Welcome to FEPPS Talks, the podcast series of the Foundation for European Progressive Studies. Find out more about us on FEPPS-Europe.eu. Hello this is FEPPS Talk, the podcast series of the Foundation for European Progressive Studies from Brussels. My name is Lars Lohander and I'm the Secretary General of FEPPS. And this is another episode of FEPPS Talks with distinguished guests from Canada, which is not very common.
Most of our guests are from different European countries, sometimes from the so-called Brussels bubble. But Professor Margarita Mendel is connecting with us from Montreal. She is a distinguished professor emeritus at the School of Community and Public Affairs at Concordia University. Margie, welcome to our program. Thank you. Thank you for having me. It's a pleasure. Let me introduce you briefly to our listeners.
I think we can say that we have three decades long collaboration and even friendship because we have a shared interest in the legacy of Karl Polanyi, a famous social scientist of the Hungarian origin. But we also have another shared interest, which also dates back to some time, which is about developing, promoting what we call the social economy. And this is primarily what I wanted to talk with you about.
You have been very active in Canada to develop the practice, to some extent also the legislation about the social economy. You have been working with a variety of international organizations, including in Europe, the OECD, the European Commission, the Global Social Economy Forum. And more recently, you have been working with the ILO, the International Labour Organization, on the same issues.
So apart from your teaching in Canada about social innovation and issues like economic democracy, which must be a fascinating course, you also have been a practitioner of the social economy and the policies surrounding it. And I thought that this would be now a very timely conversation because the European progressives are now approaching an election period when the new frontiers of the social agenda would need to be defined again.
And I always thought that the social economy is sometimes an ignored, sometimes an underdeveloped area for European policy on which we could do more. We could do much more. And you are not only experienced in Canada, but also you have an overview of the European and the American experience as well. Maybe we could start with some important examples of your personal involvement in the work on the social economy, and then we could do some transatlantic of merit and afterwards.
Okay. There's a lot to say. Thank you for that broad, those broad brushstrokes. It's a great deal to say. In my own case, I want to go back just briefly to the 1980s and the recession because it was very formative in the development of the social economy in Quebec. And at the time, Montreal was the cradle of industrialization in Canada.
And it then appeared to be also the graveyard in the early 1980s, following a long period of deindustrialization and closure of factories and many layoffs and so on and so forth. What was very interesting at the time was that many of these neighborhoods where the industrialization and deindustrialization were taking place were very cohesive. And most people living in these neighborhoods worked for these large factories. And suddenly there was this devastation of closures and job losses.
I became involved as a professor with my students, not as a voyeur to observe disaster, but to see what could be done by way of a transition or a transformation for these neighborhoods that were really devastated. And so we worked very closely. And I think this was such an innovation. We worked very closely with the businesses that were going to close with the labor movement. The union, most of these businesses had a large number of employees and they were unionized.
But with social movements, with community actors, basically not to save a dying industry, but to work towards a transition. Because I'm an economist, last year, you are as well. And the trend at the time was to say, well, this is history and move on and people will leave the neighborhood and find jobs elsewhere. And the neighborhood will become a museum of industrial Canada that no longer exists. Well, we rejected that.
And to be very brief, we formed what became known as Community Economic Development Corporations, which were subsequently supported by government. And it was an economic development model. It was a model of economic democracy, really, because it brought together all these stakeholders to say, what can we do? And in some cases, we were able to save one or two factories from closure.
And what this demonstrated was the importance of dialogue, was the importance of negotiation, was the importance of collaboration, and the importance of government at the time supporting but taking a back seat. The agenda was really written by citizens. So this was really formative in the 1980s and very, very successful. And these experiences mushroomed across Quebec. And in the 1990s, there were over 100 local development centers that were established.
It's a sad story because many of these no longer exist. And I'll leave that for after.
I'm just giving you the sort of background because I think what distinguishes the social economy in Quebec, or what we now call the social and solidarity economy, is that we've always thought beyond the actual enterprises, the actual collectively owned enterprises, which are at the heart of the social economy, the cooperatives and the not-for-profit social enterprises and so on, we've always thought of the social economy as a model of development.
So we needed to ground ourselves in a place-based strategy, look at the need for development tools to allow the social economy to thrive, to grow, to thrive, and to be territorially rooted. So if we fast forward to 1995, the government that was in power at the time was also faced with a fiscal crisis and a high level of unemployment.
And I'll be brief here, but in Quebec, there was always a tradition of what we call concertation, concertation, which is not an English word, but it's different from the social democracy, institutionalized social democracy model because this is sort of case by case where times of crisis, the labor movement, the business community and government come together to say, "What is to be done?" And they do this together.
For the first time in 1995, the then Premier of Quebec invited what he called the community sector to participate in this conversation. And they created something called the Task Force on the Social Economy, the Chantier de l'Economie Sociale, and gave the Chantier two years to demonstrate how the community sector could also participate in a collective project to address this economic crisis of deficit, the need to reduce the deficit, and also to address unemployment.
They were given a challenge to create 20,000 jobs. They exceeded that objective way beyond the 20,000 jobs that were created in new sectors. And in 1999, very, very cleverly, those who were working on this agenda said we had to separate ourselves from government and create a nonprofit entity called the Chantier de l'Economie Sociale so that we could take this work forward and not be reliant on a particular party in power, a particular government agenda.
This is now 25 years later, and the Chantier de l'Economie Sociale not only exists, it's a remarkable story with its ebbs and flows of successes and challenges and so on, but it is institutionalized, it exists, and we remain very committed to this notion of a model of economic democracy without in any way shape or form minimizing the role that collective enterprises play, which are at the heart and core of the social economy. I mean, I could go on, it's a really interesting story.
I'll stop here maybe you could, if you wish to. Indeed, I have two questions about your introduction. One is whether this model, which you developed in the 80s and the 90s, spread to other parts of Canada, did it inspire other people in Canada?
And then obviously, I wanted to ask you about, let's say, the Transatlantic Comparison, how this tradition, which you developed in Quebec, would compare to European traditions of the social economy and the cooperative movement, whichever you want to start with. Well, let me start with my own country, I'll start with Canada.
The short answer is no, it did not spread to the rest of Canada, but that's not to say that there were not other very interesting and inspiring initiatives that were going on across the country. The vocabulary was very different. In English, don't forget, Quebec is a small French speaking province that exists in this very large North American English speaking seat.
And that's important because this isn't a political statement, it's not with respect to whether one is a sovereignist or a federalist. There is a glue, there is a cohesion in Quebec, which is unique because of this fact of it being a French speaking province, which is probably the reason why we're able to work collectively across social movements with the business community, with the labour movement and with government. This is not the case in other parts of the country.
That said, community economic development initiatives exist throughout Canada, from coast to coast. We had a short period where we received some funding, competitive funding, these were academic grants that a group of professors from across the country successfully applied for, where we developed a social economy agenda for the country. It is not deeply rooted, there is no equivalent to the chantier in other parts of the country.
I should mention that we had a brief, very inspiring moment for Canada, and that was from 2003 to 2006, when Paul Martin was the Prime Minister of Canada, and he was a strong supporter of the social economy, and he was very eager to make this a Canadian agenda. Sadly, his tenure as Prime Minister was short-lived and this agenda was dropped. Since then, we have had a variety of experiences.
Most recently, with the current government in power, we just launched what is called a social finance and social innovation fund of $800 million, which is quite significant, but I should tell you it took four years to get this off the ground. It is really in Quebec that this is flying and moving much faster because we have these routes that now go back to the experiences in the 1980s and in the 1990s.
That's a long answer to your short question, but it's a variegated sort of portrait in Canada. We are much closer to a European definition or a social economy identity with the history of the cooperative movement and also the history of we participated together in that large forum on social business.
Recall that there was lots of discussion and debate around whether this should be an Anglo-American vision of social business or whether it should be much more of a European vision of social business, which was a child of the history of the cooperative movement and the social economy. The affinity for Quebec is closer to Europe and to experiences in other parts of the world and in the global south in Latin America and Africa.
We have exported a lot of our experience, but we've also imported a lot of experience from different parts of the world. Our solidarity cooperatives, for example, are a variant of the social cooperatives that were created in Italy. I can give you examples of collective kitchens, which in Quebec resemble very much the collective kitchens in Peru. We really are an amalgam of initiatives. We learn from and then we do not adopt, we adapt.
What I find fascinating is that for Quebec, for so long myself, my colleagues, my academic colleagues, my practitioner colleagues traveled to Europe and other parts of the world because Quebec was so unique in its approach and adoption of a social economy model.
As I sit here in Montreal and as I've traveled, what is happening in Europe, despite your introductory comments of it being ignored or perhaps underdeveloped, maybe because my focus is so much on the social solidarity economy, I find that there has been such a rapid increase in attention to and policy initiatives on the European front and that we are in a much more of a catch-up mode here and it's not a competition. It's just that we leverage each other's experiences.
When things go well for you, we bring them home and demonstrate to our governments why it's succeeding in Belgium or Spain or Italy and why we must similarly adopt measures. By subversa, we have brought our experiences to bear on yours in Europe. The European Union Action Plan that was passed in 2021, we have no equivalent at the federal level here.
Of course, here I would be interviewing you and saying, "Well, what does all this mean in terms of adoption and implementation?" Europe is a big continent. What is happening at the country level? I watch as closely as I can. Spain recently reinstated a ministry or a minister for social economy. There is framework legislation in many European countries. We have framework legislation in Quebec.
Of course, we have the United Nations resolution that was just passed this spring on the social and solidarity economy. That took 10 years. That's 10 years of hard work and it was the founding of the United Nations Task Force on the social and solidarity economy in 2013, which was also a very important moment. If we fast forward 10 years later, that resolution was finally adopted.
We sit here and I think what is unique for us, and I'm now talking about Quebec rather than Canada, is that we are very rooted in civil society. There is a movement. There's a social economy movement, which is strong. It exists across Quebec. It's not centralized. The Chantier exists in Montreal, but there are many Chantiers that exist throughout the province. They only relied on government policy initiatives. I don't think our story would be the same as it is today.
It is thanks to the ingenuity, the innovative initiatives, the tenacity, the guts. The guts and courage of many men and women and young people that are involved, many young people in the social economy, that it exists, that it's as successful today as it is because we do not have the same government support as we did, I'd say a decade ago or 15 or 20 years ago.
I watch what is happening in Europe to some extent with envy, not because I think it's easy and I understand that the implementation in each country is a challenge, but symbolically, it's very significant. These symbols are important because it means that this is on the agenda.
Even if we know that it is not at the center of European Union politics, we know that and we also know what the environment is in many European countries at the moment, which would be not terribly favorable to the social economy.
I think I would need to explain my question further because I very much very well understand your point that several European countries are quite advanced with maintaining a cooperative movement, having supportive legislation, which in my view is a sign that most of the Europeans insist on a model which we call a social market economy in which the social sector should have a strong role and it should represent a strong leg of the economic system.
But why was I saying that for me at the European level, it has remained somewhat marginal? You remember we both attended a conference in Strasbourg exactly 10 years ago. At that time, I think we expected that in a kind of reconstruction of the European business model after the great crisis, there would be a more central role for the social economy. That has in my view at least two dimensions or two fields.
One is finance, where a social sector could play a greater role with cooperative banking and microfinance and other forms of not for profit and not necessarily for bonus-oriented financial operations and models. The other one is where there is a lot more talk today, which is industrial policy. I think your Quebec example should be particularly relevant because Europe is struggling with the same.
Now there is a lot of talk about the need for a new industrial policy in Europe, but still very few people connecting this with the opportunities the social economy would provide. That's why I was saying that if you look at it from this perspective to have a new model of finance or a new industrial policy, maybe the social economy is still an underdeveloped area. What we always said from the beginning was that the social economy was not only the social sector.
It was very important that the social sector be recognized for its contribution to the economy. It employs thousands of people. In the initial phase when the Chantier was created in 1996, there were three sectors that were identified. One was daycare, the other was home care, and the third was what we would now call environmental sector, at the time we refer to it as resources. In the daycare sector, for example, is the fourth largest employer in Quebec.
So we're talking about a significant contribution to the economy, through multiplier effects and through purchasing power and so on. But we have fought very hard and successfully to say two things. One, the social economy is not there to manage poverty, or to only deal with poverty reduction. A macroeconomic agenda must deal with poverty reduction strategies.
This is not the responsibility of the social economy, that it was beyond the social sector, and that collectively owned enterprises exist across all sectors, whether it's finance, daycare, home care, IT, manufacturing, you name it. We could say it's a parallel economy, all these sectors that you see in the private economy, in the market economy, exist in the social economy as well.
My impression, certainly if you look at the clauses in the United Nations resolution on the social economy or on the ILO resolution, it was adopted. This was a, 2023 was a big year of adoption of resolutions and recommendations. It was the OECD recommendations on social event, innovation, the ILO resolution, and the United Nations. They all address the social and solidarity economy broadly.
The question is, what's happening on the ground, you know, within Europe, within the countries that are part of the European Union, or within the United Nations, or the members of the United Nations communities. But these documents understand that the question of ownership and governance, which underlie the social and solidarity economy, have a demonstrated capacity to address the SDGs.
For example, because this is the sort of mode jour, I mean, is where does the capacity lie to successfully address the SDGs? I mean, 2030 is only a few years, six years away, that's not a very long time to meet, you know, the objectives of that very broad agenda.
And so you're right, you know, we are not the World Economic Forum, but I should say there was a meeting of the United Nations Task Force on the social solidarity economy here in Montreal in October, and there were people there from the World Economic Forum. So there's, you know, when things work, you have, you know, new friends, as one would say. I don't, you know, we could get into a whole discussion on the ideological differences, which are obvious.
But I think what we have proof of is that governance and ownership matters, particularly the issue of governance, and the survival rate and the successful, you know, operations of not all, but most cooperatives and not-for-profit social enterprises, their bankruptcy rate, you know, within their first five years of existence, and we've gone through really rough times. I mean, just the last three years have been unprecedentedly rough.
The survival rate of the social economy of social and solidarity economy entities, nonprofit and cooperative, has been much greater than the private sector. They have, likewise, in 2008 and 2009, you raised finance, you know, the credit unions, and again, not all, but the social economy financial sector did not go belly up as quickly as many of the, you know, the financial institutions in the private economy. And so, you know, you come back to finance.
When we developed our vision of the social economy, we understood immediately that we needed development tools, and finance was a great access to finance. Access to capital was critical. And we have a whole range of investment tools that we have developed over the last 25 years.
Within Europe, I mean, we work very closely with different organizations, like the Federation of Ethical Banks, the Bayer, you know, across Europe, with similar credit unions and ethical banks and social finance institutions in the global south. All of these initiatives always run the risk of being captured when they're successful.
And I'm not a cynic, but I do think that the whole trend today in impact investing, for example, is a form of capture of what we have done and what we have tried to do in developing financial tools for the social and solidarity economy, because all the financial tools, investment funds that exist have responded explicitly to the needs of social economy enterprises and organizations.
When we realized that there was just too much short-term capital available and that we needed to have access to long-term capital, how do you create long-term capital for cooperatives when there isn't an equity issue involved? We invented a patient capital tool, which, you know, does not involve ownership, but it allows for long-term investment possibilities for investors.
What happened with the surge in impact investing was that it's detached, it's not connected directly to the needs of the enterprises that it's trying to serve. It's an objective with capital that is floating and large amounts of capital that are available, that is available without having the... You know, if we were teaching our students, it would be supply-chasing demand. I mean, there isn't the demand which is demonstrating a need for capital and a need for customized capital.
So the impact investing model, the social impact bonds, all these very contemporary and trendy tools, I think, have to be nuanced. You know, are these forms of, you know, responding to the financial crisis in 2008, 2009 and capital flowing, you know, from private financial institutions into this sort of social finance sector? A lot of it, I think, is... That is the case.
In the case of social impact bonds, we came out very strongly against these because it was in our view a form of privatization by government where the government could just disengage from social service provision and, you know, and turn this into a risk return market for private investors. So what the social economy, I think, demonstrates is a kind of vulnerability that the more success it demonstrates, the greater the risk that it is captured by a kind of market ideology.
And we have resisted that on the grounds of success, you know, demonstrating that shareholder capitalism, we'll call it what it is, has demonstrated it, its failures has demonstrated the excessive control over management decisions, over governance within enterprises. These are not possible in a social economy entity where there's one person, one vote. We don't... They are not subjected to the decisions made from outside by shareholders who have control over these enterprises.
So just to circle back to what you were saying, if we were to do a survey now of so-called social economy entities or social and solidarity economy enterprises, we would see many more in a diversity of sectors than we would have seen 10 or 15 years ago when it was very much the social which dominated and it was in many ways associated with the social market economy or with also the social enterprise Anglo-American model of disengagement by government
and a form of privatization of social services. But I'm encouraged, very encouraged, to see young people now in web design, in alternative energy enterprises, waste management, 3D printing, I mean, you name it. I mean, all these, what we would call high-tech sectors that are cooperatives and not-for-profit enterprises. And I think young people really want to work collectively. I mean, this is a demonstrated reality, at least in the context in which I live.
But I will absolutely conclude with you that we are on the margins. I mean, we are part of a global... But we're pushing towards the center. We have much more recognition for the work of the social and solidarity economy internationally. And I think the fact that you've got people from the World Economic Forum and from major players in mainstream economics curious and interested in what we do is a sign that there's something happening beyond focusing on the social.
I'm glad you mentioned the young generation and the new technologies because I think it would be wrong to kind of leave an impression that like in the case of Quebec, the point is just to protect somehow jobs in declining industries because certainly there's a forward-looking aspect of the social economy when it comes to responding to social needs which cannot be satisfied through the profit-driven enterprise sector.
And obviously this leads us to a little bit more theoretical discussion. And I wanted to connect the two sides of your work, one on the social economy and the other one regarding the legacy of Karl Polanyi because I'm really curious whether you found the work of Polanyi as an inspiration to work on the social economy or vice versa. What is the connection in your case between the two?
Because I think basically anybody you speak to who read the Great Transformation or other works of Karl Polanyi, they find it as a major inspiration. Some people can draw an inspiration for the whole academic life from this book. So what was the situation in your specific case and what could you recommend to our young listeners?
As you know, the work of Karl Polanyi has been very inspirational for me throughout my academic career which is now quite long, it's almost half a century that I discovered Karl Polanyi and I should tell you that doing a doctorate in economics in the late 1970s and the early 1980s, I discovered him all by myself on my own. He was not on any syllabus.
His Great Transformation was not on any syllabus in any economics course that I took as an undergraduate, as a master's student or as a PhD student, including economic history and history of economic ideas. I mean, I hope that's no longer the case in some economics departments. So for me, theoretically, his work has guided me.
I'm very fortunate because we created the Karl Polanyi Institute of Political Economy and we have his archive and I discovered fascinating work which is now well known because many scholars have come to study the archive and have written books, but his focus, I mean, the Great Transformation is extremely well known. Less known is some of his earlier work in Austria in Vienna and his work on what he called a functional democracy or a functional socialism.
And it really, you know, if we fast forward, we could take many of those writings and say, well, these are really the back with theoretical backbone of the social and solidarity economy. Pat Devine many years ago wrote a book on negotiated planning. I mean, these are terms we don't use anymore. They sound wooden, they sound old, but they're all about dialogue. They're all about communicating needs and embedding the famous Polanyi term, embedding or re-embedding the economy in society.
And so for me, the social and solidarity economy as a model is exactly that. It is a form of re-embedding the economy in society. If we go back to the UN resolution where they say that, you know, it is the social and solidarity economy that can achieve the SDGs, the SDGs are socially constructed objectives to save the planet and to contribute to societal well-being. And then you construct an economy, an economy of provisioning if we want to use Polanyi's terms.
And so it goes back and forth. I've never been a deductive theorist, I'm much more of an inductive researcher where I have seen with my own eyes my observations and some of the applied research that I've done that the work we've done, whether it's on microcredit, on new financial tools, on business development strategies, on identifying new needs and sectors, it's a jigsaw puzzle, but the pieces fit very neatly.
And when you put the pieces all together, you have an economic model, which is a Polanyi model of decommodification. And forgive me for using technical terms, but Polanyi's main thesis is that, you know, labor, money, land, nature are fictitious commodities. We have turned all these into commodities. So labor market wages are determined through market interactions.
Money, rather than being a means of exchange, generates interest and the famous M.M. Prime that we learned in our Marxist economics. Land is nature and cannot and should not be commodified. If we look at the wide spectrum of the social and solidarity economy, the labor, labor co-operatives is a key example of the decommodification of labor, where there are fair wages, decent work and so on.
And bonuses and all sorts of monetary remuneration that we would find in the private economy, but these are not subjected to, you know, market to market forces. Money, we saw the impact of the 2008, 2009 financial crisis and we see that in the social finance sector that we have created us and others in other parts of the world that there is a rate of return, which is viable and allows for reinvestment into social and solidarity economy entities. But we don't have speculative returns.
We don't have the ability to play the markets and generate returns on money itself. Land in nature, we don't even need to discuss the impact of the commodification of nature and the planetary crisis that we face. And there are plenty of examples in Europe and elsewhere of land trusts, more and more land trusts that exist or cooperatives in energy.
I mean, in Europe, they're wonderful examples, I think of Denmark, a country that I've looked at quite closely on renewable energy and the world of cooperatives. So these are all initiatives that are, you know, this is a kind of circular response. Yes, the work of Karl Palani is very inspirational because it's so rich in its understanding of the impact of market forces on societal well-being.
But then we see these initiatives that are actually playing out a Palanian agenda, so to speak, reinforcing his call to re-imbed the economy in society through these lived realities. So what I used to say to my students was that, you know, social and solidarity economy is theorizing itself as it evolves. On the question of young people, I was just in Dakar in Senegal for a global social economy forum. There were over 6,000 people and there was an entire day devoted to youth.
And there were, I think, 2,000 young people from all over the world. It was remarkable. And what they said at the end was, don't have a special day devoted to us, please. We are your future and we should be, you know, they weren't excluded from the rest of the conference, obviously, but it was a day on women and there was a day on youth. And both women and youth said, there's no reason to have these separate days.
We are all, you know, working towards the same objectives, which are to democratize the economy or to decommodify if we want to use Palanian terms. And one last issue I think I want to just raise about Palanian, which was, for me, a huge surprise and has been very inspirational. And I quote it all the time. And that's in a lesser read book, which was published posthumously, The Lidlighhood of Man, where he talks about agency and that we have to, we have to fight fatality.
There's no fatalism about how societies will evolve. There is agency. Human beings have agency. And I think this is what we've experienced in the social and solidarity economy around the world. The capacity, the courage of people to stand up and say, well, we can do this differently. We can do this collectively. And we do not have to respond to market impulses, but we need to be viable. We need to be profitable.
And I put that in quotes because the profits are reinvested in the social and solidarity economy. We need to offer decent work, decent wages. We need financial tools, business development tools. We need public policy that enables the social economy. I think that we are all very much on a Palanian journey. Thank you so much. I think this is an excellent closure of our conversation.
You gave us a lot in terms of practical examples, but also the theory of the social economy, how the concept is embedded in a political economy. And originally, I wanted to focus on the transatlantic comparison, but you also stretched it to Africa with the latest example.
And I think this just shows that any discussion on sustainable development and social cohesion must put the question of the social economy into the center because there are a lot more opportunities than many people would think about. And many examples which we can explore together. Thank you very much for your time. You're welcome. It's a pleasure, really a pleasure. Exactly.
There are many points we can still come back again, including the Polanyi legacy, but also the practice of public policy. Thank you, Lasso. Thank you very much for the invitation. It's a pleasure. [music] [music fades out] [BLANK_AUDIO]