A social entrepreneur
Economic theory missed the most thrilling opportunity to change the fate of the world by completely ignoring the number and power of the people who are more interested in social gains than personal financial gains, and those passionately interested in making the world a better place to live in, rather than remain narrowly focused on their own personal benefits.
By restricting the driving force of the market to narrow self-interest, economics also missed the greatest opportunity to become a truly social science and escape from being a cut and dry dollar-and-cent science. Nobody doubts that an entrepreneur can set up a pharmaceutical company to make a big profit for himself or herself. But it can be equally plausible that a person sets up a pharmaceutical company to bring quality medicine at the lowest price possible so that even the poorest family can afford it. If economics could envisage two types of entrepreneurs, personal-gain driven and social-objective-driven, it would not only be more realistic, but it would have helped the world solve many of the problems that profit-driven market doesn't solve today.
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He or she competes in the market place with all other competitors inspired by a set of social objectives. This is the basic reason for his being in the business.
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He may earn personal profit as well. This personal profit may range from zero to a significantly large amount, even larger than his personal-gain-driven competitor. But in his case, personal profit is a secondary consideration, rather than the prime consideration. On the other hand a personal-profit driven entrepreneur may contribute in achieving some social objectives. But this will be a by-product of his business, or a secondary consideration in his business. This will not make him a social entrepreneur.
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The higher the social impact per dollar invested the higher will be the market rating of the social entrepreneur. Here 'market' will consist of the potential investors who are looking for opportunities to invest their money in social-objective-driven enterprises. Social investment dollars will move from low social impact enterprises to higher impact enterprises, from general impact enterprises to specific and visible impact enterprises, from traditional social enterprises to highly innovative and efficient enterprises.
Social-objective driven investors will need a separate (social) stock market, separate rating agencies, separate financial institutions, social mutual funds, and social venture capitals, etc. Almost everything that we have for profit-driven enterprises will be needed for social-objective-driven enterprises, such as, audit firms, due diligence and impact assessment methodologies, regulatory framework, standardization, etc., only in a different context, and with different methodologies.
In terms of cost recovery a SE can work within a scale ranging from zero cost recovery to 100 per cent cost recovery and even far beyond cost recovery. If a SE distributes food to the hungry, he or she is operating at zero level of cost recovery. If he provides health services and charges a fee which covers a part of his cost, he is operating at a positive point on the cost recovery scale. Once he reaches 100 per cent cost recovery, he becomes a market compatible or sustainable social entrepreneur (mSE). This is the most critical point on the cost-recovery scale. If a SE can stay on the right side of this point he can become a legitimate player in the market place. He can grow as much as he wishes and has the capacity to manage. He can draw on the resources of the market. The more the SEs are in the category of mSEs, the more powerful they become as a business community. They can start accessing the trillions of dollars of market capitalisation money, part of which will find the mSEs just the right kind of investment.
Overcoming evil with good:
The Commonwealth can set example in massive expansion of financial services for the poor to create self-employment and for preparing the poor to bring the benefits of globalisation to their homes. It can help the member nations to open up telecom and IT sector and bring these services to the poor. It can set example in preparing the youth of the poor families for the knowledge economy and open up doors to quality education and work experience. In the backdrop of September 11, doors of rich nations are either closing down to the young people of the south or getting narrower. This is a very ominous sign for the poor countries trying to get ready for globalisation.
While standing solidly against terrorism the Commonwealth may make it clear that terrorism is not something which can be conquered at the battlefield. We must address the root causes of terrorism to eliminate it. One of the major causes of terrorism is poverty.
Education for the poor via interest on principal:
Another Grameen Company, called Grameen Education, offers a scholarship management service. If a sponsor gives a recoverable grant of Tk 100,000 (US $ 1,724) a scholarship of Tk 500 (US $ 8.62) per month, or 6 per cent per year on the grant amount, is given to any poor student, Grameen or non-Grameen, upto perpetuity or as long as the money is kept with Grameen Education. Grameen Education is hoping to find hundreds of thousands of sponsors for these scholarships to prepare the poor boys and girls in Bangladesh for the knowledge economy and globalisation.
http://www.grameen-info.org/bank/Commonlth03.html
By restricting the driving force of the market to narrow self-interest, economics also missed the greatest opportunity to become a truly social science and escape from being a cut and dry dollar-and-cent science. Nobody doubts that an entrepreneur can set up a pharmaceutical company to make a big profit for himself or herself. But it can be equally plausible that a person sets up a pharmaceutical company to bring quality medicine at the lowest price possible so that even the poorest family can afford it. If economics could envisage two types of entrepreneurs, personal-gain driven and social-objective-driven, it would not only be more realistic, but it would have helped the world solve many of the problems that profit-driven market doesn't solve today.
*
He or she competes in the market place with all other competitors inspired by a set of social objectives. This is the basic reason for his being in the business.
*
He may earn personal profit as well. This personal profit may range from zero to a significantly large amount, even larger than his personal-gain-driven competitor. But in his case, personal profit is a secondary consideration, rather than the prime consideration. On the other hand a personal-profit driven entrepreneur may contribute in achieving some social objectives. But this will be a by-product of his business, or a secondary consideration in his business. This will not make him a social entrepreneur.
*
The higher the social impact per dollar invested the higher will be the market rating of the social entrepreneur. Here 'market' will consist of the potential investors who are looking for opportunities to invest their money in social-objective-driven enterprises. Social investment dollars will move from low social impact enterprises to higher impact enterprises, from general impact enterprises to specific and visible impact enterprises, from traditional social enterprises to highly innovative and efficient enterprises.
Social-objective driven investors will need a separate (social) stock market, separate rating agencies, separate financial institutions, social mutual funds, and social venture capitals, etc. Almost everything that we have for profit-driven enterprises will be needed for social-objective-driven enterprises, such as, audit firms, due diligence and impact assessment methodologies, regulatory framework, standardization, etc., only in a different context, and with different methodologies.
In terms of cost recovery a SE can work within a scale ranging from zero cost recovery to 100 per cent cost recovery and even far beyond cost recovery. If a SE distributes food to the hungry, he or she is operating at zero level of cost recovery. If he provides health services and charges a fee which covers a part of his cost, he is operating at a positive point on the cost recovery scale. Once he reaches 100 per cent cost recovery, he becomes a market compatible or sustainable social entrepreneur (mSE). This is the most critical point on the cost-recovery scale. If a SE can stay on the right side of this point he can become a legitimate player in the market place. He can grow as much as he wishes and has the capacity to manage. He can draw on the resources of the market. The more the SEs are in the category of mSEs, the more powerful they become as a business community. They can start accessing the trillions of dollars of market capitalisation money, part of which will find the mSEs just the right kind of investment.
Overcoming evil with good:
The Commonwealth can set example in massive expansion of financial services for the poor to create self-employment and for preparing the poor to bring the benefits of globalisation to their homes. It can help the member nations to open up telecom and IT sector and bring these services to the poor. It can set example in preparing the youth of the poor families for the knowledge economy and open up doors to quality education and work experience. In the backdrop of September 11, doors of rich nations are either closing down to the young people of the south or getting narrower. This is a very ominous sign for the poor countries trying to get ready for globalisation.
While standing solidly against terrorism the Commonwealth may make it clear that terrorism is not something which can be conquered at the battlefield. We must address the root causes of terrorism to eliminate it. One of the major causes of terrorism is poverty.
Education for the poor via interest on principal:
Another Grameen Company, called Grameen Education, offers a scholarship management service. If a sponsor gives a recoverable grant of Tk 100,000 (US $ 1,724) a scholarship of Tk 500 (US $ 8.62) per month, or 6 per cent per year on the grant amount, is given to any poor student, Grameen or non-Grameen, upto perpetuity or as long as the money is kept with Grameen Education. Grameen Education is hoping to find hundreds of thousands of sponsors for these scholarships to prepare the poor boys and girls in Bangladesh for the knowledge economy and globalisation.
http://www.grameen-info.org/bank/Commonlth03.html
Labels: business, social justice
posted by Steve Neola at 2:57 AM
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