Still an unsolved problem in 2012: articulating the goals of social capitalism 

The Emergence of Social Capitalism: Adaptation or Threat?
(via Instapaper)

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Last week I published a timeline of social business. The infographic shows 
range of different ways that technology and marketing are now strongly 
associated with the idea of “social”. Is there a new kind of capitalism 
evolving here, one that is not solely driven by markets and market regulation 
but instead is more of a socialised milieu, something we are not entirely clear 
about, but which seems to stand somewhere between socialism and capitalism?

Ron Paul's Gold Warning
Over the twenty odd years from 1984 to 2007 we were barely able to ask that 
question. Those years represented a sense of completion, a sense that we had 
reached a historic high watermark for the capitalist ethos. It was about what 
to consume rather than what to make. This was cruise liner living.

To suggest that there might be flaws in this system was like suggesting now to 
bankers that they do not deserve a bailout.

As it turns out the flaws might well be down more to poor regulatory and 
political intervention than flaws that are integral to capitalism.

Regardless of that, a new type of economics has been evolving through those 
years. Even when the system as we now characterise it was apparently at a peak, 
a new one was burrowing away.

Is this a new adaptation to capitalism or is it a replacement, in effect a 

Long before the bank bailouts, academic business economist were talking about a 
need for flatter hierarchies. The command and control system of corporate 
management was already exposed as inefficient. Companies like Proctor and 
Gamble had been out looking for new ways to innovate for a decade before the 
crisis hit, by going outside their walls to find expertise and invention 
wherever they could.

Developments like open source software – people dedicating their time and 
energies to making sure that large software projects deliver on their 
objectives often for free – also pre-date the crisis by a decade.

Crowdsourcing, relying on large numbers of volunteers to propose designs or 
products that a company’s core teams could not develop or design, emanates from 
the work of French philosopher Pierre Levy, whose book Collective Intelligence 
was published in English in 1997.

And over the course of the decade from 2000 onwards social software allowed 
people to create content in competition with established media outlets, first 
through blogging and then through social networks.

For five years smart companies have been incorporating those social 
technologies into their basic enterprise operating system. Much of that 
activity is wholly unrelated to recession and its causes.

The popular term for these types of activities might actually be 
“socialization.” We talk about socializing problems and challenges and even 
about the socialization of data.

This social capitalism is driven by collaboration and sharing, by the 
replacement of command and control by self-organising ecosystems of independent 
producers of software, apps and even components.

In fact in an important oversight we have tended to think of this system as 
distinctly software related whereas self-organising ecosystems have typified 
many physical product communities in areas like the Veneto region of Italy for 

If that is the production side, then on the consumption side we are fast moving 
towards a new type of market fragmentation where the end game lies in scaling a 
business while delivering to a market of 1.

Companies with multimillion volume product sales, like Dell, are wrestling with 
how to communicate with their customers on a 1:1 basis but of course Dell have 
also pioneered production for highly variegated markets.

Apple cracked that problem in software when it grew its developer ecosystem to 
300,000+. 300,000 producers creating for niche markets, down to the market of 1.

In this new ecosystem there is often huge waste – creating apps that don’t sell 
or have no bigger mission to pull products and services with them is wasteful. 
Crowdsourced projects that entice thousands of participants to create one 
answer are hugely wasteful.

Content production platforms that entice people into write content for free for 
audiences that don’t support a writing community are at best dubious.

Companies that embark on internal social media strategies, their staff blogging 
and tweeting instead of focusing on a market-related problem could also be 
wasting their most important resource – passion.

So we have a new economic system that seems to allocate resources very badly 
but at the same time has enormous appeal. People want to be involved and find 
convoluted reasons for legitimating involvement as economically valid and 

Another way to tell this story is to construct a narrative of transformation. 
What we see around is now is not waste. It’s the kind of collateral damage that 
is inevitable when you try to transform a system.

But let’s be clear that the system is being transformed. The way we set about 
creating wealth is undergoing a significant transition. Many leaders may not 
get it. Some might not know how to catch up. But it is happening.

It lacks a resonant label and I don’t see social business having powerful 
resonance over time, not like the word capitalism.

We need to recognise what is strong and weak about the emergent economic system.

It is full of trial and error and it lacks abundant proof points of what works 
best in social.

It lacks a meta level. We don’t actually have a strongly delineated sense of 
what goals this new social capitalism serves. It is defined by collaboration 
and sharing not by an ideology, unless you talk about the developmental 
capitalism of Muhammad Yunnis. We don’t know how it will impact the economics 
of capitalism.

In fact for the most part we are taking on trust the idea that a car company or 
a device company will be better and do better by socialising more of its 
processes. And we adopt that belief because we understand the tools – we grasp 
what an enterprise social network is or we know Twitter and have a very partial 
understanding of their impact on our own capacity to communicate.

The reality as far as we know it though is the a more socialised work system 
and market system is better at the level of those companies that succeed with 
it. Its broader impact and its validity as a resource allocation system we 
should honestly put into a box marked Must Learn More.

Follow me on Twitter @haydn1701

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