Enlighten capitalism rising;

UK’s lessons for the Thai crisis.

By Sunit Shrestha
May 7, 2010

The 2010 march of the Thai Red Shirts and their demonstration is rather unique in Thai history compare to countless protests it had in decades. It is without doubt that the main uniting purpose of these demonstrators, mostly from rural areas across Thailand, is to desperately bring back the influence of the oust ex-Prime minister Thaksin Shinawatra. However, the key condition that allows such massive mobilization is Thailand’s worsening income distribution, which resulted in inequality of various dimensions from disparity in well-being to the lack of opportunity.

Researches from various academic groups in Thailand found that roughly 20% of population is holding 80% of all resources within the economy. Aside from international investors, less than 50 oligopolistic business families own most of the assets in the Thai Stock Exchange’s market capitalization. This dynamism locks the classic vicious cycle where the rich gets richer while the poor get comparatively poorer, the rigid and oligopolistic political and economic class system is making the income distribution gap much worst, allowing politicians to exploit this widening gap for their own benefit.

The sustainable solution to Thailand’s political crisis is, therefore, not only in politics but rather in the solving the capitalism’ inherited economic inequality. Without rapidly improved social and economic equality, Thai politics will still be subject to long-term instability risk.

In solving inequality, simple redistribution strategies are often suggested, ranging from massive welfare programme to radical socialism. However, these solutions are usually not sustainable without perpetual economic growth. The essence of the matter is in ensuring a unique growth strategy that is more equitable, distributive and reinforcing balance between economic, social and environmental benefits.  This almost utopian growth strategy was thought of as impossible in the past. However, the rise of a more enlighten version of capitalism is making the case for such sustainable growth strategy, and the UK is taking a global lead on this so-called ‘Social Enterprise’ movement.

Social enterprise are businesses setup to address social and environment challenges. Their surpluses are reinvest back into their operation or into the community rather than maximizing profit for the shareholders. Social enterprises exist in various fronts such as health, renewable energy, fair-trade, sustainable agriculture, homelessness, social finance and many more. In the UK, there are over 55,000 of them with total revenue of over 8 billion Pounds. Many of them are the fastest growing companies in various category.

These enterprises provide an alternative vision for the world driven by public interest while maintaining business acumen and individual freedom. They are being led by social entrepreneurs whose missions are in innovatively fulfilling unmet needs critical to the well-being of the society. They represent the case for a more enlighten and balanced growth strategy not only for the UK but for the whole world where inequitable growth is resulting in increased social tensions.
The UK government has played an instrumental role in catalyzing such growth. Office of the Third Sector (OTS), setup within the cabinet office, has been creating the right environment for social enterprises to emerge with various support infrastructure. The law was passed on the specific type of social enterprise called ‘Community Interest Company -CIC’ whereby the company must be primarily for social purpose, profit is not allowed to be distribute back to the shareholders more than 20% annually and assets are being locked against speculative gain or the selling to traditional private sector.  With such law and other legal infrastructure, social enterprises are given a chance to compete for winning government contracts for providing public services in many areas from public health to reoffending reduction.

This provide an alternative model of decentralizing public services without the usual risks associated with traditional privatization, whereby the government focuses on commissioning function while social enterprises become instrumental in providing and improving public services with competitive innovation difficult to match in conventional public sector. This creates a uniquely lean and liberal approach in the role of government as buyer of public goods that is capable of growing without necessarily expanding the inefficient bureaucracy associated with government service delivery.

The Department of Health is exploring such option by encouraging social enterprises to bid for contracts from Primary Care Trusts, effectively separating its commissioning and health service delivery functions. The aim is to improve the quality and efficiency of health service delivery through social enterprises, in complimenting to National Health Service (NHS) units,  while the government focuses on specializing the commissioning function. The early  result is very positive as the community’s needs are being responded and executed in a much faster and innovative manner, paving the way for the rise of localized community health service ecosystems nation-wide. The Department of Health recently launched a 100 million pounds Social Enterprise Investment Fund in order to catalyze the movement.

This vision of alternative growth strategy and its growing evidences in UK is truly useful to developing countries, especially for Thailand. The Thai economic growth had been the usual story of concentrated benefit to very few oligopolistic business owning families with widening income gap as mentioned earlier, the growth also happened at the expense of massive destruction in environment and community livelihood. The massive social unrest for the past few years is driven heavily by injustice resulting from such unequal and one-sided growth. Social enterprise with its exceptional value in economic-social-environmental sustainability, therefore, can become part of the important solutions to Thailand’s current political economic challenges.

Social enterprise, however, is not completely new in Thailand. There had always been different social enterprises around especially in health, community finance, alternative publishers, community-scale renewable energy and many more. Many royal projects are using social enterprise strategy in sustaining and expanding their operations, such as Doi Tung project that converted hill-tribe opium growers into premium producers of coffee, macadamia as well as tribal handicrafts. Doi Tung also creates distribution channel for these products to reach popular markets in big cities such as Bangkok and Chiang Mai. Social enterprise as a concept also compliments the King’s sufficiency economy development philosophy. The main challenge is how to aggregate and grow these fragmented clusters into significant scalable sustainable development solution for the country as a whole.

In fact, Thailand has already begun to integrate learning from the UK into their public policy. A Thai delegation consisted of the Advisor to the Prime Minister, members of the Thai Social Enterprise Promotion Commission and players in social enterprise scene, went to the UK, through the partnership of the British Council, to learn about opportunities in social enterprise-related public policies and private-led initiatives.

The lessons learned were integrated into the development of Thailand’s first Social Enterprise Promotion Master Plan, now endorsed by the Prime Minister. The Master Plan proposes the creation of Thai Social Enterprise Promotion Office in order to fulfill three strategic objectives of creating a nation-wide awareness campaign and education programme on social enterprise, providing legal as well as capacity support and, finally, the facilitation of access to finance for social enterprises in all sectors, from grassroots to urban settings.

The plan’s vision is to grow social enterprise sector by 20 percent per year over five years, hoping to reach perhaps 2 percent of GDP in 2014. Although the Master Plan was developed based on local social enterprise conditions as well as learning from various countries, from Singapore to the U.S. However, the key strategies are consistent with the UK’s Office of the Third Sector and its social enterprise programmes. The UK concrete experience in social enterprise sector development has been quoted as a major piece of evidence in convincing the Thai government, even at the early stage of social enterprise development, to launch such a relatively ambitious Master Plan.