Mass protests against widening wealth inequality have become a common occurrence in recent years. Protests have sprung up across Europe, from Spain to France to Greece, as well as in Switzerland, where a recent referendum required the leveling of “excessive salaries.” Even the free-market standard bearer, the United States, saw the recent rise of Occupy Wall Street. Though each national movement has had its own specific character, most have involved protest against the emergence of a historically unprecedented social class: the “super-rich.”
A century ago, capitalism’s titans became wealthy by creating railroads (Cornelius Vanderbilt) or running steel mills (Andrew Carnegie) and refineries (John D. Rockefeller). The new super-rich are founders of global businesses (Microsoft, Google, and Zara, for example) or managers of financial holdings of global dimensions. The global marketplace correlates closely with the attainment of super-wealth, as Forbes’s list of the world’s 500 richest people demonstrates: oil, natural gas, digital technology, telecommunications, fashion, cosmetics, and financial management are globalized and provide the foundation for most extraordinary fortunes. The new super-wealth is naturally concentrated in locales where such value is created: California’s Silicon Valley for digital technology; Switzerland for pharmaceuticals; Paris, the arbiter of high fashion; Hong Kong, where Chinese capital flees; Geneva, London, and New York, where money is invested; and wherever natural resources, concentrated in a few hands, dominate world markets, such as Russia and Saudi Arabia.
Humanity thus finds itself divided into two economic categories that Karl Marx never envisioned: not proletarians and capitalists, but rather those who work for local markets and receive local compensation, on one side; and those who, as part of a global market, have access to salaries and profits of planetary dimensions, on the other. Popular resentment of super-wealth tends to be visceral, not rational; it’s not unusual in democratic societies. But confiscatory taxes in the French style, or prohibitions on excess wealth in the Swiss populist manner, can’t restore the balance between local and global sources of wealth. Globalization makes it possible for people and profits to move around beyond any nation-state’s control.
To explain this contemporary super-wealth is not to justify it uncritically: the super-rich are often privileged to find themselves at the right place at the right time. It’s better to be the prince of Qatar than a Congolese peasant, or to be an employee in a Swiss bank rather than in one in New Zealand. Do these chance differences justify huge income gaps? From a strictly economic point of view, it’s impossible to demonstrate that the billionaire head of an investment fund produces added value sufficient to warrant his immense personal advantage. It is equally impossible to show that the president of a bank, a pharmaceutical lab, or a mobile telephone company is so irreplaceable as to merit a salary 1,000 times greater than the average of his collaborators. No one is that indispensable.
It is, therefore, up to the super-rich to seek a kind of forgiveness for what is often (at least partially) as much a matter of chance as it is of unique talents. There is a path to such forgiveness: philanthropy. But only in the United States is philanthropy truly well-developed. The American nonprofit sector, neither capitalist nor socialist, represents 10 percent of the nation’s economic activity. For example, apart from his partisan political efforts, George Soros has devoted $10 billion—half of his total fortune over the last 20 years—to helping dissidents in Central Europe, financing drug-rehabilitation programs in Baltimore, and educating the persecuted Roma people of Hungary. Bill and Melinda Gates give $4 billion annually to develop African agriculture and to eradicate malaria. More recently, the New York financier John Paulson gave $100 million for the upkeep of Central Park, and Stephen Schwarzman, a Wall Street investor, donated $100 million to renovate the New York Public Library and another $100 million to finance scholarships for American students in China. Private giving underwrites almost all American cultural institutions and major universities. By contrast, in Europe, such institutions rely on public money; most are currently starved for funding.
As Benjamin Franklin, perhaps the founder of modern philanthropy, wrote in 1740, the goal of philanthropic giving is to change society so as to do away with the need for charity. Thus what is called systematic philanthropy focuses on education, scientific research, and public health. It should be noted that this philanthropic tradition is essentially a Calvinist legacy: according to the Genevan preacher, riches only pass through the hands of the wealthy, who are then supposed to redistribute them. This doctrine led Andrew Carnegie, a century ago, to declare it disgraceful to die rich.
The super-rich of Europe would do well to discover the American philanthropic model. Whole swaths of European societies are severely disadvantaged and could benefit from the financial largesse of those who can afford to bestow it. Such gifts would not constitute charity; they are better understood as the price one pays for remaining a member of the human community.