Essay: Tackling Poverty — The Roles of Business, Government, and NGOs

The increase in world poverty is startling. I am referring to the numbers, not the absolute proportion, though the decline in the proportion of poverty is worryingly slow. Those who claim to have answers to poverty are perceived to fall into two main groups.

First, there is the “pro-market lobby”: those who think that unfettered freedom for business is the best way forward – and that governments and NGOs are merely “necessary bothers,” whose role should be kept to the minimum. Such “right-wing” folk point to the impressive gains in the struggle against poverty brought about by capitalism in the last few decades. We can take Milton Friedman, Jagdish Bhagwati, and Martin Wolf as representative of this view.

By contrast, there is the “anti-market lobby”: those who think that markets have not always had that effect, and that markets will not necessarily have that effect unless there is both a good government and an active citizenry (i.e., NGOs). This left-wing camp can be represented by Jean Ziegler, Immanuel Wallerstein, Vandana Shiva, George Soros, Joseph E. Stiglitz, David Korten, and others.

But most intelligent people agree that business has a positive role to play in human welfare. They also agree that governments have a key role to ensure that markets work fairly, productively, and for the long-term good of all. There are many things at which markets are decidedly bad, such as education, social justice, welfare, policing, and security.

Most people agree that NGOs play a positive role, though there are some abuses. The most extreme right-wing folk question the democratic credentials of NGOs, forgetting that business has no democratic credentials either.

In other words, abuse of position, power, and privilege can be indulged in equally fully by everyone, whether governments, business, or NGOs.

What is the proper role for each of these?

Let’s start with business, because it is the simplest. The role of business is to identify opportunities that contribute to human welfare in such a way that there is a sustainable profit. In other words, business is essentially a creative value-adder. That is why it is so important to fighting poverty.

But business cannot even function in the way described above if there is no government or if there is bad government. Good governments provide the framework conditions for society as a whole, and if they do their job aright, then business as a whole profits. Consider that the most sustainably successful businesses in the world are in those parts of the world that have the best governments, even if their philosophies vary slightly.

The sorts of areas about which there is no disagreement are:

  • the provision of defense and security;
  • the creation and sustenance of the rule of law, freedom, and human rights;
  • maintenance of a (relatively) sound economic, financial, and monetary system, including access to capital and suitable bankruptcy laws;
  • making it possible for citizens to be well educated, with relatively equal opportunity in terms of careers.

NGOs have historically arisen only when there are gaps in market provision as well as government. Historically, too, the first substantial NGO (the church) was very costly to join – you could lose your life, or you would certainly lose social acceptance and popularity. Ever since then, NGOs have been associated with values and with working sacrificially to create the right overall culture, which, of course, will always influence both government and business.

As society has become more civilized (primarily, over the last thousand years, as a result of the Protestant Reformation), the creation of NGOs has become progressively more possible and less costly. In fact, we nowadays think of “civil society” (i.e., NGOs) as a mark of civilized societies.

In addition, science and technology have arguably been the real contributors to the reduction of poverty. It takes only a moment’s thought to recognize that science and technology cannot exist without governments to set the rules, and to offer the encouragements as well as the discouragements that help to create what is helpful, productive, and ameliorative, as distinct from what could be primarily unhelpful. On the other hand, without business, there would be neither the money nor the entrepreneurship to take scientific and technological advances to the masses. NGOs work to keep everyone (including each other) on track, particularly in relation to excesses, abuses, and gaps in provision.

As Paul of Tarsus, a much wiser man than I, originally put it, we are all together in one world and all of us are needed to help each other. He was talking, though not in exactly these words, not only of individuals, but also of institutions such as business, government, and NGOs.

Prabhu Guptara is executive director,
Organizational Development,
Wolfsberg Executive Development Centre of UBS
in Switzerland. He has contributed this piece in an entirely personal capacity.