The Limits to NGOs' Effectiveness

Over at the Boston Review, Pranab Bardhan is eloquent in making the case against NGOs and their effectiveness and goals. The point that looms in Badhan's argument is that NGOs cannot "dismiss the complexity of issues involved in the problems they hope to remedy or the democratic mechanisms and experiments necessary for finding the best way forward for all parties." When it comes to NGOs working on economic development, though, this gets right to the heart of it for me:

The social activists share with left-wing unions a preoccupation with redistribution, and a lack of concern for generating enough surplus to enable it. There are obvious trade-offs here between incentives for private enterprise and the need for social justice. Faced with these issues, just as the Left might refer to the great things the state can do, social activists refer us to the great things small producers and community-based organizations can do. The small-is-beautiful communitarians often ignore the many cases of local communities tyrannizing minority groups (Forms of lynching reminiscent of the U.S. South continue today in the ethnic villages of Africa and India.) And small local producers often cannot benefit from economies of scale and technological upgrades or invest in high-risk-high-return projects, which require risk pooling with non-local entities. As a result, they remain on the margins, mired in low productivity. While there are scattered examples of dynamic small producers, they don’t represent a viable systemic alternative. When real capacity to create wealth is missing, social activism is often reduced to mere populism, which in the long run can be wasteful and counterproductive.

This takes me back to the early 2000s when coffee farmers and social justice was the sexy issue of the day, and we still see the same thing rearing its head in the push-and-pull between small farms and commercial agriculture. Read the whole thing.