<html><head /> <body> <META http-equiv="Content-Type" content="text/html; charset=UTF-16"><title>Social Entrepreneurs and the Responsible Economy</title><meta name="keywords" content="economy,entrepeneurs,community,economics,europe,exclusion,global,globalisation,globalization,henrietta,humans,innovation,Language,market,moore,nature,needs,philanthropist,philanthropy,private,public,quebec,responsibility,responsible,science,scientist,sectors,social,transparency,uk,values,voluntary,"><table style="font-family:Verdana; font-size:larger; " align="center" border="0" width="50%"><tbody><tr> <td style="background-color:silver; border-color:white; border-left-style:none; border-style:none; " width="730"><span style="font-family:Verdana; font-size:larger; ">Social Entrepreneurs and the Responsible Economy</span></td> </tr> <tr> </tr> </tbody></table><br><table style="font-family:Verdana; font-size:medium; " align="center" bgcolor="white" border="0" width="50%"><tbody><tr> <td height="131" width="669"><span style="font-family:Verdana; font-size:x-small;"><strong>Editors Introduction</strong></span><span style="font-family:Verdana; font-size:x-small; "><IMG SRC="auth_Moore.JPG" WIDTH="100" HEIGHT="146" ALT="Moore" VSPACE="0" HSPACE="0" BORDER="0" ALIGN="right"> <span style="font-family:Verdana; font-size:x-small; ">The intersection between the needs of the welfare state and rapidly changing market forces has produced a new economic model: the social economy. A social economy is one in which welfare needs are delivered not by the state but by socially aware local entrepreneurs--social entrepreneurs.</span> <P> <span style="font-family:Verdana; font-size:x-small; ">Henrietta Moore (right) explores the concept of a responsible economics, an economics that is ethically, socially and environmentally aware. The transformation of the "voluntary sector" into a space for independent organisations to provide community services has given rise to an entirely new kind of enterprise, one that demands a fundamental reformulation of our vision of the economy.</span><br><br><span style="font-size:x-small;"><strong>The illusion of transparency</strong></span><br> <span style="font-family:Verdana; font-size:x-small; ">People have less desire to know the world than to recognise themselves in it. Societies have tried to intellectually master the world by constructing images of relationships: between people and between humans and the natural world. Anthropologists would argue that this comes not just from a desire to know the world but from a need to locate ourselves within it, to substitute an ungraspable universe with a closed and potentially knowable world. This may explain, amongst other things, that strange preoccupation with whether life exists on other planets, a question that has always been more than simply a search for scientific data.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">One of the ways we try to understand and master the world is through economics--through formulating a view of relations between people based upon an understanding of the relationship between humans and nature. Economics, like all other fields of intellectual endeavour, cannot be separated from the context in which it operates, and it draws much of its passion and energy from social values and assumptions. This point is an obvious one, since we know that particular values underpin certain ways of looking at the world and particular ways of looking at the world provide specific kinds of economics.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The social sciences are confronted with a rather special sort of problem, one that I could characterise as transparency. Whenever a social scientist stands up to talk about, for example, society, you can be sure that a significant proportion of the audience thinks that what they say is banal, and much of the rest think that it is obvious. It says much for academic training that we persist in the belief that part of our audiences think that what we say is profound! Certain things appear transparent when they accord unproblematically with experience and/or when they reinforce or resonate with key values and assumptions. Such transparency is, of course, an illusion, but it does underscore the point that the academic and what, for want of a better term, we might call the popular are never separate domains of enquiry.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The popular and the academic are not closed spheres of activity and interest. They intersect in myriad ways, each forming the imagination of the other. One of the most obvious instances concerns language: phrases, terms, assertions and apocrypha. What begin as academic concepts enter popular discourse and find new meanings and resonances; Freud's notion of the unconscious is an example. What arise as matters of general public discussion, such as ideas about the nature of persons or the characteristics of society, find their way into academic debates and become codified, specified and quite changed in shape from their humble beginnings. The traffic down this two-way street has a long history, and many terms, ideas and concepts cross back and forth between the two domains several times, creating a curious genealogical narrative that can no longer be traced to its origin point.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">One peculiar feature of such boundary crossing is that it reinforces the illusion of transparency. There are certain terms, phrases and concepts that may be said to be so obvious in their meaning that they require no further discussion. Recent candidates include "the knowledge economy," "joined-up thinking," "globalisation" and "the third way." Such phrases are subject to the dictates of fashion, but often not before they have had a profound effect on such diverse domains as public policy, corporate management, governance and risk assessment. The jury is still out, in my view, on whether this is a particular feature of modern societies or just one more example of striving to know the world in order to recognise ourselves within it.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The notion of the social entrepreneur occupies a similar space on the boundary of several domains and has recently caught the attention of local and national politicians, businesspeople, academics, journalists and community workers in the UK. As a term, it too suffers from the problem of transparency. It is obvious, is it not, what a social entrepreneur is. Or is it? Transparency is, as I've said, frequently illusory.</span><br><br><span style="font-size:x-small;"><strong>The social entrepreneur</strong></span><br> <span style="font-family:Verdana; font-size:x-small; ">Who or what is a social entrepreneur? Social entrepreneurs are those who deploy entrepreneurial skills for social ends. They create value by building portfolios of resources to address unmet social needs. They seek and find innovative ways of tackling the gaps left by the market and/or the welfare state and commit themselves to addressing intractable social problems.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">We are living in a situation in which democratic capitalism is finding it difficult to respond to the challenges and the consequences of globalisation. In the UK, as elsewhere, the transformation of the economy--the dwindling of the manufacturing sector and the rising dominance of the service sector--the retreat of the welfare state, the impact of information and communication technologies, and long-term unemployment have produced a crisis. This crisis is not just one of poverty but one of social exclusion. The aim of the social entrepreneur is to utilise whatever resources are on hand to improve the situation of those who are socially excluded and to promote social cohesion. Social entrepreneurs, unlike their compatriots in the commercial sector, are not motivated by profit but by enhanced well-being for the communities they work in. They seek to work with and for communities to produce solutions that are innovative, democratic and sustainable--socially, financially and environmentally. Social entrepreneurs and the social enterprises they create are one kind of response to a renewed search for the public good.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">Modern society is driven by both a consumerist and a moral individualism in which criteria for personal achievement and aspiration are closely linked to choice. Under such circumstances, any call for a return to community is likely to be unsuccessful if it simply tries to impose social order and social cohesion. In addition, the societies we live in are increasingly diverse, and maintaining shared values is not a simple or straightforward task. We may feel that we have a strong sense of the public good and that we know what kind of community we want to live in and be part of, but do others share our values and our views? The challenge, as many writers have pointed out, is how to create a modern sense of the social and of society.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">There is a growing sense across Europe that modern communities must be decentralised and self-governing, some would say anti-statist and anti-hierarchical. This does not mean that everyone shares such views, but just that this is now a recognisable and powerful cultural strand in modern European thought. There is an emerging consensus that local action is where the innovation will come, that the local is the space where we will find community strengths based on diversity of interests, skills, resources and aspirations. To deliver a renewed sense of the public good, we will need, as a minimum, new mechanisms and new spaces for doing so. One such mechanism is social entrepreneurship, and one such space is the social enterprise. Not all social enterprises are community-based, and not all social entrepreneurs operate at the local level, but it is the impetus for local regeneration and renewal that has provided one of the major driving forces of the social entrepreneurship movement.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">It is impossible to say how many social entrepreneurs there are in the UK; there are certainly thousands worldwide. Guesstimates suggest that since 1970 as many as a million new organisations have been established worldwide to focus on issues such as health care, human rights, education, disability, the environment, poverty and women's rights. Twenty years ago, the Ashoka Foundation, an organisation that now supports more than 1,000 social entrepreneurs in Asia, Africa, Latin America and Central Europe, introduced the term "social entrepreneur" because, according to its founder, Bill Drayton, the most critical ingredient at the heart of social change is the human one.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">Michael Young is very likely the UK's most famous social entrepreneur. He has started more than 30 socially oriented organisations, the most famous of which is probably the Open University. In 1997 he began, with colleagues, the School for Social Entrepreneurship in East London. Andrew Mawson developed, with colleagues and the local community, a regeneration initiative in Bromley-by-Bow in the East End of London that brings together health, housing, community care, education and the arts in one social enterprise. He has since, with Adele Blakeborough and Helen Taylor-Thompson, gone on to start the Community Action Network, which seeks to identify successful social entrepreneurs, link them both physically and virtually, disseminate the best practical models and provide key information on funding, legal issues and the like.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">These two national initiatives are part of a drive to promote, develop and professionalise social entrepreneurship that is evident in the large number of organisations in Europe and the US that have sprung up in the past few years with the sole purpose of doing just that. The School for Social Entrepreneurship and the Community Action Network are designed to underpin the plethora of local activity. Such initiatives include the Acorn Centre in Barnsley, essentially a one-stop shop for the local community in a former coal-mining village. The centre now uses a multipurpose community resource facility with managed workspace units, a library, a college and a caf&#233;. In addition to community enterprises like call centres, landscaping and an electronic village hall, it offers basic training in IT, vocational skills, advice services and business support. Another initiative is the Portsmouth Community Safety Partnership, which represents five integrated community services in the Portsmouth area working with young people and their families to reduce crime and social exclusion. In 1998, 2,000 young people and their families used the service.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">These enterprises need passion, commitment and dedication to launch them, and skills to bring diverse resources together for a variety of purposes. They need, in other words, social entrepreneurs. However, their underlying success and sustainability requires more than a single charismatic individual; it requires team building, devolved community participation and partnership. Leadership is important for social entrepreneurship, as it is for its commercial counterpart, but harnessing, managing and building the energies and capacities of others is what ultimately makes any kind of enterprise a success. The future of social entrepreneurship is much less likely to be about individuals and much more about the viability of social enterprise.</span><br><br><span style="font-size:x-small;"><strong>The social economy</strong></span><br> <span style="font-family:Verdana; font-size:x-small; ">Certain key factors have created a particular space in which social enterprise can flourish. Chief among these is the so-called collapse or retreat of the welfare state. There are two key points in favour of this argument. The first is that some of the most impressive examples of social entrepreneurship and social enterprise come from countries where the welfare state has never really existed. The second is that the welfare state is a relatively recent phenomenon. Although the roots of contemporary social entrepreneurship lie in an earlier period of nineteenth-century philanthropy and paternalism, the specific circumstances of the present are rather different.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The effects of globalisation, changing labour market structures, long-term unemployment, the rising costs of welfare and the consequent crisis in civil society are structural features that have to be seen in their philosophical context. In trying to come to terms with the very rapid changes we have experienced and to seek some way of managing them, new theories have begun to evolve, new theories about human interrelationships and human/nature relations--in other words, theories about economics. And these new theories support new practices.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">There is increasing debate about a new kind of economics that is ethically, socially and environmentally responsible. These debates certainly echo earlier radical "small is beautiful" thinking, but they also go well beyond that in an attempt to rethink the notion of a modern economy. The fundamental question at the root of these debates is: What is a modern economy, and how will it function? Without this kind of philosophical questioning, it will not be possible to respond to the challenges of globalisation and technological change. When we ask, "What is a modern economy, and how would it function?" we are inevitably asking, "What kind of society would we like to live in?" If we are not to be overwhelmed by change and the scale of the world around us, then we have to find ways of recognising ourselves in that world.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">Within this debate about a new economics, an earlier model of the economy based on a tripartite division between the public, private and voluntary sectors--one that held sway fairly comfortably up until the 1970s in the UK--has given way to one based on distinctions between the public, private and social sectors. There is, however, no agreed way of describing this social (or "third") sector, and different analysts have proposed different divisions of the economic cake and have supplied a raft of terms that overlap, reinforce and undermine each other.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">International debate on such terms has had a very real impact on public policy. Discussions of these issues in the UK have had, and will have, further significant effects on public policy and on ideas about governance, the role of the state and the management of the economy. In Spain and hispanophone countries, the talk is of the popular economy and the solidary economy. In France, Canada, the Netherlands and francophone countries, discussion focuses on the social economy, the third sector, and the solidary economy. In the UK, until recently we appeared to claim that we had never heard of a social economy, but that we did do "community development."</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">But it was an Englishman, Samuel Smiles, who first used the term "social economy," in his work <i>Thrift</i>, published in 1875. Smiles had used the term to cover cooperatives, self-help organisations, savings societies, philanthropic and charitable societies, and indeed the big enterprises, like Salt's mills in Saltaire, that had social projects and support systems for their workers. Smiles's definition is an interesting one, because it identifies the fact that the social economy intersects with the private sector and cannot be merely reduced to the voluntary sector or cooperatives, mutuals, associations and friendly societies. The social economy certainly includes the voluntary sector, but it is much larger than the latter and has a more heterogeneous composition. A certain confusion arises--as with so many of these terms--because definitions are not just about typologies but about reorientations of values and priorities.</span><br><br><span style="font-size:x-small;"><strong>The private, the public and the other</strong></span><br> <span style="font-family:Verdana; font-size:x-small; ">In the UK of the 1970s, the third sector, in so far as anyone talked about it, was the voluntary sector. The voluntary sector at that time was not seen as a discrete entity per se but as a vehicle for social welfare. In the 1980s, the voluntary sector was increasingly perceived as a possible solution to the welfare state crisis, but it was still not perceived as an independent sector: rhetoric focussed more narrowly on distinctions of public versus private. In this period, the state provided support for voluntary organisations and individual organisations responded actively to public policy, but there was no real coherence to the sector from a public policy or theoretical/philosophical point of view, because the real drama of the moment was focussed on the struggle between the market and the state.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The contemporary social economy cannot simply be reduced to the voluntary sector, because its own emergence heralds a shift in thinking about the economy, about the relationship of the state to the market, and about the relationship between the economic and the social in a modern system. Although the social economy differs in definition and content between countries, properly speaking it is a third sector of the modern economy. It exists in a complex relation to the private for-profit sector and the public, or state, sector through partnerships, stakeholding, joint venturing, trading and contracting relationships. It is also predicated--in terms of its visibility and potential role--on a particular set of views about communities, civil society and social values. These views are not new, but to a certain extent they have been rethought and repositioned.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The EU has recently decided that the social economy should be called "the third system." A positive gloss on the gratuitous introduction of yet another term into this debate is that it does provide for visibility and for consequent funding and policy. The desire for visibility comes from two sources: the cost of providing social support and developing the "public good," and the potential for job creation within the social economy.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The third system is estimated, across the EU, to account for 6-6.5 percent of private enterprises and 4.5-5.3 percent of employment. In individual countries, the figures are much higher. In France, the third sector accounts for 29 percent of all employment, in Germany 23 percent and in Italy 25 percent. Figures on this sector are notoriously difficult to assess, because they vary so widely with definition and because there are no reliable sampling frames for gathering statistical data. For example, some definitions of the social economy include higher education and businesses with a social orientation pushing figures sky high. In the US, health care is included in the not-for-profit sector.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">A recent estimate for the UK suggests that the third sector now employs between 2 and 6 percent of the UK's paid labour force and accounts for between 3 and 9 percent of the gross domestic product. These figures are a great deal lower than those for continental Europe and reflect problems of definition and categorisation. However, they still mean that this sector is an important part of the social and economic life of the UK. One of the eye-catching features of the third sector is its potential for growth. A study of 12 EU countries found that in 1990 there were 1.3 million cooperatives, mutuals and voluntary organisations involved in some sort of trading. They employed 5.3 million people and had a combined turnover of more than &#163;1 trillion. Current estimates for the whole of the EU suggests that the sector now employs 6.4 million people, 4.4 percent of the total employment. A 1994 study suggested that the third system in Europe was growing faster than the economy as a whole in terms of jobs: 11 percent against 3 percent in Germany, 15.8 percent against 4.2 percent in France, and 39 percent against 7.4 percent in Italy. Additional European Commission research has suggested that as many as 3 million new jobs could be created in the social economy to service the outstanding needs of communities.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">In December 1997, the Council of the EU adopted a series of employment guidelines following the Amsterdam and Luxembourg summits, and the British presidency at the time pushed for measures to bolster employability, flexibility and adaptability. These guidelines were adopted by all member states and for the first time explicitly recognised the potential for job creation in the "social economy." Subsequent National Action Plans provided measures to promote both the social economy and local development initiatives.</span><span style="font-family:Verdana; font-size:x-small; "><blockquote>The social economy and the activities oriented to meet the needs unsatisfied by the market can lead to the development of a new sense of entrepreneurship particularly valuable for economic and social development at the local level. This sense of entrepreneurship is closer to the aspirations and values of people that do not seek profit making but rather the development of socially useful activities or jobs. These forms of entrepreneurship have a useful role in promoting social cohesion and economic local &#91;sic&#93; performance.</Blockquote></span><span style="font-family:Verdana; font-size:x-small; ">The EU Commission's Local Development and Employment Initiative has identified 19 separate areas where intervention can open up jobs for the unemployed. These include home help and child-care services, security, housing and neighbourhood improvements, local shops, cultural and leisure activities, audio-visual services, new information technologies, and a whole range of environmental businesses, including waste disposal and recycling. With the exception of the technology-oriented areas--mention of which is probably obligatory--it is evident that the emphasis is on local jobs that maintain and support the social and economic fabric of communities. Social cohesion and social renewal are the key drivers.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">Clearly the third sector suddenly became mainstream in terms of public policy in the late 1990s. First steps in the UK included the launch of regional compacts between the government and the third sector--although, arguably, when these pacts were launched in 1998 this was seen primarily as the voluntary sector--a fiscal review of charities, and a commitment announced in 1999 to invest in a government unit called the Active Community Unit, which was charged with dealing with third sector issues. All this activity adds up to three things: first, a new way of conceiving of a modern economy; it now has a sector called the social economy; second, a new relationship between the social economy and the state, underpinned by public policy; and, finally, a new relationship between the social economy and the market.</span><br><br><span style="font-size:x-small;"><strong>Social economics in practice</strong></span><br> <span style="font-family:Verdana; font-size:x-small; ">How can we characterise this set of new relationships in practical terms? The detail of the pattern, of course, varies from country to country, but the outlines show a remarkable consistency. One key feature is a change in the perception of the state's role from that of provider to that of enabler. A new kind of regulatory state that is redefining its public service tradition in terms of contract (even if those contracts are often dressed up as partnerships) has emerged. This is particularly evident in the UK in terms of local government, where a fundamental shift has changed the nature of the relations between local authorities, local voluntary and community organisations, and local businesses. The result is a crossing of boundaries and mixing of responsibilities. The most notable areas are in the provision of health and social services, training and employment creation and, to a lesser extent, education.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">In continental Europe, Italy has seen an explosion of social enterprises since the 1980s, with a new statute in 1991 giving them specific legal status. These enterprises operate predominantly in two areas: the provision of social, educational and health services and the reinsertion of disadvantaged groups into the workforce. The situation in Spain is somewhat similar, with huge growth since the 1980s. In Belgium, more than 4,000 not-for-profit organisations are created each year, although a significant number are what might be termed para-profit or para-public organisations. As in Italy and Spain, these organisations work primarily in social services, health care, education and getting disadvantaged groups--the disabled, ex-prisoners, those with mental-health problems--into work.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">These organisations typically focus their activities on the goals of social cohesion and community empowerment. Their core values are connected to securing citizen participation, establishing proper representation of excluded minorities, and promoting user control. They draw on values associated with the cooperative movement, community activism and development, feminism, and environmental campaigning. They promote the development of social capital--networks of trust, resources and capacities within communities. Their performance criteria are based on social outcomes, but at the same time they aim to retain surpluses within the community and to provide new services and products through the creation of new local jobs.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The result is a creative set of relationships that draw on public, private, voluntary and not-for-profit activities. Many of these organisations are run by individuals who label themselves social entrepreneurs, who see their added value coming in the form of enhanced social solidarity and reduced social exclusion, and many of whom are explicitly calling for a new form of capitalism based on a revised form of social contract. In other words, they are promoting the idea that the economy has to be reconceived in the context of a new form of social citizenship that is, in the context of a revised way of thinking, about the relationship between individuals and the state.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">Scholars working in France and Quebec have done much of the best work specifying how this rethinking of the relationship between the economy and society should work. The situation in Quebec in particular provides some interesting points of discussion. The starting point for discussion in the Canadian context is that we are no longer dealing with a dual (formal/informal) or tripartite (public, private, voluntary) model of the economy but with a plural economy. This plural economy is one where the boundaries between traditional sectors have blurred, and where recognition has to be given to the intersections and interdependencies of all the different sectors of the economy, including the domestic, non-monetary economy and the social economy, as well as the market and state sectors. What has this meant in concrete terms in Quebec?</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">The Quebec example of Le Chic Resto Pop is instructive. Le Chic Resto Pop is a local restaurant that in 1985 began serving meals using foodstuffs that had already attained the sell-by date. It now provides 500 meals for children in six schools, and also sells to the unemployed, people on benefits and low-paid workers. It employs 14 permanent and 90 contract staff in a back-to-work programme. Its annual budget is $800,000, of which half comes from the state (health and social services programmes, etc.) and $100,000 comes from gifts and charities. However, the final $300,000 comes from the sale of its services. In addition to all this, Le Chic Resto Pop also runs a community assistance centre, a training centre with access support, counselling support and a cultural centre for youth.</span><br> <br> <span style="font-family:Verdana; font-size:x-small; ">This is only one of many such social enterprises. What is immediately evident is that its overall budget is small, but it has diversified revenue streams, drawing on regional and national budgets, sales and charitable donations. Its scale of impact is local and it supports local social objectives, as evidenced by the diversity of its portfolio of activities. Commentators in Quebec feel that these social enterprises are innovative because they do three important things. They focus on assistance to the community which is socioeconomic rather than simply social--as shown by the fact that these enterprises are increasingly producing goods and services that communities need; they address new kinds of social problems, in new kinds of ways, such as developing new educational fora for children who have dropped out of school; and they assert that answers to local problems reside in local development, led by local people.</span><br><br><span style="font-size:x-small;"><strong>Conclusion: A new kind of enterprise</strong></span><br> <span style="font-family:Verdana; font-size:x-small; ">Many commentators have begun to declare that such local initiatives are producing a new form of citizenship, a new relationship between civil society and the state. What is at issue here, amongst other things, is a move away from dependency and towards empowerment, accompanied by a determined call for autonomy. One corollary of this is that these new forms of community action are an alternative, in some sense, to social movements--unions, feminist organisations, ecological movements. Perhaps they are not alternatives, exactly, but new spaces, social enterprises where the values of those social movements, and other social values, are pursued through local social action. It is for this reason that social enterprises are not just social versions of firms; and in my view social entrepreneurs are not just social versions of commercial entrepreneurs--they are new kinds of enterprises altogether.</span><br><br><span style="font-family:Verdana; font-size:x-small; font-style:italic; ">Copyright The London School of Economics and Political Science.</span></td> </tr> </tbody></table> </body></html>