Philanthropy as the Privatization of Money
The subject of money has been a hot topic in the past decade. One important controversy evolves around whether money is a commodity or a commons. As a commodity, money is a property that people can buy and sell, give away, or stick under a mattress. As a commons, money is available to all, owned by none, and protected by civic authorities. Money can be used as a commodity and a commons, but it does make a difference which one we see as more fundamental.
Money appears to have several functions in economic systems. First of all, it is a means of exchange. People exchange one thing for another and use money to facilitate the exchange. In such exchanges, it belongs to all and is owned by no one. It is a commons that facilitates the exchange between different properties, but it is not a property itself.
Money is also used in economic systems as a means of credit (and debt). Individuals and businesses, for example, apply for credit from banks to develop projects that have the potential to increase the debtor’s worth enough to not only reward the debtor for his or her effort, but to also repay the loan. When money functions as credit, it exists in a human relationship wherein the parties make promises to extend credit and to repay it. This relationship is best understood as a relationship of reciprocity: where each party should expect to receive good for good. Money flows in this relationship of mutual trust, not as a commodity, but as a means for fulfilling mutual promises.
A third function of money is simply to give citizens a means to pay taxes. Some would say this is the origin of paper money—a rulers’ need to cover expenses, especially the expenses of war. Today, of course, taxes are collected for more than to finance wars (still a major expense for the United States), but also to finance social, infrastructural, and other public expenses.
In all these uses of money, it functions as a commons, used to facilitate exchanges, provide credit, and pay taxes. We can call it “public” money because it is embedded in communities, facilitates interactions among community members, promotes the making of provisions for all, and is protected by public agencies that enforce laws against such crimes as counterfeiting and fraud. What governments have not done is to protect money from privatization.
The privatization of money is to take it out of circulation and to treat it as a commodity—as an object cut off from any human relationships. Once this occurs, then those who take the money can decide how to insert the money back into the community by giving it to one organization or cause according to their preferences.
As the CEO of Microsoft, for example, Bill Gates withdrew millions of dollars from the economic system, some of it by not paying taxes, and then used some of that money to set up the Melinda and Bill Gates Foundation. The Foundation then inserted the money in the public educational system, which had experienced a steady decline in the past decades.
What was the reason for declining quality in public schools? Various factors, of course, but one significant factor was the significant decrease in the collection of corporate taxes. In the year 2000, for example Microsoft paid zero corporate taxes, although they have a large profit. How did they do this? They moved their profit-center to Ireland and paid the Irish 12 percent tax instead of the US 35 percent corporate tax.
The evasion of taxes has been a standard practice of corporations. The percentage of federal income taxes paid by corporations has declined from 40% in the 19060s to 5 or 6 percent today. Without public funding, of course, individual schools have looked for private funding of their schools and in cooperation with such Foundations as the Gates Foundation have improved their schools.
If we take a step back, it seems reasonable to assume that many of the first generation of Microsoft employees was educated in public schools. Certainly, much of the innovation in early computer technology originated at state universities. The growth of Microsoft, in other words, was dependent on a good public school system. Then corporations stopped paying taxes, which left them with greater profits at the expense of public services. With these profits, they turn around and decide who will receive that they decide to “give back to the community.”
When one considers that Gates riches were largely the result of using copyright laws to transform what had been common knowledge into private property, as well as Microsoft’s infamous attempts to destroy competitors, the money in his hands is certainly not only the result of Microsoft’s contributions to the world of information technology. Once he has the money, through his Foundation, he can decide what schools to improve. The net result is the general impoverishment of public schools, and the establishment of a feudalistic relationship of a few schools with their benefactor: in this case the Gates and Melinda Foundation. That’s what philanthropy is: the privatization of money.