In another life, I was a trained Sovietologist who got to work on the undoing of the Soviet Union. In that context, it was mostly about how to bring markets to life on the foundation of a badly faltering planned economy. And so we went in with all the confidence warranted as experts on market economics from the World Bank–only to be stopped short by one of those deadly Soviet jokes.
“Oh, you’re from the World Bank [mirovoi bank]? Oh yes, you must be important people. Because, you know how we used to have the State Planning Agency [Gosplan] here in the USSR? Well we know you work at a much grander scale as Mirplan [the World Planning Agency].”
Of course, it hadn’t occurred to us at the World Bank–one of the bastions of the Washington consensus–that we were in the business of planning. We thought we were spreading the gospel of the power of markets. But the Russians were right. The World Bank was, in fact, trying to put together 5 year plans for economies, and issuing loans behind those plans. Which went a long way towards explaining why the work of the Bank was so complicated and required mastery of details worthy of Robert McNamara.
Perhaps there was a time when economic growth could be planned top-down. But it clearly doesn’t exist today, when innovation or exogenous forces can make market leaders if not entire sectors uncompetitive in far less than 5 years.
So most of the field has come around to the idea that in situations of complexity, the best thing is to create sound institutions that can mediate change by transmitting feedback signals as quickly and richly as possible, and letting individual actors respond to those signals.
So that’s what we tried to do in the former Soviet republics after our egos had been taken down a notch—build institutions, like stock exchanges (standards), anti-trust agencies (regulatory monitoring), or commercial courts (conflict resolution).
Just as the international development field has not absorbed the importance of markets at the meta level, the philanthropic sector has not taken the importance of institutions that facilitate the flow of information and capital and labor to heart.
There are far too few standards to credibly establish when something is working, no industry-wide monitoring, and fewer conflict resolution mechanisms. There are disincentives to reveal what’s not working, creating in effect what some people perceive to be a market for lemons.
This initiative supported by the Bill & Melinda Gates Foundation, the Hewlett Foundation and Liquidnet is therefore breaking new ground by making a case for a much more systemic look at the field of philanthropy. If successful, it will allow us to transition, finally, from the world in which we treat every challenge as complicated—and therefore if we have a well enough thought-through logframe, everything can be mapped out—to treating challenges as complex in nature instead.
What it means is that we can finally have a field that has the tools necessary to test emergent solutions and iterate towards an answer because we get feedback in as close to real-time as we can get it.
That is radically different from being expected to come up with completely thought through answers to challenges that are by their nature complex because they shift in real-time.
As anyone who has planned a party for toddlers can testify, complex problems require emergent solutions. The framework proposed by Markets for Good will make it possible for the system as a whole to entertain more solutions, and to double down on them as they prove to be effective in the context.