The Social Entrepreneurship movement:

New hope or old illusions?

Christian Arnsperger
FNRS & Université catholique de Louvain

Buenos Aires, Pontificia Universidad Católica de Argentina

Tuesday, September 9, 2008

1. The entrepreneurial climate

For some years now, I have been busy with what I call an existential analysis of contemporary
economies. It is a field within a broader area I like to designate as existential economics. What
led to me into this—somewhat iconoclastic—direction was a twofold factor : on the one hand,
an anchoring within what, roughly, we might call Christian humanism, a way of doing
philosophy that accepts that anthropological reflection need not (and, in fact, cannot)
disconnected from radical reflection on religious and spiritual issues; on the other hand, a
deep indignation with the injustice of capitalism, together with a growing difficulty to fit my
thinking into Marxist schemes of reasoning. Thus, I gradually became a left-wing, liberation-
oriented existentialist. In the 1950s or 1960s, this might have been a rather classical
trajectory—from Marxist materialism and Christian humanism into “optimistic”
existentialism; in the late 1990s, maybe less so. In fact, among my fellow economists the
move was not always very positively appreciated. After all, existential economics has as one
of its central postulates that what looks, on the surface, as “rationality” in our economic
actions—and can be analyzed as such—is, in fact, underpinned by “irrational” fears of an
existential kind. Most importantly, existential economics establishes a clear connection
between our economic decisions to consume, save, invest, produce, compete, and work and
our anxieties in the face of the fragility and precariousness of our mortal existence. In short,
economic life is secretly connected to the fear of death.
This is certainly a controversial claim, especially in today’s climate of “capitalist
exuberance.” Consumption, investment, and competition are routinely associated with
dynamism and, more generally, with a life principle: growing, going forward, creating,
entering new territory. Whether it is within neo-liberal or social-democratic circles,
entrepreneurship is viewed as the heart of the economic system—the idea being that within
today’s capitalist logic, each of us is destined to become a “self-entrepreneur” (in French:
entrepreneur de soi) and that capitalist firms are, in the end, nothing but organizations which
hierarchically articulate such self-entrepreneurs, some of them being managers, others being
workers, and yet others being shareholders or customers. In other words, capitalism is seen
increasingly as a logic that uses the principle of profit (or shareholder-value) maximization in
order to create a network of organizations, each of which is a network of entrepreneurs de soi.
Each of these individuals is seen—and is asked to see himself—as a creator of himself, a
designer of his own life, a discoverer of his existential trajectory. Whether it is Margaret
Thatcher’s ultra-liberal view, or Tony Blair’s “Third Way,” the underlying notion of capitalist
entrepreneurship as the heart muscle of society is the same—what differentiates Blairism
from Thatcherism is the role played by the government in facilitating this generalized
entrepreneurship. From Thatcher’s neo-liberal angle, as we well know, the option was radical:
following the prescriptions of her maître à penser, Friedrich von Hayek, who believed
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Ethics Conference n° 1
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© Christian Arnsperger 2008

governance was much like skilful gardening, she advocated a drastic reduction in all public
involvement and intervention, keeping only the minimal “Rule of Law” and the idea that
public coercion serves to protect private property. Free-market capitalism, allied with
parliamentary democracy—but rejecting forcefully any idea of economic democracy—was
supposed to lead to collective as well as individual liberation. Blair’s diagnosis was not that
Thatcher was fundamentally wrong, but rather that she and her ultra-liberal friends minimized
the prerequisites for a society of “self-entrepreneurs”: the need for massive public as well as
private investment in human and social capital. As Blair’s organic intellectual, the sociologist
Tony Giddens, repeatedly emphasized, an efficient capitalist market economy could only
function if people were given the means to function in it—lots of human capital in the form of
technical and psychological skills to enhance their “employability,” and lots of human capital
in the form of local infrastructures and social networks to enhance their “community
anchoring.”
In a sense, what mainly differentiated Thatcher’s Conservative party from Blair’s “New
Labour” was that, while both fully agreed on the centrality of the capitalist market economy,
Thatcher had a radical, uncompassionate liberal outlook whereas Blair had—at least on the
face of it—a softer, more compassionate approach. But both visions were essentially bottom-
up visions, with the public sector becoming virtually a set of more or less paternalistic
facilitating mechanisms for the coordination of “self-entrepreneurs.” That property of being
very bottom-up is, I believe, what led this liberal view to be gradually adopted all over the
European landscape, even by the more traditional socialist left. In a sense, the core idea of
entrepreneurship had won the day as never before in history; with enough skills (in the form
of “human capital”) and enough networks (in the form of “social capital”), each of us is
thought to be able to become a fully-fledged member of the great capitalist-market
mechanism through which we use our various sorts of “capital” … to do what, exactly?

2. Capitalism and anxiety

This, indeed, is the key question which, in a secularized age such as ours, has been pushed
from center stage and swept under the rug. What is capitalism for? All the agitation on
markets, all the competitive exuberance, all the heartache of broken projects, all the fear of
the future and uncertainty—what are they for? The usual reply is, wealth creation. The
capitalist market economy, so it is claimed, is a sophisticated hardware that generates
aggregate wealth by inserting all its members into a tight network of competitive incentives
which unleash constant waves of what Joseph Schumpeter called “creative destruction”: by
impersonally distributing gains and losses through market-success evaluation, capitalist
markets instrumentalize the individual fear of (relative) poverty to create collective
prosperity. The individual fear of poverty leads all of us to strive for market-generated wealth
as a security, and so the liberal miracle of collective enrichment through individual fear is
achieved.
Obviously, there is a close connection between incentives and anxiety. Without the fear of
loss—and the actual, observable fact of loss in the economic arena—competition and various
“internal” incentive schemes could not operate. Nor could socialist planning, for that matter.
Different systems of economic regulation can be distinguished by the different way in which

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they “translate” fundamental human anxieties into incentives. This, in turn, boils down to
determining who, within the system, is in charge of “triggering” the “right” anxieties at the
right time—who, in other words, is in charge of setting in motion the behaviors to be elicited
by the incentive schemes. What has always been viewed as a strength of the capitalist market
system, as opposed to both pre-capitalist, so-called “primitive” economies as well as
bureaucratically planned economies, is that people’s anxieties—their fear of loss—is literally
triggered by no one in particular, but by the resultant, impersonal forces of the interaction of
a multitude of profit-seeking, accumulation-thirsty, and consumption-driven individuals. In
short, a multitude of individuals inhabited by what we might call a “capitalist desire
structure.” In capitalism, our desires are structured in such a way that when we interact, take
decisions, evaluate our lives, and so on, we automatically trigger each other’s deepest fears of
loss and suffering—and this mutual triggering, which is carried out predominantly by
competition (between firms) and by vertical commands (within firms), results in the
impersonal “market order.”
From the viewpoint of existential economics, I argue that this multitude of profit-seeking,
accumulation-thirsty, and consumption-driven individuals who interact on capitalist markets
are fundamentally anxious individuals. The apparent exuberance and busy-ness of their
interactions is only a surface that conceals a darker truth: unless they become existentially
lucid—and this, I should emphasize immediately, is a real and full possibility (so my approach
is realistic but not at all pessimistic)—they will experience their exuberance on the backdrop
of a deeper, and frequently unconscious, “death pull”: profit will be “mine and not yours,”
accumulation will have a tenacious and often compulsive undertone, and consumption will
tend to become addictive. Why? Simply because the fundamental logic of capitalist markets
consists in feeding the existential anxiety which initially created it. Let me emphasize this
idea, which I will develop further in tomorrow’s talk: capitalism is obviously not responsible
for our existential angst; we have not waited to become modern homo capitalisticus in order
to be afraid of suffering, old age, and death—those three scourges which, more than two and a
half millennia ago, the Indian prince Siddharta Gautama witnessed and which led him to
engage on a spiritual journey towards existential lucidity; but while capitalism is certainly not
the initial cause of our anxieties, it tends—in most us, most of the time—to feed on them and
then to perpetuate them.
To put things in a nutshell, the logic of capitalist markets is an existentially distorted
response to our fundamental human condition. Our modern era has made this distorted
response into a way of life. Not just private property, but the maximal exploitation of all
“valuation opportunities” contained in private property, which therefore becomes
“capital”—this is the fundamental principle that underpins our interactions on capitalist
markets, whether we are on the production side, where we serve the direct interests of capital,
or on the consumption side, where we are induced, and let ourselves be induced, to perform
the actions that will maximize capital’s profitability. I will say more about these aspects
tomorrow.
What is important for now is to realize that this way of life, which I call “capitalist
existence,” is what the promotion of “entrepreneurship” aims to fit us into. I asked earlier
“… to do what?” in connection with the promotion of human and social capital, and the
answer offered implicitly by our capitalist culture is: to be better able to fit into the
mechanisms and behavioral schemes of capitalist existence. Whether it is Thatcher’s neo-

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liberalism or Blair’s “Third Way,” they have in common the basic idea that the public sector
needs to become a set of more or less paternalistic facilitating mechanisms for the
coordination of “self-entrepreneurs,” all oriented towards maximum participation in capitalist
existence. To be successful in business, we need to become entrepreneurs or managers who
contribute as much as possible to the income flows of shareholders; to be successful on the
labor market, we need to become flexible and employable employees who contribute as much
as possible to the objectives of entrepreneurs or managers; and to be successful on the markets
for consumption of goods and services, we need to become shareholders who contribute as
much as possible to the ventures that will make the highest profits. The circle is complete …
Is there anything morally wrong with this? The answer depends very much on the
ambitions one has for the human race. If humans are conceived as bio-machines which satisfy
basic drives by consuming, working, and playing, without any transcendent reference to a
collective dimension (apart from the impersonal “market order”), let alone to a spiritual
dimension, and which end up dying and falling apart into nothingness, then capitalism is the
greatest of all civilizational successes: through “self-entrepreneurship,” which gradually
becomes synonymous with “individual self-aggrandizement,” it offers to a significant number
of us the opportunities of consumption, wealth, and entertainment that we are assumed to
crave. True, an even more significant portion of us actually fail to realize those opportunities
and end up as failures on the market—our business ventures fail, we lose our jobs, we are no
longer “employable,” we fail to have enough money to buy all the consumer goods we and
our kids “need”—but as Hayek claimed in his defense of free markets, such widespread
failure accompanied by reasonably widespread success is actually the hallmark of a well-
functioning, impersonal incentive structure that distributes gains and rewards according to the
unbending requisites of private-property valuation. The enterprising self is also, so it is
claimed by both right- and left-wing liberals nowadays, is also a responsible self—and self-
responsibility includes the acceptance of “entrepreneurial” failure. The Blairist version of
compassion is to insist that we should all have received from the collectivity enough human
and social capital so that we can get up again after a failure and get back into the ring of self-
enterprise.
As I often say, if death is the very last word on existence—if death exists and is ultimately,
metaphysically real—then capitalism is the least bad system human culture has invented over
the millennia. Neither pre-capitalist economies nor planned economies have been able to
provide as much material wealth and existential illusions as have capitalist economies. The
logic of capitalist markets, which is rooted in the idea that human existence is basically an
entrepreneurial challenge and that we have to be educated to take up that challenge (by
becoming either successful business people or highly employable working people), has made
us into the sorts of “enterprising” human beings it needs us to be—and we need to be—so that
the wealth-driven alleviation of existential fear can operate with maximum efficiency.

3. Social entrepreneurship and the renewal of society

It would be quite wrong, however, to infer from what I have just said that I object to the idea
of entrepreneurship. I don’t—in fact, I believe it is the way of the future. What do object to is
the idea that capitalist entrepreneurship, which includes consumerism as a “self-

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entrepreneurial” endeavor, is the final word. In that sense, I share a lot of the optimism that
has recently been expressed by various advocates of a new kind of entrepreneurship: social
entrepreneurship.
Among those of us who are concerned with corporate social responsibility (CSR), social
entrepreneurship is a field attracting more and more interest. It represents the hope that, while
keeping some of the good sides of the “spirit of enterprise,” persons and communities can “do
things differently”—namely, use the dynamism of entrepreneurship in order to solve pressing
social issues which free-market capitalism is unable to solve (especially in the area of public
health, the environment, and the fight against poverty) and which governments have, for
various reasons connected to their type of organization or to their political priorities, been
unwilling to address. If neither private, shareholder-oriented firms nor public institutions are
up to the task of addressing certain pressing social issues, couldn’t private but “socially”-
oriented firms or organizations do the job?
The idea of social enterprise undoubtedly has a liberal flavor to it—even a “Hayekian”,
neo-liberal flavor, since it puts faith in the fact that solutions to social problems can emerge
from the decentralized interactions of agents on the shop floor, so to speak. Social
entrepreneurship is essentially a bottom-up affair. At the same time, there is a rejuvenation of
the very notion of an entrepreneur: not just someone who finds new ideas that can help some
shareholders or capitalists make a maximum profit, and not just someone who is able to
maximally “fit in” with the requisites of workaholism and consumerism, but someone who
undertakes a risky, uncertain task for the benefit of others, measured by the degree in which
“market failures” as well as “government failures” get resolved. A social entrepreneur is
still, in a sense, a “self-entrepreneur” because s/he engages in his/her activity in part out of
personal joy and enthusiasm—but, precisely, this joy and enthusiasm seem often to come
“from somewhere else,” from a kind of a conversion experience (some even use the word
“epiphany”) rooted in a newly acquired existential lucidity: life has little meaning in the
profit-making treadmill, and the needs expressed on so-called “underserved markets” cry out
through the voices of the poor and the vulnerable. The social entrepreneur is looking for
alternative ways of financing and organizing a production or service-provision activity so that
s/he can be highly effective in terms of his/her non-market, non-government activity (provide
high-quality education to the poor, solve a difficult local environmental problem, etc.) while
at least breaking even on the financial side.
This ability to be efficient along metrics that differ significantly from mere profitability
has always been the hallmark of the so-called “nonprofit” sector. Organizations such as
Ashoka prefer to use the label “citizen sector,” which is less negative. If all works well—if
funding is forthcoming in the form of donations as well as “market”-generated incomes, and if
production/provision are skillfully engineered and performed—financial incomes will usually
be fairly low, wages paid even to the executives will be much lower than in the “for-profit”
sector, but success measured in terms of so-called “social return on investment” (SROI) will
be maximal: not the shareholders, but the stakeholders will benefit from a good or service that
neither the capitalist market nor the government we willing or able to provide. Support and
screening organisms exist—among the most prestigious being Bill Drayton’s “Ashoka:
Innovators for the Public” and Klaus Schwab’s “Foundation for Social Enterprise”—which
attempt to coordinate social entrepreneurs and, most important of all, select those projects
which have the most chances of success. Such organisms and foundations are crucial

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“bottom-up” substitutes for the impersonal forces of capitalist markets which sanction
commercial ventures through monetary profits and losses; they ensure (as much as is possible)
that the funds they have been able to collect in the form of private donations and public
subsidies are channeled towards the most efficient social enterprises.
The Social Enterprise movement is based on a conviction which, although I started out as
a “classical” left-wing intellectual, I have gradually come to share: structural social change is
not well served by “top-down” State intervention—at least not in the stages of elaboration of
the project and direction of change. Local actors, entrepreneurial persons at the shop-floor
level, have much more precise knowledge of the needs, requirements, and opportunities than
does a bureaucratic apparatus. In that sense, I share much of Hayek’s social philosophy and
epistemology: knowledge is very diffuse in modern societies, and no single brain is able to
elaborate blueprints for what needs to change, when, and how. This is a basic fact of human
cognition. I have also come to share more and more the Blairite/“Third Way” view about the
role of government not just as a protector of private property under the rule of law, but as a
genuine facilitator and coordinator—rather than government as an initiator and organizer of
actual change. There is certainly room—lots of room—for a genuinely “enterprising
government,” but that means essentially a team of well-organized public officials who are
able to tap the huge potential of social entrepreneurship and to coordinate these multiple
initiatives into a well-functioning “pseudo-market for public goods.”
This set of ideas is quite novel, but it is picking up momentum very quickly now. Over the
past decade, more and more economists, sociologists—social scientists, and “intellectuals”
generally—have flocked to the new field of social-enterprise economics. Business schools
have opened up new curricula, and universities have created whole new tracks to make sure
their students can be initiated into this new view on the social role of entrepreneurs. The
enthusiasm is understandable, and I share it. As I’ll argue later, there is a potential here for a
return to old illusions about economic wealth and its role in our lives, but the new hope
created by social entrepreneurship can’t and shouldn’t be understated. In a simple graph, we
can see how things have tended to develop:

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Citizens
Social entrepreneurs

Business
entrepreneurs
Government:

Facilitating/
coordinating

Government:
State
bureaucracy

I have placed the facilitating/ coordinating government agents inside the circle of social
entrepreneurs because they are essentially in “congruence” with the social-enterprise project,
whereas in the mainstream capitalist economy State bureaucracy and “classical” business
entrepreneurs are, as postulated in standard neoclassical economics, acting with different
incentives in mind. This graph is partly descriptive, partly normative and stylized; it’s
intended to describe the situation towards which we are currently tending. It’s a sort of hybrid
between the social economy and the State-driven capitalist market economy we already know.
If organizations such as Ashoka and some of the social scientists working on social
enterprise had their way, we would actually be heading for a somewhat different picture:

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Business Social
entrepreneurs entrepreneurs

Public facilitators
Citizens

State

Here, there is much more interpenetration between the various categories of agents, with
crucial interfaces between business enterprises and social enterprises (something which
people like Bill Drayton and Muhammad Yunus are calling for) as well as between State
bureaucracy and social enterprises (something with uncertain results, and probably not desired
by social entrepreneurs) and between State bureaucracy and public facilitators/ non-
bureaucratic agencies (something which is also somewhat mysterious and would probably
involve power struggles). In fact, the unease with which State bureaucracy blends into this
modified picture suggests that, ultimately, the promoters of the Social Enterprise movement
would like to move towards a world in which (a) the interface between for-profit business and
the “citizen sector” grows, with classical, capitalist business firms only covering what social
entrepreneurs really can’t do better, and (b) the State bureaucracy is reduced to a neo-liberal
“minimal State” preoccupied with the protection of private property:

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Social
entrepreneurs

Business
entre-
preneurs

State

Public facilitators

Citizens

I feel myself very much in agreement with this picture. It portrays a society in which
markets are used for the collective good, not mainly as a place to reap profits at (almost) any
cost. Profit-oriented firms enter into various ventures with social entrepreneurs in order to
combine, whenever possible, the benefits of private capital with those of social investment. It
portrays politics as what it ought to be: the facilitation of individuals’ and communities’
autonomy, which indeed requires skills of coordination which can only be exercised at the
appropriate level: the “bird’s-eye” level of government, leaving individuals and communities
free, however, to orient their entrepreneurship in the directions they deem important. And it
portrays the “classical” State, the bureaucracy, as a necessary but very small aspect of non-
coordinatory politics: the safeguard of people’s private property and bodily integrity. This is a
minimally capitalist market economy with social entrepreneurs and a facilitating
government—the dream of front-line social democrats. No wonder it raises enthusiasm. It’s
the best chance we ever had of significant post-capitalist advance without revolution and
without planning.
Actually, I find myself in agreement with one of the key theses of Hayekian liberalism:
genuine social change can occur only from the bottom up, through the suitably coordinated
initiatives of those actors who, locally, know their own environment and situation best. In
fact, Hayek’s own view of liberalism is quite compatible with social entrepreneurship and the
emergence of a private-public partnership generating a set of “pseudo-markets for public
goods.” Not only are these elements compatible with liberalism, they are in fact an mandatory
part of it. Efficient—therefore skillfully coordinated and monitored—provision of public
goods and of personalized services to precarious people cannot be done through well-meaning
charitable funds alone; it requires high-level entrepreneurial skills and a no-nonsense outlook
on quality as a requisite of respect. Nor can bureaucratic institutions do the job, since for all
their powerfully increasing returns to scale in the case of mass measures, they often lack the

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adequate shop-floor knowledge. A competitive—or, rather, sanely emulative—citizen sector

is the way of our post-capitalist future. I’m convinced of that.

4. From the moral crisis of capitalism to the need for “democratic experimentalism”

In order to understand more deeply why the Social Entrepreneurship movement is promising,
let me suggest a political-economy analysis of contemporary capitalism. This will make it
possible to see why a new bottom-up emergence of new ways of thinking about economic
issues is so important.
If we want to move away from a purely neo-liberal defense of classical “free enterprise”
and “free markets,” we have to explicitly introduce at least two elements. I propose to call
these two elements the interest-oriented politics thesis and the economic-power clustering
thesis.
It seems difficult to say which of the two theses designates the logically or historically
primary phenomenon: Does the collusion of political and economic elites lead to a
concentration of economic power among a smaller set of individuals, or—conversely—does
the concentration of economic power tend to increase the effectiveness of alliances between
powerful economic actors and influential political actors? In the end, especially within the co-
evolution paradigm, the order is irrelevant. What matters is that, to a very significant extent,
the two phenomena generate strong mutual feedback loops and are therefore mutually
reinforcing. Economic power concentration tends to induce a spread of behavioral norms
which are congruent with it and help it sustain itself. And interest-driven politics tends to rely
on and create political decision procedures which facilitate the pursuit of the interests of those
in whose hands economic power is concentrated. Consequently, capitalism needs to be
viewed as a much more pervasive systemic—rather than sub-systemic—phenomenon: The
mutual interplay of market transactions and property rights regimes strongly influences, and is
in returns strongly influenced by, behavioral norms and political procedures which mutually
reinforce each other through power clustering and interest-driven politics. As a result, one can
arguably call this systemic phenomenon the cultural system of capitalism.
This cultural system is endowed with built-in mechanisms that tend to be homeostatic:
When followed by the majority of individual agents, the co-evolved norms of behavior tend to
confirm the need perceived by powerful economic agents to press for congruent political
decisions—something which can be done all the more easily if the political elite is itself
inclined to adopt the co-evolved behavioral norms. Although this process of interdependent
adoption of a common frame of mind could be described in more exact terms (something
which exceeds the scope of this paper), what matters for our present purposes is that this
process of emergence portrays the process by which a set of agents with heterogeneous
interests coordinate on a shared “ideology”, that is, on a set of mutually supporting and
reinforcing norms of behavior, norms of political deliberation, aspirations, and perceptions of
their own role in the whole network of social relations.
In this view of ideology two properties hold at the same time: (a) The norms, political
rules, individual aspirations, and shared representations are such that they maximize the
benefits for the most powerful holders of economic power, but they do so (b) under the strict
constraint that the benefits perceived by the other agents in the system (the political elite, the

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middle class, and even the small people) also be increasing or at least non-decreasing. In other
words, the ideology can be shared because it induces and is reinforced by an overall
functioning that Pareto-improves the social situation over time. (This is undoubtedly what
occurred, at least roughly, in Western capitalism during the period from 1850 to 2000.) Thus,
instead of the Marxist caricature of society as a zero-sum game or as a Pareto-deteriorating
system held together only by violence of the powerful, by submission of the masses and by
thickening alienation, the co-evolution thesis can accommodate a much more positive view of
the emergence and permanence of capitalism as a cultural system. There is no underlying
providential scheme at work—just a set of norms (most notably among them market norms
and norms of democratic decision-making) capable of creating a minimal initial congruence
of divergent interests, and then a process of systemic reinforcement of the shared aspirations
and perceptions.
The pressing question, of course, is now the following: How can such an account of the
co-evolution of social norms and interaction structures make any room (a) for the perception
by individuals that the system in which they live is decaying and is in need of more or less
radical reform, and equally importantly (b) for the possibility for these individuals to actually
effect the social changes they believe will implement such radical reform?
There’s a risk involved, of course, in the idea of capitalism as a cultural system. Even
though I brought in the interest-oriented politics thesis and the economic-power clustering
thesis, is there not a possibility that the co-evolving ideology supporting the capitalist cultural
system might be a fully self-confirming and self-perpetuating ideology? This might be the
case if any attempt by individuals to question the foundations of the culture that surrounds
them were to trigger a set of norm-induced social sanctions so strict that these individuals
would be chastened into forever abandoning their questioning stance. Such sanctions, of
course, would involve no physical violence and would be fully compatible with a formally
democratic political regime—but the fear that they could become an endogenous product of
the capitalist cultural system is what has always led radical critics of capitalism to label it
totalitarian or repressive.
But more radically still, the very capacity for questioning the foundations of the capitalist
cultural system might disappear, simply because the perceived need for such questioning itself
disappears. The “thin” alienation of the desperate factory worker, whose mind is hopelessly
emptied and numbed by harassing workloads, might give way to a state of “thicker” or
lighthearted alienation, in which individuals sincerely believe that they have every reason to
remain content with existing norms and interaction structures. The classic example is the
extreme version of the American Dream, in which the individual firmly believes that the
capitalist market economy offers everyone an equal chance of success and that failure is only
a sign that something is wrong with the individual himself. If this version of the American
Dream is literally held by a majority of people, there is no possibility that decay be viewed as
anything but the result of the basic, ontological wickedness of human beings.
As Joseph Stiglitz has amply demonstrated, for instance, many Americans reacted with a
shock when they found out that “crony capitalism” was not just something faraway Asians
practice in shady, semi-democratic regimes. However, Stiglitz’s own indignation at the Enron
scandal and at the way the US Administration covered or ignored the initial stages of the
decay is, to my mind, ambiguous. He gets angry at the economic and political elites which
meet in cocktails or in plush backrooms to strike deals on new regulations or deregulations

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which open the way for fiscal evasion or even outright fraud. However, the body of economic
theory on which he bases his indignation is one in which markets allocate resources
efficiently if subjected to the “right” regulations, in which capital accumulation can produce
equality of opportunity for a majority of citizens if subjected to the “right” regulations, and in
which regulations and other public goods are provided by a benevolent, public-welfare
oriented government with the power to establish the “right” incentives. But who, apart from
Stiglitz and those who have read his books and agree with him, possesses the information
about what is “right”? And what does this matter to the “truly existing” US administration,
since according to Stiglitz’s own diagnosis—and also to Paul Krugman—the political elites
are not public-minded and will still concede interests to their favorite oil lobbies or to the
Vice-President’s own favorite construction company?
What normative issues are involved here over and above the merely efficiency-related ones
which we saw to be the exclusive realm of normative criticism in Hayek? Stiglitz and
Krugman may be lonely prophets screaming in an empty desert; this will be the case if the
prevailing ideology is so locked-in that all Americans believe in the extreme version of the
American Dream and hence are spending all of their time—each on his or her own rung of the
ladder—pursuing the same goals as the CEO of Enron, with no time to read critical books and
not even any awareness that such books exist. Of course, this lonely-prophet scenario is
nonsense because in actual fact Stiglitz and Krugman do sell books (there is a market within
capitalism for books critical of capitalism) and their books do spark public debate. Still, such
debates could simply boil down to a lament on human evil and on the “sin of cupidity”, with a
vibrant call for resurrecting moral values of honesty, truthfulness, maybe even altruism—
along with, perhaps, an equally vibrant call for the government to enact “new and tougher
sanctions” against “financial criminals” who individually “ruin the reputation of American
business”. In fact, the economic elite which profits most from its acquaintances with the Bush
administration may actually have an interest in publicly demanding such tougher sanctions
which harm them in the short run, in order to be able to continue profiting from its
government connections on a longer-term basis. Still, just like in the lonely-prophet scenario,
all this finally boils down to using an individual rather than systemic condemnation of “evil
businessmen” in order to minimally refurbish the set of norms and to keep intact the basic
configuration of interaction structures, behavioral norms, politically vested interests and
economic-power concentrations that make up the prevailing capitalist culture.
So either Stiglitz and Krugman are lonely prophets to whom hardly anyone listens, or they
are ineffectual prophets who call to the government elite to correct a set of norms which are
really a result of the alliance between that government elite and the business elite. Is there a
third possibility? I believe there is, and I believe it is the one possibility which can put us on
the right track towards a post-capitalist future.
That third possibility is for Stiglitz, Krugman and other social critics to realize that in the
same way as the subsystem of decentralized market exchanges in the capitalist culture can be
viewed as a device for what can be called “interactive problem solving,” various processes of
decentralized democratic decision-making can also be called on to act as devices for
interactive problem solving. The specific problem which these decentralized democratic
processes would attempt to solve—and which, like the market-exchange problem, cannot be
solved by any centralized mechanism for lack of information—would be the following:

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(a) For any dissatisfaction to be voiced in an effective way, it needs to be rooted in

collective-action movements.
(b) In the absence of a centralized normative authority, collective-action movements can
only take shape on the basis of a set of shared interests based on a collective
consciousness.
(c) This collective consciousness can only emerge interactively on the basis of the gradual
realization that existential failures within capitalist interaction structures are not always
individual failures, and that what is being most deeply stifled is a set of shared
aspirations.
(d) This shared dissatisfaction can be sparked by various analyses and diagnoses by social
critics to the effect that a certain subset of the norms of the capitalist cultural structure
allows certain individuals to use the capitalist structure of interaction to subvert
another subset of the norms of the capitalist cultural structure.

Since the capitalist culture is based on a strong belief in the capacity of the market-
exchange subsystem to solve a large number of economic coordination problems through
interaction, there is no reason at all why the same capitalist culture could not develop an
equally strong belief in the capacity of a suitably designed political-decision subsystem to
solve through multi-level interactions the specific coordination problem called “formation of
a collective consciousness”. And if Stiglitz, Krugman and the others could develop this belief,
they could write their diagnoses and analyses with such multi-level political interactions in
mind. By doing so, they would be circulating critical theories which attempt to offer
alternatives—moderate or radical—to today’s capitalist market logic.
How are such enlightenment and emancipation to be produced? Not, emphatically, in the
traditional moralistic way by which a set of actions or modes of behavior within the capitalist
system are judged and denounced using value judgments which are absolute, categorical or
otherwise towering above the capitalist cultural structure. Instead, citizens need to see why
capitalism has become what it is, and how our bodies, brains, and cultures have co-evolved to
become capitalist bodies, brains, and cultures.
Doing this requires a more or less radical dis-ideologization or de-fetishization of these
norms and interaction structures: These citizens have to come to the realization that the
particular historical dynamics imposed by a particular interplay of economic-power
concentration and interest-driven politics has created a specific economic culture which is
capitalist, which is both necessary when viewed from today and non-necessary when viewed
from the future, so to speak. Thus, to put it a bit idealistically perhaps, if the economic power
which had become concentrated was that of capital-owning workers rather than that of
capital-owning bourgeois or of a Soviet-type intelligentsia, and if the political decision
procedures had been shaped by the interests of these capital-owning workers rather than by
those of the bourgeoisie or the intelligentsia, a cultural system might have emerged in which
the co-evolved behavioral norms might have been those of solidarity, self-restraint in profit-
seeking, socially conscious consumption, and so on, and the co-evolved political decision
procedures would have gone more along the lines of workers’ councils, a participatory
economy, or the Social Entrepreneurship movement.
Collective reflection on such alternative capitalist cultural systems and on their possible
evolution out of the same basic modern norms of individual liberation, freedom from

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ecclesiastical or royal power, self-creation and self-responsibility, and so on, is not at all
aimed at simply wishing away all the technical and normative problems—most notably, the
free-rider problem and the principal-agent problem—thrown up by these alternatives. Rather,
this reflection can be viewed as a counterfactual exercise which suddenly historicizes—and
hence renders relative and fragile—the currently prevailing capitalist culture.
To finish this discussion on the place of capitalism in socio-cultural evolution, let’s see
how such counterfactual and historicizing reflections can be fed into the processes of
decentralized democratic decision-making designed to provide interactive solutions to the
problem described by points (a), (b), (c) and (d) above.
One of the basic and positive lessons of the discussion so far is that the evolution of social
norms is guided neither by some heavy historical necessity nor by some a-historical absolute.
Capitalism is not merely a subsystem in a broader “system of liberty” as Hayek would have it,
but it is a fully-fledged cultural system. However, it is also a historically contingent cultural
system open to internal variations on the basic normative theme of individual liberation,
freedom from ecclesiastical or royal power, self-creation and self-responsibility—a theme
which pervaded early defenses of the liberating horizons offered by capitalism (as in
Montesquieu or Smith) and which needs to be salvaged from what the particular dynamics of
early-to-contemporary capitalism has made it into. In other words, capitalist markets have to
be replaced, as much as possible, but post-capitalist markets.

5. New hope or old illusions? Towards “existentially active” citizens

However, up to now I have left one absolutely crucial issue out of the picture. Notice that we
haven’t said a word about that very large “outside” category: the citizens who are neither
State employees nor public coordinators nor entrepreneurs—capitalist or social. The reason
we haven’t said a word about them is that, usually, the defenders of social entrepreneurship
say virtually nothing about them. They’re “out there,” waiting for goods to purchase and
services o receive. But isn’t it strange to imagine a change in both the structure and
motivation of enterprise and the structure and functions of public administrations—and to say
nothing about the “bigger picture,” the overall context within which these changes are
supposed to take place? Here is the point I’d like to make to finish my analysis: the Social
Entrepreneurship is rightly viewed as a source of new hope, but for this to be so there needs
to be a fundamental change in outlook within the population of citizens as a whole.
How exactly can individuals in the current society become aware of the need for post-
capitalist markets, and how can they enact these new variations given the current constellation
of market-exchange mechanisms, property-right regimes, norms of behavior and political
procedures? Collective efforts should not be directed at launching a deeply contemplative
reflection on a “new morality for today’s capitalism”, nor should they simply call for an
ethical revival among the current business elite; rather, the whole complex of existing market-
exchange mechanisms, property-right regimes, norms of behavior and political procedures
should as much as possible be “put up for grabs” in the spirit of what Roberto Mangabeira
Unger has called “democratic experimentalism.”
Unger’s main point of departure is the recognition of the “institutional indeterminacy” of
the main components of the market economy: “The crucial assumption is that the market

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economy, like representative democracy or any other abstract institutional conception, is

institutionally indeterminate: it lacks any single natural and necessary institutional form. The
narrow repertory of variants of the market economy now established in the rich North Atlantic
economies is made up of institutions and practices that have shown themselves more
innovation- and growth-friendly, and more hospitable to free political institutions, than many
others now or once on offer. Nevertheless, we read the lessons of experience wrongly if we
suppose them to teach that these arrangements represent the inevitable outcome of a halting
but relentless convergence toward the necessary, or even the best, form of the market. […]
Instead of seeing every disturbance of the present course of market-oriented reform as the
trumping of the market by a non-market based form of resource allocation, we must learn to
recognize in some such disturbances early moves in a campaign to reorganize the market.”
Thus market economies need not be capitalist. They can be post-capitalist, for instance with
an extensive and expanding social-entrepreneurship sector and a government-regulated
“market for public goods and personalized services.”
What actors in the capitalist cultural system need to push for is the design of decentralized
experience-building and experience-dissemination mechanisms which are analogous to the
“catallactic” Hayekian market mechanism—and which, quite possibly, might political
generate economic institutions quite opposed to the Hayekian market mechanism. So the idea,
quite emphatically, is not to make politics more like marketing, or to create market incentives
within democratic decision-making. Rather, the idea is to reform in depth the political
procedures of the capitalist cultural system so as to render possible the decentralized
experimentation with innovative social norms by groups, communities, virtual forums, etc.
To the extent we believe that decentralized market exchanges based on local experiments
by individuals will produce a self-organizing pattern rather than a chaotic void, we must also
accept to believe that decentralized institutional experiments based on local innovations by
individuals and groups will produce a self-organizing pattern. Through the multiple levels of
democratic interaction among critical citizens, the self-organizing market on which these
citizens also interact can progressively generate a self-organizing democracy which can shape
and reshape the market economy from within. We urgently need to realize that the capitalist
culture in which we are living is not living up to the market economy’s initial potentials; a
certain subset of the norms of the liberal market culture has allowed certain individuals to use
the capitalist structures of interaction to subvert another subset of the norms of the liberal
market culture. Thus, democratic experimentalism will largely consist in various regions,
groups or collectives trying out different re-combinations of norms and interaction structures
within the capitalist culture, implying different ways of reorganizing economic and political
processes. This is where hope lies.
How could we explain the emergence of social entrepreneurs and public coordinators—a
new view on how and what to produce, and a new view on how to stimulate and coordinate
economic activities—from within a population of good old homo capitalisticus? How would
the mutation occur, and if it did, what citizen support would entrepreneurs get in the alleged
“citizen sector,” if everybody else was still fully immersed in capitalist bodies and minds,
with capitalist brains, within a capitalist culture and a capitalist consciousness which values
consumption, competition, profit-oriented evaluation, and endless accumulation accompanied
by constant growth of GDP? This would be quite implausible—and empirical data show it is,
in fact, not true: among social entrepreneurs who have experienced an “epiphany” or a kind of

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conversion, there is a high proportion of so-called cultural creatives, also called by Arjuna
Ardagh the “translucent generation”—people who, although they may not adhere to
established and institutionalized religions, are more attracted to Mohandas Gandhi, Juliet
Schor or Eckhart Tolle (or, for that matter, Christ Jesus) than to Jack Welsh, Rupert Murdoch
or even the now very charitable Bill Gates. The “translucents” are perhaps slightly New Age,
yes, but many of them have acquired—through life’s tribulation or at birth—a deep existential
lucidity that simply compels them to quietly give up the capitalist rat race. Their stories fill
the many books on social entrepreneurs. They settle for less money and more time, less
consumption and more communal life, less competition and more emulation and mutual
support, less material security and more fragility, less materialism and more spirituality.
They’re the spearhead of the really “new economy,” that is, of the post-capitalist market
economy towards which the Social Entrepreneurship movement has been pointing.
But they’re only the spearhead. The Social Entrepreneurship movement will eventually
fail—that is, it will remain small and, in some cases, even revert to the capitalist-market logic
after a brief spell of post-capitalist experimentation—if the existential lucidity of the cultural
creatives doesn’t spread to the whole population. Some, like Eckhart Tolle or Ken Wilber,
believe it will eventually spread as human consciousness evolves towards higher levels;
however, my own position is that this spread itself requires that, at the level of economic
education and especially in our business schools, we present and popularize a vision of Man
beyond homo capitalisticus—a vision through which the younger generation can broadly
accept that less consumption might be better than more if we embrace voluntary simplicity,
that workplace democracy might be part of a successful business model and that a high social
return on investment might make you more proud (though usually less rich) than a high
financial return. New ways of investing, producing, and consuming can be found—they are
already around, being experimented by some “translucent” or other—but to make them stick
requires a new level of existential lucidity. And as I will show in tomorrow’s conference, such
a new lucidity requires, first and foremost, that we perform (as part of the deep work of our
Western culture, with its wonderful tools of rationality and scientific psychology) a far-
reaching existential critique of capitalism, a “critique of capitalist existence.” For unless we
come to understand how capitalism makes us live, and what we (usually unconsciously)
demand of capitalism in order to deny our existential fears, we will never evolve towards
higher consciousness.
This implies that the “citizen sector” must, apart from engineering novel technical
solutions to hard social problems, also be the place where the existential critique of capitalism
gets fostered through experiments in post-capitalist living. Social entrepreneurs have to be not
only agents of structural social change, but also—an by that very token—creators of a critical
citizen sector, a sector of renewed economic thinking in which critical citizenship is born and
fostered. In other words, what has to spread from the social entrepreneurs to the rest of
citizens is a desire for post-capitalist living, and (as I will show in tomorrow’s conference)
this is possible only if social entrepreneurs impel other citizens, through their examples of
conversion and commitment, to become existential activists. Unless this happens, the
magnificent potential contained in the Social Entrepreneurship movement is likely to wither
and, eventually, be swallowed up by the crunching logic of capitalist existence.
This is not something that can be engineered from the top down. It requires lively
communities of life (and faith). However, it can and must be encouraged by the public

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facilitators in the form of citizenship education and incentives to work less, consume less,
produce more socially oriented goods and services, and use our “free time” to share, pray,
meditate, commune with nature and with our fellow citizens, instead of rushing to the
shopping mall, to the factory, or to the office for a few hours of overtime …
That an economist should say such things might seem strange to some of you, or perhaps
even a bit scandalous. Nevertheless, I’m convinced that the way out of the contradictions and
pathologies of capitalism lies on that direction. Economics is not ultimately about efficiency
or production or consumption, which are only instruments; economics is, or should be,
ultimately about happiness and joy. Today, combining social entrepreneurship with existential
economics and spiritual reflection on what it means to be truly human is—I think—the only
serious way towards genuine happiness and joy.
Thank you.

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