Social Solidarity Economy (SSE): Emerging Concepts & Models

by Dr. Benjamin R. Quiñones, Jr.

President & CEO

Asian Solidarity Economy Council (ASEC)

October 16, 2013

Aldaba Theater, University of the Philippines

Quezon City, Philippines

SSE & MARKET ECONOMY Social Solidarity Economy (SSE) is an economic system developed by ordinary people as an alternative to the neoliberal market economy.

SSE: organizations use social norms, ethics, other social philosophies to influence consumer behavior. Economic transactions are guided by core values, sociological and political relationships.

Market economy: the principal direction of influence is reversed: economic factors shape politics and sociology (De Long, 1997)

FOCAL POINT OF DEVELOPMENT

Market economy: The ENTERPRISE – e.g. company,

cooperative, NGO, people’s organization. The orientation is

profit over people and planet.

SSE: The COMMUNITY, where the household is the basic

unit and the territory defines the resources for the

community’s development. The orientation is people and

planet over profit.

Capture the SSE mindset 1. Reflect on the assumptions of your development paradigm. The problem of poverty consists of two inter-related aspects: (i) the short-term issue of lack of access to resources needed for overcoming poverty, and (ii) the longer-term issue of the absence of an alternative economy for, by, and the the poor, socially excluded, & marginalized.

2. Learn to scrutinize every development intervention (e.g. microfinance, organic farming, fair trade, coop devt, etc) in terms of its capacity to: (i) address the immediate problem of lack of access to resources; & (ii) tackle the longer term problem of developing SSE as an alternative economy.

3. Re-orient your resources towards the great transition to SSE.

Developing SSE thru people-owned & managed community company 1.The COMMUNITY rather than the ENTERPRISE is the dominant mode of organizing life. The enterprise is subordinate to the community rather than the other way around. In SSE, the towns are not owned by companies. Instead, companies are owned by townspeople. In other words, SSE establishes community companies, not company towns. 2. The basic unit of the community is the HOUSEHOLD, not the enterprise. The community is the HOLDING COMPANY that has a stake and controlling interest in all the enterprises. Roxas (2006) argues that the household, being co-owner of the community holding company, has a claim on outputs, just as land and capital are (e.g. claims of landlord, trader, etc.)

Developing SSE thru people-owned & managed community company 3. The community holding company (CHC) is the integrator of local supply chains. Instead of developing individually the micro/small enterprises producing the same product and competing for consumer patronage, the CHC integrates production at the community level & facilitates relationships between producers & households as consumers.

4. The CHC resolves the issue of the participation of households in the governance of economic activities. Having roots in the family, the CHC can use social norms, ethics and other social philosophies to influence consumer behavior. Its economic transactions can be guided by core values shared by the households and by their sociological and political relationships

Developing SSE thru people-owned & managed community company 5. The community holding company bears the two fundamental dimensions of SSE: (i) ethical values, and (ii) social mission-oriented governance. The community holding company can sustain its social mission when member-households steadfastly adhere to edifying ethical values. Ethical values are the basis of the community holding company’s vision and social mission.

6. Three other dimensions of SSE – (i) products and services that meet basic needs of households, (ii) ecological conservation, and (iii) economic sustainability – constitute the community holding company’s triple bottom line.

CHALLENGES IN SSE DEVELOPMENT For the Households Households are citizens of the community and owners of the community holding company. Basic human rights of individuals are respected & defended against injustices. Respect for human rights of citizens is balanced by a deep sense of awareness and accountability to one’s social responsibilities. Citizens who have more - in terms of power, education/ information, wealth/resources, physical strength, etc. - have greater social responsibilities.

For the Helping Organization -Affirmation of households as the basic unit of the community, rather than the enterprise; - Integration of enterprises into community-based supply chains where households are both owners & workers; and - Transformation of the community into a holding company that directs and manages all community-based supply chains.

COOPERATIVE: Rice Production INPUTS

ASSEMBLER/W

HOLESALER

RETAILER

CONSUMER

Partnership

Building

1

Cluster

Strengthening

8

Product Supply

Assessment

2

Market Chain Study

3

Cluster

Formation

4

Cluster Production

5

Marketing

6

Scaling Up

7

New

Clusters/

Enterprises

The Cluster Approach

Case 1: Onion Supply Chain

Community Base Social

Preparation

Production

Processing Warehousing

Marketing

Tra

inin

g

Production loan Linkages

Case 2: RICE SUPPLY CHAIN - Farm Integration

Development Approach (FIDA)

COOP

FF FF

FF

FF

FF FF

FF

FF

FF

FF

COOP

FF FF

FF

FF

FF FF

FF

FF

FF

FF

COOP

FF FF

FF

FF

FF FF

FF

FF

FF

FF

COOP

FF FF

FF

FF

FF FF

FF

FF

FF

FF

Milk

Feeding

Case 3: The Dairy Farm Supply Chain

Milk

Processing

Plant

Market

Overseas Filipino Workers (OFWs), foreign & local investors (DIP)

DIP (Dairy Innovative

Partners)

Coops Breeders

Dairy Plant

Small-hold Farmers

Coops Coops Coops Breeders Breeders Local

Market

Export

Solidarity from local to international levels & across various

stakeholders & economic functions in the supply chain

Milk

Milk Milk

Meat Processing

Animals

Males Animals

Animals

Animals

ADVANTAGES OF THE COMMUNITY HOLDING COMPANY (CHC) FRAMEWORK OF ANALYSIS

1. CHC represents a multi-stakeholder, multi-enterprise model of solidarity, risk sharing, and shared human responsibilities that are required to meet people’s needs at the community level. CHC takes collective action at the community level that includes and benefits both the poor and the non-poor.

2. The CHC provides a platform for local people to work

out the complexity of social and economic relationships among stakeholders within a given community or territory as well as between the community and external economic actors;

3. The CHC allows development planners to locate the cost burden of institutional change as enterprises in the community transition from a purely economic or financial orientation to the triple bottom line of social development, ecological conservation, and economic sustainability;

4. The CHC is an appropriate development partner of the government and the private sector for re-orienting Corporate Social Responsibility (CSR) towards supporting inclusive and sustainable development at the community level; and

5. The CHC is a natural, grassroots level instrument for the promotion and implementation of a Universal Declaration of Human Responsibilities (UDHR), as the third pillar of international law in addition to the first two pillars – the UN Charter and the Universal Declaration of Human Rights.

BASIC FEATURES OF CHC 1. ETHICAL VALUES DIMENSION

PEOPLE and PLANET over PROFITS Human beings control capital, not instruments of capital Solidarity in wage rates between management & workers Solidarity, cooperation, equity, reciprocity

2. GOVERNANCE DIMENSION

community-based supply chains are organized & self-managed by households

inclusive: ordinary people participate in decisionmaking benefits & profits shared by ordinary people

as co-owners/co-managers of community-based supply chains

3. SOCIAL DEVELOPMENT DIMENSION

Explicit aim of production: community benefit (basic needs – food, shelter, clothing, health, education)

Social responsibility directed at building sustainable communities

Shared responsibilities approach to development Vehicle for social inclusion & sustainable

development

4. ECONOMIC SUSTAINABILITY DIMENSION

the CHC undertakes business activity, creates economic value added

ordinary people bear economic risks; business risks spread over various stakeholders & enterprises

ensures business viability thru shared responsibilities of ordinary people towards people & environment

profits shared to cover human & ecological costs of development

5. ECOLOGICAL CONSERVATION DIMENSION

promotes the protection of species, their habitats, and ecosystems from excessive rates of extinction

aims to sustain the community’s economic and social progress

Application of CHC Framework:

The Case of Free-range chicken supply chain

Input Supply Production Market/Consumer

On Eagle’s Wings

Foundation (OEWF)

On Eagle’s Wings

Foundation

On Eagle’s Wings

Foundation

New Tribes Mission

(NTM)

New Tribes Mission New Tribes Mission

Banaban Community

Organizations (BCO)

Banaban Community

Organizations

Banaban Community

Organizations

Shared Vision

Cooperative (SVC)

Shared Vision

Cooperative

Shared Vision

Cooperative

Bumbaran

Development

Corporation (BDC)

Bumbaran

Development

Corporation

AgriChexers Corp.

Braveheart Farm(BHF)

Overall Assessment

Stakeholder D 1 D 2 D 3 D 4 D 5 Average

OEWF 3.00 3.00 2.25 3.00 3.00 2.85

NTM 3.00 3.00 1.50 3.00 3.00 2.70

SVC 3.00 3.00 2.25 2.25 3.00 2.70

BDC 1.00 3.00 3.00 3.00 3.00 2.60

AgriChexers 0.50 0.33 0 1.25 1.00 0.62

BHF 0.50 0.33 0.75 3.00 2.00 1.32

Average 1.83 2.10 1.62 2.58 2.50 2.13

0

1

2

3

GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

OEWF

00.5

11.5

22.5

3

GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

NTM

00.5

11.5

22.5

3GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

SVC

THE NGO PARTNERS

0

1

2

3GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

ALL

THE PRIVATE ENTERPRISE PARTNERS

00.5

11.5

22.5

3

GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

BDC

0

0.5

1

1.5GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

Agrichexers

00.5

11.5

22.5

3GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

BHF

0

1

2

3GOVERNANCE

ETHICAL

SOCIAL ECONOMIC

ENVIRONMENT

ALL

ACTUAL (PRACTICE) vs. IDEAL (CONCEPT)

ACTUAL

IDEAL0

0.5

1

1.5

2

2.5

3

ACTUAL

IDEAL

CONCLUSIONS & THOUGHTS FOR FURTHER REFLECTIONS

In the Philippines, the objective conditions are ripe for civil society, cooperative movement, and communities to develop SSE as a new model of development. Rather than economic transactions influencing sociological & political relationships, ethical values should influence the way people organize their economic activities.