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Challenging Global Wealth Inequality

Jun Han_SWF Blogger

Oxford’s Fierce Compassion – Series of Student Insights to the Skoll World Forum 2016.

D.Phil. of Sociology student, ampoule Jun Han gives his perspective on the Skoll World Forum seminar session ‘Challenging Global Wealth Inequality’.

“As long as poverty, injustice and gross inequality exist in our world, none of us can truly rest.” —-Nelson Mandela

Global wealth inequality is growing fast. In 2014, OECD (Organisation for Economic Cooperation and Development) released a report, indicating that “in OECD countries, the richest 10% of the population earn 9.6 times the income of the poorest 10%. In the 1980s, this ratio stood at 7:1 rising to 8:1 in the 1990s and 9:1 in the 2000s”. In 2015, a report from Oxfam also warned that the combined wealth of the richest 1% of world’s population will overtake that of the other 99% of people by 2016, unless the rising inequality is checked. So, what is the driver of the global wealth inequality, and how to relieve the growing trend? What can social enterprises do?

Jun Hun

The 13th Skoll World Forum organised a panel “Challenging Global Wealth Inequality” on 15 April 2016 at University of Oxford’s Saïd Business School to shed lights on this critical issue. This panel was moderated by Emily Kasriel, Head of Editorial Partnerships and Special Projects at BBC World Service Group. The five panelists, who are pioneers fighting against inequality, as shown in the photo from left to right, are: (1) Degan Ali, the executive director of Adeso (African Development solutions), an African development and humanitarian organization, (2) Darren Walker, President of the Ford Foundation, (3) Yves Moury, the Founder, President and CEO of Fundación Capital, and the 2014 recipient of the Skoll Award for Social Entrepreneurship as well, (4) Nick Hanauer, the founder of Civic Ventures, and (5) Ngaire Woods, the founding and inaugural Dean of Oxford University’s Blavatnik School of Government.

The panel discussion kicked off with the request from the moderator to use 20 seconds by each panelist to paint the picture of inequality in terms of their personal or work experience. Degan Ali said in 2003 she saw the startling situations of hungry children in Somalia. Darren Walker described the desperation and dreams of young African Americans. Yves Moury witnessed the life of a group of mothers in slums. Nick Hanauer offered statistics of the income shift in US. Ngaire Woods highlighted the role of the government in relieving inequality by taking improving literacy as an example.

The second question for the panelists is what the drivers of inequality are. Degan Ali said, the drivers of inequality are invisible, for example, some policies from the government. Yves Moury agreed with the invisibility argument, and further discussed the relations between inequality and mobility. His words, “high inequality and high mobility is the American dream”, triggered the laughter of the audience. Nick Hanauer pointed out the wealth did not dribbled down, and the wage of middle class declined as well. Darren Walker talked about the cultural norms, not technical issues, that drive the inequality, and encouraged a more say on the economic development and tax policy.

The final question for the panelists is what social enterprises can do while other actors cannot. Yves Moury believed that all business in the future will be social enterprises, and meanwhile acknowledged the role of social enterprises should not be exaggerated. He said, in China many people’s livelihoods were improved probably not because of social enterprises. Darren Walker, the president of the Ford Foundation, emphasised the role of rights. He said: “we believe that people, when given their rights, have the power and agency to transform their lives”. Emily Kasriel further asked how to use social enterprises when the state is weak in tackling inequality. Degan Ali claimed that civil society including social enterprises can play a key part to get the government work and change.

All of these are of course very interesting and important points. Yet, in the panel discussion, one aspect of social enterprises (SEs) is not sufficiently discussed. That is the way how SEs use profits in addressing the global wealth inequality. Social enterprises are drawing upon business techniques to address social issues and promote sustainable social change. What distinguishes social enterprises from for-profits enterprises is the way how they use profits. Social enterprises (SEs) devote a significant proportion (usually 35% or half) of their profits to pursue social and environmental causes, rather than merely transfer the profits to the people, organisations or countries located at the top of the pyramid. SEs share a significant proportion of profits with their stakeholders (including the disadvantaged people, local communities, etc.) rather than primarily among their shareholders. This approach, I think, can address the issue of global wealth inequality at its root.

Social enterprises not only can relieve the income inequality, but also are able to change government policies on some economic and social issues. My Ph.D. research has shown that, when social organisations or NGOs has transformed into social enterprises, their likelihoods of achieving positive policy change from the government become doubled, when other organisational and institutional factors are equal (this chapter was recently accepted by the journal Nonprofit and Voluntary Sector Quarterly). I further use two case studies to demonstrate how two social enterprises have successfully promoted five policy changes in China to tackle the economic and social inequality (this chapter is forthcoming in July 2016 on the journal China Review).

In sum, social enterprises can play a critical role in “challenging global wealth inequality”.