SRDC Working Paper Series A Review of the Theory and Practice of Social Economy / Économie Sociale in Canada - PDF

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SRDC Working Paper Series A Review of the Theory and Practice of Social Economy / Économie Sociale in Canada by William A. Ninacs with assistance from Michael Toye August 2002 The Social Research

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SRDC Working Paper Series A Review of the Theory and Practice of Social Economy / Économie Sociale in Canada by William A. Ninacs with assistance from Michael Toye August 2002 The Social Research and Demonstration Corporation is a non-profit organization and registered charity with offices in Ottawa, Vancouver, and Sydney, Nova Scotia. SRDC was created specifically to develop, field test, and rigorously evaluate social programs. SRDC s two-part mission is to help policy-makers and practitioners identify social policies and programs that improve the well-being of all Canadians, with a special concern for the effects on the disadvantaged, and to raise the standards of evidence that are used in assessing social policies. As an intermediary organization, SRDC attempts to bridge the worlds of academic researchers, government policy-makers, and on-the-ground program operators. Providing a vehicle for the development and management of complex demonstration projects, SRDC seeks to work in close partnership with provinces, the federal government, local programs, and private philanthropies. Copyright 2002 by the Social Research and Demonstration Corporation SRDC Working Paper Series A Review of the Theory and Practice of Social Economy / Économie Sociale in Canada William A. Ninacs Coopérative de consultation en développement La Clé With assistance from Michael Toye August 2002 SOCIAL RESEARCH AND DEMONSTRATION CORPORATION The Community Employment Innovation Project (CEIP) is sponsored by Human Resources Development Canada (HRDC) and the Nova Scotia Department of Community Services (NS-DCS). This paper was produced for the Social Research and Demonstration Corporation (SRDC). The opinions expressed herein are the author s and do not necessarily reflect those of SRDC, HRDC, or NS-DCS. In this SRDC working paper, commissioned in the context of CEIP, Bill Ninacs, an independent consultant and observer of social trends, reflects on the available literature dealing with the social economy in an effort to provide us with an understanding of its characteristics, in particular what is termed the new social economy. Commissioned by SRDC, Ninacs work assists us in understanding both the Quebec model of community economic development and models in use in other parts of Canada. Future working papers will examine European models of social economy. CEIP is a multi-year demonstration research project that is trying out a new way to use Employment Insurance (EI) or income assistance (IA) payments to increase the employment prospects of unemployed individuals and to strengthen communities. CEIP grew out of the belief that new government initiatives to improve the economic well-being of individuals in disadvantaged communities must support local efforts to create a sustainable economy. In short, CEIP has been designed to respond to community needs while simultaneously providing needed employment. At the outset, a series of public meetings were held in communities in the Cape Breton Regional Municipality (CBRM) in Nova Scotia. All of the communities met the following criteria: they had an established community or neighbourhood identity, they had a moderately sized population, and they were experiencing a period of economic decline. At these meetings the purposes of CEIP were explained to interested community members. To manage community involvement in CEIP, each community was required to form a citizen board, prepare a constitution for the board and a strategic plan for the involvement of CEIP participants, hold a public meeting to approve them, and elect the first board members. Of the six communities in which boards were initially formed, five are taking part in CEIP. The economy of Cape Breton has historically been highly dependent on resource-based activities. However, the industrial heart of the CBRM has been undergoing a process of deindustrialization associated with the decline of the coal, steel, and fishing industries. Past efforts to diversify the economy using traditional development approaches have had limited success, and the regional unemployment rate has remained high relative to provincial and national rates. Cape Breton is particularly well positioned for CEIP because of the island s long history of grassroots community development. This tradition of local activism and the availability of expertise and organizational infrastructure are helping in the implementation of CEIP. Individuals who meet CEIP s eligibility criteria are chosen at random from administrative files and invited to attend an information session. Those who wish to volunteer for the project are asked to sign a consent form. In a lottery-like process known as random assignment, half of those who volunteer are offered the opportunity to take part in CEIP s program group, -ii- while the remainder are assigned to a control group. A total of 1,522 volunteers from the CBRM have been recruited over a two-year period. Those participants who are assigned to the CEIP program group become eligible for community-based employment for up to three years. While participating they receive a weekly community wage in lieu of EI or IA benefits. At present, this wage is set at $290 a week, and will be increased in line with any increases that occur in the provincial minimum wage. The earnings from this community employment are taxable, insurable for EI, and eligible for Canada Pension Plan coverage. In addition, participants accrue entitlements to vacation and sick leave and can enrol in a health insurance plan. Program participants are free to leave CEIP for other employment if they wish. If that employment ends at any time during the three-year eligibility period, they can return to CEIP. Individuals assigned to the control group are not eligible to take part in CEIP s community-based projects, but their involvement is crucial. It is only by comparing the experiences of the control group with those of the CEIP program group that researchers can know for certain what effects CEIP had on participants. Control group members continue to have access to all other programs and services for which they would otherwise be eligible. In addition to giving individuals the opportunity to gain valuable work experiences and learn new skills, CEIP encourages community capacity building. CEIP differs from many earlier programs in the amount of control communities have over the selection and implementation of projects. Each community has established a volunteer board to mobilize support and to plan and set priorities for the kinds of employment projects the community wants to see undertaken. The boards are responsible for reviewing and approving project proposals put forth by a variety of sponsoring organizations within the CBRM including non-profits, local businesses, and individuals. Each sponsor must put together the resources to develop and run a community project employing one or more CEIP participants. Human Resources Development Canada and Nova Scotia s Department of Community Services are the funding agencies for CEIP and set the overall policy research agenda for the project. Most of the funds will be used to make payments to individual participants, with the remainder to be used to deliver the program, to provide support to community boards, and for data collection, research, and information dissemination. The Social Research and Demonstration Corporation (SRDC), a not-for-profit social policy research organization, provides general management for the entire project, including playing the lead role in the design, implementation, and evaluation of CEIP. SRDC will produce reports, disseminate the research findings, and serve as the primary contact for anyone wanting to know more about this unique demonstration research project. The administrative office of CEIP, located in Sydney, is staffed by four local organizations that are jointly supporting this initiative. The Cape Breton Family YMCA is acting as the manager of the CEIP Sydney office and oversees the activities of participants including the initial enrolment process, managing participant files, and delivering participant training activities. The Breton Business Center is responsible for managing the project assignments of CEIP workers. Breton Rehab Services is conducting employability and skill assessments to assist in matching participants to work assignments. The Atlantic Coastal Action Program Cape Breton is managing a portfolio of transitional work opportunities -iii- designed to provide participants with meaningful activities while they are between community-based project assignments. In addition to the organizations involved in the administration of CEIP, a number of other partners are playing roles in the project s research and evaluation. Statistics Canada is responsible for assisting in the selection of Employment Insurance and income assistance participants, implementing a survey of participants, and preparing the data for research; the Institute for Social Research, York University, is responsible for assisting in planning and implementing a community survey, as well as preparing the data for research; SRDC s Sydney office employs a team of local researchers who are collecting qualitative information and community indicators throughout the life of the project and will produce research reports on aspects of CEIP; EDS Canada Inc. is responsible for designing and maintaining a system to meet CEIP s payroll and management information system requirements. CEIP is a long-term project; design work and consultation with communities began in 1998; participant enrolment began in July 2000 and continued to July 2002; and community projects will last until July Regular reports on CEIP s progress will be produced as the project unfolds. As well, in order to assess CEIP s longer-term effects, researchers will collect data from administrative records and from follow-up surveys once the community projects have ended. As a result, the final chapters of the CEIP story will not be written until Allan Moscovitch Director of Community Studies Social Research and Demonstration Corporation July iv- Table of Contents Introduction 1 Theoretical Issues: The Social Economy as a Field of Study 3 Historical Overview 3 The Old Social Economy 4 The New Social Economy 5 Organizations of the Social Economy 6 Conceptual Ambiguities 9 The Third, Non-profit, and Voluntary Sector 9 Social Enterprise and Social Entrepreneurship 10 Social Capital 11 Corporate Social Responsibility 12 Political Perspective 13 Empirical Issues: The Social Economy as a Field of Practice 15 Quebec 15 Context: The Quebec Model of Development 15 The Quebec Model of the Social Economy 17 Canada (Outside of Quebec) 21 Elsewhere in the World 22 Practice Issues 25 The Role of the Community and Community Economic Development 25 The Poverty Management Ghetto 26 Feminist Critiques 26 Discussion: Policy Implications 29 Potential Benefits 29 Enabling Factors 32 References 35 Figure Page 1 The Social Economy Quadrilateral 7 2 The Social Enterprise Spectrum 10 -v- Introduction Interest in the social economy is rarely neutral. Philosophers, scholars, and policy-makers often seek new ways of redistributing resources whenever social tensions are exacerbated to the point where the fabric of society becomes dishevelled and risks being torn apart. This paper is written in such a context. Indeed, recent economic growth in Canada, as in most industrialized countries, has resulted not in lessening the disparity between rich and poor individuals and communities but has instead simultaneously created both wealth and poverty (Robinson, 2001; Yalnizyan, 1998). 1 Even the reduction of unemployment levels in recent years and the decrease in welfare rolls due to policy changes have not bridged the gap between haves and have-nots (Desmarais, 2000; Gorlick & Brethour, 1999; National Council of Welfare, 1997; Shragge, 1997). Direct state intervention is not regarded as the best way to redress the situation, since it is widely associated with a costly and inefficient bureaucracy administering cumbersome programs and imposing paternalistic policies. This perception may not be fair, but the fact remains that programs enacted to decrease poverty do not always meet fully the needs of the targeted individuals and even often inadvertently contain barriers that lessen the chances for some of these people to become employed or to accumulate assets (Deniger et al., 1995; Sherman, Amey, Duffield, Ebb, & Weinstein, 1998). As a consequence, new policies and programs that can address these problems are actively being sought. Can the development of the social economy speak to some of these issues? This paper will attempt to answer this question by providing information on the history, theory, and practice of the social economy and seek to explain some of the associated conceptual ambiguities. For example, the concept of the social economy is fairly well established in Europe (outside of Germany), Japan, and Quebec, while elsewhere in North America and in other industrialized countries concepts such as the third sector and the voluntary sector are better known. Do these expressions mean the same thing? As will be noted, confusion remains. This will be followed by a presentation of social economy practice in Canada and around the world with a particular emphasis on the Quebec experience as well as on certain selected practice issues. 1 While this trend has been global, it can also be noted that when compared with other industrialized countries Canada has fallen behind. While Canada was third overall in the 2001 Human Development Report, it ranked 11th on the Human Poverty Index (United Nations Development Programme [UNDP], 2001). -1- Theoretical Issues: The Social Economy as a Field of Study HISTORICAL OVERVIEW An examination of knowledge building concerning the social economy over the years shows that attention to it generally climbs during societal upheavals (such as the late 18thcentury Industrial Revolution or the growth of urban centres 50 years later), following catastrophes (such as the two world wars in Europe in the last century), or when market mechanisms falter (such as during the Great Depression of the 1930s and as is the case today). When obstacles that limit its potential to solve immediate problems are discovered, interest usually slides down to more conventional theories, often disregarding what is known about the social economy and relegating it to rather unfashionable academic inquiry. These ups and downs have resulted in a term that does not depict the same reality for everyone. Nevertheless, perspectives on the phenomenon are generally influenced by theoretical constructs found in mainly European works. In fact, the social economy s roots can be traced back to late 18th-century France. While economists in other countries, such as Scotland s Adam Smith, delved into individual motivations to explain economic realities, others who became known as the French utopian socialists 2 focused on social systems as the means to ensure well-being, rejecting laissez-faire and promoting collective solutions to problems like poverty (Gislain & Deblock, 1989; Soule, 1952). Later on, authors in other countries, such as Robert Owen ( ) who lived in both England and the United States, continued the attempt to find ways of reconciling free competition and social justice or, in moral terms, the values of liberty and solidarity through co-operation (Gislain & Deblock, 1989; Soule, 1952). None of these authors could agree with each other, however, and few of them built on the works of their predecessors. They nevertheless contributed a long line of religious and secular experiments from which the first co-operative a consumer co-operative store established in 1844 at Rochdale, England inherited inspiration and experience (Melnyk, 1989). Following the Rochdale store, co-operatives blossomed in England and then in France in the latter half of the 19th century. Economists such as Charles Gide ( ) and Léon Walras ( ) began investigating these organizational structures, especially the consumer co-operatives, and began using the term social economy to describe what they believed was a science or, at the very least, an academic discipline (Bidet, 2000). 3 While their works built upon each other s, differentiating between the pure, applied, and social economies (the real, useful, and just domains), they could not agree on the ultimate goal of setting up co operatives. Indeed, Gide saw them as tools for social transformation and Walras, as simply specific components of the production system. Their thinking fell into neglect even though the principles of the social economy that they identified were put into practice in the reconstruction of Germany after the Second World War. In fact, little 2 French utopian socialists include, most notably, Charles Fourier ( ) and Claude Henri de Saint-Simon ( ). Other later authors, such as Pierre-Guillaume-Frédéric Le Play ( ) and Pierre-Joseph Proudhon ( ), are also referred to by this expression. 3 Unless otherwise indicated, this article is the principal reference for the information in this paragraph. -3- theoretical construction was accomplished until a meeting of the minds between two French scholars, Henri Desroches and Michel Rocard, revived the concept but not Gide s or Walras s theories in the 1970s and provided the social economy with sufficient legitimacy to see it incorporated into legislation in France and elsewhere in Europe. Recently, the evolution of social economy practices and policies has prompted renewed scholarship that distinguishes between the old social economy, focused on the development of the co-operative as an alternative model of business enterprise, and the new one, with the social economy being seen as a fundamental part of a new socio-economic regulatory mechanism. These competing perspectives have also been referred to as the pragmatic/reformist vision (old) and the social change/utopian (new) one (Fontan & Shragge, 2000). THE OLD SOCIAL ECONOMY The old social economy is often described as another way of doing business (Fontan & Schragge, 2000) and is generally associated with the structural aspects of the organizations that make it up. Conceptually, it is well illustrated by a rather strict interpretation conceived by Henri Desroches (1984) that builds upon the legal status of co-operative, mutual, and nonprofit organizations and that posits an organizational structure based on the principle of people before capital implemented within a democratic decision-making framework using a one person, one vote formula. Also required is a financial configuration that disallows individual benefit in both decision making and the distribution of surpluses (both in terms of annual profits and accumulated reserves should the enterprise cease to exist). This definition can apply to certain private sector businesses, autonomous public sector agencies, and other mixed organizations; but each enterprise has to be analyzed on a case-by-case basis to determine if it has the necessary characteristics. For example, a business owned by workers in whole or in part could belong to the social economy if it incorporates formal mechanisms for balancing financial returns and social objectives and if it guarantees worker participation in its governance systems. Many co-operative development professionals see the social economy in these terms. This way of seeing the social economy is, to a great extent, founded on the belief that social goals are attained through the structural components of co-operatives since democratic decision making levels the relationship between rich and poor members, because local participation in economic development is ensured through boards of directors made up of members of the community served by the organization, because dividends are based on services received
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