What gets counted decides what gets done: the new MDB methodology on private capital

On 1 October the Multilateral Development Bank Task Force on Mobilization published its new Joint Methodologies for Measuring Private Finance for Development. It is the first revision since 2018, and it arrives two weeks before the IMF and World Bank annual meetings in Bangkok, which open this week. Publish What You Fund has read the ninety pages so that the rest of us do not have to, and Paul James’s summary is worth the ten minutes: the measure now reaches beyond the project itself, to the capital a bank raises on the strength of its own rating before any project exists and, for now only as a note of progress rather than a rule, to the private money that is supposed to follow once the bank has shown the way; and it adds a new category for the credit risk that banks sell on to private investors through securitisations and similar instruments. Reported mobilisation is likely to go up. On disclosure, on the investment-level data that would let anyone check why the figures move, the package says close to nothing.

Gary Forster, the organisation’s chief executive, drew the conclusion on LinkedIn without softening it: «the pursuit of private capital has become the number one priority for the MDBs and DFIs we work with, over and above impact». That is the sentence we want to stay with, because it explains why a technical document about accounting rules matters to the Social and Solidarity Economy far beyond the circle of people who will ever read it.

A methodology is a map of what an institution can see

In the Social and Solidarity Economy we are used to being described as a family of organisations: cooperatives, mutuals, associations, community finance. We are that. But the SSE is also something else, and this is the part the sector itself tends to forget. It is a school of economic thought, heterodox in the plain sense that it starts from different premises than the mainstream. From Polanyi it takes the idea that the economy is meant to be embedded in society, and that the self-regulating market is a long attempt to reverse that relation; from him too, the observation that an economy is made of several principles of integration at once, exchange among them, but also reciprocity, redistribution and householding, and that none of these is the natural one. Laville and Coraggio turn that observation into a project: a plural economy in which the other principles are not residues of the past but living parts of the whole.

One consequence of that starting point is that measurement frames are never neutral. A frame decides what counts as capital, which flows are visible and which are noise, and therefore which actors exist for the institution that uses it. The new methodology defines a private entity by its ownership, its funding and its purpose, and a credit cooperative or a mutual guarantee society passes that test. What the frame cannot see is what makes them different. It counts them as investors, through the single principle of exchange, and is blind to the collective ownership, the reciprocity and the redistribution of surplus that are the reason they exist. They are not excluded; they are counted as something they are not, and the part of them that matters is unthinkable within the frame. And an institution whose success is measured by that frame has no reason to go looking for what the frame does not show.

This is the lesson we draw from our own work on the internationalisation of cooperatives, where the same mechanism keeps appearing. Public programmes define success as exported volume, and cooperatives conclude, quite rationally, that the programme is not for them. Nobody closed the door. The door was drawn on a wall where they do not live.

Who writes the rules, and for whom

There is a second lesson, and it belongs to a different discipline. The SSE has a political theory of its own, still half articulated, with its own account of where legitimacy comes from (participation rather than delegation) and of how rules should be made (negotiated among those who will live under them). Seen from there, the striking fact about the Joint Methodology is not any particular definition. It is the procedure. The banks wrote the rules by which the banks will be judged. They did so in collaboration with the OECD, and Publish What You Fund mentions a call with civil society; but the joint statement describes no consultation before publication, only a promise of engagement in the months ahead, and nothing in the package commits the banks to publish the data that would let anyone else apply those rules independently.

Students of power distinguish between the visible kind, which wins or loses an argument, and the quieter kind, which decides which arguments can be had at all. A methodology sits in the second category. By the time a board discusses whether a target of mobilised capital was met, the question of whether mobilised capital was the right thing to count has already been settled, somewhere upstream, by people who did not have to defend the choice. Asking for investment-level transparency, as Publish What You Fund does, is a way of dragging that choice back into the open, where it can be contested by governments, by civil society and by the organisations that the current map leaves blank.

What we would ask for

We would not ask the Task Force to count the Social and Solidarity Economy better. That would be accepting the map and asking for a corner of it. We would ask something prior: that the measure of a development bank’s success be set by the people whose development is at stake, and that the data behind every figure be public enough for them to check it. Everything else, including the question of whether private capital should be the first priority at all, follows from that.

The annual meetings open in Bangkok this week. The methodology will be presented as a technical improvement, and in several respects it is one. We would only add that a ruler is also a decision about what is worth measuring, and that decision was never technical.