Part two of our series on ‘philanthrocapitalism’

One explanation offered for the rise of philanthrocapitalism is the recent ‘surge in entrepreneurial wealth’. According to this, the growing number of ‘self-made billionaires’ tend not only to be more inclined to make charitable donations than wealthy philanthropists in the past but are also more pro-actively involved in shaping the very nature of charity itself in line with ‘business principles’.

However, this explanation is based on a complete myth: the idea that there can be such a thing as a ‘self-made billionaire’. Barring winning the lottery or some other stroke of good fortune, there is zero possibility of making a substantial sum of money under capitalism except by investing what money you have in some business and securing a healthy return. To get a substantial return you need a substantial sum to invest to begin with.

Investing it in a business means relying on the contributions of other people working for that business to grow the business and, by extension, what you get out of it by way of a financial return. The apocryphal rags-to-riches story belies the simple truth that the richer you become the less you owe your wealth to your own effort and enterprise and the more you depend on the effort and enterprise of others. A so called self-made billionaire, as much as one who had entirely inherited their wealth, could happily retire to a tropical island and sip Campari on a sun lounger for the rest of their life but still their income stream would remain relatively unaffected. Proof enough, if proof were needed, that their capital can and does reproduce itself without the slightest assistance on their part.

Even some of the very rich do not seem to have bought into this myth of the ‘self-made man’ – though, on the face of it, it would surely be to their advantage to promote it. As Ray B. Williams notes:

‘Some of the wealthiest entrepreneurs in North America say there is no such thing as the “self-made man.” With more millionaires making, rather than inheriting, their wealth, there is a false belief that they made it on their own without help, a new report published by the Boston-based non-profit United For a Fair Economy, states. The group has signed more than 2,200 millionaires and billionaires to a petition to reform and keep the U.S. inheritance tax. The report says the myth of “self-made wealth is potentially destructive to the very infrastructure that enables wealth creation.” The individuals profiled in the report believed they prospered in large part due to things beyond their control and because of the support of others. Warren Buffet, the second richest man in the world said, “I personally think that society is responsible for a very significant percentage of what I’ve earned.” Erick Schmidt, CEO of Google says, “Lots of people who are smart and work hard and play by the rules don’t have a fraction of what I have. I realize that I don’t have my wealth because I’m so brilliant.” (‘The myths of the “self-made man” and meritocracy’, Psychology Today, June 13, 2010)

Williams goes on to refer to the meticulous research carried out by Malcolm Gladwell, in his book, The Outliers (2008), that ‘enormously successful people like Bill Gates, The Beatles, and professional athletes, scientists and artists, all had people in their lives that helped them get there’.

It was in the early 19th century in America that this myth of the ‘self-made man’ took off, the term having been coined by Henry Clay. It was a concept that went hand in glove with another – the myth of the ‘American Dream’. The late 19th century ushered in the Gilded Age of the Robber Barons – Vanderbilt, Rockefeller, Morgan, Carnegie, and others – the very epitome of so called ‘self-made men’. These were corporate capitalists ruthlessly bent on amassing huge fortunes by whatever means possible, including outright criminality.

This was also an era in which the doctrine of Social Darwinism became highly fashionable in certain circles – in particular, among the wealthy and the well-heeled. It furnished them with an ideological weapon in the battle of ideas, allowing then to justify their great wealth in terms of the working out of a natural law. According to this doctrine, founded by the British sociologist, Herbert Spencer (who enjoyed the patronage of Robber Barons like Carnegie and Rockefeller), the progress of society depended on the ‘survival of the fittest’. A corollary of this was the weeding out of the weak as a precondition of a general improvement in the human stock. Hence Spencer’s vigorous opposition to the poor laws and any form of state welfare that would impair the workings of this selective process. As he charmingly put it in his 1851 work, Social Statics: ‘Under the natural order of things society is constantly excreting its unhealthy, imbecile, slow, vacillating, faithless members’. Today, Social Darwinism has been completely discredited as a concept though, at the time, it contributed to the rise of the Eugenics movement in America and elsewhere and later served as a cornerstone belief of Nazi ideology.

Co-opting the poor

It seems paradoxical that, at a time when America’s Robber Barons were exalting in the dog–eat-dog society that had been prescribed by Social Darwinism and that had delivered to them their fabulous wealth, that there should emerge within these self-same circles, a strong tradition of philanthropic giving. How does one account for this?

Centuries ago, in Europe, the harshness of a lowly status would have been somewhat tempered and ameliorated by Christian teaching about the virtue of poverty. The poor were looked upon as an inevitable – not to say, God-ordained – feature of the social landscape. Their purpose in life was to provide the well-to-do with a ready-made pretext to bestow on those less fortunate, a measure of charity that would prove their piety in the eyes of God and their fellows. For the poor, at any rate, there may well have been a crumb of comfort in the biblical expression that it was harder for a rich man to get to heaven than for a camel to pass through the eye of a needle.

With the growth of secularism, however, such religious solace was not so readily forthcoming to those of meagre means. Attitudes towards poverty and its amelioration through charity began to change. The traditional moral economy which bound the rich and the poor together increasingly gave way to the exigencies of a market economy, with the rise of industrial capitalism. Poverty began to be viewed, not so much as ineliminable, but as inexcusable.

In the increasingly harsh moralistic climate of Victorian Britain, poverty came to be attributed to one’s own moral shortcomings and defects, with the ghettoes of the poor being looked upon as hotbeds of vice and depravity. By contrast, the fortunes of the well-off were considered to be divinely ordained with God’s own personal stamp of approval. Alain de Botton quotes a representative voice in this regard – William Lawrence, the Episcopal Bishop of Massachusetts – who wrote in 1892 that ‘In the long run, it is only to the man of morality that wealth comes. We, like the Psalmist, occasionally see the wicked prosper but only occasionally. Godliness is in league with riches’ (Status Anxiety, 2004, p.86).

As usual, the economists weighed in to back up the moralists. The old Elizabethan poor laws which afforded a measure of charitable assistance to the poor were strenuously attacked by David Ricardo and others for diverting money from productive purposes and weakening the incentive to work. If withdrawing such assistance meant the poor would be left to perish then so be it. This was Mother Nature’s ‘final solution’ – culling the poor – with the aid of the eugenicists, of course. Thus did the Social Darwinists, following in the footsteps of the Reverend Malthus, join hands with the economists in calling for a remorselessly competitive laissez faire economy as the very expression of this natural order.

If charity was to be reluctantly rendered – one could not, after all, allow those duly ‘excreted’ by society and driven to the point of desperation by sheer hunger to run riot – then it ought to be made strictly conditional upon the performance of work and from the 1830s onwards ‘charity’ increasingly took the form of workhouses in which the very poor were housed, overseen, regulated and expected to labour. The ignominy and shame of being despatched to the workhouse was, in a way, deliberately cultivated, as was the barrack-like grimness of the physical environment of these institutions. Their purpose was to instil an austere discipline and to provide a powerful disincentive to those not minded to pull themselves up by their bootstrings.

The idea that poverty is something that one essentially brings upon oneself has its corollary in the idea that one can get rich by wanting to get rich and if one is not yet rich that that is only because one is not sufficiently motivated to get rich – an unfalsifiable claim that makes such an assertion downright meaningless.

However, despite the attraction of Social Darwinism to individuals like the Robber Barons, the poor failed to conveniently succumb to Mother Nature’s culling programme. Their numbers grew and, more disturbingly still, they began to organise and fight back. The new unionism of the 1880s was an expression of this rising resistance – a new kind of trades union, differing from the older specialised craft unions in that it sought to widen its appeal and recruit from sections of the working class such as the unskilled that had hitherto been unorganised.

A ruling capitalist class cannot rule by force alone; if nothing else, the sheer costs of coercing an uncooperative population would tend to make this unfeasible. To secure its rule it has also to resort to ideological persuasion and the manner in which it sets about doing that is very much shaped by the prevailing material conditions.

In the 19th century, the growing differentiation within the working class in terms of income and occupation, encouraged a tendency to distinguish between the ‘deserving poor’ and the ‘undeserving poor’. Where the institution of the workhouse was wielded as a ‘stick’ to discipline the latter into submission, the ‘carrot’ of philanthropy was primarily focused on the former. To that end, an ideology of self-improvement and upward social mobility was relentlessly peddled as the route to riches and books such as Samuel Smiles Self Help (1883) which essentially blamed the poor for their own poverty, became best sellers.

This obsessive focus on the individual was, one might say, almost designed to encourage a sense of separateness between worker and worker. At the same time, strenuous efforts were made to direct and channel the collectivist impulses of workers along nationalist lines and to crowd out and replace an emerging working class identity with a sense of national identity. In short, these various tendencies constituted different prongs of a pincer movement in a wider ruling class strategy of ‘divide and rule’.

Philanthropy came to the aid of capitalism not only by presenting the capitalists in a more positive light but, just as importantly, by striving to pour working class aspirations into a particular mould that would help to solidify and buttress the existing capitalist order. This is nowhere better illustrated than in the case of the Robber Baron and steel tycoon, Andrew Carnegie.

Carnegie’s book, The Gospel of Wealth (1889), was enormously influential at the time. In it, he expressed concern over the huge inequalities of that era. Though he regarded inequality as absolutely indispensable to the process of wealth creation, it presented a problem inasmuch as too much of it could potentially undermine the ‘ties of brotherhood’ that ‘bind together the rich and poor in harmonious relationship’ and promote class struggle. Resolving this dilemma, he concluded, had to involve creating ‘opportunities for people to better themselves’.

Condescension and self-conceit

With great wealth, he argued, came the moral duty to put this money to good use through purposeful charitable donations rather than just indiscriminately doling it out to the poor. ‘It were better for mankind’, he declared, ‘that the millions of the rich were thrown into the sea than so spent as to encourage the slothful, the drunken, the unworthy’. The man of stature, Carnegie confided, was ‘the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could for themselves’.

Taking up Samuel Smiles’ line of argument in Self-Help, Carnegie set about endowing, and putting his name to, institutions like colleges, libraries, museums, and concert halls through which individuals could aspire to ‘improve’ and educate themselves and eventually become self-made men like himself – a degree of self-conceit and self-promotion that has not dimmed with the emergence of modern philanthrocapitalism. Thus were the fortunes of so-called self-made men deployed to bolster and perpetuate the myth of the self-made men.

While the likes of Carnegie might have approved of the efforts of workers to improve their own circumstances via means he had specifically laid down for them, woe betide the worker who sought to do the same by asking for a wage rise or organising within a trade union to press for such a rise. Wage demands were fiercely resisted by him and other Robber Barons who frequently called upon the state to brutally crush organised labour protests or made use of the notorious Pinkerton agents, a private security force, for precisely that purpose.

So much for the myth of the ‘self-made man’. You would have thought, had these individuals actually been the authors of their own financial success, that it would have been of little or no concern to them that their employees should have striven for a modicum of ‘financial success’ themselves in the guise of a higher wage. Their very actions belied the grandiose claim that they had made their own fortunes themselves. Those fortunes were made for them by others and their curmudgeonly and belligerent response to even the most modest wage claim that might erode their profit margins underscores the exploitative nature of their relationship to, and dependence upon, their workforce.

Once again, there is little here to differentiate philanthropists of the past and modern philanthrocapitalists. The same galling patronising attitude is to be found amongst the latter too. They too are all too ready to lecture others on what is good for them and to act without the mandate of the intended recipients of their charity.

Their huge wealth gives them the power to shape the social agenda and determine the priorities of the poor in ways that are transparently, and obnoxiously, undemocratic. Some like Mark Zuckerberg of Facebook would deny this. According to him, ‘When you give everyone a voice and give people power, the system usually ends up in a really good place. So, what we view our role as, is giving people that power.’ But this is delusional. Power has to do with how people relate to one another. It operates in a context of social inequality. You don’t remove that inequality by enabling individuals to access a social network like Facebook (which, by all accounts, is itself becoming more and more intrusive, censorious and authoritarian in its mode of operation). All you do is accentuate the feeling of powerlessness by being drowned out by the voices of millions of others.

ROBIN COX

(Next month: The Rich Stay Rich)