Fourth Sector

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"American, as a society and a system, has long had three major sectors: civil society’s community- and home-based sector(s), government’s public sector, and business’s private sector. Having these three has enabled America to be successful for over two centuries, more so than other three-sector societies, and far beyond what anyone could accomplish with far-older one- and two-sector systems. But these three no longer suffice if we are to continue advancing. We need a fourth sector (commons?) sector. We should start enabling its emergence as the next step in long-term social evolution (à la TIMN). Doing so will improve our society’s complexity as well as simplify its functioning — a reorganization that will make everybody happier and healthier."

- David Ronfeldt [1]

Description

David Ronfeldt:

"According to Sabeti (2018), “The emerging Fourth Sector is fundamentally comprised of organizations that pursue social purposes while engaging in business activities.” Thus, he/they view the Fourth Sector — a term they coined in 1998? — as “a new economic space at the intersection of the three traditional sectors (public, private and non-profit).” In their view, the “non-profit sector” is also the “social sector” (a term they borrow from Drucker’s usage a few years earlier?). Its key actors will be for-benefit organizations." (https://twotheories.blogspot.com/2019/07/toward-new-sectorism-3-attractive-but.html?)


Discussion 1

Need for a four-sector framework

David Ronfeldt:

"It would be better to start moving toward a four-sector (quadriform) design.


For long-term evolutionary reasons (i.e., TIMN), our society has grown so advanced, so complex, that adjusting the two-, three-sector framework will not work well for resolving what have become our most critical, crisis-riven social problems: health, education, welfare, the environment, and related insurance matters. They are now too immense, complicated, burdensome, and interrelated to fit any longer into a two- or three-sector framework.

For reasons I will keep explaining and exploring in future posts, including with points I’ve held back, our society’s complexity is moving into a phase where it will have to add a next / new / fourth sector in order to progress further. Developing such a new sector is not an idle add-on suggestion; it is a looming evolutionary imperative, drawn from the arcs and archives of history (i.e., TIMN).

Best I can deduce, a particular set of matters — namely, health, education, welfare, the environment, and related insurance matters — form the bundle that will make sense to aggregate and migrate into a new sector. None are being addressed well by either government or business actors, and they are too big and complex now for civil-society actors to handle. What may explain why they can, and should, be viewed as a bundle is that they all concern collective and individual care, broadly defined to include social, economic, cultural, and environmental care — people care, life care. The cross-cutting purpose is to assure that people can do their best for themselves, for their families, neighborhoods, and communities, and for the common good of society. That’s a purpose that would suit a new “commons sector.”

Consolidation of such next/new/fourth sector may take decades to unfold, and may seem too far-out for immediate tasking. But it is not too early to begin considering its creation, identifying the advantages it can bring, and figuring out how to move relevant actors and activities (e.g., hospitals, schools) into it.

As has occurred with the long historical evolution of the prior three sectors (including the particular forms of organization, property, and information that each requires), this fourth sector will, in time, become as distinct and independent as the civil-society, government (public), and market (private) sectors are from each other. As noted above, my current sense (though I keep looking for alternative prospects is that it will be a care-oriented “commons sector,” constructed around yet-to-be-identified information-age network designs that enable massive sharing, consisting of yet-to-be-identified organizational entities designed for collective cooperation (not like independent corporations designed for stand-alone competition), probably entirely non-profit, with properties commonly held in enormous trusts. It will not be exist entirely apart from civil society, but rather in conjunction with that realm. It will not be part of government or market realms, though it will co-exist with them. It will mean that societies have advanced from triform to quadriform systems." (https://twotheories.blogspot.com/2019/07/toward-new-sectorism-3-attractive-but.html?)


Discussion 2:Competing Three-Sector Frameworks

Limits of the three-sector framework

David Ronfeldt:

"As these papers show, today’s policymakers, politicians, and media pundits, not to mention social theorists, mostly behave as though our society, our system, has only two sectors that matter: the public sector and the private sector. Our leaders have long relied on a two-sector framework to propose fixes for America’s mounting health, education, welfare, environmental, and other domestic problems. Some proposals call for more government programs, others for more privatization, a few for better public-private collaboration.

By now, this two-sector framework is deeply entrenched and tribalized. It is also just plain wrong-headed. It wasn’t true in the past. It will be even less true in the future. For it neglects two other sectors that belong in the framework: one very old, and still occasionally recognized, as these papers set out; the other so new its prospective emergence is barely discernible today.

Our society used to regularly recognize three major sectors — besides the public and private sectors, Americans also recognized that their society’s functioning depended on the vitality of civil society’s home- and community-based sector(s) and their arrays of voluntary groups, social clubs, charitable associations, and activist NGOs. When not acting alone, they would often assist public- and private-sector actors with all sorts of local issues. Indeed, this sector used to have a well-regarded, albeit lesser place in policymaking circles. And for decades, lots of theorists and activists have called for better recognition of civil society and its sector(s), often by new names — e.g., “social sector” (Drucker), “third sector” (e.g., Salamon; Rifkin), “people sector” (Mintzberg).

But lately, especially nowadays, this sector’s significance is acknowledged mostly as an afterthought. If its policymaking value could be recognized anew in Washington — if a three-sector framework were truly put back in play, as these papers urge — that would help. But this is no small goal, given the power, profit, and privilege, as well as inertia and tribalism, that are overwhelmingly concentrated in the dominant two-sector framework.

It usually takes a crisis to illuminate civil-society’s importance — the papers at hand are correct to emphasize this, and to call for correctives that would revitalize the three-sector framework. But many other efforts have urged likewise in the past, and so far not little if anything has changed. The Covid-19 crisis has presented a new opportunity — but political trends and rhetoric in Washington just continue to harden around the two-sector framework."

It will take more than this singular health crisis to prompt deep reform. Other motivating crises, including disruptive climate change, will have to come to the fore as well, and all these crises will have to be rethought, not in isolation but as interrelated and interactive. By then, people may begin to see that what’s needed is not a revitalized three-sector framework, but steps toward constructing a four-sector framework." (https://twotheories.blogspot.com/2019/07/toward-new-sectorism-3-attractive-but.html?)


Bowles & Carlin’s three-sector framework

David Ronfeldt:

"Their article makes good sense regarding what framework to use for addressing and resolving complex policy issues. Their paper illuminates that concern with solid reasoning as well as two elegant charts (best I’ve seen lately) about how government, market, and civil-society actors and their sectors may work together. In their words:

“COVID-19, for better or worse, brings into focus a third pole in the debate: call it community or civil society. In the absence of this third pole, the conventional language of economics and public policy misses the contribution of social norms and of institutions that are neither governments nor markets — like families, relationships within firms, and community organisations.”

“No combination of government fiat and market incentives, however cleverly designed, will produce solutions to problems like the pandemic. What we call civil society (or the community) provides essential elements of a strategy to kill COVID-19 without killing the economy.”


“These examples underline an important truth about institutional and policy design: the poles of the institution space — at least ideally — are complements not substitutes. Well-designed government policies enhance the workings of markets and enhance the salience of cooperative and other socially valuable preferences. Well-designed markets both empower governments and make them more accountable without crowding out ethical and other pro-social preferences.” (https://twotheories.blogspot.com/2020/10/toward-new-sectorism-4-same-old.html?)


Scharmer’s more-or-less three-sector vision

David Ronfeldt:

"In observing how people — people, not government or business — are responding to the pandemic, Scharmer is heartened to see “the further awakening of a movement taking shape across the planet … the activation of a deep and widely held longing for profound societal and civilizational renewal.” As a futurist, he heralds the continued emergence of “the new superpower in the making — the rise of a new pattern of collective action that operates from an awareness of the whole: Awareness-Based Collective action (ABC)” on a planetary scale.

After blaming Big Government, Big Business, and Big Tech for a “massive institutional failure connected to these issues,” he asks: “Should health and healthcare — or core parts of it — be organized by a different type of enterprise, one that is driven by a social mission instead of profit?” In reply, he calls for “rethinking the framework of public health in terms of the planet: putting planetary health and well-being first in our framing of what a good healthcare system is trying to do.” In his view, this means creating “new types of societal innovation infrastructures” — new learning infrastructures, democratic governance infrastructure, and economic infrastructures.


His proposal is not clear about the details, and it’s not explicitly a three-sector view. But it is in keeping with his long-standing quest to transform capitalism and society — specifically, to “upgrade our operating systems” by evolving toward “Capitalism 4.0” or “Operating System 4.0.” For our society has become so complex “you cannot solve ‘4.0 challenges’ with response mechanisms that are rooted in operating systems 2.0 and 3.0.” (https://twotheories.blogspot.com/2020/10/toward-new-sectorism-4-same-old.html?)


Mintzberg, Etzioni, and Mantere’s three-sector framework

David Ronfeldt:

"They summarize their triform argument very concisely right up front:

“Progress in dealing with the problem of climate change will require that the institutions of government, business, and community work, not in isolation from each other, let alone at cross purposes, but by reinforcing each other’s efforts through consolidation.”


They then categorize various climate-strategy initiatives “by sector … because the public, plural, and private sectors seem to favor different processes.” Of these processes, “orchestrated planning” is favored in the public sector, “autonomous venturing” in the private sector, and “grounded engagement” in the “plural sector.”

In their definition, “The plural sector includes those formal and informal associations that are neither publicly owned by government nor privately owned by investors. Some are owned by members, such as cooperatives, while others are owned by no one, such as the Sierra Club and the Girl Scouts.” It’s a sector whose associations are often led by “social entrepreneurs.” In other words, it is mostly a civil-society sector.

In addition to showing that different climate-change initiatives may involve different sectors, and different combinations of sectors, Mintzberg and his colleagues urge that these sectors and their actors work together, not alone and especially not at cross purposes.

Indeed, what they urge is entirely in accord with TIMN dynamics:

“By contrast, when the three sectors work together, to constructively reinforce each other’s efforts, they can together generate an ascending spiral of consolidation. …


“Each activity can thus spawn more activities in the other sectors as well as in its own, so that, together, they can feed this ascending spiral of consolidation. Perhaps more significantly, there can also be constructive networks of consolidation, as the organizations of the three sectors interact with each other in many different ways—alliances, partnerships, joint ventures, and so on. …

“In any event, addressing the problem of climate change will likely require that each of the sectors attends to what it does best, in conjunction with the other two. In general, communities engage, governments legitimize, and businesses invest. We believe that this is how healthy societies progress.”

Preferring the term “worldly” to “global,” they note that new narratives and mindsets are needed: “A worldly mindset can prepare actors to appreciate their differences, and thereby work together towards consolidated ascension, from group to globe.” (https://twotheories.blogspot.com/2020/10/toward-new-sectorism-4-same-old.html?)


More information

  • Heerad Sabeti and associates work in the Aspen Institute’s and Kellogg Foundation’s Fourth Sector Network, created in 1998. Sabeti is currently the head of the World Economic Forum’s Fourth Sector Development Initiative and CEO of The Fourth Sector Group (4SG).
  • Here’s the principal statement about Sabeti et al.’s fourth-sector concept:

https://assets.aspeninstitute.org/content/uploads/files/content/docs/pubs/4th%20sector%20paper%20-%20exec%20summary%20FINAL.pdf

• Samuel Bowles and Wendy Carlin’s “The coming battle for the COVID-19 narrative,” in a specialized journal (see URL below), dated April 10, 2020. The authors are renowned complexity scientists affiliated with the Santa Fe Institute (SFI). [2]

• Otto Scharmer’s “A New Superpower in the Making: Awareness-Based Collective Action,” at a blog he heads, dated April 8, 2020. As a futurist based at MIT, Scharmer writes mostly about organizational and economic trends and prospects. [3]

• Henry Mintzberg, Dror Etzioni, and Saku Mantere’s “Worldly Strategy for the Global Climate,” Stanford Social Innovation Review, Fall 2018, pp. 42-47. Mintzberg, a famed organization theorist, is based along with his co-authors at McGill University in Canada. He writes mainly about the roles of the “plural sector” — his term about what are mostly community-based civil-society actors. [4]