Less controversially, coming into contact with philanthropy bodes well for Obama as he tries to deliver smarter government, which is more likely to happen if he finds ways to work with philanthrocapitalists.

How Obama performed in his Annenberg role came up in a discussion chaired by Matthew on Sunday at the 92nd Street Y, between Vartan Gregorian and Paul Brest. According to Gregorian, now president of the Carnegie Corporation of New York, who used to oversee the Annenberg Challenge, Obama managed to double the amount of money paid to Chicago, and also helped pave the way for Chicago’s mayor, Richard Daley, to take control of the city’s schools, a move that is widely regarded as a catalyst to significant reforms, some of them implemented by Obama’s incoming Education Secretary, Arne Duncan.

As we report in the book, overall the Annenberg Challenge is widely regarded as a disappointment. In his book, “The Foundation”, Joel Fleishman described the initiative as one of the biggest philanthropic failures he has seen. Whilst not that dismissive, Gregorian conceded that the challenge lacked focus, being willing to fund almost anyone who was labelled a ‘reformer’, however far left or right they were.

Generally, Gregorian, who now funds education reform through the Carnegie Corporation, including in partnership with the Gates Foundation, was gloomy about the impact philanthropy has had on education, despite a lot of money being given and lots of experimentation, as Matthew reports in this column on economist.com. (In the book, we are somewhat more upbeat, especially on the impact of giving on education in New York City, though clearly much more progress is needed.)

Gregorian and Brest, president of the Hewlett Foundation, also had a lively discussion about the outlook for philanthropy in the recession, noting that their foundations are now much poorer than a year ago, yet are largely sticking to their giving plans for this year, at least. A crumb of comfort in these tough times.

So it is with some surprise that we read, in an entry on the Gates Keepers blog, that we are “trying to silence the legitimate voices” of civil society by using the word “attack” in the title of our recent blog entry, “Attacking Gates“. Since when has joining a debate been trying to silence anybody? Unless, of course, silence indicates that there is nothing to say in response to our arguments.

Our blog entry, when we so crushingly use the A-word, concerned a chapter of a new book that, well, attacks the Bill & Melinda Gates Foundation in various ways. Although we list our response to nine criticisms in the chapter, Gates Keepers addresses only one of these, where we say that it may be no bad thing that the foundation is not accountable to governments of developing countries or the World Health Organisation. As the rest of our comment makes clear, this is because we believe this enables the Gates Foundation to bring much needed innovation and a different perspective to solving global health and development problems, not because we oppose it being accountable in the broader “social contract” sense.

More broadly, in other entries, Gates Keepers suggests we are too cosy with the Gates Foundation (though it confuses us with The Economist: Matthew, who works for the magazine, and Michael, who does not, both wrote the book in a personal capacity; the same goes for this blog). As readers of the book will know, although overall we admire what Bill Gates is trying to do through his foundation, and by encouraging others to become philanthrocapitalists – in many ways, he is the book’s hero – we are not uncritical.

We point out that he faces significant challenges. These include choosing the right partners in the foundation’s work; figuring out how to achieve large scale change; that the foundation may be distorting jobs markets in developing countries; that progress in improving America’s schools has been slow; that so far there is not much to show for its efforts in terms of new drugs; that delivering new drugs to those who need them will not be easy; that it will be hard to find sensible ways to use the increasing sums of money it is planning to give away; that getting bigger may make the foundation more bureaucratic; that its opposition to “mission-related investing” may be “one respect in which the Gates Foundation reflects philanthropy’s past, not its future”; that its recruitment choices have sometimes been questionable; and that managing well the foundation’s relationships with other foundations and organisations, including governments and multilateral bodies, will be crucial.

As we write, in a discussion of a memo circulated within the World Health Organisation expressing concern that Gates might be creating a “cartel” in health research, “if the power of the Gates Foundation is enough to worry a UN agency, its effect on other philanthropists may be even greater.” We conclude that “Gates will help himself, and other philanthrocapitalists, by ensuring that his foundation is as transparent as possible and subjecting its activities to rigorous public performance analysis.”

Of course, we welcome the creation of the Gates Keepers website, which seems to be dedicated to criticising the Gates Foundation (although the lack of any information on the website about its mission or who is writing or funding it is somewhat troubling, especially given its frequent calls for the Gates Foundation to be more transparent). We will certainly be regular readers.

Opposing the motion, John Ruggie, of Harvard’s Kennedy School, and Bennett Freeman, of the social investment firm Calvert, argued that, whilst Milton Friedman’s claim that “the business of business is business” might make sense in a perfect world, it does not do so in the imperfect world in which businesses actually operate. If governments do not adequately address social ills – which is often the case, especially in the emerging economies – then business must. Moreover, Ruggie argued that the rise of the corporate social responsibility movement in recent years has been a direct response to the more laissez-faire government policies toward business of the past 30 years. He also predicted that the pendulum is now going to swing back toward greater government oversight of business, which seems more than plausible.

The debate trod much the same ground as the recent online conversation about Bill Gates’s theory of “creative capitalism”.

One puzzle is how those who support Friedman’s line, because it helps deal with the agency problems rife in business (ie. how do owners get managers to act in their best interest?), seem to care so little about the agency problems rife in government, even in democracies (how do voters get politicians to act in their best interest?). Yet to admit that government can and does often fail is surely to concede that the world is too complicated for a simple rule like “the business of business is business” to be of much practical use.

In the book, we argue that companies can play an important role in philanthrocapitalism, but that what they can do to solve society’s problems is necessarily constrained by the fact that they need to make some money rather than just give it away, like individual philanthropists such as Gates.

What is needed now is a pragmatic, practical debate about the most effective division of labour between firms (public and private), government, mass charities and philanthropists, and which roles each should play in the partnerships that will often be the best way to get things done.

Instead of black and white ideological positions, this is the time for a flexible, empirical approach focused on finding out what works. Where better to start than two examples of effective corporate citizenship cited by Freeman during the debate, which we discuss in the book: the different approaches to the threat of climate change recently taken by two of the world’s biggest companies, General Electric and WalMart?

Neither of these firms have traditionally enjoyed a reputation for good corporate citizenship, yet both are now embracing a green strategy driven largely by its potential to make them money. Of course, there will be many situations where doing well and doing good will be at odds with each other – in which case, yes, here’s hoping there will be some effective government intervention – but it is surely worth encouraging firms to look for what ought to be the low-hanging fruit of opportunities to do well by doing good.