On responsibility

Senior bankers, private equity moguls and hedge fund managers appear cut off from the rest of us. They often pay little or no tax, increasingly live in heavily guarded enclaves, and some have little or no real allegiance to Britain. The sources of their wealth are often mysterious, and appear unrelated to merit. These feral rich pose, in their way, every bit as much of a danger to society as the rioters who stole and pillaged London streets last August.

So writes journalist Peter Oborne, not in a small circulation left-wing magazine but in a passionate outburst in today’s Daily Telegraph. This is not a sign that Mr Oborne or his newspaper have moved away from their conservative position on the political spectrum support but one of a number examples of the fact that some of those now most worried about the state of our economic system are those who are theoretically its strongest supporters.

Thursday saw Prime Minister, David Cameron, address the issue championing: “a vision of social responsibility, which recognises that people are not just atomised individuals, and that companies have obligations too” before adding: “I believe that out of this current adversity we can build a better economy, one that is truly fair and worthwhile” and claiming that the government would reduce barriers to setting up co-operatives.

A good time, then, for the social enterprise movement to have its say and Social Enterprise UK (SEUK) chief executive, Peter Holbrook, stepped up to the keyboard with a blog post calling for the government to actively support the development of social enterprises: “We need to shift quickly, through tax breaks and through education and reward new radical forms of fair, responsible and wealth redistributing capitalism, we must re- invigorate  the connection and moral responsibility our business leaders have  and insist on a better understanding of, and commitment to our society

and concluding with a stark challenge to political leaders: “If the government and opposition are really serious about reforming market based capitalism then tipping the playing field in our collective favour is the only long term solution to our social and economic woes  and offers the only hope to tackling the ever greater divisions and an ever growing gulf and detachment between rich and poor.

On Guardian Social Enterprise Network, The Social Investment Business‘s Jonathan Jenkins claims: “This is an important moment for social investment. I’m not naïve enough for one minute to believe this is Big Society II: The Coalition Strikes Back, but the very fact that the politicians are vying for profile on this topic means that they know this is becoming of increasing interest and concern to the Great British Public

before adding: “I have written before in The Guardian that I have a dream that everyone can become a social investor, whether their budget is £5 or a £5m bonus. This dream was anchored in my belief in the efficiency of markets, and the increasing demand from socially driven retail investors, will make it happen. It doesn’t seem such an absurd dream to chase, after all.”

There seems to be little to disagree with in any of these contributions but while Oborne asks pertinent questions about what we want from our economic system, none of the others really provide an answer. I’m a big fan and customer of co-operatives but I reckon it would be stretching it a bit to suggest that our current economic predicament is primarily down to the fact that we didn’t have enough them in the years leading up to 2008.

I entirely support tipping the playing field in favour of social enterprise but if the government formally decreed that 100% of the nation’s economic activity has to take place at Underhill, the sloping home of Barnet FC, it’s still highly unlikely to bring about a situation where social enterprises are the biggest players in the UK economy.

And social investment, so far at least, has primarily been a vehicle for promoting and supporting socially enterprising approaches to public service delivery, as opposed to increasing the size of the social portion of the mainstream economy.

This is not a counsel of despair but a recognition that if we’re going to move towards a more socially responsible economy in the UK then the key players are not social enterprises but the government and mainstream businesses. Ordinary customers, workers and citizens have limited power to influence the behaviour of the larger mainstream businesses – those who have little money and no job have virtually none – but are at the mercy of their actions.

Unfortunately, based on current evidence, it’s difficult to disagree with Peter Oborne’s conclusion:”it is right that men and women who have made a fortune through ingenuity and hard work – such as writer JK Rowling and inventor Sir James Dyson, for example – should be allowed to retain their wealth. The question is how to create a set of rules which achieves that aim while penalising the greedy and rapacious. Neither leader (David Cameron or Ed Miliband) has quite put their finger on the answer.

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7 Comments

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7 responses to “On responsibility

  1. I’ll disagree with one of them. Jonathan Jenkins’ claim that the call for responsible capitalism didn’t come from social enterprise. It did, 15 years ago and in 2004 a paper distributed to the social enterprise community said this:

    “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”

    This proposal describing a social enterprise investment fund drew attention to the economic crisis we’d seen in Russia and warned that it was only a matter of time before uprisings became commonplace.

    It was sent to Social Enterprise London and ICOF, introduced to SWRDA the Social Enterprise Coalition and two members of the House of Lords plus a number of APPGs.

    One of the points made in the original white paper was that making profit wasn’t a bad thing but when that meant others went without basic needs, human suffering began:

    ‘There is nothing wrong with individuals becoming wealthy. It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day. ‘

    Post growth people-centered local economies is the reponsibilty I advocate and practice locally.

    http://www.ecademy.com/node.php?id=173424

  2. Interesting take, David. I’m slightly more optimistic, but agree with Peter + Jonathan that if all three parties are serious about this agenda, they need to do more than just suggest employee-ownership or co-operatives as an option, or ask businesses to be more responsible. There’s much more that can be done practically for social enterprise and social investment to grow.

    But the mood music is important, as is where/who it comes from. It sets the tone for conversations and discussions with the private and public sector (the mainstream business + government you identify as most important), and helps create a backdrop that’s supportive. It’s then up to the sector to a) continue to step up and deliver and b) keep pushing and promoting the agenda.

    [Jeff – I think you misunderstand Jonathan’s point in his piece, which was about *who* was saying it: i.e. it is the politicians bringing this stuff to the table, not the sector lobbying them to say it; there has been plenty of people talking social enterprise, responsible capitalism and much else besides for many years (indeed, for many years before 1996)]

  3. The distortion of the market created by the policy confection called ‘social enterprise’ has led to a sector characterised, at least in part, by small, under-capitalised, inefficient organisations who are failing to make a real impact as they focus on survival. Inefficient because they spend a disproportionate amount of time filling in funding applications, providing monitoring returns and trying to quantify their social impact in order to attract the next wave of ‘investment’. Social objectives present at the start (we are going to help the local poor) soon evaporate in the face of a need to generate income in order to merely exist.
    We should be developing much more transparent frameworks around all enterprises that allow both their customers and wider stakeholders to take a view on who they are serving and how. Those that primarily exist to meet the demands of investors and shareholders should have the spotlight turned on them so that buying from, and investing in them is seen as socially unacceptable.
    Politicians will find no way of separating these particular sheep from goats that cannot be gamed. Instead we should rely on the good judgement of the communities in which these enterprises are based to ensure that only ‘the good’ can prosper.
    This will of course require many of us to be prepared to act in our own self interests instead of just selfishly.

  4. Beanbags admin

    @Nick Yes, I don’t disagree with anything that Peter or Jonathan Jenkins are saying on this – or what you’re saying. I think more interaction between the (social enterprise) sector and the private sector is useful for both.

    But I also think we need to acknowledge the split between the questions ‘how do we grow the social economy?’ (rightly a prime concern for sector leaders) and ‘how do we create a more responsibly capitalist economy in the UK?’. The first of these is definitely part of the answer to the second but definitely not all of it.

    @Mike I don’t disagree with you regarding transparent frameworks and I’m hopeful about the ability of communities to make judgments based on information about how companies operate. But I’m not sure how they’re going to get that information without government setting up the frameworks.

    There’s a lot in your first point and I agree with some of it. I’m not an opponent of grant-funding but I think the political rhetoric around social enterprise has often left people running social ventures in a confusing position – particularly in terms of not being clear about whether grants are paying for an activity, subsidising an activity or providing start up support for an activity that will become wholly sustainable through trading.

    • We most certainly don’t need govt kite marking socially responsible businesses for us. I cant think of anything more ludicrous than a social enterprise kite mark. Oh, wait a minute…

      We need active citizens who are thoughtful, curious and willing to trust their experiences of the businesses they choose to engage with, and be prepared to undertake small daily acts of self-sacrifice in order to support those who are doing the ‘right’ thing. If we want good businesses then the starting point must be with ‘good citizens’rather than passive consumers.

      • Beanbags admin

        I’m not suggesting a government kitemark. I’m suggesting that government sets the framework for companies to provide information on what they do and how they do it. Companies’ accounts are available through the Companies House website – for a small fee – an annual social report could be too.

        I agree with you about the active citizens but a lot of the information thise active citizens would need to support good business (or oppose less good business) is not available through direct customer experience.

  5. Nick, We can go back more than 50 years to calls for responsible capitalism to when John Lewis said “The current state of affairs is really a perversion of the proper workings of capitalism, it is all wrong to have millionaires while there are still slums”.
    Now I can show you when David Cameron was lobbied to support capitalism for social purpose, when I called on him in 2010, on the day of his election. But first the matter of tackling the ‘greedy and rapacious’ which David refers to.
    Here’s the background: it involves those who exploit and neglect disabled children for profit, lets call them mafia. Research reveals the extent of the problem and what it will cost to resolve the problem, which is rooted in poverty. First call for support is on USAID and the US Senate Committee on Foreign Relations, where Biden and Obama may be found in 2008. Then I take it to the EU.

    http://www.european-citizens-consultations.eu/uk/proposal/2012

    In 2010 I take it direct to David Cameron with a petition, mindful of his own family experience of disability:

    http://www.change.org/petitions/the-abandoned-children-of-ukraine

    What we see next is for the British Council to arrive alongside USAID. They want to do social enterprise under their own banner and we’re in the way with a social objective which terrifies them.

    In this work we’ve made the case and been am operational example for the self-sustaining business approach with embedded social objectives which 5 years later will re-surface as ‘Creating Shared Value’.

    Cameron may have missed all this, but he can’t have avoided noticing what opposition politicians were up to, especially those like Blair and Mandelson who’d implanted social enterprise of the form Mike describes above. They were now turning up alongside us, but this had little to do with social anything. Mandelson was especially active in advocating their access to EU markets. What an East Europe Partnership needed least of all was a major human rights abuse case.

    There was an immense amount of effort to discredit us, painting the picture of a business fabricating a human rights issue to tap into public funds. When in February 2011 the story featured in a Sunday Times article it concluded “If by our deliberate blindness, children are allowed to suffer such depravities then, by our inaction, we are all guilty”

    Shining the spotlight on the unacceptable, lifting the rock to see the insects scatter has been our approach even if the SE sector, so called “social” investors, government and economic theorists aren’t willing to stand alongside us.

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