Failings of the market
The last 30 years have been characterised by a shift from a market economy to a market society where, according to Sandel (2012), almost “everything is up for sale”, including moral, civic and educational duties. Market mechanisms ringfenced such duties from the poor, resulting in unequal access to rights such as political influence, healthcare, income and housing. Indeed, Crouch (2011) found that neoliberalism has worked well in achieving choice for upper classes, particularly in the UK and US, but the replacement of state intervention with NPM which runs on a “logic of competitiveness”, has led to financial and economic crises which have hit the poor the hardest. The 2008 crisis served as a global demonstration of the ‘creative destruction’ of deregulated markets (Crouch, 2011; Birch and Mykhnenko, 2010), but local and national examples had long been brewing. Roy et al (2015) found that the city of Glasgow (Scotland) for example, accommodates life expectancy gaps of up to 28 years between its richest and poorest inhabitants and although this hits the poor the hardest, Wilkinson and Pickett (2009) find that an entire society is affected by inequalities, with the top 5-10 per cent by education and income experiencing lesser outcomes than their peers in more equal societies. Indeed, the Scottish government (2010) found that despite its high quality of health care, the nation’s overall levels of ill-health surpass those of its immediate European neighbours. Looking at relative deprivation, Wilkinson and Pickett (2009) find that poor physical and mental health, violence, drug abuse, low levels of educational attainment, high teenage birth rates, incarceration and low levels of child wellbeing are all outcomes which are more apparent the lower someone’s social status is. Deeper analysis leads them to the revelation that health differences exist among wealthier populations as well, with those in executive jobs with better education and income experiencing worse health than those in higher positions than themselves. These findings lead them to the suggestion that inequality, not poverty, is the pertinent issue. Their argument that individual lifestyles are highly dependent on factors within the social environment correlates with Roy et al’s (2013) suggestion that health interventions may flourish at a micro level, where small-scale social enterprises can benefit from the social capital that is needed for a healthy community to thrive. The following section will take a deeper look at what social enterprise has been historically and what it represents in the UK today.
What is social enterprise?
According to Defourny and Nyssens (2008:2010), the term ‘social enterprise’ was first coined in Italy in the late 1980s (which coincided with the rise of neo-liberalism) and was characterised by the EMES European Research Network as a hybrid of resources including commercial income, public subsidies and private donations and/or volunteering, which place them at the centre of the public, private and third sectors (Kerlin, 2009). The social capital developed by including multiple stakeholders, including workers, customers or beneficiaries, in operational activities was also a defining factor of social enterprises (Defourney and Nyssens, 2010). The concept was fostered across Europe in the mid-nineties with the support of the EMES Network, but when it reached the UK at the turn of the century, the onus on involving various stakeholders was replaced with business-like values, defining social enterprises as:
businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners (Defourny and Nyssens, 2008:6).
Nonetheless, European concepts of social enterprise did have something in common. This was the dominant model of work-integration social enterprises (WISEs), which aimed to integrate disadvantaged people into employment and society through productive activity (Defourny and Nyssens, 2008). The following section will look at the health benefits that have been linked to such social enterprises through research.
Health benefits of social enterprise
Roy et al and the World Health Organisation (2013) expose the potential for social enterprise to represent an innovative and sustainable public health intervention both directly and indirectly, by addressing the social, economic and environmental issues that contribute to inequality. Building on former prime minister David Cameron’s previous Big Society campaign, which calls for voluntary and social enterprise participation to ‘fix’ Britain by fostering social inclusion, these researchers suggest that holistic community-based initiatives could be more effective in combatting exclusion and hopelessness than diet and exercise (Roy et al, 2013). They call for definitions of health and wellbeing to include social outcomes such as self-efficacy, confidence and self-esteem, which can be adopted in contracts that identify the specific needs of targeted communities to deliver effective and efficient services (Roy et al, 2013). Research finds that areas where unemployment is significant are more likely to experiencing poor physical and mental health, financial exclusion, fuel poverty and other disadvantages which adversely affect communities as a whole by creating social problems (Roy et al, 2014). As such, social enterprises, by operating as businesses that work to address social determinants of health (Macaulay et al, 2017), could establish direct and indirect routes to tackling such issues. For example, WISEs may work to develop social capital through inclusion in economic and social activities, which could foster the skills needed to gain and maintain employment (Roy et al, 2014). As indicated above, this could lead to better physical and mental health, financial inclusion and community prosperity. Scottish self-reliant group (SRG) Wevolution, is a prime example of a social enteprise that aims to empower members to become independent micro-entrepreneurs by participating in group savings. Wevolution member Lucy, who was a stay-at-home mother and now owns her own shop, credits a lot of her success to the empowerment, capabilities and social capital that the SRG developed within her, enabling her to access networks and funds and also to develop her self-efficacy, confidence and self-esteem, which have been identified as health and wellbeing factors (Roy et al, 2013). The following section will look further into social enterprise as a response to inequality by asking, ‘is social enterprise a market-based solution to issues caused by the market?’
Is social enterprise a market-based solution to issues caused by the market?
Teasdale (2011) makes the point that social enterprises are “hybrid organisations facing a trade-off between social and commercial considerations” and tensions may exist between the impetus to promote social value and following a capital-driven model for sustainability. Alvord et al (2002) find that such tensions can prove destructive for both effectiveness and sustainability, which can result in failed attempts at social change. A case which illustrates this is the catalogue delivery social enterprise Aspire, who’s attempts at franchising instigated the eventual downfall of their WISE model. To franchise successfully, Tracey and Jarvis (2006) suggest that a compromise should be accepted between social and commercial objectives. For example, employing fewer and more selective homeless people to deliver catalogues at Aspire may have improved their competitive position, but this would have undermined their primary goal of employing homeless people full time and year-round. However, commercial values inevitably dominated, with investors compelling the social enterprise to limit catalogue deliveries to the Easter and Christmas seasons. Moreover, social impact was adversely affected by poor performance and efforts to support the homeless and ex-homeless, who generally struggled with addiction, mental illness, and a lack of basic skills, became increasingly difficult. WISEs demonstrate neoliberal values by presenting a model where social services are commodified in the hopes of introducing efficient production and distribution services, but the dependence on commercial revenue rather than government support to achieve social missions proves somewhat problematic. By shifting the responsibility for individual welfare from governments to WISEs, the social values are at risk of becoming skewed, with any work becoming more important than being in no work at all (Garrow and Hasenfeld, 2014). Interviews carried out at Aspire revealed that social and commercial tensions were not uncommon, with situations arising where employees’ wellbeing needs were countered by their need to accrue income through catalogue deliveries (Tracey and Jarvis, 2006). WISE workers face the risk of being exploited by receiving minimal wages for their labour under the guise of ‘social good’, the same guise which is increasingly used to appeal to charitable consumers who may buy or donate based on the organisations expressed commitment to a social mission (Garrow and Hasenfeld, 2014). With no consensus on what constitutes good social performance, outcomes are difficult to measure, so the ability to evidence social value for resources is limited and market methods are often necessary to sustain WISEs. This includes charging fees for services and competing for donations, volunteers, and other kinds of support (Dees, 1998). The takeover of the neo-liberal logic is evident in many forms of social enterprise, including microfinance, where Grameen Banks original social business model proved unsustainable without commercialisation (Bateman, 2010). The evidence indicates that the social value created by social enterprise as a response to issues such as inequality can be undermined by the pre-paradigmatic state of what social enterprise is and how they should perform. Market tactics may therefore be incumbent upon the sustainability and competitiveness of social enterprise, as social values themselves are difficult to justify in the race for contracts to deliver products and services. However, social enterprise works best when using social capital to provide targeted solutions to communities and upscaling operations to provide generic services would be a dangerous path to take. Having already been accused of acting as an ‘interim non-profit private provider paving the way for proper private takeover’ by the UK’s Guardian newspaper (2013), it is important to state that social enterprise cannot replace public assets such as the NHS and the neo-liberal sentiments regarding the hollowing out of an interventionist state should be replaced with talks of a partnered relationship where contracts are offered to those social enterprises that possess the skills, social capital and resources to go into communities and build on the foundations laid by private and public sectors.
This paper has discussed the rise and fall of the neo-liberal market logic which sought to replace the interventionist state with private entities that exercise freedom and efficiency by presenting ‘customers’ with choice and competing for the take-up of their goods and services. The free market worked better for the well-endowed than it did for poor citizens, who were met with externalities such as inequality and lack of access to welfare rights such as income, housing and healthcare etc. Social enterprise represents a reformation of the neo-liberal logic and has demonstrated the potential to tackle social ills such as health inequality. However, a defining characteristic of social enterprise is its ability to leverage social capital to respond effectively to local issues, and this micro-level approach implies that social enterprise cannot be applied as a blanket solution to problems created by the market. Instead, it fairs well to adhere to Roper and Cheney’s (2005) description of social enterprise as “social trends, organisational structures and individual initiatives”. This provides freedom to adopt the necessary model or strategy (including market strategies) required to respond to the relevant community’s needs. To echo the words of the European Commission (2014), social enterprises are an effective and necessary response to the challenges of ‘an ageing population, youth unemployment, climate change and increasing inequalities’ which will benefit from the co-creation of policies that create an enabling environment for social enterprise. Thinking globally but acting locally, capitalising on its inherent features (e.g. social capital and local expertise), instead of trying to mirror the public and private sectors, will enable social enterprise to complement rather than compete with these sectors.
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