>Creative Capitalism and Enterprise Architecture

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CNET News, 24 January 2008 reports that Bill Gates calls for creative capitalism “in a speech Thursday at the World Economic Forum in Davos, Switzerland, Gates is calling on companies to think more broadly about how their products can benefit society.”

What is creative about creative capitalism?

For the last 500 hundred years or so, capitalism was considered the creative economic system based on private ownership of capital, a free enterprise, and a market economy. Capitalism was the economic “light unto the nations,” while socialism, an economic system, based on state ownership of capital and a managed economy, was deemed as inefficient and almost totalitarian in nature.

Capitalism generally refers to an economic and social system in which the means of production are predominantly privately owned and operated, and in which investments, distribution, income, production and pricing of goods and services are determined through the operation of a market economy. It is usually considered to involve the right of individuals and groups of individuals acting as “legal persons” or corporations to trade capital goods, labor, land and money. Capitalist economic practices became institutionalized in Europe between the 16th and 19th centuries, although some features of capitalist organization existed in the ancient world, and early forms of merchant capitalism flourished during the Middle Ages. Capitalism has been dominant in the Western world since the end of feudalism, It gradually spread from Europe, particularly from Britain, across political and cultural frontiers. In the 19th and 20th centuries, capitalism provided the main, but not exclusive, means of industrialization throughout much of the world.” (Wikipedia)

Well, as of today, Bill Gates has declared that capitalism is no longer creative, and we need a new capitalism called “creative capitalism”.

Is creative capitalism really a form of socialist capitalism, where the state and companies redistribute private capital based on economic and social factors? Hasn’t the country’s progressive tax system and various social programs (Medicaid, Food Stamps, Student Financial Aid…) been doing this all along, so that as a society we can take care of the needs of the less fortunate? This is an important aspect of social justice and an expression of humanity in our otherwise free enterprise system, where everyone must fend for themselves. In a purely capitalist society, you can be successful and rich beyond your wildest dreams, like Bill Gates or end up destitute and desperate. Socialist capitalism is a way to maintain an overall capitalist economy, but conceptually still take care of all people.

Is Bill Gates sincere?

“Forbes magazine’s list of The World’s Billionaires has ranked Gates as the richest person in the world from 1995 to 2007, with recent estimates putting his net worth over $56 billion.” (Wikipedia)

At the same time, Bill and Melinda Gates have become some of the world’s largest philanthropists (after Warren Buffet). “Much of Gates’ work at the Bill & Melinda Gates Foundation has centered on two particular shortcomings of capitalism–solving health problems that affect only the poor and improving educational systems.” Of course, these are noble goals and the Bill and Melinda Gates and their foundation’s contributions have been magnanimous. Moreover, “in July, Gates will step down from full-time work at Microsoft and shift his focus to the foundation.”

Then again, it’s sort of easy to call for creative capitalism, when you’re the richest man in the world.

From a User-centric Enterprise Architecture perspective, the need to take care of those less fortunate in society, rings true and just as a principled architecture goal. Our nation and our enterprises must remain human and charitable, even while we compete in the global marketplace. We cannot architect our nation and organizations to succeed merely based on economic factors, but rather must instill human dignity and altruism in the fiber of our nation, organizations, and as individuals. And while of course companies can help by being altruistic and developing products that are cost-effective for those less fortunate (some examples are the One Laptop Per Child Initiative or the $2500 automobile by Tata Motors of India), at the end of the day government must really play the primary role in ensuring that the fundamental needs of all people in society are met.

>Adam Smith and Enterprise Architecture

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Adam Smith, known as “The Father of Economics”, is best known for his “laissez-faire” economic theory. Smith believed in the right to influence your own economic progress freely, without the puppet strings of guilds and/or the state. His theory caught on and changed much of Europe into a free trade domain, allowing the emergence of the entrepreneur. Smith’s work helped to build the foundations of free market economics that includes:

  • Capitalism (an economic system in which the means of production—land, labor, and, capital—are privately owned and operated for profit, and in which production and distribution of goods and services are determined through the operation of a ‘market economy’—free markets and free pricing system)
  • Libertarianism (belief that all persons are the absolute owners of their own lives, and should be free to do whatever they wish with their persons or property)
  • Free Trade (trade in goods and services between or within countries flow unhindered by government) (Adapted from Wikipedia)

“Smith laid the intellectual framework that explained the free market and still holds true today. He is most often recognized for the expression “the invisible hand,” which he used to demonstrate how self-interest guides the most efficient use of resources in a nation’s economy, with public welfare coming as a by-product. To underscore his laissez-faire convictions, Smith argued that state and personal efforts, to promote social good are ineffectual compared to unbridled market forces.” (lucidcafe.com)

Here’s the User-centric EA question…

Based on Adam Smith’s framework for an efficient free market unencumbered by the state, how are we to view enterprise architecture planning and governance “hindering” the organizational end-users from making the ‘best’ choices for what systems, products, and standards they want to purchase or use? Based on Smith’s notion of “laissez-faire”, doesn’t the end-user know best? And won’t they make the most efficient use of corporate resources? Why does EA ‘interfere’?

The answer is…

The end-user does know best and we do need to let them ‘guide’ decision-making. However, there is a difference between letting them guide decisions and pursuing their own interests completely unimpeded. We do not have to use a great amount of imagination to recognize the wasteful spending on redundant solutions, stove-piped data and applications, and inefficient processes that would exist.

  • Taken to an extreme, if all users in the enterprise would purchase and implement whatever business and technology solutions they desire, without any form of governance what-so-ever, you would have total chaos!

So the User-centric EA view is that we put the user front and center in the decision process. We work diligently and ongoingly to understand user requirements. And as architects, we work to satisfy those requirements by rationalizing them, enforcing enterprise standards, developing enterprise solutions, and looking out for the greater good of the enterprise. This is the great EA balancing act!