Social Entrepreneurs & Capitalism
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Social Capitalism: The Race to the Finish Line
By
Deborah Phelan
If there is a message to ubiquitous big oil, monmouth transnational corporations, and bloated international aid organizations, it’s this: Watch out for that rickshaw.
Environmental writer and entrepreneur Paul Hawken tells us the world is undergoing a sea change. While no one was looking, he says, tens of thousands of grassroots organizations have been working behind the scenes to save the world. In a swelling undercurrent of synchronized and simultaneous small steps forward, it looks like the 'little guys' just may succeed in dominating the picture of what tomorrow will look like.
In short, a revolutionary global rethink is well underway, a rethink involving a redefinition of the role of the world’s poor in the global marketplace, a broadened visualization of the end game of capitalism and a universal awareness that traditional models of development just don’t cut the mustard.
Recent indicators on poverty make the point loud and clear. It’s 2007, midway through the race to meet the United Nation’s Millennium Development Goals and 3 billion people still live on less than $2 a day; globalization continues to widen the gap between the rich and the poor, and the devastation of global warming is already rendering a devastating impact on the world’s poorest regions. (Vast drought-driven migrations from northern Sudan are considered the initial catalyst for the crisis in Darfur.)
Social Entrepreneurs and Compassionate Capitalism
A fiery new brand of social entrepreneur is addressing the crisis of global poverty by hacking into the holy grail of capitalism. They are organizing around the mission of wresting power from international aid organizations and transnationals and returning it to the people.
"Social entrepreneurs identify resources where people only see problems,” says David Bornstein, author of How to Change the World: Social Entrepreneurs and the Power of New Ideas.
“They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they're serving."
New social business models focus on producing products at significantly less cost, engaging experts in R&D, using donation funds to cover initial start-up costs, and localizing the business so that it is owned and operated within the community it serves.
MacArthur Fellowship recipient David Green thinks of himself as a compassionate capitalist. Green heads up Project Impact, a mission-related nonprofit working to provide affordable, accessible and financially self-sustaining health care and medical technology throughout the developing world.
Green, working with the Seva Foundation in 1992, partnered with India’s Aurolab to develop an affordable intraocular lens for cataract patients. Aurolab provides intraocular lenses to poor cataract patients at a cost of $4 - $6. (In contract, US manufactures lenses at a cost of $100-$150.)
The lower cost lenses are subsidized with income from revenues generated from higher income customers.
PI’s financial and resource partners include Schwab Foundation, Acumen Fund (Rockefeller and Cisco Foundations), World Bank Development Marketplace and Ashoka.
Green says when he first started working in global health issues, he didn’t even know what a cataract was. His motivator was the billions of people desperately in need of affordable health and what he could do to change the system.
Compassionate capitalism, he says is all about “human will and the motivation to serve and to be transformative, to change the pretty screwd up paradigm that we exist in now.”
Social Capitalism and Microfinance
Stuart L. Hart, one of the head honchos in the endeavor to merge sustainable development with business strategies, defines social capitalism as a horizontal collaborative system involving small companies and individuals in a mutually beneficial community.
“This model is much less competitive than the corporate model in which large organizations vie for absolute power,” says Hart, author of Capitalism at the Crossroads.
What corporations bring to the development table, he says, is an innate ability at “marshalling resources behind an idea, at creating organizations that operate both efficiently and effectively. They apply sound management tools and discipline, and they demand results.”
These tenets are by no means a novel concept. For the past 30 years, poverty pioneers have been working with community based paradigms for sustainable development. They take on poverty in a multipronged assault, using microfinance and collateral-free credit; focusing on empowering women, entrepreneurship and upward mobility; and reinvesting revenue in development.
A recent report by the Global Development Research Center states that global microfinance has been growing at a rate of 30% annually, with 13 million borrowers worldwide and $7 billion in outstanding loans. Set interest rates and repayment schedules are implicit in the formula, with some firms holding onto interest as revenue and others reinvesting profits
Hawken reckons Hurricane Katrina and Al Gore’s global warming campaign shook the sleep from the eyes of pure profit-driven high rollers. But there is little doubt that the award of the 2006 Nobel Peace Prize to Bangladesh economist Dr. Muhammad Yunus and his Grameen Bank are playing no small part.
The Bonsai Model
Dr. Yunus tells us the poor are very much like bonsai trees. “When you plant the best seed of the tallest tree in a flowerpot, you get a replica of the tallest tree, only inches tall. There is nothing wrong with the seed you planted, only the soil-base that is too inadequate.”
Crack open that flowerpot, he says, and poverty will soon be a thing of the past, unleashing enormous energy and creativity of the poor.
Yunus cracked his first pot some thirty years ago.
“I found it difficult to teach elegant theories of economics in the university classroom, in the backdrop of a terrible famine in Bangladesh,” he recalls. “Suddenly, I felt the emptiness of those theories in the face of crushing hunger and poverty. I wanted to do something immediate to help people around me, even if it was just one human being, to get through another day with a little more ease.”
Yunus’ first step, dishing out $27 to pay off the loans of 42 victims of local moneylenders, generated such gratitude he decided to aim higher.
After struggling for years to involve banks in providing collateral free loans for the poor, Yunus created Grameen (Village) Bank in 1983. Grameen was the first bank to lend money on the honor system.
By 2006, Grameen had loaned $5.7 billion to the poor, with a default rate less than 1.5% and was working with 250 institutions in 100 countries. The bank has made education loans a priority and has provided funding for houses, a mobile phone business, and a chain of eye-care hospitals providing sliding scale cataract surgery.
Recently, Grameen teamed up with Danon Yogurt in a joint social business venture designed to address the poor health of malnourished Bangladeshi children.
Barefoot Engineers
India’s barefoot guru Bunker Roy was labeled an upstart last year when he blasted the United Nations’ Millennium Development Goals as “a recipe for disaster.”
In 2005, Roy’s Barefoot College invested $100,000 to bring ten semi-literate Afghans to India where they trained for six months to become barefoot solar engineers. They returned home with 120 solar units, enough to power five villages.
Compare that, Roy says, to the $250,000 cost to set up one Millennium Village.
Launched 30 years ago, Barefoot College is a successful model of decentralized discovery learning. Students - Roy affectionately calls them "washouts, copouts, and dropouts" - bring their experience and skill to bear on real life problems. Assisted by local mentors, they assume careers in rainwater harvesting, midwifery, education, health care, computer programming or solar engineering. No diplomas. No formal education.
The school is funded by income generated by the services it provides to over 1000 villages. In a 2003 report, UNESCO reported barefoot professionals have become confident enough to talk shop with professionally trained experts.
Barefoot’s Afghanistan project exemplifies the power of its model. Seven men and three women learned how to construct, install and repair solar units. One month after returning home, they brought power to 124 homes in five villages. Communities pay the engineers for ongoing repair and maintenance, collecting enough funds over five years to replace batteries.
To date, the ‘barefoot approach’ has brought solar power to 19 Ethiopian villages and over 500 villages in India. Two Cameroon women are currently in training.
At latest count, 1,000 Barefoot employees are working in 20 sites in India, with a client base of 500,000. The organization recently received $615,000 in seed money to expand its program in poor communities around the world.
2007 Social Capitalist Awards and The Fair Trade Cake
A Gourmet Chocolate Torte, the first ever Fair Trade Cake, landed California-based Rubicon Bakery at the top of Fast Company’s 2007 Top 20 Social Capitalists list.
Rubicon, in partnership with TransFair USA - the only third-party certifier of Fair Trade products for the U.S – introduced the first Fair Trade Certified™ cake in grocery stores last November.
Since 2004, Fast Company has worked with the global consulting firm Monitor Group to identify organizations that are most successfully using corporate tactics to reshape the reality of the global economy. Rubicon, who has made the list every year, shares this honor with such diverse winners as Kickstart, SEED Foundation, Calvert Social Investment Foundation, TransFair USA, Grameen Foundation and WITNESS.
"Our Social Capitalist Awards winners have forged partnerships that blur commerce and charity, challenging our assumptions about making a profit and making a difference," said Mark Vamos, editor of Fast Company. "Their alliances help big business bring conscience to commerce, changing old-style capitalism as we know it."
Rubicon’s bakery sales help over 35,000 marginalized people find jobs, housing and training.
Tomorrow’s World
NYU’s Professor Hart predicts a process of ‘creative destruction’ in the global marketplace. A new breed of stakeholders and social entrepreneurs are using “beyond greening” strategies and tapping into undeveloped markets with emerging technologies.
“Capitalism cannot afford to ignore sustainability,” he says, “
Green believes social businesses sorely need assistance in attracting investment in social enterprises. And Dr. Yunus says he has the answer. He is calling for the creation of a social stock market.
His visionary market is only open to those interested in owning and trading shares in social businesses. Participating investors match their money to a mission, maintain the investment and feed dividends back into their chosen projects. Needless to say, the market would need a social business version of the Wall Street Journal.
Yunus likes to compare globalization to a hundred-lane highway criss-crossing the world. New rules are needed to ensure the poor have equal access to the fast tracks. He has no problem maneuvering through the traffic generated by transnational trucks … so long as his rickshaws aren’t jostled off the road.
-end-
By
Deborah Phelan
If there is a message to ubiquitous big oil, monmouth transnational corporations, and bloated international aid organizations, it’s this: Watch out for that rickshaw.
Environmental writer and entrepreneur Paul Hawken tells us the world is undergoing a sea change. While no one was looking, he says, tens of thousands of grassroots organizations have been working behind the scenes to save the world. In a swelling undercurrent of synchronized and simultaneous small steps forward, it looks like the 'little guys' just may succeed in dominating the picture of what tomorrow will look like.
In short, a revolutionary global rethink is well underway, a rethink involving a redefinition of the role of the world’s poor in the global marketplace, a broadened visualization of the end game of capitalism and a universal awareness that traditional models of development just don’t cut the mustard.
Recent indicators on poverty make the point loud and clear. It’s 2007, midway through the race to meet the United Nation’s Millennium Development Goals and 3 billion people still live on less than $2 a day; globalization continues to widen the gap between the rich and the poor, and the devastation of global warming is already rendering a devastating impact on the world’s poorest regions. (Vast drought-driven migrations from northern Sudan are considered the initial catalyst for the crisis in Darfur.)
Social Entrepreneurs and Compassionate Capitalism
A fiery new brand of social entrepreneur is addressing the crisis of global poverty by hacking into the holy grail of capitalism. They are organizing around the mission of wresting power from international aid organizations and transnationals and returning it to the people.
"Social entrepreneurs identify resources where people only see problems,” says David Bornstein, author of How to Change the World: Social Entrepreneurs and the Power of New Ideas.
“They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they're serving."
New social business models focus on producing products at significantly less cost, engaging experts in R&D, using donation funds to cover initial start-up costs, and localizing the business so that it is owned and operated within the community it serves.
MacArthur Fellowship recipient David Green thinks of himself as a compassionate capitalist. Green heads up Project Impact, a mission-related nonprofit working to provide affordable, accessible and financially self-sustaining health care and medical technology throughout the developing world.
Green, working with the Seva Foundation in 1992, partnered with India’s Aurolab to develop an affordable intraocular lens for cataract patients. Aurolab provides intraocular lenses to poor cataract patients at a cost of $4 - $6. (In contract, US manufactures lenses at a cost of $100-$150.)
The lower cost lenses are subsidized with income from revenues generated from higher income customers.
PI’s financial and resource partners include Schwab Foundation, Acumen Fund (Rockefeller and Cisco Foundations), World Bank Development Marketplace and Ashoka.
Green says when he first started working in global health issues, he didn’t even know what a cataract was. His motivator was the billions of people desperately in need of affordable health and what he could do to change the system.
Compassionate capitalism, he says is all about “human will and the motivation to serve and to be transformative, to change the pretty screwd up paradigm that we exist in now.”
Social Capitalism and Microfinance
Stuart L. Hart, one of the head honchos in the endeavor to merge sustainable development with business strategies, defines social capitalism as a horizontal collaborative system involving small companies and individuals in a mutually beneficial community.
“This model is much less competitive than the corporate model in which large organizations vie for absolute power,” says Hart, author of Capitalism at the Crossroads.
What corporations bring to the development table, he says, is an innate ability at “marshalling resources behind an idea, at creating organizations that operate both efficiently and effectively. They apply sound management tools and discipline, and they demand results.”
These tenets are by no means a novel concept. For the past 30 years, poverty pioneers have been working with community based paradigms for sustainable development. They take on poverty in a multipronged assault, using microfinance and collateral-free credit; focusing on empowering women, entrepreneurship and upward mobility; and reinvesting revenue in development.
A recent report by the Global Development Research Center states that global microfinance has been growing at a rate of 30% annually, with 13 million borrowers worldwide and $7 billion in outstanding loans. Set interest rates and repayment schedules are implicit in the formula, with some firms holding onto interest as revenue and others reinvesting profits
Hawken reckons Hurricane Katrina and Al Gore’s global warming campaign shook the sleep from the eyes of pure profit-driven high rollers. But there is little doubt that the award of the 2006 Nobel Peace Prize to Bangladesh economist Dr. Muhammad Yunus and his Grameen Bank are playing no small part.
The Bonsai Model
Dr. Yunus tells us the poor are very much like bonsai trees. “When you plant the best seed of the tallest tree in a flowerpot, you get a replica of the tallest tree, only inches tall. There is nothing wrong with the seed you planted, only the soil-base that is too inadequate.”
Crack open that flowerpot, he says, and poverty will soon be a thing of the past, unleashing enormous energy and creativity of the poor.
Yunus cracked his first pot some thirty years ago.
“I found it difficult to teach elegant theories of economics in the university classroom, in the backdrop of a terrible famine in Bangladesh,” he recalls. “Suddenly, I felt the emptiness of those theories in the face of crushing hunger and poverty. I wanted to do something immediate to help people around me, even if it was just one human being, to get through another day with a little more ease.”
Yunus’ first step, dishing out $27 to pay off the loans of 42 victims of local moneylenders, generated such gratitude he decided to aim higher.
After struggling for years to involve banks in providing collateral free loans for the poor, Yunus created Grameen (Village) Bank in 1983. Grameen was the first bank to lend money on the honor system.
By 2006, Grameen had loaned $5.7 billion to the poor, with a default rate less than 1.5% and was working with 250 institutions in 100 countries. The bank has made education loans a priority and has provided funding for houses, a mobile phone business, and a chain of eye-care hospitals providing sliding scale cataract surgery.
Recently, Grameen teamed up with Danon Yogurt in a joint social business venture designed to address the poor health of malnourished Bangladeshi children.
Barefoot Engineers
India’s barefoot guru Bunker Roy was labeled an upstart last year when he blasted the United Nations’ Millennium Development Goals as “a recipe for disaster.”
In 2005, Roy’s Barefoot College invested $100,000 to bring ten semi-literate Afghans to India where they trained for six months to become barefoot solar engineers. They returned home with 120 solar units, enough to power five villages.
Compare that, Roy says, to the $250,000 cost to set up one Millennium Village.
Launched 30 years ago, Barefoot College is a successful model of decentralized discovery learning. Students - Roy affectionately calls them "washouts, copouts, and dropouts" - bring their experience and skill to bear on real life problems. Assisted by local mentors, they assume careers in rainwater harvesting, midwifery, education, health care, computer programming or solar engineering. No diplomas. No formal education.
The school is funded by income generated by the services it provides to over 1000 villages. In a 2003 report, UNESCO reported barefoot professionals have become confident enough to talk shop with professionally trained experts.
Barefoot’s Afghanistan project exemplifies the power of its model. Seven men and three women learned how to construct, install and repair solar units. One month after returning home, they brought power to 124 homes in five villages. Communities pay the engineers for ongoing repair and maintenance, collecting enough funds over five years to replace batteries.
To date, the ‘barefoot approach’ has brought solar power to 19 Ethiopian villages and over 500 villages in India. Two Cameroon women are currently in training.
At latest count, 1,000 Barefoot employees are working in 20 sites in India, with a client base of 500,000. The organization recently received $615,000 in seed money to expand its program in poor communities around the world.
2007 Social Capitalist Awards and The Fair Trade Cake
A Gourmet Chocolate Torte, the first ever Fair Trade Cake, landed California-based Rubicon Bakery at the top of Fast Company’s 2007 Top 20 Social Capitalists list.
Rubicon, in partnership with TransFair USA - the only third-party certifier of Fair Trade products for the U.S – introduced the first Fair Trade Certified™ cake in grocery stores last November.
Since 2004, Fast Company has worked with the global consulting firm Monitor Group to identify organizations that are most successfully using corporate tactics to reshape the reality of the global economy. Rubicon, who has made the list every year, shares this honor with such diverse winners as Kickstart, SEED Foundation, Calvert Social Investment Foundation, TransFair USA, Grameen Foundation and WITNESS.
"Our Social Capitalist Awards winners have forged partnerships that blur commerce and charity, challenging our assumptions about making a profit and making a difference," said Mark Vamos, editor of Fast Company. "Their alliances help big business bring conscience to commerce, changing old-style capitalism as we know it."
Rubicon’s bakery sales help over 35,000 marginalized people find jobs, housing and training.
Tomorrow’s World
NYU’s Professor Hart predicts a process of ‘creative destruction’ in the global marketplace. A new breed of stakeholders and social entrepreneurs are using “beyond greening” strategies and tapping into undeveloped markets with emerging technologies.
“Capitalism cannot afford to ignore sustainability,” he says, “
Green believes social businesses sorely need assistance in attracting investment in social enterprises. And Dr. Yunus says he has the answer. He is calling for the creation of a social stock market.
His visionary market is only open to those interested in owning and trading shares in social businesses. Participating investors match their money to a mission, maintain the investment and feed dividends back into their chosen projects. Needless to say, the market would need a social business version of the Wall Street Journal.
Yunus likes to compare globalization to a hundred-lane highway criss-crossing the world. New rules are needed to ensure the poor have equal access to the fast tracks. He has no problem maneuvering through the traffic generated by transnational trucks … so long as his rickshaws aren’t jostled off the road.
-end-
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Hi boatsie,
I read your article. Lots of facts. I thought you might be interested to read something I wrote about alternative economy. This is the link. http://whateconomics.blogspot.com/ Every comment, different viewpoint or thought are much appreciated. Thanks and Greetings, Octavee |
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This article is a work in process. As yet, I have not conducted requisite interviews. Posting here in event 'someone' stops by with some ideas.
boatsie |
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but im doing a lot of research in evolutionary psycology and quantum mechanics ... read this latest article by steven pinker on 'the moral instinct' http://www.nytimes.com/2008/01/13/magazine/13Psychology-t.html
what do you think? kind of a tie-in to the 'selfish gene' concept and the innate instinct for dominance/power ... kinda think that is becoming non adaptive (thus declining fertility rates, domination over reproduction and extinction means we have 'obsoleted' ourselves ..
dunno, i like your ideas and your references ... but i don't know about the idea of not being able to create a system within a system ... like in a parallel universe? how can we escape the system?