Social Capitalism vs. Charity

How to end poverty? The question is getting more serious attention today than I’ve seen in several years. Some contend, of course, that the bible says it’s an impossibility. I don’t read the bible that way. The point of Jesus’ often-cited statement (Matt 26:11) was that he was soon to be gone and his disciples needed to hear him and get prepared. It was less about the poor than about the current demands time was pressing upon them.

Another important part of the conversation is the value of benevolent giving to support efforts to eradicate poverty on the one hand, and the use of social capitalism to create economic sustainability on the other. Mohammad Yunus is the most well-known and successful social entrepreneur. His Grameen Bank has lifted hundreds from poverty. This article evens points out that microfinance might be a viable investment.

A few months ago I heard Frederick Smith, CEO of FedEx, make the claim that corporate capitalism is doing the same, citing India as the example.

For me, the key is building economic self-sufficiency that results in people gaining the power and capability to change their communities for the better. This kind of development is about more than profit for the sake of profit and more than jobs for the sake of creating more individual consumers. It’s about profit for community change.

Yunus advocates this. Many others don’t. For some, it’s a by-product of the capitalist model, not the rationale for it. That’s where the social entrepreneurship discussion begins to head down different pathways. Profit for the sake of profit, with side benefits of economic improvement; or profit for the sake of community improvement and individual economic benefit.

Yunus works with small groups in their communities. He develops viable community organizations from the ground up. The corporate model operates on a totally different scale and relies on trickle down benefits. Yunus tackles the challenge of working with those who are poor, unskilled and illiterate. Depending on the kind of business and the workforce it needs, the corporate model will develop skills, even among illiterate workers, or rely upon highly educated workers underutilized in the society. But social benefits flow downward from higher paying jobs and more money in circulation, not from helping the poor find their own voice.

The trickle down theory of economic development that held sway during the Reagan years has not notably improved the lives of the millions living in poverty. The claim that globalization has done so is being disputed as often as it is being revered today.

Social entrepreneurs are quick to condemn charity because, they say, it creates dependency and does not result in change. In fact, it undermines real income-generating sustainability, some say.

Those skeptical of entrepreneurial ventures see it as yet another form of economic exploitation encouraging consumption but weak on justice. I recall saying when I came to my present position that non-profits were going to have to become more entrepreneurial. I was cautioned about using the word “entrepreneurial.” It did not fit the culture of the organization at that time.

This has changed. We are in a more entrepreneurial environment, even if there are those in the non-profit community who don’t like it or agree with it. The challenge to traditional fundraising and benevolent giving will continue to loom large in this environment, and so too, will the the methodology most likely to create social change.

Community organizer Saul Alinsky laid the foundation for social change theory and its implementation that sustained the radical change movements of the Sixties. He gave us the lens through which we have viewed social change the past thirty years. He believed grassroots organizing was necessary to achieve social justice. The system would not change enough by nudging and tweaking. Fundamental change required radical intervention often through confrontation.

We are negotiating yet another turning point in the debate about social change theory. Social entrepreneurship and radical social change theory have parted ways. It’s a legitimate question to ask if radical social change can result from capitalist models. Yunus says it can. His experience is that people can move from poverty to economic self-sufficiency with a small loan and skills training.

But the broader question is whether this change can lead to empowerment. Can upward-moving poor folks gain the power to transform their communities? Can they get a voice to influence decisions affecting their communities, build schools, clinics, get basic services and pass laws that protect the weak, poor and vulnerable? Yunus says yes.

Economic well-being is not empowerment and it does not result in community empowerment. As well-paying jobs in the U.S. migrate off-shore or disappear, the ability of those who had enjoyed economic well-being does not translate into the ability to forestall the loss of jobs or community decline.

Charity is built upon an ethical system that at the very least informs us that life is about more than material well-bing. It is about quality and dignity and self-determination. For all its weaknesses as a methodology of change, charity is a reminder that human dignity is intrinsic. It transcends any social order or economic method. It is rooted in the concept that we are all created in the image of God, it isn’t conferred by any government and should not be violated by government.

And it reminds us that justice occurs in a nurturing community in which all are valued and each is encouraged to achieve his or her fullest potential. The conversation should be about how to create the most nurturing and effective community. Absent these values, business at best is benign and at worst very harmful as Human Rights Watch reports. The transition period we are in is about much more than the theory of social change. It’s about how people achieve justice.

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