Time for the Plural Sector

(Illustration by Adam Simpson) 

What is frequently called the “third sector” turns out to be surprisingly obscure. No wonder, with vague labels like this one. What does third sector mean to most people? This sector deserves a better name, and it deserves greater recognition of the critical role it will have to play in restoring balance in this troubled world.

What might best be called the “plural sector” (more later on why) has been consistently excluded from the great debates of our time—over left versus right, public sector governments versus private sector markets, nationalization versus privatization (as if these two sectors are the only homes for our important institutions). People argue about the need for government control of health care services to insure equality, compared with leaving control to the marketplace for the sake of efficiency, without recognizing how many of these services are actually supplied by community institutions in the plural sector for the sake of quality. And then we use the term PPP as if partnerships exist only between organizations that are public and private.

The plural sector is not some middle position between left and right, but as different from the other two sectors as they are from each other. Its particular focus is on communities, whereas the other two sectors focus on governments and businesses. It is time, therefore, for the plural sector to take its rightful place alongside the ones called public and private.

The Plurality of This Sector

What, then, constitutes a sector that can be called plural? The answer is any association of people that is neither public nor private—owned neither by the state nor by private investors. Some are owned by their members; others are owned by no one. There are vast numbers of both.

Cooperatives, for example, are owned by their members—whether customers, suppliers, or workers—each with a single share that cannot be sold to any other member. Amul, a dairy cooperative in India, has three million members.¹ Mondragon, the world’s largest federation of worker cooperatives, headquartered in the Basque region of Spain, employs 74,000 people,² in businesses ranging from supermarkets to machine tools. And many of us belong to co-ops as customers, whether in credit unions or sporting goods stores. Indeed, the United States alone is home to 30,000 cooperatives with a total membership of 350 million,³ more than the country’s entire population. Similar ownership patterns can be found in professional associations, chambers of commerce, and kibbutzim.

Owned by no one are a great many associations of enormous variety: foundations, clubs, religious orders, think tanks, activist NGOs such as Greenpeace, and service NGOs such as the Red Cross. Most US hospitals, called “voluntary,” are supported by donors but owned by no one (58 percent, compared with 21 percent by governments and 21 percent by private investors).⁴ In Canada, close to 100 percent of hospitals are likewise non-owned, even though Canadian hospitals are mostly funded by government. Included in this sector are non-owned organizations that engage in business activities and so form part of what is called the social economy. Red Cross chapters in North America sell swimming lessons, and the Kenyan Red Cross has built commercial hotels to support its beneficial work.

In an article entitled “The Invisible World of Association,”⁵ a group of us categorized the associations of this sector into four groups: mutual associations, which serve their own members (book clubs); benefit associations, which serve other people (food banks); protection associations, which advocate for their own members (chambers of commerce); and activist associations, which advocate for the needs of others (Amnesty International).

Most of these associations are legally registered and formally organized. But especially important are the more spontaneous associations of this sector, in the form of social movements and social initiatives. The former bring people together, often in large numbers, to challenge some aspect of the status quo, as we saw in Cairo’s Tahrir Square and the occupation of Wall Street, and continue to see in the American Tea Party movement. Social initiatives, in contrast, are usually undertaken by small groups that champion programs of social change, usually in local communities, although some, like the Grameen Bank, have scaled up to become global.

Environmentalist Paul Hawken’s book Blessed Unrest includes a 112-page appendix that lists social sector associations under headings such as culture, education, pollution, social justice, and religion.⁶ Hawken refers to all of this as a “movement” of more than one million associations, which he describes as “dispersed” and “inchoate.” We need many more such associations, but we also need them to work together in partnership as a force for radical renewal in society.

Why Call It Plural?

This sector has to take some of the blame for its own obscurity, as it has not been able to settle on an acceptable label for itself. Third sector sounds third-rate, an afterthought. Referring to the sector as the home of non-profits and non-governmental organizations (NGOs) makes little sense, because governments are literally non-profit and businesses are literally non-governmental. Calling the sector voluntary overemphasizes the role of volunteers, whereas civil society, an old term but of increasing currency these days, is hardly descriptive—in contrast to uncivil society? The social sector is a better label, but logically used only when the other two sectors are called political and economic—which rarely happens.

At a meeting I attended recently of researchers in this sector, in little more than one hour they used almost all of these labels. If the experts can’t get their vocabulary straight, how is anybody else supposed to take this sector seriously?

I propose the label plural sector for two reasons. The first is the variety of this sector’s associations and their range of ownerships. Forms of ownership in government departments and business enterprises tend to be limited and their structures tend to be more consistently hierarchical. The second reason I favor the label plural is that it can be seen to take its place naturally alongside the labels public and private. Public, private, and civil society just doesn’t do it. When I have introduced this label in discussions about the sectors, it has been used quite readily.

Revisiting de Tocqueville

The plural sector has long played an important role in the United States. Alexis de Tocqueville used the term “association” for the many organized activities he found in the new country.⁷ The American people’s preference for limiting government encouraged them to organize for themselves, into plural sector associations alongside private sector businesses.

“The political associations that exist in the United States are only a single feature in the midst of the immense assemblage of associations in that country,” de Tocqueville wrote in the 1830s. “Americans of all ages, all conditions, and all dispositions constantly form associations.… Whenever at the head of some undertaking you see the government in France, or a man of rank in England, in the United States you will be sure to find an association.”⁸

De Tocqueville saw these associations as not only quintessentially American, but also a central component of the country’s democracy. “If men are to remain civilized or to become so, the art of association together must grow and improve.” ⁹ That it certainly did, in America at least. But more recently, Harvard University professor Robert Putnam has written about Americans “bowling alone,” ¹⁰ and Institute for Policy Studies scholar Chuck Collins has commented on the steady “erosion of the community institutions that we all depend on”, such as schools, libraries, and parks.¹¹ (See “Struggling for Sustainability” below.)

If de Tocqueville saw it correctly, then this erosion would appear to lie behind the decline of democratic processes in the United States—from decreasing voter turnouts in public elections to private sector lobbying that has coopted so much of the country’s political activity. Perhaps, then, the plural sector needs to regain the influence that de Tocqueville described so compellingly almost two centuries ago.

STRUGGLING FOR SUSTAINABILITY

Among the forces that have been undermining the plural sector, two merit particular attention: pressures from the other two sectors and the consequences of new technologies.

It is evident that in those countries where they have dominated, communism debilitated the private sector and capitalism has been co-opting the public sector. Less evident is that both have been relentlessly undermining the plural sector. To achieve balance in society, we need to understand why.

Communist governments have never been great fans of community associations (as remains evident in China), for good reason: These are a threat to their omnipotence. De Tocqueville put the point well: “A despot easily forgives his subjects for not loving him, provided they do not love one another.”²³ The first real crack in Soviet communism arguably came because of the influence of two plural sector organizations in Poland: the Catholic Church that survived under communism, and the Solidarity Union that the Church’s presence helped give rise to.

But even elected governments have often been hard on community associations. Sometimes for no more than the convenience of their administrators, governments have forced the mergers of community hospitals into regional ones, just as they have promoted amalgamations of small towns into bigger cities. The importance of community figures hardly at all in a prevailing dogma that favors economic scale no matter what the social consequences.

We see much the same pressures, for much the same reason, emanating from the private sector, especially in the global arena. Consider how global manufacturing firms play local communities off against each other to gain tax advantages in locating operations.²⁴ Likewise, fast food chains are hardly promoters of local cuisines, or global clothing retailers of local dress. There is a homogenizing effect in globalization that is antithetical to the distinctiveness of communities. As a consequence, while private sectors have been expanding their powers globally, plural sectors have been withering locally.

Popular now among many governments is cutting back public services, in the expectation that plural sector associations will provide them instead. This might make sense for certain services, except that alongside cutting their own budgets, these governments have also been inclined to cut their financial support for plural sector associations. The prime beneficiaries of much of this cutting have been the wealthy owners of private sector businesses. Will the foundations that some of these people create alleviate the problem? And if so, will this kind of funding co-opt the independence of these associations? We need true balance in society, not new versions of imbalance.

Also detrimental to the plural sector has been a progression of major new technologies, from the automobile and the telephone to the computer and the Internet. Many of these technologies have reinforced personal individualism at the expense of social engagement.

Wrap some sheets of metal around many of us and out comes road rage. Have you ever experienced sidewalk rage? Indeed, have you ever been tailgated by someone walking behind you on a sidewalk? (Unless, of course, he or she was texting on a cell phone!) The sidewalk may not be a community, but it exists in one and certainly has a greater sense of social contact than does a road.

Telephones help keep us “in touch,” but they can also distance us from people in our local community, because it is easier to call than to visit. And contemporary electronic devices distance us further: They put our fingers in touch, with a keyboard, while the whole of us sits, often for hours, typing alone. No time even for bowling.

The new social media—Facebook, LinkedIn, Twitter, and so on—certainly connect us to the people on the other end. But let’s not confuse networks with communities. (If you are not sure of this, try to get your Facebook “friends” to help you rebuild your barn.²⁵) These new technologies are extending our social networks in remarkable ways, but at the expense of our local relationships. Many of us are so busy texting and tweeting that we barely have time for meeting and reading.²⁶

In his New York Times column, Thomas Friedman reported asking an Egyptian friend about the role of social movements in that country’s protests: “Facebook really helped people to communicate, but not to collaborate,” he replied.²⁷ That is why, although larger social movements may raise consciousness about the need for renewal, it is the smaller social initiatives, developed by groups in communities, that make it happen.

Of course, by facilitating connections among people, these new media help people find others with common cause. Moreover, they make it possible for local communities to connect with each other globally and thus to carry their initiatives into wider movements. Will this connection make up for the debilitating effects that the new technologies have been having on traditional forms of associating? I hope so. As social animals, we will find our affiliations in one form or another. Let’s just hope that we find them before it is too late.

Time to Rebalance Society

Each of us personally, and all of us together, require attention to three basic needs: protection, provided primarily by our governments; consumption, provided primarily by our businesses; and affiliation, found especially in our communities. With regard to the last of these, between our individualized and collective natures, we are social beings who crave human relationships: we need to belong and identify, especially in a world of so much isolated individualism. Accordingly, a healthy society combines respected governments in the public sector, responsible businesses in the private sector, and robust communities in the plural sector. Weaken any one of these and a society falls out of balance.

The communist regimes of Eastern Europe were out of balance because their public sectors dominated the other two. Certain needs for protection may have been served, but at the expense of personal consumption. Many countries today, including the United States and others of the “developed” world, are falling out of balance in the opposite direction. Their private sectors have become dominant, with the result that consumption, alongside the accumulation of wealth, has become excessive, at least for some people, whereas protections have become inadequate for many others. Moreover, under both regimes, communities have been weakened, and so too, as a consequence, have been the local affiliations provided by these communities.

One of the great periods of development—social and political as well as economic—took place in the United States in the four decades that followed World War II. The public sector was certainly strong (consider the welfare programs introduced in those years), businesses and their employees shared the fruits of rapid economic growth, and the plural sector remained robust. All three sectors were in relative balance.

Then came 1989. As the communist regimes of Eastern Europe began to collapse, pundits in the West had a ready explanation: capitalism had triumphed. They were wrong, gravely wrong. Balance had triumphed. As noted, these communist regimes were severely out of balance in favor of their public sectors, and so they collapsed largely under their own dead weight.

But a failure to understand this has been throwing many countries, led by the United States, out of balance ever since, as too much power has shifted to their private sectors. The results are evident in the unrelenting degradation of our environment, the accelerating demise of our democracies, and the ongoing denigration of ourselves, treated as “human resources”—as if we are economic commodities.

In the United States, this imbalance shows up in statistics on rates of incarceration, obesity, the use of antidepressants, the costs of health care (with mediocre results), levels of poverty, high school dropouts, and most surprisingly, social mobility. Income disparities have reached levels not seen since the Great Depression. One poll of US working men reported that 70 percent “either hate going to work or have mentally checked out.”¹²

Intent on limiting the power of government, the framers of the US Constitution instituted checks and balances. But these applied only within the public sector. Perhaps, then, it’s time to revisit the Constitution to institute greater checks on the private sector for the sake of balance across all three sectors. Radical renewal will require that each sector maintain sufficient influence to be able to check the excesses of the other two. The plural sector, however, has a special role to play in the process of renewing society.

Leading Radical Renewal

We can hardly expect governments—even ostensibly democratic ones—that have been coopted by their private sectors or overwhelmed by the forces of corporate globalization to take the lead in initiating radical renewal. A sequence of failed conferences on global warming has made this quite clear.¹³

Nor can private sector businesses be expected to take the lead. Why should they promote changes to redress an imbalance that favors so many of them, especially the most powerful? And although corporate social responsibility is certainly to be welcomed, anyone who believes that it will compensate for corporate social irresponsibility is not reading today’s newspapers.

This leaves the plural sector. Radical renewal will have to begin here, in communities on the ground, with groups of people who exhibit the inclination, independence, and resourcefulness to tackle difficult problems head on. “What now?” asked former UN Secretary General Kofi Annan in 2013 about the repeated failures of the talks on global warming. His answer: “If governments are unwilling to lead when leadership is required, people must. We need a global grassroots movement that tackles climate change and its fallout.”¹⁴

But will a plural sector that has been so marginalized in the battles over public versus private be able to take the lead in restoring balance? It had better, before we are swamped by our problems—if not literally by global warming, than politically by social turmoil.

The plural sector may be obscure, but it is not impotent. Paul Hawken has described, and articles in Stanford Social Innovation Review indicate regularly, the enormous vigor of this sector. A good deal of it can be attributed to the independence and flexibility of many of its associations, whose people are deeply engaged in what they do, especially when the missions are compelling, such as treating the ill or protecting the environment.

These people are not workers forced to maximize “value” for some shareholders they never met, or civil servants who must submit to a plethora of government controls. Many are more like members with a purpose than employees in a job. Consider the health care professionals who volunteer for Doctors Without Borders, the locals who self-organize to deal with an unforeseen disaster in their community, or the protesters in mass movements. “At its best civil society is the story of ordinary people living extraordinary lives through their relationships with each other.”¹⁵

If the private sector is about individual ownership and the public sector is about collective citizenship, then the plural sector is about shared communityship.¹⁶ Its associations are able to function as communities of engaged human beings rather than collections of passive human resources. While individual leadership has received so much attention in the private sector, in the well-functioning associations of the plural sector, it is this communityship that matters. Leadership facilitates that.

Aside from functioning as communities, many plural sector associations function in communities, and they often remain rooted there, even after becoming global. As Gui Azevedo and I wrote in another article, “Social initiatives … seem to be essentially indigenous: they work from the ‘inside up,’ and out, by people collectively engaged. They are not solving the world’s problems so much as their own common ones, later to discover that their own problems are the world’s problems.”¹⁷

Of course, not all plural sector associations take advantage of their potential. Some structure themselves too formally, thanks to board members or CEOs who force them to adopt unsuitable business practices (including use of the very label “CEO”), whereas others are driven by granting foundations or governments to apply inappropriate controls.¹⁸

Moreover, even at its best, the plural sector is not some sort of Holy Grail. We hardly need a new dogma: communism and capitalism have provided more than enough of them. It is balance that we require. If, at their worst, public sector departments can be crude and private sector businesses can be crass, then plural sector associations can be closed. The best of the latter may open us up, but the worst of them close themselves down by excluding outside concerns. Bear in mind that the witch-hunts of old were community-based, as are many of today’s terrorist cells as well as some of the narrow populist governments of the world.

But compared with what we have been getting of late from so many of our established institutions in the public and private sectors, the associations of the plural sector offer a way forward. And with plural sector success in restoring some degree of balance in society can come more of the reforms we require of our governments and more of the socially responsible behaviors we should expect from our businesses. In other words, constructive social movements and social initiatives, carried out in local communities and networked for global impact, are the greatest hope we have for regaining balance in this troubled world. But something will first have to change in the plural sector.

Time to Get the Plural Sector Act Together

Why is it that with so much energy and activity in the plural sector, the world continues its unrelenting march toward imbalance in favor of private sector forces? This trend can be explained by a variety of factors, for example the sheer size of many corporations and court decisions that have granted them certain rights as “persons” (for example, to make political donations). But one key factor has been largely overlooked: Although many of the associations of the plural sector have their own acts together, collectively this sector does not. Many initiatives are making enormous differences in the lives of people around the world. Yet altogether they don’t add up to a consolidated movement for “collective impact,” as John Kania and Mark Kramer have written in these pages.¹⁹ Hence society continues to fall out of balance.

Years ago, in one of his satirical songs, Tom Lehrer devoted some lines to the Spanish Civil War: “Though [Franco] may have won all the battles, we had all the good songs!” The struggle now going on over the future of this planet will not be won with good songs, however heartwarming they may be.

Is the problem with the plural sector its own plurality? Certainly the dispersal of efforts that Hawken described may be necessary to let thousands of social flowers bloom. “‘The landscape of the third sector is untidy but wonderfully exuberant.’ It promotes pluralism by enabling multiple interests to be represented, different functions to be performed, and a range of capacities to be developed.” ²⁰ True enough. But unless the sector can get its own act together, many of its flowers will continue to be bulldozed by more powerful forces.

Private sector businesses are no less dispersed; indeed, they compete aggressively with each other. Yet when it comes to their common interests, such as lobbying for tax cuts, this sector is able to get its collective act together. Businesses often speak with one voice, domestically in institutions such as chambers of commerce, and globally through international agencies, such as the World Trade Association and the International Monetary Fund, which have often acted on behalf of economic concerns. In this regard, the plural sector could do well to take a leaf or two from the playbook of the private sector.

This does not mean, however, that plural sector organizations should imitate business practices without careful thought. Each sector can certainly learn from the others—including the private sector from the plural sector, for example about engagement in mission and more open forms of governance. But given the obscurity of the plural sector, it has to focus on its distinctiveness. Let’s welcome partnerships across institutions of the three sectors, as long as they are balanced, with full recognition of the contributions that can be made by each of the partners. Examples can be found in the Danish initiatives for renewable energy and in how the Brazilians dealt with their HIV/AIDS crisis.²¹

Milton Friedman was quite clear in his emphasis on the distinct role of the private sector—that the business of business is business.²² This tenet has served businesses well—too well when these interests have led to interference in democratic processes. Right now what plural sector associations need are partnerships with each other, to collaborate for the cause of better balance in this world.

Please welcome the plural sector!

Read more stories by Henry Mintzberg.