Cooperatives and Social Solidarity Economy
Social Economy
Social Economy refers to enterprises and organizations (cooperatives, mutual benefit societies, associations, foundations and social enterprises) which produce goods, services and knowledge that meet the needs of the community they serve, through the pursuit of specific social and environmental objectives and the fostering of solidarity.
Social Economy integrates those entities that do not belong to the public sector, but to the private sector, which have specific objectives that identify them. Thus, the main core of social economy is integrated by companies producing goods and services (industrial, commercial, financial, agricultural, insurance, etc.), as well as by private non-profit entities, whose services are financed through fees from their members and are supplied according to social criteria.
In this context it is important to note that:
Social economy companies, in terms of their production processes, can have a similar behavior with that of other companies in the same sector.
As companies operating in the market, they aim to optimize their benefits and decrease their costs, which is why the social economy should not be confused with companies from whose activities no benefits are produced.
Social economy companies require capital (own and external) to finance their production process, and in this they are not different from other companies.
The characteristics that identify companies in the social economy are:
The distribution of benefits is not directly linked to capital contributions, but according to the level of activity maintained with the company.
Decision making is linked directly to members, not to capital, according to the principle of one person one vote.
The values of the social economy are defined as follows:
Primacy of man and corporate purpose over capital. In this sense they are called companies of people, without this freedom being influenced by any type of discrimination.
Voluntary and open membership. It is what has always been called freedom to enter or exit the company.
Democratic control by its members stemming from the corresponding corporate bodies.
Interests of members and users coincide with the general public interest.
Defense and application of the principle of solidarity and responsibility.
Autonomy and independence of management from the public powers.
Application of surpluses to the corporate purpose through reinvestment or distribution, according to the wishes of its members, for job creation, activities, new companies, return on invested capital, service to members, sociocultural activities, etc. In other words, no one gets rich individually, but the result is used for the benefit of the community.
In addition to the aforementioned, other characteristics of the social economy can be summarized as follows:
It is a sector that, due to its origins and management mechanisms, differs from both the classical capitalist economy and the public or state economy, but it is undoubtedly part of the private economy.
It substitutes the private interest for the social interest, that is, within its business logic it substitutes the capitalist benefit for the social benefit.
Its entities are always companies of persons, with the sole purpose of helping its members to solve the problems caused by economic life and are structured as companies, with the appropriate techniques for it.
In no case are they societies for the defense of the individual against the economic fact, but rather a better channel to fully face the economic reality, without the prominence of other strange elements.
Its actors fully address and resolve all the purposes of human activity, which can be from the purely economic to leisure or culture.
Of the extensive and varied typology of companies of the social and solidarity economy that exist, we can mention the following: cooperatives, mutual benefit societies, employee funds, savings banks, associated work companies, community companies, self-managed companies, associations and foundations.
Cooperatives
A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise.
Cooperative values
Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others.
Cooperative Principles
The cooperative principles are guidelines by which cooperatives put their values into practice.
1. Voluntary and Open Membership
Cooperatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination.
2. Democratic Member Control
Cooperatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and cooperatives at other levels are also organised in a democratic manner.
3. Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
4. Autonomy and Independence
Cooperatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
5. Education, Training, and Information
Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public - particularly young people and opinion leaders - about the nature and benefits of co-operation.
6. Cooperation among Cooperatives
Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures.
7. Concern for Community
Cooperatives work for the sustainable development of their communities through policies approved by their members.
Main data on Cooperatives
According to the International Cooperative Alliance, there are about 3 million cooperatives worldwide with 1 billion members.
The World Cooperative Monitor shows that the top 300 cooperatives and mutuals report a total turnover of over two trillion USD, based on 2017 financial data (www.monitor.coop)
Employment in or within the scope of cooperatives concerns at least 279.4 million people across the globe, in other words 9.46% of the world’s employed population, according to a report published by the International Organization of Industry and Service Cooperatives - CICOPA.
Mutuals
Mutuals are private entities grouping people (natural or legal people), whose interests overcome financial interests of the organisation itself. Mutuals are solidarity-based organisations and their main purpose in general is to cover risks, or to provide services, connected to human life.
Mutuals are not-for-profit organisations, whose financial surpluses are usually reinvested in the mutual activities themselves or used for social support activities in the interest of people in need. Thus, the primary purpose of a mutual is to satisfy the common needs of its members.
The governance of mutuals is democratic. In general, each member has one vote and membership is open to all individuals that satisfy the requirements of membership.
The principle of solidarity is important for members and is often enshrined in law.
For more information:
Cooperatives Unit of the International Labour Organization
Intercontinental network for the promotion of social solidarity economy
International Association of Mutual Benefit Societies
International Centre of Research and Information on the Public, Social and Cooperative Economy
International Cooperative Alliance
UN Interagency Task Force on the Social and Solidarity Economy