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