Social Innovation, Wall Street, and the Financial System

Social innovators seem to be silent about the financial crisis engulfing the western world. Why?

Geof Cox has written a good article on this. titled "The financial crisis gives social enterprise an unprecedented opportunity – so why so quiet?" http://www.guardian.co.uk/social-enterprise-network/2011/oct/14/crisis-social-enterprise-voice?commentpage=last#end-of-comments

In addition to Geof's observations, there are several additional reasons for this silence that appear to be critical.

One is a legacy of the social innovation and social enterprise sector's deference to the corporate sector that has occured over the last decade. We were all encouraged to see the corporate sector as an ally and partner in our ventures, even those corporates who exploit as their standard mode of operation. Macquarie Bank has made its mega-bucks by devising infrastructure projects that screw consumers mercilessly, but this hasn't stopped some social innovators and social entrepreneurs from turning a blind eye to this, and accepting the "investments" of Macquarie Bank in the social sector as a good thing. The Goldman Sachs and their equivalents that brought us the GFC have invested heavily in the social sector as a means of enhancing their reputations. So when a grass roots movement appears around the globe that is critical of Wall Street and the corruption surrounding the financial system, many social innovators are silent.

Another factor is the legacy of 'localism' that has developed as an important part of the sector's ethos. Yes, 'local solutions for local problems' has been an important theme in social enterprise, rather than nation-wide solutions. One consequence of this has been a lack of engagement with system-wide challenges. Both are important, but the social innovation scene has been caught with little to say about system-wide or economy-wide reform. If innovation is required in addressing the way the financial system has become out of sync with social needs, why aren't social innovators in the forefront of this challenge?

Another factor is the legacy of the way the notion of 'social impact' has been introduced into the social innovation scene in the past decade. Governments and corporates have been encouraged to develop 'social impact' agendas, which has typically meant partnering with charities to deliver 'feel-good' charitable programs. The negative social impacts of institutions have been ignored. In particular, the negative social impacts of banks and financial sector players have been swept under the carpet by Social Impact agencies, instead of being subject to fearless scrutiny. The financial sponsorship of these Social Impact agencies by key financial system players has in turn created a relationship of dependence upon their largesse which stifles debate.

As in every aspect of the developing social innovation field, a great deal more open public debate and critical thinking are needed here.

Vern Hughes