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Creative Capitalism

Submitted by Daniel Ruwe on Mon, 08/04/2008 - 22:58
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The most commonly used argument against capitalism is that it enriches a few while many others remain poor. The quintessential illustration of this supposed phenomenon is the fact that Nestle sells bottled water to poor, nearly destitute Africans. Isn’t there something wrong, liberals say, with a system that allows a massive, multibillion dollar conglomerate to sell a necessary commodity to people who have almost nothing?
 
No. Capitalism is flawed. Sometimes people will be used up by the system and never receive any prosperity. But if those poor Africans saving up to buy water ever achieve any measure of material prosperity, it will come due to capitalism.
 
In fact, the self-interest of the rich is almost certainly the best hope for the poor. Bill Gates is perhaps the most successful capitalist in the history of the world, and is also a world-class philanthropist. He has retired from his day-to-day control of Microsoft to run the Bill & Melinda Gates Foundation, which practices what he calls “creative capitalism”—capitalism that attempts to help the underprivileged.
 
It sounds like a contradiction in terms, but it isn’t. Take the story of the Vodaphone, which invested in a Kenyan cell phone company. In a Time magazine piece, Gates explains what happened.
[Vodaphone] figured that the market in Kenya would max out at 400,000 users. Today that company, Safaricom, has more than 10 million. The company has done it by finding creative ways to serve low-income Kenyans. Its customers are charged by the second rather than by the minute, for example, which keeps down the cost. Safaricom is making a profit, and it's making a difference. Farmers use their cell phones to find the best prices in nearby markets. A number of innovative uses for cell phones are emerging. Already many Kenyans use them to store cash (via a kind of electronic money) and transfer funds.
Vodaphone has succeeded beyond its wildest dreams—it has gotten over twenty times the sales it expected—and also managed to change Kenya for the better. The “electronic money” used there is innovative—and will probably eventually be used here. (Already, credit cards and computers are helping make cash obsolete). Thanks to capitalism, Kenya is, in one small way, ahead of the rest of the world technologically.
 
Gates’ whole Time article is well worth reading—he explains how self-interest is curing malaria, fighting AIDS, educating the poor, and harnessing the estimated five trillion dollars in purchasing power of the poorest two-thirds of the world’s population. Gates, like conservatives, realizes that capitalism does a lot of good.
 
One the flip side, it also does harm. Nike, for example, is probably guilty of human rights violations. As late as 1996, Nike was guilty of violating Vietnamese labor laws (which is a little like being considered extravagant in Vegas), and possibly still employs child labor. (Kinda puts the whole “Wal-Mart vs. unions” thing in perspective). Nike makes billions while (probably) exploiting people—isn’t that a flaw in capitalism?
 
Actually, yes. No system is perfect, and capitalism doesn’t help everyone. It produced slavery, child labor, awful working conditions (such as in coal mines), and exploitation of the less fortunate. In capitalism, there will always be haves and have-nots.
 
But the first group will always steadily grow, while the second will shrink. In socialism, this doesn’t happen. There are no haves and have-nots—only have-nots. To paraphrase Winston Churchill, capitalism may be the worst system of economics (it is flawed)—except for all the others. Capitalism exploits some people, and helps the rest. Socialism exploits everyone.

 

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