Leave a mark - with impact investing

THE big debate during the 20th century was about the relationship between the market and the state. Both those institutions are now tarnished. The market is prone to devastating crashes and seems to be producing widening inequality. Government is gridlocked, sclerotic or captured by special interests. Government is an ever more rigid and ineffective tool to address market failures.

So over the past generation many of the most talented people on earth have tried to transform capitalism itself, to use the market to solve social problems. These are people with opposable minds: part profit-oriented and part purpose-oriented. They've created organisations that look a little like a business, a little like a social-service provider and a little like a charity - or some mixture of the three.

Hippy companies such as Ben & Jerry's ice cream led the first wave in this sector, but now you've got a burgeoning array of social-capitalist tools to address problems - ranging from B Corporations such as Warby Parker (which gives free glasses to the poor) to social impact bonds. (For example, a private investor raises money to finance a programme to reduce recidivism. If the programme works and the government saves money because there are fewer prisoners to house, then the government pays back the investor, with a profit.)