“A New Approach to Capitalism in the 21st Century”

by Bill Gates

Prepared remarks delivered at the World Economic Forum, January 24, 2008, in Davos, Switzerland.

Thank you for that welcome and for the privilege of speaking at this forum.

This is the last time I will come to Davos as a full-time employee of Microsoft.

Some of us are lucky enough to arrive at moments in life where we can pause, reflect on our work, and say: “This is great. It’s fun, exciting, and useful – I could do this forever.”

But the passing of time forces each of us to take stock and ask: What have I accomplished so far? What do I still want to accomplish?

Thirty years, twenty years, ten years ago, my focus was totally on how the magic of software could change the world.

I believed that breakthroughs in technology could solve the key problems. And they do – increasingly – for billions of people.

But breakthroughs change lives only where people can afford to buy them – only where there is economic demand.

And economic demand is not the same as economic need.

There are billions of people who need the great inventions of the computer age, and many more basic needs as well. But they have no way of expressing their needs in ways that matter to markets. So they go without.

If we are going to have a serious chance of changing their lives, we will need another level of innovation. Not just technology innovation – we need system innovation. That’s what I want to discuss with you here in Davos today.

Let me begin by expressing a view that might not be widely shared.

The world is getting better.

In significant and far-reaching ways, the world is a better place to live than it has ever been.

Consider the status of women and minorities in society – virtually any society – compared to any time in the past.

Consider that life expectancy has nearly doubled in the past 100 years.

Consider governance – the number of people today who vote in elections, express their views, and enjoy economic freedom compared to any time in the past.

In these crucial areas, the world is getting better.

These improvements have been matched, and in some cases triggered, by advances in science, technology, and medicine. They have brought us to a high point in human welfare. We are at the start of a technology-driven revolution in what people will be able to do for one another. In the coming decades, we will have astonishing new abilities to diagnose illness, heal disease, educate the world’s children, create opportunities for the poor, and harness the world’s brightest minds to solve our most difficult problems.

This is how I see the world, and it should make one thing clear: I am an optimist.

But I am an impatient optimist.

The world is getting better, but it's not getting better fast enough, and it’s not getting better for everyone.

The great advances in the world have often aggravated the inequities in the world. The least needy see the most improvement, and the most needy see the least – in particular the billion people who live on less than a dollar a day.

There are roughly a billion people in the world who don’t get enough food, who don’t have clean drinking water, who don’t have electricity, the things that we take for granted.

Diseases like malaria that kill over a million people a year get far less attention than drugs to help with baldness.

Not only do these people miss the benefits of the global economy – they will suffer from the negative effects of economic growth they missed out on. Climate change will have the biggest effect on people who have done the least to cause it.

Why do people benefit in inverse proportion to their need?

Market incentives make that happen.

In a system of pure capitalism, as people’s wealth rises, the financial incentive to serve them rises. As their wealth falls, the financial incentive to serve them falls – until it becomes zero. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well.

The genius of capitalism lies in its ability to make self-interest serve the wider interest. The potential of a big financial return for innovation unleashes a broad set of talented people in pursuit of many different discoveries. This system driven by self-interest is responsible for the great innovations that have improved the lives of billions.

But to harness this power so it benefits everyone – we need to refine the system.

As I see it, there are two great forces of human nature: self-interest, and caring for others. Capitalism harnesses self-interest in helpful and sustainable ways, but only on behalf of those who can pay. Philanthropy and government aid channel our caring for those who can’t pay, but the resources run out before they meet the need. But to provide rapid improvement for the poor we need a system that draws in innovators and businesses in a far better way than we do today.

Such a system would have a twin mission: making profits and also improving lives for those who don’t fully benefit from market forces. To make the system sustainable, we need to use profit incentives whenever we can.

At the same time, profits are not always possible when business tries to serve the very poor. In such cases, there needs to be another market-based incentive – and that incentive is recognition. Recognition enhances a company’s reputation and appeals to customers; above all, it attracts good people to the organization. As such, recognition triggers a market-based reward for good behavior. In markets where profits are not possible, recognition is a proxy; where profits are possible, recognition is an added incentive.

The challenge is to design a system where market incentives, including profits and recognition, drive the change.

I like to call this new system creative capitalism – an approach where governments, businesses, and nonprofits work together to stretch the reach of market forces so that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.

Some people might object to this kind of “market-based social change” – arguing that if we combine sentiment with self-interest, we will not expand the reach of the market, but reduce it. Yet Adam Smith – the father of capitalism and the author of Wealth of Nations, who believed strongly in the value of self-interest for society – opened his first book with the following lines:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.”

Creative capitalism takes this interest in the fortunes of others and ties it to our interest in our own fortunes – in ways that help advance both. This hybrid engine of self-interest and concern for others serves a much wider circle of people than can be reached by self-interest or caring alone.

My thinking on this subject has been influenced by many different experiences, including our work at Microsoft to address inequity.

For the past 20 years, Microsoft has used corporate philanthropy as a way to bring technology to people who don’t have access. We’ve donated more than $3 billion in cash and software to try to bridge the digital divide, and that will continue.

But our greatest impact is not just free or inexpensive software by itself, but rather when we show how to use technology to create solutions. And we’re committed to bring more of that expertise to the table. Our product and business groups throughout the world, and some of our very best minds at our research lab in India, are working on new products, technologies, and business models that can make computing more accessible and more affordable. In one case, we’re developing a text-free interface that will enable illiterate or semi-literate people to use a PC instantly, with minimal training or assistance. In another we’re looking at how wireless technology, together with software, can avoid the expensive connectivity costs that stand in the way of computing access in rural areas. We’re thinking in a much more focused way about the problems that the poorest people face, and giving our most innovative thinkers the time and resources to come up with solutions.

This kind of creative capitalism matches business expertise with needs in the developing world to find markets that are already there, but are untapped. Sometimes market forces fail to make an impact in developing countries not because there’s no demand, or because money is lacking, but because we don't spend enough time studying the needs and limits of that market.

This point was made eloquently in C.K. Prahalad’s book The Fortune at the Bottom of the Pyramid, and that’s had a huge influence on companies in terms of stretching the profit motive through special innovation.

When the World Health Organization tried to expand vaccination for meningitis in Africa, it didn’t go straight to a vaccine manufacturer. It first went to Africa to learn what people could pay. They found out that if they wanted mothers to get this vaccine for their babies, it had to be priced under 50 cents a dose. Then they challenged the partners to meet this price, and, in fact, Serum Institute in India found a new way to make the vaccine for 40 cents each. They company agreed to supply 250 million doses to distribute through public health systems over the next decade, and they are free to sell it directly to the private sector too.

In another case, a Dutch company, which holds the rights to a cholera vaccine, retains the rights in the developed world, but shares those rights with manufacturers in developing countries. The result is a cholera vaccine made in Vietnam that costs less than $1 a dose – and that includes delivery and the costs of an immunization campaign. There are a number of industries that can take advantage of this kind of tiered pricing to offer valuable medicine and technology to low-income people.

These projects are just a hint of what we could accomplish if people who are experts on the needs in the developing world would meet several times a year with scientists at software or drug companies and help them try to find poor world applications for their best ideas.

Another approach to creative capitalism includes a direct role for governments. Of course, governments do a great deal to help the poor in ways that go far beyond nurturing markets: they fund research, subsidize health care, build schools and hospitals. But some of the highest-leverage work that government can do is to set policy and disburse funds in ways that create market incentives for business activity that improves the lives of the poor.

Under a law signed by President Bush last year, any drug company that develops a new treatment for a neglected disease like malaria or TB can get priority review from the Food and Drug Administration for another product they’ve made. If you develop a new drug for malaria, your profitable cholesterol-lowering drug could go on the market a year earlier. This priority review could be worth hundreds of millions of dollars.

Another approach to creative capitalism is simply to help businesses in the poor world reach markets in the rich world. Tomorrow morning I will announce a partnership that gives African farmers access to the premium coffee market, with the goal of doubling their income from their coffee crops. This project will help African farmers produce high-quality coffee and connect them to companies that want to buy it. That will help lift them, their families, and their communities out of poverty.

Finally, one of the most inventive forms of creative capitalism involves someone we all know very well.

A few years ago, I was sitting in a bar here in Davos with Bono. After Asia and most of Europe and Africa had gone to bed, he was on fire, talking about how we could get a percentage of each purchase from civic-minded companies to help change the world. He kept calling people, waking them up, and handing me the phone. His projections were a little enthusiastic at first – but his principle was right. If you give people a chance to associate themselves with a cause they care about – they will pay more, and that premium can make an impact. That was how the RED Campaign was born, here in Davos.

RED products are available from companies like Gap, Motorola, and Armani. Just this week, Dell and Microsoft joined the cause. Over the last year and a half, RED has generated $50 million for the Global Fund to Fight AIDS, TB, and Malaria. As a result, nearly 2 million people in Africa are receiving life-saving drugs today.

What unifies all forms of creative capitalism is that they're market-driven efforts to bring solutions we take for granted to people who can’t get them. As we refine and improve this approach, there is every reason to believe these engines of change will become larger, stronger, and more efficient.

There is a growing understanding around the world that when change is driven by market-based incentives, you have a sustainable plan for change – because profits and recognition are renewable resources. Klaus Schwab runs a foundation that assists social entrepreneurs around the world, men and women who turn their ideas for improving lives into affordable goods or services. President Clinton demonstrates the unique role that a non-profit can play as a deal-maker between rich world producers and poor world consumers. The magazine Fast Company gives awards for what they call Social Capitalism.

These are not a few isolated stories; this is a world-wide movement, and we all have the ability and the responsibility to accelerate it.

I’d like to ask everyone here – whether you’re in business, government or the non-profit world – to take on a project of creative capitalism in the coming year. It doesn’t have to be a new project; you could take an existing project, and see where you might stretch the reach of market forces to help push things forward. When you award foreign aid, when you make charitable gifts, when you try to change the world – can you also find ways to put the power of market forces behind the effort to help the poor?

I hope corporations will consider dedicating a percentage of your top innovators’ time to issues that could help people left out of the global economy. This kind of contribution is much more powerful than simply giving away cash, or offering your employees time off to volunteer. It is a focused use of what your company does best. It is a great form of creative capitalism, because it takes the brainpower that makes life better for the richest, and dedicates it to improving the lives of everyone else.

There are a number of pharmaceutical companies – GlaxoSmithKline in particular – that are putting their top innovators to work on new approaches to help the poor. Other companies are doing the same – in food, technology, cell phones. If we could take the leaders in these areas as models, and get the rest to match them, we could make a dramatic impact against the world’s inequities.

Finally, I hope that the great thinkers here will dedicate some time to finding ways for businesses, governments, NGOs, and the media to create measures of what companies are doing to use their power and intelligence to serve a wider circle of people. This kind of information is an important element of creative capitalism. It can turn good works into recognition, and ensure that recognition brings market-based rewards to businesses that do the most work to serve the most people.

We are living in a phenomenal age. If we can spend the early decades of the 21st century finding approaches that meet the needs of the poor in ways that generate profits and recognition for business, we will have found a sustainable way to reduce poverty in the world. This task is open-ended. It can never be finished. But a passionate effort to answer this challenge will help change the world.

Comments

[Jake Seliger]

This originated as an e-mail, which Conor asked me to post.

Hi,

Thanks for running Creative Capitalism, which is of great interest to me because I work with my family as a grant writing consultant. This means we get to experience the mechanical aspects of distributing funds for nominal social goods in a wide range of areas, giving us a very different viewpoint than funders like Bill Gates or academic economists, whose work we sometimes cite.

The major problem with philanthropy as currently practiced is that it seems to be designed chiefly to make the people giving the money away feel better about themselves than it is to provide genuine assistance to whoever the target audience is. I discuss some aspects of this phenomenon in Foundations and the Future and, to a lesser extent, in Why Do People Give? And Other Unanswerable Questions.

You can see these perverse incentives at work in the forms money distribution take: see, for example, my comments on RFPs in RFP Lunacy and Answering Repetitive or Impossible Questions, Further Information Regarding the Department of Redundancy Department, and Deconstructing the Question: How to Parse a Confused RFP. RFPs like these, unfortunately, are the rule rather than the exception, and though the implicit criticism in the linked posts focuses on programs from the United States government, foundation RFPs often aren't any better. One interesting thing my father likes to note is that in 15 years of grant writing business, a funder or funding source has never contacted us to ask how the process can be improved. This would be like Microsoft not using software testers, or not talking to its customers; when I was a teenager, I occasionally tested games and offered feedback at Microsoft's Redmond campus. But as far as I know, most funders don't even go that far.

I think these poor RFPs and poorly thought out programs are often symptoms of what Richard Posner wrote: "Corporations have long made charitable donations, quite properly from a profit-maximizing standpoint, in order to curry favor with politicians and interest groups, advertise the corporation to potential consumers (as by underwriting cultural events), create diffuse goodwill, disguise greed, and ward off criticisms." You can see the problems with what they're doing based on the relatively small amount of money available in many RFPs, especially given how much time and effort is required to apply for and operate programs.

In addition, foundations and governments seem to become sclerotic as time progresses, and without any feedback correction loop, they eventually become bureaucratic and self-sustaining and defending. When FEMA screws up disseminating information about a program, nothing happens, and when a foundation has submission guidelines so demanding that an organization would have to invest more work to get the money than the money is worth, nothing happens, and it's possible that the foundation will never go away because it doesn't have to distribute much money every year. Businesses might flail about for a while, but they eventually whither and die. Foundations and government agencies simply become zombies, trudging through the world in a simulacrum of life.

I'm not sure that what Gates calls "Creative Capitalism" will work, or what "work" really means in this context, but it seems probable to me that it will at the very least be an improvement on traditional methods of throwing money at projects on a piecemeal basis, feeling virtuous, and then moving on to the next thing, which is somewhat like throwing seeds in the wind and hoping for food in the autumn rather than running a farm. Issues of scale contribute to this: aside from the Gates Foundation and a handful of others, giving away just five percent of assets every year means that most foundations just won't have the impact or wherewithal to really study programs, outcomes, and effectiveness, whether in the U.S. or elsewhere.

[laura]

My major complaint about grant money? The program for which money was needed had to be new, innovative, creative. In organizations with new clients coming for assistance every day, every month, every year, money to sustain those programs was the important thing in my organization. Programs which had reliable track records for providing necessary assistance did not count, even though they were led by creative people whose jobs were to come up with new solutions as new situations arose. Documenting the number of users of the programs, including their evaluations with the proposal, defining the needs of clients and how our alreay successful programs met those needs--not attractive to most foundations/corporations whose own needs were to fund "new" programs and then brag about their successes. I hope things have gotten better in the money-lending pholanthropic world.

Laura

[Anon]

Until Gates faced indictment, he never gave a penny. Faced with indictment, he started to give to both Republicans and Democrats. It was a smart move (though not a very creative one) from a very smart man. In fact all his palaver now is also politics-as-usual, smart and anything but creative. Every problem he mentions has a political solution if one had a government which would make us live within limits. Example: by giving money to say, AIDS, one releases Bush&Co from funding AIDS. Ditto for the host of other "do good" crumbs that business throws out. In fact, I would say businesses are marginal enablers for the war in Iraq (by easing the strain on government budgets for non-war items).

Gates cites Adam Smith who wrote in a time when the impact of the human economy on the environment was several orders of magnitude less than it is today. Smith may have even observed external effects but why consider them? They were inconsequential then, so Smith celebrates division of labor and the possibility of trade to improve material life in the late 18th century. Why doesn't Gates cite the text which has become historical in modern times for modern problems: "The tragedy of the commons" by Garrett Hardin (Science 1968). The tragedy begins by telling us that there is a class of problems for which there is no technical (read: technological) solution . Moreover, seeking one will only make those problems worse! One must change values to reflect the times and, above all, live within limits. I know, I know, ....all this negative talk (hiss, hiss)...Malthusian! So, let me say something positive and proactive for these G-d like philanthropists. What philanthropists should be funding are projects that promote a wide-ranging public conversation so that we can achieve "mutual coercion, mutually agreed upon." Alas, that would be political, and threaten the very disparities that allow philanthropists to throw out those crumbs (and yes, billions of dollars are crumbs when one can still retain billions of dollars questionably "earned").
Anon
PS "The potential of a big financial return for innovation unleashes a broad set of talented people in pursuit of many different discoveries. This system driven by self-interest is responsible for the great innovations that have improved the lives of billions." When Gates was a pimply faced adolescent working out of his father's garage, he thought "without the potential of a big financial return [at its peak about 100 billion]," I am going to watch the Brady Bunch! Give me a break.
Anon

[Levi Yoder]

Bill Gates and Warren Buffett are exceptional capitalists wrestling with their respective accumulated wealth. This reflects a conscience,a sense of caring for those less fortunate. Capitalism is a tool, a method, used to pursue an innate greed and selfishness. Therefore,"creative capitalism",although a great concept, will never be practiced widely for lack of individual or corporate conscience.
Federal regulations,taxation, and a benevolent body of elected officials is the most likely way to redistribute wealth.Scandinavian countries could be viewed as potential models.(I am pessimistic-it will never happen). In the meantime,kudoos to Mr. Gates and Mr Buffett for sharing in a creative way.

[Jim Callahan]

"In a system of pure capitalism, as people’s wealth rises, the financial incentive to serve them rises. As their wealth falls, the financial incentive to serve them falls – until it becomes zero. We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well."

This is the classic argument for redistribution of income from rich to poor, which is an option in wealthier industrialized societies. But, Bill Gates also makes an argument for adapting products to meet the low income consumers' ability to pay out of current income.

Both options, redistribution of income and lower the cost of products to meet the current budget constraints of low income consumers are important and one option should not be advocated to the exclusion of the other.

Jim Callahan
Orlando, FL

[Joe]

Is this speech and so-called new doctrine to benefit the poorest in the world the basis for his continued, specious argument for importing workers around the world for his global, research and continuing development of his Microsoft products?

I question his sensitivity to import lower income workers when his corporation is the direct beneficiary of these lower paid workers rather than the available skilled workers here in the U.S.

[Diana]

When an intelligent mind meets a generous soul you get a genius and I believe that Bill Gates is one of the genius in the recent times. The fact that the richest person in the world and the generator of a technological revolution is interested in the well-being of the poor is amazing and the world should do the best to profit from this.

I believe that the name of "creative capitalism" is a little bit too far from the concept itself and that "generous capitalism" would be a better option, if not even the already existent concept of "social capitalism" (because in fact they share the same goal: making the world better by using the virtues of capitalism).

Capitalism is indeed very focused on "increasing individual profits", but improving the status of the poors is, on the long term, in the profit of everybody because poverty creates conflicts and conflicts create stagnation or even losses both riches and poors.

So the "creative capitalism" is perfectly sustainable. What we miss are the tools to make it happen (that can be developed just by experimenting) and the philosophy of social generosity(that can be understood just by thinking on a long term perspective).

It is in the hands of each of us to make the world a better place. And the first step is for each of us to assume a social responsibility.

[Robbie]

No matter what kind of capitalism you're talking about, it's still capitalism. And greed makes capitalism work. But the bottom line is, capitalism is monopolism. Like the game, the luckier players began buying everything until they (and eventually one person), own everything. Look at the large corporations today. They just keep buying out their competitors until they own it all. Capitalism is the game of monopoly on a world wide scale, and at the end of the game there is only one winner. Who's winning this game right now, well Exxon Mobile, the largest corporation on the planet, is looking like a real possibility!

[Thomas Yellich]

Hi,
I would like to think of the Philosophy of "Capitalism with a Conscience" as the goal of the fortunate. Choice to do the right thing has nothing to do with Religion, Political Party, or Ethnicity. It has everything to do with being taught and knowing that the real key to our lives is about the magic word "Choice".
Everybody to some degree has choices. These choices come with responsibilities, and we as human being are responsible for the consequences of these choices.
Most any person understanding that the wealth that they have created or inherited happened for many reason, one being just good timing. At the same time the unfortunate must also learn and practice responsiblity at their own level of existence. Personally I am opposed to "Wealth redistribution" by a Government through taxes. As an Independant party affiliation I tell my Democratic friends I prefer to make the choice of where and when I will give my own wealth away to others. Taxation on wealth is not the answer. Being taught at youth to spread around good fortune would be a key ingrediant to a more humane philosophy instead of just the need for selfish reasons. Break it down and all of us will die, that is the great equalizer. Everything you have at this moment will be someone else's in the near or later future period! Learn self control, discipline, limits, responsibility and not only will you become a better person, you will become Happy. Happiness is knowing that to wake up each day is a gift, not to feel hunger or pain these are gifts as well. Our society is based on consumption, and the more one consums the more influential they are seen in the eyes of the general public. "More" seems to be the guiding force of modern humans. Whether one needs more of anything is not important but rather just having more means a sense wealth. More food, more drugs, more sex just more of all things seems to be what will make us all happy eventually. Only it is not true. Until our civilazation is taught that to have what one needs is the important cocept as opposed to just having more for one's ego than we will keep repeating our current ways. Love, kindness, compassion all must be "taught" at birth otherwise we will get the same type of human behavior we have in the World now which is selfishness, greed, intolerance and forced human behavior otherwise known as "Religion". Choice is the magic word for all of us. It is not too late for humanity to change!
So for now and into the future to understand how to arrive at being Happy then each person just needs to be satisfied with "enough" rather than "more" of anything. To learn humility will have alot to do with our species remaining on the planet. We have a long way to go though!

[Jake Seliger]

Laura writes:

My major complaint about grant money? The program for which money was needed had to be new, innovative, creative.

One of the more entertaining aspects of many RFPs comes from them telling you what to do, and then asking that you do it in an innovative way. The The Community Based Abstinence Education Program is particularly amusing in this regard.

The "sustainability" section many RFPs have is equally bizarre: they ask how programs will be sustained beyond the grant period. The answer, for many programs, is that they simply won't: if an organization had the money to run them in the first place, the grant wouldn't be necessary.

This is indicative of what we call the proposal world and the real world, and the divorce between them is often enormous. Businesses might have the kinds of problems, but if they have them long enough, the market will eventually correct them—whereas the nonprofit world has dramatically fewer corrective tendencies, leading to the inefficiencies that I think Gates wants to get around through Creative Capitalism. The question is: can he? As my first post, above, indicates, I'm skeptical, but I suppose it possible.

[Chatarra Schwager]

Chatarra$chwager LIVE

[Andre]

There is capitalism and there is liberalism. Creative minds need freedom more than money, and here I respectfully dissent with the views provided.

Many essential elements of the human world were not created by extrinsic incentives but by conscious humans (or even maniacs). Extrinsic incentives represent a low state of personal development and dependence. Providing incentives for the "good mission" bears the same misconception.

Further I believe in technology driven social change. The world of Economics is based on scarce resources and does not really apply to the digital world we are moving to.

[jorge aspillaga]

Dear Sirs,

I am a lawyer that work in Chile in corporates matters and in bioremediation of oil and heavy metals.
Since I was very joung I have been very interested in ecology and nature.
A few years ago I learn about Kioto and it's Protocol.
Since then, I think we can use the method that inspires this system, to make an equivalence system to create profits from the support of the pour people of the world. To make true the "genious of the capitalism in its ability to make self interest serve the wider interest" in decresse powerty of the weak econonomies and pour people of the world.
I am sure that this system can make reality this target, allowing market incentives happens and create wealth to whom more need it.

Best regards.
Jorge Aspillaga.

[sandra H.]

Bill Gates believes we should find approaches that help the poor in ways that generate profits and recognition for business.A goal of profit making keeps the real number of poor people from ever permenantly decreasing.This is proven by the recent spikes in food and energy prices(needed to maintain corporate profits)that caused large numbers of poor people to lose any gains they have made.Biofuels are taking food out of hungry mouths.Many multinationals make money off the backs of the poor with low wages and cut rate production techniques and labor exploitation of the uneducated these practices exascerbate and perpetuate poverty..Profit motive and poverty reduction are opposites that dont attract goood results.
I work in Haiti and have seen grinding poverty that no human being should have to tolerate.The poor need clean water,sanitation,arable land rights and then leave them to their own creativity and self reliance of which they have more of then the creative capitalists!The creative capitalists assume the poor want to be like them.A level playing field for trade and living standards will never happen.The discrepencies between the haves and have nots cannot be reconciled in this lifetime they are too mammoth.The developed world thinks it is up to them to solve the poor's problem...it's not.It is up to the developed world to share the natural resources that belong to everyone.Creative capitalism is a new modern myth that allows the well off to stay well off while believing they are reducing poverty.

[mary smith]

Govertments,philanthropists and NGOs have trillions of dollars in their hands for poverty reduction but the overall improvement of the poor doesnt really change,one poor person escapes another takes its place.The money is in the wrong hands.

[harry jackson]

The Bono model encourages consumption and materialism thus wasting natural resources that the poor should have greater access to.

[Hugo Cespedes A.]

First of all, I apologize in advance for my English (not my native language), since I am not accustomed to express myself in this language.

True, the most dispossessed must be a priority for all actors in the economy. What motivates us to help people who had not reached the benefits of capitalism? Why should help other people interested, if there is no direct benefit to us in making this expenditure of time and effort? ... Questions like these will pose all those who were present the proposal, or who read this blog, or those who learn through the press here that the proposals are being developed. Understandably consider these questions and others, since what you are trying to do here is change the incentive system with which we have been accustomed to operate.
As Bill argues, it is necessary to "create incentives" to carry out these tasks. True, the market is, was and will be the best allocator of resources. However, this allocation depends on the "proper functioning of market incentives to achieve its objectives." You see, as I see it, the market has no flaws, what happens is that there are interferences in it, so it is unable to function properly (interference will arise lobbying of interest groups, mismanagement on the part Governments of Corporate enterprises, which eventually leads to financial instability, not only to company level but also at regional and even global economic). If “there is no right incentives”, the market mechanism will not operate at 100%. The latter is a consequence of that "in situations of stress or decisions with incentives unclear, the personal interests to take precedence when making strategic decisions, ending results in inefficient both enterprise and economic level.

Companies should consider the most deprived, as "a potential market," a potential client, so that "investment to help these potential customers," should be seen as a way to generate useful to the company future (a project that requires leadership to control the entire project carries risks), to take the best strategic decision for the benefit of future customers (to help people in need, helpless and with large demands) and indirectly benefiting the own company and its shareholders with greater value added delivered by the project in question. This utility -recognition, future profits, etc.- aid to make decisions on "cooperation between enterprises" to help those most in need. In situations where there are no "clear benefits", it is the duty of governments, generate these instances. If not possible that governments see these opportunities and act, it should go to area specialists, responsible for studying, analyzing markets and correct implementation of them (I mean "designers market", who analyzes the "Thickness of markets", "security or disclose confidential information revealed preference", "congestion-market rate at which transactions are conducted in-market"). It's rare talk of designers market, but is nothing more than "specialists in market analysis and its operation, incentives and so on."
There are several themes that come together to create a conversion to capitalism, problems of asymmetric information, agency problems, strategies decision (game theory), free riders, and so on. However, a phenomenon that I believe can contribute greatly to the goal, is "innovation" (with all its edges and classifications: technological innovation, social innovations hard and soft, disruptive, incremental, etc.). Here we are talking about a social innovation, which aims to "cooperate", helping those most in need. This is a project which requires cooperation, coordination, alignment of incentives diverse and often divergent, but with a common goal, achieving a higher social-economic benefit.
Innovation, as a concept, involves doing something new, make a change, which is usually slow and takes time. It was slow implementation (for which we must be patient about it). However, given the advances and technological innovation will allow such changes are faster than usual. If incentives are well implemented, the decisions of cooperation will be well carried out. The information asymmetries can be overcome by technology innovation, allowing tasks such as education (cornerstone for reducing poverty and inequality gap anywhere in the world) can be performed more efficiently, where the analysis the requirements of these groups can be studied and carried out faster which makes 20 or 10 years ago (think that progress in doubling per capita income, who needed nearly two centuries to take place formerly economies today day we have done in 40 years, including some in a decade). Therefore, there is significant evidence about the potential for innovation.
As can be seen, innovation is not a phenomenon that takes place spontaneously, requires planning, cooperation, measurement and a lot of patience, and above all else, has the desire to carry it out, have the conviction that the objectives sought will be achieved.

[john brown @pennstate.edu]

Dear Hugo Bigfoot the most deprived are not a potential market or customer they are the most neglected and poorest of all mankind.They need basic tools of survival to live and improve themselves not to be used as future consumers to up the income of
individuals and corporations.

[Hugo Cespedes A.]

Dear John, what you say is true, those most in need should not be looks like something usable. " However, we must find incentives for businesses and corporations involved in this project. Maybe I do not correctly said, referring me to "seek incentives for businesses to see that there are indirect benefits for them" (recognition if you want to view it from that standpoint, or tax incentives for donations) that can motivate them to participate this beneficial project. The fact that, as you say, they need basic tools of survival, entails urgency to take action as soon as possible in this matter.

[mother theresa]

a very large problem so if everyone does small things with great love the world gets better.

[mother theresa]

Dear Hugo you need to lose the business model as the answer to the poverty crisis.Take into consideration how the poor nations are at a different stage of development then the wealthy ones and need to start where they are to improve not where you are at.The poor are not ready for market forces to feed their children but they are ready to plant their own food.

[Hugo Cespedes A.]

Mmmm, is not easy item, I admit.

[sandra H.]

Well Im kinda hoping you are an easy item.....To capitalize on anyway!!

[Andrés Sepulveda]

Estoy muy agradecido, por haber desarrollado este tema, pero no leo en inglés, sería posible que pudieran traducir al español, los textos?
Gracias

[Andrés Quintanilla]

Dear
I am a small industralist from South America in the business of Snowboard and Skateboard, celebrations. ever since he was a boy works in many different things knowing in different countries in South America, knowing and working in Chile, Uruguay, Argentina, Peru, Brazil and the U.S.A. knowing different realities and styles from life. from the poorest districts in Rio de Janerio, Buenos Aires and Santiago, Chile until Mercer Island, Seattle.
I believe that the best way of than Capitalism can serve so much to the rich ones as to the poor men it is that the great and small industralists minds shining of the businesses we donate 1% of our gains for a foundation in aid to the poorest people in all the planet, families and children who in many sides cannot study single not to have a little money, to eliminate the infantile work like the children in India, Asia and in many places in South America.
To help to the children homeless with its studies, food and sports for those children who can be future minds shining of the economy and the well-being of our future planet.

Andrés Quintanilla, Santiago Chile.