Sunday, March 30, 2008

"Philanthrocapitalism"

I want to critique a recent article in the British current affairs magazine, The New Statesman, which rails against what the author is calling philanthrocapitalism or philanthropy 3.0. According the analysis, 21st-century philanthropists take a more "hard-nosed" approach to giving than philanthropists of an earlier era.

"[Philanthropists] behave like investors, allocating their money to maximise 'social return'. So, for example, Gates calculates how much malaria costs in lost GDP and then decides it's worth paying for its eradication."
Gone was the era of simply giving away profits willy nilly and hoping charitable organizations were able to use it wisely, philanthropy 1.0. In our era (regrettably?) 3.0 philanthropists take charge of their donations and work especially hard in order to increase its benefits to society. Are we to assume philanthropy is not justified in making cold calculations and not justified in their desire to maximize social returns? Ostensibly, that is the position of The New Statesman. At any rate the author points out thee distinct problems with philanthrocapitalism:
"[First] philanthrocapitalism legitimises growing inequality, which might be unsustainable politically without greater generosity from the filthy rich. In fact, the rich are not particularly generous; if anything, people on middling or low incomes give proportionately more of their money to charity."
The amelioration of inequality is not an imperative for anyone in particular in the first place. But why are we assuming philanthropy legitimizes rather than ameliorates? If the state had distributed the same amount of wealth to society it would legitimize state power. Second, business owners should be expected to invest more into their enterprise than charity. If they are using a portion of their profits for charitable purposes, investing in their profitable business only compounds the portion to which they are able to make charitable donations.
"Moreover, generosity is subsidised from tax breaks."
Since when did 'tax breaks' become 'subsidies'? The view that the absence of taxation is an "indirect subsidy" presupposes that the burden of justification is on the state if any income or spending left untaxed, rather than having the state justify any taxation in the first place. It is a complete reversal of liberal ideas about the unassumed justification of the state as the ultimate arbiter. The author goes on,
"[Second] philanthropy is often just another form of marketing, designed to strengthen the donors' market dominance and even to tie certain groups into buying their products or services."
Essentially, a portion of consumer income is being donated to charities whenever they purchase these products or services. Yet the author shifts the focus from amelioration of inequalities to the financial benefits for the philanthropist from donating, neglecting to mention that many philanthropists actually enjoy donating and spend a large portion of their time figuring out ways to maximize social returns. The author overtly sidesteps the real effects of philanthropy in order to talk about the philanthropist's "self interest" or "legitimization" of wealth accumulation.
"[Third] why should rich people, who wield enormous economic power, also determine social priorities? As Robert Reich, secretary for labour under President Clinton, has observed, governments used to collect billions from tycoons and then decide democratically what to do with it."
The author reveres low-income earners when they determine social priorities, but not when wealthy business owners do the same. This is a double-standard. To begin with, business owners had the ambition and the right to design goods and services that society valued in the first place. Second, they had the ability to decide where to spend their profits, and if by so doing they addressed issues that were important to them, it should make little difference what their level of income is. They are 'determining social priorities' through the same principle of liberty that anyone else would.

The author says the governments decided what to do with taxed income "democratically" in the past. Yet involuntary wealth distribution is not democratic, it is statist. Once again, the author assumes that philanthropists must justify their wealth before governments need to justify adversely taking possession of it. When philanthropists decide what to do with their income voluntarily, this is the most democratic form of giving. It is not paternalistic. It requires no arbitrary justification.

The author takes what are essentially benefits to social welfare through free enterprise and paints an ugly portrait of them as anti-democratic and manipulative. The author would rather the state have the monopoly on charity, robbing individuals of their own desire to return their wealth to society through ways that would be incredibly authoritarian. It is disappointing to see so many liberals take up such anti-liberal and anti-democratic positions. State monopolies do not diffuse power; they concentrate power within the arbitrary nexus of institutional thievery.

6 comments:

JCD said...

I'm not going to read the original article (I've got other things to read), but I've got some questions for you, re: some of your rhetoric here.

When philanthropists decide what to do with their income voluntarily, this is the most democratic form of giving. It is not paternalistic.

A lot of work is being done with this decision, don't you think? I mean, you want to make the argument that it is democratic for the incredibly wealthy (who have obtained that wealth by exploiting labor on a massive scale!) to be able to decide where to dole out their charity? That's rather laughable. Wouldn't a more 'democratic' way of giving be to increase the number of 'decision-makers'? Perhaps instead of allowing the figure-heads of various charitable foundations exercise their so-called philanthropic choice in the Market of Social Needs, we should have state grants allocated by every citizen; it could be funded by appropriating from a few Very Rich People and then the many Very Poor People could 'decide', per their own choice, where their allocation could go. By your argumentation here, that would increase the aggregate democracy in giving, since it would increase 'decision'. Do you think we should do something like this?

Your last paragraph is basically a distillation of right libertarian fear and dogma. 'Free enterprise?' 'The State!' Look at the concrete effects of either and you'll see how hollow this rhetoric is.

The problem with '3.0' philanthropy is that it evaluates social needs in terms of GDP. That's stupid. The problem with philanthropy in general is that it treats symptoms, not causes.

At any rate, I'm not a liberal.

Acumensch said...

By "democratic" I don't mean majoritarian rule. I mean that diffused power comes from the demos, the people, and those people are discrete decision-makers. What the original article means by "democracy" is social democracy. So really I'm just arguing for the basic difference between majoritarian and discrete decision-making.

Wouldn't a more 'democratic' way of giving be to increase the number of 'decision-makers'?

Giving must be a voluntary decision. If giving were either forced or manipulated it becomes thievery. The author applauds low-income donors when they set priorities, but for some reason high-income earners are disparaged when their donations set priorities. Why is that? Anyone who argues this way should provide the brightline principle behind this remarkably hypocritical analysis. "Because they're rich!" is not satisfactory; it uses one set of principles for one class and a different set for another class.

The problem with '3.0' philanthropy is that it evaluates social needs in terms of GDP. That's stupid. The problem with philanthropy in general is that it treats symptoms, not causes.

I didn't say this in the entry, but I think that is a very simplistic view of how philanthropy works. I have met a number of philanthropist organizers myself and evaluation of need and social return are thought about in much more sophisticated ways than comparing philanthropy to GDP growth.

Usually a philanthropic enterprise hires a staff to decide what to do with the general idea the philanthropist had, like giving away scholarships. Bill Gates, for example, is not usually actively involved in doling out money. He provides the network; he doesn't choose the staff. Gates' father, however, has taken up a lot of the projects and travels around speaking and connecting with other social "investors". I saw him speak to a group of high school students a few years ago about going to college. Gates' father is very passionate about this; why should an impersonal institution feeding on general taxation replace this resourceful voluntary activity?

JCD said...

Well, I am not one to argue for bureaucracy. I am, however, one to argue against myths of choice, and the like liberal dogmas that undergird talk discussions of this sort. Think of it this way: the Very Rich People who are making these philanthropic decisions aren't simply exercising their right to choose. They are acting out according to a set of social relations that has allowed them to amass social power. Their choice or decision can't be understood properly without reference to what enables them to make it.

My purpose in saying we should simply increase the number of choices made in the allocation of charity, if we wanted to increase the 'democratic' or 'discrete-decision making' level of social processes, was simply to provide more people with the means to make that choice. Liberals can't pony up to this, though, because it would seemingly deprive an individual or group of individuals of their Right to Choose! It wasn't meant as a serious example but as demonstration of the inherent contradiction in the liberal line about choice. If choice is what really matters, let's allow more people to make one, and increase the aggregate amount that takes place in society! This, however, is not going to be endorsed: choice isn't what really matters here.

Why do you think that the impersonal operations of a philanthropic enterprise are in any way superior to the impersonal operations of a hypothetical state entity, by the way? They both deal in objectifying analyses of subjective problems and then decide which ones to throw money at. I can envision Gates' father going about, pouring his soul into speeches that were funded by state-appropriated funds in the same manner that he goes about doing so on his son's dime.

Again, I don't actually endorse the state appropriation of private wealth; I'd be more pleased with the popular appropriation and redistribution of private wealth. But the liberal arguments you're putting forth here in defense of the Rights of the Rich aren't actually so tenable.

Acumensch said...

My views on social policy often get in the way of what people think about my overall political views. When I say liberal I usually do it mostly to show the hypocrisy of the conservative/liberal dichotomy, since both are manifestations of the old liberalism. Anyone whose views are anti-authoritarian to me has liberal views. (Yet "liberal" today usually implies a high degree of authoritarianism.) You already know this.

At any rate,

Very Rich People who are making these philanthropic decisions aren't simply exercising their right to choose. They are acting out according to a set of social relations that has allowed them to amass social power. Their choice or decision can't be understood properly without reference to what enables them to make it.

What you'd need to argue to sound convincing to me would be to say that social power the VRP had amassed came about in suspect ways. You and I have different views on what would be suspect. When I look at social power, I examine how it was achieved. If it came about through voluntaryism, I have no reason to be opposed to it. Social authoritarians could care not whether anything was voluntary or not, it seems. The fact that Someone Somewhere has that social power is itself unjust, and I don't agree with that. Choice ultimately does not matter to them.

Why do you think that the impersonal operations of a philanthropic enterprise are in any way superior to the impersonal operations of a hypothetical state entity, by the way? They both deal in objectifying analyses of subjective problems and then decide which ones to throw money at.

The difference is I don't see philanthropy as a social policy. You're juxtaposing private and social philanthropy as if they were policy choices to decide between: we can choose either to let discrete decision-makers divvy up their income, or we can do it for them. This is more like a utilitarian analysis, and I don't juxtapose the two at this level, as if society can "decide" for discrete decision-makers what they should do in the first place. Do you see the difference?

They both deal in objectifying analyses of subjective problems and then decide which ones to throw money at.

I agree; and I'd say any decision is going to be subjective. That being said, it makes no difference what subjective process we go through then, and we have to analyze other values that determine whether to be authoritarian or voluntaryist about it.

jcd said...

You have to come at it from a total critique is what I mean when I say you have to understand the ability to be a philanthropist in relation to how that ability is acquired. People don't just wake up one day and engage in philanthropy; you have to have a certain amount of wealth (social power) to even qualify for the name.

This of course isn't a hard and fast rule. But when you think of philanthropy, you generally think of the Noble Actions of VRPs. Gifts out of pocket, freely given. As it were. But to become a VRP in our society entails some specific things. You have to engage in practices that deprive people of the value of what they produce; you have to exploit them (and while there are exceptions to this, they remain that: exceptional). So, Bill Gates, Warren Buffett, the richest guys in the room: they are freely able to decide to give billions to found a charitable organization. But this ability to make the decision to grant billions comes from the accrued exploitation of millions of people. Philanthropy is an epiphenomenon of the conditions it would improve.

Take the archetypal philanthropist: Rockefeller. Sure, did he decided to do some nice things; he funded the Uni of Chicago (which would produce the Chicago Boys!), started the Rockefeller Institute in NYC, etc, but all of this was made possible because of wealth earned via the monopoly of Standard Oil. Without rather abhorrent practices he wouldn't have been able to do them.

We could say "well, we have to take the bad with the good, especially when the good is so good." But I don't think it's necessary that we leave social development to the whims of VRP. I think we can look at the structure of society and see how poverty is engendered, and work to fix it at the source, even if it means the abolishment of societal structures that allow VRPs the ability to choose to be philanthropists.

This is more like a utilitarian analysis, and I don't juxtapose the two at this level, as if society can "decide" for discrete decision-makers what they should do in the first place. Do you see the difference?

I don't see how I said that 'society' could decide this; you brought up the talk about 'the state'. I was suggesting that if what were important were the decisions of discrete-decision makers we could increase those by allocating the ability to decide by decreasing the decisive capacity of a few VRPs. For instance: if we take 6 billion in private wealth from 6 people and divided it up among 6 million to decide how to allocate (perhaps not even philanthropically! the choice is theirs!), we gain a net increase in discrete decisions made by 5.994 million. If, I argued, the important thing were discrete decisions made, then this would be the way to go. But I don't think that this would be palatable: so what is the important thing?

Muser said...

There's a huge spectrum of philanthropists now, so it's hard to generalize about them, and of course, those in lower and middle income brackets give a greater percentage of their income than the very wealthy. Some philanthropists simply set up foundations that have criteria or special interests and don't get involved again. The interests might be health-care, homelessness, education, or whatever. Apparently the younger holders of wealth tend to be micro-managers, however. If Gates's dough can knock the hell out of malaria, I'm not sure I care about his calculations. In this particular case, I'm with Larry the Cable Guy: "Get 'er done." But I agree with the broader philosophical points made, too.