What is Social and Solidarity Economy and why does it matter?

April 29, 2013

     By Duncan Green     

UNRISD Deputy Director Peter Utting introduces the theme of his organization’s big conference in MayPeter Utting

Having had my professional and political interests shaped during the somewhat heady days of the 1980s in Sandinista Nicaragua, I’ve long been interested in the potential and limits of collective action—of people organizing and mobilizing through associations, unions, cooperatives, community organizations, fairtrade networks and so on. The Sandinista “revolution” soon gave way to the “neoliberal” 1990s. As in much of the world, collective action went on the backburner or assumed new forms via NGO networks and identity politics. Fast forward two decades and we are witnessing a significant rebound in collective action associated with workers, producers and consumers. Whether in response to global crises (finance and food), the structural conditions of precarious employment or new opportunities for cultural expression and social interaction afforded by the internet age, old and new forms are on the rise.

The term social and solidarity economy (SSE) is increasingly being used to refer to a broad range of organizations that are distinguished from conventional for-profit enterprise, entrepreneurship and informal economy by two core features. First, they have explicit economic AND social (and often environmental) objectives. Second, they involve varying forms of co-operative, associative and solidarity relations.  They include, for example, cooperatives, mutual associations, NGOs engaged in income generating activities, women’s self-help groups, community forestry and other organizations, associations of informal sector workers, social enterprise and fair trade organizations and networks.

In addition to diversification, we see signs of upscaling. SSE appears to be moving beyond its niche, peripheral, project or community-level status, and becoming more significant in terms of macro-economic, commercial and social-economic indicators, as charted in a 2011 ILO report:

  • In the UK some 62,000 social enterprises contribute £24 billion ($37.1billion) to the economy and employ 800,000 people.
  • In Europe; 2 million SSE organizations represent about 10% of all companies.
  • In India, over 30 million people (mainly women) are organized in over 2.2 million self-help groups; and the country’s largest food marketing corporation, the cooperative organization Amul, has 3.1 million producer members and an annual revenue of $2.5 billion.
  • In Nepal, 5 million forest users are organized in the country’s largest civil society organization.
  • The global fairtrade market has grown to €4.9 billion ($6.4 billion) and involves some 1.2 million workers and farmers producing certified products.
  • Mutual benefit societies provide health and social protection services to 170 million people worldwide.

sse_news_270Beyond the statistics, why the growing interest in SSE? Theory and anecdotal evidence tell us that such an approach can be a key mechanism through which poor or disempowered people in society gain greater control over resources and decision-making processes that affect their lives. Economists and political scientists have long espoused the benefits that can derive from co-operation or group behaviour in terms of addressing market failures and making demands on more powerful entities. Sociologists have emphasized other virtues related to social cohesion, identity and job satisfaction.

But the contemporary interest in SSE also relates to the fact that we are living in an era that seems to be crying out for new models of development. Not only have we to deal with multiple and recurring crises (finance, food and energy), but there is growing recognition that today’s normative agenda has to be much more encompassing. Some may hark back to the glorious days of post WWII “embedded liberalism”, of welfare states protecting citizens and corporations upholding some principles and practices of “decent work”. But for all its benefits and ongoing pertinence, this model ignored some key issues related to gender equality and environmental pollution, and is struggling to reproduce itself in contexts of economic liberalization and informalization of labour markets.

The discussions and debates taking place in the build-up to 2015—the date that has been set for a new or revised set of Millennium Development Goals (MDGs) and Sustainable Development Goals (SDGs)—signal that the old development formula of economic growth plus social protection is no longer sufficient. Other aspects, associated with the realization of rights, empowerment, equality, women’s care burden, and transformations in production and consumption patterns, need to be factored in. The theoretical attraction of social and solidarity economy lies precisely in the ways it lends itself to addressing these multiple dimensions of development. It simultaneously fosters economic dynamism, social and environmental protection and socio-political empowerment.

But achieving in practice what is promised on paper is another ballgame. SSE’s recent revival has been, organic, a largely grassroots phenomenon.  And therein lies the rub—in two respects. First, collective action needs to connect at multiple scales via networks, movements and alliances. If the SSE is to be sustained, enabled and scaled-up on terms compatible with its values and objectives, action cannot remain local; it must cohere at other levels (municipal, provincial, national, regional and global) where governance, advocacy and politics play out. Second, in order to expand and really move beyond the fringe, the SSE must interact far more with states, for-profit enterprise and global value chains. Such interactions inevitably generate tensions and dilemmas given differences in development priorities and approaches, as well as differentials in bargaining power.

For a graphic illustration of these tensions, look no further than fair-trade. In 2011 there was a major split in the international fair trade movement aslink handsthe US labeling organization (then known as Transfair USA) left the international federation, FLO (since renamed Fairtrade International).

Closer integration with powerful market actors underpinned the split. Fair-trade had expanded significantly over the years but quite different approaches were being promoted. The US organization leaned towards engagement with corporations like Starbucks and was keen to source from large commercial tea and other plantations, something not possible under FLO rules. Such relationships with big business had implications for the price that buyers were prepared to pay to small farmers and the quality of sustainability standards. Meanwhile, various labeling organizations and producer groups that were key stakeholders in FLO wanted to stick to the original principles and practices of fair trade, based on smallholder empowerment and agro-ecology.

What immediate policy implications stem from this reflection? Governments and international organizations clearly need to be paying far more attention to the SSE, and question how its developmental and emancipatory potential can be realized. And they should also be asking themselves whether current priorities or biases in policy approach in the field of development are not missing, or indeed undermining, what could be a major new game in town. These include the tendency to focus on

i) individuals or entrepreneurship, rather than groups,

ii) economic, rather than political, empowerment;

iii) idealize the integration of small producers and communities in global value chains; and

iv) social (and environmental) protection, rather than equality and emancipation.

It is these and other issues we’ll be debating at UNRISD’s conference on Potential and Limits of Social and Solidarity Economy from 6-8 May at the ILO in Geneva.  Please join us!

Peter Utting is writing in his personal capacity.