Source: Adapted and Re-drawn from Rexhepi (2017)
Figure 1 depicts an overview of social finance and the way this market
operates. The role of government in social finance has been critical and
as noted by Myers and Conte (2013) governments can be actors on both the
supply and demand sides of the social finance marketplace.
Intermediators, as depicted in Figure 1, are institutions that help
investors invest their money in the demand side for social purposes. HRD
should be at the intersection of all these social and private actors in
the social finance ecosystem with what Bierema and D’Abundo (2004)
describe as socially conscious HRD.
Social finance has been heralded as a driver for social change and
social good. It is framed as an attempt to “humanize” or re-moralize
capitalism by utilizing financial markets to tackle social problems
(Berndt & Wirth, 2018). Proponents of social finance are of the
conviction that many people will be earning a good amount of money
instead of just a small group of people getting very rich. Social
finance also influences social innovation and social entrepreneurship,
which can solve many problems of today’s economic system. Social finance
approaches enable governments to “share the risks” with the private
sector. It also helps governments improve outcomes by aligning interests
so that capital is channeled toward the most effective interventions.
Similar issues HRD is confronted.
Just like any other innovations and advances, there also those who are
very critical of social finance. While dedication to social finance to
solve social and environmental problems increases among governments and
the networks of supporting organizations, broader opinion on the merits
of the various forms of social finance like development bonds are
divided (Dey & Gibbon, 2018). “The scope and depth of the critique
emerging from this literature suggest that the claims being made about
the potential role of impact bonds in addressing fundamental societal,
developmental and environmental problems are often exaggerated.” (Dey
& Gibbon, 2018). It has been argued in some of the academic literature
that social finance has the potential of increasing economic insecurity,
accentuating inequality trends and exacerbating vulnerability especially
in the global south (Lavinas, 2018). This critique is predicated on the
belief that social finance is ‘financialized’ capitalism that is
radically subverting the role and logic of social policy, which raises
concerns of re-commodification replacing de-commodification; and debt,
through financial inclusion, now serving as an alternative to exclusion
(Lavinas, 2018). It has also been argued that social finance is a
“co-imbrication between the state and the financial sector in which the
state is using finance to intervene in society in ways that ostensibly
seek to reduce costs and welfare dependency, while at the same time the
state is used as a vehicle for financial capital
accumulation.”(Dowling, 2017). Another critique of social finance is
that it is a way “marginalized people are converted into commodities
and re-packaged as derivatives by investors plying their trade in the
new marketplace of inequality” (Neyland, 2018). HRD cannot be left out
of these dialogue relating human and development with the potential of
bringing a new social order.