteria in the ‘structural operational definition’ of non-profit organizations. They are, therefore:

· Organizations, i.e. they have an institutional structure and presence. They are usually legal persons.

· Private, i.e. institutionally separate from government, although they may receive public funding and may have public officials on their governing bodies.

· Self-governing, i.e. able to control their own activities and free to select and dismiss their governing bodies.

· Non-profit distributing. Non-profit organizations may make profits but these must be ploughed back into the organization’s main mission and not distributed to the owners, founder members or governing bodies of the organization.

· With voluntary participation, which means two things: firstly, that membership is not compulsory or legally imposed and secondly, that they must have volunteers participating in their activities or management.

The Solidarity Economy approach

This approach has been developing since the 1980s. In this approach, the economy revolves around three poles: the market, the State and reciprocity. These three poles correspond to market, redistribution and reciprocity principles. The latter refers to a non-monetary exchange in the area of primary sociability that is identified, above all, in associations. The solidarity economy approach tries to hook up the three poles of the system in a way that specific solidary economy initiatives constitute forms that are hybrids between market, non-market and non-monetary economies.

Another view of this approach was presented in Latin American countries which dealt with it as a force of social change, the bearer of a project for an alternative society to neo-liberal globalization.

Other approaches

Other approaches that are replacing market economies where the means of production are privately-owned with other ways of organizing the production include:

· The alternative economy with roots in the anti-establishment movements that developed in France after May 1968

· The popular economy, promoted in various South American countries since 1980 with very similar views to the Latin American version of the solidary economy, so much so that it is also termed the solidary popular economy. The popular economy excludes any type of employer/employee relationship and considers labor the main factor of production.

Recognition of the concept of Social Economy at national level

Spain, France, Portugal. Belgium and Luxemburg are countries where the concept of the social economy is widely recognized. Spain and France stand out with the former to be the birthplace of this concept and the latter to be the first European country that approved national law on the Social Economy in 2011.

Italy, Cyprus, Denmark, Finland, Sweden, Latvia, Malta, Poland, the United Kingdom, Bulgaria, Greece, Hungary, Ireland, Romania and Slovenia are countries in which the concept of the social economy enjoys a moderate level of recognition.

While Austria, the Czech Republic, Estonia, Germany, Lithuania, the Netherlands, Slovakia and Croatia are countries where there is little or no recognition of the concept of the Social Economy.

Over the past seven years, most European countries have paid attention to law-making concerning the social economy. Specific laws on the social economy have been passed at national level in Spain (2011), Greece (2011 and 2016), Portugal (2013), France (2014) and Romania (2016) and at regional level in Belgium (Wallonia, Brussels and Flanders) and in Spain (Galicia).

Lastly, at the national level, and generally in cooperation with European structural funds, several national action plan have been established in recent years. These are cases in which the European funds’ operational programs target social economy and social inclusion. Table 1 identifies the main national plans. Three key factors for success are important: firstly, a multiannual and holistic framework, secondly, the concept of partnership between government, the social economy and other stakeholders, ensuring that real needs and priorities are met, and thirdly, the structuring and inclusive effect of the European structural funds around Europe. The latter is a key lesson for EU policy makers.

Table 1: National plans that boost the Social Economy in European countries (2011–2016)

The European Social Economy provides:

· over 13.6 million paid jobs in Europe

· equivalent to about 6.3% of the working population of the EU-28

· employment of a workforce of over 19.1 million, including paid and non-paid

· more than 82.8 million volunteers, equivalent to 5.5 million full time workers

· more than 232 million members of cooperatives, mutuals and similar entities

· over 2.8 million entities and enterprises

The above aggregates underline how important is European Social Economy in both human and economic terms. In this context, the activation of SocialPolis (SPL) Coin in the Social Economy spectrum seems to be at least sustainable. SocialPolis Coin wants to act as an alternative financial tool able to foster Coops financing and investing profitability.

Greece is recovering from a shaken up period with social and economical reordering. A turn to Social Economy values and principles may be a step closer to the reshape of a society wounded by social deprivation.

Learn more about SocialPolis Coin Project here: https://socialpolis.io

Sources:

https://www.eesc.europa.eu/sites/default/files/files/qe-04-17-876-en-n.pdf