Tag Archives: Philanthrocapitalism

Nauseous in Davos: The Philanthrocapitalism Debate, Part 2

Earlier this month I vented on the World Economic Forum in Davos, and in particular, on a session on the topic of “Philanthrocapitalism”.  Tony Blair and Bill Clinton were present and their photograph topped an article in the Times newspaper.  This post touched off a series of comments and counter-posts, some of which can be seen attached to the original from 5 February 2009 and was followed by a video.  I would like to reply to all of these, but owe my first reply to Matthew Bishop who, together with Michael Green, wrote the book and coined the term.  Matthew’s counter-blog can be seen here – as ever it is clever, but evades my key points.

He addresses two “serious” points I make in my first blog post.  The second is clear and I will address it shortly.  I cannot be sure which is the first point he is challenging.  If it is that I “dislike” his describing Clinton and Blair as philanthrocapitalists, fair enough.  But its not a question of what I “like”.  He and Green coined the ghastly phrase and can use it to describe anybody they please.  But the sort of people they provide in the book as examples of philanthrocapitalists are not like Blair and Clinton–they are entrepreneurs who are turning their skills to resolving social problems.  Thus based upon the Bishop/Green model, Clinton and Blair do not seem to fit.  But then it seems like Bishop accepts this point and he goes on to say these two are actually “celanthropists”–celebrity philanthropists.  As a wordsmith goes, Bishop is a genius–but he seems to accept the argument originally made.

If the first point Bishop objects to is that I have “no time for politicians in general”, well, that is not what I feel nor what I said in my posting.  This challenge is therefore puzzling.  If it is that I blame “economic policies pursued enthusiastically by Clinton and Blair for the current mess”–well yes, I certainly do.  But Bishop here seems to agree.  Matthew–please help me here!

The second point Bishop attacks is the more substantive.  I argue that the power of philanthrocapitalists derives from their influence over the much more substantial purse strings of givernment.  Here Bishop retorts that he sees “opportunities to leverage corporate and non-profit budgets, too”, but cleverly side-steps the main thrust of my point.  I argue that for these philanthrocapitalists to carry such influence is simply undemocratic–and on this point Bishop is silent–I think understandably.  And when he and Green speak of leverage throughout the book it is mostly with regard to government, not the corporate and non-profit budgets he mentions in his post.

He goes on to say that “Schwartz is actually a big fan of the vigorous support for social investment provided by the British Labour government”.  This is not the case–my views here are a matter of public record and elaborated in another post entitled, “Oooh, Lots of Lovely Government Money”.  I have been a staunch critic of this trend but must accept that recent Labour Governments have been serious about assisting the social sector–it is not however clear how helpful their assistance has been or will continue to be–but that is another story.

Jessica Brown, of Tellus Mater, (previously with NEF) and Peter Wheeler, a Trustee of New Philanthropy Capital (ex-Goldman Sachs) also make some excellent and thoughtful criticisms.  I hope to be able to reply to these in the coming days.  For observers who are more keenly interested in the subject of Philanthrocapitalism, I can recommend a pamphlet by Michael Edwards, of the Ford Foundation, who writes under the auspices of Demos and the Young Foundation in “Just Another Emperor: The Myths and Realities of Philanthrocapitalism”.  All of these are best described by what Bishop and Green refer to as “Friendly Fire”, the typically clever title of their reply post.

Let’s face it – we are all trying to advance a cause – and there is much more that unites us than divides us.  We seek to develop more entrepreneurial approaches to solving social, ethical and environmental problems, and our debate is about tactics and strategy – not direction.  This should not diminish our fervour to engage in a vigorous debate as it is only through this interchange in the “marketplace of ideas” that the wheat really can get separated from the chaff (to quote Wheeler).

Philanthrocapitalism and Davos Make Me Sick!

My reaction was one of (nearly) incontrollable nausea. A colleague showed me yesterday’s article in The Times on Philanthrocapitalism and the scene at Davos (the World Economic Forum) and I nearly lost it. Right at the top of the article by Matthew Bishop was a photo of ex-Prime Minister Tony Blair watched admiringly by a thoughtful looking ex-President Bill Clinton. What is so wrong with this picture, Matthew Bishop’s article and the entire notion of “Philanthrocapitalism”, a concept he publicised in a recent book with the same title?

First, a reflection on Davos and the World Economic Forum. Reportedly, the great and the good have been rather down and depressed this year. Their numbers have dwindled despite the good skiing and they are worried about the state of the world, and searching with their peers for solutions to our global economic problems. I am struck with dis-belief with the apparently unlimited extent of their smug arrogance. It is these very men (and yes, they are mostly men!) who are singularly responsible for the mess we are in. Blair and Clinton in particular presided over the massive accumulation of debt, reckless deregulation and disproportionate and unbalanced boom in our economy which brought us to the precipice. That they and their ilk imagine that they have anything to say that might be helpful in sorting things out is absurd. In another time they would have been thrown in the dungeon or perhaps beheaded. It is a powerful statement of our state of affairs that they continue to be so feted.

And what about Philanthrocapitalism? This unfortunate term, was coined by Matthew Bishop and his co-author Michael Green in a book with the same title as the Times’ article – “Philanthrocapitalism: How the Rich Can Save the World and Why We Should Let Them”. It describes a phenomenon wherein the rich and super-rich are “showing the way” in how philanthropy should operate, utilising their entrepreneurial skills (yes, and some of their capital) to make a difference.

As a persistent advocate of the concept of deploying entrepreneurial models to solve global problems, which is what social business, enterprise and investment is all about, I wanted very much to like the book. I have heard Matthew Bishop speak and found him engaging and I must confess the book is a good read and well-researched. But the concept has many fundamental flaws and I have been intending to post on this subject for some time–I would welcome feedback from readers on this as well.

The main flaw I will touch on in this post is based on Matthew Bishop’s concept of “leverage”. He rightly points out that however rich the wealthy are, their billions simply do not match the trillions available to government. Thus the (the rich) seek to “lead by experiment”. When they have “proven” that a model works for solving some social problem works they use their “influence” to get governments to follow in scale. This seems fine in theory, but there are some questions which need to be raised.

First, can we be sure that the assessment of the success of these experiments will be truly fair and objective and that the “influence” of these philanthrocapitalists will not overwhlem judgement? I doubt it. Second and more fundamentally, does such a process, very much like Davos and the World Economic Forum, not merely amplify the voice of those who already have an overwhelming influence on government policy and expenditure? And let’s face it, the evidence is not very encouraging that they have used their influence very effectively–do we really wish for them to have more?

I applaud the entry of entrepreneurial approaches into the social realm. I think it is long overdue. I am also delighted by the fact that business itself is becoming increasingly “social”. The disconnect between the pursuit of profit and the pursuit of the common good has become too great and has been a major contributor to our current crisis. I would prefer that these successful industrialists were to concentrate on making their businesses more social, or creating new social businesses. Such acts are more likely to tap into what is most remarkable about these men than a foray into these new fields.

Where Matthew Bishop sadly loses much credibility is when in the Times article he describes Clinton and Blair as “politicians-turned-philanthrocapitalists”. Such a fawning statement beggars belief. It is true that both were politicians. It is also true that they are very much capitalists, and perhaps even giving some of their rapidly increasing wealth to charitable causes, which is great. But to use the term he coined for great entrepreneurs, wealth creators and titans of industry, who are deploying these skills in charitable causes, to describe these two guys is ludicrous and undermines whatever value the term philanthrocapitalism may have.

I think Matthew Bishop and Michael Green have done us all a service in writing a good book and putting the concept of philanthrocapitalism (if not perhaps the rather appalling word) up for debate. Let the debate continue!