Bill Gates writes in this magazine that he wants big corporations to do more for the world's poor. He calls this "creative capitalism." Who could possibly object?
Actually, lots of people. After Gates outlined creative capitalism in a speech at Davos, Switzerland, in January, I started a website on the topic creativecapitalismblog.com) with the Tom Sawyer--ish intention of inviting distinguished economists, journalists and ordinary people to discuss their reaction to Gates' notion and then turning it all into a book. It has worked like a dream, and the book will be out by the end of the year. The remarkable thing is the variety of objections to what seems like an idea that's hard to dispute.
There are some, of course, who find anything Gates does or says nefarious. Last year the Los Angeles Times reported indignantly that while the Bill & Melinda Gates Foundation was busy saving lives from malaria, Africans continued to die of other causes. A more serious left-wing argument is that important social goals shouldn't have to rely on the charity of some corporation. While Gates sees what he calls "recognition"--credit for doing good--as a healthy incentive for corporations to behave well, others see the same phenomenon as propaganda and are not impressed. There is something deeply wrong with a system that allows extremes of inequality, these people believe, and creative capitalism is just a way for the corporate élite to put off making the necessary changes.
These left-wing objections have their equivalents on the right. With the term creative capitalism, some critics complain, Gates is implying that capitalism itself isn't creative. Superenthusiasts of free markets believe that any goal capitalism fails to achieve can only be the fault of interference from the government. Gates, in this week's article, denies his concept is a "knock on capitalism itself." But if there is something called "creative capitalism," there must be an "uncreative capitalism," just as George W. Bush's "compassionate conservatism" is unavoidably an insult to conservatism in general.
Beyond slogans, some conservatives believe that Gates' emphasis on changing the behavior of large corporations in developed countries is misplaced. More good can be done, they say, by spreading the gospel of free markets to places where corruption and red tape still strangle capitalism than by tinkering with the machinery in places where it already works pretty well.
In 1970, Nobel-laureate economist Milton Friedman wrote a magazine article about "corporate social responsibility," an earlier term for something very much like creative capitalism. Friedman said the responsibility of corporations was to maximize value for their stockholders--period. Anything else was a betrayal of those stockholders, who can always give their profits away to worthy causes if they want. But the choice should be theirs. It was argued in reply back then that social responsibility benefits the bottom line because it makes the corporation look good, thereby attracting more customers and better employees. Gates makes a similar argument. But this reasoning is a bit circular: if creative capitalism makes good business sense, then corporations deserve no special praise for practicing it. If it carries a real cost to stockholders, then Friedman has a point.
As it happens, Gates' financial history has followed the Friedman philosophy more than his own. Gates founded Microsoft and ran it with legendary single-mindedness for three decades. There was not a lot of energy devoted to lifting up the world's poor. Now, having squeezed every drop out of capitalism, he is going to devote almost all his time and fortune to improving the state of the world. Even the skeptics tend to agree that the results of that redirected single-mindedness could be awesome.
And the general reaction to Gates' proposals has been positive. Certainly no one can seriously object to his putting these issues on the table. His timing is excellent: there is growing interest, especially among young people, in helping the world's poorest. Even the most troglodytic corporation is feeling pressure to be green (and to pretend, at least, to be excited about it). The parade of corporate scandals continues, and capitalism's need for a bit of image repair continues alongside. It's a perfect moment for the biggest corporate titan of all time to turn his attention to problems that software can't solve.
Conflict-of-interest note: I worked for Microsoft for seven years, and my wife Patty Stonesifer is a senior adviser to the Gates Foundation after 11 years as its CEO
6 months ago