Creative Capitalism - A Conversation with Bill Gates, Warren Buffet, and Other Economic Leaders

01 Jul 2011

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Book: Creative Capitalism: A Conversation With Bill Gates, Warren Buffet, And Other Economic Leaders
Author: Michael Kinsley, Conor Clarke
ISBN-13: 978-1416599418

January 24, 2008 - The World Economic Forum, Davos, Switzerland. A speech by Bill Gates, one of the most successful entrepreneurs & philanthropist created a whirlwind in the business circles. Gates proposed a new idea of making capitalism work for the poor and needy in the developing world. He coined the term “Creative Capitalism”. This book is a compilation of discussions, blogs, critics by 43 well known successful business leaders, economists etc around the topic. Micheal Kinsley did a pretty good job in compiling 300+ pages with thought-provoking ideas, approaches to Creative Capitalism. Many of you may have seen Gates speech on YouTube or read the transcription on Microsoft website. But, after reading this entire book, you will have a complete knowledge, different thinking and a birds-eye view of this topic. About the pros and cons of what was proposed by Bill Gates. Many of the business leaders do not agree with his idea of Creative Capitalism (with valid statistics and business ethics). Some, do agree with Bill Gates.

Here is the cheat sheet of Creative Capitalism

  1. Markets respond only to “demand”, not to “need”.
  2. The world is getting better, but not fast enough and not for everyone. For ex., Climate change will impose the worst effect on those least responsible for it.
  3. In a system of pure capitalism, the incentive to serve people rises as their wealth rises and falls as their wealth falls. This needs to be changed so that there is an incentive to serve poor people too.
  4. A revised capitalist system would both make a profit and improve the lives of the have-nots.
  5. Creative Capitalism is a system where incentives for both profit and recognition motivate both self-interest and caring for others.
  6. Under Creative Capitalism governments, businesses and non-profits work together.
  7. Some real-world scenarios are: Corporations donating money or products. Tiered pricing by drug companies for vaccines against diseases affecting the third world. Help poor world business do business in the developed world. The Bono RED campaign model.
  8. Corporations should allow “top innovators” to spend part of their times on issues facing people too poor to be customers. This “takes the brainpower that makes life better for the richest, and dedicates it to improving the lives of everyone else”.

The book starts with the conversation with Warren Buffet, Bill Gates and author Micheal Kinsley. They discuss in detail about all the possibilities of making this concept to the real world. To my perception, Warren Buffet is much more experienced and knows what he puts forth on the table. Bill Gates is very impatient and wants to change the world very fast. Just like switching to a PC and start working. Warren Buffet suggests to tax 3% from the corporation and let a neutral body consisting of Government officials, Business leaders, and NGO manage the fund to make the world a better place for everyone.

But Gates proposes a different approach, where the businesses using its technology & resources get into the field of philanthropy directly. He urges the businesses to explore the unexploited business opportunities available in the sub-Saharan African countries and thereby improving the lives of the less privileged people. He urges the corporations to donate huge amounts of money, resources or employees time for those who cannot afford it. What would the businesses get in return?. Recognition as do-gooders which will improve the company’s reputation and in turn improves the profits. The ultimate aim is again profit maximization. But, he does not mention who has to make the decision to decide the charitable cause. The corporate managers or the shareholders or the stakeholders?. There are a lot of practical complications around this. This could be an easy option for the companies that are about to go to IPO.

Hundreds of pages discussing each and every specific good and bad things in Gates speech. How is it different from Corporate Social Responsibility (CSR)?. Why do we need a different form of capitalism?. etc. I feel good about Bill Gates intention to eradicate poverty in the world through Creative Capitalism. But just the intention is not enough. A complete real-world implementation plan is needed to make that a reality. Apart from the speech made at Davos, what else has been done in the past three years?. Where are we in this idea?. What Gates has done other than making a speech?.

We need more people like Gates to come together and persist in the idea so that it becomes a goal of every corporation in this world. I would suggest everyone interested in business or has those entrepreneurial instincts to read this book. It will prepare you to help others and at the same time, survive the competition.

Please buy the book from your local bookstore.

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