Creative Capitalism [Hardcover]

Bill Gates is one of the richest men in the world. He is also one of its biggest philanthropists, having given over $30b to the Bill and Melinda Gates Foundation of which $16b has been spent. This book centres around a speech Gates gave to the World Economic Forum at Davros in 2008. He argued the world was getting better thanks to science, medicine and technology. However, "the great advances in the world have often aggravated the inequalities in the world. The least needy see the most important and the most needy see the least." He accepted market incentives played a major role in creating this situation. "The genius of capitalism lies in its ability to make self-interest serve the wider interest." Further, "capitalism harnesses self-interest in helpful and sustainable ways but only on behalf of those who can pay." Basing his analysis on the social principles of self-interest and caring for others, Gates argued that market forces should be encouraged to serve more people and reduce inequalities. Creative capitalism can meet the needs of the poor by making products which fit their market price while simultaneously looking for higher prices from those who can afford them.

This viewpoint constrasted sharply with the opinion of Milton Friedman set out in "The social Responsibility of Business, written in 1970." Friedman argued that promoting social ends was "pure and unadulterated socialism" and that businessmen talking this way "are the unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades." Corporate executives had a responsibility to their employers and the shareholders of the company for whom they work. Social responsibility was a matter for them to determine on an individual basis, it was not for the company to do so. Any suggestion to the contrary involved " the acceptance of the socialist view that political mechanisms, not market mechanism, are the appropriate way to determine the allocation of scarce resources to alternative uses."

Clive Crook commented that Gates's viewpoint was based on "Do as I say, not do as I did." He describes Gates's "Creative Capitalism" as "convulated and incoherent ....a potentially debilitating distraction from the search for profit." William Easterly drew attention to the fact that the Great Depression of the 1930's led some to favour Soviet planning without success. The Chinese Communist model "gave us famines, great leaps backward, cultural revolutions and deaths of tens of millions". The recent boom in the Chinese economy came when the Chinese ruling class gave up totalitarian power to the markets. While capitalism may be unstable and unequal it works, its power contributing to the fall in world poverty. Elizabeth Stuart argued that capitalist philanthropy applied to developing nations could assist those nations to avoid the downsides experienced by mature economies during their industrialisation. Stuart opined that capitalism must be prepared to accept restrictions on its activities such as improved labour conditions and greater regulation.

What emerges from the various contributors undermines the Marxist caricature of bloated capitalists exploiting the working classes. A former CEO of Proctor and Gamble adapted the company's product to the market in rural India by selling washing powder in single sachets at a price customers could afford. Shoppers in the UK may have noticed the reverse process recently with standard containers carrying less content. Robert Reich argues that social responsibility is harmful to democracy as it diverts attention away from the establishment of laws and rules in the first place and from corporate involvement and influence in the democratic process through lobbying. Gregory Clark drew attention to the fact that early capitalist development was as much about idealism as profit, noting that Sir Humphrey Davy developed the miners' safety lamp as a humanitarian venture from which he refused to take any profit. At the same time he squabbled furiously with George Stephenson as to who deserved credit for the innovation.

The various essays demolish the myth of capitalism as a unified force both in society and history. Capitalist philosophers are no more united than any other group of thinkers. The profit motive is an incentive to develop new markets, satisfy customers' needs and produce wealth. Alternative methods of wealth creation based on planning and re-distribution of wealth have failed. Marxism failed in Great Britain because the middle and working classes wanted to participate in the creation of wealth rather than just accept distributed benefits. In addition, those involved in capital creation were not solely motivated by maximising profits but by human factors of prestige, feeling good about themselves and, in some instances, a paternalist viewpoint. The moral case against unrestricted capitalism is significantly stronger than the economic or social arguments but is frequently distorted by ideological considerations. Robert Owen's cooperative venture failed, Marxist planning failed, traditional Labour mixed economies failed. They all failed because of human factors - the inability of human groups to agree on worthwhile objectives.

That raises the question of what constitutes enlightened self interest. In the case of the banking crisis it was self interest that created financial meltdown. There was no enlightened element. The absence of that element created unfairness in the economic consequences of the crash. As Elizabeth Stuart pointed out capitalistic ventures require rules and regulations to keep wealth creation within the ethical values of the nation. Thus while enlightened self-interest has outlasted alternative solutions and should be encouraged, governments have the right to call to account economic practices which adversely affect society. Five stars for a book which everyone should read whatever their ideological persuasion.

I really enjoyed reading this book. Composed of different articles (posts from a blog) written by different professionals (professors, business people, journalists, ...), this book gives a good overview and critique of Bill Gates's idea of Creative Capitalism.

I would recommend this book to anyone interested in capitalism and helping others.

Although a colleciton of essays I was worried there would be alot of repeating of the same thing by deifferent people, but they have been carefully selected to give a good representation of the subject across the board. Having a colleciton of essays on the subject by a multitude of authors instead of a book by one author gave way for a lot of differnet opinions and great variance in proposals.

Despite being light in detail and content it is an informative worthwhile read, I'd recommend it.