Has the social economy been lost to corporations?

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.

The call above,, for business to embed  social benefi,t came in 2004, with the introduction of social purpose business to the UK. In an unusual business plan which warned of the risk that leaving people in poverty was a time bomb waiting to explode. It also warned that i'it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world'.

When the economic crisis struck 4 years later, it was a "Black Swan", an unpredictable event - we were told, yet as far back as 1996, US . .

That same year, UK Parliament were contemplating the idea of a business model to deliver revenue for community benefit. It became known as the Community Interest Company or CIC and was brought into being the following year. .

It is perhaps surprising that it wasn't until 8 years later, that government,by now Conservative, introduced the Social Value Act, requiring public bodies to consider the economic, social and environmental value of their procurement decisions. Neither New Labour nor parliamentarians who introduced the CIC as law seem to have been aware that corporate capitalism was any kind of threat.           

"It's socialism for the rich. capitalism for the rest of us" says Owen Jones in the Guardian, drawing our attention the the extent to which private contractors benefit from public contracts About half of the £187bn of public spending..

Writing today on behalf of contractor Balfour Beatty, Chris Whitehead expresses concerns of the wide interpretation of the Social Value Act. Social value is greatest when business and public sector collaborate on infrastructure projects, he argues, revealing that Balfour Beatty have been involved in this kind of collaboration.

Now consider the very different experience of a social enterprise. In 2010, I'd had the opportunity to raise a question in a public meeting about public funds being misused to set up a healthcare Social Enterprise Trust  Having described my efforts to offer service, I was told:

The Council does not have a specific policy to offer support to social enterprises. The financial support provided to the Forest of Dean Health & Social Care CIC resulted from a specific decision of the full Council - the history of which is included in our agenda papers at tonight's meeting.

However, the Council's Procurement Strategy does aim to encourage and support local suppliers to provide goods and services to the Council, in support of our corporate priority to promote a thriving economy

Earlier. I'd been invited by the council's economic development officer to participate in a voluntary capacity in their broadband task group. That didn't happen. EU funding had been acquired and the task group recommendation led to a major  BT project.  In 2004, drawing attention to the need for infrastructure investment, we'd warned of inferior rural service for years to come.

Was our expierience with a district council a one-off? Not when one considers similar experiences in international development.

Infrastructure projects had been our stock in trade, since the highly successful Tomsk Regional Initiative which P-CED had sourced for USAID in 1999. In 2004, the social business model was described in an Interview with a diaspora leader from Crimea where our efforts were focussed on creating housing infrastructure for the repatriated Tatars:

The P-CED model is not a charity sort of operation. It is business. What we choose to do with profits is entirely up to us, and we choose before anything else happens to set most of our profits aside to assist poor people. In fact, our corporate charter requires us by law - UK law, where rule of law is very well established - to use our profits only for social benefit. We cannot do anything else with it. To the extent that it is difficult or impossible to engage honestly and predictably in business activities in any given community and make a profit, we are reduced in what we can do with any profits that might be made. I do not take kindly to, and do not accept, paying bribes and gifts to government officials or to anyone else in order to do business.

As our late founder Terry Hallman reveals in his notes, he was obliged to take a stand against his own project, due to it being compromised by corruption  

From 2004, our major focus had been infrastructure development at a national level, having delivered a strategy plan for microeconomic development and social enterprise to Ukraine's government It was described as a 'Marshall Plan for Ukraine and government had adopted several of its recommendations...It was very clear in its social objectives:

'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. '

As I've related recently we'd approached USAID for support and found ourselves eventually displaced by a social enterprise intiative, involving USAID. The British Council,. Price Waterhouse Coopers and Erste Bank. It would bring in the foundations of Ukraine's leading oligarchs who are renowned for lack of philanthropy. It was a corporate vanity project which steered clear of the most intractable social problems like children abused and neglected in institutional care.  

According to the British Council, who we'd applied to become social enterprise partners with in 2010 in response to public solicitation, our application had been disregarded because one of the criteria was for partners to make a financial contrbution to their project.  Clearly only corporate partners wre required.  .

In 2012, Business in the Community welcomed the Social Value Act. Take another look \at USAIDs donors in Ukraine and you'll find them there beside the predators who'd let children in their own country starve while handing out donations to the like of Tony Blair's Faith Foundation.or sponsoring Lord Mandelson to promote EU partnership. a trigger for the current crisis.

Our associates at Maidan had taken a stand against this crony capitalism.

Excuses won’t work, particularly in light of a handful of oligarchs in Ukraine having been allowed to loot Ukraine’s economy for tens of billions of dollars. I point specifically to Akhmetov, Pinchuk, Poroshenko, and Kuchma, and this is certainly not an exhaustive list. These people can single-handedly finance 100% of all that will ever be needed to save Ukraine’s orphans. None of them evidently bother to think past their bank accounts, and seem to have at least tacit blessings at this point from the new regime to keep their loot while no one wants to consider Ukraine’s death camps, and the widespread poverty that produced them.

'Capitalism must be a force for good', says BITC chairman Stephen Howard, in The Telegraph

Unilever CEO Paul Polman says we need a new business model serving citizens and communities   This model already exists

Richard Branson is going to make business a driving force for social enviromental and economic benefit. We walk his talk

In contrast to the must be's, will be's and going to's of corporate leaders, here's how one who determined to "be the change" put it. 

.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. The 1996 paper 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.