Creative capitalism

Citation

Ali, A.J. (2007), "Creative capitalism", Competitiveness Review, Vol. 17 No. 4. https://doi.org/10.1108/cr.2007.34717daa.001

Creative capitalism

In his commencement address at Harvard University (June 7) Gates, 2007 promoted the concept of “Creative capitalism”. While acknowledging that capitalism as a system has triumphed and there is no credible alternative yet, Gates asserted the need to make the system more responsive to the aspirations of the poor and especially children in developing nations. Gates insisted that to make capitalism a creative system it has to listen to the voice of those who are left outside the market mechanism because they have neither the means nor the power to effectively leave their marks in the global marketplace.

Gates was specific in stating that capitalism should incorporate new features to make it capable of dealing with unfolding problems, including the severity of disease and poverty. In particular, Gates suggested that governments have to band together to ensure that for expensive risky vaccines, for example, a demand is guaranteed.

That is, there should be incentives for corporations and market competition to place discovery and innovation under the service of those who could benefit from them the most – the poor. Gates believes that “every life has equal value” and it is against human nature to propose that “some lives are ... worth saving and others are not”. The pressing question is “what can be done to make corporations more responsive to the needs of the poor and those who have no voice in the system – capitalism?” In answering this question, Gates stresses two interrelated approaches: stretching the reach of market forces to widen the arena of opportunities – more people can make a profit – and inducing governments in various parts of the world to spend taxpayers' money in ways which approximate the values of those who pay taxes.

Gates appeals to policymakers, business executives, and leaders of educational institutions to take the message to a wide audience and engage in constructive action to move from the current form of capitalism to the proposed one, creative capitalism. Previously, Handy (1999), an executive and management philosopher, called attention to the growing gap between the “haves” and “have-nots”, asserting that today's capitalism faces a formidable challenge; placing the pursuit of efficiency and economic growth above all else. Handy asserted that capitalism is a mechanism that unfortunately lacks a cause. Handy believes that the search for efficient business operations should be accompanied by compassion and purpose. This is a variant of Gates' message. Both Gates and Handy emphasise that for capitalism to evolve and avoid minefields, it must serve all members of the society. The difference between them is that Gates believes that providing incentives for corporations will induce them to serve the poor and provide solutions to serious health and poverty problems. Handy, on the other hand, believes that the problem necessarily is more than incentive. Rather it is rooted in the outlook of the existing form of capitalism. For Handy, the only workable solution is that the system itself has to go through profound change. Accordingly, individuals and corporations have to look beyond their immediate interests: “if the purpose is only for yourself, it rapidly dissipates”.

Previously, Attali (1997), the French statesman and executive, asserted that there is an inherent conflict between capitalism and the aspiration of the majority of citizens. He argued that capitalism allows powerful minorities to control resources and who view the collective democratic decisions of the majority to be intolerable burdens. He seems to suggest that it is the nature of capitalism to disenfranchise and alienate a large segment of the population. If this is true, then Gates' prescription for creative capitalism may not work and Handy's suggestion for profound change in orientations and conduct might be more realistic.

Probably creative capitalism, in the foreseeable future, is the only practical means to solve mankind's serious and chronic problems, be they poverty or diseases. However, the thriving of creative capitalism will not be the predictable outcome of governments' cooperation and treaties. Rather, the ascendancy of creative capitalism is the natural result of business pragmatism. Politicians are always driven by the narrow interests of their immediate constituencies and the influence of the lobbyist groups. In both cases, politicians are expected to champion the cause of the powerful. In contrast, managers display a loyalty to their customers wherever they are found and have interest in seeing that the majority of the population, in any quarter of the globe, is an active contributing force in the marketplace. For them creative capitalism could be an innovative response to an integrated world economy where the desire and aspirations of all customers are neither ignored nor discredited.

Politicians flourish in a state of confusion. Executives and their businesses generally thrive when they are gifted with foresight and are close to their customers and their expectations and needs. For them functional capitalism is a testimony of their pragmatism, sound strategies, and trust in a market mechanism which aligns economic progress with societal goals. Ultimately, thoughtful business executives are in business to serve customers. It is not in their interest to alienate or deprive people of their dignity. Driven by pragmatism and humility and free of nationalistic or parochial prejudice, they continuously search to upgrade market mechanisms to incorporate the ever-changing needs of a world's population, be they rich or poor.

Abbas J. Ali