Reporting from both sides, a TEDxJohannesburg talk by TO Molefe
This is text and visuals from my talk at the TEDxJohannesburg salon on social enterprise. The video will be out in December and, obviously, there will probably be differences between the text and the delivered version. Art direction by Pola Maneli.
I am going to ask a few difficult questions about the social enterprise model and of us here who consider ourselves social entrepreneurs. Just questions; no answers. The answers you must find yourselves.
But, before I do that, I need to tell you a story.
Now, I am getting older and slowly, despite my best efforts not to, am turning into my father, Dr Molefe, a retired academic of sorts.
His stories ramble on and on and on before getting to the point. But, as I myself get older, I’m learning to be more patient, to listen. Because his stories always have a point, a thoughtful and often poignant point.
So, here is my long and rambling story. Bear with me:
I am, by training, a chartered accountant-slash-auditor — but by profession, a writer. These may seem worlds apart, accounting and writing. But, they really aren’t.
Accounting traces its origins to Mesopotamia, with the discovery of mathematics. But the work of an accountant as we know it today came into its own in feudal societies, where a person was designated the task of calculating and reporting to the feudal lord how much in tribute and labour his vassals had extracted from the serfs on his lands — and paid into the lord’s coffers. This person would report the news, facts and figures he had gathered to his audience, the lord of the lands, to keep him informed and empowered to make decisions.
Much like what reporters today at newspapers do, don’t you think?
Not much has changed in the intervening years. Accounting became professionalised and accountants, especially auditors, still report to the owners of capital like land — to, in our capitalist society, shareholders.
What I am saying, though, is that accounting isn’t, contrary to popular belief, primarily about crunching numbers; it is about finding and telling the story behind the numbers.
I still use the knowledge and techniques I learned from the practice of accountancy when I write today.
I conduct and transcribe interviews. I examine evidence, laws, regulations and policies. I factor in the effects of culture and systems of control — albeit now at a societal rather than an organisational level. I pore over data and research.
And, yes, much to my chagrin, I still even crunch numbers.
Most of all, I write at the end a story — a report — that informs my audience. The difference being that my audience today is society at large — the readers of publications where my writing has appeared, such as The New York Times, City Press and, most recently, Mail & Guardian.
This background gives me a view of our society from two perspectives. One as a reporter to shareholders, and another as a reporter to society at large.
From this vantage point, one thing has become clear to me:
Capitalism, like sexism, like feudalism, is a system of distributing power in society, power to make decisions and give effect to them, power to influence and control the use of resources and the lives of others, power to influence policy making and laws. And like the other two, capitalism is inherently unjust because it, too, distributes power unequally on an unfair and hereditary basis.
However, instead of unfairly skewing power in society in favour of lords, as feudalism did, or men, as sexism does, capitalism skews power in the favour of shareholders — not just any shareholders, those with enough share capital to influence or control the decisions of companies.
Many — dare I say, most — of these shareholders, the ones in whose favour capitalism unfairly skews power, did not come into their wealth through their own hard work. Most inherited it or extracted through exploitation — exploitation of people and the exploitation of the environment. Thus I say the outsize power capitalism affords them is unfair, and is passed on from one generation to the next through inheritances and isn’t actually earned through their own labour.
In accounting these shareholders, the ones towards whom capitalism skews power unfairly, are easy to identify. In fact, identifying them is a part of the job.
A shareholder is said to exert significant influence over the decisions of a company when they hold more than 20% of the shares. And if a shareholder has over 50%, they are in control of the company and its decisions. They are in control of the company’s board of directors and executive management team.
Now, relax, despite all you’ve heard so far, I am not actually here to deliver a screed against capitalism. Although secretly I'm quite happy to be doing that, too.
I am here to point out that many of the ills that social enterprises seek to address are largely the outcomes of the decisions, and the unearned, outsize power to give effect to them, capitalism bestows on shareholders, especially those who wield significant influence or control over companies.
History shows us that the decision these shareholders have made, and continue to make, have not been for the greater good; they have been, instead, to enrich themselves and their families at the expense of others and the environment.
They have focused on short-term profits over everything else. And the institutions build around shareholders and companies, such as stock exchanges, incentivise this behaviour. The quarterly and annual earnings reports companies file are the primary source by which shareholders decide if they’re getting their return on investment — which is measured in monetary terms.
Terms such as sustainability, impact investing and building long-term value have only recently become buzzwords. And only recently has become popular to think about reporting on how a company’s business model and operations increase or erode the value of other capital, not just financial capital — capital inputs such as the wellbeing of workers, the environment and the societies and communities in which companies operate.
But much of this is still mostly, for now, just talk. How companies, stock exchanges and valuation models work remains as they always have — with a near single-minded focus on shareholders, on delivering maximum returns on financial capital, as quickly as possible, at all costs.
This way of thinking and being, and the unearned power to give effect to it gave us:
The dop system, which paid farm workers in wine — a decision whose legacy of alcohol dependence and abuse, and the social problems they cause, continues to haunt farmworker communities today. Introduced by colonialist Jan van Riebeeck in 1658 and formally banned in the 1960s, though it continued well into late 1990s, the dop system is, according to researchers, the root cause of the disproportionately high levels of babies born with foetal alcohol syndrome disorder in the Cape Winelands. This incurable, lifelong condition impairs the cognitive and physical functioning of babies born with it.
In South Africa, about 30 in every 1,000 babies is born with FASD. However, in some farming communities in the Cape winelands, such as in the Boland region, the rate is ten times higher, as high as 300 in every 1,000 babies.
It, this way of thinking and being, gave us:
The migrant labour system, which broke up black families as men left their homes to break their backs for pittance in the mines; for slave wages — just enough for them to survive but not enough that they could educate their children and break the supply of unskilled cheap labour the mines depended on.
The South African Chamber of Mines, an organisation of mining-company owners founded in the 1890s, had among its primary tasks: 1.) Reduce the wages of black mineworkers, and 2.) Recruit more cheap labour — which saw it lobby the colonial administration to introduce hut taxes to force black people from the land and into the mines.
And it gave us:
The acid mine drainage problem, where, once they’d extracted what they wanted from the earth, mining companies simply moved on to the next mineral deposit, leaving polluted water from these old, disused mines to flow into the groundwater and rivers people drink from and swim in.
I could go on forever with more examples.
Now, some of you might grumble that this was just apartheid capitalism. “Pure” capitalism, whatever that is, can and has been good.
But, in fact, there are legion examples from every corner of the earth, of negative environmental, social, political impacts on people and societies that are a direct result of the incentives that companies and shareholders have under capitalism.
That said, it is no coincidence that Thomas Piketty decided to start his book Capital in the 21st Century with the Marikana massacre — where the shareholders that exercised significant influence or control of Lonmin had implicitly decided — through the expectations they placed on the mine’s management to maximise their ROI — to renege on the company’s commitments in its social and labour plan to build decent housing for workers.
The Farlam Commission found in its report into the massacre that Lonmin’s failure to fulfil its social and labour plan commitments were a contributing factor to the conditions that gave rise to grievances that striking miners were trying to address.
Piketty’s book isn’t about South Africa; it is about global capitalism and how it has come to unfairly concentrate power in the hands of the few. In this regard apartheid capitalism makes South Africa an extreme of a global trend but by no means exceptional.
So this reality — the often direct causal relationship between the decisions of shareholders and many of the ills the social enterprise model seeks to address — asks serious questions of us as social entrepreneurs. Social enterprises do operate, after all, between two words: with a profit motive, but to also build social value as they do.
So with that being the case, what are we, as social entrepreneurs — and I reluctantly consider myself a social entrepreneur — doing?
Are we, in our words and work, responding to the social ills that underpin social enterprise as symptoms of, and I might even say caused by, unjust systems such as capitalism, sexism and racism — and working to dismantle these unjust systems of distributing power in society?
Or, are we profiting from the ills they cause — and feeling good about ourselves as we do — and not really dealing with their origins in these unjust systems?
Doing the former, could make social enterprise a force for good. The latter would make it a parasite. What I am saying is that social enterprises should be, as part of their primary mission, dismantling and replacing unjust social systems — otherwise they are likely parasites profiting from the undeserved hardship of others.
A good way to tell which of the two — force for good or parasite — a social enterprise is is by considering whether in its own ownership structures, business model and work is responding to issues in five areas.
Let’s start with the easy one first.
- Socioeconomic rights
This is where the work of most social enterprises is concentrated.
So, some questions:
- Do the owners and management of the social enterprise put themselves at risk and stand in solidarity in the streets with the communities they serve when corporations and the state conspire to silence dissent and protest against injustice and inequality?
- Does the social enterprise working on, for example, the right to education see and respond to the dangers in the corporatisation and privatisation of this human right?
2. Ownership, influence, control and decision making.
Some more questions:
- Have the owners and management of the social enterprise considered and responded in some way to what of the tangible and intangible wealth they inherited from their parents were the fruits of unjust social systems?
- Does the social enterprise bring the community it serves on board as equitable partners with a fair, equal and democratic say in its decisions and operations?
- Does the social enterprise, in its work, do its part to attempt to redistribute the ownership of capital in our society more equitably?
3. Decent work
- Do the social enterprise’s own workers earn a living wage, and enjoy freedom, equity, security and dignity at work?
- Does the social enterprise agitate for this — a living wage, and freedom, equity, security and dignity at work — in the other organisations it works with?
4. The environment
- Does the social enterprise consider and respond to the adverse environmental impacts of its own work, and the tensions that exist between human development on one hand, and the sanctity of the environment on the other?
- Does it agitate, in its work, that others do the same?
The fifth and final area I consider among the more important of the issues.
5. Societal values
Does the social enterprise’s operations and work contribute to the very necessary shift in societal values from the current atomised, individualistic focus on the self, to the realisation that each of our being is bound up in the other’s? The decisions we make and actions we take affect others, so we have an ethical duty being human to consider their effects on others and to be accountable to them.
If the answers to most of these questions is no, then the social enterprise is, sadly, likely, a parasite.