Friday, January 25, 2008

Keep Reading, Mr. Gates

Here's one more from The Wall Street Journal. (I swear I'm beginning to feel like King Henry exhorting you "once more into the breach.")

Anyway, yesterday's issue featured a front page story on Bill Gate's call for kinder capitalism. Specifically, he calls for business to work with government to develop more creative solutions to help the poor of the world. At one point in the article, the Microsoft founder noted that there's more to Adam Smith than The Wealth of Nations, flipping through a copy of Smith's earlier major work, The Theory of Moral Sentiments.

I applaud Mr. Gates for his deeper reading of Smith. I'm not sure he's reconciled the two works. He apparently sees that self-interest drives capitalism. I'm not sure he gets the fact that caring about others also serves self-interest, albeit on a different level. I would, however, encourage him to read more. One economist he may consider is Schumpeter, who coined the term "creative destruction." Given that Microsoft has changed our lives in a substantial way, one wonders how Mr. Gates could have missed the creative element inherent in capitalism. Indeed, creativity is vital to keeping an economy growing. To discount capitalism in its present form for a lack of creativity in addressing the problems of the poor is to dismiss much of the world's progress since the time of Smith. It is the dynamism and creativity that is harnessed by the self-interest of capitalists that allows new products and services to grow to the size that the founders can take an interest in world around them. Because capitalism is creative, Mr. Gates now stands next to Mr. Carnegie and Mr. Rockefeller as a philanthropist.

I encourage your comments.

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