The Analysis of Social Innovations as Social Practice

bridges vol. 30, July 2011 / Feature Article

By Josef Hochgerner

Challenge Social Innovation
Vienna Calling: Conference “Challenge Social
Innovation – Innovating Innovation by
Research – 100 Years after Schumpeter”

September 19–21, 2011

A series of sessions will take place over three days,
moving from policy discussion and debate to FP7
networking and engagement.

There will be keynote speeches by renowned
researchers and practitioners
in the field, from
Europe as well as from Canada, the USA, South
America, and Southeast Asia (Japan, South Korea).
Confirmed speakers include Denis Harrison
(University of Montreal), Kriss Deiglmeier (CSI
Stanford), Antonella Noya (OECD), and Uwe
Schneidewind (Wuppertal Institute).

A focused networking session will take place on
September 21, providing information on the upcoming
call for proposals FP7-SSH-2012, to be launched in
summer 2011. SSH researchers and stakeholders
(universities, research institutions, civil society
organizations, and SMEs) will have the opportunity to
meet potential coordinators and potential project
partners in a structured networking environment.

This event will give you the unique opportunity to
build consortia for the next Socio-economic
Sciences and Humanities call in FP7.

Challenge Social Innovation is an event
co-organized by NET4SOCIETY (the Network of
Socio-economic Sciences and Humanities National
Contact Points) through the support of the European
Commission, the Center for Social Innovation,
Vienna, and the Dortmund University of Technology

Experts, as well as the general public, commonly perceive innovation as an important ingredient in economically effective new technologies, marketing strategies, and organizational approaches to enterprises. By contrast, innovative new social practices, organizational forms, or patterns of behavior rarely receive much attention, either as research fields or as objectives deserving of financial support.

This one-sidedness is systematic and has a history that will be reviewed in this article in order to outline, and then to work out, the specifics of what should be considered as social innovations, and the categories by which they can be empirically recorded and analyzed. The article will conclude by referring to critical areas of social development in the 21st century, which have manifested a special need for basic social innovations.

The concept of innovation in an economically dominated society
There have always been innovations - even before there was a concept for them and long before their increasing prominence in recent decades. However, their long history does not lessen the potential significance of innovations, emerging from research and receiving financial support, in safeguarding and improving human living conditions. After all, space, time, stardust, and biological cells existed before humans perceived them, made them into concepts, and began to understand and utilize their qualities and their effects. The concept of innovation, in terms of implementation and dissemination of a novelty, was developed in the first half of the 20th century and first described by Joseph Schumpeter with features still acknowledged today. It attracted attention and significance over the course of decades, initially in economic theory. Towards the end of the 20th century, innovation became a salient objective in general corporate practice and guided research and economic policy in industrially highly developed countries. The focus on economy and technology remained characteristic: Indicators and statistics on innovations, their forms, prevalence, and differences between countries or regions, have until now been based only on surveys within the general population of enterprises.

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"Innovations that aim not at
improving/perfecting, but at
changing/altering the status
quo may expect and need to
overcome greater obstacles."

Innovations are embedded in basic cultural patterns and processes of social change, and depend on historical, regional, and political conditions. The phenomena, functions and effects, as well as the opportunities and speed of dissemination of concrete innovations, are based on and affected by these variables. The social relevance of innovations can be thoroughly ambivalent: Innovations can affirm, support, and accelerate existing social conditions and trends, or can oppose these developments and change the "normal" course of events. Although innovations are based on intentions and, by definition, unfold potential for change, their chances of success and proliferation differ according to whether the intentions and effects of an innovation comply with or run contrary to the basic patterns of a society. The effort necessary to assert the new against the old, or to make an idea or an invention successful in society or on the market, is less for innovations that basically conform to existing expectations. Innovations that aim not at improving/perfecting, but at changing/altering the status quo may expect and need to overcome greater obstacles.

Max Weber
Max Weber, German Sociologist and Political Scientist
1864 - 1920

Just as technology is to a certain extent socially constructed (shaped), innovations - whether technological or social in nature - also develop under concrete cultural conditions. In the present with its global and defining "Western industrialized" world economy, the economy dominates the foreground of society. More than 200 years of industrial development and the global assertion of the capitalist value system have led to an economic model with global interdependencies, but lacking adequate institutions and structures of a world society with shared interests, objectives, and standards which might be able to end poverty and dependence by steering and utilizing in targeted ways the enormous economic productivity. Schumpeter's Austro-Hungarian compatriot and contemporary, Karl Polanyi, perceived that the modern changes in "Economy and Society" (also the title of Max Weber's main work of 1922) had led to a separation and independence of economic processes and structures from society. In the course of this "great transformation", different logics of development and action emerged, making society dependent on a specific type of economy - seen increasingly as something "external" and socially uncontrollable.

Accordingly, industrially and financially developed capitalism (the "system of the market economy"), unlike earlier market forms1, became a specific institution of enormous significance for the overall structure of society: It means no more and no less than the treatment of society as an appendix to the market. The economy is no longer embedded in social relations, but social relations are embedded in the economic system. Such a dominance of modern economic conditions and criteria in or against society implies that all socio-cultural structures are determined by the economy. In this context, it is hardly surprising that a value difference exists between "social" and "economic" innovations: Innovations in and through the economy, whose success can be defined and measured in sales and revenue figures, stand in the limelight and are heeded, financed, and applauded. Innovations outside the world of the economy, i.e., in state and civil society domains, not only seem different but receive less attention, funding, and acceptance.

Joseph Schumpeter
Joseph Schumpeter, Austrian-American Economist and Political Scientist 1883 - 1950

However, this dichotomy is artificial and logically untenable. Some innovations directly target economic enterprises, but innovations in public and civil society sectors may also have economic causes and consequences. What is important here is the objective: Social innovations create social facts2, whereas economic innovations create added economic value. In neither case does it mean that social facts must be positively assessed and desired (and by all the people affected by them) nor that economic added value should be sustainable in the broader sense of the word. Nor should we exclude the possibility that social facts (e.g., practices, norms, lifestyles) may also have economic effects or that economic and technological innovations can lead to new social facts (e.g., Web 2.0 technologies result in new communication patterns).

The most important contributions to introducing and disseminating the classical concept of innovation are rightly attributed to the social scientist Schumpeter3. However, the term ‘"innovation" typically did not have a fixed position at any time in his comprehensive oeuvre. The basic elements of what he and others later call "innovation" already appear as "new combinations of production factors" in an earlier book, disseminated both swiftly and effectively, in which he describes five forms of such new "combinations." Four of these forms can be found nearly unchanged 100 years later, as categories for recording innovations in the so-called Oslo Manual, where the categories from the English edition of Schumpeter's 1911 work are quoted and form its basis.

Comparison of the "new combinations" according to Schumpeter and the basic categories (four main types) of "innovations" according to the Oslo Manual
“New combinations of production factors”
(Schumpeter 1911, and subsequent publications):
Four (technical and non-technical) types of innovation
(OECD/EUROSTAT 2005, 29): 
 New or better products  Product innovations
 New production methods  Process innovation
 Opening up new markets  Marketing
 New sources of raw materials  
Organizational innovations
 Reorganization of the market position

Hence, "innovation" without a prefix mainly refers to new products or processes based on advanced technology or new combinations of technical components successfully employed in existing or new markets. In discussions and programmatic declarations on national, European, and international levels, the greatest significance is attached to the acceleration and reinforcement - and also the continuous alteration - of innovation processes. Innovation is often regarded as the final product of the scientific generation of new knowledge and its economic application. Indeed, by deliberately promoting new developments in research, technology, and innovation, modern society has considerably expanded its potential for improving present and future living conditions. These developments are currently going further and create new characteristics of innovations. On the one hand, new methods are being employed to increase the technological and economic development and effectiveness of innovations, such as user-driven innovation or open innovation. On the other hand, concepts stating that the social dimensions of technical innovations should no longer be neglected are gaining influence, but the special qualities of social innovations must also be taken into account.

The breakthrough of the Schumpeterian concept of innovation took place in the 1960s. The definition of innovation (differing from ideas and inventions by commercial success in markets) became widely adopted from Schumpeter, and characterizing innovation as a process of creative destruction is traced back to him. However, the originator himself did not always use these concepts stringently and with exactly the same meaning. Thus, Schumpeter turned the "new combination of production factors" from 1911 into "innovations" in 1934, while frequently writing "mutation" instead of "innovation" in 1942, and characterized the concept of "creative destruction" as a feature of capitalism and not innovation.

"The opening of new foreign or domestic markets and
the organizational development of handicraft
enterprises and factories into such concerns as U.S.
Steel  illustrate the same process of an industrial
mutation - if I may use this biological expression -
that constantly revolutionizes the economic structure
from within, constantly destroys the old structure,
"creative destruction" is the significant fact for
capitalism. Capitalism consists of it, and in it every
capitalist structure must live." (Schumpeter) 

Schumpeter's much-quoted description of "creative destruction" is always a sign of necessary change, for Schumpeter saw economic development processes not as being driven by the commonly assumed quest for equilibrium, but by inequality and instability. However much innovations themselves cause change, by definition innovations must be viewed as necessities of the modern economic and social system - a means for putting itself permanently in a position to face ongoing problems and new challenges.

Innovations are elements of the modus vivendi through which the economy and society ensure their existence in flux. Schumpeter himself came to the conclusion that even the basic system of economic activity is subject to major changes, as reflected in his assumed impossibility that capitalism could continue to exist:  "Can capitalism continue to exist? No, in my opinion not."4

Expansion of the concept of innovation by social dimensions
For more than 60 years following the Second World War, the capitalist system was marked by constant expansion and growing power globally, largely unchecked after the collapse of the Soviet Union in 1991 and disappearance of competition between the systems. Thus, it is not surprising that economic categories and expectations have dominated the innovation discourse. But in conjunction with the rapidly increasing interest in social innovations in recent years, development towards a postindustrial innovation paradigm is beginning to emerge. In such a paradigm, social innovations as well as technological and economic innovations could be comprehended as integrated components of social change in a "holistic" interpretation of innovation.

The social and economic changes of the 21st century pose further-reaching challenges, going beyond the economic context to concepts such as the implementation and analysis of social innovations:

(a) In addition to technical and organizational innovations in the economy, social innovations beyond primarily economic guiding principles and their rationale are gaining increasing importance in research, among the public, and in policy making.
(b) In the scientific analysis and research of economically effective innovations - based on indicators, scoreboards, evaluations, and benchmarking - the social dimensions (range and outcomes of their effects) must be taken into account.
(c) Apart from the "classical" innovations (products, processes, organization, marketing), new categories determining social innovations are required to capture innovative properties of new solutions to social issues (e.g., concerning societal poverty, social inclusion or regional development).
(d) Further to such categories there is an urgent need to develop scientifically informed and empirically ascertainable indicators, scoreboards, etc. for social innovations with their own logics of action.
(e) The interactions between economic and social innovations must be researched in a targeted fashion and the results integrated into the relevant fields of policy.

These demands of perspective should be read concretely as a medium-term work program for further innovation research.

The general point (a) basically affects all stakeholders in scientific and practical innovation discourses. The table below illustrates that in recent years, especially some elements of development towards a higher response to and treatment of the topic have become evident.

Objective (b) necessitates that the mainstream of economy-oriented innovation research be opened to social scientific studies on intended and non-intended outcomes of implementing and disseminating innovations. To achieve this goal, approaches from STS (‘Science-Technology-Society') studies, practices and experiences from the field of technology assessment, evaluation research and associated methods can be adapted and employed.

Point (c) refers to a core area of theoretical work through which the field should progress from general descriptions of the nature of social innovations to the definition of operable categories of social innovations. Suggestions for discussion will follow below.

The indicators (d), increasingly being demanded in ongoing discussions in science and practice need systematic development, testing, and application in empiric research.

Finally (e) the different types of social, economic, and technical innovations can be comparatively investigated as to their form, development, and effect.

All Innovations are Socially Relevant
All Innovations are Socially Relevant

The relevance of an innovation should not be gauged exclusively by the respective reference system or the rationale of the economy, society, or technology. Although economic and social innovations differ according to their objectives and logics of action, all innovations are socially relevant in that they emerge under social conditions in different contexts and have social effects. However, social innovations that do not aim primarily at economic objectives may also produce economic effects. The contexts and interactions of different innovation processes are currently gaining importance and will continue to do so in the future. The expanding sphere of "social innovation" is finding its way internationally into policymaking, the economy, and science - as seen from the growing number of institutions researching and/or practically supporting social innovations and from political declarations of intent, conferences, and documents addressing the topic.

 Expanding capacities and increasing interest in social innovations since 20005
2000  “Center for Social Innovation,” Graduate School of Business, Stanford University, USA
2004 “Centre for Social Innovation,” social enterprise, Toronto, Canad
2005 The “Young Foundation,” formed from the amalgamation of different organizations, founds
“SIX – Social Innovation Exchange,” London
2005 “Social Innovation Japan,” NGO, Tokyo
2006 “Netherlands Center for Social Innovation,” PPP (sponsors: ministries, industry), Rotterdam
2006 “New Zealand Social Innovation Investment Group” (key group of philanthropists, grant givers,
and community leaders), and “New Zealand Centre for Social Innovation” (Foundation), Auckland
2007 “Social Innovation Generation” (SiG), Kitchener, Ontario, Canada; ”a national collaboration
addressing Canada's social and ecological challenges by creating a culture of continuous social innovation”
2008 DG Enterprise and Industry of the EC sets up a “Business Panel on future EU innovation policy,”
which formulates the salient recommendation in its report (Vasconcelos et al. 2009, 1): ”We
propose to base EU action around compelling social challenges, to finance venture and social
innovation funds, to incentivize large scale community level innovations, to transform the public
sector and to unlock the potential of new infrastructure and new types of partnerships.”
2009 Social innovation is approaching the mainstream and is pushed by leading international politicians.
In the first week of his term in office, President Obama announces the establishment up of an
“Office of Social Innovation” in the White House (and endows a corresponding fund with US$ 50m);
in Brussels, EC President Barroso declares “The financial and economic crisis makes creativity and
innovation in general and social innovation in particular even more important to foster sustainable
growth, secure jobs and boost competitiveness.”
(Press release IP/09/81, Jan. 20, 2009).
2009 “Australian Centre for Social Innovation,” state-financed, Adelaide
2010 New Zealand: “Social Innovation and Social Entrepreneurship Research Centre” at the Massey
University – Palmerston North, Auckland, and Wellington
2010 Waterloo Institute for Social Innovation and Resilience (WISIR), Institute of Waterloo University,
Waterloo, Ontario, Canada
2010 Empowering people, driving change: Social innovation in the European Union,” a report written by
Agnès Hubert et al. from the Bureau of European Policy Advisers (“BEPA Report”), recommends
policy options for social innovations and actions at the EU-level addressing social demands,
societal challenges, and the need to reform society at large
2010 Social Innovation is taken up as a field of research in the 2011 Work Program in the Thematic
Program Social Sciences and Humanities of the 7th Framework Program for RTD; following a public
call for tenders, DG Enterprise places an order “Social innovation pilot initiative.” In the ”Europe
2020 Flagship Initiative: Innovation Union,” published October 6, 2010, very great importance is
attached to social innovations:  ”Social innovation is an important field which should be nurtured. It
is about tapping into the ingenuity of charities, associations and social entrepreneurs to find new
ways of meeting social needs which are not adequately met by the market or the public sector.”

(European Commission 2010, 21)
Page 22 specifies the objectives and measures: “The Commission will launch a European Social
Innovation Pilot … It will provide social innovation through the European Social Fund (ESF) …
Social Innovation should become a mainstream focus in … European Social Fund programs”
2011 “The Commission will support a substantial research program on public sector and social
innovation … it will pilot a European Public Sector Innovation Scoreboard.”

Categories for determining social innovations

"'Social innovation' is a term
that almost everybody likes,
but nobody is quite sure of
what it means"

Until now, social innovations have hardly been thematized and analyzed as an independent phenomenon in social scientific innovation research, which is heavily focused on the social prerequisites, consequences and processes in the context of technical innovations. This is why social innovations usually are not so much present as a specifically defined concept with its own and delimitable field, but rather as a descriptive metaphor in the context of phenomena of social and technological change6.

For this reason, it can and must be established that, notwithstanding the popular boom of the topic and the increasingly recognized relevance of social innovations, the foundations of sustainable and productive scientific analysis are incomplete with parts still to be created, or at any rate standardized, to the extent that approaches are available7. To this end, two central elements of such a foundation will be discussed here: first, a general definition of social innovations, with the idea of changed social practice at the core; second, a theoretically derived concept of operable categories for recording, describing, and analyzing different types of social innovations.

Social innovations are new concepts and measures to resolve societal challenges, adopted and utilized by social groups concerned.8 This definition differentiates between idea, intervention, and implementation. Ideas (inventiveness and creativity) underlie concepts and measures proposed, which, after targeted intervention (as a response to social challenges) and successful implementation, become innovations only when utilized. Social innovations are not determined solely by the potential of an idea, but also by whether and to what extent the potential of an idea is realized. It depends on whether the "invention" yields benefit to target groups and thus in the process of implementation, usage and dissemination a social idea mutates into a social innovation.

Under the conditions of globalization, innovations of all kinds affect larger and larger sections of society. They shape not only processes and trends in Civil Society, but also in public administration, in political institutions, in the economy, and in professional associations of the social partners. The behavior of individuals in small groups (the micro level of society) can be affected just as much as e.g., organizational development in enterprises, the structuring of teaching and learning forms in education, and various societal institutions (the meso level), or structurally effective regulations in the social constitution (social legislation,  pension, health care, taxation systems, etc. (the macro level)9. These levels provide directions to locate social innovations in a given society. In order to qualify social innovations by their characteristic objectives and intended impact, the BEPA-Report (2010) distinguishes "three complimentary approaches to the social dimension of social innovation": "The social demand perspective"; "The societal challenge perspective"; and "The systemic changes perspective."10

Talcott Parsons
Talcott Parsons, American Sociologist 1902 - 1979

The intention, testing, implementation, and dissemination of a new social practice that is enforceable against others will lead, as an innovation, to deviations from the routine current of reproducing stereotyped practices. The features of innovations in general, and of social innovations as defined here, can be observed in the actions and behavior of individuals and groups, and in social relations and institutions, and hence are accessible to empirical research. Max Weber offers theoretical approaches in the concept of social action, Talcott Parsons in the analysis of action systems based on it. At the center of Weber's theory of social action stands the subjective "meaning" of action, i.e., the intention, aim, and purpose of an intervention, and the reference of this action to or orientation according to "others" (persons, groups, institutions, the social environment): "Social action' ... intends to refer to such actions that in terms of the actor or actors relate to the behavior of others and take their bearings from it."

Whenever social innovations are manifested in social practices, in the diction of action theory, it follows that they either lead to new forms of social action or presuppose new social action. In either case, social innovations are expressed in a new definition (dimension or direction) of what constitutes the meaning of action and its relation to others (to the social environment). Social action in families, school classes, working groups, and also in large social systems (administrative entities, states, major concerns etc.), is determined by given roles and functions. However, a recasting of these very roles and functions can modify the social systems themselves, or even affect the processes of social change at large. The latter depends on the form and "range" of concrete innovations, i.e. in case of systemic social innovations at macro level of the society.

It seems necessary here to refer to the difference between incremental innovations and (improving innovations), in particular the frequent "unobtrusiveness of social innovations" on the one hand, and "basic innovations" relevant to the many people and stakeholders affected on the other hand.
To make the entire spectrum of social innovations accessible to scientific analysis, both small-scale (affecting individuals) and large-scale (affecting social structures) changes must be defined in categories, along with the processes of different ranges in all functional systems of society. A slightly adapted recourse to some elements of Parsons' structural function theory appears suitable, despite the fact (or perhaps even because) this theory of social systems understands function as "the effect of a social component making a contribution towards realizing a specific system status and maintaining and integrating a social system."

[The evolution of] human
beings ... repeatedly shows
forks and sprouting
branches. A fork stands for
the opening of a new path, a
new work method. ... I term
such a change in direction
from the previously
customary practice a basic
innovation. Technological
basic innovations create new
trades or branches of
industry, nontechnological
basic innovations open up
new fields of activity in the
sphere of culture, in public
administration, and in social
services, etc. Basic
innovations create new
terrain for human activity.
(translated from Gerhard
Mensch, Das technologische
Patt. Innovationen
überwinden die Depression,

So it is a question of innovations contributing to stabilizing systems, although certain adaptations are also involved. "Stability" can be achieved by safeguarding the status quo or by change, although change can also create instability, leading to complete system collapse, the demolition of old systems, and building up of new ones. In these processes, which often occur in parallel in society, innovations have a special significance. As already explained in Schumpeter's innovation theory, they guarantee the survival of enterprises (maintenance of stability), but keep in motion the more comprehensive process of "creative destruction" (dynamics of change).

All innovations are socially relevant - both those with objectives and rationality criteria to change economic parameters and those with social intentions and effects in the field of social practices. This also implies that, irrespective of the kind of innovation to be developed, realized, or examined, the meanings and effects of innovations do not remain restricted to the respective functional system: Technological and economic innovations affect or change not only the functional system of the economy, but also the other major functional systems dealt with by Parsons, i.e., politics, law, and culture. It is equally evident that social innovations not only exert an influence on culture or politics, but also on the functional systems of law and the economy. Within these systems, the functional area of "integration"11 has major importance for maintaining the system as well as for change.

According to Parsons, four structural categories come together in all social systems, i.e. "roles," "collective," "norms," and "values." Roles refer to the personal assignment or assumption of assignments; here, the collective stands for social relations abstracting from personal attributes; norms are rules of the most varied kinds (from house rules to laws and international agreements); values express general patterns of desirable modes of behavior and attitudes which usually have the character of orientation, but to a certain extent also normative significance. These structural categories, contained and linked in social systems from the roles of individuals to fundamental societal values, can be used to identify or designate different types of social innovations. The amended typology of innovations - which previously covered only products, processes, marketing, and organization, and exclusively in the sector of the economy - would then include roles, relations12, norms, and values as categories of social innovations13 in all functional systems of society as a whole.
Such an enlarged typology of innovations goes beyond the sector of the economy: It can also make innovations in the State (in public administration, regional bodies, etc.) and in Civil Society (the so-called "Third Sector") the objects of empirical research. Of course, the technical and non-technical economic innovations are and remain of salient significance for the functional area of the economy, just as innovations in values must primarily be situated in the functional area of culture.

One way to represent innovations of different kinds in relation to one another, and in Parsons' functional systems, is a circular chart (see below)  in which innovations are arranged from outside to inside according to the degree of their ordinary plasticity. The sequence goes from outside, the material environment of society (the most quickly changeable ‘surface' of social systems14), to the inside, to social structures most difficult to change and relatively more resistant to innovations.

 Types of innovations in social functional systems

This representation shows that different innovations not only interact with one another, but may also occur and operate in all social functional systems. Concrete investigations in surveys of all types of innovations in all sectors of society, will show which individual types occur more or less frequently and form clusters in specific functional systems, depending on different rationales and action logic. Such next steps may produce results that not only might verify, concretize, or amend the proposed typology, but also might make attitudes toward innovations, their perception, and dynamic processes in innovation systems appear in a new light.

"This relationally referential innovation concept
opens up the research perspective from a
narrower innovation-economic research program.
The economic references lose their monopoly, as
they are joined by other social references and
investigations of innovations become possible in
art, religion, science, politics and many other
fields according to their own performance
criteria." (Rammert)

The proposed categories of innovations are intended to help analyze the influences of and interactions between new elements of social practice, the objectives of novelties, their functions, and effects, in empirical research. Werner Rammert's approach seems fruitful here, as he suggests "differentiating between relation and reference in a two-stage innovation concept". Relations concern the temporal, factual, and social differences between what is new and "normality." In Rammert's opinion, only through the "process of social selection" and the references it introduces (e.g., in the form of social rationales, dimensions of use, objectives, and interests) do novelties become social innovations that can be differentiated from the economic rationale of "classical" innovations and from unintended social change.
Theoretical considerations and definitions of this kind are necessary to prepare the ground scientifically for future innovation research to attain a position from which to record, comprehend, and evaluate the activities required to meet the so-called "Grand Challenges"15 and innovations emerging in this context. This places great demands on interdisciplinary and transdisciplinary research in the social and economic sciences and on their ability not only to develop adequate methods and research programs, but also to reflect on their relationship to social practice and to deliberately utilize their own organizational competences.

Future prospects: social innovations for the 21st  century

"The most urgent and important innovation advance in
the 21st century will take place in the social field.
Technical innovations will continue, of course, and
 bring about a materially and immaterially utterly
changed environment and new living conditions in
comparison with previous possibilities; but the social
innovations will be those that the inhabitants of this
world must first produce or ensure."

At present and in the future, in addition to technical and economic innovations, a multiplicity of minor and major social innovations will become indispensable. Without them, peace and development - in keeping with the standards of industrial potentials - would be at extreme risk in a world society of eight to ten billion people, especially in light of the problems such as climate change and the growing gap between the rich and the poor.

With reference to these challenges, and to Polanyi's diagnosis of society as an appendix to the economy, the most urgent basic innovation of the 21st century can be formulated as the re-integration of the economy in society16.

To this end, and as a beginning, future economic indicators (with the purpose of deriving and justifying economic, labor-market, and social-political measures) must measure not only productivity, but above all prosperity. There are important approaches to this, and significant contributions have already been made to its systematization by the Commission on the Measurement of Economic Performance and Social Progress, headed by Joseph Stiglitz, Amartya Sen, and Jean-Paul Fitoussi17.

Secondly, apart from eliminating shortages (in terms of satisfying real needs), it is high time to establish strategies for surplus management ("management of abundance") as an equally salient task for the economy and economic policy (instead of continuously promote unlimited growth in any sort of markets, while expecting the State and Civil Society to balance deficits, social disparities and resulting conflicts)

This initially requires a "state that is in the position effectively to supervise and sustainably to tax the profits skimmed off on money markets", preferential treatment of the production and services sectors over critical sections of the financial sector18, special funds for a global Marshall Plan, and a ban on speculation with foodstuffs. In the EU, these and additional measures could be clustered in a New Deal for Europe19.


The author, Josef Hochgerner, is the founder and Scientific Director of the ZSI (Zentrum für Soziale Innovation, Centre for Social Innovation) in Vienna, Austria.

The above article is based on an English paper by the author that has been published first in German under the title "Die Analyse sozialer Innovationen als gesellschaftliche Praxis"  in: Zentrum für Soziale Innovation (ed.). 2011. Pendeln zwischen Wissenschaft und Praxis. ZSI-Beiträge zu sozialen Innovationen. Vienna and Berlin: LIT. 173-189.

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