How (Yesterday’s) Heroes Impede (Today’s) Progress

Paul Polak isn’t just one of America’s most remarkable “ascending market”* entrepreneurs–having founded and built International Development Enterprises (IDE), the treadle pump design and marketing organization that has brought improved livelihoods to more than 2 million smallholder farmers.

Paul also wins my vote–admittedly somewhat by default–as the country’s leading development economist. (Sorry Jeff & Bill, but still more heat than light coming out of the ongoing Great Aid Debate. Not much of practical value emerging elsewhere in the academic literature on development, including RCT wave.) He recently authored a powerfully insightful post titled “The Birth and Death of Big Institutions.” Here’s how he starts:

The failure of development is closely tied to the ossification of big institutional structures.
The World Bank was born as a vehicle for reconstructing Europe after World War II, a task it carried out with amazing success. But when it morphed into a massive institution to address global poverty, it didn’t do so well. Schumacher launched a revolution in design with his admirable book, Small is Beautiful, but the appropriate technology institutions that emerged from it became ossified, failed to address market forces and died.

I’m about to walk over to the World Bank for the 2nd half of the Tech@State Civil Society 2.0 meeting. So I’ll have an opportunity this afternoon to reflect on this specific observation. But the point Paul is making in this blog post is much bigger than the World Bank, and even much bigger than “development” as it is narrowly conceived.

What I understand Paul to be saying is that the core issue facing society is not more or less government control, or whether markets should have greater or lesser scope in the allocation of resources. What really drives societal change is the manner in which both political and economic incumbents establish and maintain advantage. That is the core point of Paul’s blog post. It is why entrepreneurship matters.

Read this post twice, then reconsider your takeaways from developments of the last week, the last month, and the last year. Much about the change that surrounds us is not how it seems, or how it is sold. 

* Ascending markets are markets for the global majority–elsewhere sometimes referred to as “bottom of the pyramid” which is a term that does make any sense to me so I don’t use it.