Social Innovation and the fight against poverty

For most of the last decade, a number of diverse economic prescriptions for many developing countries or now what is known as “emerging nations” have been made.  In this regard, it is appropriate to take stock of the 1979 Nobel lecture of the renowned economist T. W. Schultz. He said that “most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters. Most of the world’s poor people earn their living from agriculture, so if we knew the economics of agriculture, we would know much of the economics of the poor. People who are rich find it hard to understand the behavior of poor people. Economists are no exception”.

Most  of those prescriptions for many emerging nations have focused predominantly on “getting prices right” by adjusting macroeconomic policy, privatizing state-owned or sponsored enterprises, or opening domestic markets to international trade in agricultural commodities and currencies. The implicit assumption is that structural adjustments will attract foreign capital through the domestic and international private sectors. More recently, evaluation of the interrelationships among macroeconomic policies, firm strategies, and societal issues, particularly the idea of social innovation has been the source of great debate.

It is obvious that the complex and multifaceted societal challenges of poverty can possibly tackled by social innovations. The importance of innovation for development is widely recognized in both the developed and developing nations all over the world. The Second World War devastated Europe and Japan beyond limit. It was the United States’ 1947 “Marchal Plan”- a 20 billion dollar relief to a war-torn Europe which enabled Europe to stand up on its feet again within few years. Europe’s recovery was extraordinary and defied the assumptions of many of the world renowned economists and development experts. It took less than ten years particularly for Germany, the main culprit for the cause of the war, to rebuild itself and fast assume the position of one of the top five largest economies of the world.

For Japan, on the other hand, the story is different. Like Europe, the war totally ruined its economic infrastructures as if they had never been there in the first place. In addition, Japan was not the beneficiary of the United States’ “Marshal Plan”. The herculean task of the post-war rebuilding was just left on its own shoulders.

However, like Germany, Japan also defied every economic and development assumptions and managed to rebuild its economy with miracle like speed and magnitude. Japan’s post-war rebuilding and economic recovery was like a fairy tale. Japan not only recovered its economy, but also conquered the prestigious spotlight of the second largest economy in the world, a position over taken only last year by the current “world economic wonder Tiger” China.

The secret for Japan’s post-war economic miracle was none other than its human capital and social values. Japan’s human capital was the only economically valuable asset which was relatively less affected by the war. It was this human capital which was highly instrumental in the process of rebuilding the country afresh and recovered the ruined economy. In this huge and difficult task of rebuilding, Japan gave prior attention to the idea of social innovations. As a result, Japan employed different alternatives and techniques of social innovations which suitable with its policy and societal values to tackle the severe economic woes the war caused and stimulate the recovery.

It was not so long since Ethiopia was the “poster-child” of war and famine coupled with a shambled economy tied on down ward spiral. The current story is starkly different.  Today’s Ethiopia is almost the direct opposite of its past. Now, the country has become one of the fastest growing non-oil producing countries in the world. Ethiopia’s economic development in the past several years was so remarkable that it earned the country the nickname of the “African Tiger”. To achieve this new found status, the government gave due emphasis for social innovation. To this effect, the government selected appropriate alternatives and employed different social innovation techniques particularly in agriculture and social service sectors.

Maria Clara Couto Soares, an economist from the Economics Institute of the Federal University of Rio de Janeiro, Brazil, in her recent study voiced her concern that despite the visible success of social innovations as mentioned above, the benefits of innovation are not readily or equally distributed among or within countries. In fact, there has never been so much innovation with so little benefit for far-reaching social welfare. Innovation has created immense capabilities for improving life conditions, in areas such as food production and information technologies. However, these coexist with growing poverty rates, widespread hunger and poor health conditions for much of the world’s population.

One reason for this is the issue of global power relations, which influence how markets are organized and who benefits from technological progress. Innovation systems are not neutral. The effects of purely market-led science and technology efforts and associated innovations tend to aggravate existing inequalities. To enjoy the maximum benefit from it, this needs to be changed. The process of innovation and its place in development must be revisited and aligned with social concerns.

It is indispensable to seeking different alternatives continuously to tackle the multi faceted malaise of poverty through social innovation. In the current age, financial capital and transnational corporations have an unprecedented concentration of power. With market-based philosophy dominating as the logic for social organization, technological progress tends to put pressure on natural resources and societies through a perverse combination of fast accumulation of capital, together with deepening inequalities and environmental degradation.

On the basis of solidarity, social inclusion and ecological preservation social and political movements have encouraged alternatives to this system. Social innovation is one such alternative. It is a process of societal change that not only improves living conditions, but also encourages new forms of social organization. It paves the way for the emergence of new social actors, family farmers, for example, and treats the fight against poverty and inequality not as a residual or compensatory issue, but a priority.