“Mutual” vs “social” types of cooperatives
The first problem in the new Greek law on Social and Solidarity Economy (SSE) is the exclusion from the SSE law of some cooperatives that are not considered to be sufficiently focused on the general interest and to be too inwardly oriented.
The distinction between cooperatives that would be “mutual” (inward-looking) and others that would instead be “social” (more oriented towards the general interest and community interest) is incompatible both with the ICA Statement on the Cooperative Identity (1995), reproduced in full in ILO Recommendation 193/2002 on the Promotion of Cooperatives, and with the definition of social cooperative as defined in CICOPA’s World Standards on Social Cooperatives (2011).
According to the Statement on the Cooperative Identity, all cooperatives have both “mutual” and “social” characters.
The mutual character of all cooperatives is enshrined in the cooperative definition, where “persons” gather in a “jointly owned and democratically controlled enterprise” in order to “meet their economic, social and cultural needs and aspirations”.
The social character of all cooperatives, namely the fact that they transcend the group of members to reach out to the wider community, is given by the following characteristics of all cooperatives:
- The 1st cooperative principle of “voluntary and open membership” implies that all types of persons belonging to a community and responding to the characteristics of a given type of cooperative members are potentially members of it, both today and in future generations.
- The third cooperative principle of “members’ economic participation” foresees the constitution of common reserve funds which, in many countries, are even indivisible after the dissolution of the cooperative, and are thus not to be enjoyed “mutually” by cooperative members if they dissolve their cooperative.
- The seventh cooperative principle explicitly mentions the “concern for community”, which can materialize in different ways but is not a common characteristics of enterprises in general.
- The sixth cooperative principle of “cooperation among cooperatives” actually brings the seventh cooperative principle to an even wider dimension, as it concerns a community of one billion persons in the world, and potentially more.
According to the definition of social cooperative as formulated in CICOPA’s World Standards of Social Cooperatives, the main difference is that the social character of social cooperatives is given by the fact that the general interest mission of the latter is an explicit, primary and direct one (whereas, in other cooperatives, such social mission can be implicit, secondary and indirect).
At the same time, as also pointed out in the World Standards of Social Cooperatives, “a governance structure potentially or effectively based on multi-stakeholder membership is an important characteristic of social cooperatives”. Through multi-stakeholder membership, social cooperatives can include all interested stakeholders (producers, users, representatives of the local community) as members of the cooperative, thereby emphasizing the mutual character of social cooperatives.
The confusion between the concepts of social economy, social enterprise and social cooperative
Social (and solidarity) economy or SSE
The concept of social economy is a wider one than cooperatives, and includes some of the main components of the cooperative identity statement, such as democratic governance (see the values of the social economy on the website of Social Economy Europe). It includes all cooperatives, all mutuals, as well as other types of entities such as associations, foundations and social enterprises (see below). All cooperatives are included because the cooperative identity statement actually contains all the standards of the social economy in an explicit and, since ILO R 193, in an internationally recognized way.
The social enterprise concept was born in North America in the 1990s and was then promoted internationally mainly by the OECD and the IMF . Generally speaking, social enterprises are enterprises that provide services of general interest or work integration to disadvantaged people . These can be part of the wider social economy, or can even be enterprises that do not belong to the social economy, depending on the national policy or regulation regarding them, if there is.
The social enterprise concept spread rapidly to the UK and to Central-Eastern Europe as of the I990s. Some Central-Eastern Europe countries have tended to make a confusion between SSE and social enterprises, like Bulgaria, Slovakia and Slovenia, even though the social economy concept had been strongly promoted by CECOP – CICOPA Europe through the organization of large European social economy conferences in Prague in 2002 and Cracow in 2004.
Today, Poland is putting the emphasis on the wider social economy concept by preparing an SSE law, Romania already has it in its SSE legislation, and Bulgaria and Slovenia are presently undergoing a transition towards putting the emphasis on the wider concept of social economy.
After having officially recognized the social economy in the 1990s and the early 2000s, the European Commission also started to mix the concept of social economy with the one of social enterprise, and to give more emphasis to the latter, in particular as of 2009 with a conference and a report on social enterprises, and as of 2011 with the Social Business Initiative and in 2012 with the creation of the GECES (European Commission’s Working Group on Social Entrepreneurship). Since the European Council Conclusions on the social economy (a European breakthrough on the topic) were published in December 2015, the Commission has been gradually coming back to the classical social economy concept which includes all cooperatives.
The concept of social cooperative emerged in Italy, with a first national law in 1991. Other national laws or pieces of legislation regulating social cooperatives followed in the 1990s and 2000s in France, Spain, Portugal, Hungary, Poland and Greece (2011) and, outside Europe, in Quebec, Uruguay and South Korea. As mentioned above, the concept has been defined by CICOPA in the World Standards of Social Cooperatives (2011), which are complementary to the ICA Statement on the Cooperative Identity. Those standards (that are the result of 3 rounds of consultation within CICOPA over 3 years and two successive general assembly decisions) state that “The most distinctive characteristic of social cooperatives is that they explicitly define a general interest mission as their primary purpose and carry out this mission directly in the production of goods and services of general interest. Work integration, which is a key mission of many social cooperatives, should be considered as a service of general interest to all intents and purposes, regardless of the types of goods or services which they produce”.