Will Market-Based Models Save the World?

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Permalink Reply by Kevin Parcell on January 26, 2010 at 4:05pm

The thing about these debates is that they treat "the market" like a monotheistic religion, and then they argue about its nature: can it be changed, and if so then how - but rarely do they recognize that instead of either "this market" or "that market" or "no market", we could instead have "the markets". Or, in other words, it might be that arriving at the correct solution requires beginning with a better resolution - perhaps, for example, "Markets-based models will save the world". I blogged about this metamarketplace alternative on my page here, and it's the basis of the business model I'm developing for my own enterprise: using two currencies - the one we all know, the other a new kind that is strictly local and stronger than the first locally so that it empowers local regulation/accountability/sustainability. Local sustainability everywhere is global sustainability, and everything else is neither.

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Permalink Reply by Dirk S on January 29, 2010 at 1:41pm

I think it needs to be a little bit of both.

I personally know a story, where a foreign aid organization distributed a great low cost technology within Tanzania free to farmers to help them grow there business. However, the producer (an NGO) never got the information, who the customers of their technology are. Thats a problem, as it happened, that the technology needed a bit explanation. Otherwise if applied wrong, it wouldn't work and farmers would spread the word that its not useful. Big problem for the NGO.

That was a problem with accountability. The foreign aid just counted distributed technology, but not the results from it. That was not sustainable.

On the other hand, only doing market-based help is too strict. In business it can be a decision to cut services and cost, but still improve profitability. The business itself is than more profitable, but the service delivered is a lot less. I also guess, that strictly market-based models would be afraid of too much risk...

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Permalink Reply by Marc McCabe on February 7, 2010 at 3:34pm

Well, it seems that maybe to me it's question of horses for courses. In that, market-based models have been used to good effect in places which can support them.

In Haiti though for example due to poor infrastructure (aside from mobile communication which is relatively good thanks to Digicel), exporting to international markets is a challenge and local markets often can't sustain market-based initiatives, especially in smaller isolated communities.

However it would seem to me, and I'm perhaps not the most qualified to make this statement, but a country like India, with much higher levels of education, infrastructure and, even perhaps, a more entrepreneurial culture would allow these initiatives to thrive.

I certainly agree that accountability and a more comprehensive process for encouraging adoption of initiatives improve chances of success though. As Edwards mentions as well, co-operative solutions which tie into how well a community can work together are much more effective as they spread both the responsibility and success of the initiative. For example, we have seen that community storage houses to store crop off-season are have worked very well both in terms of bringing farmers together, but also helping them get a more robust understanding of the market place. However, I always wonder, and this is perhaps something someone else can answer, but are you distorting the market place of the greater region through aiding one group of communities over another? Does the initiative add value and increased trade to a market, or does it tilt the balance?

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Permalink Reply by Mahesh Kankal on February 16, 2010 at 12:27am

Dear Rob,

Thanks for bringing this really insighful debate on this forum. I am putting my own take on this.

These two stand points will always be like this. One need to understand what it means, why they differ & more importantly how these two stand points can coexist within oneself.
What I mean is most governments (democracy or autocracy) works on behalf of powerful groups (majority, force), within a country. Priavte sector also aligns itself with counry governments to large extent as they can't do business without government approvals. So this makes both these organisations blind, limited, ineffective in dealing with enequalities, discrimination existing or growing in the country. Though they talk about "inclusive growth". Factors like limited resources, skill, shocks add further complexities. So in principle all governments, private sector organization are trying to serve people/customers but they fail to cover "few groups/minorities" similarly all social movements want equality but fail to effectively convince the majority, powerfull, rich. They make some dent on the mindsets & policies, get some donations, grants but that not enough.

As social enterprenuer, one needs to understand these two stand points & then walk "the middle path" refraining from taking sides but maintain "balance" . I increasing find the inclination of social enterprenurers focussing on Bottom of Pyramid but the social enterprenurers need to aspire for "rotating" pyramid so that no one remains at bottom for generations.


Thanks
Mahesh

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Permalink Reply by lakshmi kumari on February 23, 2010 at 10:21am

Dear Rob good to read ur article and I think it may be few market based approaches which really solve the problems of poor ,and I think there are more contravercies in this area like how the rich can save the poor ?Its the business which work for profit than for non-profit .Hence its a very long discussion and hope to get the feasible solution of how really market based approaches are helpful to the poor
thank u
lakshmi

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