Thursday, August 25, 2011

Growing the Solidarity Economy

Justice Rising: Building an Economy for People and Nature A Publication of the
Alliance for Democracy
by Nancy Neamtan, excerpted from her talk at the USSF

The Solidarity Economy—
what we call the
social economy in Quebec—refers to cooperative,
collective and non-profit, democratically-
controlled enterprises, that emphasize the
primacy of people over capital and embrace a
philosophy of empowerment, equality and
inclusivity. Their goods and services respond to
the needs of the community. These enterprises
do not move away, sell out, or lay off masses of
workers in order to maximize return to shareholders.
They are born out of the need and
aspirations of the community, which will not let
them fail. Even conservative politicians want to
keep jobs in their community.
We used to define our institutions as a community
radio station, or a fair trade organization,
or a co-op with no common umbrella for
defining institutions as part of the economy.
Then in 1996, we came together to establish
the Chantier de l'économie sociale. Our first victory
was for the government and the private
sector to recognize that we are part of the economy,
which gave us the standing to engage in
the policy dialogue.
As a result, the
Chantier or its allies
proposed every piece of
successful public policy
in the last 15 years. The
old top-down approach
does not work, because
you cannot force programs
on people.
Having useful public
policy means that the
priority has to come
from the bottom up.
You have to find out
what the needs are.
We have done a lot of
work around access to
capital. We raised private
money and a government
match to create
a $10 million fund
that made non-guaranteed
loans up to
$50,000 to co-ops and
non-profits. Everybody
thought we were crazy.
But, we were able to
show that this was one of the most solid ways
of investing in job creation. Now lots of local
funds have opened up to collective enterprise.
The next issue became access to equity,
because as our projects grew, we cannot just be
borrowing millions of dollars and then have to
pay it back the next day. That is not the way
General Motors or any other big corporation
works. If they need money, they sell you shares
on the market. And if you want your money
back the next day, you can sell it back on the
market, but the enterprise does not have to pay
it back. So, of course they can develop.
But the Solidarity Economy mission is not
to give return on investment to outside shareholders.
On top of this, when venture capital
comes in to finance an enterprise, they will
share the risk, but they also share the power. We
cannot do that with democratically controlled
enterprises. So we needed to create democratically
controlled tools for investment.
As a solution, in 2006 we were able to
negotiate seed money from the Canadian government
and leveraged some other capital to
create a $52 million investment fund controlled
by the Chantier Trust. Now we have financial
instruments responding to the needs of the
Solidarity Economy actors and enterprises.
In Quebec, the biggest venture capital
investors now belong to the movement. Unions
negotiated with the government to create a $7
billion pension fund that gives a tax credit if
you put money into it. In return, the fund has
to invest 60% of their money to create and
maintain jobs in small and medium-size businesses.
And there is a similar fund with a billion
dollars that invests in self-management, environmental
or Solidarity Economy enterprises.
Now we have the venture capitalists running
after us, because we came out of the crisis on a
smooth economic rise. When comparing risk to
margin of return, we come out smelling like a
rose. The circle just grows and grows and grows.
Nancy Neamtan is President and Executive Director of
the Chantier de l'économie sociale. For the past 20
years, she has been involved in various organizations
devoted to community economic development and labor
force development and training.
Growing The
Solidarity Economy
Economic Twists
• The economy is the work people do every day.
The economy is not the stock market
• The financial crisis shows that private enterprises
are more dependent on government support than
non-profits and co-ops.
• Why is it that private companies that provide
public services get government contracts that pay
high wages and a tidy profit, while non-profits providing
public services only get grants that pay low
wages and allow no year-end surplus?
• Solidarity Economy enterprises should pay lower
taxes and receive subsidies because they produce
social benefits.
• Private businesses that harm the public good
should pay higher taxes and receive no subsidies.
• Nobel Prize winner Elinor Olstrom points out that
the best way to manage resources is not through
the private sector and not through the government
bureaucracies, but by democratic organizations
controlled by users.
• Private enterprise thinks that market share belongs
to them. But many things are better done by the
Solidarity Economy.
• When a co-op fails, it is not because the model is
not good.
• When a private business fails, it may well be
because the model is not good.
Nobel Prize
winner Elinor
Olstrom points out
that the best way to
manage resources is
not through the
private sector and
not through the
government bureaucracies,
but by democratic
controlled by users.

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