International Conference UAW – Lisbon
23 April 2014
KEY NOTE SPEECH
“Social Innovation: Motor for social and economic development”
Mr. Simon Willis
CEO – Young Foundation
Good evening. Unfortunately we have run out of time, so any questions? (laughter)
I was… I was very touched this morning session listening to Domingos, and Jaime, and Filipa paying tribute to my dear friend and former colleague Diogo Vasconcelos, and it reminded me of a time quite a few years ago when I was in Lisbon. And coming to Lisbon is a very bittersweet feeling because I always associated it with being here with Diogo, who is no longer with us, and I was speaking at a conference which Diogo had arranged and we were running a little bit behind schedule, it was the end of the morning session, and I thought I could catch us up to the right time, so I spoke very quickly and I spoke for 12 minutes and sat down again and we were back on time. And Diogo rushed up to me in the coffee break and said: “What the hell was that?” and I said: “well, I was getting us back on track and also showing respect to the audience by being brief, as we do in England”, and he said: “Okay look, listen to me, in Portugal the way you show respect to the audience is to speak for as long as possible” (laughter). So I’m just going to talk for two or three hours now, sorry about that, you might want to text your families that you are going to be late for dinner.
So, this is my plan, I’m going to talk about four things: the problem we face together, some of the traditional answers that have been provided to this problem, what role social innovation might play, particularly disrupted social innovation, and how to get started on this project.
So here’s the problem and I’m no expert on the situation… this is a very small shelf… and I am no expert on the situation in Portugal so I’m going to speak from the point of view of the UK. And some of these problems may be familiar to you, some might be different. But we’ve been through a period of increasing crisis and catastrophe, where effectively not only have the governments, that we looked to, to control the worst excesses of the markets, effectively become collaborators with those markets and in particular with the financial markets and participated in increasing financialization of our economy so that a larger and larger proportion of GDP growth in the last two decades has been captured by the financial sector, hand-in-hand with the process which of course came to ahead of a few years ago, whereby we can see that we and our governments have had to take on the funding of all the risks, not only of the primary and fundamental research that underpins the innovation in the private sector but also taking on board the losses that they’ve made as a result of taking too many risks, while allowing the rewards to be not only privatized but captured by an ever smaller elite of the top of our companies or organizations and our banks.
This has been underpinned by what I’ve called here the de-legitimization of some collectives. What I mean by this is that the discourse has been about the importance of the individual, the freedom of the individual and the breaking down of our ability to organize ourselves socially, to organize labour, to organize collectives to counteract some of the powers which are damaging us. I say some collectives because while the discourse has been very much about the illegitimacy of organized labour and other collectives that are regarded as being old-fashioned and part of the past, the collective organization of capital and of financial services and the capture of many government decisions by organized capital has remained and indeed increased in strength. We’ve seen at the same time a strong set of arguments for privatization which have effectively allowed the penetration of many of the social and state services that we’ve built up in the post-war period to effectively also be captured by financial elites so that profit can be extracted at the expense of providing healthcare, education, social welfare and so on. This has been allied in recent times with the particularly unpleasant narrative of blaming the victim or sometimes blaming the outsider. What I mean by this is, when we drive people into debt and into unemployment and into poverty and into obesity and into un-wellness by the unbalanced nature of our economies to then turn around and blame those individuals for being undertrained, lazy, greedy, too much reliant on hand-outs and so on and so forth is a particularly violent way of justifying what has been a regrettable set of actions by our elites. It’s the common redoubt of the bully, starting in the playground and going up to the level of the nation and then even the region to blame the victims for the punishment that you made out to them. It has always been the way of the violent and abusive to do this and I think particularly in the context of Europe, when I look at the discourse in recent years around the southern European countries - the idea that Portugal and Greece and Spain and others should be blamed for having participated in a system which enriched the banks and countries that now blame them for the situation they’re in - as extraordinary and should be rejected.
What I’m trying to draw here is a parallel between the way we talk about those people at the bottom of society and those who’ve been left behind, about the growing extraordinary damaging phenomenon of youth unemployment and the way which we talk about various countries, I think there are some interesting analogies between the two. And they are part of the same system. And underpinning much of it has been debt.
The problem we’ve had is that economic growth for the last two or three decades has created surpluses which have to a very large extend been captured by the top five or ten percent of society. Now this is an unsustainable way to run a national, regional or international economy because it suppresses economic demand which drives the motor, which is generating the wealth. And the only way out of it has been to lend more and more money to those people who have not benefited from economic growth so that they can continue to be economic participants and to drive for that growth. This is obviously a completely unsustainable system and led to a first taste of the catastrophe that ultimately must come from it in 2008. And the following extraordinary set of circumstances by which we all paid to bail out the financial institutions, that had created the unsustainable debt structures and now had to pay through austerity by cutting benefits to the poorest and the weakest to make back and reduce some of the debt that in many cases was largely created by bailing out the very financial institutions and banks that had created the problem in the first place.
This is an Alice in Wonderland situation. What underpins this economic phenomena, set of phenomena, has been as you all know rising inequality. And Portugal, as we can see here has chosen to be in the very elite company of the United Kingdom and United States - and congratulations on that - has been one of the most unequal societies in the developed world.
This is another illustration of the same problem, here in the US, which is of course running just a little bit ahead of Portugal and the United Kingdom, but it gives an absolutely striking illustration of what has been happening over the last 30 years, following a very slight decline in inequality following the second world war, we’ve seen effectively return to a situation which we last saw at the very beginning of the 20th century with the top 1% capturing here half of all capital gains in the US and the top 100 to 1% capturing around half of that. I put this picture up because I really like the expression on this woman’s face. I have absolutely no idea what her sign says and perhaps somebody could tell me afterwards because for the look of serenity and truth on her face I imagine that what it says on the sign is something true. What is the effect of this inequality? It’s corrosive at every level of society; I think we have to stop talking about the effect on the poor and alone and on the socially excluded or even using terms like “social exclusion” because this is a distortion of our economy which is corrosive in every way. It’s corrosive and damaging in terms of mental health, in terms of chronic illness, but most profoundly and particularly when we have high level of long and sustained youth unemployment, it creates a breakdown in social cohesion, a breaking apart of the trust that we have in each other and the profound undermining of the trust that we have in our companies, in our institutions, in the parliaments, in police forces, in our newspapers and TV stations. Trust levels certainly in the UK have never been so low as they are now. If you ask people about each of those sectors and each of the organizations which present them “Do you trust that these people are there to serve your interests” and in the United Kingdom at least it’s now down at around 30% of people who answer “yes” to the question that they trust these institutions. And that is an extremely dangerous situation for us all to be in. Because it opens people to the attractions of easy answers and in particularly populism and what we are starting to see at least in the United Kingdom is increasing attraction to the idea of blaming firstly Europe, secondly foreigners, particularly immigrants, and finally the poor. Now, a situation where you start to blame immigrants and the poor for a situation that was created by anybody other than those people is a very dangerous social situation to be in and we’ve seen that story before.
So what are the traditional answers? Well, we have a group of people.. I’m going to do this really crudely in terms of the right - politically, the left and the kind of middle way, certainly in our country and the US called the third way for a while, and what they offer us. Well, very simplistically on the far right what they tell is that we need more market forces, we need more competition, with need more entrepreneurialism, if we can just get the state to reduce in size and get off the back of the natural entrepreneurial energy of the market then the problems would all be solved. That is getting to be a very hard story to maintain given the facts of the last 30 years but it’s still maintained. On the left and again I’m being incredibly simplistic we traditionally had an answer that what we need is more state, that we need a government that would provide for people and that we could solve everybody’s problems.
The third way approach, the kind of middling approach that was developed by Tony Blair and Bill Clinton amongst others, in a sense to my mind took the worse of both sides. It said, let’s have the market being relatively unbridled and let’s privatize as much as we possibly can and give particularly financial services as much freedom as possible to do more or less whatever they like and part their profits in the offshore sector. And at the same time let’s proceed to try and mop up the damage afterwards by having a social program that deals with the after effects of the aforementioned by providing a welfare system which encourages dependency amongst those that have been left behind - effectively capturing the worst elements of both sides of the previous political alternatives. Characteristic behind all traditional arguments which seek to end argument, to end political argument, is to claim that there is no alternative, that it is scientifically, ineluctably, inevitably proven that certain things must be the way they are.
You know, when I was young there were still Marxists around who believed that it was scientifically inevitable that capitalism would destroy itself and this was certainly a big relief to young socially concerned people like me because all you really had to do apart from going on the occasional demonstrations and read some extremely difficult to understand French theory was just wait until capitalism destroyed itself. It was scientifically proven, it was kind of determined. No less ridiculous, damaging and toxic is the claim of the neoliberals that the market works the way it does because of some kind of God given scientific inevitability and that all we have to do is get out of the way let it do its magic. This tyranny of no alternatives, as the Brazilian philosopher Roberto Mangabeira Unger has called it, is really the greatest enemy that we have in my view. This idea that you have no alternative is the most profound, dangerous enemy that we face. It has always been the case that we had a choice and we have exercised a choice often through large-scale disruptive social innovation. We decided for example that we didn’t want children to work in factories at the age of six or eight, or ten. The arguments that were mounted against stopping children from working in factories at the time that those laws were introduced and lobbied for politically were exactly the same arguments that we will hear now when you hear people trying to argue for capping executive pay or capping bonuses in banking or introducing some kind of respectful minimum wage for workers. We decided we didn’t want slavery at a certain point and the same arguments were heard again. If we together decide that we want a particular social outcome from our markets, if we recall that they are our tool that they belong to us and they are ours in the same sense that their government of ours, then we can choose together any outcome that we collectively want. And the inequality and degradation and youth unemployment that we have found ourselves with at this point in time is not of our choosing. It is not what we collectively want. So we have to find strategies to together choose some alternative routes.