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The world financial meltdown in early October 2008 has dealt a resounding blow to those who placed great faith in the self-regulating mechanism of the market and extolled the benefits of comprehensive deregulation. World powers rushed to France on Sunday, October 13, to put together a rescue package that will shore up the global financial system. In a joint statement the Group of Twenty (G-20) finance officials pledged to work together “to overcome the financial turmoil, and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world’s financial markets.” But the G-20 market stabilization plan does not address the root cause of what former Chairman of the Federal Reserve Board, Alan Greenspan, calls “the irrational exuberance of the markets”.

 

Even today, financial and stock markets all over the world are plummeting. Anxiety and fear grip people from all walks of life. They wonder if there’s an end to the nightmare and whether world leaders will soon find a way to restore people’s confidence in the market economy.

An Alternative Economic Order based on Social Enterprise

 

The uncertainty and fear brought about by the collapse of the market economy have emboldened proponents of social enterprise to offer an alternative economic order called “Solidarity Economy”. Values that provide the ethical basis of a responsible, plural and solidarity-based society include sharing, co-responsibility, justice, reciprocity, plurality, respect for diversity, freedom, equality, transparency, brotherhood, and sisterhood 1. These values inspire attitudes and behavior that are supportive of solidarity economy.

 

The elements of Solidarity Economy are comprised largely of Social Enterprises. Social enterprises are social mission organizations which trade in goods or services for a social or environmental purpose 2. While commercial-oriented enterprises seek profit first and foremost, social enterprises pursue a “triple bottom line” of social development, ecological justice, and financial self-sufficiency.

 

The various forms of social enterprises can be classified into five major categories, based on the purpose for which they were organized 3.

 

1. Social Enterprises dealing with Creation of Resources

Social enterprises dealing with Ecological creation focus on earth processes – the birth and

growth of natural resources, including photosynthesis, respiration, geological & chemical transformation. etc.

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1 Marcos Arruda, 2007. “Views on Solidarity Economy”. Interview conducted in conjunction with the Asian Forum for Solidarity Economy, Philippines, Oct 2007. Arruda is founder and Director of PACS  (Institute of Alternative Policies for Southern Cone of Latin America), Brazil and Member of the Global

Coordinating Team of the Alliance for a Responsible, Plural and Solidarity-based Economy (ALOE, France),

2 Source: www.wikipedia.org

3 Source: Ethan Miller, ___ “Solidarity Economy”, downloaded from email <ethanmiller@riseup.net>

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Social enterprises focusing on the subject of Cultural creation are interested in human cultural resources (language, stories, music, ideas, skills) generated & transformed over millions of years by collective creativity, imagination, intuition, observation & experimentation.

 


 

2. Social Enterprises engaged in Production

Social enterprises engaged in production include:

(i) Worker Cooperatives: enterprises owned and democratically controlled by their workers

(ii) “Solidarity cooperatives”: multi-stakeholder coops, bringing together all parties involved in a particular endeavor

(iii) Democratic ESOPs (“Employee Stock Ownership Plans”): workers own shares of stock in the business they work for.

(iv) Self-Employment: considered a “worker cooperative of one,” providing the worker with significant control over the conditions and terms of his/her work.

 

3. Social Enterprises engaged in Exchange/ Transfer

Social enterprises engaged in various modes of exchange/ transfer develop new instruments, such as:

(i) Gifts : Acts of exchange built on generosity and community. Something is given with no expectation of return.

(ii) Community or Social Currencies : Alternative forms of money, usually issued and circulated at local / regional level, that encourage locally-rooted commerce & development of stronger community ties

(iii) Solidarity Markets: Relationships of exchange built on mutual agreement to seek best interests of all parties involved, including the communities of which they are a part

(iv) Barter Clubs : Organized direct exchanges of goods and services between people and groups

(v) Fair Trade: Involves direct connections between cooperative producers and retailers (eliminating exploitative intermediaries). Provides equitable payments to small-scale solidarity producers through sales to conscientious ethical consumers.

 

4. Social Enterprises engaged in Consumption/ Use

Social enterprises dealing with consumption/ use of goods and services include the following:

(i) Consumer Cooperatives : Structures through which consumers are democratically organized to purchase and distribute goods and services among each other.

(ii) Housing Cooperatives : Houses or apartment complexes that are owned and democratically controlled by their residents

(iii) Ethical Purchasing : Also called “solidarity consumption.“ Example: Anti- sweat shop movement

 

5. Social Enterprises engaged in Surplus Allocation

Social enterprises involved in the allocation of economic surplus include the following:

(i) Cooperative Banks : Banks owned and run by cooperative member organizations, working to serve their membership and other coops with a variety of financial services.

(ii) Credit Unions/ Cooperatives: Multi-service cooperative financial institutions. Democratic, member controlled, not-for-profit organizations

(iii) Solidarity Investment: Financing of a solidarity project through the pooling of funds from various stakeholders

 

The Challenge

There is a growing interest on social enterprises and social entrepreneurship not only in the business sector, as a result of shareholder activism on corporate social responsibility (CSR), but also in the academe. The challenge is to view social enterprises not as an instrument for dressing up the CSR compliance of bigger companies but as an integral component of an alternative economic order.

 

OBJECTIVE OF THE REGIONAL WORKSHOP

Against this backdrop, CSRSME Asia organizes the regional workshop with the aim of bringing together managers of development finance institutions (DFIs), researchers, advocates, and operators of responsible, plural and solidarity-based enterprises (RPSEs) – more popularly known as “social enterprises” – for the purpose of reviewing the conceptual framework and implementing guidelines of a regional cooperation program that promotes greater outreach of financing institutions to RPSEs. This program is called the Asia Pacific Solidarity Invest Program (APSIP).

In the process of reviewing APSIP, the workshop will provide an opportunity for participants to share information and experience on their respective financing programs for social enterprises and the indicators they use to monitor the performance of these enterprises.

The workshop will then consider the proposal of establishing a multi-stakeholder task force comprising of DFIs, RPSE operators, researchers and advocates in the region that collectively promote information exchange and experience sharing on the outreach of financial institutions to RPSEs, the criteria used to assess RPSE eligibility to access credit from formal sources, the contributions to RPSE development by various stakeholders, and the appropriate indicators for monitoring RPSE performance.

 

by
Benjamin R. Quiñones, Jr.