What is the “Social Economy”?

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What is the “Social Economy”?

Severyn Bruyn

Many people have asked me “What is the social economy?”

I say to them, “read my books,” but that’s not fair to those who are just curious. So here is a quick way to answer it.

“Social economy” is a field of knowledge about how people organize the production, distribution, and consumption of scarce resources in society. It refers to all income making people, organizations, corporations, and government. This means that the economy in its broad sense is coterminous with society. It is a social order that generates a culture for the entire society. It includes the family, the business sector, and the Third Sector.i

This is a field of knowledge in sociology that is broader than the fields of economics and political economy. It is not based on the principles and premises of capitalist markets. People in every society down through history have experienced scarcity and organize associations and engage in social interaction in very different ways. Capitalism is only one way to do this.ii

Capitalist markets did not exist in the Middle Ages and they are changing today into something different. They are changing within the culture and institutions of the larger society. The business sector, as one part of the economy, has its own subculture, evolving in the context of other sectors and subcultures like religion, art, science, and government.iii

The idea of “economy” comes from the Ancient Greek word oikonomia, which for Aristotle meant "management of a household." In the transition into the 16th–18th century, overseas expansion led to the growth of commerce and a theory known as mercantilism. In the late 17th and the 18th centuries a protest against the governmental regulation was voiced, by the physiocrats. That group, led by Francois Quesnay, preceded the classical school of economics. They argued that business should follow “natural laws” without much government interference.iv

. The idea of “political economy” began with the social contract philosophers (notably Jean Jacques Rousseau, 1755) who described the economy in the context of the state, not society. Then in the latter 19th century, economists (notably Alfred Marshal, 1890) recommended “economics” as a term emphasizing how this new field is a science.v

The concept of political economy is narrower than social economy. The organizations and human interactions that take place in the economy are not all political. Rather, they are more broadly rooted in social relations and organizations. The concept of “social” includes “political” and “economic” relations but is more inclusive. Social interactions and forces take place in markets that not based on just power and politics.

The concept “social” is more comprehensive (including political relations of course) but also relationships that are not -- like interpersonal relations and organizational relations based on symbolic interaction. It includes the nonprofit institutions and their subcultures, not just government. The social economy in the modern period includes the Third Sector with its churches, science associations and civic groups having their own values and ways of life.

The field of economics and political economy tend to focus on the business sector and its relation to government. But social economy includes more cultures and sectors of society. In this broad sense, the economy is linked with the whole society.vi


Such words as “social” and “economy” and “society” did not exist at one time. The word “society” was not in the language of the ancient Greeks. Aristotle did not write about the economy in “society”, rather, he wrote about the family and government. Economics was not a word in his vocabulary even though he talked about the use of goods in the marketplace.vii

The terms themselves, “social” and “society,” emerged in the sixteenth and seventeenth century at the time of the Social Contract philosophers. The word “society” come into view in English with various meanings, as “A system of sharing within a group,” and the “condition of living or associating with others,” and “companionship, fellowship, or company,” and as human association or friendly interaction with other people.viii

Then in the nineteenth and twentieth centuries it became defined in more complex terms by sociologists. See the history of civil society as a concept in Appendix A and B of the Civil Republic posted on my webpage.ix

Adam Smith wrote about “commerce” but did not use the word “capitalism”. When he was writing in 1776, the word did not exist. Karl Marx did not use the word in the Communist Manifesto. It came to be popularized in his later work and Das Kapital in 1867.x
The Word Social Emerges as an Analytical Concept

The word “social” in the field of sociology refers to its fact-based meaning (or facticity.) It does not refer to its a normative meaning, that is, what “ought to be.” Normative meaning refers to an ideal, a value, a standard or model. These two meanings are different in reference to the market economy. The words “individual” and “social” are facts but they may become normative doctrines (or ideologies) called individualism and socialism, or systems of belief.xi

My point is that the word “social” from a sociological perspective refers to a scientific (analytical) fact that underlies all human existence. It is fact in capitalist markets. At this moment in time, the social factor is hidden in the ethos of the business sector. Hence, the word “social” is latent (hidden) rather than manifest (obvious) in the culture of markets. The word “economic” is manifest, seen to be the tone and character of modern markets.

Stay with me. This is subtle.

The social factor is not viewed as significant in today’s economy because the market is defined on an economic foundation, not a social foundation. This is the zeitgeist of the modern period. In this modern ethos, for example, the market is seen as a process of competition, not a process of cooperation. The process of cooperation exists in markets as a fact but it is not seen to typify markets. It is a phenomenon that is latent and emerging.

Similarly today the term “private sector” can refer to the business economy and the “public” refer to government. But the private sector is steeped in questions of whether it should be “public” outside of government. We can see the term “public” emerging with its own meaning inside the private sector as issues of transparency appear again and again in business.

The term “public” is used (normally) to refer to a government but it may refer to “the community as a whole.” It can refer to the common welfare. It can refer to an activity in the private sector.

Adam Smith looked at enterprises as “public.” When the market has small enterprises that are transparent, then “reason” should win for buyers; people can make rational decisions in their own self-interest. In his time, business had not yet legally separated itself as distinct sector of society.

Many terms (e.g. public and private) evolve in meaning with the advance of new social structures and laws in society. The legal “structure” and the “ethos” affect one another in this evolution. For example, the ideas of Justice John Marshall in the Dartmouth College case (1819) set the guidelines for understanding the nature of the corporation in the private sector. Now when a corporation puts shares on the market, it goes “public” in the private sector.xii

Social Enters into the Field of Economics

The work of the economic historian Karl Polanyi shows how the term “social” was evolving as an analytical concept in markets. Polanyi saw how every economy is submerged in social relationships. His book on The Great Transformation is a history of the self-regulating market and its emergence from the Industrial Revolution. He wrote about the cultivation of the market economy through the efforts of statesmen of England in the first decades of the nineteenth century. The market was brought into existence by government not just by “natural” forces. Government policies for him were instrumental in helping to develop free markets. He saw how social processes like cooperation, reciprocity, and association were central to economies. But he felt the capitalist economy developed as an economic system.xiii

Stay with me. My point is that Polanyi was part of the change for historians and social scientists to see the social factor analytically and as a fact in markets. He was part of that shift in economic thought that included a series of new outlooks by economists who could see the social fact. These “social economists” started separate movements in their own discipline called evolutionary economics, welfare economics, labor economics, institutional economics, social economics, and socioeconomics.xiv

Such intellectual movements in economics show how the social factor began to play a role in the paradigm. But the “social” as a fact was seen only as “conditioning” (affecting) economic activity. The terms evolutionary economics, welfare economics, etc. altered the neoclassical view but they did not recognize that the economy is based on a social order. These movements did not change the basic premises of economics as a field itself. They are movements in economics, not sociology.xv

Consider the intricacy of this change. It is like watching the hour hand of a clock move or a seed grow into a flower. For economists to see the social factor active in the economy took many decades. For economists, the concept of “social” is still a “conditioning” (influencing) factor in markets. It is not seen analytically to be at the foundation of the economy. Economists do not see the economic order rooted in a social order.

Consider how different and separated the fields of economics and sociology were at the beginning in the late 1800s and how they are now closing ranks by sections. A few sociologists joined economists in those first stages of change (e.g. sections on institutional economics) and more sociologists joined later in the field of socioeconomics where sociologists and economists blend together into the membership. But now we must see how economic anthropology took one more step toward recognizing that economic life is rooted in a social order.

Economic Anthropologyxvi

Polanyi was drawing from research in economic anthropology.

He argued that “economics'” has two meanings: the formal meaning refers to economics as the logic of rational action and decision-making -- a rational choice between the alternative uses of limited (scarce) means. The second, substantive meaning, presupposes neither rational decision-making nor conditions of scarcity. It refers to the study of how humans make a living.

He saw society's livelihood as an adaptation to its environment and material conditions. It may or may not involve utility maximization. The substantive meaning of “economics” is seen in the broader sense of “economizing”. Economics is simply the way society meets material needs.

Polanyi's term "great transformation" refers to how modern market societies are different from pre-industrial societies, and centrally planned economies. Early societies are not based on market exchange but on redistribution and reciprocity. Reciprocity is defined as the mutual exchange of goods or services as part of long-term relationships. Redistribution implies the existence of a strong political center, which receives and then redistributes subsistence goods according to cultural-specific principles. Rather than being a separate and distinct sector the economy is embedded in both economic and non-economic institutions. Exchange takes place within and is regulated by society.

Polanyi says, for example, that religion and government can be just as important to economics as economic institutions themselves. Social obligations, norms and values play a significant role in people's livelihood. Consequently, any analysis in the field of economics -- as an analytically distinct sector isolated from its socio-cultural and political context -- is flawed from the outset. What Polanyi calls a substantivist analysis of economics focuses on the study of the various social institutions on which people's livelihoods are based. The market is only one amongst many institutions that determine the nature of economic transactions. Institutions are the primary organizers of economic processes. The substantive economy is an "instituted process of interaction between man and his environment, which results in a continuous supply of want satisfying material means" xvii

Economic Sociology

Sociologists have been interested in the relationship between the economy and the society since the field began in the 19th century, but economic sociology began developing in the 1980s. Then it began as a section of ASA in August 2000. Wayne Baker, the section's organizing committee—Nicole Biggart, Neil Fligstein, Mark Granovetter, Brian Uzzi, Fernanda Wanderley, and Harrison White—set up the section and it became a permanent Section in January 2001.xviii

The idea of economic sociology gained legitimacy with the 1985 work of Mark Granovetter titled "Economic Action and Social Structure: The Problem of Embeddedness". Granovetter analyses how economic relations between people take place within social relations, indeed, through social network analysis. Granovetter's theory of weak ties and Ronald Burt's concept of structural holes are among the most reported theoretical contributions of the field.

Some section members say economic sociology analyzes economic phenomena such as markets, corporations, property rights, and work using the tools of sociology. The field shares in economic theory's attention to the role of interests and rationality, but equally emphasizes the importance of social relations and social institutions.

Neil Smelser and Richard Swedberg define economic sociology as “the sociological perspective applied to economic phenomena” Swedberg emphasizes the role of institutions and gives special attention to the effects of culture on economic phenomena. He studies the ways that economic actions are embedded in social structures.xix

Alejandro Portes argues that economic activity is embedded in social and cultural relations, and that power and the unintended consequences of purposive action must be factored in when seeking to explain economic behavior. Portes identifies three strategic sites of research--the informal economy, ethnic enclaves, and transnational communities.xx

Wayne E. Baker says in the section of ASA,

The mission of the Section on Economic Sociology is to promote the sociological study of the production, distribution, exchange, and consumption of scarce goods and services. It does so by facilitating the exchange of ideas, information, and resources among economic sociologists, by stimulating research on matters of both theoretical and policy interest, by assisting the education of undergraduate and graduate students, and by communicating research findings to policy makers and other external audiences. Economic sociology is a distinct subfield. It is ecumenical with respect to method and theory. Economic sociologists use the full range of qualitative and quantitative methods. No theoretical approach dominates; the field is inclusive, eclectic, and pluralistic.

Karl Polanyi plays a key role in this transition of thought. After finding other economies around the world based on social processes, he decided that capitalist markets were different. He said: “Instead of economy being embedded in social relations, social relations are embedded in the economic system.” The differentiation of the business sector in the evolution of society convinced him of the change. “Once an economic system is organized in separate institutions, based on specific motives and conferring a special status, society must be shaped in such a manner as to allow that system to function according to its own laws.”xxi

Notice. He does not describe how the economy is grounded in a social order. But the business sector evolved as part of society. He simply develops the social factor as an analytical concept in the economies around the world.xxii

Economic sociologists now study inter-organizational relations that exist in the economy in society not just in the business sector. In this sociological perspective, they are more able to see how the economy is embedded in society. Economic relations are embedded in social relations, not the reverse.

Polanyi argued that there were interdependencies between economics, politics, and civil society that could not be coordinated simply through the market mechanism. He did much to advance the idea of economic sociology as a field of knowledge. He could at least see how markets work in the “shadow” of a social order.xxiii

When I wrote The Field of Social Economy in 1976 I had not read the work of Karl Polanyi. I had studied all the classical sociologists but it appeared to me that some new field was needed. The concept of economic sociology was not in the vocabulary of sociology at that time.

What does this history tell us?

A Sociological Perspective

The ethos of a society is important to consider in a theory of social economy. The public thinks that the market is based on competition; the bottom line is “economic” (i.e. money, efficiency and profits); markets are driven by financial incentives. But that is not the whole story. Nonprofits like churches, temples, unions, and universities compete and cooperate in the market. They must balance their budget but their foremost goals are not profit making. Money is not their primary motivation.

In this business ethos people believe that there would be no incentive to work and that no inventions would take place without the goal of making money. But that is not true. Inventions took place long before the evolution of capitalism. Inventions have taken place since the beginning of civilization.xxiv

When sociological research on the economy is more popularized and publicly oriented, citizens should see how a social order underlies the economy. The bottom line is “social” in its analytical meaning, not just profit making. Mainstream economics has become filled with formulas and calculations on prices as though the economy was “natural” (not human); economics is defined as a science, not a social science. But when the capitalist economy is conceptualized sociologically, the picture changes; the economy is grounded in society. A sociological perspective alters the way we see markets change in a larger context.xxv

For example, sociologists study the way a corporation is socially organized, not assuming that they are all command systems. The nonprofit sector of corporations includes churches that range in their governing systems from high “command” (e.g. Catholic and Episcopal) to relatively democratic (e.g. Presbyterian and Congregational). Business corporations may develop such governing variations as this sociological perspective becomes more public.

The way business corporations are socially organized is important. Corporations are (and can become more) organized by a system of “mutual governance” as well as by a system of “command governance”. Sociologists have studied how corporations decentralize their operations and develop self-management and worker ownership successfully. This type of mutual governance changes the character of business from its typical command structure. Employee ownership and self-management are evolving in business firms. This is a recent (latent) trend not typical of capitalism.xxvi

The way markets are socially organized can also show how capitalism is changing. A sociological perspective can better predict a market’s success or failure. This is because so many social processes exist by which a market is orgnized beyond competition. These processes include collaboration, accommodation, assistance, conflict, mediation, adjustment, support, conflict, negotiation, absorption, integration, cooperation, assimilation and different kinds of socialization. Research needs a sociological perspective about market organization to understand the reality and predict the future.xxvii

Business corporations were competing so hard in the 19th century market that they were destroying each other in ways that were not in their self-interest; hence, they decided to cooperate and create trade associations. Trade associations developed as a form of mutual governance, with electoral processes and tribunals. They became self-governing in their trade sector. They became self-governing like corporations today quietly become self-governing with worker ownership and self-management.xxviii

Socialist Doctrines

Normative theories develop as a reaction to capitalist markets. For example, there is “social market theory “and “market socialism. Proponents seek a middle path between socialism and laissez-faire economics. Theorists argue that federal (government) regulation is required to establish fair competition in competitive markets. They argue that governments can maintain a balance between a high rate of economic growth, low inflation and low levels of unemployment, good working conditions and social welfare -- by using state intervention. But is different from state socialism. People have defined state socialism with many variations.

During the first half of the twentieth century the Soviet Union and Communist Parties around the world came to represent socialism in terms of the Soviet model. To some extent, other countries (e.g. China and Cuba) followed this model. This meant centralized planning directed by the state. Some governments called themselves socialist and also a “mixed economy” with partial nationalization and an emphasis on social welfare. I could go on with more variations but… Socialism is a doctrine. It is not my theory.

A Normative Theory in Social Economy

There is a normative element in my theory that starts by defining the purpose of a democratic government.

The purpose of a democratic government is to cultivate the basis for the market to regulate itself. In this case, the state encourages corporations govern themselves through associations for the common good, together -- apart from the state. The purpose of government is to keep fair competition going but to encourage cooperation to maintain public standards (e.g. safety, healthy, environmental protection) in the interest of society. This lessens the need for government to regulate the economy from the outside.

In addition to other purposes of government, like promoting the general welfare and protection of its citizens from invaders, the task is to increase transparency and public accountability in the economy. The purpose is to encourage countervailing powers, electoral processes, judicial powers and democratic associations in the private economy. This policy includes offering economic incentives that lay a basis for self-governance among corporations with their associations in the private sector.xxix

This social theory is different from positions taken by Democratic and Republic parties in the United States but surprisingly it is in accord with their key values. This theory in practice leads to Republican values, e.g. a small government, a balanced budget, self-regulation and fair competition in a free market. In practice it also leads to Democratic values, e.g. greater income equality among citizens, transparency in exchange, and public accountability

Republicans and conservative economists claim that the market is already self-regulating. Well. This may be partly true but not enough to keep the market from becoming destructive to people and the environment. I view the current market organization as self-destructive in ways that require a parent state to regulate it. The capitalist economy is not truly self-regulating. One could describe the capitalist economy as in an adolescence stage of social development, not yet mature enough to be independent of the government.

Democrats and left-oriented economists claim that the government should regulate the market. This is true under present conditions, but such policies alone (market socialism) lead toward bigger government. As socially organized, the capitalist market will find new ways to be exploitive in spite of government agencies and regulations.xxx

Hence, the market requires new government policies to build a new (civil) economy that can be more free, profitable, self-regulating, self-sufficient, self-correcting and self-reliant without government regulations. My books all show how this can be done by societal development. The process is based on a mix of voluntary action, imitation, modeling, competition, cooperation, spontaneity and government planning.xxxi

My Question

My question is how the private sector could become more self-governing to work for the common good apart from the state. How can the private sector become truly free, profitable, and self-regulating?

Some historians argue that political democracy began in Ancient Athens but it is a very complicated story of evolution. Political democracy evolved in countries around the world by free will, intent, and spontaneity. It has taken centuries for it to evolve, as we know it today, a very slow process. The rise of democratic parliaments in England and Scotland involved the Magna Carta (1215), which limited the authority of kings and power holders. The first elected parliament (1265), The Levelers’ political movement, the English Civil War (1642–1651), Habeas Corpus (1679), the English Bill of Rights, the Mayflower Compact, and so much more history that would show thousands of details.

Likewise one could also see the economy changing by the centuries, slowly, like the hand of a clock. In the modern period, the business sector separated from the state to become a private domain but keeping a feudal tradition, not democratic. In the United States, citizens were afraid of the “new corporations.” They required state charters for corporations with ethical rules to operate in society. But then states began to compete for charters and corporations went to states with the lowest social standards in their charters, mainly Delaware and New Jersey. By the end of the 19th century people described the market composed of the “lords and barons of industry.” The capitalist economy developed without the basic forms of democracy. Government regulations then began to take place to protect the public.xxxii

The legal scholar Kent Greenfield describes how States competed against one another in this “race to the bottom.” For the last century, Delaware has won. Here is a state with less than one-third of 1 percent of the nation’s population providing the governing law for nearly 50 percent of all American corporations and 60 percent of the Fortune 500. The New York Times identified one office building in Wilmington that serves as the legal address of more than a quarter of a million businesses, including Apple, General Electric, JPMorgan Chase, and Wal-Mart. In fact, Delaware is home to more corporations than people.xxxiii

Societal evolution is not just progressive in its differentiation of institutions. In 1776 Adam Smith wrote The Wealth of Nations in which he thought the new economy would work for the common good. He described how wealth is produced in a “self-regulating market.” The market was self-regulating for Smith because people produced according to what people would buy and people consumed according to what they wanted and could afford. Businesses in his day were new, small, rational and transparent. Freedom to trade was part of this so-called self-regulating market -- a freedom depicted by Frenchmen as laissez faire. The great value in these innovative markets was “freedom from government controls.”

Smith coined the phrase the “invisible hand” to describe how individual ambition and self-interest benefits society even when such motives have no benevolent intention. Since Smith's time, the principle of the invisible hand has been discussed in economic theory but the fact is: nobody really understands how it happens. Well, it did happen by some measure but how it did not happen is not explained by economics.xxxiv

Competition in markets alone could not support laissez faire apart from the state. Markets were kept from collapsing by social forces and processes not economic. In the social economy, sociologists can see new social processes like cooperation and association as part of the answer.

Private entrepreneurs and professionals found themselves competing so fiercely that they were destroying one another. It was a joint recognition that association was needed for survival. They had to cooperate to set social standards as trade and professional associations. They had to set up standards by which to compete and stay alive. They created private adjudicatory courts to settle disputes between them. They sought to make trade associations democratic with electoral processes and judges.

Laborers also cooperated to organize unions with electoral processes to protect themselves from business corporations and trade groups. In these and other cases, like the social movement to create cooperatives, we see indications of self-governance advancing slowly in the capitalist economy. But the changes were not widespread, or good enough to change the name of capitalism.

Corporations at the end of the 19th century demanded federal regulations. Giant corporations lobbied for government regulations in order to make entry more difficult for startup competition. The classic case is Meatpacking regulation. Gabriel Kolko, historian of the era, said: "The reality of the matter, of course, is that the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors." Small packers, it turned out, would feel the regulatory burden more than large packers would.xxxv

The economist Joseph Schumpeter saw markets on a path of “creative destruction.” Capitalist markets are creative but remain self-destructive. They force the government to regulate them over and over again.xxxvi

My question is how to lay the basis for markets to be creative for the common good. In other words, how can markets be developed without a parent having to supervise them all the time?

The short answer is that private markets need countervailing powers in new associations and trade standards. At the moment, trade associations need social constitutions and modes of cooperation with standards between them (e.g. on safety and health) so members can compete within those limits. Current markets, structured by competition alone have to be governed by the state. They end up harming consumers and fail to work in the public interest, hence, the need for government controls.

This means advancing democratic structures with private “electoral processes” and “judiciary organizations” and standard making for the common good. Nonprofit corporations (e.g. universities, museums and hospitals) do this. They cooperate to have outside judges and professional evaluators to make sure they maintain their standards. New policies mean advancing the values of democracy, freedom, justice, and equality in the business sector. It means stakeholder participation at local and national levels.

The co-op movement. xxxvii

I call this process “social development” in the private sector because it leads to a growth in public accountability and transparency in the public interest. Social development, ironically, leads to Republican values, a balanced budget, and smaller government, i.e. less need for state regulation. For Democrats it leads to more market transparency and socially accountable corporations.

Government policies are needed to help create a transition for a new economy that I call “civil” not capitalist. The economy becomes civil as it develops self-governance and becomes part of a civil society, building step by step by social contracts in private markets, keeping competition alive.

Some market civility is evolving now but it will develop quicker and more predictably with new government policies. New government policies would help the economy become more free, productive, efficient, and profitable, and accountable to stakeholders. Markets should be encouraged by government to be transparent for the common good.

“Self-interest” remains a motive in a civil economy, a theoretical part of a new market system and it coexists with other concepts like “mutual governance” and the “public interest.” It was in the self-interest of members in trade associations and unions to “cooperate” in face of market forces. For a definition of all these concepts see The Glossary on my homepage “Glossary” on the left side under A Civil Republic.

An Emerging Civil Economy

Relatively “free markets” developed slowly from feudalism with new government policies and now the structures for self-governing markets are appearing. Democratic systems in corporations are developing inside business markets like credit unions, community development corporations, community land trusts, community finance corporations, and cooperatives (consumer, distributive, worker owned companies). These are not typical capitalist organizations. Ethical practices in finance (e.g. social investment), corporate codes of conduct in business and public standards in trade associations are evolving.xxxviii

Below are a few organizations that exemplify what is happening in self-monitoring.xxxix

SA8000 is a global social accountability standard for decent working conditions, developed and overseen by Social Accountability International (SAI). SAI offers training in SA8000 and other workplace standards to managers, workers and auditors. It contracts with a global accreditation agency, Social Accountability Accreditation Services (SAAS) that licenses and oversees auditing organizations to award certification to employers that comply with SA8000.
BSCI is an initiative started by the Foreign Trade Association (FTA). BSCI can be described as an Industry Code with companies and associations as members. No NGOs, unions or governments are involved in key decision-making. On local level BSCI participates in Round Tables, where besides companies and associations also NGOs, unions and governments participate.
Ethical Trade Initiative (ETI) is a multi-stakeholder initiative with members representing brands, unions and NGOs. ETI is active in the garment and footwear industry but also in the food industry. The ETI Base Code is in its most important elements comparable to the JO-IN standard. JO-IN is however more progressive on a few issues especially those under discrimination
The Fair Labor Association (FLA) is a multi-stakeholder initiative with members representing brands, unions and NGOs. ETI is active in the garment and footwear industry but also in the food industry. The ETI Base Code is in its most important elements comparable to the JO-IN standard. JO-IN is however more progressive on a few issues especially those under discrimination.
The Fair Weather Foundation (FWF) is method of monitoring is based on a management system located at the brand. Each member brand annually reports to FWF on the progress in the supply chain. The FWF method consists of a complaint procedure for workers enabling to complain at brand and initiative level. The brands are required to audit all their suppliers within three years. The FWF reports on initiative level regarding the amount of audits in total, per country and the type of non conformities. There is no transparency on brand and supplier level. The content of the FWF Code of Labour Practices is in its most relevant aspects comparable to the JO-IN code of conduct.
World Wide Responsible apparel Foundation (WRAP) is an independent, non-profit organization dedicated to the certification of lawful, humane and ethical manufacturing throughout the world. It is the organization responsible for the Apparel Certification Program. WRAP is active in the apparel sector only. Of the described standards, the content of the code of conduct promoted by WRAP is the weakest. WRAP is less strict on several issues. On wages, overtime and compensation of overtime WRAP settles for local law.
Global Recycle Standard (GRS) is a standard developed to ensure greater sourcing clarity on recycled materials right through the production supply chain. It is intended for companies that wish to make a content claim on the amount of recycled material in the final product. It is based on the certification of the full chain of custody for recycled products; incorporating environmental and social criteria.
The Organic Exchange (OE) Standards by Textile Exchange is a voluntary, ”fiber only” standard for organically grown cotton. The two versions, the OE 100 Standard and the OE Blended Standard, are used for tracking and documenting the purchase, handling and use of certified organic cotton fibers in yarns, fabrics and finished goods. It provides independent certification of the used fiber in the entire textile supply chain after the harvesting/farming stage.
The Global Organic Textile Association (GOTS) is the worldwide leading textile processing standard for organic fibres, including ecological and social criteria, backed up by independent certification of the entire textile supply chain.
ISO 14000 is a family of environmental management standards that provide organizations with a practical toolbox to assist in the implementation of actions supportive to sustainable development. It is a framework to manage environmental aspects, assess their environmental performance and support the auditing system.
The EU Eco Flower is a product label and a voluntary certification system developed by the European Commission to promote products that have the potential to reduce negative environmental impacts and contribute to the efficient use of resources and a high level of environmental protection.
he bluesign® standard is an independent industrial textile standard directed and implemented by bluesign technologies. It is designed as a comprehensive Input-Stream-Management-System that is built around the principles of resource productivity, consumer safety, air emission, water emission and occupational health and safety.
Sedex, the Supplier Ethical Data Exchange, is an open membership organisation providing a secure, robust, and user-friendly central database of information for companies to store and share ethical data including self-assessment, audit reports and corrective action reports and statuses, which enables member companies to generate transparency and manage efficiently the ethical and responsible practices of their global supply chains.

Each association and corporation operates with self-interest but develops socially through systems of shared governance, like electoral processes, self- adjudicatory systems and jointly approved outside monitors in the private sector. “Self-interest” remains as new democratic systems of mutual-governance emerge.

These new systems are created both by voluntary action and by government policies (e.g. a new tax system, proper subsidies, etc). They develop with movements toward “public standard making” (safety, health, environment protection, etc.) in trade associations. They should be encouraged across all industries– roofing, chemicals, plastics, furniture, shoes – and thousands more. They also need to be researched by sociologists for their problems, their unintended consequences, as well as the degree to which they add to the common good.

Many more details are in my books but new policy changes need to be introduced right now. Reducing the U.S. deficit would include taxing transactions on stocks and derivatives, stopping tax haven abuses, taxing the wealthy in a fair way, taxing pollution, ending fossil fuel subsidies, and ending military waste, closing overseas military bases, -- and more policies like these that make common sense.

There are many new steps needed at the global level with details that support domestic change. For example, reducing the need for big defense departments and size of military armies in nations can be reduced by strengthening and restructuring the United Nations, working toward new global governing systems, developing enforceable international law and world courts. Developing global nonviolent peace forces to work creatively with the United Nations could help prevent civil wars. This was a dream of Mahatma Gandhi (he called them Shanti Sena). And such groups are now emerging.

It took centuries to develop a capitalist economy and could take centuries to develop an “associated market” based on democratic principles, not capitalist. I would call it a “civil economy.”

For more details on how to develop civil markets, click on Beyond Capitalism on my webpage.

i A “social order” refers to a set of linked structures, institutions, and social practices that maintain and enforce regular ways of relating and behaving in society. In a sociological perspective, it is a “relatively persistent system of institutions, patterns of interactions and customs, capable of continually reproducing at a minimum those conditions essential for its own existence.” For Talcott Parsons, it is a set of social institutions regulating pattern of “action-orientations”, which again are based on a frame of cultural values. These stable expectations do not necessarily lead to individuals behaving in ways that are considered beneficial to group welfare.

ii Sometimes I say that the social economy is based on “symbolic interaction” (instead of social interaction). This might confuse professional sociologists. Symbolic Interactionism originated as a concept with George Herbert Mead, Charles Cooley, and Herbert Blumer. Blumer held premises about this outlook. These included: "Humans act toward things on the basis of the meanings they ascribe to those things” and “the meaning of them is derived from the social interaction that one has with others and the society." For many in this tradition, it refers to the patterns of communication, interpretation and adjustment between individuals.

This is true but my perspective holds that symbolic life is not just based on interpersonal relations and meaning among individuals. Sociologists (people) also think and act on symbols (words) already produced collectively in previous societies. Thus we are able to communicate and examine society both objectively and subjectively. We live in the tension of opposites seeking resolution.

Max Weber argued that the meaning of “social” was the root of all human communication (i.e. subjective) but sociologists also think objectively as did Emile Durkheim. If Weber’s view were taken as the truth, it would lead to subjectivism. If Durkheim’s view were taken as the truth, it would lead to objectivism. So this term (social) should be seen as standing between these two extremes, subject and object. The market is in the tension of opposites, like subject and object, “order” and “freedom” seeking resolution. For different views on symbolic interaction, see Herbert Blumer, Symbolic Interactionism; Perspective and Method. 1969, Englewood Cliffs, NJ: Prentice-Hall. Sheldon Stryker; Symbolic Interactionism: A Social Structural Version” (Menlo Park, CA: Benjamin/Cummings) 1980. (Reprinted: Blackburn Press, 2003.}

iii “Social economy” as a field of knowledge assumes that there is a constant process of diffusion and accommodation among different institutions. This is one cause for change in the market system. William Graham Sumner in the early 1900s recognized how “diffusion” occurs between society’s different institutions (with different values, customs and folkways) but he never studied the phenomenon happening in the economy of the United States. Nonetheless, the manifest values in capitalist markets, like freedom, competition, profit making, productivity, and privacy, contrast markedly with other societal values, like justice, cooperation, standard making, social accountability, and transparency. These contrary values are in a constant process of resolution through interaction, accommodation and synthesis. The tension among these society-wide values is one “cause” for changes that bring about the evolution of society and its economy. For example, people live and work in institutions that have contradictory values, like the church and a business firm. They seek resolution and integrity.

A person teaches “cooperation and altruism” in a Sunday school to children and the next day promotes vicious competition and strong self-interest in his or her business. Or, let us say, a scientist believes in transparency in his profession and then believes in privacy for his discoveries in the laboratory of his corporations. We can say that “opposites” seek resolution in people and a sense of wholeness in society.

iv The assumption in “classical theory” is that the economy is self-regulating. Classical economists held that the economy is always capable of achieving “the natural level of real output”, which is obtained when the economy's resources are fully employed. The classical doctrine—the economy is always at or near the natural level of real GDP—is based two beliefs: Say's Law and the belief that prices, wages, and interest rates are flexible. But this fails to take account that the economy exists in the larger culture of society.

v Alfred Marshall (1842 –1924) was the most influential economist of his time. His book, Principles of Economics, (1890), was the dominant economic textbook in England for many years. He brought the economic ideas of supply and demand, marginal utility, and costs of production into a coherent whole as natural laws.

There is a long history before Marshall that includes the Mercantilists, Physiocrats, Classical Economics, and Modern Economics. The history shows many outlooks in the field of economics have emerged in the last century -- like institutional economics and social economics, etc. But they are all based on the idea that a capitalist economy is socially conditioned. The field of economics assumes the values of capitalism. These varieties simply recognize that a social factor conditions market operations. None of these subfields view the economy grounded in society with its larger culture. They cannot envision how capitalism is evolving into a different system of exchange

vi A social economy is a fact of life in any country where people make a livelihood and material scarcity prevails. Every economy is based on the way of people socially interact through their culture of values, norms, traditions, fashions, customs, and mores in society. In modern society it includes all income making organizations including the family and government. It also includes what is known as the informal economy – where people make incomes off the official record.

viiAristotle wrote about the “economy” in reference to the household -- not in reference to society. In Book I of the Politics, Aristotle distinguishes between use value and exchange value. It was Aristotle who created the concept of value in use. The use value or utility of a good or service depends upon its being productive for the good of the family.

viii The word “society” kept evolving diversely to mean “the company of others, the system of customs and organization adopted by a group of people for harmonious coexistence or mutual benefit, an aggregate of persons living together in a community, esp. one having shared customs, laws, and institutions.” (See The Oxford Dictionary.) On the other hand, “culture” is generally understood as the beliefs, behaviors, objects, and other characteristics common to the members of a particular group or society. Through culture, people and groups define themselves; conform to common values that contribute to society. Culture includes: language, customs, values, norms, mores, rules, tools, technologies, products, organizations, and institutions. Finally, “institution” may refer to clusters of rules and symbolic meanings associated with specific social activities, including the family, education, religion, work, and health care.

ix The term "society" came from the Latin word societas, which was derived from the noun socius (“comrade" friend, ally." When Karl Marx used the word “social” he implied the meaning of “human” in some cases and in other cases he implied “cooperation.” He was looking for a word that lay at the base of the capitalist market. Max Weber later came to see the whole field of sociology based on what is “social.” “Sociology is a science”, he said, but it is different from physical science in the sense of researchers dealing “with social action seen by agents as subjectively meaningful.” This meaningfulness can be observed as intended in human interaction or as an ideal type interpreted as a number of agents view the world.

Other sociologists had different outlooks on what is “social.” Georg Simmel defined the word “social” as the way people resolved their interactions into “togetherness” or a union with others. It referred to the free-playing interacting interdependence of people. Auguste Comte considered “social” equivalent to the word “human.” Emile Durkheim defined “social” as the virtual opposite of Max Weber’s meaningful human interaction. He saw “social facts” as objective conditions set by a community that teaches its members how to act in associations with statuses and roles. The larger community defines all these positions. Thus, Durkheim emphasized its objective meaning while Weber emphasized the subjective meaning of “social.” Talcott Parsons saw the word “social” as a concept that integrates all the social sciences.

So what is correct?

My answer: the word “social” can be used in all these ways but it is important to indicate one’s own definition. I emphasized Weber’s definition ofVerstehenin writing The Human Perspective (1966) and in The Social Economy (1977). I used Weber’s “ideal type”. Generally, the word “social” refers to human interaction and organization. In Durkheim’s research on Suicide, he used words that referred to what could be measured objectively. For example, “egoistic suicide” is measured by degrees in which a person is isolated from society, lacks altruism, etc. He uses operational definitions.

The word “economy” can be equally various in its usage. The common reference is to the business sector but it can also refer to the Third Sector apart from government. It may also be used to refer to the whole society that includes government, business, and the Third Sector. In general it exists where income is created. This broader usage makes the “general economy” coterminous with society. See Appendix C under

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