Commentary: Carnegie’s “Gospel of Wealth” and the Gates/Buffett Giving Pledge
Click to Print This Page
Andrew Carnegie’s essay titled “Gospel of Wealth” published in 1901, is the touchstone of the great American philanthropic tradition. Its central thesis warns against extreme wealth being passed on to heirs or even charitable institutions ill-equipped to administer its effective disposition. Carnegie’s position on the “duty of the man of Wealth” is quite clear:
First, to set an example of modest, unostentatious living…to provide moderately for the legitimate wants of those dependent upon him; after doing so to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community – the man of wealth thus becoming the mere agent and trustee 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 do for themselves.
Carnegie’s support for an aggressive estate tax, what some now call a “death tax,” was unambiguous:
Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire’s unworthy life.
Few have followed Carnegie’s admonition that it is the duty of the rich to “recycle all of one’s wealth back into the communities from which it came” before one’s death. But many are guided by his benevolent principles, even if moderated to accommodate their personal choices.
Many more, including the aspiring wealthy, are supportive of Carnegie's rationalization for the acceptance of extreme wealth disparities as a necessary cost of the “advancement of the race,” dictated by the “law of competition” in accordance with Carnegie’s philosophy of social Darwinism. No doubt Carnegie chose the word “Gospel” carefully, which of course means “good news”, for he concludes his essay believing he had found the cure for poverty, and it required no revolutionary change in the economic system.
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; entrusted 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…thoughtful and earnest men into whose hands it (the wealth) flows…by using it year by year for the general good.
No shortage of self-confidence here. For emphasis, he once again calls on his fellow millionaires (today’s billionaires) to follow his lead by wisely recycling their wealth back into the “community” for the public good before death: “The man who dies thus rich dies disgraced.” Carnegie’s final sentence of "Gospel of Wealth" is a prediction:
Such, in my opinion, is the true Gospel concerning Wealth, obedience to which is destined some day to solve the problem of the Rich and the Poor, and to bring “Peace on earth, among men Good-Will.”
Much has changed in 110 years, but the “problem of Rich and Poor” has not been solved. While there is much good and wisdom in Carnegie’s essay, it’s time for an updated Gospel of Wealth.
Instead of a “Gospel,” I propose we develop a new understanding for the Purpose of Capital if we are to preserve all the good of our capitalist economic system, yet effectively address the gross injustice, and the life threatening physical unsustainability, not to mention financial unsustainability, of the present world economic order.
In Part II of this post, I will present a challenge to Carnegie’s “law of competition” and reliance on “Individualism” that makes immense wealth disparity inevitable, and I will challenge his core philosophy of philanthropy and capital recycling. In Part III, I will present at least a preliminary sketch of a 21st century purpose of capital.
–John Fullerton is the founder and president of the Capital Institute. He is also the principal of Level 3 Capital Advisors, LLC, an investment firm focused on high impact sustainable private investments.
As an impartial, nonprofit forum for the finance and banking industries NYSSA encourages discussion and debate among its member and other professionals. Commentaries, however, should be taken as the sole opinion of the author(s) and not of NYSSA. If you would like to submit a commentary to the Finance Professional's Post, send your article to the editor.