Socialism and Social Enterprise

There's been a lot of talk about socialism recently, and one of the questions I get asked on occasion is whether it has any relation to social enterprise.

Does it ever!

As I describe in Is Social Enterprise Sustainable?, the term "social enterprise" migrated to Western charity from socialist law. "Social enterprise" as a term associated with blended value did not originate from capitalism, and its identification with commercial business & venture capital actually came rather late in the game.   

In socialist jurisprudence, social enterprise was a term designed to replace the capitalist notion of businesses dedicated to the pursuit of profit. The social enterprise generated revenue in excess of the costs of production, but profit-making was not the goal of socialist business--rather, its fundamental organizational purpose was to serve collective benefit. More over, in keeping with Marxist/Leninist ideology, the social enterprise was owned & controlled not by private shareholders--a hallmark of bourgeoise capitalism--but by workers themselves, from the workers immediately connected to the enterprise to society as a whole.

(Pictured above: a 1964 New York Times article notes how Poland had reclassified a tax-privileged charity with industrial production facilities as a fully taxable "social enterprise.")

In the 1960s and '70s, dissidents got the clever idea of leveraging Marxist rhetoric to subvert the centralized Leninist state. One concept the dissidents revived was "civil society"--grazhdanskoe obschestvo, equally translatable as "citizens' society"--which the dissidents were able to use to challenge the concentration of power in a government elite. Relatively moribund in Western political rhetoric for roughly a century (we had drifted to "civilization" instead), the term "civil society" soon enjoyed an international revival as a term synonymous with nongovernmental associations.

Social enterprise, in the sense of a venture with a social purpose, migrated to the West in a similar fashion. In particular, in the late 1970s, the Polish labor union "Solidarity" became the subject of international attention for its challenge to Communist Party and state control of labor unions. Having learned from emulated the previous decade's dissident appropriation of civil society, Solidarity leaders put forth a model of social enterprise that circumvented the state. Instead of being controlled by the government and Party, the social enterprise would be run by its workers for the greater social good.

Almost instantaneously the concept of "social enterprise" became a buzzword among Western advocates of an alternative to profit-centered business. Not coincidentally, it started popping up in the charitable world as well, most notably in the rhetoric of an emerging leader (and Yale-trained lawyer) named Bill Drayton.

That we have come to associate social enterprise with commercial business & venture capital is one of history's little ironies, much like how the socialist-scribed Pledge of Allegiance became a shibboleth of conservative Republicanism or the avant-garde feminist Mother's Day came to perpetuate the cult of domesticity.

What can we learn from this history? More on that soon enough. Until then, social enterprise office workers unite! We have nothing to lose but our Starbucks Cards.