Bills debate capitalism

William Easterly, doyen of free market development economists, had a polemic against Bill Gates’ “creative capitalism” schemes to help the poor in yesterday’s Wall Street Journal. Easterly rightly attacks the limitiations of schemes such as the partnership to give African farmers access to the premium coffee market. “This is fine as a modest endeavor to help a few Rwandan and Kenyan coffee farmers, but it’s hardly going to remake capitalism.”

Easterly is also right that economic development is preferable to such limited schemes. “The number of poor people who can’t afford food for their children is a lot smaller than it used to be – thanks to capitalism. Capitalism didn’t create malnutrition, it reduced it. The globalization of capitalism from 1950 to the present has increased annual average income in the world to $7,000 from $2,000. Contrary to popular legend, poor countries grew at about the same rate as the rich ones. This growth gave us the greatest mass exit from poverty in world history.”

However, Easterly’s avid support for capitalism grates at times. It is true that the market system has provided significant growth – and to that extent it should be welcomed – but growth remains too limited and uneven. The demand should be for more rather than less.