Bill Gates suggests we need to re-examine the role of capitalism. His solution was to move to “creative capitalism.” He defined it as:
There are two great forces of human nature: self-interest and caring for others. Capitalism harnesses self-interest in a helpful and sustainable way, but only on behalf of those that can pay.
Government aid and philanthropy channel our caring for those who can’t pay. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.
Such a system would have a twin mission: making profits and also improving lives of those who don’t fully benefit from today’s market forces. For sustainability we need to use profit incentives wherever we can.
At the same time, profits are not always possible when business tries to serve the very poor. In such cases there needs to be another incentive, and that incentive is recognition. Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to the organization.
As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy: where profits are possible, recognition is an added incentive.
The challenge here is to design a system where market incentives, including profits and recognition, drive those principles to do more for the poor.
I like to call the idea creative capitalism, an approach where governments, businesses, and nonprofits 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.
Source: Bill Gates