NPOs and NGOs are Socialists

You can call them by any other name. You can call them special interest groups. You call them Non-Profit Organisations. You call them Non-Governmental Organisations. You can say they are entities doing a lot of good in society addressing issues that need to be addressed. Whatever you call them, these are socialists.

Why are they undertaking activities that are not for profit in a profit-driven capitalistic world? If we are to call them for what they are, we would refer to them as Socialists, for they are socialists-in-disguise. They are undertaking social work. They like redistribution of resources. They want to take care of others. They want transactions that do not involve profit. They're as socialist as any socialist can be.

The Anti-thesis of Capitalism

Non-Profit Organisations serve a purpose. They are essentially an antithesis of capitalism. By choosing to create and distribute value outside of the confines of the profit motive, they are silently declaring that the profit motive has failed. These entities (NGOs and NPOs) are solving problems that could not be solved by capitalism. They are also solving some problems that are created by capitalism.

NPOs do not come out in the open as an ideological anti-thesis of capitalism because they are by and large funded by capitalism. They exist in capitalistic systems where value is hoarded by capitalists, so they have to be subservient to capital. They have to raise funds from capitalists. They cannot explicitly oppose capitalism, even though the activities they undertake explicitly oppose the profit motive. They are redistributing value; something that the capitalist would have failed to do equitably.

NPOs and NGOs are not only addressing the shortfalls of capitalism, but they are also addressing the shortfalls of governments. The term NPO (non-profit organization) is antithetical to profitable organizations and thus diametrically opposed to capitalism. The term NGO (non-governmental organization) is antithetical to governments, but not in an anarchist's way. Whilst NPOs make profitable companies their point of reference, NGOs make government their point of reference.

Deficient Economic Theory

NPOs and NGOs are non-existent in economic theory, yet there are now dominant features in real life (on the ground). In mainstream economics, you have private companies at the center of capitalism. The shortfalls of capitalism are addressed by the government. It's either private or public. The government steps in to provide public goods, taxes and redistribute wealth, and provides a legal framework for business to take place. The starting point in liberal economics is that of allowing private companies to provide everything they can. Whatever they cannot provide (market failure) can then be provided by the government.

But what happens when both private companies and the government fail at what they do? This is where entities that are neither private nor public step in. They are neither governments nor private companies. Due to our cognitive mode that thinks in binary terms (either or, yes/no) we tend to want to fit NPOs and NGOs into one of our chosen categories. NPOs are typically forced into private entities groups and NGOs are forced into public entities groups though they are fundamentally existing on a different dimension altogether. They are existing on a different axis. They are a rejection of the “business/government”, and “private/public” binarity. These creatures are set up with a desire to exist in the Socialist dimension, where the entity exists to serve the people.

Why is mainstream economics still deficient in recognizing the economic activities undertaken by NGOs and NPOs? The answer might be simpler than we think; they don't like socialists. It is said that socialism doesn't create any value. Okay, how about factoring in the redistributive effects of NPOs and NGOs? There are regions of the world where aid is a dominant feature of the economic setup. Rwanda is a good example. There are regions of the world that have been failed by global capitalism. There are city districts that have been failed by capitalism. There are pockets of the countryside that have not benefited from capitalism’s great leap forward. All these sorts of pockets of space that have suffered from the inequality inherent under capitalism are mostly being helped by NPOs and NGOs because the governments have also failed at addressing these issues.

Though capitalism creates so much value, it is poor at distributing that value, and governments (due to state capture by the capitalists) are also poor at redistributing value, hence the need for a new layer of NPOs and NGOs. The role of this third layer has to be expounded in mainstream economics because it is not insignificant. It has in fact increased over the years. This layer has grown from anecdotal to the mainstream. There are countries where NGOs carry out more activity than governments, and there are numerous NPOs that are bigger than listed companies in terms of the scope of activities undertaken.

But how can mainstream economics rope in the value distributed by NGOs and NPOs when it is fixated on prices and markets? NGOs and NPOs create and distribute value, we can all see it, but it exists outside the markets. Of course, you can slap a price on free sanitary pads and clean drinking water supplied to a region forgotten by both private companies and the government. You can base your price on the prices prevailing nationally in the open market. But the value (utility) generated is clearly different. People dwelling in the forgotten region will value the free sanitary pads and clean drinking water way more than the price prevailing nationally. The value is way higher than what a market price indicates. Yet, they cannot afford to pay for the pads and clean water at any price level. You can slap a price based on the cost to the NGO, but that cost is still way below the value derived by people in that forgotten region. The absence of a perfect market reference point doesn't mean there is no value. Value is there, but you can't accurately measure it with capitalistic instruments.

Philanthropy as a Socialist Redistribution Tool

Every billionaire is into philanthropy now. Of course, they harvest tax benefits, but that is not the main reason why they are into this philanthropy business. They are into this philanthropy thing to appease the spirits of the masses who are clearly anti-billionaire. The average person hates billionaires.

Billionaires have to be seen as doing something to change the status quo. They have to be seen as helping out. They have to be seen as sharing wealth. Since they are the ones that were chosen to be at the very top of the food chain, they are being given a salient responsibility to share the value generated by the system with others who could not attain the same positions, especially those at the very bottom of the pyramid.

Philanthropy is emerging. In the beginning, High Net Worth Individuals simply donated to NPOs and NGOs. The size of the donations increased over time from being small and insignificant to being large and outsized. With the increase in size, HNWI began to actually set up their own NPOs and NGOs that undertake specific activities in areas of life that they are interested in addressing. Bill and Melinda Gates Foundation is a good example.

Gates Foundation Facts

The foundation’s 2021 Charitable support figure of $6.7 billion is larger than the entire Market Capitalization of the Zimbabwe Stock Exchange. A donation of $2 million to a community in rural Zimbabwe does way more than what private companies and the government of Zimbabwe can ever do for that community. Such a donation, is actually a redistribution of value, from those at the top of the global pyramid to those at the very bottom.

Philanthropy is thus a Socialist Redistribution Tool. Taking $2m from a Microsoft shareholder and giving it to villagers in Muzarabani, Zimbabwe for free is as socialist as any scheme can get. Philanthropy is socialism by another name. Fullstop.

The increase in philanthropies is informative. It explains to us the global societal dynamics at play. Socialism is super-imposing itself as a layer above capitalism, existing to save capitalism from its own contradiction. The now ubiquitous expectation that a rich person must donate something towards something is a socialist expectation. Of course, rich people (under capitalism) are said to not owe anyone anything. The poor must work harder and not wait for handouts. People must not expect freebies. They must not demand that rich people donate to them. That was supposed to be the reality. That, however, is not the reality we live. The reality is that society has set expectations on how the winners should behave, and on what they should do with some of their money. Society expects something (rightfully or wrongfully).

On social media, entitled internet trolls pack up comment sections on billionaire timelines with content on how they should spend their money.

Philanthropy soothes the pain, in real life and in the eyes of many. It changes the perception of billionaires and other Ultra HNWI. It's the saving grace, otherwise, those at the bottom layers would want to eat the rich.

Of course, philanthropy is not a Marxian type of socialism where the means of production are owned and regulated by the community as a whole, but the redistribution of wealth is nonetheless socialist and the increase in expectations of redistributing this wealth is a trend toward socialism.

Socialism by any other name is still Socialism.




Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Ryan Gosha

Financial Analyst, Cloud Accountant, Citizen Data Scientist, FPL Boss