I am in the midst of reading a very interesting book, Winners Take All: The Elite Charade of Changing the World, by Anand Giridharadas. The premise of the book is that market-based solutions to social problems (aka doing well by doing good) have been vastly oversold and are displacing meaningful dialog about the need for regulation, government programs, and traditional social activism. The idea that capitalists are best-suited to solving the world’s problems allows the economic winners in modern society to feel entirely vindicated and even virtuous. When the economic elite commandeer discussions of social ills, however, they start from the premise that their authority is a given and that their socioeconomic status is legitimately obtained. This, in turn, limits the scope of their solutions to those which legitimize and reinforce their power.
Giridharadas discusses an example of a social entrepreneurship company, Even.com, that assists workers in smoothing out their incomes through the month. The tool, when implemented by employers, allows workers access to some of their earnings prior to getting their latest paycheck, as well as helping with financial planning. The company’s premise is to assist the large number of Americans who live paycheck-to-paycheck and who have no financial safety net in the event of an unexpected expense. Allowing these people access to a new source of funds, they may be able to avoid getting sucked into payday lending or other sub-optimal solutions. While this sounds good, Giridharadas suggests that discussion of the social benefits from this type of service detracts from addressing the deeper issue of why people are living paycheck-to-paycheck in the first place. The bio of one of Even.com’s founders states, for example, “Quinten Farmer dropped out of Columbia University to found Even, the financial health platform that addresses the challenges of the 78% of full-time workers in America living paycheck-to-paycheck.” One might argue, however, that the real challenge for the median American household is to earn more and to have better benefits. Smoothing out an inadequate paycheck is only so useful.
Giridharadas argues that belief in the superiority of market-based solutions is at the heart of neoliberalism and that the backlash against this world view on the left (Bernie Sanders) and on the right (Donald Trump) demonstrates popular disenchantment with business as usual.
As in most situations, the best solution is the middle way. Market-based solutions are no panacea, but they can play a role. While the claims of social entrepreneurship often sound grandiose, the world is better off with these types of enterprises. That said, government and social activism have a proven historical track record of improving things for vast numbers of people, from the New Deal, the labor movement, to the creation of a huge and successful system of public universities. The claims for market-based solutions to social problems have not been demonstrated at scale.