More Than Money: Five Forms of Capital to Create Wealth and Eliminate Poverty - Brossura

Godfrey, Paul C.

Brossura

ISBN 10: 0804782806 ISBN 13: 9780804782807

Casa editrice: Stanford Business Books, 2013

Riassunto

Is poverty inevitable? No, says author Paul Godfrey. More than Money shows how organizations can win the fight against poverty and create prosperity for people at the base of the pyramid in the developing and developed world.

This book presents a novel framework that shows how five types of interrelated capital—institutional, human, social, organizational, and physical—enable development and sustainable growth. In addition to a widely-applicable model, Godfrey provides principles to guide application. Core chapters articulate each specific form of capital and provide examples of how it contributes to the triple bottom line. Not just a theoretical examination of poverty, More than Money delivers timely advice to organizations that produce goods and services, implement policies, and create meaningful change on the ground. This book will guide social innovators and entrepreneurs in business, government, and civil society settings as they create a vision, assemble a team of strong partners, and effectively measure social innovation.

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Informazioni sugli autori

Paul C. Godfrey is Professor of Strategy and Associate Academic Director of the Melvin J. Ballard Center for Economic Self-Reliance at Brigham Young University's Marriott School of Management, where he helps students and practitioners translate organization and economic theory into action that reduces poverty. He has recently pursued projects in Ghana, the Navajo Nation, and with disadvantaged populations in the United States.

Paul C. Godfrey is Professor of Strategy and Associate Academic Director of the Melvin J. Ballard Center for Economic Self-Reliance at Brigham Young University's Marriott School of Management, where he helps students and practitioners translate organization and economic theory into action that reduces poverty. He has recently pursued projects in Ghana, the Navajo Nation, and with disadvantaged populations in the United States.

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MORE THAN MONEY

FIVE FORMS OF CAPITAL TO CREATE WEALTH AND ELIMINATE POVERTY

By Paul C. Godfrey

Stanford University Press

Copyright © 2014 Board of Trustees of the Leland Stanford Junior University
All rights reserved.

ISBN: 978-0-8047-8280-7

Contents

Acknowledgments............................................................
ix
Introduction: Eliminating, Not Alleviating Poverty.........................
1
1 More than Money..........................................................
5
2 Self-Reliance: The Mechanism that Eliminates Poverty.....................
21
PART I: THE FIVE TYPES OF CAPITAL..........................................
3 Institutional Capital: Yarn-Dyed Cloth...................................
43
4 Social Capital: A Double-edged Sword.....................................
62
5 Human Capital: The Heart of the Matter...................................
81
6 Organizational Capital: Power from Simple Machines.......................
100
7 Physical Capital: The Last Puzzle Piece..................................
121
PART II: CREATING EFFECTIVE ORGANIZATIONS..................................
8 Mission and Vision: Leading the Fight with Values........................
143
9 Ecosystems of Development: Systems to Fight a System.....................
158
10 Measuring Impact: Are We Winning?.......................................
173
11 Eudemonia: Human Flourishing and the End of Poverty.....................
188
Notes......................................................................
201
Index......................................................................
219

CHAPTER 1

MORE THAN MONEY

There are a thousand hacking at the branches of evil to one who isstriking at the root.

—Henry David Thoreau

IT'S NOT ABOUT THE MONEY! In the global wars on poverty money has servedas both the primary weapon and chief foot soldier for both academics andpractitioners. If we deploy the right amount to the right place at the righttime, the right things would happen, poverty would abate, and misery giveway to human happiness. Development economists, business scholars, socialentrepreneurs, and thought leaders all trumpet the right amount and mix ofinvestment and spending by government, businesses, and consumers, as criticalto meaningful gains by the world's poor.

I like Thoreau's observation. Most of the billions, or trillions, of dollarsthrown at the poverty problem ends up in the branches—alleviating thesymptoms of poverty—but little gets at the root and creates lasting prosperityfor individuals. Money doesn't eliminate poverty. Money fails, primarily,because it does little to develop or encourage self-reliance; I'll make a case inthese pages that self-reliance leads to a lasting solution to poverty. First, however,let's truly understand the fascination with money as the key to battlingthe curse of poverty.

The focus on money conforms to our conventional wisdom about whatpoverty is, and by implication how it can be overcome. The World Bank'soperating definition of poverty tells us that

Poverty is "pronounced deprivation in well-being." The conventional viewlinks wellbeing primarily to command over commodities, so the poorare those who do not have enough income or consumption to put themabove some adequate minimum threshold. This view sees poverty largelyin monetary terms.

Specialists and lay people alike may intuitively realize that it takes morethan just money to create meaningful change, but requests for aid—often urgent—inmonetary terms often force other critical conversations to the background.The "conventional view"—deeply engrained into our mental mapsof poverty—means that the conversations about strategic solutions quicklydevolve into tactical talk about fund raising, potential donors, and expectedreceipts.

Money also provides a seductively convenient soldier to deploy. When wemove past the simple symptoms of want we begin to see the complex causesof need, and those deeper causes constitute what planners refer to as wickedproblems: ones that defy definition, have multiple causes and potential remedies,and no definite or optimal solution. At one level, writing a check iseasier than finding the causal roots in the quagmire of wicked complexity. Ata deeper level, money-as-the-solution appeals to a deeper belief that moneyis the apparent solution to our own problems, so giving money to the poorshould help them with their problems. Money acts as a quick palliative for thepain of the destitute.

For some, maybe many, money represents not only a convenient way toengage in a worthy cause; it also consoles the conscience. Living lives at or nearthe top of the economic pyramid, our drive for justice, or perhaps our senseof guilt over our abundance, encourages us to do something. But again, doingsomething requires getting our hands dirty and admitting our weakness in theface of an intractable problem. Giving money relieves our feelings of helplessnessand hopelessness. Money becomes a palliative for the pain of the donor.

Money may conform to convention, provide a convenient and consolingway to get involved. What it hasn't shown, at least to date, is a curative effecton poverty. That's a bold claim, one I'll back up in a moment, but it will provehelpful to think more about poverty and the different levels where it exists. Wecan think of two overarching types of poverty, Big P and little p.

Big P poverty describes poverty driven by macrosocial forces and measuredat very aggregate levels. Big P poverty isn't about people, at least not oneswith names and faces; it's about people as statistics and the metalevel forcesthat drive them: famine, ignorance, marital and family institutions, politicaloppression, and war, to name a few. Percentages and aggregates matter in thefight against Big P poverty, the percent of people with clean drinking water,access to sanitation, or secondary education. It's not about whether the Agbetesof Accra or the Walkers of Window Rock have any of those things. Thefocus lies in alleviating—mitigating the effects of—poverty but tacitly framesits underlying causes as intractable.

Little p poverty focuses on individuals and families. It's about the Agbetes,the Walkers, and millions of other people with names, faces, lives, and realneeds. Real people live in corrupt or fragile states; they often lack access toformal educational opportunities or participation in the formal economy. Thecauses of Big P poverty put real people in little p poverty, as do things likephysical or mental handicaps, family dynamics, and personal choices. Fightinglittle p poverty means improving the lives and livelihoods of individuals,one at a time. Little p poverty can be eliminated, individuals and families canmove from poverty to prosperity.

If Big P poverty focuses on statistics, then little p poverty concerns stories,the intimate arcs of individual lives. Slicing poverty into Big P and little p doesmore than provide a memorable metaphor; it highlights that those fighting itwill be more effective when their efforts and organizations match the realitiesoperating at each level. We'll talk more about that throughout the book. Thedivision also illuminates the failure of money to make much of a dent in theglobal problem of poverty.

Money and Big P Poverty—the Failureof Foreign Aid

The most public debate about money and the fight against Big P povertyfeatures cross-town dueling economists Jeffrey Sachs of Columbia and NewYork University's William Easterly. Both admit that foreign aid has proven lessthan stellar—more like an abject failure—in eradicating poverty and enablingsustained development. Much of the more than $620 billion that USAID hasgranted or loaned to foreign countries for economic aid from 1946 to 2010in the form of foreign aid has not delivered anything like an adequate returnon investment. Sachs and Easterly offer radically different explanations andproffer different solutions.

For Sachs the problem lies in the paucity of aid: the problems and shortcomingsin developing countries are so extensive that foreign donations aretoo small to make a difference. For example, aid to Kenya for health carecame to about $100 million per year a decade ago; to build a health systemcapable of providing substantive care to all Kenyans would cost about $1.5billion per year, fifteen times the amount earmarked. Not surprisingly, Sachscalls for a new a massive infusion of aid large enough to get developing countriesover the hurdle; we should supersede the big push of the 1960s with aneven bigger push in the twenty-first century. Big P poverty requires staggeringlybig sums to eradicate.

Easterly proffers the exact opposite explanation: foreign aid has presenteddeveloping country leaders with a glut of resources that creates and reinforcesdependency, institutionalizing and enshrining Big P poverty into the fabricof these societies in the form of graft and corruption. Aid to improve theeducational systems in Africa, for example, doesn't lead to economic growth(and may not do much for substantive learning either). Easterly's remedy liesin cutting foreign aid and replacing free public money with the miracle of themarket; development policies should create a proper set of incentives for investmentand private business. The abstract nature of Big P poverty requiresan equally abstract institution, the Big M market, to fight it.

Given the failures of previous efforts, and the seeming inability of manydeveloping markets to adopt Big M market mechanisms, it comes as no surprisethat nations, businesses, and individuals express cynicism at worst, orsuffer fatigue at best, toward well-intended efforts to attack Big P poverty.One response has been to abandon the focus on large-scale interventions andfocus instead at the smallest scale of economic activity.

Money and Little p Poverty—The UnfilledPromise of Microcredit

The fight against little p poverty changed in the mid-1970s when futureNobel Laureate Muhammad Yunus discovered that many of the poor womenin the villages of Bangladesh captured only subsistence wages, rather than themarket price, for their work. What shut the women out of the market? Theirinability to purchase the small amounts of raw materials on their own; theylacked the financial capital and relied on a middleman. Yunus lent $27 to agroup of forty-two women and initiated the microcredit movement.

Undoubtedly microcredit has helped millions improve their livelihoodsand given them a measure of control; unfortunately, it has also become apanacea for solving the problems of the poor. I attended a lecture given by ahigh-profile management guru who asked: "[Do] you want to eliminate poverty?Well, just give every woman a small loan and she'll pull her family out ofpoverty." That's a bold claim.

Does the reality of microcredit match the hype? The best research on microcreditshows that the tool appears to increase income; however, the biggestgains in income come to those who are the best off among borrowers; onestudy found that the poorest borrowers actually saw their incomes decrease.Microcredit produces contradictory outcomes; many borrowers see incomesrise but measures of health, housing, and nutrition decline. A devil's bargain:borrowers appear forced to trade off economic or social gains.

One challenge lies in the fact that microcredit is micro—small scale. Financinghelps individual entrepreneurs purchase raw materials or other consumablesbut often leaves no slack to fund asset purchases or employees.Microcredit may facilitate individual self-sufficiency, but the model doesn'tlead to job creation or growth in business scale; the ripple effects of microcreditdon't extend out very far into the broader community.

Whether fighting Big P or little p poverty, a financial focus fails to eliminatepoverty because at best it helps people have more; it can't help them be more.Having more relates to external things: what people own, possess, or can access.Being more happens inside; it captures capabilities, character, and desires thathelp people reach their full potential. Money may be the ticket that helps ushave more, but being more requires more than money. Having more alleviatesthe suffering of poverty; being more eliminates the situation of poverty.

This book is about self-reliance, its role in eliminating little p poverty andhelping people become more. Self-reliance interacts with five elements in oureconomic and social lives that I refer to as types of capital. The book presentsand argues a simple thesis for those interested in eliminating little p poverty:real development—the kind that permanently lifts people out of poverty—requiresharnessing and focusing five different types of capital in ways thatenhance and leverage people's self-reliance.

SELF-RELIANCE AND THE FIVE TYPES OF CAPITAL

What is real development and how does it influence self-reliance? Jane Jacobswas not a professional economist but a writer and activist. In The Natureof Economies she offers a wonderfully concise way to understand real economicdevelopment as opposed to mere growth. Growth consists of a quantitativechange in the output of an economic system, while development captures aqualitative change in the types of outputs of that system. Growth is about havingmore, development about being more.

For some, talk of self-reliance evokes images of Jim Bridger, the earlynineteenth-century trapper who scratched out a meager existence in the ruggedand untamed American West. Living and working alone, Bridger, likemost Mountain Men, relied solely on his own skill, strength, and cleverness.Self-reliance, as I'll discuss at length in Chapter 2, captures something vastlydifferent; two distinct, yet related, elements of people's economic actions: theinputs they use and outputs they produce. Self-reliance represents both a disposition,a bundle of beliefs and attitudes that drive behaviors, and a condition,or configuration of assets and resources that result from those behaviors. Weall have the potential to become self-reliant, and our natural tendencies to beso will either be nurtured or hindered by the social settings in which we live.

Those social worlds provide sets of resources that strongly influence boththe disposition and configuration that defines self-reliance. Individuals andfamilies employ and leverage these resources to produce economic income aswell as social satisfaction. I describe them as types of capital because they aredurable sources of wealth that produce wealth. The types of capital are:

Institutional: The large social structures that provide meaning andstructure to social life.

Social: The resources available to us by virtue of our relationships withfamily members, friends, or associates.

Human: Knowledge, skills, and attitudes that produce tangible outcomesand create wealth.

Organizational: Collective social endeavors we engage in or interactwith that harness the powers of cooperation between and competitionamong people.

Physical: The tangible, and financial, resources we employ to produceproducts or services or exchange with others to create value.

To illustrate the role of the five types of capital and self-reliance in creatingreal, sustainable development, let's look at what may be history's greatestepisode of development: the Industrial Revolution. More specifically, let's considera single actor who made a big difference: James Watt, developer of thesteam engine, the machine that powered the industrial economy. We'll returnto Watt's story throughout the book to illustrate in greater detail each type ofcapital, but for now I'll sketch out the basics of the fascinating story of Watt'ssteam engine.

James Watt's Steam Engine

There are at least two great myths about the Industrial Revolution: that itwas a revolution and that it began with James Watt's invention of the steamengine in the 1760s. The term Industrial Revolution appeared well after thesupposed "revolution" began and didn't become the description de jour untilhistorian Arnold Toynbee popularized the term almost a century after the supposedrevolution took place.

Economic historians see industrialization beginning in the thirteenth century,with the Magna Carta and the gradual rise of the rule of law throughoutEurope playing a starring role. Religious historians argue that the spiritof inquiry in thirteenth-century Christian theology that re-emerged withThomas Aquinas enabled scientific progress and discovery. Military historianspoint further back to the twelfth-century Crusades, which planted the seedsof large-scale organizations, sophisticated communication and logistics networks,and the development of a banking industry. All these scholars arguethat industrialization resulted from social evolution, not revolution.

The invention of the steam engine has been relegated to the stuff of achildren's bedtime story, and legend has it that James Watt, as a very youngboy, watched steam lift the lid of a tea kettle at his grandmother's home andhad the epiphany that steam would be a tremendous source of power. Jameswould then spend his life doggedly bringing that boyhood vision to life, firstin the laboratory and then in industry. The reality of the steam engine includestrial and error, happenstance meeting, good fortune, and clevernessworthy of the best grown-up novel.

The power of steam had been known since Hero of Alexandria, who madesteam-powered toys in the first century A.D., but that technology would liefallow for more than a millennium and a half. By 1712 Englishman ThomasNewcomen had developed a commercially viable steam engine that becamea familiar fixture in England's coal mining regions by the 1720s. Newcomen'sengine, a huge, stationary steam-powered pumping arm, allowed English coalminers to pump water from their mines and thus pursue coal in deeper veinsto fuel an already expanding industrial base.

While a marvel of technology and a quantum leap in industrial development,Newcomen's engine suffered from two major drawbacks. First, themachine couldn't be moved. The "engine" was really a large building; onceconstructed it became the embodiment of fixed capital. Second, the enginewasn't efficient, as it generated very little power for each ton of coal that firedits boiler. In consequence the expensive giant could be used only where coalwas cheap and close—the rural coal regions of England and Scotland. Newcomen'smarvel could fuel only the coal industry, but an engine that could fuelan entire economy would come within a generation at the hands of JamesWatt.

(Continues...)

Excerpted from MORE THAN MONEY by Paul C. Godfrey. Copyright © 2014 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Stanford University Press.
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Dettagli dell'edizione

• Editore: Stanford Business Books
• Data di pubblicazione: 2013
• Lingua: Inglese
• ISBN 10: 0804782806
• ISBN 13: 9780804782807
• Rilegatura: Copertina flessibile
• Numero di pagine: 227
• Contatto del produttore: non disponibile
• Persona responsabile: non disponibile