By Edwar Reynaldo Arenas Rocha
When discussing the social economy it is necessary to explain one’s position. The theoretical field is clearly under construction and the concept has many names, such as the ‘third sector’.
The theoretical models used to define the social economy are economic-political models: based on Keynesian and monetarist capitalism; and on socialism with centrally planned provision. But is the social economy an economic or a political model? Theoretically it is a concept that has many meanings; in practice it consists of collective and individual experiences, traditionally called cooperatives, mutual societies and associations.
José Luis Monzón (1998) argues that the social economy is not a replacement of the liberal capitalist system of the economy and is not a by-product of the cyclical evolution of capitalism, and I give him credit for this. However, he says that it emerges as an additional institution of the economic system [one asks, ‘which economic system?’], different from the public sector and the capitalist sector, and it is structured as these are.
I think that the social economy is not one more institution of the capitalist economic system as argued by Monzón. Rather, the economy has always been social, but this feature of being social has been lost over time. This current loss of the ‘social’ aspect manifests itself in what is called individualism, or the service of the few: corporations, for example.
So the ‘social economy’ aims to recover this characteristic of sociability of the economy, with which it was born, i.e. one at the service of society. I would argue that it is the economy itself that needs to be recovered, with its fundamental nature of sociability, rather than the creation of another sector within the system (mainly capitalist), as I believe Monzón was referring to.
However, the capitalist economic model has a public sector and a private sector. Let us take an illustrative example; each nation has a Magna Carta or constitution called a social contract. The constitution in Peru changed in 1993. Since then, this Constitution clearly stipulates; “… private initiative is free. It is exercised in a social economy of the market . Under this regime, the State guides the development of the country and acts mainly in the areas of promotion of employment, health, education, security, public services and infrastructure ”
I have commented that the economic-capitalist political model has two variants: Keynesian and monetarist. The type introduced in Peru is monetarism, and this regulates all economic activities in the market.
A major deficiency in the analysis of the social economy is that it is not known exactly what the principles governing these two variants of capitalism are and what the principles governing the economic planning of socialism are. We do know that each economic model has political and economic principles. One of the principles governing the capitalist model is the private ownership of the means of production; and in socialist economic model planning it is the public ownership of the means of production.
There is a difficulty if in a nation’s constitution it is stipulated which economic model is accepted and therefore legitimised. Knowing that the monetarist variant is stipulated in the Peruvian Constitution we can state that it is the market that regulates all economic activity. It is a mistake to assert that the State should offer solutions to any failure of economic activity, when the State only guarantees actions as set forth in the Constitution. We would be falling into an interpretative error, since that would be demanding the intervention of the State, i.e. the Keynesian variant.
The monetarist variant of capitalism includes public and private activity, which is very different to affirming the principles stated previously regarding means of production.
Now the questions are: What principles was the economy born with? If the economy was always social, why is it being considered as a third sector and not as an economic model? If the economy was always social, what are we therefore talking about? Are we not trying to return to the principles of the social character of the economy? We are therefore conscious that this has been lost.
But we are adding principles: reciprocity, solidarity and primacy of persons, self-management and internal democracy. The social economy is based on different principles to the two economic models above. Empirical evidence shows that the social economy works with different socio-economic principles from the two models referred to. So are we not talking about a new economic model?
If so, wouldn’t there be a paradox within this new economic model that it interacts within the market and accepts a national currency which is heavily tied to the international currency market.
Or that some empirical evidence is demonstrating that some organisations considered part of the social economy do not guarantee that they operate under its principles. In Peru, there are or there may be many “social institutions” that have nothing associative, mutual or cooperative about them other than their name, which serves only as a facade for activities involving profit and advantage.
 Peruano. Egresado de la Carrera Profesional de Antropología por la Universidad Nacional de San Antonio Abad del Cusco. Miembro del proyecto “Economía Social y Aplicaciones en la Educación Superior” de la UNSAAC-Cusco.
 The emphasis is personal.
 Art. 58 Constitución Política del Perú de 1993.
Thank you to everyone who has completed our survey. So far we have responses from: Argentina, Colombia, East Timor, Guinea Bissau, Ireland, Mexico, Peru, Portugal, San Tome, Spain, United Kingdom!
mutual financial associations owned by their members;
informal groups dedicated to producing crafts;
social enterprises seeking to promote employability of young people;
associations for local development;
and many more.
If you belong to an association which exists for the good of the community, a cooperative which works to provide fair working conditions to its members or to the public, if you work in a social enterprise which is aiming to address a social/environmental issue in your community, we would love you to be part of this. Your experience will help to inform universities as they teach human-centred and sustainable ways of doing business. It will only take 10 minutes.
The survey is also available in Portuguese and Spanish:
The Social Economy in Higher Education project handbook will have a chapter on the importance of social capital to the social/solidarity economy. This article describes a women’s group in Kenya which is drawing on the bonds between a group of women to manage micro-finance in order to provide sustainable incomes to support their families and provide employment. This post is written by Mike Calvert, York St John University, UK, collaborator with the Social Economy in Higher Education project.
Readers of the blog may have read an earlier post (Dec ’13) in which I described the work of four women entrepreneurs in Nairobi. Recently, I had the good fortune to meet them again in Nairobi and visit two of the enterprises. It is clear that they are going from strength to strength. Having paid back all the money they were lent in June 2013 with interest by November, they decided to take out KES30,000 each and step up their investment. A further injection of capital enabled them to increase the size of their loans. They had requested a longer period to return the money (December – August) and this had been agreed.
In the earlier post, the women described the impact the micro-finance had had on their lives:
Update: what have they been up to?
All four women have benefitted from the investments they have made. Eunice Mama has been able to control her cash flow. She is able to source materials more confidently and gives work to her previous employees who carry out piece work. Susan has diversified from selling women’s clothes to selling men’s and children’s clothes, shoes and cosmetics. Her business is flourishing. Jacinta wanted to diversify in terms of what she could offer at her kiosk. As a result of the second injection of money she has been able to provide samosas, chapattis, chips and tea and, most importantly, she is employing her husband full-time. Previously, he was doing odd job work digging gardens, etc. She is now talking about buying a cow which is an ambitious aim but with a cow yielding 30 litres a day, she could sell a great deal of milk apart from putting it in the tea – Kenyans tend to put tea in their milk and sugar rather than the other way around as in the UK! Jacinta is much more confident and can now feed her children well. Alice, who is breeding chickens, has been able to buy a second brood of 600 chickens and when the current hens are no longer laying eggs, will have a new source of eggs. She is currently using a wholesaler to sell her eggs. She is also selling more chicken manure (14 bags up from 10).
What then are the next steps?
With a further injection of capital, the group can currently draw on at least KES50,000 from the new capital in addition to the money they are paying back as it becomes available. They have decided amongst themselves that they are going to save KES 1,000 (£7) per month in addition to making their monthly payment. This is an important shift in their thinking as they plan to save for the future. A further investor is possible.
They have decided also to open an M-pesa account. M-pesa is a way of transferring money electronically via the mobile phone. This is highly developed in Kenya and can even be used by Kenyans without a bank account. This will mean that they can make payments or receive new monies via the phone rather than face-to-face.
Finally, they also talked about allowing the money to be used like an overdraft facility for those who needed cash in the short term and would pay it all off in a month (at 5% interest). It is interesting to note that they have gone from first time investors to behaving like social bankers. They are certainly sharpening their business acumen.
A crucial decision is the extent to which they open the scheme up to others. They have now decided to offer a loan to another member of their core group (of 11 women) and to mentor that individual. This pilot will help them to understand the challenges of opening this up to a wider audience. There was reference in a previous blog to the issue of how much to draw as income and how much to invest. Their issue now is whether they should open a bank account and what interest their money would attract compared with what they can gain in terms of their own value-added work. They have decided to open an account that needs several signatories for withdrawal but they would rather re-invest money rather than see it sitting in a bank.
The group collectively want to move slowly but also have tasted the transformational impact of the investments to date and may be impatient. Our discussion touched on risk management and the need to ensure that they did not overreach themselves.
All four women and their mentor are showing that with a relatively modest level of help and close support and encouragement, they can produce impressive changes in their lives and businesses. It is early days but there are grounds for optimism and it is hoped that this model, however small, can benefit others.
Our next meeting will be in June 2014 when we will be able to visit the businesses and see for ourselves what is happening on the ground. Watch this space!
Following the 2008 economic crash, the need for innovative approaches to the economy has only grown larger. One such answer to that problem has been a strong resurgence in the use of “time banks,” a service for service exchange that skips the middle man of financial currency while building community in the process, according to a special report published by Al Jazeera America.
Time banks are organizations where individuals come together to offer services, traditionally within their immediate community. In return for providing a service, individuals earn “time credits” based on hours donated, which can be redeemed from any other service provider in the system. The exchange of money is avoided all together and each service is treated equally.
Since the crash, over 300 time banks have popped up around the United States alone, “located everywhere from Appalachia to Oakland and run by institutions ranging from art galleries to retirement centers to hospitals,” Al Jazeera reports.
See the article on timebanks on the social economy in higher education project website. The project aims to gain an in-depth understanding of the social economy system, such as social enterprise, not-for-profit business, credit unions, cooperatives, etc. in order to enhance the study and practice of this field in higher education.
Article in Spanish by Diana Meza, student of social communication at Universidad Pontificia Bolivariana, Colombia
Translated into English by Charles Hanks, UK, collaborator in the social economy in higher education project
Bucaramanga is a city where, paradoxically, over-construction is evident and yet there are more and more housing projects leaving fewer and fewer green spaces. Luckily for the inhabitants, however, there is a small group of people fighting to preserve the environment and for ecological education: Guan Permaculture Centre is an organisation which, without being officially part of the social economy, fully supports its aims.
Permaculture is a word few people know and a fewer still practise. It essentially consists of a sustainable system integrating housing and the natural landscape, saving materials extracted from the earth and, as a result, generating less waste.
The organisation stemmed from a concern about the constant harm humans inflict on the earth with toxins, chemicals, rubbish and other types of contamination that form part of our daily lives. One day, a group of friends decided, without ceremony, to live an eco-friendly life and to incorporate make that culture a habitual part of the people of Santander’s lives: one step at a time they formed the permaculture centre. The specific role that Guan plays in the region is to generate knowledge around bioconstruction so that people are aware of an economical, ecological and sustainable alternative living arrangement.
The people behind Guan have already been putting this into practice for two years, sharing their experience with others through workshops, run either by themselves or by international experts. The participants work together in a bioconstruction project and some of them end up joining the organisation as volunteers. It is important to note that there is no hierarchy at Guan: all the members take part collectively in decision-making and make up a network of sharing, be it materials or labour – they are in many ways more like a family than an organisation.
In a city where it seems titles and ownership are all-important and social inequality is evident, it is interesting to see such groups emerging, with ideas and projects that leave status and economic values to one side to make way for collective benefit which, though few of us acknowledge the fact, we all have a responsibility to achieve. It seems to me that this innovative bioconstruction project contributes to ecological development: the organisation is breaking with modern conventions and rediscovering a healthy lifestyle based on environmental conscience, that which our Guane ancestors themselves practised*; it is breaking with the consensus that in order to make a pizza or some biscuits you need a cooker or a sophisticated oven, reminding us that a clay oven performs the same function.
Guan Permaculture Centre exists to provide ecological education, convey messages about the responsible care we must take of the planet, nurture environmental conscience, and through this generate social impact in the sector. It is a non-profit organisation which, with a great deal of effort and love, is kept going by selling artisanal goods made from recycled materials, and various foods such as ready-to-bake dough, pesto, sauces, organic bread, as well as seeds, fertiliser and plants. There is a small fee for workshops which is used to pay the workshop leaders and to cover the students’ meals during their stay at the Centre.
*The Guanes were a South American people that lived mainly in the area of Santander and north of Boyacá, both modern departments of Colombia. They were farmers cultivating cotton, pineapple and other crops, and skilled artisans working in cotton textiles
Article in Spanish by Paola Andrea Cogollo, student of social communication, Universidad Pontificia Bolivariana, Colombia
Translated into English by Charles Hanks, UK, collaborator in the social economy in higher education project
What would happen if a more people were to contribute to the quality of other people’s lives, to unite to achieve something impossible for others?
This is how the Hypatia Corporation came into being, created by a group of women deciding to work collectively for their own interests and those of their families. In keeping with its name, Hypatia was formed by women who are today bringing their knowledge to the group and seeking a modern vision of the role of women in society, just as Hypatia of Alexandria did in the 4th century.
By developing different activities with marginalised groups and families, the Corporation tries to reconstruct and repair damage caused by both conflict and social discrimination, promoting the defence of human rights, especially those of women and ethnic groups.
Succeeding in this goal has been complicated for Hypatia, however, since much of their work goes unseen, due to a lack of support from other organisations.
The training, workshops, and other assistance and activities carried out by the Corporation have provided communities with a more complete support programme, not only a training space but what has become a space for mutual growth.
And Hypatia has managed to demonstrate its work by constantly making use of ICT, through its website and social networks such as Facebook and Twitter, which have made the public aware of their development and the results of their experiences within different communities; this is a vital communication tool as it helps the group financially and gives them more visibility in the public sphere.
The group of people behind the whole process must not be forgotten: 13 people who fight daily for a fairer, more humanitarian country, people with a broad social conscience who dedicate a large part of their lives and a great deal of their time to a corporation that pays them, yes, but also rewards them with smiles, hugs and satisfaction from those who receive their help.
It is, for me, gratifying to know that in a country where there is so much violence, big actions like these exist – however small some people may consider them – making this a simpler world for the thousands of families which benefit from the programmes offered by the Corporation. Evidence once again that to be happy, we don’t have to change the whole world.
If you work in a UK-based social enterprise (such as a social business, a community enterprise company, a cooperative, etc), could you spend 10 minutes completing a survey from York St John University? Click here for the survey.
Answers will inform a handbook about teaching and practice of social enterprise in higher education. It is part of an international project which seeks to understand models of business for social purpose by learning from the people who make it happen.
At the end of the survey, there is an opportunity to put yourself forward for an in-depth interview or collaborate with the project in other ways.
If you are a non-UK social enterprise, we will launch a separate survey (which doesn’t have UK-specific aspects) shortly.
Article in Spanish by Laura Pradilla, student at Universidad Pontificia Bolivariana, Colombia.
Translated into English by Charles Hanks, Collaborator in the Social Economy in Higher Education project
“How happy farmers would be if only they knew they were happy!” Virgil
For healthy land, a decent job and a better future: the Corporación Buen Ambiente (Good Environment Corporation, ‘Corambiente’) is backing the development of the Santander region’s farmers and carrying out food security proposals, starting with the recovery and improvement of organisational processes in farming communities, especially those displaced because of the armed conflict.
Corambiente carries out its work in different areas such as: farming for personal consumption; generating income; improving access to drinking water; supporting the creation and strengthening of community organisations, principally those for women and farm producers; and political lobbying to ensure that food remains a topic at the heart of local, regional and national politics.
Corambiente has been working for around nine years with the farmers of Santander, for which it has gained recognition in the promotion of good environmental practice, educational processes and the commercialisation of organic products offered directly onto the market by farming communities. For its work helping the rural population, Corambiente has in its turn received support from national and international bodies such as the Norwegian Refugee Council, the Swiss Agency for Development and Cooperation and the International Organisation for Migration.
Finally, Corambiente continues to implement its work and development expertise through participatory processes characteristic of the assistance it offers to rural communities, and as such the organisation is helping to secure a prosperous life for present and future generations.
Article in Spanish by Paula Andrea Serrano Gélvez, student of Social Communication, Universidad Pontifícia Bolivariana, Columbia
Translated into English by Charles Hanks, collaborator in the social economy project
The sugar cane (Saccharum officinarum L) “is a giant tropical grass, related to the sorghum and to maize, in the stem of which forms a liquid rich in sucrose, the compound which when extracted and crystallised in the sugar factory is turned into sugar. Sucrose is created by the cane thanks to the energy taken from the sun during photosynthesis”. Although it is not originally a Colombian plant (it comes from South East Asia) the sugar cane has been one of the most important economic sources for this country for many years.
Various activities have developed around the farming of this plant, for example the artisanal production of panela, a type of brown sugar, which is “obtained through the extraction and evaporation of sugar cane juices, and manufactured in what are called panelero sugar mills”. This trade is traditional in various parts of the country, such as Piedecuesta (Santander), where the majority of the work of the Coopanelas cooperative takes place. Part of the third economic sector, the organisation is dedicated to the commercialisation of its members’ products, all produced from sugar cane cultivation, such as panela.
Since 28th November 1939, Coopanelas has helped its members, the majority of them land-owners and farmers, to sell their products at a fair price, as well as offering advice, assistance with crop-growing and sometimes even credits to enhance their economic activity.
Throughout this time the cooperative has not only offered support in the ways mentioned above, but has also educated others on topics such as the cooperative movement, inspiring its members with its key values: solidarity, comradeship and above all a respect for the rules.
According to Luis Enrique Figueroa, Coopanelas “was born, like all good things, of ambition and anxiety. Tax on panela was valued at very little – a laughable price in fact – which forced worried farmers to seek union and solidarity, credo of the cooperative movement, so as to get out of their predicament. And it has continued like this for so many years, bringing together individualist temperaments and unfriendly personal desires – a common trait of farmers by the way – and achieving the miracle, so to speak, of becoming an ‘interpreter’ for the land-owner, the harvester, even the rural worker who amidst the smoke of the sugar mill, dreams of a fairer future”.
Despite so many years in operation, the outlook for Coopanelas does not look too encouraging; much of the farmland has been urbanised and as a result production has reduced considerably.
For this reason, among others, the cooperative has considered seeking other fields of action, for example tourism, whereby people can witness the transformation of the sugar cane as well as enjoying a night of tranquility in one of the farm houses. The aim of all this is to preserve the work of the cooperative and perhaps establish themselves as a heritage site for the region, where the work of many generations comes together around the sugar cane.
 PAVA CAPACHO, Germán. PIEDECUESTA PROYECCIÓN Y POTENCIAL TURÍSTICO [on line]. <http://coopanelas.com/wp-content/uploads/2013/05/proyeccion_turistica1.pdf> [cited 27th October2013, translation C. Hanks]
In November the Erasmus Mundus social economy project, led by York St John University, UK, was highly commended the UK Times Higher Education International Collaboration of the Year 2013 an award that ‘recognises exceptional projects carried out jointly between a UK institution and one or more international partners’.
The project is international in its scope (see partners and associate partners/supporters) and aims to gain insight into the values and belief systems that people working in the social economy have in different regions of the world, and the way in which this motivation is turned into action with a social purpose. It aims to make this knowledge accessible and practical within higher education. It has international collaboration, the value of learning from each other and of creating knowledge together, as its lifeblood.
Over 30 Universities and NGOs worldwide have become Associate Partners of the project and over 600 people have signed up as friends of the project across the globe. Looking ahead, we want to attract more universities worldwide to study social enterprise in their regions to gain a better understanding of how the social economy impacts on people’s lives and communities. We are also seeking to understand how universities teach social enterprise and promote it on campus.
The most inspiring thing about being part of this project is the contact with people from all over the world who are motivated by the its aims and have been prepared to put many hours and days of work in to help move things forward, who have written pieces (see this blog), sent interesting articles and who have given a word of encouragement when it’s been most welcome.
Getting this far has been a truly collaborative effort.