What would a social enterprise economy look like?

CafedirectSocial enterprise – using business models and methods, but for the common good, rather than private gain -  has now proven to be a viable way of organising human affairs.  We can do business better than businesses: for years Cafédirect, for example, has taken market share from multinational corporations, and social investment funds often beat conventional funds even by their own criteria of financial returns; but at the same time we also often achieve greater social impact than conventional charity or philanthropy.

So why aren’t politicians clamouring to use social enterprise as a template for a new economy? – especially in the light of the shortcomings of planned economy models exposed by the soviet collapse in the nineties, and those of contemporary capitalism exposed by the world financial crisis from the noughties to date?

I believe the nature of social enterprise itself is partly to blame.  It’s hard!  The energy and vision of social entrepreneurs is focussed on their own enterprise, and on the particular social or environmental problem they are trying to address, rather than on wider social reform; nor do they generate the personal wealth that gives them the time to pontificate on business and economy in the way some celebrity entrepreneurs do (even though, when closely examined, most of their self-publicised ‘success’ is founded on inheritance, luck, bullying or corruption rather than business skills).  The golden egg of social enterprise – that we now really do know how to generate wealth but without all that macho selfishness – is only visible if you get close enough to look carefully into the nest.

Social entrepreneurs are also held back by the two camps within social enterprise: those who see it as no more than a small business sector, addressing market failures like jobs for disabled people, but not really challenging corporate capitalism – and those who see it as a bridgehead for a new society, part of a broad social movement linked with the sharing economy, anti-globalisation, pirate parties, social investment and social innovation, learning how to actually organise human affairs for the common good rather than private gain.

In many countries, notably the UK, social enterprise representative bodies are dominated by the limited ‘small business sector’ view of social enterprise, so unsurprisingly they fail to facilitate any wider political vision – and are viewed as hopelessly conservative from the perspective of the sharing economy, etc.  Similarly, most academic study of social enterprise is linked with business schools or other departmentalised perspectives that do not lead easily to wider social, economic or political theory.

So the questions I want to broach here, and inspire initiatives around, are:

  • how are we to develop a coherent political programme for the social-enterprising of society as a whole? and
  • what might such an enterprising society look like?

We have the wind in our sails.   Research already indicates that 1 in 3 of all early stage entrepreneurs want to be social-entrepreneurs, and the most recent EU estimates are that 1 in 4 of actual start-ups in Europe (and 1 in 3 in France, Belgium and Finland) are social enterprises (The Social Business Initiative of the European Commission).  Moreover, universal networking and other new technologies - such as 3D printing - are changing capitalism in ways which potentially favour enterprise and organisation based on free and equal collaboration rather than exploitation – of either staff or customers.

Can we identify some core beliefs and values that might generalise social enterprise practice towards a political-economy theory?

First, we need to be clear that social entrepreneurs work with and believe in markets - but not the kind of abstract free-market-selfish-individualism of neo-liberal and other right-wing ideology.  Instead, we believe that markets always arise within specific institutional and cultural frameworks, and that it’s perfectly possible to shape these frameworks to agreed ends.  I actually think everyone believes this.  Who would really argue that child labour is perfectly ok if ‘the market’ demands it?  The same neo-liberal proponents of ‘free markets’ vehemently assert draconian intellectual property regulation, whenever it enables powerful corporates to make more money.  In reality, ‘capitalism’ operates very differently in different countries, within different legal, institutional and cultural contexts.  There is not really any significant disagreement about the fact that markets are always, and need to be regulated – the disagreements are about what regulations are needed, and in whose interests they will operate.  The task for the social-enterprise-political-economist is simply to work towards frameworks that facilitate social enterprise, as opposed to corporate business models based on greed and exploitation.

This means more of the kind of facilitative legislation we already have – like the Community Interest Company form in the UK – but ultimately it will mean putting social and environmental responsibility at the heart of all company and other commercial law.  A proper industrial strategy – with renewable energy and energy conservation at its heart – will surely be another aspect.  The biggest challenge here will be curtailing capitalism’s tendency to just produce more and more stuff – however useless – as long as it can be sold somehow.  Culture change will be key here - we need to make it deeply unfashionable to buy the latest iphone, or trendy trousers so cheap they can only have been made in conditions of apalling exploitation.

Equally, I think, we have to acknowledge that some sectors are less amenable to social enterprise – indeed cannot really be successfully marketised at all – and here I think we will find a lot of common ground with the old labour movement.  Universal infrastructures – from roads and railways, basic utilities, the internet - through to legal, health, education and other universal-access or human-rights-based systems, should be pursued primarily through public ownership – albeit with a generous injection of ‘intra-preneurialism’ - and in any case these things are best done in the public sector because of the scale of investment and co-ordination required.

A genuinely social approach to intellectual property rights will also be central to a coherent political programme for the social-enterprising of society, based on the ideas of the open source movement and the pirate parties that are winning increased support in many countries.  This is important: knowledge and creativity are now the main drivers of developed economies – and the private ownership of knowledge and ideas is the mainspring of corporate greed and exploitation.  We need intellectual property law that enables the free exchange of knowledge and ideas, and which incentivises research and development into what is really needed, not just what can be patented.

I think of all this as a kind of Keynesian+ political economy: welcoming the role of democratic government not just to mitigate the worst instabilities of under-regulated markets, but to shape the cultural and institutional frameworks that will make enterprise work for the common good.

But most importantly, a coherent programme to help enterprise become more social need not imply huge disruptive change.  We already know how to do it.  We already are doing it (already, remember, 1 in 3 entrepreneurs in Europe want to be social-entrepreneurs, and in 1 in 3 or 4 actually set up social enterprises).  This is precisely where a political economy based on social enterprise offers a post-planned-economy solution for left-leaning politicians – because other strategies do imply huge dislocations.  It is the fear of precipitating this economic disruption that ultimately, I believe, explains why the centre-left across Europe, and America, has failed to tackle increasing social inequality and environmental crisis, and is now sinking in disarray; but promoting entrepreneurialism while putting social and environmental responsibility at the heart of company and other commercial law, and introducing a responsible industrial strategy, can be done incrementally.

Social entrepreneurs, and social investors, are already changing the world - with one hand tied behind our backs.  All we need now is a coherent political programme to reshape the institutional and cultural frameworks to make enterprise work for everyone, instead of underwriting corporate greed.

There are some further

There are some further thoughts on this in my next blog...