In 1933, when Franklin Delano Roosevelt took his oath of office, he inherited control of a vast country with a booming population, abundant resources, the world’s largest economy, and next to nothing in the way of central government. At a time when other industrialized nations were erecting welfare states, the United States still lacked the capacity to tax most of its citizens. Its roads were mostly unpaved, its rail lines lay in private hands, its central banking system was rudimentary (a condition that had exacerbated the Depression), and local authorities—not the federal government—ran the schools and kept the peace. Foreign relations were no better. The US had entered World War I late and retreated immediately afterward, declining to claim the geopolitical spoils of the war and refusing to join the League of Nations.
How such an underdeveloped government became a leader in world affairs is something of a mystery. Where did it gain the capacity and unity of vision to become, if not a global empire, then something very much like it? How did it formulate and then act on a grand geopolitical strategy that required massive aid deployments, substantial foreign expertise, and military interventions throughout the globe? These questions are all the more puzzling because, domestically, the federal government would remain weak for decades after World War I, crippled by an entrenched and recalcitrant group of politicians who feared that any aggrandizement of the state might interfere with white supremacy in the South.
An intriguing explanation of how the US Government, politically hamstrung at home, could act with force and purpose abroad is contained in Inderjeet Parmar’s excellent Foundations of the American Century. Throughout the 20th century, Parmar argues, the weak state was supplemented by private foundations, which took on many of the functions of government. Unelected, unaccountable, and for the most part unchecked, these foundations channeled billions of dollars into positioning the United States as a world power. Immune to the vicissitudes of democratic politics, they functioned as a shadow government, implementing the goals of what C. Wright Mills called the “power elite,” the men of affairs who moved easily from corporate boardrooms to high-ranking government office, often in or around the State Department.
These men had money, often more of it than they knew how to spend. The endowments of the big three foundations—Rockefeller, Carnegie, and Ford—were drawn from the immense profits of the oil, steel, and auto industries. In part, the founding of these philanthropic institutions was a public relations strategy. John D. Rockefeller and Andrew Carnegie, still the first and second wealthiest men in history, had both been targeted by the press after turning armed strikebreakers on their employees. Henry Ford, the seventh richest, at first was hailed as a new kind of industrialist, deriving his profits from technical and sociological innovation rather than from naked power grabs. But after his men opened fire on a march of laid-off workers at River Rouge in 1932, killing five and seriously injuring nineteen, Ford, too, found himself the object of public scorn. (The “despot of Dearborn” is what Edmund Wilson called him, and that same year Aldous Huxley envisioned a dystopian society run on Fordist principles in Brave New World). Four years later, Ford established his own foundation, to which he and his son, Edsel, bequeathed 90 percent of the Ford Motor Company’s stock. After Ford’s death in 1947, nearly all of the profits of his firm, one of the world’s largest, went to the Ford Foundation. The result was a form of public expenditure for which there was no public oversight.
The money itself, though substantial, never threatened to surpass the size of the federal budget. What was important was how it was spent. The trustees of the large foundations comprised a cozy group of men—well-heeled, white, and Protestant—who were raised in the same milieu, attended the same colleges (over half graduated from Harvard, Princeton, or Yale), and belonged to the same social clubs. Such men could not help but share a worldview, and for most of 20th century there was no one in the room to argue the other side. Internally united and externally unimpeded, they acted with a speed and resolve that was impossible for elected politicians. While government officials mired themselves in political debates, foundation leaders acted: they commissioned research, trained students, launched pilot projects, cultivated allies among foreign governments, and built networks of experts. By the time the government overcame its inertia on an issue, it found a smooth and well-marked trail stretching ahead through the wilderness.
It is easy to overlook this quiet trailblazing because the big foundations rarely pushed extreme agendas, at least not at home. Unlike the think tanks of today, the Ford, Carnegie, and Rockefeller foundations were, and continue to be, studiously nonpartisan. They sought above all technocratic order: a strong federal government, a class of experts ready to guide it, and a docile public eager to follow. Abroad, they combined their faith in the rule of experts with the belief that the ideas and institutions best suited to the poorer countries of the world were those of the United States.
At their best, the foundations ushered the nation and the world along toward a more progressive state of affairs. In 1935, the Carnegie Corporation initiated a massive social scientific survey of African-American life in the United States. Afraid that a scholar from either the North or the South would bring too many prejudices to the study, Carnegie hired a Swedish economist, Gunnar Myrdal. It turned out to be an inspired choice. Myrdal was a born politician (he had been a member of the Swedish Parliament) and was able to glad-hand nearly every social scientist concerned with race in the United States, black and white, into producing research or advice for what became a commanding 1,483-page tome, An American Dilemma (1944). More than any other work of the time, Myrdal’s work cemented the view of racial liberals that the treatment of blacks in the United States was, as he wrote, “nothing more and nothing less than a century-long lag of public morals.” The book’s findings were not new, but the resources Carnegie invested in their production endowed them with an air of authority, and they served to center the national debate about race for decades to come. Ten years after the publication of Myrdal’s study, the Supreme Court cited it in Brown v. Board of Education, and echoes of An American Dilemma could be heard in Martin Luther King, Jr.’s casting of racism as a question of morality—rather than class or empire—in his address to the March on Washington.
There is much to admire in the far-sighted liberalism that guided the best of midcentury foundation philanthropy. But, as Parmar shows, the deft sense of the public interest that guided Carnegie’s support of Myrdal faltered abroad, where the foundations’ mission of development and state-building was undermined by their commitment to maintaining U.S. hegemony. Parmar’s most disturbing revelation concerns the Ford Foundation’s work in Indonesia. In the 1960s, while Ford’s leaders were laying the groundwork for the War on Poverty in the United States and funding the development of Sesame Street, they were also bankrolling a network of social scientists and economists around the University of Indonesia who would, with Ford’s approval, participate in the campaign to oust Indonesia’s elected but left-leaning President Sukarno. Concerned that Sukarno was too accommodating of Communism, Ford’s experts came to the aid of his rival, General Suharto, who gradually took control of the government over the course of three years, starting in 1965. Suharto would go on to rule the country in a corrupt, autocratic manner for over three decades, but the greatest tragedy of his rule came in the period of his ascent, when his supporters slaughtered some half a million alleged communists.
Students at the University of Indonesia, Ford’s main recipient, played a leading role in the bloodshed and used the university’s campus as their base. Top Ford officials were aware of the massacre, but they reopened their Indonesia office (it had closed briefly during Sukarno’s presidency, in the face of Communist “agitation”) and sent more funds, even as many of their experts entered the ranks of the Suharto regime. In one exchange of letters, the foundation’s representative in Indonesia reported both the scale of the massacre and the role played by University of Indonesia students in it to Ford’s president, but celebrated the country’s “atmosphere of sustained holiday-spirit and exhilaration” and opined that Indonesia had never known such freedom. “I’m enjoying the trip. Hope all’s well in New York,” the representative signed off. Ford’s president at the time was McGeorge Bundy, who had come to the post directly after serving as National Security Adviser to Johnson and Kennedy and had been a chief architect of the Vietnam War. There is no evidence that he or any of the other officials at Ford were troubled by the reports from Indonesia.
Ford’s willingness to support dictators as long as they were anti-Communist was not unique to philanthropic foundations—it was a fault to which the entire US foreign policy apparatus was prone. But while the government supplied military assistance, the foundations built networks of experts, the “right” kind of experts who would work with the “right” kind of governments. The process began in the United States, with the provision of grants to scholars who would study the regions and topics in which the foundations took an interest. The need for this infrastructure was acute, as the United States, never having invested in training colonial officials, had achieved a position of global dominance without possessing experts in the places it now sought to control. Along with the State Department, the foundations channeled millions of dollars to US universities to establish area studies programs, with the understanding that such programs would generate men who could then advise or serve the US foreign policymaking establishment. Area studies was wide-ranging by design, encompassing language instruction, economic and political assessments of fledgling countries, ethnographic research, and graduate training. The particular endeavors that received funding, however, inevitably concerned the areas and topics that were of the greatest strategic importance to the United States.
Many observers have found something sinister about the marriage between private sector funders and academic research, but Parmar takes care to note that there is no evidence that foundations ever interfered directly with research. The relations between the foundations’ money and their political agenda were subtler than that. “It is merely the fact that a fund is within reach which permeates everything and alters everything,” British economist Harold Laski explained. “The foundations do not control simply because, in the direct and simple sense of the word, there is no need for them to do so. They have only to indicate the immediate direction of their minds for the whole university world to discover that it always meant to gravitate swiftly to that angle of the intellectual compass.”
When scholars moved outside of the circle of approved research, they found themselves cut off from the largesse that their colleagues enjoyed. Parmar relates the attempts of the eminent sociologist Robert Lynd, the first author of the influential Middletown studies of community life, to investigate democratic rather than elite-driven forms of popular mobilization. Though Lynd was as credentialed an academic as they come, foundation officials criticized his application ruthlessly, and both Carnegie and Rockefeller rejected it out of hand. The pattern was even clearer when it came to the creation of an area studies community specializing in Africa. Here the foundations spurned not an individual scholar, but a whole class of them: researchers at historically black colleges and universities. Although such institutions of higher education, especially Howard, had built up significant strength in the field of African studies, when the foundations eventually took an interest in Africa they bypassed both African American and African scholars—who they feared were too politically “prejudiced”—in favor of the mostly white programs at Columbia, Yale, Johns Hopkins, Chicago, and Northwestern.
At the same time that the foundations groomed area studies experts in the United States, they also funded foreign researchers. Here again, the emphasis was on selecting a certain kind of scholar: a “modern” thinker, deferential to US expertise, who would aid the development of a strong, anti-Communist state. If foundation money exerted a gravitational pull on scholars in the United States, it had a much stronger attraction for resource-strapped academics abroad. Foundations used grants to lure foreign scholars to the United States and to foundation centers overseas, where they would attend seminars in US culture and politics meant to engender sympathy for the United States and its projects. One such seminar at Harvard, funded by Ford and by the CIA, sought to establish what it called a “spiritual link between the younger generation of Europe and American values.” Rising European intellectuals were flown to Cambridge, Massachusetts for the summer, where they discussed the abstract and philosophical aspects of US democracy and freedom with Henry Kissinger, attended evening lectures by the leading neoconservative thinker James Burnham, and took in baseball games. The task of indoctrination was handled with a light touch. As one participant in a similar Ford-funded seminar put it, “Your propaganda is the best propaganda, because it is not propaganda at all.”
The large foundations also established pockets of sympathetic experts abroad by creating partnerships with universities in the developing world. Here again, money that might have slightly tilted the playing field in the United States had an overpowering effect in poorer nations. The full consequences of this policy could be seen in Chile, where Ford and Rockefeller, along with the US State Department, invested heavily in funding economists starting in the 1950s. Economics was a contested field in Chile due to the popularity of a strain of economic thought known as “dependency theory,” which asserted that the chief cause of Latin America’s underdevelopment was its exploitation by the United States and other prosperous nations. At their mildest, dependency theorists favored blocking the United States out of the region with tariff barriers; at their most extreme they favored Marxist revolution. In the hopes of crowding out dependency theorists, the major foundations began funding centrist and right-wing economists, many of whom pursued doctoral degrees at the University of Chicago, then as now a bastion of free-market thought. In Chile, they were known as the Chicago Boys.
The Chicago Boys’ moment came in 1973, when Augusto Pinochet overthrew the democratically elected president of Chile, Salvador Allende, in a right-wing military coup. Ford and Rockefeller–funded economists moved rapidly into the halls of government, taking up posts in the ministry of the economy and in the central bank. Attracted by the prospect of an authoritarian ruler who accepted their policies, faculty members of the University of Chicago, including free-market thinkers Milton Friedman and Friedrich von Hayek, sped to Santiago to aid their former students. Hayek was made honorary president of Chile’s Center for Public Studies and Friedman appeared on the government’s television channel to give a lecture on economics. Under the Chicago Boys’ guidance, Pinochet privatized public assets, opened up natural resources to unregulated private exploitation, removed trade barriers, made war on inflation, and dismantled the country’s social security system. The Chilean economy’s initial success under the new policies legitimized the general economic and political approach that within ten years would return to the United States, in the form of the Reagan revolution.
The Chicago Boys’ victory in Chile was, by one measure, a ringing vindication of the foundations’ methods. Some two decades of investment in building a friendly network of experts had paid off, and once the socialist Allende government fell, a cohesive, competent group of US-trained economists had been ready to take its place. But Pinochet’s coup triggered a crisis of conscience at Ford. The concern was neither the two thousand murdered nor the tens of thousands tortured by the new government. It was rather that in the course of its revolution, the Pinochet regime had expelled non-conservative economists from their posts. Many of those ousted economists had received foundation funding—they were insiders. Ford officials were deeply troubled by the sight of one half of the foundation’s network of experts committing fratricide against the other. It called into question some of their most sacred assumptions: that expertise was apolitical and that, with a little guidance, “reasonable” men would tend to see things the same way. Chastened, Ford gave money to institutions that would shelter the purged scholars—creating, to its credit, important spaces of refuge from which Chilean thinkers criticized the regime in relative safety and laid the groundwork for a post-Pinochet Chile.
The 1970s were a turning point. As the costs of doing business with men like Pinochet grew clearer, hopes of remaking the developing world by “modernizing” it gave way to a multiplicity of often contradictory campaigns for human rights, environmental sustainability, market freedoms, women’s rights, and poverty alleviation. But the large foundations quickly found their footing, and shifted smoothly from backing strong states to pursuing market access. Since the cold war, Parmar argues, U.S. foreign policy has been shaped by the theory that, since market democracies rarely make war with one another, national security can be best protected by advancing the frontiers of globalization. This theory was first advanced by Michael Doyle, who was funded at the time by the Ford Foundation, and has since been developed by the Princeton Project on National Security, a nonpartisan group of nearly four hundred scholars and opinion leaders bankrolled by Ford and Carnegie. Vice President Joe Biden has been closely connected to the Princeton Project, and the Obama Administration’s approach to global affairs appears, so far, to follow from the Princeton model.
As the global mission of the large foundations has shifted since the 1970s, so have other features of the nonprofit world. Boards of trustees have opened their ranks to women and to racial and religious minorities. The grip of the big three has loosened as other foundations have entered the field. Today there are some fifty thousand philanthropies operating in the United States, controlling assets of over $300 billion. European, Japanese, and Australian foundations have also sprouted up in the tens of thousands, creating an overlapping, often overwhelming global network of donors, board members, and experts. And while foundations still seek to change the world by shaping and producing knowledge about it, they have also taken advantage of new information and transportation technologies to reach past traditional experts, toward local entrepreneurs, village councils, neighborhood groups, women’s organizations, and community associations of all kinds.
But surface novelty can conceal deeper continuities. Although the number of US foundations has multiplied, the most powerful are still the ones that have been bankrolled by the richest donors. Many of those donors, such as Bill Gates, number among the richest people on the planet, and the world they seek to bring about is defined by their common values. Whereas the elites who ran Ford, Carnegie, and Rockefeller in the midcentury saw themselves as exemplars of scientific, state-centered modernity and designed their projects accordingly, the trustees of the new generation of foundations place a notable emphasis on “entrepreneurship”— the characteristic that defines the super-rich’s sense of themselves today. And so foundations seek to save the public school system with for-profit charter schools and to alleviate global poverty with microfinance loans, even though the benefits of such approaches have been elusive.
Last September, the most powerful direct challenge to domestic inequality in decades came not from the world of philanthropy but from a handful of unfunded activists living in tents in a park in Lower Manhattan. The Occupy Wall Street movement initially commanded surprising public support and appeared as if it might break through a political logjam on such crucial issues as financial regulation, tax equity, and campaign finance reform. And yet, as the occupations continued, some foundation employees—men and women who had spent their entire careers confronting the effects of inequality—found that they were unable to publicly endorse or participate in the movement, for the simple reason that the banks being targeted were among their donors.
Funding, to the degree that it has been offered, has tended to flow in the other direction. The NYPD is able to draw on funds not only from the city but also from the New York City Police Foundation, a nonprofit that purchases special equipment and supplies counterterrorism training to the police. Its board is a collection of heavyweights in real estate, advertising, finance, publishing, health care, and energy that includes both a former homeland security advisor to George W. Bush and Ivanka Trump. Among its top donors are Barclays, Goldman Sachs, and JPMorgan Chase, the last of which gave the New York City Police Foundation $4.6 million in money, patrol car laptops, and monitoring software just months before the protests began. “You have a police department that is beholden to a private entity and you end up with a situation where there is absolutely no oversight and no transparency about the funding of government operations,” the associate legal director of the New York Civil Liberties Union observed. Money, as Parmar argues, has its own trajectory.