Opening 'Center for Economics & Mutuality' (Engels)

Blog by Eppo Bruins on March 10, 2020 at 11:53 AM

Opening 'Center for Economics & Mutuality' (Engels)

Toespraak uitgesproken bij de opening van het Center for Economics and Mutuality aan de Erasmus Universiteit.

Throughout human history we have known what is required to build a pleasant society. Even in scriptures as ancient as Jewish torah, these guidelines concern relationships, justice, taking care of the vulnerable, and having a well structured life with ample rest.

But hardly anything about finance. Not because there was none. It just is not as important for building a pleasant (or should I say blessed?) society.

In the past century however, economic thinking has been dominated by indicators such as gross national product. And terms like profit and growth have had a mere financial interpretation.

I want to share three recent developments with you (three hopeful developments), that have taken place in the Dutch political arena.

1. Broad prosperity
The first example takes me to the third Tuesday of September.
On the third Tuesday of September, our country celebrates Prinsjesdag. On that day our King visits Parliament, riding in his golden carriage. He presents the government’s plans for next year, and that same afternoon, the Minister of Finance presents next year’s budget to the House of Commons. Instead of only presenting financial data, in recent years, the Dutch Parliament has pushed the idea of government justifying its actions also on the basis of a broader definition of prosperity.

Broad prosperity measures the quality of life in the here and now, but also takes into account the extent to which that prosperity is reached at the expense of later generations or at the expense of people elsewhere.

Our Central Bureau for Statistics now annually presents the Monitor Broad Prosperity & Sustainable Development Goals. A large and diverse set of indicators is used to describe broad prosperity from two perspectives: In part 1 the prosperity ‘here and now’, ‘later’ and ‘elsewhere’ are mapped statistically, and the distribution of broad prosperity ‘here and now’ among various groups in Dutch society is presented. In part 2 the 17 Sustainable Development Goals are described statistically using a large number of indicators. Although Parliament is still struggling how to use these data in a more forward sense, in order to influence policy plans, the focus on societal issues, and not only financial issues, is an important mental shift in this country.

2. Social enterpreneurship
Not only macroeconomically, Dutch politics has undergone this shift. On the scale of individual companies, in recent years Dutch politics has become much more sympathetic towards the phenomenon of social enterprise. This is the second example I want to mention here.

Ten years ago the definition of social enterprise was confined to foundations wishing to start up commercial activities in the semi-public sector. About five years ago the definition shifted, singling out entrepreneurs taking over the task of employing disabled people, as a result of budget cuts in government spending.

But in the last couple of years, a broader and more flexible definition of social enterprise has emerged, based on a greater and renewed awareness that generating money is not the main task of companies.

This shift has led to public and political interest in an age-old Dutch ideology known as the "Rhineland model" – capitalism with its function focusing on societal return as well as financial return. The Rhineland model is the historical basis for the Catholic and Christian-democratic political movements in the Netherlands, Germany and later in some Scandinavian countries, promoting capitalism with a human face.

The broader definition of social enterprise, and the renewed interest for the Rhineland way of thinking, has opened up the possibility for visibility and recognition of social enterprises in the Netherlands.

Changes in the labour market have also spurred on this change in attitudes. As a result of decreased government spending, the government and representatives of employers and unions, have agreed to take shared responsibility to enhance the number of workplaces with sheltered employment.

In 2016, Jan Vos, member of parliament for the Labour Party, and I announced an initiative for new legislation to promote social entrepreneurship in the Netherlands. The initiative got a positive response from the Ministry for Social Affairs, but the Ministry for Economic Affairs was much more skeptical.
The following year I was able to elevate the issue further, because my party, the Christian Union, became part of the new four-party coalition government following the general election.
As part of the coalition accord, our parties promised to create (and I quote) "suitable regulations and more room for companies with social or societal goals, while maintaining a level playing field".
Spurred on by this accord I submitted a formal white paper to the Dutch parliament advocating the legal recognition of social enterprises. This time, the Ministry of Economic Affairs reacted, although hesitantly, in a more positive manner.
In a letter from both the Ministry of Economic Affairs and the Ministry of Foreign Trade, the Dutch government now has come to recognise the importance and the potential of social enterprises and wants to stimulate social entrepreneurship further.

Any week now we expect the result of a market research, that will determine whether a sufficient number of companies support the adoption of a legal form for social enterprises.
At the very least, my white paper and the positive reaction of government has sparked new attention for the topic of social entrepreneurship in the Netherlands. We are aiming for new legislation this year.

In the political debate to come, it is important to maintain a broad view of what social enterprises are. I believe that for many companies, social entrepreneurship will become part of their everyday business.

I expect that in the long run, more and more customers want to know whether they buy "fair" products in the broadest sense.
The realisation that profit is much more than just financial is here to stay, in the private as well as the public sector.

3. International socially responsible enterprises
The third example is a recent initiative from my ChristianUnion colleague Joel Voordewind. Last week he has announced a proposal for legislation that will oblige companies to act conform OECD norms for social responsible enterprises. Such a law would make it compulsary for companies to prevent e.g. forced labour and deforestation. This initiative will force companies to detect human rights violation and environmental damage, happening in their supply chain. They also will be obliged to provide plans how to avoid these, and how to mitigate risks of these violations and damages happening. This due diligence process will by Dutch law oblige companies to act conform OECD rules for multinational enterprises.
Until now, following OECD guidelines was on a voluntary basis only. Although Dutch government stimulates this and supports convenants in collaborative initiatives, this policy of voluntarity proven ineffective.

According to the Transparency Benchmark 2019 of the Ministry of Economic Affairs, only 22% of the largest companies in the Netherlands conforms itself to OECD guidelines.

The ChristianUnion proposal for legislation follows an international trend: in France, Australia, the UK and the United States, legislation on socially responsible entrepeneurship is in place. Germany and Finland are developing legislation at the moment.

With these three new initiatives taking place in The Netherlands, the opening of the Centre for Economics and Mutuality here at Erasmus University seems timely and highly relevant. Nevertheless, the Economics of Mutuality radically changes your view of business.

If we want politics and policy to be effective, we need science, metrics and an evidence-based approach to help make these political initiatives more tangible and real. And go beyond!

Research and politics sometimes are like water and fire. In this case, I hope - and expect that the Centre for Economics and Mutuality will be like oil on a fire. A fire that will not consume but instead will spread light and hope in the world, and will guide us in the way we run countries, the way we do politics, and the way we do business worldwide.