Wednesday, February 10, 2010

Creative Capitalism

"Progress means not changing, but changing for the better." -C.S. Lewis, Mere Christianity

I say that because as I read Creative Capitalism I was encouraged that these big successful business men were coming to the conclusion that the current way that we do things (the 'system') doesn't work for all (the poor in particular) and needs to be amended.  Not to say we need to have a complete overhaul, but that change (progress) needs to happen because it would be for the better.

At the same time I was reading about Creative Capitalism, these words, spoken by Christian community developers, continued to ring loudly: "How can we harness market forces so that the poor are also beneficiaries."

The following is an exerpt from the book (an executive summary of Creative Capitalism).  Whether or not it will come to fruition is debateable.  But I'm thankful that God is bringing business/economic savvy people to the table, regardless if they recognize that it's Him changing their hearts or not!  (disclaimer: I don't necessarily agree with all of the wording or reasoning but I think it's still a good step in the right direction.)

1. Today's miracles of technology benefit only those who can afford them.  Markets respond only to "demand", not to "need".

2. This is a systematic flaw in the free-market system.  Further technological innovation is less important than systematic innovation to mend this flaw.

3. The world is getting better, but not fast enough and not for everyone.  Great advances in technology therefore make inequity worse.  About a billion people are left out.  For example, climate change will impose the worst effects on those least responsible for it.

4. Why?  Because in "a system of pure capitalism," the incentive to serve people rises as their wealth rises and falls as their wealth falls.  This system needs to be changed so that there is incentive to serve poor people too.

5. Self-interest is just one or two forces in human nature.  The other is "caring for others."  The genius of capitalism is that it makes self-interest serve the general interest.  Philanthropy and government are supposed to address our "caring for others," but there isn't enough philanthropic or government money to solve the world's problems.

6. A revised capitalist system would both make a profit and improve the lives of the have-nots.

7. A revised system should use profit incentives where possible.  But even where profits are not possible, there is a market-based incentive that can be used: recognition.  Positive recognition is good for a company's reputation, good for attracting customers, and good for attracting employees.

8. Creative capitalism is a system where incentives for both profit and recognition motivate both self-interest and caring for others.

9. Under creative capitalism governments, businesses, and non-profits work together.

10. "This hybrid engine of self-interest and concern for others serves a much wider circle of people that can be reached by self-interest or caring alone."

11. Example: Corporation donating money or products.  Or, even better, corporations spending money or using technology to find new markets in poor countries.

12. Example: "tiered pricing."  A drug company has a valuable patent and charges full monopoly price in the developed world, but lets poor-world manufacturers produce less than one dollar a dose.

13. Sometimes there is a "direct role for government": creating market incentives for companies to help the poor.  For example, the FDA rules that if you develop a new treatment for a neglected disease, you get priority review by the FDA for some other drug.

14. Another approach: Help poor-world businesses do business in developed world.

15. Another example: the Bono ("RED" campaign) model.  Sell products with a small percentage of the profits going to worthy causes in the poor world.  People will pay more for products associated with these causes.

16. "What unifies all forms of creative capitalism is that they are market-driven efforts to bring solutions we take for granted to people who can't get them."

17. Corporations should allow "top innovators" to spend part of their time on issues facing people too poor to be customers.  This "takes the brainpower that makes life better for the richest, and dedicates it to improving the lives of everyone else."

Now that is and would be progress.

Saturday, February 6, 2010


"Ancient Hebrew wisdom describes four levels of charity.  The highest level is to provide a job for one in need without his knowledge that you provided it.  The next, lower level is to produce work that the needy one knows you provided.  The third level is to give an anonymous gift to meet an immediate need.  The lowest level of charity, to be avoided if at all possible, is to give a poor person a gift with his full knowledge that you are the donor." -Bob Lupton, Compassion, Justice and the Christian Life

Levels of Charity:

1. Providing a job without the recipient knowing who provided it
2. Providing work and the recipient knows it was you that provided it
3. Giving a gift anonymously to meet an immediate need
4. Giving a gift and the recipient knows it was you that provided it

This is interesting.  I'm sure the most frequently practiced levels of charity go from numbers 4 through 1.  It's also true that it's easier to perform level 4 charity and subsequently harder to perform three than it is two and one.

Maybe you have to start at number four before you can move to other higher forms of charity.  Number four then being the bottom or base of compassion.. an entry way so to speak.  If anybody is interested in reading more about how to go from betterment to development, or to go deeper into development.  I'd suggest reading Compassion, Justice and the Christian Life.  This book and others have helped to shape my thinking when it comes to ministry to the poor.