Writer Micheal Edwards’ recent book http://www.justanotheremperor.org/ takes a critical look at the hype surrounded the emerging phenomenon that some are calling “philanthrocapitalism”: using business and market systems to affect social change. The main criticism from Edwards can be summed up in his opendemocracy.net article:

“My worry is that the hype surrounding philanthrocapitalism will divert attention from the deeper changes that are required to transform society, reduce decisions to an inappropriate bottom line, and lead us to ignore the costs and trade-offs involved in extending business principles into the world of civil society and social change. I’m concerned that these questions, and the evidence that underpins them, are not being given a fair hearing. And I want to provoke a conversation in which different positions can be aired and listened to. The only way that philanthrocapitalism will be able to fulfill its considerable potential is by moving beyond the hype.”

Mohammed Yunus has also recently written a book that looks at how Social Enterprise can affect change. Yunus argues:

“The social business dollar is much more powerful than the charity dollar [..] Whereas the charity dollar can be used only once, the social-business dollar recycles itself again and again, ad infinitum, to deliver benefits to more and more people.”

Although, I’ll also point out that Social Entrepreneurship is different than “Philanthrocapitalism”. Social Entrepreneurship as discussed by Yunus covers many scales, from small to large business. While, “Philanthrocaptialism” is defined by Edwards as:

• “Resources: very large sums of money being committed to philanthropy, mainly the result of the remarkable profits earned by a small number of individuals in the IT and finance sectors during the 1990s and 2000s.
• Methods: a claim that methods drawn from business can solve social problems, and are superior to the other approaches used in the public sector and in civil society.
• Achievements: a claim that these methods can achieve the transformation of society, rather than increased access to socially-beneficial goods and services – a noble goal for sure, but insufficient to lever deeper changes in the distribution of power and resources across the world.”

Both Edwards and Yunus appear to be right, in my estimation. Yunus is right that there is much power in entrepreneurship, in the freedom to create wealth for yourself and others. Yet, Edwards is right that (in my words) there is also a huge machine, which is a combination of broadcast media corporations, and a plethora of big businesses and wealthy people around the world, that seek to co-opt social emergences, so as to funnel money, human energy, and control over domains towards their market corrals.

This is nothing new. With every social movement, from the early 1960’s, to the “creative class” of the early 2000’s, there have been people trying to capitalize on, and co-opt the symbols and energy of emergent social movements. (see http://www.press.uchicago.edu/Misc/Chicago/259919.html for a look at the origins of the phenomenon). Social entrepreneurship, or “philanthrocapitalism” is really no different. When a social phenomenon starts out in a “democratized” way (as they often actually do), meaning that most, or all of the building blocks are already present for individuals to participate in self-sustaining ways, that would let people bypass or obsolete their need for mass pre-produced solutions, the big companies must act to keep people buying something, or risk being obsoleted from their lives. This basically means that corporate spending of public money is sold to the public as a project to make it easier for them to be more “creative”, more socially or environmentally responsible, or more philanthropic. This, I believe is the danger that Edwards is warning us about. That we’ll just leave it up to “business” to take the lead in social enterprise.

The problem is that when we leave social transformation to business, we end up with a society that is structured by the principles of business management. Edwards’s book contends that there is evidence that the mission “drifts” away from social change, and towards profit, efficiency, and sometimes corruption. What is lacking in these situations is a social basis for social change.

The market, and while being a powerful force, is no basis for sustainable social change. The atomization of business infrastructure to an individual level is but one building block towards real social change that is enabled in part by social enterprise. The next step is the atomization of social infrastructure. People must learn to cooperate and collaborate together in equitable ways. People must learn to co-manage common infrastructure, and common resources in a democratic and transparent way. Accessing and employing the efficient production and distribution systems of business and the market is not enough. Those who rely on those systems must also have co-control of them.

This means that everyone in the “chain” gets a say, from grower/builder/laborer, to the person that buys a finished product. This means that a person’s “job” is not just to specialize in being a lawyer, baking bread, or hauling garbage, but also in direct civic participation and oversight of the systems that feed, clothe, and house you. How can you know that the companies your are buying from, or are employed by, are working equitably? You are involved in making sure that they are. Adam Arvidsson’s Valuing the Ethical Economy offers some deep insights into how this is plausible. Adam writes:

” What creates these ethical values? They are not the direct results of investments in labor time. You can work as much as you want on your music and style, that, in itself will not make you a rock star. Rather, suddenly something happens and then, you’ve made it. What determines your value are the quality and quantity of affect (attention) that you have been able to accumulate. The relation between the productive time invested in a project and the mass affect that it is able to attract is non-linear, or viral, to use a popular marketing term.[2] Models could be found in contemporary mathematical theories of network dynamics, and perhaps in Gabriel Tarde’s theories of the role of public sentiment.[3] Indeed, the logical relation between value and labor is rather the reverse of that usually associated with the capitalist economy. Once you have a sufficiently attractive brand, you will attract an abundance of free labor as well as other resources. Linux has no problems recruiting new programmers: people want to work for them for free; people pay to use brands in their everyday life and thus freely co-produce their ethical value through their constructive consumer practices. On financial markets, capital flows to the most attractive brands. More means more in this case, if you have accumulated a significant stock of ethical capital, people will freely give you their time and further attention, or, on financial markets, their capital.”

To sum it up, in order for markets to really help change society, we first need to create social infrastructure that allows us to value the ethical capital of the companies that we are doing business with. We need to democratize and equitably control these infrastructures on the level/scale of voluntarily cooperating and collaborating individuals. This will then create a conduit of ethics, and social focus, through which we all can pursue market exchanges. Markets measured against our real social interests, not just made to appeal to our base needs, or fool us into thinking they will solve our social problems.

See also:

• http://p2pfoundation.net/Civil_Corporation
• http://p2pfoundation.net/Civil_Regulation
• http://p2pfoundation.net/Collaborative_Standards_Initiatives