Social entrepreneurship, social movements and capitalism

Do the social entrepreneurship and social movements serve as solution for the mistakes that were created from capitalism as a system?

The purpose of this paper is to start an analysis of three factors: capitalism, social entrepreneurship and social movements and after establishing their relations examining whether social movements and social entrepreneurship act as a reparative for system malfunction.

CAPITALISM

To start answering our questions we have to go back to the basics of defining terms and correlations. Definitions from encyclopaedias see capitalism as:

● Encyclopaedia Britannica: "capitalism, also called free market economy, or free enterprise economy: economic system, dominant in the Western world since the breakup of feudalism, in which most of the means of production are privately owned and production is guided and income distributed largely through the operation of markets."

● Encyclopaedia of Marxism: "The socio-economic system where social relations are based on commodities for exchange, in particular private ownership of the means of production and on the exploitation of wage labour. Wage labour is the labour process in capitalist society: the owners of the means of production (the bourgeoisie) buy the labour power of those who do not own the means of production (the proletariat), and use it to increase the value of their property (capital)."

One of the greatest opponents of capitalism Karl Marx argues, that capitalism is distinctive, in that it involves not merely the exchange of commodities, but the advancement of capital, in the form of money, with the purpose of generating profit through the purchase of commodities and their transformation into other commodities which can command a higher price, and thus yield a profit. Marx claims that no previous theorist has been able adequately to explain how capitalism as a whole can make a profit. Marx's own solution relies on the idea of exploitation of the worker. On the other side we have the sociologist Max Weber, who in The Protestant Ethic and the Spirit of Capitalism stresses out: "We will define a capitalistic economic action as one which rests on the expectation of profit by the utilization of opportunities for exchange, that is on (formally) peaceful chances of profit...Unlimited greed for gain is not in the least identical with capitalism, and is still less its spirit. Capitalism may even be identical with the restraint, or at least a rational tempering, of this irrational impulse. But capitalism is identical with the pursuit of profit, and forever renewed profit, by means of conscious, rational, capitalistic enterprise."To go a century forward to these days, we will focus our attention on Muhammad Yunus, Nobel Peace Prize winner and microfinance pioneer thoughts on entrepreneurship and relate them to the previous definition of Marx about capitalism, and his explanation how profit is made: All human beings are entrepreneurs. When we were in the caves, we were all self-employed … finding our food, feeding ourselves. That’s where human history began. As civilization came, we suppressed it. We became “labour” because they stamped us, “You are labour.” We forgot that we are entrepreneurs. As we can see the link in these thoughts there is an idea that is being evolving and transforming during the decades, that the continuous pursuit of profit creates an anomaly in the free market economy related to usage of labour.

SOCIAL ENTREPRENEURSHIP

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To see the problematic from a different perspective we have to define the term social entrepreneurship, having in mind that it is a new tendency, developed and more precisely researched in the last decade. This puts more pressure when trying to find an exact definition, globally accepted by different scholars and especially when determining the difference between commercial and social entrepreneurship. In doing this we will use two different approaches: first one as defined from the Kaufman Foundation, world’s largest foundation dedicated to entrepreneurship, and second one as defined from INSEAD Business School.

As quoted by Filipe M. Santos in his publication A Positive Theory of Social Entrepreneurship, (INSEAD) “According to the Global Entrepreneurship Monitor 2005 survey, an estimated 1.2M people in the UK (representing 3.2% of the working age population) are social entrepreneurs (defined in the survey as being involved in founding and running a social oriented venture younger than 42 months). Given that the comparable number for commercial entrepreneurship is 6.2%, these data raises the intriguing possibility that social entrepreneurship may be almost as important a phenomenon as commercial entrepreneurship (Harding, 2006).” The statistical data are only one more proof for the importance of the social entrepreneurship as a global phenomenon.

Let’s go back to the origins of the word: In its original French, entrepreneur means literally someone who undertakes. The French economist Jean Bapiste Say summed it up at the turn of the 19th century when he described entrepreneurs this way: “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” In other words, entrepreneurs create value. Early in the 20th century, economist Joseph Schumpeter boldly declared that “the function of entrepreneurs is to reform or revolutionize the patterns of production.” Management guru Peter Drucker described entrepreneurs and entrepreneurship this way: “the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” Entrepreneurs see the opportunities rather than the problems created by change.1 These few definitions are derived from some of the greatest minds in the field of research and from them our authors from Enterprising nonprofits distil down all the thinking on what makes someone an entrepreneur, and are left with this definition: Entrepreneurs are innovative, opportunity-oriented, resourceful, value-creating change agents.

The next step is to specify the research to the social entrepreneurship. Most of the characteristics that we already identified for entrepreneurship are applicable for social entrepreneurship also: innovative, resourceful, value-creating change agents. The simple difference is that their orientation is treatment of a social cause. Social entrepreneurs are defined as the reformers and revolutionaries of our society today. They attack the underlying causes of problems rather than simply treating symptoms. The term entrepreneurship applies to the world of non-profit organizations - a world where success is generally measured not by how much profit you make, but by how well you serve your social mission.2 Social entrepreneurship, commonly defined as “entrepreneurial activity with an embedded social purpose” (Austin, Stevenson, & Wei-Skillern, 2006), has become an important economic phenomenon at a global scale (Mair & Marti, 2006; Zahra, Rawhouser, Bhawe, Neubaum, & Hayton, 2008). Some of the most striking social entrepreneurship innovations originate from developing countries and involve the deployment of new business models that address basic

1 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 32 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 2

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human needs (Seelos & Mair, 2005). The typical answer for a phenomenon that is not easily classifiable is to call it a hybrid. Social entrepreneurship is commonly seen as a hybrid that combines elements of commercial entrepreneurship and social sector organizations (Dees, 2001). Indeed leading organizations in the field define a social entrepreneur as someone who “combines the characteristics represented by Richard Branson and Mother Teresa” (Schwab, 2009).3

To identify the change they are making in the world the authors of Enterprising nonprofits explain the behaviour as following: Social entrepreneurs act as change agents in the social sector by behaving in the following ways:

Adopting a mission to create and sustain social value. For social entrepreneurs, the mission ✔

of social improvement is critical, and it takes priority over generating profits. Instead of going for the quick-fix, social entrepreneurs look for ways to create lasting improvements.

Recognizing and relentlessly pursuing new opportunities to serve that mission. Where others✔ see problems, entrepreneurs see opportunities! Social entrepreneurs have a vision of how to achieve their goals, and they are determined to make their vision work.

Engaging in a process of continuous innovation, adaptation, and learning. Social ✔

entrepreneurs look for innovative ways to ensure that their ventures create social value and obtain needed resources and funding as long as they are creating value.

Acting boldly without being limited to resources currently in hand. Social entrepreneurs are ✔

skilled at doing more with less and at attracting resources from others. They explore all resource options, from pure philanthropy to the commercial methods of the business sector, but they are not bound by norms and traditions.

Exhibiting a heightened sense of accountability to the constituencies served and for the ✔

outcomes created. Social entrepreneurs take steps to ensure that they are creating value. They seek to provide real social improvements to their beneficiaries and their communities, as well as an attractive social and/or financial return to their investors.4

What is important is that the authors from Kaufman Foundation base their research on determining differences between philanthropic and commercial entrepreneurship and base the social entrepreneurship in between as hybrid of both. They identify two important aspects of social enterprises:

Social enterprises have a social objective. The primary objective of a social enterprise is to ✔

maintain and improve social conditions in a way that goes beyond financial benefits created for the organization’s funders, managers, employees, or customers.

Social enterprises blend social and commercial methods. In addition to using their ability to ✔

tap into the goodwill of some of their stakeholders, they look for creative ways to generate revenue, like businesses. Where businesses are completely commercial, social enterprises area hybrid of commercial and philanthropic methods.5

The following diagram represents the major differences between philanthropic, commercial and hybrid social entrepreneurs.

Continuum of Options

3 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 5 4 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 4, 55 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman

Foundation), page 9, 10

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Purely Philanthropic

Hybrids Purely Commercial

General Motives, Methods, and Goals

Appeal to goodwill Mixed motives Appeal toself-interest

Mission-driven Balance of mission and market

Market-driven

Social value Social and economicvalue creation

Economic valuecreation

Key Stakeholders

Beneficiaries Pay nothing Subsidized rates and/ or mix of full payersand those who paynothing

Pay full market rates

Capital Donations and grants Below-market capital and/or mix of fullpayers and thosewho pay nothing

Market rate capital

Workforce Volunteers Below-market wages and/or mix of volunteers and fullypaid staff

Market rate compensation

Suppliers Make in-kind donations Special discounts and/or mix of in-kind and full price

Charge market prices

EXHIBIT 1.1 The social enterprise spectrum.6

Filipe M. Santos professor at INSEAD Business School, in his publication A Positive Theory of Social Entrepreneurship proposes a new approach and a new more strict definition of social entrepreneurship. “By highlighting the key trade-off between value creation and value appropriation and explaining when situations of simultaneous market and government failure may arise, I suggest that social entrepreneurship is the pursuit of sustainable solutions to problems of neglected positive externalities.” 7

The difference between all other definitions and Santos’s is that he focuses on the differences between social sector organizations and social entrepreneurship organizations. “Modern economies also include different types of social sector organizations such as charities, social activists, and philanthropic organizations. These organizations operate in the pursuit of certain societal values such as human rights, economic fairness, equal opportunity, freedom of expression, consumer rights and environmental protection. Social entrepreneurship organizations often work in areas that are closely associated with social sector organizations. Yet, I argue that social entrepreneurship, in its essence, is not about upholding particular “values” but about the creation of value. It thus plays an economic and societal role that is distinct from other types of social sector organizations.” 8

6 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 157 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 1

8 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 5, 6

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Santos than proposes a very important question: In the modern economic system, characterized by market-based capitalism with a varying level of government sponsored services and an active social sector, what is the role and distinctive domain of social entrepreneurship?Social-mission organizations usually maximize on value creation and satisfice on value appropriation by aiming to capturing just enough value to sustain operations and re-invest in growth. What distinguishes social entrepreneurship from commercial entrepreneurship is a predominant focus on value creation as opposed to a predominant focus on value appropriation.This distinction between value creation and value appropriation allows developing a theory of social entrepreneurship that is rooted in established paradigms in economic organization and does not tautologically use the concept “social”.9

Let us go ahead with Santos explanation of the validity of his new approach:“While self-interested competition in regulated market conditions may be an optimal system from an economic efficiency point of view, this system may not lead to equitable economic outcomes since initial endowments and differences in capabilities often generate inequalities in the distribution of resources and welfare. Governments then also assume a redistributive function, through the tax system and social coverage, to try to raise every individual in society beyond a minimum accepted level of individual welfare. Yet, it can be argued that governments often do not have the means or capabilities to perform this redistribution function, particularly when action is needed at a local level. The visible hand of the government is blunt and favours general solutions not customized actions. Here enter charitable organizations, which are groups of citizens concerned about a particular social inequality who create an organization that re-distributes resources to reduce that inequality. Charities usually source funds from governments, philanthropic organizations such as foundations, and wealthy individuals to pursue their mission for the benefit of disadvantaged populations. Charities represent the dynamic and distributed mechanism that makes economies move towards a more just distribution of resources and economic outcomes. Unfortunately, the simple and appealing architecture of the economic system outlined above is spoiled by the presence of externalities. Externalities exist when economic activity creates an impact, positive or negative, that lies beyond the objective function of the agents developing the activity (Rangan et al., 2006). In the case of negative externalities, the consequences are usually the adoption of harmful practices (e.g., pollution) or the over-production or over-consumption of activities that bring negative consequences (e.g., excessive car usage leading to road congestion). In the case of positive externalities, the consequence is usually the under-provision of goods that would create value for society (e.g., education, vaccination).” 10 Santos argues that in the case of positive externalities governments have a key role to play in correcting this market failure and either decide to provide those services directly through governmental organizations since they are considered public goods (which are goods that have the characteristics of being non-rival and non-excludable, such as national defence) and/or create a system of public subsidies that generates an incentive for self-interested actors to increase the provision of these services (e.g., education vouchers; R&D incentives; subsidy for renewable energy production). “Yet, as I argued before, governments have multiple roles and often scarce resources. This suggests that some positive externalities are likely to be neglected by governments. What is the distributed mechanism that ensures that positive externalities are continuously being identified and internalized in economic system? I suggest that this mechanism is social entrepreneurship and

9 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 11-1510 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 17

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that pursuing neglected positive externalities is the distinctive domain of social entrepreneurship.” 11

In the areas where severe market and government failures occur, the neglected positive externalities are treated by social entrepreneur and prepare the ground for easier government intervention. Or as Santos specifies, Ashoka, the global organization that identifies and supports close to 2000 high impact social entrepreneurs, claims that over half of the social entrepreneurs in their network influenced national legislation within five years of launching their organization (Sen, 2007). What this suggests is that social entrepreneurs operate in areas of neglected positive externalities, develop economic action to demonstrate a solution to address the externality, and then often influence governments to create legislation that legitimates and supports their innovation. This facilitates scaling-up and replication of the innovation, thus reducing the market failure of service under-provision in their chosen field. This systematic identification and solution of problems related to neglected positive externalities is the distinctive role of social entrepreneurship in society.12

What we have to have in mind is the changes in the world that are happening in this past decade concerning financial crisis, shortened funding and the raised importance of issues like sustainability, effectiveness and financial responsibility. As the authors of Enterprising nonprofits further explain: The non-profit world is changing. Non-profit leaders face government funding cuts, rising demands for performance measures by foundations, corporations that want strategic benefits from their philanthropy, new forms of competition from the business sector, and serious questions about the effectiveness and appropriateness of traditional charitable remedies for social problems. These changes pose both opportunities and challenges. Politicians on both sides of the aisle are looking to non-profit organizations for innovative solutions to social problems. To respond effectively, non-profit leaders must be particularly enterprising. They have to sharpen their entrepreneurial skills and put them to use.13

To go a step further they are explaining recent trends in the sector as following: There is a new spirit in social organizations, and this spirit is social entrepreneurship at work. This spirit is characterized by several trends that have emerged and steadily gained strength over the past couple of decades, including the following:1. Heightened concerns about the effectiveness of traditional governmental and charitable approaches to meeting social needs.2. A search for more innovative solutions that lead to sustainable improvements.3. An increased openness to experimentation with market-based approaches and businesslike methods in the social sector.4. A growing shift toward the privatization of public services, leading to government contracting with both for-profit and non-profit providers.5. A parallel shift toward outcomes-based (rather than needs-based) approaches to funding on the part of both private philanthropies and government agencies.6. A new, more engaged and strategic approach to corporate involvement in social and community issues.14

11 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 19, 20 12 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 2413 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 1

14 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 12, 13

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Analyzing the authors of Enterprising nonprofits’ work we can see a shift in creating a systematic way for improving social conditions through empowering the people to have an active role in solving their problems, rather than making them dependent from help and external funding. In particular, they engage in the following:• Reducing the need for charitable assistance rather than simply meeting the need (as we saw with Rubicon’s employment programs).• Engaging people in and allowing them to take some responsibility for improving their own lives (as we saw with Habitat’s requirements that homeowners work on and pay something for the houses they receive).15

On the other side Santos is focusing on making a distinction between social entrepreneurship and social activism, because in his opinion these two roles are often confused in practice. “Part of the confusion is that sometimes negative externalities can be seen as the flip side of positive externalities. For example, trying to prevent companies from polluting (a behaviour that generates negative externalities and is often tackled by social activists) may look similar to trying to convince companies to recycle (a behaviour with positive externalities). Indeed, sometimes individuals or organizations take the role of both social entrepreneurs and social activists. However the underlying activities and their requirements are different. Influencing behaviours to cancel negative externalities is inherently a political activity. It requires exerting pressure on governments and corporations using political mechanisms (demonstrations, strikes, civil disobedience, data gathering to build arguments, garnering public support). Social entrepreneurship is not about exerting pressure but rather about developing and validating a sustainable solution to problems that often have a local expression but global impact. It is about exploiting opportunities for value creation that were neglected by other institutional actors. It is also about facilitating the dissemination of the solution so that others are compelled to adopt it as well. This process involves innovation and leading by example as opposed to pressuring. Both social activism and social entrepreneurship have important functions in the economic system but they constitute different processes with different institutional goals.16

What can be viewed as an innovative way of looking at social entrepreneurship is the final definition that Santos gives about the role of social entrepreneurs as second invisible hand of the economic system. “Even Adam Smith, the father of “the invisible hand”, acknowledged that human behaviour is often driven by a sense of sympathy towards others. In his other seminal book “The Theory of Moral Sentiments” Smith described the mechanisms through which a sense of attachment and desire to help others was an important element for individual action and personal fulfilment (Smith, 1976). Human beings have an ability to imagine themselves in other’s situations and thus empathize with their plight as well as take pleasure from their success. Going back to Adam Smith’s ideas of a benevolent invisible hand that turns self-interested individual behaviours towards socially optimal outcomes, social entrepreneurship can be interpreted as the second invisible hand of the economic system, this one based on others-interest rather than self-interest. By pursuing their specific others-interest and addressing opportunities for value creation in a distributed way, social entrepreneurs drive the economy closer to an efficient outcome by systematically identifying neglected positive externalities and developing mechanisms to incorporate these into the economic system. In this regard, they can do a more effective job than a benevolent central actor such as the government.” 17

15 Dees, J, Gregory, Emerson, Jed, and Economy, Peter, Enterprising nonprofits: A Toolkit for Social Entrepreneurs, (Kauffman Foundation), page 1316 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 3017 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 41-43

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SOCIAL MOVEMENTS

The third factor of the puzzle that this paper is trying to solve are social movements, or more specifically the factors that affect the development and rise of social movements.

William K. Carroll (University of Victoria) and Elaine Coburn (Stanford University), authors of the publication Social movements and transformation, in their effort to explain the mutually affected relationship between political economy and social movements go back to Habermas. “We began by arguing that political economy and social movements, both oriented towards whatHabermas has called 'emancipatory interests', have been engaged in a dialogical relationship. This relationship has enriched Canadian political economy (CPE), pushing it to respond creatively to developments within political practice and sparing it from the atrophic fate of many intellectual projects. At the same time, this dialogue has enriched social movements themselves, as, for example, activists draw upon political-economy frameworks to understand their own situation and to discover the transformative opportunities that inhabit specific situations. By interrogating 'social facts' like ecological degradation, hetero-sexism, racial oppression and speculative or casino capitalism, CPE has made an ongoing contribution to the practical work of activism, unmasking the contingent, constructed and thus transformable nature of Canada. Political economy and social movements are entwined: the development of each has conditioned the development of both.*Habermas (1971) contrasts three kinds of interests, basic to the human condition, that may guide the formation of knowledge: the interest in controlling a phenomenon (e.g., through a technology), the interest in understanding socio-cultural practices and texts, and the interest in emancipation. Knowledge produced on the basis of one interest may differ markedly from knowledge produced on the basis of another. For instance, while liberal economics takes for granted the apparent permanence of capitalism and is informed by an interest in control (including control by equilibrating market mechanisms) political economy problematizes the future of capitalism, and its scientific analyses are pursued on the assumption that emancipatory change is possible and desirable.”18

Concerning Caroll and Coburn opinions in the topic that I am proposing in this paper they are introducing Sam Guindin thoughts: This attention to national politics is precisely what Sam Guindin has found wanting in the movement against corporate globalization. As he argues, no internationally-focused movement can sustain itself — let alone fundamentally challenge capitalism — without also sinking the deepest domestic roots. Any politics that is anti-capitalist must carry the fight into the national states which remain the ultimate bases of capitalism’s power, and any anti-capitalist politics with staying power can only evolve out of the collective experiences and struggles in workplaces, neighbourhoods, universities, and within historic communities such as nations (2002, p. 8).19

In the attempt to research the relation between capitalism, social entrepreneurship and social movements I came across a very interesting paper, joint work of professors from New York and Berkeley University, which talks about the disappearance of capitalism from social movement studies in these recent decades. As they explain: The dynamics of capitalism provided a number of important causal mechanisms in the groundbreaking studies of social movements by

18 Carroll, K, William and Coburn, Elaine, Social movements and transformation, (University of Victoria and Stanford University) page 2319 Carroll, K, William and Coburn, Elaine, Social movements and transformation, (University of Victoria and Stanford University)

page 20

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English-speaking scholars during the 1970s. However, more recent scholars on movements and political conflict has, with very few exceptions, largely ignored the enabling and constraining effects of capitalism. This strange disappearance of capitalism from social movement studies is a result, we speculate, of the declining influence of Marxism in the social sciences during the 1980s and 1990s, among other factors. Ironically, during a period in which global capitalism became ever more powerful, it also became increasingly invisible to scholars of popular movements. The neglect of capitalism might also be explained (and justified) by the fact that the “new” social movements that many scholars have come to study in recent years are not centrally concerned with economic, labor, or work-place issues and thus have nothing or little to do with capitalism.20

The authors Goodwin and Hetland explain the importance of capitalism in the studies of social movements in the ‘70 and ‘80. As they refer: Although it now seems largely forgotten, the dynamics of capitalism played an extremely important role in many if not most of the seminal, English-language studies of social movements written by social scientists during the 1970s. A series of important studies of social movements and revolutions appeared in the late 1970s and early 1980s that had the effect of radically reorienting the study of social movements and political conflict. The field moved away from primarily psychological and social-psychological treatments of political protest—studies that often cast a very negative light on protest—to more sympathetic analyses that emphasized the importance of resources, power, solidarities, and opportunities for movements. Movements were no longer viewed as irrational outbursts, but as eminently rational forms of politics by other means. But all this is now common wisdom among movement scholars. What has been forgotten is that these same studies tended to emphasize quite strongly the effects of capitalist dynamics on movements. Furthermore Goodwin and Hetland specify the concrete studies, authors and their most important beliefs concerning the role of capitalism in the social movements. Among the more important such studies were Michael Schwartz’s Radical Protest and Social Structure (1976), Francis Fox Piven and Richard Cloward’s Poor People's Movements (1977), Charles Tilly’s “resolutely pro-Marxian” From Mobilization to Revolution (1978: 48) (and many other of Tilly’s writings from this period [e.g., Tilly, Tilly, and Tilly 1975, Tilly 1982]), Theda Skocpol’s States and Social Revolutions (1979) (see also Skocpol and Trimberger 1994 [1977-78]), and Doug McAdam’s Political Process and the Development of Black Insurgency (1999 [1982]). The dynamics of capitalism figure prominently in all of these studies, sometimes constraining and sometimes inciting or enabling collective action. The authors of these groundbreaking works believed that capitalism was crucial for understanding movements due to a variety of important causal mechanisms: Capitalist institutions (factories, railroads, banks, etc.) or capitalist-controlled institutions (legislatures, courts, police, etc.) are often the source or target of popular grievances, especially but not only during times of economic crisis; these institutions, moreover, shape collective identities and solidarities—and not just class solidarities—in particular ways; they also distribute power and resources unevenly to different social classes and class fractions; they both facilitate and inhibit specific group alliances based on common interests; class divisions, furthermore, often penetrate and fracture particular movements; and ideologies linked to capitalism powerfully shape movement strategies and demands. The effects of capitalism on collective action, for these authors, are both direct and indirect and the result of both short- and long-term processes.21

20 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York University and University of California, Berkeley), page 1

21 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York University and University of California, Berkeley), page 2, 3

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What is a joint discussion in the social movements’ studies from the 1970s is the anti-capitalist views in their research and publications. Precisely Goodwin and Hetland explain an example derived from the book Poor People’s Movements. The groundbreaking movement scholarship of the 1970s, we should note, not only emphasized the causal importance of capitalism for collective action but also tended to view capitalism, ultimately, as a major—and perhaps the major—constraint on human freedom. A number of these studies have an unmistakably anti-capitalist tone—a sign of the times, no doubt—a normative quality that is quite rare in contemporary scholarship on movements. To take just two examples, Piven and Cloward begin their study of “poor people’s movements” with a critique of the “mystifying” quality of capitalist democracy:Power is rooted in the control of coercive force and in control of the means of production. However, in capitalist societies this reality is not legitimated by rendering the powerful divine, but by obscuring their existence. . . . [through] electoral-representative institutions [that] proclaim the franchise, not force and wealth, as the basis for the accumulation of power. (1977: 2)And Skocpol concludes her important comparative study of revolutions by suggesting that “Marx’s call for working-class-based socialism remains valid for advanced societies; nothing in the last hundred years of world history has undercut the compelling potential, indeed necessity, of that call” (1979: 292).22

On the other side, Goodwin and Hetland make a remarkable notion that the recent studies of social movements besides lacking anti-capitalist tone, they completely ignore the effect of capitalism on them: More recent studies of social movements not only lack this anti-capitalist spirit, but they have also largely ignored, with very few exceptions (e.g., Sklair 1995, Buechler 2000, Clawson 2003), the enabling and constraining effects of capitalism. The more recent scholarship tends to ignore not only the direct and proximate effects of capitalist institutions on collective action, but also the ways in which capitalist dynamics indirectly shape the possibilities for protest, sometimes over many years or even decades, by, for example, influencing political institutions, political alliances, social ties, and cultural idioms. Instead, recent scholarship tends to focus on short-term shifts in “cultural framings,” social networks, and especially “political opportunities,” rarely examining the deeper causes of such shifts.23

Furthermore, they examine two journals writing about themes concerning social movements and their ways of transferring information to the public. Evidence for these claims may be found by examining the two main English language journals dedicated to the analysis of social movements, namely, Mobilization (which is based in the U.S.) and Social Movement Studies (based in the U.K.). Mobilization began publication in 1996 and Social Movement Studies in 2002. Goodwin and Hetland notice that by the 1990s, the evidence indicates, a concern with capitalism had virtually disappeared from the field. Indeed, the reader of these journals is struck by the almost complete absence of economic analysis in their pages. (This is not necessarily a criticism of these journals; it undoubtedly reflects the changing theoretical orientations of movement scholars. We have no reason to believe that the editors of these journals have tended systematically to reject work which emphasizes economic dynamics.) These results are all the more striking given that the publishing histories of Mobilization and Social Movement Studies largely coincide with the history of the so called global justice movement (also called the anti- or alter-globalization movement), a movement with strong anti-capitalist or at least anti-

22 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York University and University of California, Berkeley), page 4, 5 23 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York

University and University of California, Berkeley), page 5

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corporate demands. This movement has not been overlooked by these journals, but the treatment of it in their pages, oddly, does not reflect a strong interest in linking it with the dynamics of global capitalism. Thirteen articles on the global justice movement were published in Mobilization between 1996 and 2007 (7 percent of all articles published in the journal), but only three can be said to evince a political-economy perspective. Nine articles on the global justice movement were published in Social Movement Studies between 2002 and 2007 (nearly 13 percent of all articles published in that journal), but only two reflect a substantial concern with capitalism or political economy. 24

What Goodwin and Hetland argue that happened to result in a strange disappearance of capitalism from social movement studies is that this transformation is the result of several linked factors, including the waning after the 1970s of Marxism in the social sciences, the so-called “cultural turn” in academia, and a growing emphasis on micro- and meso-level analysis—including framing and network analysis—in social movement studies proper. We will try to explain using the publication The Strange Disappearance of Capitalism from Social Movements what triggered this disappearance especially during an era in which global capitalism became ever more powerful—an era when capitalism triumphed over Soviet style Communism—it also became increasingly invisible to scholars of popular movements. Even a recent volume on the “silences” in social movement theorizing (Aminzade et al. 2001) is silent about capitalism and political economy. For us, in any event, the key question is not so much why capitalism has disappeared from movement studies, but whether the analysis of movements has suffered as a result. We believe it has, conclude Goodwin and Hetland. 25

The explanation that the authors offer is that capitalism is examined as purely economic system: Typically, whether one employs a Marxian or Weberian framework, capitalism is treated as a purely economic system (Marx 1992 [1867]; Weber 2003 [1923]). But the concept of “political economy” underscores the need to examine the political role of the state within the economy, a role that has of course grown considerably over the past two centuries. Furthermore, our emphasis on the role that capitalist ideologies may play in shaping social movements forces us to move toward a more Gramscian or “sociological” understanding of capitalism, which encompasses the role played by civil society in advanced capitalist nations (Gramsci 1971; Burawoy 2003). In sum, movement scholars need to consider not only how political economy has shaped movements, but also how movements have shaped the political economy, including the politics of workplaces. 26 Their last thought leads us back to the other two authors mentioned before, Caroll and Coburn, which also argued that political economy and social movements are entwined: the development of each has conditioned the development of both.

To conclude with Goodwin and Hetland: The academic field of social movement studies has paid a heavy and unnecessary theoretical price for its recent neglect of capitalism and political economy. A number of very important causal processes—direct and indirect, short- and long-term—are now routinely ignored by movement scholars, and in fact movement studies have tended increasingly to focus on short-term and proximate causes of collective action. Greater

24 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York

University and University of California, Berkeley), page 5-7 25 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York University and University of California, Berkeley), page 10, 1126 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York University and University of California, Berkeley), page 23, 24

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attention to causal mechanisms associated with the dynamics of global capitalism will undoubtedly improve the quality of current social movement analysis. 27

CONCLUSION

To introduce the conclusion of the question of this paper: “Do the social entrepreneurship and social movements serve as solution for the mistakes that were created from capitalism as a system?”, we will shortly analyze two respectable authors and review a report from the European Union on the issue of Social Innovation.

In an interview that the renowned MIT professor Noam Chomsky gives for the Salon Magazine he introduces the reasons for the rise of the Occupy Wall Street Movement and especially focusing on why capitalism is not ready for worker/community owned industries and multinationals will rather close down the capacities than decide to give them in the hands of workers. Chomsky gives two examples: “I mentioned before that, in the 1930s, one of the most effective actions was the sit-down strike. And the reason is simple: That’s just a step before the takeover of an industry. Through the 1970s, as the decline was setting in, there were some important events that took place. In 1977, U.S. Steel decided to close one of its major facilities in Youngstown, Ohio. Instead of just walking away, the workforce and the community decided to get together and buy it from the company, hand it over to the work force, and turn it into a worker-run, worker-managed facility. They didn’t win. But with enough popular support, they could have won.  It’s a topic that Gar Alperovitz and Staughton Lynd, the lawyer for the workers and community, have discussed in detail. It was a partial victory because, even though they lost, it set off other efforts. And now, throughout Ohio, and in other places, there’s a scattering of hundreds, maybe thousands, of sometimes not-so-small worker/community-owned industries that could become worker-managed. And that’s the basis for a real revolution. That’s how it takes place.In one of the suburbs of Boston, about a year ago, something similar happened. A multinational decided to close down a profitable, functioning facility carrying out some high-tech manufacturing. Evidently, it just wasn’t profitable enough for them. The workforce and the union offered to buy it, take it over, and run it themselves. The multinational decided to close it down instead, probably for reasons of class-consciousness. I don’t think they want things like this to happen. If there had been enough popular support, if there had been something like the Occupy movement that could have gotten involved, they might have succeeded.” 28

Other recent tendency is the European Union institutional interest in the concept of Social Innovation. We will analyze the report of the Bureau of European Policy Advisers, published in 2010, by project leader Agnes Hubert - Empowering people, driving change - Social Innovation in the European Union. The report has been written in response to a request from the President to produce an analysis of suggestions received from participants in a workshop on social innovation organised by the Bureau of European Policy Advisers in January 2009. Concretely the report starts with drawing attention to “The Renewed Social Agenda, which was adopted by the European Commission in June 2008, created an opportunity to shape Europe’s response to

27 Goodwin, Jeff, and Hetland, Gabriel, The Strange Disappearance of Capitalism from Social Movement Studies, (New York

University and University of California, Berkeley), page 24, 25 28 Chomsky, Noam, Salon Magazine, Chomsky: “Jobs aren’t coming back”, http :// www . salon . com /2012/05/08/ chomsky _ jobs _ arent _ coming _ back / singleton /

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new social realities and challenges (climate change, ageing, rising unemployment, etc.). The global crisis has exacerbated these challenges.” 29

Some of the most worsened numbers that create these challenges are the unemployment, especially among young people, and the poverty. “The number of people who are inactive or unemployed is dramatically increasing. In stark contrast, labour participation rates rose from 62 % to 66 % between 2000 and 2008, while unemployment fell to 7 %. The financial crisis has changed the overall perspective dramatically. GDP fell by 4 % in 2009 and the figures for 2010 are worse. The efforts made over an entire decade, which resulted in a reduction of unemployment from 12 % to 7 % in the EU, are now being undone by the crisis. Since 2008, the number of unemployed has jumped up by 7 million and unemployment has increased to 10 %, i.e. more than 23 million people: levels not seen since the early 1990s. The problem with respect to youth unemployment is particularly acute. In October 2009, the youth unemployment rate (under-25s) was 20.6 % in the euro area and 20.7 % in the EU27.Too many people live in poverty and social isolation. Poverty implies an inability to participate in society on a level that the majority in that society takes for granted. In all, 72 million EU citizens — 15 % — are at risk of poverty, with another 36 million on the verge of that risk. No fewer than half of the people living in a low income household have an income more than 23 % below the poverty line. In all, 9 % of the EU’s population — or 35 million people — have been living in a low income household for at least two of the previous three years.On top of this far-reaching set of societal changes, the worst economic and financial crisis in decades has hit Europe hard with a sharp economic recession. Part of the EU’s growth potential has been destroyed by the crisis. Overall, the effects of the crisis have made the challenges which existed beforehand, such as globalisation, demographic ageing, lagging productivity and climate change, much harder to handle. Public finances are severely affected, with average deficits now reaching 7%of GDP and debt levels having increased by 20 percentage points in two years. At a time when resources are limited, new solutions must be found to respond to these demands, making better use of existing resources and transforming them into sources of growth. 30

The opinion which summarises the notions in the report, and with that the mood of the EU institutions concerning social innovation is the statement from President Barroso: “I believe that in the current economic turmoil, where the financial crisis has already had serious consequences on employment and public budgets, we have to mobilise all our strengths to alleviate the negative impacts on the most vulnerable populations. Social innovation is not a panacea but if encouraged and valued it can bring immediate solutions to the pressing social issues with which citizens are confronted. In the long term, I see social innovation as part of the new culture of empowerment that we are trying to promote with a number of our initiatives, starting with the Renewed Social Agenda.”

Our author from before, Santos makes a turn in his Positive Theory of Social Entrepreneurship with simplifying the explanations with the practical experience viewed through the eyes of Yunus, the first name which associates with social entrepreneur: In the words of Muhammad Yunus, referring to the current inability of modern economies to solve societal problems, “things are going wrong not because of market failures. The problem is much deeper than that. Mainstream free-market theory suffers from a conceptualization failure, a failure to capture the essence of what it is to be human” (Yunus, 2007). Bringing social entrepreneurship into the fold 29 Hubert , Agnès, Empowering people, driving change - Social Innovation in the European Union (report of the Bureau of European Policy Advisers, 2010), page 730 Hubert , Agnès, Empowering people, driving change - Social Innovation in the European Union (report of the Bureau of European Policy Advisers, 2010), page 21-24

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of economic and strategy theory may allow us to better capture in our theories “the essence of what is to be human”. It is more useful to adjust our theories and assumptions to reflect the world we live in, than to force human nature to follow the assumptions on which we conveniently established our theories. 31

Finally, we identified capitalism as a free-market economy and at the same time we examined the term as political economy which in today’s conditions cannot be viewed without having in mind the influence of the civil society in it, especially the effect of social movements. On the other side, we reviewed innovative statement of an author that sees social entrepreneurship as the second invisible hand of the economic system, this one based on others-interest rather than self-interest and from here social entrepreneurs as change agents concerning neglected positive externalities in which they do a more effective job than the government. To answer our question we can with certainty proclaim that the social movements serve as a correction of the capitalism as political economy and the social entrepreneurs as a reparative to the free-market economy.

31 Santos, M, Filipe, A Positive Theory of Social Entrepreneurship, (INSEAD), page 44

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