Today the free market, capitalist system is under real threat. A proven economic mechanism for creating wealth is now increasingly perceived as failing and unfair. Only 17 years into the 21st Century the free market along with other established social institutions and processes appear poorly aligned with the needs of everyday people. However, unlike a growing number of millennials who are demanding change, throwing the ‘baby out with the bath water’ is not the way to achieve it.
Demanding change at any cost is a bad thing that needs be avoided. Similarly, ignoring the widespread appetite for change in the hope that it will simply go away and the status quo will be maintained is equally bad and ultimately doomed to failure.
It’s time that those who benefit most from the free market recognise that the free market only exists if the majority prospers as a result of the economic system. Following the financial crash in 2008, this reality has never been under greater scrutiny as inequality grows and living standards come under increasing pressure.
Many far left politicians propose replacing the whole free market, capitalist system with a government controlled, centrally operated economy. However, unlike the free market, which is proven to work, this approach always leads to catastrophe. Simply look at Venezuela. A preferable alternative would be radical change led by the free market that better aligns it with today’s social imperatives and moral tone.
Taking Moral Responsibility
Wealth distribution is often viewed negatively, which is understandable when it’s based on robbing ‘Peter to pay Paul.’ This has never worked and it never will. It undermines ambition and innovation, and ultimately erodes wealth, reducing the size of the economic pie for everyone. Modern philanthropy, on the other hand, could be the acceptable form of wealth distribution for the 21st Century; the radical free market response to today’s challenges.
In Victorian times, the wealthy used philanthropy very successfully to directly address some of their biggest social challenges, and although the world in which we now live is very different, similarities exist that point towards a greater role for modern philanthropy.
Early Victorian Britain was undergoing major upheaval as the industrial revolution progressed. As society was changing living standards were falling. According to the Cambridge Urban History of Britain, the 1830s and 1840s was probably the ‘worst ever decades for life expectancy since the Black Death’. In contrast to the suffering of the poor, this was a period of rapidly expanding wealth from industry and commerce. As a result, government policy was struggling to respond to new social problems – Ring any bells?
As in Victorian times, modern philanthropy could be used to help government directly address some of today’s biggest social challenges like housing, healthcare and education, whilst protecting and nourishing the free market.
A Win-Win Approach
Clearly there are many companies that contribute to standalone social responsibility projects, which do some great work. But most of these positive initiatives go virtually unknown by the vast majority of the public. As such, their impact is restricted and they do not encourage a broad philanthropic response. One of the biggest challenges, therefore, for modern philanthropy is to ensure that it is done in a high profile way that provides a win-win situation for those contributing and those receiving. In this way, free market organisations will be more willing to share their wealth and to be more altruistic? The capitalist, free market would be seen to be responding to people’s problems and seen to care.
Big Challenges Require Big Responses
The ambition of the Gates Foundation is not reduced by the size of the task; the challenge doesn’t get much bigger than curing the world of Malaria. Successful, modern philanthropy needs to be equally ambitious. Working together the UK free market could raise significant funds that could be used to finance positive and proactive, large-scale interventions – venture philanthropy.
An ambitious, proactive modern philanthropic response to the housing crisis is not to simply fund the building of a few more homes. It is actually to establish an infrastructure that can directly and meaningfully impact this challenge. Fund the establishment of factories that can build very large numbers of high-quality, pre-fabricated homes. Then work with local authorities to identify appropriate sites for development, whilst providing financial support for those who want to live in them. This would represent a radical, end-to-end home building echo system funded by the capitalist, free market.
Standing back and doing nothing could be very problematical for the free market. Modern philanthropy could be the free market’s visible and tangible recognition of the importance of society and its commitment to help address some of its bigger challenges. ‘We’re all in it together’ would actually be true.
Simon Lofthouse is a freelance marketing professional with over 25 years’ senior management experience. He’s passionate about the free market and its ability to transform society and improve lives.