The Social Economy

This is the draft of an article published in Planet S Magazine: May 24 - June 6, 2007 Volume 5: Issue 16

There are two kinds of problems, to put it simplistically. One set can be approached with more research and advances in the sciences, or related fields. The spread of infectious disease, for example, is remedied by better treatment and prevention methods. If we need to discover a renewable energy resource, well, that just takes time and research. Some problems are technological and nothing more. The second set of problems is quite different. These problems do not depend on scientific failings, but on the failure of people to cooperate in long-term and sustainable ways. They are, essentially, social problems.

In 1968, Garrett Hardin published an influential paper called “The Tragedy of the Commons” in the journal Science. He described a sequence of events: There are a group of herders that own a large pasture in common. If any one herder gains an extra animal, his profits increase. But with every additional animal, the pasture is degraded for everyone and they all lose – at least in the long-run. So what is the herder to do? Well, if there is no coordination and everyone is left to act in their own individual interest, they will all get additional animals and eventually ruin the pasture for the rest as well as for themselves. Tragic, indeed.

This is a sort of parable on how the free market fails us when the goods are public. A public good like street lighting, for instance, just wouldn’t get produced if all we had was the free market. The reasoning goes: If everyone pays their share of the lighting costs, I won’t have to. The lights will be on at night and I can walk safely, a content free rider. But, of course, if everyone thought this way, the project would never get off the ground. So, the free market, or private sector, is just incapable of producing these kinds of goods. But don’t worry. There is another, growing, sector capable of doing so. And it has done so according to Nancy Neamtan, CEO of the Chantier de l’economie sociale (Task Force on the Social Economy). The Chantier is a network overseeing the work of various projects in the Social Economy, the alternative to the private sector, as well as to the public sector of government-produced goods.

“Social economy refers to enterprises that produce goods and services like any other business but that are run on the basis of very different principles. Social economy enterprises are collectively owned (coops, or non-profits, or mutuals), are democratically controlled and respond to collective needs rather than generating profit for outside investors,” Neamtan says.

Outside investors are much like the herders. They just can’t help but ruin the pastures of cooperative enterprises with their narrow self-interest.

“For all these reasons, Social Economy enterprises can do things that neither the private sector nor the public sector can or will do. In rural communities in the 30's agricultural cooperatives helped save agriculture in communities in many parts of Canada. Today in rural communities Social Economy enterprises are responding to a variety of needs - maintaining local services (food coops., funeral coops, daycare, homecare for the elderly, etc.) and are being used by local communities to develop their economy and maintain control over local resources (eg ecotourism, cultural initiatives, alternative agriculture etc).” This approach would fit well in Saskatchewan. We have a number of rural communities facing an extinction of sorts, and leaving it up to the free market, in the form of private investors and businesses, would only speed the process up. Neamtan suggests the methods of Social Economy enterprises would work here as well as they have elsewhere.

We should remember that the Social Economy is not only critical of the private sector. The public sector, led by government, is also lacking in some places. Although government-led projects generally avoid the tragedy of the commons, by legislating taxes on everyone for the common good, they nevertheless continually miss spots. Some projects need to be led by the people on the ground – a grassroots endeavor – because they, better than a distant government, know how resources should be allocated.

“In other cases rural communities choose collective enterprises because they want to maintain control over their environment. For example, a big debate in Quebec presently is who should be developing renewable energy and, particularly, wind energy: the private sector that gives token returns to farmers to be able to use their land; the public sector through Hydro-Quebec; or the Social Economy through locally owned and managed wind energy coops that would reinvest profits back into the community? The jury is still out on that one.”

Continuing on the theme that the Social Economy solves certain problems even the public sector can’t, Neamtan says: “In the field of daycare, the majority of the Quebec daycare system which is universal and accessible (7$ a day) is delivered through parent-controlled non-profits. International studies show that the quality is better - quality is guaranteed when parents are in control, as it is their kids that benefit from the service. And government gets a better return on its investment because all dollars are invested in assuring quality care and none is skimmed off the top for private profit. Plus these daycares are able to adapt to local realities and local needs.”

Our environment is a shared good, and an obvious one at that. It is our metaphorical pasture, with literal pastures here and there. And, of course, the private sector cannot help but degrade it. What incentive does a company have to be environmentally-friendly when it gains all the profit of negligent waste disposal and shares the costs of a depleted environment with everyone else?

“Social economy enterprises are more able to integrate environmental concerns because they are not profit-driven. The social economy movement has worked closely with the environmental movement to try to assure that environmental concerns are integrated into all aspects of what we do. Many social economy enterprises have emerged in the environmental sector, particularly in the field of recycling, but more and more innovation is going on - for example, the new trend in eco-design where young designers are working with social economy enterprises to produce high fashion from recycled materials. Ecotourism which respects the environment is another field in which the social economy is beginning to flourish.”

The Social Economy also helps integrate people that have been, for various reasons, excluded from the workforce. The idea is that they are resources neglected by the free market just as much as the environment and public day cares.

“Many social economy enterprises have been created to integrate marginalized groups into the labour force, be they youth in difficulty, the handicapped, etc. Though these people are not considered 'productive' in a profit-driven labour market, they have a potential to be active participants in the economy and, through a non-profit structure, we have been able to allow thousands to become productive individuals.”

There are countless movements falling in the category of the Social Economy. They are not affiliated with the public sector, because they are democratic structures composed of regular people with specific concerns. And they are not with the private sector because the goals are emphatically non-profit. But despite the nobility of these various projects, there is a need for some organization to coordinate them all for maximum effect. This is the mandate of the organization Chantier that Neamtan heads.

“The Chantier de l'économie sociale is a network of networks whose mission is to promote and develop the social economy. Our membership and Board of Directors is made up of networks of collective enterprises (recycling businesses, daycare, housing coops. community radio etc); networks of community economic development or local development organizations from rural and urban communities and social movements that share our vision of the need to build a more democratic and equitable economy; the union movement; environmental movement; women's movement; community movement etc. By bringing together these various networks, we have been able to show the important role that the social economy plays in our communities, to build new collective tools such as investment funds dedicated to social economy, to gain strength as a movement and to become an important actor in debates over social and economic development in Quebec.”

We should hope as Canadians that this ethic of cooperation towards goals without a dollar sign continues to spread. We should also hope that more faith – the kind normally given to the private and the public sector – would be given the third route of the Social Economy. It seems very clear now that if many of our social goals are to be realized, we'll have to practice the kind of cooperation the Social Economy advocates.