Andrew Carnegie and Robert Reich essay

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Nowadays, the United States is one of the most developed countries in the world. It exceeds many European and Asian countries in economic growth. Nevertheless, a research done by Marco Cagetti of the Chicago Fed showed that the United States represents the most uneven distribution of income and wealth (Cagetti 22). An irregular distribution of wealth is a matter, which residents of the United States know very well. This issue has gained notoriety in 2012 owing to the Occupy Wall Street movement. 

Contemporary state of affairs is the result of certain historical events, which have determined today’s correlation of different classes of society. The U.S. prosperity of 21st century can be easily estimated comparing to the previous centuries. One can compare its economic conditions, because of two prominent individuals of 19th and 20th centuries. The first one is Andrew Carnegie (1835-1919), famous steel tycoon, businessman and philanthropist. The second one is Robert Bernard Reich (born in 1946), who is now economist, professor, and political commentator. Each of these great men had their own economical point of view that was deeply appreciated by their contemporaries. Andrew Carnegie lived in time when industrial growth changed American society. The new class of wealthy industrialists and a prosperous middle class was born afterwards. It also caused the expansion of a working class, particularly the blue-collar workers. Robert Reich, on the opposite, was a witness of 1990s economic transfer from one economic system to another. The core pyramid like corporations has changed into the global webs.

As far as Andrew Carnegie and Robert Reich had a lot to say about social and economic issues, they had both written books about it. This research will concentrate on two works of these authors – “The Gospel of Wealth” by Andrew Carnegie and an essay “Why the Rich Are Getting Richer and the Poor, Poorer” by Robert Reich. It is worth noticing that both of these authors had common and different views reflected in their writings. Though Andrew Carnegie and Robert Reich were both living under different historical circumstances, in different time periods and in different societies, they have something in common. They are bothered with the same issues, and they raise the same problems for discussion. They have a concern in where is society heading for and what is the right way of distribution of wealth. Both authors are writing about the wealth balance within society. They explain that there is no way for society to consist from the wealthy members only. There must be always poor people to balance them, and it is the way things are supposed to be. Carnegie states that it is inevitable, and it is natural. He speaks of the appearance of strict castes in society. These castes ignore each other and do not trust each other. The wealth must be accumulated in the arms of rich cast to benefit lower classes. Thus, Carnegie notices that society loses its homogeneity. Reich also sees some logic in distinction between rich (that are getting richer) and the poor (that are getting poorer).

Both authors say enough about the competence, as well. Carnegie describes the law of competence. Under this law, the employers are forced into the harshest economies with the constant controversies between the employer and the employed, between investments and efforts, between privileged and underprivileged. It can be difficult for individual, but it works for the sake of the whole society. This is the competence that should be the common aim for everybody. Everyone has a right to the wealth one can afford. In his evolution ladder, rich people are “the men”, the elite of the society who deserve the most of the wealth. The poorer somebody is the less clever he or she has to be. Thus, everybody gets fairly what one deserves.

Carnegie’s opinion is alike to one of Robert Reich. According to his perspective, society is divided into three groups, each of which can count on the specific “share” in the common wealth. He likens three social groups to the boats. The first group of routine producers is sinking slowly. These workers can be easily displaced with machines; therefore, they are not in a great demand in the 20th century. The second boat of in-person servers is sinking more slowly. There is a strong demand for such kind of workers, but there is also a great competence that may sink this boat. The third boat of symbolic analysts is rising and will continue with rising further. Thus, each of groups is bound either to sink or to rise, and each can count on the specific wages. Competence in Reich’s essay is considered within the terms of particular social groups. Its members have to compete for the vacant positions available to the limited quantity of people.

Both authors write about the price society, which will need to pay for the well-balanced economic system. Carnegie suggests this price to be the disappearance of society homogeneity. Society is from now on divided into strict castes where no understanding can be found.  For Reich, this price is high as well. Citizens of the U.S. loose good-paying routine production jobs within advanced economy. Their positions are often taken by the workers from east countries that do the same work for the lower salary. Many of them lose their opportunity to belong to unions and benefit from predominant wage rates customary for collective bargaining agreements. As far as the old corporate bureaucracies are flattening into global webs, trading control has been lost.

Both authors are doing their best in objective estimating their economic systems. For that, they name its pros and cons. Carnegie believes that economical evolution is beneficial for everybody. He still admits that competence might have both positive and negative results of it. Castes’ appearance is the negative result of the evolution process. Nevertheless, society can do nothing, but accept it as an integral part of the progress. Reich also believes that global webs have positive and negative sides. Particularly, their negative side is that they do not work for the benefit of society. They work for their own benefit and try to do everything to gain more profit with the low costs. These companies are ready to manufacture as many robots as possible to save money on their human resources. Under such conditions only symbolic analysts can earn much and thus benefit from the whole system. People possess something that computers could never attain. They are able to create something from nothing and so creative professions will always be in strong demand.

As for the rest, both authors have many differences in opinion. Firstly, Carnegie argues about equal distribution of wealth, the main problem of his age. He wants “the ties of brotherhood to bind together the rich and poor in harmonious relationship” (Jacobus 391). His point is based on the Darwin’s theory of evolution. Carnegie believes that rich people are the most developed individuals in the evolution hierarchy. They reach their wealth as the result of the progress. As follows, the individual that accumulates much wealth is an extraordinary human being that managed to use his natural talents and energy for the society progress. His next topic is using of that surplus wealth for “humankind improvement” in philanthropic affairs. Thus, rich are expected to help poor as far as they need it despite the competence between them.   

Comparing to that, there is no way for the brotherhood in Reich’s essay. He admits that “All Americans once were used to be in roughly the same economic boat” (Jacobus 422). Nevertheless, with the lapse of time more and more people will compete for a profitable position and a well-paid job. As far as many people can now be substituted with machines and robots, the demand for human work gradually decreases. Thus, there is no need in human resources. Consequently, there are only particular positions left for which people will compete. This is how the “jungle law” operates – "every man for himself". Reich does not suppose any help from one class to another. Classes of routine workers and in-person servers do not usually like their work. Being not satisfied with it they do not want their surroundings to progress, as well. Still being afraid to lose their job, they would do everything to eliminate their rivals.

Another point two authors may argue about is an economical concept. Carnegie talks about national economics. He discovers the theme of economic and business development within the bounds of the country. Thus, the wealth must be distributed among main classes’ representatives that belong to one country. Meanwhile, Reich does not confine himself to the U.S. only. With the development of modern technologies companies can hire the workers all around the world. Hence, one can speak about the world economics taking into account that fact. The distribution of wealth then is done among more and less developed countries.

Carnegie’s point is that exceed wealth distribution is obligatory. Therefore, he raises the issue of the proper mode of administering wealth after the laws upon which civilization is founded. For that, he suggests three modes. The first one is to leave the wealth to the families of the decedents. The second mode is to bequeath it for public purposes after death. The third mode is to administer one’s wealth during the life of its possessor. Carnegie considers the first mode as the least effective. According to him, this mode does not bring in the profit neither to the state nor to the children of decedents. As for the second mode, it is believed to be better, but riskier. Society usually does not approve people who do it for they look as greedy ones. Carnegie believes that it is fair to impose taxes on the rich people, who do not wish to share it with the society while being alive. The purpose of fair wealth distribution is to be “by far most fruitful for the people”. Therefore, the wisest mode of wealth distribution is to use wealth during the life of its possessors. Carnegie approves is as “the true antidote for the temporary unequal distribution of wealth”. This mode contributes to the reconciliation of the rich and the poor, and a reign of harmony. Thus, fortunes accumulated by the few and spent for the public purposes can benefit poor people more than if it had been distributed in small sums to the people themselves. These are the preconditions for the ideal state for surplus wealth of the few becomes the property of the many.

Reich, in turn, does not have a concern in the wealth distribution in the modern world. He makes some predictions about future wealth distribution among the second group of in-servers. Particularly, expectations are that the life-expectancy will lengthen in the future, and the number of octogenarians will triple. All these old-timers will need additional medical help. Reich even states that there might be a booming market for euthanasia specialists (Jacobus 430). Thus, in­person services will be in strong demand. Nevertheless, Reich warns that these people will not be able to pay for these services due to the lack of money. They would have used up their personal savings years before. Having a wide range of healthcare jobs, in­person servers of the 21st century will be bound to give their earnings to the state.

Thus, talking about money distribution, Reich puts it next way. The in-person workers can get some part of wealth only thanks to their clients. They will depend mostly on the value that their customers will add to the world economy. Hence, Reich does not explore the issue of the proper mode of administering wealth. Moreover, he rather cares about “how to make large amounts of money by moving large amounts of money”. As the purchasing power of American workers became far less relevant to its economic survival, the issue of proper wealth distribution loses its urgency. Society is no longer bothered with sharing surplus wealth problem. Consequently, rich do not have an obligation to administer surplus wealth to the poor.  

It seems that Carnegie and Reich discuss different notions of growth. For Carnegie, the social and economic growth is important. Primarily, few magnates have to appear to be able to help the other members of society to progress as well. It is the way the whole society benefits. Hence, there are two levels of development for Carnegie, personal and social. They in turn lead to economic growth and state prosperity. On the other hand, Reich talks about private career growth. People do not unite their efforts for the sake of society and common good. People only care about the quality of their work. Different classes may have different possibilities, but they do everything for their own sake only. Thus, nothing can be done to provide state prosperity and social wealth.

Additionally, Carnegie believes the concentration of capital is essential for societal progress and should be encouraged. For Reich, private capital is increasingly global and unattached, while a human capital is the only one resource on which the nation’s standard of living depends. These are the public investments that have to be the cornerstone of economic policy (Reich 203).

After this one can conclude that though over hundred years passed the issue of distribution of wealth in America is still relevant today. Works of Andrew Carnegie and Robert Reich demonstrate common and different views towards the question of wealth and poverty. Being written in 19th and 20th centuries they remain applicable to the current economic status of America today. Their writings also allow to estimate contemporary economical situation better and to grasp the idea about economics concepts of their time.  

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