On 17 June 2020, Tunisia’s law on social and solidarity economy (SSE) was, after more than three years in the making, finally approved by Parliament. Because of the government’s amendments to the bill presented by the Tunisian General Labour Union (UGTT), which had adopted the SSE project, the final law did not satisfy SSE proponents. However, the law’s passage represented an accomplishment in terms of extracting political recognition of SSE’s developmental role. In this interview with Lotfi Ben Aissa, economist and scientific coordinator of the UGTT’s SSE bill initiative, the Legal Agenda returns to the foundations of the SSE philosophy and the historical context in which it arose on the global level. The interview also sheds light on the most important reservations about the new law and the challenges facing its implementation.

 

Legal Agenda (LA): Let’s begin with the historical context of the rise of the concept of SSE. How did this economic proposal appear and under what historical circumstances?

 

Ben Aissa: The SSE concept appeared in the mid-19th century in the loaded historical context of the European continent at the time, specifically in 1848. The region was experiencing a wave of popular revolutions and uprisings of a sociopolitical nature. We could say that the concept of social economy arose as an extension of a new ideological discourse, namely socialism. However, this concept, while deriving much from the scientific socialism that was developed by both Karl Marx and [Friedrich] Engels and became an ideology adopted by several revolutions (particularly the Bolshevik revolution and then [the revolutions in] China and some Latin American countries), was distinct from it in other points. Its theorists during that period, such as [Henri de] Saint Simon, [Charles] Fourier, [Étienne] Cabet, and [Robert] Owen, considered themselves to be in an actual capitalist society and did not recognize a need to topple the entire system. Rather, they saw a potential to make a difference by establishing what could be called islands in the sea or ocean of the existing system. That meant establishing socialist units within the capitalist body and betting that they would extend and expand in the social body as a whole to gradually replace the dominant economic system. This vision was criticized by scientific socialists, who considered it “utopian socialism”, in the words of Engels from his book Socialism: Utopian and Scientific. However, the intellectual conflict between the two camps – so to speak – is what ultimately produced the universal principles that paved the way for social economy.

 

Social economy is founded on three main components: the first is cooperatives, which are the root of the concept. They were subsequently adopted by the Paris Commune (1871), which utilized some workshops abandoned by their owners and converted them into labor cooperatives after their owners were compensated. They were [then] united and their principles cemented by the International Co-operative Alliance, which was established in 1895 and played a large role in mitigating the effects of both world wars on artisans and small farmers. The second component of the social economy concept is mutual societies, which played the same social role as cooperatives during that era. Initially, mutual societies arose on a narrow scale, particularly among workers. The third component is associations, which were originally established to support the millions wounded in the two wars, as well as to help socially vulnerable groups. Later, the scope of their activities expanded to encompass nearly all fields.

 

LA: Where is the term “solidarity” in all this?

 

Ben Aissa: We were talking about the traditional components or elements of social economy. Later, as activities with environmental, social, and economic purposes developed, a new form of businesslike enterprises appeared – commercial companies with a social or non-profit purpose, or what’s called social entrepreneurship. These associations usually take on the character of commercial companies, and they originally appeared in the USA. Hence, solidarity is a departure from the classic form of social economy through cooperatives, mutual societies, and associations, and a step toward companies that are legally businesses but have social, non-profit goals. Solidarity economy is therefore defined, first and foremost, by its social venture and not its legal form.

 

Here, the scope of social economy expanded and took on its current label with the addition of the term “solidarity”. Tunisian law assimilated this idea, like its French counterpart (which approved it in 2014), after it sparked a broad debate about how these commercial companies should be classified and the validity of considering them a component of social economy.

 

While we’re talking about labels, I should mention that there are three major ones. The first is “Social and solidarity economy” is used in the European sphere, of which Tunisia is considered an extension. “Nonprofit economy” is used in Anglo-phone [literature], and “popular economy” is used in Latin America.

 

LA: If we want to dissect the SSE philosophy, what is the core idea that this concept proposes?

 

Ben Aissa: SSE was born out of the socioeconomic crises produced by capitalist systems (the periodic crises of capitalism, the latest of which occurred in 2008) and as a response to them.

 

In its finest manifestations, this concept combines the features of the private sector, chiefly profitability (SSE does not invest in poverty, as is promoted; rather, its fundamental purpose is to eliminate poverty), with the pillars of the public sector, most importantly public interest. The private sector sacrifices the person and society to achieve the highest profits, and the public sector sacrifices the profit aspect for the sake of the person. As for SSE, it created a new system based on bolstering the role of the person and preserving the person’s dignity without neglecting the importance of profitability in economic activity but instead harnessing it to serve society.

 

Hence, the major theme of SSE is “humanizing” the economy. That’s because the destruction that humanity has witnessed began with the emergence of private property, which contributed to the formation of social classes and the exploitation of one person by another across the eras under various labels, the latest being “owner” and “worker” in the modern era. This situation produced periodic crises, conflicts, and wars, and here lies the role of SSE in plotting the way back to [human] nature.

 

LA: How does SSE present itself as an alternative or third way? Should we consider it a productive paradigm distinct from its counterparts, i.e. the public sector and private sector?

 

Ben Aissa: The concept strives to bridge the economic and social dimensions. The economy must serve society. That’s why the concept is based on a series of special principles that clearly distinguish it from the public sector (state capitalism) and the private sector (capitalism of private actors).

 

The first pillar, which I mentioned previously, is the precedence of the person over capital. In the SSE philosophy, money is a fundamental element, but as a means and not an end. Contrary to the capitalist system, which considers profitability a goal and measure of success, even if that leads to sacrificing the workers’ dignity and environmental safety and circumventing the law, [in SSE] the goal of improving the enterprise’s financial profitability is to achieve human happiness. In other words, the goal is for the individual to benefit from the returns on investment in a manner that satisfies his needs in a decent life, albeit within the framework of the group and an integrated project that guarantees the enterprise’s sustainability and decent work conditions. This very point takes us to the mechanism for dividing the profits, which differs totally from its counterpart in commercial enterprises. The SSE law compels SSE organizations and enterprises to allocate 15% of proceeds to mandatory reserves until they reach 50% of the enterprise’s capital. Similarly, a maximum of 5% of the proceeds are allocated to social, cultural, and environmental activities. Up to 25% of the remaining profits are then distributed as decided by the general assembly. As for the excess, it is directed toward growing and developing the enterprise’s activities or contributing to the creation of new enterprises within the SSE framework.

 

The second point concerns the enterprises’ social responsibility, which in the capitalist system falls within the context of rationalizing the performance of capital. We, on the other hand, do not need deterrent decisions to underscore these fundamental guarantees because they are the soul of SSE.

 

As for the third principle, it concerns the mechanism of governance. In traditional commercial enterprises or companies, decisions are made by the person with the largest share of the ownership of the capital. In the SSE philosophy, on the other hand, voices are equal irrespective of share value or ownership slice, and decision-making is subject to strength of argument.

 

LA: The UGTT played a pivotal role in shaping the SSE law, and it struck a divergence of visions with the government’s version before it was approved on 17 June 2020. What are the main reservations concerning this final version?

 

Ben Aissa: Our most important criticisms concern the substance of the law. It was passed in Parliament as a regular law, contrary to our proposal, which demanded that it be an organic law to guarantee its supremacy and that it would be a binding referential text for all components of the SSE fabric.

 

Moreover, Article 4 of the law, which pertains to principles, neglected to mention the principle of the civil nature of the state and citizenship and nondiscrimination on a gender, religious, or factional basis, as appeared in the UGTT’s bill. This is a key point that would have played the role of a safeguard against the exploitation of components of the SSE fabric for narrow factional, doctrinal, or political interests.

 

As for the most important criticisms, they pertain to the enshrinement of the principle of independence from the state.

 

LA: On that very topic, to what extent does the new law enshrine the principle of SSE’s independence from the state?

 

Ben Aissa: Unfortunately, the principle of independence was breached on three levels. The first pertains to the SSE label, which is akin to a visa for entering this sector. The UGTT’s bill, which did not stipulate this point, classified SSE enterprises into two groups: enterprises belonging naturally (par nature) and automatically to the SSE system because the organic laws governing them stipulate the same principles (such as mutual societies, mutual insurance companies, mutual societies for agricultural services, cooperatives, and cooperative agricultural production units), and enterprises belonging voluntarily (par option), such as commercial companies (with the exception of those active in the health, education, and transport sectors) that serve a social purpose and reinvest at least two-thirds of the profits in their social realm. Stipulating this label raises issues in principle and practice. Enterprises in the first category don’t need a label to begin with given the nature of their SSE activity. The law [also] deferred to a governmental decree with regard to the conditions for granting the label and the granting body without clarifying precisely what they are. But fortunately, this breach was rectified in the draft of the governmental decree presented to the latest ministerial session of the outgoing government, which I personally helped draft. A “committee for granting and withdrawing the SSE enterprise label” was created in every Regional Directorate for Professional Training and Employment, headed by a representative of the Ministry of Employment and composed of representatives of the major national organizations (the UGTT, the Tunisian Union of Industry, Trade and Handicrafts, the Tunisian Union of Agriculture and Fisheries, and the National Union of Tunisian Women) and the SSE enterprises. The draft decree also stipulated granting the label automatically to cooperatives – including mutual societies for agricultural services, development groups in the agriculture and fishing sector, mutual associations, microfinance associations, and mutual insurance companies – and granting it to associations, companies, and economic interest groups after their cases are examined and their compliance with SSE principles on paper and in practice ascertained.

 

The second point pertains to the public commission [the “Tunisian SSE commission”] that has legal personhood and administrative and financial independence, and operates under the oversight of the ministry charged with SSE. This public body was granted broad powers and functions that we felt – per the bill that the UGTT submitted – must remain within the purview of elected bodies lest we tighten the administrative apparatuses’ control over the sector.

 

Finally, mutual associations were excepted from the principle of managerial independence from public authorities and political parties. This is a serious breach. The universality of the principle shouldn’t have been compromised, and mutual societies that don’t abide by the principles of freedom and independence should have been left outside the SSE system. Note that mutual societies for public sector personnel and employees include personnel and employees of ministries, public administrative institutions, and local authorities, and joining them is optional, with the exception of the mutual societies that were created by laws, such as the Customs Agents’ Mutual, the National Army Mutual, the National Security Mutual, the Mutual for National Guard and Civil Protection Personnel, and the Magistrates’ Mutual. In this category, joining is mandatory for all active personnel and optional for retired personnel. Moreover, the administration of mutual societies created by laws is entrusted to the heads of boards who are appointed by the supervising ministries.

 

The unexpected surprise was the abolishment of the Ministry of Employment and Vocational Training and the attachment of its offices to the Ministry of Youth and Sports under the label “vocational integration” in the architecture of the new government. This decision was made without regard for its present size and importance or the future functions entrusted to it as a governmental body vested with the SSE portfolio.

 

LA: The issue of financing SEE enterprises was a pivotal subject of debate during the process of drafting this law. How was this problem solved? Can cooperative banks be an effective solution?

 

Ben Aissa: Parliament approved the most important provisions pertaining to financing the SSE system as they appeared in the UGTT’s bill. The most important were creating a cooperative bank with a standard statute based on the General Organic Law for Cooperation. The gateway for true independence is money. Without financial resources, the sector will remain hostage to the commercial banks’ policies and choices. Note that in this context, Tunisia had a successful experience in the form of the People’s Bank,[1] which the UGTT established in 1957. Contrary to the misconception surrounding this bank, it was not public; rather, its capital came from the contributions of the parties making up this sector, such as workers, artisans, and farmers.

 

Because financing the cooperative banks will take 3 to 5 years, the new law stipulated that financial institutions open preferential lines of financing for SSE enterprises, a percentage of public procurements be allocated to SSE enterprises, and tax and financial privileges be granted based on the enterprise’s classification and the nature of its activity irrespective of its region. These measures were reinforced with other measures to benefit the sector, namely establishing and developing SSE platforms and a mechanism for guaranteeing loans and all categories of financing granted to SESE enterprises, especially by the banking system and other financing institutions.

 

LA: SSE is organically connected to local governance. To what extent can it adapt to unique local socioeconomic conditions? Does the local governance system seem ready to open up to this experiment?

 

Ben Aissa: The common denominator between local development and SSE is what’s called “proximity economy”, i.e. enterprises that develop in accordance with local needs not dictated from the center. Here lies the role of the municipalities in translating this project. Articles 109 and 110 of the 2018 Local Authorities Code explicitly stipulated financial mobilization for SSE enterprises through contracts between the two sides. However, as of 2019, no thought had been given to programming financial provisions to finance SSE enterprises as there was no law regulating their operation. Today, the legislative text is ready, and things are moving in the right direction on the legal level.

 

As for your question about readiness, admittedly the exceptional circumstances of the COVID-19 pandemic have undermined the ability to launch the experiment. Most provisions were spent on covering wages and emergency expenses related to combating the virus’ spread. Hence, the development projects related to SSE enterprises were postponed until 2021. They will launch with minimum cost, expenses, and funding because the pandemic’s economic repercussions will last years.

 

Likewise, the process of establishing this system remains long. Regarding cementing decentralization, achieving the desired goals will take 27 years, and not all the institutions pertaining to SSE have been created yet. For example, the Supreme Center for SSE can only be created after the public commission is established.

 

Moreover, the legislative aspect suffers from some shortcomings, such as the [failure to] finalize the regulatory decrees, examine the relevant legislations (such as Beylical Decree of 18 February 1954 on Mutual Societies), and revise the texts concerning the components operating in the agricultural sector so that they are all in conformity with the new legal sphere that SSE has established. At the same time, what has been achieved – such as the extraction of political recognition of this sector and its establishment on the legal level in anticipation of subsequent steps – should not be undervalued.

 

LA: In the 1960s, the country had a painful experience with cooperativism that ended in failure and the subsequent imprisonment and exile of its architect. What might make the coming experiment distinct from Ahmed Ben Saleh’s experiment?

 

Ben Aissa: The new project is based on a critical reading of Ben Saleh’s experiment, which violated the two most important elements, namely freedom and independence. The state adopted an authoritarian policy that made joining the cooperative system mandatory. Herein lies the difference with this new law. The demand to renew and reestablish the SSE experiment was not imposed by state institutions; rather, the initiative emerged from civil society organizations and the UGTT and was joined by citizens, people concerned with the sector, and people interested in the matter. This radical change to the traditional path of such projects, which usually come from the top of the legislative or executive authority, is what increases our faith in the sturdiness of this experiment and its ability to succeed. It emerged from a grassroots desire and the consciousness and choice of those aggrieved by the development paradigm.

 

This interview is an edited translation from Arabic.

 

 

[1] The People’s Bank was established by the UGTT in 1957, and it began financing cooperatives in every sector even before the state adopted cooperativism as an official approach to development. The People’s Bank experiment ended in 1966. The bank was seized by the state and its name changed to “the South Bank” after UGTT General Secretary Habib Achour was imprisoned in the so-called “Babour” case. This case involved a fire aboard a ship belonging to the Kerkennah Islands Revival Company, of which Achour was the general director.