Book Review: Creative Capitalism

Creative Capitalism: A Conversation with Bill Gates, Warren Buffet, and Other Economic Leaders edited by Michael Kinsley (Simon & Schuster, $26, 9781416588418/141658841X, December 2008)

At the 2008 World Economic Forum, Bill Gates proposed an idea for ameliorating world poverty. He dubbed it "Creative Capitalism" and briefly outlined his vision: that successful corporations look more closely at how their business acumen and resources could contribute to fighting disease and poverty while also furthering their business goals either through exploiting previously underserved markets or through recognition for their efforts. Gates provided examples of possible approaches that would provide the incentives he described from his experience at Microsoft and at the Bill and Melinda Gates Foundation. As he emphasized the enormity of the challenge and the need to bring more resources to bear on the problems, he also asked his fellow corporate executives, economists and others to ponder his proposal and generate further ideas.

To foster a discussion on the topic, Michael Kinsley conducted a series of web-based conversations with representatives from business, academia, the media and nonprofit organizations, including Warren Buffett, Richard Posner, Lawrence Summers, Robert Reich and Jagdish Bhagwati. The resulting book is fascinating on many levels.

One theme that runs through the conversation is the desperate need for eliminating corruption in target countries, along with establishing rule of law and basic infrastructure--nobody wants to channel their funds into a sinkhole. A surprising number of respondents missed the concept of market-based incentives in Gates's proposal and continued to view the idea in terms of corporate philanthropy. Moving away from abstractions about the future, David Vogel recounts the unexpected economic benefits Sears reaped from sponsoring 4-H Clubs; he also states that the average corporate expenditure on philanthropy is currently 0.7% of pretax earnings. Among other positively-engaged participants, Loretta Michaels discusses a new Vermont law that creates a charity hybrid that could serve as a model of conduits for funds.

Economic history is filled with new ideas that initially met with skepticism until they became run-away successes. Gates's well-intentioned proposal faces that predictable skepticism, along with much defensiveness and veiled hostility. As Loretta Michaels wisely notes: "The debate here tends to assume that the world is divided into two camps: the nonprofit, charitable sector with its focus on 'good' causes, and the for-profit, free-market-driven worlds of business with its focus on, well, profits." Rather than sinking the enterprise, however, that opposition adds spice to the "conversation" just as rancorous roundtables on television are stimulating and entertaining. In its own way, Creative Capitalism becomes a guidebook to bridging those age-old divides and helping us all get beyond the limitations of binary thinking.--John McFarland

Shelf Talker: Creative Capitalism is a warts-and-all round table on the ways in which corporations might be able to contribute expertise and resources to ameliorating world poverty while still advancing their own business agendas.