My first reaction to reading this book is, what has all the controversy been about? Patterns is an empirical study of corporate giving to public interest—as opposed to traditional health and welfare—charities. Mr. Bennett has shown great ingenuity in constructing a paradigm of such giving that he does not claim to be formally representative, but that is nevertheless very serviceable, and certainly the best study of the subject ever attempted.

The results of the survey show that American corporations—unsurprisingly—distribute their public interest philanthropic grants rather evenly between conservative, centrist, and liberal groups. But, although the number of grants are spread out, the larger ones tend to be directed toward the left end of the political spectrum; hence the controversy.

Yearly, liberal groups receive about $11.7 million from business, compared to $11.3 million for centrist groups and only $3.2 million for conservative ones. When center groups leaning left and right are analyzed, liberals are found to have almost twice the financial support from the corporate world as do conservatives. James Bennett finds it strange that businesses should offer greater assistance to groups that are critical of the capitalist marketplace than to those organizations that support it. Corporate charitable decisionmakers, with one eye on their stockholders, have howled in response that they are not guilty of supporting their enemies. But Mr. Bennett’s data are irrefutable.

On second thought, who should be surprised that businessmen who sell rope to their hangman might also be giving it to him? Lenin did not know much about economics, but no one has denied he was politically perceptive. For that matter, long before him Adam Smith observed that businessmen were not necessarily friends of the market. Indeed, the greatest social analyst of the early 20th century, Joseph Schumpeter, predicted that large corporation executives would become impatient with the discipline of the market and make cause with the government’s bureaucrats to give the coup de grace to faltering capitalism under the welfare state.

Why might business support their enemies? First, as Smith noted, to do so might well be in their short-term interest. Poor market judgment can always be remedied by a government subsidy. (Lee Iacocca is called a great businessman for getting a government-supported loan to save a faltering Chrysler. Even yours truly could make a great comeback if someone gave him $3 billion.) Second, businessmen find that supporting left-leaning causes can help to establish them as part of the chic set, putting them in a better position perhaps to acquire an eighteen-year-old artist for a fifth wife. Third, leaning left gets good press from a sympathetic media. Finally, as Schumpeter noted, businessmen are trained temperamentally not to make waves; they will “not say boo to a goose,” as he put it. When the left plays its political version of trick-or-treat, most corporations give the one to escape the other.

Still, given the incentives and the personalities involved, one ought not to be surprised at the level of support for the pro-market public interest groups. Indeed, if one removes the civil rights groups from the analysis, the left-leaning groups have an advantage of just $9.6 million to $8.1 million. Certain types of right-leaning groups are very successful: those which support removing regulatory burdens from business, and those which litigate against groups that harass corporations. So what’s new; the business community seems to be supporting its short-term self-interest, as it always has.

To the cynic, the shock is that general interest, pro-market groups are supported at all. The fact of the matter is that markets are dangerous to the health of any particular firm. As F.A. Hayek has made so clear, the market helps the consumer and disciplines businesses. Schumpeter called the market the process of “creative destruction,” meaning it is inefficient businessmen who are destroyed by the disciplinary forces of the market.

It is essential that friends of the market recognize that when businessmen support capitalism, they are performing a heroic and altruistic act. They are supporting a social good over what might not be in their short-term interest—which means, of course, that their behavior is going to be the exception rather than the rule. That business cannot save capitalism was Schumpeter’s point, and he predicted that government would keep eating away at the market, increasingly fettering it and creating the demand for more regulation to correct new problems, until the system fell apart from its accumulated inefficiencies. Capitalism could only be saved if a political class loyal to it could be “developed before the end.

In short, Schumpeter predicted Jimmy Carter and hoped for Ronald Reagan. Unfortunately, the political class created around Reagan has atrophied, and recreating it will be painfully slow. In that effort, which itself is problematic, one can be grateful for those businessmen who can look towards the common good served by the market and who are willing to support groups that promote it. Yet such men cannot do the job without the necessary political class to lead the fight. Building that political class is the challenge of the 21st century, one that will require the assistance of every friend of the free marketplace.


[Patterns of Corporate Philanthropy: Ideas, Advocacy, and the Corporation, by James T. Bennett (Washington, D.C.: Capital Research Center) 322 pp., $50.00]