Introduction

2. Introduction • Although most of the cooperatives and other social and solidarity enterprises operate in a capitalist market, they do not operate, at least in theory, motivated by capitalism, where the rational defined by neoclassical economics is the prevailing logic, and where in practice, it is expected the highest economic return per unit invested in a market transaction, which is a rule for the "rational" individual (insatiable, who prefers more to less and who thinks that to stop earning means losing).

3. Introduction • However, this "rational" logic could explain part of the cooperative advantage to which several authors have already made some contributions (Spear 2000) (Ramirez 2002) and (Dávila 2005), among others. In synthesis, the cooperative advantage is derived from working in groups and can be understood as savings/benefits from the effort obtained (Aliende 2002: 65) by the partners of the cooperative. The competitive advantage is defined as activities that a company performs better than its competitors (Spulber, 2004, quoted by Martinez-Lopez 2006: 6). Paradoxically, it is precisely the rationality of the neoclassical model which will lead to conclude that the cooperative is in turn, the same competitive advantage of companies in social economy.

4. Some information about Colombia • Colombia, officially the Republic of Colombia (Spanish: República de Colombia, pronounced is a constitutional republic in northwestern South America. Colombia is bordered to the east by Venezuela and Brazil, to the south by Ecuador and Peru;[10] to the north by the Caribbean Sea; to the northwest by Panama; and to the west by the Pacific Ocean. Colombia also shares maritime borders with Venezuela, Jamaica, Haiti, the Dominican Republic, Honduras, Nicaragua and Costa Rica. With a population of over 46 million people, Colombia has the 29th largest population in the world and the second largest in South America, after Brazil. Colombia has the third largest population of any Spanish-speaking country in the world, after Mexico and Spain.

6. Colombian Solidarity SectorFormation of Sector

7. Law 454 of 1998: Solidarityeconomylaw • Paragraph 2. Have the character of solidarity organizations including cooperatives, agencies second and third degree that group cooperatives or other forms ofassociational and collective property, auxiliary institutions of solidarity economy, community enterprises, businesses supportive of health, pre-cooperatives the funds of employees, mutual associations, service companies in the forms ofgovernment cooperatives, partnerships, and corporations all those forms of solidarity associations that meet the characteristics mentioned in this chapter.

8. Naturaleza: Kind of companies # Entidades: Number of Institutions Activos : Assets Patrimonio: EquityIngresos : Incomes

9. COMPETITIVE ADVANTAGE IN Social and Solidarity Economy (SE) Abstract:The advantages of social economy enterprises and other third sector enterprise operating in a market can be measured and its measurement becomes a factor of competitiveness to the competition from non-cooperativeIn a race that goes through the base of the pyramid, cooperatives, and mutual fundsmust make decisions and integration of inter-market or to keep the challenge of disappearing.A company of the social economy can be more efficient than a capital company, even from the standpoint of cost. In short, the letter explains the equation:Yd = Y + Tr - Tx + TrsSolidarity Companies Are more efficient capital firms from the cost point of view?

10. The contribution of the social and solidarity economy: the cooperative advantage • Capitalist market, VS (theoretically) non-capitalist motivation.The cooperative advantageCompetitive advantageparadoxes:It is precisely the rationality of the neoclassical model which will conclude that thecooperative advantage is in turn the same competitive advantage of companies insocial economy.The union advantage is the same competitive advantage of nonprofitsA rational person ("neoclassical speaking"), will choose never to leave a social enterprise as it is your best choice.

11. This reality in practice partners will conclude that the best decision under the neoclassical rationality will  cooperate and stay united in the organizationIn short, the best decision will cooperate in solidarity.

12. Why? • Because if the cooperative meets the precepts and management principles, available income is always greater than that of a non-associate person, under conditions. • Because it will increase consumer surplus. • Because the opportunity cost will be lower as individual economic agent.

13. Explanation • Y = C + I + G + XN (fundamental equation of macroeconomics - Keynes 1934)

14. Explanation • Contributions of previous documents that may be part of the explanation for the above statements. For example, the focus of a cooperative advantage as a function, among other variables, domestic prices (the price of the product, service or salary sold, paid or delivered at the time of the transaction between the member and the cooperative, • and the refund or supplement price or salary given to the member at the end of the financial year in the form of distribution of surplus) (Bridault 1999) is an interesting • approach. Mathematically, this function is conceived as follows: • f (Vcoop) = [Pcoop, Excoop,...]

15. Explanation • Where: Vcoop = the cooperative advantage; Pcoop = the price the associate pays to the cooperative to acquire a good or service that is supposed to be cheaper than the one paid in the market to another company outside its property. • Excoop = the return that is given to the partner in the distribution of surplus, and this leaves space for other variables (nonmonetary benefits, quality of service/product, social participation, etc.) that are supposed to be part of the cooperative advantage, which for explanatory purposes of this document, are only mentioned because it is not the aim of this paper to quantify, since they are part of the non-tradable goods, focusing this document only in the tradable goods and services of the cooperative practice .

16. Explanation • Therefore, this approach does not aim to show a total quantification of the total cooperative advantage but yet can show an approach to the measurement of a part of it. Then, an approach is given to the quantification of this part of the expression, which means that it can be monetized and settle faster.

17. Explanation • This part that covers the differential price in the market, the refunds by surplus distribution, the revaluation of contributions, among others, will eventually be a specific amount of money that can be found doing the corresponding mathematical calculations, and this will be named Solidarity Transfer (Trs.)

18. Explanation • Since it will finally be a part of the income not used for paying taxes and that indeed, will be a differential between the income of a cooperative associate, and a non-associate person to the same cooperative. At this point, the idea is to show that: • Yds >Yd

19. Explanation • Where Yds is the available income of a cooperative associate and Yd is the income of anon-associate person of the same cooperative. Under the assumptions that the two individuals are rational according to the neoclassical model, there is no perfect information, both keep the same preferences, the same income level (in this case, their wages), and the same indifference curves. This shows that: • [ Yds = Y -Tx +Trs ]> [ Yd = Y -Tx ]

20. Explanation • As you can see, the Trs is responsible for both expressions not to be equal, and in fact, the available income of an associate person to a social enterprise, in this case, a cooperative, is greater than the available income of a non-associate person to the cooperative. • Let’s take the case of a savings and loan cooperative, which has specific services as discussed here below. Disaggregating the components of the Solidarity Transfer for a cooperative of this type, then we have: Str. = A + B + C + D + E + F + G + H + I

21. Explanation • Str. = A + B + C + D + E + F + G + H + I • Where: • A = sum of the price differential - market VS cooperative prices /solidarity enterprise • B = sum of the aid received • C = Interest paid on savings + (differential lending interest rates applied to loans of • associates) - the opportunity cost of inputs at market prices • D = Revaluation of contributions • E = end of year bonus or Christmas bonus (for Employee Savings Fund) • F = Value of credit study • G = value of events attending • H = No charge of 4 x 1000

22. Explanation • So then, the transfer of solidarity can be expressed in the case of a cooperative associate as follows:

23. Part of Conclusions… • If the cooperative or other social and solidarity enterprise meets the solidarity precept and is consistent with the management model attached to it (transparency, nonprofit, democracy, etc.) will achieve the maximization of its cooperative advantage as well as its competitive advantage. This reality, in practice, will get cooperative partners to conclude that the best decision under the neoclassical rationality will cooperate and keep within the cooperative. In short, the best decision will be to cooperate cooperatively and always use the services of the cooperative.

24. Bibliography • Aliende, Iñaqui (2002). La ventaja cooperativa y el e-learning. En la revista Capital humano: revista para la integración y desarrollo de los recursos humanos. Año nº 15, Nº 154, 2002 , Págs. 64-69 • Bridault, Alain (1999). Manejar el desarrollo de una cooperativa. Documento recuperado de la Internet de la dirección URL: http://www.orion.coop/Site2EspanolG.html#Site2EspanolG4 el 1 de julio de 2007. • Castillo Sandoval, Darío (2000). Economía y Sector Solidario. Universidad Javeriana, Ed. CEJA. 1ª Edición. Bogotá DC, 2004. 271 pp. • _____________ (2007). “Racionalidad y transferencia solidaria: una aproximación teórica y empírica”. Ponencia Presentada en la VI CONFERENCIA REGIONAL DE ISTR PARA AMÉRICA LATINA Y EL CARIBESALVADOR DE BAHIA, BRASIL, 8 AL 11 DE NOVIEMBRE DE 2007. Tercer Sector Y Sociedad Civil en America Latina Y El Caribe: (RE) Pensando Identidades Y Relaciones Intersectoriales • Dávila, Ricardo (2004). Innovación y éxito en la gerencia cooperativa – casos exitosos de cooperativas rurales de ahorro y crédito. Universidad Javeriana, Ed. CEJA. Bogotá DC, 2004. 141 pp. • Dornbusch, Rudiger y Fischer, Stanley (1992). Macroeconomía. Ed. Mc Graw-Hill. Bogotá DC, Colombia. Quinta edición, 974 pp. • Keynes, John Maynard (1934).La teoría general de la ocupación, el interés y el dinero. Fondo de Cultura • Económica de México – Serie Economía. Novena re impresión, 1986. México DF. 356 pp. • Ramírez, Luis (2002). Fundamentos de la gestión cooperativa en proceso de formulación estratégica; la ventaja cooperativa. En: El proceso estratégico en las organizaciones cooperativas. Universidad de Costa • Rica y Université de Sherbrooke. San José de Costa Rica, 2002; 230 pp. Samuelson, Paul y Nordhaus D. (1990). Economía. Ed. Mc Graw-Hill. Madrid, España. Decimotercera edición 1193 pp. • Razeto, Luis (1998). El “Factor C” y la economía de la solidaridad, Serie Cuadernos de Educación No.1, Montevideo, Cofac, Mayo. S.P. • Spear, Roger (2000). La ventaja cooperativa. Documentos - Publicación del Centro de Estudios de Sociología del Trabajo. Nro 21 – Julio-Agosto de 1999. Buenos Aires: Facultad de Ciencias Económicas, Universidad de Buenos Aires. • Spulber, D. F. (2004). Management Strategy. New York, NY: McGraw Hill Irwin, citado por Martínez-López, • Carmen Leonor (2006) en: Modelo de Innovación y Oportunidad: Una Aproximación hacia el Proceso de Gerencia Estratégica de la Organización Cooperativa. The City University of New York/BMCC, Mimeo, documento recuperado de la Internet de http://www.aciamericas.coop/conferencia2006/docs/leonororgcoop.doc el 30 de junio de 2007.

25. DARÍO CASTILLO SANDOVAL Unidad de Estudios Solidarios – UNES Instituto de Estudios Rurales – IER Pontificia Universidad Javeriana COLOMBIA dcastil@javeriana.edu.co dariocastillo1@gmail.com www.javeriana.edu.co/ier RULESCOOP UNICOSOL UNIRCOOP CIRIEC Colombia