This is one of the central themes in our new book The Road from Ruin, which has just been published in America. In it we set out an agenda to build a more stable and sustainable capitalism than the one that collapsed so spectacularly in September 2008. As well as reform of the financial system and the architecture of global governance, we argue that building a better capitalism demands more fundamental changes in how we run businesses. (You can read the introduction to the book here.)

Before the crisis, there was a widely-held assumption that chasing ever-increasing quarterly profits was the best way for business to serve shareholders and society as a whole. The crisis proved this to be false. Business leaders need to think more about the long term. They need to recognise that capitalism does not exist in a vacuum – it cannot survive if our societies are unhealthy and our environment is unsustainable.

In one chapter, ‘The Age of Philanthrocapitalism’, we look at reforms to corporate governance, executive values, pension fund strategies, and even the way we measure success, that would together help build a better capitalism. ”Today it is easy to be cynical about capitalism”, we write. “Nevertheless, over the past decade, for every blinkered banker chasing short-term profit, there has probably been a social entrepreneur, an ethical investor, or a philanthropist trying to find a more sustainable way of making money. If business leaders, shareholders, and consumers want a better capitalism, now may be the best time to remake the system.”

The challenge is enormous. Haiti is an isolated outpost of sub-Saharan-style poverty in the Caribbean – it ranked just above Sudan in the United Nation’s ranking of ‘human development’ last year – and has had a long history of political instability and social unrest that persistent interventions by the United States and United Nations have barely kept a lid on. There have also been many pledges to rescue Haiti in the past, which have come to nothing.

There are, however, some grounds for optimism. In mid-2009 Haiti finally benefitted from a World Bank-led debt reduction deal. Preferential access to the US market offers the potential to build an economy based on trade with North America. A development strategy led by the Clinton Global Initiative, according to former President Clinton, was going well before the earthquake, and is a reason to hope, he says. And then there are all the pledges of further aid that are coming. There is also likely to be an unprecedented high-level leadership coalition on Haiti bringing under one umbrella the World Economic Forum, the Clinton Global Initiative and the United Nations. The challenge in each case is making it work.

State-building has been one of the hot topics in development in recent years. The British economist Paul Collier, in particular, has popularised the idea that the bottom billion of the world’s poor would benefit most from being freed from civil war and dictatorship. Collier has argued, and been criticised for, championing strong intervention, with military force if necessary, by the governments of the rich world to fix the problems of ‘failed states’. It is in the spirit of Collier that some voices have called for a temporary protectorship for Haiti – with the Economist championing putting Bill Clinton in charge, to be succeeded within a year by Brazilian president Lula – to get reconstruction going quickly unshackled by Haitian politics. Clinton says he would only run such an effort in partnership with a local Haitian leader, such as the prime minister.

Security and stability for the people of Haiti should certainly be a priority. Yet the track record of international protectorates after crises has not been great - in Bosnia and Kosovo as much as in Iraq and Afghanistan. The aid industry has burned a lot of money in these countries for few returns, with much of the assistance leaking out in bureaucracy, corruption and lavish payments to western consultants and contractors.

One way to break the cycle of expensive aid stagnation would be for a massive effort from philanthropcapitalists in the area they know best – wealth creation. Could a Marshall Plan led by the Bill & Melinda Gates Foundation (to apply its thinking around agiculture and supply chains), backed by multinationals such as Coca-Cola, Wal-Mart and Nike, kick start the Haitian economy and tackle chronic food shortages? Then add to that a grand coalition of Omidyar Networks, Grameen, Endeavor and others to promote enterprise – and maybe Haiti could start to work its way out of poverty.

Mass philanthrocapitalism could also be harnessed to get ordinary donations working harder. Kiva and GlobalGiving will surely operate in Haiti, so why not also a donorschoose for schools in Haiti? Could this type of platform help to lever the contribution of one of Haiti’s biggest exports – its people? The Haitian diaspora remits more than $1 billion back home each year. So why not create a network of Mexican-style hometown associations to get some of that money working to build schools, hospitals and bridges? Slice off a piece of the official aid budget to match those contributions and use a donorschoose or Kiva style of interface to connect people to what they are funding and we might get something interesting.

An even more radical idea would be to take up Paul Romer’s idea of charter cities, that might be run by experienced leaders from abroad and compete to be the most successful places to live. The mind boggles (not entirely positively) at the thought of breaking Haiti into a number of charter protectorates and letting competition rip between different leaders – Bill Clinton could take one, Tony Blair another, one perhaps to the former President of Mozambique Joaquim Chissano. And why restrict it to former leaders of countries? Maybe Bill Gates and Muhammad Yunus could be tempted into government for a while? Or might Michael Bloomberg run New York and Port-au-Prince at the same time?

Moving on from the world of fantasy, there is a germ of an idea here – rather than putting recontruction into the hands of bureaucratic planners from the United Nations or the World Bank, why not have some competition? Although this is a terrible tragedy, it is also an opportunity for creative thinking – for doing things much better than before. This has been probably the biggest contribution that the philanthrocapitalists have made to global development – new ideas that challenge orthodoxies and conventional wisdoms.

The summit echoes the idea of the great British economist John Maynard Keynes that “there are not many who are influenced by new theories after they are twenty-five or thirty years age, so that the ideas which civil servants and politicians and agitators apply to current events are not likely to be the newest.” Over 25s need not apply to One Young World.

According to Jones, events like the annual World Economic Forum in Davos cater to the established and already successful. One Young World wants to hear from the next generation of leaders.

A genuinely radical part of their plan is to weight participation by the population of each country, so there will be 300 delegates from China and only 13 from Britain (although they admit that it is going to be hard to get authoritarian governments like that of Burma to agree to send a delegation). Some participants will be nominated, others headhunted but, as Jones responded when Michael asked him about legitimacy, online polls will also be used to select delegates (through a dedicated youtube channel).

This initiative responds to two key trends in philanthrocapitalism. First, Euro RSCG is trying to play to its core business strength – creativity. (A bit all-encompassing for a core strength, but there you go.) Second, it is part of the company’s business strategy to do well by doing good: Euro RSCG is responding to what Jones describes as “the biggest trend in business”, social responsibility. According to its own research, consumers want companies to be ethical and are willing to vote with their wallets.

This is a trend that Jones believes has got stronger during the economic crisis, even if corporate finances mean it has been more of a slog to find corporate sponsors for the summit.

Will youth and creativity find new solutions to global problems? So far, audience research for the summit says some obvious things – young people care about poverty and climate change. It also shows that young people feel frustrated by their political leaders – plus ca change.

The interesting bit will be to see if this process does throw up genuinely new ideas. Hopefully those of us over 25 are in for a few surprises.

He goes on to make two serious points, neither of which really stand up. First, he dislikes us describing former politicians Bill Clinton and Tony Blair as “philanthrocapitalists”. Schwartz says he has no time for politicians in general, whilst blaming economic policies pursued enthusiastically by Clinton and Blair for the current mess. Well, maybe. But post-government, both Clinton and Blair have enthusiastically embraced philanthropy of the impact-oriented variety we champion in the book. Strictly speaking, as neither is a rich man, both Blair and Clinton are “celanthropists”, celebrity philanthropists, whose primary contribution comes from their brand and convening power: people take their calls. It is too soon to know whether Blair will prove a talented philanthrocapitalist, though there is no obvious reason why not, but as we document in the book, Clinton has undoubtedly been effective.

Second, Schwartz objects to the importance we give “leverage” – the idea that philanthrocapitalists need to achieve extra impact by using their relatively small sums of money to enlist partners who are far better funded. Schwartz complains that we focus only on leveraging government budgets. In fact, we see opportunities to leverage corporate and non-profit budgets, too. Besides, curiously, Schwartz is actually a big fan of the vigorous support for social investment provided by the British Labour government which, lest we forget, was headed for 10 years by Schwartz’s bogeyman Blair. Go figure.

Odder still, Schwartz says we have written a “very good book” – which is not surprising, as he is a card carrying philanthrocapitalist, who invests in for-profit social businesses, with a goal of doing well by doing good.

Friendly fire may also be the best description of recent criticism we have received from Phil Buchanan of the Center for Effective Philanthropy. We wrote an enthusiastic chapter about the contribution made in the for-profit world by intermediaries and professional advisors, and described some of the philanthropic intermediaries and advisors which we hope can play a similar role in the business of giving. Although we noted that none of these for-profit intermediaries and advisors, which include management consultants, money managers and investment banks, are perfect, and that they work best where they promote transparency and accountability, in a recent article Phil decided to dismiss this chapter as “Lehman Brothers to the rescue”.

As a schoolboy debating point, we grant that this is an excellent line. As a serious response to our argument, however, it is sadly lacking. We set out a long list of philanthrocapitalistic intermediaries and advisors, ranging from New Philanthropy Capital to McKinsey and Bridgespan, to Buchanan’s own Center for Effective Philanthropy. What does Buchanan think of these institutions, and the role they play? Does he think they improve the effectiveness of the philanthropic and non-profit world? It would be interesting to know.

Instead, Buchanan complains mystifyingly about “organizations that would not agree with the authors’ characterization of them as ‘philanthrocapitalist.’ I should know: the Center for Effective Philanthropy is one of them.” The Center for Effective Philanthropy is as clear an example of a philanthrocapitalistic intermediary as we can find: its goal is to improve the effectiveness of philanthropy by gathering information from those receiving grants from philanthropists, and relaying that information back to the philanthropists so they can improve their performance.

Curiously, Buchanan continues by quoting – presumably against us – Warren Buffett, saying that “In business, you look for the easy things to do. In philanthropy, you take on important problems, and it is a tougher game.” We feature this quote in the book, and devote a large part of the book to exploring why solving society’s big problems is a tougher game than business, and how to win that game.

He also quotes – again, seemingly with the goal of dismissing our arguments – Jim Collins, the management guru author of “Good to Great”, who has written about the dangers of simplistically importing business thinking into the non-profit sector. We agree: our argument is about the need to apply sophisticated business thinking, and we write at length about the dangers of business people entering the non-profit sector arrogantly and without proper understanding of the complexities of the problems they are addressing.

Buchanan may have missed all this, but Collins did not: he actually endorsed our book, which he described as “Important. Well-written. Timely. Here in this wonderful book, Matthew Bishop and Michael Green shine a light on sparkling examples of effective philanthropy, and how some of the most accomplished people are trying to solve the world’s most intractable problems. A superb portrait of a vital new force shaping the world today, Philanthrocapitalism deserves to be widely read.” Modesty prevents us from saying whether Collins is right – but he is certainly not against us.

Matthew outlined this proposal in two articles this week, in the Huffington Post and the Times of London. He first raised the idea during the closing global agenda plenary session at the World Economic Forum in Davos, prompted by a discussion of what business should do to reduce the risk of a social backlash. The proposal provoked quite strong reactions, both for and against.

As we write in the book, there needs to be a new social contract between the rich and everyone else. A key part of this contract should be that those who get rich do so by just means, and that they have an obligation to give back, and to do so in ways that use their talents to achieve real impact.

As Bill Gates said in Davos, although there is a shortfall in giving due to cuts by some philanthropists (though not him) who have been hit by the crisis, that shortfall could easily be made good if those wealthy people and business leaders who do not currently give seriously were to start to do so.

Gates made his case by stressing the ”carrot” that doing philanthropy is fun and fulfilling. But perhaps he should also wield the stick of the social contract. After all, Andrew Carnegie did so in the 19th Century, such as when he criticised people who failed to give their money away by the end of their life, saying “the man who dies thus rich dies discgraced.”

One of the film makers, Abby Disney, a grand niece of Walt Disney, is one of a growing band of philanthropists who are embracing the power of movies-with-a-message to change the world. (Jeff Skoll, who we write about in the book, is probably the philanthropist who has taken this furthest, not least by funding Al Gore’s “Inconvenient Truth”.) Earlier in the week, she appeared on a fascinating panel about philanthrocapitalism moderated by Matthew at Burda Media’s DLD conference in Munich, where she espoused the need to build strong non-profit organisations and attacked the narrow obsession of some philanthropists with measuring everything.

In Davos, however, her target was some big NGOs who she said “girl-wash” themselves, by talking up their enthusiasm for empowering women whilst failing to make much progress in addressing the structural problems that tend to disempower them. The women’s organisation in Liberia gained its power from being a grass-roots organisation and, Disney argued, by remaining one, refusing to accept a seat at the peace negotiations as to do so would have involved compromises that could have weakened its voice.

Hearing Tutu speak is to be reminded of why The Elders is such a great idea. He is exactly the sort of wise, experienced old person that world leaders should turn to in a crisis, and it is excellent that through the efforts of philanthrocapitalists, starting with Peter Gabriel and Richard Branson (as we discuss in the book), Tutu and his 11 fellow Elders are now properly funded so they can pursue their work in a more effective and strategic way. Following the documentary, his discussion of the problems of masculinity (especially the insecurity of men that often drives them to do bad things), in particular, was honest, self-critical and inspiring.

Tutu talked briefly about the power sharing deal just announced in Zimbabwe, which The Elders played a key role in brokering. He made it clear that many aspects of the deal made him uncomfortable, yet he urged that the international community give it every chance to succeed whilst remaining tireless in its scrutiny of the implementation of the deal and in its insistence that justice be done. Let’s hope that one day there will be an uplifting documentary to be made about Zimbabwe’s escape from hell.

At this year’s Davos, the mood is decidedly sombre, and rightly so. The slumping world economy has destroyed a large chunk of the financial worth of companies and the rich alike. Moreover, many people blame this on Davos Man and Davos Woman, who have after all been running the world as it has gone pear shape.

We hope that the economic crisis will cause business leaders and other wealthy folk, as well as the politicians rubbing shoulders with them in Davos, to take even more seriously the message of Philanthrocapitalism. If they are to lead the world out of this crisis, it is likely to require them to demonstrate their commitment to the well-being of society, not just to their narrow financial interests.

This is a message that is getting a good reception at Davos. Yesterday Matthew co-hosted a well-attended lunch to discuss “philanthrocapitalism in action”, along with Nancy Lublin of “DoSomething.com”, a non-profit that encourages social action by teens. and venture-capitalist Matt Cohler. DoSomething recently held a “non-profit IPO”, which Matthew wrote about in The Economist.

The event was lively, inspiring and well-attended. Participants included several leading philanthrocapitalists – Marc Benioff, John Studzinski, Kim Samuel Johnson, among them; social entrepeneurs such as JB Schramm, the founder of College Summit; leaders of large NGOs, including the heads of Care and Youth Aids; Jim Wallis, of the Sojourners movement; and Arianna Huffington of the Huffington Post, who blogged about the event not once but twice. “Maybe it’s a sign of the times, but there was an overflow crowd at the luncheon, causing the organizers to open two additional rooms to hold the extra attendees,” she wrote in her second post. Let’s hope she is right.