F. Scott Fitzgerald said, “The rich are very different from you and me,” to which Ernest Hemingway replied, “Yes, they have more money.” Another retort might be a variation on the quote attributed to Honore de Balzac, “The secret behind every great fortune is a great theft.” There are 657 billionaires in the United States whose combined wealth grew more than $1.7 trillion over the past year of the pandemic. And we know that one-tenth of 1% own more wealth than the bottom 90%. Where does that wealth and that of other members of the predator class originate? We know it’s produced by the collective labor of the working class — as has been said, “It takes a village to raise a billionaire” — but there are many related and often overlooked factors.
Off the top of my head, here’s a very incomplete list (add your own) of factors contributing to wealth accumulation under capitalism: Originally, the enclosure acts of the late eighteenth century in England, expropriation of peasants, forceful acquisition (1500s) wage slavery and imperialism; Later, in the United States, extermination of the indigenous population, Black slaves, immigrant Chinese railroad workers, land speculation, police powers of the state, theft, usury, corporate charters and plunder; eminent domain, child labor, taxpayer subsidies, corporate welfare, tax policy, inheritance laws, foreign dictatorships that guarantee cheap labor and raw materials for U.S. corporations.
And more: taxpayer subsidized public schools and universities, communications, the Federal Reserve, Treasury, Defense and Commerce Departments, public investments that created, for example, the internet platform and human genome research; health and safety regulations created and enforced at public expense; laws enforcing contracts; bridges, highways, airports, water treatment plants, harbors and other utilities maintained at public expense; the mail system, public hospitals, police and fire protection, Securities and Exchange Commission, government licenses for broadcast channels and state granted business incentives. Bill Gates and computers are instructive examples. On Gates, I’ll draw upon Malcolm Gladwell’s (no radical) book, “Outliers,” the thesis of which is how external factors play the determining role in individual success. It’s a thoroughgoing evisceration of the great American myth of the self-made man. What do we know about Bill Gates? His father was a wealthy lawyer in Seattle and his mother, was the daughter of a wealthy banker. In seventh grade, they took Bill out public school and sent him to Lakeside, a private school catering to Seatte’s elite families. In eighth grade, Lakeside started a computer club, spending $3,000 for a computer terminal and turned it over to the kids. This was in 1968, when most colleges did not have computer clubs and those that did needed a computer card system.
Lakeside installed an ASR-33 Teletype connected to a mainframe in downtown Seattle whereas only few lucky college frosh did time-sharing in 1971. Gates was in eighth grade in 1968 and basically lived in the computer room. It was very expensive but the parents contributed all the money and the kids spent it. At that point, the University of Washington in Seattle set up a Computer Foundation and one of the founders was Monique Rona who had a son at Lakeside. Rona invited the kids to come and test the software on weekends and Gates was able to program late into the night. Over seven months, he ran up 1,575 hours on the ISI mainframe or 8 hours a day, seven days a week. He’s 15 years old. Then, he and Paul Allen found a UW computer that was available on off hours. Living only a few blocks from campus, they’d steal computer time. Then, TRW (a huge tech company) got a call to set up a gigantic computer system for Southern Washington state but there was a severe shortage of programmers. Someone at TRW recalled the Lakeside kids and Gates spent much of his senior year in high school writing code at Bonneville.
In sum, for five years, from 8th grade through high school, Gates had extraordinary opportunities available to very few. Gates dropped out of Harvard after his sophomore year, after spending seven consecutive years doing programming. In his own words, “I had better exposure to software development at a younger age than anyone, all due to an incredibly lucky series of events.” Bill Gates acknowledged that Microsoft’s success was accomplished by “embracing and extending ideas developed by others” — what any person with an iota of integrity would term, “the public sector.” I’d go further and say that we know from the history of computers that Microsoft did not make any of the critical technical advances and further still, it only exists because of massive public investment (tax dollars) and from the indirect individual contributions of millions of individuals, from teachers, farmers and nurses to truck drivers, secretaries and sanitation workers.
More on computers: They were born at public initiative and public expense. During the 1950s, the funding came from the taxpayer funded Pentagon and the National Science Foundation. Virtually everything was created a public expense and then gobbled up by enterprising opportunists like Gates. For example, the Pentagon was absolutely fixated on having a communication system that could survive a nuclear attack. The answer? The internet. Kenneth Flamm, in his book “Creating the Computer,” explains that “Key players in the military first tried to convince established businesses and investment banks that a new and potentially profitable business opportunity was presenting itself. They did not succeed and, consequently, the Defense Department committed itself to financing an enormously expensive development program.” As Noam Chomsky has asserted, “Capitalism means, we don’t take the risks. The public takes the risks and we take the profits. As much as possible, risk and cost have to be socialized and profits privatized. That’s the basic principle.”
The Air Force and the Atomic Energy Commission were responsible for initiating data-based software; the genesis of artificial intelligence research was not intrepid entrepreneurs but the military in the 1950s. The U.S. government and especially the military sponsored research were behind video terminals, the drawing tablet, light pen and even the mouse. Flamm notes that more than half of IBM’s R&D budget was in the form of government contracts in the 1950s and 1960s — in other words, from the taxpayer. The vaunted AT&T and its Bell Laboratory was a wholly government supported monopoly. They developed the transistor but because of its prohibitive expense, for their first decade only the government procured them for military application. Incidentally, Flamm points out that because European governments were reluctant to provide these massive taxpayer subsidies to industry, Europe fell hopelessly behind the United States.
And what has this great wealth been used for? For personal aggrandizement, fantastic comfort and immense privilege. And it permits the accumulation of even more profits, leverage over private and public life and coopting government to do its bidding. Finally, I’ve always been partial to the injunction “To whom much is given, much is required.” If we apply this to the United States, the “much” is rarely given voluntarily while the “required” has neither been requited nor demanded. And although I wouldn’t presume to improve on scripture, I would suggest this corollary: “From whom much is taken, much is owed.” In short, if all production is social — from public investments to our collective labor — where is our dividend?
Photos: Bill Gates often takes holidays on super yachts, preferring to rent them. However, last year, there were reports that Gates was going to purchase the five level, ultra-super yacht “Sinot Agua” with a price tag of $776 million but he apparently didn’t go through with it. (Top) Two of the most expensive personal yacht’s in the world belonged to Microsoft co-founder Paul Allen who died in 2018: “Octopus” at $200 million and “Tatoosh” at $100 million.
Gary Olson is professor emeritus of Political Science at Moravian College. His most recent book is Empathy Imperiled: Capitalism, Culture, and the Brain. Contact: firstname.lastname@example.org
Leave a Reply