Creative Capitalism

People who make millions of dollars doing one thing often come to view themselves as being experts in subjects far afield from those in which they made their wealth. Because they have so much money, others tend to humor them and tell them they are brilliant in the hopes of currying favor, so they don’t get realistic feedback. (The same is true of best-selling authors.)

Thus, I was not optimistic when I received a link to a speech given by Bill Gates at Davos on “Creative Capitalism.”

I have to say I was extremely impressed by Gates’s speech. Not only do I think he is probably right, but it is also beautifully argued.

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  1. Skywalker says:

    I have not yet read Gates’ speech, but “creative” sounds like a useless adjective to put in front of capitalism. Plain-jane capitalism rewards creativity more than anything else I can think of.

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  2. c-dog says:

    I have read Gates’ speech, and it’s a good’un.

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  3. orphancow says:

    Gates’ argument for “creative capitalism” is understandable, but unnecessary. One of key values of capitalism is that it produces social benefit from individuals pursuing self-interest. Dictating that a system that relies on freedom to pursue profit must also try and pursue social welfare agendas misses the entire point of how philanthropy develops in a capitalist society. Gates is an excellent counterexample to his own point. He gained his wealth and then CHOSE to give back. Many companies and wealthy individuals already choose to give back for the recognition that Gates discusses in his speech because recognition for helping others is great free marketing. Companies “going green” or helping those in need is a profitable strategy because wealthy consumers now care about more than just the product or service a company offers. The fact companies address social concerns is also good for society is a beautiful byproduct…. the same beautiful byproduct of capitalism where you can only help yourself by helping others. There is no need to dictate a “creative” capitalism or demand that companies and wealthy individuals “give back,” it happens anyway for all kinds of self-interested reasons… If Gates really wants to help other countries, he would do better to spend his money finding a way to change the institutional framework of those countries to allow capitalism rather than corruption to prosper.

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  4. Alex says:

    But Gates IS an expert on capitalism. He has always been much more of a businessman than a technologist. If you want to say that he understands the tech industry and not the agriculture industry, you might have a case. But when it comes to buying, selling and understanding of markets, Bill Gates has done as well as anyone.

    On the other hand, he knows nothing about education. He grew up in a well off family, made it to Harvard as much on his cultural capital as anything else, and then dropped out. He knows nothing about failing schools or causes for the achievement gap(s), and yet the nation’s governors listened to him lecture them on the state of the nation’s high schools.

    So, yes, Bill Gates does often speak outside of his expertise. But when he is talking about capitalism is right in his sweet spot.

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  5. Rick says:

    #3, Gates fundamental point is that the vast majority of Capitalisms social benefits are reaped by those who comprise the market. Gates’ is arguing that large swaths of the worlds population exist outside of the sphere of influence of capitalist systems. They don’t have enough money to participate as producers nor consumers. They simply cannot get a foot in the door.

    Where I think you are missing the point is that he’s not just making a moral argument for “social welfare agendas”, but rather a business argument. For example, if Microsoft spends some of its capital and intellectual resources on developing a market in 3rd world countries, it expands its consumer base and provides a broader market in to which it can sell its goods.

    We need to look no further than Henry Ford to see how this works. Ford didn’t pay a good wage because he was a nice guy and was being philanthropic. He did it so that his employees could afford to buy his cars, creating a massive market which did not previously exist. Technological advance simply made this system economically feasible. Gates is arguing that more businesses need to think like Ford.

    It’s not about business versus society, it’s about recognizing that the health of business is inextricably tied to the health of society and that investments in the welfare of people currently outside of the capitalist sphere will grow the pie in the long term — moral imperative aside.

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  6. Thwim says:

    orphancow: Gates doesn’t contradict anything you say, but clarifies within his own speech that the problem is that it’s not happening fast enough.

    Something to remember is that while Gates chose to give back, there are others that don’t. In a system which relies on personal character to provide charity, and where a person who is charitable places themselves at a material disadvantage to one who is not charitable, eventually we end up with a society where those who are charitable do not have the resources to enact their character, while those with the resources do not have the character that causes them to be charitable.

    Right now, while oil is still relatively plentiful, we have a huge opportunity to pull the majority of the world out of desparate poverty. This does nothing but benefit us as it creates greater markets and pools of healthy labour. At the same time, it reduces incentives for crime and violence.

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  7. orphancow says:

    #5, my point is that “social welfare agendas” are profitable from a business perspective, there is no need to call it creative capitalism… it’s just plain jane capitalism.

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  8. oddTodd says:

    Often the most innovative contributions in any field come from people who were educated in a different area and are unburdened by preconceived notions about how things are supposed work.

    I am willing to bet that the individuals who ultimately make headway against global poverty will not be developmental economists.

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