Ryan C Briggs

Time has an article by Bill Gates on creative capitalism which, unfortunately, doesn’t really address my core concern with the idea. In a previous post I mentioned that I thought that capitalism was already creative—that it already does a good job of  harnessing and directing resources—and that poor governance was a much larger problem. I understand that markets respond to money, and the poor people by definition don’t have much of it, but creative capitalism still seems like a no-go for me because it requires conditions that rarely exist.

Creative capitalism doesn’t (and can’t) address the problems of poor governance and weak states. Markets function best when they exist within predictable legal systems and a strong rule of law. Thus, the whole creative capitalism idea is predicated on strong states with good governance, a condition which doesn’t exist in many of the states that need economic growth the most. I see creative capitalism as an economic solution to a problem that is deeply political.

Gates does say that “there is something to [governance concerns],” but argues that reforming states takes too long and that creative capitalism can work now. I agree that reform is a slow process, but creative capitalism can, at best, only be a stopgap measure. I am still thinking hard about this and my opinion may change, but as of now I think creative capitalism will probably be most effective as a marketing tool in rich countries. Companies that participate in this (and spend advertising dollars telling us about it) will look better to consumers, even if their money doesn’t have a strong positive effect overseas.

As a final anecdote, does anyone else think that creative capitalism is a little strange because it presumes that increasing bottom-of-the-pyramid consumption through “creative” capitalism is a good development strategy? I usually started my thinking with the idea that increasing production and domestic growth in poor countries was the best strategy, and that consumption followed growth. Is creative capitalism supposed to replace or supplement humanitarian (consumptive) aid instead of creating growth? Am I way off in left-field here?