Bill Gates Isn't Calling For Kinder Capitalism -- He's Calling For Better Understanding Of Capitalism

from the it's-not-all-about-greed dept

Thu, Jan 24th 2008 10:32am — Mike Masnick

Many people seem to think that capitalism is only about money. It leads to bizarre and incorrect claims suggesting that behavior that doesn't maximize dollars isn't "rational," as neoclassical economists would suggest. But, that's generally a misunderstanding of economics -- where it isn't money that's the driving force but the utility or the benefit that a person receives from any given action. Quite often, that benefit is in the form of money, but it certainly doesn't mean that it always needs to be. As we all know (but sometimes need to be reminded about), money does not equal happiness (utility). So, while it's a good thing to hear Bill Gates is giving a talk in Davos about embracing capitalist principles in urging companies to take up issues dealing with the world's poor, it's hardly a "different" capitalism or a "kinder" capitalism, as implied by the Wall Street Journal. It's actually just a more accurate understanding of capitalism -- where it's about decisions based on actual benefits, which include both monetary and non-monetary benefits.

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Filed Under: bill gates, capitalism, economics

35 Comments

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Anonymous Coward, 24 Jan 2008 @ 10:45am

Money won't make you happy, but it sure helps. Not having it makes things a lot harder.
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manny, 24 Jan 2008 @ 11:14am

manny
they say the best things that life are free, but you can give the that to the birds and the bees I WANT MONEY THAT'S WHAT I WANT
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Ronald Reagan, 24 Jan 2008 @ 11:16am

Money....
“Money can't buy happiness but it will get you a better class of memories”
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Anonymous of Course, 24 Jan 2008 @ 11:30am

Bah!
Life is like a poop sandwich and
money is the bread. The more money
you have, the less poop you have to eat.

Money won't make you happy- but it
makes being miserable a damn sight more
comfortable.

A healty, happy, product-consuming,
middle class benefits everyone.

Promoting policies that nurture future
markets is a sound investment... that's all.

If it makes you feel good too that's
bonus points.
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some other guy, 24 Jan 2008 @ 11:49am

Re:
Money may not buy you happiness, but it sure can buy a better class of misery.
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Patrick Henry, 24 Jan 2008 @ 11:53am

Unfortunately, most of the wealthy elites who want to criticize the "failings" of capitalism and the free market usually aren't content with simply donating their personal wealth to charitable causes, but instead want to redistribute massive amounts of wealth from everyone. Any "solution" to the world's woes that requires the loss of liberty should be rejected, and all charity should be voluntary. It would be nice if everybody in the world lived in a comfortable home, had a car, an internet connection, and free health care, but to suggest such a thing is possible contradicts the very definition of economics. Simply put, resources are limited, so it is impossible for everyone to have everything they want or, in many cases, what they need.

The poverty, famine, disease, and any other number of tragedies that exist around the world cannot justly be blamed on American businesses, so I think it's ridiculous to expect them to pick up the tab for fixing them. Likewise, using the police powers of the government to coerce, i.e. tax, individuals to lower their standard of living for the sake of transferring wealth to despots, dictators, bureaucrats, and wastrels half a world away in an attempt to assuage the guilty consciences of the elite should be cause for outrage if not revolt.

The free market, and I emphasize "FREE," is based on individuals, not the government or an oligarchy of corporate leaders, making choices about how scarce, limited resources are best utilized. Its not all about money, but it is all about freedom. The surest way to impoverish a nation and debase its people is to deprive them of their liberty to do as they see fit with their own wealth.
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Tashi, 24 Jan 2008 @ 11:53am

My dad said, it's better to have it and need it, than to need it and not have it.

Btw, companies love to have people thinking money can buy them happiness. The new car, jewerly, wardrobe is just around the corner to happiness. And it does... for a little while. Until you need the next fix. This is a dysfunctional cycle that keeps people in the consumer loop. Rich people jump off buildings and go to AA and NA meetings too.

What's first needed is not money but the correct attitude and mentality about money and happiness. Most think you get the money THEN you're happy. That's assbackwards.
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Tashi, 24 Jan 2008 @ 11:57am

Re:
Oops.. have it and not need it, that is.
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tony, 24 Jan 2008 @ 11:57am

Isnt it amazing how many so far have equated not being consumed with having a lot of money with poverty? That isnt what this is about. Its about how you spend your money, which is the utility of the money. If you have a lot of money under your mattress it has no utility and in fact accrues risk through inflation. If what you really (and here is where people fall down, trying to define what the really is) want to do is not what you spend your money on and this is a loss of utility. Measuring actual benefit against perceived benefit and looking at long as well as short term,assessing risk versus gain and balancing group and individual needs is what utility is actually about
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Shun, 24 Jan 2008 @ 12:00pm

Re-defining capitalism, from the world's richest m
Does anybody else see the irony in this? Maybe the thought process went like this:

"Hmm...I have all this money, but I'm not happy. In fact, I'm despised. I didn't think that would happen. I thought being the world's richest person would make me happy, like into a super-jock, or something. Now, I gotta think of why this isn't happening. But, first, let's make sure I don't stray into dangerous waters...I still need lots and lots of money to make this work."

Then he goes on to advise people that are not as super-wealthy as he is. "You've got to think about money in a different way. You have to think about it as something you give to me...I mean, er, a means to an end, yeah, that's it."

It's all just B.S. The capitalists are scared because they know the game is up. Just what is Davos but a rich man's club? The edifice is crumbling. The peasants are at the "gates". Giving a little song and dance about how capitalism must be more compassionate, from Mr. Moneybags is not going to solve the problem.

Nice philosophical soliloquy, Mr. Gates, but you fail to understand the purpose of Davos. Davos exists to help its members become more rich, and to protect their wealth from all of the great unwashed. If they wanted to get in touch with their human side, they would have gone to Esalen.
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chris (profile), 24 Jan 2008 @ 12:07pm

the MBAs can't count happiness...
money is a quantifiable measurement, so it looks nice when you put earnings and whatnot on the quarterly report.

the earnings arrow goes up, the board is happy, and the executives get raises. the earnings arrow doesn't go up, the board is unhappy, and we all get fired. it's so easy and simple even a venture capitalist can understand it.

if you go saying that utility counts too... well, you might as well take all of those charts and graphs that economists and executives love so much and throw them out the window, along with your mother, apple pie, and the american flag.

you can't go by qualitative measurements, they can't be represented on a chart or in a stock price and they make people think. thinking leads to tough questions. tough questions mean people in suits have to give real answers, and if people in suits hate anything, it's thinking about real answers.
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MissingFrame, 24 Jan 2008 @ 12:08pm

Re: Re-defining capitalism, from the world's riche
You are assuming that what motivated Bill Gates was getting rich, when it could as very well had been power, or simply to be successful. It's a big leap to think that because someone is rich, they got that way by thinking being rich would make them happy.
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tony, 24 Jan 2008 @ 12:10pm

Re:
I dont favor redistribution anymore than you do but to somehow exonerate companies from their role in global events is effectively denial.As entities within a system they must by virtue of being dynamic agents, share some,and I emphasize some of the responsibility of how events play out. This is simply a matter of being empirical. There are also ethical considerations within the framework of being a human being that must be considered. No fiscal entity exists completely independent of cultural forces and therefore must accommodate them or not and run the risk of retaliation.
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ohnopirates, 24 Jan 2008 @ 12:11pm

Beware the man with one gun
I'm always amused at the underlying acceptance of Rational Choice in IT circles, I suppose this is mainly due to it's nature as a blunt instrument - well wielded it can hammer through almost anything.

Bearing in mind, that doesn't actually make it particularly elegant or the "best" solution.
Emergent complexities through binary interactions don't require each participant to behavre rationally, just in a manner that can be modelled.

Shame society isn't a laboratory.
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slimcat (profile), 24 Jan 2008 @ 12:24pm

Altruism or lock-in with a nice wrapper?
I don't know where Bill balances out on the scales of justice and I don't care. That is between him and his god. But, I can't help but wonder if his recent world speaking tour isn't just lubrication for the announcement to spend $235.5 in schools worldwide, in the form of a low-cost Windows+Intel computers, thus, locking in a new, global generation of users and killing off OLPC's XO laptop at the same time. Hey, once bitten, twice shy.
PJ over at Groklaw has more on this story.
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Lagunatic, 24 Jan 2008 @ 12:27pm

Easy for BG to say...
I look forward to the day when I am worth billions and can spout off to those not as fortunate about how THEY should use capitalism to help the poor. How condescending.

A statement I - would - agree to would be that excessive wealth as a result of capitalism empowers and facilitates charitable actions resulting in happiness for both the benefactor and recipient.
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dazcon5, 24 Jan 2008 @ 12:40pm

Money
Money can't buy you happiness but it can damn sure rent it!
Money can't buy you happiness but it can buy BEER and that's close enough.
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comboman, 24 Jan 2008 @ 1:06pm

Capitalism is not Corporatism
True capitalism is good (or at least morally neutral). The problem is that capitalism has been replaced with corporatism. Corporations are not run by people, they are run by anonymous mobs of shareholders. They do things that are bad for themselves (and their employees, customers, neighbors, etc) in the long term for some small gains in the short term. True capitalists don't do that, they are looking for maximum long term gain (which usually also benefits their employees, customers, neighbors, etc).
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Shiv, 24 Jan 2008 @ 1:09pm

Re: Re:
that was awesomely said & makes sense.
kewl.
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Clouser, 24 Jan 2008 @ 1:32pm

Adam Smith
We need to gob back and read what Adam Smith had to say when he taught on George Square at the University of Edinburgh. The Free Market was a way out that democratized the landscape and gave power to the people, the poor. The problem is we don't have free markets anymore, rather way too much government intervention, which only serves to benefit the elite.
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Anonymous Coward, 24 Jan 2008 @ 1:34pm

Re:
sorry, but utility is measured by the individual. To those with the mattress the utility may come from accumulating and not spending.
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Anonymous of Course, 24 Jan 2008 @ 2:18pm

Re: Capitalism is not Corporatism
Excellent point!

I'll add shareholders to my list of pure
democracy in action examples along with
lynch mob.
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tony, 24 Jan 2008 @ 2:32pm

to: Re: the MBAs can't count happiness...
you can quantify happinessor for that matter anything else..its just that the type of mathematics needed is not what most people are exposed to or even aware of..
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Urza, 24 Jan 2008 @ 2:34pm

"Money won't can't buy happiness? Well it buys a wave runner. Try to frown on a wave runner."
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PerroPerdido, 24 Jan 2008 @ 2:55pm

Money and Happiness
I read an article that said basically that over income $75,000 per year did not necessarily contribute to greater happiness, but up to that point more money does seem to.
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napacab, 24 Jan 2008 @ 3:03pm

the obvious
well from some of the comments on here it is obvious that Gates is right about people needing a better understanding of capitalism.
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Anonymous Coward, 24 Jan 2008 @ 3:32pm

Re: Capitalism is not Corporatism
Excellent point! A truly free market cannot exist in a world where a group of people can function legally as a single entity. If anyone wants to truly help the poor through capitalism they will work towards reducing corporate power to a reasonable level. Corporatism is just a fancy word that means fascism.
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Cixelsid, 24 Jan 2008 @ 4:02pm

Money makes rich people happy
If you don't have money then you have to download music illegally using your asian friend's super fast cable connection at his mom's place then your asian friend's mom gets sued and she's very sad but you're not because you got linkin park to listen to so you download more while she's in court.
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Anonymous Cow Award, 24 Jan 2008 @ 5:16pm

..the benefit that a person receives from any given action.

An you think that's what makes a society happy.

So, I own an factory and benefit from throwing the waste into the river from which thousand of people drink.

I benefit from having children working 15 hours a day for 10 cents

I benefit from killing 1 million people to a country to keep oil price high

I benefit from coercing brazilians to destroy amazon rainforests to pay their dept to the world bank

think what could happen if you change the words "a person" with "society"

...the benefit that society receives from any given action.

Then you wouldn't need no ethics, you wouldn't have or need no ethical question.
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tom Termini, 24 Jan 2008 @ 6:08pm

Re: Capitalism is not Corporatism
Ah, to quote someone famous, and no doubt an economist you've heard of, "In the long run, we're all dead."

Maximizing short term gain often makes perfect sense -- the market / corporations are made up of mobs of shareholders who are HUMAN BEINGS. These people make rational consumption choices on an individual basis. You are complaining that the sum of these choices isn't rational. Well, of course it isn't. But on an individual basis, these choices are perfectly rational.
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Anonymous Coward, 24 Jan 2008 @ 6:42pm

Happines
Money may not be able to buy happiness, but it can sure rent it.
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Iron Chef, 26 Jan 2008 @ 11:59pm

I think Gates is onto something here.

I'd call it Blue Dog Capitalism. The questions remain how to create an environment which caters to the creative "innovators" while also maximizing shareholder value.

That would be a course I'd like to take, especially if it focused on societal and psycological human factors. Think of it as a Howard Schultz-type course..
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Jonathan Adams, 27 Jan 2008 @ 5:33am

I'm not sure who these "neoclassical economists" are, but they're confused. Maximizing dollars is not a fundamental part of capitalism ... maximizing the value, tangible or intangible, realized by each party in a free and voluntary exchange of said value is. On that basis, Gates is not suggesting a new or "kinder" capitalism. Unfortunately, there's a very fine line between accepting intangible benefits as partial return on investment, and considering a person, or economic system, to be flawed or evil if he/it isn't "morally advanced" enough to accept only the intangible or emotional as a form of exchange.

Gates appears to be embracing the typical idealist fallacy that falls well across this line and that inevitably leads to unfortunate consequences, like having a few hundred million die as a result of the whims of socialist dictators. Yes, there are many poor in the world. These poor are, largely, not in free countries. In general, but not universally, they are poor in proportion to the degree to which they have failed to embrace capitalism and its necessary human rights foundation, ignoring human rights altogether or, worse, tainting legitimate capitalist principles with socialism or other fantasies and blaming the resulting distress on the inadequacies of capitalism. Aid and benefit from more capitalist countries to these countries inevitably filters to the most corrupt of their society, harming their people, supporting their oppressors, and perpetuating their suffering.

Is this capitalism's failure? Capitalism's inability to be "kind"? Hardly.

I'd argue that it's the fault of the idealists and altruists. And, much like the international aid industry attempting to improve parts of Africa, the result will be (even more) entrenched oppressors, more suffering, ... and more condemnations of capitalism.
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Dominic Crapuchettes, 30 Jan 2008 @ 11:47am

Define capitalism!
I would love to be engaged in a conversation around several terms which seem to get used loosely; Free Market and Capitalism. Everyone seems to mean something different when they use these words.

My understanding is that capitalism simply means that it is ok to earn interest from your money (your capital). It used to be called usury and you landed in Dante's 7th circle of hell because of it (which is pretty bad). Now a days, we think it is an important aspect of any strong economy because it allows people to take risk with their hard earned savings and invest the money in ventures that "might" better meet the needs of people than current options. Basically, instead of centralized governments deciding whether to give a venture the proper permit (based upon which ventures they think will be most beneficial to the people), each individual decides where to put his savings. This money is allocated to ventures which he/she deems are likely to pay out the highest returns.

I understand Free Market capitalism to be an economic system which is not centrally planned, meaning, individuals get to decide how much they are willing to pay for any given resource or item. So allowing interests rates as well as other goods get set by the market (as opposed to centrally planned by the government) is a certain type of capitalism.

Is this at all correct? I want an authoritative definition for Socialism, Communism, Fascism, and Democracy too! A lot of these terms don't seem to be as much at odds with each other as people think. As for defining Freedom and Liberty, well, we'll leave that for another time.
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Muhammad shahid, 1 Apr 2008 @ 1:49pm

Need help for Money
Dear,
Sir
I am a father of 5 childerns and i havent lost in my buisness plz sir help me give me some money plz i am very needy person
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