Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being.

• Author: Shockley, Gordon E.
• Position: Book review

Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being

By Zoltan J. Acs

Princeton, N.J.: Princeton University Press, 2013.

Pp. xviii, 249. $29.95 (cloth).

Zoltan Acs's Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being is a useful book, appropriate to academics and an informed general readership as well as in undergraduate and graduate seminar-style classrooms (I myself am requiring it in a masters-level seminar this semester). Although the book has limitations, as discussed later, it raises timely issues about the American economy, in particular the nexus of capitalism and philanthropy in America.

Acs implicitly poses the following question in his book's title: Why does philanthropy matter? Throughout the book, he cogently argues that philanthropy solves the "problem of wealth" and its corollary of the presence of vast inequality in capitalist economies, specifically America's. The "defining characteristic of capitalism," Acs writes, "has been its amazing wealth-generating capacity" (p. 90). And the defining characteristic of American capitalism is the wealth generated by entrepreneurship: "At the heart of American-style capitalism--and the ability to attract

and sustain entrepreneurial activity--is an acceptance of the cycle of creative destruction" (p. 9). Acs's phrase "the cycle of creative destruction" of course invokes Joseph Schumpeter's theory of entrepreneurship. (Schumpeter, in Capitalism, Socialism, and Democracy [New York: Harper & Row, 1950], famously imbued his theory of entrepreneurship with the force of nature as "the perennial gale of creative destruction" and crowned it "the essential fact about capitalism" [pp. 83-84].) One of the most problematic effects of Schumpeterian entrepreneurship and creative destruction in America is inequality. Acs observes: "[T]he forces of creative destruction and economic growth since then have resulted in uneven allocation of wealth across the population. This is perhaps the fundamental tension in American capitalism: a balancing act between encouraging vast accumulations of wealth and maintaining economic opportunity" (p. 24). Too often the story of capitalism ends here at inequality. If an economy enjoys the fruits of capitalism--that is, its wealth--it must also bear its evils--that is, inequality.

But Acs does not end his story of American capitalism there. Rather, he continues and completes it by...