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We Care A Lot: Profits of Social Entreprenurship

Social Entrepreneurship is often championed as a solution to social problems. As I understand it, social entrepreneurs are ingenious people who use their creativity to help those who suffer from poverty, sickness, lack of education, and whatever other problems catch their attention. Their solutions, because ‘Social Entrepreneurs’ would never question the basic good of capitalism (would they?), are of course only feasible if they return a profit to good-as-angel investors. Let’s ignore that the framing of Social Entrepreneurship, by itself, suggests that other profit seekers are Anti-Social Entrepreneurs (which is probably right). Instead let’s offer a brief critique of social entrepreneurship itself.

Here’s a good example in this morning’s New York Times. Retail monster Walmart is well known to pay its employees a less than livable wage of, on average, $13.85 an hour. One fortunate worker highlighted in the piece, Alexis, earns $19.25 an hour. Trading 30 hours a week with Walmart, she gets in return around $30,000 a year. This would put Alexis and her 4 children just beyond the $28,780 federal poverty guideline for a family of 5 in 2017, but they’re certainly eligible for many forms of assistance. So, this is a paycheck to paycheck life.

Alexis says she’d like to save more, but that’s hard to do with most of your money spent between pay-periods. So, here’s a problem for the Social Entrepreneurs to solve. In this case the solution is an app called Even, cofounded by idealistic young man Jon Schlossberg, to help low-wage workers manage their money. With Even, workers can even withdraw some of their earned cash before the next paycheck. No more pay-day loans with their high interest rates, but rather earlier access to money you’ve earned. Jon is focusing his entrepreneurial energy on helping those in need, which is good. He’s able to do this because he’s already created something very useful for us:

“Before creating Even, one of the firm’s founders, Jon Schlossberg, had developed an app called Knock, which allows phone users to unlock a Mac computer by knocking on their phone.”

Having made his money via this invaluable contribution to society, it was time to do good.

Idealistic and flush with money from the success of Knock, Mr. Schlossberg said
he began studying how a cash shortage affects people’s physical and mental well-being. “It is a fundamental problem with the capitalistic society,” Mr. Schlossberg said in an interview. Mr. Schlossberg, 30, said he set out to create a product that could reduce the stress associated with money problems, joining a crowd of other so-called fintech start-ups seeking to disrupt the traditional banking model.

Sounding like a real Marxist (who conveniently came to understand how awful capitalism is for workers after he’d made his money), Jon identifies how capitalism is fundamentally alienating and destructive of the human person. That’s not good. So, what’s the lesson? Do as any good capitalist would and disrupt! For a profit, of course.

Walmart pays a small fee to Even to allow workers to withdraw their wages
ahead of payday. Workers can take out only a portion of wages that they have already earned during the two-week pay cycle — so technically, Even says, these are not loans.

Walmart is paying Jon. Jon, flush with cash because he made it easier to unlock your computer, is being paid by Walmart so that he can help Walmart employees manage their paycheck to paycheck lives.  Stand-up guy, Jon. But, far from alone in his social entrepreneurial quest for justice, he has partners who share his concern for the struggles of the poor.

“You have earned this money,” said Safwan Shah, founder of PayActiv. “Who
decides you should get paid every two weeks?”

Jon’s comrade Safwan owns a company, missing an ‘e,’ that helps process the transactions between Walmart and its cash poor employees. Safwan understands that workers are the source of wealth, and how unfair it is that the capitalist decides when the worker gets access to the fruit of their labor. He’s going to help by processing a limited number of mid-pay-period transactions for a fee paid by Walmart, or if things get really bad, the employee.

With the new service, every Walmart employee can obtain a portion of his or her
earned wages eight times a year free of charge. For most of the workers, the so-called Instapays will be deducted from their next paycheck. The workers can pay extra if they want more than eight Instapays.

Safwan is also being paid by Walmart, at least indirectly, to help out it’s cash-strapped workers. Walmart is making the “reasonably substantial investment” in Even because C.O.O. Judith McKenna believes it’s “the right thing to do.” Judith says the company will keep “investing in its associates.”

$10.20 an hour Walmart associate Matt Fixel has some input for entrepreneurial justice warriors Jon and Safwan:

“That app sounds helpful,’’ Mr. Fixel said of the Even service, but added, “I
would prefer it if they gave me more hours.”

So, what do you say Jon and Safwan, maybe a campaign for better, more frequent pay for hard-working associates like Alexis and Matt? Of course, the needed changes might put your profits at risk, but you don’t actually care about those, do you? You care about justice.

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Wrestling with C. Wright Mills

I am by no means an expert on C. Wright Mills. I’ve read a couple of the excellent biographies and treatises on his work. Like many sociologists I do find him inspirational, and I’d love if my writing had the same eloquent urgency as his best does. Still, it’s hard to read his work today and not see holes. There is little to nothing about race or gender in any of his writing. It’s so absent, it’s stunning. How could a self fashioned radical, so concerned with human freedom, have been so silent about people who were so oppressed and who’s movements were beginning to take shape even as he wrote. It’s glaring, and I struggle with it when I take him as a model.

Nonetheless, what I find in his work is a thoroughgoing call to take the perspective of the radical if you are to produce sociological understanding. You must be radical, he seems to say, even as you look at those things that you cherish. Also, his work is humane in a way that so many other sociologists’ work, then and now, simply isn’t. You can read a lot of sociology and reach the end wondering if the author ever wondered at all about the experience of being human. You must be humane, he seems to say, if your work is to be the least bit relevant.

You must be radical. You must be humane. It’s stunning how often those two things are one and the same.

Baseball Salaries and Inequality

Are professional athletes paid too much? It’s pretty common to claim that’s the case, and here is a fairly standard example of the claim from Edward McClelland in today’s Slate. However, maybe the athletes aren’t overpaid, but are rather paid fairly relative to the wealth their labor helps produce for others. Here’s a good example of this argument from baseball writer Craig Calcaterra, which was a direct response to the ‘overpaid’ Slate essay. This is a fun debate to explore in discussions of social inequality. When I teach social inequality, I use this debate to focus in on how we, as a society, determine the value of work. Do we let the free market sort it out and trust that those getting paid the most are most deserving according to its logic? The classic functionalist explanation of economic inequality is that those who get paid the most must be doing the most important things. So, high pay indicates high social value. This explanation has been rightly debunked because it’s easy to point out many inefficiencies and counter examples that demonstrate that our meritocracy doesn’t really work very well. Calcaterra rightly points out these critiques when he writes:

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Teaching Marx: The Creative Class and the Ikea Effect

This morning we discussed a selection of the Manifesto of the Communist Party in Social Theory (the selection in Peter Kivisto’s Social Theory: Roots and Branches, Vol 4). We spend about a week reading and discussing Marx, and it’s never enough. In general, I think the students get the basic argument about the bourgeoisie and proletariat because they are likely exposed to this in other sociology classes. As important as that argument is, I’ve personally always been a lot more interested in what Marx has to say about alienated labor, how his work can lead into a discussion of consumption, and his general claims about the political implications of revolutions of the system of production.

I’m always looking for good ways to make Marx’s writing relatable to students. Many have had, or are working, jobs that are unsatisfying because they don’t allow them to be creative. These are jobs that are a means to an end, just like Marx writes about. I’ll ask them to think about the value of various commodities like iPhones. Who made that iPhone, what is its use, and why is it valuable? I’ll talk a little about advertisements that encourage us to want things we don’t even know exist. They get this point too, I think.

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Wealth in daily life

Adam Davidson’s NY Times magazine essay about Edward Conard’s view of wealth has been on my mind for a few days. There is much to criticize here, not the least of which is Conard’s application of a discredited functionalist model of society that says stratification is a function of occupational importance, such that the most important players receive the most lavish rewards.  Clearly this is Conard’s argument, and he would like more inequality because he believes it would generate the motivation for those who are currently ‘wasting’ their talents on things like art to move into other, more productive lines of work.

In particular I’ve been thinking about the primary players in Conard’s model of investor driven capitalism, which I take to be ‘investors,’ and ‘consumers,’ and the relations between these actors.  In this model, the risks of investors pay off in better lives for consumers.  Another category of actor which is really only hinted at is ‘workers.’  Workers in Conard’s ideal capitalism appear to serve at the pleasure of investors who are driven to improve the lives of consumers.  Conard shared an example of improvements to soda cans which make all of us richer because increased efficiency means each can costs a few cents less.  He also shared examples from computing technology, Davidson himself writing that even progressive economists believe the economic success of companies like Google spreads ‘value’ throughout the economy. (more…)