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Recession and the Social Economy

Listed author(s):
  • Martha A. Starr

In recessions, there is typically an increase in unmet basic needs -- for food, shelter and health care. While government programs offset these to some extent, and friends and family may also help, an important role is also played by the 'social economy', i.e. private, nonprofit organizations relying primarily on donations, grants and volunteer labor to support social welfare in their communities. This paper reviews evidence on the growth of unmet needs during recession and documents social-economy mechanisms that aim to contain them. The analysis highlights hallmarks of social-economy models that make them well-suited to accommodating unmet needs, including use of multiple strategies to mobilize resources, ingenuity, efficiency, cooperation, and a dominant ethic of care. It also identifies fragilities in social-economy models and inherent issues of power imbalance between those offering and receiving help. While some view these problems as underlining the need for more generous government programs to meet basic needs, the paper takes the contrary position that the social economy constitutes a critical reserve of nonmarket, nongovernment values that hold better promise for addressing issues of need and social justice than expanded entitlements. As such, the question is how to reduce fragilities and imbalances in the social economy, where furthering its institutional innovations is likely key. These include information sharing, cooperative backbones supporting frontline agencies, strategic connections with socially responsible businesses, and stakeholder strategies that upturn relationships between 'helpers' and 'helped'.

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File URL: http://american.edu/cas/economics/pdf/upload/2010-8.pdf
File Function: First version, 2010
Download Restriction: no

Paper provided by American University, Department of Economics in its series Working Papers with number 2010-08.

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Date of creation: Jul 2010
Handle: RePEc:amu:wpaper:2010-08
Contact details of provider: Web page: http://www.american.edu/cas/economics/

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  1. Christopher J. Ruhm, 2000. "Are Recessions Good for Your Health?," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 617-650.
  2. Martha Starr, 2007. "The Macro/Social Economics of Corporate Social Responsibility: Informational Abundance and Collective Action," Working Papers 2007-22, American University, Department of Economics.
  3. Cawley, John & Simon, Kosali I., 2005. "Health insurance coverage and the macroeconomy," Journal of Health Economics, Elsevier, vol. 24(2), pages 299-315, March.
  4. Frank Moulaert & Oana Ailenei, 2005. "Social Economy, Third Sector and Solidarity Relations: A Conceptual Synthesis from History to Present," Urban Studies, Urban Studies Journal Limited, vol. 42(11), pages 2037-2053, October.
  5. Vladislav Valentinov, 2007. "The Property Rights Approach to Nonprofit Organization: The Role of Intrinsic Motivation," Public Organization Review, Springer, vol. 7(1), pages 41-55, March.
  6. Carlo Borzaga, 2013. "Social enterprise," Chapters,in: Handbook on the Economics of Reciprocity and Social Enterprise, chapter 32, pages 318-326 Edward Elgar Publishing.
  7. AfDB AfDB, . "AfDB Group Annual Report 2008," Annual Report, African Development Bank, number 64 edited by Koua Louis Kouakou.
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