What is philanthrocapitalism?
“ Philanthrocapitalism is a term that was coined a few years ago in an article in the Economist magazine and was developed most comprehensively in a book entitled “Philanthrocapitalism: how the rich can save the world,” co-written by Matthew Bishop and Michael Green. The concept is that philanthropic organisations are increasingly harnessing the power of the market in order to make philanthropy more efficient and achieve better results. There is actually a far larger heritage behind the idea than many proponents seem to realize. Notably, Rockefeller and Carnegie, some of the leading philanthropists of the early twentieth century, were explicit in the aim to apply some of the business strategies of their own profit-making organisations to their philanthropic activities. That being said, one aspect of philanthrocapitalism that is novel is the sheer scale of funding available in this sector today. For example, Warren Buffett, a leading philanthropist, donated approximately $30 billion (US) worth of shares in Berkshire Hathaway to the Gates foundation in 2006. That gift was larger, in 2006 dollars, than the combined amount that Rockefeller and Carnegie gave away in their lifetime. ”
What makes the Bill and Melinda Gates Foundation different from other philanthropic organisations?
“ The Gates Foundation might object to being classified as a philanthrocapitalist organisation, because they have never assumed or advocated that label. However, Bishop and Green perceive them as the key philanthrocapitalist foundation today, partly because the Gates Foundation has advocated applying Microsoft strategies to its philanthropic activities. Another reason why the Gates Foundation is often upheld as a key philanthrocapitalist organisation is its size. It is the largest private philanthropic player in global health. Its spending on global health exceeds the combined assessed contributions to the World Health Organisation (WHO) by member states. The foundation’s annual grants disbursement is almost as large as the overall operating budget of the WHO. ”
Could you provide a concrete example of the way the Gates Foundation reshapes the field of health in the USA and then, more globally?
” When it comes to the USA, the Gates Foundation invests the bulk of its money on trying to improve public education. However, there are commonalities between how the Foundation tries to reshape education in the US, and how it tries to reshape global health at the international level. In both cases, the foundation tries to improve the evidence we have for what measures work most effectively in improving outcomes in education and in health. In the case of US education, for example, they use college readiness, or the rate of graduating high school students that go on to postsecondary education, as indicators of improved results. It also places a strong emphasis on how we can best evaluate teachers, and has strongly supported initiatives such as trying to link teachers’ remuneration levels to the grades that their students receive. This is criticized because it is very hard to know whether a teacher’s performance, or an external factor such as the socio-demographic status of the student, has affected test results. ”
” More globally, the Gates Foundation is seen as having made a quite positive impact on global health through its contribution to the Global Alliance for Vaccines and Immunisation (GAVI). The GAVI Alliance receives much of its funding from the Gates Foundation and has played a strong role in improving vaccination rates globally since its inception. The Gates Foundation has also invested in the Institute for Health Metrics and Evaluation, which tries to determine the impact of different global health policies. Its investment in the latter initiative points to some concerns with the Gates Foundation’s tendency to assume that unless an initiative visibly reflects results, it’s not worth putting further investment towards. According to some of its detractors, the Gates Foundation has an almost naïve or simplistic idea of the power of numbers in determining the value of an intervention. Numbers are important. But as any global health scholar will tell you, data is susceptible to “data torture,” which, crudely put, is the idea that if you torture your numbers long enough, they will tell you whatever you want to hear. That concept was coined by an economist and there is really no sphere of social science where recognition of the limits of numbers is not evident. Yet, many people feel that the Gates Foundation’s management may not be aware of those limitations. ”
Do foundations like the Gates Foundation influence health policies?
“ It is absolutely beyond any question that the Gates Foundation plays an incredibly strong role in shaping and directing policies at the highest echelons of international decision-making in the sphere of global health. They are the second largest contributor to the World Health Organisation after the United States. Although technically the WHO needs to be responsive, in a democratic sense, to the needs of its member states regardless of monetary contributions, people have observed that in practice, it has a tendency not to irritate people that are contributing financially to its survival. So in the past, we have seen a tendency to align some of its decision-making with US interests, and there is evidence today that some of its policies have been affected by direct suggestions made by the Gates Foundation. ”
What are the consequences of the Gates Foundation’s initiatives in the field of health?
“ Consequences are hard to determine. Just as policy-makers and philanthropic institutions face difficulties in acquiring robust evidence of the positive impact of their own initiatives, it is very hard to determine whether or not on the whole, having a player like the Gates Foundation taking a strong role in global health is more negative than positive. On the one hand, we see a very welcome injection of funding into an area that has been starved of research and public support for years. We also know that states have been steadily rescinding some of their commitments to development aid in recent years. What the United States spends as a proportion of its gross national income on aid today is not nearly as much as what it spent in the 1950s. ”
“ Do we then support and salute the growing role of philanthropic actors in this space? The answer, for a number of reasons, may be no. We need to start looking at why States are retracting their commitments to aid spending at the international level in today’s climate. One of the reasons stems from very complex but observable changes that have happened in the space of global economic governance, and particularly in the space of increased financialisation. We observe very high rates of inequality at the national and international level. We have seen an incredible enrichment of the wealthiest individuals on a global level, and there is a direct correlation between increased wealth accumulation, regressive tax measures, and funding towards philanthropic activities. Philanthropy may be growing, but only in the context of rampant inequality. Many people suggest that we need to reconsider how we can increase political measures to help ensure more distribution of wealth at the level of taxation and at the level of increasing government resources for spending on health, rather than assume that the needs of various marginalised populations can be met through hoping that private philanthropic players will spend their fortunes in a socially just way. ”
Do you think that philanthropic organisations are in a better position to foster health innovations than governments or other social players are?
“ No. I think it is a misconception that it is typically the private sector or private philanthropists who are more innovative than governments. Many market actors are actually profoundly risk-averse, because they have bottom-lines to meet and shareholders to please. There has been a small but growing literature in economics focused on the question of who is actually more innovative: the public or private sector. In the 1950s, the economist J.K. Galbraith wrote extensively of the tendency for corporate actors to be state-dependent, almost parasitic, for tax relief and funding support, rather than the renegade innovators they are perceived to be. Today, economists such as Mariana Mazzucato have documented the ways that many financial and scientific innovations are contingent on large financial commitments from governments to private actors in order for seemingly entrepreneurial activities to prosper. For instance, we do not know how effective microfinance initiatives have been: the evidence is mixed. But the key thing about microfinance – something that is not often written about – is that various micro-lenders received huge government support which helped to attract private sector interest to this area, long before there was any indication that microfinance could provide a return that made it attractive enough for private-sector players to get involved. So, I do not think that philanthropists, by their sheer business acumen, are better placed to ameliorate health and inequalities: a) because there is not strong evidence that private players are, on balance, more innovative than public actors, and b) because there is strong evidence that market actors – because of their need to invest in profit-making activities – have tended to increase already existent health inequalities at the global level. ”
Bishop, M. and Green, M. (2008). Philanthrocapitalism: how the rich can save the world. London, Bloomsbury Press.
Mazzucato, M. (2011). The Entrepreneurial State. Demos, London.
McGoey, L. (2012). Philanthrocapitalism and its Critics. Poetics 40 (2): 185-199.