The Social Economy in Times of Retreat: A Call for Hope

The following article is an adaptation of a previous briefer one on Spain’s New Social Economy Law. It arrives at a moment of widespread political retreat across Europe and the USA. Against timid political calculation, perhaps the time has come to accept that defending this model is, above all, an ethical etance for transformation.

I. A Context of Political Recession

The social economy appears to be entering a process of «political recession», with setbacks in both tangible aspects (budget cuts in France, the dissolution of the dedicated unit within the Industry portfolio of the European Commission) and in less tangible but equally significant developments: the gradual disappearance of the agenda from numerous public spaces, the loss of centrality of concepts that orbited around it, such as responsible investment or non-financial reporting, and its progressive depoliticisation and reduction to mere technical exercises.

In this context of generalised retreat, it is significant that legislative advances in the social economy are occurring precisely in countries whose governments are confronting, directly or indirectly, the rise of the far right to power. This is no coincidence: defending the social economy is also a form of democratic resistance.

II. The Spanish Case: Updating the Legal Framework

This is why the approval by Spain’s lower house of parliament (the Congreso de los Diputados) of the Comprehensive Law for the Promotion of the Social Economy (Ley Integral de Impulso de la Economía Social) constitutes good news. The law updates and strengthens Spain’s pioneering 2011 legislation, the first framework law of its kind in Europe.

But understanding this law requires grasping what kind of policy instrument it represents. Not all public policies are the same: there are strategies, programmes, action plans (instruments that allow governments to mobilise funding, set priorities, experiment with tools and respond flexibly to changing circumstances), and then there are laws (instruments that establish the structural framework, define who is recognised as a legitimate actor, determine rights and obligations, and generate expectations of institutional stability over time).

Spain has advanced on both fronts in recent years:

• On the operational side, through explicit funding programmes such as the PERTE for the Social Economy and Care Sector (Proyecto Estratégico para la Recuperación y Transformación Económica), European funds, and both national and regional strategies.
• On the legal side, through this reform, which aims to consolidate those advances into durable institutional architecture.

The political significance of the law lies precisely here: it complements the conjunctural policies with an update of the institutionalisation of the policy area.

III. 2011 Is Not 2025: A Necessary Historical Contrast

Comparing this process with the approval of the 2011 law is inevitable, but doing so without context leads to misunderstanding.

In 2011, very specific circumstances converged:

• A deep economic crisis in which the social economy stood out for its capacity to understand the limits of orthodox economic thinking and to propose alternatives: ways of reintroducing the market as a sphere subordinate to the reproduction of life and care, rather than as a supposed law of physics that constrains what is politically possible and empties collective action of meaning.
• A conservative government (Partido Popular) with incentives to show social sensitivity without committing significant resources.
• A social economy still perceived primarily as a «shelter sector» in emergency contexts.
• A law that largely ordered and recognised existing realities more than it transformed them.

This context facilitated a virtually unanimous political consensus, but it also limited the material scope of the law.

Today the context is radically different:

• The macroeconomic situation is better.
• The government is a coalition led by the social-democratic PSOE, with the more left-wing SUMAR as a junior partner, and it is precisely SUMAR that holds the Ministry of Labour and Social Economy, which is responsible for this policy area.
• The social economy is now presented as a structural tool for addressing systemic challenges (energy transition, digital transformation, demographic change, territorial cohesion) not merely as an anti-cyclical buffer.
• There is an explicit commitment to accompany legal recognition with real funding and institutional advancement.

This inevitably raises the level of political conflict.

IV. Greater Ambition, Greater Resistance

In this legislature, social economy policy is being driven by a ministry led by the junior coalition partner, with a clearly more transformative orientation. This translates into:

• Greater normative ambition.
• A will to strengthen institutional recognition.
• A disposition to back the law with resources.

But it also generates tensions:

• With other key ministries (Social Security, Economy and Finance).
• With more conservative administrative cultures.
• With political balances that are sensitive to external pressures.

This internal coalition dynamic (where SUMAR controls the Ministry of Labour and Social Economy but the PSOE controls Finance and Social Security) shapes what is politically achievable. The limits of the law are not simply technical; they reflect the balance of power within the government itself.

V. CEPES: Strategic Ambition and Legislative Realism

CEPES (the Spanish Confederation of Social Economy Enterprises) is not merely a sectoral actor; it operates as a political interlocutor with a transversal agenda that includes taxation, social security, public procurement, governance, and institutional recognition, including participation in the Social Dialogue (the institutionalised tripartite negotiation between government, employers’ organisations and trade unions).

However, the legislative process reveals something fundamental: not all strategic demands are translated at the same level into parliamentary outcomes.

CEPES has described the text approved by the Congress as “a good starting point”, while simultaneously noting that “significant aspirations remain unaddressed”. These are not marginal issues. The confederation itself has consistently identified structural pending questions in three core areas: the legal configuration of social economy entities, Social Security provisions, and the cooperative tax regime.

The distinction between strategic aspirations and legislative battles is therefore crucial.

• Some demands, most notably explicit recognition of the social economy as a participant in the Social Dialogue, appear clearly in CEPES’s programmatic documents but do not surface as sustained claims in the parliamentary committee hearings. Where such claims do appear in the legislative file, they do so in a procedurally fragile manner, for example by being tabled as amendments and subsequently withdrawn at the Ponencia stage. This absence is politically intelligible: advancing this demand as a central line of confrontation would likely have opened a structural conflict with entrenched actors in the industrial relations system, risking a reframing of the bill beyond its viable parliamentary scope.
• Other demands, particularly those relating to Social Security, taxation, and labour market instruments, were explicitly articulated during the legislative process and translated into concrete amendment proposals. This includes extending the capitalisation of unemployment benefits to facilitate worker takeovers and generational business transitions, as well as correcting the treatment of cooperative worker-members under the self-employed social security regime (RETA).

A review of the parliamentary record shows that these demands were clearly expressed and formally tabled, and in some cases channelled into transaccional packages. However, the extent to which the final Commission-approved wording reflects the full scope of CEPES’s proposals remains constrained by coalition governance, inter-ministerial balances, particularly in Social Security and fiscal matters, and the narrow parliamentary margins under which the law was ultimately approved.

VI. What the Law Does: Real Advances

The law approved by the Congress is not a minimal law. Its ambition is considerable:

• It updates the Cooperatives Law (Ley 27/1999) to reinforce cooperative identity against bogus cooperatives, recognise digital participation and advance gender equality.
• It modernises the Social Integration Enterprises Law (Ley 44/2007) by decoupling the concept of vulnerability from the individual to focus instead on the external factors that generate exclusion.
• It revises the Social Economy Law itself (Ley 5/2011) by incorporating new types of entities already recognised at European level.
• It introduces fiscal improvements, such as the recognition of housing cooperatives operating under a right-of-use model as specially protected cooperatives.
• It clarifies the distinction between Special Employment Centres of social initiative (which are included within the social economy) and those of profit-seeking initiative (which are not); a distinction that has generated significant controversy but which responds to a logic widely accepted in both academic literature and international practice.

These are changes that reduce legal uncertainty and support a sector that in Spain comprises more than 74,000 enterprises and organisations, generates 2.5 million jobs and accounts for 10% of GDP.

The text approved by the Congress also includes amendments from the conservative Partido Popular, particularly in relation to social integration enterprises (provisions that reinforce the role of these enterprises in defining insertion pathways and that introduce mechanisms to combat intrusion and unfair competition). This means that, despite the PP’s vote against the final text, the law is not entirely devoid of cross-party input.

VII. What the Law Does Not Do: The Structural Limits

However, the law is also incomplete. CEPES and its member organisations identify structural pending issues that have not been fully incorporated:

• Extended capitalisation of unemployment benefits: The sector has long demanded that workers be able to capitalise their unemployment benefits to acquire viable companies undergoing generational transitions, even if they are not formally unemployed. This would facilitate the transformation of conventional businesses into cooperatives and prevent closures. Spain was recognised by the European Commission during the 2012 crisis as the country where the most failing companies were converted into cooperatives. The current law does not fully address this.
• Social Security treatment of cooperative members: CEPES has argued that the modification of Article 308 of the General Social Security Law, introduced by Royal Decree 13/2022, creates confusion regarding the contribution base for cooperative members in the self-employed regime (RETA). This correction was explicitly requested but does not appear as a central modification in the approved text.
• Exclusion from the de minimis regime: Social integration enterprises have demanded that public aid to the sector be expressly excluded from the European de minimis framework, which currently limits growth. This does not appear to have been resolved.
• Full bonification of social security contributions: FAEDEI (the Spanish Federation of Social Integration Enterprises) has called for 100% bonification of employer contributions for integration contracts. This has not been incorporated.
• Deeper fiscal reform: The sector has long called for a comprehensive reform of the Cooperative Tax Regime Law (Ley 20/1990), which is now 35 years old. The current law introduces some modifications but does not represent the structural overhaul that CEPES considers necessary.
• Participation in the Social Dialogue: CEPES has explicitly stated in its programmatic documents that one of the objectives of the law should be «to guarantee [the social economy’s] participation in public governance spaces, including the Social Dialogue». This aspiration does not appear in the parliamentary committee hearings of CEPES members and does not translate into explicit normative recognition in the approved text. The absence is significant: it reveals the extent to which the social economy is recognised as an economic actor, but not yet fully assumed as a subject of the social pact.

These omissions are not random. They reflect the political limits of the current moment: the balance of forces within the coalition government, the resistance of key ministries, and the reluctance to open structural conflicts with established actors.

VIII. The Senate: A Moment of Real Political Risk

The move to the Senate now opens a particularly delicate phase. The Partido Popular holds a majority there that would allow it to block the legislation through a veto or introduce substantial amendments. VOX, the far-right party, has only three senators. Although the PP’s final position has not yet formally materialised, its vote against in the Congress introduces a high degree of uncertainty.

To this must be added a further factor: the possibility of an early general election. Should parliament be dissolved, the bill would automatically lapse if it had not completed its passage, forcing the entire process to restart in the next legislature.

This is, therefore, a moment of real political risk, in which timing, parliamentary strategy and the willingness not to block sectoral legislation may prove decisive. Furthermore, the PP will probably not want to give any political victory to the government in what they perceive as the final months of its life. The situation is therefore extremely delicate.

IX. A Decisive Ideological Controversy: The Special Employment Centres

It is significant that the main media attacks on the proposal focus on the exclusion (fully consistent with public procurement law) of Special Employment Centres that are not promoted and controlled by non-profit entities.

This criticism touches on a deeper conceptual debate that extends well beyond Spain. Some actors still defend a minimalist conception of «social enterprise», one in which «doing good» is considered sufficient, where dedicating a majority of profits to social goals qualifies an organisation for social economy status, regardless of its governance structure or ownership model.

But both academic literature and policy practice (and, one might add, common sense) demonstrate that this is not enough. Without effective mechanisms to ensure that the value generated cannot be appropriated individually, the «social» character of an enterprise remains contingent and reversible. What distinguishes the social economy is not merely the destination of profits, but the governance architecture that prevents capital from exercising prevalent ownership rights over other factors (labour, community, purpose).

This is why asset lock mechanisms, non-profit control, and limits on individual appropriation are not bureaucratic obstacles but constitutive features of the model. They are what ensure that value created collectively remains oriented toward collective ends, rather than being redirected toward anti-social or environmentally harmful purposes at the discretion of capital holders.

The Spanish law’s insistence on distinguishing Special Employment Centres of social initiative from those of profit-seeking initiative responds precisely to this logic, a logic widely accepted in international practice and increasingly central to European policy frameworks. Stating this clearly is not sectarianism, but conceptual rigour.

X. An Ambitious Result Within the Current Political Constraints

The Government, and in particular the Ministry of Labour and Social Economy, has fulfilled its role and pushed the legislative process forward in an adverse context. The scenario that now opens up is complex. A strictly utilitarian analysis might warn that a law approved without the support of the Partido Popular risks becoming an «orphan» piece of legislation, easily challenged or even reversed under a future government of the right and far right.

Yet the result must be evaluated in context. This is not a minimal law. It incorporates real advances, updates four key laws, recognises new actors, and even includes cross-party contributions. The text approved in the Congress is ambitious given the correlations of force in parliament—fragile in the face of changes in majority, and open to future disputes, especially in the Senate and in subsequent legislatures.

XI. A Call for Hope

The social economy cannot afford a politics of retreat or of timid calculation. Its own historical logic is one of advancing in adverse contexts, disputing common sense, and building institutions step by step.

Being ambitious, in this context, does not mean denying the limits, but refusing to naturalise them. And fighting from hope is not naivety, but coherence with a project that, by definition, places people, cooperation and the common good at the centre.

Perhaps the time has come to be consistent with the humanist and empathetic approach that constitutes the very foundation of the Social and Solidarity Economy, and to reject both extreme utilitarianism and an overly timid political calculation. Perhaps this is the moment to accept that the social economy is not merely about managing values-driven enterprises or palliative public policies, but embodies an ethical and political stance of systemic transformation: that of those who choose to be actors of hope, committed to the collective construction of a future worth living.

Note on sources and parliamentary tracking

A substantial part of the factual reconstruction of the parliamentary process presented in this article draws on the work of the Observatorio Español de la Economía Social y del Trabajo Autónomo, managed by CIRIEC-España. In particular, the Observatory’s legal and parliamentary monitoring, including its detailed reporting on the approval of the Proyecto de Ley integral de impulso de la economía social in the Commission with full legislative competence, has been essential for identifying which amendments were incorporated at the Commission stage and for situating the law within its precise procedural context. The Observatory’s synthesis provides a level of clarity and reliability that is not easily accessible through the raw parliamentary documentation alone, and has therefore been used as a primary reference for the analysis of legislative outcomes in this article.¹

¹ Observatorio Español de la Economía Social y del Trabajo Autónomo (CIRIEC-España), La Comisión de Trabajo y Economía Social del Congreso de los Diputados aprueba el Proyecto de Ley integral de impulso de la economía social, 11 December 2025.