“Innovation in Organizations of the Social Economy” by Prof. Benito Díaz

Professor Benito Diaz
“Innovation in Organizations of the Social Economy” by Prof. Benito Díaz, Editor of CAYAPA (Venezuelan Journal of Social Economy), Venezuela Board of CIRIEC, Professor at the Universidad de Los Andes – Trujillo. Watch the video. Listen to the English audio file or audio file in Spanish. – Read the original Spanish presentation.

[Translation of his presentation at the First Global Prout Conference in Venezuela, “Building a Solidarity Economy based on Ethics and Ecology”, July 7-9, 2011, Caracas.]

Thank you for your presence. Thank you, Dada, José, and all friends of Prout for your invitation to participate. Thank you to the Parque Technologico de Oriente for their sponsorship. I feel honored for the invitation and I want to contribute with this presentation on “Innovation in Organizations of the Social Economy.” It is appropriate to talk about what social economy organizations are, and what innovations are, and give some examples of how they blend together, and why it would be good for us to blend them and combine them with the team of Sadvipras [enlightened leaders].

What I will talk about is in the context of the National Development Plan of Venezuela 2007-2013, and I will refer to fundamental ethics. I’m very happy to be here because we share the vision of the new society proposed by Prout, of grassroots organizations, based on ethics, respect and love for the environment. I’m going to focus on ethics, and if I have time, I will refer to the environment, because environmental ethics is a fundamental part of our lives.

In 2007, according to the National Development Plan diagnosis, the situation of social economy enterprises was quite small in comparison with lucrative private capitalist enterprises that were greatest in number, the most important and which represented the paradigm that was imitated by most people. Fewer in number were what the report called “Capitalist Enterprises of the Socialist State.” In the middle were mixed enterprises. This was the situation in 2007.

In 2013, which will soon be here, the social economy enterprises should be equally or more important than private capitalist enterprises, and should be larger and more important than the capitalist enterprises of the State in terms of their input to the gross domestic product. In the middle there should still be a point of common crossroads for mixed enterprises that can have a bit of each thing.

Recently a law was passed about the popular economy in December 2010, and other laws relating to this were passed in 2008. They have a communal economic system and a specific set of ways in which they relate to the social economy.

However it is not exactly clear what a social economy is, and how these types of enterprises should be. It is important to stop for a moment here. Because in this country, the social economy and social economy organizations are constitutionally authorized, stimulated and guaranteed. That is, the organization of social economy enterprises is one of the two ways to implement people’s influence in society. The constitution states that participation is the horizontal axis of building society, and that it can also include the political sphere. There are so many spaces for political participation for the social economy. Here we find opportunity for enterprises that are people’s experiences.

However, even though they have a constitutional mandate, there is confusion and contradiction in the legislation. There isn’t coordination regarding the definition and execution of social economy programs. This is from the State to the organizations. Meanwhile, in real life, the participants of the social economy continue their work irregardless of how the State thinks they should be. For example, the workers of the very successful cooperative network CECOSESOLA, which just presented have, continue their project and their lives as they have for the last 44 years. However, the legal definitions are important for the many smaller solidarity economy organizations, to which these programs are addressed.

This problem is not only in Venezuela, but elsewhere in the world, too. Because the social economy is an awakening, a rebirth, a search. Europe is the region where we can find the most successful cooperative experiences. Research was recently done there of the entire European Union, and its main finding was that the social economy is invisible. It is invisible despite the fact that Europe has the most developed social economy in the world! Last year, in 2010, a satellite survey was completed showing the social economy in Belgium, Bulgaria, Spain, Macedonia and Serbia. In all these countries they surveyed the national economy social accounting. It was supposed that if successful, other countries could also use this tool to know what the size and importance of their social economy is.

The survey found a very different situation from one country to another. This is important, because sometimes we have a message but ignore companions whom we should walk with, and instead go with others with whom we have almost nothing in common. We need to pay attention to this, because here in Venezuela it is not clear, and there are laws that operationally define the solidarity economy in one way, and there are other laws that define it operationally in another way. Some accept and others exclude. This happens in this country and it happens in other countries, too.

If there is no coherence, then some programs get blocked, and some synergies are prevented between the State, which is supposed to be serving the communities, and the organized communities, which are supposed to be wanting to work with the State that is giving them a hand. We have to find a way to create relationships that also include small and medium scale enterprises

The social economy and solidarity economy are not exactly the same. In some countries these include for-profit organizations which have a high social responsibility, and in other countries for-profit organizations are not included, only non-profit ones.

For example, in the European Union the social economy is divided into three categories. I mention this because Europe is the region of the world where there is a high acceptance. The countries where the concepts and organizations of the solidarity economy are most accepted and most visible are the Latin-origin countries: France – the terminology is originally from French – Italy, Portugal and Spain, where the people like this the most. Other countries with high acceptance are Belgium, Ireland and Sweden. These are the countries where the social economy is more visible and has more support, protection and size, and contributes significantly to the Gross National Product. Countries with a slightly lower level of acceptance are Cyprus, Denmark and Finland, where it is known as the non-profit segment, the voluntary segment, or the social enterprises segment. There are other countries of Europe where the social economy is less significant, yet they still have specific instruments and ways to define it.

However if this is not done correctly, the specific programs will not be effective. There can be effectiveness in some cases, but not efficiency. And if this is not remedied, all the calls that the President has made for the three R’s [“revision, rectification and relaunching”], will neither be effective, possible nor successful.

Let’s talk about ethics. Because we have to open up so we can innovate. Innovation is another constitutional item protected per se. Social economy organizations are macro level innovation that allow citizens at a micro level to anticipate the enjoyment of a better society. But this grant at the social level should have an explicit ethics policy. And the socialist State Bank should have it. “How are you doing?” asks Venezuela’s Bank, like any other commercial enterprise. Is that what we want? Is that transformation? No, it is simply that the bank, like other capitalist private or state enterprises, is trying to get more customers. But this won’t create a qualitative jump.

We need to innovate and include ethics in public banking and in popular banking. There are innovative examples, such as the popular bank of the poor, the Grameen Bank of Bangladesh. There are also well-known examples in other countries where this is happening.

We should promote the social economy and ethics, considering three important paradigms: sustainable development, social innovation and social responsibility. Studies are required, because we don’t know how it is, nor what is happening. And we need to find finance sources to fund this research in order to meet the National Development Plan. Because just as there are different definitions of the social economy, which I presented at the beginning, in the same way there are different definitions of the concept of innovation, of innovators, of when innovation starts, of when innovation begins to spread, and of what is the most optimal way to do things. We also do not know what the reality in the country is. If we don’t know this, we won’t have the adequate medicine to make it happen efficiently. Do you follow?

This is important. The Co-operative Financial Services in Great Britain, which is one of the heirs of the Rochdale Society of Equitable Pioneers that was founded in 1844, as Professor Carlos Molina Camacho pointed out in his presentation, is an example of how banks should apply ethics in innovation to help empower the organization and help society jump forward. They decided to integrate ethics as a policy in the bank through a process of consultation, and that has allowed them to gain experience as a bank. The balance sheets are audited and every time they show what has been done and what hasn’t been done. The bank rejects all applications presented to them that are legal but not ethical. The rejected applicants quarrel with the bank’s policy. However, the bank has continued growing and has been very productive.

That is possible here in Venezuela, too. Integrating ethics as an innovation in the banking system would help to empower the country’s transformation. If we do this with our cooperative banks and credit unions and show by example, we then can ask the State to also introduce ethics in the state and privately-owned banks. This would be a big step towards the transformation of this country.

Thank you very much.
[Translated by Eugenio Mendoza and Dada Maheshvarananda]
Panel 3 questions and answers.