The oft-maligned Bill Gates on “creative capitalism”

The August 11 edition of TIME Magazine featured philanthropist and Microsoft founder Bill Gates on the cover, and included a somewhat interesting article by the man himself on the topic of “creative capitalism”. As arguably one of the greatest individual beneficiaries of the capitalist system in the twentieth century, I suppose that we should not be surprised to hear that Gates believes that capitalism does have the potential to lift the third world out of poverty and into the marketplace. On the other hand, it may be surprising to some to hear that one of the most successful in-practice exponents of market domination ever believes that capitalism should be bent to meet the needs of the less unfortunate.

This passage from the article sums up Gates’ philosophy quite succinctly (p.28):

As I see it, there are two great forces of human nature: self-interest and caring for others. Capitalism harnesses self-interest in a helpful and sustainable way but only on behalf of those who can pay. Government aid and philanthropy channel our caring for those who can’t pay. And the world will make lasting progress on the big inequities that remain – problems like AIDS, poverty and education – only if governments and non-profits do their part by giving more aid and more effective aid. But the improvements will happen faster and last longer if we can channel market forces, including innovation that’s tailored to the needs of the poorest, to complement what governments and nonprofits do. We need a system that draws in innovators and businesses in a far better way than we do today.

In short, he is something of a modern-day socialist. Gates cites C.K. Prahalad’s work The Fortune at the Bottom of the Pyramid (which sounds like an intriguing read!) in formulating his thoughts in the article, which revolve around the fact that there are many markets all over the world that the free market system has essentially looked over. Effective markets have not arrived in some impoverished developed countries, and the blame for this can clearly not just be laid at the feet of the despots who lead some or perhaps many of these places. Free-ish markets have failed to deliver wealth to the world’s poor over the last few decades, and clearly need more of a push from the public and non-government sectors.

It is deeply ironic that despite the fact that Gates is almost universally maligned today as the former leader of the world’s least cool software company, the work he has done in his industry and is now involving himself in is quite frankly invaluable to the world at large.

ELSEWHERE: There’s a video featuring Gates’ thoughts on the topic here.

4 thoughts on “The oft-maligned Bill Gates on “creative capitalism”

  1. I understand Gate’s dad wrote a book defending the progressive tax system.

    To get way off the subject, it’s hard to avoid thinking about the financial implosion and what it means politically. It could mean a very rough time for the Rudd Government , but I can’t help thinking that at a broad international level this will result in a turn to the left in economic thinking, and that Australia will almost inevitably follow this trend.

    And I was thinking about the number of political writers and intellectuals that have moved from right to left – people like Robert Manne here or Michael Lind in the US. Did you notice when you were in the UK any writers who’ve moved to the left, Guy? I understand Will Hutton was something of a Thatcherite at one stage.

    Anyone else think of any names? I have a feeling that a steady trickle might grow substantially in the next few years.

  2. Already we are seeing what we might describe as “old left” measures (e.g. nationalisation) being applied in order to solve in the short-term some of the problems that the sub-prime crisis and financial markets are throwing up. Although I expect that there is a pretty high probability that every crash we have is going to be cancelled out by an equivalent bounce as investors seek bargains in the market, I am sure that people recognise now that even “old left” measures should not be considered anathema today if the conditions demand it.

    Off the top of my head I can’t think of any prominent folks who have moved from the right to the left in the UK just now. Unfortunately over there, David Cameron is considered to be something of a renaissance man by the conservatives; they are quite infatuated with him and his boiler-plate economic rationalism.

  3. I apologise to Bill Gates’s Dad for the incorect use of an apostrophe – I can only plead sleepiness.

    I know “The City”, that is the financial sector, is all-powerful in Britain, but I think that may change a bit. As part of the Anglophone world we tend to follow the prevailing economic ideas in the US and UK, and I find it amazing that, in the finance area at least, the word “regulation” suddenly seems to have taken on the aura that “free market” once had.

    I wouldn’t advocate strict regulation of every nook and cranny of the economy, but for crying out loud how may times do we have to learn the same lesson when it comes to the shenanigans of the finance industry?

    And I notice that many US commentators are picking up on the fact that, at root, the subprime mess has been caused by the massive inequality in the US.

  4. Indeed – good point in particular on “regulation”. A few years ago “regulation” was a negative word… this latest crisis may have just turned it into a positive word.

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