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Gates vs. Grove

Last week, the two most significant figures to emerge from the technology industry, Bill Gates and Andy Grove, offered views about how capitalism can solve complex social problems. Their thinking could not be more different, and the differences are instructive — and not favorable to Gates.
Gates, the co-founder of Microsoft, was at Davos, where he delivered a much-publicized speech advocating “creative capitalism.” The phrase has a nice ring, and Davos major domo Kurt Schwab endorsed it as an “enlightened” view of capitalism. In fact, it was remarkably unimaginative. Gates argued that business needs to “stretch the reach of market forces,” because there are so many places in the world where capitalism has not yet worked. He said that technology and micro financing can provide solutions for business, health, and social problems in the developing world.

All this is unobjectionable. Indeed, it is precisely what all smart companies have been doing since globalization became a reality. Everyone from soap makers to vaccine manufacturers has been figuring out how to create very inexpensive versions of much-needed products. This is how capitalism adapts to new situations, although not every business learns. Where capitalism is failing in the developing world, it is more often due to the absence of political freedom – a subject apparently too sensitive for the international harmony at Davos.

If you want to take a deeper look at creative capitalism, read the current Forbes article on Andy Grove’s efforts to advance research on Parkinson’s Disease. Grove, the co-founder and former CEO of Intel, has consistently proven to be a much deeper thinker than Gates on social and public issues. When he examined how the National Institutes of Health and leading pharmaceutical companies were dealing with Parkinson’s (he was diagnosed with the disease in 2000), he realized that not enough people were asking why there had been so much failure and why so few new treatments had emerged.

The Forbes article provides an entirely different view of how private wealth can bring fresh thinking to the work of government and corporations. The amount Grove is spending is a fraction of what the Gates Foundation has, but you do get the sense that his “creative capitalism” is far more rigorous than what Gates has in mind. For Grove, the problem isn’t the nature of capitalism, it is the lack of contrarian second-guessing within business and governments that is the real enemy of innovation. This doesn’t go down as well as talking about the limits of capitalism. But it strikes me as a much smarter critique of market failures.