Social Enterprise is the Next Big Thing – 3 of 3

I agree with Professor Jeffrey Sachs that the continuing challenge of sustainable development will drive the future growth of social enterprises – with their triple bottom lines (defined at Post #74). In his book, Common Wealth (find Amazon link below), Professor Sachs defines these challenges as “protecting the environment, stabilizing the world’s population, narrowing the gaps [sic] between the rich and poor, and ending extreme poverty.”

I think the Professor took the word ‘common’ in his book title from two different sources and tries to write another for the future.

Firstly, there is a traditional meaning, ie British or Continental, of commons that a Wikipedia illustration captures well: “Common land (a common), is a piece of land owned by one person, but over which other people can exercise certain traditional rights, such as allowing their livestock to graze upon it.”

As with British common law, this description is more normative than prescriptive. From my own experience of common law from living in New Zealand where it applies, I can generally do what I want if I think I am doing right by the ‘norm,’. If there is a challenge, I can argue for my legal right in court from precedents. I will return to this below.

Secondly, the word common’s other take off point is the article “The Tragedy of the Commons,” from which I quote Wikipedia lengthily:

“The article describes a dilemma in which multiple individuals acting independently in their own self-interest can ultimately destroy a shared limited resource even when it is clear that it is not in anyone’s long term interest for this to happen.”

“The metaphor illustrates the argument that free access and unrestricted demand for a finite resource ultimately dooms the resource through over-exploitation. This occurs because the benefits of exploitation accrue to individuals or groups, each of whom is motivated to maximize use of the resource to the point in which they become reliant on it, while the costs of the exploitation are borne by all those to whom the resource is available (which may be a wider class of individuals than those who are exploiting it).”

This influential article was written by Garrett Hardin and first published in the journal Science in 1968. Conservationists often use it to justify government intervention or regulation in allocating a common resource.

For Common Wealth, Professor Sachs writes his book from an American, big country perspective. Given the common problems potentially coming from unsustainable development, he suggests cooperation, ie “the Power of One” as the best way for countries to move forward.

Writing from the developing world, I do see a role of countervailing power for innovative social enterprises in the gray area between the market and non-market. Interestingly, this role for social enterprise to modify traditional free markets dominated by big business was first formulated by American economist John Kenneth Galbraith in his book American Capitalism.

Unintentionally, Professor Sachs’s first example on cooperation was on the supply of affordable HIV/AIDS drugs to Africa. I think this example shows that he achieved qualified cooperation. He only got it when the Indian generic pharmaceutical companies successfully reverse engineered the drugs and threatened to supply Africa at US$1 per dose.

Professor Sachs grew up in America where he negotiated “cooperation” in an environment of established countervailing powers. Across borders, there is a need for social enterprises based in developing countries to similarly establish themselves as countervailing powers in the global arena.

Within the Philippines, examples of the application of countervailing power are farmers’ cooperatives or industrial clusters (See Post #14) organized, among other reasons, to bypass middlemen and capture more returns for their stakeholders from the value chain. Social enterprises based in developing countries could very well serve as countervailing powers in a modified mode of Sachs’s “cooperation.”

Given its organizers’ pedigree, it is not surprising that ISEA (See Post #74) is focused on nurturing social enterprises of the money-poor. As the Philippines progresses, the other fertile ground for social enterprise nurturing may be for the un-empowered or Max Weber’s “status-rich, money poor.” The un-empowered include soldiers, government employees like teachers, OFWs, artists, small entrepreneurs and innovators.

Here’s to all social enterprises – with their triple bottom lines – blooming among the money-poor and the un-empowered and working to achieve wealth for all and strength for the country … by other means.

Click here for Part 1 of 3 and here for Part 2 of 3.