Wednesday, August 24, 2011

How does one define social innovation?

After the last piece that I had written on this blog platform on the issue of corruption, I got very insightful comments from friends and well wishers. One of my friends questioned the lense of social innovation that I was applying to see the range of activities that have been initiated around us in the recent past regarding the anti corruption movement in India. These questions brought me to the cross roads of thoughts dealing with how does one define a social innovation. In the last blog articles, I did not deal with the definitional aspects of social innovation.
Some continuous thinking on these definitional aspects brought out the following dimensions which I thought to share with readers. The first set of question that emerged is – a) What is an innovation?. Some possible answers to these questions will be - it is a set of techniques, activities, thought processes that generate something new and also has certain element of uncertainty associated with it. Essentially, what these set of techniques, activities will help is getting aware of the abilities and capabilities that are ingrained or which have stayed latent and have the scope to generate a new stream of possibilities. These possibilities happen or not is not sure and hence lies the uncertainty with the outcome. These outcomes will very much depend on the process of innovation. It will also link to the way the existing, latent capabilities are harnessed and converted to fruitful outcomes.
In a society, existence of corruption at various levels can create a hindrance towards this fruitful conversion and can create barriers in harnessing of capabilities and abilities. Abilities are the potential that one is capable of and has been proved through past. Whereas capabilities are the future potential which can regenerate towards fruitful outcomes only through better processes. Rampant corruption in the institutional systems, governance structures can hinder these abilities, capabilities of individuals and can create laggards in functioning of the society. It is over here an anti corruption campaign can trigger off debates, create systems, processes, movements which can thereby help in larger fruitful transformation of abilities and capabilities of individuals in a social system. Because of this reason an anti corruption campaign might be seen as a type of innovation process and since it deals with better effective translation of abilities, capabilities of individuals in a society, it can be thought to be an instrument of social innovation. Though the question still exists that how far these movements can be seen as a social innovation process.
In this aspect of the interconnections between social innovation, capability and corruption, I will like to share an incident which will lead to further objectivities in the science of linking social innovation, capability and corruption. The incident happened while crossing a traffic signal of South Delhi in an auto. The auto in which I was travelling was stuck in a signal. Suddenly then, a person with a snake arrived and asked me to give money. Being irritated, bored with the indifference that I showed to him, he moved away after a while.
But what struck me with this incident was why these people have to do these jobs of getting money easily from people by playing around with the fears of people. Is this way of getting money easily by using snakes in traffic signals is also a kind of corruption? I was not sure with the questions neither with the answers. But if there is an alternative to engage these people in some other activities where their capabilities can be harnessed to generate livelihoods for them, should not that be tried: Or else if institutions, policies and systems are brought in place which harness the skills of these people and nurture their capabilities and shift them away from this money earning procedure should not that be tried. One can also ask if those mechanisms of chanelling the capabilities of these people are implemented then isn’t it a social innovation! This is because it will help them to move away from this way of money earning which to many can be a form of corrupt practice of gathering and collecting money. If that happens then can we call it a social innovation after cross referring to the concept of social innovation that we highlighted at the beginning of the write up.
One thing is clear, that it is not only essential to create the systems, mechanisms of harnessing the capabilities of these people for tackling the corrupt behavior of earning money. But, what needs to be done first is to motivate and incentivize this people so that they stop this practice. This will depend a lot on each of the individual and their psychologies with which they get engaged in this type of money gathering process. If I assume, that the guy who came with the snake and tried to collect money from me is a lover of wild life species like snake, then can he be engaged in snake preservation activities. If we can create a system that can ensure that conversion to take place then we will harness capabilities, freedom, skill and will bring in social innovation as a result of which corruption might also reduce. But let me pose another instance; say this guy who came with the snake has no passion about snake or wildlife and is just engaged in this because it is an easy earning option for him in the absence of alternative employment and livelihoods. Then a social innovation which will counter the corruption will happen only when this guy is directed to an alternative stream of income earning where he feels happy and thinks that he is nurturing his abilities and capabilities through that alternative stream. Here the role of policies, institutions, incentives will be a key. All these have to be bonded together to find out what is the option for this guy in a prioritized gradual mode. Immediately after that, actions have to be designed and taken so that transfer of this guy carrying the snake happens towards a new set of activity from the existing one. In the process he has to be constantly motivated to do this shift. Here the role of public policy will become very crucial. Without active public policy making and its effective implementation this social innovation harnessing the capabilities of the individuals with an objective of stopping corruption will not happen. And the day when it happens, may be we will see the same guy who was holding the snake in some other corner of the city to be engaged in a shop or in an activity where his real interest and capabilities lies upon.

Wednesday, August 17, 2011

When does social reform follow the process of creative destruction?

Introduction to "Creative Destruction" term happened to me through some writings of Schumpeter during 2009. In terms of a student of "Social Science", once I got introduced to the logical reasoning process of "Creative Destruction", a realisation of noviceness creeped in. It was enhanced when I studied some other readings dealing with application of Schumpeterian thoughts in analysing innovation systems. Few readings are worth mentioning with this respect. Papers by Chris Freeman (studying the relationship between inequality, technology and economic growth), Bengt - Ake Lundvall (exploring the linkages between innovation systems and economic development) and Richard R. Nelson (assessing economic development using evolutionary economic theory) needs to be mentioned.

Now, the point is why I am mentioning about these papers. All these writers in their papers bring out a connection between innovation systems and economic development process. We all know that an economic development process is in many ways guided by social reforms and progress. Rather, these papers motivate us to think how the process of innovation systems, evolutionary economic theory (which counters neoclassical school) raises and pin points to several elements of innovation process that can be analysed to understand social reforms which underlines the development of a society around us. I will just take one activity as an indicator of social reform in this piece of write up.

Let us take the example of the entire set of activities that has been happening encircling around the anti corruption campaign of Anna Hazare. Now when I was reading about the innovation literature mainly following the writings of authors mentioned above, I thought even movements by Anna Hazare in today's context are a form of innovation in bringing changes in the processes by which social systems are operating.

These innovations are trying to constantly bring a change in the modes of operational structures of the institutions, rules that are guiding our day to day activities. Hence, I thought that why cant the integral components of innovation systems approach be applied in trying to understand these activities (Anti - Corruption Campaigns).

A major element of innovation is the presence of uncertainty associated with any activities which are integral components of innovation. Schumpeterian concept of uncertainty tells us that the actor who innovates cannot estimate the probability with which any new innovative action of his/her will bring the result for which the action was taken or originated. Here the concept of uncertainty in innovation is very similar to Frank Knight (Knight, F. {1921}, Risk, Uncertainty, and Profit (Boston:Houghton Mifflin)). Another important aspect of innovation is assimilation of new ideas leading to effective actions instead of only accumulation of new thoughts, ideas. Neoclassical school always talks of accumulation in explaining the behaviour of an economic system behaviour. But the evolutionary school of economics remind us of the importance of assimilation in changing an economy and towards the development of an economy. While reading about all these I was seeing that the anti corruption movement in India has most of these elements.

So, can we say an Anna Hazare campaign as an innovation to change the social systems as it closely follows the concept of uncertainty element of innovation as mentioned in the Schumpeterian way of explaining innovation. All these anti corruption campaign actors in many ways dont know the exact estimate of the probabilities of the success of their action. A large part of their success will also depend on how the social actors and systems assimilate these actions and implement it in their day to day actions. So it is not only about accumulation of more campaigns like these. But the success of these anti corruption campaigns as a social innovation process will depend on how much assimilation of these thoughts happen which will be measured by the effective translation of these ideas of social reforms towards implementable, practical, effective actions.

Another dimension of innovation systems is creative destruction. Schumpeter's writings on "Creative Destruction" suggests that any new innovation creates new markets where some firms loose out, become obsolete and new firms, market structure are born once they become obsolete. Technological innovation plays an important role in that dying out and birth of new firms leading to new market structures. But the question is whether a same mechanism of creative destruction will follow in the society. So analogically, a social innovation like anti corruption campaign has to destroy old corrupt institutional systems, processes and will have to give birth to new ones to maintain the analogy. The answer to these are very unknown to all of us in India at this stage. But that should not stop us from thinking about them.

So the anti corruption campaigns can be identified as a part of social innovation process as they have two traits of innovation - viz. a) role of uncertainty in innovation and b) role of assimilation in determining the success of innovation. Further they might or might not follow a process of "creative destruction" pattern of innovation systems depending on many other social, political and economic factors. It is not clear to me to what extent these anti corruption campaigns can be called as social innovation process. But after doing only little literature review on innovation systems and economic development, these overlapping areas of innovation systems in studying social systems was coming on mind. I am not yet clear about any definitive conclusion about whether anti corruption campaigns can be called as social innovation processes or not. But that doesnot stop any of us to think, write, debate and exchange more thoughts on these issues. These debates only will give a definite direction on whether we can call "Anti Corruption" campaigns or any social reform as a social innovation system process. And this will always raise one question in the minds of all those debate lovers. That question will be - "When does social reforms follow the process of creative destruction?"

Freeman, C . (2011), "Technology, inequality and economic growth", Innovation and Development, Vol.1, No.1, April 2011, pgs 11 - 24
Lundvall, B. (2011), "Notes on innovation systems and economic development", Innovation and Development, Vol.1, No.1, April 2011, pgs 25 - 38
Nelson, R. (2011), "Economic development as an evolutionary process", Innovation and Development, Vol.1, No.1, April 2011, pgs 39 - 49

Friday, August 5, 2011

"Harassment Bribe" and "Institutions"

Since the upsurge in the news of corruption in the country, I have been trying to stay stoic to these news and continue doing the daily job of being insync with the project related research. But this stoicism to the loud news' of corruption didnot stay long. As a first step, I thought to read the latest article written by distinguished professor, author, thinker Kaushik Basu titled - ""Why for a class of bribes, the act of giving a bribe should be treated as legal" - Ministry of Finance, Government of India, New Delhi - 1.

The article has been uploaded on the web for wider public reading and invoking thoughts on the minds of every Indian regarding the issue of corruption.

Professor Basu discusses of a particular instrument called "harassment bribe" in this article. In short words he has defined what are "harassment bribe" and when do they arise in a system. Typically it is a bribe which has to be given to a bribe taker to enable the bribe giver to claim and get access to something to which he/she is entitled to. Thus this bribe helps the giver to avoid the harassment and have a claim on his/her right to something. This something can be an asset or any property or any good over which the bribe giver has a full right and is being harassed by the bribe taker towards getting this right to access the property/good/or something tangible.

The article discusses of the incentive structures of the bribe giver, taker and the regulatory, legal paradigms in which harassment bribes get enhanced in a system. These bribes are rampant in several blocks of the system and in our day to day life. We as common Indian have observed, sensed situations where giving little bribe induces the bribe taker to act fast and provide the giver the right or the facility to which he/she is legally entitled.

In many of our day to day scenarios, from the bribe giver point of view, the act of giving the bribe has an incentive as it fastens the procedure of claiming the right and reduces the transaction costs thereby bringing efficiency in the functioning of the institutional systems in which the bribe giver and taker is operating. The taker becomes happy with the illegal payment and does the job and stops harassing the bribe giver by reducing the transaction costs for him/her.

The article by Prof. Basu suggests that if we can create a system where infomation disclosure of giving harassment bribes are made legal and with larger punishments for the harassment bribe taker in comparison to the giver, incentives for the bribe giver to disclose information will increase. Further it will create threat for the taker to not indulge in harassing people and get engaged in taking "harassment bribe". This will reduce the chances of occurance of the act of "harassment bribes" and can diminish the level of corruption in a system.

But this can only happen unless and until the bribe taker and giver collude. The chance of collusion will depend on the discounting of expected costs and benefits of collusion/non collusion by the giver, taker while being involved in the act of "harassment bribes". The article highlights about all these possibilities. Valuation of the expected costs and benefits for both the giver and taker will depend on time horizon of each of them. This time horizon will further depend on the political economy of the institutions and mechanism of operations that decides the nitti grities of the functional mechanisms of the institutional system in which these two individuals operate.

It is here, I believe that even if there is a legalisation of the disclosure of information of the act of giving "harassment bribe" and creation of legal structures that penalises the giver more than the taker, the system can still be marked by the same level of corruption with its sustenance. To put it simply if we ask - "Why does one harass another in terms of exercising his or her claims on something to which he/she is legally entitled?". Is it not linked to the human behaviour, psychology and moreover on the nature of institutions that facilitates one form of human behaviour over the other. The issue of role of institutions to promote the right ethics of not harassing people from exercising and claiming their rights therefore becomes important. So ideally, morality and ethics of the human behaviour regarding corruption and bribe taking should be questioned, regulated and necessarily changed to stop harassment bribes. But in a practical scenario with various constraints it is not possible to change the morality and ethics of every people of a country because of their different backgrounds and socio- cultural routes, constraints. This brings out the question that in terms of policy prioritisation what should be the objective - a) Should it be reform of the institutions to regulate the human behaviour or b) Should it be creation of norms, legal processes to facilitate transparent information disclosure to reduce the level of corruption as some degree of corruption will always stay unless and until in an idealistic situation all human beings are driven by perfect ethics, morality and stop harassing people and taking harassment bribes.

In terms of pragmatism for policy prioritisation, I think to reduce the level of corruption in the economy and the system, the way ahead might be to first change the functional and non functional operational instruments of the institutions. Incentive structures should be first embedded within the institutions and be regulated for effective, efficient operation. Once institution systems with embedded incentives for promoting efficiency, transparency seeking behaviour of human beings within the systems are in place and implemented to some extent, only then instruments of legalising disclosure of information of "harassment bribe" should be brought in. This will further enhance the efficiency of the operational mechanisms towards reduction of corruption in the institutions. Legalisation of "harassment bribe" without the initial institutional reforms through policies and legislations might not be able to reduce the corruption levels. So may be , first institutional reforms have to be brought in followed by legalisation of the "harassment bribe" wherever and if required.

Operational structures of the institutions under different political regimes have to be questioned and modified wherever necessary followed by thought provoking new ways of reducing corruption within the economy. One of the ways of that could be transparent informal disclosure norms supported through effective legal and regulatory frameworks and instruments. In this regard, the suggestion of legalising the "harassment bribe" is a thought provoking idea. Debates, discussions and effective actions following such debates surrounding these types of thought provoking ideas will help in constructing a new India in the days to come. But definitely for a country like India, only legalisation of "harassment bribe" wont be able to reduce the corruption levels unless and until they are complemented with very strong institutional reforms at all levels of governance.