Finally, the conservative push in the social enterprise movement encourages self-regulation and deregulation in the economy

Whither social enterprise ?

In 2013, social enterprise advocates found a new ally to burnish their credentials as economic and political progressives—America’s most famous right wing radio talk show host, Rush Limbaugh. “Now we’re going to reward businesses that do not make a profit if someone approves of their social mission,” Rush bellowed, in reaction to the rise of so-called “L3Cs” or “Low Profit Limited Liability Corporations. “This is designed to pervert capitalism.”
About time too—if like me you’re one of the ‘perverts’ intent on transforming our disastrously unequal and unsustainable economic systems. That’s what ‘social enterprises’ like L3Cs are intended to accomplish, by replacing conventional businesses with radically different institutions. These institutions are designed to attack social and environmental problems though the market—not exactly ‘flavor of the month’ for Limbaugh and his allies.
In fact one year after he broadcast his rant, the North Carolina State Legislature repealed its own L3C legislation and rejected a bill to authorize “benefit corporations” (another form of social enterprise). The reason? “Web chatter” cited by some Republican state legislators to show that these innovations are part of a “socialist plot” tied to the “United Nations Sustainability agenda.”
Only in the United States would a movement predicated on the ability of capitalist enterprise to solve social problems be viewed as a ‘socialist plot.’ But behind the hysteria there’s something more interesting going on: a struggle for the soul of social enterprise between progressives and conservatives. Despite developments on the air waves and in states like North Carolina, social enterprise has enjoyed a recent boom in support on the right of American politics.
This movement is especially strong in conservative think tanks and among younger, millennial-focused Republican legislators like Illinois Representative Aaron Schock (who recently resigned from Congress amid charges of misspending public funds), and Indiana’s Todd Young—the cosponsor of Congressional legislation on ‘social impact bonds’ (another way of drawing business into the provision of public services in return for a profit if the venture is successful).
There have always been tensions in the social enterprise community between ‘reformers’ and ‘transformers,’ with the balance between social and financial criteria shifting one way or the other. But what’s happening now is a more deliberate attempt to move the debate in a more conservative direction—which begs a crucial question: is social enterprise the harbinger of progressive change in the economy, or the soft edge of efforts to conserve the legitimacy of capitalism in its current form with a few marginal adjustments?
The first issue in this debate concerns the ‘negative externalities’ that result from all economic activity, notably increased pollution and natural resource extraction that stem from rising consumption and production. In the conservative reading of social enterprise, the problem of capitalism isn’t its externalities, but the business focus on an attachment to ‘abundance.’  That’sthe argument of Arthur Brooks, for example, the economist who leads theAmerican Enterprise Institute, one of Washington’s leading conservative think tanks.
According to Brooks, the world’s progress is due to globalized capitalism, but capitalism has gone a little off the rails by focusing on the accumulation of things, rather than on helping everyone to be—or at least feel—‘entrepreneurial.’ So encouraging more ‘social entrepreneurs’ is the answer to this problem. By being simultaneously more entrepreneurial and less attached to abundance, fewer negative externalities will be created. And that means there’s no need to transform the economic system through a more radical redesign.
Secondly, whenever social enterprises grow to a scale where they can make substantial profits, they tend to be acquired by larger corporations—Ben & Jerry’s ice cream by Unilever (#113 on the 2015 Forbes Global 2000 of the world’s biggest public companies), the Body Shop by L’Oreal (#178), Tom’s of Maine by Colgate-Palmolive (#445), Odwalla juices by Coca-Cola (#93), Stonyfield Farms yogurt by Danone (#285), and Boca Burger by Kraft Foods (#410).
As soon as new institutions grow to a scale at which they might influence the economy on a systemic level, they are snaffled up by more conventional firms which have no interest in deeper transformation. For conservatives however, the absorption of social enterprises by larger corporations isn’t a problem, it’s an advantage: these behemoths are seen as more attentive to social and environmental issues through their acquisitions without having to alter their core business.
Third, there’s the issue of whether social enterprise—at least in the hands of conservatives—acts as a justification to increase still further the influence of business in society. In the United States, one of the most active philanthropic foundations promoting social enterprise is the Case Foundation, established by the co-founder and former chief executive officer of America Online (AOL)—Steve Case—and his wife Jean.  Both regularly argue that business has somehow been excluded by government and the nonprofit sector from solving social problems, kept on the “sidelines,” and deprived of a “seat at the table.”
It is difficult to imagine which ‘table’ for problem-solving isn’t designed, built, and largely owned by the business sector, at least in America. The nation’s decision-makers are awash in corporate campaign contributions, and the nonprofit sector is frequently beholden to corporate philanthropy.  But by emphasizing the social benefits of new forms of enterprise it’s easier to sell an even bigger role for business.
Fourth, much of the enthusiasm for social enterprise downgrades the contributions of organized labor in ‘civilizing’ the economy. The people who brought you the concept of the weekend and much else besides—labor unions—don’t get much of a nod.  In fact conservatives see unions as a hindrance to the success of social enterprise, and collective bargaining isn’t recognized as relevant for these new forms of institution.
In the US, an organization called B-Lab certifies social enterprises as “B Corporations” in a process akin to Fair Trade certification for coffee. On labor issues, the B-Lab’s assessment criteria include job growth, health insurance, and other benefits, but the notion that employees might benefit from having a collective voice to argue for their interests is nowhere on the list.
Finally, the conservative push in the social enterprise movement encourages self-regulation and deregulation in the economy. Those states that have authorized and validated L3Cs, for example, require little by way of application material, and virtually nothing in terms of annual reporting. For benefit corporations, government requires little or no disclosure of financial transactions. Such corporations turn to purportedly disinterested third-party evaluators to verify their social benefits, but these reviews are conducted largely without government involvement and verification.
Because social enterprises are not tax-exempt entities, they are freed from the kinds of regulation that nonprofits have to endure. Conservative supporters seem to believe that operating in the market will make them automatically more accountable than any form of public or democratic oversight. And as Erik Trojian, B-Lab’s director of policy noted at a recent Georgetown Law School conference, “If we start to overregulate this form, we’re going to see no one going into [the creation of benefit corporations]” in the first place.
Like any good corporate lobbyist, these advocates argue that regulation is important and necessary for others, but not for them.
Boosting the image of business, suggesting that capitalism can and will solve the problems that its own behavior creates, telling workers that they don’t need labor unions, and calling for limited regulation—these are common elements in the conservative interpretation of what social enterprise means, at least in the U.S. It’s a recipe that reads like the agenda of many business trade associations, except that social enterprises say that they will operate to solve social and environmental problems.
“It’s time to invite them in,” says Jean Case, and many states are doing exactly that. On April 1st 2015, Republican state representative Chuck McGrady introduced a new bill in the North Carolina Legislature to authorize socially conscious benefit corporations and override the legislature’s rejection of his own benefit corporation bill two years earlier. Perhaps this time around, Rush Limbaugh will see social enterprise as comfortably ensconced in a right wing economic and political agenda.
    Alochonaa.com

 

 

Finally, the conservative push in the social enterprise movement encourages self-regulation and deregulation in the economy

Whither social enterprise ?

In 2013, social enterprise advocates found a new ally to burnish their credentials as economic and political progressivesAmericas most famous right wing radio talk show host, Rush Limbaugh. Now were going to reward businesses that do not make a profit if someone approves of their social mission, Rush bellowed, in reaction to the rise of so-called L3Cs or Low Profit Limited Liability Corporations. This is designed to pervert capitalism. About time tooif like me youre one of the perverts intent on transforming our disastrously unequal and unsustainable economic systems. Thats what social enterprises like L3Cs are intended to accomplish, by replacing conventional businesses with radically different institutions. These institutions are designed to attack social and environmental problems though the marketnot exactly flavor of the month for Limbaugh and his allies. In fact one year after he broadcast his rant, the North Carolina State Legislature repealed its own L3C legislation and rejected a bill to authorize benefit corporations (another form of social enterprise). The reason? Web chatter cited by some Republican state legislators to show that these innovations are part of a socialist plot tied to the United Nations Sustainability agenda. Only in the United States would a movement predicated on the ability of capitalist enterprise to solve social problems be viewed as a socialist plot. But behind the hysteria theres something more interesting going on: a struggle for the soul of social enterprise between progressives and conservatives. Despite developments on the air waves and in states like North Carolina, social enterprise has enjoyed a recent boom in support on the right of American politics. This movement is especially strong in conservative think tanks and among younger, millennial-focused Republican legislators like Illinois Representative Aaron Schock (who recently resigned from Congress amid charges of misspending public funds), and Indianas Todd Youngthe cosponsor of Congressional legislation on social impact bonds (another way of drawing business into the provision of public services in return for a profit if the venture is successful). There have always been tensions in the social enterprise community between reformers and transformers, with the balance between social and financial criteria shifting one way or the other. But whats happening now is a more deliberate attempt to move the debate in a more conservative directionwhich begs a crucial question: is social enterprise the harbinger of progressive change in the economy, or the soft edge of efforts to conserve the legitimacy of capitalism in its current form with a few marginal adjustments? The first issue in this debate concerns the negative externalities that result from all economic activity, notably increased pollution and natural resource extraction that stem from rising consumption and production. In the conservative reading of social enterprise, the problem of capitalism isnt its externalities, but the business focus on an attachment to abundance. Thatsthe argument of Arthur Brooks, for example, the economist who leads theAmerican Enterprise Institute, one of Washingtons leading conservative think tanks. According to Brooks, the worlds progress is due to globalized capitalism, but capitalism has gone a little off the rails by focusing on the accumulation of things, rather than on helping everyone to beor at least feelentrepreneurial. So encouraging more social entrepreneurs is the answer to this problem. By being simultaneously more entrepreneurial and less attached to abundance, fewer negative externalities will be created. And that means theres no need to transform the economic system through a more radical redesign. Secondly, whenever social enterprises grow to a scale where they can make substantial profits, they tend to be acquired by larger corporationsBen Jerrys ice cream by Unilever (#113 on the 2015 Forbes Global 2000 of the worlds biggest public companies), the Body Shop by LOreal (#178), Toms of Maine by Colgate-Palmolive (#445), Odwalla juices by Coca-Cola (#93), Stonyfield Farms yogurt by Danone (#285), and Boca Burger by Kraft Foods (#410). As soon as new institutions grow to a scale at which they might influence the economy on a systemic level, they are snaffled up by more conventional firms which have no interest in deeper transformation. For conservatives however, the absorption of social enterprises by larger corporations isnt a problem, its an advantage: these behemoths are seen as more attentive to social and environmental issues through their acquisitions without having to alter their core business. Third, theres the issue of whether social enterpriseat least in the hands of conservativesacts as a justification to increase still further the influence of business in society. In the United States, one of the most active philanthropic foundations promoting social enterprise is the Case Foundation, established by the co-founder and former chief executive officer of America Online (AOL)Steve Caseand his wife Jean. Both regularly argue that business has somehow been excluded by government and the nonprofit sector from solving social problems, kept on the sidelines, and deprived of a seat at the table. It is difficult to imagine which table for problem-solving isnt designed, built, and largely owned by the business sector, at least in America. The nations decision-makers are awash in corporate campaign contributions, and the nonprofit sector is frequently beholden to corporate philanthropy. But by emphasizing the social benefits of new forms of enterprise its easier to sell an even bigger role for business. Fourth, much of the enthusiasm for social enterprise downgrades the contributions of organized labor in civilizing the economy. The people who brought you the concept of the weekend and much else besideslabor unionsdont get much of a nod. In fact conservatives see unions as a hindrance to the success of social enterprise, and collective bargaining isnt recognized as relevant for these new forms of institution. In the US, an organization called B-Lab certifies social enterprises as B Corporations in a process akin to Fair Trade certification for coffee. On labor issues, the B-Labs assessment criteria include job growth, health insurance, and other benefits, but the notion that employees might benefit from having a collective voice to argue for their interests is nowhere on the list. Finally, the conservative push in the social enterprise movement encourages self-regulation and deregulation in the economy. Those states that have authorized and validated L3Cs, for example, require little by way of application material, and virtually nothing in terms of annual reporting. For benefit corporations, government requires little or no disclosure of financial transactions. Such corporations turn to purportedly disinterested third-party evaluators to verify their social benefits, but these reviews are conducted largely without government involvement and verification. Because social enterprises are not tax-exempt entities, they are freed from the kinds of regulation that nonprofits have to endure. Conservative supporters seem to believe that operating in the market will make them automatically more accountable than any form of public or democratic oversight. And as Erik Trojian, B-Labs director of policy noted at a recent Georgetown Law School conference, If we start to overregulate this form, were going to see no one going into [the creation of benefit corporations] in the first place. Like any good corporate lobbyist, these advocates argue that regulation is important and necessary for others, but not for them. Boosting the image of business, suggesting that capitalism can and will solve the problems that its own behavior creates, telling workers that they dont need labor unions, and calling for limited regulationthese are common elements in the conservative interpretation of what social enterprise means, at least in the U.S. Its a recipe that reads like the agenda of many business trade associations, except that social enterprises say that they will operate to solve social and environmental problems. Its time to invite them in, says Jean Case, and many states are doing exactly that. On April 1st 2015, Republican state representative Chuck McGrady introduced a new bill in the North Carolina Legislature to authorize socially conscious benefit corporations and override the legislatures rejection of his own benefit corporation bill two years earlier. Perhaps this time around, Rush Limbaugh will see social enterprise as comfortably ensconced in a right wing economic and political agenda. Alochonaa.com