Social? Non-market?

Associations and NPIs play an important role in meeting individual and collective needs; they are thus important actors in economic life. But where exactly are they situated in the economic sphere? According to the point of view adopted, one can alternatively amalgamate the voluntary world with two sub-sectors of the economy: the non market sector, for one, and the social economy for the other.

The non-market

The expression ‘non market sector’ or, more succinctly, ‘non market’ has been generally used since around thirty years ago in France and francophone Belgium to designate certain producers, private as well as public; within the heart of the economy. The equivalent for the Dutch speaking community is the term ‘social profit sector’, used in particular by the Confederation of Non Market Enterprises (CENM).

In the widest sense, the non market sector is the overall group of producers

1) benefiting from non market resources (and in particular from public funding), and

2) having non profit making goals

Understood in a strict sense, the non market sector includes producers that meet the two preceding conditions and who furthermore (3) provide services principally within healthcare, social action, education and culture.

According to this definition, every association comes under the heading of the non market sector in the widest sense because for a large part they fall back on non market resources and because, by definition, they have non profit making goals. But can we in this way really assume that the voluntary sector is the same as the non market sector? Certainly not, as some organisations other than the associations also satisfy the two definition criteria: that is true of public services, public administration services, certain state run businesses such as the rail service (S.N.C.B.), social insurance companies, etc. Associations thus only make up part of the non market economy.

The social economy

The growing interest in the social economy over the last twenty years has given rise to numerous debates and sometimes to terminological confusion. Nonetheless, for the francophone community the definition given by the Wallonia Social Economy Council (CWES) has held sway since 1990:

A definition of social economy (the francophone community approach)

The social economy is composed of economic activity carried out by enterprises, mainly co-operatives, mutual insurance companies and associations whose ethics are made up of the following principles:

1)     An end goal to provide a service to members or the community rather than make a profit

2)     Management autonomy

3)     Democratic decision making procedures

4)     The primacy of people and work over capital in distributing revenues

For the Dutch Speaking community it was in 1997 that the Vlaams Overleg Sociale Economie (VOSEC), a consultation think-tank which gathers together organisations representing actors claiming membership of the social economy, offered the following definition:

A definition of social economy (Dutch speaking community approach)

The social economy consists of the whole of the enterprises and initiatives whose objectives advocate the carrying out of certain social plus-values, whilst respecting the following basic conditions: primacy of work over capital, democratic decision making, social insertion, transparency, quality and sustainability. Particular attention is given to the quality of internal and external relations. They market goods and services whilst ensuring efficient economic use of their means in order to ensure their continuity and their viability.’

We see that there is a profound conceptual similarity between the two definitions, even if the Flemish approach has added a ‘sustainable development’ connotation whilst insisting on the economic viability of social economy organisations. In the two cases the notion of non profit making is very apparent, notably by the accent placed on the primacy of work over capital. As it has just been defined, the social economy is larger and is not to be confused with the voluntary sector. The francophone community definition moreover lists explicitly the juridical forms that social economy enterprises can adopt: associations, certainly, but also companies (primarily co-operatives) and mutual insurance institutions. Thus, much in the same way that they only make up part of the non market sector, associations represent only a section of the social economy, even if it is quantitatively speaking the largest part.