Honor the Stanford mission, be of value to society, urges Reich
Rob Reich, associate professor of political science, exhorted members of the Class of 2011 to use their education not just for personal gain but also to better society.
Rob Reich, who is faculty director of the Program in Ethics in Society and co-director of the university's Center on Philanthropy and Civil Society, was chosen by the senior class to give the annual Class Day Lecture.
It was that sort of gorgeous, sunny June day – blue sky, white clouds, light breeze. But despite the temptation to stay outdoors, a flock of several thousand soon-to-be grads and their families converged on Maples Pavilion on Saturday for the Class Day Lecture.
Some came from the Baccalaureate Celebration, some no doubt from family functions and some proud parents, judging by their "I'm going to be comfortable today no matter what" style of attire, might have come in from a game of Frisbee with their offspring to hear Rob Reich, who had been chosen by the graduating seniors to deliver the annual lecture. Reich is an associate professor of political science, faculty director of the Program in Ethics in Society and co-director of the university's Center on Philanthropy and Civil Society.
After a short performance by the a cappella group Everyday People, some welcoming remarks by Howard Wolf, president of the alumni association, and an introduction by Provost John Etchemendy, Reich stepped to the lectern. He prefaced his lecture by offering his apology to anyone who thought they were going to hear a talk by "the other" Robert Reich, the diminutive Secretary of Labor in the Clinton administration.
"Same name, different guy," he said. "For the political junkies among you, you will know what I mean when I say that while I am lesser in stature, I am greater in height."
The new social economy
Segueing into his lecture, "The Promise and Peril of the New Social Economy," Reich promptly informed his audience that his talk would not be about Facebook or Twitter or other social media.
"By 'new social economy,' I mean the broad new landscape of organizations that seek to produce social benefits," he said.
"The exciting fact about the world that you graduates are about to enter is that there are many novel and innovative ways for people to do good."
Rattling off some of the buzzwords associated with the new approaches, such as "impact investing," "venture capitalism" and "social return on investment," Reich acknowledged the enormous innovation and ferment that has been taking place.
"This innovation brings along with it great promise," he said, "but also, I hope to show you, some real peril."
Historically, he said, a flourishing democratic society is composed of three distinct sectors: the business or for-profit sector; the government or public sector; and the social or nonprofit and philanthropic sector, this last constituting the social economy.
Blurring the lines
But innovations of the past 20 years have broadened the social economy far beyond the world of nonprofit organizations and foundations, and the new social economy is full of hybrid organizations and philosophies.
In the for-profit sector there have been innovations such as "corporate social responsibility," in which corporations assume responsibility for the social impact of their actions.
And there is socially responsible investing, in which investment funds avoid industries embroiled in moral controversy, such as tobacco companies, or purposely invest in companies that produce social returns. Such funds barely existed 15 years ago, but now constitute more than 10 percent of professionally managed investment funds.
There are nonprofit organizations that seek to create operations that earn revenue in addition to accepting donations, and "philanthrocapitalism," as The Economist dubbed it, in which philanthropists purposely employ business strategies in their grant-making efforts.
Government also acting
Even government is getting into the act, Reich said, with the creation of the White House Office of Social Innovation, which seeks to create new types of partnerships between government and the private sector, and between government and the public sector.
The "Investing in Innovation Fund" of the Department of Education involved 12 foundations, including the Gates and Hewlett foundations, which contributed $500 million to the department to unlock $650 million in federal funds.
"Now there's a genuinely novel idea," Reich said. "Foundations making grants to the federal government."
Because of this blurring of boundaries between the traditional three sectors, the new social economy offers today's graduates a host of choices in "doing good."
"If you aim to do good and pursue a social cause, you can be sector agnostic: It doesn't matter what sector – public, private, civil society – one enters," he said. "That is an amazing new world and quite possibly a brave new world."
Will it work?
But innovation can also be perilous, as there is no guarantee that all innovations lead to positive social change, Reich pointed out.
Hybrid organizations like social enterprises might seem great in theory, but in practice they must cope with a deep tension between the profit impulse and the social mission impulse.
"Will profit overwhelm principle?" he asked.
Reich said the 20th-century regulatory framework governing the old three-sector society will eventually prove inadequate for the cross-sector collaborations that are increasingly popular in the 21st.
So, he queried, what does this brave new social economy mean for those about to graduate from Stanford?
Citing the purpose of the university as set forth by Jane and Leland Stanford, "to promote the public welfare by exercising an influence in behalf of humanity and civilization," Reich called it "a beautiful, honorable and worthy mission."
"As you commence the next stages of your life, remember this: Your education here has not been frivolous," Reich said.
"It has qualified you for personal success, yes. But – not to put too much pressure on you – we adults are counting on you to solve the global financial crisis, to figure out the war on terror and to come up with the governance structure of the new social economy."
Following Reich's lecture, the four senior class presidents – Dante DiCicco, Pamon Forouhar, Mona Hadidi and Molly Spaeth – each spoke briefly to extol the members of the Class of 2011 for their ability to engage in both hard work and hard play with equal skill and devotion.