D The Unique Possibilities of Cooperatives in the Provision of Social Services

There are numerous theoretical and practical questions related to the study of the role of cooperatives in the provision of personal welfare services are quite numerous. The discussion here is limited to three main theoretical arguments, each with broad practical implications. The theoretical setting reflects the welfare mix of public, private, cooperative and NPOs in the provision of social welfare services discussed above. The more specific inquiries involve the role of consumer cooperatives in empowering clients or consumers of social welfare services and the role of worker cooperatives in renewing and enriching work life. In addition, the role of NPOs in increasing the effectiveness of the welfare network and social welfare services is also of theoretical importance here. Other considerations, such as entrepreneurship and management of social service cooperatives as well as their effectivity compared with the public and private provision of social services, will be considered at a later stage.

The provision of social welfare services by cooperatives can be divided into three or four main categories which reflect the type of service offered (i.e. services with residence or housing as its starting point; services concentrating on health and other types of personal care; professional or worker cooperatives in the social service sector and cooperatives for leisure, education, culture or tourism). Our interest focuses on all types of cooperatives providing social welfare services, except housing cooperatives per se. Healthcare, rehabilitation societies, various kinds of social cooperatives, handicap, daycare and elderly care, school cooperatives and integrated social service cooperatives will be the subject of future empirical studies.

The two more specific theoretical problems raised in the sections below concern the renewal of the public sector and enrichment of the welfare state as well as the renewal and enrichment of work life associated with the various forms of providing welfare sendees - in particular, changes between one form of provision and another. What would the most likely impact of a change from public social services to third sector provision on relations with clients and employees of such sendees be? Financial and strictly economic aspects aside, rather different customer and work relations are implied by each form of provision. Public provision often implies standardization of welfare services according to some publicly agreed upon or politically approved norms. These norms may be determined by relevant experts and applied through political decisions to all providing units within a given territorial jurisdiction. Uniform higher education, particularly for civil servants, ensures the standard application of such norms (William-Olsson, 1988; Dagens Nyheter Jan, 18, 1990). However, such standardization has been criticized for resulting in the application of Fordist principles of mass production to the provision of personal welfare services (Christensen, 1990; Tarschys, 1990). This often alienates both the clients and employees. The post-Fordist emphasis on decentralization and flexible specialization rejects such a model of production (Nielsen, 1989; Nielsen and Pedersen, 1989).

The contemporary debate on privatizing public services also influences the goals and constraints of public provision of welfare services. The 1980s the welfare state was subjected to prolonged criticism and severe budget curtailments. This, in turn, has had an impact on the goals of public providers - such as attributing greater priority to economizing resources, rather than expanding or improving the quality of welfare services. The present economic and political climate sharply restricts the possibilities for the renewal of the public sector and the enrichment of the welfare state as well as the renewal and enrichment of work life in the public sector.

Competitive, private provision of welfare services implies greater flexibility and, hence, greater differences between providing units. Standard or uniform norms do not determine all or even most aspects of service, rather only a few basic or strategic ones. Efficiency and profit in providing services are not determined by standardization but rather by market expectations and flexible local solutions. Nor are private providers subject to the same public scrutiny and debate as public ones. Private social services will be relatively small scale, at least at the outset. The greater flexibility and specialization in the services provided will be welcomed by both clients and workers.

There are, however, limits to the renewal of social services via privatization. The flexibility and innovation expected by clients will be limited by the economic constraints of private for-profit firms. Most employees will, moreover, face equal or perhaps even stronger economic constraints in the private sector than in the public sector (Szulkin, 1989). Thus, except for the owners and/or managers of private firms providing social welfare services, possibilities for the renewal and enrichment of work life may be limited to the greater flexibility provided by smaller bureaucratic units.

The discussion below summarizes several of the points in the Swedish debate about new cooperatives (Pestoff, 1990b, 1991b). It considers the main advantages of social service cooperatives in terms of empowerment of consumers, renewal and enrichment of work life, renewal of the public sector and enrichment of the welfare state. They will be addressed separately below. It also mentions some of their drawbacks.

1 Empowerment of Clients and Consumers

The first important issue dealt with herein concerns the empowerment of clients or the consumers of social welfare services. Markets and politics are the two main institutions governing the influence of clients and consumers in market-oriented economies (Hirschman, 1970). However, they operate under quite different constraints, according to rather contrasting principles and rely upon quite distinct responses by producers and consumers or clients. Markets respond primarily to market signals which can be initiated or augmented by consumers changing their patronage from one producer or provider to another. Hirschman refers to ‘exit’ as a reaction by dissatisfied customers or clients. Political decisions, by contrast, are not only subject to voting and elections, but also to protests of one kind or another. Hirschman refers to such responses as ‘voice’, since they call attention to unsatisfactory conditions in the provision of goods or services. Exit is a typical market response and has the greatest impact on commercial or private firms. Voice is a typical political response and has its greatest impact on public services. The beneficial impact of exit and voice depend, however, upon the type of goods produced or service rendered (Hirschman, 1981, 1982; Pestoff, 1994).

Exit and market responses may provide ample, if not optimal, information in decisions concerning many, if not most, types of goods. In this case, quality can be determined by some combination of objective or general standards. Services, however, are not normally subject to the same general agreement about standards. Voice has one of its most important functions in determining the quality of service. This is true in particular of social welfare services - most of which have been developed and made available to the public-at-large in recent decades - and, therefore, are rarely subject to previously determined general standards of quality. Rather, it is often through a dialog at the local level between the providers and consumers of such services that some agreement upon standards of quality can be derived at all. Market signals alone are, thus, inadequate and inappropriate for determining quality standards of welfare services, since they provide insufficient information concerning the desires of clients.

Most forms of providing social welfare services are governed by either one or the other of these two principles (i.e. exit or voice). Private provision of social welfare services is undertaken on a commercial basis, while public provision depends upon elections and political decisions. The former is primarily subject to exit, the latter to voice. As such, voice may operate at infrequent intervals (e.g. at best, every second, third, fourth or fifth year or more seldom) depending on election periods and the saliency of issues related to welfare services in election campaigns. Not only private providers of social welfare services, but also social service cooperatives run on a worker co-op basis and similarly, though to a lesser extent, NPOs operate under commercial-like constraints. They are primarily subject to exit or market responses if the market is competitive but to little or no voice reactions.

Cooperatives providing social welfare services to members as consumers of these services (i.e. on a consumer co-op basis) can, however, readily combine both exit and voice options among their guiding principles at the level of production. It is their ability to combine both of these guiding principles that makes it possible to discuss the empowerment of clients as consumers, since it makes clients directly responsible for the service produced. By involving members in the day-to-day operations of their cooperatives - in addition to giving them a voice in the running of the co-op as a whole - clients-cum-members obtain an institutionalized voice in the provision of social welfare services. This voice can be employed in determining the standards of quality of the services at the level of production. This type of institutionalized voice is not normally found in other forms of welfare service provision. Thus, clients/customers become empowered with rights and responsibilities by virtue of an institutionalized voice made available to them through membership in the social service co-op.

There are, however, some problems associated with member ownership. Some employees may resent having to deal with clients as members. Certain employees may even consider it an infringement upon their professional prerogatives. Under- and over-consumption of work environment may also become a complication. Members may not always understand the necessity of making investments to improve the work environment. Rather, on the contrary, their investments in the work environment may be ro rhe detriment of the economic well-being or survival of rheir social service cooperative.

Consumer cooperatives can thus play a unique role in the provision of social welfare services. They alone can directly empower clients or the consumers of these services, and they alone can directly institutionalize a dialog between the producers and consumers of welfare services about the quality of such services. This, in turn, contributes to the renewal and enrichment of the work life of the professional providers of such social services. Employees can gain valuable, direct feedback from clients about the quality of the services provided.

Social welfare services provided by NPOs may, in addition, potentially contribute to the empowerment of consumers. Members who share the group’s or NPO’s goals might find it easier to engage in a dialog about services and their quality. Common goals may, on the other hand, act to impede criticism of existing routines due to group loyalty. Non-members who subscribe to such services will probably do so with the lower costs made possible by volunteers in mind and, therefore, also avoid open criticism. Thus, although staff resources may facilitate a dialog between volunteer providers and consumers about quality of services, cost considerations will most likely impede overt criticism of existing routines or services.

2 The Renewal and Enrichment of Work Life

The second important theoretical issue raised herein concerns the renewal and enrichment of work life associated with the various forms of providing welfare services and, in particular, changes between one form of provision and another. Different work relations are implied by each form of provision, as mentioned above.

In post-communist societies, Havel (1978) recommends that the production and satisfaction of human needs should take place through cooperatives and various forms of self-management. Everybody who works in an enterprise must share in the decisions and in the returns. Cooperative provision of social welfare services in the West also implies greater differentiation than public provision but not significantly so in terms of standards and norms, as in forms for organizing the provision of services (Lindkvist and Westenholz, 1987; Lindkvist, 1990).

Two basic forms or models of cooperative services are apparent. One is the worker co-op model, where all or most of the providers of a social service are also shareholders in the service cooperative but the clients have a formal customer relation with the providers. It is here that we can expect to find the greatest possibilities for the renewal and enrichment of work life (i.e. from a perspective of cooperatization rather than privatization of social welfare services). By combining the roles of owning a firm with that of being an employee, co-determination is also greatly enhanced.

Hirschman (1982) argues rhar greater participation in work life and the discussions concerning it can help to bridge the gap between instrumental and the expressive attitudes. This would make work less instrumental and introduce more expressive aspects - something which, in turn, renders work more satisfying and enjoyable to most employees.

There are certain problems associated with worker ownership. Either the under- or the over-consumption of work environment is one such problem. The members of social service co-ops of the worker type might ignore some of their own interests as employees, for example, in making investments to improve their work environment. They could be inclined to do this in a highly competitive situation in order to save their jobs. The members/workers of this type of social service cooperative might, on the contrary, make improvements in their work environment at the expense of their clients and/or other financiers of these social services. This should be a greater risk with public than with individual financing of cooperative social services. There is also a risk that members of worker co-ops which provide social services would give preference to their own interests rather than those of their clients. Their preferences for increased salaries may outweigh those of their clients for high-quality services at reasonable prices. This depends, of course, on the competitive nature of the market and on fiscal control, if such services are financed by public funds, on a third-party basis.

The final form of providing social welfare services involves NPOs and bears some of the features of cooperatives but also has some unique characteristics of its own. Great variation is found between countries in terms of the characteristics of NPOs and their role in the provision of personal welfare services (Kramer, 1990a, 1990b). From a Nordic perspective, NPOs often rely on idea-based or purposive groups. They may provide welfare services to members initially and then, perhaps, to non-members on a commercial basis. NPOs do not, however, normally attempt to cater to the public-at-large but only to persons subscribing to, or at least not rejecting, certain of the NPO’s basic values. Members of the NPO who are involved in the actual provision of welfare services usually do so on a volunteer basis or for reduced remuneration, thereby lowering the costs of providing such services and, thus, making them more commercially viable or profitable. The surplus derived from the provision of personal social welfare services can be used to finance other activities of the NPO. An equally important point may be contact with non-members and the opportunity of explaining or demonstrating the ideas of the NPO and, thus, gaining new adherents. New souls may be more important than greater income. NPOs will, therefore, provide an uncertain example of the enrichment of work life.

The extent to which NPOs rely upon volunteers diminishes their importance in the renewal and enrichment of work life - in particular, when rhe active work force includes a large proportion of working- age females. On the contrary, in a society with a lower level of activity in the work force, in particular for women, volunteer work may be the first step out of house work and back into the active remunerative work force. The necessary skills and self-confidence may be gained through volunteering. This aspect is not, however, seen as particularly relevant in countries like Sweden, mainly due to the uniquely high level of female activity in the work force.

3 The Unique Advantages of Nonprofit Organizations in the Welfare Network

Nonprofit organizations have often been praised in the U.S.A. and the U.K. for providing more efficient welfare services than either public or private for-profit channels. The third sector or voluntary associations have not earned the same recognition in Sweden as elsewhere, in spite of recent support by a parliamentary commission (Folkrorelseutredningen, 1986, 1987, 1989; Kulle, 1991). The volunteer aspect of NPOs often gives rise to expectations of less-costly services compared with both public and private provision of such services (Kramer, 1981). They can relieve heavily burdened public budgets, which is often one of the main political reasons for proposing an increased role for NPOs (and privatization) in the implementation of public policy and in the delivery of various social services to the public. A shift to voluntary sector delivery of welfare services in the U.S.A. and the U.K. reinforces, however, the dependence of voluntary organizations on the government for funding such activities (Hall, 1987; Salamon, 1987; Johnsson, 1989). This, in turn, encourages their professionalization and increases their personnel costs in the next phase of development (Salamon, 1987; Kramer, 1990a, 1990b).

Our focus here, however, is not on the issues of efficiency, productivity or costs, but rather on whether and how NPOs contribute to greater effectiveness in achieving the goals of public health and social welfare policy. Thus, it is not the costs of welfare service per se, but rather the ability of NPOs to contribute to the effective achievement of Swedish public health and social welfare goals that deserve attention. Greater effectiveness in public services can be achieved by the unique outreach functions of NPOs.

In a seminal work on voluntary agencies and the welfare state, Kramer (1981) compared the role of NPOs in the U.S.A., the U.K., the Netherlands and Israel that provided services to the handicapped. He argued that voluntary handicap agencies combine three unique functions that are not normally associated with service provision by either public or for-profit agencies in most welfare states: pioneering or innovation through specialization, advocacy and the preservation of specific civic values of participation by clients.

The relationship between governmental and NPOs varies from country to country over time and according to the issue or problem at hand. Kramer (1981) discusses five major strategies of relating government to voluntary agencies in the delivery of personal social services. They range from nationalization, government dominance and ‘pragmatic partnership’, to ‘empowerment’ and ‘reprivatization’. In the four countries in his study, he characterizes relationships between governments and NPOs for the handicapped according to one or the other of these strategies.

In this way too, the acute case of AIDS helps to bring to light an additional strategy for relating governments to voluntary agencies not initially observed by Kramer. If, for any reason, the government is unable to successfully come into contact with relevant risk groups, then it may actively encourage NPOs to do so in light of their unique outreach function.

A highly topical example was chosen for exploring the role of NPOs in the welfare mix and their outreach functions in the welfare network in Sweden (i.e. the case of ‘Managing AIDS’) (Marin and Kenis, 1989). It illustrates the interaction of NPOs with the state under dire stress and serves to identify the limits as well as to clarify the essentials of the role played by NPOs in Sweden’s welfare mix.

The AIDS epidemic provided clear cut case for examining the functions of NPOs in delivering social services. The acute case of AIDS brought an additional organizational function into focus - namely, reaching out to risk groups that are reluctant to work directly as individuals or in groups with public health or social welfare authorities, partly because of the stigma involved with their group characteristics and special illness. This outreach is the unique feature of NPOs that provide AIDS services (Pestoff and Walden Laing, 1990; Walden Laing and Eads, 1991). Without NPOs, it would be impossible to come into contact with most risk groups, to inform them, test them and provide them with counseling and services, nor would it be possible to provide them with humane conditions and treatment once their HIV-positive situation becomes more acute.

NPOs involved with managing AIDS in Sweden and elsewhere are engaged, to a greater or lesser degree, with one or more of the following functions: Prevention; Care and social services; Control, surveillance or monitoring; Policy advocacy. They collaborate, of course, with public agencies in most of these functions and much of their financing comes from public funds. However, a significant number of NPOs can also be expected to fulfill the unique function of outreach in which both public and for-profit agencies fall short.

Government dominance may be the principal mode of operation in most areas of personal social service in Sweden, as Kramer claims elsewhere (1990a, 1990b). However, ‘pragmatic partnership’, active encouragement of outreach or ‘empowerment’ can determine this relationship in other areas of social services. Thus, ‘empowerment’ would best characterize the Swedish government’s relationship with NPOs in the field of consumer policy (Pestoff, 1989, 1990a), while ‘pragmatic partnership’ or perhaps active encouragement of outreach seems to best capture this relationship when it comes to managing AIDS (Pestoff and Walden Laing, 1990).

By virtue of their unique outreach function, we expect that, in most aspects of managing AIDS, many if not most of Swedish NPOs will function as a supplement or complement to public health and social welfare agencies rather than as an alternative or obstacle to them. In a more general sense, if clients are organized in self-help groups, then they can play a more active role in articulating and promoting the interests of their members in designing and delivering social services. This gives them greater influence in the provision of such social services. Their participation may initially promote some disagreement between such self-help groups and public sector agencies over the quality and quantity of such services. However, in the long run, it should promote a greater dialog among these groups.

Resource-poor clients who lack organizations of their own may be assisted by public servants and/or concerned individuals in forming client groups. Extremely disadvantaged groups may, thus, be reached by these social services via such client groups. However, they are unable actively to articulate their own needs or to promote the provision of services tailored to their needs. Thus, both in the specific case discussed above and in general, NPOs can increase the goal fulfillment of public health and social service policies. Under some circumstances, NPOs may even provide greater client influence on the services provided.

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