Philanthrocapitalism often acts as a smokescreen to cover 'business-as-usual': Michael Edwards By Sudhirendar Sharma
Tweet 15 Nov 2010
Business will achieve much more impact in the world by fixing itself than by trying to fix philanthropy and the not-for-profit sector, where it has little expertise or experience, says Michael Edwards to d-sector.
Michael Edwards believes development isn’t only about providing goods and
services to poor people
Author of the bestseller Small Change: Why Business Won't Change the World, Michael Edwards is an authority on civil society, philanthropy and social change. A doctorate from the University of London, Michael has spent a significant part of his career managing international relief and development organisations, including Oxfam, Save the Children and the Word Bank. Author of thirteen books and numerous articles and op-ed pieces, Michael lives with his wife, Core, in Swan Lake, a small community in the foothills of the Catskill Mountains of New York, where they have painstakingly rebuilt and renovated one of the first houses built by settlers who arrived in the 1830s to establish a tanning industry in Sullivan County. Sudhirendar Sharma picked his mind on several of the issues baffling the connection between for-profit and not-for-profit sector.
Q. When the developed countries have failed to meet their ‘development commitments’ towards the southern countries why should the role of businesses be suspect in this regard? Should businesses be expected to hold the high moral ground under the situation?
A. That’s a good point, but I don’t think the argument turns on whether business “should be expected to hold the high moral ground”, and after all, “two wrongs don’t make a right” as the old saying goes, so the poor performance of the industrialized world in meeting its commitments on foreign aid, trade liberalization and climate change should not divert attention away from the costs and benefits of involving business in addressing the challenges of development.
As I make clear in “Small Change”, business does have a crucial role to play in fostering a healthier form of economic growth and in holding itself accountable for the social and environmental costs of its activities, but this has nothing to do with corporate philanthropy or “philanthrocapitalism”, which too often acts as a smokescreen to cover the continuation of “business-as-usual.” Business will achieve much more impact in the world by fixing itself than by trying to fix philanthropy and the not-for-profit sector, where it has little expertise or experience. So let’s be clear about where business can help and where it can’t.
Q. On one extreme you argue that advance of capitalism promotes inequality and individual alienation and on the other extreme you favour fight and negotiation for solution to social issues. Isn't capitalism preparing ‘alienated individuals’ to ‘fight’ for their just cause?
A. Ideally that would be true: it’s an argument that I hear quite a lot, and I’m certainly sympathetic to anything that helps people, especially marginalized people, to stand up for their rights, and things like jobs, small enterprises and micro-credit loans are an important part of breaking that dependency. But history suggests that people’s commitment to fight for social justice and the radical transformation of society often doesn’t increase as their incomes grow – leading to what J. K. Gailbraith called “a culture of contentment” – and that, unless injustice, power relations, pollution and so on are tackled as an integral part of efforts to create economic wealth, then those problems will remain, so inequality will grow even as absolute poverty goes down. That’s exactly the pattern we see in most countries today. So I think we should combine the struggle for social causes with our efforts to transform capitalism. Then we might really get somewhere.
“I am not against using the tools of business and the market where they make sense (for example, in social enterprise), but I am against importing the underlying philosophy of business into civil society so that competition replaces co-operation and rates-of-return on investment replace solidarity and service.”
Q. Do you think philanthrocapitalists in a democratic set-up work at cross purposes with each other? Is philanthrocapitalist's gain a loss to the democracy?
A. I think any great concentration of wealth is a threat to democracy, because wealth brings with it political influence, access to the media, and “communicative power.” However well-intentioned, this means that wealthy philanthrocapitalists will have a major say in deciding which problems are addressed and how, but of course they will be selective, and in a democratic society that is always potentially dangerous. That’s partly because the philanthrocapitalists may not be right – they may just make mistakes on a much bigger scale – and partly because all of us have different opinions on how society should solve its problems and what our priorities should be. And that means that all of us should have a fair say in making these decisions – you can’t privatize the public interest. So I would like to see these huge foundations place their resources at the service of democracy rather than acting only as vehicles for the personal preferences of their donors.
Q. In a world that is transforming faster than ever, on account of technological prowess, would you contend yourself with ‘humility and patience’ of the civil society in resolving issues of equity and justice or would you prefer ‘speed and determination’ of time-bound action by the capitalists?
A. Nicely put, but I think that’s a false dichotomy! I think we should be aiming for the appropriate mix of both these things, while recognizing that civil society and business bring different skills, values and tools to the table. I’m not against using the tools of business and the market where they make sense (for example, in social enterprise), but I am against importing the underlying philosophy of business into civil society so that competition replaces co-operation and rates-of-return on investment replace solidarity and service. In fact I think it is precisely those civil society qualities that you mention – like humility and patience – that enable us to use technology and markets to best effect, by guarding against hubris and forcing us to confront the issues that those tools can never deal with by themselves – issues of politics and power, for example, values and human relationships. Technology and markets are just instruments, not ends or solutions in and of themselves. Sometimes I think we forget that. And in any case, as social activists have shown throughout history, civil society can be every bit as “determined and time-bound” as business!
“I do worry that the popularity of “corporate” (non-profit) organizations will take money and other forms of support away from civil society activism, and that will be very damaging in the long run because development isn’t only concerned with providing goods and services to poor people, it’s about all the other things that civil society, and only civil society, can contribute.”
Q. While you contest the idea of profit-motive capitalists for social change, what would you think of the NGOs which act and behave like corporate entities under the garb of civil society? And such numbers are on the rise even in the developing world.
A. I think the rise of these kinds of NGOs, social enterprises, social entrepreneurs and hybrid organizations is inevitable given trends in philanthropy and foreign aid, and the increasing popularity of business and the market as tools for social change, so I think we will continue to see a rise in their numbers, size and profile. Actually I think that’s fine, so long as they do an effective job where they have a comparative advantage and don’t displace civil society, which I think is a very different thing, constituted by organizations and networks that are more authentically-rooted in society, accountable to their constituents, and therefore able to take on more radical roles such as promoting accountability and organizing social movements. So I think we will see increasing diversity within civil society as these different kinds of organization evolve. I don’t have a problem with that, but I do worry that the popularity of “corporate” organizations will take money and other forms of support away from civil society activism, and that will be very damaging in the long run because development isn’t only concerned with providing goods and services to poor people, it’s about all the other things that civil society, and only civil society, can contribute.
Q. If businesses have profit-motive, NGOs are being co-opted and social entrepreneurs are addressing the effects not causes of poverty then where does fight to eradicate poverty heading for? Aren't we asking the poor to defend themselves?
A. Ultimately poor people do have to “defend themselves”, since there’s no-one else they can rely on! As history shows, no one gives up power voluntarily, which is why large-scale collective action by the poor and disenfranchised have always been central to the achievement of equal rights and political participation. Businesses and governments are not going to “give” these things to people, but obviously they have to be a big part of the solution. I think that’s why “philanthrocapitalism” worries me so much – it individualizes action on poverty rather than supporting collective action by the poor, but the power of the poor lies in their numbers not in their assets as consumers or producers. And by exercising that power they can achieve system-wide changes like the minimum wage or freedom of information that can never come from things like micro-credit. So I want philanthropy to support collective action and build the capacity of poor people to fight for their rights. Contrary to the philanthrocapitalists, that will be a far better “investment” in the long term.
Q. Finally, is it a deliberate lack of strategy to fight poverty or is it a crisis of knowledge in understanding what poverty is?
A. Well, I have to say a little of both! Our knowledge of poverty will continue to evolve, partly in the light of research and experience and partly because we all define it differently in the first place, so this is a negotiation between different views and voices. I think more of that negotiation will be very healthy, and will itself lead to more effective strategies over time. But the links between knowledge, policy and practice are very complicated I think, and often one doesn’t lead to the other because all sorts of things get in the way, things like ideology and culture, power relations and politics, and different theories of poverty and social change. The rise of philanthrocapitalism is a good example, being more of an ideological movement than something that is solidly grounded in research and experience. So democratizing the debate about poverty has to be the first step in creating the kind of knowledge base that will eventually lead to more effective strategies, and that’s also a role that philanthropy can help to support.
Dr Sudhirendar Sharma is an environmentalist and development analyst based in New Delhi. Formerly with the World Bank, Dr Sharma is an expert on water, a keen observer on climate change dynamics, and a critic of the contemporary development processes.