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A billion people can’t be wrong 4 October 2012

Posted by cooperatoby in cooperative, social economy, Social enterprise.
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Mutual advantage is a comparative advantage

The EESC’s conference on The Social Economy and 2020 on 3rd October 2012 started with an interesting economics lesson from Professor Luigino Bruni of Milan-Bicocca University. The social economy, he said, produces economic value because it is based on the principle of mutual advantage. This he likened to economist David Ricardo’s concept of comparative advantage. This posits that trade is beneficial to both parties when their costs of producing various goods have different relations to each other – not only when their cost is cheaper than their trading partner’s. So even when one party can produce everything cheaper (China?), it is still good for it to trade with others. Prof. Bruni transferred the reasoning to work integration. If we put unemployed people back to work, then everybody in society benefits. Capitalism is based on self-interest, but by contrast the strength of the social economy is that all the stakeholders benefit: it serves the general good. All the recent social innovations such as microcredit, fair trade and social co-operatives are built on this principle. Without this logic of mutual advantage, it becomes not entrepreneurship but ‘assistentialism’ – it encourages dependency but doesn’t really improve anything.

Don’t let the wolf into the sheepfold!

This excursion into theory also provoked a short bout of calling a spade a spade, when Professor José Luís Monzón, head of CIRIEC International, presented its new study The Social Economy in the EU. As rigorous academics do, he called for a single definition of what the social economy is. CIRIEC’s formal definition fills the screen, but it turns out that reduced to its essentials it basically means ‘not capitalist’. But did he mean this in a technical or a popular way? He pointed out with the aid of a simple Venn diagram that while ‘social enterprises’ in the continental definition are inside the ‘social economy’, ‘social enterprises’ in the Anglo-Saxon conception are outside it. And this could be dangerous, as financial investors’ interests should not be allowed to predominate. “Ne laissons pas le loup dans la bergerie”, commented Conny Reuter, president of the Social Platform. Haroon Saad of LUDEN expanded on this to ask whether the social economy was not in fact a fundamental critique of the economic system: “We should not depoliticise it – Europe 2020 is bust.” But Philippe Huchet, President of AIM representing health mutuals mollified matters by saying no, it was just about consumer choice. Prof. Monzón summed up by saying that because the social economy not only creates wealth but distributes it more equally, this legitimises public policies to support it. It combines efficiency with fairness.

A co-operative seat at the G20

The pragmatic consensus seems to be that we should focus on the ‘real economy’, not on rehashing definitional arguments. And in this regard CIRIEC’s new study, which updates its 2006 predecessor to cover 29 countries, is a cause for celebration, Rafael Chaves showed. The social economy employs 14 million people in the EU, which makes up 6.5% of total paid employment. What’s more, it is growing in this crisis: between 2002-03 and 2009-10 it has grown by 27% (in Malta it has grown by 604%!). In the two years from 2008 to 2010, employment in Italy’s 106 largest social co-operatives rose by 11% from 75,800 to 84,200. And in those countries where the crisis is hitting hardest, the social economy is proving itself resilient: in the last four years Spain’s employment has fallen by 19%, but that in co-operatives by only 9%. Dame Pauline Green backed this up by pointing out that the co-operative family worldwide involves no fewer than a billion members. “If you add up the turnover of just the largest 300 co-operatives, it’s equivalent to the 9th largest country in the world. Co-operatives should have their own seat at the G20!”

Conclusions

The conclusions of the conference insist on the importance of social economy values, regretting that the Commission’s Social Business Initiative is sowing confusion through loose terminology, and that private businesses are claiming to be social enterprises.

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