The European Commissioner for Innovation, Máire Geoghegan-Quinn. Photo: European Union 2014
Climate change, credit crunch, political disenfranchisement, youth unemployment, ageing society, mass migration, even the German energiewende – the policy to phase out nuclear energy – are all manifestations of global change and show the inadequacy of our current institutions to deal with the transformation.
This is our small world crisis. This is the cause of the crisis in Europe.
For centuries we commanded the destiny of the world, sitting comfortably on a stretch of land called Europe. We were able to extract value from across the world without seeing or sensing the impact of our actions. The outreach of our hands was greater than our sight. Like the bourgeois described by Engels in the Manchester of the first industrialisation, we enjoyed our lives concealed from unpleasant sight over the miserable lives of our neighbours. National borders protected us.
We turned Western countries in the richest ever in human history and left local communities far ashore to deal with the consequences of our passage. We lived in the illusion of an infinite world capable of serving our dreams and absorbing our waste; a world that was about to become a copy of our society.
Indeed, Western progress led to a sequel of world crises but we kept on going until we peaked. At the end of WWII our grandparents realised that the world had changed so dramatically that they had to invest in the creation of a whole swathe of political, economic and social institutions to address the structural causes of war, poverty and inequality. Their brave choices gave birth to decades of peace and prosperity in the West. The European Union stemmed from that creative momentum and collective endeavour.
We need to return to that creative mind-set and develop a new generation of concepts, rules and tools to re-innovate our institutional infrastructure before we reach another peak of crisis. The world that constructed a domestic peace and prosperity for the West has come to an end.
The small world emerging in front of our eyes as we connect online, watch television, travel across countries or stroll in the streets of our towns, is forcing us to deal with the interdependency and intertwinement of our new global society. This is due to the forces we unleashed but the final result turned to be different from what we had planned. The unintended consequences of our behaviour have already reached our doorstep. Now we can see and sense our footprint. We can even scent its smell but we don’t know what to do. We are disoriented and afraid in this unfamiliar world.
Reforms are mere patches attempting to address in isolation symptoms of an outdated vision and institutions unfit for purpose. Patching single solutions without reinventing our institutional infrastructure is doomed to fail. We need a new system and institutions to both lever and make sustainable the affordances, opportunities, and challenges raised by a worldwide and rapidly emerging networked society.
Institutional change does not mean a new constitution for Brussels, but engaging and reshaping values and practice of millions of people. Real change starts with the institutions that people believe and operate in their daily lives. Public institutions are just a part of them, their crystallisation.
People are the starting point and the European Union must redefine its partnership with millions of micro civic initiatives which are already reinventing communities from the ground up. The future lies in fine-tuning a partnership between the micro and the macro, between the commitment, passion and inventiveness of citizens, and the capacity of public institutions to scaffold, invest in, and scale-up.
The European Union needs to invent a new generation of institutions that shift from the discreet silo of closed disciplines & mediums to an age which embraces transparency, openness and peer-to-peer collaboration across sectors and fields. It needs to capture and multiply the value of micro initiatives as 3D making micro factories, citizen owned supermarkets, co-working spaces, coding clubs, car-sharing, digital communities for learning languages, open platforms for innovation, crowd-funded action to protect public heritage, distributed energy production through renewable sources.
The European Commission has already moved a few steps in this direction, acknowledging the value of citizens in developing innovative solutions to tackle societal challenges. It was part of the Innovation Union Flagship Initiative (2010) under the ‘social innovation’ label. The following year Commissioner Barnier developed a dedicated policy – the Social Business Initiative, later renamed Social Entrepreneurship – within the strategy to re-launch the Single Market.
Social innovation and entrepreneurship do put a spotlight on an emerging field where volunteering and corporate social responsibility meet; at the crossroad between profit and non-profit. They rediscovered the universal character and full potential of civic agency to transform the whole society. They acknowledge the value of free collaboration between individuals to take the future in their hands and reinvent political, economic and social institutions.
The EU is the world’s largest source of public funding in the field. Social innovation and entrepreneurship are priorities in the cohesion funds (€366.8bn), in Horizon 2020 (€80bn), and social value has become a criterion in the new directive on public procurement. A €90m fund for social entrepreneurship has been committed in addition to the Social Impact Accelerator, the €60m the first pan-European social impact fund launched by EIF in 2013.
These are impressive financial commitments but the next Commission has to direct its investments to open governance in all sectors, mutualize data and learning processes, and democratise finance and production. We believe six actions are required to start and make this emerging policy field truly transformative for the shared future of 500 million people:
1) Move from Social to Societal innovation - We see what we know, so we need to change our lenses to discover a new world. The Commission needs to expand its concept of ‘social’, moving beyond the traditional framework which confines it to employment rights, social inclusion and non-profit. This is not just semantics, but it’s a strategic move to make social policy relevant to every person. Therefore we argue to replace ‘social’ with ‘societal’ and create a new framework that allows every citizen to be an innovator and entrepreneur for the good of his or her own community. Public institutions have to understand the values, potential and needs of engaged citizens, and champion an emerging movement of millions providing voice and representation.
2) Crowd-sourced policy – The Commission needs to change methods to source data for policy design and build on the willingness and capacity of people to engage. New technologies offer all the opportunities for turning people and their initiatives into a societal neural system made of millions of live sensors to share information and act quickly. This would be a transformative shift from a policy process shaped by experts and lobbyists to a participatory policy system based on crowdsourcing and open data. Data sharing is a primary source of transparency and accountability, and contributes to empowerment and collaboration. There are already some successful stories. After the financial crisis, Iceland rewrote its constitution involving all its citizens. Another one is Better Reykjavik which has helped the citizens of Reykjavik to define and debate the public agenda for the city. These are relatively small scale initiatives. The National Day of Civic Hacking mobilised hundred thousands people across the cities of the USA using publicly-released data, code and technology to solve challenges relevant to federal, state and local governments. This is the kind of scale that the European Union has to deal with, although diversity is greater in Europe than the US. Prof David Lane is working on a prototype at the European Centre for Living Technologies (University Ca’ Foscari, Venice) to meet this challenge. Collective Awareness Platforms for Sustainability and Social Innovation is a new funding programme of the Commission supporting similar projects to boldly go where no man has gone before.
3) Build institutional capacity – The commitment to invest made by the EU won’t deliver results if the Commission doesn’t further its effort by simplifying the financial regulation and fostering a leverage effect on European funding. Provisions such as the one on in-kind contribution still bar the combination of different kinds of capital as volunteering whilst the one on co-financing stops start-ups as well as young and migrant entrepreneurs to access these resources as they cannot subsidize projects. European and national public officials need a dedicated program to understand the new array of opportunities and act accordingly. The focus has to shift from management control to outcomes leaving space for experimentation and rewarding results. The Commission needs to change its working framework to partner with transformative initiatives such as Vodafone’s M-Pesa for online micro lending, and Citizen Solar Power Plant, the crowd-funding initiative of Vienna to help citizens becoming energy producers.
4) Experiment with institutions for the future – The Commission should start innovating the market institutions given the economic crisis experienced by most people. Possibilities are infinite despite the claims of acolytes of the End of History. The list might include a public-owned cloud computing, open-source IP, low-profit company, an opt-in unemployment insurance scheme, full disclosure of corporate and government accounts, triple bottom-line accounting principles like B-Corporations, Social Impact Bond, a crowd-sourced impact rating agency, and special socio-economic zones in the areas the most affected by unemployment. Special economic zones, just to pick one, worked pretty well to introduce the market economy in China. In Europe they could introduce the principles of common goods as identified by the Nobel Prize Laureate Elinor Ostrom. Every region could be empowered to experiment and prototype new institutional infrastructure necessary to address our societal challenges turning the EU in a network of thousands laboratories of innovation.
Small-scale experiments are already happening. Capitalized by the UK Cabinet Office and the Birmingham Housing Association the £4m impact investing Hub Launchpad has been designed to combine peer-ownership and shared risks. Amongst other things a result is 50% increase in women start-ups being funded. Learning should not be limited to the EU. India, for instance, has introduced Corporate Social Responsibility (CSR) in the new Company Bill requiring large companies to reinvest 2% of corporate profits in local communities (Clause 135, Company Bill 2012). This is transformative for both the market and social agenda at it affects 800’000 companies and generates $2bn for social investments.
5) Bridge & scaffold - The millions of micro civic initiatives that make a difference on the ground don’t often feed into the policy process, and access resources to scale. The next Commission needs to be proactive building a scaffolding infrastructure not unlike its programme for trans-European transport infrastructure. Europe has a centenary history of building societal infrastructure. It is strategic to bridge its existing public and private institutions with the future technology and behaviour. For instance, it could create a fund for cooperatives to embrace the 21st century technologies in governance, management, and finance; or fund a network of open R&D Universities focused on societal innovation, the European equivalent of what Stanford did for Silicon Valley. These kinds of actions would be a powerful way to bridge the tradition with the emerging youth economy. Something is already happening. In Portugal the Misericordia of Lisboa, one of the oldest charitable institutions in the country established in 1492, has launched the first Banco de Inovação Social in the country. It’s a seismic change transforming traditional philanthropy for poverty relief into an investment-based welfare.
6) Open new markets - The only answer to the economic crisis is expanding the realm of opportunities within and outside of the EU. The next Commission needs to consider how to open the Single Market to social innovators and entrepreneurs establishing public liability markets where the long term financial commitments of public institutions are opened up to social enterprises. Something has already been tried applying prize challenges to tackle societal challenges such as Naples 2.0 and the Europe Social Innovation Prize in memory of Diogo Vasconcelos. An extension and evolution of the British Right to Bid to the Single Market could have a transformative impact when combined with open public liability markets. Few are still the cases of social enterprises and innovators able to win contracts outside of the home country. Only recently ABS, a consortium of social cooperatives from Perugia, has branched out in the UK to help traumatised veterans coming back from Iraq find a job in the solar energy market.
Even greater opportunities could be generated opening up to global markets and including social innovation and entrepreneurship in the Aid Policy. This is already in the agenda of the G8 with the taskforce for social impact investments. The next Commission can’t ignore this opportunity. The international success of the French Groupe SOS in dozen countries across the world has proved the value proposition of European social enterprises.
Complex systems are unpredictable and the European Union falls under the same rule. We can’t control the unintended consequences of innovation, neither forecast crisis; but we can build resilience in the system strengthening ties between people and organisations, and multiplying connections as natural systems do to last. This would be also the only long term strategy for social justice.
The European Union needs to reinvent itself adapting to a new small world and rediscovering that its strengths is in the resilience and entrepreneurship of the European people and peoples, their civic economy, communities, and organisations, in an ever innovative transformation of the institutional infrastructure.
This is the only Union useful to people who fight every day in the front line. This is the only Europe that can justify its existence to people.
Article published in Esharp in February 2014.