Creative Capitalism

Page 10 of the reading (E-module 15, CISL) about “Creative Capitalism” proposed by Bill Gates (creating profit while helping the poor) interests me a lot. I was reading Creative Capitalism: A Conversation with Bill Gates, Warren Buffett, and Other Economic Leaders (written by Michael Kinsley) in the past months. At the 2008 annual meeting of the World Economic Forum in Davos, Bill Gates first presented the creative capitalism idea in which multinationals, the distinguishing feature of the modern global economy, integrate doing good into their way of doing business. Such controversial new idea is discussed and debated by over forty contributors to this book, among them three Nobel prize winner and former American cabinet secretaries. Creative Capitalism challenges the conventional wisdom about our economic theory, a blueprint for the new global economy that is emerging as capitalism caters itself once again to a rapidly changing world.

My fellow cohort classmates would know that I’m passionate about education and is taking a deep dive into the Confucianism world. According to Confucius, “education is for everyone, irrespective of background”. Therefore, education is facing a similar dilemma as the Creative Capitalism idea proposed by Bill Gates, which is, the necessity to strike a delicate balance between profit-making versus social responsibility. Back in 2011, the US Government promulgated the “No Child Left Behind Act” to encourage “education is for everyone, irrespective of background”.

Understandably, similar dilemma and considerations are applicable to healthcare industry especially in light of the rapidly ageing population. How do governments around the world ensure all walks of life, whether the rich or the poor, have access to quality healthcare at affordable rates, is a big policy issue and a focus of the United Nations’ Sustainable Development Goals.

When 90-year old Mr Li Ka Shing (Asia’s richest man) announced his retirement few weeks ago, he explicitly mentioned education and healthcare are the two areas in which Mr Li and his family foundation would like to focus on post retirement. This echoes what Bill Gates (besides numerous other billionaires post retirement) has proposed and is pursuing.

Education and healthcare are closest to my heart. Very keen to follow how these two industries (globally) evolve to achieve dual bottom-line in the years to come.

 

5 thoughts on “Creative Capitalism

  1. I really like the list of names in the introduction 🙂

    Indeed, as of late it’s like PR reps of these people are aligned to promote education as a key to a better future, and focusing on that as an opportunity for an entrepreneur is both a very noble and also well-thought out strategy, as population is growing – more people obviously means more need for education.
    On the topic of Confucianism, I just recently came upon an interesting, even if slightly dated article here:
    https://www.theatlantic.com/education/archive/2013/10/why-are-hundreds-of-harvard-students-studying-ancient-chinese-philosophy/280356/?utm_source=atlfb
    The smallest actions have the most profound ramifications. Confucius, Mencius, and other Chinese philosophers taught that the most mundane actions can have a ripple effect. An interesting excerpt from the article says “Recent research into neuroscience is confirming that the Chinese philosophers are correct: Brain scans reveal that our unconscious awareness of emotions and phenomena around us are actually what drive the decisions we believe we are making with such logical rationality.”
    Looking forward to learning more about basic principles of Confucianism and discussing how it distinguishes itself as one of the three teachings, as I am a little more familiar with Taoism and Buddhism.
    Looking forward to reading more on this!

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  2. I understand that this post is indirectly related to the topic of “transition to a low carbon economy” in that sense that philanthropists like Bill Gates can invest in social enterprises that support a low carbon economy.

    I would like to add that by supporting initiatives which support a low carbon economy, these philanthropists would also support access to a healthy environment for all. Unfortunately, it is often the poorest people who live in the most polluted environments and one would hope that these philanthropists can make a difference.

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    1. Ronald,

      After reading your blog with great interest, I researched this topic further and found this interesting article published by Richard Matthews in 2015: Two Visions of Capitalist Philanthropy from Two Renewable Energy Investors
      https://globalwarmingisreal.com/2015/07/23/two-visions-of-capitalist-philanthropy-from-two-renewable-energy-investors/
      It argues that whilst Warren Buffet and Bill Gates are both well-known for their philanthropic activities, there is a major difference between their investment philosophies. Buffet’s investment philosophy would be focused on value hunting and how much return his investments generate whereas Gates’ investment philosophy takes into consideration issues beyond corporate profit.
      For instance, he explains that in 2014, Buffet’s firm (Berkshire Hathaway) sold its US$4bn stake in Exxon Mobil due to market conditions (falling oil prices) and not based on environmental or social concerns. Furthermore, Berkshire Hathaway had invested US$30bn in renewable energy by 2015. But again, Matthews argues that this investment philosophy was based on higher rates of returns and whilst investing substantially in renewables, Berkshire also owns Burlington Railroad which uses huge amounts of coal.
      Gates argues that “capitalism offers our best hope for social and environmental renewal” and is an adept of system innovation and more generally creative capitalism. He views capitalism and its ability to harness innovation as instrumental for social and environmental good and seem to stay away from environmentally friendly investments purely based on high rates of return.

      In short, Buffet and Gates’ investment philosophies reflect two different visions of capitalism. So, now the question is what is the solution? Avoid engaging in philanthropic activities and investing in renewables if one is still investing in corporations which have a high carbon footprint for fear of being considered as a hypocrite? The answer is difficult. Corporate attitudes will take time to change and, in my opinion, one needs to start somewhere. Warren Buffet had still given US$17bn to philanthropic causes by 2015. I personally prefer Gates’s investment philosophy but one cannot castigate Warren Buffet either.

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  3. I was really interested in your blog post and the concept of Creative Capitalism, so thank you. I work in an industry where I see too little of this and can often become cynical that companies will never be anything other than purely profit maximising. (Whilst this does still leave some room for socially or environmentally responsible business practices, it does impose hard limits – in my experience).

    Given the ambiguity over the precise meaning of Creative Capitalism, two (fairly distinct) meanings come to my mind. One is about existing businesses becoming more socially/environmentally responsible. The other is using private sector models to address social or environmental issues, such as the provision of health care and education that, particularly in developing countries, are traditionally left to governments or the non-profit sector.

    There are many fantastic examples of private sector initiatives entering this space to serve poor or marginalised people with affordable and appropriate access to health and education services, often driven by innovation and technology. One such model that I’m piloting in my work is an e-health solution provided by Grameen in Bangladesh. http://ghealth.gramweb.net/. The idea is to introduce a portable health clinic system into garment factories to help provide better healthcare to workers. It’s a great model, although we’re learning a lot about the challenges of operating in this context. Not least, the ever present ‘systems’ effect. One of our main findings to-date is that workers may get a better quality medical consultation but for various reasons they don’t buy the medicine they’re advised to. This leads to discussions around the availability of low cost (and reliable) medicine, the consumption decisions of low income households and the living wage (or lack of) earned by such workers.

    Anyway, back to Creative Capitalism…

    I think the former definition – existing businesses becoming more socially/environmentally responsible – is far more challenging. How can we influence more big businesses to adopt a set of values consistent with ‘creative capitalism’; how do we judge the degree to which they operate by these values; and what are the implications if they don’t? All big questions. It also brings in the question of stakeholder versus shareholder value. How this equation plays out within each business will of course depend on the values and requirements of their particular set of shareholders and stakeholders. This is a promising perspective however, as it demonstrates the numerous potential channels through which business leaders might be influenced to take a genuine and considered look at what Creative Capitalism could mean for their business.

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  4. Very interesting post! Thank you!

    First, since Bill Gates’ speech in Davos in 2008, everyone seems to have continued in their way, without having changed the way that they do business. In fact, for a lot of companies, corporate social responsibility is still merely lip service, something being done for reporting purposes.
    I believe governments and courts of justice need to adopt a more proactive approach, with a mix of carrots (fiscal incentives) and sticks (punitive damages, big fines). We need to try everything to make corporate social responsibility a reality !

    Have you seen the UNESCO report « education for sustainable development goals » ? http://unesdoc.unesco.org/images/0024/002474/247444e.pdf
    In the introduction, Qian Tang underlines that « education is both a goal in itself and a means for attaining all the other SDGs. It is not only an integral part of sustainable development, but also a key enabler for it. That is why education represents an essential strategy in the pursuit of the SDGs. »

    As always when it comes to education, Nordic countries, especially Finland and Norway seem to be far ahead : http://www.education4sustainability.org/tag/norway/
    Here are six learning objectives pursued by a school in Bergen, Norway. They stretch from the individual to the planet. We shall teach our pupils to:
    • Understand and take care of themselves
    • Understand and take care of one another
    • Understand and take care of your local community
    • Understand and take care of nature
    • Understand and take care of the planet
    • Make good sustainable decisions about the future of a democratic society.

    A difficulty to address is to change people’s mindsets. Indeed, a recent study published in late April in the journal Cognitive, Affective & Behavioral Neuroscience (https://link.springer.com/article/10.3758%2Fs13415-018-0581-9) , Swiss researchers studied the behavior of a group of individuals regarding climate problems. Their goal was to determine whether there is a correlation between the ability to project oneself into the future and “selfish” or “altruistic” character traits. The results of this experiment could lead to the development of new ways of sensitizing humanity to various issues, including that of global warming.

    Hopefully, we will find ways to implement creative capitalism!:)

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