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CIRIEC in Antwerp – more theory than policy 6 November 2013

Posted by cooperatoby in EU, social economy, Social enterprise.
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CIMG1196-7 BoerentorenSocial Economy on the Move, the CIRIEC conference in Antwerp two weeks ago, was the first academic conference on the social economy that I’ve ever been to. Given that it was so close I couldn’t really say no – especially with €10 ‘Web Deal’ train fares on offer.
But I confess I was a little disappointed. The organisers had given space to as many promising young researchers as they could – the 48 workshop sessions each dealt with between 3 and five papers – and this meant that they each had very little time to play with. Anxious to prove their academic credentials, they tended to use most of their 15 minutes of fame to set out the theoretical model they were applying, and had no time to talk about the real world to which it referred. So not only was there no way to verify the truth of their assumptions and deductions, but I learnt very little about the state of the social economy in the wide world.
Of course the corridors and Oxford-style quadrangle of the Hof van Liere – you should not ignore the mediaeval heart of Antwerp if you have the chance to visit – did provide a place to bump into old friends and colleagues.
Thus, the main value I got from the event was the plenary sessions, held in the Boerentoren or ‘Farmer’s Tower’ – a miniature Empire State Building which was Europe’s first skyscraper, and has now passed from CERA to KBC, my bank.

Positive social value, but market regulation

On the bright side, the Belgian state certainly sees the value of the social economy. Yasmine Kherbache from the cabinet of Prime Minister Elio di Rupo reassured us that it was a misconception that policy to support the social economy has more costs than revenue – it’s just that the benefits are hard to measure in strict economic terms. She also stressed that the social economy’s role is growing: the present economic model cannot last till the next generation as it cannot cope with the issues of demographic change and the environment. “We can only progress if everyone can follow”, she said. She sees the sector’s growing relevance, noting how second-hand shops (kringloopwinkels) have been transformed from being the preserve of the poor into a resource for sustainability for everyone.
Getting down to brass tacks, she went on to justify the controversial Flemish maatwerkregeling (‘made-to-measure regulation’) which reallocates work integration subsidies according to each individual’s distance from the labour market. This reform has caused concern among WISEs in Flanders, as it makes their budget unpredictable and their financial planning very difficult. Not only that, but it puts social and conventional enterprises on the same footing. The subsidy is portable, and the worker carries it in a ‘rucksack’ if he or she changes jobs (although apparently the social economy and economic affairs ‘rucksacks’ will be different beasts, which might limit mobility).

Trust in globalised markets

Avner ben Ner from the University of Minnesota looked at how the globalisation of the supply chain is affecting the social economy.
Globalisation leads to long anonymous supply chains with asymmetric information and social distance. Businesses have greater opportunities to take advantage of this information asymmetry, so the self-regulation which the social economy practices is a valuable asset. It was asymmetric information (in the form of adulterated flour) that led the Rochdale Pioneers to set up shop in 1844. Long supply chains make quality inspection prohibitively expensive, and government regulation is out of fashion. So by quasi-regulating themselves, social economy organisations reduce the damage that globalisation causes.
His conclusions are that the social economy should focus its efforts where success is most likely: on food, on collaborative marketing, on new ways of raising capital (e.g. crowdfunding) and on new technologies.

Co-ops poised to benefit from global trends

According to Ruben Monbaillieu from MacKinsey, co-operatives’ credibility with their members means that are in a good position to benefit from four trends:

  • the rebalancing of the world economy from developed to developing countries
  • the rapidly raising old-age dependency ratio
  • ‘pricing the planet’ – factoring environmental costs into prices
  • the ‘market state’ – governments becoming active in the market

Aspects of management they need to improve are measuring their impacts and the speed with which they react to change.

The social economy as a component of social justice

Philippe van Parijs of UCL in Louvain-la-Neuve situated the social economy in a philosophical perspective. He believes that social justice has there dimensions: equality of opportunity, freedom and efficiency:

  • Equal opportunity means equal concern for the interests of all members of society – but personal responsibility means that it is up to each individual to make the most of the opportunities he or she has;
  • Freedom implies a liberal, pluralist perspective, that respects everybody’s right to seek their own conception of the good life;
  • However efficiency must also be considered: if equality leads to worst outcomes for all members of society, then we should allow injustice.

We need the market to ensure efficiency. The state’s role is to regulate the market, redistribute income and provide services such as education, health, cash transfers, justice and tax. So do we need a third sector?
Luckily the answer is “yes”, because of two characteristics:

  • its ‘marriage of trust and flexibility’
  • its facility for ‘legitimate self-exploitation’ which benefits the public

Non-profit private sector organisations are particularly needed where there is asymmetric information in markets.

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