Contrary to the best instincts of many, our economic system has been dom­inated by a system which measures value creation in only one dimension — financial impact, profit and loss.

We are surrounded by the orthodoxy of risk aversion, but social entre­preneurs challenge orthodoxies, take risks and persevere. 2006 Nobel Prize Winner Muhammad Yunus took a risk when he started the Grameen Bank giving micro-loans to the poorest Bangladeshi villagers – primarily women who traditional bankers said would never repay the loans.

The term “social entrepreneur” does not trip off the tongue lightly. Its asso­ciated entity, the “social enterprise”, is not commonly understood here either. In Australia we usually associate entrepreneurs with business — and then often with a tarnished sneer. This is unfortunate, because applying the best of the entrepreneurial spirit to enterprises and activities of direct benefit to commu­nities has tremendous potential to unleash innovation, solve problems and improve the quality of life for many thousands of people here and abroad.

It starts with an understanding of the role and character traits of a traditional entrepreneur like Sir Richard Branson — highly motivated, original think­ers and pragmatists who want to do things and are not constrained by the limits of old ways of thinking. The next step is to add a social/environmental aspiration to the business’s core purpose, as distinct from the economic purpose of maximising shareholder wealth. This combination produces a marriage of entrepreneurial drive and social mission which leads to the creation of social businesses or ventures.

In a speech to the Skoll World Forum in 2006, Jeff Skoll, co-founder of eBay and through his eponymous foundation, the Skoll Centre for Social Entrepre­neurship at Oxford University, said that social entrepreneurs are rebelling against one of the worst ideas that has ever gripped mankind — that the prob­lems that surround us are so big that ordinary men and women can’t make a difference.

From his experience Skoll argues that social entrepreneurs see these problems as a call to action rather than a cause for despair: “Some chari­ties give people food. Some teach farmers to grow food. Social entrepreneurs have to teach the farmer to grow food, how to make money, turn it back over to the farm and hire ten more people. They’re not satisfied until they have trans­formed the entire food industry.”

This encapsulates the difference between the nascent social enterprise space and the traditional third sector in Australia. There is still a narrow, welfare-oriented focus on creating employment as a tool of social inclusion. The contrasting model of large scale systemic change with a market orienta­tion is happening around the globe, but is neither significantly embraced nor enabled here. This new model fosters the creation of employment, with jobs designed to address social and community problems, and owned by those directly involved. These jobs are qualitatively different from those produced as a result of private sector expansion or government stimulus.

Social market failure is not confined to one sector of the economy, or any one country. It can be seen in government inefficiencies in public service delivery, the rise of corporate power, and the retreat of the state in the face of free-market ideology. Australian social market failures include the lack of afford­able housing and rental accommodation for those on low incomes, access to fair finance, affordable child care, real employment opportunities for Indige­nous Australians, the proliferation of oil-based plastics in landfill and barriers to the use of renewable power. As a nation which prides itself on its techno­logically inspired innovative public policy genius, where is our Muhammad Yunus, or Jeff Skoll, the socially innovative genius who has the capacity to inspire and transform?

There is clearly a need to invest in technological innovation, but there is also a need to invest in social creativ­ity. Australia needs the leadership to provoke and enable us to move beyond Hills Hoists, wine cask bladders, Victa lawnmowers and Speedos to the “Social Silicon Valleys” — the places and institutions that will mobilise resources and energies to tackle social problems in ways that are comparable to the invest­ments in technology made in the first Silicon Valley and its equivalents around the world.

Since its election the Rudd Government has given policy priority to consultation with the third sector on a National Compact (‘to develop effective relationships between Government and the sector to build social inclusion’), an inquiry into disclosure regimes for charities and not-for-profit organisa­tions and a reference to the Productivity Commission “to construct a new tool to measure the contribution of third-sector organisations to our economy as the starting point for maximising the sector’s contribution to social inclusion, employment and economic growth.”

This is a disappointingly technocratic response. By all means let’s continue to collect evidence to inform policy choices, but isn’t a twenty-first century Aus­tralian government capable of multi-tasking, and forging ahead with what we already know from international best practice?

I find it enormously disappointing that, with an “investment bank” of over $51 billion and growing, the Rudd government with its ‘Long Term Nation Building Investments’ (buildings, computers, physical infrastructure) has failed to grasp the enormous potential of this generational opportunity to invest meaning­fully in transformative social infrastructure. How about a $500 million Social Investment Fund with matched funding from social investors? Perhaps that matched funding could come from a marshalling of the existing collective cor­porate social responsibility dollars into a consortia fund for the purpose of huge systemic impact?

It is important that Australia not be missing in action from this global rev­olution. What is clear is that governments need to enable a supportive policy and fiscal environment as a catalyst for change and as an investor in solu­tions that work.

From its election in 1997, the British government under Tony Blair, and continuing under Gordon Brown, has enthusiastically embraced the opportunity for social enterprises to contribute to Labour’s policy goals of a fairer, more just society by meeting unmet social needs, addressing environmental challenges, encouraging ethical markets and raising the bar for corporate responsibility. Gordon Brown when he was Chancellor of the Exchequer said:

Today, corporate social responsibility goes far beyond the old philanthropy of the past — donating money to good causes at the end of the financial year — and is instead a year round responsibility that compa­nies accept for the environment around them, for the best working practices, for their engagement in their local communities and for their recognition that brand names depend not only on quality, price and uniqueness but on how, cumulatively, they interact with companies’ workforce, community and environment.

Now we need to move towards a challenging measure of corporate responsibility, where we judge results not just by the input but by its outcomes: the difference we make to the world in which we live, and the contribution we make to poverty reduction.

Is our vision as comprehensive as this?

Cheryl Kernot is the director of teaching and learning at the Centre for Social Impact, a collaboration of the business schools of the universities of New South Wales, Melbourne and Swinburne.

This is an edited extract from an essay which first appeared in Griffith REVIEW 24: Participation Society (ABC Books) .

Peter Fray

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