The non-profit sector, B companies, third sector, Social, circular, solidarity or popular economy. In Chile, it is increasingly common to hear these concepts, which have been incorporated as subjects in university training and have been successfully developed in undertakings related to topics such as renewable energy and labor inclusion. And although it is not a new model, it has re-emerged in a context of environmental, health and social crisis as the promise of a more sustainable future.
The Social Economy brings together all the organizations and companies that belong neither to the state economy nor to the traditional private one. In other words, they are not in the public sector, such as ministries, municipalities or Codelco, nor are they intended to generate a return on capital, such as shops, supermarkets or restaurants. They are cooperatives, foundations, non-profit corporations, mutuals, union associations, neighborhood councils, unions, indigenous and community organizations, among others. In the country, all these entities contribute 5% of employment and correspond to 3.5% of GDP, while the public economy 25% and the traditional private 75%, according to data from the Central Bank and the Ministries of Finance and Economy.
If there is someone who knows about the social economy, it is Mario Radrigán. He has been dedicated to this for nearly 40 years, since, in 1980, he entered the University of Chile to study Social Anthropology and began a job as a volunteer for Caritas Chile, for which he collaborated with food and housing cooperatives. He received his doctorate in Applied Economics and is currently director of the International Center for Social and Cooperative Economy (CIESCOOP) of the University of Santiago.
Is the Social Economy in Chile on the rise?
Yes. There is a very impressive fact. Using the same methodology, a UNDP study yielded 106 thousand organizations in this sector in 2005 and in 2015 a study of the CPP of the Catholic University yielded 226 thousand. Chile is the Latin American country most densely populated with Social Economy organizations. Since the 2008 economic crisis, people began to look at other less extractivist alternatives for society. Although this issue has not been prioritized and has not been systematic over time, there have been advances in public policies and some ministries and services have opened up to support this type of organization, something totally different from what happened during the military government. The generational change also influences. Young people have are looking for different ways to organize companies,
Do you think that there is currently a more caring spirit?
I think there has always been a spirit of solidarity. In Chile, there was a distortion of this word, since solidarity has been understood as something charitable. In the Social Economy, we refer to solidarity as mutual aid. And this is a constant. An example: there are 2,400,000 inhabitants of rural sectors, of which 98% are supplied with water through cooperatives or rural drinking water committees. There is no private company, it is the people who have been organizing for almost 60 years. The theme is that we have locked ourselves in a bipolar world, black or white, where things are either more market or more State. But underground is this economy that has always worked, and that is more important now to be able to stimulate and recognize.
Is the Social Economy exclusive or complementary to the current economic system?
There is a group that promotes replacing the market economy with one based on barter, voluntary work or social currency. I see it very difficult for a sector to disappear, be it the state, the capitalist economy or the social economy. There is no country in the world that is like this. Rather than isolating the actors in these sectors, I think it is interesting to maintain diversity and seek spaces for their complementation. The OECD center dedicated to the social economy coined a very interesting concept: plural economy. It is based on non-discrimination of any of the three sectors of the economy. In Chile it is discriminated: if I want to create an AFP or a bank with a cooperative legal structure, the law prevents me, while in France the main private bank is a cooperative.
What changes must be made to achieve this?
Constitutional recognition of the Social Economy is required so that it is systematically supported beyond the current government. Another important factor is that the actors of the social economy manage to integrate into structures such as federations. In Brazil, by law, cooperatives have to allocate 5% of their profits to a national fund, which allows them to have 180 million dollars for training programs. There are five states where cooperatives created their own universities. In Europe, there is the Social Economy Europe, which brings together 15 national confederations from that continent. A very different reality from that of Chile, where there are approximately 15 thousand foundations and non-profit corporations and the largest platform that brings them together amounts to just 120 of them.
What can the Social Economy contribute to Chile?
Chile has macroeconomic figures that are very good, but a fragility in microeconomics that is very hard and will continue to hurt us. Ours is not the knowledge economy, it is not the vanguard of development. We have been transforming into a country with many problems that are going to be difficult to solve without a greater share of solidarity, participation and mutual aid. We must begin to think about the common good and not about each one saving himself. We need to feel part of the same ship where there is no first-class car, another second-class car and another third-class car, as in the Titanic, where those of the last class had no boats to save themselves. Social economy organizations have a long history of promoting, within diversity, a feeling of equality and solidarity among people.
The keys to the social economy
The five fundamental principles of the Social Economy are solidarity, participation, freedom, self-training and orientation towards the public good. To clearly differentiate the organizations that are part of this model, there are three basic criteria, endorsed even in legal frameworks that govern Chile and are also international in scope.
1. They are entities that satisfy the needs of goods and services of their associates or third parties. The motivation of someone who creates a social economy organization or company is not focused on maximizing its profits; its central objective is to satisfy a need.
2. Its management is usually democratic, under the criterion “one person, one vote”. In other words, the entity’s decision-making is done considering all the people that make it up, regardless of how much capital or work they have contributed. “This is something that is in the DNA of these organizations. It has been this way since the first organization, even with very curious subjects from a historical point of view. For example, in the first cooperative in the world, in England, in 1844, they participated women, with the right to vote and to be elected, on equal terms as men. In Chile, the registration of the first cooperative is from 1871 in Valparaíso and three women appear as members: two housewives and a seamstress, “says Mario Radrigan.
3. The owners of these entities are both their clients or users. In all cooperatives, for example, members are owners and beneficiaries of it.