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The book "Creative Capitalism" features a discussion, sparked by Bill Gate's speech about the ability of tweaking capitalism somehow to serve the very poorest o

by netcan 17y ago

The book "Creative Capitalism" features a discussion, sparked by Bill Gate's speech about the ability of tweaking capitalism somehow to serve the very poorest of the world. The economist-headed detractors tended to boil everything down to companies charging higher prices in order to give money to charity. They then explain that this doesn't work because it is proven that customers will buy the ethical option online if it is of equivalent value and price. Being from a marketing background, I immediately pricked my ears at the complaint marketers have at hand wavy economists. Even if we ignore the fact that the value of a product is completely subjective & that it is influenced in many ways on some of which have anything to do with the physical product, getting customers to choose your product when it of "equivalent price and value" is the no. one thing a whole heap of companies do. Think how much money goes into ads for washing powder.

cwan 17y ago
Just a small quibble - I think you're creating a bit of a strawman in economists. Coming from both an economics and marketing background, I would suggest most economists believe that companies should act in the interests of their shareholders. Charity can be a form of marketing just as creating a culture where at times short term profits may be sacrificed for long term benefits is also very much in the best interests of shareholders. Thus, the beauty of this economic system is that while you can profit by pursuing profit for its own sake (which can mean being charitable), I do think taking a principled approach results in more sustained and greater long term profitability - as I suspect irrespective of the outcome, this will be a case study for years to come.
- netcan 17y ago
  I come from a somewhat similar background. I work in marketing and I am somewhat of an amateur economist. I agree with you about the strawman. But many economists or more commonly, people with economics in their backgrounds take this sort of a view. They like to distil things to an economics "story." Sometimes this is a great tool. Sometimes this loses important info. Economics training does come with the danger of this kind of mistake though. I heard that there was a serious divide between students and old timers about Ostrom receiving the Nobel (the students didn't like it). One "story" they (the against camp) told was: If being good is more profitable, companies will do it without being told. That's capitalism, nothing creative about it. If it isn't more profitable and they do it, they are forcing shareholders to contribute a charity of the company's choosing. Another was the one I mentioned above. If you take an economics graduate, you may find that they're not sure what make of a world where getting customers to choose you're same price, same value product is the difference between non-starter & Unilever. It doesn't make sense to tell this story with the basic vocabulary of microeconomics. In any case, some essays published in the book make this argument. I don't mean to suggest that all or even most economists would take this view. Great economists (like great anyone) are empowered, but not restricted by their tools.

by netcan 17y ago

cwan 17y ago

Just a small quibble - I think you're creating a bit of a strawman in economists. Coming from both an economics and marketing background, I would suggest most economists believe that companies should act in the interests of their shareholders. Charity can be a form of marketing just as creating a culture where at times short term profits may be sacrificed for long term benefits is also very much in the best interests of shareholders. Thus, the beauty of this economic system is that while you can profit by pursuing profit for its own sake (which can mean being charitable), I do think taking a principled approach results in more sustained and greater long term profitability - as I suspect irrespective of the outcome, this will be a case study for years to come.

netcan 17y ago
I come from a somewhat similar background. I work in marketing and I am somewhat of an amateur economist. I agree with you about the strawman. But many economists or more commonly, people with economics in their backgrounds take this sort of a view. They like to distil things to an economics "story." Sometimes this is a great tool. Sometimes this loses important info. Economics training does come with the danger of this kind of mistake though. I heard that there was a serious divide between students and old timers about Ostrom receiving the Nobel (the students didn't like it). One "story" they (the against camp) told was: If being good is more profitable, companies will do it without being told. That's capitalism, nothing creative about it. If it isn't more profitable and they do it, they are forcing shareholders to contribute a charity of the company's choosing. Another was the one I mentioned above. If you take an economics graduate, you may find that they're not sure what make of a world where getting customers to choose you're same price, same value product is the difference between non-starter & Unilever. It doesn't make sense to tell this story with the basic vocabulary of microeconomics. In any case, some essays published in the book make this argument. I don't mean to suggest that all or even most economists would take this view. Great economists (like great anyone) are empowered, but not restricted by their tools.