Viewpoint Is Not By Marshall Ganz, Tamara Kay & Jason Spicer

Stanford Social Review Spring 2018

Copyright  2018 by Leland Stanford Jr. University All Rights Reserved

Stanford Review www.ssir.org Email: [email protected] Stanford Social Innovation Review / Spring 2018 59

Second, they assert that the organiza- Social Enterprise Is tional form best suited to achieving social change is the entrepreneurial firm, offering Not Social Change organizational flexibility, efficient service delivery, and consumer choice between com- Solving systemic social problems takes people, politics, and peting services. SEE firms, however, compete power—not more social . not for “customers” but for private sector donors or “investors” on the promise that BY MARSHALL GANZ, TAMARA KAY & JASON SPICER they will satisfy the needs of their “end users” (beneficiaries) and “do good” by “doing well.” ocial enterprise and social power of democratic to over- Third, SEE promoters seek to minimize entrepreneurship (SEE)—a come resistance to structural social change. government. John Whitehead, a former Gold- -inspired approach to Successful examples of this approach include man Sachs chairman who funded Harvard’s Ssolving social problems—has the social movements that fought for aboli- Social Enterprise Initiative, was explicit: “I’m exploded across the and the tion, public , agrarian reform, labor always looking for opportunities to expand world in the last decade. It has entrenched rights, civil rights, women’s rights, and envi- the nonprofit sector of our economy to have itself within a broad spectrum of fields, from ronmental protection, in the United States nonprofits take over functions that are now economic development and urban plan- and elsewhere. performed by the government. ... [I]n the ning to and education policy. Since SEE’s incompatibility with collective, work of public schools, charter schools are the Harvard Business School established democratic political action is clear in the way an example of how the private sector can the first “Social Enterprise Initiative” 25 its proponents frame their approach. First, do it better, or nonprofits can do it better.” years ago, SEE has rooted itself in more than they claim that “heroic” individuals are the We are not suggesting that SEE never has 100 colleges and universities, anchored by key to broad social change. As explained in positive effects, but that its capacity to deal endowed chairs and new courses in elite the SEE organization Ashoka’s promotional with major social problems is woefully inad- universities such as Stanford, Yale, Penn, materials, “Just as entrepreneurs change the equate. The SEE approach turns over major Columbia, Duke, and the University of Cal- face of business, social entrepreneurs act as public policy domains to private sector orga- ifornia, Berkeley. These institutions have the change agents for society, seizing oppor- nizations, for-profit or nonprofit, replacing helped turn SEE into an industry, funded by tunities others miss to improve systems, democratic with market dis- $1.6 billion in grants since 2003. invent new approaches, and create solutions cipline. But doing so makes little sense when However, SEE has done little to solve to change society for the better.” addressing truly systemic social problems the systemic social problems it purports to such as economic, racial, or address, many of which have actually got- gender inequality; or health ten worse. In fact, SEE’s rise distracts from care, education, or criminal and undermines the critical role of an orga- justice. nized citizenry, political action, and dem- Entrepreneurial capital- ocratic government in achieving systemic ism relies on market-based social change, by offering itself as a private, competition among firms for market-based alternative. SEE is founded on customers and can reward neoliberal ideology: a belief that markets, innovation with economic not government, produce the best social success. No comparable and economic outcomes. SEE advocates consumer-based reward sys- construct social problems as knowledge prob- tem exists for SEE, mean- lems that can be solved by technical innova- ing that even successful SEE tion driven by competition among individual initiatives rarely scale up. social entrepreneurs, operating through In fact, effectively scaling for-profit, nonprofit, or hybrid enterprises. solutions to social problems In contrast, a political approach sees usually requires the kind of social problems as power problems. Dealing government engagement that with them requires collective political action SEE eschews. SEE as a field

ILLUSTRATION BY ROB WILSON ROB BY ILLUSTRATION by organized constituencies that use the has gotten to scale not from 60 Stanford Social Innovation Review / Spring 2018

MARSHALL GANZ is a senior lecturer in public policy at JASON SPICER is a PhD candidate in MIT’s Department of Harvard Kennedy School. Urban Studies and Planning.

TAMARA KAY is associate professor of global affairs and sociology in the Keough School of Global Affairs at the University of Notre Dame.

market success but by building a vast network limited resources meet the requirements of equitably, disincentivize carbon produc- of ideological support and funding for its proj- multilateral institutions such as the World tion, provide adequate urban housing and ects, including attracting talented college stu- Bank and the International Monetary Fund. transit, and control quality and dents and graduates. And yet SEE efforts—such as PlayPumps— cost. SEE fails to name, much less address, themselves remain partially dependent these core political problems. POPULARITY WITHOUT PROOF on public funding, tax-exempt foundation Funding for SEE proliferates in spite of stag- grants, and procurement contracts. RECLAIMING PUBLIC VOICE geringly little empirical evidence that it can Given SEE’s poor track record, what SEE’s construction of social problems as de- create meaningful social change. Unlike pub- accounts for its popularity? Its rise is linked riving from a lack of technical knowledge, lic sector organizations, whose interventions to the dramatic renegotiation of the rela- rather than from a power imbalance, has and actions are often identified and tracked, tionship between private wealth and public serious political implications. Economist SEE organizations are not subject to strin- power over the last 40 years. The consensus Albert Hirschman argued that in a system gent regulations and disclo- view of democratic capitalism that emerged undergoing dynamic change, members can, sures, and we find little evidence that they after World War II was that inequality of in return for loyalty to a shared purpose, use engage in rigorous assessments of their own wealth could only be moderated by equality their voice within the system to affect the impact, as many nonprofits do. The popu- of political voice among citizens. Democratic trajectory of its change, or they can exit the lar impact reporting and investment stan- government’s role was not as a “safety net” system in search of another that can better dards (IRIS) and social return on invest- for the unfortunate few, but as a publicly meet their needs. The SEE approach promotes ment (SROI) tools promoted by SEEs are not accountable institution that could advance both individual and collective exit from the based on rigorous research methods. Although the common good in domains as diverse public sphere in favor of private approaches to affiliates of EMES International Research as education, health care, research, and social problems. SEE thus rejects innovation Network have attempted to address some of national defense. It was the only mecha- in how to employ collective voice and gener- these concerns, the fundamental problems nism that could employ the rule of law to ate the social power needed to redirect public remain. rein in the power of private wealth. institutions to solve what are fundamentally In the absence of such disclosures or Since the 1980s, however, elites hostile political problems. In doing so, it undermines evaluations, most of SEE’s numerous fail- to constraints on private wealth have suc- citizens’ commitment to political engagement ures go unreported. Among the excep- ceeded in promoting a neoliberal ideology on which is based. tions, however, are two cases that do receive that rejects government as instrumental in In a democracy, creating social change wide attention: US charter schools overall solving social problems and instead casts it requires sustained interaction between the have not only failed to reduce educational as the source of most problems. In this view, state and a vigorous . SEEs, how- inequality but have been shown to increase efforts should focus not on improving how ever, redefine civil society as a space in which it—and yet significant financial support for democratic government functions, but on to create parallel, private institutions that them remains widespread. Internationally, replacing it with private sector groups. circumvent the state and citizens’ claims to a much-hyped South African company’s This minimization of government’s role its resources. Constructing the disadvan- effort, backed by US and UK SEE funders, undermines the power of ordinary citizens, taged as clients or customers, rather than cit- proposed to use children’s play on special democratic politics, and the deployment of izens, undermines development of an active, merry-go-rounds to pump water in African public resources to solve social problems. Cit- engaged citizenry that can use its voice to villages but proved poorly adapted to many izens become customers, and, in the absence participate in public institutions and demo- areas and inferior to existing solutions. Five of constraints on spending, politics becomes a cratic processes that reflect its will and needs. years after the project launched, PBS Front- form of marketing. As a result, organizing the Real change and equality that all citizens line found that many “PlayPumps” were citizenry to demand public solutions to pub- deserve, and that the public good requires, unused or broken, having diverted resources lic problems grows increasingly challenging. can be achieved only when citizens can effec- from broader water-access solutions. There are known solutions to most social tively use their political voice and do not exit SEE’s unimpressive track record in many problems; what is missing is the capacity to the public sphere. The neoliberal assault on such cases is ironic because its proponents put them to work. A global body of knowl- democratic government creates an oppor- cite government programs’ lack of account- edge exists on how to reduce inequality, tunity to renew our democracy—if we can ability and efficacy as justification for promot- educate children, address climate change, put aside distractions like SEE, step up, and ing SEE in government’s place. In developing improve our cities, and make decent health join our fellow citizens to do the educating, countries, the SEE model aspires to help dys- care available to all. Absent is the political organizing, and mobilizing that are needed to

functional postcolonial with will to restore labor rights, fund schools reclaim the power of public voice. n WILSON ROB BY ILLUSTRATION