I have argued previously that capitalism is broken and that we need to find new approaches that are good for people, animals and the planet. Further I asked if social innovation might be part of that new approach.
The world is facing an unprecedented financial crisis that is creating a future in which traditional jobs are being destroyed. Jeff Jarvis outlines this future well in his post The jobless future. Before our eyes entire industries that thrived during the nineteenth and twentieth centuries are disappearing.
The consumer driven economy of the late twentieth century is teetering due to:
- the demise of the debt fuelled growth to support consumer spending, and
- a lack of jobs to provide the income for consumers to continue acquisition of goods and services.
In the period 2008-2010 the car industry is a good example. A confluence of high fuel prices, a global financial crisis (GFC), tightening of credit markets, and job losses across Europe and North America meant that demand for new vehicles dropped to historic lows. This in turn drove job losses in the car industry around the world.
But the car industry has for many years produced more new cars than the world really needs to replace old or damaged ones. Driven by consumer leasing arrangements that saw people acquiring a new car every few years, debt was fuelling an artificial demand. And when that debt fuelled demand dropped away during the GFC, demand levels for new cars fell back to more ‘real’ levels. With demand down, jobs will go in this industry. It is unlikely that the lost jobs will return.
This is a strange situation. Motor vehicles are a great social good. They have enabled us to achieve mobility to move people and goods in ways that our ancestors could not even imagine. But even a social good, when inflated by debt driven acquisition, might not be good for us.
Faced with the kind of jobless recovery and jobless future that the US is so kindly modelling for us we need to consider what means of value creation and exchange need to be created to replace the old models. In some places we are even seeing tent cities arise for those who have lost access to traditional housing and jobs.
One response is a top down Keynesian approach, with centralisation and extensive government intervention. However, the scale of the economic crisis facing us today means that governments simply do not have the resources for continued intervention. After a variety of interventions in the US and Europe the first world governments cannot afford to keep spending.
But another response is a grass roots and bottom up response that finds different, diverse and sustainable ways to re-create an economy.
It is here that the notion of social innovation comes into its own. It is the notion that we can create innovative businesses and business models that generate value for us from both a social and economic perspective.
Just repeating the same old models will not get us out of this situation. It is time to broaden our perspective and look to each other, to our local communities for sustainable and ethical ways to generate value.
An interesting place to start thinking about this is the work that is being done about resilient communities: