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The Social Region

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DOI: 10.1177/0969776405048500

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 THE SOCIAL REGION
BEYOND THE TERRITORIAL DYNAMICS OF THE LEARNING ECONOMY

Frank Moulaert
University of Newcastle upon Tyne, UK and IFRESI-CNRS, France
Jacques Nussbaumer
IFRESI-CLERSÉ-CNRS and University of Lille I, France

Abstract
The purpose of this paper is to launch a debate on a
broader meaning of the term ‘innovation’ and its
significance for local and regional development. Inno-
vation and related economic and social categories
have been at the centre of policy discussions on the
future of the European economy and society.
Reflections on the innovative and learning region
(Territorial Innovation Models; TIMs) have under-
pinned regional and local development policies. Yet
dissatisfaction with the technologist and market-
competition-led development concept of the TIMs is
growing and today its shortcomings are well known.
But to formulate an alternative based on a different
ontology requires a multidimensional reflection on
the pillars of territorial development. The first
section briefly refers to the critical evaluations of
the literature on regional innovation and the so-
called Territorial Innovation Models. The second
section returns to basic questions about the
meaning of regional economic development and
innovation. It puts forward community development
based on social innovation as an alternative to
market-led territorial development. The third sec-
tion examines the consequences of the community
ontology for the definition of a number of basic
concepts. Categories such as capital, knowledge,
learning, evolution, culture and so on receive a
different meaning in a model where the economic is
only one dimension of the overall dynamics of
community development. The fourth section
integrates the role of power relations and the artic-
ulation between various spatial scales and institu-
tional settings into the community-development
approach. The final section dwells on the conse-
quences of this community-oriented territorial
approach for contemporary research agendas on local
and regional development policies and strategies.
KEY WORDS ★ community-based development
★ regional policy ★ social innovation

Beyond the learning region? Analysis in the evolutionary tradition became

Over the last two decades, economic analysis and
policy have stressed the role of innovation and
learning as processes feeding economic restructuring
and leading to improved competitiveness of firms,
sectors, regional and national economies.
This ‘innovation’ in economic discourse, after
almost 20 years of unilateral supply-side economics,
meant a clear recognition of the analytical and
policy value of evolutionary economics and its work
on innovation, adaptation and learning of firms and
other economic institutions within regional and
national (innovation) systems (Edquist, 1997).
particularly relevant to regional and local innovation
studies, partly because of the strong affinity between
the milieu and the district literature on the one hand
and institutional economics on the other hand, but
also because of the failure of undifferentiated
national regional policies in dealing with regional
problems. In some countries this failure was partly
recognized as a consequence of a misperception of
(local) institutional dynamics by national policy
agents and, therefore, gave an extra impetus to an
institutional-economic approach towards regional
and local problems (Moulaert and Willekens, 1984).
Today the institutional and evolutionary reading

European Urban and Regional Studies 12(1): 45–64 Copyright © 2005 SAGE Publications
10.1177/0969776405048500 London, Thousand Oaks, CA and New Delhi, www.sagepublications.com
46 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
of the innovative economy has evolved to the extent
of challenging its own foundations. Increasingly, the
innovative and learning economy (and economics) is
criticized for its narrow technological and
economistic interpretation of innovation dynamics
and learning, and questions about what will happen
‘beyond the learning economy’ have gained
attention (Hodgson, 1999). Concepts and processes
such as culture, networks, communication and
organization have become increasingly theorized as
instruments of economic progress which itself was
considered as the equivalent of human progress in
general. This of course means a hollowing-out of
categories which are in essence part of overall social
and human dynamics, and not of economic life only.
In this paper we challenge this reductionist
approach to human progress. We argue that
territorial development and innovation should be
conceived and implemented on the basis of a
broader existential ontology in which the (market)
economic rationale and technological innovation are
only supporting rationales. To this purpose, we work
in five steps. First, we make a summarized critical
evaluation of Territorial Innovation Models (TIMs);
these are based on the evolutionary-economics
tradition of innovation and development.1 In the
second section, a broader existential interpretation
of development and innovation is presented and
translated into a community-based development
ontology. The third section examines the analytical
consequences of this ontology for ‘classical’ categories
such as capital, knowledge, learning, evolution and
culture. The fourth section makes a plea to integrate
both power relations and articulation between
various spatial scales and institutional contexts into
the models and analysis of community development.
The final section dwells on the consequences of the
community-oriented territorial approach for
contemporary research agendas on local and
regional development policies and strategies.
The reductionist development view of
Territorial Innovation Models
The Territorial Innovation Model is used here as a
generic name for models of regional innovation in
which local institutional dynamics play a significant
role. In general three families of TIM can be
European Urban and Regional Studies 2005 12(1)
identified.2 The French model of Milieu
Innovateur, which was the basis for the synthesis
produced by GREMI (Aydalot, 1986), emphasizes
the role of endogenous institutional potential in
generating innovative dynamic firms. The same
basic idea is found in the industrial-district model,
which stresses even more the part played by
cooperation and partnership in the innovation
process (Becattini, 1987). Other models of territorial
innovation lie in the tradition of the systems of
innovation: a translation to the regional level of the
institutional coordination principles found in
sectoral and national innovation systems (Edquist,
1997) or an evolutionist interpretation of the
regional learning economy (Cooke, 1996; Cooke and
Morgan, 1998). A third tradition stems from the
Californian School of Economic Geography: the
New Industrial Spaces (Storper and Scott, 1988;
Saxenian, 1994). In addition, a residual category,
having little affinity to regional analysis but which
lies close to Porter’s (1996) clusters of innovation, is
the ‘spatial clusters of innovation’. According to
Moulaert and Sekia (2003), ‘these models share a
large number of key-concepts that have been used in
regional economics or analysis for a long time, or
that have been borrowed from other disciplines,
especially in social science’.
Table 1 summarizes the meaning of territorial
innovation in most of these models.3 The learning-
region model has not been included, because it can
be considered essentially as a synthesis of the
features of many of the other TIM models.
Reading the categories in Table 1, one has the
impression that there is semantic uniformity in
concepts, and that conceptual differences are
complementary rather than contradictory.4
Most of the TIM models stress the
instrumentality of institutions for economic
restructuring and improved competitiveness of
regions and localities. But none of these models
makes reference to improving the non-economic
dimensions and non-market-led sections of the
economy in localities, unless these improvements
would contribute to the competitiveness of the
territory. According to the TIM, quality of life in
local communities coincides with growing
prosperity and will be produced as positive
externalities of higher economic growth; no
distinction is made between well-being and growth,
between culture and business climate and so on.
 MOULAERT
Table 1 Views of innovation in Territorial Innovation Models
Features Milieu innovateur
of innovation (Innovative milieu) (MI)
Core of innovation Capacity of a firm to
dynamics innovate through
relationships with other
agents of the same milieu
Role of institutions Very important role of
institutions in the
research process
(universities, firms, public
agencies, etc.)
Regional Territorial view based on
development ‘milieux innovateurs’
and on agent’s capacity to
innovate in a cooperative
atmosphere
Culture Culture of trust and
reciprocal links
Types of relations The role of the support
among agents space: strategic relations
between the firm, its
partners, suppliers and
clients
Type of relations Capacity of agents to
with the modify their behaviour
environment according to changes in
their environment. Very
‘rich’ relations: third
dimension of support
space
Source: Moulaert et al. (1999).
Note: a NSI (National System of Innovation).
TIMs reflect a certain view of economic
development: innovation and learning will improve
the market-economic performance of a region or
locality, and therefore will contribute to the
achievement of other goals of development. There is
no doubt that TIMs are superior to other models of
& NUSSBAUMER: THE SOCIAL REGION 47
Model
Regional Innovation
Industrial District (ID) Systems (RIS) New Industrial Spaces
Capacity of actors to Innovation as an A result of R&D and
implement innovation in interactive, cumulative its implementation;
a system of common and specific process of application of new
values research and production methods
development (path (JIT, etc.)
dependency)
Institutions are ‘agents’ As in the NSI,a the Social regulation for
enabling social definitions vary coordination of
regulation, fostering according to authors. interfirm transactions
innovation and But they all agree that and dynamics of
development the institutions lead to entrepreneurial
a regulation of activity
behaviour, both inside
and outside organizations
Territorial view based View of the region as a Interaction between
on spatial solidarity and system of ‘learning by social regulation and
flexibility of districts. interacting/and by agglomerated
This flexibility is an steering regulation’ production systems
element of this
innovation
Sharing values among The source of ‘learning Culture of networking
ID agents – trust and by interacting’ and social interaction
reciprocity
The network is a social The network is an Interfirm transactions
regulation mode and a organizational mode
source of discipline. It of ‘interactive learning’
enables coexistence of
both cooperation and
competition
The relationships with Balance between inside- The dynamics of
the environment impose specific relations and community formation
some constraints and new environment and social reproduction
ideas. Must be able to constraints. ‘Rich’
react to changes in the relations
environment. ‘Rich’
relations. Limited spatial
view of environment
territorial economic development (e.g. neoclassical
regional-growth models) in that they recognize the
explicit role of institutions (including firms) and
their learning processes as key factors of economic
development. In this way, they replenish the black-
box of the neoclassical model of the firm and its
European Urban and Regional Studies 2005 12(1)
48 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
networks which disregards the institutional
dynamics of innovative agents, and only considers
their logic of rational economic agency. TIMs are
therefore trickier than neoclassical regional growth
models, for they make all institutional dynamics
(culture, learning organizations, networks) of
immediate utility to improving the market-
competitiveness of the local economy. (In orthodox
development discourse, one could say that they
make ‘development’ functional to ‘growth’; the
neoclassical adage turned upside down!)
In other words: implicitly, TIMs do not consider
the multifunctionality of the economy – in reality
much broader than the capitalist market economy –
nor the other existential (non-economic) spheres of
local and regional communities such as the natural
environment, the sociocultural (artistic, educational,
social services) and sociopolitical spheres. Despite
their devotion to institutional dynamics, they swear
by a market-based economic ontology and
technological view of development.
Towards a community ontology for
territorial development
Today, many views of development at various spatial
scales share the mainstream political debate.
However, these views (sustainable development,
stakeholder governance, cooperative administration,
social-redistributive economy) seem to exist apart
from each other, and where they are integrated in
multidimensional approaches such as those
portrayed in the literature on sustainable
development, conflicts between agendas and
rationales are consciously or unconsciously avoided.
For example, we have not found any social-science
text that manages to bridge the tension between
growth, redistribution and ecological sustainability
(but see Buckingham-Hatfield and Evans, 1996).
Still, the observation that policy debates have
rediscovered the importance of multidimensional
views of development is encouraging in itself.
However, the scientific challenge is to confront
these views and integrate various dimensions of
development into balanced policy approaches. To
make this integration feasible, a different ontology
of human society, which we will call here community
development, is needed. A community-based
European Urban and Regional Studies 2005 12(1)
development ontology is rooted in the broad
tradition of alternative development, at first an issue
only in development economics and sociology but
today frequently used as a source of inspiration for
local and neighbourhood economic development in
so-called developed economies (Friedmann, 1992).
The term ‘community development’ is obviously
also associated with the theory and practice of urban
development and struggle in the big cities of the US
and Europe (Moulaert et al., 2000; Saegert et al.,
2001). The term ‘community’ refers here to the
nature of human interactions within groups that can
be defined according to geographic, sociological,
political or economic considerations. We use it as an
alternative to the individualistic, market-led vision
of human organization which seems to be
fashionable nowadays. According to our theory,
market relations are to be considered against the
background of other modes of interaction within the
various spheres of human life, where a sense of
human belonging is important. In other words,
‘community’ is a way of integrating market relations
as historically situated in the wider world of human
organization, in which these market relations are
embedded as well as constrained.
Social innovation and community development
The central concept for building the ontology of
community development is the ‘social’ twin term of
technological innovation, namely ‘social innovation’.
Obviously, the TIM literature discusses both social
and technological innovation; but TIM puts the
instrumentality of the former to the latter and to
improving competitiveness upfront. In fact in TIM
models it makes more sense to talk about
technocratic instead of technological innovation,
because in most TIMs other types of innovation are
made instrumental to technical, organizational and
managerial innovation in order to improve the
market-competitive position of firms.
From the community-development perspective,
social innovation receives a double content. First, it
concerns the satisfaction of basic human needs.
This is the meaning adopted in the social economy,
but also in alternative development literature
(Laville, 1994; Moulaert and Ailenei, forthcoming).
Human needs are much broader than the jobs and
 MOULAERT & NUSSBAUMER: THE SOCIAL REGION 49

The term ‘community’ was criticized at the beginning of the 20th Century by many scholars in social sciences, and rejected
in economics (e.g. Nussbaumer, 2002) or reformulated in sociology by Weber or Tönnies (Fisher, Sonn and Bishop, 2002).
Society was preferred, as it did not presume the intensity of interpersonal relations, leaving to each discipline of social
sciences the choice of focusing on one kind of interaction in society, following also the actual changes in the emergence of
individual freedom (Fisher, Sonn and Bishop, 2002). Moreover, the idea of identity implicitly associated with community
was considered as ‘non-scientific’. The typical German vision of a national soul (Seele) as the core of the national
community, present in the work of the German Historical School, created suspicion1 (Nussbaumer, 2002). However, the
critique of positivist methodology and excessive analytical reductionism over the last 30 years, as well as a fruitful dialogue
between disciplines, has shown the importance of considering collective logics in the analysis of social processes. Although
many definitions of ‘community’ can be found in the literature (psychological, local, social, practice, epistemological,
political community etc.), it always refers to common interests and bonds which participate in the actual process of organization
of individuals in more or less formal groups. Note that it does not imply an overall homogeneity of a human group, but a
possibility to develop cohesive and collective action (Friedmann, 1992). Therefore, concrete elements (geographical location,
socio-economic characteristics, ethnicity) as well as symbolic features (religion, values, identity, rights) can be part of the
concept of community. In this perspective, the postmodern acceptance of the term ‘community’ refers to the refutation of
mechanist approaches to human relations, and to the acknowledgement of the multiple causalities which exclude the claim
of universal individualistic and ahistorical approaches. Human societies are to be considered as historically generated,
enhancing the role of culture, anthropology in the analysis of social processes (Fisher et al., 2002). In this sense,
‘community’ is always to be defined empirically in reference to one of the concrete historically situated actualizations.

Figure 1 What is a community?

Note: 1 Schmoller’s approach to territorial communities ([1887] 1905) was nevertheless ahead of its time in its perspective,
showing the historical movement from traditional/blood solidarity to communities linked by common interests (see
Nussbaumer, 2002).

incomes for a large majority of people in the
territorial community. Figure 2 portrays the variety
of human needs, many of which are insufficiently
met by the market economy growth-base strategy
put forward in the TIMs. This variety of needs
relates to the multitude of dimensions in human
existence. The extent to which market allocation
mechanisms will manage to satisfy human needs will
depend strongly on the distribution of wealth and
income. Provocatively stated: the more egalitarian
the market economy, the better the market
mechanism will work as an allocation mechanism
satisfying basic needs. But when there is great
disparity in income and wealth, markets will no
longer reveal most of the needs of deprived groups,
who will have to increasingly rely – when they can
do so – on Local Exchange Trade (LET) based on
reciprocity, self-sufficiency (e.g. self-production of
food, clothing) or state redistribution. But access to
and quality of these systems will vary significantly
between countries, regions and localities. Figure 2
suggests both how various allocation systems are
important for revealing and meeting human needs,
and also how the distribution of wealth within a
society determines the relative importance of market
and LETs.
But social innovation also refers to innovation in
social relations between individuals and groups of
humans in communities – social innovation in the
sense of Max Weber, when he compares technical
with social inventions. Within a locality, a
neighbourhood, a community, a city, a region and so
on, various types of social relations exist, including
relationships between, within and among ethnic
groups, professional relationships (crafts,
commerce), labour relationships (between firms and
their workers), market relationships (between firms
and their markets and market partners, including
clients), governance relationships (government
relationships between constituency and local
authorities; relations of self-governance and
collaborative governance).
Social innovation and market mechanism
Theoretically speaking, one could analyse social
innovation by submitting it to the test of
competition and market dynamics. Many theorists
argue that free-market allocation mechanisms can
satisfy basic needs. But the experience of

European Urban and Regional Studies 2005 12(1)

50 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)

ALLOCATION SYSTEMS
Capitalist LETS Self-sufficiency State
Market

HUMAN NEEDS
- nutrition
- clothing
- housing
- medical care
- education
- sports
- cultural
consumption
- natural and Quality problems
physical
environment - modes of
- sociocultural satisfaction
networks of needs
- travel - modes of needs
revealing
- quality of goods
and services

DISTRIBUTION OF INCOME AND WEALTH

EVEN UNEVEN

Figure 2 Human needs and allocation systems

privatization, especially in Great Britain, shows
different outcomes: the need for social housing,
school infrastructure and public transport has not
been appropriately satisfied after having entrusted
their provision and allocation to the private sector
and competitive market mechanisms. Other
theorists (e.g. Buchanan, 1990) would argue that a
well-working democratic system shows intimate
similarities with a well-working market system; for
isn’t the market for votes exactly what a decent
political system represents? But in reality we know
that the so-called leaders of democracy only see
about 50 percent of their eligible constituencies at
the ballot-box, and that in run-down
neighbourhoods these statistics are even more
depressing.5 Moreover, the satisfaction of basic
needs is scarcely present in contemporary national
political agendas, which are increasingly oriented
towards ‘pleasing the free market’ by deregulating
and regulating in favour of free-riding capital and
profit-oriented competition. This, of course,
sharpens inequality and makes market allocation less
capable of satisfying human needs (Friedmann,
1992).
In brief: under the increasing pressure of market
forces and their political protagonists, the two
dimensions of social innovation become increasingly
disconnected and the satisfaction of basic needs
cannot be guaranteed through either competitive
market allocation mechanisms, or free-market
democracy. In fact, ‘minority’ democracy of the
powerful (executive class, wealthy people, political

European Urban and Regional Studies 2005 12(1)

 MOULAERT
figures, high-level civil servants) no longer reveals
basic needs, but puts forward demands for bourgeois
projects such as elite culture, sophisticated transport
and communication systems, condominium housing
and localized environmental programmes. The basic
needs of deprived populations in disintegrated
neighbourhoods or localities are no longer revealed
through either market mechanisms or political
consultation procedures. A different ontology of
community governance and needs satisfaction
should be considered.
The socially innovative region and its
analytical categories
A community-based ontology
Figure 3 summarizes the ingredients of the TIM,
and suggests how the reading of these ingredients
changes when they are linked to a community-
based instead of a ‘market-competition’-led
ontology.
A community-based ontology, as defended in
this paper, starts from a different conception of
Targets of social, political, cultural and economic community development
Community norms of behaviour: solidarity, cultural exchange,
democratic decision-making structures, etc.
Networking: Governance:
1. horizontal bottom-up
2. loose coupling contractualizing
ONTOLOGY OF SOCIETY AND COMMUNITY
Figure 3 Institutional instrumentality: a society and a marked-led view
& NUSSBAUMER: THE SOCIAL REGION 51
capital and innovation. In the TIM, the logic of
capital obeys mainly the criteria of profitable
investments and financial returns. This does not
mean, of course, that in this approach capital is
reduced to just machines or workshops – physical
capital; in fact, it includes any type of capital
(human, social, cultural etc.) as long as it contributes
to achieving the market-economic behavioural
norms of efficiency, productivity and technological
and organizational innovation. In this way, TIMs fill
the neoclassical black-box concerning the functional
nature and diversity of capital for regional and local
development. But they fill it according to a market
logic, meaning that they:
• exclude economic activities which are not
market-efficient
• make capital exclusively functional to profitable
activities, and in this way
• provide a biased reading of innovation of capital.
When capital and its reproduction (innovation) tune
up to community norms of behaviour, or are
embedded into a community logic of reproduction,
their meaning for development changes (e.g.
Schramm, 1987). By abandoning or integrating the
Economic
targets
Economic behavioural norms:
- efficiency
- productivity
- technological and organizational innovation
Endogenous Economies of
development: local agglomeration
assets
Innovation:
learning, knowledge
development
Logic of private
capital
European Urban and Regional Studies 2005 12(1)
52 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
market logic for capital reproduction (and
innovation) into a community logic, the range of
economic activities increases since more agency
principles, in addition to economic efficiency and
competitiveness, are taken into account and new
criteria for production and distribution, in addition to
the market-efficiency criteria, are introduced. In
fact, a wide range of economic activities will become
directly linked to the implementation of the broad
view of social innovation spelled out in the previous
section. Integrating the market logic into a
community logic also means that markets receive
functions other than only ‘bloody competition’.
Indeed, when institutionally embedded, markets can
play allocation roles in the social economy or
collective service provision systems (Moulaert and
Ailenei, forthcoming).
New agencies, new agendas
Territorial innovation models cover a large group of
agents, involved in investment, learning and
innovation and meant to improve the institutional
capacity and economic performance of the local
economy. It would be an incorrect representation of
TIMs to describe the agents as networks of ‘private
entrepreneurs’ only, because they also cover the
networks of all public and private agents relevant to
innovative behaviour in improving the productivity
of private capital as they define it.
In the community rationale, private capital exists
in combination with public and collective capital in a
way that is different from the instrumental view –
public serving private and collective capital – in
TIM. And although today the distinction between
private and public capital has become a bit blurred,
it is clear that both analytically and politically it
remains very relevant. The distinction between
public and private capital is obscured in the sense
that the ascription of their role is no longer clearly
defined. The transformation of the state from top-
down governing to cooperative governance calls for
a redefinition of what is public and what is private,
and perhaps how the qualifier ‘collective’ should be
added to the analysis.
To comprehend their full meaning in the context
of community development, the distinctions
between public, private and collective should be
European Urban and Regional Studies 2005 12(1)
made from a needs satisfaction and a capital ownership
or control point of view.
In terms of needs, it is important to distinguish
between private and collective needs. Private needs
are private in the sense that they correspond to the
basic needs of the individual and his (her)
household, without necessary reference to the larger
community or society and its needs. Food, shelter,
clothing are private needs. But education, culture,
protection against group enemies, transport and so
on are collective needs because they are rooted in
community life; there is a social dimension to them,
and a collective answer to these needs is more
adequate in terms of justice and equality.
A household or a private firm satisfies its own
needs by purchasing goods and services from the
market or from another allocation system. These
agents do so by use of an income. But what happens
when private needs can no longer be satisfied
through the market, for example because of private
agents’ lack of purchasing power? When this
happens people turn to self-sufficiency, LETs or, as
in social-democratic market systems, in the first
place to the state and its redistribution agents.
Public (and collective) agents tend to satisfy private
needs, when the market no longer reveals them, in
the first place because private agents no longer have
the purchasing power to express a demand and buy
them. In that sense, private needs can be met by
both private agents or collective and public agents
(capitals). We return later in this section to the
distinction between the latter two.
As for collective needs, the picture of which type
of capital will satisfy them is even more blurred.
Any agent – private or public – that is capable of
reaching the scale economies needed to face the
indivisibility of many public goods and services is
technically eligible to provide them. In reality, and
especially with the neo-liberal reveil persisting,
public budgets prioritize spending for the provision
of collective goods and services. The generous state
budgets for public works, city marketing and
cultural projects make this ‘market’ for collective
goods and services quite attractive to private capital
to act as developer, supplier and service provider.
Collective needs can be met by the provision of
collective goods by different types of agents
through the mediation of the state. These goods are
also ‘public’ in the sense that the users are not
paying – at least not entirely – for accessing them.
 MOULAERT & NUSSBAUMER: THE SOCIAL REGION
But today, the distinction between public and
private capital is no longer sufficient to cover the
world of mixed ownership, control and cooperative
arrangements which have been established to satisfy
needs. Collective governance and ownership reach
far beyond the state realm. Therefore we also make a
distinction between public and collective capital.
Public capital is any combination of state and
private capital designed to satisfy private and
collective needs by way of an allocation system other
than the capitalist market, or to control or redirect
market allocation functions; private capital involved
in such constructions seeks a return on its
investments; but the role of the state is often
predominant in the control of both the acquisition
and allocation of goods and services. Collective
capital is broader than public capital in as much as it
follows a community logic, both from the point of
view of its composition and its investment rationale.
Collective capital can include state capital with a
minor stakeholdership, as well as an association of
private capitals based on principles of reciprocity
and solidarity. These capitals are not only
normalized by market competition but also by other
socio-economic coordination norms as well. The
private capitals involved here are disconnected from
the maximum return on investment logic that
prevails in the market allocation. Investment is also
guided by ethical principles, where satisfaction of
needs is considered as an alternative measure of
capital efficiency.
Investments by collective capital can be made to
benefit all members of a community, or particular
groups within a community that are excluded from
the benefits of the market-profit logic.
These collective investments are in most cases
made by ‘other’ types of agents to the ones
portrayed in the TIMs: public departments for
social integration, collective-housing agencies and
social-housing developers, nature-park
administrators, and neighbourhood community-
development agencies. These will in general invest
in activities serving needs which are only marginally
revealed by the market. Therefore, if a TIM were to
follow a community logic, this would extend not
only its variety of agents, but also especially the
plethora of strategy agendas which would become
more oriented towards sociocultural, socio-
economic as well as sociopolitical development and
innovation.
53
New criteria for production and distribution In the
TIM approach the main criterion to decide on
investments is the profitability and marketability of
the commodities which will be produced thanks to
these investments. In the community logic, the
range of criteria is larger. The community logic is
focused on the satisfaction of basic needs and the
institutional innovation needed to attain this. The
linkage of developing new activities to institutional
innovation is as old as regional and urban economics
itself. The German Historical School already
provided challenging insights on this topic at the
beginning of the 20th Century. Gustav Schmoller’s
analysis of local communities shows that local needs
can be faced at the local level. Schmoller emphasizes
the emergence of local institutions which are
designed to answer the local basic needs of the
populations, and which can do so more adequately
than higher institutional levels. (Schmoller, 1905).
Nevertheless, the capacity to face these needs is also
dependent on the quality of the collaboration
between local authorities and the (national) state.
The content of this collaboration has to be defined,
in order to enable local potentials to develop. The
capacity of a locality to develop new activities
depends on its socio-economic and sociopolitical
history; it is ‘path-dependent’. Existing skills can
enable the successful restructuring of existing
industries or the attraction of new activities in need
of these skills; and existing skills can also be
transformed. At the same time socio-economic and
socioprofessional skills can only be mobilized if the
institutional capacity of the municipalities and their
neighbourhoods permit it. In dynamic localities,
socio-economic skills and institutional capacities
develop more or less in harmony. They are the
pillars on which the community as a whole develops.
Of course, we should be aware of falling into the
trap of the quasi-automatic instrumentality of
‘social capital’ to community development, as the
Putnam tradition of social capital would argue. It is
not because skills and institutions develop in
harmony that community development will actually
take place (see Defilippis, 2001; Moulaert and
Ailenei, forthcoming).
Institutional capacities of a community include
community decision-making mechanisms and
strategy as well as policy-delivery mechanisms.
They also comprise needs-revealing processes. It is
inherent in the community logic that the capitalist
European Urban and Regional Studies 2005 12(1)
54 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
market is considered only as one system of needs
revealing and goods or services allocation. The
community logic of governance prioritizes other
needs-revealing mechanisms and allocation systems,
based on neighbourhood direct democracy,
collective and public capital as a provider of goods
and services. Market mechanisms embedded in
broader community logics can play their part in
these systems. The prioritizing of the community
logic obviously has consequences for the allocation
of funds to activities outside the ‘uncorrected
market’, and to the benefit of subsidized allocation
of individualized goods and services, as well as to
collective (including public) allocation of collective
goods and services.
The community logic of needs revealing and
satisfaction also involves neutralizing paralysing
power mechanisms, such as the market mechanism
in a highly inegalitarian economy, and state
governance in which powerful private (or in origin
public but privatized) or public bureaucratic
interests predominate. True communitarian
democratic control and public administration
include control and decision-making mechanisms
which seek to counter perverse power relations. In
this, the state – especially the higher-level state
institutions – can play a monitoring role, as already
observed by Gustav Schmoller a century ago.
The following section seeks to translate the
critical revisiting of public, collective and private
capital, the complexity of communitarian needs
revealing and decision-making mechanisms, and the
multitude of human activities involved in
community reproduction, into a broader theory of
capital and innovation.
Redefining capital and innovation
What is capital? A new theory of capital and
innovation fitting the community-development logic
defended in this paper should start from the
following premises. It should:
• include the tension between private, collective
and public interests, and between individual and
collective needs satisfaction
• encompass the various types of capital as they
refer to the spheres of existence of humanity:
European Urban and Regional Studies 2005 12(1)
natural, biological, sociocultural (sometimes also
called ‘strata of existence’)
• support the various activities of human
reproduction within each of these spheres: goods
and services production, consumption,
distribution (economic); governance and
government (political); communication and
artistic creation (cultural).
Cross-tabulating each of these dimensions could
lead us to an interesting ‘tableau de bord’ of types of
capital to be considered in local development
agencies; and the question of how their
reproduction and innovation will work. Observe
that the term ‘capital’ is used here with a different
meaning to that in the previous section. Here it
refers to the reproduction of ‘capital (assets)’ within
a variety of spheres of existence and reproduction,
whereas previously it referred to ownership and
control relations of supply and production agents.
Despite the analytical confusion it may generate,
this ‘double’ use of the term often occurs in the
socio-economic analysis of production and
reproduction dynamics.
Since this is not the first time such an exercise
has been taken on board, we know that there is no
ultimate solution to such a typology problem. Still
the exercise is useful and, being aware that its
outcome depends significantly on local conditions
and scale interactions (see Moulaert and Ailenei,
forthcoming), we would like to start from the
typology put forward by O’Hara and which was
already used in a more superficial way in Moulaert
et al. (1999). But we improve it here by valorizing
the reflections made in the previous sections.
We prefer to go back to the roots of ‘old’
institutional economics, following an argument by
O’Hara (1997) who extrapolates Veblen’s analysis of
collective wealth. We could broaden the discussion
on social innovation by referring to different types
of capital and the relations between them. O’Hara
writes: ‘Capital or wealth, generally speaking, is the
dynamic stock of durable structures, whatever those
structures may be’ (1997: 3). He distinguishes
between four types of capital: ecological, social,
human and private business capital. Although this
classification deserves some criticism with regard to
its structuring criteria (collective or individual,
private versus public ownership relationships – see
previous section – combined with organizational
 MOULAERT & NUSSBAUMER: THE SOCIAL REGION
and ecological considerations), this typology
represents well the tensions between the four
domains of development essential to the future of
humanity. It also lays the grounds for a discussion
on the concept of innovation that is broader than
the one embodied in ‘[private] business capital’.
Table 2 provides definitions of each of these
categories of capital.
This subdivision suggests a number of
interesting discussions about the synergies,
destruction and substitution which are possible
between the various types of capital. It is well
known that innovation in private business capital
has destroyed a large part of environmental capital.
Numerous local communities’ physical destruction
has been the price to pay for the development of
business capital. Many local communities accepted
this destruction because business capital brought or
promised jobs and income. But often this local
wealth effect was of medium duration and after a
few decades environmental destruction was followed
by the failure of business capital. Often, the latter
also worsened environmental problems still further,
leaving degraded infrastructure and polluted sites as
contaminated battlefields at the heart of local
communities (Moulaert et al., 1994).
Less well known and analysed are the positive
trade-offs between various types of capital at the
local level: for example, regions with a qualitatively
outstanding social capital, and/or a good ecological
system, that have a higher level of well-being than
other regions with a much vaster business capital
stock and higher level of income (O’Hara, 1997).
The capital needed for local development is
necessarily multidimensional. An innovation
strategy for a local or regional community is only
partially a business (capital) innovation strategy.
Other forms of capital need regeneration and
innovation. And the ultimate synergy would be for
business capital to become instrumental to the
development of collective wealth in the Veblen
sense. Business capital is therefore not private
business capital per se. To improve the typology, we
would prefer to change the content of O’Hara’s
private business capital to business capital tout
court, reserving the qualifiers private and public to
property relations or relations of control exerted by
private or public interest groups, or by individual or
collective institutional arrangements, including the
state (public) or not (private).
55
The analysis of the interaction between the
various types of capital also shows the artificiality of
the borderlines between them. In fact O’Hara’s
classification is a typology in the real sense of the
term, with fuzzy overlaps between the types. ‘Social
capital’ in particular receives a very broad content
and is susceptible to alternative interpretation
(Bourdieu, 1977; cited by Healey 1997; Putnam,
1993; Defilippis, 2001; Moulaert and Ailenei,
forthcoming). Healey avoids the term because of its
‘confused and broad use’, but primarily because: ‘in
some usage [it] is just a portmanteau term to bring
social relations, culture and civil society back into
focus in ways understandable in the “culture” of
economic analysis . . .’ (1997: 7). She suggests
replacing it with the term ‘institutional capital’ to
include knowledge resources, relational resources
and mobilization capacity – concepts combined by
Innes (1997).
To be in tune with the community view of spatial
development and innovation set out in this paper,
the history of the locality, the power relations and
the spatial scales must be included in the analysis of
the interaction between types of capital: capital has a
history, spatial scales, and is embedded in power
relations including the tensions between public and
private, and collective versus individual control.
The ‘dynamic stock of durable structures’ is an
historical, spatial and sociopolitical concept, and
must be theorized as such. Path dependency
involves much more than the neo-institutional
economics’ path of institutional change (North,
1990); it includes the development trajectory of the
local system in all its dimensions and spatial scales
(Moulaert et al., 1994; Moulaert and Leontidou,
1995; Moulaert, 1996). This ontological stance has
significant consequences for the methodology of
regional analysis (Moulaert, 1995).
Table 2 has been designed as if each type of
capital had (partly) an autonomous logic, which it
can (partly) valorize in synergy with other types of
capital. This is a positive logic: human capital can
illuminate the knowledge about the environment
and therefore contribute to an improved ecological
capital; institutional capital can foster learning
processes for human capital and so on. Of course,
these ‘improvements’ can only receive a solid
orientation if the communitarian view of territorial
development is really filled in. Norms and objectives
for ecology, social relations, solidarity, production
European Urban and Regional Studies 2005 12(1)
56 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
and distribution of economic assets and so on must
be defined. In the social view of territorial
development, the dynamics of the various forms of
capital must be existentially oriented and the trade-
offs between the orientations evaluated. For
example, a local community can choose to invest less
in large-scale urban regeneration projects, and to
spend more resources on neighbourhood actions
including decent primary schools, social services
and individual (social) housing.
But what does it mean to invest or to invest in?
Investing can be done in any of the four types of
wealth or capital, for the purpose of regeneration of
their own or other capitals. For example, there can
be investment in business capital to produce more
marketable consumer goods. But there can also be
more investment in business capital for the purpose
of sanitizing the environment or improving the
quality of labour skills. In the logic of the semi-
autonomous interaction of these various types of
capital, investments in one type of capital need not
necessarily follow the (pure?) logic of that capital.
Capitals should be reinvested not only to regenerate
their own type (more business capital to produce
more business capital – Marx’s circuits of capital, or
more ecological capital just to improve the quality of
the natural environment and so on) but also to
establish creative synergies with other types of
capital. Therefore, investment decisions involve
various types of capital, with evaluations about their
combined use or mobilization becoming necessary.
What is at stake here can be explained by
referring to environmental impact studies: What is
the cost and benefit in ecological capital if business
capital expands? How much ecological capital can be
preserved if business-capital expansion is limited or
geared towards environmental protection? But
environmental impact studies are only used as a
point of reference here, for in the O’Hara scheme, as
we apply it, other types of capital with their own
logic are involved. The balance of synergies and use
of types of capital by each other is to be made in a
four by four way: for example, human capital can be
expanded in the medium or long run; but in the
short run there should be an allocation of labour
needed for the reproduction of all types of capital.
Given the uneven availability of skills, reproduction
may not be easy for all types of capital. For example,
in the short run there will probably be a shortage in
European Urban and Regional Studies 2005 12(1)
human capital for sustaining ecological and
institutional capital, and a surplus of certain types of
human capital feasible for employment by business
capital.
Investment in human capital should therefore
not only be the object of an individual, but also of a
collective and public strategy. The various skill
needs according to the diversity of logics of capital
should be developed in individual and collective
educational plans and actions.
Society not only needs engineers and managers
for business capital, but also for the reproduction of
other types of capital, including human capital
(education, training) and institutional capital
(including governance relations, institutional
capacity and so on). Similar considerations hold for
the allocation and reproduction of other types of
capital: it needs institutional capital for good
governance of communities, but also for good
governance of business, learning (human capital)
and ecological preservation and regeneration.
Therefore, in the community logic of territorial
development, many types of capital, their agents and
their organizations are involved: that much we can
extrapolate from O’Hara’s approach. As in other
approaches in classical economics, in O’Hara’s
scheme the reproduction of capital is left to the
circuits of capital that continue flowing according to
their own logic, and in interaction with the logic of
other types of capital. But the reproduction is
systemic, almost in the functional determinist sense
of the term; there are no dynamics reflecting the
decision-making process of the organizations and
individual, collective or public agents which are the
carriers of reproduction and innovation in these
circuits. Even institutional capital responds to a
circuit logic, without spelling out the interaction
between institutions and organizations. We will try
to overcome this systemic determination, which
leaves out the institutional dynamics and the
individual and collective agency, by looking at the
real nature of innovation in the community logic of
territorial development.
A community logic of innovation What does
innovation mean for each of these categories of
collective wealth? To bypass the tautology of
mutually interacting semi-autonomous circuits of
various types of capital, leading to the definition of
innovation as a reproduction of the stock of capital
 Table 2 Interaction between various types of capital

SOCIAL (OR
Influence ECOLOGICAL INSTITUTIONAL
From → to CAPITAL CAPITAL) HUMAN CAPITAL BUSINESS CAPITAL

ECOLOGICAL CAPITAL
The stock of all environmental and
ecological resources. It is a dynamic
stock involving the biosphere, the gene
pool, plant and animal species, the
weather, the cycles of nature and the
physical environment
Reproduction of ecological Environmental impact on Improvement of quality of ‘Green’ capitalism – ecological
capital – ecosystem human interaction patterns physical and natural production and consumption
and norm systems environment – health systems
fostering creative human
capital

SOCIAL (OR INSTITUTIONAL Administration and norm Social dynamics Learning and cooperative Valorization of social dynamics
CAPITAL) development vis-a-vis Building of norm systems processes in economic activities
MOULAERT

Comprises those norms, mores, Ecosystem

relationships and organizational
arrangements which help to bond people
together. Some minimal degree of trust,
respect, dignity and communication
between people is necessary with this
form of capital’

HUMAN CAPITAL is usually related to
those skills and knowledge that are
capable of general application, although
‘firm-specific’ human capital and
‘learning by doing’ are of considerable
Improved knowledge and Knowledge impact on Skills and knowledge growth Valorization of human capital
skills to reproduce institutional capability in business system
environment Improved institutional
dynamics
& NUSSBAUMER: THE SOCIAL REGION

importance

BUSINESS CAPITAL includes the Investment in eco-economics Codifying of institutional Training of manpower for Investment in machinery,
creation of durable structures within capital to economic logic economic activities factories, etc.
important corporations, such as
machinery, factories, tools, warehouse,
buildings and inventories

European Urban and Regional Studies 2005 12(1)

57
58 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
in a more advanced form, we have explicitly chosen
to make social and institutional innovation (i.e.
innovation in social and institutional capital)
predominant. To this end we dynamize the notion
of social and institutional innovation by use of the
double dimension of social innovation as introduced
above in the second section (and as the German
Historical School, and especially Schmoller, foresaw
it more than a century ago). According to
Schmoller, institutions emerge in order to address
human needs (that are not met though the market)
and are politically and economically relevant in as
much as they are needed, meaning that their
existence and duration are conditioned by their role
in need satisfaction (Schmoller, 1905; Nussbaumer,
2002). Social innovation then means innovation in
social relations of governance combined with the
satisfaction of basic needs as revealed by the new
relations of governance. In other words: innovation
in institutional capital means in the first place
innovation in needs-revealing processes, forms of
cooperation, communication and good governance.
These processes are geared towards revealing needs
appealing to the four types of capital, while they
should be adapted to the specific needs of the
regeneration of each type of capital in interaction
with the others.
Therefore, innovation is in the first place
institutional and social: social choices and
institutional processes are adapted to better reveal
basic needs and coach the processes that should
satisfy them. Basic needs are to a certain extent
context and community-bound; needs-revealing
processes are therefore generic to institutional
innovation in a community context.
What, then, does this mean to the innovation of
other types of capital? Several consequences to be
developed in more detail in later research are
relevant here:
• Not only the market logic of competition, but the
broader logic of community development will
lead the innovation processes for the various
types of capital. And human capital also serves to
govern, to assist, to be artistically creative, to
coordinate social services and so on in order to
improve the social cohesion (institutional capital)
of local and regional communities. Will human
capital become humane again?
• The end of technological determinism. Not
European Urban and Regional Studies 2005 12(1)
technological, but social-institutional norms will
lead innovation processes. As many TIM analysts
have pointed out, even business capital has
suffered from the technological bias that
downgraded the importance of social and
institutional innovation for improving the quality
of business and the levels of productivity and
efficiency.
• The revalorization of ecological capital. The
reproduction of ecological capital is no longer
considered as an inevitable constraint for the
survival of society and economy, but a fully
fledged component of communitarian
development. Ecological capital forms part and
parcel of the collective wealth of a community
that seeks individual and collective health and an
environment which will foster creative social
interaction. (‘Healthy governance in a healthy
environment.’)
• The organization of the innovation process poses
a real challenge for the future of society and its
communities. A multilogic, multi-agent but
community-oriented view of innovation should
be translated into visionary innovation systems at
all spatial levels. There is a need here for a new
Utopia that will inspire new approaches to
innovation strategies, networks and policies.
Provocative buzzwords could be: laboratories for
social capital, learning beyond-scientific
knowledge, arts as a creative process, solidarity as
an economic norm, community-solidarity
culture, communication and corporate
governance and so on.
Conceptual consequences
This innovative view of capital and innovation has,
of course, consequences for the meaning of the
concepts put forward in Table 1 and Figure 3.
Networking, governance, learning and culture – to
cite maybe the most important – receive a different
content than in the TIM literature. Their
instrumentality is no longer exclusively geared
towards improving institutional thickness and
institutional dynamics to the benefit of the market-
led innovation system. Capital and its innovation
respond to a variety of functionalities and logics, in
which community social innovation predominates.
 MOULAERT & NUSSBAUMER: THE SOCIAL REGION
Table 3 anticipates a more detailed discussion on
what these concepts embody in a community-
oriented social-innovation context.
In community-oriented socio-economic
relations, for example, production and allocation are
not only coordinated through market mechanisms,
but also through exchange systems based on
reciprocity and association. The economic
anthropology and economic sociology literatures
often deal with these topics (Kropotkin, 1902;
Polanyi, 1944; Swedberg, 1987; Mingione, 1991).
Networking, governance and learning will become
more diverse in the community-based approach;
they will be part of a social organization and based
on creative principles that do not necessarily follow
a functional logic. These implicit modes of
organization (informal socialization?) are sometimes
‘just there’, as the social basis of a community which
‘has done its own things’ for a long period, just for
the sake of reproduction of the various conditions of
its existence, without any reference to a grand or
boosting-up discourse.
Culture Our view of territorial development based
on social innovation adopts Mouzelis’s
communicative-integration strategy to address
communication within a multicultural society.
The multilogic or communicative-integration
strategy – a concept which Mouzelis took from
Habermas:
. . . tries to avoid compartmentalisation without
resorting to either the monologic/authoritarian and or
the syncretic/postmodern strategies. It respects the
autonomy and internal logic of the various cultural
traditions, while insisting on constructing a lingua franca
with the help of which one cultural language can be
translated into another. (Mouzelis, 1997: 9)
This strategy includes combating ‘distorted
communication’, respect for alterity, and the
acceptance of certain limitations to cultural
autonomy for the benefit of the functioning of
democracy and the respect of basic human rights.
Not only does this mean that different ethnicities
and cultures should develop a common language
and a system of communication, but also that a new
balance between their logics of existence must be
sought. Cultural integration is only possible if the
fundamentalism of market logic is limited, and if
other views of economic development responding to
59
the needs of various cultural groups enter the
picture of community communication and
development design. Communication and decision-
making systems must involve non-
compartmentalized community-rooted views of
economic, social and cultural development. They
should include constraints on the influence of
dominant views and practices. Therefore, the view
of culture in territorial social innovation is much
broader than in the TIM.
Networking Normatively speaking, it looks quite
straightforward to ‘design’ a network configuration
that fits the multilogic and communicative strategy
of cultural interaction responding to the
community-based ontology. The finality of the
network is integration of existential logics and
agendas of emancipation. The institutional
environment in which a communitarian network
develops is basically democratic and should act as a
catalyst in cooperation and interaction with other
networks, and with coordination agents responsible
for fine-tuning agendas and actions between
networks. Agents in the networks will be individual,
collective and public, representing various logics of
capital (business, ecological, institutional and
human). Communication happens through
horizontal flows and democratic collective meetings
where information is exchanged and proposals for
further action are prepared. From a blueprinting
humanist or communitarian point of view, this all
sounds very interesting. But in reality,
communicative strategies of networking can only
materialize if the institutional and human capital of
the communities allow it. In other words: path
dependency of institutional and human capital
interferes with the potential to design ‘true’
communicative community relations.
Learning The learning society, the learning region
or locality, life-long learning: do these categories
still have a meaning in community-based ontology
and development strategies? According to the TIM
rationale, humans should individually and
collectively learn to reproduce individual human
capital, to innovate in organization, coordination
and technology, and in institutional capital to make
local innovation systems perform better.
But what does all this mean from a community-
based perspective? First of all, given the importance
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60 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)

Table 3 Enriched notions of cultural dynamics in a community-oriented ontology

Notions Features

Networks • Agents: belonging to various spheres of the community

• Agendas: diversity possible
• Rationales of networking: predominantly social innovation, geared towards overall
development of community
• Creation of institutions: see community culture
• Power relations: are inherent in human communities and cannot be ‘rationalized away’;
need of countervailing power, mobilization and political organization
• Communication: see community culture
Governance • Collective and public decision-making mechanisms
• Horizontal communication between governance agents
• Coordination of governance networks
• New roles for public sector: promoting various logics of capital and their integration,
R&D on social innovation
Learning • Learning is not only rational, i.e. meant to acquire scientific knowledge or knowledge
directly useful to scientific discovery and efficient organization
• Learning is not only a scientific activity; knowledge and skills should be multi-
purposeful or just for social and personal emancipation
• Science is not the only activity producing knowledge; there are also arts, poetry,
literature, intuition, etc.
• Learning is a vehicle to socialization, not to monopolizing knowledge
• Learning is not the only experience-building activity of human kind: creation,
enjoyment, communication, etc. are equally valuable
Community culture . . . communicative integration strategy . . . [Mouzelis, 1997]
[. . .] different ethnicities and cultures should develop a language and a system of
communication, but also a new balance between their logics of existence must be sought.
Cultural integration is only possible if the fundamentalism of market logic is limited, and
if other views of economic development responding to the needs of various cultural
groups enter the picture of community communication and development design.
Communication and decision-making systems must involve community-rooted views of
economic, social and cultural development. They should include constraints on the
influence of dominant views and practices.

of knowledge about all types of capital and their
interaction, and the primacy of social innovation,
the way knowledge will be organized and ‘learned’
will change. Scientific knowledge will become one
among many types of knowledge and modes of
learning (Feyerabend, 1975). Therefore, a variety of
modes of learning should be introduced and
combined. These modes refer to both the social
organization of the community and the types of
knowledge and how they are ‘best’ acquired. Shared
and collective learning, individual creativity,
communicative strategies, decision-making
procedures, philosophy, and theory and practice
should be integrated into the learning strategies and
styles.
Community governance In Table 3 we have
mentioned a number of issues which are of
relevance in governance according to a community-
based ontology. As for networking, there is a danger
that we start blueprinting without taking into
account the antecedents of communities, their social
groups, collective organizations and logics of capital.
Blueprinting in governance by setting norms,
behavioural rules, modes of interaction and decision
making without taking into account the trajectory of
institutional capital in localities, is a dangerous
project which could easily turn against the core of
democratic governance itself. In any case, a new
wave of scientific, administrative and political work
on democratic community governance is badly

European Urban and Regional Studies 2005 12(1)

 MOULAERT & NUSSBAUMER: THE SOCIAL REGION
needed; preferably avoiding the mistakes of previous
analyses which were a consequence of the ahistorical
and disembedded approaches used there (see Hillier
et al., 2004).
Localities, power relationships and scales
of development
Defining a new view on innovation and
development at the local level involves a number of
risks. They are connected to the power relationships
which are to be analysed in order to avoid
misunderstandings on the conceptual framework we
propose here.
First, there is the discourse of social-policy
defendants saying that promoting local-development
initiatives boils down to devolution of social
(security) policy to the local level. In the philosophy
and practice of ‘The Active Welfare State’ there
exists indeed a tendency to apply this devolution
principle. In countries that already have a weak
social-protection system (US, UK or Italy in
contrast to North-western continental Europe), the
state finds it easy to leave social programmes to local
authorities and their NGO partners. But this is not
what we mean by promoting social innovation at the
local level: we suggest introducing social innovation
at the local level because of the territorial
characteristics of communities; at the same time we
argue that local innovation policy can only work if a
decent national social-security system is maintained
and extended. Innovation in local governance can only
work in concordance with innovations in national and
global governance and social security (Moulaert et al.
2000: ch. 6). And these innovations should pursue a
better working of political democracy, instead of
supplanting it by ‘private’ NGOs or eroding it by
‘de(sur?)volution’ to local policy levels and global
economic agencies (Swyngedouw, 2000).
Therefore, promoting local communities as the
appropriate level for social innovation implies an
emphasis on the political and social guarantees
which should be provided at the national level and
embodied by the state, although the actual practice
often shows a withdrawal by the state or from state
institutions.
Second, we should consider the role of power
relations and their various spatial scales. Cumbers
61
et al. (2003) have pointed to the neglect of power
politics in the recent institutional turn of economic
geography. The same observation holds for the
TIM, which can to a certain extent be considered as
a spatial offshoot of new institutionalism in
economics (Moulaert and Sekia, 2003). The
development ontology of the social region takes the
spatial articulation of power relations into account.
Political forces cannot be identified at the local level
only. A good mayor, a dynamic city council, a
collaborative and professional civil sector can be real
resources for social innovation at the local level, as
many case-studies show. But these case-studies also
show that social innovation at the local level only has
a chance of being implemented when support
networks including public/state agents at other
institutional levels are involved. The best federal
systems in Europe seem to be the best catalysts for
local development, as we found in a previous study
(Moulaert et al., 1994). However, this is only true if
there are at least partially shared political agendas
between the various state levels and institutions, and
if the local and regional levels have effective political
competences. Otherwise, situations in which various
decisionmakers block each other off or paralyse each
other’s actions, will further erode the credibility of
the state and public agents, and nourish appeals in
favour of continuing privatization. Again, we should
be aware that the devolution of competences is only
a part of our framework that is focused essentially
on existential needs. Because of the current
ideological trend, the devolution process often
covers up a withdrawal of state responsibility. This
‘privatization through devolution’ has to be critically
appraised.
Therefore, when defending the community-
based development logic, we should not naively
believe in the benevolent state that would
automatically support meaningful social-innovation
strategies. States remain political machines which
will only move if they are ‘moved to move’ by social
and political movements operating at various spatial
and institutional levels. This is why the unions, the
nationwide political organizations and the old as
well new supralocal sociocultural organizations,
which were believed to be typical of the modern era,
keep their relevance within postmodern governance
dynamics. Of course, many of them are in strong
need of profound reorientations stressing more
bottom-up democracy and wider action agendas
European Urban and Regional Studies 2005 12(1)
62 EUROPEAN URBAN AND REGIONAL STUDIES 12(1)
(e.g. unions should increasingly mobilize in favour
of ecological agendas, or should give more power to
their shopfloor workers’ cells).
But power relations are not to be found only in
the political arena. It is clear that the most powerful
agents these days belong to the business world.
Financial capital, large companies and so on are very
often strong opponents of social innovation at the
local level. The reasons for this opposition are
diverse: for example, supposedly unfair competition
from local states and NGOs, different budget
priorities, conflict over urban space, exclusive belief
in neoliberal urban renewal strategies. Examples of
the instruments used to block social-innovation
strategies in the first place include: the refusal to
participate, the ideological and technical control by
the business community of the public economic
debate and development budget, the advertisement
of conflicts of interest between business and
political worlds. Fortunately, in some cases the
business world acts in a more positive way and the
call for ‘corporate social responsibility’ becomes
louder.6 But whatever the attitude of the business
communities, their role in local development
agendas will depend very much on the strength of
the social-change movements.
Finally, scales do not only interact with economic
or political power, but also with the organizational
and input–output structure of the development
initiatives. In the world we live in, it no longer
makes sense to define local strategies without
recognizing the various and connected spatial scales
of the various initiatives constituting local-
development projects. For example, even, or
especially, in the social economy, it would be
unrealistic to define markets for products, inputs
and labour power purely in local terms. Any
initiative, however modest its technological
ambitions may be, will be connected to the outside
world. In other words, the efficiency of local
initiatives for community development is also
dependent on the capacity of the agents to join
appropriate supralocal networks which can provide
know-how and support.
Therefore social innovation at the local level also
means innovation in relations between agents and
organizations existing at various spatial scales.
Modes of communication and coordination between
levels of governance, trade and exchange relations,
support agents, clusters of expertise and so on
European Urban and Regional Studies 2005 12(1)
should be revisited with the purpose of improving
the quality of social relations between change
agents.
Consequences for research agendas
In this paper we have laid the grounds for a
community-based approach to innovation and
development in localities and regions. The discourse
we developed borrowed key ideas from a number of
currents in social science: evolutionary economics,
economic sociology, (cultural) anthropology and
social economics. Although the links between these
ideas were carefully structured around the concept
of social innovation (satisfaction of basic needs,
innovation in governance dynamics), the
community-based territorial-development approach
presented here as an alternative for the TIM will
need substantial further scientific research and
sociopolitical discussion.
In the community-based territorial-development
approach, concepts such as culture, capital,
governance, networking, innovation strategies and
organizational change receive renewed meanings. It
will be essential to complete these new meanings
through philosophical discussion, theoretical
analysis, empirical case-study work and the
synthesis of all three. The approach defended here
is similar to the methodology used in the EU project
SINGOCOM, where the work on an ‘Alternative
Model for Innovation in Local Governance’ is also
built on a synthesis of visionary work on the future
of society, theoretical reflections on the local social
economy and civil society, and case-studies of
neighbourhood development strategies.7 The
socially innovative potential of the social economy is
important and all the more relevant as it is
embedded in local social and political culture
(Moulaert and Ailenei, forthcoming).
Current research on the importance of culture
and institutions at the local level aims to present a
theoretical framework which connects social
innovation to local cultures (Nussbaumer, 2001).
It is argued that many initiatives of alternative
development or initiatives in the vein of social
economy try to improve the quality of local socio-
economic relations. Many of them reactivate
historical traditions, showing that the development
 MOULAERT & NUSSBAUMER: THE SOCIAL REGION
of socio-economic relations is all the more efficient
when it is embedded in local culture. For example,
the solidarity-based funding of small projects in
northern France is based on the working-class
tradition of the industrial period. The connection
between historical trajectories, local patterns and
social innovation provides challenging elements for
further theoretical investigation in that domain.
In a wider perspective, this analysis of community-
based development should be connected to other
research on development. Taking into account the
existential needs of populations requires some
revision of the epistemological position of social
sciences. There is a need for a philosophical inquiry
into the implications of an existentially grounded
epistemology which rests somehow in a tension
between the scientific objectivation in social science
and the existential stakes of its analysis. Dealing
with this tension needs the awareness of the scientist
of his or her position in the social processes and
towards readers of his or her work. The ontology
presented in this paper offers a first step in this
direction.
Acknowledgements
We wish to thank Mrs Bernie Williams for her
language advice, and two anonymous referees for
their recommendations.
Notes
1 For details see Moulaert and Sekia (2003).
2 For details see Moulaert et al. (1999).
3 For more details see Moulaert et al. (1999). See also
MacKinnon et al. (2002) who, among other critical
observations, point out how the learning-region model
underemphasizes the articulation among spatial scales in
learning dynamics.
4 But the apparent semantic uniformity in concepts and
shared theoretical sources hides a ‘pluralism’ of
conceptual interpretations and theoretical focuses
(Moulaert et al., 1999).
5 In countries with mandatory voting, many citizens
express protest votes (spoilt or blank ballot papers,
extreme Right, ‘nonsense’ parties, etc.)
6 See the recent (2001) EU Green Paper on ‘Promoting a
63
European Framework for Corporate Social
Responsibility’, Brussels.
7 See website FRAMEWORK 5 PROJECT SINGOCOM:
[http://users.skynet.be/bk368453/singocom/index.html].
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Correspondence to:
Frank Moulaert, University of Newcastle-upon-
Tyne, School of Architecture, Planning and
Landscape – GURU, Claremont Tower – 3rd Floor,
Newcastle upon Tyne NE1 7RU, UK.
[email: frank.moulaert@ncl.ac.uk]