How do social enterprises contribute to a better economy?
It’s no secret that there are plenty of things wrong with the economy. Inequality of wealth and income and dependence on fossil fuels to create economic growth are my top two concerns, but there are many others, held by people much more mainstream and well-informed than me.
The OECD defines Inclusive Growth as growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity fairly across society. “Inclusive Growth” has become the thing to call for with statements from the World Economic Forum and the 2016 G20 meeting in Hangzhou. But, for many of us, these look like suspiciously like add-ons to a business-as-usual narrative.
As a director of PSEN, I believe that social enterprises create a better economy. Social enterprises are businesses which trade for a social or environmental purpose. Their profits are reinvested for that purpose. Like all businesses, social enterprises find opportunities to create value, they develop and sell products and services, employ people, make a profit, pay tax. But they differ from private businesses in two important ways. Firstly, the value they seek to create is more broadly defined than private businesses and includes social and environmental value alongside economic value. Secondly, and this is the real difference between private and social enterprise, is that private enterprise creates value in order to capture it for owners and shareholders. For example, of the £2bn allocated to social care in the March 2017 budget, £115M will go to private investors. Social enterprise creates social, environmental and economic value for the benefit of the community as a whole. It is for this reason that we think social enterprise is a radical alternative to traditional business and an important ingredient of a more inclusive and sustainable economy.
There are also hundreds of people, organisations and initiatives who are not involved with social enterprise, or who wouldn’t use that label, but who are also working toward a more sustainable and inclusive economy. These include local currencies, time banks, local food networks, community renewable projects, transition towns, worker co-ops, community businesses, socially engaged artists, digital inclusion and open data initiatives, social justice, fair trade and environmental campaigners, proponents of participatory democracy, you can probably think of plenty more.
These grassroots initiatives are supported by research from heavyweights such as the New Economics Foundation which has been developing policy recommendations since 1986, and the RSA whose work on the economy, enterprise and manufacturing includes the Inclusive Growth Commission and the Citizens Economic Council. The Transition Town movement which champions a community-led transition to a low carbon economy celebrated its 10th birthday this year and, more locally, the annual convergence of the Devon New Economy Forum has become a regular event. Good ideas have gained traction: wellbeing indicators are now part of the Annual Population Survey in the UK, providing a baseline against which initiatives can be evaluated. Universal Basic Income pilots in Scotland and Finland build on others around the world. The first local bank in the UK, the Greater London Mutual is due to open soon with a South West bank to follow. Cornwall LEP has put “inclusive growth” at the heart of its economic strategy. In Plymouth, academics, city and regional economic leaders are taking an interest in purpose-driven business. PSEN representatives chair the Plymouth City Council Inclusive Growth flagship and we have submitted our Good Growth plan to the Local Enterprise Partnership and the national government’s industrial strategy.
Over the next twelve months PSEN, will be holding a series of events to highlight some of the important themes around creating a more sustainable and inclusive economy. This will help explain the role that social enterprises can play and develop relationships with others who are working toward the same thing. The aim is to join forces to work more effectively together and see where the gaps are.
The events planned will focus on demystifying and democratising economics, rethinking the relationship between work and money, moving towards a more ecologically sustainable economy and exploring some of the ways in which open data can facilitate the transition.
In addition to the events I’d like to facilitate a conversation on social media and in pubs and cafes about what a more sustainable and inclusive economy will look like. If you would like to be involved, get in touch.
The first two events are now live…
Rethinking Work and Income, held in collaboration with RSA, will be on 20th June. For more information and bookings, please follow the link below:
An Economy that Works for Everyone? is on 6th July, again in collaboration with the RSA. Information and bookings at: https://aneconomythatworksforeveryone.eventbrite.co.uk
The Social Enterprise for an Inclusive and Sustainable Economy project has been supported by a Big Lottery Fund Awards for All grant.