Keynote to: Social Innovation and Entrepreneurship Research Conference (SIERC), Massey University 12 th February 2016 Rendering the social solidarity economy: exploring the case for a paradigm shift in the visibility of cooperative and mutual enterprises in business education, research and policy-making Rory Ridley-Duff, Reader in Co-operative and Social Enterprise Sheffield Hallam University (Mike Bull, Senior Research Fellow, Manchester Metropolitan University) Rory Ridley-Duff and Mike Bull, 2015 Adapted by Rory Ridley-Duff, 2016

Outline of the Paper / Presentation Research Question: “How can the emergence of social enterprises be rendered in a way that makes their scale, diversity and impact more visible?” Response set out in four parts: 1.Link motivations to act to Polanyi’s (2001, [1944]) theory of economic systems and Dreu and Boles (1998) theory on social value orientation. This draws out two axes of thought. 2.Link the third bottom line (Elkington, 2004) to sustainable development using research into ‘institutions of collective action’ (Ostrom, 1990, 2009). 3.Examine evidence that a ‘desirable discourse’ rooted in social liberalism and pragmatic communitarianism is forming. 4.Re-evaluate claims made during the 2012 UN International Year of Co-operatives to set out the case for a paradigm shift in business education, research and policy-making.

Back to basics: some philosophical assumptions Activities directed by / towards others Actions are self-directed Benefit others Benefit self I'll help you to benefit others I'll help you to benefit myself I'll direct my efforts towards helping others I'll direct my efforts towards helping myself I'll help others without exploiting myself and share any benefits received with others

These attitudes influence our enterprises Activities directed by / towards others Actions are self-directed Benefit others Benefit self Public service Community action Social entrepreneurship Private enterprise Co-operative & mutual enterprise

Some basics of: socio-economics Activities directed by / towards others Actions are self-directed Benefit others Benefit self Public service Community action Social entrepreneurship Private enterprise Co-operative & mutual enterprise Polanyi, K. (2001, [1944]) The Great Transformation, Boston: Beacon Press RedistributionReciprocityMarket Dreu, C. and Boles, T. (1998) "Share and share alike or winner take all?", Organization Behavior and Human Decision Decision Processes, 76(3): Philanthropic ("Prosocial") Cooperative Individualistic

Pratchett, L, and Wingfield, M (1996) ‘Petty bureaucracy and wooly minded liberalism? The changing ethos of local government officers’. Public Administration 74: Smith, A. (2006 [1790]) The Theory of Moral Sentiments, Sao Paulo: Metalibri Let's consider underlying philosophies Activities directed by / towards others Owen, R. (2014 [1816]) A New View of Society (Kindle edn: Gold Books). Smith, A. (1937). The Wealth of Nations, First Published 1776 DESIRABLE DISCOURSE ? Ridley-Duff, R. (2007). Communitarian perspectives on social enterprise. Corporate governance: an international review, 15 (2), Actions are self-directed Benefit others Self-benefit RedistributionReciprocityMarket Philanthropic ("Prosocial") Cooperative Individualistic Neo-liberal Altruistic communitarian Adam Smith's "Invisible Hand" Pratchet and Wingfield's "Public service ethos" Pragmatic communitarian Social liberal Robert Owen’s “co-operator" Adam Smith's "Moral Sentiments" John Nash's "Equilibrium" Communitarian pluralism (Kantian perspective) Nash, J. (1950) "Equilibrium points in n-person games" Proceedings of the National Academy of Sciences 36(1): Nash, John (1951) "Non-cooperative games" The Annals of Mathematics 54(2): DOMINANT DISCOURSE

Analysing: types of organisations Activities directed by / towards others Actions are self-directed Benefit others Self-benefit RedistributionReciprocityMarket Philanthropic ("Prosocial") Cooperative Individualistic Neo-liberalism Altruistic communitarian Private enterprises State agencies, foundations and charities Pragmatic communitarian Social liberalism Unions and societies Social businesses Mutuals and co-operatives Community businesses Member-owned businesses Social co-ops Industrial & retail co-operatives Community associations CMEs SRBs CTAs

Analysing: economic sectors Activities directed by / towards others Actions are self-directed Benefit others Self-benefit RedistributionReciprocityMarket Philanthropic ("Prosocial") Cooperative Individualistic Neo-liberalism Altruistic communitarian Private Company (CLS) Public Corporation Pragmatic communitarian Social liberalism Community Interest Companies (CLG) Community Benefit Society Community Interest Companies (CLS) CIO Foundation CIO Association Community Associations Social Co-ops Co-op Society Co-op Business (CLS) Employee-Owned Business (CLS) Public Service Mutual (CIC) Partnerships Charity PUBLIC SERVICES PRIVATE ECONOMY Unions and Societies SOCIAL AND SOLIDARITY ECONOMY

Analysing: economic sectors Exchange TypeRedistributionReciprocityMarket Enterprise approach Public sector Fundraising Charities Non-Profit Orgs Co-operative Sector Civil Society (CMEs) Private Businesses Trading Charities (CTAs and SRBs) Legal forms Statutory / State Bodies Charitable Foundations and Trusts. Co-operative Businesses Social Co-operatives Mutual Societies Associations Companies / Corporations Partnerships Self-Employment Table 1 - Dominant discourse influence on options for economic development Choice presented: Altruistic Communitarianism v Neo-Liberalism

Analysing: economic sectors Exchange TypeRedistributionReciprocityMarket Enterprise approach Unions, Societies and Associations (CTAs) Co-operative and Mutual Enterprises (CMEs) Social / Responsible Businesses (SRBs) Legal forms Unions and Societies Community Associations Social Co-operatives Community Benefit Societies Co-operative Societies Mutual Financial Institutions Public Service Mutuals Employee-Owned Businesses Co-operative Partnerships Social Purpose Businesses (e.g. B-Corps) Community Interest Companies (CLG / CLS) Industrial Co-operatives Co ‑ operative Retail Societies Table 2 - Desirable discourse influence on options for economic development Choice presented: Social Liberalism v Pragmatic Communitarianism

Integrating sustainability RedistributionReciprocityMarket Philanthropic Cooperative Individualistic PUBLIC SERVICES SOCIAL AND SOLIDARITY ECONOMY PRIVATE ECONOMY Exploits? Environment Sustains? Enhances? What effect does each socio-economic model have on the environment?

Identifying property in the social solidarity economy Four types of property (Ostrom et al., 1999) : ●Open access (no regulated control) ●Local group property (group rights, can exclude others) ●Individual property (individual or firm rights, can exclude others) ●Government property (state regulation and/or subsidy) Until the late 1990s, discourse on property was dominated by Hardin’s (1968) paper on the ‘tragedy of the commons’ which argued for state / private control of common pool resources. Ostrom et al. (1999) rejected Hardin’s theory on the basis that ‘local group owners’ who depend on common pool resources manage them in ways that are more sustainable and sensitive to local needs. ●Key Point: Local group property (mutual / cooperative) is distinct from open, private and public forms of ownership.

Responses to the ‘tragedy of the commons’ Ostrom’s research team used satellite imagery of Mongolia (group control), Russia (state control) and China (state, then private control) to show there is markedly less land degradation under group control. Mongolia (10% degraded), Russia (75%), China (33%). Identified thousands of cases (from decades of case study work) in Nobel Prize acceptance speech to link local democratic control to sustainable development. Ostrom, E. (1990) Governing the Commons. The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press. Ostrom et al. (1999) ‘Revisiting the Commons: Local Lessons, Global Challenges’, Science, 284: Ostrom, E. (2009) ‘Beyond markets and states: polycentric governance of complex economic systems’, Acceptance speech for Nobel Prize in EconomicsBeyond markets and states

Responses to the ‘tragedy’ Design principles for the sustainable development of common pool resources based on group-ownership of property. (Ostrom, 1990, p. 186) Principle 1 – clear definitions of the resource and the resource users (members responsible for creating and appropriating a shared resource). Principle 2 – ensure that appropriator rights (rights to use) are proportional to provider obligations (labour, materials and money necessary to sustain the resource). Principle 3 – local appropriation rules / rights are decided, partially or wholly, by those with rights of appropriation. Principle 4 - User / resource monitoring is subject to the principles of democratic accountability (officials who monitor use report findings to users of the resource). Principle 5 – low cost conflict resolution systems in which sanctions are graduated with clear links to the extent of resource / rule violation.

Making group ownership / property visible Voluntary / community sector Public sector Private economy Social and solidarity economy (SSE) Based on Westall, A (2001) Value-Led, Market-Driven: social enterprise solutions to public policy, London: IPPR Grants / no owners shares / private owners Relationship to private capital Trustor + public benefit Member + public benefit Member + investor benefit Member Benefit Mutual benefit Private (corporate) investor benefit State / public control Autonomy / self-help Who is in control?

Beyond three sectors: control rights Voluntary / community sector Public sector Private economy SSE (Members) Based on Westall, A (2001) Value-Led, Market-Driven: social enterprise solutions to public policy, London: IPPR Trustee controlledInvestor owned/controlledMember controlled Member owned Member governed State / public control Autonomy / self-Help Who is in control? for the community to the market for the state Social value CMEs SRBs CTAs

Evidence of a paradigm shift Employment: 4 old increase in CMEs across the EU (3.7m in 2004, 16m in 2014). Estimate for global CME employment increased from 100m (in 2008) to 250m (in 2014). CMEs now account for 21.2% of jobs in China. (Avila and Campos, 2006; Roelants et. al., 2014) Fair trade: 2013 revenues rose 43% for ‘small producer organisations’ (SPOs) to €882m but were flat for ‘hired labour organisations’ (HLOs) at €91m, while premiums rose 52% for SPOs, but fell 3% in HLOs. (Fairtrade International, 2013). Crowdfunding (at time of writing): Kiva (1,385,782 lenders lent $812m) Kickstarter (10.2 million contributed $2.19 tr to 99,856 projects), Indiegogo (150,000 projects supported), Funding Circle (over $1 bn lent by 43,000 people), Zopa ($1.28 bn lent by 63,000 people) are growing exponentially. Intellectual Property (IP): 1.1 bn items of Creative Commons IP, growing at 761,643 item per day in million people are funding Wikipedia. Mutual Financial Institutions: premiums risen year on year since 2007 (grown from 23.8% to 27.3% of the global market).

Evidence of a paradigm shift 915 million people get financial products from CMEs (ICMIF, 2013) Almost 60% of working people ‘secure their livelihood’ through the work of CMEs (UN, 1994, ILO, 2001, Coops UK, 2011).

Implications and Conclusions In 2012, at the UN, the global institutions of CMEs claimed that 59% of people in work ‘secured their livelihood’ through the co-operative economy (about 3 million people today). If 915 million people get life insurance from CMEs (and this covers families, not just single people), then CMEs may protect close to 3 million people. If we add in the evidence that the four fastest growing economies amongst the OECD - China, India, South Korea, Turkey - are also economies with the highest % of people working in CMEs… If we add in the evidence that a new breed of crowd funding / investing institutions deploying Ostrom’s design principles (e.g. Zopa, Funding Circles, Kickstarter, Indiegogo, Kiva) are growing far more rapidly that other (social) financial institutions…. If we add in the evidence that over a billion items of IP have been issued under Creative Commons, and that billions of people routinely use OpenSource software … The claims made at the UN in 2012 by the ICA look more credible than they did at the time.

Implications and Conclusions Within our lifetime, the choice may not be between altruistic communitarianism (charity + state aid) and neo-liberalism (market- driven private enterprise)… …it may soon become a choice between social liberalism (in associations, societies and unions) and pragmatic communitarianism (in employee-owned, mutual, cooperative and social businesses). Is it time to accept the case for a paradigm shift in the visibility of co-operative and mutual enterprises in business education, research and policy-making? I submit that it is.

Thank you Contact: (References can be found in the paper that will be published with the conference proceedings) This presentation was based on lecture slides that accompany Chapter 1 of: Ridley-Duff, R. and Bull, M. (2016) Understanding Social Enterprise: Theory and Practice, 2 nd edn, London: Sage Publications)