Dr Rory Ridley-Duff Reader in Co-operative and Social Enterprise Revealing the Social and Solidarity Economy York St John University, 1 st – 3 rd September 2015 Social Economy in Higher Education Conference Universities Developing Social Entrepreneurship through Cross-Sector Collaboration

Outline Critically evaluate how personal / collective philosophies link to the development of social economy. Articulate different ideological orientations towards economic and social value creation that impact on sustainable development. Identify a theoretical perspective that emphasises member-ownership and social solidarity, and apply it to current practice.

What is the argument? Exploring ideological choices helps to make sense of three alternatives to public (redistributive) and private (market-based) enterprise systems. Social enterprise varies according to its framing as a neo- liberal agenda (Big Society) or a radical response to neo- liberalism (social and solidarity economy). The social economy is politically branded and rebranded by social groups according to their ideology. Recent work on the design principles for collective action undermines the theory of the ‘tragedy of the commons’ and reassert the value of social solidarity.

An initial theory of social economy Source: Ridley-Duff and Bull, 2011

Back to basics: 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

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: 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?

The tragedy of the commons The institutional bias toward private and state property (to the exclusion of group property) was influenced by Hardin’s theory of the ‘tragedy of the commons’. This theory postulated that ‘tragedy’ was ‘inevitable’ under conditions of peace: the commons would be over-used and so must be owned/managed privately or by the state. (online at Hardin, G. (1968) “The tragedy of the commons”, Science, 162;

Responses to the ‘tragedy’ Ostrom rejects Hardin’s thesis on the basis of empirical evidence that resources are used in more sustainable ways when there is local group control over the resource. Using the example of Mongolia (group control), Russia and China (state / private control), Ostrom shows there is markedly less land degradation in Mongolia 10% (Mongolia) v 75% (Russia under state control) / 33% (China, under state, then private control). 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:

Responses to the ‘tragedy’ Design principles for sustainable development with group- ownership of property (common pool resources). (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.

Revealing the social solidarity economy Voluntary / community sector Public sector Private economy Social and solidarity economy 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 State / public control Autonomy / self-help Who is in control?

Social solidarity: beneficiaries Voluntary / community sector Public sector Private economy Social and Solidarity Economy 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 Only community benefit Member + community benefit Member + investor benefit Only Member Benefit Mutual benefit Only investor benefit State / public control Autonomy / self-help Who is in control?

Social solidarity: control rights Voluntary / community sector Public sector Private economy Social and solidarity economy 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 Delivering value

Variations across the social economy Voluntary / community sector Public sector Private economy 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 Ford Foundation Wikimedia John Lewis Mondragon coops Grameen bank British Petroleum WordPress Raiffeisen Credit Unions Leisure trusts State / public control Autonomy / self-Help Who is in control?

Summary The social economy transcends traditional sector boundaries and has the potential to form a social and solidarity economy with distinct characteristics based on Ostrom’s design principles. Social enterprise is a useful umbrella terms for any (democratic) organisation or activity where ‘people are not in it for the money’ but still trade to generate a financial surplus or mitigate dependence on others. A three sector model is useful for conceptualising the issue of hybridity A four sector model which acknowledges ‘group property’ and recognises the rise of the social and solidarity economy (new co- operativism) as distinct from charitable, state-owned and private sector models of enterprise.

References and Reading Understanding Social Enterprise: Theory and Practice (forthcoming, November 2015) 2 nd Edition, Chapter 1