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Wednesday, April 11, 2012

Moneybox: Gordon Gekko was wrong. Greed isn't good--but it could help solve some of the world's toughest problems.

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Moneybox
Greed for Good
Gordon Gekko was wrong. Greed isn't good—but it could help solve some of the world's toughest problems.
By Vijay V. Vaitheeswaran
Posted Monday, Apr 09, 2012, at 02:14 PM ET

Gordon Gekko was wrong, but not for the reason you think. It's not that "Greed is good," as the fictitious corporate raider famously intoned in the 1987 movie Wall Street. But it turns out that greed can be a force for good. In fact, there is reason to think that harnessing self-interest wisely is a necessary precondition for kick-starting the innovation revolution needed to tackle some of today's most wicked problems like climate change, deadly pandemics, and the ongoing middle-class squeeze.

Consider two powerful forces with the potential to upend the global economy as we know it. The first trend is the dramatic transformation of the nonprofit world from sleepy, under-resourced, and inefficient to market-minded, well-funded, and eager to change the world. The second trend, driven in part by the first, is the emergence of the "philanthrocapitalist." This new specimen of the global economy leads organizations that don't fall neatly into either the for-profit or nonprofit worlds. Their companies are, in fact, a little bit of both. One example is Ashoka, a pioneering social-sector incubator that has helped hundreds of firms with hybrid business models take off. The new breed of market-minded "philanthrocapitalist" is also typified by New York's Acumen Fund, which invests donor money not in old-fashioned NGOs but in social firms that have viable business models delivering both profits and social goods (like clean water or malaria protection). If companies like these continue to prosper, they could help the world tackle many of the ...

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