Saving capitalism

We begin a four-part series on the 'philanthrocapitalism' of billionaires such as Bill Gates

What do you do if you are billionaire and run out of ideas about what to spend your money on? Increasingly, it would seem, the answer is to indulge in philanthropy. 'Philanthrocapitalism 'has today become big business.
In the blurb to Matthew Bishop and Michael Green’s book, Philanthrocapitalism: How the Rich can Save the World, this comment appears:

‘For philanthropists of the past, charity was often a matter of simply giving money away. For the philanthrocapitalists – the new generation of billionaires who are reshaping the way they give – it's like business. Largely trained in the corporate world, these "social investors" are using big-business-style strategies and expecting results and accountability to match. Bill Gates, the world's richest man, is leading the way: he has promised his entire fortune to finding a cure for the diseases that kill millions of children in the poorest countries in the world.’

That book was published way back in 2008; on 1 January 2018 – that is, approximately ten years later – Bill Gates was listed on the Forbes list of the richest people of the planet, as having a 'real time net worth 'of $91 billion, playing leapfrog with Amazon’s Jeff Bezos to become the richest person on the planet. Seemingly, if we are waiting for Mr Gates to put his money where his mouth is, we will be waiting forever.
On the Forbes Website, incidentally, there also appears a quote attributed to Gates as follows: ‘Money has no utility to me beyond a certain point. Its utility is entirely in building an organization and getting the resources out to the poorest in the world’. What that 'certain point 'might be he fails to disclose but, presumably, there is still some way to go before he reaches it.

So what exactly is going on here? Why this alleged concern for the fate of the poor by the super-rich and paradoxically in an era that has witnessed a veritable explosion of extreme wealth? According to an OXFAM press release (16 January 2017) a mere eight individuals, almost unbelievably, now ‘own the same wealth as the 3.6 billion people who make up the poorest half of humanity.’ You would think, on the face of it, that global inequality must by now be set on a trajectory of steep decline with all this loose talk of billionaires, stricken by some unaccountable sense of moral angst, giving away their fortunes. But then you would be sorely mistaken.

The truth of the matter is that philanthrocapitalism is not at all what it seems and the disgustingly elitist suggestion that the 'rich can save the world 'is as condescending as it is patently absurd. 'Saving the world', at the very least, implies some kind of fundamental structural transformation permitting a radical change of direction. Why would 'the rich 'want to restructure the world in a way that would prevent this minuscule minority from continuing to enrich themselves at the expense of the vast majority? For it is precisely this class monopoly on the means of producing and distributing wealth that the world needs saving from. That, in essence, is what underlies the multiple problems that afflict it and prevents their effective resolution.
Philanthrocapitalism is predicated on the denial that this is how capitalism operates. Denying it helps to ensure the system’s continuation. In sociological jargon, it deflects attention away from 'structure '– the particular pattern of class relationships linking individuals that defines the social system we live under – to 'agency', meaning the individuals themselves, their personality profiles and the inner motives that drive them. The difference between these approaches was rather neatly summed up by the Brazilian Archbishop and 'liberation theologist', Dom Hélder Pessoa Câmara: ‘when I give food to the poor, they call me a Saint. When I ask why they are poor, they call me a communist.’

Thus does philanthrocapitalism fail to see the wood for the trees. 'Saving the world' from its ideological standpoint, boils down to a handful of individuals being sufficiently motivated and economically empowered to undertake such a project. The focus shifts from those who are 'given' to those who 'give'. The latter’s empowerment is predicated upon the former’s disempowerment and their dehumanisation in becoming the mere objects of charitable display.
We should not be surprised by this. It’s the same kind of top-down arrogant thinking that permeates and informs mainstream politics. Career politicians market and preen themselves on the pretext that they possess certain key qualities that their rivals lack and that electing them will somehow make a difference to the lives of the electors themselves. We all know what becomes of such wishful thinking. The widespread apathy and corrosive cynicism that pervades contemporary society is the direct outcome of the folly of putting your faith in political leaders to lead.
Like the political establishment, philanthrocapitalism is driven by a kind of saviour complex. To that end, it bathes itself in an aura of moralistic self-righteousness and smug do-goodery. That is its defence mechanism, its own way of disarming criticism. How can you possibly criticise your Zuckerbergs and your Bonos when they so obviously mean good? Shame on you.

Why Philanthrocapitalism?

The interesting question is why are the likes of Zuckerberg, Bono and others now so intent on thrusting themselves into our collective consciousness and piously promoting their pet causes? Is there really such a big difference between the philanthropy of the past and modern philanthrocapitalism as Bishop and Green’s book suggests and, if so, how come? According to the website:

‘Part of the explanation is the surge in entrepreneurial wealth in the last thirty years. Self-made billionaires tend to be more willing to give their money away than those who inherit their fortunes. Entrepreneurs are also, by nature, problem-solvers and relish the challenge of taking on tough issues: for Bill Gates, it is malaria and other infectious diseases, for George Soros it is political change. There’s also a growing recognition that big global problems cannot be left to government alone. Philanthrocapitalists can do the risky, innovative things that government cannot, to find new solutions to problems’ (

Let’s take this last point first. The assumption here seems to be that the reason why those 'big global problems' persist basically has to do with the particular mix of agents involved in tackling them. Only create a larger space in which our enterprising philanthrocapitalists can bring to bear their own particular brand of 'innovative' problem-solving and you are likely to see a good deal more progress being made. What is conveniently overlooked is that the 'problem' these entrepreneurs are supposedly skilled in solving is how to make money and augment a corporation’s profits.
It is no concern of theirs that, for instance, the workers made redundant in the pursuit of these profits are now confronted with the problem of how to pay the mortgage and avoid being made homeless. Corporations are obliged to take a narrow self-interested point of view in a competitive market environment – as indeed, to an extent, are charities too in their scramble for funding – but this provides a very poor grounding in which to set out to 'save the world'. That, one would have thought, minimally implies the joined-up thinking of a holistic approach to 'problem solving' that fully takes into account the wider external costs (externalities) of one’s decisions and this demonstrably is not something that the application of 'big-business-style strategies' lends itself to.


There are other grounds on which these strategies have been criticised.
Firstly, while charities are increasingly forced to compete for funding there is a problem in that you cannot really apply to charities the same criteria as you might in choosing between, say, two different brands of soap powder on the basis of comparative price and quality. Charitable causes are not so easily substitutable. Is combating HIV/Aids more important than building a school or sinking a well in some remote rural village? Who is to say? The application of business strategies to charitable causes tends to override this qualitative issue by subjecting the performance of charities to the same pseudo-quantitative metric that businesses apply to themselves, permitting them to make a choice on the basis of what offers the greatest return on their money. But people remain loyal to their particular pet charities for reasons that don’t necessarily apply when choosing between soap powders.

Secondly, philanthrocapitalist business-style strategies tend to focus on technical fixes, ignoring the socio-economic roots of the problems they seek to ameliorate. Addressing the latter is a much more costly, complex, and time-consuming process and costs are precisely what businesses are intent on cutting. This 'technicist' bias is sometimes linked with promoting certain technologies in which the philanthrocapitalist concerned might have a vested commercial interest. In fact, a lot of what is called 'foreign aid 'is provided on this basis – to induce a sense of commercial dependency in the recipient country upon the donor country with an eye on future market growth in the former.

Thirdly, there tends to be a marked preference for big organisations in the world of charity, (reflecting the dominance of the large corporation in the business world and their preoccupation with increased market share) in the belief that this makes for economies of scale. As a result many small charities operating on a shoe string get overlooked and starved of funds.

Finally, the provision of financial incentives to volunteers, turning charitable work into paid employment, ironically tends to exert a corrupting or debilitating influence on volunteering. There is also a tendency for philanthrocapitalism to weaken and undermine civil society itself. Grass roots citizen organisations highly dependent on external funding can find themselves subject to a process of 'co-optation' and disempowerment. Like the saying goes: 'beggars can’t be choosers'. Rather, the function of the beggar from this standpoint is simply to passively consume and to exude gratitude for the privilege of being able to do so.

The utter inappropriateness of applying business strategies to social transformation when these different things are each driven by a qualitatively different kind of dynamic was revealingly borne out by Peter Buffett, the second son of billionaire investor, Warren Buffett. Buffet expressed concern that the state of philanthropy in America ‘just keeps the existing structure of inequality in place.’ At meetings of charitable foundations, he averred, ‘you witness heads of state meeting with investment managers and corporate leaders. All are searching for answers with their right hand to problems that others in the room have created with their left’ (New York Times, 26 July, 2013).

But let us be clear on one point. Criticising philanthrocapitalism does not mean the state is any more capable of solving these problems and, in any event, that is not what socialists are advocating. We argue instead that the problems themselves arise from the very nature of capitalism itself and will persist irrespective of the agents involved in tackling them. Piecemeal welfare reforms enacted by the state will never be enough but nor will private charity. What’s more, there does appear to be an inverse, or zero sum, relationship between these two things. One tends to expand at the expense of the other.
Philanthrocapitalism has often been characterised as a peculiarly American phenomenon. There is some truth in this but we should not imagine that, as a phenomenon, it is confined to the United States. There is a saying that, when the latter sneezes, others catch a cold. America’s cultural hegemony on the world stage may now be on the wane but it is still insidiously powerful and pervasive. This, along with global developments in recent decades – in particular the emergence of neoliberalism since the 1970s and its austere policy prescriptions for pruning back on state spending - have opened up more opportunities for the philanthrocapitalists to muscle in, acting under their own initiative or in concert with their government host.

Free market lobby

According to Mike Konczal, there is in America a powerful free-market lobby that favours private charity not just as a means of filling the obvious gaps in the threadbare safety net provided by state welfare but as part of a wider programme entailing the denationalisation of welfare provision ('The Voluntarism Fantasy', Democracy Journal, Spring 2014). We can see how this might serve as a pretext for slashing Federal budgets and by extension, the tax burden on American capitalists. However, the argument, suggests Konczal, is grossly misinformed. It appeals to a rose-tinted vision of America’s past but there never was some golden age of voluntarism, which free market libertarians wish now to reinstate, where society functioned perfectly well without state intervention.

In this context, 'voluntarism' denotes not just the charitable act of freely offering time and money to assist others but also the capacity of individuals to take responsibility for their own welfare by exercising choice in the market. This is an extension of the dogma that since we are free to choose whether or not to enter into a particular market transaction, the market itself must, by definition, be a non-coercive or voluntary institution. Workers freely choose to sell their working abilities to their capitalist employer and consequently cannot be considered 'exploited'. Their labour is voluntary and thus not coerced.

This is yet another example of the failure of a 'methodological individualist' approach to see the wood for the trees. Society is seen as simply the sum total of its parts and nothing more. This same approach which vests in a tiny handful of super-rich individuals the power to 'save the world' neglects to consider the individual worker as a member of an economic class. For it is the class to which they belong – the working class – that has, as a class, no choice but to sell its working abilities to the tiny minority who own the means of living. That is why the system of wage labour is fundamentally coercive and non-voluntary – not because individual workers do not have the option of choosing which particular capitalist enterprise should exploit them.

The 'Voluntarism Fantasy' of the American free-market lobby hinges on what Konczal calls the 'myth of a stateless nineteenth century'. To the contrary, he argues, the footprint of the state was everywhere in evidence. Not only has the state always been an active player in providing social security but had to expand its role in the face of the clear failure of private initiatives to do the job. This was particularly true in the case of the 1930s Great Depression and also more recently in the case of the 2008 recession and its aftermath when ‘overall giving’ in the US fell away quite significantly – by 7 percent in 2008, with another 6.2 percent drop in 2009 – precisely at a time when it was most needed. In spite of itself and its fundamentally competitive nature, capitalism needs a state to do what is functionally required in order for the system to operate relatively smoothly on its own terms.


(Next month: The Myth of the 'Self-made Man').

Published in the Socialist Standard No. 1365 May 2018

No comments: