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Monday, July 7, 2008

A Dialogue on Philanthrocapitalism: "Just Another Emperor" Reviewed

By Derek Newberry

Edwards"The profit motive could be the best tool for solving the world's problems, more effective than any government or private philanthropy,"

-Oracle CEO, Larry Ellison

Larry Ellison's bravado makes Michael Edwards mad.? Similar quotes highlight the introductory section of Edwards' new book, Just Another Emperor.? Throughout his book, and in related articles published by the Financial Times and OpenDemocracy.net, Edwards makes it clear that he is tired of pro-market hype - and he doesn't want you to buy into it.? Edwards takes aim at the market-based principles of development underlying the base of the pyramid (BoP) perspective and even mentions BoP movement leaders by name.?

Here at NextBillion.net, we've followed Edwards' work closely.? Having read his book and articles, our cadre of Staff Writers has decided to offer a sampling of our thoughts in response to Edwards' ideas.? In this and?five subsequent posts, NextBillion staff will offer our own personal perspectives on Edwards' diatribe against what he calls "philanthrocapitalism."? Today, I'll kick off this dialogue with my own review of Just Another Emperor.

In Just Another Emperor (2008, published by Demos and the Young Foundation), Edwards, a Director at the Ford Foundation, targets what he calls "Philanthrocapitalism" for critique. ?This is a philosophy that he defines as being based on the belief that business approaches to social problems are superior to approaches traditionally advanced by the government and civil society and that these approaches have the unique ability to create transformational social change.

The philanthropic landscape has shifted.? As social entrepreneurship, venture philanthropy, and corporate social responsibility have gained popular acceptance, so has the market-based logic that underlies them.? Edwards argues that such market-based approaches have limited use in the philanthropic world, and that philanthrocapitalists are taking a toll on traditional "civil society". ?Is there a role for the market when it comes to promoting the non-market values of transparency, participatory democracy, and collective action?

Having defined the terms of his argument, Edwards sets out to debunk the idea that philanthrocapitalism can create transformational social change.? He takes those of us in the venture philanthropy/social entrepreneurship community to task for fetishizing slick technology and headline-making innovations over decidedly un-sexy "old philanthropy" activities such as soup kitchens and clothing drives.? In his words:

"The philanthrocapitalists love handing out new prizes-for building private spaceships and electric cars, sequencing the human genome, and ending global warming-but not for the [Swan Lake Fire Department] Ladies Auxiliary or reviving New Orleans."

While praising philanthrocapitalists for the undeniable benefits they have delivered to many of the world's poor, particularly in the form of increased access to goods and services, he disputes the transformational capabilities of these efforts, suggesting that "a sharecropper with a cell-phone is still a sharecropper."?

According to Edwards, the best way to drive social change is to put governments and a healthy civil society in charge.? These are the non-profits and community organizations that create slow, deliberate, political change through democratic participation and a willingness to focus on complex, systemic problems rather than quick-fix business "solutions."? Edwards harangues philanthrocapitalists for being unwilling to address thorny political issues or power relationships that cannot be solved with - and are even exacerbated by -market-based engagements:

"In the ever-growing outpouring of books, newspaper stories, and conference reports on philanthrocapitalism, you will find plenty of attention to finance and the market, but scarcely a mention of power, politics and social relations-the things that really drive social transformation."

I agree with this point - questions of homophobia, corporate malfeasance and class-based inequalities, to name a few, are like kryptonite to development groups that need to appeal to business-friendly donors and investors.? For example, a market-oriented development model might address the issue of rural access to energy by promoting an enterprise that sells low cost solar panels.? A more traditional civil society organization might work to build a grassroots network of groups that call governments out for favoring urban over rural populations in the distribution of public resources.

This is not to say that we should ditch the cause of social entrepreneurship, and I don't think Edwards is necessarily making this argument either - low-cost solar panels are important after all, and they have their place in the ecosystem of poverty alleviation solutions.? But the critical and difficult work of engaging political issues and social injustice has its place as well, and this work is often best carried out by community activists and advocacy groups in civil society.

Edwards seeks to prove this in a subsequent section, in which he takes on the laborious task of historically and theoretically demonstrating that the values of individualism and self-interest underlying market-based activity are frequently incompatible with collective interest and social well-being. ?In a chapter that is long on polemics and sometimes short on references, he makes the case that certain public goods, like healthcare and civil rights, should be protected from the ravages of unequal market competition.

These are valid points, but I had a few issues with Edwards' work that bear mentioning.? First, he correctly observes that the hyperbole of philanthrocapitalism is muddied by vagueness.? For example, for all our talk of financially sustainable solutions, much of the work of philanthrocapitalist groups is still dependent on grants, frequently from the "old school" foundations whose development models we are supposed to be breaking away from.? But after illustrating the problem with "old vs. new" dichotomies and taking philanthrocapitalism off its hyped-up pedestal, Edwards proceeds to create new dichotomies, juxtaposing civil society groups and philanthrocapitalism in black and white terms.

Edwards paints civil-society NGOs as bastions of democratic values and accountability, organizations driven by a "love of human-kind" rather than the cold logic of the marketplace.? However, I don't think this ideal organization exists; just as philanthrocapitalism is rife with elements of old school charity, so too is civil society bound - at least in part - to the market.? They too are forced to compete heavily for a limited supply of funds.? Civil society groups must meet donors' demands, who often ask NGOs to prioritize work in "hot" areas such as biofuels or AIDS treatment rather than less "marketable" causes such as AIDS prevention.? ?Perhaps this is why every NGO I have come into contact with has an obsession with "branding" that can't be blamed on philanthrocapitalism.

The difficulty of cleanly separating these two terms is even evidenced by the fact that I would actually identify myself as both a member of what Edwards deems "civil society" and as a philanthrocapitalist. I work for an organization (World Resources Institute) that advocates open access to information for the poor (civil society) as well as investment in social enterprises (philanthrocapitalism).

In addition, I don't think Edwards gives enough credit to philanthrocapitalists for creating legitimate social change.? Though it may not be well-documented, there is no way the act of handing women throughout Bangladesh power over household income (as the microcredit movement has) could not have a major impact - though I agree with Edwards that the larger ramifications of this social tinkering should be studied.? I also don't think pioneers of the BoP movement would take kindly to the author placing "co-creation" squarely in the camp of civil society, as the concept of businesses co-venturing or co-creating value with local communities is at the core of BoP theory.

Despite its flaws, Just Another Emperor does a superb job of fulfilling Edward's main intent - deflating the hype around philanthrocapitalism without denying it its place as a tool for combating poverty.? Edwards reminds us that the free market cannot solve all social ills and inequalities.? While noting the benefits of approaches championed by social entrepreneurs and venture philanthropists, he suggests that these movements complement - rather than replace - non-market-based approaches to poverty and sustainability.

Overall this is a humbling text.? It reminds us that while the benefits of microfinance and m-banking are commendable, philanthrocapitalists have not broken away from old development paradigms nor are our market-based solutions able to transcend the messiness of the human condition and the cultural complexities that come along with it.? As Edwards notes, "There is no place for triumphalism in this conversation."

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