Why social transformation is not a job for the market

Michael Edwards introduces his new book, "Small change, Why business won't change the world"

Michael Edwards
26 January 2010

In 2007, I experienced one of those fork-in-the-road moments that seem to occur when you least expect them. It was another day at the office, sifting through e-mails in the Ford Foundation’s glass palace in Manhattan, where I worked as one of the organization’s six directors. As usual, half of my inbox was filled by advertisements for books, conferences, and consultants promising to solve society’s problems by bringing the magic of the market to nonprofits and philanthropy — the masters of the universe, it seemed, also wanted to be saviors of the world — and the other half was filled by complaints from those experiencing the negative consequences of doing exactly that.

It suddenly struck me that this was more than a simple clash of cultures — it had potentially profound implications for the success of our efforts to transform the world in the image of love and justice. And in the rush to embrace new approaches to philanthropy, some very important older questions were in danger of being buried under hype and adulation — questions of deep social change and social transformation, of democracy versus plutocracy, and of people’s willingness to work together on common problems as full and equal citizens, not as clients or consumers.

This is not an anti-business or anti-market argument. Any successful recipe for social transformation must include a wellfunctioning market economy that creates wealth — broadly distributed throughout the population — and fosters technological innovation, directed at socially useful ends. When business puts its own house in order in this way, it can have an enormously positive impact by increasing the social and environmental value of the goods and services it produces, improving the quantity and quality of the jobs and incomes it creates, and acting as a good corporate citizen — which means paying taxes, obeying regulations, ending monopolies, and removing lobbying from politics.

But how is that to happen? It has always been civil society and government that have pressed businesses to do these things; and to exercise their influence effectively, both government and civil society need to be strong and independent. Only then can they exert sustained pressure for accountability and act from a different set of values and priorities. Otherwise, “organized greed always defeats disorganized democracy,” as Matt Taibbi puts it. It’s the difference that makes the difference to society. In fact, real transformation will occur when business behaves more like civil society, not the other way around.

The problem comes when businesses and markets undertake tasks for which they are not well designed — like rebuilding the cohesion of communities, strengthening the ways in which people care for each other, and pushing for fundamental changes in the economic system itself. Expecting price competition, the profit motive, short-term deliverables, and supply-chain control to bring about a world of compassion and solidarity is, to say the least, a little strange.

Despite these seemingly-obvious points, the business-is-best philosophy remains a powerful and seductive hook. It promises to supply a new magic bullet that removes the messiness of social change, and a route to doing good for others while doing well for yourself without any of the sacrifices that have been necessary for progress in the past. That’s an attractive proposition, and also a dangerous mirage. Can we compete ourselves into a more cooperative future, or consume our way to conserve the planet’s scarce resources, or grow our way out of deep-rooted poverty and oppression, or fight our way to peace? Such ideas are disingenuous at best and dishonest at worst. The claim that business thinking can save the world is a convenient myth for those who occupy positions of great wealth and power; and the constant celebration of rich and famous individuals is a dangerous distraction from the hard, public work of finding solutions, all of us together.

There are four key points in my argument:

First, neither philanthrocapitalism nor transformative approaches to social change are monolithic. Both contain many different strands, and they engage and overlap in the middle, sometimes with positive effects and sometimes not. These various strands and hybrids have different costs and benefits, so rather than tilting at windmills by writing off one approach or the other, it is more useful to identify where business thinking can advance social change and where it can’t, separating out the use of business tools from the underlying ideology of the market.

Second, the hype that surrounds philanthrocapitalism runs far ahead of its ability to deliver real results. There is little hard evidence that these new approaches are any better at reducing poverty and injustice than the governments, foundations, and civil society groups that have been working away more quietly in the background for a generation and more. Yes, they get much-needed drugs, microcredit loans, solar-rechargeable light bulbs, and the like to people who really need these things, but they don’t change the social and political dynamics that deny most of the world’s population the hope of a decent life.

Third, among the reasons for these disappointing results, one seems especially important: the conflicts and trade-offs that exist between business thinking and market mechanisms on the one hand, and civil society thinking and social transformation on the other. There have always been areas of life that we deliberately protect from the narrow calculations of competition, price, profit, and cost — such as our families and community associations — but in the rush to privatize and commercialize social action and activity, there is a danger that these firewalls will be forgotten. Lasting damage can be done to society if these distinctions are eroded.

Fourth, the increasing concentration of wealth and power among philanthrocapitalists is unhealthy for democracy. When the production of public goods like health and education becomes the province of private interests, fundamental questions of accountability apply. Why should the rich and famous decide how schools are going to be reformed, or what kinds of drugs will be supplied at prices affordable to the poor, or which civil society groups get funded for their work? “I remember a day,” lamented Robert Reich in American Prospect Online, “when government collected billions of dollars from tycoons like these, and when our democratic process decided what the billions would be devoted to . . . I don’t want to sound like an ingrate or overly sentimental, but I preferred it the old way.” He has a very important point. Weak accountability is the Achilles’ heel of all systems for financing social change — new or old, public or private — and philanthropy of all sorts needs to be reconfigured so that it can be more useful and supportive to long-term structural change.

One clear message emerges from these four points: Social transformation is not a job to be left to the whims of billionaires. Perhaps if we supported the energy and creativity of millions of ordinary people, we could create a foundation for lasting progress that will never come through top-down planning by a new global elite, however well intentioned. When this principle is accepted and philanthropy is reconfigured to be less technocratic and more supportive of people’s own self-development efforts, then change will come — larger than we can control, quicker than we can imagine, and deeper than we could ever hope for by reducing everything to market forces.

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