This document discusses 5 propositions about the social economy and the global economic crisis: 1. The current crisis marks a transition from the 20th century model of mass production to the 21st century model of a distributed digital economy. 2. Strong social and technological trends are providing the basis for expansion of the social economy, including addressing intractable problems, expressive culture, and the digital economy reconfiguring production. 3. The social economy can become an innovative driver of economic transformation if conditions are transformed for the state, grant economy, market, and households. 4. Crisis requires differentiated counter-cyclical policies focused on investment, innovation, and regulatory changes to create conditions for social innovation

1. The Social Economy and the Crisis Robin Murray, Julie Caulier-Grice & Geoff MulganLisbon 15th July 2009

2. From the micro economics of social venturing To the macro economics of social innovation and the global economic crisis

3. 5 propositionsProposition 1The present crisis is about a long wave transition from the 20th century paradigm of mass production, to what? to the 21st century paradigm of the distributed digital economy?

4. TURNINGPOINTBubbleGolden Age1793–97GreatBritish leapCanal mania1848–50 Railway maniaThe Victorian BoomLondon funded global marketinfrastructure build-up(Argentina, Australia, USA)Belle Époque (Europe)“Progressive Era” (USA)1890–95 The roaring twentiesEurope1929–33USA1929–43Post-warGolden ageTelecom mania, Internet emerging marketsand NASDAQSustainable global knowledge-society ”golden age”?2000/7–? The historical record: bubble prosperities, recessions & golden agesDEPLOYMENT PERIODINSTALLATION PERIOD 1771Britain1829Britain1875 Britain / USAGermany1908 USA1971 USAEach Golden Age has been facilitatedby enabling regulation and policies for shaping and widening markets

5. MATURITY SYNERGYFinancialBubble Market saturation and social unrestTechnologicalexplosionGolden Age FRENZY TURNING POINTIRRUPTIONCrashInstitutionalrecompositionThe sequence of propagation has four phases and a break20 – 30 years20 – 30 yearsINSTALLATION PERIODDEPLOYMENT PERIODDegree of diffusion of the technological revolutionTime big-bangNextbig-bang

6. Proposition 2Strong social and technological tides which provide the basis for the expansion of the social economy

7. i) Intractable Problems. Widespread recognition that the big issues not solvable with business as usual.

8. But the social economy is particularly well suited to tackle these issues and is the source of many innovations in these areas.

9. ii) Insistent voices, active lives.The rise of expressive culture - the post modern citizen actively searching for identity, meaning and self improvement , individually and collectively through social movements

11. iii) Digital economy reconfiguring production around the user. The Lego principle. Households become designers, processors and assemblers. The house becomes an office/recording studio/learning lab/doctors’ surgery/power station. Rise of distributed systems and the support economy

13. Platforms – from the linear to the multi-nodal

15. Proposition 3Social economy can become an innovative driver of economic transformation in the deployment period – social SchumpeterCan do so only if conditions transformed in each part of the social economy and their inter-relations

16. The social economy

17. State. Innovation episodic and centralised. Requires transformation of public finance and systems of accountability related to itGrant economy. Seed bed of innovation but fragile economicallyMarket 55,000 social enterprises in UK. Requires new mediating institutionsHouseholds: conditions for participation

18. Proposition 4Crisis in macro economic policy. Battle against recessions being fought with weapons of the last war. 4 differentiated counter-cyclical policies required that focus on investment and creating conditions of next wave

19. A) short and medium term investments that can be rapidly introduced

20. B) Factor Four innovations for services faced by cuts (e.g. Elderpower in Maine)C) Innovative use of resources freed up by the market – people/land/buildings/ideas + encouraging initiatives insulated from the market (exchange systems/local food/volunteering)D) Regulatory changes creating conditions for SI

21. Proposition 5The coming years are a critical moment of danger and possibility.Danger from crisis (debt overhangs and credit shortage/unemployment/cuts to grant programmes & social servicesPossibilities: 1930s, Argentina, favellas

22. ConclusionJust as 1930s crisis generated alternatives based on mass production model (Soviet, social democracy, fascism) so current crisis suggests alternatives based on distributed digital economy

23. References:Eric Beinhocker, The Origin of Wealth, Random House, 2007Bill Ivey, Arts Inc, University of California Press, 2008Francois Jegou and Ezio Manzini, Collaborative Services: social innovation and design for sustainability, Poli Design 2008Jim Maxmin and Soshana Zuboff, The Support EconomyCarlota Perez, Technological Revolutions and Financial Capital, Edward Elgar 2002Walter Stahel, The Performance Economy, Palgrave 2006Robin Murrayrobinmurray(AT)blueyonder.co.ukJulie Caulier-Gricejulie.caulier-grice(AT)youngfoundation.orgGeoff Mulgangeoff.mulgan(AT)youngfoundation.org