Philanthrocapitalism and the Gospel of Wealth

by complexdevelopmentsblog

The Gospel of Wealth is an article that has been applauded by modern philanthropic figureheads such as Bill Gates and Warren Buffett, and continues to draw attention despite being more than a century old. [1] Written in 1889, the article is one of the reasons why Andrew Carnegie is remembered by certain ‘higher circles’ as a role model for the thoughtful, even ethical member of the economic elite; his aggressive business tactics, to put it mildly, simply brushed aside. In this article we will explore the extent to which members of the surging philanthrocapitalist movement in the United States can be seen as the successors of Carnegie’s thought, and identify some of the commonalities and differences. The last part is devoted to a discussion on symbolic structures and the role of large-scale philanthropy in maintaining them.

Robber Barons and The Gospel of Wealth

The late 19th century saw a wave of extreme inequality, especially and firstly in the US. The reason is commonly ascribed to technical advancements such as railroads. With various governmental subsidies, the extension of the railroad system to connect remote areas within the still sparsely inhabited United States became a very profitable business; other branches such as the steel industry vital to the production of rails, or fuel producers similarly created fortunes for their owners and investors. In the rough political and economic climate of those days, open corruption and, from today’s view, downright cruel business practices led to increasingly monopolised markets, dominated by the people oft-referred to as ‘robber barons’: people such as Carnegie, Rockefeller or Mellon.

Carnegie, himself from a working class family, had developed an inclination for philanthropy already early in his life. Based on his discipleship of the original propagator of Social Darwinism, Herbert Spencer, Carnegie developed a theoretical legitimisation of the severe socio-economic inequalities that characterise the so called Gilded Age (1870-1900). It is worthwhile quoting him at length, if only to display his superior rhetorical qualities; he concludes in his ‘Gospel of Wealth’ (1889):

Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; intrusted for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself. The best minds will thus have reached a stage in the development of the race in which it is clearly seen that there is no mode of disposing of surplus wealth creditable to thoughtful and earnest men into whose hands it flows save by using it year by year for the general good.

In his theory, society as a whole stands to profit from rampant inequalities: In an individualistic economic system, the most capable individuals will accumulate (or create) the wealth they then have the power to put to work. However, only if they use it for the better of broad parts of society, such a system can be sustainable and untouched by social upheaval. If such a scenario materialises, the ‘surplus wealth’ of these successful entrepreneurs who themselves are to live modestly will be used in the most effective way than if it were to be administered collectively. Carnegie thus envisions an aristocratic utopia, in the etymological meaning of the word as the ‘rule of the most capable’.

There are several aspects to critically examine here; the most obvious flaw in my view concerns the question whether a person successful in business necessarily has the knowledge and social understanding to create a functional, and simply happy civil society as well. Taking the business practices of the robber barons as a hint, it seems save to assume that this relation is very shaky indeed. [2] This article is however not devoted to Carnegie’s theory of the state (after all he is not remembered as a great philosopher), but to examining how he succeeded in making philanthropy the number one trait of the capitalist-turned-conscientious even in the 21st century. So, let’s move on.

The Profits of Philanthropy

It is interesting how explicit Carnegie often was about the personal benefits to be accumulated through philanthropy; indeed, Harvey et al. (2011) find that the philanthropic engagement of Carnegie yielded returns in all the forms of capital that Bourdieu originally introduced to sociological studies: economic, cultural, social and symbolic. These gains could be, and were, reinvested into his business activities, calling into question the notion that modern philanthrocapitalists are the first to merge business and philanthropy; or, from another angle, allowing for the question whether there is an element of altruism in these ‘high-level’ charity engagements at all.

Some aspects of this virtuous circle, of philanthropy and business are particularly interesting in a comparison of the robber barons and modern day giving practices. Easy access to political leaders is something which seems to come along with economic capital to begin with, at least in our times. As people have more money to give away, they are more likely to invest into political campaigns and be in contact with politicians (interestingly, both their direct representatives and others). [3] This might help to explain the general representative gap between popular opinions and political action in the US, where political reality was found to be responsive almost exclusively to elite policy preferences. [4]

As Harvey et al. however note, it was the scale of giving which set Carnegie apart from other businessmen, even in the eyes of fellow members of the power elite: “Few entrepreneurs have enjoyed the opportunity to lecture elevated political leaders on pressing topics – for example, Gladstone on political organisation, McKinley on imperialism, and Roosevelt on international peace – as Carnegie did” (Harvey et al., 2011, p. 441). This edge over his peers allowed him to outperform competitors on a nation-wide scale and construct a business empire, all the while fine-tuning the economic system towards his benefit. The common example for this is his campaign for the protection of the US steel industry, he was dominating at the time.

This opens another area for the use of philanthropy in capital reproduction: media. While Carnegie knew how to use them to polish his image in spite of the bloody clashes over the Homestead Strike at one of his steel works, modern representatives of philanthropy certainly take this a step further. Initiatives such as the ‘Giving Pledge’ with its trail of media attention and whole websites set up to celebrate it have no counterpart in history. While Carnegie did convince others to join him in his philanthropic practice – most famously his old competitor John D. Rockefeller – this pursuit of his was not organised in such a (mass) media-friendly way. The phenomenal claims that Edwards (2008, p. 32) finds to be one characteristic of philanthrocapitalism certainly contribute to this difference in scale between Carnegie and the contemporary philanthropists. (One example would be google.org‘s assurance that they “invest in teams with bold ideas that create lasting global impact”. If that’s all…) The profits to be reaped here are obvious: companies are able to whitewash their social impact, and the deeds of Bill Gates are eternally connected to Microsoft; what is good for (the image of) Bill Gates is good for Microsoft and vice versa, as he still owns shares [5]; after all, Gates has not become poorer over the last years, despite his philanthropy.

Going Global

Despite his fame, Carnegie’s influence never reached far beyond the trans-atlantic US-UK nexus, both business-wise and in terms of his philanthropic efforts. While he was engaged in the governmental part of politics and tried to use his influence “to bring ‘Peace on earth, among men Good-Will'” – the last sentence in the Wealth essay – Harvey et al. conclude that “[l]ittle of real substance came of Carnegie’s efforts” in that respect. In the global arena, modern philanthropy has had much more success than Carnegie, albeit in different areas: global peace, and other politically difficult engagements are shunned. This development can be seen critical or positive, but my point is something else.

Working with education in the US, globally it is their work on health that Bill and Melinda Gates (and less so Warren Buffett, although he is just as much a part of it of course) are famous for, having “spent over $15.3 billion on global health programmes to date, and the money has done considerable good.” (This line is from the actually very critical book on the Gates Foundation by Linsey McGoey, 2015, Chapter 5, ‘Gates Goes Global’.) Especially the vow to eradicate polio from the face of the earth and initial successes towards that goal have resonated greatly in media, and are certainly to be subsumed under the ‘considerable good’ that McGoey admits. The change of focus towards global issues is indeed remarkable: from the four divisions of the Gates Foundation, two are directly related to international development, one is for policy analysis and advice both in the US and anywhere else, and only one is devoted to the US entirely.

While we can see similarities between the patterns of engagement between modern philanthrocapitalists and Carnegie, to me this divergence of ‘spacial focus’ seems to be the greatest disconnect between them. Their family background seems unlikely to be able to account for that: Bill and Melinda Gates, as well as Warren Buffett are born and raised in the US, while Carnegie just migrated there at the age of twelve and thus had strong foreign ties. Perhaps this divide is driven by their different business backgrounds. After all, Carnegie mainly operated in the US. Microsoft, Berkshire Hathaway and of course Google are global to the core. Sure, the Gateses and Buffett have their special focus on the US as well, so that we can merely speak of a gradual change. After all, they are doing very similar things there compared to Carnegie and company. Nonetheless, the way they choose to present themselves, and also the location of their successes are widely more global than those of their, I think it is safe to assert now, predecessors among the robber barons.

The Philanthropic Motive

Reading The Gospel of Wealth suggests that there is an element of what Harvey and colleagues call proclivity to world-making, but what could be the simple desire to be admired, even post mortem:

[…] yet the man who dies leaving behind many millions of available wealth, which was his to administer during life, will pass away “unwept, unhonored, and unsung”, no matter to what uses he leaves the dross which he cannot take with him. Of such as these the public verdict will then be: “The man who dies thus rich dies disgraced.”

The Gates Foundation is conspicuously opaque on why they are engaging in philanthropy. They extensively inform about who, what, how and where the foundation operates; but the question about motives is formulated only in technical, teleological terms, any deeper philosophy or emotional motivation seemingly absent: “We believe by doing these things—focusing on a few big goals and working with our partners on innovative solutions—we can help every person get the chance to live a healthy, productive life”, is the closest I managed to find concerning the why-question on their web page. As royal scribes Bishop and Green note in their chapter called Carnegie’s Children (2010, Paragraph 1): “Long before Warren Buffett gave his money to Bill Gates, he gave Gates a copy of Carnegie’s text, and so helped inspire him to become a philanthropist.” We can thus only assume similar motives.

Surely, this notion of public image and being remembered is a not a fault of character. It might seem infuriating that people who regularly act(ed) against public interest, and are arguably responsible for much suffering, want to whitewash their image by spending on what they arbitrarily define as public good; nonetheless, doing what one finds to be beneficial for society is the basis of fruitful social organisation. I want to be clear on this: philanthropy must be critically examined for its efficacy and broader ramifications, just as other practices seemingly untouchable such as foreign aid. The money could alternatively be channeled via some public institution; philanthropy might even have to be curtailed, denying the power of wealth to transform into political power altogether. Condemning the individual which wants be recognised for, maybe naively, helping others without any consciously hidden intentions or put-aside knowledge, is criticising people for being good people. I am yet to see how this could get us anywhere better…

Society, Philanthropy and Symbolic Violence

On a final note: what does this article try to do? – Coming back to Bourdieu, he talks a lot about symbolic violence. What he means by that is a system of symbolic structures which assigns to people ‘their place in society’ and that everybody internalises as they grow up. Let’s assume your mother’s male boss always wore suits, while your family struggled to make ends meet and couldn’t afford fancy clothes. According to Bourdieu, chances are that you will be shaped by these relations, misrecognising men with suits as naturally authoritative instead of protesting the arbitrariness which keeps you, who can only afford cheap pullovers (and might happen to be female), from the capital accumulation that comes so easily to people who grew up under the ‘right’ circumstances. [6]

Philanthropy helps maintain these structures by making it seem legitimate that economic elites have the power to decide what the produce of society will be used for – aren’t they doing good with ‘their money’ after all? – Well, maybe, maybe not; opinions are split on this issue and vary from project to project. The point is that there cannot be conspicuous philanthropy without an element of misrecognition, or false consciousness, or whatever you want to call it; and in a time where inequalities within countries are growing rapidly (and I am sure people still remember the Oxfam numbers about global inequality [7]), everything that legitimises political inaction concerning that matter needs to be thoroughly vetted.

Bourdieu notes that all the symbolic violence inflicted upon the dominated by the dominant is only in the rarest cases the result of a conscious decision on behalf of the elites. At the same time it requires tacit acceptance by the dominated. Something which I find missing in Bourdieu’s analysis is however the power of consciousness, the ‘thinking slow’-part of Kahnemann’s thinking slow/thinking fast distinction, when people have the potential to actively rise above their stereotypes; when they become aware of their chains, to speak with Marx. The World Development Report of 2015 about behavioural economics actually mentions and agrees with Bourdieu’s concept when speaking about mental models. It however also mentions possibilities to circumvent this problem of symbolic violence which all too often feels rather deterministic in Bourdieu. [8]

Therefore, getting you, the reader, to think about what philanthropy nowadays is and what it does – to you, to society, to the donors themselves – is the point of this writ. If you are part of the problem, realising that very fact will often be a big step towards change. You can change your perception of yourself, agitate for structural change, all to your liking. Just don’t content yourself with what you have.

~Yannick Schwarz

Notes

[1] See for example Bishop and Green’s (2010, Chapter 2) part on Carnegie’s influences in their enthusiastic espousal of the philanthrocapitalist phenomenon.

[2] In a different context, economic elites might of course be of a very different ilk, as Carnegie and his peers are surely not universally representative of the affluent classes throughout time and space. A similar relation has however been discussed by Edwards (2008) in the context of today’s philanthrocapitalist movement. He comes to the conclusion that even in the contemporary US, efforts to strengthen civil society by such economic elites, business practices and the profit motive do not reinforce but rather impede each other.

[3] The evidence is not conclusive but this positive correlation between wealth and political engagement seems to continue until the very top of the income distribution (Page, Bartels and Seawright, 2013: Cook, Page and Moskowitz, 2014).

[4] This is a strong statement, but to me the evidence seems to be pretty clear on this issue (Gilens and Page, 2014; see also Page, Bartels and Seawright, 2013). While common sense might tell the same story for European countries, I have not seen systematical evidence for this. (Please comment if you know of some.) As European economic elites are traditionally more opaque about their lifestyle, this might be a more difficult task though.

[5] Gates seems to be selling though.

[6] I notice myself constantly struggling with this as well. Just when I wrote this sentence, going through Bourdieu’s work in my head, I thought about the dualisms he finds to structure our language: bright-dull, quick-slow, high-low – and realised that I had written about ‘high circles’ without the apostrophes all along.

[7] There are problems with these numbers, but no matter what, they are astonishing and show a clear trend. Problems are the underestimation of hidden wealth, and their strange way of counting which overestimates their findings (the second link is for last year’s report but it still applies and is nicely written).

[8] I do not want to say that Bourdieu thought of symbolic structures as completely determining the human condition. To me, reading his work however does not make me optimistic about change; it does not give me the tools to overcome the internalisation of my social place beyond the “objective element of uncertainty [which] provides a basis for the plurality of visions of the world” (Bourdieu, 1989, p. 20).

 

References

Bishop, M., & Green, M. (2010). Philanthrocapitalism: How giving can save the world. Bloomsbury Publishing USA. E-Pub version.

Bourdieu, P. (1989). Social space and symbolic power. Sociological theory, 7(1), 14-25.

Carnegie, A. (1889). Wealth. The North American Review, 148(391), 653-664.

Cook, F. L., Page, B. I., & Moskowitz, R. L. (2014). Political engagement by wealthy Americans. Political Science Quarterly, 129(3), 381-398.

Edwards, M. (2008). Just Another Emperor? The Myths and Realities of Philanthrocapitalism. London: Demos.

Gilens, Martin, and Benjamin I. Page. “Testing theories of American politics: Elites, interest groups, and average citizens.” Perspectives on Politics 12, no. 03 (2014): 564-581.

Harvey, C., Maclean, M., Gordon, J., & Shaw, E. (2011). Andrew Carnegie and the foundations of contemporary entrepreneurial philanthropy. Business History, 53(3), 425-450.

McGoey, L. (2015). No Such Thing as a Free Gift: The Gates Foundation and the Price of Philanthropy. Verso Books. E-Pub version.

Page, Benjamin I., Larry M. Bartels, and Jason Seawright. “Democracy and the policy preferences of wealthy Americans.” Perspectives on Politics 11, no. 01 (2013): 51-73.

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