Development alternatives to capitalism?

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How do we ensure that alternative economic models produce inclusive growth?

In a recent blog for the Guardian, development economist Ha-Joon chang stated “we are seeing the beginning of the end of the neoliberal approach to development”, suggesting we are on the edge of an entirely new chapter in development economics. Could alternatives such as Africapitalism, philanthropic investment and social enterprise replace aid as mechanisms to stimulate economic growth? Or can we expect to see development as usual?

‘Africapitalism’, coined by Nigerian billionaire and founder of United Bank for Africa, Tony Elumelu, is an economic philosophy he describes as the “middle ground between capitalism and philanthropy“. While framed as an empowering alternative to aid, the approach claims not simply to be capitalism in the hands of Africans but to address the shortcomings of capitalism itself. It does this by championing the dual pursuits of profit and social good through long-term investments.

In India, where an Intelligence Bureau report this month accused foreign-funded NGOs of negatively impacting on economic development, social enterprise has grown in prominence as an alternative. Despite ending its aid commitment to India, the Department for International Development maintains its engagement with the subcontinent by investing in social enterprise schemes. Other donors such as the World Bank have also got on board, while the UN has set up a Social Enterprise Action Hub “to create and advance innovative business models with social impact to address global development challenges”.

But the alternatives are not without their critics. Duncan Green, senior strategic adviser at Oxfam, argued: “The idea that private-sector investment is good and aid is bad, as some advocates of this theory have said, is completely ahistorical”.

How cautious should we be about the privatisation of development and approaches that monetise services the state was previously expected to provide? And how truly alternative are the ‘alternatives’ in theory and in practice? While the millennium development goals may have been criticised for failing to produce inclusive growth, how do we ensure that the new models will be any different?

Editor’s Note:  This discussion was sponsored by The Guardian and held on June 19, 2014. To follow the discussion in detail, click here.  

Photo: Dan Chung for the Guardian

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