24 January 2018
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Half of the world’s wealth is held by 1% of the population. The concentration of wealth in the hands of a few people continues to accelerate. This severe and indecent observation challenges one of the foundations of our economic and social belief: no, the law of the markets does not lead to a naturally fair balance; no, the sum of the individual interests does not converge with the best possible general interest. Making the rich richer does not benefit the largest number of people. The so-called “trickle down” effect does not work as effectively as people would like to think. If the proceeds from capital benefit whoever owns it, then growth will never be fairly distributed among all the stakeholders. This proprietary primacy of capitalism ushered in a long period of economic development, but the latter was made possible above all through the exploitation of exhaustible resources. Time is running out .We will not be able to escape the reckoning of the environmental and social consequences of our wealth-creating machine.

Theorized by Professor Yunus, Nobel Peace Laureate 2006, social business, a business model where social utility takes precedence over the capital invested, has been tried as such for some ten years. This model exists also in France. In the older economic paradigm where individualism reigned supreme and its insecurity consequences generalized, the convergence between financial and social performance sounded like a contradiction, a paradox – a utopian whim. And yet, their convergence, however singular it may be, is a path rethinking and refining a more responsible capitalism and a more voluntarily inclusive economy for the future.

Social business is very conventional in its search for profitability. But it is also very different because its primary goal is social utility. Its way of creating sustainable value lies in its capacity to implement a collective utility for which it was created.

The notion of utility as “service rendered to the customer” is inherent in every commercial undertaking. At times the utility has a social dimension, but it remains an efficiency strategy for companies. For its part, a social business exists only by and for its social mission, no longer only in its own interest, but in the interest of society as a whole. This is brought about by a sort of contract it concludes with its eco system – the point of departure for building a common future. Beyond an encounter and an opening which exceed the boundaries of the company, a social business provides positive effects, fairness, and concrete and beneficial changes for the largest number of people.

Impact investments in the form of shareholding stakes in social businesses is a promising yet risky, difficult and patient commitment. The public and investors have long been made complacent by an exciting phantasmagoria. The idea is grand, of course. But the reality is hard. Return on investment is long in coming, at times uncertain, and the projects require constant financial support to develop. Embarking on social business calls for persistence.

Social business undoubtedly harbours the origins of economic change. There are true champions of social businesses but few contenders succeed. Many on the other hand have managed to amplify and disseminate in wondrous fashion a renewed vision of business, driven by an energy and desire to improve alarming social and environmental situations.

The development of social business requires specific financing tools as much as the need to adapt to the conventional financing methods of full service banks. To that end, we have to accept a real economic revolution: the social utility must be booked in the company’s income and financial balance sheet. Conceiving this integration means accepting a real change of paradigm in the treatment of the social economy. It is probably one of the only means to disseminate a socially responsible economic model driven by entrepreneurial dynamism.

Social business could thus post its operational performance more clearly and mobilize conventional bank financing. The path that social entrepreneurship beckons us to follow is that of a world that is asking profoundly to be regenerated. Social business is an expression of capitalism. It is one of its voices, the voice of those who wish to discover new sources of utilitarian entrepreneurship. It is also the path of a liberal economy renewed through a reasonable, responsible and sustainable exploration.


Source: Le Monde