Can the super-rich save the world?

Development Policy02 Dec 2008William Dowell

Philanthrocapitalism: How the Rich Can Save the World, by Matthew Bishop and Michael Green. Bloomsbury Press, 2008.

A review by William Dowell.

With the current financial crisis, will the super-rich still have the resources or the inclination to save the rest of the world? When Philanthrocaptialism was published in October, it still seemed reasonable to think that a new generation of multi-billionaires might be able to give the developing world the kind of hard-nosed practical advice it needs. Unfortunately, Philanthrocapitalism hit the bookstores just as the liquidity crisis was throwing much of the free market into a panic and raising serious questions about global capitalism.

However, the basic arguments in Philanthrocapitalism are still worth considering. Matthew Bishop, US business editor for The Economist, says that the book is simply trying to explain a phenomenon that has been a reality for several years. ‘We are trying to make the public aware of who these people are, and of their in-depth thinking about solving problems. The line that we are taking is that in the division of labour between governments and mass charities and the super-rich, the super-rich can play a role that almost no one else can’.

As Bishop and Green state, this new generation of super-rich philanthropists is taking a hands-on approach that promises to cut through many of the political and financial logjams that have frustrated the UN and NGOs over the last several decades. Several of these new philanthropists, including Bill Gates, George Soros, Richard Branson and Jeff Skoll, are not only brilliant strategists, but also have the financial means to take effective action without having to ask for permission from a board of directors or from international donors that are pushing their own geopolitical agendas. At a time when national governments are increasingly short of cash, these men are rolling in it, and they want to invest in improving the world.

The Gates Foundation’s campaign to fight HIV/AIDS, George Soros’ efforts to create a more open society, Ted Turner’s strategically placed support for the UN and Richard Branson’s efforts to draw attention to global warming are examples of the wealthy making a difference. They have done so not just by handing money to a foundation, but by playing a direct role in shaping how that money is used. As Andrew Rasiej, a New York-based socially conscious entrepreneur used to say to potential funders, ‘Your check book is not all that I want; I also want your brains’.

The idea is appealing, but it is also dangerous. Bishop warns that the power held by this small group could quickly evolve into something resembling plutocracy. He suggests that a new social contract would have to be drawn to reassure the public about the philanthrocapitalists’ ultimate objectives. Even then, there could be problems. The Gates Foundation has unquestionably put new energy into the fight against HIV/AIDS, but in doing so it has tended to push to the sidelines some of the experts who preceded it. A number of people within World Health Organization question whether it should be the Gates Foundation or the World Health Organization that is actually making policy. The greater danger is that the philanthrocapitalist who lacks a profound knowledge of the subject may use his or her superior financial resources and freedom of action to push policy into a dead end.

Some of the most cogent criticisms of the concept are compiled in the book Just Another Emperor by Michael Edwards, available as a free download. Edwards argues that super-achiever capitalists are often ill-equipped to understand the complexity of the problems faced by the developing world or how to deal with them.

Bishop and Green would argue that the philanthrocapitalists are quick studies who can learn on the job. More than that, during the hard times ahead they may be the only option. ‘With everything continuously stretched to the limit’, say Bishop and Green, ‘governments need whatever help they can get. A Bill Gates or a George Soros is going to get a seat at the table in exchange for helping’. But it is up to the rest of us to see that their contributions really do help.