Bill Gates wants creative capitalism: But what is it?

January 25, 2008

world-poverty.jpg

Bill Gates has called for capitalism to contribute more effectively to the big social and environmental issues of the emerging century. What is creative capitalism? A working definition might be capitalism which places the resolution of social needs as a primary goal of economic activity, rather than a secondary consequence

The most successful capitalist of the late twentieth century calls for a shift in capitalist philosophy and actions for the twenty first century. The speech at the Davos conference follows his earlier efforts at creating a foundation to channel funds towards the social good. And where Bill Gates leads, others follow.

The parallel with science is worth a moment’s thought. Scientists for many years considered their contribution to the well-being of society was an indirect spin-off from their discoveries. Science and ethics were as much two worlds, as were the two cultures of C P Snow (Science and Humanities).

Over time, many critical issues arose at the interface between science and social responsibility: the applications of nuclear energy, stem-cell research, communications technology, surveillance and personal freedoms. The social responsibilities of science become acknowledged as a vital component in the development of improvements to the quality of life around the globe.

Old and new capitalism

As for science, now for capitalism. The old arguments were that entrepreneurs and businesses created wealth. It was up to society to decide how the wealth was redistributed, and resources allocated to social causes. The blind variation of capitalist growth seemed to have few more direct conduits to social amelioration. [And yet, the most ruthless capitalists of the nineteenth century tended to convert their amassed fortunes into trusts and foundations for the betterment of the less fortunate.]

Gates is proposing a different relationship between capitalism and the creation of the social good.

Gates at Davros

The Davros meetings have become synonymous with the powerful getting together to reflect on the human condition and what to do about it. For some, the meetings conceal a conspiracy of the most dangerous and monstrous kind. For others, it indicates where global change is needed, and what might be done about it.

Gates has the power to shape those changes, and may well bring others into line. If so he is yet another capitalist who has undergone a process of re-evaluation of self and the legacy he wants to create for himself

According to the BBC, Mr Gates said

“We need a creative capitalism where business and non-governmental organisations work together to create a market system that eases the world’s inequities,”

He gave examples of the sort of thing he had in mind, such as the Red campaign, itself launched two years ago in Davos by Bono, now to be partnered by Dell and Microsoft in committing proportions of earnings to sovial anti-poverty causes. He also mentioned the contributions from drug companies that were selling vaccines to Africa for a much lower price than in developed countries.

So what is creative capitalism?

As a working definition, we could start with what is implied in Mr. Gates’ speech. He challenges the old touchstone that capitalism does not have to concern itself directly well-being of people. Maybe we could see this as a challenge to that economic petty but benign deity which operates in mysterious ways, Adam Smith’s invisible hand in the interplay of the market forces.

Uncreative capitalism took for granted its benefits to all, through its mechanisms of social Darwinism, competition, and evolutionary success of the fittest. Creativity was a by-product of economic change – creative destruction Schumpeter called it. Exogenous sources of variation, muttered the neo-classical economists.

In contrast, creative capitalism places the resolution of social needs as a primary goal of economic activity, rather than a secondary consequence of accumulation of resources (‘rents’).

It’s only a working definition. We can argue whether the examples offered by Bill Gates are ‘sticking plasters’ leaving the economic sickness largely unaddressed. But the plaster is being administered with care and professionalism. At least two cheers for Gates at Davros.

Acknowledgement

Thumbnail Image is of World Bank estimates of poverty levels (2001) from the Aberdeen Business School Public Policy Site.


The Budget, and the Battle: Which leader will create the more powerful myth?

March 22, 2007

Gordon Brown’s eleventh budget has been widely assumed to be his last, and an opportunity to indicate his credentials as a future Prime Minister. Its presentation permits a comparison of the leadership images or myths which he and David Cameron are concerned to project.

Gordon Brown makes his eleventh Budget speech. The prelude had been inauspicious. The Turnbull story has persisted, mainly as evidence corroborating Brown’s image as an arrogant control freak. A few journalists suggested that the story might be taken as more positive for Brown, and evidence of a leader unprepared to suffer fools gladly.

I listened to the budget speech while driving from a late-morning meeting. Brown constructs speeches like the Germans build luxury cars and compose classical Operas. The products are impressively. Purposively designed, and fit for purpose. This one was no exception.

A leitmotif recurred by way of ‘then and now’ theme, ‘then, being was 1997 when the Conservatives were last in power.. ‘now after nearly ten years of economic success under New Labour’. This device was interspersed with a more complex yet related theme around ‘past present and future’ conditions.

The delivery was in an appropriately major key. The effect was that of a series of percussion blows.

The speech was well up the scale on information, and down on rhetorical flourishes. It put each of its items in that ‘then and now context’: inflation then, inflation now: investment then, investment now, unemployment then, and so on. Current Conservative counter-proposals were swatted aside, as a sorrowful head teacher might summarize and correct errors encountered while assessing homework assignments.

The speech appeared to be reaching its predestined conclusion. Maybe some listeners were waiting for the unexpected. The Chancellor has been known to conjure up a surprise. He had me fooled, at least. As he was appearing to beat out the appropriate magisterial last few chords, he produced a startling finale. Perhaps I had bought too much into the stereotype of the humorless Chancellor. Even as he was signaling the end of his last speech, literally gathering together his folio of notes, he added a coda:

To reward work, to ensure working families are better off, and to make the tax system fairer, I will from next April cut the basic rate of income tax from 22p down to 20p. The lowest basic rate for 75 years.

Cut basic tax! Surprise and delight on the Labour benches. Mr Brown had stolen the clothes that Conservative traditionalists worried that David Cameron had discarded.

Later, I caught up on the spectacular visual impact the ending produced on the House. David Cameron takes the floor. Despite valiant efforts, he was unable to build on the weapons provide the previous day by Lord Turnbull’s reported remarks. Just you wait, he seemed to be saying, you and your gang will get it for your sneaky ways. You’ll see. If not now, after School is over.

His sallies sounded even less effective as he redirected them towards more junior members of the Government team, such as the even younger Boy David, the Secretary of State for Environment, Food and Rural Affairs. David Miliband winced as if embarrassed by such an expression of poor form. Why pick on the first-formers? [You can see David Miliband’s youthful features on his very own blog, which he seems to have built using his very own pocket money].

I have scanned newspaper headlines, followed the debate conducted in political blogs, and listened to a fair sample of callers to phone-in broadcasts. The Basic rate cut does grab headlines, with appropriate contextualization. Right-leaning papers echo the Conservatives (‘It’s a con … all smoke and mirrors’). The Guardian, the paper that has been reporting Gordon Brown’s unpopularity in predictive polls in recent months, is warm in its praise.

The Institute of Fiscal studies considers that around 20% of families will lose out, spread rather widely across the spectrum of incomes. Bloggers and callers to phone-in programmes have tended to be driven by motives of disappointment. I’d estimate that more than 80% of responses have come from those unhappy with what they have received (or not received) from the Chancellor.

Real biz or showbiz?

The Game’s afoot. The Boy David suffers a setback, as his opponent girds himself not so much in the armor of righteousness as in the magical powers of transmogrification and cross-dressing. But this is no more than a skirmish.
Maybe it indicates the perils of charismatic leadership. David Cameron has been relying very much on a high-profile leadership style. The credibility of his messages is very much bound up in the credibility of his public image. This makes a delicious contrast with Gordon Brown’s style. If that’s not enough interest, we will from time to time be surprised by behaviours when one or the other moves outside the simplified stereotypes we might hold of them.

Which myths will matter more?

According to leadership theorists, the budget presentations are opportunities for leaders to consolidate the story they wish to be remembered by. This is a partly deliberate process of myth-making.

Until now, Gordon Brown has operated strictly in the mode of the rational manager par excellence. In contrast, David Cameron has been energetic in presenting himself as a Charismatic leader. But success and power can result in even rational managers acquiring the mystique of charisma. If David seems to tick the boxes for one kind of charismatic, Gordon may tick the boxes for another. One typology (by Will McWhinny) would probably locate David as an idealistic or prophetic entrepreneur such as Anita Roddick. And Gordon would be closer to rational geek as wunderkind such as Bill Gates.

So there we have it. The battle will be between the leadership appeal of an Anita Roddick, or a Bill Gates. But if this were to become a party game, would we necessarily place them at the head of the Conservative and Labour parties? And who would be better placed to attract the voters?


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