The Blindness of Using Venture Capital to Fight Human Trafficking

Yves here. We’ve regularly criticized various gimmicks like social impact bonds for them to take advantage of do-gooder investors, which in the eyes of Big Finance is just another species of dumb money. But since I do find these schemes to be distasteful, I have avoided looking at them in detail. So it’s useful to call out these promoters wrapping themselves in the mantle of supposedly virtuous and savvy venture capital investing….when NC readers know they are sharks too.

By Laine Romero-Alston, who leads the Open Society Fair Work Program in the Americas, Kavita Ramdas, the Representative for the Ford Foundation in India, Nepal and Sri Lanka, Chair of the Global Practitioner Council at Stanford University and formerly the CEO of the Global Fund for Women, and Sebastian Köhn, Project Director, Public Health Program at Open Society. Originally published at openDemocracy

Over the past 20 years, philanthrocapitalism has shown a predilection for quick, sensational, and often tech-driven approaches to addressing many of society’s biggest social issues, including human trafficking. This has benefitted a vocal faction of the anti-trafficking movement, one that primarily focuses on carceral (law and order) responses and victim ‘rehabilitation’. This funding tactic often comes at the expense of other parts of the movement that are oriented more towards prevention, justice, and rights.

Why has philanthrocapitalism shown interest in shaping the anti-trafficking movement in this particular direction? First, and perhaps most importantly, philanthrocapitalism’s modus operandi comes from venture capital finance. Some would argue that any large-scale private philanthropy constitutes philanthrocapitalism, but the term more accurately describes a subset of private and corporate philanthropy that is based on a venture capital theory of change – one that supports the use of business models in the non-profit sector and focuses on ‘social return’ on investments.

Crucially, venture funding is not long-term funding. The whole idea is to make a short-term investment in an entrepreneur’s concept or initiative. In the business world, this sometimes helps a start-up grow to the point where it can obtain liquidity from other sources. Applied to anti-trafficking initiatives, or indeed to the non-profit sector more generally, venture money tends to favour quick and quantifiable measures over structural change. At Open Society, our philanthropic origins are in private capital but we have avoided venture finance ‘solutions’ to worker exploitation. Instead, we have focused on supporting movements of workers to organise for justice, health, and safety in the workplace.

Second, philanthrocapitalism is deeply embedded in the system of colonial and predatory capitalism that permits – and sometimes even encourages – the exploitation of workers. Under this system, it is perfectly logical for a company like Walmart to give millions of dollars to anti-trafficking organisations that seek to address exploitation, while failing, over and over, to address worker exploitation both in its supply chains and at its stores.

It is easy to turn cynical when corporations that clearly lack their own ethical standards ‘join the fight’. For example, the investment bank UBS spends millions of dollars on anti-trafficking programmes while settling their own money laundering and tax evasion probes left and right. In the past 20 years, UBS has also paid out more than $100 million in penalties for employment-related offenses.

This is not to say that philanthrocapitalism is actively complicit in human trafficking, but that it adheres to an understanding of exploitation that is neoliberal and binary. There is a convenient focus on the most extreme and salacious forms of exploitation while those that appear less egregious, such as wage theft, harassment, or retaliation for speaking out about rights violations, are ignored. In reality, exploitation is not binary but exists along a spectrum, and most workers in the world experience it in some way.

Third, over the past 20 years philanthrocapitalism has had very strong ties to Silicon Valley and frontier tech more generally, and these links have influenced the ways in which it supports the anti-trafficking movement. In particular, they have resulted in an excessive focus on technology as the ultimate solution to human trafficking. Money is pouring into facial recognition and artificial intelligence efforts that will supposedly revolutionise the detection of both traffickers and victims. For example, Spotlight, an initiative of Thorn that uses Amazon’s Rekognition software, and DIG, which is primarily supported by the US military, catalogue huge numbers of sex work ads to fight human trafficking. The result? In 2017, DIG led to just three human trafficking prosecutions, though allegedly far more detention and deportations of sex workers. Similarly, Hotels-50K and TraffickCam are designed to help law enforcement recognise hotel rooms where trafficking might take place, but concerns remain that the tools are more likely to be used against sex workers.

The Problem with Chasing Short-Term Gains

Of course, the impact of philanthrocapitalism on the human trafficking movement extends far beyond tech utopianism and a few unscrupulous corporations. Most importantly, the orientation towards venture capital-style investments determines what solutions are considered effective, and by what measures. Too often, police operations will be favoured over efforts to build worker agency and power. This is because the former produces quick, visible, and quantifiable outputs, and does not require long-term investments in worker movements that could actually upset power imbalances and lead to structural change.

For example, a ‘raid-and-rescue’ operation at a brothel can easily be portrayed as a short-term success – owners handcuffed and sex workers paraded in front of cameras – without any regard for what the workers want or the help they need to sustainably achieve that. In some cases, workers – domestic workers and sex workers, in particular – are ‘rescued’ from their place of work just to be locked up ‘for their own good’ and further exploited by their ‘rescuer’. Although many ‘rehabilitation services’ provide crucial support to victims of trafficking, few are sufficiently funded to analyse and address the structural inequities – casteism, gender injustice, poverty, racism – that created vulnerability to exploitation in the first place. As a result, many trafficking victims remain at risk of being trafficked again, since ‘rehabilitation’ rarely changes their material position and other injustices.

The philanthrocapitalist preference for quick and visible results has also helped push narratives about extreme and sensational exploitation at grand scale to the forefront. These largely fail to acknowledge more mundane but far more entrenched and widespread forms of exploitation. This explains in part the focus on sexual exploitation over other kinds of labour exploitation, and lets both philanthropy and companies off the hook for not addressing the structural issues of low wages, unorganised workers, and unenforced labour regulations that sit at the core of their business model.

As a result, we see the kind of frenzy that has led otherwise serious media to proclaim absurd numbers of trafficking victims with scant evidence. These narratives also influence governments and other public institutions. For instance, in November 2020, the Committee on the Elimination of All Forms of Discrimination against Women (CEDAW Committee) issued a General Recommendation on human trafficking that was littered with unsubstantiated assertions and recommendations. These included the suggestion that states ought to “cooperate with technology companies in creating automated tools to detect online recruitment and identify traffickers”. In practice, ‘automated tools’ involve extensive surveillance, sting operations, and other harms to marginalised workers. These kinds of recommendations exacerbate rather than address the underlying and structural forms of economic and gender discrimination that women and gender-nonconforming people face on a daily basis.

Twenty years ago, the dot-com bubble had just burst and the Palermo Protocol on human trafficking had just entered into force. It should have made us think twice about venture capitalist approaches in human trafficking philanthropy. Alas, here we are in an anti-trafficking venture bubble, where lives and resources are wasted on ineffectual and often harmful vanity ‘solutions’. Victims of trafficking are individuals who deserve dignity, power, and voice – not the patronising response of rescue.

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  1. Jeff N

    As I begin my trucking career, there is a lot of anti-trafficking messaging, and many larger carriers require drivers to take a class

  2. Tom Stone

    There will always be a need for Human Traffickers, Gun runners, drug smugglers and money launderers, if for no other reason than that the intelligence agencies need cover for their activities.
    And a little boost to the budget is always nice.
    Citi, Deutsche, Wells and the rest may have an implicit “Get out of Jail” card for dealing with the cartels, Al Quaeda and the rest because they provide the same services to MI6, CIA and so on.
    So performative virtue signalling is very much in order.since
    actually addressing these issues could become quite awkward.

  3. David

    I was depressed but not surprised to read that the

    “Committee on the Elimination of All Forms of Discrimination against Women (CEDAW Committee) issued a General Recommendation on human trafficking that was littered with unsubstantiated assertions and recommendations.”

    Nothing changes, and probably never will because there’s too much grant money, too many shock-horror stories and too many careers involved. The classic academic work on this, a little dated but well worth a read, is this one, edited by Andreas and Greenhill.

  4. Robert Hahl

    On saving the world with schools:

    “My friend was sent to a school where she did well, eventually took advantage of an Army program that enabled her to train as a nurse, moved to the U.S., and spent the rest of her life thousands of miles from her home and family. She made a good living and sent money home to her family, but she was well aware that this was not the way it worked for everybody. I asked her what happens to the girls from her province who do not succeed in school.

    “Without missing a beat, she said, ‘They get trafficked.'”

  5. HotFlash

    philanthrocapitalism — a subset of private and corporate philanthropy that is based on a venture capital theory of change – one that supports the use of business models in the non-profit sector and focuses on ‘social return’ on investments

    Firstly, I thank Ms Romero-Alston et al for this definition. I had been seeing the examples but now I have a word for them.

    Secondly, a suggestion. Sex work, despite imputed (whether proven or not) trafficking, is legitimate and valuable work. People who work in this sector are entitled to the protections that any worker should be entitled to, incl minimum wage, freedom from harassment from customers or ‘bosses’, child labour laws — the whole nine yards. I have known quite a number of sex workers, although I have never been one (insufficient skills to go pro ;), although I have worked as an artist’s model). Make it legal, extend ordinary worker protections, and *expand worker protections to all workers*.

    Not bloody likely, under the current regime(s), but I think it could be possible. Where there’s a will, there’s a way

    1. Felix_47

      Good point. But women should not be forced into sex work Out of dire need. So much could be solved with a national jobs program and federally funded child support (since very few men make enough to pay enough to support a child). Then if someone wants to take on sex work as a paying avocation go for it.

  6. jpr

    @HotFlash, the moral panic is pretty bad on this issue and any nuanced opinion even slightly in danger of veering outside the “conventional wisdom” will be hammered into prudish flatness in no time. Sadly, some of the libertarian-style right-wingers can be more right on this issue than, say, repackaged descendants of some of the pugilists of “feminist sex wars” from past century like Catharine MacKinnon and the late Andrea Dworkin:

  7. lobelia

    In response to a few of the comments, I hardly think little girls – in a humane and equitable world – aspire to be even Smart™ Escorts, let alone prostitutes. Both are an actually very deadly and dangerous Vocation™ (just for one thing, let alone a Vocation™ of servicing wealthier male desires???); particularly for prostitutes (e.g., but given the predominance of sociopaths among the incredibly wealthy, also for so called Escorts™ (See Jerry Epstein, et al).

    I’ll never forget a high profile, Silicone Valley California vicinity (I want to say the City of San Mateo) case in the 80’s or 90’s, where a very wealthy – married with family, as I recollect – attorney, strangled a young woman in his bathtub because (according to his sworn testimony) she wouldn’t stop screaming when he acted out his bathtub strangulation fantasy on her; which, reportedly, he sickeningly appeared to expect the jury to sympathize with him for. There were female survivors – In The Industry™ – of his fantasies (it hadn’t at all been the first time he acted on his ‘desires’ while Home Alone™) who testified against him.

    Further, what exact Vocation™ do these children, teenagers, and women take up after their Expiration Date™ – in a world where most males who pay for women would prefer someone in their early twenties, if not far,far younger???

    gotta run.

    1. HotFlash

      My neighbour of some years back, Rosemary, mother of two and a very good neighbour, was middle-aged and had supported her family a small but steady private clientele, plus she had tenants on the upper two floors of her three story house. Her Thursday night regular was a somewhat older man, married I think, who would arrive at the door promptly at 6pm. Rosemary would greet him with a kiss on the cheek and ask him how his day had been. She would be wearing an apron (yes, fully clothed under that), mix him a drink, after which they would eat a dinner she had prepared. No sex, perhaps he couldn’t, dunno, just companionship.

      Exploitation of people, young or old, whether for sex work, sweatshop labour, piloting drones, working in a warehouse, whatever is wrong and criminal, even if not a crime.

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