Posted by: Tayo Akinyemi | July 9, 2010

Who Needs a Social Competitiveness Index?

On June 21st, the blog at philanthrocapitalism introduced a new project called the  Social Competitiveness Index.  The  SCI, conceptually inspired by the World Economic Forum’s Global Competitiveness Report, will compare the capacities of countries to engage in social innovation.

The Social Competitiveness Index (SCI) would rank countries according to the effectiveness of their legal, fiscal, governance and cultural environment with regard to social innovation. …  In doing so, it would provide a meaningful tool for decision-makers in all sectors to benchmark a country’s ability to tackle social and environmental problems and, through case studies, identify concrete steps on how to enhance this capacity.

Idea-makers Matthew Bishop, Michael Green, and Jed Emerson define social competitiveness with respect to three main criteria:

  • the capacity of the government, private sector and NGOs to innovate and create new models or technology;
  • the capacity to test these ideas and figure out what actually works;

  • [the ability to provide funding] to get the ideas that work to scale;

Now what our happy group of philanthrocapitalists want to know is whether they’ve captured the core of social competitiveness.

Truth be told, I’m not entirely sure.  At minimum, the criteria listed above describe the architecture of a functional social capital market, albeit in broad strokes and exclusive of social metrics as ‘value signals’.  However, as unhelpful as it seems, the question raised and the criteria proposed suggest a broader query.  That is, “To what extent is social competitiveness demonstrably different from economic competitiveness?” In other words, are the conditions that characterize each completely distinct from one another?

On the face of it, this challenge is a bit silly.  After all, one can easily name several countries that are economically competitive but not socially competitive.  (I can’t think of any examples of the opposing case, but I’m sure many of you can.)  However, as I am not an economist nor an historian,
I  cannot attest to the degree to which these things remain empirically distinct over time.  What I can say is that the proliferation of terms used to describe the co-mingling of economic and  social/environmental value—BoP business, creative capitalism, development through enterprise, impact investing, inclusive business, philanthrocapitalism, social enterprise & entrepreneurship,  social innovation, and triple bottom line, to name several—suggests that people are discovering more and more ways to un-externalize social and environmental value in the capitalist system.

Why is this significant?  Because it reflects an appreciation for the possibility that social and economic value may be linked.  If they are, then creating a separate index for social competitiveness would seem a touch superfluous. It would make more sense to recalibrate existing indexes to explicitly embed its key indicators.  (Heck, the New Economics Foundation has already created a ‘Happy Planet Index’, which “reveals the ecological efficiency with which human well being is delivered”,  so there’s clearly a place to start.)

If they are not, then the creation of an SCI could create real additional value, in which case separating social profit from economic profit and the mechanisms that produce them (such as Muhammad Yunus’ social business, the exclusive goal of which is to generate social benefit) is appropriate.  The problem is, we don’t know if they are.  We suppose, but we don’t know.

Fortunately, the purpose of the SCI is to “drive the creation of a systematic body of knowledge about the current structure of legal, tax and other policies toward social innovation, and about what works best.”  In that case, it may be worth clarifying what these elements work best for.  If social competitiveness gives rise to economic competitiveness, some systems-oriented rejiggering may be in order. Even if the relationship is not causal, any potential overlap would be well worth noting.  Additionally, it would be useful for  the index to track what specific outcomes socially competitive countries are well-equipped to achieve (or not) and what strategies are used to achieve them. That way, decision-makers will have concrete, specific information on which to act.  (Thanks MM for the primer on outcomes-based strategy.)

Oh, and I’d like that with a side of fries, please.

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Responses

  1. […] is necessary) and integrating it into the current economic system. This introduces a  conundrum which I’ve raised before, i.e. whether social and economic value are the same.  If they are, as Mulgan implies, than his […]

  2. […] also raises interesting questions about how social change should work.  I’ve suggested before that there seems to be a growing level of consensus around the possibility that social and economic […]


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