Can philanthrocapitalism solve the world’s problems?

Last week I attended a discussion called Philanthrocapitalism: Savior or Emperor? at the Hudson Institute. This lively debate featured two thought leaders with contradictory points of view:
Matthew Bishop of the Economist, and author of Philanthrocapitalism: How the Rich Can Save the World and Michael Edwards, author of Just Another Emperor? The Myths and Realities of Philanthrocapitalism. An impartial perspective was provided by Dennis Whittle, CEO of Global Giving.

First, what is philanthrocapitalism? Since this word was basically created by Matthew Bishop and Michael Green, lets see how they define it:
“First, a micro-level definition: it is a new way of doing philanthropy, which mirrors the way that business is done in the for-profit capitalist world. Second, philanthrocapitalism describes at the macro level the ways in which capitalism itself tends to be philanthropic, working for the good of mankind.”

During the debate, I thought each side had valid points and that the argument is not black & white. The ultimate approaches to solving poverty will involve a combination of capitalism, philanthropy, government, and civil society. I still think there is tremendous power in figuring out how capitalism can have a positive impact on poverty, and discussing philanthrocapitalism facilitates that debate.

Here are some of the key points from the debate that stuck with me:
– Matthew Bishop: There has been a historical pattern where a period of great wealth creation is followed by wealthy using their wealth to do good. This recently gained high visibility with Bill Gates and Warren Buffett giving away their fortunes through the Gates Foundation. There is tremendous opportunity for the wealthy to make a social impact by using their wealth and business expertise to solve problems.

– Michael Edwards: There is no evidence that capitalism can fix philanthropy. Real changes to poverty should be driven by government and civil society. Wealthy capitalists would have a bigger impact if they focused on fixing their business practices versus building and giving away wealth.

– Dennis Whittle: Citizen philanthropy is the wave of the future. Some of the key principles at Global Giving include 1) access and transparency, 2) harnessing market forces around innovation, 3) stimulate learning, 4) there is no single right answer, and 5) donors energy and interest really matter.

What do you think about philanthrocapitalism? Will it help society, or will it actually lead to more inequality by promoting all the good you can do if you are rich?