The rise of global inequality and philanthrocapitalism

Is there a nexus between global inequality and philantrocapitalism?

According to a new Oxfam report the richest 1% (62 people in the world, 53 of whom are men) owns as much wealth as the poorest half of the global population (3.6 billion). The report also points out that ‘since the turn of the century, the poorest half of the world’s population has received just 1% of the total increase in global wealth’. This is quite telling, considering that the recent adoption of the Sustainable Development Goals has marked the renewed global commitment to poverty reduction proclaimed with the Millennium Development Goals.

Accurate or not, these figures clearly show that we need more redistribution and this requires us to question some of the ideologies, politics and practices that have brought us to this point.

When last December Mark Zuckerberg and Priscilla Chan announced in an open letter/post to their new-born daughter that they would be donating 99% of their Facebook shares valued about $45bn to charity, this was unsurprisingly acclaimed as an act of exceptional generosity. And it was difficult not to, considering that the donation was motivated by their hopes ‘to advance human potential and promote equality to make the world a better place for their daughter’. More suspicious and critical views pointed out that the $45bn wasn’t a proper gift at all and that the Chan-Zuckerberg Initiative set up to achieve the philanthropic aims is a limited liability company (LLC). This means that they will be allowed to invest in for-profit companies, which they believe are the most effective means of driving the innovation that will change the world. This can be considered a great example of philanthrocapitalism.

The term philanthrocapitalism was coined in 2006 in The Economist and later developed by Matthew Bishop (business editor of The Economist) and Michael Green (a former policy maker at the UK’s DFID) in Philantrocapitalism: How the Rich Can Save the World. According to Linsey McGoey’s book No Such Thing as a Free Gift, to apply a business method to philanthropy was initially John D. Rockefeller’s idea, but what is new about philanthrocapitalism is the unprecedented scale of philanthropic spending, as wealth concentration is reaching unprecedented levels: 5000 more philanthropic foundations are set up each year and new philanthropic trusts.

Philanthrocapitalism is based on the idea that poverty, inequality and other world problems cannot be solved only through charity or political agitation, but they require business, which can provide money, management and innovation. A prominent exponent of philanthrocapitalism is the Bill and Melinda Gates Foundation, which in 2014 has provided almost 4 billion dollars in grants.

Philanthrocapitalist projects are characterised by a strong focus on entrepreneurship and market and financial inclusion, considered as the best tools to solve persistent social problems, from diseases to illiteracy and gender inequality, while creating profits. In this way, philanthrocapitalist foundations offer incentives to corporations to develop new products and services for the poor, creating new powerful dynamics within capitalism.

There are few questions to be asked in order to reflect on the link between the rise of inequality and philanthrocapitalism. The first is about capitalism itself. Bill Gates has argued that ‘We need new ways to bring more people into the system, capitalism, that has done so much good in the world’. But is this the right way to go? What about profit-maximisation practices, labour exploitation, and the forms of dispossession and inequality developed under capitalism?

Relevant to this debate are also the issues of accountability and collective responsibility. Are philanthrocapitalists accountable to the West or to the countries they aim to help? In any case, large chunks of philanthropic wealth are not taxed or they enjoy tax benefits, limiting the capacity of governments to provide social services to their citizens.

Another important point is that philanthrocapitalists like Gates and Zuckerman, who made a fortune in the tech industry, focus on the vital importance of providing the poor with access to technology and in particular ICTs. They sustain that technology would allow the poor to lift themselves out of poverty through communication, entrepreneurship and access to various goods and services. But relying on consumer-based technology to access basic resources such as clean water and food is not always possible and convenient for those living with less than $3 per day. Not to mention the fact that Facebook initiatives like to provide ‘free internet to the developing world’ often limit people’s freedom of choice, as the recent Indian example has demonstrated.

And if we want to advance the discourse on solidarity we can arguably say that the Facebook shares donated by Zuckerberg are the fruits of a combination of time, sociality and ideas that derive directly from the people using the social network everyday. So maybe a part of that money should be common good anyway.

Finally, it should be said that philanthrocapitalist projects are framed around Western ideas of family, gender and wellbeing: as Zuckerberg says in the letter to his daughter ‘We must participate in policy and advocacy to shape debates’. But who’s we? Does “we” limit the possibility to achieve a balance between the provision of equality and the recognition of difference, which is a necessary condition for redistribution?

As I have argued in a previous article, if we haven’t succeeded in focusing on the welfare of the poor, we would probably obtain more results by targeting the wealth of the rich and aiming at reducing extreme wealth.

People might agree or disagree with these reflections, but it is very important to adopt measures that seriously focus on redistribution and not giving up the fight. After all we (the remaining 99%) too want to leave a much better world for the next generation.



Human RightsOpinion
Serena Natile

Serena is a Lecturer in Socio-Legal Studies at Brunel University London, where she teaches Public Law in Context, International Law, Gender and Human Rights and Research Methods. She has worked on a variety of research projects on social and economic inclusion, digital finance, gender rights, law & development and digital humanitarianism. She is currently completing a monograph based on the PhD thesis and titled 'Mobile Money, Gendered Walls: The Exclusionary Politics of Digital Financial Inclusion'. Besides academia, Serena has worked for the Permanent Representation of Italy to the EU and for the UNDP in Brussels, served as a pro-bono lawyer and collaborated with gender rights organisations in Italy, Kenya, Ghana, Uganda and Brazil.
    6 Comments on this post.
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    29 January 2016 at 4:19 am
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    Serena Natile
    29 January 2016 at 8:21 am
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    Thanks for the suggestion. The article doesn’t change my view that we need to ask more questions and adopt different approaches to the issue. The author says “poor people are not so much exploited by globalization and international capital markets as they are excluded from it”. Well, I think that inclusion without redistribution doesn’t make a real change for people living at the lower end of the global income distribution. For instance, providing access to financial services through microfinance can become a debt trap as widely documented and creating new markets/products for the poor that would theoretically achieve social goals for them while creating profits for corporations (e.g. BoP approach, shared values) usually does not provide people with the basic resources and social infrastructures they desperately need or it does this at conditions which are usually not convening or fair. I think that it is important to think more about these issues…

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    2 February 2016 at 2:43 pm
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    Thanks for ones marvelous posting! I seriously enjoyed reading
    it, you could be a great author. I will be sure to bookmark your blog and definitely will come back sometime soon. I want to encourage you
    continue your great posts, have a nice evening!

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    Sukhdev Singh
    4 February 2016 at 5:26 pm
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    The article is informative. But the logic of what are called philanthrocapitalists is quite simple: help while being paid for it in terms of profit. What is wrong in this? They are capitalists after all! Anyway, I was recently reading on neoliberalism wherein reference to Marx and Engels mentioned that they did see the positive dimension to capitalism. So could philanthrocapitalism be it? Your article might doubt that. Many others and might also doubt that. Nevertheless, something might happen. Yet redistribution of wealth is not possible. No one has seen people of the upper section come down, but no one can deny poors turning rich.

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    29 March 2016 at 11:54 am
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