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Social entrepreneurs: it’s time for some honest soul-searching

Social entrepreneurs: it’s time for some honest soul-searching

By Tim Frewer

It seems that the general direction of development practice and theory is the uncritical embrace of financial jargon. NGOs and development workers in the past ‘helped’ orphans and the marginalised, ‘provided’ goods and services and ‘advocated’ for the poor. But increasingly, we are led to believe that ‘entrepreneurs’ and ‘social enterprises’ are the avant garde of ‘change making’. They ‘invest’ in women and other vulnerable groups, they ‘innovate’ and ‘collaborate’ but, most importantly, they blur the boundaries between profit and charity. Their claim is not only that the search for profitability is compatible with ‘positive social outcomes’, but also that profit-seeking entities can actually achieve such goals more efficiently.

In fact, the boundary between capital accumulation and charity has long been blurred (if it ever really existed). Take for instance Cambodia with its swollen development industry. Millions of dollars worth of grants from bilateral donors get channelled into consultant companies, technical assistance and service providers. Then there are the loans from development banks that make profit from interest rates (even if they are low). Historically, development has always been infused with the rationale of securing profit, which has tended to be obscured by the moral call to help the vulnerable. So too in contemporary Cambodia, where the development industry is habitually immune from critiques over its often painfully obvious inefficiency and ineffectiveness.

But the new ‘social entrepreneurialism’ goes a step further. Unlike the grant project based model, it does not aim to feed off aid money. Rather, it wishes to revolutionise the entire practice of development by basing it on market principles. There is a word for this – neoliberalism. This new entrepreneurialism seeks to integrate profitability with positive social and environmental change. In the process it entirely marginalises those things that cannot have a profit component. Bizarrely, it does not critique older forms of development for embracing the market too aggressively, but rather for not embracing it enough.

Patrick Bateman entrepreneurs
Patrick Bateman in American Psycho. Photo courtesy of Tim Frewer.

All development now has to be ‘efficient’, ‘competitive’ and ’empowering’ whilst striving for ‘sustainability’ (read: secure profit). Social entrepreneurialism sees people not primarily as political subjects or rights bearers but as potential entrepreneurs who are to be invested in. It wants to create the poor as market actors. In other words, it wants to reorganise development so that flows of money and expertise are centred around expanding market principles. This is why in places like Cambodia there is a rapidly proliferating number of ‘impact hubs’ where ‘social entrepreneurs’ ‘network’ together to nut out the details of their vision.

There is a major problem here. If social entrepreneurialism is revolutionising development by reorganising it along market principles, then how is it different from regular businesses? Aren’t millions of people in the global south already running businesses that aim to ‘achieve positive social outcomes’? Does not your typical small business in, say, a market in Cambodia, strike a balance between profitability and the needs of family members who provide labour and neighbours who are the customers of the business? Yet, even now, most multi-nationals must have a  ‘corporate social responsibility’ strategy.

When white middle class people hailing from places like Australia and America come to ‘empower’ and ‘invest’ in the poor in the global south to ‘create’ them as entrepreneurs, is there not a level of arrogance here? In places where the majority of the poor are much better at capitalism than those in the global north – being phenomenal savers and creating value from the most unlikely of places – is it not absurd to assume that such people have something to offer the poor? Fundamentally, are the woes of the poor really caused by a lack of entrepreneurialism? In Cambodia, for instance, people struggle not for lack of entrepreneurialism, but due to having no shelter from the devastating effects of a predatory capitalism that shamelessly hyper-exploits labour and natural resources.

capitalism entrepreneurs
A banner reading “capitalism isn’t working” (a pun on the Conservative election poster “Labour isn’t working”) at the G20 Meltdown protest in London on 1st April 2009. Photo from Wikipedia Commons.

Nonetheless, there is more at stake here than merely being arrogant. Development is being transformed in the wake of the global financial crisis and the ideological triumph of neoliberalism. There is now enormous pressure to ‘leverage private finance’ to cover the costs of climate change and poverty in the global south. Green bonds, social impact bonds, revolving funds and concessional loans are already set to dwarf official development aid. In one swift move, climate debt, environmental justice and even common but differentiated responsibility go out the window. NGOs and governments are under ever-increasing pressure to make projects financially sustainable by ensuring cost recovery. This is an impossible task, because working on environmental justice, working in solidarity with activists and working with the poor and marginalised will never be profitable, no matter how much social entrepreneurs spruik their neoliberal theories.

There is no need to work in the interests of capitalists and claim it is in the interest of the poor. There are already more than enough capitalists working on capitalism. Starting a business is fine, but that is all it is – an entity that seeks to make profit. Even if a business does have good intentions, there is no need to elevate oneself to the dizzy heights of social entrepreneurialism.

To hell with good intentions. To hell with neoliberal financial jargon. What is needed is not a return to the heyday of NGOs. What is needed is a new path. Not one that pushes even more aggressively for the marketisation of everything, but one that starts with those painfully obvious problems of development that have been neglected for so long due to the hubris of development jargon. Namely, the fact that development has never managed to shed its colonial past; that it is still dominated by a small group of predominantly white, middle-class ‘experts’; that it is unable to take account of privilege or race; that it feeds off the vulnerability of people of colour; and that it has become so mixed up with the twin forces of sovereignty and neoliberalism that it has become an instrument for the reproduction of power.

Tim is a researcher and PhD student at the University of Sydney. He has done various research projects in Cambodia over the past ten years and has a budding interest in Myanmar and Laos. You can follow him on twitter @Tim_Frewer.

Featured image shows a sign reading “not business as usual”. Photo from vimeo.com.

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7 thoughts on “Social entrepreneurs: it’s time for some honest soul-searching

  1. Hannah Feldman

    Hi Tim, I found this really interesting article – an issue I have been trying to weigh up for a long time. I wandered if you could point me in the direction of any articles and books that explore this further? Thanks!

  2. Ben Jeffreys

    Hi Tim, thanks for the article, a worthy and interesting read. But I think it’s important to note that we don’t throw the baby out with the bath water. That those actually working in social enterprises may have a variety of reasons for taking an approach that isn’t linked to ideology.

    I work in a social enterprise as a white male in Cambodia. We’re not neoliberal capitalists or neocolonialists, we don’t think social enterprise will solve all the worlds problems, and we don’t bag other forms of development.

    What we have is a product that people want to buy because it gives them a benefit to their lives, much like any other product. The fact we can then attribute a range of social benefits to it is why we want to sell the product, but doesn’t change the fact that people will only buy it if they see value in it.

    We chose an enterprise approach because we saw it as the most effective way to achieve what we wanted to achieve, but we were only able to do that because of the commercial potential of the product. If we were working on a different issue without commercial potential, we would have taken a different approach. Pretty simple really.

    For us social enterprise is one of many tools to achieve a goal and don’t think it should be viewed as much more than this. For those who spruik it as a solver of all ills is taking it beyond a tool into the realm of ideology which is usually a dangerous thing. Likewise, by arguing against it because one doesn’t agree with an ideology with which it may be aligned is, in our view, equally dangerous.

    Again thank you for your article in raising a point worthy of discussion and hope to see some more on this thread.

    1. Tim Frewer

      Hi Ben, thanks for your reply. Just a note on ideology. Ideology does not work through the structure of believing in a particular doctrine. As popular philosopher Slavoj Zizek has famously pointed out ideology works by ‘securing the voluntary consent’ of subjects about contested ideas. In this structure it is the exact act of claiming to be outside ideology that gives a particular ideology its efficacy. This is the level that my article is aiming at. It is not meant to be a reflection or attack on any individuals work, but a consideration of the broader discourse of social enterprises. As soon as we narrowly view our own practices and ideas merely in terms of pragmatic decisions we entirely lose sight of the broader effects that a particular discourse may be having. To ignore how our ideas and practices are caught up in power is to take the easy path. I wouldn’t be the first to point out that the discourse of social enterprises and the new entrepreneurialism is neoliberal in nature. The fact that every powerful institution in the development industry now spruiks it from USAID to the World Bank, to silicon valley venture capitalists should be evidence of that. I think the golden rule should always be if one discovers that one thinks the same way Bill Gates does– one of the most powerful capitalists in the world, it is probably time to rethink one’s approach. And I use the term neoliberalism in a very particular sense – as the both the economic and discursive project that came out of the 1970’s that attempts to restructure the relations between labour and capital and nature (but this is really something you need to look up yourself). And here is my problem with the social enterprise community – they do not take the hard path. They rarely stop and ask questions about how they have become mixed up in powerful discourses. It should be very clear that social enterprises are not just a pragmatic answer to reductions in traditional aid – but they are in fact driving these cuts in traditional aid (for good or bad) as social entrepreneurialism in a remarkably Thatcherite move relentlessly critiques traditional aid for being ineffective and unaccountable. The social enterprises community also tends to ignore political questions – ignore race, privilege – even when there is so much fantastic things written about these issues. Take Cambodia. It’s not enough just to say, I’m a white guy, but I’m also a good guy. Cambodia has been colonised how many times now? Once by the Vietnamese in the 19th century, then by the French and again by the Vietnamese in the 20th and now… by the development industry? I’m not trying to make a crude neocolonial argument here. I’m just saying there is no shortcut to long and difficult conversations about how our ideas and practices still carry baggage from colonialism. The same goes for privilege. Take for instance the Impact Hub in Phnom Penh which is so incapable of thinking through the basic tenets of privilege that it charges a membership fee that is 3 or 4 times higher than an entire monthly average wage of a Cambodian. It also uncritically celebrates the mobility and ‘creativity’ of an elite class while the majority of Cambodian’s are being confined to joblessness and exploitation. Nor does the social enterprise community tend to question the impacts that the promotion of social enterprises may be having outside their community. I have spoken to numerous service providers in Cambodia who are frustrated and exhausted due to pressure from donors to make their services ‘economically sustainable’. Like I say in the article, there are a whole bunch of important services that government and NGOs provide which no matter how much we talk about ‘entrepreneurialism’ will never in a thousand years have a cost recovery component. Yet they are under increasing pressure to adopt the language and practice of social enterprises. Anyway I am happy to discuss this stuff in person as I am in PP. Cheers.

      1. Ben Jeffreys

        Hi Tim, thanks for replying and I couldn’t agree more that entrepreneurship isn’t the answer to all developmental issues. For donors to enforce a particular model on an organisation is altogether unproductive as there is a range of factors that would determine what approach suits that particular issue, not just because they saw it in a TED talk.

        I can’t agree with your view on ideology though, saying that by not conforming to an ideology enforces it doesn’t pass the logic test. What enforces it is either conforming, or providing a counter-ideology which is not what I was saying.

        I also can’t agree with that by conducting a social enterprise you are enforcing neoliberalism or colonialism. It’s a tool, and like most tools it can be used for good and bad. If the World Bank etc. want to push social enterprise and they have a misinformed view of what it can achieve, then it’s the job of those who are informed to help bring them to a holistic understanding before they burn it out.

        For example the biggest issue I see at the moment is the use of social enterprise as an excuse by government for divestment in what should be government provided services (directly or indirectly). This to me is the real issue we should be talking about. We only have to look to the Government of Cambodia, which has used the development sector in the same way over the last 25 years, to see the detrimental effect it can have.

        I always enjoy a robust discussion with people of alternative views so if you want to grab a coffee sometime text me on 0888 319 385.
        —–
        PS. Never been to Impact Hub so can’t comment. On your comment below that social enterprise has failed in Cambodia, I would say 25,000 toilets per year by iDE, around 15,000 water filters by Hyrdologic, and a rural clean water network infrastructure by Teuk Saat 1001 would be counter to this conclusion.

        1. Laura Smitheman

          Hi Ben!
          Laura from Impact Hub Phnom Penh here.
          Next time you’re in Phnom Penh and have time, we’d be delighted to show you around and introduce to some members of our awesome community – we have over 20 nationalities at the last count, 50% of whom are Khmer.
          We believe we have a safe place for people to share skills and experiences and to collaborate positively.
          Many of our events, talks and workshops are for free and if you’d like to work from the space and have the option to meet with a range of mentors, you can do so from $12/month.
          Our Hub Fellowship provides entirely free membership and additional support to outstanding start-ups and if anyone (irrespective of nationality) cannot afford anything we offer, we always look at options to ensure they can join.
          Hope to see you there soon!

  3. DT

    Hi Tim,

    Thanks for the insightful article.

    Certainly, its important to correctly assess the phase of development that the community is in. If primary needs are unmet (eg. lack of shelter), then these would be the priority.

    But while I don’t think that lack of entrepreneurialism should be seen as the cause for all poor communities in the world today, the base idea of social entrepreneurship – creating jobs for locals – is one that can help lift communities out of poverty sustain ably and subsequently handed over to the locals. Such is the beauty of these initiatives.

    To be effective, these enterprises have to be (1) sustainable (able to survive) and (2) Able to Upscale (in order to provide more jobs for locals, increasing social impact). To do this, I would argue that they should seek to generate a decent profit margin.

    What are your thoughts on such a rationale for promoting profit-driven social enterprises?

    1. Tim Frewer

      Hi DT, thanks for the comment. You seem to be dissolving any difference between what any regular profitable entity does, and development work. Do not all businesses attempt to be sustainable, aim to expand and generate profit? I can not see the benefit of treating ‘social enterprises’ as distinct from any regular business, nor for talking about these enterprises as if they are doing development.

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