A technology-based theory of Social Enterprise

A specter is haunting the globe since the sixties – the specter of Social Enterprise.  All the powers of old have entered into a holy alliance to exorcise this specter. Like all ‘holy alliances’ of the past, they will fail, not least because it offers genuine alternatives for communities that are really neither served by commercial providers nor by government programs that produce results meaningful to their needs. Social enterprises are created on the fault lines between market forces and charity, between the necessity of averting unrest and discontent and the imperatives of continuing to create opportunity on which a knowledge-driven economy depends. Venture philanthropy, CSR and charitable foundations, classic and also non-traditional cooperatives have experimented for some time with a broad range of initiatives. They range from microcredits to social direct investment to many versions of small-scale, targeted help with self-help. Sometimes their underlying objectives include social engineering and sometimes they do not.

But overall, social enterprise is here to stay. It is no threat to for-profit operations, nor does it erode their realistically perceived market potential. Only at the fringes of predatory capitalism (think sub-subprime mortgages, pre-paid credit cards accruing fees greater than their ‘credit line,’ bad-faith insurance policies or violations of implied consumer trust) need it be expected that semi-charitable service to less than privileged target audiences, sometimes to the ultra-poor, would somehow interfere with bona fide generation of profit and other aspects of commercial shareholder value.  

While the traditional political left finds itself at a loss for effective solutions and its reflexive reach for Big Government and entitlement spending has failed resoundingly over considerable parts of the twentieth century, isolationist concepts such as opposition to free trade in North America or quasi-isolationist proposals fashionable in Europe such as taxing machines or hard drives as “job killers” do not resolve anything. Social enterprise attempts to put technology and education to differently prioritized uses that ultimately all aim to put existing tools and concepts to a smarter use with greater holistic value creation for the public interest. It is not synonymous with volunteerism.

Political and philosophical views about the proper role of government or the optimum size and funding of the welfare state may well differ across many cultures and political flavors. It will continue to make for die-hard election issues. What cannot differ, though, because it operates on the very principles of a free market and in the organizational, structural and legal forms and tools of private enterprise, is the use of imaginative entrepreneurial means to effect impactful social change. Whether one wants to proclaim socialism dead or simply hibernating, the conclusion “if you can’t beat them, join them, they must be doing something right” has been demonstrated more than impressively across all the success stories of Eastern Europe as well as by the legacy of Deng Xiaoping, the man who transitioned China from cultural revolutionary chaos to capitalist juggernaut (yet was also responsible for the 1989 massacre at Tienanmen Square) with all its remaining environmental and civil libertarian issues. But one of Deng’s unforgettable aphorisms is particularly memorable in this context: “Poverty is not socialism. To be rich is glorious.”