The Gospel of Wealth

In my last post reviewing the autobiography of Andrew Carnegie, I promised a review of his famous essay included in the end of that tome.  Carnegie was wrote numerous books and articles, but he is probably best remembered for his essay “The Gospel of Wealth.”  In this essay, Carnegie sets himself apart from his multimillionaire colleagues by declaring his philosophy towards wealth.

First, Carnegie clarifies what he means by wealth.  We’re not talking here about the 401k retirement account of some middle-class factory worker.  We’re talking about so much money you could fill an ocean and swim in it.  Wealth in that sense is possessed by a small percentage of the population.

Carnegie defines the problem presented by wealth — the kind that absolutely boggles the mind — in the very first sentence of his essay: “The problem of our age is the proper administration of wealth, that the ties of brotherhood may still bind together the rich and poor in harmonious relationship.”  In other words, how can the mega-wealthy be mega-wealthy without the impoverished classes rising up in a repeat of the French Revolution?

Carnegie begins his solution by defending the existence of the mega-wealthy:

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“It is well, nay, essential, for the progress of the [human] race that the houses of some should be homes for all that is highest and best in literature and the arts , and for all the refinements of civilization, rather than that none should be so.  Much better this great irregularity than universal squalor.”

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I agree completely.  Those “refinements of civilization” benefit all who embrace them.

He then enters a brief and very general examination of history as a background for competing economic theories of socialism, communism, and individualism.  He defends individualism by referencing the great accomplishments made by men of creativity and industry, accomplishments which have benefited society as a whole and which could not be possible in societies in which the government distributed the rewards of those who worked to those who did not.  I agree wholeheartedly.  As Carnegie says, socialism and communism are “not evolution, but revolution.”

As much as I agreed with Carnegie during this first half of his essay, I would agree with him even more during the second half.  The question he posed in his very first sentence now takes a new form: What should the mega-wealthy do their wealth?  Carnegie presents three possibilities:

1. It can be left to family after death.
2. It can be left to the public (i.e. the State) after death.
3. It can be distributed to the public before death.

Carnegie’s philosophy centers around that third option.  I found his reasoning to reach that conclusion most interesting.  Inheriting great wealth which one did not earn through the sweat of his or her own toil is a burden; it diminishes the person who has no appreciation of how the wealth was obtained or what life is like without it.  Passing wealth to one’s descendants is then a great disservice to them.  Likewise, those who leave their money to be distributed after death often seek a legacy which history has shown they never really attain.  That legacy they can obtain only while distributing their wealth before they die.

Carnegie takes something of a side road here by defending the estate tax.  In my younger days, I thought estate taxes were an affront to freedom.  But reading Carnegie, I find myself agreeing with him that high estate taxes are beneficial for society and therefore a good thing.  High taxes on an activity discourage that activity, and I agree with Carnegie that distributing wealth after one’s death should be discouraged.  The wealthy should distribute it for the public good before they die.  But Carnegie takes it one step further.

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“This, then, is held to be duty of the man of wealth: To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgement, is best calculated to produce the most beneficial results for the community — the man of wealth thus becoming the mere trustee and agent 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.”

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I don’t like the arrogance implied towards the end of the paragraph-length sentence, but I do like that the man of wealth is the one who decides how his wealth should be distributed.  Some of used this sentence to argue that wealth does not really belong to the mega-wealthy but rather to the community because that wealth would never exist without the labor of the community.  It’s not far then to step into socialism or communism with the idea that the State is best disposed to decide how to distribute wealth because they really own it after all.

I disagree there.  The laboring classes do not own any of the wealth amassed by the captains of industry.  They own only what they are paid, and that is according to the agreement they made when they gave their labor.  If the captain of industry have paid them according to that agreement, then they have been dealt with justly because they have received all that is their own.  They didn’t agree to labor for the wealth of the mega-wealthy; they agreed to labor for their wages.  So long as they receive those wages, they have what is their own.  That’s what they agreed to.

Again, I like how Carnegie proposes the man of wealth to be the one who decides how the wealth that he amassed should be distributed.  This arrangement is entirely consistent with the principle of individualism Carnegie defended earlier in his essay.  Carnegie also goes on to decry almsgiving, saying that means should be provided only to those who are willing to help themselves.  Put together, this proposal provides a wonderful solution to the question Carnegie proposes at the start.

But Carnegie saves his best punch for last.

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“. . . yet the day is not far distant when the man who dies leaving behind him millions of available wealth, which was free for him to administer during life, will pass away ‘unwept, unhonored, and unsung,’ no matter to what uses he leaves the dross which he cannot take with him.  Of such as these the public verdict will then be” ‘The man who dies thus rich dies disgraced.’”

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Wow!  That’s something else.  “The man who dies thus rich dies disgraced.”  What a powerful philosophy!  As I said in my last post, I don’t admire everything about Carnegie, but I can’t help but admire this.  And it’s really made me think about my own philosophy towards wealth.  In large measure I agree with Carnegie.  I intend to die as penniless as I came into the world.  I’m not sure exactly how much money will pass into my hands, but whatever the amount I’ll gift it all away before I die.

There’s much more I could say about Carnegie’s essay.  And I’d love to write something tha continues the conversation about the essay based on someone who disagrees with Carnegie or who thinks his essay actually supports socialism or communism.  But for now, I’ll simply express my gratitude that I read the essay and had the moments of reflection that it gave me.