Friday, April 11, 2008

Philanthrocapitalism: Just Another Emperor?

One of the topics we cover at Policy Innovations is trends in social organization, how they affect globalization, and vice versa. Based on his new book, Michael Edwards of the Ford Foundation wrote an interesting article for openDemocracy on the subject of philanthrocapitalism—the "movement to harness the power of business and the market to the goals of social change." He believes it's time to look past the hype and really debate whether this influx of market mojo is delivering what it claims. Are social goals compromised in favor of financial ones?

[ASIDE: We ran an article by Laura Raynolds of Colorado State University not too long ago discussing a similar moment in the evolution of Fair Trade. Raynolds argues that Fair Trade's new position in the marketplace—due to success in scaling up and expansion into new products—puts it in conflict with its social goals.]

Edwards believes that civil society's shift from community organizing to services provision represents an erosion of the sector's power to participate in social transformation: "The accumulated outcome is that civil society may be getting larger—but not stronger or more effective in leveraging fundamental changes in society."

What are the changes Edwards wants to see?
Systemic change has to address the question of how property is owned and controlled, and how resources and opportunities are distributed throughout society.

How do we get there?
[C]ollaboration among separate organizations may be better than blending or competition. It preserves the difference and independence required to lever real change in markets (not just extend their social reach), and to support the transition to more radical approaches that might deliver the deeper changes that we need, like new business models built around "the commons" such as open-source software and other forms of "non-proprietary production"; and community economics and worker-owned firms, which increase citizen control over the production and distribution of the economic surplus that businesses create.

How do we keep nonmarket civil society motivated?
What separates good and bad performers is not whether they come from business or civil society, but whether they have a clear focus to their work, strong learning and accountability mechanisms that keep them heading in the right direction, and the ability to motivate their staff or volunteers to reach the highest collective levels of performance.

I think the most important critique Edwards makes is that market-style projects shouldn't be the sole logic of civil society—social entrepreneurism has hit the scene with a fair amount of zeal. If civil society acts as a social immune system, as Paul Hawken puts it, then that system should have several curative options. Plus, people are more and more motivated to find meaning in their work—social entrepreneurs are filling a niche.

When critiquing the new unity of philanthrocapitalism, Edwards sets it in comparison to the diversity of actors that was required in successful social movements of the past. But right now there is no unified movement. The only thing comparable is the set of actors that are pushing the shift to an environment-friendly lifestyle—though goals may overlap, they are loosely bonded at best in their actions. And the problem they are trying to solve is so inherently tied to our existence as consumers, making it no surprise that fast-acting market forces have swooped into the new environmental gap in our political consciousness.

Has philanthrocapitalism only flourished because civil society becomes too calcified when it is based on institutions instead of a broad social struggle?


Amanda said...

Can you help me understand what exactly philanthrocapitalism is? I don't quite understand

Krys said...

Well there are a few interesting points made in this argument and I think that the shift is mostly caused by the newer generation looking for ways to buy into an experience, rather than a product, per se. So here is where I see MLM and network marketing as a viable form of product or service distribution among the new generation. It is because of the simple fact that this business model addresses every issue brought forth in this blog. In MLM employees are also the consumer and part owner of the company. Usually the products are built around a social need, whether it be health care, financial protection or management, or even a product which claims to increase gas mileage.

So, in essence, I believe that this business model has been adopted by different companies because of this so called "philanthrocapitalism". The employee has all the benefits of both partner and consumer, the person gets to experience the meaning behind their job and it allows the newer generation to socially connect and get invovled.

Evan O'Neil said...

Amanda, thanks for your question. Philanthrocapitalism is quite an unwieldy portmanteau for a fairly straightforward idea. Mike Edwards describes it as the "movement to harness the power of business and the market to the goals of social change." This covers social entrepreneurs that use the market to deliver beneficial goods and services. Some corporate social responsibility can probably be lumped in as well, along with big projects such as the Gates Foundation.

Overall, the trend represents the desire for greater accountability, effectiveness, and metrics in social development. As Krys points out, it's also about involvement: People are awakening to their influence on the social and physical environment and the power of participation. At the same time, we are still highly embedded in a consumerist system, so there's a natural merger with ethics.

Matthew Bishop of the Economist coined the term and is writing a book on the subject due out later this year. He debunks the concept a little in an Alliance magazine article.