‘If class warfare is being waged in America,” Warren Buffett recently suggested, “my class is clearly winning.” But, he added, “they shouldn’t be”. Buffett is the second richest man in the world, behind only Microsoft’s Bill Gates.
Buffett recently made headlines when he gave $31 billion of his $44 billion fortune to the Bill and Melinda Gates Foundation in the form of shares in Berkshire Hathaway, his enormous insurance company.
Buffett’s story is often sycophantically rendered as the archetypal American Dream. With a couple of paper rounds and work at his father’s brokerage from the age of 11, he was able through sound investment and business sense to accrue considerable wealth to himself.
Now, he wants to give some of it back. For all the world, it would seem as if an unusually capable individual had generated gold out of thin air and was disbursing it to less worthy if needful individuals.
That story is a heroic idealisation. Berkshire Hathaway was formed from a merger of two textile companies in the 1950s which involved massive layoffs and plant closures. Much of Buffett’s wealth had come from ownership of farmland which he made money from by leasing it out to tenants.
His acquisition of Berkshire Hathaway shares enabled him to draw it more and more into the lucrative insurance business, closing down the textile plants and sacking much of the workforce.
Buffett says the rich shouldn’t be winning the class war, but he has been fighting it nonetheless - most recently urging airline businesses to break the hold of strong unions.
His company was built on the labour of cotton and textile workers who he dumped when he saw a more profitable venture in the extremely lucrative insurance business. Like most of his class, he was a rich kid who got richer.
Some of the most famous philanthropists have also been among the most combative class warriors for the rich. Andrew Carnegie used armed thugs to break a strike at his Homestead Mills in 1892, but he went on to donate $350 million to various charitable causes.
John D Rockefeller Junior suppressed a strike by 12,000 workers in coal mines using the National Guard, but also founded numerous institutions. Henry Ford’s strikebreakers killed workers at the Rouge River Bridge outside his car plant in Detroit, yet he engaged in many philanthropic enterprises.
Bill Gates is not - as far as anyone knows - responsible for killing any of his workers, yet he happens to be the richest guy on the planet.
The success of the Microsoft Corporation is in fact the result of a classic feat of enclosure. Technology that was devised largely in the public sector, and which was treated as a common good by developers, formed the basis for a minor innovation by Bill Gates which he was then able to sell the rights for.
MS DOS, the operating system licensed by Bill Gates to IBM, was in fact a rip-off version of the standard operating system CP/M. Microsoft simply bought the rights to this version, having contributed little or nothing to its development. Gates and his business partners led a crusade against the then prevalent model of open source technology and soon made the closed for-profit model ubiquitous.
So why do successful capitalists give their wealth away? Aside from human kindness, which even the best of us are prone to in weaker moments, the ideology of philanthropy functions as the natural complement to exploitation.
With its pieties of moral reform, self help and “reaching one’s potential”, it says that problems are individual rather than systemic and that with a little boost and a great deal of effort, anyone can succeed. It says that structural change is unnecessary, since the enterprising man will always step in and help. Capitalism has a heart, it says, and it bleeds for you.
Philanthropy has been most widespread when capitalism has been at its most vicious. In the US, since 2000, wages have consistently failed to keep up with inflation, while the wealth of the richest 1 percent has grown staggeringly.
In 1999, Bill Gates had more wealth than the bottom 45 percent of US society combined, and more than the GDP of the world’s 70 smallest countries. This creates an interesting situation. On the one hand, child mortality in the US is higher than in Cuba. On the other hand, the Bill and Melinda Gates Foundation gets $26 billion to invest in market oriented initiatives in health and education.
Bill and Melinda will not find their lifestyle terrifically squeezed by having to make do with only a few billion left in the bank. It will, however, corroborate the illusion that the solution to capitalism’s ills lies within capitalism.
Aside from this, philanthropic institutions have the wonderful effect of reminding the world of the matchless generosity of the ruling class. Because sometimes you forget, don’t you?
Richard Seymour lives in London and runs the Lenin’s Tomb blog at leninology.blogspot.com