In my last article, I wrote about the problems with foreign aid. I would now like to talk about the libertarian alternative, social entrepreneurship. The term “social entrepreneurship” isn’t typically part of the libertarian lexicon, but it should be. While libertarians do a good job of explaining how the market indirectly helps people through the profit motive, we need to do a better job of showing our support for those who use the market to help people directly. One of the biggest stumbling blocks libertarians encounter is explaining how a free society can take care of its least fortunate members. The answers typically given — private charities or NGOs, mutual aid societies, and for-profit ventures dedicated to helping others— can all fall under the category of social entrepreneurship. According to Bill Drayton, the man who popularized the term through his foundation, Ashoka: Innovators for the Public, the job of a social entrepreneur is “to recognize when a part of society is not working and to solve the problem by changing the system, spreading solutions, and persuading entire societies to take new leaps.” For social entrepreneurs, wealth is a means to achieving a social mission. Social entrepreneurs are able to pursue such a mission through inexhaustible determination, entrepreneurial quality, and strong ethical fiber.
The traditional concept of entrepreneurship, on the other hand, has long been associated with libertarianism. The term itself was most closely associated with the economist Joseph Schumpeter in the 20th century who described entrepreneurs as the innovators who drive the “creative destructive” process of capitalism, which moves the economy forward. In using a double bottom line to measure profit and social impact (or a triple bottom line that also measures environmental impact), social entrepreneurs fuel creative destruction in areas of poverty reduction that are rarely popular or effective in politics such as education, welfare, law, and health. All without the help of the government.
Here are five examples of sustainable social enterprises that help people become self-sufficient. Libertarians should keep such examples in mind when asked how the free market can take care of people:
1. Sustainable Health Enterprises: SHE was founded by Elizabeth Scharpf when she realized that absenteeism among girls and women in Rwanda was due to the high price of menstrual pads — $1.10 for a pack of 10. Her team engineered a new biodegradable sanitary pad made of banana tree fibers that sells for 75 cents. SHE works with 600 small-scale banana farmers in Rwanda. They have also called on the Rwandan government to lift an 18 percent sales tax on feminine hygiene products. The Rwandan Parliament recently allotted $35,000 to pay for pads for impoverished girls.
2. Grameen Bank: Muhammad Yunus started this Nobel Prize winning microfinance organization in Bangladesh in the 1980s. Its poorest borrowers, mostly women, own 95 percent of the bank, while the government owns the other 5 percent (which unfortunately ousted Yunus in 2011). There have been 8.35 million borrowers, $11 billion in loans, and a loan recovery rate of 97 percent. 68 percent of the borrowers’ families have crossed the poverty line and over 10,000 beggars have joined. The bank also provides housing for the poor and educational loans and scholarships.
3. The Body Shop: Anita Roddick of England began a company (now owned by L’Oréal) of cosmetic stores to promote causes like ending animal testing, protecting the rain forest, helping indigenous farmers, promoting voting rights, and anti-sexism and anti-ageism campaigns. She also helped establish the magazine The Big Issue, produced and sold by homeless people and Children on the Edge, a charity for children in Europe and Asia.
4. Better World Books: This corporation, founded by three young Notre Dame graduates, sells used books and donates much of the proceeds to nonprofit charity programs across the country. They have recycled over 87 million books and raised over $12 million for literacy. They partner with over 1,800 college campuses and over 3,400 libraries in the United States, Canada, the United Kingdom, and Ireland.
5. Barefoot College: Officially called the Social Work and Research Centre, this organization was started by Bunker Roy in India in 1972 to train impoverished people in the fields of education, health, drinking water, and electrification through solar power. Since 2004, Roy has brought women from 15 African countries as well as Bhutan, Afghanistan, and Bolivia to be trained as solar engineers. Barefoot College is responsible for training more than three million people. It is mostly funded by international funding agencies, private foundations, and self-generated revenue.
In addition to improving the life prospects of the disadvantaged, social entrepreneurship is crucial to libertarian agorist philosophy, which advocates peaceful revolution to bring about an entirely voluntary society. As Matthew Feeney, assistant editor for Reason 24/7, has said, social entrepreneurship develops societies in which a new outlook can become popular without government support. He hopes that the efforts of social entrepreneurs can help fuel a libertarian grassroots movement akin to the environmental and labor movements. With decentralization increasingly heralded as the preferred policy model, it seems his hopes are plausible.
However, John Mackey and Michael Strong think that while micro-level grassroots projects have made a huge impact in many people’s lives, they do not directly address governmental monopolies in education, welfare, law, and health. While we can hope incremental change will have an impact, they think we need to do more.
Mackey and Strong both have impressive backgrounds. Mackey, co-CEO and co-founder of Whole Foods, advocates “conscious business,” or business that serves others and seeks to improve the world rather than just focus on profit. Whole Foods supports only organic and natural food providers to avoid supporting environmental degradation. It was the first Fortune 500 Company to completely offset energy costs using wind power credits. Whole Foods donates at least 5% of its profits each year and their Whole Planet Foundation provides grants to microfinance institutions.
Strong has worked as a public school reformer and has created highly ranked and successful Montessori and charter schools. He has also worked as an educational consultant in half a dozen developing nations and is the author of two books. He also worked with the Honduran government on behalf of the Free Cities Institute to allow a city to be developed that would be exempt from the government’s laws, operating under a free market government with strong property rights. Unfortunately, the Supreme Court shot down the project, but the possibility for free cities in many other countries is being explored.
Mackey and Strong co-founded FLOW, or Freedom Lights Our World, a series of programs dedicated to “liberating the entrepreneurial spirit for good.” FLOW operates a website called “Radical Social Entrepreneurs” to catalyze systemic innovation. There they say, “Piecemeal projects may be steps in the right direction, but the scale of today’s challenges requires radical thinking. We feature the latest work in revolutionary technology, new strides in design, urbanism, business, management, law, conduct, and especially their relevance for changing our legal, community, governance, and education systems for good.” They support radical social enterprises like the Free Cities Institute and the Seasteading Institute.
It remains to be seen whether radical social entrepreneurship can feasibly succeed the way micro-based social entrepreneurship has. So far, projects by the Seasteading and the Free Cities Institute are still in the planning stages and have a long way to go before becoming realities. In the meantime, it is in our best interest as libertarians to support and advocate for micro-level social enterprises to show critics that we are serious about supporting social change and poverty alleviation in practice and not just theory.
I am a believer that certain periods in history are ripe for change and that we are living in such a time. I also believe, as Bill Drayon has said, that young people are the “last large group of people in the world we treat the way we used to treat women, older people, people with disabilities, African Americans, and colonized peoples. We say to them, ‘We are in charge of everything—the classroom, the workplace, extracurricular activities where they still exist, and sports—and we don’t think you young people are very competent or responsible.’” As a result of the discouragement of independence and coddling by adults, many young people see themselves as powerless and without experience in teamwork, leadership, or in understanding the lifestyles of others. However, history shows us that oppressed groups have a tendency to rise up and rebel. We’re seeing the rise of social entrepreneurship programs in colleges and universities and Forbes recently released a promising list of the top 30 Social Entrepreneurs under 30. Let our rebellion be one of peace and charity.
If you are interested in social entrepreneurship, check out one of the following foundations. Also be sure to register for and attend the International Students For Liberty Conference where John Mackey will be giving the keynote address: