There is a successful European model of economic development … and it is called the social economy

New data prepared by economics professors Damien Rousselière and Anne Musson demonstrates that countries in Europe with higher levels of cooperative values in their society have seen higher levels of recent economic performance.

Forget the daily market news. The larger question for economic policy across countries is how to generate prosperity on an inclusive and sustainable basis.

Europe still offers some of the clues as to how to achieve this, even if, battered by austerity and sovereign debt, it has lost confidence in its own difference.

Values map

In June 2017, Dr Tom Crompton (Director, Common Cause Foundation) completed a map of cooperative values across the world, the first of its kind, testing the extent to which the public in different countries aligned themselves with the values at the heart of the co-operative model.

Euro values 2

The top three countries in Europe were Norway, Spain and Finland, nations perhaps not surprisingly with outstanding and strong cooperative enterprise sectors touching many or most households.

Picking up on this, Professors Damien Rousselière (Professor of Economics, Agrocampus Ouest, SMART-LERECO) and Anne Musson (Assistant Professor of Economics, Full-time Faculty, ESSCA School of Management, SMART-LERECO) have compared the results to more traditional economic data, to test the links:

“We estimate a correlation between wealth and cooperative values of European Countries, using an econometric model that take into account the variability of these values inside a given country. Due to missing data, analysis based on Cooperative Values Score cannot be computed for Malta and Latvia.”

“Economic wealth (as measured by Gross Domestic Product, GDP) and Cooperative Values Score (CVS) are highly correlated among European Countries. A 1% growth of GDP is linked with a growth in CVS between 0.22% (in Bulgaria) and 0.62% (in Luxemburg), with a mean of 0.37% for the European Union. This empirical finding is consistent with previous economic literature on growth and social capital which underlines an economic pay-off of the social economy (cooperative and non profit) sector.” 

cvseurope

This finding is important. It has long been argued that cooperation shapes economic competitiveness through the influence of culture. Mario Grondona, for example, has explored the role of culture in supporting or hindering economic development.  He found that there were three groups of characteristics that explained success: norms relating to individual behaviour (strong work ethic, individual accountability, agency); norms relating to co-operative behaviour (value generosity and fairness, and sanction those who free-ride and cheat); and norms around innovation. Professor Tim Kasser, similarly, has explored how values of egalitarianism and harmony link to improved child well-being and also to sustainable development (in terms of lower greenhouse gas emissions).

With the association found by Professor Rousselière and Musson, a European social model of economic development emerges, with one possible transmission mechanism in particular – the social economy of cooperatives, mutuals and non-profits.

Cooperatives are strong across Europe, with 141 million members and 4.7 million employees. It was European cooperative enterprises that were first to introduce an eight hour day in factories, the first to champion a minimum wage, the first to give business backing to the idea of national health and welfare services. Today, cooperatives and the wider Social Economy represent around 10% of all European enterprises.

Cooperatives Europe has been working with its member networks to call on the European Council to recognise the contribution of the cooperative sector – and the potential to create a Europe that is closer, not in terms of political integration but in terms of social cohesion, economic collaboration and democratic engagement.

These rich and varied cooperative networks include Housing Europe (European Federation of Public, Cooperative & Social Housing), CECOP (The European Confederation of Cooperatives and worker-owned enterprises active in industry and services), Copa-Cogeca (European agri-cooperatives), EACB (European Association of Cooperative Banks), Euro Coop (European Community of Consumer Cooperatives), EUSP (European Union of Social Pharmacies), REScoop (European federation of renewable energy cooperatives).

Cooperatives were involved at the start and at the heart of the European project. The European Commission on the back of its early 2017 White Paper on the Future of Europe starts by saying that Europe was once the future, pointing to the inspiration of the Manifesto di Ventotene, co-written by Ernesto Rossi while he was held prisoner by fascist authorities in the Second World War.

Rossi was the founder and member of a cooperative, and its exchanges were core to his ideas.

So the Manifesto calls for a free and united Europe, as the Commission White Paper points out. But the Manifesto also goes far further by suggesting how that Europe should be organised – with “industrial reform which will extend workers’ ownership in non-nationalized sectors, through co-operative adventures, employee profit-sharing, and so on.”

Yes, this Europe is still the future.

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