Did September 2008 mark the start of a new, tumultuous era in contemporary history? How many governments will be brought down by their inability to assuage the public's anger? How many wars and famines will arise? Will it rewrite American hegemony and geopolitics? Media outlets the world over are wondering.
At a recent international economic conference, a speaker argued that the current financial tsunami is unfathomably deep: Financial markets act as capitalism's circulatory system. If they shut down, "real-economy" businesses are starved of their lifeblood. This leads to bankruptcies and layoffs that increase unemployment and further reduce consumption. And when people don't have money to spend, markets stagnate.
Global leaders are currently struggling to rescue financial markets in hopes of preventing another Great Depression. How are they doing? Will their efforts give rise to side effects? As global equities markets plummet and unemployment rates skyrocket, anxious individuals the world over are holding their breath.
Whether these efforts succeed or no, many people now believe that global capitalism, driven as it is by greed and maximization of personal gain, is in need of a thoroughgoing reexamination. No one disputes that self-interest functions as an "invisible hand" in the marketplace, but it should not be the only one. There must be many hands in the market if we are to bring prosperity to all. Recall that Adam Smith didn't just establish the foundation for free markets with his The Wealth of Nations; he also wrote on the power of kindness and sympathy in The Theory of Moral Sentiments.
Self-interest isn't the only or even the most important factor in humanity's quest for success. In recent years, super-wealthy individuals such as Bill Gates, Warren Buffet, and the founders of Google and eBay have donated huge sums to ventures that promote the public good. Wang Yung-ching, Taiwan's recently deceased "god of management," also won great respect on both sides of the Taiwan Strait for his half-century of philanthropic activities.
But the pursuit of social justice and the public good doesn't require personal wealth. This month's cover story looks at how ordinary individuals are using "social enterprises" to put their ideals into practice.
Take Aurora Social Enterprise Co., for example. Having long worked with Taiwanese Aborigines, it was very aware that they needed income to be able to remain in their villages. It also knew that these communities possessed an abundance of skilled agricultural workers and the kind of fertile, unpolluted soil rarely found on Taiwan's western plains. Aurora recognized that if it could marry the need to a niche, it could create a market that would provide for life's necessities and fund appropriate development. In short, tribal communities would be able to support themselves without recourse to handouts from government or NPOs.
Unfortunately, Taiwan has yet to successfully apply the entrepreneurial spirit to improving public welfare. Aurora, for example, has so far failed to win funding from "social enterprise venture capitalists," leaving it unable to provide indigenous communities with the promised capital. This state of affairs is not just disappointing for social entrepreneurs; it is also indicative of the inflexibility of market thinking and structures.
If social enterprises are to flourish, the government must rewrite the rules of the game. These enterprises need different tax regimes, lending criteria, and means of receiving donations than do ordinary businesses. They also need channels other than the stock market, with its focus on quarterly income statements and price-to-earnings ratios, through which to raise large amounts of capital.
In the past, "social welfare capitalism" operated outside of traditional capital markets and was largely ignored. But by encouraging people to give this other approach to capitalism serious thought, the current financial tsunami may yet bring about positive change.
Also in this issue, we look at new approach to water management around the Shihmen Reservoir through cooperation between government agencies and the public, which points to the rise of civic movements more powerful and mature than the confrontational movements of the past. If appropriately guided and developed, such movements could become a bedrock of social stability in these trying times.
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