What is Solidarity Economy?

What is solidarity economy?

To understand what the solidarity economy is, we need to look at some economic and management concepts to start this conversation. But rest assured, we will explain everything so that there is no doubt.

In a nutshell, Supportive Economy is the name given to the set of economic activities, be it production, distribution, consumption, savings and credit organized in the form of self-management (form of organization where the company is managed by its participants, with direct democracy, without the figure of the “boss” and with equality among its members).

Let’s start with a little history. Where does the term “Solidarity Economy” come from?

Historians and scholars say the term came up in Britain during the First Industrial Revolution. It was a reaction of the artisans who lost their jobs to steam engines and in the transition from the 18th to the 19th century, the first unions and the first cooperatives (symbol of the solidarity economy) emerged.

However, we can say that the solidarity economy had already existed and happened long before this date. Starting from the intercultural view, and based on the concept of economic movements founded on solidarity, ancient solidarity practices in the economic field were recognized long before the Industrial Revolution.

The concept

The Solidarity Economy, by definition, aims to reduce inequality in society, so it is a form of collaborative rather than competitive economy. It can only be achieved if there is full equality between all who come together to produce, consume, trade or exchange, therefore, the Solidarity Economy aims at the union between equals instead of the contract between the unequal.

In this sense, there is no competition between the partners. If the cooperative needs directors, they are directly voted, and if the cooperative manages to accumulate capital, the profit sharing is the same among all participants.

However, even with the equality between the participants and cooperation between the cooperatives, it is inevitable that one will perform better than the other, so, from time to time, a new leveling between them should occur through government or line incentives credit.

Lastly, important decisions are always made in assemblies by the partners, using the principle that “each head is a vote” regardless of the job or position that the partner holds in the organization.

Solidarity Economy in Brazil

Now that you understand where the Solidarity Economy comes from, let’s talk about the effect it has in Brazil.

Worldwide speaking, the Solidarity Economy has grown very quickly, however, thinking about it in the Brazilian context is something really significant.

The increase in this business model is due to different internal factors such as unemployment, rural exodus and constant exclusion. In recent years, the Brazilian Solidarity Economy has been seen as beyond isolated organizations, making it a movement. This movement has influenced political actions such as the approval of the Bill PLC 137/2017 by the Senate.

Today, the creation of the PNES (National Policy for the Solidarity Economy) assists and regulates the development of more enterprises in the Solidarity Economy model so that they are truly solidary, as the enterprises need to fulfill a series of requirements to enter the PNES.

Not everything is sunshine and rainbows. Nowadays, there are several fake cooperatives operating in Brazil. And what are those fake cooperatives?

As it is a business model in which there are no employees, only partners, payments are made pro forma, that is, they are not obliged to pay any labor rights that Brazilians have in a form of formal contracting as year-end bonus, severance pay fund, vacation, etc. Therefore, entrepreneurs create pseudo-cooperatives and cut their spending on wages by almost half, removing only acquired labor rights.

There is a bill in progress that requires cooperatives to pay basic labor rights to members, thus reducing front cooperatives and increasing the development of the Solidarity Economy in Brazil.

Thinking about this, Aventura de Construir does not work with cooperatives directly, however, we help microentrepreneurs from the outskirts of São Paulo to open and close their businesses, thus generating income and jobs for the communities in which they live. If we are going to base ourselves on the concept of Solidary Economy, we try, through training and assistance to micro-entrepreneurs, to reduce inequality in society.

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