Economics

Creative Capitalism = Compassionate Conservatism?

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Bill Gates spoke at the World Economic Forum in Davos last week, and touted what he calls "creative capitalism":

…where governments, businesses, and non-profits work together to stretch the reach of market forces so that more people can make a profit or gain recognition doing work that eases the world's inequities….

This system, [capitalism], driven by self-interest is response for the incredible innovations that have improved so many lives.

It's always good to see an important person speak so highly and at such great length about the wonder working powers of market forces and describe "self-interest" in such glowing terms. But the whole "creative capitalism" concept has a certain echo of "compassionate conservatism," which wound up being the worst of both worlds (At last! The state funding religious charities, plus a massive new Medicare entitlement! Just what we needed!).

Can Gates-style "creative capitalism" avoid the same trap? (At last! Governments bullying corporations to do good and massive new aid budgets!)

Cross posted at reason.tv

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  1. Gates sounds like Buffet on this. The Moonies shill for the right. When Gates didn’t pay any attention to politics, he got spanked for it.

    Apart from that and quasi-marketing, I don’t understand why somebody who built a company from scratch would say some of the things he does.

  2. Can Gates-style “creative capitalism” avoid the same trap?

    Only if everyone ignores it.

    “Creative capitalism” implies that, if left alone, capitalism is uncreative. It’s like all that “fair trade, not free trade” bullsh!t.

  3. Why Gates would speak so lovingly of governmental power, given his ass-fucking at the hands of anti-trust lawyers and regulators, is beyond me.

  4. given his ass-fucking at the hands of anti-trust lawyers and regulators

    Maybe that IS why.

  5. Why Gates would speak so lovingly of governmental power, given his ass-fucking at the hands of anti-trust lawyers and regulators, is beyond me.

    Because he’s realizing that government power trumps his monetary power, and he probably wants in on the game.

  6. “Why Gates would speak so lovingly of governmental power, given his ass-fucking at the hands of anti-trust lawyers and regulators, is beyond me.”

    Maybe he just learned his lesson.

    In a system designed to prevent Darth Vader from getting any deals done, you better not let yourself be characterized as Darth Vader.

    Having a ownership relationship with a media outlet helps too–see Rupert Murdoch* and the Moonies as examples.

    I sometimes wonder, if it wasn’t for Fox News, etc., whether “Family Guy” would get away with what it gets away with in prime time.

  7. Classic case of Stockholm Syndrome.

  8. In my opinion, creative capitalists can do whatever the heck they want, so long as they don’t use coercion or the power of government to do it.

  9. I think I should b able 2 buy what I want
    Hire who I want
    Fire who I want
    Live with who I want
    Rob who I want
    … who I want

  10. I’m an Apple man myself.

  11. Like people in the military, actual business leaders are so much more impressive than their cheerleaders.

  12. When you’re worth ~$60 billion you can afford to be fairly magnanimous.

  13. Perhaps the better question is, what makes you think you understand how capitalism and social progress interact better than the founder of Microsoft/head of the Bill and Melinda Gates Foundation?

    Read some books?

  14. I find a lot of Gates is saying here rather inspiring. The cynical jaded H&R comments here are unnecessary, a lot of what he’s saying is pretty awesome.

  15. yeah yeah i know the grammar for that last commment was awful. My bad.

  16. i call shenanigans.

  17. Gates may be a fine person and a true philanthropist, but “creative” is not an adjective I would associate with him.

    I don’t see where he said anything about government coercion, though.

  18. …what makes you think you understand how capitalism and social progress interact better than…

    Who is the “you” that comment is directed at? Someone in particular? Everyone who commented here?

  19. Perhaps the better question is, what makes you think you understand how capitalism and social progress interact better than the founder of Microsoft/head of the Bill and Melinda Gates Foundation?

    I don’t know as much about capitalism as Bill (but probably more than Melissa). But to suggest that Bill is an expert at it is ludicrous. He knows how to aquire other companies, how to lobby government, how to defend himself in court, and how to milk copyrights for all they’re worth. But I don’t see much evidence that he knows more about a market economy than the neighborhood Afghani liquor store owner. I will grant him a large dose of entepreneurial know-how, but the rest of his fortune comes for corporatism, not capitalism.

  20. Recognizing important breakthroughs and acquiring those technologies, to be combined with other technologies in order to bring a product to market that will sell well, isn’t “capitalism?”

  21. Brandybuck — Love your comment. But please don’t use “corporatism” to mean “corporate welfare.” They mean different things.

  22. Recognizing important breakthroughs and acquiring those technologies, to be combined with other technologies in order to bring a product to market that will sell well, isn’t “capitalism?”

    Creative Capitalism maybe?

  23. Lefties do love to hold up straw puppets like Bill Gates as examples of capitalists. Gates is a liar and con artist extraordinaire, a mercantalist and protectionist through and through. He rose to prominence on daddy’s money, has been a follower of trends rather than a creator of them, and his company became successful by marketing substandard shit and ripping off other people’s best ideas.

  24. Who is the “you” that comment is directed at? Someone in particular? Everyone who commented here?

    Guess an answer isn’t important now. You got someone to bite.

  25. Burn the witch! Burn him!

    Remember all the conservatives describing him that way during the anti-trust investigation?

  26. Mike,

    How about, the fist half dozens commenters?

    Clear yet?

  27. Perhaps the better question is, what makes you think you understand how capitalism and social progress interact better than the founder of Microsoft/head of the Bill and Melinda Gates Foundation?

    Yeah, you damn Libertarians keep your mouths shut! Only the rich and powerful are entitled to opinions on the economy and politics!

  28. I use “corporatism” to refer to an economic system with tax and regulatory structures that encourage large corporations as the expense of smaller businesses.

  29. “Perhaps the better question is, what makes you think you understand how capitalism and social progress interact better than the founder of Microsoft/head of the Bill and Melinda Gates Foundation?”

    And who, better than a professional quarterback, knows more about which company I should use for my auto insurance?

  30. On second thought, if you’re talking about auto insurance, I guess you really need to go to a NASCAR driver.

  31. I didn’t even read anything–I was just making a ha ha.

    Wealth does not make one an expert at economics or at sociology, I will note. Buffet says some silly things about capitalism on occasion, which doesn’t make him any less wealthy or less of a good investor. But it doesn’t make him right, either.

  32. Clear yet?

    Yes, argumentum ad verecundiam.

  33. “Wealth does not make one an expert at economics or at sociology…”

    What do you mean?!

    I think being a quarterback probably makes you an expert on which company to pick as your stockbroker, because to be a really good quarterback, you have to have a lot or success.

  34. Just to be safe, you’d better ask a lizard, Ken.

    Rex doesn’t know the difference between experience and wealth. HA HA!!!

    Bill Gates didn’t inherit his wealth, he earned it by starting a running a successful business. Then, he went to work to use that wealth to promote social and economic development, and has spent several years watching how it might work.

    You can mouth off all you want, Rex, but you’re kidding yourself if you think your readings on political theory provide you with an understanding of how business entities function in, and influence, the world better than that of somebody in Bill Gates’ position.

  35. Recognizing important breakthroughs and acquiring those technologies, to be combined with other technologies in order to bring a product to market that will sell well, isn’t “capitalism?”

    It’s an aspect of capitalism; it’s not the whole shebang. I suspect that Bill Gates doesn’t know the theoretical underpinnings of a market economy well, though he does know how to run a company in a semi-market economy.

    Don’t give too much credit to Microsoft. They lucked into making the original OS for IBM computers, and didn’t do too hot a job of that (most of DOS was copied from CP/M). The success of IBM compatibles had little to do with Microsoft; IBM’s decision to open the hardware standard was almost entirely the reason that IBM compatibles took off (in fact, IBM tried to rectify this “mistake” later with the PS/2, but it didn’t work so well). MS DOS was a perfect example of “good enough for the job.” Microsoft since then has made a number of strategic mistakes; the only thing that’s saved them is that their competitors have made even bigger mistakes.

    Note that I’m not a Microsoft basher. I think that overall they’ve done more good than harm to the computer industry. Characterizing Bill Gates as some kind of capitalist genius is wrong, though. He’s more competent than average at running a company, but mainly he was in the right place at the right time by happenstance. That doesn’t qualify him to know any more about capitalism than any one of us here.

  36. Why does this remind me of the apologists for Communism saying: “well, the pure form hasn’t been tried yet. Once it is, you’ll see how wonderful it is!”

    Ditto libertarians and their comments about “Capitalism”, an ever-receding Platonic ghost just always out of the grasp of existence.

  37. joe:

    Gates actually started Microsoft by selling software he didn’t own the rights to… then followed an embrace, extend, extinguish philosophy to kill standards that threatened the company. When Microsoft was first starting out, it had a couple of moments of upstart rebeldom (like being able to open WordPerfect files in Word). But that went away a long time ago.

    The IT world is a strange one when comparing it to a standard market. If a better piece of software comes out, it has to run on a platform that all of your current software runs on. Otherwise, the cost to change over is far too large. Interoperability and legacy support are considered critical functions in almost everything.

    Suffice it to say, I’m not a fan of Microsoft’s business practices, I did support the anti-trust, but was looking for a punishment of opening up the API’s.

    Nephilium

  38. I don’t see where he said anything about government coercion, though.

    Nor did I, unless by “partnerships” KMW thinks he means coercion. That’s a bit of a stretch, but typically cynical, and therefore to be expected.

  39. Samuel Johnson on Joe:

    “I will acknowledge that I have a better opinion of him now, than I once had; for he has shewn more fertility than I expected. To be sure, he is a tree that cannot produce good fruit: he only bears crabs. But, Sir, a tree that produces a great many crabs is better than a tree which produces only a few.

  40. what he’s describing really is Fascism. Hillary is a great champion of this.

    Gates is no Hayek, he was a master of buy low, sell high and innovate…not economics.

  41. Perhaps the better question is, what makes you think you understand how capitalism and social progress interact better than the founder of Microsoft/head of the Bill and Melinda Gates Foundation?

    I thought it was conservatives, not liberals, who bow to authority rather than thinking for themselves.

  42. grumpy: I would say the attempts at reaching each (Early USA capitalism vs Soviet Russia communism) form of pure government gave vastly different results. From that we can argue that a pure form of capitalism is better (for individuals) than a pure form of communism.

    We can also argue that on the sliding scale of mixed economies, that as we trend towards communism we get worse results.

    So given that, why not hope for pure capitalism?

    And somewhat off topic, why must statists try to convert the only somewhat capitalistic country to statism when they could be perfectly happy in already formed socialist/fascist countries? Us capitalists have nowhere left to go. 🙁

  43. I guess the “creative” part of Gate’s creative capitalism is him creatively suggesting the definition of capitalism includes some joint venturism with government to attempt to achieve some egalitarian goal.

    That has nothing to do with capitalism. Specific individuals or businesses may want to achieve some egalitarian goal and may be willing to put some of the money they have acquired via capitalism toward that goal but that doesn’t mean those activities have anything to do with capitalism.

  44. Jobu tells me to buy auto insurance from Allstate. Jobu know better than American football quarterback. But Jobu no help me hit curve ball.

  45. Of course, one has to take any wisdom from Bill Gates with a grain of salt: He reputedly married Melinda without a prenuptial agreement. This is a community property state. Must be to blave.

  46. Did any of you even watch the video? He was so vague about his ideas that you couldn’t possibly find something to object to. Zealots.

  47. Did any of you even watch the video?

    Not me.

  48. Like most Dems, joe confuses ‘pro-business’ and ‘pro-market.’ If the CEO of a mega-corporation is really looking after his self-interest, then almost by definition he’s cozying up to the feds. Microsoft was very nearly wrecked by its neglect of this aspect before – count me in with those who think Gates has learned his lesson. Warm and fuzzy good ‘corporate citizen’ Microsoft, with its legions of crack lobbyists, is virtually immune to the DoJ.

  49. I bet Billyboy hasn’t even read Atlas Shrugged (I’ve read it three times).

  50. Did any of you even watch the video?

    Sort of. Sporadically. I don’t have time to give a 35-minute video my full attention.

    I thought the most interesting thing he said was his suggestion that a corporation try to help the third world in its area of expertise rather than trying to help in more generic ways: for example, a cell phone company should help with a country’s communications infrastructure.

  51. There’s a reason why economists are a joke on Wall Street.

    This is why we should let the government make as few decisions as possible–no one, not even Bill Gates, is more qualified than I am.

    …well maybe Hillary Clinton.

  52. “for example, a cell phone company should help with a country’s communications infrastructure.”

    Except that the corporation has a legal fiduciary duty to it’s owners – the stockholders – to maximize shareholder value. The coroprate officers are not playing with their own money and they don’t have any right to be giving it away to burnish their own image.

  53. It Takes a Pillage.

  54. Except that the corporation has a legal fiduciary duty to it’s owners – the stockholders – to maximize shareholder value. The coroprate officers are not playing with their own money and they don’t have any right to be giving it away to burnish their own image.

    Ordinarily true. But there’s nothing to prevent a corporation from amending its charter (if it can get sufficient stockholder approval) to permit such spending.

  55. for example, a cell phone company should help with a country’s communications infrastructure

    I didn’t realize cell phone companies were tax-exempt.

    But there’s nothing to prevent a corporation from amending its charter (if it can get sufficient stockholder approval) to permit such spending.

    Nothing but the inevitable cratering of its stock value.

  56. Except that the corporation has a legal fiduciary duty to it’s owners – the stockholders – to maximize shareholder value.

    But there’s nothing to prevent a corporation from amending its charter (if it can get sufficient stockholder approval) to permit such spending.

    I don’t know the legalities here. Corporations engage in philanthropy all the time. Are you referring to having a fiduciary responsibility morally, or referring to specific SEC regulations? Do the regulations not make allowances for engaging in some reasonable degree of corporate philanthropy?

    I didn’t realize cell phone companies were tax-exempt.

    I didn’t follow what this comment meant.

    Nothing but the inevitable cratering of its stock value.

    I’m not following this comment, either. Corporations engage in philanthropy all the time. It may or may not decrease stock value, but it usually doesn’t cause cratering.

  57. Fighting urge to make dumb joke about corporate lycanthropy…

  58. Indeed. Witness Home Depot’s decision to NOT raise prices after Hurricane Katrina even though the “rational marketer” would have said “charge what the market can bear.” Because they knew that NOT gouging their customers got them an incredible amount of good PR.

    But I guess that according to those who live by the Need of the Shareholder this was obviously a Bad Thing.

    Libertarians don’t seem to ever acknowledge the existence of community. Or that the community might get together and vote to carry out actions that are decidedly “un-libertarian” and that it is their collective right to do so. If they decide to have a National Health Care plan, it is their collective right to vote one into existence. If the bulk of people decide that progressive taxation is a Good Thing, all the ranting on the sidelines won’t stop them.

    Face it–you’re just pissed off because people aren’t voting the way you think they should. Talk about a bunch of nanny-staters!

  59. grumpy: a business can and should charge whatever it wants. That is the free market. If it is better for their long term gain that they skip profits now for a good reputation and large profits later that is absolutely fine. Government stepping in a nd forcing them to do this is not fine. If home depot did raise prices competitors would have come in and stolen market share where/if they could.

    It does not mean that home depot is altruistic or that altruism should play any part in anything.

    And about your collectivism, majority rule is mob rule. If 51% of the country is white and decides to exterminate the blacks is that okay because the collective wants it?

    Your statist arguments suck.

  60. “Or that the community might get together and vote to carry out actions that are decidedly “un-libertarian” and that it is their collective right to do so.”

    So if your neighbors decided they’re tired of putting up with you and collectivly decide to beat you to death, I presume you would be OK with that.

  61. Libertarians don’t seem to ever acknowledge the existence of community.

    You’re doing good up to this point. A lot of us libertarians do acknowledge the existence of community, but, sure, there are some that don’t.

    Or that the community might get together and vote to carry out actions that are decidedly “un-libertarian” and that it is their collective right to do so.

    Now, you’re straying from talking about community into talking about government by majority rule.

    Face it–you’re just pissed off because people aren’t voting the way you think they should.

    True. At least a little pissed off about it.

    Talk about a bunch of nanny-staters!

    Huh?

  62. “Like people in the military, actual business leaders are so much more impressive than their cheerleaders.”

    And the inverse is true for politicians and their cheerleaders (and maybe even city planners and their cheerleaders).

  63. I’ll see your Bill Gates and raise you a T.J. Rodgers.

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