Social economy is an economic system with a focus on the collective wellbeing of society, and involves the interaction between the state, market, and civil society. It is a form of economic activity which puts people's needs and aspirations at the centre of the economy, and encourages the participation of citizens and civil society organisations in the development of the economy.
The main elements of the social economy can be summarised as follows:
- Social solidarity: This involves the establishment of social relationships of solidarity among individuals, groups, and organisations. It is based on principles of reciprocity, mutual aid, and solidarity, and encourages collective action and social responsibility.
- Social justice: Social justice is concerned with providing equal access to resources and opportunities, as well as ensuring the equitable distribution of resources and opportunities throughout society.
- Sustainable development: This involves promoting economic, social, and environmental sustainability, as well as promoting the efficient use of resources and the conservation of the environment.
- Democratic governance: This involves promoting participatory decision-making and providing citizens with the opportunity to participate in the political process.
Example of Social economy
The Mondragon Corporation is an example of a successful social economy. It is a Spanish federation of worker cooperatives founded in 1956, and is the largest business group in the Basque Country. It has over 80,000 employees and operates in sectors such as finance, retail, and manufacturing. The Mondragon Corporation has adopted a model of social economy, where workers are owners and have the right to participate in the decisions that affect their lives. This model is based on principles of democratic governance and economic democracy, as well as the sharing of profits and the promotion of social justice. In addition, the Mondragon Corporation promotes the development of local communities through job creation and the development of education and training.
Formula of Social economy
SE = (State + Market + Civil Society) * (Solidarity + Justice + Sustainable Development + Democratic Governance)
The formula of social economy states that social economy is the result of the interaction between the state, market, and civil society, multiplied by the factors of social solidarity, justice, sustainable development, and democratic governance. This formula serves to illustrate the importance of the state, market, civil society, as well as the principles of social solidarity, justice, sustainability, and democracy in creating a social economy.
When to use Social economy
Social economy is most applicable in situations where traditional market-based approaches have been ineffective in achieving desired social outcomes. It can be used in a wide range of areas, such as job creation, poverty reduction, access to healthcare, and the provision of essential services.
For example, social economy initiatives can be used to create jobs in areas where traditional markets have not been able to generate employment. These initiatives can involve the establishment of cooperatives, social enterprises, and other types of organisations which are focused on providing employment opportunities and creating value for the local community.
Social economy can also be used to reduce poverty by providing access to essential services, such as healthcare and education. It can also be used to provide access to credit and other financial services, as well as to facilitate investment in poverty reduction initiatives.
Types of Social economy
There are several different types of social economy organisations which are based on different models and principles. These include:
- Cooperatives: These are businesses which are owned and operated by their members, and which share profits equally among members.
- Social enterprises: These are organisations which are run for the benefit of society, and which reinvest profits into social objectives.
- Mutual organisations: These are organisations which are owned and operated by their members, and which provide services and products to their members.
- Non-profit organisations: These are organisations which are run for the benefit of society, and which reinvest any profits into the organisation to further their mission.
Steps of Social economy
The social economy is a complex concept and there are many different steps and strategies involved in its implementation. Generally, the steps are broken down into four main categories:
- Strategic Planning: This involves establishing a shared understanding of the purpose and goals of the social economy. It also involves identifying the stakeholders, assessing the needs of the community, and developing a strategy for achieving the desired outcomes.
- Implementation: This involves putting the strategy into action, including developing and delivering the necessary services and programmes. It also involves monitoring and evaluating the progress of the social economy initiatives.
- Financing: This involves securing the necessary resources and financing for the social economy initiatives. It also involves developing and implementing financial and administrative systems to ensure that the programmes are successful.
- Policy Development: This involves developing policies and legislation to support the social economy. It also involves ensuring that the policies are implemented and enforced.
Advantages of Social economy
The main advantages of social economy include:
- Improved wellbeing: Social economy initiatives are designed to bring about improved wellbeing for people, communities, and the environment. These initiatives can create jobs and economic opportunities, as well as providing access to social services and support.
- Increased participation: Social economy initiatives encourage the participation of citizens in the economy and in decision-making processes. This can increase the sense of ownership and involvement in the economy, and help to create a sense of community and shared ownership.
- Sustainable development: Social economy initiatives promote sustainable development and the efficient use of resources. They can also help to reduce poverty, inequality, and environmental degradation.
Limitations of Social economy
Despite its many benefits, social economy has some limitations. These include:
- Inadequate access to resources: Social economy organisations may lack the resources needed to effectively implement their plans and achieve their objectives.
- Difficulty in measuring impact: It can be difficult to measure the impact of social economy initiatives, as the outcomes are often qualitative rather than quantitative.
- Lack of recognition: Social economy organisations and initiatives are often not recognised or supported by policy makers and the wider public.
- Economic instability: Social economy organisations may be vulnerable to economic instability and external shocks, such as changes in government policies or fluctuations in the market.
The social economy can be related to other approaches, such as the social and solidarity economy, the triple bottom line, and the sharing economy.
- The social and solidarity economy (SSE) is an approach that seeks to promote economic, social, and environmental sustainability while ensuring the equitable distribution of resources and opportunities. It is based on principles of solidarity, cooperation, and social justice, and encourages collective action and social responsibility.
- The triple bottom line is an approach to business which looks at the economic, social, and environmental impacts of decisions, with the aim of creating a more sustainable economy.
- The sharing economy is an economic system which involves the sharing of goods and services among individuals, groups, and organisations. It encourages the efficient use of resources and promotes collaborative consumption.
- Amin, A., Cameron, A., & Hudson, R. (2002). Placing the social economy. Routledge.
- Monzón, J. L., & Chaves, R. (2012). The social economy in the European Union. Brussels: European Economic and Social Committee.