On Philanthrocapitalism – Part Four

The fact that I have to go to a fourth 2,000-word blog post in order to analyse the failings of Philanthrocapitalism and my displeasure at its argument says something in itself.

Most of the books that I read and find myself disagreeing with would not merit an 8,000 word essay, but such is the intensity and attempted persuasive power of Philanthrocapitalism that it is necessary to deconstruct just how far off the mark it is. The entire “the rich can save the world” theory is at best misleading, and at worst an outright lie. Now that we are on to the fourth blog post on the topic, I hope that you are beginning to see this.

We start back in the United States where capitalists seem to thrive at the expense of everyone else in society. When charitable giving was broken down in Philanthrocapitalism it was found that “education makes up nearly a quarter of foundations giving in the United States… much of it [going] to higher education”. In 2014, Una Osili, director of research at the Indiana University Lilly Family School of Philanthropy said that: “people are giving to education, including higher education… at record levels, across the board.” ( A golden age of philanthropy it seems).

These record levels of giving meant that between 2012 and 2013 “giving to education is estimated to have increased 8.9 percent”. The total sum given to education through charitable donations was $52.07 billion. I have said previously, and I will say again here, that charitable giving in itself is not a bad thing. Quite obviously this funding of education produced untold numbers of positive outcomes, children attending school, students graduating, scholarships being awarded, and new programmes being taught for example. My issue however lies in the fact that Federal Government spending on education amounted to just 2.67% of the budget and a figure of only $102.26 billion.

This means that of the total amount of money spent on education in the United States, charitable giving made up one third of it. And when one third of a nations education can only exist through charitable donations then the government seems to be failing at its job.

The UK, by way of comparison, spent 12% of their budget on education in 2015. Canada spent 19.4% of its budget on education in 2011/12. Finland spent 11.6% of its budget on education in 2011.

It is unsurprising then that the UK (6th), Finland (5th), and Canada (7th) all finish above the United States (14th) in a 2014 global education league table from Pearson.

Whilst Philanthrocapitalism praises the charity afforded education in the US it is clear that something is not right with the situation. A recent US News article said that “American education is rife with problems”. Schools are said to give unequal opportunities, have deep lying problems on the issue of race, and are increasingly being occupied by children who are forced to live in poverty. Added to this is the fact that University, and the possibility of earning a degree, is becoming less accessible and less attractive to many students in the US, as this article in The Economist points out.

It would not be too much of an exaggeration to say that the US education system is facing a crisis. Here is where government investment – because expenditure on education is just that, an investment – should increase and the burden on charities should be softened. It is unlikely that the philanthrocapitalists would arrive at the same conclusion however.

As we saw in the last piece, Richard Branson has come in for heavy criticism, despite his apparently altruistic nature. Bill Gates is another who routinely appears in the firing line of those opposed to philanthrocapitalism. Gates has been accused of taking with one hand and giving to the other – much like Branson who says he wants to tackle climate change whilst being the owner of an airline company.

Gates came under fire in 2007 from the LA Times who calculated that 41% of the Gates Foundation’s portfolio was invested in unethical companies. These ranging from Exxon Mobil (the company that knew of climate change in 1981, but funded deniers for 27 years) to Abbott Laboratories (a company that once raised the price of its HIV drug by 400%). Essentially, this 41% consisted of businesses that “countered the foundations charitable goals or social aims.” In other words, Gates was being a massive hypocrite.

Though the issue of morals and ethics is a philosophical minefield – and I would know having just enrolled on an online course in Effective Altruism – inevitably, the discussion of morals is a crucial factor on the topic of philanthrocapitalism. Depending on which side of the fence you sit, philanthrocapitalism can be good or bad. Perhaps the ends justify the means, so Gates’ unethical investments are acceptable just so long as his Foundation continues its brilliant work. On the other side of the coin is the belief that the means are just as important as the ends, and that even if a positive outcome is produced, it must not come as a result of an unethical act.

For me, I take the latter view, and the fact that there are people who enter the charitable sector in order to make a profit is rather sickening. It is not enough for Branson to tackle climate change because it is for the good of humanity and the Earth, Branson sees it as a business opportunity and yet another chance to make money. This then is the motivation behind his exploits. Not because he is caring and compassionate, but because he wants to increase his revenue and annual turnover. It makes me wonder that if Branson didn’t see climate change as an area for investment and profit, would he even attempt to rectify the situation at all?

And it is this, before even the numerous criticisms, hypocrisys, and propagandist stories, that is most disturbing and most unlikeable about the concept of philanthrocapitalism. The fact that if there was not a motivation of profit much of what is done may not be pursued in the first place. Business moves into the charitable sector are not because business has suddenly found a conscience, but is actually because of other motives. Firstly that charity represents fantastic PR for a business, and secondly that charity may even open up new markets in which that business can operate at a later date. It is not so much a case of helping the poor, but instead elevating the poor into a position where they can become a consumer. Ideally of the goods that that particular business is selling.

The same motivation that drives the creation, continuance, and expansion of business is present when they move into the charity sector. This being greed. The desire for more money. Philanthrocapitalism highlights this, echoing my thoughts on these charitable endeavours: “increasingly, it is also being driven by the belief that good can be profitable, or at least boost the firm’s reputation.”

At a World Economic Forum in Davos, Gates called this new approach “creative capitalism”, and he says that it is an attempt to “stretch the reach of market forces so that more people can make a profit, or gain recognition”.

To continue through the pages of Philanthrocapitalism is to stumble upon some of the most misguided and unrepresentative statements that may ever have been attributed to certain companies. General Electric is said to be embracing environmental sustainability, and is followed closely by perhaps the most ludicrous statement in the whole book, it reads: “environmentalism has also been championed by oil giant BP.” Needless to say the phrases “oil giant” and “environmentalism” are completely at odds with one another. They are entirely mutually exclusive, but the authors of the book seem to forget this.

BP, those champions of environmentalism, have recently been fined $18.7 billion due to the damage caused by the Deepwater Horizon oil spill of 2010. As Fortune state,  it “was the worst environmental disaster [ever] caused by the oil industry”. Even with that tremendous payment, it is likely that BP will continue to pay out huge sums of money in damages and compensation. Since the Deepwater Horizon spill, BP has paid $53.8 billion and Time Magazine believes it is unlikely to stop there.

The damage to their bank balance could be overcome in time, but the damage to the environment is unlikely to be such a quick fix.

Throughout Philanthrocapitalism the authors attempt to persuade the audience that capitalism, and the businesses that thrive within it, will provide the solution to our problems. This argument itself is flawed, but time and time again we see that the argument is supported by some of the most self-destructive evidence possible. Even if the argument were to be believable, the case studies and supporting material which is meant to add bite to the theory only proves to blunt it further. It is as if the authors are deliberately picking the worst possible businesses to shine a light on, in order to sabotage their own book and argument.

There is not a single mention of Ecotricity, Triodos Bank, Lush, Social Bite, or Gravity, to name but a few, who are all far better and far more ethical in their methods of conducting business. Ecotricity is an energy company in England that supplies only wind turbine-generated electricity. Triodos Bank, whose name derives from the Greek tri-hodos, meaning three-way approach (people, planet, profit), only invest in businesses judged to be of social or ecological benefit. It supports microfinance projects in developing countries, lends to fair trade organisations and organic farms, and compensates 100% of its CO2 emissions.

Lush are a UK-based company, and provide bathroom products such as soap, shower gel, and body lotions that are entirely free from animal testing. The products are also 100% vegetarian and have no traces of palm oil. With their profits Lush support environmental causes (Sea Shepherds and Hunt Sabs), human rights (OneWorlds Freedom for Palestine), and economic justice (UK Uncut). Their Charity Pot, which grants hundreds of thousands of pounds each year, is open to grassroots organisations that are in need of funding. I myself was a beneficiary when I applied for money to help Syrian refugees in 2013.

Social Bite are another UK-based business, operating in Edinburgh and Glasgow. On their homepage they state that they are “a sandwich shop with a difference”, and that is completely true. 100% of their profits are donated to good causes, they have a scheme whereby customers can buy homeless people drinks and food which the homeless can then claim later, and one in every four members of staff used to live on the street themselves. Their website states: “This is not a PR spin. This is not a token gesture. This is just a different kind of business. A business to help others. This is a Social Business.”

The most recent of the examples I mention, and one we can’t criticise the authors of Philanthrocapitalism about too heavily, as it occurred years after the book was published, is the case of Gravity. In April of this year Gravity CEO Dan Price made headlines around the world after he decided to take a $930,000 pay cut in order to raise the minimum wage at his company to $70,000 a year. That meant that 70 of his 120 members of staff got a raise, and 30 more saw their incomes double. If the rich truly are going to save the world, it will be through acts like these.

It seems that the word count has beaten me once again. In the fifth and final post we will wrap up Philanthrocapitalism, completing this lengthy critique and ending my discussion on the topic.

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