Social Enterprise Versus Socialism

Socialists - proper socialists that is - cannot get comfortable with markets. Unlike Peter Mandelson, socialists are definitely not relaxed about people getting filthy rich. Capitalism is tremendously wasteful, inefficient, exploitative, chaotic, divisive and unjust. So yes, unlike the establishment, we socialists take a pretty dim view of business. Therefore on Wednesday when I attended a presentation on "social enterprise" - an idea that counts Gordon Brown and David Cameron among its fans - it was with a generous dollop of cynicism. My sceptical countenance wasn't helped by the blurb that went round on the email before hand. Our speaker was social enterprise guru, Geoff Cox, who lists among his achievements consultation work over the contracting out of NHS services. So, hopes were not very high. But pleasingly what followed was more interesting and thought-provoking than I expected, and it got me thinking about what it means for socialist politics.

The presentation proper began with a definition of what 'social enterprise' means. It is not the same as corprorate responsibility. This for Cox is a bolt-on extra to the basic business operation and is often designed to legitimate or gloss over commercial activities. Social enterprises on the other hand start out with a social justice objective and build a business to meet that goal. Organisations of this type, for Cox, include Jamie Oliver's restaurants, Cafe Direct, and the Eden Project - you could also include outfits like radical bookshops and the printing presses developed by left groups too.

For Cox there are a number of reasons why social enterprises have grown in recent years and are likely to remain a permanent feature of the economic landscape. He started off with the ideological effects of the collapse of bureaucratically planned economies in Eastern Europe and the USSR, which opened the floodgates for market fundamentalism. In the Global South state-led developmental economics quickly fell out of favour and neoliberalism took root (in many cases, this "fashion" was foisted on countries by the IMF and World Bank). In the West it combined with existing cuts in social provision and undermined the legitimacy of the welfare state itself. In a political climate where the state was seen as a cure marginally less deadly than the illness, policy makers and entrepreneurs began to wonder if the market could be harnessed to realise welfarist objectives.

Second, Marx's analysis and critique of commodity fetishism identifies how capitalism renders relations between people as relations between things, and captures the essence of the experience of modern consumerism. For example when we go shopping in a supermarket, we are confronted with an array of colourfully labelled and branded jars and packets - to the buyer they are simply objects to be purchased and consumed. But for Cox this experience is increasingly at odds with the contemporary zeitgeist. We live in a society whose media is dominated by "human interest" - whether waxing about the lives of no-mark celebrities or thundering against the immorality of the dangerous classes - it is a discursive problematic that permeates the social fabric. Social enterprises have successfully tapped into the part of this culture that seeks to re-humanise the world. Fair trade, Cox argues, breaks down the fetishistic relation between consumer and producer. Buying Cafe Direct, for example, allows the consumer to feel satisfaction knowing the premium paid will provide a living wage for the farmers. If you like, it is consumerism without reification.

Capital has responded to this cultural shift too with the emergence of large ethical investment funds. There is generally a lower return than traditional funds but profit is not the primary concern of investors - it is secondary to whatever social development goals this capital is put to.

Then there is technology. The development of the internet has made the discovery of commodity "biographies" much easier, and this combined with high profile exposures by the likes of Naomi Klein have driven the adoption of corporate responsibility. But this is not all. The medium has provided a new arena for social enterprise in the form of open source software, and it is slowly but surely expanding its influence. For example, as of January 2009 70 per cent of internet browsing used Microsoft's Internet Explorer as compared 21 per cent share for Firefox. But the year before the figures stood at 77 and 16 per cent respectively. If the trends continue at the present rate within four years Microsoft will lose its market dominance to a rival that is free, commonly owned and collectively produced.

Lastly, the general business culture particular to the sector could attract more capital to fuel further social enterprise growth. In the space of 18 months the global economy has gone from a historical high point for capital to a grim future of market failure and recession. It is reasonable for elites to wonder if the crisis partly derives from the fundamentalist conceit of traditional business models. Commercial and political elites, as well as a new generation of entrepreneurs that once embraced neoliberalism may now be asking themselves if that really was the best way to do business.

Cox then re-visited Cafe Direct as an example of a particularly successful social enterprise. The basic business model is premised on two principles: it pays growers a guaranteed price; and provides a secure market for their crops. Because of its success not only has Cafe Direct outperformed other developmental charities but crucially for the market fundamentalists, it has proven more efficient than the for-profit operations of bloated multinationals. For Cox it demonstrates that "doing the right thing is good for business".

This is all the more remarkable when you consider social enterprises begin trading with higher start-up costs. Another of Cox's favourite firms is Cardiff's Pack-IT Group. Originally starting out as a project spun out of the city's social services department to provide jobs for disabled service users, over 20 years it has expanded into a successful packing and warehousing operation. It has given employment to a group of people for whom finding work would otherwise be difficult. But that's not all - its workers each receive a living wage and the firm is able to post healthy profits, ticking the social and the enterprise boxes. For Cox the secret of its success lies in the labour process, which is diametrically opposite to the received wisdom of one-size-fits-all. Instead Pack-IT works intensively with each employee to mould its operation around them. This enabling culture breaks with the police state-like conditions typical of many workplaces and makes it more productive than its commercial rivals.

Is social enterprise the answer then? Should socialists wind up our organisations, stop faffing about in the labour movement and sink the old fighting fund into businesses instead?

No. Socialism is more democratic, participatory and planned than capitalism can hope to be. It is also a society that can only come through the activity of a global working class conscious of its independent interests and objectives. Anything short of this - be they Keynesian welfarism of the West or the bureaucratic planning of the East, or business with social as opposed to commercial bottom lines - cannot be socialism.

Social enterprises are problematic from this standpoint. Yes, accepting Cox's examples at face value, it is laudable and welcome that good work has been done and lives have been transformed for the better. But in this regard it is akin to guerilla Fabianism. The crucial difference between social objectives performed through commercial activity and reforms won by workers through old-fashioned struggle is that our class grows in confidence and experience, and enters the next round of confrontations a more powerful collective. Social enterprise does not differ from Fabian programmes of reform - both bypass the workers and do not directly strengthen its power. (This of course does not rule out the possibility such outcomes could provide a more favourable context for class struggle).

Like all firms, social enterprises have to operate in a market and as such are dependent on its vagaries. Cafe Direct, for example, is now facing stiffer competition from the multinationals as they introduce their own fair trade-type brands. Couple this with the economic crisis and its knock-on effect - declining purchasing power of workers and middling layers, the social objective is in trouble. The relationship this kind of ethical consumption has established is a commodified and stilted imitation of the associated production we can expect in a socialist society. Instead we have a dependency-charity relation, one in which third world farmers are forced to rely on the kindness of strangers.

Then there is welfarism. I suspect Brown and Cameron are keen on social enterprises because they can theoretically achieve welfare outcomes. For the Tories especially, the success of social enterprise in this sector reconfirms their commitment to private welfare provision. It presents an opportunity to ideologically undermine the idea society has a collective responsibility to its citizens in times of need - and of course it bolsters the 'small state' arguments, which are sure to make a comeback when the crisis and the Keynesian moment has passed. But for all the establishment arguments around welfare dependency, having social enterprises, not the state, delivering services does not fundamentally alter the passive relationship the client has with service provider.

And lastly, how about the issue of power? Cox made clear the unifying principle of social enterprise is putting the social before the commercial, but a myriad of organisational forms and models can realise these objectives. There's nothing essential about the sector that would exclude charities, "political" business, co-ops, private concerns, etc. But part of the problem is, essentially, deciding for the lower orders what is best for them.

But socialists need not be churlish about social enterprise. There are ways it can assist our political project beyond licking the left's collection of presses, publishers and bookshops with a trendy gloss. Simply put it could help create a more favourable ideological climate for socialist ideas, and this is how. Because social enterprise legitimates the subordination of the economic to social needs, the more they grow, the more government policy favours them, the more they provide us with fuel for the socialist fire. If a social enterprise can be commercially viable and meet its goals, why can't the same be expected of other businesses? If a social enterprise can pay its staff a living wage, why can't other businesses? If an enterprise achieves its outcomes on the basis of common ownership and cooperative, collective production, why not others? And so on.

I may have a less rosy view of social enterprise than Cox, but despite the crisis, I am in fundamental agreement with him that the sector is likely to weather the tempest and emerge out the other side. Social enterprises are something socialists are going to have to get used to and deal with seriously. We can be wary of the dangers they represent but we must not allow our criticisms blind us to the opportunities that may arise.