Bill Gates's 'Kind' Capitalism is a Misnomer

Microsoft founder Bill Gates used the splendor of the World Economic Forum in Davos yesterday to promote what he deems a new, kinder form of capitalism. Though he didn’t shun its fruits altogether, it is his hope that we can “find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.”

With all due respect to the world’s richest man, the poor that he seeks to help should hope his vision is merely a vanity concept for him, rather than some form of capitalism-light to be foisted on the oblivious masses. They should because while it ultimately delivers staggering improvements to all in terms of health and lifestyle, capitalism can’t be kind.

Instead, capitalism is better than kind for engendering a form of ruthless benevolence whereby capital is constantly being directed away from the businesses and entrepreneurs who fail to give people what they want, and redirected toward those who are. With profit paramount in capitalist systems, capital rarely lies dormant such that its overseers can use it in ways inimical to the interests of the rich and poor alike.

When we consider living standards prior to the proliferation of the profit motive, a vastly different world existed. Economist Gregory Clark points out in his book A Farewell to Alms that before the onset of the Industrial Revolution, “the average person in the world of 1800 was no better off than the average person of 100,000 BC.” According to Clark, the “lucky denizens of wealthy societies such as eighteenth-century England or the Netherlands managed a material lifestyle equivalent to that of the Stone Age.”

Far from kind, pre-capitalist living among the masses took the form of what Clark 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.

Furthermore, Clark writes that when we look at how the rich live, “their current lifestyle predicts powerfully how we will all eventually live if economic growth continues.” Sure enough, this writer experienced the shock of seeing a wealthy Beverly Hills resident talking into a bulky hand-held cell phone in the mid-‘80s, but by the new millennium cell phones were ubiquitous; the only thing remarkable about them in recent years having to do with those not in possession of one.

Some, including Gates, might point to the wealth gap wrought by capitalism as a problem in and of itself, but returning to the proliferation of cell phones, capitalism is an engine that rewards profits; the profits frequently resulting from mass production of goods marketable to a broad spectrum of economic classes. So while some may bemoan the dollar-contrast between rich and poor, it’s that very contrast which continues to shrink the lifestyle gap between the rich and poor.

Gates speaks wistfully of a world in which companies would pursue profits while “improving the lives for those who don’t fully benefit from market forces.” But it’s there that he most impressively contradicts himself. There are parts of the world, particularly sub-Saharan Africa, that owing to a non-embrace of market forces have according to Clark produced “among the lowest material living standards ever experienced.”

Simply put, it’s a lack of market forces that has produced the poverty and ill-health that so vexes Gates. No doubt he would agree to a point, but in seeking a form of “soft” capitalism, he would to some degree retard the ruthless process whereby capitalism rewards those fulfilling individual needs, all the while punishing those that don’t.

In the end, “kind” when it comes to capitalism is a misnomer. Capitalism is about profits; the profits evidence of how unintentionally kind and virtuous capitalism actually is. That is so because it is profits that tell us who among the capitalist class is doing the most to remove uneasiness from the lives of others. To soften capitalism is to harden the lives of the poor.