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Creative Capitalism for Richer, for Poorer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

With Addis Abeba selected to host the 22nd World Economic Forum (WEF) on Africa, the movers and shakers of the global economy will have the opportunity to witness the irony of economic development in Africa.

Shiny glass walled skyscrapers and a series of urban slums, Lexus sport utility vehicles (SUVs) and old rusted public buses, as well as groups of big spending tourists and lines of beggars on the street are the faces of contemporary Africa.

So long as poverty remains the principal global hitch, the WEF serves to stage exchanges on alleviating it. Creative capitalism is one such an idea introduced in Davos, Switzerland, in January 2008, by Bill Gates, the second richest man on the planet who had a net worth of 56 billion dollars in 2010.

For Gates, creative capitalism is the new way to align individuals and social interests.

With traditional capitalism designed to serve the “haves,” the benefits of a free market system do not reach the globe’s “have nots,” he claimed. Fixing the system through creative incentive instruments is essential, according to Gates.

In an era of technology driven revolutions, the poor are marginalised as they cannot express their needs in a way that matters to markets, Gates argued.

Markets respond only to economic demands and are underpinned by the ability to pay; as a result, companies innovate for the rich.

While the conventional free market system continues, the world continues to witness more deaths from HIV/AIDS, tuberculosis (TB), and malaria, he claimed.

Amending traditional capitalism to serve the global poor requires more than changing the rules of the game, proclaimed pundits such as Michael Kinsley, former American editor of The Economist.

Traditional capitalism is the panacea as it relies on a profit motive, the driving force of innovation and investment, and there is no need to reclaim it, asserted critics, including William Easterly, professor of economics at New York University (NYU).

Due to the accumulation of wealth increasing the financial incentive to serve, little probability exists for companies to cater to the poor, argued Gates. Puritan capitalism enriches the rich while it deprives the global poor of essentials like food, shelter, and primary healthcare, he asserted.

Salvaging the world from these ills through innovation aimed at the poor is the illusion of a rich man because democracy is endangered where charity prevails, according to critics. With philanthropy at the heart of the proposed solution, the inalienable right of the poor to hold governments accountable would be estranged and the task left to the instincts of the wealthy, they argued.

Reclaiming capitalism through philanthropy, as Gates advocates, would deprive the poor of the right to change governments, according to critics. If money defined election results, corrupt dictators could reign while filling their pockets with generous corporate gifts. In this manner, the blood diamond saga would continue, they claimed.

For Gates, innovating for the poor could be achieved through employing recognition as a proxy to market prices. The more good deeds a company does, the higher would its recognition incentive be. The inability of the poor to initiate effective economic demand would then be compensated through corporate recognition, Gates argued.

The debate continues along with the suffering of the global poor. In focusing on the market, the debate pays lip service to government effectiveness and charity accountability while perpetuating a poverty culture.

Markets can respond naturally if only states could perform their responsibilities efficiently. As can be witnessed in Africa, government failure is the principal cause of underdevelopment.

With states becoming increasingly dynastic, patrimonial, inefficient, and corrupt, markets cannot operate naturally to reach the poor. Instead, they serve the rich while denying the poor access to basic services such as education, roads, and clean water.

Cognisant that Africa has become the major destination of corporate philanthropy, it also shows the irony of charity that is unaccounted for. Public relations matter most for companies and less attention is given to the impact of their charity.

Despite the world’s hard labouring to harmonise aid, corporate philanthropy remained untouchable. While it continues not to be accounted for, it adds pain to the overstretched system.

Creative capitalism might also help to take technology nearer to the global poor. Yet, the capacity of the poor to use it should be built.

It is not that they do not want to be a part of the technology revolution, but they do not have the knowledge and skills to utilise it. Narrowing the digital divide cannot be achieved only through making gadgets available.

The utopia of creative capitalism might seem attractive in theory. However, it is much easier to talk about than getting it done.

Retiring billionaires, such as Gates, might enjoy a life of compassion and charity. Local sympathisers like NGOs, volunteer associations, and charities might even find the cause worth taking on, but none would lift the poor up from the quagmire of poverty in a more sustained manner than a regulated free market.

The talk at the WEF and other meetings should be about investment, free market, and limited state intervention rather than about repackaging charity. Retired billionaires cannot be confronted by more evidence than the faces of poverty on the streets of Addis Abeba.

A visit to the city for the forum would reveal these ironies, which call for a solution with a new tune.

 
By GETACHEW T. ALEMU
Getachew T. Alemu is the Op-Ed Editor for Fortune. He can be contacted at getachew@addisfortune.com.
 
 
 
 
   
   
   
 
 
 

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