The philanthropic state: market–state hybrids in the philanthrocapitalist turn

Abstract

Over the past decade a new form of philanthropy has emerged, termed ‘philanthrocapitalism’. Champions of philanthrocapitalism suggest that private giving can fill the void left by diminished government spending on social and development programmes. Critics suggest that philanthropy is no substitute for strong governmental support for social welfare. Both arguments perpetuate a dichotomy between the public and the private, implying that philanthrocapitalism operates in a vacuum largely divorced from governmental interventions. In this article I challenge that assumption, exploring how new philanthropic initiatives have compelled increased financial support from governments toward the private sector. Drawing on three cases – advanced market commitments (amcs) in drug development; impact investing; and direct philanthropic and governmental grants to corporate entities – I illustrate the ways that governments remain one of the most powerful – if not the most powerful – philanthropic actors in the philanthrocapitalist turn.

Keywords:

• philanthrocapitalism
• public–private partnerships
• financialisation
• risk–reward nexus
• advanced market commitments
• global health

Acknowledgements

This paper benefited from comments from Troy Cochrane, William Davies and participants at the 2012 annual British International Studies Association (bisa) conference in Edinburgh. Thanks also for helpful comments from Lisa Ann Richey and Stefano Ponte.

Notes

1. The incident is reported in Bank, Breaking Windows.

2. “Midlife Crisis,” quoted in Perlroth and Noer, “World’s Most Powerful People.” On the growing influence of the Gates Foundation on policy setting, see Stuckler et al., “Global Health Philanthropy.”

3. See Richey and Ponte, Brand Aid.

4. Bishop and Green, Philanthrocapitalism.

5. On the role of hedge funds in the new philanthropic movement, see Jenkins, “Who’s Afraid of Philanthrocapitalism?” For a discussion of increased rhetoric surrounding market-based, ‘innovative’ approaches to global health, see Harman, “Innovation.”

6. Katz, “What does it Mean to Say that Philanthropy is Effective?”

7. Guilhot, “Reforming the World,” 451. See also Bornstein, “The Impulse of Philanthropy”; Zunz, Philanthropy in America; Villadsen, “The Emergence of ‘Neo-philanthropy’”; Edwards, Small Change; and McGoey, “Philanthrocapitalism and its Critics.”

8. Interview with author, January 2012.

9. Crutchfield et al., Do More than Give. See also Moran, Private Foundations and Development Partnerships.

10. Shah, “Foreign Aid for Development Assistance.”

11. Youde, “The Rockefeller and Gates Foundations.”

12. Institute for Health Metrics and Evaluation, Financing Global Health 2012. See also McCoy et al., “The Bill and Melinda Gates Foundation.”

13. Garrett, “Money or Die.”

14. See http://fletcher.tufts.edu/CEME/publications/~/media/Fletcher/Microsites/CEME/newpdfs/SafaricomFinal112010.ashx.

15. Koh et al., “From Blueprint to Scale,” 16.

16. Whitehead, “Africa,” fourth para.

17. On public–private partnerships, see Buse and Harmer, “Power to the Partners?” and Buse and Walt, Part I and Part II, “Global Public–Private Partnerships.” On changing forms of reason and accountability generated through the emergence of novel state–market–ngo relationships, see Krause, The Good Project; and Watkins et al., “Outsourcing Social Transformation.”

18. Collins, “Africa’s First Bitcoin Wallet,” fourth para.

19. Lazonick and Mazzucato, “The Risk–Reward Nexus,” 1095. Emphasis in the original.

20. Mazzucato, “The Entrepreneurial State.”

21. Lazonick and Mazzucato, “The Risk–Reward Nexus,” 1099.

22. See Milberg, “Shifting Sources and Uses of Profit”; and Palley, “Financialization,” 3.

23. Krippner, “The Financialization of the American Economy,” 182.

24. Lazonick and Mazzucato, “The Risk–Reward Nexus,” 1097.

25. McCambridge, “Social Entrepreneurship,” fifth para.

26. Nicholls, “The Institutionalization of Social Investment.”

27. Koh et al., “From Blueprint to Scale,” 10.

28. Emerson and Bugg-Levine’s comment is available in an online interview at http://www.good.is/post/social-impact-investing-it-s-not-wall-street-as-usual.

29. See Banerjee et al., The Miracle of Microfinance? and Sinclair, Confessions of a Microfinance Heretic.

30. Stuckler et al., “Global Health Philanthropy.”

31. Trouiller et al., “Drug Development”; and McGoey et al., “Global Health Complex.”

32. On a research and development treaty and prize funds, see Love, “Assessment of Additional Global Partnerships.” On a version of prize funds diverging from Love’s earlier proposal, see Hollis, “The Health Impact Fund.” On patent pools, see Lexchin, “One Step Forward, One Step Sideways?” On priority vouchers, see Ridley et al., “Developing Drugs for Developing Countries.”

33. Kremer and Glennerster, Strong Medicine.

34. Guari and Khaleghian, “Immunization in Developing Countries.”

35. See Usher, 2009.

36. Scudellari, “Are Advance Market Committments for Drugs a Real Advance?”

37. See http://www.gavialliance.org/media_centre/press_releases/nicaragua_pneumococcal.php.

38. Usher, “Dispute over Pneumococcal Vaccine.”

39. Light, “Making Practice Markets for Vaccines”; and Light and Warburton,

“Demythologizing the High Costs of Pharmaceutical Research.”

40. Farlow, “Over the Rainbow,” 2011.

41. Usher, “Dispute over Pneumococcal Vaccine.”

42. Garrett, “Money or Die.”

43. Birn and Lexchin, “Beyond Patents.”

44. Bishop and Green, Philathrocapitalism, 3. Author's emphasis.

45. Skoll, “Preface,” vi.

46. Martin and Osberg, “Social Entrepreneurship,” 31.

47. Brenner, “The Economics of Global Turbulence,” 31. See also Palmås, “Re-assessing Schumpeterian Assumptions”; and Schumpeter, Capitalism, Socialism and Democracy, particularly 80–88.

48. Schumpeter, Capitalism, Socialism and Democracy, 88.