What unites Mark Zuckerberg and the Koch Brothers? For many, their politics appear to set them apart. At least before the Cambridge Analytica revelations of last spring, Zuckerberg seemed the darling of a certain kind of liberal, announcing on Oprah Winfrey’s television show that he planned to spend $100 million to fix the Newark school system, declaring (in a talk at the University of California, San Francisco) that he plans to use his limited-liability philanthropic corporation to “cure, prevent or manage all diseases,” promising to use his vast riches to help create “a future for everyone,” as the promotional materials for the Chan Zuckerberg Initiative put it—all of which led his name to be batted about as a possible Democratic presidential candidate in 2020. The oil magnate Kochs, on the other hand—leading supporters of libertarian political organizations like Americans for Prosperity—have become synonymous with “dark money” efforts by elusive billionaires to push right-wing politics.
But the two are in fact much closer than they seem—both share an underlying commitment to a certain kind of economic hierarchy. As Anand Giridharadas, author of Winners Take All, warns, “Beware rich people who say they want to change the world.” Even philanthropic endeavors associated with liberal causes in truth owe much to a worldview that takes stratification as a positive good.
Today’s titans, Giridharadas argues, talk about “changing the world”: a project they promise can be accomplished by buying the right brand of tennis shoes or lipstick, by investing millions as “impact investors” in companies that disrupt markets by doing business in virtuous and sustainable ways, by simply using private wealth to step in to do what the public sector, starved for funds, no longer can. Billionaires step up to fix national monuments and affix their names to institutions such as the Stephen A. Schwarzman Building of the New York Public Library. Wal-Mart claims that its low wages don’t matter, because of its $150 billion in charitable giving. Charter schools—agents of change! disrupters!—replace any effort to build a stronger public school system for all.
The market giveth, and then it giveth some more. Clearly our sole public responsibility must be to keep on giving back to it, through the low taxes and low wages that make it possible for these entrepreneurs to become so grotesquely wealthy in the first place. The idea that philanthropic giving might also provide a justification for the existence of stark economic inequality itself goes back to the person often seen as the founder of the American philanthropic tradition: Andrew Carnegie.
Carnegie is often cited as a model for people like Zuckerberg and Warren Buffett, for virtuous elites who use their fortunes for social betterment. A look back at his arguments in favor of inequality can be instructive today. For it reveals how his faith—which ultimately backfired—has nevertheless continued to inspire our own generation of plutocrats. Most importantly, studying Carnegie reveals how deeply the ideal of philanthropy has permeated across the political spectrum, so deeply that the Koch Brothers and Mark Zuckerberg can be considered two sides of the same coin.
In 1868, when Carnegie was 33 years old and already a very wealthy man, he wrote himself a short memorandum while staying in a hotel on a visit to New York City. He had celebrated his birthday the previous month, and growing older was on his mind.
Carnegie’s reflections suggest a deep ambivalence about the pursuits to which he had given his life. The amassing of wealth, he told himself, was “one of the worst species of idolatry. No idol more debasing than the worship of money.” If he continued on as he was—with “most of my thoughts wholly upon the way to make more money in the shortest time”—he would soon “degrade … beyond hope of permanent recovery.”1
In the end, of course, Carnegie never did leave the corporate world. He continued to focus his energy and intelligence on making money by making steel for decades after writing to himself that he would need to do the opposite in order to rescue his integrity. He sought a different solution: a way to turn the relentless pursuit of riches into a vehicle for the common good, to reconcile being perhaps—as financier J. P. Morgan called him in 1901, while negotiating the mergers that created US Steel—“the richest man in the world” with his own sense of being a moral individual, a person who lived by the precepts of and beliefs in democracy that he had held as a boy.
He did so, famously, by giving his riches away: to build thousands of libraries, concert halls, universities, intellectual institutions, even an endowment to pursue world peace. He set up annuities and pensions for friends and acquaintances, including the former president William Howard Taft. Over the course of his life, he spent most of his fortune on charitable purposes—more than $350 million, worth in the hundreds of billions today. At the same time, not coincidentally, Carnegie became a hugely successful popular author, writing books and articles and giving speeches limning his vision of capitalism, giving countless people in the Gilded Age and afterward a way to understand, and ultimately to justify, the remarkable concentration of wealth and expansion of inequality taking place around them. Like that of the Silicon Valley moguls, Carnegie’s charity emerged out of a profound discomfort about the world that his own business was helping to create, and his contributions, like theirs, affect millions of people.
But Carnegie is a model for them not only because of his gifts. Through his celebrations of philanthropy, Carnegie became a militant defender of economic inequality. Even as he feared that poor people might come to hate the rich in a highly unequal society, he argued that economic division was inevitable, indeed righteous. Carnegie’s life and thought are a study in the defense of social hierarchy; they also explain how certain strains of liberalism have sought to make politics that might seem unacceptable instead appear to be the only moral way.
Andrew Carnegie was born in Dunfermline, Scotland, in 1835, the child of a weaver who was committed to the cause of Chartism, the mass movement for universal male suffrage that swept through Britain in the 1830s and 1840s. The Chartist mobilization was a consuming cause for those who participated in it, a subculture devoted to the political potential of the working classes and an intellectual world of newspapers and magazines, church takeovers, and theatrical performances. While the explicit reforms the movement sought were political—the Charter, its founding document, called for a range of democratic restructurings but above all for the vote—the causes that motivated it were primarily economic: the depredations of industrial capitalism and the reduced living standards of workers in the early years of the 19th century.
Carnegie’s father was among those destroyed by the rise of industrial textiles. His young son watched as his father’s craft collapsed and the family slid into poverty. When he was 12 years old, at the urging of his mother, Carnegie’s family departed Scotland for America. His father never adjusted to the new country, or to the loss of his livelihood, and he died when Andrew was 20 years old.
By that time, the son was already well on his way to a successful business career. Carnegie’s route to riches had much to do with luck, and with his ability to recognize the direction in which the economy was going. Although later in life he would decry speculation, much of his own fortune in fact came from investments. By the time the Civil War arrived, he was already a thriving investor (at age 26, his biographer David Nasaw points out, Carnegie’s salary of $2,400 only accounted for five percent of his total income); after the war, he poured money into iron manufacturing in time to capitalize on the building of bridges and roads that followed the war’s end. And when a new way of making industrial metal emerged—a metal that was lighter and more flexible than cumbersome iron, made via a process relying more on technology than skilled labor—Carnegie knew that steelmaking was the place to be.
The economy of the late 19th century in which he came of age was one of chaotic, rapid development, a world with few regulations to hamper anyone from making as much money as he could (women, of course, encountered innumerable obstacles to the same). Carnegie took every advantage offered to him—from the inside information he was privy to as an executive’s assistant to the hiring of strikebreakers to quell discontent at his own factories—and used it to the fullest extent he could.
For the son of an artisan and a Chartist, though, there could not but be some dissonance: the value of labor and the dignity of the working man were hardly apparent in Carnegie’s rush to wealth. Carnegie subscribed to the ideals of Social Darwinism, the vision of complex social organizations as arising out of a vast metaphysical competition, with the strongest and best arising inexorably to the top. Yet he differed from thinkers like the economist William Graham Sumner, who argued that the drunkard should be allowed to wallow and die in the streets. Carnegie knew, after all, that sober prudency had little to do with his own rise; his own accumulation had as much to do with his capacity to seize the main chance when it presented itself as with anything his father or his brethren would have recognized as hard work.
Like that of the Silicon Valley moguls, Carnegie’s charity emerged out of a profound discomfort about the world that his own business was helping to create.
Carnegie may never have left the business world, but he fulfilled his other ambition—to write widely about the pressing problems of his day. From the time he published his first article, in 1882, to his last, in 1916, according to his one of his major biographers, Joseph Wall (whose 1970 book was the standard until David Nasaw’s 2006 account), Carnegie wrote 63 essays and 8 books and had 10 major speeches reprinted as pamphlets. His first book, Triumphant Democracy, a romping celebration of his adopted country and its capitalist norms that seemed something of an answer to de Tocqueville’s Democracy in America, was published in 1886: “The old nations of the earth creep on at a snail’s pace; the Republic thunders past with the rush of the express.”
He was relentlessly optimistic, insisting that what really mattered in the strike wave of 1886 was not the hundreds of thousands who had participated across the country but the millions who had not. Speaking just a few years after Plessy v. Ferguson, in 1907, on the subject of “The Negro in America,” he insisted it was only a matter of time before the “race of colored citizens” was recognized as productive, respectable, educated, and intelligent, with the majority still laboring in the cotton fields and textile factories but “gifted” individuals rising to fill places in the professions. (About lynching, he wrote, “The number who suffer, not from injustice but undue haste, is not great.”)
Yet despite these assurances, a note of fear and anxiety ran underneath many of Carnegie’s writings. Capitalism was under assault—from Populists and socialists and the labor movement of the late 19th century. He worried that it was also rotting from within. His insistent good cheer was linked to an intellectual position, a faith in the slow and steady nature of social progress. The “organic structure” of society, as he wrote, could not be “completely altered.” Whatever flaws and problems there might be, they could not be quickly or easily overcome. What was, he felt, was what had to be.
But at the same time, he feared that the mass of humanity could hardly be persuaded of this. He had to make them see what existed as good in its own right. He had to make them believe that there was some way to heal the gulf between the rich and the poor.
Carnegie wrote “The Gospel of Wealth,” his most famous essay and the clearest statement of his ideas about philanthropy, in 1889, three years before the devastating labor struggle at Homestead, Pennsylvania, where violent conflict broke out after Carnegie’s manager, Henry Clay Frick, hired professional strikebreakers in an effort to crush the steelworkers’ union (Carnegie himself was on a European tour at the time). The essay is remembered for advocating that wealthy people should give away the vast majority of their fortunes, rather than sequestering their money for their heirs. But Carnegie’s argument was as much about justifying inequality as it was about alleviating it.
He began by bemoaning the social separation of the modern age. A tremendous division had opened up in society, he argued, so that rich and poor people were no longer joined together in “harmonious relationship,” the “ties of brotherhood” broken. Economic change had ripped them apart. In the past, there was relatively little difference between the rich and the poor, in terms of their overall material conditions of life. Now they might as well live on different planets.
This inequality was, for Carnegie, not in and of itself a problem. Rather, the gap was simply a measure of “the change that has come with civilization.” For the human race as a whole, it was better for some people to enjoy culture, philosophy, science, and the arts than that no one be able to do so; much better “this great irregularity than universal squalor.” If these assurances were not enough, Carnegie offered his old standard: this inequality was simply the way that the world had evolved to be: “It is a waste of time to criticize the inevitable.” The harsh rule of economic competition “is here; we cannot evade it; no substitutes for it have been found; and while the law may sometimes be hard for the individual, it is best for the race, because it insures the survival of the fittest in every department.”
Philanthropy was his solution. Massive amounts of wealth had been generated through the labor of the whole community. These riches should not, Carnegie argued, simply be hoarded by those families that had earned them. Better that the state should tax it away from them than that they be allowed to fritter it away for private use. But this was far from the optimal solution; the real purpose of such a tax should be to encourage the wealthy to decide how best to “administer” their wealth. Those at the pinnacle of the society should themselves decide what to do with the investments and wealth they had created. Through philanthropy the “surplus wealth of the few will become, in the best sense the property of the many, because administered for the common good.” Ultimately, the millionaire would become “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.”
In other words, giving poor people charity—or higher wages—would not be as good for them, in the long run, as allowing the rich to accumulate more wealth. The poor would see the rich contributing their money to institutions devoted to the public uplift: libraries, concert halls, universities, parks. They would themselves come to understand why this made more sense than, for example, giving the money out piecemeal: a quarter more an hour could at best be used for a bit more food or a little extra clothing (and at worst might go to frivolities or drink), but only a Carnegie could endow a library. Men with the “peculiar talent for affairs” were the ones who would generate great fortunes; it was in the interest of society as a whole that they also be the ones charged with spending their wealth. In so doing, their good works would bind together a broken society.
Although Carnegie’s philanthropy was motivated by his discomfort with the spectacle of inequality, his belief in good works ultimately meant sanctioning the gap between rich and poor. All his arguments were devoted to explaining why inequality ultimately was good: not only for its obvious beneficiaries, but for poor people as well. The liberalism of Carnegie’s philanthropy was so dependent on economic inequality that it was impossible to separate them.
“The surplus which accrues from time to time in the hands of a man should be administered by him in his own lifetime for that purpose which is seen by him, as trustee, to be best for the good of the people,” Carnegie wrote in an essay that followed up on the themes of “The Gospel,” titled “The Best Fields for Philanthropy” (1889). The wealthy should be the ones to choose how to allocate their fortunes for the good of the whole society, for the fact of their wealth was testament to their superior gifts of organization. “The gospel of wealth but echoes Christ’s words.”
All Carnegie’s arguments were devoted to explaining why inequality ultimately was good: not only for its obvious beneficiaries, but for poor people as well.
At the time, many of Carnegie’s arguments were met with dismay. No less than the prime minister of Britain, William Gladstone, wrote a response in the North American Review, arguing that wealthy people would be more willing to play a socially responsible role if they were able to amass money to pass down to their heirs (rather than feeling obliged to donate it to charitable causes). William Graham Sumner, the Yale professor who was most prominently associated with Social Darwinism, rejected the notion that there might be any duty on the part of the rich to spend their money in any particular way, writing that “millionaires are a product of natural selection” and that he had the perfect right to spend his money in the silliest ways imaginable—all he needed to do to fulfill his social obligation was to accumulate his wealth in the first place, offering employment to people in so doing.
At the same time, the workers in Carnegie’s factories, driven to the wall by the long, difficult hours demanded by the steel industry, found themselves and their unions facing newly strict opposition. Carnegie loved to contract out the managing of his factories to others, as he had in Homestead, allowing them to be the ugly face of capital while he built his concert halls.
No matter how Carnegie might have longed for things to be otherwise, it was not so easy to separate accumulation from distribution. Workers were too insistent on having some say into the daily conditions of their lives—and they might also have wanted some degree of choice in how the wealth their labor helped to build was spent. As another respondent to “The Gospel of Wealth” put it, “Millionaires at one end of the scale involved paupers at the other, and even so excellent a man as Mr. Carnegie is too dear at that price.”
Unlike his counterparts in the Gilded Age, Carnegie did manage to give away the vast majority of his fortune before he died. He left behind libraries and universities with his name on them, bearing witness to a certain vision of self-education. More questionable is whether he was able, in any meaningful way, to resolve the divisions in society he observed. The model of philanthropy that he embodied was founded, after all, on those same divisions.
Today’s philanthropy embodies the same impulse, and the same contradictions. The Kochs (who, in addition to their role in building libertarian intellectual organizations, have also supported the local university in their hometown of Wichita, Kansas, and donated to the Metropolitan Museum of Art and Lincoln Center) and other conservative donors may have very different politics from Silicon Valley philanthropists interested in a “universal basic income” or fighting malaria. But Carnegie’s writing suggests how both kinds of giving might come from a common ideological source. For their donations reflect the assumption that the rich are the ones who know best how to spend their money—that the community as a whole should have no input, that the brilliant individuals who made the fortunes also possess, automatically, the keenest insight into how the money should be spent.
One might view it more instrumentally: philanthropy helps to tamp down populist outrage, and it burnishes the public image of the rich. But beyond this, these executives tout their giving because they believe in their own entrepreneurial magic, favoring the ease of writing a check over any democratic accountability. For them, too, a basic acceptance, even a promotion, of inequality seems written into their ideas about giving their money away. Their generosity mirrors the divisions they have benefited from and helped to create.
Motivated in part by their fear over what their society is becoming, they have no real way of redressing it, no way (to paraphrase the French revolutionary Saint-Just) to be wealthy and yet at the same time able to call themselves innocent. They seek, desperately but as futilely as Carnegie himself, to find themselves in possession of riches to which (as Carnegie put it) “no bar will be found at the gates of Paradise.” In the end, their philanthropy—dependent on inequality, and defending it—is ultimately more akin to spiritual money laundering than to justice.
This article was commissioned by Caitlin Zaloom.
- To save himself, he wrote, he would need to “resign business at thirty-five,” at which point he would be able to move to Oxford and continue his formal education (he had no university or even high school training). He would buy a newspaper or a review and dedicate himself to turning it into a vehicle for social reform. Most of all, he would commit himself to “taking a part in public matters,” in particular “those connected with education & improvement of the poorer classes.” For the next two years, before making this leap, he planned to manage his affairs in the mornings (his wealth stood at about $400,000, tens of millions today) and devote himself to study and systematic reading in the afternoons. ↩