Social Ecology London

Social Ecology and Development
November 6, 2008, 10:03 pm
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When contemplating the relevance of Murray Bookchin’s social ecology to the contemporary world, it is striking to note the degree to which this school of thought, like other radical Euro-American intellectual traditions, concerns itself largely with ‘advanced’ Western/Northern societies. Like his sometimes-comrade Herbert Marcuse, Bookchin, in fact, has conceded as much, stating that the primary responsibility of Western/Northern radicals vis-à-vis less-developed country residents is to overthrow dominative institutions in their own societies so as to allow for the emancipation of those currently oppressed by the international system. It is to be wondered, then, whether his project, as valuable as it is, can be applied to contexts outside of those on which he focused most of his efforts—that is, directly to those peoples his work largely ignores. It certainly seems that he has much to say here, and that many of the profound problems that beset the “wretched of the earth” could perhaps be helped along by the contributions of social ecology. It is the hope of the present work, then, to employ the insights of Bookchin and his social ecology to critique mainstream development theory, in an effort ultimately to present an alternative by which the dominant trends, both contemporary and historical, of the world’s course might be overturned, and a “free nature”—a reconciliation between external nature and human society that radically diminishes the pain and suffering in both —realised. As the most radical critique of conventional development thought and practice with which I am familiar, and one that in fact shares many of the analyses advanced by the aforementioned thinkers, post-developmentalism seems to represent a useful means to this end.

Though ‘post-developmentalism’ is not as an intellectual tradition as clearly demarcated as Bookchin’s social ecology, the many thinkers associated with it share a number of common theoretical views. Most post-developmentalists hold a highly critical view of the trajectory of history, especially of its most-highly lauded creation, modernity. In language reminiscent of Bookchin, Sahlins notes that contemporary society is the “era of hunger unprecedented,” a time of “the greatest technical power” in which “starvation [is] an institution.” He contrast this with what he calls “the original affluent society,” or the lived space-time experience of hunter-gathering societies, which he finds to have “easily satisf[ied] all people’s material wants” and provided a degree of leisure time unknown in most of the forms of human social organization that have followed ‘primitive’ society. Latouche similarly remarks that the promises of Renaissance humanism have devolved within modernity into the instauration of “the most inhuman society ever constructed by man,” one characterised by the dominance of “the quantitative”—a “cult of life without quality” that remains fundamentally indifferent to the fate of the individual. He sees a valuable alternative in “traditional societies,” most of which he finds to have gone without the concept of accumulating wealth or dominating external nature. Galeano, for one, sees the perpetuation of the prevailing state of affairs, which he see as “poised on the brink of an abyss,” as fundamentally necessitating the perpetuation of injustice. Indeed, there is reason to believe that the very development of the West/North has been based on the systematic underdevelopment of the South; the poorer countries of the latter, which Latouche sees as being considered within prevailing society as “good only […] for the wrecker’s yard,” thus face little prospect of realizing development, as they lack a periphery of “‘New’ Worlds” to exploit for their own benefit. The atrocious consequences of the present situation are, then, unsurprising: according to Latouche, 40,000 “radically outcast” children die every day of poverty—the equivalent, as he puts it, of the number of deaths at Auschwitz every three months —while “large majorities […] within most Southern countries” are reputed to be worse-off now than at the time of formal decolonization, with Central and Southern American societies purportedly having suffered the worst social and economic conditions since the European conquest during the ‘lost decade’ of neo-liberal restructuring in the 1980s.

Faced with the enormity of problems extant in the status quo, many writers associated with post-developmentalism have called for an “end to development.” Most such advocates reserve much of their ire for those who, cognizant of the substantial problematics characteristic in conventional development theory and practice, call for an ‘alternative development’—whether ‘participatory,’ ‘socialist,’ and so on—noting that the “opposition between ‘alternative development’ and alternative to development is radical, irreconcilable.” For such theorists, ‘development’ cannot be made “different from what it has been,” and they suggest that we give up the “comforting illusions” of working to “change the world,” develop “new types of social organisation,” and “save ‘humanity’” and instead advocate the development of “post-modern spaces,” which one group of theorists find to be the “only hope [for] a human existence” and for the “survival and flourishing [of] the ‘social majorities’” of the world. Such positions amount to a radical rejection of ‘progress,’ which, in the view of various theorists, represents a Western ideology that has enshrined the “one and only way of thinking”—that of subordinating the entirety of the life-world to the interests of transnational capital —and legitimated the “top-down, ethnocentric, and technocratic” forms that Escobar sees development theory and practice as having represented since their inception. Declaring, then, that “we are facing modern problems for which there are no modern solutions,” some post-developmentalists advocate the rejection of all the institutions they see as associated with the Western social construct of Homo oeconomicus (neo-liberal globalization, the welfare state, human rights, and the “modern self”), the “replacement of ‘global thinking’ with the ‘local thinking’ practiced at the grassroots,” and support for peoples’ local struggles as consonant with “their own cultural contexts.” Rahnema, for his part, seems to favor a devolution of power from the modern state to those whom traditional societies purportedly found the “wisest, the most virtuous, and hence the most ‘authoritative’ and experienced.” He hopes for the day when the peoples of the world will be left “free to change the rules and the contents of change, according to their own culturally defined ethics and aspiration,” noting that the coming post-development period will “distinguish itself from the preceding one” if the world’s jen—Confucius’ purported term for “the authoritative persons”—come to institute “an entirely new rationale and set of assumptions” whereby responsibility and compassion for the min—the “masses”—is actualised.

Many thinkers associated with post-developmentalism also express deep concern for what they see as the ecological predicament brought on by modernity. Sachs asserts that the global capitalist economy has “come up against its bio-physical limits” and, indeed, called into question the very survival of the earth itself, yet he expresses the concern that mainstream environmentalism tends to privilege dominant Western/Northern views of nature that, in the name of practicality or relevance, do not “plead anew against the world’s course” and hence ultimately serve the ends of capital, oligarchism, and eco-technocracy. In dominant formulations, argues Sachs, the “crisis of nature” stands at odds with the “crisis of justice”: thought and action dedicated to resolving problematics regarding humanity’s treatment of external nature are deemed mutually exclusive with attempts to ease the suffering of ‘second nature.’ Sachs asserts, however, that this false set of choices rests on conventional understandings of questions related to development and external nature, and he hopes for an eclipse of the current emphasis on endless growth, consumption, and “progress” by the emergence of a “politics of sufficiency” that would drive a search for modes of social organization that respected ecological limits and took “their inspiration from indigenous ideas of the good and proper life.” Escobar shares Sachs’s concerns about global eco-technocracy, noting that much of development discourse assumes it is the “benevolent (white) hand of the West”— the “fathers of the World Bank,” aided by “a few cosmopolitan Third Worlders”—that is to “save the Earth” by means of a set of superficial policies which follow directly from their understanding of the life-world as a “technical problem.” Escobar here remarks on the wealth of indigenous knowledges regarding external nature that largely is excluded from development theory, and he concludes that knowledge of the prospect of ecological finitude demands that humanity “reimagine the relationship between society and nature” and “reconnect life and thought at the level of myth.”

Toward a Post-Developmental Ecological Rationality

From the previous section, then, it should be clear that many of the thinkers associated with post-developmentalism share many of the concerns of Bookchin: common to all are fierce critiques of the trajectory of human history, a stress on the need to deconstruct and rethink given conceptions of ‘progress,’ opposition to capitalist modernity and most forms of constituted power, and concern for humanity’s relationship to external nature. However similar their concerns and views may be on some of these questions, there nonetheless exists a considerable degree of difference among them.
Perhaps the greatest conflict to be found between the thought of Bookchin relative to most post-developmentalists can be found in the latter’s interpretations of post-modernism and poststructuralism. Esteva and Prakash’s call to replace ‘the global’ with ‘the local’ typifies this, as does Latouche’s dismissal of the search for “new types of social organisation.” Such conclusions seem highly misguided, as asserting that humans give up concern for ‘the global’ and work to create local, post-modern spaces seems completely to overlook the decidedly significant influence that global processes—neo-liberal globalization, capitalism, colonial legacies and neo-colonial relationships, global warming, and so on—have on local realities and the very existence, let alone flourishing, of the “‘social majorities’” of the world. The very fact that these regional/global relationships exist in the current day, are socially contingent, and have dramatic and often highly negative effects on the lives of billions of people demands that they be addressed and radically overturned; to dismiss the structural bases for many of these relationships as immutable or irrelevant, as some postmodern strains of post-developmentalist thought suggest, is tantamount to a betrayal of the world’s dispossessed.

The emphasis many post-developmentalists place on outrightly rejecting ‘the Western’ also seems fundamentally problematic. Certainly, the West/North has much to atone for as regards its historical treatment of Southern peoples—for how can European colonisation, the Columbian Exchange, the Atlantic slave trade, neo-liberal structural adjustment processes, the atomic bombings of Hiroshima and Nagasaki, the destruction of Vietnam and Iraq, and the global imposition of a fundamentally ecocidal economic system be forgotten, let alone forgiven? Post-developmentalists are certainly right to be suspicious and critical of Western/Northern designs for Southern peoples, but they are mistaken in seeing Enlightenment principles of social emancipation and resistance to oppression as being irrecovably tied to neoliberalism, the welfare state, and the social construct of Homo oeconomicus. Esteva and Prakash correctly point out that dominant Western/Northern notions of the self and society represent just one in a set of “diverse cultural windows” regarding these questions, but it seems doubtful whether it follows that concerned observers uncritically endorse the resolution of such problematics in the pre-modern or hybrid modes of social organization that Esteva and Prakash, Rahnema, and Escobar seem to advocate. While it may be true that the modes of governance that have been imposed on Southern peoples in the modern period dwarf “[t]he evils and injustices of traditional village governance,” it hardly seems clear that what should follow is a return to societies dominated by the “compassionate and authoritative” jen favored by Rahnema. Instead, post-developmentalists like Latouche and Esteva and Prakash should remain true to their emphasis on difference and so come to see the concept of development “as a set of conflicting discourses and practices based in positions that contradict one another” and thus one open to contribution from critical, non-hegemonic Western thought, such as that advanced by Bookchin. If the analyses of the latter are to be seen as in any way legitimate—and it is the argument heretofore advanced that they most certainly are—it seems that the task of critical inquiry should be directed not toward the valorisation of hierarchical power but rather toward an opposition to hierarchy and domination as such. Such efforts are to stress the need for the emergence of the “real ‘state of exception’” sought by Benjamin: the “abolition of domination.” The realization of emancipatory societies, freed from both capitalism and domination more generally, could allow for the instauration of Bookchin’s ‘liberatory technologies,’ ones which could help historically poorer societies conquer material scarcity in manners that avoid the torturous “process of dissolution [that] constitutes the historical evolution of the West” : its legacy of thoroughgoing self-repression, social injustice, and destruction of nature. A new, critical developmentalism, one that views development, like the Enlightenment, as “a real quest for improving the human condition” corrupted by “class power and ruling ideologies,” would disprove Latouche’s view that development cannot be made “different from what it has been” and refute the view common to Esteva, Prakash, and Rahnema that the prospect for systemic change now has passed.

Javier Sethness


1 M. Bookchin, Post-Scarcity Anarchism xvi (Oakland, CA: AK Press, 2004.)
2 Ibid, The Ecology of Freedom: The Emergence and Dissolution of Hierarchy 191 (Oakland, CA: AK Press, 2005 [1982]), The Philosophy of Social Ecology: Essays on Dialectical Naturalism 45 (Montréal: Black Rose, 1990) 45
3 M. Sahlins, “The Original Affluent Society” 18 (The Post-Development Reader. Eds. Majid Rahnema and Victoria Bawtree. London: Zed Books, 1997. 3-21.)
4 Ibid 4, 18-19
5 S. Latouche, In the Wake of the Affluent Society: An Exploration of Post-Development 224 (Trans. Martin O’Connor and Rosemary Arnoux. London: Zed, 1993. emphasis in original)
6 Ibid 204, 230
7 E. Galeano, “To Be Like Them” 215 (The Post-Development Reader. Eds. Majid Rahnema and Victoria Bawtree. London: Zed Books, 1997. 214-22.)
8 M. O’Connor and R. Arnaux, “Translators’ Introduction” 8-9 (Latouche, Serge. In the Wake of the Affluent Society: An exploration of post-development. London: Zed, 1993. 1-20.); S. Latouche, op. cit. 41
9 Ibid 36
10 W. Sachs, “Global Ecology and the Shadow of ‘Development” 5 (Global Ecology: A New Arena of Political Conflict. Ed. Wolfgang Sachs. London: Zed, 1993. 3-21.)
11 A. Escobar, Encountering Development: The Making and Unmaking of the Third World 217. (Princeton, NJ: Princeton UP, 1995.)
12 Ibid vii-viii; S. Latouche op. cit. 149; M. Rahnema, “Towards Post-Development: Searching for Signposts, A New Language and New Paradigms” 392 (The Post-Development Reader. Eds. Majid Rahnema and Victoria Bawtree. London: Zed Books, 1997. 377-403.)
13 S. Latouche, op. cit. 159; Escobar, op. cit. 5
14 S. Latouche, op. cit. 160, 187; M. Rahnema, op. cit. 392
15 G. Esteva and M.S. Prakash, Grassroots Post-Modernism: Remaking the Soil of Cultures 4. (London: Zed, 1998.)
16 I. Ramonet, “The One and Only Way of Thinking” 179 (The Post-Development Reader. Eds. Majid Rahnema and Victoria Bawtree. London: Zed Books, 1997. 179-81.)
17 A. Escobar, “The Making and Unmaking of the Third World through Development” 91 (The Post-Development Reader. Eds. Majid Rahnema and Victoria Bawtree. London: Zed Books, 1997. 85-93.)
18 B. De Sousa Santos, “On Oppositional Postmodernism” 36 (Critical Development Theory: Contributions to a New Paradigm. Eds. Ronaldo Munck and Denis O’Hearn. London: Zed, 1999. 29-43.)
19 G. Esteva and M.S. Prakash 146, 121, 11, 21, 137-8
20 M. Rahnema 388-9
21 Ibid 384, 391, 394; emphasis in original
22 T.W. Adorno, Mahler: A Musical Physiognomy 7 (Trans. Edmund Jephcott. Chicago: University of Chicago Press, 1992.)
23 W. Sachs (1993) 6, (1999) 61, 68
24 (1997) 293
25 Ibid (1993) 17, 4, 7-8
26 (1995) 193, 91
27 (1995) 211
28 R. Bryant and S. Bailey, Third World Political Ecology 6-7 (London: Routledge, 1997); R. Peet and E. Hartwick, Theories of Development 159-61 (New York: Guilford, 1999.)
29 G. Esteva and M.S. Prakash, op. cit. 140-1
30 Ibid 137-8; M. Rahnema op. cit. 388-9
31 G. Esteva and M.S. Prakash op. cit. 114
32 M. Rahnema, op. cit. 394
33 R. Peet and E. Hartwick, op. cit. 156, emphasis in original
34 M. Löwy, Reading Walter Benjamin’s ‘On the Concept of History’ 59-60 (Trans. Chris Turner. London: Verso, 2005.)
35 K. Marx, The Portable Karl Marx 557 (Ed. Eugene Kamenka. New York: Penguin, 1983.)
36 R. Peet and E. Hartwick, op.

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Capitalism, unfettered or not, is unjustifiable, and unsustainable!
Having been helped by Javier Sethness to review the relevant literature, let us now consider the facts – or to be more precise the estimates of the facts. Let us dispense with the rhetoric, and look for solutions.
Population calculators on the Internet indicate that about 6.84 billion people live on the Earth in 2008, of which 2.2 billion are children.
Anup Shah of Global estimates that out of the 6.84 billion people, 5.4 billion live, or we could say die, on less than $10 a day……30000 children die each day. In the USA, social security is provided for, and poverty defined as, those living on $58 a day.
A recent report by the World Bank proposed that the average global wage is $21 a day.
The World Wealth Report of 2008 declared that there were 10.1 million people who were millionaires, with at least $4 million each; of which 103,250 were ultra rich with at least $35 million each. They comprise 0.15% of the global population and live on at least $11000 a day! This group controlled $42 trillion, out of a global GDP of $54 trillion.
I admit that these estimates exclude those living on $60 to $10,000 a day, as there are few statistics about them. But I can follow the US Census Bureau, who calculate that 6% of the population earn more than $100.000, or $274 a day: across the world that would be 410 million wealthy, and would include the rich and ultra rich.
It is well understood that the world in 2008 is dominated by unfettered capitalism, unregulated and unsupervised [at least until the October financial crises]. But such a capitalist world is one in which poverty is normal for 6.8 billion people.
Such unregulated capitalism is unjustifiable. It allows the rich to get richer and the poor to get poorer.
The rich minority will hold their wealth in stocks and shares and bonds and funds in corporations. This wealth will be used to invest in all the projects designed to exploit the resources of the world. The corporations such De Beers, Alcoa, Danzer, Esso, Shell, BP, Billiton, Anglo-Gold, Rio Tinto, and many others, will move onto sites across the world to mine and drill and cut forests, and clear land for industrial farming: to convert nature into products. Investigations by Greenpeace and Oxfam reveal that such corporations are not interested in alleviating the poverty of the local populations, only in securing and protecting the profits of their corporations. It is no accident that some of the poorest countries in the world, like the Congo, Somalia, Zambia, Ghana, are the sites of some of the most valuable resources. ‘Development’ is best considered as another capitalist strategy to extend and maximise corporate profits.
Capitalist enterprises are unsustainable.
Change is necessary. We have seen over the last 3 months that unfettered capitalism has led to the unraveling of the financial and banking systems in the West and the collapse of many finance houses and funds. This has been accompanied by increasing demands for regulation, supervision, and control, and government intervention. The principle of deregulation has been challenged. At the same time we have had to witness the distribution of trillions of dollars to the very corporations that had brought us to this crisis and to the edge of economic depression: the rich looking after the interests of the rich.
If such trillions had been given in low interest loans to the ‘developing’ world, and as grant aid to the poverty- stricken communities across the globe, the alleviation of poverty would have been significant.
The debate should now be about how to reorganise societies, in which 95% of the population is relatively poor, lacking basic amenities, educational opportunities, healthcare, and social services, and to provide a fair redistribution of wealth to all, through the development of social businesses, and the initiation of projects that provide work for local communities, and the funding to support local services now and in the future.
We must not assume that governments can be trusted to supervise any reorganisation. We have to recognise that they have the power. But in many countries across the world their governments have become the fiefdoms of ruling families, who have fed monies to their friends and relatives. In such cases, there may not be ‘political’ solutions, because the politicians succumb to bribery and corruption.
Against this background Mr. Zoellick, the president of the World Bank, has highlighted ten areas for action in what he describes as ‘fragile states’ – states that are subject to constant internal conflicts. It is the sum of these actions that combine to present a very different perspective on approaches to economic development than has been the traditional core of the World Bank’s work. He said the ten necessary actions are:
• Building the legitimacy of the state.
• Establish a relatively safe and secure environment.
• Building rule of law and legal order. President Zoellick noted: “The most fundamental prerequisite for sustainable development is an effective rule of law, including respect for property rights… legal order is not only vital to public safety – it is also a safeguard against the serious risk of criminalization of the state. Corruption adds to fragility and lack of legitimacy. Abuse of state power destroys confidence, and ultimately the state’s legitimate and core purpose.
• Bolster local and national ownership, which is fundamental to achieving legitimacy, trust, and effectiveness.
• Ensure economic stability as a foundation for growth and opportunity.
• Pay attention to the political economy – this means taking into account the relationships between power and wealth in society.
• Ensure the development of a healthy private sector.
• Coordinate across institutions and actors to ensure that government is not overwhelmed by the international institutions, foundations, NGOs, and the private sector, which seek to assist the fragile states.
• Consider the regional context given that fragile states can be both the cause of regional unrest and the object of manipulation by neighbors.
• Think and act with a long-term perspective. Mr. Zoellick said, “These are not quick-fix countries: Support needs to be for the long-haul. Money and humanitarian aid flood into the more fortunate countries at the beginning of a post-conflict settlement, often beyond the state’s capacity to absorb it.”

J. Kelvyn Richards
For a comprehensive argument for Social Ecology, in the future, see my web site
‘Social Ecology – a moral opportunity……alternative choices’

Comment by J.Kelvyn Richards

Social Business and Development
Will the concept and the practises of Social Business Enterprise provide us with alternative models of business organization based upon community/neighbourhood/municipal ownership?

2007…..2008….2009….World in crisis….Capitalism in crisis.

Food crises: prices going up, and down.
Millions starving.
Food for fuel……corn, rice, ethanol.
Food for animal feed…more animals being eaten.

Oil Crises: prices rocketing, then slumping.
Production reduced by 2 billion barrels a day.

Financial crises: funding based on debt. Debt defaults. Banks and corporations go bankrupt.
crises: pollution, deforestation. Desertification. Ice melt.
Coastal flooding.

The current model of capitalism is free market, with self regulated investment, and owners and investors looking for maximum profits. The assumption is that if the capitalist owner gets rich, the workers will all get rich. A company and owner are judged on the basis of the profits made: the bigger the profits, the better the company. Few care about the product, most care about profitability, and the returns on capital. ‘Capital’ is the key product.
But the truth is that profit capitalism leads to the enrichment of the owner. By 2008, the evidence of the World Wealth Reports is that free market capitalism has led to the unparalleled prosperity of the few [10 million $ millionaires including 103,500 multi millionaires/billionaires] accompanied by the continuing poverty for the rest, the majority.
Professor Muhammad Yunus, a banker and economist, and founder of the Grameen Microcredit Bank in Bangladesh, argues that even though there has been crisis after crisis in the global capitalist economy, no-one has put forward alternatives to capitalism. On the contrary, centres of socialism and communism, like the USSR and China, have become centres of capitalism, challenging the dominance of the USA. It is accepted across the world that free market capitalism is better at generating profits, which can be used to payback loans, to reward investors, to promote innovation, to fund expansion, corporate development, and motivate the workers.
But Professor Yunus wants to propose an alternative version of capitalism: social business capitalism – a version in which [a] success is measured by the achievement of social objectives, not the size of the profits;
[b] loans are offered to the local communities to enable them to organize the projects and improve their living conditions, their employment opportunities, their nutrition, their healthcare; [c] the monies are invested to start social enterprises, such as farming projects; provision of shelter; eradication of disease, providing eye care clinics, hospitals, pharmacies; constructing roads and railways; opening educational opportunities; all of which are organized by the local communities: [d] the owners and investors are selfless, altruistic, charitable, and not selfish and greedy; [e] social entrepreneurs are encouraged by means of low cost loans from banks/cooperatives/municipalities/ non-governmental organizations/charities to establish social business enterprises in competition with all kinds of other enterprises; [f] the quality of the services and benefits provided to the customers is the most important criteria of success.
A key financial change in this social business capitalism is that loans are provided at little or no interest according to the necessity of the social objectives and social benefits, and these social business loans are to be available to all, in particular, the poor.
At the present, even during financial crises, most of the money available in the world is controlled by the few. In 2009, out of an estimated world population of 6.9 billion people, 10 million have access to $42+ trillion, living on more than $11,000 a day. Up to 5.8 billion people are living on less than $10 a day, with little or no cash to spare. Many of these poor people will have ideas about projects to improve their living conditions, achieve social objectives and provide social benefits for the people in their local communities, but have no access to funding. For example, a collective of farmers may want to develop new crops; or to devise more efficient and sustainable sources of water; a number of families in local villages may want to produce a solar powered system of lighting, or water toilets or water purifiers; groups of teachers want to provide a mobile library service for all the children and schools in a neighbourhood. Within free market capitalism, none of these groups will qualify for loans as they do not have enough cash and have no collateral and would be regarded as too risky, and their projects could not generate enough profit to be of interest to any of the 10 million potential investors. But within social business capitalism, these groups will all be entitled to small loans, say $200, to get started. If they formed themselves into social business enterprises, they could offer proposals to local banks and local municipalities or local councils and work to achieve their objectives for their own community, and then expand to provide for other communities. Their success will be measured by the benefits provided for these communities, and the local funders will be free to invite other agencies or individuals to contribute more money into the projects.
So what are the characteristics of a ‘social business enterprise’? How is it different to a profit business enterprise? It will be owned and operated by the local communities, not by some funding agency or capitalist group in London/New York/Paris/Singapore…….. An SBE is a non-profit, non-dividend, non-loss company set up for social benefit. But, it is not to be seen as a ‘loss-leader’. An SBE is expected to be efficient and generate income so as to cover all costs. If it is operating efficiently, and the enterprise wants to expand its services to more customers by investing in innovation, and greater production, it will be necessary to create profits to provide the resources for expansion, innovation, development. For an SBE, profits are intended to support the product and the customers, and not to enlarge the bank balance of the senior directors and managers.
Prof. Muhammad Yunus reports that the concept of social business ‘crystallized in my mind through my experience with the Grameen companies. Over the years, Grameen has created a series of companies to address different problems faced by the poor in Bangladesh. Whether it is a company to provide renewable energy, a company to provide healthcare, or yet another company to provide information technology to the poor, we were always motivated by the need to address the social need. We designed these businesses as profitable companies to ensure their sustainability so that the products or services they provided could reach more and more of the poor on an ongoing basis. In all these cases, the social need was the only consideration; earning a personal profit was no consideration at all. That is how I realized that businesses could be built that way, from the ground up, around specific social needs, without relying on the motive of personal gain.’
For example, Grameen Danone Foods Limited [GDFL] was established, as the world’s first consciously designed multinational social business in 2006. GDFL was established with a view to conduct social business on a no-loss basis. This means that no shareholder should lose money from their participation in the business. Any profits (beyond the cost of capital) generated by the company will be re- invested in the growth and development of the business, in a manner that is mutually agreed upon by parties to the contract.
The first, and currently the only, manufacturing unit has been established on 800 m of land in Banani Betgari, an area close to Bogra town, some 220 km north-west of the capital, Dhaka. The 7,500 ft. factory currently processes around 6,000 litres of milk on a daily basis to produce 3,000 kg of yoghurt. It aims to increase production up to 10,000 kg/day by the third year and beyond. The facility is manned by a total of 35 staff. The primary raw material, milk, is obtained from a variety of sources, collected by specially
refrigerated vehicles that operate across various collection centres. Premium quality full-cream milk is supplied to these centres by individuals, obtaining micro-loans from Grameen Bank. Staff, at the collection centres, test the quality of milk with lactometers and if the minimum quality standards are met, payments are made at a pre-agreed rate (currently at Tk20/litre). The milk is then transported and processed at the plant, into fortified yoghurt, which is currently being offered in one flavour, and is packaged in 80 gm plastic cups, priced at Tk5/cup (approximately seven cents), and marketed under the name ‘Shakti Doi’ (Energy yoghurt).
At the moment most of the milk comes from the Grameen livestock and fisheries farms and from various local villagers who raise cows. Over the longer term, GDFL is actively considering developing about 500 mini dairy farms financed with micro loans by Grameen Bank. Such measures will lead to an augmentation in employment and business opportunities for all stakeholders.
GDFL is an eco-friendly facility designed to ‘ensure environmental sustainability’. Water used in the plant is treated by means of special water-treatment equipment, which purifies both incoming and outgoing water. This ensures that all water used in the plant is treated both before and after use. Such treatment helps to meet water safety standards before being used, and subsequently ensures that the water returned to the environment is clean and safe (Yunus and Weber, 2007; Sarkar, 2007).
Harvested rain water is also sanitised and used in certain parts of the plant. Solar panels generate renewable energy that is used in the facility, while a biogas plant supplies energy to meet any natural gas demands, such as to illuminate the perimeter fencing of the factory.
The containers in which the yoghurt is dispensed are made of cornstarch. These are biodegradable and, if buried, are transformed by naturally accumulating pressure and heat into a nutrient-rich substance suitable for fertiliser, which works just like compost for fertilising soil. The Bogra plant has a specially prepared pit for recycling used containers (Yunus and Weber, 2007). The GDFL team is currently trying to design edible containers. These cups would offer extra nutrition, the problem of trash disposal would be completely eliminated, and recycling would not be necessary.
Why produce yoghurt? The yoghurt is high nutrition, providing most of the daily energy requirements for children. A report by the WHO and UNICEF (EHPA, 2006) warned that the vicious cycle of ill health and poverty could defeat human development efforts, with children being the first to suffer. The provision of high quality foods secures the health and fitness of the children. The report further warns that a global trend towards urbanisation is marginalising the rural poor, and putting a huge strain on basic services in cities. As a result, families living in rural areas and urban slums are being trapped in a continuous, never-ending cycle of ill health and poverty. Children are always the first to suffer from diseases caused by dirty water and poor hygiene, while the wider impact of unhygienic environments drags back economic progress. For this reason, health should be the pre-eminent measure of the success or failure of development policies in the next century.
Grameen Danone is just the first social business.
There is also an eye care hospital in the area of Bogra.
A joint-venture with Veolia of France is building a small water treatment plant to bring clean water to 50,000 villagers, in an area of Bangladesh where the existing water supply is highly arsenic contaminated. The water will be sold at a very affordable price to the villagers to make the company sustainable, but no financial gain will come to Grameen or Veolia.
Now more and more companies are coming forward to partner with Grameen to set up new social businesses.
Prof. Yunus observes that some people are skeptical when he describes the concept of social business. Who will create these businesses? Who will run these businesses? Why would anyone devote time, energy, and money to projects with no hope of personal gain? ‘I always say that, to begin with, there is no dearth of philanthropists in the world, no dearth of donor countries giving grants. People give away billions of dollars every year. So do donor countries. Imagine if those billions could be used by social businesses to help people. These billions would be recycled again and again, and the social impact could be all that much more powerful. In the same way, money allocated by companies to corporate social responsibility projects could easily go into social businesses. Each company would create its own range of social businesses. We can also create Social Business Funds to pool funds from many sources and invest them in social businesses’. The opportunities for launching social businesses are really limitless. The funds could be provided by governments, municipalities, banks.
The more one reflects upon this alternative version of capitalism, the more one realises that there is no reason why a profit motivated company could not become a social business enterprise by altering the funding, the objectives, and the business plan. Profit maximizing companies can be social businesses if they are owned by the poor and the local communities. For example, Grameen Bank falls under this category of social business. It is owned by its poor borrowers. The borrowers buy Grameen Bank shares with their own money.These shares cannot be transferred to non-borrowers. A committed professional team does the day-to-day running of the bank. Every year, dividend checks are sent to the borrowers, representing their share of the bank’s profits.
Bilateral and multi-lateral donors interested in supporting economic development could easily create social businesses of this type. For example, when a donor wants to give a loan or a grant to build a bridge in the recipient country, it could create instead a “bridge company” owned by the local poor. A committed management company could be given the responsibility of running the company. Part of the profits earned by the company would go to the local poor as dividends, while part would go towards building more bridges. Many infrastructure projects, like roads, highways, airports, seaports, and utility companies could be built in this manner. The social business is operated by the local communities, not by the donors.
Once the concept of social business is included in economic theory, thousands of people will come forward to invest in social businesses because of the social dreams they have in their hearts.
Powerful multi-national social businesses can be created to capture a share of the benefits of globalization for poor people and poor countries. Social businesses will either bring ownership to poor people, or keep the profit within poor countries, since taking dividends will not be their objective. Direct foreign investment by foreign social businesses will be exciting news for recipient countries. Building strong economies in poor countries and protecting them from plundering companies will be a major area of interest for social businesses. In the UK, the movement towards ‘social enterprise’ has been developing, so that now there are 55,000 social enterprises involving 650,000 people and contributing 8.4 billion GBP to the economy, with the support of the ‘Third Sector’ of the government.

Comment by J.Kelvyn Richards

Good paper Javier! Good to look into Social Ecology and “development”! let´s look further into it.

/Malin Widehammar, Democratic Alternative

Comment by Anonymous

thank you for

Comment by a. mahmadi

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