Going beyond GDP: The Role of Social Innovation in Building a Welfare State

1. Introduction

Growing number of economists are realizing that simple economic activity measured by the GDP is, alone, not enough to represent the well-being to citizens. In recent years, a number of scholars and some politicians have embarked on efforts to conceptualize and theorize new economic paradigms. Former president of European Commission, Manuel Barroso, once featured that “Despite being an invaluable tool for economic policy, Gross Domestic Production (GDP) is unfit to reflect many of today’s challenges, such as climate change, public health and the environment. We cannot face the challenges of the future with the tools of the past” (European Parliament, 2009, p.24)). Innovative solutions are necessary to face with the challenges of the future and foster sustainable growth. Measuring a prosperous society as a whole is more complex and necessitates considering several other elements besides robust GDP growth, such as peace and happiness, economic and financial well-being, and individual freedoms and liberties (Urama & Acheampong, 2013). A redirection towards sustainability and well-being, which produces lasting social and economic vitality for global civilization as a whole may be the most viable option for further development (Rogers et al., 2012; Fullerton, 2015).

There are numerous economic, social and technical developments which led governments and societies to seek new approaches to overcome related contemporary challenges and provide sustainable well-being. Shifting focus of economies to a greener form of production, engagement of cities throughout the world in the promotion and pursuit of climate mitigating activities, growing attention on ecological developments are some of the illustrative cases of big shifts.

We argue that social innovation is capable of providing new means to overcome today’s challenging problems, ranging from zero-carbon housing to fair economic system by providing social capital needed for the improvement of the human well-being and social progress. In this process, social innovation is expected to change beliefs, basic practices, resources and social power structures profoundly by providing a unique opportunity to step back from a narrow way of thinking about social enterprises, business engagement, and philanthropy and to recognize instead the interconnectedness of various factors and stakeholders (Urama & Acheampong, 2013).

The main objective of this chapter is to highlight the shifting dynamics by elaborating the drivers of the change and to shed light on the potential role of social innovations praxis in improving welfare of the people. After the introduction, the second section of the chapter addresses the beyond GDP approach from various aspects with a particular focus on the “new economy” discussion. In the third section, by following conceptual heuristic, foundational drivers of new economic paradigms, namely exogenous developments, socio-technical transformation, socio-ecological transformation, economic crisis and the shifting the role of government and society are elaborated as the drivers of the “new economy”. In the fourth section, we analyze the role of social innovation from various aspects as a facilitator in building the welfare state. Possible contributions of social innovations have been highlighted under four illustrative cases. In this context, role of social innovation is investigated in four categories including creating a fair economic system, facilitating the social transition, providing sustainable added value, empowering the community to adapt itself to socio-ecological transition and building a “competitive advantage” in applied country.