Bill Gates’ Creative Capitalism
At Davos in 2008 Bill Gates introduced the world to the concept of Creative Capitalism and two of those tuning in to what he was saying wrote for Forbes saying:
“When Bill Gates suggested recently that corporations should sacrifice profits to the public welfare, practicing what he called “creative capitalism,” he wasn’t the first robber baron with the idea. Henry Ford made a similar proposal in 1916, but he was defeated in court by shareholders who preferred he simply issue dividends.
The countervailing view, famously expounded by Milton Friedman, is that the only responsibility of business is to increase profits. This view is popular among corporate chiefs, which may explain the tepid response to Gates’ proposal in the business community.”
It wasn’t missed by a pioneer of social purpose business who wrote a year earlier in A ‘Marshall Plan’ for Ukraine, of how profit could be applied to resolve a broad range of social problems:
‘An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.
‘That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples — the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.’
Armed with this “endorsement” from such a prominent name in business author Terry Hallman wrote to USAID, calling for their support with this “new form of capitalism”. His missive described the apalling conditions of institutional childcare and requested funding for grass roots activism against corruption.
‘What Ms. Fore is describing has been central to P-CED’s main message, advocacy and activity for a decade. That, and helping establish an alternative form of capitalism, where profits and/or aid money are put to use in investment vehicles with the singular purpose of helping the world’s poorest and most vulnerable people. The paper on which that is based is in Clinton’s library, dated September 16, 1996, author yours’ truly. That is reflected in P-CED’s home page and history section. In fact, you might notice a number of ideas and writings there that have now made their way into the mainstream of economics and aid thinking, how to make business and aid work smarter and more effectively in relieving poverty and the misery and risks that result. Bill Gates — as hard-edged a capitalist as has ever existed — reiterated the same things in Wall Street Journal a couple of weeks ago (ref below.) It sounds as though Ms. Fore’s remarks very much reflect this sort of thinking. Now it’s time to move forward and get it done.’
Back in 1996 his argument against Friedman’s assertion had been pitched to US President Bill Clinton then published online.
Bill Gates was back at Davos a year later and with Terry Hallman still trying to leverage investment, Gates was one of the key speakers at a roundtable to discuss creating more effective social programs in Ukraine. At this event Richard Branson stated that “business should focus more on solving social problems”
Richard Branson: “Business should focus more on solving social problems”
Tony Blair and Bill Clinton were there too. Pinchuk had provided funding support for both Blair’s Faith Foundation and the Clinton Foundation. Their respective influences on The British Council and USAID would explain the inclusion of Pinchuk’s foundation as a partner in a subsequent social enterprise development project where we were not welcome.
So was Matthew Bishop , editor of The Economist, to discuss Philanthrocapitalism or “how the rich can save the world”
They didn’t save Ukraine however and they were back at the same place 5 years later as violence erupted on the streets of Kyiv. They were still talking the walk:
