Bill Gates and "Creative Capitalism"
ECONOMICS, CORPORATE CITIZENSHIP
Friday, February 15, 2008
At a speech at the 2008 World Economic Forum in Davos, Switzerland, Bill Gates introduced a new theory for improving the plight of the poor in developing countries. According to Mr. Gates, “the world is getting better, but it’s not getting better fast enough, and it’s not getting better for everyone.” Companies need to use new technologies to develop innovative products that are specifically designed to improve the lives of those individuals living in less-developed countries, but this is not what tends to happen in the business world. Gates claims that the problem lies in the capitalist system – the poor do not provide enough financial incentive to entice capitalism to serve them. While philanthropy can ameliorate some of this problem, such activities do not provide enough resources to fully satisfy the needs of the poor.
Mr. Gates feels that the solution to this problem is to create an alternative incentive to persuade the forces of capitalism to serve poor, developing countries. He proposes that recognition can be this incentive. Recognition enhances the reputation of a business, which then delivers the “market-based reward” of attracting customers and “good people.” He labels this new system “creative capitalism,” which will pursue both profit and recognition based incentives in order to benefit the developing world.
William Easterly, author of “The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good,” disagrees with Bill Gate’s approach. In an editorial published in The Wall Street Journal, Mr. Easterly highlights the historical record of the “recognition motive,” stating that it has not been very effective in the past. Rather, it is “profit-motivated capitalism” that has done the most good. The lack of profit based incentives in the developing world is not a fault of the pure capitalist system, but is due to domestic shortcomings, such as corruption and political unrest. “Creative capitalism,” according to Mr. Easterly, will be ineffective in the battle to end poverty.
Jim Kelly is the President of Solidarity Center for Law and Justice, P.C., a public interest civil and human rights law firm based in Atlanta, Georgia. The opinions expressed herein are his own.
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