Bill Gates’s call, in Davos, for "creative capitalism" is getting much press. Here’s a letter on this matter that I sent yesterday to the Wall Street Journal:
To the Editor:
I’m
delighted that Bill Gates is reading the important work of the late
Julian Simon ("Gates Calls for Kinder Capitalism," January 24). When
he digests Mr. Simon’s central idea – that human beings in market
economies are "the ultimate resource" – Mr. Gates might then recognize
that there is no need to change capitalism so that it becomes
"creative." Capitalism has always been creative. It is inherently
creative.
Everything from apparently mundane pencils and stocked
supermarket shelves to obviously complex skyscrapers and personal
computers are astonishingly complex artifacts created by human
ingenuity unleashed, as only capitalism can unleash it, to experiment,
cooperate, and compete. No philanthropist, no government body or
commission, no Great Leader – no matter how "creative" or "kind" – has
done one-trillionth as much to give dignity and comfort to ordinary
people as has capitalism. It doesn’t need re-inventing or to be made
kinder; it just needs to be spread more widely around the world.
Sincerely,
Donald J. Boudreaux
Update: John Tamny at RealClearMarkets has this wonderful reaction to Bill Gates’s failure to grasp the reality of capitalism. Here are some key paragraphs:
Far from kind, pre-capitalist living among the masses took the form
of what [Gregory] Clark [in his new book A Farewell to Alms] terms “unrelenting drudgery,” with food in short supply,
and early death a fact of life given the ravages of disease that
capitalism hadn’t yet cured. Though humans today are capital themselves
in the sense that a broad division of labor ensures greater work
specialization and more plentiful output, death was a virtue in
pre-capitalist societies thanks to the inability of its economic
systems to produce much of anything for people very much in need.
Fast forward to the 19th century and industrialization, life for the
average person changed substantially for the better. Whereas income had
been flat for thousands of years, societies that welcomed the upheaval
which industrialization brought saw their pay make near 180 degree
turns upward.
And while capitalism surely created a class of wealthy owners, Clark
notes that “industrialized economies saved their best gifts for the
poorest.” To this day we see the truth in Clark’s words in that while
the rich may have better houses, food and jobs than the average person,
capitalism has done a better job than any other system of housing,
feeding and employing those not at the top of the income pyramid.
