Food For Thought - ‘Do you believe in Social Justice or in the Social Entrepreneur?’

Outline for working paper, London October 2009.
By Natalia Gunther

The current crisis will force us to rethink not only the architecture of International Economic Co-operation and Aid Policy, more than that it forces us to generally rethink Consumerism. Consumerism in the wider sense of consuming goods and services, those basic ones you need for surviving, mentioning here just food, water, air and energy, and on the other hand all current available consumer goods and services which are on offer in the so called developed world. When one talks about consumerism and puts it in relation to equal access to basic goods and services for human development, this leads us to rethink fundamental matters of Social Justice. Having in mind the real gap in Social Justice in terms of equal access worldwide, the idea of the Social Entrepreneur or better Social Entrepreneurship evolved over the last decades and is now seen as a remarkable business model for the 21st century.

Now, bringing these to conceptions together: Does the notion of Social Entrepreneurship replace the one of Social Justice? Does it promote it?

In this context there has recently been published an interesting article at IFRTD’s news site on India’s massive reform plans by demanding an extreme increase in foreign investment. It invites foreign supermarket chains to help modernise the system. In the centre of this articulated interest stands the aspiration to boost rural incomes and to stop so much Indian farm produce rotting on the road to market (approximately 50%). Big companies such as British Tesco are likely to play a key role in the food distribution and retail system there by opening their own stores, introducing modern ‘cold-chain’ transport and promoting the building of new high-speed links, freight corridors and modern stations over the next decade. It is predicted that India will replace China as the world’s fastest growing economy next year. Economic reform is needed for India.

One may ask – is Tesco maybe a social entrepreneur now? Of course not as it is a for-profit organisation which applies business practices not to solving the world’s problems but to accumulate wealth. But entering a new region as an investor and promoter for sustainable Economic Development makes it possible to consider it as a sort of maybe. The real question is how far an intervention such as this influences social development in a relatively unequal society like India by playing a key role in the organisational process of food distribution? At the same time significant changes in consumer behaviour are expected with its presence. Will this form of foreign direct investment, in the long term bring consumer access to formerly disadvantaged, maybe excluded groups? Is a faster transport link likely to spread entrepreneurial behaviour and a positive, encouraging dynamic? And finally, does that kind of intervention in India’s economic growth process go along with more social justice in the future?

This approach has perhaps the potential to come closer to being a facilitator of social justice in the long term than much of conventionally known action, by simply combining business methods to contribute to solving social or societal problems. Apart from the fact that this big supermarket enterprise Tesco itself is not a social entrepreneur per se, it illustrates problem solving ways with a prospective impact for India’s rural development. Innovation generating direct investment activity usually provokes networks of organizations and enterprises to cluster around it. In this sense, it brings a diversity of new opportunities not just to the social entrepreneur but also to the entrepreneur with a developed social responsibility.

Crossing the ocean from emerging India to the developing Andean community in South America as another illustration, let’s take Ecuador as an example. A democratically highly unstable and socially unequal country that rejects any potential investment prospects which could be helpful to create a trust promoting environment for regional activities. It invites foreign organisations, mostly public ones, to help modernise the system, but keeps stacked on the idea that exclusively public enterprises and community organisations should be or are ‘the driver’ for a socially balanced and inclusive long-run development. Wealth accumulating organisations or enterprises are widely perceived as friends of the elites, those who have been exploiting the region for so many decades now. This would be of course be exactly the reason why creating a trust promoting environment for public-private joint venture activities in the region is so important. A few cautious steps into this direction have been made by accepting direct investment from the indigenous community living abroad, mostly in the US.

This approach has the advantage that it supports productive rural community initiatives directly and thereby promotes a sense of social entrepreneurship. These initiatives tend to be, on the other hand, often detached from more structural economic development approaches. Take for example the fabrication of artisan products for internal and external markets: Big efforts have been made over recent years to boost rural incomes by optimising local and regional supply chains for clothes, mainly wool products. There are no big brand companies there, neither national nor international ones, which play any important role in the wool distribution and retail system. Many products lack the minimum quality standards as a requirement for export (promotion). Traditionally there are a few centres across the region, well known for selling wool clothes.

Nonetheless this market shows a significant exclusion and waste of resources for simply not making the optimal use of potential regional providers. The socially highly deteriorated society would just now need a regional policy that facilitates trust promoting joint ventures, led by a selection of Tesco style big market enterprises with a spirit of social responsibility. The idea of community based, social enterprises is widespread in the Andean Region while at the same time the current political and socio economic systems are characterised by high levels of social injustice.

Closing the gap, going one step back and asking if the notion of Social Entrepreneurship replaces the one of Social Justice, one may conclude that the conception of Social Entrepreneurship does not replaces the one of Social Justice nor necessarily promote it. Second, foreign direct investments which target wealth accumulation can stimulate an example driven entrepreneurial spirit and facilitate new dynamics which help to develop or harmonize the regional production, distribution and retail system in the mid to long term. Third, rethinking consumerism and the promotion of equal access to basic goods and services for human development worldwide may make it necessary more than ever to incorporate the Social Entrepreneur and the Entrepreneur with Social Responsibility into the architecture of International Development Co-operation.