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Tuesday, July 22, 2008

A Dialogue on Philanthrocapitalism: The Importance of Listening

By Rob Katz

This is the fifth and final installment of our series reviewing Michael Edwards' Just Another Emperor and the concept of 'philanthrocapitalism'. Follow the links to read part 1, part 2, part 3 and part 4.

By Rob Katz and Francisco Noguera

Philanthrocapitalism ? harnessing business and the market to the goals of social change ? is a controversial term. First introduced by The Economist's Matthew Bishop, then expounded upon by the Ford Foundation's Michael Edwards, philanthrocapitalism has been the subject of no fewer than four major online discussions and debates. Here at NextBillion.net, we have dedicated five blog posts to the topic, offering a range of opinions on Edwards' new book, Just Another Emperor: The Myths and Realities of Philanthrocapitalism.

Derek, Moses, Manuel and Nitin ? who authored the first four entries in this series ? offer a range of viewpoints, mostly critical of Edwards' argument that market strategies are inappropriate tools for driving social change. Edwards, of course, makes many salient points, and is not to be criticized as a hack. (Over at the Global Philanthropy Forum blog, Benetech's Jim Fruchterman deconstructs Michael Edwards in no uncertain terms, and comes close to making this very criticism. Edwards responds.)As I read through the NextBillion.net posts and comments, the Global Philanthropy Forum debate, the OpenDemocracy forum and other discussions on philanthrocapitalism, I wonder if we aren't talking past each other at least a little bit.

My choice of words is deliberate, since I believe one critical point has not been made during the course of this debate: the importance of listening. Markets may be the single most effective listening device for understanding preference, need, and ? most importantly ? how and what products and services are valued by the poor. Edwards' critique of philanthrocapitalism misses this point entirely, which is unfortunate.

Critics will correctly point out that the market as listening device may send questionable signals ? such as the demand for alcohol, tobacco and even racially-charged skin lightening cream. I won't get into the free market vs. paternalist development argument here and simply suggest that, as the next billion emerge from poverty, we must engage this growing class with humility. (Humility, by the way, is something that Edwards suggests we need more of ? and I couldn't agree more.)

Along the same lines, it can also be argued that markets are an ideal testing ground for many of the causes promoted by civil society organizations, which are the true essence of philanthropy according to Edwards. For example, microfinance may have done more for the cause of gender equity than many of the civil society-led movements before it. It has empowered women and given them an important role within local communities in countries like Bangladesh. This social outcome, however, was a byproduct of the mechanism - loans - originally designed for income generation purposes, whose creators saw women as less risky customers.

Whether you agree with Edwards or not, I urge you to think of markets not as a tool used for the exploitation of the poor, but rather as a listening device that gives voice (and choice) to the disenfranchised. In that sense, it's hard to argue about the virtues of philanthrocapitalism.
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