Bill Gates seems to have expressed the sentiment the best in his speech at Davos when he discussed the need for something he called creative capitalism. He argued for "an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities." And this sentiment came from one of the most successful capitalists of all time.
So it's no wonder that many have taken an interest in this topic, whatever name one might apply to it. From October 13 to 15, representatives from organizations as varied as Citigroup, Kiva, and the Skoll Foundation will be gathering in San Francisco at the Social Capital Markets conference. With the term social capital, the organizers have something in mind rather different from the more typical definition of the norms that helps societies function. Rather, the conference will focus on ways that financial capital can be directed to social purposes.
The organizers of the conference predict "a massive sea-change" in the way businesses work. And perhaps something is afoot. I see no a priori reason why investors can't direct their money to companies that may earn a less-than-maximum profit in exchange for some measurable social benefit. However, if you take a visit to the Creative Capitalism website, a blog initiated because of Bill Gates's speech, you'll see some very hotly contested arguments about the wisdom of trying to rejig the goals of corporations.
I'd like to focus on a slightly different issue, one that seems to be absent from the Creative Capitalism discussion but that has a direct bearing on the goings-on of the Social Capital Markets conference. It is not just the modus operandi of the businesses we should be concerned about; the way that traditional philanthropic organizations operate are also worthy of attention. The hope to wed market-efficiency with social purposes is not new; philanthropy has come under greater and greater pressure to perform more efficiently and to adopt business-like managerial styles. The outcome of such endeavors, I would argue, has so far been mixed. The lessons learned from these organizations might be useful to keep in mind as enthused entrepreneurs, venture capitalists, and traditional philanthropists all meet up in October.
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