Keynote to: Social Innovation and Entrepreneurship Research Conference (SIERC), Massey - PowerPoint Presentation

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Keynote to: Social Innovation and Entrepreneurship Research Conference (SIERC), Massey University12th 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 EnterpriseSheffield Hallam University(Mike Bull, Senior Research Fellow, Manchester Metropolitan University)r.ridley-duff@shu.ac.uk

Rory Ridley-Duff and Mike Bull, 2015Adapted 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: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.Link the third bottom line (Elkington, 2004) to sustainable development using research into ‘institutions of collective action’ (Ostrom, 1990, 2009).

Examine evidence that a ‘desirable discourse’ rooted in social liberalism and pragmatic communitarianism is forming.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 areself-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 areself-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 othersActions areself-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

Redistribution

Reciprocity

Market

Dreu, C. and Boles, T. (1998) "Share and share alike or winner take all?",

Organization Behavior and Human Decision Decision Processes,

76(3): 253-276

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: 639-656.

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), 382-392.

Actions are

self-directed

Benefit others

Self-benefit

Redistribution

Reciprocity

Market

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):48-49.

Nash, John (1951) "Non-cooperative games" 

The Annals of Mathematics

 54(2):286-295.

DOMINANT DISCOURSE

Analysing: types of organisations

Activities directed

by / towards othersActions areself-directed

Benefit others

Self-benefit

Redistribution

Reciprocity

Market

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 othersActions areself-directed

Benefit others

Self-benefit

Redistribution

Reciprocity

Market

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 sectorsExchange Type

RedistributionReciprocityMarketEnterprise approachPublic sectorFundraising Charities Non-Profit Orgs

Co-operative SectorCivil Society(CMEs)Private BusinessesTrading Charities(CTAs and SRBs)Legal formsStatutory / State BodiesCharitable Foundations and Trusts.Co-operative BusinessesSocial Co-operativesMutual Societies

AssociationsCompanies / CorporationsPartnershipsSelf-EmploymentTable 1 - Dominant discourse influence on options for economic developmentChoice presented: Altruistic Communitarianism v

Neo-Liberalism

Analysing: economic sectorsExchange Type

RedistributionReciprocityMarketEnterprise approachUnions, Societies and Associations (CTAs) 

Co-operative and Mutual Enterprises (CMEs)Social / Responsible Businesses (SRBs)Legal formsUnions and SocietiesCommunity Associations Social Co-operativesCommunity Benefit SocietiesCo-operative SocietiesMutual Financial Institutions

Public Service MutualsEmployee-Owned BusinessesCo-operative PartnershipsSocial 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 developmentChoice presented:

Social Liberalism

v

Pragmatic Communitarianism

Integrating sustainability

Redistribution

Reciprocity

Market

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: 278-282Ostrom, E. (2009) ‘

Beyond markets and states: polycentric governance of complex economic systems’, Acceptance speech for Nobel Prize in Economics

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 / communitysector

Public sectorPrivate

economy

Socialand 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 / communitysector

Public sectorPrivate

economySSE (Members)

Based on Westall, A (2001)

Value-Led, Market-Driven: social enterprise solutions to public policy

, London: IPPR

Trustee controlled

Investor owned/controlled

Member 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 2015. 2 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 shift915 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: r.ridley-duff@shu.ac.uk(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, 2nd edn, London: Sage Publications)