CHALLENGES TO THE LEGAL REGIME OF THE SOCIAL ECONOMY AND THE ORGANIZATIONS OF THE SOCIAL ECONOMY

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1 CHALLENGES TO THE LEGAL REGIME OF THE SOCIAL ECONOMY AND THE ORGANIZATIONS OF THE SOCIAL ECONOMY Daniel Francisco Nagao Menezes 1 Universidade Presbiteriana Mackenzie nagao.menezes@gmail.com Ernani Contipelli 2 Universidade Autónoma de Chile ernanicontipelli@gmail.com Abstract This paper will discuss the legal framework of the social economy in Brazil aimed at building a theoretical concept and support the creation of a focused national legislation for the social economy. The text shows the evolution of the relationship between politics and law in relation to the legislation of cooperatives and the third sector in Brazil. Key Words: Cooperatives; Social economy; State; Third Sector; 1 Graduated in Law from the Catholic University of Campinas, specialization in Constitutional Law and Civil Procedural Law both from PUC-Campinas, specialization in Curriculum and Teaching Practice in Higher Education from the University Center Padre Anchieta, Master and Doctor of Political and Economic Law University Mackenzie. University professor at the Law School of Mackenzie Presbyterian University, Campinas campus and, the Faculdades de Campinas - FACAMP 2 Graduated in Law from Universidade Mackenzie (1998), specialization in Tax Direio the Pontifical Catholic University of São Paulo (2000), master's degree in Law from the Catholic University of São Paulo (2004) - CNPQ and doctoral scholarship in Law from the Pontifical University Católica de São Paulo (2009) - CAPES scholarship, post-doctorate in Constitutional Comparative Law from the Complutense University of Madrid (2011) - CAPES scholarship and post-doctorate in Comparative Politics from the Universitat Pompeu Fabra (2012) - bag Generalitat de Catalunya. Currently, he works as a visiting researcher at Centro di Ricerca Interdipartimentale and di Formazione south Diritto Pubblico Europeo and Comparato (DIPEC) of the Università di Siena (Italy), the Observatorio de la Evolución de las Instituciones the Universitat Pompeu Fabra (Spain), the Institute of Compared Derecho of the Universidad Complutense de Madrid (Spain), the Institut de Recherche Juridique the Université Paris I Pantheon-La Sorbonne (France), the Centre de Recherches et d'études sur les Droits fondamentaux (CREDOF) of Université Paris Ouest Nanterre 10 ( France), the Korean Institute of Southeast Asian Studies (South Korea) and the European Center for Strategic Research (Italy). Vistante is Professor in the Department of Constitutional Law of Albacete Law School of the Universidad Castilla-La Mancha (Spain), the Autonomous University of Coahuila (Mexico), at the University of Lomas Zamorra (Argentina), at Korea University (South Korea) He is currently Professor of the Graduate Program Strictu Sensu the region of the Community University of Chapecó (Unochapecó) and the Law Faculty of the Autonomous University of Chile.

2 1. Introduction The social economy in Brazil go through three historical moments: a) Denial ( ) - this time there is no legislation in this area; b) social control by the State ( ) the SE is incorporated as part of the Brazilian state, lacking autonomy; c) Market Approach (1964-current): the social economy is seen as part of the market economy and is used as a palliative to economic inequalities. With this, the Brazilian situation is total absence of specific legislation on social economy, which is compounded by the absence of a concept of the economy on its meaning. The hypothesis of the research is that there is, in Brazil's 1988 Constitution exists within the economic organization the possibility of developing an infra-constitutional legislation on social economy as it determines the social and economic integration through work and further exploration of the possibility for economic activity state. The article will explore the chances of the Brazilian Constitution dialogue with the theory of social economy developed especially in Europe, resulting in the creation of a legal and economic knowledge that is used as a reference for the Brazilian legislature. 2. Denial moment and Cooperative Control in Brazil The effective legal regulation of the cooperative movement in Brazil began properly in Before that, during the period , the existing legal constraints were not about to form an autonomous cooperative system, although there were laws providing for cooperatives and public policies in order to stimulate the formation of cooperatives. Prior to the year Empire period and early Republic - Brazil's economic model was liberal, the absence of any action of the State in Economic Order. The little state interference occurred by the Commercial Code, 1850, legislation in which the State was only trade relations, nothing interfering in the relations of production or consumption. The only effective intervention of the state was to ensure private property, central element of the capitalist economic system. In this sense, considering the collective nature of

3 cooperatives - especially its European headquarters who knew the concept of collective ownership - any initiative was rejected by the Brazilian State. Added to this the economic history of Brazil, which was established as a colony of Portugal exploration, preventing the enterprise constitution facing the community (society), but rather targeted for maximum economic exploitation of the colony. In this sense, there were references to cooperatives in Decree 979 of January 6, 1903, as an organization in order for the consumption and production union; in Law n. 1637, 1907, which was co-operatives as commercial and non-profit society with a structure similar to corporations. A few years later, on is created by Decree No , with the specific purpose of approving the Regulation on the system of agricultural credit unions and the Popular Banks Luzzatti (urban credit cooperatives). Although there are no special record on the effects of the application of this new legislation is to admit, he has led government agencies to more surveillance in the constitution of these entities and in meeting their goals. The first structured regulation comes with the Decree. 22,239 / 32, specific legislation on cooperative, but that would have had the effect suspended more than once by other standards that established several public programs, the example of cooperative programs with the trade unions, among others. We note that at this stage there is an attempt to control the cooperative movement for their incorporation into the state. Prevailed in Brazil, either in the Empire ( , in the First Republic ( ) and in the Vargas government ( ) a strong sense anticommunist, feeling which influenced labor relations in Brazil. The solution that Brazil adopted, similar to fascist Italy of Mussolini, was the incorporation of workers to the state apparatus, with all labor relations are controlled by the government, thus nullifying the ability to mobilize workers as well as entrepreneurs. All any activity was previously regulated by the Brazilian State.

4 So much so that the cooperative was, from , designed and used by the state as a basic instrument of a comprehensive program of organization and development of agrarian society. This behavior caused strong State Cooperative relationships: Esse momento da história da intervenção estatal no cooperativismo só será entendido, considerando-se, de um lado, a profunda crise de natureza econômica, política e social vivida pela sociedade brasileira a partir de meados da década de 20 e, de outro, a ideologia e a natureza do estado emergente da Revolução de 30. (BENETTI, FRANTZ; 1985, p. 08) Such anti-political thought justifies the first Brazilian laws only regulate consumer cooperatives in economic sectors already captured by the government (military, civil servants and utility companies). That is, any mobilization of the cooperative does not involve threat to the Brazilian state, it is not possible too, the enterprise self-management. 3. Step Approach to Market After the previous step, incorporating the state, cooperatives were set up in legislation but as a corporate type underused and integrating a branch seeking autonomy, suffering government interference in accordance with the policies and historical moments of the season. Decree-Law no. 59, of (regulated by Decree of 04/19/1967) brought a legal status and contribution of cooperatives in the discipline, society of people with own legal form of a civil, non-profit, but because of the historical moment of military dictatorship, the government controlled collective forms of work organization and ended up repressing the cooperative. After the overthrow of this regime entered into force the Law / 71 - Brazilian Cooperatives Act (LCB) in force to this day. This law came from an interference context of the political scenario of state intervention on the grounds of Recommendation 127 of the ILO - International Labour Organization. Such an international discipline brings the fundamentals, the characteristics of cooperatives, the organization of the cooperative system, the operability and social relations. Brazil follows the international orientation and cooperatives continue to have its constitution and operation subject to government approval, and are conceptualized as a partnership, with

5 form and legal nature, civil, characterized in the face of voluntary, variability of the share capital, the share capital number limitation for each member or proportionality criteria (if more appropriate); inaccessibility of quotas; uniqueness of the vote; one vote per member; return of net surplus in proportion to the transactions; indivisibility of reserve funds and technical assistance, educational and social; political neutrality, religious, racial and social; providing assistance to members and employees (at the statutory provision); and associated limited admission area to the meeting possibilities, control, operations and services (art. 4 ). With the Brazilian Federal Constitution of 1988, the cooperative is inserted under actions that contribute to national development, and constitutional norms express: the fundamental right to freedom of association regardless of the state authorization (. Article 5, XVIII); as a statement of principle that guides the encouragement of cooperatives and other forms of association (art. 174, 2), the appropriate tax treatment for the cooperative act (art. 146) and miners unions (174, 3). The Brazilian Constitution breaks cooperative market logic, putting cooperatives out of a context of public policies that seek social and economic development of the country, allowing social inclusion through cooperatives, thereby creating the legal possibility of the existence of the Social Economy in Brazil. It happens that, this new vision of the Constitution has never been effective in Brazil, remaining in force common legislation, which completely close cooperative societies of market developments. This position is confirmed a few years later. In 2002, Brazil took on a new Civil Code, which brought a specific chapter on the cooperative societies the right to book companies (Articles ). The law refers to the cooperative principles and characteristics of the corporate type, setting even if the cooperative society will have the regime equivalent to that of a single company and that the standards of this type of company shall apply complementarily. 3 3 O direito societário brasileiro classifica as sociedades como empresárias e simples. Por expressa determinação legal, as cooperativas serão classificadas como sociedades simples, independentemente do exercício da atividade econômica empresarial, de sua organização ou tamanho da sociedade cooperativa (art. 983, Código Civil).

6 4. Challenges to the cooperative legislation in Brazil The challenges for realization of the true cooperative in Brazil are immense and beyond the legal level, reflecting on social and economic issues of historical origin. The Economic Power always exceeded the Political Power in Brazil, that national interests never prevail over economic interests. Brazil has always been treated since the time Portuguese colony, as a large state-owned export of primary goods. Only changes the figure of the colonizer, Portugal, Spain, England and the United States. There has never been, and there is at present, interest in turn Brazil into a nation, keeping the country under economic dependence on dominant centers. Not only in Brazil but throughout Latin America for the privilege of a ruling elite, that in exchange for some goodies, maintains a framework of social and economic domination that leaves the country dependent on foreign power centers. The Brazilian Constitution of 1988 try to start a process of breaking the political and economic dependence of power centers (especially economic), creating for it a long-term project with clear objectives (see art. 3) which are sought in all state actions as well, private. Within this structure is entering the cooperative, that is, as a production model capable of promoting social justice through collective appropriation of the wealth generated in a determined society. This, obviously, involves not only an economic change of the means of production and consumption, but also a social and cultural change. Discuss collective appropriation of wealth, which is the ultimate goal of the cooperative is subject not discussed in the economic and legal theories in South America. This follows the capture by local elites, who represent the international economic power, is the knowledge production tools (universities) as well as political (parliament), and the latter domain results in the production of legal devices that prohibit or regulate the cooperative so that the cooperative not reach autorregularão and collective appropriation of wealth. For these reasons, not just the existence of a common law that meets the Federal Constitution (only Brazilian legislation is on the right track) so that the cooperative takes its

7 rightful place in Brazil. It is necessary to break with the economic and social dependence on the centers of power before speaking in mere legislative amendment. This disruption includes the extinction or total renovation of the OCB system (Organization of Cooperatives of Brazil). Law 5,764 / 71, in order to maintain a form of state control over cooperatives, so that they do not deviate from market approach process, created an entity (OCB) with regulatory power over cooperatives. It happens that, by law / 71, the OCB print an ideological bias (capitalist) the entire Brazilian cooperative structure, breaking with the passage of time, with the socialist ideas of cooperativism. The bureaucratic structure of regulation of law / 71 prevents the development of the solidarity economy in Brazil, about the Brazilian government to create a National Secretariat for Solidarity Economy, under the Ministry of Labor since, the agency charged with promoting cooperatives only It operates in sectors with capitalist bias. Brazil needs legislation that favors cooperatives that constitute under the command of the cooperative and not under the command of capital. Final Considerations The conclusion that one reaches this article is that the legal challenges of social economy and the cooperative movement in Brazil go beyond mere law reform. The Brazilian law equates the enterprises of social economy, especially cooperatives, to joint ventures that compete in a tight market by new customers. It happens that there is an issue that transcends where little is treated by the economic and legal doctrine, which is the socioeconomic dependence on Brazil to developed countries, currently the United States. At present, there is an acceptance of the dependence of Latin American countries to the hegemonic center that prevents both politically and culturally the autonomy of the region's countries, resulting in difficulty in approving legislation consistent with the libertarian nature of the social economy. The way out of the impasse is long term once requires a process of political and economic autonomy of the region. A good start for this transition is the resumption by Latin

8 American universities of the old discussions about the dependence of the region and the paths to their autonomy. Only after this step can we think of legislation that promotes the social economy in the region. REFERENCES BENETTI, Maria D., FRANTZ, Telmo R. Desenvolvimento e crise do cooperativismo empresarial no Rio Grande do Sul. Porto Alegre: Fundação de Economia e Estatística (FEE), 1985.

PRESENTATION: THE FOREIGN POLICY OF BRAZIL

Austral: Brazilian Journal of Strategy & International Relations e-issn 2238-6912 ISSN 2238-6262 v.1, n.2, Jul-Dec 2012 p.9-14 PRESENTATION: THE FOREIGN POLICY OF BRAZIL Amado Luiz Cervo 1 The students