Is my cat as good at math as Bill Gates?

Posted by Marc Hodak on June 30, 2008 under Practical definitions | 2 Comments to Read

Michael Kinsley and Conor Clarke have opened up a discussion on Bill Gates’s new, big idea: “creative capitalism.” Kinsley tries to confer some intellectual heft upon these musings by labeling Gates “the most successful capitalist in the history of the world.”

Bill Gates is arguably the most successful businessman in history, and he achieved his success in a largely capitalist system, so I suppose it’s fair to refer to him as a successful capitalist.* But does that endow Gates with any special insight into the system of capitalism, i.e., the legal and social framework under which market-based economies function? In other words, does his great success as an economic agent make him a great economist? I don’t think so, any more than my cat’s ability to jump from the floor to the window sill without knocking over a vase makes her a great mathematician or physicist.

Gates is certainly more self aware of market and political processes than a cat is about angles and muscle reflex, but that doesn’t get him anywhere close to being an expert on capitalism. In fact, one of the key features of economics is that you don’t have to be an expert in anything except your space in the overall market in order to be a financial success. Ignorance of unrelated matters may even help, if it contributes to enhancing one’s focus on one’s own business.

All this is not to say that Gates has nothing to say about capitalism. His contributions, however, are far more likely to be empirical than theoretical. Unfortunately, I’m doubtful that he will be forthright about his achievements on the empirical front. I doubt we will hear about the virtues of vaporware in marketing, or how the vigorous attempt to monopolize via the network effect gave him a sustainable competitive advantage. I say this as one who was never bothered by Gates’s ruthlessness in achieving market dominance. I actually supported Microsoft in their defense against federal anti-trust charges.

So, I don’t think Gates will defend capitalism the way he practiced it, red in tooth and claw. It appears that he has joined the pursuit of a third way. That’s a shame, because he does understand vanilla capitalism better than most, and the Gates Foundation is capable of doing much good short of saving the world. But the title of “world’s most successful capitalist” makes him no more likely to develop a better approach capitalism than his ability to leap onto a big, new stage will enable him to develop a new proof in math or physics.

* I tend to think of a successful capitalist as one who made their pile as an investor rather than entrepreneur, but that’s a minor quibble in this discussion.