Larry Kramer, president of the $13 billion William and Flora Hewlett Foundation since 2012, has announced that he will be stepping down at the end of the year to become president and vice chancellor of the London School of Economics. Hewlett’s heft as a grantmaker and Kramer’s personal prominence makes this big news in the philanthropic world. As Kramer’s tenure at Hewlett comes to an end, it is worth examining one of the more controversial programs initiated under his watch: the foundation’s grantmaking campaign against free-market capitalism.
Reimagining Capitalism
In short, Kramer believes that the free market has failed, and will continue to fail, to produce the economic, social, and political outcomes that he considers to be most desirable. He outlined his criticisms in a December 2022 article entitled “We Need to Talk About Capitalism,” though he went into greater depth in an earlier memo to the Hewlett Foundation’s board of directors. To Kramer, the dominance of “neoliberalism” as championed by Milton Friedman and his many intellectual followers has produced such levels of income and wealth inequality—which in turn has led to a variety of negative societal externalities—that it must be replaced with a new economic philosophy. “The upshot,” he wrote, “is that the 20th-century free market paradigm has reached the end of its useful shelf life.”
The role of the Hewlett Foundation, as envisioned by Kramer, is to fund the intellectual development of such an alternative system. A comprehensive 2020 grantmaking strategy for the foundation’s Economy and Society program spells out the details, but it succinctly defines the overarching goal as being “to develop a new ‘common sense’ about how the economy works, the goals it should promote, and how it should be structured to serve those goals.” Income and wealth inequality are perhaps Hewlett’s biggest concerns with the current economy, though climate change and racism also feature prominently. The explicit presumption underlying the program—through which Hewlett paid out $34 million in 2022—is that free-market capitalism “has outlived whatever usefulness it might once have had” and today “causes more problems than it solves.” The Hewlett Foundation simply believes that capitalism offers “no credible solutions for society’s biggest challenges.”
These are perplexing and rather astonishing statements in an era of literally unprecedented global prosperity, and they caught the attention of the Wall Street Journal. The paper’s editorial board quite rightly pointed out that the truth was precisely the opposite. Noting that this burgeoning campaign against the free market was being bankrolled by private philanthropy, the Journal also cautioned today’s successful capitalists against allowing their charitable legacies to be co-opted by “knowledge-class progressives” to finance “the destruction of the system that made business success and wealth creation possible.”
Indeed, a great irony that was not lost on the Journal was that the Hewlett Foundation owes its very existence to the nurturing business environment fostered by capitalism. The foundation was established from the personal wealth of Hewlett-Packard co-founder William Hewlett and his wife Flora, and billions of dollars from its endowment are currently invested in public and private equity, including in the stock of some of the world’s most powerful corporations. Hewlett’s website proudly displays graphics demonstrating how its investments have consistently outperformed the applicable benchmark, allowing its assets to grow enormously over the past decade even while distributing hundreds of millions of dollars in grants annually.
This may explain why the Hewlett Foundation paid four of its on-staff investment officers more than $2 million each in 2021, including a whopping $5.1 million to its chief investment officer Ana Marshall. That is all well and good—this presumably reflects the market rate for elite investment professionals—except that Hewlett attacks the market for fostering “grotesque wealth inequality.” Kramer himself was paid $927,156 by the foundation that year, yet has written of how wealth inequality has become “one of the major causes, if not the major cause, of rising political and social tensions.”
An honest question: Does Kramer see himself as personally contributing to the tension that he believes compels a top-down transformation of the United States’ entire economic system by collecting a top 1 percent salary from a philanthropic foundation that is only capable of paying out such levels of compensation because of the economy-wide prosperity generated by the very system he wishes to replace? If not, why?
Perhaps he would respond by pointing to the $500+ million in grants made by the Hewlett Foundation in 2021—a vast sum that was presumably directed at supporting what the foundation’s leadership believed would do the most good. That is, of course, the purpose of philanthropy. Accordingly, to understand what Kramer and the Hewlett Foundation envision as the ideal economic framework to supplant free-market capitalism, it makes sense to examine the positions and policy proposals of those grantees that Hewlett has funded through its Economy and Society program. What are the actual ideas being developed and promoted with Hewlett’s support? Do the foundation’s grantees want to tweak American capitalism or tear it apart root and branch?
The Wall Street Journal focused on Hewlett’s higher education grantees, which is sensible given the amount of money involved. In early 2022, the foundation announced tens of millions of dollars in grants to prestigious universities so that they may begin the work of “reimagining capitalism” into a “better approach to political economy” based on “a new set of economic values.” Massive grants ranging from $7.5 million to $10 million were made to fund new academic centers at Columbia University, Howard University, Johns Hopkins University, Harvard University, the Massachusetts Institute of Technology, and the University of California, Berkeley.
These centers have only just begun to get underway—the one at Berkeley was announced a few months ago—and the grants are for five-year terms, so it may be some time before any coherent picture of what they are developing becomes clear. It is also true that the ivory tower can be notoriously long on theory and short on practicality. Fortunately for those who seek concrete clues as to the specific direction Hewlett would prefer American economic policy to turn, the foundation also funds many activist nonprofits that make their proposals crystal clear.
Reinforcing Socialism
What follows are some examples of groups that have recently received funding though the Hewlett Foundation’s Economy and Society program, indicating that the foundation finds their socioeconomic ideology and/or policy stances compelling. Some grantees have received funding under other Hewlett programs, too. The figures provided reflect the total amounts the foundation reported giving to them over the applicable period.
Action Center on Race and the Economy Institute ($1,675,000 since 2020). The 501(c)(3) affiliate of a similarly named left-wing activist group, it seeks to provide “anti-corporate analysis with an explicitly racial lens.” One of its campaigns to “Cancel Wall Street” demands that the U.S. Federal Reserve offer zero-cost loans to state and local governments, with the goal of completely eliminating the private municipal bond market. A large share of municipal bonds are held by ordinary American households directly or through funds. The word “inflation” is not mentioned anywhere in the campaign’s 22-page report despite it appearing to be a likely consequence—there is only a vague reference to the need for (high) borrowing limits—and an automatic tax-the-rich clause in the lending agreement is briefly suggested as a backstop against cities failing to make payments.
Center for Popular Democracy ($5,858,527 since 2019). A strong supporter of the Green New Deal, the center’s core values include guaranteed income for everyone and guaranteed jobs for “everyone who wants to work.” It also advocates for government-provided social housing that is permanently excluded from the private market, government-provided health care, and a wide variety of other left-wing policy proposals—including to totally “dismantle” the criminal justice system.
Community Change ($1,336,000 since 2021). Community Change defines its ideal alternative to free-market capitalism as “one in which ordinary people can see themselves and exercise democratic ownership” and in which governmental power is used to “dramatically” redistribute wealth and hamstring corporations. The group supports government-guaranteed income paid to everyone (including illegal immigrants) “regardless of their formal work status,” and it believes this should be provided “alongside other material benefits like housing, child care, and health care.”
Demos ($1,175,000 since 2019). Another prominent supporter of the Green New Deal, Demos promotes a new system of “economic democracy” that would “dismantle corporate concentration, racial capitalism, and white supremacy by shifting power to Black and brown communities.” It wants the public sector to directly provide a wide array of goods and services including banking and credit, energy utilities, health care and childcare, and higher education—all while guaranteeing a job to anyone who wants one. To Demos, economic democracy means that “people and public agencies . . . collectively make decisions about the economy,” and it supports a federal homes guarantee that prioritizes social housing alongside national rent control. Demos attacks major American tech companies such as Amazon, Apple, Google, Meta, and Microsoft for presenting “novel threats” that are “deeply dangerous” and believes at least some of them should be forcibly broken up. As of 2021, the Hewlett Foundation had over $100 million directly invested in the stock of those five corporations.
Economic Security Project ($3,940,000 since 2019). A former Hopewell Fund project that later spun off to become an independent 501(c)(3), the Economic Security Project promotes a government-guaranteed income program in the form of direct cash entitlement payments “with no strings attached and no work requirements.” Of the money from Hewlett, $1.5 million was earmarked for the project’s “Anti-Austerity War Room,” where it would fund efforts “shape the narrative in Washington and counter calls for spending cuts and debt reduction.”
Open Markets Institute ($750,000 since 2019). A nonprofit that spun off from New America in 2017, its work is largely directed at criticizing the power and influence of large corporations. In 2021, the group’s senior legal analyst wrote an article for the journal Democracy, wherein he argued that corporations should be required to obtain a charter from the federal government. The charter could be used to restrict the size and structure of companies, limit the industries in which they are permitted to operate, or mandate a specific racial/ethnic composition for their boards of directors.
New Economics Foundation ($450,000 since 2021). This United Kingdom–based group wants government to tax and redistribute enough of the country’s wealth that it can provide guaranteed income, social housing, energy, and a variety of other “universal basic services,” all while having people work fewer hours. The group produced and housed the Happy Planet Index until 2019, which purports to measure “how well nations are doing at achieving long, happy, sustainable lives.” During the time it was housed at the foundation, the index ranked Mexico (2nd), Nicaragua (7th), Venezuela (29th), Haiti (57th), Iraq (67th), China (72nd), Iran (84th), Yemen (94th), and Zimbabwe (99th) above the United States (108th).
PolicyLink ($11,125,549 since 2018). Over $1.8 million of this went to a project called Liberation Ventures, which is a funding network working to advance proposals to pay reparations to Black Americans. Another $1.525 million was earmarked for the Liberation in a Generation project, which accuses the United States of operating a racist “oppression economy” in which “white elites and their institutions use racism to steal from, exploit, and exclude people of color from wealth and power.”
It argues instead for what it calls a “liberation economy,” in which the federal government guarantees income for everyone and employment for those who want to work, replaces all private health insurance with a public system, directly subsidizes rent, abolishes tuition at public universities, cancels all student loan debt, and makes direct cash payments into trust funds for children based (inversely) on their family income.
Along the way, it wants to abolish U.S. Immigration and Customs Enforcement and all immigration detention facilities, end cash bail, allow currently imprisoned felons to vote, and levy an assortment of new and presumably high taxes on individuals and corporations.
PowerSwitch Action ($600,000 since 2021). This far-left anti-corporate activist group considers the entire American economy to be an extractive system “of misogyny and white supremacy.” It favors a system of central planning in which “the rules for how goods are produced, services delivered, and wealth produced are governed democratically” and where land is “commonly-owned,” with housing being provided as a government-guaranteed right.
RadicalxChange ($150,000 since 2019). The economic and political theories of this group include the concept of “plural property”—touted as being superior to both capitalism and communism—under which “assets belong to no one and everyone,” but are instead taxed at the current possessor’s self-assessed value and must be sold if someone else bids more than that value.
Roosevelt Institute ($7,899,000 since 2020). A prominent left-of-center think tank, the Roosevelt Institute’s mission statement closely resembles the economic perspectives articulated by Larry Kramer and the Hewlett Foundation. It has published a series of reports promoting a new American industrial policy in which government “should directly shape markets to better serve Americans” and directly provide “essential goods and services—from higher education to health care.” A framework for a government policy of “marketcrafting” as a replacement for the “failure” of neoliberalism, co-authored by Facebook (now Meta) co-founder Chris Hughes, broadly summarizes the idea as an “approach that seeks to achieve optimal outcomes through the proactive and purposeful use of the power of the state”—where government actively manipulates the market (through laws/regulations and direct economic participation) to further specific public policy goals.
The Role of Philanthropy
Further examples could be added, but these are sufficient to demonstrate a clear theme in Hewlett’s grantmaking. Despite Larry Kramer’s insistence that “we must reject the notion that our only choice is between neoliberalism and socialism,” the foundation he leads has been funding a slate of grantees that favor some awfully socialist-sounding ideas for how best to “reimagine” capitalism. Almost quintessentially so.
Hewlett might well object to that characterization—it describes itself as a “neutral player” that doesn’t necessarily support the specifics of what its grantees advocate for and it has also funded a few right-leaning groups that hold a similarly dim view of the free market—but money speaks for itself in both philanthropy and politics. It is simply impossible for Hewlett to fund “ideas” and an “intellectual framework” for replacing neoliberalism while also claiming to remain neutral on the specific policy proposals developed and promoted by its grantees toward those ends. The two are functionally inseparable.
Would all of Hewlett’s Economy and Society program grantees agree with Kramer that “no one” is opposed to leaving American industry and trade primarily in private hands? How many of Hewlett’s grantees would object to the foundation’s endowment being parked in some of the most thoroughly capitalist investments imaginable—assuming they were not the direct beneficiaries of those investments? For that matter, under the statist and vigorously anti-corporate economic system clearly envisioned by many of its grantees, would it even be possible for an institution like the Hewlett Foundation to exist?
The free market creates wealth, wealth endows philanthropy, and philanthropy is supposed to do good in the world. It certainly has tremendous resources at its disposal with which to do so.
A final question: If a thousand different Americans were asked how a hypothetical donor could spend $100 million (the amount multiple sources say Hewlett has committed to its project) to do the most good, how many would respond that the money would be best used to fund new intellectual theories and policy proposals for an economic paradigm to replace free-market capitalism at nonprofits and universities that already have millions-to-billions of dollars at their disposal? Is that even the right question to ask in the world of Big Philanthropy? Should it be?
