Profit Meets Self-reliance
Author: Simon Stander
Originally Published at Peace and Conflict Monitor on: 01/18/2005
Category: Book Review
C.K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, Wharton School Publishing, 2005, ISBN 0-13-146750-6, pp. 401 plus CD
Policy prescriptions aimed at promoting “development”, formerly economic growth, in less “developed” or “poorer” nations have always, since their inception, been fraught with difficulty. It has never been clear, for instance, what the objectives of development are. Is the end of development industrialization? Or westernisation? Or modernisation? Currently the main objective of development appears to be the eradication of poverty. Somewhere in the back of their thoughts the policy makers in wealthier nations are also concerned with increasing consumption, pursuing profit, national security, personal development of the individual, democracy, equality, equality of opportunity, longevity, health, conserving resources, providing full employment, expansion of educational opportunities at all levels, personal liberty and “progress” generally.
As recently as December 2004 the UN report on reform, rightly or wrongly, sees poverty, development and security as intimately linked:
“Development has to be the first line of defence for a collective security system that takes prevention seriously. Combating poverty will not only save millions of lives but also strengthen States’ capacity to combat terrorism, organized crime and proliferation. Development makes everyone more secure. There is an agreed international framework for how to achieve these goals, set out in the Millennium Declaration and the Monterrey Consensus, but implementation lags.”
Development, economic growth, poverty, ecology and sustainable development also continue to exist in the debates in much the same murky waters in which sustainable development was born in the 1987 Brundtland Report:
“Humanity has the ability to make development sustainable..technology and social organization can be both managed and improved to make way for a new era of ECONOMIC GROWTH..The Commission believes that widespread poverty is no longer inevitable..A world in which poverty is endemic will always be prone to ecological and other catastrophes.”
Former policy prescriptions involving state intervention and central planning in the Soviet style or according to the Chinese model have been abandoned as models for development or economic growth, though the lessons of the so-called Asian tigers, Japan and the later tigers of Malaysia, Thailand and Indonesia have raised the issue of state led capitalism to such an extent that the neo-classical structural adjustment of the last twenty five years are now being re-examined, given that alternative approaches involving state led market solutions are relieved of their “socialist” overtones.
Seemingly also abandoned has been the self reliance approach advocated many decades ago by Ghandi and in the early days of post-colonisation by, for instance, Nyrere’s Ujamaa in Tanzania.
In the midst of this muddle of ends and means is C.K. Prahalad’s meticulous study: The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, published by the Wharton (Business) School Publishing and also sub-titled: Enabling Dignity and Choice Through Markets..
The title says most of what the reader needs to know as the basic premise. Four billion people live at the bottom of the pyramid on $1,500 or less per capita per annum. Not much per capita but a lot in total. The right kind of exploitation by entrepreneurs will bring both profit and development.
Some original thinking involving simple micro-economics, big business and the entrepreneurial wealth that lies also at the bottom of the pyramid (BOP) is an important way forward. Along with the more familiar example of the Grameen Bank in Bangla- Desh we have the provision of false limbs, eye treatment, soap to prevent disease and many other ventures. Convincing claims are made for associated reduction of corruption, advances in good governance and protecting the eco-system, strengthening the position of women, improved communications and knowledge.
Prahalad’s examples thus indicate the scope for innovation, combining enterprise with self-reliance, building confidence and pride and treating the poor with respect. In many respects this is a heartening book for the very reason that the poor are regarded as fully fledged human beings rather than as a bunch of poor people who need handouts from the rich to get from one day to the next.
“When the poor at the BOP are treated as consumers, they can reap the benefits of respect, choice, and self-esteem and have an opportunity to climb out of the poverty trap.”
The process involves connecting micro enterprise to MNCs, a process aided by national and local government. In this way the connections have been made: big firms, little ones, government at all levels, individual action.
The market really does work with the right kind of help, of course. Hasn’t this always been the case?
This well-written book, crammed with detail, as well as prescription, comes with a CD, deserves close attention and, of course, debate.
Just one issue for that debate: true, the bottom of the pyramid contains four billion people and true to some extent this provides profit of a kind for big and small entrepreneurs alike, but the sheer scale of poverty, deprivation, illiteracy, ill health and high mortality rates is such that it is hard to see how these problems can be solved so as to affect more than a tiny percentage of those who live among those four billion. So, great but how big a dent can Prahalad’s prescriptions make?