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 Mulgan Lisbon 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 propositions Proposition 1 The 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. TURNINGPOINT Bubble Golden Age 1793–97 GreatBritish leap Canal mania 1848–50 Railway mania The Victorian Boom London funded global marketinfrastructure build-up(Argentina, Australia, USA) Belle Époque (Europe) “Progressive Era” (USA) 1890–95 The roaring twenties Europe1929–33 USA1929–43 Post-warGolden age Telecom mania, Internet emerging marketsand NASDAQ Sustainable global knowledge-society ”golden age”? 2000/7–? The historical record: bubble prosperities, recessions & golden ages DEPLOYMENT PERIOD INSTALLATION PERIOD 1771Britain 1829Britain 1875 Britain / USAGermany 1908 USA 1971 USA Each Golden Age has been facilitatedby enabling regulation and policies for shaping and widening markets

5. MATURITY SYNERGY FinancialBubble Market saturation and social unrest Technologicalexplosion Golden Age FRENZY TURNING POINT IRRUPTION Crash Institutionalrecomposition The sequence of propagation has four phases and a break 20 – 30 years 20 – 30 years INSTALLATION PERIOD DEPLOYMENT PERIOD Degree of diffusion of the technological revolution Time big-bang Nextbig-bang

6. Proposition 2 Strong 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 3 Social economy can become an innovative driver of economic transformation in the deployment period – social Schumpeter Can 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 it Grant economy. Seed bed of innovation but fragile economically Market 55,000 social enterprises in UK. Requires new mediating institutions Households: conditions for participation

18. Proposition 4 Crisis 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 5 The coming years are a critical moment of danger and possibility. Danger from crisis (debt overhangs and credit shortage/unemployment/cuts to grant programmes & social services Possibilities: 1930s, Argentina, favellas

22. Conclusion Just 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, 2007 Bill Ivey, Arts Inc, University of California Press, 2008 Francois Jegou and Ezio Manzini, Collaborative Services: social innovation and design for sustainability, Poli Design 2008 Jim Maxmin and Soshana Zuboff, The Support Economy Carlota Perez, Technological Revolutions and Financial Capital, Edward Elgar 2002 Walter Stahel, The Performance Economy, Palgrave 2006 Robin Murray robinmurray(AT)blueyonder.co.uk Julie Caulier-Grice julie.caulier-grice(AT)youngfoundation.org Geoff Mulgan geoff.mulgan(AT)youngfoundation.org