No 9: Brave new world or second dark age? Social policy and social innovation

Microfinance is an example of a social innovation that has benefitted many people around the world.
A beneficiary of a microfinance project in Vietnam in 2005. (Lorrie Graham/AusAID)

by Stephen Sinclair

It has been estimated that almost half of the jobs in the US could be made redundant by automation and new technologies in the near future. The idea that modern economies undergo successive waves of innovation is not new. Conventional economic thinking holds that while these developments might create transitional problems, ultimately they increase productivity and improve living standards. However, evidence suggests that recent and emerging technological developments may challenge this confidence. Firstly, while overall productivity has grown in the last twenty years, despite the Great Recession, the incomes of many in the Developed World have stagnated. Secondly, unlike previous generations of innovation, new technologies are not creating jobs at a rate to employ those they replace: occupations in emerging economic sectors accounted for 8.2 per cent of new jobs created in the 1980s but only 0.5 per cent in the 2000s.

The global economy is approaching a tipping point which is transforming production and employment. This is created by combinatorial innovation: the conjunction of multiple technologies. These include:

  • an exponential increase in the ability to generate and manipulate information through quantum computing;
  • a vast expansion in data storage capacity and algorithms capable of mining Big Data;
  • virtually instantaneous global communication through GPS, 3D printing, and the Internet of Things; and
  • the potential applications of developments in nanotechnology and new materials, such as Graphene.

It is easy to develop a Cassandra complex about a welfare state crisis but the impact on labour markets of some of these developments are already apparent. It is estimated that only about one quarter of working age adults in the US are employed in a secure, full-time job with benefits. Across the world, growing numbers are being drawn into a casualised precariat working in the gig economy without prospects of financial security, let alone career progression. It is not difficult to see a connection between such economic insecurity and growing disenchantment, resentment and political radicalisation.

Labour market changes are only one of many challenges confronting social welfare systems. The litany is well known: population ageing; more diverse and fluid households; widening inequality; global warming and resource depletion, and an international migration crisis. Things might not be falling apart (yet), but the challenges confronting conventional welfare provision cannot be ignored. Simply doing more of the same is not a sustainable option. Welfare systems need imaginative, long-term and large-scale responses to address chronic social problems and emerging demands. Many advocate social innovation (SI) in response to these challenges.

The promise of social innovation

To quote Eduardo Pol and Simon Ville, ‘Social innovation is a term that almost everybody likes but nobody is quite sure what it means’. One widely used definition describes SIs as:

new solutions (products, services, models, markets, processes etc.) that simultaneously meet a social need (more effectively than existing solutions) and lead to new or improved capabilities and relationships and better use of assets and resources. In other words, social innovations are both good for society and enhance society’s capacity to act.

There are numerous well-known examples of organisations and movements described as SIs: Fair Trade, Local Exchange and Trading Schemes, the Slow Food movement and Alcoholics Anonymous, to name just a few. Some SIs have involved radical departures in practice (e.g. participatory budgeting) and/or contributed significantly to the welfare of millions (e.g. microfinance). The diverse sectors, organisational scale and forms of SIs make generalisation difficult.

What this short list shows is that SIs are not the same as charities nor social enterprises; they are hybrid organisations, with complex trans-sectoral characteristics. SIs are not necessarily ‘new’ — some (e.g. credit unions) have been around for many years. Others do not invent anything themselves but involve recombinant innovation: applying existing technologies or models in distinctive ways. However, SI involves a step change beyond incremental development: innovation does not mean simply doing the same thing better, but doing things differently or doing different things.

SI champions suggest that they transcend the division between welfare production and consumption. SIs regard their clients as prosumers, involved in service design and delivery. This sentiment corresponds with demands for greater citizen control of welfare, exemplified by self-directed support and personalised budgets for disabled people.

Questioning social innovation

SI is an interesting and potentially important development. However, its current limitations and potentially negative implications give grounds for caution. SIs are not necessarily a cheaper, nor easier, option than mainstream welfare services, as they often involve complex inter-sectoral partnerships. Some are unable to provide employment terms and conditions on a par with the public sector (which may enable them to undercut public sector providers). Despite this, relatively few SIs are commercially viable and many rely upon subsidies. There is also a question of their transferability beyond the contexts in which they developed.

Many SIs emerge in response to particular socio-demographic conditions and policy environments and it is often challenging to identify a programme mechanism which applies independently of this nurturing ecosystem. Perhaps most fundamentally of all, it is not clear that SIs guarantee the kind of legally enforceable rights which characterise social citizenship entitlements.

In addition to these limitations, the SI discourse is ambiguous, with potentially progressive and regressive implications. From one perspective, SIs could be empowering initiatives which cultivate community strength to develop responsive, user-led services. But SI also has a potential dark side. It could be used to promote ideas of individual or community self-help, in which society’s little platoons and voluntary associations assume responsibility for addressing social issues. SI could, therefore, justify a laissez-faire doctrine and insistence that communities and those in need devise their own solutions to social problems. This could legitimate the withdrawal of public welfare services and encourage blaming the victim. From this perspective, SI resembles some interpretations of the Big Society and individualist ideas of active citizenship.

It is telling that there is as yet no example of an SI capable of providing public goods nor social services of general interest (such as social security benefits or pensions) for a sustained period. Perhaps the expansion of Blockchain technology, which records transactions and stores credit and assets, could be one basis for such developments (e.g. underpinning a Citizens Income or Community Allowance).

Welfare states have always had to adapt to changing demands. Perhaps the most important contribution that SI can currently make in response to the multiple challenges facing national welfare systems is the example they offer of imagination and drive to improve, rather than any particular model. The challenge for policymakers and Social Policy analysts is to learn what we can from SI and devise new answers to ‘the political problem of mankind: how to combine three things: economic efficiency, social justice and individual liberty’.

Stephen Sinclair is Professor of Social Policy, Yunus Centre for Social Business & Health at Glasgow Caledonian University. He has a particular interest in child poverty, social welfare reform in Scotland and social innovation. Stephen is the co-author, along with Simone Baglioni, of Social Innovation and Social Policy: Theory, Policy and Practice, forthcoming from Policy Press. He tweets at @sinclair_stevie.