Marie J. Bouchard, Canada Research Chair in Social SOCIAL ECONOMY Economy Université du Québec à Montréal
The social economy refers to the economic activities carried out by cooperatives, associations
(or non-profit organizations), mutuals and, more recently, foundations.
Often called the “third sector,” the social economy differs from the capitalist economy and public
economy in that it combines private (autonomous and economic risk taking) yet collective
(associative) entrepreneurship and management with goals that are not focused on profit (mutual
or public interest). Social economy organizations and enterprises operate according to a common
set of principles: the finality of providing services to members or the community, the democratic
governance by members, and the primacy of individuals and the social objective over capital in the
The social economy also refers to activities aimed at experimenting with new operating models
for the economy, such as local trade systems and community currencies, fair trade, community
economic development, social integration through economic activity, microfinance and solidarity
Older forms of associations have existed through the ages. But the modern social economy was
born in the last third of the 18th century in Europe and during the 19th century in America in
reaction to the expansion of the market economy and as a result of the recognition of freedom of
association (Vienney, 1980; Desroche, 1983; Gueslin, 1987; Chanial, 2009). It emerged in the wake
of rural and labour movements that mixed mutual aid with production in common and called for
political regulation of the economy (Petitclerc, 2007). The institution of social rights and the
success of the market economy were the main reasons the social economy primarily played the role
of a «sector» from the second half of the 19th century to the middle of the 20th century (Fauquet,
1965). With the crisis of Fordism and of the welfare State, new social economy organizations
emerged in the 1970s and 1980s in the wake of civil society and new social movements that
challenged exclusion in the spheres of work and collective services (Bélanger and Lévesque, 1992)
and called for new forms of engagement in the public sphere (Eme and Laville, 1994; Laville, 1994).
These organizations emerged not only to respond to social aspirations, but also to meet new needs
brought on by the employment and labour crisis, the reorganization of social services, and new
forms of territorial regulation (Favreau and Lévesque, 1996; Klein, 1989).
Although social economy enterprises and organizations share a historical basis and common
principles, they are also a heterogeneous group in a number of ways. First of all, they differ in their
institutional forms, which often translate into different legal statuses. A cooperative is a group of
persons that has freely gathered to meet common social, economic and cultural needs and
aspirations through jointly owned and democratical y controlled enterprises that they use as
consumers, workers or producers. An association (known in Quebec as a non-profit organization) is
formed by at least three persons united voluntarily to carry out joint activities. Associations are
subject to the constraint that they may not distribute their benefits, which may only be used to
develop their activities. «Social economy» associations are those that undertake economic activities
that generate goods and services used by their members or third parties. A mutual is a group of
persons pursuing a social, non-profit goal that consists in offering protection to members and their
families from the impacts of various social risks (illness, fire, etc.). A foundation is a non-profit legal
entity created by one or more donors, which may be natural persons or legal entities, to perform
charity or public interest work. Public foundations that generate goods or services and adopt a
democratic decision-making process are more and more often referred to as being part of the social
Different societal models exist in which the social economy assumes contrasting roles (Lévesque
and Vaillancourt, 1998; Demoustier, 2001). In a welfare-State model, the social economy subsists
only residually, been conceived of as strictly complementing the public network and nothing more.
In a liberal or neoliberal model, where State intervention is meant to remain minimal, the social
economy is in charge of non-market and redistributive activities, supported by philanthropy,
volunteer work and the informal economy instead of public funding (Chaves and Monzón Campos,
2005). In an enabling-State model, a plurality of social actors share responsibilities with the State,
namely the social economy, which is engaged in both market and non-market activities, with the
objective of democratizing work and services, and even co-driving development through its
participation in building public policies (Vaillancourt and Leclerc, 2011). These contrasted visions
influence what is expected from the social economy, and orient the measures that are applied to
evaluate its contribution (see Bouchard, 2009).
The social economy is described according to three main theoretical approaches. In French-
speaking and Latin Europe, the school of social economy combines an institutional with a normative
approach that identifies legal statuses, operating rules (Vienney, 1980), values shared by
organizations, democratic participation in particular, and enterprises that make up the sector
(Draperi, 2007). The solidarity economy approach (Eme and Laville, 1994; Laville, 1994; Singer,
2005), which was created in France but also exists in Latin America, promotes the ties of reciprocity
that characterize economic exchanges and the public space of political debates figuring in new
social economy initiatives, such as local community-based service associations. Especially present
in Anglo-Saxon countries, the non-profit organization (NPO) approach essentially involves
associative, non-profit organizations and emphasizes the non-distribution constraint. The first
major difference between these theories is that the social economy and solidarity economy
approaches, with which the European social enterprise current can be associated (Borzaga and
Defourny, 2001), emphasize democratic participation, an aspect ignored by the NPO approach. The
other difference is that the NPO approach emphasizes the non-distribution constraint, which
practically excludes most cooperatives and a large number of mutuals (Evers and Laville, 2004;
For approximately thirty years now, the dominantly non-market components of the social
economy (non-profit organizations and cooperatives that do not distribute dividends) have played
a large role in generating social services in the public interest, while the dominantly market
components (cooperatives and mutuals), which are essentially rooted in local economies, have
adapted their activities to globalized markets. In the context of globalization, the social economy
may be a counter-proposal to market liberalization. At the same time, however, it is at risk of being
instrumentalized by States engaged in privatization, or being trivialized in a competitive
environment that prompts it to opt for demutualization. Social and public recognition of the social
economy can counteract such obstacles. This requires that the sector be able to communicate its
specific value (Bouchard, 2009), which, though different from the market economy, public economy
and household economy, also complements them (Evers and Laville, 2004). This recognition also
necessitates an innovative re-examination of synergetic connections between State, the market and
civil society (Lévesque, Bourque and Forgues, 2001).
International Co-operative Alliance (2010)last retrieved on May 1, 2010). Association internationale des sociétés d'assurance mutuelle (2010).(last retrieved on
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consommation. Un point de vue sociologique,” Cahiers de recherche sociologique, no. 17, pp. 17-51.
Borzaga, D. and J. Defourny (eds.) (2001). The Emergence of Social Enterprise, London, Routledge. Bouchard, M. (ed.) (2009). The Worth of the Social Economy: An International Perspective, Brussels, PIE Peter
Chanial, P. (2009). La délicate essence du socialisme: l'association, l'individu et la République, Paris, Éditions Le
Chaves, R. and J. L. Monzón Campos (2005). L'économie sociale dans l'Union européenne, Report for the
Defourny, J. and P. Develtere (2009). “The Social Economy: The Worldwide Making of a Third Sector,” in
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Demoustier, D. (2001). L'économie sociale et solidaire : s'associer pour entreprendre autrement, Paris, Syros. Desroche, H. (1983). Pour un traité d'économie sociale, Paris, Coopérative d'information et d'édition
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ENCYCLOPEDIC DICTIONARY OF PUBLIC ADMINISTRATION
Laville, J.-L. (ed.) (1994). L'économie solidaire, une perspective internationale, Paris, Desclée de Brouwer (New
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Petitclerc, M. (2007). Nous protégeons l'infortune : les origines populaires de l'économie sociale au Québec,
Singer, P. (2005). “Économie solidaire 1,” in J.-L. Laville and A. D. Cattani (eds.), Dictionnaire de l'autre économie, Paris, Desclée de Brouwer, pp. 243-252.
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HOW TO CITE
Bouchard, M. J. (2012). “Social Economy,” in L. Côté and J.-F. Savard (eds.), Encyclopedic Dictionary of INFORMATION LEGAL DEPOSIT
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