The Social Economy and the Crisis

Lisbon 15th July 2009

Robin Murray, Julie Caulier-Grice & Geoff Mulgan

From the micro economics of social venturing

To the macro economics of social innovation and the global economic crisis

5 propositions

Proposition 1

The present crisis is about a long wave transition from the 20th century paradigm of mass production, to what? to the 21st century paradigm of the distributed digital economy?

The historical record: bubble prosperities, recessions & golden ages

1771Britain

1829Britain

1875 Britain / USA

Germany

1908 USA

1971 USA

1890–95

Europe1929–33

USA1929–43

1848–50

2000/7–?

1793–97

TURNINGPOINTINSTALLATION PERIOD DEPLOYMENT PERIOD

Telecom mania, Internet emerging markets

and NASDAQ

London funded global marketinfrastructure build-up

(Argentina, Australia, USA)

Railway mania

Canal mania

The roaring twenties

Bubble

Sustainable global knowledge-society ”golden age”?

Post-warGolden age

Belle Époque (Europe)

“Progressive Era” (USA)

The Victorian Boom

GreatBritish leap

Golden Age

Each Golden Age has been facilitatedby enabling regulation and policies for shaping and widening markets

The sequence of propagation has four phases and a break

FinancialBubble

Technologicalexplosion

Market saturation and social unrest

Golden Age

Nextbig-bang

big-bang

Deg

ree

of d

iffus

ion

of th

e te

chno

logi

cal r

evol

ution

Time

INSTALLATION PERIOD DEPLOYMENT PERIOD20 – 30 years 20 – 30 years

MATURITY

SYNERGY

FRENZY

IRRUPTION

TU

RNIN

G P

OIN

T

Crash Institutionalrecomposition

Proposition 2

Strong social and technological tides which provide the basis for the expansion of the social economy

i) Intractable Problems. Widespread recognition that the big issues not solvable with business as usual.

But the social economy is particularly well suited to tackle these issues and is the source of many innovations in these areas.

ii) Insistent voices, active lives.

The rise of expressive culture - the post modern citizen actively searching for identity, meaning and self improvement , individually and collectively through social movements

iii) Digital economy reconfiguring production around the user. The Lego principle. Households become designers, processors and assemblers. The house becomes an office/recording studio/learning lab/doctors’ surgery/power station. Rise of distributed systems and the support economy

Platforms – from the linear to the multi-nodal

Proposition 3

Social economy can become an innovative driver of economic transformation in the deployment period – social Schumpeter

Can do so only if conditions transformed in each part of the social economy and their inter-relations

The social economy

a) State. Innovation episodic and centralised. Requires transformation of public finance and systems of accountability related to it

b) Grant economy. Seed bed of innovation but fragile economically

c) Market 55,000 social enterprises in UK. Requires new mediating institutions

d) Households: conditions for participation

Proposition 4

Crisis in macro economic policy. Battle against recessions being fought with weapons of the last war.

4 differentiated counter-cyclical policies required that focus on investment and creating conditions of next wave

A) short and medium term investments that can be rapidly introduced

B) Factor Four innovations for services faced by cuts (e.g. Elderpower in Maine)

C) Innovative use of resources freed up by the market – people/land/buildings/ideas + encouraging initiatives insulated from the market (exchange systems/local food/volunteering)

D) Regulatory changes creating conditions for SI

Proposition 5

The coming years are a critical moment of danger and possibility.

• Danger from crisis (debt overhangs and credit shortage/unemployment/cuts to grant programmes & social services

• Possibilities: 1930s, Argentina, favellas

Conclusion

Just as 1930s crisis generated alternatives based on mass production model (Soviet, social democracy, fascism) so current crisis suggests alternatives based on distributed digital economy

References:

Eric Beinhocker, The Origin of Wealth, Random House, 2007Bill Ivey, Arts Inc, University of California Press, 2008Francois Jegou and Ezio Manzini, Collaborative Services: social innovation and design for sustainability, Poli Design 2008Jim Maxmin and Soshana Zuboff, The Support EconomyCarlota Perez, Technological Revolutions and Financial Capital, Edward Elgar 2002Walter Stahel, The Performance Economy, Palgrave 2006

Robin Murrayrobinmurray(AT)blueyonder.co.ukJulie Caulier-Gricejulie.caulier-grice(AT)youngfoundation.orgGeoff Mulgangeoff.mulgan(AT)youngfoundation.org