Underprivileged societies are being used as guinea pigs by development scientists. Encouraging the poor to take risks raises ethical questions because it is they, and not outsiders, who pay the price of failure
India has long been a testing ground for Euro-American products, particularly in agriculture and medicine — and of late, finance and insurance —whose producers make the most of loose regulations and the diversity of a huge population. This cuts research costs dramatically for lucrative products to be sold in those countries, as also to promote the agenda of globalisation
The relationship is highly exploitative and many believe it represents a new form of colonialism. Development is a new and fertile ground for such experimentation upon the underprivileged. Poor societies have become guinea pigs for development scientists. The Nobel Memorial Prize in Economic Sciences, funded by the Bank of Sweden, was recently awarded for such randomised, controlled trials that have changed the face of development economics. What was earlier used for clinical trials of medicines has now become a tool for gauging the efficacy of financial and social medicines.
On account of a lack of proper awareness and failure of institutions to properly guide them, people buy insurance policies without planning and give up midway because they do not have money to pay the premium. Aggressive selling prevents the agents from properly assessing the consistency in income streams of the buyers for servicing their policies. The customers end up losing heavily due to harsh penalties. There’s a popular term to describe this, it is called “mis-selling”.
We often mistake innovation for invention. Innovators are anything but inventors: They offer deliverables because their focus is on taking something already known and improving it. Inventions are the real breakthroughs as they transforming entire cultures for the better.
The commercial pitch: A fresh nuance in the innovation discourse is the concept of ideas which have potential business value or a strong commercial proposition. In the new paradigm, the net benefit to society is usually outweighed by the profit accruing to the innovators’ financial backers — the investors and political actors who now form a new and important element in the ecosystem. Most innovations are now being measured in terms of their commercial and business worth, and how effectively they can be pitched to the investment world. The language of innovation is now increasingly couched in financial jargon and we must acknowledge this new development, however disdainful it may appear to us. There may be innovations which bring substantial net benefits to society, particularly to those excluded from mainstream development but these may not find strong adherents because they don’t have a robust business value.
Such innovations are oftentimes skewed and tailored to meet the needs of the rigid financial framework of the funders. This usually results in a compliance culture that is highly regimented, leaving little scope for creativity and attention to other dimensions of clients’ well-being.
This new dimension of development and innovation has both pros and cons. While it is being made out to be a win-win formula for the creators of the model and the recipients, given the influential position that the proponents enjoy on account of their financial and political muscle, it has degenerated into a monopolistic power for the funders. Microfinance is perhaps the starkest example of this.
There is now huge money in the field of innovation. But much of it comes from business-minded investors who are using this double-edged sword for their own hidden agenda. They claim to be investing money for the betterment of society and often benefit from this claim. However, they do not give the faintest hint of their larger commercial and business objective. Large commercial investors are usually social innovators who are targetting larger social problems. The strategy has several advantages. Since the targetted population is mostly illiterate and unempowered, the innovations are usually not subject to any rigorous scrutiny and negative objectives are brushed off with deft publicity efforts. Since the beneficiaries are from low-income and vulnerable segments, even a small benefit, despite some sections of the population suffering evil consequences, is telescoped into a great messianic act.
Moreover, since such innovations have the backing of powerful people, they can easily demolish even genuine resistance based on authentic evidence of wrongs being done in the name of innovation. The real paradox is that most investors take an exit immediately after they have reaped benefits on their investment. They don’t wait to see the longer term outcome of their investments and may not be around to answer and make themselves accountable when the evil consequences start appearing. There are times when entrepreneurs are quite well-intentioned but their funders may have a narrow agenda. Start-ups should think before going for external funding as the moment they do, the investors will run and govern the business and the founder can think only about returns and exit for the investors.
Flawed innovations: One must be very clear about the deeper and ongoing benefit and purpose of innovation. It may be aimed at simplifying processes, refining products or addressing bottlenecks in a system to improve delivery for beneficiaries or client. But, we cannot remain oblivious to the new problems that arise as byproducts of the new system.
They could be perhaps more damaging than the ones they propose to fix. Much damage has been done to the enterprise and field of innovation by certification agencies and award juries who have been lazy in studying the actual worth of innovation or have shown haste in obliging their fellow ideologists or have been driven by non-ethical considerations in awarding innovators. Several juries have severe ideological biases and that has vitiated the entire climate for innovation.
Encouraging the vulnerable to take risks raises ethical questions. This is really tragic because it is they and not outsiders, who have to pay the price of failure.
A painstaking reflection of such interventions is imperative. New agricultural practices are being propagated with extravagant promises. By manipulating the choices of consumers at the low-income pyramid, the poor are being disempowered. The damage to the economy and ecology of these already fragile societies is now starkly visible. The cost of bearing the failure of these experiments can be significantly high for those who, apart from coping with harmful effects, also face the opportunity cost of setting them right.
Gandhian engineering: But not everything is bleak and dark. There is a tribe of socially-committed and conscientious entrepreneurs which is engaged in Gandhian engineering or frugal engineering. Its practitioners have pioneered the science of breaking up complex products or business models into their most basic forms and then rebuilding them in the most economic manner possible to tap the bottom of a market.
These conscientious entrepreneurs have successfully designed and introduced a wide range of affordable products that are sturdy enough to survive the demanding environment and are easy enough for a wide range of people to use. These range from solar-powered ATM bank machines to a detergent requiring little water.
A similar example is the “sachetisation” of commodities. The FMCG industry found that rural Indians wanted the same things as everyone else but they could only afford it in bite-sized packets. We can see streams of sachets dangling from crowded shelves and filled with anything from shampoo and cough syrup to coconut oil and mobile phone minutes.
A better way to drive a revolution of this type is through empathy. Not a form of sympathy that comes from superiority but one born of profound humility. It is an offering of respect, a moment of listening to stand in the shoes of another. The most successful leaders are those who recognise this truth and invoke it in the developmental interventions they shepherd. When we design solutions that recognise all as equal partners, we have a real chance of making it to the goalpost.
Every society is going through different stages of development and the necessary solutions and interventions must be appropriate for its unique cultural and economic context. By respecting the cultural outlook of the people and embracing their concerns we enlist their buy-in and that is what paves the way for enduring and sustainable success.
(The writer is Member, NITI Aayog’s National Committee on Financial Literacy and Inclusion for Women.)
