What Is The Social Economy And Does It Matter?

The economy is often described as made up of the private sector and the public sector. In more recent years, however, there is greater recognition for what is called the ‘third sector’. The third sector, often referred to as the social economy, is gaining attention because it makes a significant and growing contribution to the economy and to society.

The level of interest in the social economy has increased not least because even though capitalism has the ability to create great wealth it does not benefit everyone or address the inequalities it creates in its wake.

The social economy is seen as an effective way to make a positive difference to peoples’ lives, particularly those living in areas of disadvantage and isolation.

There is no single definition of the social economy but it can be described as ‘organisations of people working together to pursue economic activities with a social purpose’.

The social economy is not new as it has worked in its various forms – credit unions, co-operatives, enterprise agencies, non-profit organisations – over many centuries but the attention it now attracts is new as it is seen as a way to address exclusion and create jobs.

Government often steps in to fill the gap when markets fail and does what it can but it cannot address all of the issues or people affected.

The social economy, however, has shown that it can build community cohesion and social capital in areas not served by the private sector or reached by the public sector.

The potential of the social economy to play a greater role is gaining support, as its ability to create positive impacts is better understood.
The social economy matters and will matter even more as government spending reduces. Its benefits include:

  • creating jobs, particularly in areas of disadvantage
  • providing services in areas not reached by the private or public sector
  • employing people who otherwise might not get jobs
  • encouraging social enterprise businesses at local community level
  • delivering services and value for money for the public sector
  • working for the good of society rather than solely the generation of profit
  • capturing the views of those not represented by mainstream organisations

The potential of the social economy is recognised but to ensure its success there is a need to invest, build capacity and promote its benefits.

SO, the social economy has joined the private and public sectors as an essential part of the economy and, if managed properly, will help build a richer and more inclusive society.

What do you think?

Does the social economy matter?

Look forward to seeing your comments below.