Working for the Social Value Engine has naturally immersed me in social value and the intricacies of measuring Social Return on Investment (SROI). In seeking a deeper understanding of these concepts, I have continually found myself returning to the foundational economic theories of Adam Smith.
Surprisingly, it is not just his well-known “The Wealth of Nations” that captures my attention but more so “The Theory of Moral Sentiments.” Smith’s exploration of the interplay between economic activities and moral principles has become increasingly relevant to our work, especially as we strive to align modern economic practices with broader social and environmental goals.
Adam Smith’s ideas show that our economic and social structures need significant change. These insights are valuable, and we need to consider them carefully.
Smith’s exploration of specialisation, the division of labour, and the invisible hand of the market have undeniably shaped our understanding of economic prosperity. However, as we navigate the complexities of a post-empire, post-industrial society, the limitations of these principles in addressing contemporary challenges and aspirations are increasingly apparent.
The pursuit of growth, as traditionally defined, seems an ever-elusive goal in our current era. This realisation prompts a critical reassessment of what we value and strive for as a society.
Smith’s “The Theory of Moral Sentiments” provides a compelling framework emphasising the inherent human desire for community, empathy, and mutual well-being. These elements, often sidelined in purely economic analyses, are fundamental to the fabric of a resilient and thriving society.
In the context of the United Kingdom, and indeed globally, we find ourselves at a crossroads. The legacy of industrialisation and empire has left us with profound insights into the mechanisms of wealth generation. Yet, it is increasingly evident that a new paradigm is necessary to integrate the social and environmental dimensions of value into the core of our economic systems.
The Social Value Engine represents a tangible step towards this new paradigm. Developed in response to the Public Services (Social Value) Act 2012, it is designed to measure and articulate the broader impacts of projects and initiatives. This approach aligns closely with Smith’s recognition of the importance of moral sentiments in economic life, offering a means to evaluate success not just by financial metrics but also by the positive changes generated within communities.
As we understand today, social value encompasses many outcomes, from environmental sustainability to social cohesion and individual well-being. The challenge, however, lies in moving beyond an acknowledgement to action. The Social Value Act, while a step in the right direction, represents only a fraction of the potential for embedding social value into the fabric of our decision-making processes. It suggests a transactional approach when what is required is a transformational one.
Localising the concept of social value is crucial. Within communities, the proper understanding and appreciation of social value can be realised and acted upon. This local focus empowers stakeholders to identify and prioritise outcomes that resonate most deeply with their unique contexts and needs. The Social Value Engine facilitates this by providing a framework for measuring and communicating the impact of initiatives in terms that reflect the actual experiences and values of communities.
Moreover, the importance of devolving responsibility for economic development to more localised governance structures must be balanced. The call for devolution reflects a recognition that centralised approaches to economic and social policy often fail to capture the nuanced realities of different regions and communities. We can foster a more responsive, inclusive, and adaptive economic development model by empowering local councils and organisations.
The journey towards integrating social value into our economic systems is both a challenge and an opportunity. It requires us to rethink our priorities, values, and mechanisms for decision-making. The Social Value Engine stands as a testament to the potential of such tools to bridge the gap between traditional economic models and modern societies’ complex, interconnected realities. By embracing these principles, we can forge a more equitable, sustainable, and prosperous future for all.