The Third Sector
    — and the Rebirth of Civil Society

    By Jeremy Rifkin
    from his speech to Strasbourg Parliamentarians / NGO Conference 1999

    rifkin4Up to now, the marketplace and government have been looked to, almost exclusively, for solutions to the growing economic crisis facing the country. Today, with the formal economy less able to provide permanent jobs for the millions of working people in search of employment and with governments retreating from their traditional role of employer of last resort, the nations civil society -- the Third Sector-- may be the best hope for absorbing the millions of displaced workers cast off by corporate and government re-engineering.

    The first thing to understand about the Third Sector -- the cultural sphere-- is that it is the primordial sector. Throughout history, human beings have always established social communities first. They develop rules of social exchange, embed their members in complex reciprocal relationships, and build up social trust. Only when these relationships, and the trust that is built from them, are firm can communities enter into commercial trade and set up markets for exchange. That's because markets, by there very nature, deplete trust. The old adage "caveat emptor" -- let the buyer beware -- is as true today as it was at the time of the Roman markets more than 2000 years ago. The point is that markets are secondary rather than primary institutions. They are derivative in nature and exist only as long as there is enough social trust in place to assure the terms of trade. European and American businesses learned this lesson the hard way, in the aftermath of the fall of the Soviet Empire. Companies rushed in to set up shop, anxious to establish trade in the former communist territory. Many of the businesses failed, because there was not enough social trust -- sometimes referred to as social capital -- in place to guarantee trade. The communists had eliminated the third sector, the many cultural institutions that create social trust and allow markets to function. The result is that business agreements were difficult and even impossible to arrange and commercial contracts, when they were entered into, were often unenforceable and not worth the paper they were written on.

    In the West, we have come to take the third sector for granted, often not realizing the critical role it plays in establishing social trust and making markets and trade possible. The cultural institutions of a society, its church's, secular institutions, civic associations, fraternal organizations, sports clubs, art groups, non-governmental organizations and the like are the well spring of social trust. Because they exist, they make markets possible. In communities and countries that have a strong, well-developed third sector, capitalist markets thrive. Where the third sector is weak, capitalist markets are more precarious and less successful. Indeed, if the third sector in the United States, for example, were to disappear overnight, its unlikely the capitalist marketplace -- or for that matter, even government -- would survive a fortnight. Although some neo-liberals and neo-conservatives and most libertarians continue to believe that healthy economies create vibrant communities, in fact, the reverse is more often the case. A strong community is a prerequisite for creating a healthy economy because it alone produces social trust.

    Interestingly, international lending institutions like the World Bank are just beginning to understand the relationship between culture and commerce. For decades, these institutions have funded expensive economic development projects in emerging countries in the belief that by creating a strong economy, they could help foster social development. After years of only mixed success and many failed attempts, they have begun to shift their priorities to funding social development projects first, understanding that strong communities -- a vibrant culture -- are a prerequisite for economic development, not a beneficiary of it.

    The Third Sector cuts a wide swath through society. Nonprofit activities run the gamut from social services to health care, education and research, the arts, fraternal and civic organizations, religion, and advocacy. In the U.S., for example, there are currently more than 1,400,000 nonprofit organizations in the United States with total combined assets of more than $500 billion. The expenditures of America's Third Sector organizations exceed the gross national product of all but seven nations in the world. The Third Sector already contributes more than 6 per cent of the GNP and is responsible for 10.5 per cent of the total national employment. More people are employed in Third Sector organizations than work in the construction, electronics, transportation, or textile and apparel industries.

    For more than 200 years, Third Sector activity has shaped the American experience. The nation's first schools and colleges, its hospitals, social service organizations, fraternal orders, women's clubs, youth organizations, civil rights groups, social justice organizations, conservation and environmental protection groups, animal welfare organizations, theaters, orchestras, art galleries, libraries, museums, civic associations, community development organizations, neighborhood advisory councils, volunteer fire departments, and civilian security patrols are all creatures of the Third Sector.

    Today, Third Sector organizations serve people in neighborhoods and communities around the world. Their reach and scope often eclipse both the private and public sector, touching and affecting the lives of citizens, often more profoundly than the forces of the marketplace or the agencies and bureaucracies of government.

    The opportunity now exists to create millions of new jobs in the civil society. Freeing up the labor and talent of men and women no longer needed in the market and government sectors to create social capital in neighborhoods and communities will cost money. Taxing a percentage of the wealth generated by the new high-tech, network-based economy and redirecting it into the neighborhoods and communities of each country and to the creation of jobs and the re-building of the social commons, provides a powerful new social vision and a strong countervailing force to the more impersonal forces of the global marketplace.

    Re-envisioning work, however, requires that we rethink our notion of the body politic. While politicians traditionally divide society into a polar spectrum running from the marketplace, on one side, to the government, on the other, it is more accurate to think of the society as a three-legged stool made up of the market sector, government sector, and civil sector. The first leg creates market capital, the second leg creates public capital, and the third leg creates social capital. Of the three legs, the oldest and most important, but least acknowledged, is the Third Sector.

    In the old scheme of things, finding the proper balance between the market and government dominated political discussion. In the new scheme, finding a balance between the market, government, and civil sector becomes paramount. Thinking of society as creating three types of capital -- market capital, public capital, and social capital -- opens up new possibilities for reconceptualizing both the social contract and the meaning of work in the coming era.

    It should be noted that in the 1980s President Reagan emphasized the importance of the civil society. The Reagan forces realized, early on, the potential symbolic and emotional power of Third Sector images and used them to their advantage, building a Republican mandate in the 1980s. In both the Reagan and Bush White House, Third Sector themes were continually manipulated in a cynical effort to mask a free market agenda. "Returning the government to the people" became a convenient euphemism to push for de-regulation of industry, fewer corporate taxes, and cutbacks in social services and entitlement programs for the working poor and those trapped below the poverty line. In the end, the civil society was seriously compromised and undermined by the very political forces who professed to be its leading champions and advocates.

    The key to a genuine attempt to recast the political landscape will depend on the political will to increase the clout and elevate the profile of the civil society, in every country, making it an equal player with both the marketplace and government. The point is, the Third Sector needs to become a powerful political force that can make demands on both the market and government sectors to pump some of the vast financial gains of the new Information Age economy into the creation of social capital and the restoration of the civil life of every country.

    The potential for a new third force in political life exists but has not yet been galvanized into a mainstream social movement.That's because, up to now, the millions of people who either volunteer or work in this sector have not seen themselves as part of a potentially powerful constituency -- one that, if politicized, could help reshape the national agenda. While third Sector participants come from every race and ethnic background, and from every class and walk of life, they share the belief in the importance of service to the community and the creation of social capital. If that powerful shared value can be transformed into a sense of common purpose and identity, we could redraw the political map in every country. Mobilizing these millions of people into a broad based social movement that can make tough demands on both the market and public sectors will be the critical test of the new politics of social capital.

    The wild card in the new political dynamic is government. We need recall that nation states are a creature of the industrial era. Capitalism required political institutions large enough to oversee and secure broad geographical markets. Now that commerce is moving from the Industrial Age to the Information Age and from geography to cyberspace, spatially bound nation states suddenly find themselves increasingly irrelevant and without a clearly defined mission.

    In the new world that's emerging, government is likely to play a much-reduced role in the affairs of commerce and a far greater role with the Third Sector. Together, these two geographically bound sectors can begin to exert tremendous political pressure on corporations, forcing some of the gains of the new global commerce back into the communities.

    There is much to be gained from the shift in political perspective away from the old polar model of market versus government to the new tripartite model of market, government, and civil sectors. The new schema provides an arena to mobilize broad public support for restoring the community life in every country. In the old dynamic, the community was shunted to the margins of political debate. It had little or no place in the political dialogue over how much government versus how much marketplace. In the new model, the civil society becomes the middle kingdom between market and government, and the most important leg of the political stool. The success of society is measured as much by its ability to create social capital as market and public capital.

    Taxing a portion of the productivity gains of the new cyberspace economy and allocating those funds to the creation of jobs and infrastructure in the social economy is essential to reverse the downward spiral of working people. Focusing on the creation of social capital rather than the continued expenditure of public capital puts the challenge and responsibility for community development directly in the hands of the groups affected. Most non-profit fraternal, civic, social, and advocacy organizations are created by people who live in the community and are, therefore, far more accountable to the neighborhoods they serve. The creation and expenditure of social capital builds self-determination and sustainability and offers an alternative to the continued reliance on government-run welfare programs which create a syndrome of dependency.

    Organized labor's hopes also rest, in part, on the emergence of the Third Sector as a new social force. Unions are finding it harder to recruit workers in the new Information Age economy. Organizing at the point of production becomes difficult, and often impossible, when dealing with temporary, leased, contingent, and part time workers and a growing number of telecommuters. At the same time, the strike is becoming increasingly irrelevant in an age of automated production processes. Joining with Third Sector organizations -- service, fraternal, civic, and advocacy -- to exert a collective "geographic" pressure on management to share some of the gains of cyberspace with workers and local communities is labor's best hope for success in the new era.

    Women have long been the mainstay of the civil society, volunteering their time to create the social capital of the country. Their contribution has gone unrecognized, in part, because the political importance of social capital has gone largely unheralded. While the newly emerging Information Age economy is going to mean a fundamental shift in gender roles, with more women working in the marketplace and more men at home and in the community, women are still likely to remain the primary advocates of social capital because of their long-standing relationship to this sector. A second feminist wave grounded in the politics of social capital and the restoration of the civil life of the country, could help create a new third force in politics over the next decade.

    Environmentalists also have much to gain from elevating the role of the Third Sector and making social capital equal in importance to market and public capital. The environmental community is currently involved in a debate on how to convince consumers to simplify their lifestyles in order to preserve the earth's dwindling resources and promote a sustainable economy. Unfortunately, as long as most peoples' primary identity is with the marketplace, the values of expanded production and unlimited consumption will continue to influence personal behavior. On the other hand, it is likely that the more time people spend in the Third Sector, both as paid employees and volunteers, the less consumer oriented they become -- not because they consciously think about their obligations to the planet, but, rather, because personal relationships and community bonds replace shopping as a life fulfilling experience.

    Of the three forms of capital, social capital is the most environmentally benign. Unlike market or public capital, which use large amounts of the earth's resources, social capital uses relatively few resources, relying almost exclusively on the few thousand calories of energy each person requires to maintain a healthy mind and body. The point to emphasize is that the primary resource that makes up social capital is human energy extended to others to create a social good.

    The ever deepening problem of rising productivity in the face of declining wages and vanishing jobs is likely to be one of the defining issues in every country in the years ahead as the global economy makes the tumultuous transition out of the Industrial Age and into the Information Age . The growing social unrest and increasing political destabilization arising from this historic shift in the way the world does work is forcing activists, of every stripe and persuasion, as well as politicians and political parties, to search for a "radical new center" that speaks to the concerns and aspirations of a majority of the electorate. The conventional political discussion continues to take place along the polar spectrum of marketplace versus government -- a playing field that becomes increasingly limited in addressing the magnitude of the challenges and opportunities that exist in this new age. Redirecting the political debate to a tripartite model with the civil society in the center between the market and government spheres, fundamentally changes the nature of political discourse, opening up the possibility of re-envisioning the body politic, the economy and the nature of work and society in wholly new ways in the coming century.

    Jeremy Rifkin is the author of fourteen books including-- The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era and The Biotech Century: Harnessing the Gene and Remaking the World. He is president of the Foundation on Economic Trends in Washington, D.C.

    Source -- from

  • The Rifkin Reader Homepage
  • A Rifkin Reader — our essential summary of Rifkin's ideas
  • 1995 — A View of the Future — from The Utne Reader
  • 1999 — The Third Sector and the Rebirth of Civil Society
  • 2000 — Introduction to The 2000 Penguin Edition by Jeremy Rifkin