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 organizations 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.

Hippie companies like 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 like Warby Parker (which gives free glasses to the poor) to social impact bonds. (For example, a private investor raises money to finance a program to reduce recidivism. If the program works and the government saves money because there are fewer prisoners to house, then the government pays back the investor, with a profit.)

Impact investing is probably the most promising of these tools. Impact investing is not socially responsible investing. Socially responsible investing means avoiding certain companies, like tobacco growers. Impact investors seek out companies that are intentionally designed both to make a profit and provide a measurable and accountable social good. Impact funds are frequently willing to accept lower financial returns for the sake of doing good . say a 7 percent annual return compared with an 11 percent return. But some impact investors are seeking to deliver market-rate returns.

Brian Trelstad of Bridges Ventures, has looked at companies in early autism intervention, paid for by Medicaid, that can improve long-term educational outcomes while reducing spending on special education; affordable after-school enrichment programs that bring extra education services to charter school students; and energy efficiency companies that serve people in public housing, which saves long term heating costs.

When impact funds came on the scene, seven or so years ago, there was the usual overhyping. A 2010 report by the Rockefeller Foundation and JPMorgan projected that impact investing could see new capital inflows of up to $1 trillion by 2020. That’s looking unlikely given that right now roughly something like only $40 billion has been invested through these funds.

There are more roadblocks than anticipated. It’s hard to find a reliable way to measure the social impact of these dual-purpose companies. Impact investors have also had trouble finding scalable deals to invest in. It costs as much to do due diligence on a $250 million deal as on a $25 million deal, so many firms would rather skip the small stuff.

The hype created skepticism and a backlash. But impact investing is now entering the mainstream. An older generation used their (rigorous) business mind in one setting and then their (often sloppy) charity mind in another. Today more people want to blend these minds. Typically a big client, or a young heir, will go to his or her investments adviser and say, “I want some socially useful investments in my portfolio.” If the adviser has nothing on offer, the client leaves the firm.

New impact funds are being born. In a low-interest-rate era, they can offer comparable returns. The Obama administration has been aggressively supportive. Social stock exchanges are being founded. The big players like Goldman Sachs and Credit Suisse are now in the field.

I recently sat in a beautiful New York meeting room with a nicely and formally dressed banker, Andy Sieg, as he discussed the impact fund he’s helping to create at Merrill Lynch. He said his associates, especially his young associates, were extremely eager to work on the project. People are eager to have this kind of impact.

Impact investing is not going to replace government or be a panacea, but it’s one of a number of new tools to address social problems. If you want to leave a mark on the world but are unsure of how to do it, I’d say take a look. If you’re a high-net-worth individual (a rich person), ask your adviser to get you involved. If you’re young and searching, get some finance and operational skills and then find a way to get involved in a socially useful investment proposition. If you’ve got a business mind, there are huge opportunities to build the infrastructure (creating measuring systems, connecting investors with deals).

Someday government will get unstuck, with new programs to address this new era. But there’s no prospect of that happening soon. Right now social capitalism is a more creative and dynamic place to spend a life.