Bogotá in Colombia, for the better off to pay an extra 10 per cent of their tax voluntarily (over 60,000 people did so). Many of these examples concern the terms on which finance criss-crosses the boundaries between the state, the third sector and households. These too need to be redesigned to reduce the tensions between them. Boundaries are going to have to become more permeable, to allow new ways of doing things to be assembled from each of these sectors as they are needed. This is an area of innovation in itself. Social Schumpeter All those living and working in these sectors will have experienced, as I have, an extraordinary spirit of innovation – of imagination made real – that keeps on returning. The drivers have been different from the financial ones of the private market economy, but the commitment to finding new ways of doing things has been as strong. Yet it has been constrained by the way in which finance is raised and circulated in the social economy. There is now a sense of a pressure cooker, with the forces of imaginative practice either shackled by the inherited forms and procedures (and the cultures that accompany them) or by the lack of resources to allow small initiatives to grow. The answer to the question of whether the social economy is able to be the innovative force required by the next wave of economic development is twofold. First, there is the need for structural
changes in the conditions for innovation in each of the component economies, and second, for a new institutional architecture that allows the distributed points of innovation to be wired together to develop and sustain their innovations in practice. The primary challenge for the first of these is the reconstitution of the state. The state is still the dominant part of the social economy, in terms of its size, the resources it commands and the terms under which every part of the economy operates. The state has to find ways of opening up its iron cage, finding new structures which have their own force field for innovation and which are able to work fruitfully with other parts of the social economy. The challenge for the second is to learn from the successful productive networks – both virtual collaborative networks that have developed the human genome and open source software and the established co-operative or Grameen-type networks – to provide the connections between the multiplicity of micro initiatives. There is a third task for all those working in this economy. It is to understand the process of innovation more fully, from its generation to its generalisation. Parts of this process are similar to the process of private market innovation, but much is distinct. This is one of the central themes of the conceptual and practical work of the Young Foundation. In many ways we are still at the foothills of applying the ideas and innovations of Danger and opportunity Crisis and the new social economy 33