Globalisation, politics and social enterprise

In a world where globalisation has re-aligned political affiliations, and invigorated right-wing parties with the injection of populism and nationalism, what insight can the global social enterprise movement offer?

A recent Guardian editorial traced the origins of the UK’s brexit crisis to ‘the disruptive form of globalisation promoted by Tories and New Labour that eviscerated habits of life, work and family’.  This kind of globalisation transformed politics, the argument goes, from a class-based party system, in which Labour drew support from the poor and poorly educated, to today’s electorate in which it is actually educated and younger voters that support Labour, while the old and rich back the Tories – the disputed votes now being precisely 'the poor and poorply educated', those ‘left behind’ by the disruptive impact of globalisation.

The Guardian doesn’t go into what a less disruptive form of globalisation might look like – but the discussion prompted me to ask whether the experience of social entrepreneurs might help with this.  On the one hand, social enterprise is more engaged than other businesses (or most politicians) with ‘the left behind’.  28% of UK Community Interest Companies, for example, are based in the 20% most deprived areas in the country, and 55% actively seek to employ people disadvantaged in the labour market.  On the other hand, many social enterprises that have pioneered the fair trade movement are very specifically engaged in promoting global trade.  The co-operative movement has always relied on local ownership and control - but combined with a firm commitment to international co-operation.  When social entrepreneurs think about growth, we think first not of growing our organisation or brand, but growing our mission, often by helping others propagate it for us.  McDonald’s charges franchisees to set up bland replications in soul-less cloned high streets; Unicorn Grocery puts the same kind of information free online so that others can create their own local success stories.

The way social enterprise thinks about these issues can, I think, help the left unpack the idea of 'globalisation' to tackle it effectively.  First, we need to understand that globalisation has nothing to do with internationalism, or our solidarity with oppressed peoples wherever they are in the world, or wherever they're from.  Nor has it anything to do with fair international trade - many of the world's poorest people are absolutely dependent on selling to richer countries, and this can indeed be a way out of poverty for many.  From our perspective the real problem of 'globalisation' is actually pretty straightforward.  It is not to do with global communications or trade or travel, or even immigration; the real problem is that it enables multinational corporations to move production, or services, to places where it is easier to exploit people and environment - where they simply don't have the relatively high standards of employment and environmental protection, or the free media to expose abuses, that have been hard won over centuries by the left in more developed economies.  Driven only by the profit motive, multinational corporations simply abandon the communities that originally nurtured them, and relocate operations to wherever more profit can be extracted.

Can this waste paper bin really be made from old plastic bags by some of the world's poorest people? You betcha!Can this waste paper bin really be made from old plastic bags by some of the world's poorest people? You betcha!Globalisation is genuinely a puzzle for the political right, because it is entwined with their central commitment to unregulated 'free' markets – hence their contradictory belief in free movement of capital but not of labour.  The political ‘centre’ is even more conflicted, because in essence it believes in letting big business get on with generating wealth while mitigating its worse abuses (a little, for the ‘centre-right’; a bit more for the ‘centre-left’).  But for social enterprise – that relies on free enterprise but only within a very strong commitment to social and environmental responsibility – the solutions to the globalisation puzzle are pretty clear, and it is this clarity that we can offer to more radical left political parties.

There are signs they are listening, for example in the UK Labour Party’s recent steps towards modifying company law to strengthen employee and community participation in the ownership and control of all big business, to ensure that it acts responsibly towards the societies in which it operates - both where it produces (or buys) and where it sells.

The ‘social accounting’ movement and the international fair trade movement, have promoted the voluntary reporting of businesses’ social and environmental impacts, and the UK Community Interest Company regulations have already put social reporting in a legal regulatory framework.  Insisting on the application of the same environmental and employment standards across international supply chains (with relevant cost-of-living adjustments), if necessary by legally requiring all big businesses to report on their environmental and social impacts, is perfectly achievable.

The public sector's buying power, corporation tax, import-export and other government business advice and support arrangements, can be used to incentivise fair trade over free trade, and to support ethical business indexing.

The last revision of the UK Companies Act went a little way towards recognising that business has important stakeholders, such as employees, in addition to shareholders.  While this was positive, it did not succeed in shifting the fundamental ethos of big business away from business models based on greed and exploitation.  We need to complete this movement, and encode social and environmental responsibility, stakeholder accountability, transparency and ethical behaviour in the DNA of business, and in the culture of consumers.

Right-wingers will no doubt claim that any of this will disrupt the best-of-all-possible-worlds of the unregulated free market – forgetting the fact that none of them can suggest any market mechanism that might curtail catastrophic social or environmental damage that is decades or indeed centuries in the making.  Moreover, nobody really believes in unregulated markets anyway.  Regulation ended slavery (or rather, perhaps, curtailed it).  A number of tax and other regulations surely also effectively curtailed smoking.  It is in fact easy to expose the hypocrisy of big business’ advocacy of free markets, merely by suggesting we get rid of the 'unnecessary burden' of international intellectual property protections, and watching their reaction: they are immediately exposed as among the fiercest defenders of regulation - when it suits them.

Everybody really believes in regulation: business, indeed, is absolutely dependent on an effectively regulated legal/financial environment.  Weak regulation of capitalism is a race to the bottom: bad companies that don’t care about treating people or planet well win over good businesses that look after their people and the planet.

So I believe social enterprise has some important answers in this as in so many other areas of human endeavour.  Everyday, social entrepreneurs operate in markets, but with social and environmental responsibility - not just mitigating negative impacts, but actively using business models and methods for shared benefits.  We know you can do business and do good.  We believe in free enterprise - but within a cultural and legal/financial environment that ensures enterprise works for people and planet, not against them.

We are already changing business culture - 1 in 4 of all new enterprises in the EU are social enterprises, 1 in 3 in the most advanced countries like France, and in the UK 1 in 3 new entrepreneurs would set up a social enterprise if they could get the right support.  There is evidence that consumer culture is also moving in the right direction, with increasing awareness that as buyers we need to act where poor regulation has failed to curtail unreasonable exploitation of employees or environment, or tax avoidance, wherever in the world it is perpetrated.

All that’s needed now to solve the globalisation dilemma is a regulatory framework that enables good business to win over bad.

Interesting proposals in

Interesting proposals in France, in the light of this blog, to

  • strengthen the presence of employees on the boards of large companies
  • increase transparency on pay, and make excessively high wages non-deductible against corporation tax
  • introduce a government-backed label that will enable consumers to choose between products and services on social and environmental grounds.

Trois idées neuves pour l’entreprise européenne du 21è siècle