Small Change: Why Business Wont Save the World

The reality is that the world is quite complex and is also quite gray.

Given his vast experience, it is shocking that Edwards sees the world as starkly as he does. Edwards wants the reader of this slim volume to firmly believe that business and business leaders have little to no role in solving social problems. In the 21st century, corporations of all shapes and sizes know that they cannot risk operating unilaterally.

Businesses certainly cannot ignore the concerns of their shareholders, nor can they ignore the concerns of their other stakeholders—including civil society. Edwards wants you to believe that philanthrocapitalism is completely misguided. He also wants business-minded donors to leave the messy work of social change to the professionals—that the mandarins of the NGO world can take care of it. Do I really need to remind you of the Koch brothers as a case in point?

So, if Mr and Mrs Gates want to cure malaria or lift the third world out of poverty or end AIDS - and do so by spending their own money, how can anyone think that is a bad thing? Like so much else in life, the problem is a little more complicated than this simple equation of rich men and their money makes it seem. The first problem is that a large part of the reason why rich men are so rich is that at the end of the s the world decided that society didn't exist anymore and that we collectively decided not nearly enough wealth was going to the top one per cent of the top one per cent So we fixed that rather comprehensively by inventing the amusingly named 'trickle down' economics.

Which has meant that mind-boggling amounts of wealth now go to the very richest men in the world. And this means that some of these men can now become mega-philanthropists. Usually there are only four guys who ever get mentioned in this category - needless to say this is then used to make all obscenely wealthy men look good - even though, if you were to count them all up, there are somewhat more than four obscenely wealthy men in the world. The argument raised here against philanthrocapitalism is more interesting than just that there are so few of them or that they wealth is mostly ill-gotten.

The problem of philanthrocapitalism relates to a problem Dan Ariely discusses in his 'Predictably Irrational'. There was a kindergarten in Israel that had a bit of a problem with parents turning up late to pick up their kids. It didn't happen often, but it was very annoying when it did. So they decided that it might be a good idea to put a financial punishment on those who were late to pick up their kids.

They set some nominal amount as a late fee - and the world changed. The point of the exercise was to stop parents from being late, whereas the result was to make them later. While we have been trained to believe that the market can fix everything and that the market, like breast-milk, is always best - there are things that community does better than the market, and one of those things is community.

The problem with obscenely rich men is that our old friend cognitive dissonance implies that they are likely to think market solutions will fix all of the problems of the world. And look, they have good reason for thinking that - market-solutions are what have made them obscenely wealthy in the first place.

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And haven't the do-gooders been doing good forever without said good ever quite getting rid of all the bad in the world? What is needed is some hard-nosed, cost-effective, efficient, value-adding, capitalist market-based solutions to add social problem here. And, again, Edwards doesn't even disagree that this might sometimes even work - the problem is he makes it clear that it will only work for a very limited and narrow set of problems. As he points out - capitalism is particularly good at distributing stuff it produces - so, for instance, it is likely that it will be good at getting malaria tablets into Africa really, really well.

And don't get me wrong - ending malaria is nothing to be sneezed at.

Give the man a Nobel Prize for I don't know, Peace? The actual problem, as we saw in the kindergarten, is when market-solutions are applied to community issues things become virtually the opposite of what we thought they were going to become. Take Gates's efforts to destroy public education in the US as a case in point. Mostly, he constructs this a 'closing the achievement gap', but his simple-minded solutions to 'the crisis in education' destroy community and so impose 'measures' on education that destroy the ability of teachers to be professionals by strapping a straitjacket curriculum on their ability to teach.

The problem is that market-based solutions to complex social issues like education virtually by definition impose overly simple solutions on top of the complexity of the problems faced. Just because you can make a problem sound simple doesn't for a second actually make it simple. So, education becomes equated to 'raising test scores'. The tests become invariably designed to match the dispositions of middle class children - and so, virtually by definition, those children who are not middle class will struggle to achieve the test scores that the middle class kids will achieve effortlessly. Rather than closing the gap, such education practices end up widening it while giving those already succeeding a false sense of merit in their successes.

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Consider charter schools in the US, which have been operating for decades - and yet the gap between the haves and have nots has widened that entire time. Market-based solutions are great if you need to make lots of cheap tablets to then distribute at low cost - but if you need to do something complicated, you might be better off trying to build a community. The problem is that the wealthy got to be wealthy by being rewarded by the system as it exists today. But let's pretend for a second that the way to fix the problems the world faces today involve something other than 'business as usual'.

Well, that might mean that the ways that these people got to be obscenely wealthy might, in fact, be part of the problem, rather than part of the solution. In fact, what if the best way to end racial discrimination in the US was not to support charter schools and common core testing, but rather to support Black Lives Matter? That is, what if it was the system that needed to change, and not just the lipstick. That might mean that rich men would be less likely to be the saviours they present themselves as being, but rather might, even inadvertently, stand in the way of real social progress.

This book is interesting since it provides lots of examples of community organisations that succeed because they are decidedly not constrained by needing to make a profit, and of community organisations that have been destroyed because rich men decided they needed to be more efficient. The bit of this book that struck home to me most was when he pointed out that one of the things rich men love to do is to have foundations and such that these are 'purposed' they always commit some crime against the English language as part of their justification for being to address a problem facing society.

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Let's say that problem is some dysfunction such as Southern Black Poverty - as a case of me pulling a random problem out of thin air. What you will invariably find is that there will be the billionaire as the main guy on that foundation, there will be some celebrities on the board, maybe also a local politician, perhaps a couple of business men's wives, but there won't be anyone from the community itself that needs to be 'fixed'. These are always foundations that do things to people, rather than organisations that do things with people. And that shit never works. I should end by admitting a conflict of interest.

Over the past decade, philanthropy has been invigorated by the arrival on the scene of some very large and innovative foundations, many of them established by hugely successful individuals from the worlds of business and technology. In , Matthew Bishop and Michael Green brilliantly captured the spirit of the decade in their book Philanthrocapitalism: How Giving Can Save the World. But while the book was well received within the sector, not everyone was ready to jump on the bandwagon. Given that philanthrocapitalism is a somewhat nebulous set of ideas with no universally accepted definition, is there any aspect of the concept you find value in or agree with?

Back then, philanthrocapitalism was all the rage: The aim of the pamphlet was simply to start a debate about what philanthrocapitalism was, to cause people to stop and think, because people were believing in something without actually knowing what it was. And to do that, it had to be fairly polemical or oppositional, which it was, as was my book Small Change: It was a tactic. But what really matters is delving into the details of who is doing what on the ground, regardless of the labels they use to describe it.

You have to select your tools carefully and systematically if you hope to achieve the results you want. And what pleases me now is that we seem to be moving into a different phase of the debate: In some areas, venture philanthropy, business techniques and technology can be very useful in pursuing social change.

Matthew Bishop, Michael Green and other proponents of the philanthrocapitalist approach would argue that more competition in the non-profit sector is bound to help reduce and eliminate inefficiencies, which would mean more resources being allocated to the problems we all want to see solved.

Do you agree with that perspective? Philosophers would say the philanthrocapitalists are committing a category error, which is when you take one set of ideas and principles that works in a particular setting and you transport those ideas and principles into a very different setting while expecting the same results. None of the great social movements of the past have been based on competition. What happens when you apply formal market principles to civil society — and we see this already — is that lots of very important organizations will be eliminated.



Big ones will tend to get bigger, and small ones will tend to get smaller. A lot of organizations doing easier work will attract more resources, while many doing the more difficult work will lose out.