Bill Gates: A New Approach to Capitalism in the 21st Century

Bill Gates will retire from frontline business this year and in his last speech as a full time employee of Microsoft, he told world leaders at last week's Davos gathering what is driving him in his next venture.

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As you all may know, in July I'll make a big career change. I'm not worried; I believe I'm still marketable. I'm a self-starter, I'm proficient in Microsoft Office. I guess that's it. Also I'm learning how to give money away.

So, this is the last time I'll attend Davos as a full-time employee of Microsoft.

Some of us are lucky enough to arrive at moments in life when 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 ago, 20 years ago, 10 years ago, my focus was totally on how the magic of software could change the world. I saw that breakthroughs in technology could solve key problems. And they do, increasingly, for billions of people.

But breakthroughs change lives primarily 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 the market, so they go without.

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

Let me begin by expressing a view that some do not share: The world is getting better, a lot 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 during the last 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 many crucial areas, the world is getting better.

These improvements have been triggered by advances in science, technology, and medicine. They have brought us to a high point in human welfare. We're really just at the becoming of this technology-driven revolution in what people can do for one another. In the coming decades, we'll have astonishing new abilities: better software, better diagnosis for illness, better cures, better education, better opportunities and more brilliant minds coming up with ideas that solve tough 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 get 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.

So, the bottom billion misses the benefits of the global economy, and yet they'll 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? Well, market incentives make that happen.

In a system of 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 incredible innovations that have improved so many lives.

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

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