ABOUT
This essay is a discussion of the merits of the United States’ laissez-faire economic system and the character of the American people.
Like many people today, Carnegie was discontent with the unequal distribution of wealth in the United States, and he argues for a private approach to those problems.
HISTORY
“Wealth,” better known as “The Gospel of Wealth” was an essay written by Andrew Carnegie, a Scottish-American industrialist (perhaps better known as one of the robber-barons). By 1889 America had largely broken into separate classes, a departure from what Tocqueville referred to as “The gradual unfurling of equality in social conditions….” In response, Carnegie funded over 2500 libraries and formed a self-named foundation dedicated to advancing education, a philanthropic effort that has lasted for decades.
MY ANALYSIS
After Marx’s “Communist Manifesto,” class relations in capitalist countries were recognized both as a social issue and a political issue. The social issue lay in the theory that two classes existed, one controlling wealth, and the other producing it. The political focus was also theoretical; the poor masses might rise up against their wealthy “oppressors.” Carnegie recognized both the social and political issues, “The problem of our age is the proper administration of wealth, so that the ties of brotherhood may still bind together the rich and poor in harmonious relationship.” His solution, however, greatly differed from Marx’s.
Carnegie saw two major benefits to a free-market system. The division of labor allowed for goods to be produced more efficiently. The traditional feudal system translated into “crude articles at high prices.” He also recognized the rising standard of living, “To-day the world obtains commodities of excellent quality at prices which even the generation preceding this would have deemed incredible.” It seems true: we have iPods when our cousins used Sony Walkmen. Our parent’s typewriters are (in an ironic sense) outweighed by our super thin laptops. From Wells Fargo to the telegraph to the landline to the cell phone to Skype: innovation and social progress abound in a market system.
However, the social and political issues still exist. “We assemble thousands of operatives in the factory, in the mine, and in the counting-house, of whom the employer can know little or nothing, and to whom the employer is little better than a myth. All intercourse between them is at an end.” Workers and management are naturally disposed to disagreement: “mutual ignorance breeds mutual distrust.” The consequence, more social than political, is that “Human Society loses homogeneity.” But, is a structural replacement (i.e. socialism or anarchism) the best option for social progress?
Carnegie says no, “The Socialist or Anarchist who seeks to overturn present conditions is to be regarded as attacking the foundation upon which civilization itself rests, for civilization took its start from the day that the capable, industrious workman said to his incompetent and lazy fellow, “If thou dost not sow, thou shalt not reap,” and thus ended primitive Communism by separating “the drones from the bees.” The social reformers who insist on coercion to divorce the individual and his labor need remember one thing: “The race has tried that. All progress from that barbarous day to the present time has resulted from its displacement.” Social progress is contingent on individual rights, free enterprise and limited government. The reason why America is so materially well off, Carnegie asserts, is because our system actually does work!
The gains in living standards, health standards, productivity, and efficiency are not to be thrown away because of unequal distribution. In other economic systems, citizens may get an equal slice of pie, but the pie is small. Free enterprise allows for the pie to grow rapidly, so despite unequal slices, everyone’s piece is bigger. The pie today is substantially larger than our parent’s pie, and definitely our grandparent’s pie. A poor man in Michigan is living better than a poor man in Uganda (and probably better than a rich man in Malawi). Changing the system would mean throwing away the economic rewards associated with liberty. “The question then arises, — and, if the foregoing be correct, it is the only question with which we have to deal, — What is the proper mode of administering wealth after the laws upon which civilization is founded have thrown it into the hands of the few?” The solution is not systemic as much as it is personal: it rests in how people use the wealth they have accumulated.
Carnegie’s three paths for the disposal of wealth are simple: give it to posterity, keep it for yourself and give it to others. “The first is the most injudicious,” says Carnegie, arguing that posterity will become impoverished because of folly and depreciation of the estate. A fair argument, but an argument that could be disputed. Option two does not directly solve the social and political issues, therefore it is not the best option. Private philanthropy, however, is “the true antidote for the temporary unequal distribution of wealth.” A solution far better than organizational restructuring: “differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is prepared to put it in practice by degrees whenever it pleases.”
The final argument is important: the people who are not wealthy should not demand redistribution, but should encourage the rich to follow the third path. Simply put, the debauched lifestyles of the rich and famous (read Paris Hilton) should not be celebrated, but instead demonized. Idolization of extravagance can lead to societal problems besides just the unequal distribution of wealth. Encouraging responsibility with fortunes is a good way to foster philanthropy; celebrating the merits of the Gates Foundation would be better than praising the manifest decadence displayed by teenage girls celebrating their 16th birthday on MTV.
Two more issues are raised: the kind of philanthropy and how much can we expect Americans to actually give. Carnegie addresses the first issue, “Those who would administer wisely must, indeed, be wise, for one of the serious obstacles to the improvement of our race is indiscriminate charity.” This establishes a good charity/bad charity dichotomy: bad charity rewards bad behavior, good charity provides ladders for other men to climb. A library, a college, and a scholarship fund are more likely to help a man in the long term than a turkey dinner. This is not to say that providing food is unnecessary, but long-term results come from the “good charity.” This philosophy is why we can attribute 4,500 libraries to Andrew Carnegie.
The second problem, regarding how much philanthropy we can expect, comes from a familiar source: Alexis de Tocqueville. “I must say that I have seen Americans make a great deal of real sacrifices to the public welfare; and have noticed a hundred instances in which they hardly ever failed to lend a faithful support to one another,” he wrote, and indeed is correct. The National Philanthropic Trust reports that 89% of American households give, meaning that charity transcends socio-economic boundaries. More than anything else, private philanthropy is an American quality. The same source claims that there are approximately 1,010,400 charitable organizations in the United States, and the number of U.S. non-profits has doubled in the past five years.
Based on the data, it appears that private philanthropy is a viable alternative to coercive government social-welfare policy. Carnegie and the 1,010,400 charitable organizations in the United States are a testament to the power of the individual and the humanity of man. “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.” And this is Carnegie’s Gospel of Wealth.
It would make much more sense if we adopted a more progressive tax system in which we do not tax the rich to give to the poor because they are rich. Instead we allow the rich to get out of almost any taxes by giving their tax money instead to private foundations that provide useful “ladders” in the charitable world.
Carnegie/you are right. Historians today completely ignore the rise in living conditions during the so called “gilded age.” Something I disagreed with you over Charlie was how you disliked our history book this spring from American Heritage. In my probably 8 different U.S. History textbooks I’ve read, that is the only one that does not call men like Carnegie the “robber barons.” These men, by becoming so unbelievably rich also brought the U.S. cheap oil, efficient railroad transportation, and steel in cheap and massive quantites that build the America of today (or at least started it anyways). By creating such efficiency they lowered the cost of everything. I will give critics that they did not give their workers adequate working conditions, but hey, no one is perfect. They still brought the overall cost of everything down to levels that most could afford.
Think about it, without many of the innovations and improvements these men made, most of those poor immigrants would have been lying starving in the streets rather than crammed into small tenemants. Which is better, hungry and working, or unemployed and starving?
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