Opinion

The social economy and a new development model

photo_camera Social economy

The COVID-19 pandemic has revealed many cracks in our societies, bringing to the surface political, economic and social problems common throughout the world.

On the one hand, the capitalist system is in crisis. It is the same system that in the past helped liberate the dominance of feudal regimes and developed productivity. However, ethical norms and rules for immediate gains have been lost due to greed and short-term vision.

On the other hand, there is also a social crisis. The institutions of the social contract that had for decades achieved equilibrium and laid the foundations of modern societies and democratic regimes are in danger. The system that proposed solidarity and equality has degenerated.

Therefore, today we must undertake important reforms and transitions so that inclusion, justice, sustainability and equality are the foundations of a new development model. In the face of this situation, the social economy provides solutions to tackle the crisis with a change of perspective.

The Social Economy

The social economy is already a fundamental part of the private sector and contributes to sustainable development and competitiveness. It is a leading business player that energises the economies of countries such as Spain, France and Portugal. In the European Union, it generates 8% of GDP and represents 10% of all companies. In the countries bordering the Mediterranean, it has a high socio-economic impact with more than 3.2 million social economy companies that generate 15 million jobs.

Prosperity is interdependent with inclusion and sustainability. And the fact is that no enterprise is sustainable if it does not incorporate and reflect society. The social economy is a vibrant sector of the economy and promotes sustainable and inclusive societies, along with jobs and growth, but it needs adapted and enabling ecosystems to thrive.

The Mediterranean is facing a serious demographic challenge and needs to create six times more jobs than those currently available. With youth unemployment at 35%, 45% for women, the situation is quite dangerous in some countries. Having a healthy, inclusive and sustainable business ecosystem would produce prosperity and channel all that potential.

In Europe, the social economy encompasses a plurality of successful enterprises and entities that provide jobs, social cohesion and are a key factor in the implementation of the Sustainable Development Agenda 2030. Therefore, the Mediterranean needs to promote these values and business models, establish a legislative framework that allows them to operate at a regional level, and support their growth and access to financing so that they can contribute to the region's socio-economic development.

A new development model

Serious and coordinated action is needed to create inclusive economies and youth employment. In addition, the path to the private sector must be facilitated and increased public investment in infrastructure, health and education must provide the required tools. A project is needed that provides alternatives to accommodate the enormous energy of youth and women, options that improve their representation within the governance of organizations, and use that energy for economic and social reconstruction.

It is possible to encourage the process of innovation and experimentation, as well as collaboration between all the actors in the market, even in sectors of activity not connected to the social economy.

The key to this is to recognise the added value of social economy organisations, to improve their capacity to inform about the social and economic dimensions of their actions, and to use this potential to combat unemployment.

Traditional banks could improve their risk assessment practices in order to estimate more accurately the risk associated with lending to social economy organizations, create appropriate financial instruments for these organizations, and increase participation through dedicated guarantee funds. It would also be appropriate to encourage social economy actors to mobilise their own financial resources by setting up mutual funds. The aim is to support entrepreneurship and social enterprises.

The social economy must be part of a new model of economic development, which also includes a digital revolution, green and blue, to achieve a fair, egalitarian and inclusive system that can meet social expectations and reduce the injustice gap. The fight against inequality and poverty must be at the heart of this great challenge.