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If you're receiving year-end fund raising appeals from international charities or universities, chances are that social entrepreneurship is featured amongst these. This model - featuring young, creative minds solving social ills - is all the rage in international development circles as well as in Western higher education.

While entrepreneurs have long been celebrated in free market economies, the entrepreneurial approach is inherently limited in its ability to bring about social change because it is blind to the structural barriers faced by the poorest of the poor. 

Backed by a new generation of foundation leaders like Bill Gates, Nobel Peace Prize Winner Muhammad Yunus, and Bill Clinton, a new model of social enterprise is being pushed that will, it is argued, revolutionise the business of social change and

If you're receiving year-end fundraising appeals from international charities or universities, chances are that social entrepreneurship is featured among these. This model - featuring young, creative minds solving social ills - is all the rage in international development circles as well as in western higher education.

While entrepreneurs have long been celebrated in free market economies, the entrepreneurial approach is inherently limited in its ability to bring about social change because it is blind to the structural barriers faced by the poorest of the poor. 

Private sector agency

Backed by a new generation of foundation leaders like Bill Gates, Nobel Peace Prize winner Muhammad Yunus, and Bill Clinton, a new model of social enterprise is being pushed that will, it is argued, revolutionise the business of social change and higher education.

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By bringing the principles of private enterprise to government, NGOs and education, proponents argue that these efforts will be transformed by a renewed emphasis on innovation, measurement, and accountability.

Unlike governments or traditional NGOs that raise funds from taxpayers or donors, social enterprises are essentially self-supporting business with a social agenda. As businesses, these entities need to charge a fee for the services or goods they are offering, but what they provide is framed as critical for social advancement.

A classic example of a social enterprise is Yunus' Grameen Bank. The basic idea was that millions of Bangladeshi women had been locked out of traditional credit markets which impeded their income generating capacities. By offering women small loans, and using social pressure to make sure these loans were repaid, the Grameen Bank and similar micro-credit schemes around the world, have demonstrated (with stunningly high repayment rates) that poor women are worthy credit risks.

Social entrepreneurs have now branched out into other areas, offering banking services for rural inhabitants (such as M-Pesa in Kenya) or improved seeds, fertilisers and credit for small farmers (such as the One Acre Fund in East Africa). 

What these initiatives hold in common are the belief that, firstly, progress and the way forward for the poor necessitates deeper involvement in the market economy; secondly, private sector actors are better than the public sector at innovating to deliver needed goods and services; and finally, technology (from cell phones to hybrid seeds) has the power to improve the human condition.

Forgetting the truly poor

What social entrepreneurs excel at is extending the reach of the market to smaller players. There are, however, limits to this philosophy. A key constraint is that the approach largely works within pre-existing social and economic conditions.

The market works for those who are willing and able to engage with new technologies, take on risk, and challenge other actors in the market place. This set of capabilities is rare among the poorest of the poor.

The truly poor often lack the education and skills needed to fully capitalise on new technology or the margin of wealth necessary to take on financial risks. Ironically, social entrepreneurs may inadvertently further marginalise the poor by fetishising certain technologies or encouraging individuals to take on too much credit risk.

Many of the poorest of the poor find it easier to operate outside of the market by, in the case of small farmers, trading seeds with neighbours, engaging in non-cash exchange, or relying on certain forms of common property as a safety net. Outside allies would be wise to build on these local strategies rather than undermine them through market-based initiatives.

The poorest of the poor also need help from good old-fashioned government to provide education and to ensure that the basic rights of minorities and women are protected. 

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When government is not responsive to the needs of the poorest of the poor, then grass-roots organising to pressure authorities may be the most effective approach for social change and advancement because it focuses on structural barriers - barriers to which social enterprise is often blind.

As is the case for international development, the fetishisation of social entrepreneurship has now swept into higher education with a vengeance. Universities, not to mention business publications such as Forbes Magazine, now regularly celebrate social entrepreneurs.

By stroking student imaginations, and the generosity of donors, university promotional materials and websites increasingly paint pictures of bright young alumni using their ingenuity and grit to create social enterprises that fight poverty with new approaches and technologies. 

This business-minded philanthropic approach to social entrepreneurship is a particularly American phenomenon which overshadows older European traditions that emphasised community organising and democratic control of capital. The heroes of the latter are not Bill Gates and the like, but Paulo Freire, Robert Owen, Pierre-Joseph Proudhon, and Karl Marx.

What these older versions of social enterprise emphasise are solidarity building, consciousness raising, and community action that are decidedly non-market based. These strategies also, interestingly, fit well with the contemporary needs of the poorest of the poor in the global south.

Structural barriers

While an interest in poverty alleviation is a good thing, and ought to be cultivated among today's university students, they also need to understand the limitations of the contemporary American formulation of social entrepreneurship as a model for social change. 

The main limitation is not what is shown - bright, talented young people devoting their energies to resolve poverty - but what is hidden. What this model does not expose are the social structures that shape, influence and constrain individual behaviour; drivers of poverty that no amount of technology and free enterprise will allay. 

Sadly for the philanthro-capitalists behind the new social enterprise movement, business acumen is unlikely to resolve some of the major drivers of entrenched poverty. For this, the poor need allies who are willing to spend extended periods of time in out-of-the-way places, learning local languages and developing an appreciation for indigenous ingenuity. Critical pedagogical, social organising and facilitation skills are also paramount for being able allies in the struggles to address injustice.

So the next time you receive a funding solicitation, I urge you to explore which brand of social enterprise they are peddling - because the difference matters. Students would also be wise to think critically about how they are being introduced to social entrepreneurship - and to realise that social change is harder than starting a new business.

William G Moseley is a professor and chair of geography at Macalester College in Saint Paul, Minnesota, US. 

Source: Al Jazeera