After the looting, what we require is a social economy

The government should increase economic incentives for more social behaviours, says Rod Schwartz of ClearlySo

Rodney Schwartz
Rodney Schwartz

At ClearlySo we talk a lot about the 'social economy'. We prefer the term for its breadth, incorporating as it does social business, enterprise and investment, as well as the entire commercial chain and how it operates. We exist to accelerate the growth of the social economy as against the predominant mainstream economy. We contend that the lack of a more social economy helps to explain the reasons for the riots in England in August and their underlying nature.

Before proceeding, we need to distinguish between the original outburst of anger after the shooting of Mark Duggan by the police and the other unrest that followed and spread across the country. This article deals only with the latter, where the causes of the looting and destruction seem harder to pin down.

In the days and weeks after these more opportunistic riots, I was struck by what seemed to be almost a conspiracy about the way these were reported and discussed. Rage and condemnation were the order of the day and even in private conversations one was cautioned against being in any way understanding of the rioters' motivations. "It's too early for that, Rod," I was told by a colleague.

Most political leaders, in response to public clamour, called for a crackdown to restore order and have subsequently called for, and the courts have meted out, relatively harsh punishments, with the public's fervent and overwhelming support.

I understand the fear at work and the need for public order. But if we want to minimise the risk of recurrence, we need to understand what happened, although to understand is neither to excuse nor to apologise for the violence.

In essence, the picture that has emerged is that the riots were acts of economic opportunism. People wanted more stuff and they saw this as a low-risk way to acquire it. Countless interviews suggest a cold calculation of cost and benefit. We can be aghast, if we wish, but before we fix this problem, we must understand it.

Such lawless behaviour has been categorised by the mainstream press as outside the norm. But how much of a departure is it? Have we not created a society, an economy, where the pursuit of personal objectives at all costs is indeed the norm? How different is all this, really, from politicians who fiddle, bankers who misrepresent and media personnel who hack? Rather than a deviation from the mainstream, could one not argue that the looters are the very embodiment of the spirit of the age? Is it so shocking that this has taken place, or have we been rather fortunate that is has not happened before?

Tinkering at the margins will not work as a way to solve this. Radical new ideas are needed. Interventions such as tax rises proposed in the US by Warren Buffett are welcome, but although his intentions are good, the solutions to today's ills need to go further. And his idea looks highly unlikely in political terms.

In a social economy, the array of goals to which individuals, investors and corporates aspire would be more diverse. The single-minded pursuit of profit at all costs would be replaced by a 'balanced scorecard' against which decisions would be made.

Governments would accelerate the trend in this direction by punishing negative externalities and rewarding positive ones.

A pipe dream? Perhaps. But so was the fall of the Berlin Wall and so many other events that we thought could never happen.

Rodney Schwartz is chief executive of social venture capital website

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