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The world according to philanthrocapitalism

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The philanthrocapitalist solution. If it doesn't deliver shareholder value, zap it.

The always eminently readable From Poverty To Power blog (by Duncan Green of Oxfam) has an entry about ‘philanthrocapitalsm‘. a neologism that sounds like a disastrous mash-up packaged as a convincing oxymoron. After all, philanthropy and capitalism are two quite different things, arn’t they. Yes and no, although my own view is, mostly yes.

Green writes: “I spoke earlier this week at an annual retreat of a very different kind of charity – ARK. Set up by a bunch of hedge fund managers (it prefers the term ‘alternative investment industry’), ARK raises a pile of money from glitzy gala dinners, and uses it to do what it calls ‘venture philanthropy‘. It focuses on education, child health (especially HIV and AIDS) and child protection and, like better known ‘philanthrocapitalists’ like Bill Gates, is fixated on measuring impact, hence the name, which stands for ‘absolute return for kids’.”

The usual approach, as Green says, is that when they enter the aid business, captains of industry and finance often act as if they regard all existing aid workers as utter imbeciles, who could easily achieve their small-time aims if only they adopted private sector practices.

Very true. For reasons that are obvious to us utter imbeciles but which mysteriously escape these captains of industry, this is staggering hubris. When they’re done savaging the NGOs and penniless do-gooders, and when they finally get to grips with some of the basic issues on the street (hunger, water, education, health) they face a learning curve that’s as good as vertical. It’s not the typical business school curve, and it’s infinitely more demanding. That’s when the captains (those of them who descended to the street) begin, dimly and fuzzily, to understand that the world is not made up of supply chains and shareholder value. The world’s ‘best’ companies are admired (in culturally bankrupt circles) for their skills at project management and prioritisation. The world’s ‘best’ companies have obviously never met the world’s best home-makers (women), who outnumber them by about a million to one.

When all you use is a mech-shovel, every problem looks like mud.

Put the captains and their bonus-driven crews into the development world, which has no clear bottom line of profit and loss, and they stumble around lost. Here, in the real world on the street with no name, process matters much more – it’s not just about the destination, but how you get there. Is it inclusive? Who’s shut out of the decision making? Development is about recognising the importance of power, and the way it is endlessly renegotiated and redistributed within society.

But still they try, and perhaps some get it. For those who do get it, they should steer clear of sanctimonious claptrap of the sort dished out by something called the Philanthrocapitalist Manifesto. Here’s a ripe sampling: “Thirty years of market reform has been good for Britain’s rich and our society has become more unequal. Yet populist bashing of the rich is a blind alley. Instead we need to rewrite the social contract between the rich and the rest. The winners of capitalism have a responsibility to the rest of society, not just to pay their taxes but to give back with their money and their skills. By doing so, they can be a dynamic, entrepreneurial source of innovation in our society and so build a more sustainable environment for wealth creation.”

In tones dripping with aspartame, this misbegotten manifesto continues: “The corporate world, too, is starting to realise that business can ‘do well by doing good’. The financial crisis has demonstrated that narrow-minded focus on short-term profits is bad for shareholders as well as society. Business needs to take a longer-term perspective on success, recognising that capitalism will only thrive if it sustains the society and the environment in which it operates. Before the crisis, some corporate leaders had started to lead the way towards a more responsible capitalism. After the crisis, the need is more pressing than ever.” Oh for heaven’s sake.

The philanthrocapitalist SUV, for getaways from tricky development questions.

One of the new purveyors of this oxymoron is Matthew Bishop, US business editor and New York bureau chief of The Economist, and co-author of a book named ‘Philanthrocapitalism: How Giving Can Save the World’. The Economist is a weekly compilation of jumbled opinion and pedantic misbelief masquerading as a journal, and survives only because of clever marketing and the abysmal ignorance of its corporate subscribers. My advice to you is, never waste money on a subscription, read it (borrow, don’t pay) only to understand what the more foolish captains are plotting next.

Why am I saying so? This starry-eyed account in one of the business degree shops will explain. “Now you see a company like Wal-Mart embracing green products, working with vast numbers of non-profits to change the whole product range that it is offering to the American people and other parts of the world where it operates. And this is, in turn, changing the supply chains, changing the companies all around the world, particularly in China, that it works with. It is by no means creating perfection, but it’s substantially different to what we saw before. And you hear more and more companies starting to explore this, starting to work with the non-profit world to actually improve their game.” That’s an author yodelling on about philanthrocapitalism. Wal-Mart and green?? Sad but true.

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