The 'social economy' is no panacea for social exclusion

November 16, 2001

Can socially excluded communities in areas of economic decline trade their way out of welfare dependency? That seems to be the assumption behind the promotion of 'social enterprises' by the Government - through the Social Exclusion Unit - and by the European Union. These 'social economy' organisations are seen as important sources of new work and new types of welfare provision at the local level.

But according to new ESRC-funded research by Professors Ash Amin and Ray Hudson and Dr Angus Cameron, the UK's social economy simply does not have the capacity to support the demands made of it as a solution to the problems of social exclusion in marginalised neighbourhoods. Their study of a range of community-based not-for-profit organisations in Bristol, Tower Hamlets, Middlesbrough and Glasgow indicates that:

 only 3 percent of UK social economy organisations operate without public funds
 rarely is activity in the social economy driven by members of excluded communities, while jobs are often poorly paid and unstable
 trading opportunities in the very poorest communities are often severely circumscribed, thus casting doubt on the capacity of social enterprises to provide welfare services on a sustainable basis.

The term 'social economy' is commonly used to denote the market for services sold by not-for-profit organisations in response to local welfare needs not met by the state or the private sector. It is increasingly viewed as a panacea for hard-hit communities at the same time as decreasing the burden on the welfare state.

But as Professor Amin comments:

'Policymakers should not look to the social economy as the solution to problems of social exclusion in areas of economic decline and marginalisation. The reality in most places is that of an under-developed social economy. This is not surprising since areas of marked social exclusion are precisely those that lack the composite skills and resources necessary to sustain a vibrant social economy.'

Nonetheless, the research also reveals that in some places, favourable economic, social and political conditions can allow for the development of successful and innovative social economy organisations. Such local success stories include:

 SOFA, a Bristol-based organisation, which refurbishes second hand furniture to be sold at very low cost
 the Bromley-by-Bow community health and medical centre in the East End of London
 the Wise Group in Glasgow, which provides paid in-work training for the long-term unemployed.

It also clear, however, that no model of best practice can be abstracted from examples such as these to be transplanted between places. Rather, success seems to be a product of non-transferable place-specific factors, for example, an active local civic culture, a supportive local authority, the presence of key 'animateurs', and a vibrant local economy.

The study concludes that social enterprises - in the right places and with the relevant support - do have a role to play in complementing provision and regeneration via the state and the market. Importantly however, policy-makers may need to question their assumption that the social economy can become part of the mainstream. Many successful enterprises see what they do as advocacy for another way of life, one based on social commitment, ethical and environmental citizenship, and work as a vehicle for self and social enhancement.

Professor Amin elaborates:

'This is the real strength of the social economy. It can never become a growth machine or an engine of job generation. Nor should we expect it to replace the welfare state. But it can stand as a small symbol of another kind of economy, one based on meeting social needs and furthering social citizenship. As such, the real potential of the social economy might lie in renewing democracy by encouraging capability-building and grass roots participation'.
-end- or or Dr Angus Cameron on 0116-252-3838 or Email:

Or contact Julie Robertson, Lesley Lilley or Karen Emerton in ESRC External Relations, on 01793-413032, 413119 or 413122.

1. The ESRC is the UK's largest funding agency for research and postgraduate training relating to social and economic issues. It has a track record of providing high-quality, relevant research to business, the public sector and government. The ESRC invests more than £46 million every year in social science research. At any time, its range of funding schemes may be supporting 2,000 researchers within academic institutions and research policy institutes. It also funds postgraduate training within the social sciences, thereby nurturing the researchers of tomorrow. The ESRC website address is
2. REGARD is the ESRC's database of research. It provides a key source of information on ESRC social science research awards and all associated publications and products. The website can be found at
3. The research project 'Constructing the Social Economy through Local Economy Initiatives' by Professors Ash Amin and Ray Hudson and Dr Angus Cameron was funded by the Economic and Social Research Council (ESRC). Amin and Hudson are in the Department of Geography at the University of Durham; Cameron is at the University of Leicester. The research findings will be published in a book, Placing the Social Economy, by Routledge in 2002.
4. 'Mind the Gap', the ESRC's 5th National Conference will take place at the QEII Conference Centre in London on Wednesday 15 November. The role of social science in policymaking, the democratic deficit, direct action and political parties; the provision of services; the changing role of trade unions and personnel departments will be under the spotlight. Key speakers include broadcasters Jon Snow and Jonathan Freedland, Doug Parr (Greenpeace), Stephen Thornton (NHS Confederation), Tim Martin (Rail Regulator), Professor Julian Le Grand, Professor Betsy Stanko, and Professor John Ermisch. For further information contact David Ridley, External Relations, ESRC. Telephone 01793-413118.

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