Government is not a machine, but a living thing.

It falls, not under the theory of the universe,

but under the theory of organic life. It is accountable to Darwin, not to Newton.
Woodrow Wilson, 1908

Integrating the socially responsible economy

into mainstream policy: an adaptive
approach

Alberto Cottica - October 2010

1. Introduction 2

2. Figuring out the social economy 2

Emergent 3
Outside the prevailing economic paradigm 3
Framed as a low-cost solution to budget constraints on personal care 4
Seen as threatening 4

3. How do policy makers learn? 5

The learning authority in theory: rational voters, law-making, linear
implementation 5
The learning authority in practice: inertia, windows of opportunity,
technocracy, information asymmetries 6
The learning authority in Europe: institutional constraints to adaptation 8

4. Suggestions for research 9

First: build a model 9
Next: plug in data 10
Check for attrition points: the rise of social innovation 11
Finally: superimpose data and model 11

5. Joining the conversation 12

6. References 13
1. Introduction
This paper addresses the questions allocated to group 1 of the Quality job creation through
network support advisory workgroup to the Social Cohesion Research and Development Division
of the Council of Europe. Namely:
1. How are the foundations of the responsible social economy to be promoted and propagated in
“mainstream” policies in order to create jobs through community support?
2. How are these foundations to be made better known to the citizens?
3. How can we sustain creativity, particularly among the younger generations, and approximate
their knowledge with that of others in order to devise forward-looking projects?
These questions belong to different domains. Questions 2 and 3 concern a specific policy issue,
that of promoting the socially responsible economy. While not necessarily easy, they can in
principle be addressed “locally”, by making changes on a specific domain of policy. Question 1, on
the other hand, addresses a general issue, that of integration between policies, and of how new
goals, new stakeholders and new courses of action are incorporated in policy making in general. In
other words, it asks how it is that policy makers learn.
In what follows I propose an approach that could yield insights on all three questions; framing
policy not as a top-down activity guided by impersonal rationality, à la Weber, but rather as
coevolution in an environment characterized by pervasive feedback loops among a myriad
interdependent agents, in this sense similar to an ecosystem. What a policy maker does prompts
other agents in the system (businesses, consumers, NGOs) to change their own courses of action;
changed agents behavior changes the landscape in which the policy maker operates; in a changed
landscape, the policy maker itself will be incentivized – or even forced – to adjust its own behavior;
this in turn will have an impact on other agents and so on, ad infinitum. In such a setting, feedback
loops from policy to the society and back take center stage.
The role of the Advisory workgroup is intended as doing research to be translated into policy
recommendations. The paper is therefore framed as a research proposal to be submitted to the
Division and the workgroup itself. This approach addresses directly question 1, for it sketches a
rough model of a learning policy maker; but it also illuminates questions 2 and 3. Section 2 argues
that public authorities find it difficult to understand the socially responsible economy; this difficulty
accounts for the lack of a consensus as to whether and how to make room for it in the policy
agenda is. Section 3 looks at learning processes in public authority in theory and in practice, and it
proposes an adaptive stance both for the research and the recommendations. Section 4 outlines
an agenda for research. Section 5 addresses the implications of taking an adaptive stance for the
second and third question outlined above.

2. Figuring out the socially responsible economy

The social enterprise and the socially responsible economy are the object of increasing attention
from public authorities and policy makers in general. They carry the promise to produce certain
public goods in a cheaper, more humane and generally more effective fashion than the other
available alternatives, i.e. direct provision by government agencies and market transaction with
private for-profit business. Despite its recognized growing importance, however, the social
economy as seen from the outside looks blurred, if not distorted. It is rare for its protagonists to feel
that what they do is fully understood by policy makers or the media. The European landscape is
diverse, but it seems to vary from paralysis, to mistrust (Slowakia and the “Social enterprise
meltdown” (Bussard, 2010)) to pigeonholing (Italy, where the existing legislation implies that social
enterprises belong in the low end of the service sector). There is obviously a communication issue,
and it needs addressing.
If we are to integrate the social economy in mainstream policy, we need to assess the extent to
which policy makers misjudge social entrepreneurs. As a first approximation, anybody trying to
build a rich and consistent picture of the social economy has to avoid several potentially serious
pitfalls.

Emergent
Despite its aggregate size having grown to respectful proportion, the social economy looks devoid
of structure to the casual observer. There is no key player to supply infrastructure and drive the
ecosystem the same way that Google organizes information on the web and makes advertising-
based revenue models possible, or Amazon supplies an e-commerce backbone. There is no
unifying ideology, and no obvious leader. It is seen as a radically bottom-up, headless, swarming
movement. Most of us are accustomed to thinking in terms of organizations: we find this movement
hard to grasp, and all too easy to dismiss as irrelevant or unmanageable. Organization thinking, it
should be noted, has been extremely successful in inspiring modern government institutions: the
mainstream model is still largely the Weberian bureaucracy, and Weberian bureaucracies do not
handle diversity well, nor do they like it. General De Gaulle’s famous quote about it being
impossible to “govern a nation with two hundred and forty-six kinds of cheese” can be taken as the
opinion of an expert.
This situation poses researchers with a challenge they have not yet been able to win. In many
cases it is difficult even to identify the relevant unit of analysis. A recent example from Italy: in
2008, a company producing organic cheese experienced a debt crisis in connection to a sharp
increase in the price if milk. The banks refused to refinance the debt: but its customers (final
consumers, organized into solidarity purchasing groups – there are about one thousand such
groups in Italy) engineered an injection of €150.000 fresh cash simply by paying for cheese in
advance. This not only avoided bankruptcy for the company, but led to the halving its stock of debt
towards the banking system. The whole process unfolded in only three weeks (Social Money,
2010). While businesses are the natural unit of analysis for economic research, in such a story it is
not entirely appropriate to concentrate on the company itself. It might be argued that the
consumers are the real driving force behind this financial innovation: and this raises a seirous
methodological issue, since it is very difficult to investigate a case study based on hundreds of
consumers organized into 25 different purchase groups. Emergence is at work: a myriad
independent economic agents, interacting, give rise to an unexpected result. The result itself is like
a cloud, or a standing wave: it is real, but it is not on the same level of reality as its constituent
molecules of H2O. And it is impossible to understand the cloud by examining the properties of the
atoms (Anderson, 1972): a molecule of H2O looks exactly the same, whether or not is part of a
cloud. The cloud is simply invisible at the molecular level. In a similar fashion, an emergent new
economic system may well be undetectable by looking at the individual businesses that are part of
it.
Some of the experiences related within the group seem to fit the emergence framework. For
example, the Ærø story was started out by a local island community trying to hold its ground in the
face of population decrease. All relevant agents are local and have local goals: local farmers invest
in wind turbines and solar heating facilities simply to consume the energy locally, thereby reducing
their purchase of energy produced elsewhere; the Energy and Environment Office pushes the
vision of Ærø as renewable energy island, trying to create local jobs by engaging in the energy
production industry (Schmidt, 2010a). However, when one looks up from the local level it turns out
that the geographic pattern of energy production in Denmark has gone from very concentrated to
quite dispersed over the 1996-2006 period. This was certainly unintended for by the Ærø islanders,
and by other local communities pursuing similar goals; and still, from different people pursuing their
own local goals (and probably learning from each other in the process: the Ærø solar facility was
seen by over 30,000 tourists over the past 15 years) an effect emerges at the national level.

Outside the prevailing economic paradigm

Economics has built a lot of credibility over the last hundred years or so. Most elected officials and
senior civil servants are expected to understand the basics of textbook economics: how investment
drives consumption, the relationship between investments and savings, what happens when the
interest rates rise or fall, etc. Textbook economics is not particularly useful when dealing with the
socially responsible economy: while there is no reason to negate it, using it within a social
economy context needs so many and so important qualifications that it ends up being rendered
almost irrelevant. So, policy makers venturing in the field and talking to the protagonists of the
socially responsible economy are often confronted with propositions that seem to challenge their
economic wisdom. Once again, the Ærø story comes to mind: as Rune Schmidt has noted
it is very relevant to see it in a the context of social innovation, as it is not always money that
are the crucial factor for the emergence of job creation within the renewable energy sector
(Schmidt, 2010b).
Interactions like this cannot help leaving politicians and civil servants puzzled: if financial resources
are not the key issue, what is? This makes designing policy in this context a politically risky
exercise, one in which it is quite possible to make very serious mistakes. Understandably, many
decision makers shun this kind of risk, and end up deploying policies that don’t have a lot of grip in
a socially responsible economy context. This might be part of the explanation of the difficulties
reported by social innovators in the group in building solid, effective partnerships with public
authorities despite a commonality of goals.

Framed as a low-cost solution to budget constraints on personal care

So far, the main driver for the socially responsible economy to make its way into the policy agenda
is its promise to satisfy the ever-increasing demand for care services (health care, social care,
child care) at acceptable costs. In times of shrinking public budgets and ever-rising health care
costs, public authorities are highly motivated to move in such a direction. Italy’s legislation on
social cooperatives is aimed at doing just that. This move is at risk of imposing unnecessary rigidity
on the system, thereby stifling or driving away very promising people and what they do. By
compiling a closed list of characteristics that a cooperative must have to qualify as social, we
forego the opportunity to enable the development of anybody exploring new ways of being a social
entrepreneur. And by framing these organizations as low-cost, low-tech, we risk missing out
opportunities to enable the most creative and interesting of them to have maximum impact. Quite
appropriately, Laville (2010) speaks of public authorities viewing the socially responsible economy
as instrumental to certain pre-existing policy goals 1.
For example, CriticalCity – one of Kublai’s best projects, a pervasive urban game that aims to
change cities by playing games with and within them – is incorporated as a social cooperative2 .
They make childcare services and pervasive games, and are in some ways more similar to Silicon-
Valley type entrepreneurs (as testified by one year of intense dealing with Italian venture capitalists
trying to take their project into the for profit space) than to traditional care givers. They are an
example of a new breed of social entrepreneurs, who call themselves “social innovators”. Policies
written by people who think about the typical social enterprise as, say, a gardening service
employing disabled people, are not necessarily going to be useful for CriticalCity, who engage in
coding cutting-edge online platforms for pervasive games in partnership with Silicon Valley
companies. Estrangement results.

Seen as threatening
Unit costs of social enterprises are typically low, over and above fiscal incentives: low overheads
give them a competitive edge. This poses a potentially serious threat to incumbent businesses,
which might be tempted to use their influence to put in place regulatory barriers against what they
perceive as unfair competition. In a similar fashion, software corporations resent the open source
movement: after all, how can you compete with somebody who releases for free a product that
competes against yours?
Another example is mobile Internet access provision. The debate on Internet neutrality going on in
America has shown clearly that mobile operators and other TelCos are campaigning to regulate
do-it-yourself mobile networks out of the market. At&T alone has 700 lobbyists in Washington DC;
they cannot be expected to paint a fair picture of the technical and legal solutions advocated by the
free internet activists. And they don’t: rather, they do their best to portray these solutions as
unsecure, almost anarchistic. Regulatory capture might be at work here (Leveque, 1996).

1“La seconde exigence est de sʼattaquer aux pratiques dʼinstrumentalisation de lʼéconomie sociale solidaire
par les pouvoirs publics qui ont parfois lieu sous couvert dʼune notion floue de partenariat”.
2 http://www.criticalcity.org, visited in October 2010.
Emergence, irreducibility to textbook economics, framing issues and potential threat make the
socially responsible economy a problem that is perhaps harder than most to break down and
integrate into the policy agenda. We now turn to the other side of the same problem: by which
processes, and with which tools, do public authorities incorporate new concerns into their normal
mode of operation? How do governments learn new things?

3. How do policy makers learn?

The learning authority in theory: rational voters, law-making, linear implementation
Integrating a new item on the policy agenda implies engaging in learning activities. A new
phenomenon needs to be analyzed, and courses of action need to be outlined with respect to it
before it becomes policy. For example, environmental problems in the 70s and 80s were
conceptualized in different, competing ways. Public debate (influenced by the ideological climate of
the Reagan-Thatcher age) selected a winning paradigm: environmental problems were
conceptualized as economic externalities. This opened the way for courses of action to address
them based on market or quasi-market systems, like carbon taxes or the congestion charge in
London (Pearce et. al., 1989).
How do public authorities (as opposed to the individuals manning them) learn new things? We
know they do learn, because the list and priority ranking of the issues that need governance
changes over time. Managing its overseas territories was paramount in the imperial Britain of the
nineteenth century; it is little more than an institutional fossil now. Formerly isolationist, America
after the Second World War had to put in place complex diplomatic, military and intelligence
machinery to deal with the Soviet Union and its allies (Todd, 2002). Western European countries
after 1960 had to devote more and more attention to interfacing with European institutions. This
implies the existence of a way for societies to redesign their governance mechanisms. Put it
another way, since redesign of governance mechanisms happens through governance
mechanisms, governance can and does redesign itself.
According to scholars, democracies do this in the following way:
1. a new issue, after its importance has been validated by the scientific community, gains
importance in the eye of the public opinion.
2. politicians, competing for votes, include it in the list of issues they promise to tackle once
elected.
3. after taking office, representatives embed action to be taken thereabout into law.
4. New law is enacted into policy
This process ensures that its final step, public policy to deal with a new issue that requires
government action, is fully consistent with the first, i.e. how the citizenry perceives the problem.
However, notice that, for the chain not to break down, certain assumptions are required to hold
true:
• Alternative courses of actions can be identified, discussed and selected already in the
democratic debate phase.
• The electorate has effective means to enforce their pact with its representatives, constraining
them to keep their promise. Representative keep promise by making law.
• Law enactment is “linear”, i.e. a law translates unambiguously in a course of action at the level of
the executive branch. The main tool for law enactment is generally assumed to be the
impersonal, rational Weberian bureaucracy.
• Policy is a one way street: government acts upon society, trying to mould it according to its goals,
whereas society does not exert any influence on government, save through the democratic
processes.
None of these assumptions will hold in the majority of real life situations. Voters are ill-informed
and irrational; the principal-agent relationship is anything but tight (Caplan, 2007); and, critically,
public authorities enjoy a certain degree of autonomy in how to enforce the law. The more
entangled the issue, the higher such degree: but even in extremely straightforward regulation it is
generally significant. A regulation establishing that whoever breaks the speed limit on a motorway
gets a fine seems to have very little ambiguity: but, by deciding when and where to deploy patrols,
the road police pretty much gets to decide how tight the constraint is going to be. And, of course,
social and economic agents do feed back onto policy making. Some of the 700 At&T lobbyists
mentioned above will spend some of their time talking to appointed civil servants; a lot of informal
or less formal exchange happens beyond the formalized democratic process. In fact, no
democracy would be able to function if id did not (Bobbio, 1996).

The learning authority in practice: inertia, windows of opportunity, technocracy,

information asymmetries
The traditional model seems far removed from the everyday experience of public servants and
policy makers in general. They live in a far messier world, characterized by
• inertia. Large organizations such as government bureaucracies have a strong tendency to keep
doing the same things. Instructions from the top seem to be much more effective when telling the
organization to stop a change then when telling them to effect one. This conservative bias is
clearly, sometimes painfully perceived by individual civil servants championing change within
their administrations: it can and does happen that the reform advocated by people who are
nominally in charge is defeated by a conservative organization, which is able to stall the process
until the would-be reformer ends their mandate or changes jobs. Bureaucracies can be
conceptualized as agents, with their own goals that are independent from those of the people
heading them (Niskanen, 1994).
• windows of opportunity. Policy processes can involve long and complicated procedures in
which more than one authority, or more than one office within the same authority, is called upon
to make decisions or execute some actions. Individual officials involved in policy making are like
subroutines of a computer program: they wait in standby until the master routine calls them, and
go back to standby after they have done their part. Even people in a position of influence rarely
have control on the full arch of any major policy: they can mostly exert their power by giving the
process a nudge in some direction when it is their turn to act upon it, and only then. There is a
strong window of opportunity effect: changes that are possible at some point in time can become
impossible or much harder a little sooner or later.
• technocracy. The impact of high-level strategic decisions depends on their implementation
details (who does what, when, where and with whom) at least as much as it depends on financial
resources allocated. The recent British experiences of reverse engineering (and actually
improving) government websites that had cost hundreds of thousands of pounds in one day and
with zero budget are just the tip of a very large iceberg3. In this situation, public servants and
even external stakeholders endowed with recognized technical skills wield considerable power.
For example, following the Freedom of Information Act in the UK, the hows and whens of the
release of public data has been drive essentially by a coalition between mid-level civil servants
who serve as data managers within the public authorities, and activists and NGOs. Senior
management has, for the most part, played a passive role, simply because it does not have the
cultural tools to fully understand the issue.
• “short circuit” feedback loops. Social and economic agents can and do try to influence
government policy not only through the political debate, but also engaging in interactions directly
with civil servants and bureaucrats. Lobbies, business and civic fora, and even bribery can be
seen as channels carrying “short circuit” feedback loops; for example, a certain policy being
discussed by parliament might prompt a business forum to organize a seminar to share
knowledge on the matter with elected officials and senior civil servants. Some public authorities
are indeed designed for this: for example, representatives of business and the civil society are
typically appointed to serve in Regional Assemblies in the UK (OECD, 2005).
• information asymmetries. Public servants are painfully aware that they often find themselves
on the wrong side of severe information asymmetries, and that they have to depend on third

3See for example the hackdays of Rewired State in the UK: http://www.rewiredstate.org/, visited in October
2010
 parties (often the regulated themselves) to map out the territory they are supposed to regulate.
This raises issues of regulatory capture.
Recent developments in the literature – drawing from findings in complexity science, behavioral
economics, game theory, network science – have proposed to frame policy as a fundamentally
two-way street. More precisely, policy is to be seen as a coevolutionary process: government and
society, through repeated interactions, adapt to each other, just like, in the natural world, the
interaction of gazelles and leopards over a long enough period of time has pushed both species to
become fast runners. In such a context even best practice policy might lead to unforeseen
outcomes, which might be described as emergent phenomena. For example, the printing press is
invented to improve the efficiency of the diplomacy of the Archbishop of Mainz, Elector of the Holy
Roman Empire, and one of its earliest uses is to print out indulgences in large quantities to fund
the Elector’s activities; in the hands of Martin Luther, printing enables the Protestant Reformation
and the subsequent complete demise of indulgences. In another example, improving the road
infrastructure to achieve economic growth might aggravate global warming and create urban
sprawl as a feasible alternative to inner city living (Lane, 2010).
All of these consequences were completely unforeseen by the initiators of the processes: many
scientists claim that, like evolution in biology, emergence in the social world is unpredictable even
in principle. The failing grip of European governments on the matter that this group is asked to
address – making sure that everyone has access to quality jobs – is itself an emergent
phenomenon; policies towards ever-greater access to the job market have been designed and
deployed by just about every European country and onto all categories of workers – and failed, as
emergent phenomena of social exclusion proved stronger than the mighty European welfare state
paradigm. This suggests the models we have been using to guide policy might be flawed, and
recommend extreme caution.
I submit that we conceptualize policy as an adaptation process, and the interplay of government
agencies, business, the protagonists of the socially responsible economy and civil society as a
complex adaptive system. The concept itself is rooted in complexity science: it can be described by
Whitt’s (2009) “rough formula”:
agents + networks + evolution = emergence
Consequently, I propose that our research takes an adaptive stance. This means both thinking
about policy as adaptation, rather than in a Weberian-top-down-rational way, and recommending
policy that makes sense in a coevolving world. Following Whitt, such policy should be:
• cautious. The starting assumption should be that all decisions are based in models, and all our
models are wrong. A strong dose of humility about the limits to our knowledge is probably a good
idea; policy makers should engage in reassessing evidence, considering alternatives, planning
for contingencies.
• macroscopic. The adaptive policy maker tries never to lose sight of the big picture. Composition
fallacies are among the oldest and direst fallacies in social sciences.
• incremental. Taking small steps seems like a reasonable response in the face of emergence-
driven uncertainty. Adaptive policies are experiments, each one building on the results of the
previous ones.
• experimental. Different solutions might be tried in different pilot areas, and the results
compared. Such an approach allows for small scale testing of even relatively bold solutions: the
cost of failing locally is limited, and successful solutions can be scaled up.
• contextual. As usual, there is no one-size-fits all solution.
• reversible. When at all possible, policy makers should design for reversibility. This includes
review checkpoints and “sunsetting by default”, or embedding a default termination date for any
policy: policies have a tendency to entrench and outlive their usefulness.
• accountable. Policymakers should state their beliefs and objectives in a testable form, monitor
performances and honor reputational bets. Falsificability by empirical analysis is the prerequisite
of scientific knowledge: without it, no learning is possible. Adaptation is still possible without
learning (evolution in the natural world being the prime example), but it moves at a much slower
pace.
• sustainable. Adaptive policy making is constrained by the environment in which the policy maker
moves. Its permission structure, legitimation, openness and flexibility all contribute to how far, or
how long, the policy maker will be able to sustain an adaptive path. It is critical to control for
things like institutional architecture and policy style – which vary a lot across Europe – when
designing policy.
The mantra of adaptive policy making is to think of economic and social agents as driven by
evolutionary forces that reward the fittest. Policy, then, works best by shaping the fitness
landscape, and letting agents work their way through it towards the desired outcome. It is a policy
that enables and incentivizes agents to give input, rather than forcing outcomes top-down.

A fitness landscape. Evolution pushes agents to increase their fitness. An agent in A or C is

already at a local maximum in fitness: to get it to B, a policy maker needs to reshape the fitness
landscape, raising the troughs between the local maxima and the global maximum.
Fitness is generally many-dimensional. The three policy goals with respect to the socially
responsible economy proposed to the Workgroup by Jean-Louis Laville – job creation, social
cohesion, democratic participation – can be thought of as three dimensions of a fitness landscape:
to each position in this three-dimensional space is associated some kind of reward. Shaping the
fitness landscape means setting incentives in such a way that agents that contribute more along
each of these dimensions be rewarded more. This will prompt agents to move constantly upwards
along all dimensions, creating more jobs, more social cohesion, more democratic participation.

The learning authority in Europe: institutional constraints to adaptation

Europe’s diversity is pervasive, and it should not come as a surprise that different European
countries display differences in adaptation processes. Public authorities are constrained by the
institutional systems that they exist in, and that endow them with permission and resources to try
things – or not. When making policy, it is critical to be aware of these constraints. In principle they
could be overrun by reform, because they are themselves created by higher-level policy; but
reform can be very hard, and imply large leaps that contradict the incrementality principle.
As a first approximation, I propose we look at three layers in which policy happens.
We might call the top layer constitutional architecture. Constitutions (in a broad sense) design
systems which encode different world views and different degrees of rigidity. Common law is the
prime example: it opens a channel for bottom-up reform, allowing the system to learn by low-cost
trial and error, with different courts trying different solutions and letting the most successful ones
emerge. By contrast, Roman Law follows a strictly top-down approach: change happens at the top,
and is spread by a hierarchical structure. All other things being equal, we expect adaptation to be
faster under Common law than under Napoleonic civil codes – as in fact has been show by Zak
(2008). Common law itself has been modeled as a complex adaptive system (Scott, 1998).
Constitutional architectures are all-important; changing them has a profound impact, but it requires
a lot of concerted effort.
The middle layer might be labelled policy style. It has been observed that different countries have
different templates for policy. For example, Italy’s is a system in which decentralization happens by
breaking down the territory in regions enjoying a high degree of autonomy. These regions are
managed by way of large bureaucracies that mimic the central government’s and report to an
executive selected by an elected assembly. These bureaucracies are monopolists: they are
endowed by law with competence over certain issues. In the United Kingdom, on the other hand,
many issues are managed by many small organizations called Quangos (Quasi-non-governmental
organizations. There are over 3.800 of them in 20104), which operate locally but are funded by
Whitehall, and whose top management is appointed by Whitehall. Quangos are not monopolists:
they compete for funding, so that the patterns of who does what emerge locally: for example,
vocational training in the creative industries can be managed by the local authority in one county
and by a quango spinned off by a large Art Center in another one. As might be expected, the
patterns of adaptation are quite different between the two countries.
Policy style can be changed more easily than constitutional architecture (in fact, Italy’s and the
UK’s looked much more alike in the 1960s), but such a change seems to imply some cultural shift.
The present British pattern is the result of a neo-centralist trend started in the 1970s, which
reduced the scope and resources of local authorities, and of the emphasis on competition as an
antidote to inefficiency in the provision of public services of the Thatcher era in the 1980s (OECD,
2005).
The bottom layer might be called policy hacks. It consists of the policy initiatives actually
deployed, which might range from regulation (making new rules) to intervention (deploying new
initiatives, programmes and allocating resources towards them). Some of them require making
new law, but none require major reform. In adaptive policy making, policy hacks are the means by
which public authorities alter the fitness landscape the various agents move in. While the space of
possible hacks depends very much on constitutional architecture and policy style, they are
relatively easy, and some are realistic in every European country. I borrowed the word “hack” from
computer science to emphasize their nature of empirical remedy, and the fact that they often
involve using existing institutions and organizations in new, unintended for ways.
In carrying out our research, we will most likely study experiences at the policy hacks level: they
are a natural unit of analysis. I suggest that, consistently with the contextuality principle, we make
sure we control for the policy styles and constitutional architecture underpinning these
experiences: if the latter are critical for the success of the experiment, its transferability to other
contexts might be difficult or impossible. In formulating recommendations, consistently with the
incrementalism principle, I submit that we limit them to the policy hacks level.

4. Suggestions for research

Given an adaptive stance, how would we investigate ways to integrate the foundations of the
responsible social economy into mainstream policies? How would we turn our findings into
actionable policy recommendations? This section discusses the problem and lays out a possible
road map.

First: build a model

The socially responsible economy is not the first radically new problem that modern societies have
felt the need to put on their policy agendas. Global environmental problems; Internet regulations;
privacy issues in a networked world are some of the first examples that come to mind. Just like the
socially responsible economy, all of these issues had communication problems: policy makers “did
not get them” at the start, and there were no institutions designed with them in mind. How have
societies and institutions come to grasp these problems, devise possible courses of actions and
encoded them into policy?

4 http://whatdotheyknow.com/
A first step towards a general theory might be to look at some of the examples above. One that I
have some knowledge of is the environment in Italy. Since the environmentalist movement pushed
it onto the political agenda, it followed a trajectory that can be plausibly divided into stages.
• Disconfort. The existing institutions felt the pressure to intervene, but it was not at all clear what
was appropriate for whom to do. Adaptation was happening – policies were being decided upon
and deployed. But it was constrained: since a legal framework had not yet developed around the
environment; and since existing policy towards environment-related issues (like urban hygiene)
dated back to the fascist era, all the action happened at the level of policy hacks. Existing
agencies were recruited to deal with new problems. Sometimes these hacks were quite
straightforward – as in the case of traditional urban hygiene functions being expanded to a
modern urban waste management approach; sometimes, however, they were quite contrived –
as in the case of air and water quality monitoring being allocated to the National Health Service,
which was clearly unprepared for the task, was highly decentralized (not necessarily a good thing
when dealing with pollutants that tend to travel across administrative borders, carried by the
winds) and, what’s more, did not want it.
• Concentration. A more or less organic attempt to rebuild the State’s toolbox for tackling
environmental issues took place in the 1980s. They were explicitly mirrored into the legal system
and the structure of government organization. Important new laws on waste management, water
quality and landscape quality were issued by Parliament; a Ministry of the Environment was
instituted in 1986 as the locus of coordination of environmental policy (some Regions had
already opened that road, using their local autonomy to institute regional Departments of the
Environment, with an appointed political head at the top reporting to the Regional President).
These new institutions had their principal focus on the issue: their appearance opened new paths
for adaptation and coevolution.
• Mainstreaming. Towards the end of 1990s it had become clear that the human activities with the
most environmental impact were not, and would not be, regulated under environmental
regulation, and that the Ministry of the Environment had no grasp over them. Responsibility over
energy policy was allocated to the Ministry of the Economy, and later (2006) to the “spinoff”
Ministry of Economic Development; that over transport policy to the Ministry of Infrastructures
(2001). The green economy theme, too, seems on its way to be subsumed under the label of
innovation policy, so its regulating authority should be the Ministry of economic development. The
approach to environmental concerns that seems to have emerged in the latter period is to
incorporate environmental quality targets and standards in all policies, even if they are not
primarily directed at environmental protection, so that a larger number of agents engage with
them.
Can this impressionistic three-stages periodization carry through to other examples and be
generalized onto a model? We do seem to find some generality in the discomfort stage. New items
on the agenda are more or less regularly initially pushed in the direction of existing government
agencies, and this seems to be driven by the metaphor that society utilizes to look at the new
problem. The telephone is seen as a kind of postal service. The environment is seen as a kind of
public hygiene. The Internet is seen as a kind of telephone network. In all of these cases, the
policy maker in charge of the source of the metaphor was recruited to take charge of the new
issue.
I suggest we look at a (necessarily small) number of examples of how new problems were
integrated into the policy agenda. We should adopt a historical perspective, and use categories
from complexity science (adaption) and New Institutional Economics (institutions); also, we should
look at them across different European countries, to get a sense for how constitutional architecture
and policy styles both constrain and enable adaptation. The expected result of this part of the work
is building a model that convincingly describes this process, or a small number of different
models applying to different situations.

Next: plug in data

Armed with a working model, we can turn towards the problem at hand. How closely does our
model describe the socially responsible economy story? That will depend on similarities and
differences between this issue and the issues from which we derived the model. In order to assess
them, we need to gather data from the socially responsible economy. Qualitative evidence is
probably needed most at this stage. A cursory investigation of the current debate suggests that the
history of the social economy could also be a rich resource (Chanial and Laville, 2004). The
expected result of this part of the work is a deeper, richer understanding of the socially
responsible economy as part of a complex adaptive system, coevolving with the society,
government agencies, institutions.

Check for attrition points: the rise of social innovation

I propose that our exploration of the socially responsible economy takes a deep look at the
relatively new phenomenon of social innovation. A group of people calling themselves social
innovators has come to the fore in the past four or five years. They share the concerns for the
greater good of the rest of the socially responsible economy, but they also participate in the
ideology of innovation widely shared in the developed world. They perceive their goals in terms of
the so-called “triple bottom line”: they need to report a profit on the financial bottom line; to
enhance environmental quality on the environmental bottom line; and to make the world a better
place on the social bottom line. They are smart and heavily networked. In a relatively short time
span they have managed to produce a respectable array of infrastructure, from global network of
(physical and online) workspaces The Hub to a 6 M Euro Social Innovation Park in Bilbao, Spain.
They also have the attention of some key policy makers: in September 2010 the European
Commission closed a tender to build a European social innovators community and help design a
new fund targeted at social innovation.
Social innovators represent an invaluable opportunity, but also a potential source of disruption in
European economies. Collaboration enabled by networks, online and offline, have shown to be a
credible alternative to market mechanisms and corporate hierarchies to coordinate the efforts of
large numbers of people, at least in some cases. The open software community has no
organization, no leader and no budget, yet it competes successfully with commercial companies
with products such as Linux, Apache, MySQL, Php, Mozilla Firefox, Wordpress, and others (Shirky,
2008); the open hardware community is out to do the same with manufacturing (Anderson, 2010).
Social innovators can be expected to compete not on just on the provision of low-value added care
services, but on everything, from event organization to finance. Understanding them is critical to
doing sound policy on the socially responsible economy.

Finally: superimpose data and model

I propose that a final stage of the research is dedicated to superimposing data and model. Given
what we know about how public authorities learn how to do new things; and what we know about
what kind of a new thing we are dealing with; given also the adaptive stance to policy making
advocated in section 3; which useful policy recommendations can we make? Which policy hacks
might we suggest to European governments willing to make an investment, albeit limited?
We should highlight moves that were successful in integrating new items onto the policy agenda
and that, given the evidence of the social economy, might be replicable. Conversely – and just as
importantly – we should highlight “false positives”, moves that worked for other issues but which,
given the different circumstances, are unlikely to be useful in this case. Preliminary evidence
indicates that it might be important to manage the metaphors that the decision makers use: for
example, the Silicon Valley has been a particularly toxic metaphor for innovation policy makers all
over the world, as practically every developed country tried to replicate the extraordinary success
of Northern California by building science parks and university campuses – and every one failed,
wasting a lot of taxpayer money in the process.
The expected result of this phase of the work is an array of adaptive policy initiatives that
European authorities might consider to move towards a more socially responsible economy. We
should carefully contextualize them in terms of their feasibility against the constitutional
architecture and policy styles of different countries, and highlight their costs and benefits across
multiple dimensions.
5. Joining the conversation
This final section is dedicated to the second and third questions that group 1 is required to
address: how to make the foundations of the socially responsible economy to the citizenry and how
to sustain creativity directed towards it, especially among the young. Drawing on experience from a
different area – that of the creative industries – that bears some similarities with the one in
question, I would suggest these goals might be pursued by entering into conversation with the
protagonists of the socially responsible economy (Bianchi and Cottica, 2010).
Such a conversation does not need to be built from the ground up: while there is certainly room for
improvement, it is already there. The socially responsible economy has no shortage of interaction
loci; some of them are online, some are more traditional. The vast majority of its protagonists
perceive it as a network, and take great care in maintaining and strengthening their links with each
other. These links – as was clearly shown by the first Workgroup meeting – extend well over
national borders. In other words, the socially responsible economy is already in a global
conversation; any adaptive policy maker would be a very useful and welcome participant to that
conversation.
Participating in this ceaseless activity of updating each other on what’s new and exchanging good
practices is an extremely efficient way for policy makers to communicate with the citizens. By
stepping in, they lend it the authoritativeness of the State; and by speaking in that context, they are
talking exactly to the right people, the people who are most willing to listen; most likely to spread
the information; and, most importantly, to take action upon it. Conversely, taking part in this tightly
knit web of interaction with the other agents in the system – such as the various sizes and shapes
of social businesses – is bound to provide the policy maker with a rich insight as to how to set the
stage for them to behave creatively.
How can public authorities participate in a vast conversation? There are some technical difficulties.
As forcefully pointed out by Levine and others (1999), only humans can converse. A government
agency is not human: though it does speak to us through official reports and press releases, we
cannot speak with it anymore than we could with a dishwasher or a bulldozer. This problem has
typically been addressed in two ways. The first is to create interfaces, small organizations that
bridge the cultural gap between the public authority and the community in conversation that it
wants to join; the second is to endow one or more authoritative public servants with the permission
structure to be in the conversation as individuals – but individuals that, in part, speak for the
authority in question. These approaches are not entirely straightforward, but they do seem to work
in most cases (Cottica, 2010).
A conversational approach is essentially a way to disseminate and collect information, and as such
it is a possible direct solution to question 2. It does not directly address question 3, but it does have
the potential to make traditional policy directed at sustaining creativity much more effective.
Incentives to socially responsible new business or innovation, even if they use the familiar
channels of allocating resources through a competitive process and/or tax relief, can become
vastly more effective than they presently are if they encode rich information.
A warning is due here. All of the above requires that the policy maker takes an adaptive stance.
Weberian bureaucracies do not enter in conversations. They are not designed for conversation,
nor for any other form of feedback. They are designed to take information only from above – so,
ultimately, from democratically elected officials – and use it to regulate social and economic agents
below. On the other hand, a policy maker that sees itself as an adaptive agent will find it
advantageous to engage in a tightly knit web of interaction with the other agents in the system,
such as the various sizes and shapes of social businesses. This web – as opposed to a more
traditional “ivory tower” stance – is likely to reinforce feedback loops between policy and market
behavior, and thus to facilitate mutual adaptation and coevolution. Tasking a bureaucracy with
engaging in such a way is very likely to result in failure. A more ad hoc, nimble arrangement is
recommended.
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