Small Change: Why Business Won't Save the World

by Michael Edwards

A new movement is afoot that promises to save the world by applying the magic of the market to the challenges of social change. But in this hard-hitting, controversial exposé, Michael Edwards shows that business is ill-equipped to attack the causes of poverty, inequality, violence, and discrimination. Achieving fundamental social transformation requires cooperation rather than competition, collective action more than individual effort, and support for long-term, systemic solutions instead of immediate results. With a vested interest in the status quo, business can promise only limited small change. It’s time to turn away from the false promise of the market and reassert the independence of global citizen action.

Genres: Economics, Business, Nonfiction, Politics

144 pages, Paperback

First published January 1, 2010

About the author

Michael Aubrey "Mike" Edwards (born Liverpool, England, 1957) is a writer and activist who has worked in various positions in foundations, think-tanks and international development institutions and who has written widely on civil society, philanthropy and social transformation. He is a Distinguished Senior Fellow at Demos in New York and has worked in senior management positions for Oxfam (as Regional Director for Southern Africa), Voluntary Service Overseas (as Head of Development Education), Save the Children (as Director of Research, Evaluation and Advocacy), the World Bank (as a Senior Civil Society Specialist) and the Ford Foundation (as director of its Governance and Civil Society Program). He also co-founded the Seasons Fund for Social Transformation which made grants to organizations that link their work for social justice with spiritual principles and contemplative practices before it closed in 2010. His writings examine the global role of civil society and its institutions, the purpose and impact of philanthropy and the not-for-profit sector, the role of business in solving social problems, and the links between personal and social transformation.

Source: Wikipedia

Reviews

[Trevor · Rating 5 out of 5]

So, this one and Just Another Emperor? The Myths and Realities of Philanthrocapitalism are basically the same book, except this one is a bit longer. The central concern here is something I've been concerned about for a very long time. That is, the idea of philanthropy - or what Edwards refers to as philanthrocapitalism. You might think that it would be possible to dislike capitalism, but still struggle to really find anything wrong with philanthropy. I mean, if obscenely wealthy people (let's call them men) want to give away bucket loads of their money to good causes so as to sate their consciences, well, win-win, yeah? I mean, there's lots of very rich people (men again) who are completely lacking in consciences. 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 1970s 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. You see, by turning what had been something that had been regulated by social convention (shame) into something regulated by the market (money) parents walking passed a café on the way to pick up their progeny might think - stuff it, another 20 minutes of quality adult time is worth the ten dollars, make mine a latte… (at the supermarket tonight, two parents were waiting at the checkout for their kids to come so they could go home - one of them asked if they thought they might be able to nip away without the kids noticing - I told them to run, don't look back, and I would do what I could to stop the kids following them.)

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. 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? Medicine? Economics?)

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. Do you doubt this? 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. 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. I worked for 8 years as an industrial officer in a trade union and that union covered workers in the social and community services sector. That is, I represented people who worked in many organisations that had been set up by philanthropic types. Personally, I would never work in such an organisation. The levels of exploitation of the staff in those organisations would make your hair curl. I saw more bullying in those organisations than in any other I organised in. I donate to charities - even today mostly union based or ones that assist refugees - but I never give a cent to the Salvation Army, and I encourage others to stop supporting such organisations too. I would nationalise such services. Charity is disgusting, it deadens the soul, it turns humans into supplicants, it turns the giver into an arse. The only solution is to tax the rich and provide welfare to the poor as an entitlement, not a 'reward' for being 'deserving'. You don't have to agree, and if you don't you will be proven right, I suspect - but only in the limited sense that charity will outlive me. But that will only be true if the planet outlives me. That is, charity is symptomatic of the problems the world has that are killing our planet. Charity is the smiling face on the death's mask. The band aid that doesn't even cover the gapping wound.

I'm more radical on this score than Edwards - but I would still encourage you to read his book - either of the two will do.

[Azat Sultanov · Rating 3 out of 5]

Just wanted to confirm what I believed about philanthropy. The title says is all. More often than not business way of thinking is incompatible to social activist way 9f thinking. It's a question of values subordination, what comes first when you make your decision: impact or profit?

[Marcello Eduardo · Rating 4 out of 5]

A "must read" for anyone who wants to start a dialogue about a better future for humanity and about social roles & responsibilities.

I do not agree with 100% of Michael Edwards´statements and conclusions, basically because I think he misses some "real life realities within corporations, companies".

On the other hand,I praise him as an outstanding articulator, experienced executive, hands-on leader, intellectually differentiated and a bright citizen of the world.

And his call for an open and fair dialogue is urgent!


"A new movement is afoot that promises to save the world by applying the magic of the market to the challenges of social change. Its supporters argue that using business principles to solve global problems is far more effective than more traditional approaches. What could be wrong with that? Almost everything, argues former Ford Foundation director Michael Edwards. In this hard-hitting, controversial exposé, he marshals a wealth of evidence to reveal that in reality, a market approach hurts more than it helps. Real change will come when business acts more like civil society, not the other way around."

Milton Friedman, September 13, 1970: "When I hear businessmen speak eloquently about the "social responsibilities of business in a free-enterprise system," I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free en­terprise when they declaim that business is not concerned "merely" with profit but also with promoting desirable "social" ends; that business has a "social conscience" and takes seriously its responsibilities for providing em­ployment, eliminating discrimination, avoid­ing pollution and whatever else may be the catchwords of the contemporary crop of re­formers. In fact they are–or would be if they or anyone else took them seriously–preach­ing pure and unadulterated socialism. Busi­nessmen who talk this way are unwitting pup­pets of the intellectual forces that have been undermining the basis of a free society these past decades. The discussions of the "social responsibili­ties of business" are notable for their analytical looseness and lack of rigor. What does it mean to say that "business" has responsibilities? Only people can have responsibilities. A corporation is an artificial person and in this sense may have artificial responsibilities, but "business" as a whole cannot be said to have responsibilities, even in this vague sense. The first step toward clarity in examining the doctrine of the social responsibility of business is to ask precisely what it implies for whom. Presumably, the individuals who are to be responsible are businessmen, which means in­dividual proprietors or corporate executives. Most of the discussion of social responsibility is directed at corporations, so in what follows I shall mostly neglect the individual proprietors and speak of corporate executives. In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers. That responsi­bility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while con­forming to the basic rules of the society, both those embodied in law and those embodied in ethical custom..."

[Meepspeeps · Rating 3 out of 5]

The author brings up some excellent and obvious points about trying to apply buisness or market metrics to difficult social problems. While he agrees there are certain segments of nonprofit work that could benefit from philanthrocapitalism, he mostly points out that social change and social justice has only happened through history through collective action by individual concerned citizens.

[Jen · Rating 4 out of 5]

Research-based, thoughtful analysis of the ways for-profit businesses currently engage in philanthropy, and a solid case for partnerships between for-profit and nonprofit entities that play to the strengths of each.

[Deborah · Rating 4 out of 5]

this is essentially the same book as Just Another Emperor