Jacob Harold, a program officer at the Hewlett Foundation and co-author of the paper, “The Nonprofit Marketplace: Bridging the Information Gap in Philanthropy” has written an article for Alliance Magazine that is currently free to non-subscribers.
The article is titled: Learning From the Farmer’s Market
The global financial crisis has shaken our faith in markets. Wall Street, the City of London and other financial centres asked governments for complete freedom in the capital markets. They claimed it would create value for society. Instead, it has destroyed value, and lives. This begs a question: where does that leave those of us who call for philanthropy to act more like a market? If markets fail the private sector, why should they work for civil society?
In fact, the financial crisis makes it all the more urgent to build a smarter, more open infrastructure that enables donors to make good philanthropic choices. The financial crisis has brought with it urgent need: lost jobs, increased poverty, and distraction from critical environmental issues. It has also brought a reduction in available resources – from both government and private donors. It has never been more important to help funders make good decisions and reward the highest-performing non-profits.
The first image that comes to many people’s minds when they hear the word ‘market’ is the floor of the New York Stock Exchange: frantic traders yelling into phones, countless monitors streaming arcane financial data, a floor strewn with scraps of reports and analysis.
I would like to offer an alternative image: a community farmers’ market.
Jacob argues that there are four points about farmer’s markets that philanthropy can learn from:
- First, and most critically, farmers’ markets offer open information.
- Second, buyers at farmers’ markets are focused on finding value for money.
- Third, farmers’ markets offer simple, intuitive infrastructure that enables smart, safe transactions.
- Finally, farmers’ markets offer a culture of frank friendliness.
You can click here for free access to the full article.
My take away: Markets are ancient, natural systems. There is no doubt that markets are a superior system for fairly distributing resources when compared to command and control economic policy. The current crises is not a condemnation of markets in general, but of certain rules (or the lack thereof) that came to dominate the market over time. This isn’t the first time and it won’t be the last, that excesses of various types severely disrupt the market’s functioning.
We are currently in the process of destroying that which was poisoning the system. Just as we always do, we will (over time) discard those parts of the system that did not serve us well, find new elements that we hope will work better and integrate them into a new system. This won’t be “markets 2.0”, it will be something like “markets 99.0”. We’ve been doing this for a long time.
Jacob does us a great service by evoking the image of the Farmer’s Market to remind us that the core principals of markets is not financial derivatives, overpaid executives and excessive debt, it is people coming together to exchange those things which they value dearly.