Recognizing the limits of markets

Hats off to Kevin Jones for his comment on "the things markets will not solve." Though he focuses his comments on malaria, he points out that there are certain social ills that -while horrible- don't effect the balance of power or money in such a way that the market is moved to solve them. As Kevin put it:

"...the real tragedy is that those deaths don't disturb the economy, the social fabric of society or any other lever that might cause a change. ... The market has clear and persistent failures. Malaria is one of them. Donations, grants and more awareness are needed and will continue to be needed. The market solves some things. Not all things by a long shot. It takes a mix, a blend of all kinds of capital and other support and energy to build the world we want, imho. ... Market based solutions are just one tool... but other efforts, community organizing, grass roots efforts in Africa and awareness of the problem through church, ngo and other means are the way to address malaria."
This rings true with me for several reasons. I agree that markets fail (I certainly hope my skepticism came through in my earlier posts about when do markets make sense - sometimes irony doesn't fully translate). I fully agree that we need 'other efforts' to address our complex social challenges. As I've said many times, no single sector is responsible for creating hunger, injustice, illness, cultural degradation or environmental damage - no single sector is going to solve them either.

What I find striking about Kevin's comment is its failure to mention the public sector. Now, I'm not an expert on malaria in Africa, and maybe Kevin's omission of the government is due to his specific experiences in Africa around malaria. But - more generally - the omission of the government, the public sector - as an actor on major public health issue is striking.

I recently ran across this same set of beliefs in conversation with another friend of mine. He also felt the market could do many things (in this case we were speaking specifically of microfinance), and that to the degree that commercial microfinance efforts reached the "poor but not destitute" it would make the pool of "truly poor" much smaller, and therefore government would have fewer to care for. I wish I believed this. But, as American experience shows on every issue from public education to public health to infrastructure bonds and affordable housing - the government can't raise revenue to serve "only the poor." Since we must tax ourselves to provide government services, we the people keep insisting that services to assist the poor not be only for the poor. Look at Head Start, school bonds, and housing bills for proof. To get the money from those who have to provide for those who don't, governments typically have to create programs that serve more than just the truly poor.

Which begs the question about the role of "other efforts", as Kevin calls them. I believe we need more than markets, and that community activism and NGOs can (and do) do amazing things. But we also need public supports - private (be they voluntary or market-based) solutions alone will not succeed.

What I really believe is that we need to create our solutions with more complete, complex input and coordination across sectors. Social enterprise is good, and should be developed, implemented and expanded with specific input and understanding about what the public and NGO sectors are also doing (or could do) in an area on an issue. We need cross-sector entrepreneurs, I believe. Leaders and doers and thinkers who can build effective enterprises that are developed with a clear understanding of these other forces, an ability to try to influence them, and a recognition of who is really serving whom.


1 comment:

kevin jones said...

Good catch on the ommission, Lucy. Actually in Swaziland and Mozambique where we worked on malaria, a tripartite government erradication and spraying effort involving South Africa, Swaziland was the most effective actor, in our experience, in Mozambique. In large part, it was the injection of the relatively affluent government funding and South African infrastructure (trucks, trained staff, etc.) into Mozambique that set them apart. Interestingly, they had much more of a can do attitude than many of the NGO's, relief organizations, etc.