In Europe, the social economy has traditionally been seen as a way to address market failures, such as the financial exclusion of people living in poverty, or failures of the state, for example finding adequate responses to homelessness. In practice this meant creating welfare organizations, cooperative enterprises, mutual aid societies, civic associations, and the like. These types of organizations continue to play an important role in providing social services, advocating for the most vulnerable groups of society, and contributing to social cohesion and solidarity.

Over the last two decades, however, the development and spread of new organizational forms and models have broadened our conception of what the social economy means. In particular we begin to recognize its role in promoting a green and social transformation that has the principles of inclusion, equity, and responsibility at its heart—principles we must embrace to achieve the sustainable development goals laid out by the United Nations. In this process, the social economy has ceased to be the poor cousin of the market and state, and instead is emerging as an alternative way to think about and organize the economy and even society.

Not surprisingly, the social economy relies on two main components: the community, which according to University of Chicago professor Raghuram Rajan too many times has been left behind by markets and the state; and solidarity, which according to European University Institute professors Philipp Genschel and Anton Hemerijck is “the normative expectation of mutual support among the members of large anonymous groups (the class, the party, the nation)… who ought to share one another’s risks and burdens in order to secure the goals and cohesiveness of the group as a whole.”

One can see this transformation of the social economy throughout society, but particularly in the global economic system that is in desperate pursuit of reinventing itself and embracing purpose as its driving force. Today, for example, people see social entrepreneurship less as a particular organizational form and more as a universal method of innovative action aimed at addressing social problems via unconventional approaches. One can also see the transformation in the rapid and pro-social shifts in business models that have occurred in response to challenges provoked by COVID-19, and in the emergence of what some are calling platform cooperativism, which seeks to combine elements of values-based action, open innovation, and digitization to pioneer new ways of conducting business.

Read the full article about social economy by Gorgi Krlev, Giulio Pasi, Dominika Wruk & Marika Bernhard  at Stanford Social Innovation Review.