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Neoliberalism and social enterprise – part 2

My first post examined some forthcoming research which suggests the development of the social investment market may be entrenching neoliberal language and logic into the Third sector. In this post I look at the equally contentious idea that government policy is also helping to embed neoliberal thinking in to the Third Sector.

No such thing as society?

With its emphasis on free trade, privatisation and deregulation, neoliberalism is said to be the driving force behind the increasingly individualistic nature of Western societies. An individualism which seemingly reached its zenith when Margaret Thatcher famously declared ‘There is no such thing as society’. For economist such as Hayek and Friedman, this is actually a positive thing.

Both argued that moving away from centralised control of economic activity empowers individuals, and their supporters have since presented numerous examples of how increased economic freedoms have lead to pressure for increased political freedoms, particularly within developing economies. Freedom equals freedom equals freedom perhaps? A contemporary example is arguably the Ukraine, and advocates also point to the growth of liberal democracies worldwide during the period when neoliberal thinking has been so dominant.

This chart shows the rise of 'free nations' (considered to be liberal democracies) has largely risen since the dawn of neoliberalism in 1980. The purple line marks the end of communism, and once India changes back from being 'partly free' to 'free' in 1998, almost have the world's population live under liberal democracies (no thanks to China of course!). Source: http://www.freedomhouse.org/sites/default/files/Population%20Trends,%20FIW%201980-2013.pdf
This chart shows that the rise of ‘free nations’ (considered to be liberal democracies) has largely risen since the dawn of neoliberalism (with a steady decline in ‘not free’ nations). The purple line marks the end of Communism, and once India changes back from being ‘partly free’ to ‘free’ in 1998, more of the world’s population live within liberal democracies than any other form (no thanks to China of course!). Source: http://www.freedomhouse.org/sites/default/files/Population%20Trends,%20FIW%201980-2013.pdf

But a new era is dawning upon us! Increasingly we are seeing the ‘social’ playing a much more dominant role than in previous years. Whether it be social enterprise or social media, society is making a comeback.

Breaking dawn

Some have argued that the growth of the ‘social’ represents neoliberalism’s response to the fact that people aren’t quite as rational as once thought, and we can’t “operate as isolated, calculating machines”, with only the law and the market to guide us. People need the ‘social’. Otherwise they start doing a whole load of effed-up shizzle that could bring the whole thing down (like creating derivatives or whatever).

It appears then that whilst neoliberalism still exists and shows no signs of abating, it is finally acknowledging that society actually exists. And in scenes reminiscent of the Twilight saga, the two are eyeing each other up from across the canteen, though it’s not yet clear if the outcome will be something beautiful or an absolute bloodbath.

There’s two schools of thought on this, and in the Third Sector you’re never more than a stone’s throw away from someone who thinks that this unholy matrimony is going to end in tears, with civil society the loser. There is however another school of thought that suggests like Bella and Edward, the two may be able to get it on after all.

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10 thoughts on “Neoliberalism and social enterprise – part 2

  1. Steve, It’s dawning on me why we faced do much obstruction in Ukraine. We were clearly critical of neoliberalism. An illustration is our presentation to the international Economics for Ecology conference in 2009:

    “Thus the issue of ecology economics is not only ‘the third bottom line’, it might be more aptly renamed the economics of survival of the human species. That includes everyone, regardless of one or another economic hypothesis or theory they might prefer. We can endlessly debate and discuss von Mises/von Hayek free market economics/capitalism which proved successful except for the times it failed, and then study why it failed – repeatedly, the most recent failure in September 2008. We can endlessly debate and discuss opposing Keynesian government interventionist economics/capitalism, which proved successful except for the times it failed. That has been an alternating pattern for the past eighty years in Western capitalism. We can discuss the successes and failures of various flavors of communism and fascism. At this point, the simple fact is that regarding economic theory, no one knows what to do next. Possibly this has escaped immediate attention in Ukraine, but, economists in the US as of the end of 2008 openly confessed that they do not know what to do. So, we invented three trillion dollars, lent it to ourselves, and are trying to salvage a broken system so far by reestablishing the broken system with imaginary money.

    Now there are, honestly, no answers. It is all just guesswork, and not more than that. What is not guesswork is that the broken – again – capitalist system, be it traditional economics theories in the West or hybrid communism/capitalism in China, is sitting in a world where the existence of human beings is at grave risk, and it’s no longer alarmist to say so.

    The question at hand is what to do next, and how to do it. We all get to invent whatever new economics system that comes next, because we must.”

    It was also reflected in the ‘Marshall Plan’ with a direct criticism laissez faire economics. e.g.

    ‘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. ‘

    We were in the way, I now realise. USAID were partnering not only with corporations, but the oligarchs we’d identified as the root cause of social unravelling, with the article ‘Death Camps, For Children’. Blair and Mandelson, whose party made social enterprise government policy were closely connected with the same people and still are. .

    1. Thanks Jeff, interesting as always. ‘Ecology economics’ adds an interesting dimension which I was planning to bring up later on in this series. Taking the case of the Ukraine, I noticed one of the solutions to the current crisis proposed by William Hague is greater liberalisation of Ukraine’s energy markets to reduce it’s dependence on Russia. This assertion that markets are the only solution is really at the heart of what I’m trying to explore here. The economic philosopher Philip Mirowski sums up this logic well:

      “Let’s say markets have gone awry or failed in some sense. [Neoliberals] medium term project is basically to propose new and stranger markets, to fix any perceived problems with old markets…In order to do that…it takes a strong state to impose these new market forms to supposedly address the crisis”.

      You can see this logic currently being proposed to address many issues, whether it be the crisis in Ukraine or to some extent, social issues in the UK.

      1. Steve,

        I tweeted today about the relationship between Blair, Branson and the oligarchs, from which Mandelson should not be excluded. I read this today on Virgin Unite of all places: It comes from UnLtd and Cliff Southcombe tells me its about those sponsered by UnLtd..

        http://www.virgin.com/unite/entrepreneurship/pushing-boundaries

        UnLtd as you probably know, was formed under the New Labour government with aa funding injection of £100 million.

        In 2009 Unltd were sponsors of a conference at Oxford’ Said Business School on the matter of a New Form of Capitalism. It was just weeks after our first presentation on the same matter at Sumy

        http://www.p-ced.com/1/projects/ukraine/sumy

        A dialogue on this began on the Unltd forum. Naturally I joined in, to then discover that my response had been deleted. It was around the same time I wrote to Virgin Unite about our efforts in Ukraine.

        I get much the same response from The Guardian, who tell me that what I contribute isn’t suitable. When I’ve written to their editors pointing out that our founder died in his efforts to prevent children being neglected to death in institutions, I’m told I’m going over old ground. I have been repeatedly censored for even talking about social business. Notably the Guardian is sponsored by the British Council, who didn;t want us as partners in Ukraine.

        In any other circunstances where death has uccurred due to neglect it would be indefensible to suggest that this was “old ground”. Why should it happen in this case?

  2. Good article, thanks. What strikes me as someone in the business of community is the disconnect between the interests of community groups that haven’t ever been that well funded, and the interests of civic infrastructure organisations such as charities and CVS bodies that have been well funded (by govt). The former is more likely to make the great transition to the new economy than the latter simply because their fixed costs are so much more manageable.
    And what will strengthen their hand going forward is the Social Value Act that will gradually put power in the hands of those who produce it at source – communities working together to solve their own problems.
    A new valuation system is emerging. One that values contribution to the common good over and above the things that money can’t or won’t value. And this new value, once ways have been designed to capture and record and quantify and evidence and therefore reward it’s production have been designed, we will have a new definition of both CSR and social impact both of which require a degree in bullshit to measure and report.
    In summary, the third sector is dying whilst the voluntary sector is growing. The reason for this is that the third sector in the main, doesn’t really add any value to the system. It does a bit, but not a lot. It’s a bit like local government. It’s there to support itself primarily and when exposed to the harsh winds of the market, finds itself lost for words.
    And that’s all that’s happening. It’s everyman for himself now that the protective cloak of govt funding has been removed. Let the free markets reign even if there will be collateral damage caused to people in communities.
    We need to start looking after ourselves and each other – just like we used to do.
    @mikeriddell62
    P.S. What’s a neo-liberal again?

    1. To paraphrase Tony Blair, we’re all neo-liberals now Mike ; ) In all seriousness though, I think a key facet of a neo-liberal, which links to your argument above, is the overriding of concepts such as ‘the public good’ and ‘community’ with an emphasis on ‘individual responsibility’. I heard Iain Duncan Smith on the radio recently getting quizzed about the rise in food banks, and whilst acknowledging there are too many people in poverty, he finished his sentence with something like ‘Of course people are in poverty for a whole host of reasons – drug addictions, single mothers etc’. In other words, it’s usually their own fault.

      My next post is going to be on how this logic and such values can (and have) seep in to psyche of many people in the sector (including myself to some extent). I hope you are right that a growth in voluntary action means a growing interest in and commitment to the common good though, rather than something else.

  3. On the matter of poverty and food banks in the UK, the term pre-distribution has recently entered the political lexicon. It suggests that re-distribution through taxation is unable to address the problems we face.

    On the face of it, the Social Value Act is good for social enterprise, yet I have doubts whether it will have imfluence where, as we’ve found, government collaboration with corporations trumps grassroots organisations.

    Our application to partner the British Council for example was simply disregarded because as we found out later, partnership criteria included the ability to make a financial contrbution.

    It was the matter of poverty which became our focus in the UK 10 years ago, calling for the kind of support the Social Value Act seems to be offering:

    “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.”

    http://www.p-ced.com/1/node/76

  4. Last week in London the global financial elite met in London to discuss Inclusive Capitalism, a term I’d been using to describe social enterprise a few years ago. Concerns were voiced about rising inequality and the risk of uprisings. It was what US President Bill Clinton was warned about 18 years ago. Clinton was one of the keynote speakers at the conference.

    http://www.p-ced.com/1/node/296

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