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  • Geoff Mulgan

What the future holds for the social economy?

This is a summary of a keynote given at the OECD on Monday 20 March 2023 at their conference on the social and solidarity economy.


The social economy is not new – the world has thousands of examples of coops, mutuals, social enterprises of all kinds, not to mention businesses linked to organised religions, many kinds of commons and much more. Capitalism has never been a monolith – healthy economies always have had some pluralism.


But it is a matter of choice and design whether the social economy amounts to 1% of GDP, 5-10% (the current picture in many countries) or the 30-40% which many might aspire to. The growing interest in increasing its size is a response to the widespread realisation that our economic model is unbalanced in so many ways: in relation to the environment, equality, fair rewards and wellbeing. A dynamic market economy produces many benefits - but it is possible to have apparently strong economic growth and what is, in effect, a social recession.


There are many signs of imbalance, and not just in relation to ecology. As an example, in the US during the pandemic 48% of the lowest paid jobs were deemed essential; a far lower proportion of the highest paid jobs were. Another example is the correlation of the smart phone and mental ill-health: in France depression amongst 16-24 year olds has gone up 4 fold since its arrival, yet the businesses providing them seemed oblivious to their effects.


Capitalist market economies by their nature support both what I call the ‘bees’ – the makers, producers and innovators who create genuinely useful goods and services – and what I call the ‘locusts’, the predators who extract value more than creating it. The task of policy is to reward the creators, and rein in the predators.


This means both shifting the mainstream economy and growing alternatives that can become a rising share of GDP over the next few decades. Many find this hard to imagine - the world around us seems so immutable. In many respects social imagination has shrunk in recent years, even though we are all able to imagine ecological change (usually for the worse) and technological change (with ever more AI, robots and so on). But most people struggle to generate desirable and plausible pictures of the future of care, democracy or welfare (a topic I write about in my recent book ‘Another World is Possible’).


So we need to cultivate this imagination, seeing it as a muscle that needs to be flexed. But imagination on its own is not enough. We also need practical action now, the steps that can put us on the right path.


This link between imagination and practicality can be seen in the many current policy initiatives around social innovation, now much more lively than even five years ago, with action in many countries, from Germany to Canada, Sweden to Taiwan. It can also be seen in the many fields where change is needed to realise the full potential of the social economy. Here are a few of them:


· MONEY The social economy needs capital and investment – creating social investment markets, new asset classes and funding flows as well as new obligations on mainstream investments that go beyond ESG and carbon credits. In the UK we created many funds including a wholesale funder, Big Society Capital, financed out of unclaimed bank accounts to a scale of nearly 1bn Euro, and other countries including Canada now have large social finance funds. But most organisations in the social economy still struggle to find the finance they need.


· LAW Recent years have seen lively experiment in new legal forms, such as BCorps (of which there are 6000 worldwide), Community Interest Companies that I was involved in shaping in the UK and that now number 26,000, and others like France’s entreprise solidaire d'utilité sociale. But we need more creativity in shaping legal forms to new needs, and enabling new combinations of capital, democracy, efficiency and accountability.


· INNOVATION The vast majority of global R&D spend goes on hardware and technology, including the huge sums spent by companies (eg $40bn a year in Amazon). Social innovation and social R&D receive only tiny fractions of these sums: building this up with more systematic support, labs, experiments and transition accelerators that help to demonstrate future options for food, energy, health will be vital in the years ahead as we navigate to new ways of organising health, education and democracy.


· DATA – there is rightly much discussion of how better to measure and map the social economy, but just as important is opening up data to guide social action and action on net zero. Here we need new policies (such as laws requiring public benefit data to be shared), new institutions (data trusts of many kinds) and new attention to uses.


· NEW FORMS OF ORGANISATION USING TECHNOLOGY – over the last 20 years we’ve seen much experiment with platform-based charities, movements and coops. Blockchain has also encouraged new forms of organisation, from DAOs to holochains that may point to new options for organising large scale cooperation. We need both better theory and practice to guide us to new organisational forms.


· PROCUREMENT AND FINANCE We need further reform of public finance and procurement to better support not just social value but also more efficient prevention of social harms and risks. For example, if beef contributes 60x as much greenhouse gas emissions as peas, what is the role of public purchasing of food for schools and other institutions in helping the shift away from meat?


· MEASUREMENT We need to measure not just GDP and classic social indicators but also wellbeing and crucial things like mutual support and trust which are key contributors to national happiness.


· PARTNERSHIP Many of the key tasks of this decade have to involve business. For example, net zero and population mental health. For these we will need more structured three sector partnerships linking government, business and civil society, with clear objectives, mutual accountability and measurement, instead of the often vague and loose partnerships of the past.


The forms of strategy will vary in every country. But the key point is to recognise that the task of policy is not just to grow the economy in aggregate – but rather to grow most those parts of the economy that make the greatest contribution to sustainability, equity and well-being. The social economy involves imagination as well as practicality, changes in common sense as well as changes in practice.


This is a task with many dimensions. Current mainstream economics, and economic policy, assumes that it is efficient for a wealthy person to own 20 homes even if most of them are empty the great majority of the time. This may look insane to future generations who may be much more attuned to efficiency in consumption as well as efficiency in production.


Another example is how we think about risk. Desmond Tutu famously said that “There comes a point where we need to stop just pulling people out of the river. We need to go upstream and find out why they're falling in.’ That applies to so much social action – but we need to rewire how public finance is organised, and how our systems are organised, to make it real.

These are just a few examples of potential shifts in consciousness and understanding that are the complement of shifts in policy and practice.


A final thought experiment draws on history. Two centuries ago the world was run by monarchies. There were occasional republics, like the great Italian cities or the young United States. Many leading thinkers had concluded that democracy was an aberration, an experiment that had been tried and failed. Monarchy by contrast was bound to succeed because it was rooted in human nature: human beings are designed to live in hierarchies, and societies are bound to be divided into the weak and the strong, with the strong in charge. Anything else was soft-headed wishful thinking.

As we know, each element of this common sense was turned on its head. Although monarchy pervaded every sinew of social life, from the passing of laws to the award of honors, and from land ownership to warfare, its naturalness proved deceptive. Monarchies were soon relegated to the margins, surviving only as quaint anachronisms, limitless divine right replaced with limited and largely secular responsibilities.


Now we can at the very least imagine a fate for the barons and monarchs of contemporary capitalism not so dissimilar to what befell the all-powerful rulers of a previous era: less deference, less respect, and in time less power. Few can confidently claim that capitalism is rooted in human nature in face of abundant evidence from psychology and social psychology that while acquisitiveness and greed are part of our nature, so are cooperation and care. Nor is the superiority of the private firm as self-evident as it once appeared: instead, in some very diverse sectors we are learning about the value of pluralism in economic life, the effectiveness and resilience of models that share ownership or that explicitly commit themselves to social or moral missions as well as profit. Economics for a time aspired to be a universal science. A more realistic and modest view sees it as a collection of regularities, but without any permanent laws; a sophisticated craft for making sense of money and value, but not a science capable of too many predictions.


Looking ahead perhaps the dominant forms of contemporary capitalism will be displaced by new forms that reflect ideas latent in capitalism: changed conceptions of growth; changed conceptions of the role of human relationships; changed ways of thinking about value. From these we should expect to see radically different kinds of organization and service being born—more open, more relational, more rooted in life—as well as different ethics and aesthetics. Elements of these possible futures can be found in every advanced economy—they are the seeds waiting for conditions to change so that they can grow into the mainstream.


The monarchies had their most glorious years just before they lost power. Some lost it suddenly. Others saw their power wane slowly, as parliaments chipped away at their prestige and functions, turning them from being paramount institutions in their society, the magnets of both love and hate, to becoming marginal.


It is too soon to predict with confidence a similar fate for the dominant institutions of capitalism. But there are good reasons for doubting that they are at a high noon, and suspecting instead that they may be at a moment more analogous to that of the sun before it sets, shining gorgeously before it sinks toward the horizon to be replaced by changed views of what wealth is, of how wealth is created, and of how wealth should be used. This is why the social economy is potentially so important.


To discover what comes next, maybe we should look upward. Skylines provide the simplest test of what a society truly values, and where its surpluses are controlled. A few centuries ago the most prominent buildings in the world’s cities were forts, churches, and temples, reflecting the priorities of societies ruled by warriors and priests. Then for a time they became palaces.


Briefly, in the nineteenth century, civic buildings, railway stations, and museums overshadowed them. And then, in the late twentieth century, banks became the tallest buildings, with the most luxurious atriums and entrance halls. Central business districts towered over the other parts of cities, their glass towers oozing confident superiority.


But what will come next? Great leisure palaces, casinos, and sports stadiums? Universities and art galleries? Water towers, hanging gardens, and vertical farms; or perhaps biotech empires? Or perhaps examples of the social economy – great food markets, or centres for health? No one knows the answers. But imagining what might fill the skies is one way we can rekindle our capacity to see the systems we live in as alive and in motion and to remember that they are designs, matters of choice and not of nature.



[This last thought experiment draws on my book 'The Locust and the Bee'. There is much more on the social economy in theory and practice in my book 'Social Innovation: how socieites find the power to change' (Policy Press, 2019)]





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