"Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.
"Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.
“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity."
In 2004, it was with these words that the concept of people-centered economics was introduced to the UK's social enterprise community. Greed however, was still good for some and soon we began to see our public services dismembered, by so called "spin offs". Our NHS was a particularly soft target. Authentic social enterprise was soon displaced by corporations.
Last week one of these, Circle Healthcare announced it's intention to withdraw from a contract at Hitchinbrook Hospital and as Caroline Molloy reports of the CQC report, people and their needs had been far less important that the creation of profit.
It comes as no surprise to us as an organisation whose work had subsequently focussed on childcare in Eastern Europe, where the desire to maximise profit came at the expense of human life. The 'Death Camps, For Children' series of articles had illustrated how children were dying of malnutrition in remote locations for want of care. . .
It is difficult to understand the resistance from within the social enterprise community to business which applies profit-for-purpose. Today, more than a decade later the definitions divas are still at loggerheads over whether business which distributes profit to shareholders should be acceptable for public service provision. Meanwhile it seems, those of us who have long practised a non divdiend disriibution approach have no apparent supporters. Least of all Social Enterprise UK formerly the SEC, who in 2006 had told us that our work was beyond their current focus.
It was in October 2006, that we delivered our 'Marshall Plan' to the government of Ukraine in which the primary focus had been placing all children from the streets and institutions in loving family homes. Again it argued for people over profit.:
'This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '
Within the next 2 years we would observe a global economic crisis which would lead many others to conclude that greed really wasn't that good at all. Soon after, The Oxford Social Enterprise Forum asked. Is a new form of capitalism possible?. As practitioners, we had just delivered our paper on Economics in Transition at an international conference:
"Overall, capitalism was able to produce a much larger middle class of people between rich and poor, and has gained precedence due to making safe and secure life possible for more people. But, it's various methods over the past 100 years left millions of people to suffer and die more indirectly than outright murder. Those people were dismissed as relatively unimportant, mostly left to die from deprivation rather than outright execution. In all systems, some rationale was created to either dismiss people and leave them to die, or, kill people outright. In the end, for the victims, the result was identical.
In that context of disposing of people, by all economic systems, and with capitalism having become predominant, financial profit came to rule the day. Profit, the bottom line, was master of all else. People and the environment we live in were secondary considerations. The vehicle of Western capitalism was, and is, corporations."
Pamela Hartigan who was at the OXsef conference, now says it's capitalism that has to change:
"The key to sustainable capitalism is reasonable profits as opposed to maximizing profits. In the current system, a segment of society is trying to maximize profits without concern for the impact on the well being of the society as a whole, while another segment of social organizations have to deal with the fall out. The system is not working."
"Business should focus more on social problems", said Richard Branson at Davos 2009, whose Virgin Healthcare is another provider of NHS services, but when approached by a practitioner his Virgin Unite organisation gave much the same response as the social enterprise community. That the event was hosted by an Ukrainian oligarch seems to be at odds with the message. In the audience were some of the oligarchs beneficiaries, notably Bill Clinton and Tony Blair who happens to have been the man who made social enterprise government policy.
Given Blair's neoliberal leanings, perhaps social enterprise was never intended to be about people over profit, but merely a palliative for our consumption.
Pioneers Post reports on a Question Time style debate last week on social investment at which former Labout MP Leslie Huckfield described the need for unsecured loans.
“The difficulty is that when those organisations are asking for those sums of money they don’t have any collateral, they don’t have any assets to give security. That’s where the main demand is.”
Consider this, from an interview conducted in 2004 about our work for Crimea's Tatars where founder Terry Hallman explains why "his proposed People-Centered Economic Development program, also referred to as social enterprise, would work better for repatriates who lack the necessary material collateral to start their own business."
In the 2003 proposal he describes how the profit-for-purpose business combined with a microcredit union could deliver affordble unsecure loans, warning at the same time of the risk of violent conflict
"By combining a community-funding enterprise (CFE) with a micro-credit union, the limitations inherent in each one is greatly diminished. The CFE provides sufficient funding to ensure the operating costs of the credit union, reducing the risk that the credit union will have any need to use its capital to sustain itself. The credit union immediately makes available sufficient loan money to match the needs of the community, thereby eliminating the time needed for the CFE to generate the same amounts of money. Additionally, CFE profits over and above what is needed to help with the operating costs of the credit union can be put directly into the credit union. Over time, the amount of money used to originally fund the creation of the CFE is offset by CFE contributions to the credit union. The credit union is increased so that larger amounts of money become available either to make larger loans or to service more borrowers. Together, the CFE and credit union create an enterprise where the original funding not only remains but also increases with time. They complement and balance each other by addressing the economic goals both have in common and offsetting each other’s limitations."
It was the same approach we introduced to the UK in 2004
We are seemingly going around in circles, denying solutions to restate the problems
Kathy Evans, panellist and CEO of Children England, said: “There are certain public goods – and the one I have spent time on most recently is residential care for children – where there is only one funder. It is the state.
“What we’ve ended up with is hedge funders owning clusters of childrens homes because the state has stopped investing. Residential care for children isn’t working right the way down and is near point of collapse. 75% of children's homes are now private sector, charities are down to 2% from around 70% in 1942 when we were founded.”
As I said earlier, the primary focus of our work in Ukraine was reforming institutional childcare and what we put on the table in 2006 was a strategy for transitioning childen from institutions t loving family homes, such that rather than benefit investors, the cost of childcare to the state could be reduced
“There is no substitute for a loving family environment for growing children. Existing state care institutions do not and cannot possibly provide this – despite occasional, lingering claims that state care is the best care for children. This attitude is a holdover from Soviet times when the state was idealized as the best possible caretaker for all, including children. Stark reality does not support that notion.
While this section has strong focus on financial aspects for reforming childcare in Ukraine, these are just financial numbers to demonstrate that this can be done for an overall, long-term cost reduction to state budget. That is to say, simply, this reform program is at the least financially feasible. The barrier between old and new is the cost of the transitional phase.
However, it is essential to not get lost in financial numbers and budgets. These are only important to show how this will work and will end up costing less money as the new program is fleshed out and the old program is closed. Most important is the welfare of each of these children. There are at this time, for example, numerous institutions across Ukraine where children die on a daily basis from little more than lack of knowledge about how to help them. The actual cost of helping them immediately is nothing more than one-day workshops for existing staff, to demonstrate basic, simple medical interventions common in the West. These institutions are generally closed to the outside world, difficult to access due to imposed secrecy, and are mostly in very rural areas where even the closest neighbors have no idea of the reality of these facilities."
Social Enterprise is a new kind of greed, for reputation,.regardless of the consequences for the vulnerable. Keeping others away from the discossion table is a very big part of it.