The first revolutionary act is to call things by their true names.
—ROSA LUXEMBURG
The economic-owning class is always the political ruling class.
—EUGENE V. DEBS
In the realm of political economy, societal and state domination, powerful classes and the organizations they control have the most to hide about their great power and how the world actually works. In contrast, the emancipatory potential of social science resides in its honesty and truth-telling, in illustrating how such power actually operates for the benefit of the few and to the detriment of the vast majority of the people. This is its subversive effect, its resistance function. In the case of the Council on Foreign Relations, understanding the truth involves above all comprehending that this organization is run by and for a plutocracy, the capitalist class of the United States of America.
The United States is first and foremost a class society, a key fact often left out in educational, political, and media discussions about the country. Classes are socioeconomic and power groupings of people that have common relationships with one another and different relationships with other classes. In a capitalist-class society, wealth and income are key aspects of life: having or not having a well-paying, secure job and ownership or non-ownership of capital largely determine one’s socioeconomic class. Access to capital and jobs has a huge influence on the daily existence and life chances of people in every societal group. From the time an individual is born, access or lack of access to wealth, capital, property, and employment affects family life, where he or she lives, with what possessions, and in what conditions. It influences the individual’s educational opportunities and health including access to doctors, securing healthy food, and limiting exposure to hazards such as crime and pollution. The United States is a particular type of class society, a racialized one, where some groups are stigmatized as inferior because of their race, a belief spreading to all segments of society. Once this oppressive idea becomes widespread, the resulting divisions within the working class can be used by the rulers to divide and conquer, preventing unity among the workers. People with a darker skin color than Europeans are frequent victims of this discrimination. Gender is another point of division fostered by those with capital; women are routinely paid significantly less for the same work, for example, and are discriminated against in other ways, assuring that there is no equality in the workplace, and most women are, like people of color, kept in the lower ranks of workers generally. In this system, class realities are largely downplayed or completely avoided in public discourse, and racial and gender issues are highlighted. The capitalist class always wants to highlight differences and divisions within the underlying population. In this racialized and gendered class system, class, race, and gender are all central to people’s lived experience.
The two great major classes in today’s United States are a numerically small capitalist class and a very much larger working class. The capitalist class is characterized by ownership of large amounts of wealth, much of which is capital, obtained mainly through investment in and control of the corporations that organize production, distribution, and the financing of the economy. The working class lacks such ownership and needs to enter the labor market to secure employment. Since they are without significant capital, the worker must sell to others his or her ability to labor, usually to the capitalists, in order to survive on the resulting wages. This inequality of ownership does three things. It allows the capitalist to exploit the individual worker—profits are extracted from the laborer’s efforts. It confers tremendous economic and political power upon the capitalist. And it generates overt and covert conflicts over wages, hours, working conditions, and sometimes the system itself. This conflict must of necessity take a collective form, which is class struggle. With these facts in mind, class can be summed up as a relationship of exploitation, dispossession, oppression, and conflict between owners and workers, while each class has a potential relationship of internal solidarity.
Although the capitalist-worker class relation is central in any capitalist society, there is another group, well-educated professionals, that is also important. This group, which stands between the two key classes, is usually and inaccurately called the “middle class,” but will be called here the “professional class.” These professionals, with their education, intellect, and skills, are very important to capitalists and they are often appropriately rewarded. Some of them even profit enough from their work and connections to gradually, step by step, rise to fill capitalist occupations and become capitalists themselves. Many others aspire to this status, subordinating themselves to the capitalist class, both as a technique of survival and in hope of gaining a measure of power and status with greater rewards.
The capitalist class of the United States is defined here as people and families with financial or productive assets of at least $10 million, or a position as a top officer or director of a Fortune 500 corporation, or as a principal of a major law firm. Such corporate and legal positions are very well paid, making it possible to rapidly accumulate assets and, if not already wealthy, join the capitalist class in a relatively short time. This group is a very small percentage of the U.S. population. Official wealth statistics show that the top 1 percent of U.S. households had an average wealth of $19 million in 2007, dropping to $14 million in 2009. In contrast, 37.1 percent of U.S. households had a net worth of less than $12,000, and 24.8 percent had a zero or negative net worth.36
At the $10 million level, or as a top corporate executive or law firm partner, an individual member of the capitalist class does not ever have to enter the labor market, hat in hand, to seek a job. If employed—an option, not a requirement for much of the capitalist class—he or she often works for the family corporation, or, through ownership and connections, gets a comfortable and well-paid corporate position. Some top capitalist-class institutions also use the $10 million figure as a cutoff point. The Private Wealth Management unit of the JPMorgan Chase Bank, for example, has decided not to include clients with less than $10 million in financial assets, since their coverage model, using an integrated team of specialist advisers to meet the client’s investing, wealth transfer, credit, and philanthropic needs, is most profitable when limited to only high-net-worth individuals and families.37
Viewing the percentage of wealth (total net worth) owned and controlled by key groups is also instructive. In 2010 the top 1 percent owned about 35 percent of total U.S. wealth. The next 4 percent had 28 percent, and the 15 percent after that owned 26 percent. The top 5 percent thus had 63 percent, and the top 20 percent had 89 percent of total U.S. wealth. The top about 20 percent together make up the capitalist class and the professional class, with the dividing line difficult to determine as some individuals from the professional class are rising into the ranks of the capitalists. The bottom 80 percent of the population, approximately corresponding to the working class, owned only 11 percent of the wealth. Financial wealth is even more concentrated.38
The World Wealth Report by Capgemini and Merrill Lynch Wealth Management has recently estimated the wealth of the world capitalist class. In 2010, the wealth of the world’s eleven million super-rich individuals stood at $43 trillion, or 70 percent of global gross domestic product.39 The U.S. capitalist class held more of that wealth than any other national capitalist class. The 2011 Capgemini/Merrill Lynch World Wealth Report found that North America (United States and Canada) had 3.4 million high-net-worth individuals worth a total of $11.6 trillion. Forty thousand ultra-high-net-worth individuals, over half of them living in a few large cities, held the bulk of this wealth. The Asia-Pacific and European regions were second and third with $10.8 and $10.2 trillion held by high-net-worth individuals respectively. These three world regions, and especially the top nations and key cities within them, held the vast majority of the world’s wealth. Among U.S. cities, New York, the headquarters of both finance capital (Wall Street) and the CFR, had by far the largest number of super-rich (roughly three times as many as second-place Los Angeles), with San Francisco, Chicago, Washington, D.C., Houston, and Dallas rounding out the top seven.40 Although London is also important, New York is the top command center of the world economy, controlling a large percentage of the world’s finances. It was ranked number one in 2012 and 2014 articles on the world’s most economically powerful cities, with London in second place.41
The capitalist class of the United States is by far the most organized, class-conscious, and powerful segment of society. It has, in fact, more power than any ruling class in world history. It has its own expensive private schools for its children, such as college “prep” schools at the high school level, as well as the eastern “Ivy League” private universities, like Harvard, Yale, Princeton, and Columbia, and elite outposts around the nation like Stanford and the University of Chicago. It has its own luxurious “high society” culture and lifestyle. Families in this class tend to intermarry, strengthening their connections and economic and political power. They are also usually open to allowing well-educated members of the professional class to enter their ranks, as long as these newcomers want to be of service to the capitalist class and are willing to adhere to the cultural, social, and political norms of their betters. The CFR is one place where such ambitious outsiders meet and form alliances with members of the capitalist class. Just one example illustrates the possibilities: William Jefferson Clinton was not born into a capitalist-class family, but he was intelligent and ambitious, worked to become a professional by gaining a college education, and was awarded a Rhodes Scholarship in England. He ran for political office and was, with the help of capitalist-class member Madeleine K. Albright, able to become a member of the Council in the 1980s. The contacts he made at the CFR helped him get the favorable media attention, funding, and top advisers to validate his candidacy and successfully become president. He brought many fellow Council members into leading positions in his administration, and implemented a raft of pro-capitalist CFR policies. Once out of office, lucrative speaking engagements and book deals made him wealthy, a member of the capitalist class himself, with his own foundation. One estimate is that by 2014 he had $80 million in personal assets, another estimate puts the total at $38 million.42 He was also able to bring his daughter Chelsea into the CFR, allowing her to expand her network to the rich, well-educated, and powerful people that she will meet at the Council. This is a common pattern: CFR members often bring relatives into the organization to promote individual and family agendas.
In the United States the capitalist class is numerically a large group, amounting to tens of thousands of extended families. These families usually maintain close ties with one another because their wealth is tied up in corporations with shared ownership and control, and inheritance generally depends upon blood relationships. Within wealthy circles, the age of the fortune is one key source of internal differentiation. Members of the old plutocracy, dominant in the CFR’s early history, are usually included in the Social Register, a book that lists and promotes social relationship among the “prominent” families (that is, those wealthy for a long time) of the United States. These old plutocratic families have also, whatever the original source of their wealth, usually diversified it, especially into finance but also into other sectors of the economy. They are also more transnational: they and their corporations have invested significant amounts overseas. Newer wealth is usually more concentrated in one industry, such as manufacturing or trade. Newer wealth also tends to be more locally and nationally based. The capitalist class also supports both the Democratic and Republican parties, with the newer, more localized rich more strongly supporting Republicans and the financialized old rich more balanced in their support for both “moderate” Democrats and “moderate” Republicans. But all sectors of the U.S. capitalist class organize their economic power through the corporate system, which they control, as families and as a class. If the modern corporation is one of the key locations in which the power of the capitalist class is institutionally crystallized, another central place of capitalist-class power is the Council on Foreign Relations and its larger network of associated organizations. The activities of the CFR are one important way that this class organizes itself, develops a generalized unity, and projects itself and its special class interests (portrayed by the Council, of course, as the general interest) upon the national and world stage. The CFR’s key role is to move the capitalist class from being a class in itself (the owners of the corporate-dominated economic system) to a class for itself (with consciousness, agency, and heightened power).
This chapter discusses the capitalist-class representation in the CFR during the 1976–2014 years. Since the Council has both individual and corporate membership categories, both individuals and corporate members are included. Professionals also appear, as they are important to the intellectual functioning of the Council, but it must be kept in mind that they are primarily present in an advisory role. Although many professionals may be on their way up the power and wealth ladder into the capitalist class, all final decisions are still reserved for their capitalist masters.
When examining the CFR leadership as a group, their close relationship to the federal government is striking. Many CFR leaders are “in-and-outers.” These individuals often have a primary career, typically in finance, business, law, politics, or academic life, but are appointed to high political office by a given U.S. president, serve a few years, then return to “private enterprise,” sometimes including nonprofit work. These individuals often are a kind of access entrepreneur, who use connections acquired in government service to afterward do business or advance professionally. They may also maintain influence with their former colleagues in government, especially the ones who are also members of the Council. As we shall see in this and future chapters, this is an important pattern both for the CFR’s top leadership and for the Council as an organization.
The Council on Foreign Relations is a corporation, and is organized in a top-down corporate fashion with a chairperson as the final decision maker, aided by the president and board of directors. The board of directors approve all new members and selects all of the top leaders. There is a pro-forma process set up for the membership to “elect” the board, but even the membership does not take the process very seriously, as almost all board members are chosen as a listed slate that the members vote for, so up to two-thirds of the members typically do not vote.
Between 1970 and 2007 there were only two chairs—David Rockefeller and Peter G. Peterson—and from 2007 to 2014 two co-chairs, Robert E. Rubin and Carla A. Hills. At the same time there have been seven vice chairs who served longer than one year: Rubin, Hills, Cyrus R. Vance, Douglas Dillon, Warren Christopher, Maurice R. Greenberg, Richard E. Salomon, and David M. Rubenstein. Through a discussion of these ten individuals, a detailed collective biography of the organization’s top leadership can be developed. Vast personal and family wealth, finance capital careers, top corporate connections, and cabinet-level government service are their main characteristics, and they exemplify the Council’s deep capitalist-class connections.
David Rockefeller was born in 1915 into what is likely the richest family in human history (the European Rothschilds being their main rival for this title). His grandfather, John D. Rockefeller, at one time held an estimated inflation-adjusted equivalent of a hundred billion dollars or more in today’s values, far outdistancing even the richest individuals of our era. David grew up in the largest private home in New York City, surrounded by an army of working-class employees: butlers, valets, drivers, gardeners, nurses, cooks, and chambermaids. He also spent significant time in coastal Maine and the Hudson River Valley, where his family had enormous houses and estates. He was educated at Harvard and earned a Ph.D. at the Rockefeller-founded and funded University of Chicago. He is now, in 2014, the last Rockefeller of his generation, the grandchildren of John D. Rockefeller Sr.
As a man who has epitomized the Establishment, David Rockefeller is, fittingly, also one of the two most important leaders of the CFR during the 1976–2014 years. As this is written in 2014, David Rockefeller is revered as the still living legend linking the Council’s past with its present. It is difficult to exaggerate his importance in several areas, including as the CFR’s all-time leading financial contributor. Though exact amounts are not available, consider that during every single year since 1976, he was always ranked in the top group of contributors in the CFR’s Annual Report listings, and that he often gave special gifts, such as one for “$25 million and above” in 2007.43 This last contribution led to the renaming of the CFR’s study program as the “David Rockefeller Studies Program.”44 The 2007 Annual Report called Rockefeller “a guiding force in the Council for over half a century.” He first became a member in 1941, served as a board member from 1949 to 1985, and was Chairman from 1970 to 1985. Although he is now almost 100 years old, he remains, in 2014, the CFR’s Honorary Chairman.
At the beginning of the new century, David completed a full-length book on his life and times with a one-word title: Memoirs. Although he lists by name no less than ninety-five individuals—writers, researchers, archivists, and commentators—including twenty-five members of his “immediate staff,” who helped him research and write the book, it nevertheless appears to accurately reflect his thinking, his philosophy, and cultural preferences. As could be expected, a close reading of Memoirs reveals a person with a strong sense of class and personal entitlement, illustrated by Rockefeller’s recounting of his and his wife’s attempt to limit their household spending just after the Second World War, a time when they acquired “three rather large houses” in only one year. As he put it: “This presented a serious financial challenge since I had no capital of my own and was dependent on the income from the trust that Father had established for me in 1934, which in 1946 amounted to slightly more than $1 million before taxes.” “Making ends meet,” as this section of the book is titled, on that level of trust income was difficult, Rockefeller states, because taxes were quite high and they gave $153,000 to charity that year, leaving them with “less than $150,000 in discretionary income.” Since they wanted the furniture they purchased to be of “good quality,” they had a problem, solved by finding a dealer who “helped us buy many fine pieces of eighteenth-century English furniture at prices we could afford.” He was happy that his homes had “style and elegance” on an income level that was, in his opinion, “clearly modest.”45 Census data point out, however, that the average income of non-farm U.S. families was about $3,000 in 1946.
David points out he learned the neoliberal “free market” economic philosophy at an early date. The conservative Austrian economist Friedrich von Hayek tutored him at the London School of Economics in the late 1930s. He later recounted: “I found myself largely in agreement with [von Hayek’s] basic economic philosophy.”46 This belief in the efficacy of the “invisible hand of the market” was later reinforced during his graduate work at the University of Chicago.47
Rockefeller often stresses his and the larger family tradition of “noblesse oblige,” or “philanthropy,” but this giving was tainted by the causes to which he donated to and the ruling-class aims of undercutting both the need for state intervention and people’s movements for fundamental change, promoting reformist “solutions” instead. Another purpose was to improve the “public image” of the Rockefellers and their institutions like the Chase Manhattan Bank: “The manner in which an institution gives expression to its relationship with the community has an important bearing on its public image. I was eager to have Chase perceived as a modern, progressive, and open institution. To forge a new ‘image’ . . . I wanted to transform our uncoordinated corporate charitable giving into a broad-based and carefully conceived program.”48
Memoirs also starkly reveals the culture of illegality, corruption, and extreme commodification that pervades the higher circles of U.S. society. There is a sense that money rules and can buy everything and everybody, and that the rich are above the law. For over a decade, 1969–80, David Rockefeller was the Chairman and CEO of Chase Manhattan, the Rockefeller family bank. David Brooks, a “moderate” Republican columnist of the New York Times, stated that Rockefeller, “the leading corporate statesman of his day . . . spent much of his career at Chase doing business with tyrants. . . . Rockefeller was soiled by his close embraces with these thugs.”49 One illuminating example of the practices of the Chase Manhattan Bank and the larger corporate ruling class comes from this period. When Nixon and National Security Adviser Henry A. Kissinger were establishing U.S. ties to China in 1971–2, Rockefeller was very interested in gaining a top position for Chase Manhattan Bank there as a key part of expanding the bank’s presence in Asia. As Rockefeller recounted in Memoirs:
I asked Henry Kissinger for advice on the best way to get permission to enter China. He told me to contact Ambassador Huang Hua, the PRC’s permanent representative to the United Nations and the senior Chinese diplomat stationed in the United States. . . . It took more than a year to arrange an invitation. Henry’s support was certainly crucial, but astute marketing by one of the bank’s officers also contributed significantly to my success. . . . Leo Pierre . . . filled a suitcase with $50,000 in cash and spent all day in the lobby of the Roosevelt Hotel waiting for the Chinese delegation to arrive. When they finally turned up, he presented himself to the Ambassador, explained his purpose for being there, and handed over the suitcase, politely refusing even to accept a receipt for the instant loan. Huang was impressed by Leo’s gesture, and soon afterward the Chinese mission opened an account with Chase.50
Rockefeller then went on to point out how this initial contact led to his trips to China and eventually a correspondent bank relationship with the Bank of China. He clearly encouraged and approved of bribery of foreign officials to successfully gain favor, despite the law and the supposed “moral code” of the Rockefeller family. This illustrates a current fact about the United States, namely that the top economic and political leadership consider themselves to be, and often are, above the law.
Rockefeller also recounts in Memoirs his long behind-the-scenes role as a semiofficial representative of the United States and its capitalist class, acting as a “diplomatic go-between” in China and the Middle East, especially while chairman of both the Chase Bank and the Council on Foreign Relations. Prior to one of his many trips to China, he met with President Jimmy Carter, Secretary of State Cyrus Vance, and National Security Adviser Zbigniew Brzezinski and carried messages from them to the Chinese leadership.51 Rockefeller also used the Council as a means to promote the interests of his Chase Manhattan Bank. In 1977 he was invited to visit China by the People’s Institute of Foreign Affairs
in my capacity as chairman of the Council on Foreign Relations, with whom they wanted to establish closer ties. I accepted the invitation with the understanding that I would also be able to discuss banking matters with Chinese officials. Nurturing the relationship between PIFA and the CFR was important to me, but I was more interested in prodding the Chinese to be a bit more imaginative about Chase’s operations.52
In the Middle East, where Chase had major interests due to “its close and longtime association with the major U.S. oil companies,” Rockefeller often met with many of the dictatorial and repressive rulers of the regimes there, including King Faisal of Saudi Arabia, Nasser and Sadat of Egypt, and Saddam Hussein of Iraq, giving and taking back messages to President Nixon and Secretary of State Kissinger.53 Rockefeller preferred this unofficial, behind-the-scenes role rather than entering the U.S. government in an official position. Both Nixon and Carter asked him to serve as treasury secretary, and Carter wanted to appoint him Federal Reserve board chairman, but Rockefeller declined all of these requests, although he did successfully recommend Paul Volcker for the latter job. Volcker had worked for Rockefeller and Chase as a vice president, as well as the New York Federal Reserve Board, and, of course, was a director of the CFR.54
Another topic discussed in Memoirs is the tensions within the ruling class between old and new money, between “self-made” (often with the help of the already rich) and inherited capitalist wealth. The latter group is often listed (as David and other Rockefellers are) in the Social Register. David recounts how John J. (Jack) McCloy, a key Wall Street lawyer for Millbank, Tweed, Hadley and McCloy, a law firm closely connected to the Rockefeller family and its interests for many decades, and who preceded Rockefeller as chairman of both Chase and the CFR, repeatedly told a story in public that, David wrote, “always made me feel uncomfortable.” Rockefeller said that McCloy told this story “in my presence a hundred times, the last time . . . when I succeeded him as chairman of the Council on Foreign Relations.” David felt that the story demonstrated “ambivalence . . . even latent hostility” toward Rockefeller and his family:
Jack was born, as he often recalled, on the “wrong side of the tracks” in Philadelphia. His father died when he was quite young, and it was only by dint of hard work and exceptional ability that he made his way through Amherst College and Harvard Law School, and on to a distinguished career. Despite his own great achievements, Jack seemed wary, perhaps even resentful, of what I appeared to represent in financial and social terms. . . . He had worked his way through college and law school in part by tutoring during the summer and had traveled to Maine in the summer of 1912, three years before I was born, hoping to get a job on Mount Desert Island. One of the families he decided to contact was mine. Jack always imparted the story at great length—walking the quarter mile from the main road up to the Eyrie, knocking on the massive door, and explaining to the butler why he was there, only to be turned away.55
As a professional who had risen through hard work into the capitalist class, McCloy obviously did harbor some resentment toward those, like David Rockefeller, who were born into vast inherited wealth, and therefore had their path through life made relatively easy and trouble free.
In 2012 David was at the center of a significant event in Rockefeller family history, the formalization of the long-standing informal cooperation between two of the wealthiest families in world history, the U.S.-based Rockefellers and the European-based Rothschild family. In May of 2012, the Rothschild Investment Trust, RIT Partners, announced that it would purchase a 37 percent stake in Rockefeller & Company, the Rockefeller family wealth advisory and asset management group, with $34 billion under management. Lord Jacob Rothschild joined the board of directors of the Rockefeller firm, on which David Rockefeller Jr. sits, and of which David Rockefeller Sr. is honorary chair. At the time of the Rothschild purchase, David Sr. stated: “Lord Rothschild and I have known each other for five decades. The connection between our two families remains very strong. I am delighted to welcome Jacob and RIT as shareholders.”56 The Rockefeller family also remains strong in the CFR; the Council’s 2013 Annual Report lists David and four other Rockefellers, joining his daughter Peggy Dulany as members of the organization.57
The second long-term chairman of the CFR was the “in and outer” Peter G. Peterson, who served even longer than David Rockefeller. Whereas Rockefeller is a third-generation billionaire, Peter G. Peterson did not inherit vast wealth; rather he served at the cabinet level in the federal government and engaged in various business enterprises, including especially the Blackstone Group, a private equity firm that he co-founded in 1985, eventually becoming a billionaire. Born in Nebraska in 1926, Peterson is the son of a Greek immigrant father who owned a small restaurant. After being expelled for cheating at MIT, he still attended and graduated from a top private university, Northwestern, near Chicago.58 He was then able to land corporate jobs and move up the ranks due to his intelligence, work ethic, and, of course, conformity to the needs and desires of the corporate capitalist class. One of those key needs is always growth, the endless accumulation of capital. Early in his career, Peterson worked his way to the top of Chicago’s Bell & Howell Corporation, saying in Forbes magazine that his company was “committed to growth.”59 His friendship with Charles Percy, the prior head of Bell & Howell, led to Peterson’s coming into closer contact with leading members of the Rockefeller family. One event was the 1967 wedding of John D. Rockefeller IV, currently U.S. senator from West Virginia, and Charles Percy’s daughter Sharon. Another contact was through the Bell & Howell and Chase Manhattan Bank relationship, whereby Peterson became friends with David Rockefeller. A little more than a year after the wedding, John D. Rockefeller III invited Peterson to Rockefeller family headquarters at Pocantico Hills in New York’s Hudson River Valley for a meeting that included John J. McCloy, then chair of both the CFR and the Chase Manhattan Bank, and C. Douglas Dillon, another CFR leader, a close friend of John D., and head of the investment banking firm of Dillon Read. Rockefeller wanted Peterson to organize and lead a major commission that would propose “reforms” to head off looming congressional restrictions on the foundations of the super-rich. Peterson stated in his memoirs that with this meeting he, a “Greek country boy,” knew that he had connected with the top tier of the “American establishment.” As Peterson expressed it:
But any look at American foundations necessarily involved the inner sanctums of what was then the American establishment. Indeed, Jack McCloy . . . was widely proclaimed by people in the know in corporate boardrooms, the business press, and the lush apartments on New York’s Park and Fifth Avenues to be the unofficial chairman of the Establishment, of this network of elite Northeasterners. Doug Dillon was certainly on its executive committee, as were the Rockefellers. This establishment had great entrée to the corridors of power and used their access and control with quiet discretion and great effectiveness. Their grip on America’s major philanthropic institutions was particularly strong. To call upon a forty-two-year-old Midwestern outsider indicated they saw a serious problem, one that required a set of fresh eyes from outside the Eastern establishment.60
Asserting his independence, Peterson declined to head the suggested Rockefeller-funded commission until he had had a chance to fully investigate the situation. After meetings in Washington with leading congressmen, he determined the situation was serious and required a different approach. He again traveled to New York for a meeting with Messrs. Rockefeller, McCloy, and Dillon, this time at Rockefeller Center. Peterson recounted what happened at this second meeting:
I told them I was deeply flattered by what they wanted me to do, but I felt the problem foundations face went far deeper than they might have imagined. A commission on foundation reform, supported by foundation money and foundation staff, would have no credibility. If I were to chair the body they envisioned, it would have to raise its own, non-foundation money, hire its own staff, and not include members from the foundation world. Total independence was a must. I saw John D. blanch as I spelled out these requirements. I don’t know if it shook him to hear how badly the foundations were viewed in Washington, or to hear me insist on an independent commission. He probably thought he had made a mistake to propose this brash young Midwesterner, that I was presumptuous to look his gift horse of a well-intended offer in the mouth. To that point, Jack McCloy had sat quietly. . . . Now he cleared his throat and spoke into the resulting silence. “John, I have to admit frankly I’m embarrassed,” he said thoughtfully. “I believe this young fellow is proposing the wise course. I should have thought of these concerns myself.” “Do you really think so, Jack?” John D. asked. “Yes, I certainly do.” Doug Dillon quickly weighed in with Jack McCloy, and John D. made it unanimous. We set about to name our organization: The Commission on Foundations and Private Philanthropy.61
Peterson’s contacts, his success in the foundations work and in other instances, together with his Republican politics (he was a leader of Illinois citizens for Eisenhower-Nixon, for example) later brought him to the attention of President Nixon. In 1971 Nixon tapped Peterson to head up the cabinet-level Council on International Economic Policy, with advisory responsibility to the president. Peterson soon became known as the “economic Kissinger.” Peterson’s natural focus was on foreign trade, monetary policy, and U.S. economic expansion abroad. In January 1972 Nixon appointed Peterson to be Secretary of Commerce. In that post, he supported the general free-market approach to political economy, including increased government support for multinationals, relaxing antitrust laws, tax cuts, financing for exports, and business-oriented government-financed research and development. In his early career, he was active in both the “conservative” Committee for Economic Development and the “liberal” Brookings Institution. Working as a leader in both organizations he made additional important friends and contacts. In 1971 he applied for and was accepted into membership in the CFR.
Peterson became close friends and a political partner with Henry Kissinger, but clashed with the far-right Republicans in the Nixon administration, resulting in his exit from Washington.62 When he left in 1973, he was brought into Lehman Brothers as vice chairman. Later the Wall Street firm became Lehman Brothers, Kuhn, Loeb, with Peterson as chair and CEO until the end of 1983. Two years later he was a co-founder, with fellow CFR member Steven A. Schwarzman, of the Blackstone Group, which soon became a prominent firm specializing in private equity, mergers and acquisitions, real estate, and investment (especially for pension funds). Blackstone also created a more liquid and speculative branch, a fund of hedge funds called Blackstone Alternative Asset Management. Peterson became a billionaire while serving as chairman of Blackstone. In 2007 alone, the year Blackstone went public, he was paid $1.85 billion. While at Blackstone, part of the largely unregulated but vast “shadow banking” system, Peterson also served as head of the New York Federal Reserve Bank from 2000 to 2004, as well as chair of the Council.
Over the years, Peterson developed very close ties to David Rockefeller and the Rockefeller family. He has served as a trustee or board member of at least three Rockefeller family–dominated organizations—the Japan Society, the Museum of Modern Art, and Rockefeller Center Properties, Inc. Consequently, Peterson has had only good things to say about the Rockefellers. John D. III was “dedicated to maintaining one of America’s premier legacies and converting family wealth to public good.”63 David was “a special person. . . . He seemed to have met every famous person in the world, and he spoke of global political and economic matters with great command.”64 In addition, Peterson said, “I have always been a so-called Rockefeller Republican, a rapidly vanishing species. I joke that there are only two of us left, David Rockefeller and myself.”65 In addition, “I was no longer young when David Rockefeller asked me to chair the Council in 1985. . . . That I, the son of Greek immigrants from a small, rural town in Nebraska, could follow David was a rare privilege.”66
For decades Peterson has been a strong advocate of reducing the federal budget deficit, even critiquing his own Republican Party for overspending, stating in 2004: “I remain a Republican, but the Republicans have become a far more theological, faith-based party, not troubling with evidence.” He is the founding chairman of the Peterson Institute for International Economics, the Concord Coalition, and the Peter G. Peterson Foundation, donating large sums to each organization. These bodies, especially the latter two, focus on fiscal sustainability issues, especially trying to set the stage for cuts to what Peterson and other elements of the capitalist class call “entitlements.” But these so-called entitlements are actually programs like Social Security and Medicare that rank-and-file workers have fully paid for with their taxes. The federal government has borrowed heavily from the Social Security trust fund, threatening the system by leaving only IOUs behind. Peterson and the organizations he has founded and funded are trying to kill these and other programs that help working people survive, drumming up hysteria about budget deficits as a means to try to accomplish this end. This hysteria also aims to lower taxes on corporations and the rich.
Born in 1938, Robert E. Rubin was born into a New York City Jewish household strongly influenced by the culture of law. His father and his mother’s father were lawyers, and Robert at first followed the same path. After a Harvard BA in economics and a year at the London School of Economics, he attended Yale Law School. Upon graduation, he joined a Wall Street law firm. Attracted more to a career in finance capital, he soon quit the law firm and was hired by the Goldman Sachs investment bank as a securities trader, starting a lifelong Wall Street career. Soon he was specializing in the arcane world of risk arbitrage, and he was very good at it. Risk arbitrage is a type of hedge fund trading, gambling on commodities, foreign exchange, and stock price movements, the latter focusing on “spreads” between the existing stock price of a company and an offer price, which requires assessing the varied risks in mergers, acquisitions, and liquidations by and between corporations. Rubin’s skill at risk arbitrage and the two dozen or so years he specialized in it led him to both great personal wealth and the top of Goldman Sachs by 1990, when he and Stephen Friedman, another CFR leader, became co-chairmen of Goldman Sachs. Along the way he applied for and was accepted as a member of the CFR in 1981.
It was while at Goldman Sachs that Rubin became a key player in the Democratic Party, illustrating that Council leaders are active in both of the two main U.S. political parties. He was part of candidate Walter Mondale’s “brain trust,” both as a fundraiser and as a strategist in 1984, and was also a major supporter of Michael Dukakis in 1988. Both of these Democratic presidential candidates were CFR members, as was William J. Clinton, whom Rubin served as a key economic adviser. Once Clinton was elected president in 1992, Rubin was chosen to lead the newly formed National Economic Council and became one of the key formulators of the North American Free Trade Agreement. In late 1994, President Clinton appointed Rubin to be the nation’s 70th secretary of the treasury.67
As part of Clinton’s inner circle, Rubin helped him win a second term in 1996. As treasury secretary, Rubin was a vocal supporter of the repeal of the 1933 Glass-Steagall Act, allowing commercial and investment banks to be unified.68 He resigned in 1999 and was replaced by one of his protégés, Lawrence H. Summers, also a CFR member. That same year Rubin joined the board of directors of Citigroup, and also served as a senior adviser to the company. Citi was a main beneficiary of the financial deregulation that Rubin sponsored during the Clinton administration.69 Rubin is reported to have received at least $126 million in cash and stock in the almost ten years he worked for Citi. He quit Citicorp in early 2009 as it was on the verge of collapse, which was only averted by a $45 billion federal government bailout.70 After leaving Citi, Rubin became counselor for Centerview Partners, an investment and private equity firm. In 2012 Centerview was financial adviser to Rupert Murdoch’s News Corporation dealing with its intention to pursue a separation of its publishing and its media/entertainment businesses into two distinct publicly traded companies. Murdoch is also a member of the CFR.
In 2000 Rubin was elected to the Council’s board of directors, and became vice chairman in 2003. In 2006, he was a founder of The Hamilton Project at the Brookings Institution, the stated aim of which is to develop innovative policy proposals to foster growth in the U.S. economy. In June of 2007 he donated between $1 million and $5 million to the Council and that year was named its co-chair, a position he still held in early 2015.
In 2008 Rubin continued his role as a senior adviser to Democratic presidential candidates, this time helping Barack H. Obama. Varied news reports place Rubin as one of Obama’s main behind-the-scenes economic advisers. Rubin also recommended a number of his protégés, such as Lawrence H. Summers and Timothy F. Geithner, both members of the CFR, as well as Jason Furman of the Brookings Institution, for high political offices in his administration. Politico writer Eamon Javers stated that “behind the scenes, Rubin still wields enormous influence in Barack Obama’s Washington, chatting regularly with a legion of former employees who dominate the ranks of the . . . administration’s policy team.”71 He has been a director of Ford, and is a member of the Harvard Corporation, the governing body of this leading university and the oldest corporation in the United States. His views on class issues were illustrated in a 2011 interview, when Rubin defined “class warfare” as existing only when one used “inflammatory language,” not when government policies are enacted that favor the rich, which he argued has nothing to do with “class warfare.”72
Carla Anderson Hills, like Peterson and Rubin, is an “in and outer.” She was born in Los Angeles in 1934. Her mother was reported to be “socially prominent,” and though her father was not, he became a business executive worth millions, as well as the president of the Hollywood Chamber of Commerce. Carla grew up in Los Angeles and Beverly Hills, attending the exclusive Marlborough School for girls, playing tennis and riding in horse shows with the high society set. She attended Stanford University, studying during one summer at Oxford in England. A bright student, she went on to Yale Law School, ranking high in her 1957 graduating class. Soon thereafter, she married Roderick M. Hills.
A Republican, Ms. Hills was able to land a job in the Justice Department in 1974 after a number of years in private law practice. Her work at Justice brought her to the attention of President Ford, who appointed her secretary of housing and urban development in 1975. She was only the third woman cabinet member in U.S. history. That same year, Ford appointed her husband head of the Securities and Exchange Commission.
After being back in private practice for some years, Hills was tapped by President George H. W. Bush to be U.S. Trade Representative in 1989, serving until 1993. She was a primary U.S. negotiator of the North American Free Trade Agreement, as well as for the Uruguay Round of the GATT. Again out of public office, she co-founded Hills & Company International Consultants. Hills, a member of the Council at least since 1993, was elected a director of the CFR in 1994, and has been a director ever since, also serving as a vice chair from 2001 to 2007. She has also been a director of major corporations like American Insurance Group, AOL Time-Warner, and Chevron and has served on the international advisory board of JPMorgan Chase, Coca-Cola, Rolls-Royce, and the Center for Strategic and International Studies. She is chair of both the National Commission for U.S.-China Relations and the Inter-American Dialogue, and a member of the executive committee of both the Peterson Institute for International Economics and the Trilateral Commission. She has served on a number of CFR task forces, including the Future of North America and U.S.-India Economic Relations.
Her husband, who has been a member of the board of directors of twenty corporations, and was a co-chair of the Committee for Economic Development, partners with her in Hills and Company International Consultants. Their firm offers advice and other services to big corporate clients like Chevron, Boeing, Bechtel, AIG, Pfizer, Coca-Cola, and Procter & Gamble in identifying both risks and profitable economic opportunities abroad, as well as negotiating with foreign governments to implement aspects of the neoliberal economic program, such as reducing taxes, tariffs, regulations, licenses, and investment restrictions, especially in “emerging market economies.”
Cyrus R. Vance was born in 1917 and died in 2002. He was from an upper-class family long active in the CFR. One of his relatives was John W. Davis, a Wall Street lawyer (Davis, Polk) who was one of J.P. Morgan’s attorneys. As mentioned above, Davis was a longtime CFR director (1921–55) who also served as the Council’s first president, from 1921 to 1933. Davis was considerably older then Vance, but their closeness is indicated by the fact that Vance was Davis’s adopted son. Both Davis and Vance were listed in the Social Register.
As was normal for an upper-class youth, Vance attended an elite prep school, Kent, then Yale, where he was in the secret society Scroll and Key. After graduating from Yale Law School in 1942, he served in the U.S. Navy until 1946. After the war, Vance joined the prestigious Wall Street law firm of Simpson, Thacher & Barlett, working there for the rest of his legal career, interrupted by several episodes of government service.
A mainstream Democrat like his adoptive father, he was appointed by President John F. Kennedy to be Secretary of the Army. President Lyndon Johnson then promoted him to the position of Deputy Secretary of Defense. Vance, following the CFR consensus view, was at first a supporter of the U.S. war on Vietnam, but later changed his views and resigned, advising Johnson to end the war. Within a short time Vance was vindicated and was appointed a delegate to the peace talks in Paris.
Vance was elected to the CFR board in 1968, and vice chair in 1973. During the mid-1970s he was also active in the Trilateral Commission. He resigned these positions in 1976 to become President Jimmy Carter’s Secretary of State, but of course he remained a member of the Council. In this office, Vance represented the “good cop” in the administration’s foreign policy, stressing negotiations in general, and specifically with the USSR, China, and Iran, as well as between Israel and Egypt. Carter’s more hawkish National Security Adviser, Zbigniew Brzezinski, also a longtime active member of the CFR and former director, represented the “bad cop.” Once Brzezinski’s influence became dominant, Vance decided to resign, and did so once Carter ordered the 1980 failed attack on Iran to rescue hostages. Vance was again elected to be a CFR director in 1981 and served until 1987. During the final two years of his tenure, Vance again became vice chair of the Council.
Born in 1909, Douglas Dillon was also educated at an elite prep school, Pine Lodge, together with three Rockefeller brothers. He became a close friend of John D. Rockefeller III. He went on to Groton and then Harvard University. He and his family are, like Vance and the Rockefellers, listed in the Social Register. Upon graduation in 1938, he joined his father’s Wall Street investment banking firm of Dillon-Read, now part of United Bank of Switzerland (UBS). After service in the Second World War, he was elevated to the head of the firm and became active in Republican politics, serving as a major fundraiser for Eisenhower in 1952. The new president soon appointed Dillon to be ambassador to France, a reward for his fundraising. Reflecting the beginning of a transition to Democratic Party dependence on Wall Street funding, John F. Kennedy selected Dillon as his Secretary of the Treasury in 1961. Leaving government service in 1965, Dillon became a CFR director, serving until 1978. He was also chairman of the Rockefeller Foundation and Brookings Institution, as well as president of the Harvard University Board of Overseers during the 1970s.
The son of a bank manager, Warren Christopher graduated from the University of Southern California and Stanford Law School, going on to become a longtime partner in O’Melveny & Myers, a large and prestigious Los Angeles–based international law firm. Christopher became the chair of O’Melveny and Myers, whose clients included major monopoly corporations like Exxon Mobil, Bank of America, Enron, and Goldman Sachs. Late in his career he became Deputy Secretary of State in the Carter administration, then served as a CFR director from 1982 to 1991 and as vice chair during the later part of this period. He was Clinton’s Secretary of State from 1993 to 1997. Besides his role in the CFR, he was also a director of the Trilateral Commission, a member of the Bilderberg Group, president of the board of trustees of Stanford University, and chair of both the Carnegie Corporation’s board of trustees and the CFR-connected Pacific Council on International Policy. Born in 1925, Christopher died in 2011.
Son of a Jewish candy store–owner, Maurice “Hank” Greenberg was born in 1925. He earned a degree from the University of Miami and a law degree from New York University. In 1962 he was hired to work for American International Group (AIG), and soon rose to the top of the firm, where he worked for over forty years. He helped make AIG the world’s eighteenth-largest public company and the largest insurance and financial services corporation. Greenberg has also been the chair and CEO of C. V. Starr & Company and chair and managing director of Starr International, a diversified financial services company. He also serves as chair of the associated Starr Foundation. By 2006 Greenberg was worth $3.2 billion and ranked number 214 on the Forbes list of wealthy individuals.
While chair and CEO of AIG, Greenberg developed a close relationship with the Rockefeller family and Henry Kissinger, whom he appointed to be on AIG’s International Advisory Board and hired as an adviser on business possibilities in a number of nations. Greenberg was also selected to be a member of the Trilateral Commission, a trustee of the Asia Society, Rockefeller University (where he received an honorary degree), and the Museum of Modern Art, all four institutions founded and heavily funded by members of the Rockefeller family. He also served in executive positions at the New York Stock Exchange and the Federal Reserve Bank of New York, and has been a member of the Business Council and Business Roundtable. At the same time, he became active in the CFR, serving on the board of directors from 1992 to 2002 and from 2004 to 2009. In 2007, Greenberg helped arrange, through the Starr Foundation, a donation of between $10 million and $20 million to the Council.73
In 2005 New York State Attorney General Eliot Spitzer charged Greenberg and other AIG defendants with “fraudulent transactions designed to portray an unduly positive picture of AIG’s loss reserves and underwriting performance.”74 Greenberg appealed, and the case was still in the courts in 2014. Greenberg’s career at AIG was over, but he remains a leader at the CFR, which named its Center for Geoeconomic Studies after him.
Richard E. Salomon, an investment adviser, born in 1942, has been a CFR member for decades and a director since 2003. He is managing partner of an investment advisory firm, East End Advisers, but more important, he serves as senior adviser to David Rockefeller, and also works for other wealthy families. His ties to the Rockefeller family appear to be paramount since he is a trustee of Rockefeller University and the Museum of Modern Art, both Rockefeller family institutions. He also serves as vice chair of the trustees and chairs the nominating and governance committees of Rockefeller University. He is a director of Boston Properties, a trustee of the Alfred P. Sloan Foundation, is on the board of the Peterson Institute, and chairs an advisory board of Blackstone. Since Salomon has no known special expertise in foreign policy, his presence as vice chair of the CFR reinforces the view that David Rockefeller, the Rockefeller family, and old wealth generally continue to exercise an important leadership role in the inner workings of the Council. Salomon’s wife is a senior editor at the Wall Street Journal.
The youngest member of our group of CFR leaders, David M. Rubenstein, born in 1949, is a co-founder and managing director of The Carlyle Group, one of the world’s largest private equity firms. In 2011, he had a net worth of $2.6 billion, and was ranked 148th richest American by Forbes magazine. He and his two co-founders of Carlyle shared a payout of $413 million in 2011 according to the Financial Times75. Rubenstein has all the trappings of a billionaire—mansions in Nantucket and Colorado, a Gulfstream private jet, and an annual income of $135 million in 2012.76
As illustrated by the Financial Times, in 2013 Carlyle was the most geographically diversified of the ten largest U.S. and European private equity firms.77 This meant that among these top firms, Carlyle had the greatest need for intelligence about trends and events around the world, something with which the CFR can obviously help. As examples of the connections of the firm, former French president Nicolas Sarkozy’s half brother Oliver is a partner at Carlyle, as is former conservative British prime minister John Major.78
Rubenstein’s early life focused on the law, and he earned his law degree from the University of Chicago after undergraduate work at Duke University. During the 1970s and 1980s he practiced law with two leading firms in New York and Washington, and also served as a domestic policy adviser to Jimmy Carter. In 1987 he co-founded Carlyle. Today this firm manages $148 billion, with twenty-nine offices and employing over 500 investment professionals worldwide. Carlyle’s structure as a trust means that, unlike other buyout firms that have gone public, such as KKR and Blackstone, whose leaders are also prominent in the CFR, shareholders do not have the right to elect board members or vote on executive compensation.
Rubenstein joined the CFR in 2004, became a director in 2005, and gave between $5 million and $10 million to the Council in 2007.79 Several other top Carlyle officials are also CFR members, including former IBM chief Louis V. Gerstner Jr., former Air Force chief of staff General John P. Jumper, former Securities and Exchange Commission head Arthur Levitt Jr., and former Internal Revenue commissioner Charles O. Rossotti.
Besides being a Council director and vice chair, Rubenstein also serves on the boards or advisory committees of a number of important institutions, among them Harvard University, University of Chicago, Stanford University, Asia Society, Brookings Institution, Peterson Institute, Center for Strategic and International Studies, World Economic Forum, Institute for Advanced Study, Trilateral Commission, and JPMorgan Chase.
The ten top leaders of the Council discussed above, with the possible exception of the Rockefeller-connected Salomon, are all clearly part of the capitalist class and especially represent the financial sector known as Wall Street. They often have multiple connecting points with this class. David Rockefeller, Douglas Dillon, and Cyrus R. Vance, for example, are not only very wealthy representatives of leading “old” capitalist families, but are also in the Social Register. Peter G. Peterson, Maurice R. Greenberg, and David M. Rubenstein became billionaires more recently, but all are tied to the Rockefeller family through being invited to serve on the boards of one or more Rockefeller family institutions. Robert Rubin is very wealthy through the stock options and bonuses characteristic of those running top financial organizations like Goldman Sachs and Citigroup. Warren Christopher was the head of a leading law firm. Carla A. Hills has herself been a director of a number of top corporations, and her husband, Roderick M. Hills, during the past forty years has served on the board of directors of twenty different corporations and been the chair or CEO of a number of them. So at least nine of the top ten Council leaders during recent decades are clearly members of the capitalist class, and the remaining individual (Salomon) has made his career as an adviser to David Rockefeller and Rockefeller-connected institutions. Eight of the ten—all except Hills and Christopher—spent a majority of their careers on Wall Street in finance or law. In sum, these individuals illustrate how the top leadership of the CFR has an especially close connection to Wall Street and finance capital.
Also worth noting is an apparent evolution in the CFR top leadership from those involved in commercial and investment banking—such as Rockefeller and Dillon—to leaders focused more on financial trade and speculation, such as Peterson, Rubin, and Rubenstein. The typical activities of Chase Manhattan Bank and Dillon Read during the 1970s and 1980s are clearly different from Blackstone, Goldman Sachs, Citigroup, and Carlyle in the 1990s and 2000s. Rockefeller and Dillon and their banks often organized loans for capitalist development. The second group of men and one woman often engaged in speculative ventures, like hedge funds and buying and selling securities as well as entire firms or parts of firms. This difference reflects what is happening in the internationalized world of monopoly finance capital during the same era. The top leadership of the CFR has therefore reflected what is happening in the larger capitalist system.
Seven of the ten discussed above—Dillon, Peterson, Vance, Hills, Christopher, Rubin, and Rubenstein—were “in-and-outers,” and six of them served as cabinet-level secretaries in five different administrations, then returned to private business. In addition, David Rockefeller was asked by two different presidents to serve as secretary of the treasury, but declined both times.
As will be discussed in detail in the next chapter, the top leadership, together with the board of directors, make the important strategic decisions in the CFR. The role of the presidents, on the other hand, is that of day-to-day manager of all Council activities. If it is clear that the top leadership of the CFR has been and is dominated by members of the capitalist class, what about the secondary leaders, the presidents and directors of the organization during this period? There have been a total of five presidents who served longer than one year: Bayless Manning, Winston Lord, Peter Tarnoff, Leslie Gelb, and Richard N. Haass. A brief biography of each of these five individuals follows. Additionally, there have been 167 CFR directors during the period 1976–2013. Biographies of all of these directors would be tedious, and unnecessary in any case. This is because there are two major categories of director that stand out, those clearly members of the capitalist class, and those best described as part of a class of professionals hired to serve the capitalist class. Below is a short list of the longest-serving directors, which will serve as a manageable sample illustrative of the whole. The Appendix includes a list of the CFR directors from 1921 to the mid-1970s, as well as the 167 directors who served during the 1976–2013 period.
Based on career patterns, the capitalist-class sector, consisting mainly of finance capitalists and corporate capitalists, make up almost two-thirds of the total number of directors. The second group is characterized by their professional knowledge, their connections, and their intellectual skills. They make up a professional class, specializing in developing creative solutions to the problems faced by capitalism and their system, and promoting the system’s legitimacy. This latter group is divided, about equally, into two groups: first, career academics, and second, lawyers, government officials (including military officers) and journalists. Many of these professionals are in the process of being assimilated into the capitalist class, and their membership in and service to the CFR often assists their advance to that level of wealth and status. One key way is gaining invitations to serve on corporate boards, where high pay is the norm; another is setting up a consulting or other business that serves corporations and the wealthy. Of the 167, only three individuals were connected to organized labor: Lane Kirkland and Thomas R. Donahue, as salaried leaders of the AFL-CIO, and Glenn E. Watts, the head of the Communications Workers of America.
The role of the president of the Council, a paid position, is to manage the organization and its staff in accordance with the desires and will of the board of directors and top leadership. There are two striking things about the five CFR presidents as a group: their service in government and their professional-class status as organic intellectuals for the capitalist class. Only one, Winston Lord, could be called a member of the capitalist class prior to his tenure as president of the CFR. This illustrates a central aspect of the CFR, its role in marrying the intellect of a variety of corporate connected professionals with the power of the capitalist class, under the leadership of the latter.
Bayless Manning served as Council president from 1971 to 1977. He was a Yale University graduate who later taught law at Yale, then became a law professor and dean of the Stanford Law School. His expertise was in corporate law. David Rockefeller and Cyrus R. Vance reportedly chose Manning to serve as CFR president. After he resigned this position, he joined the New York corporate law firm of Paul, Weiss, Rifkind, Wharton & Garrison.
Winston Lord succeeded Manning and was president of the Council until 1985. Lord’s family is part of the old plutocracy; his mother, Mary Pillsbury Lord, was a Pillsbury of the flour fortune. He became an expert on China, going into the government as part of Henry Kissinger’s staff at the National Security Council during the Nixon administration. He then became director of policy planning at the State Department in the mid-1970s and an adviser on China. While CFR president, he became President Reagan’s ambassador to China from 1985 to 1989. In 1993 President Clinton appointed Lord an Assistant Secretary of State. He occupied that position until 1997. His wife, Betty Bao Lord, was a CFR director from 1998 to 2003.
Peter Tarnoff was Council president from 1986 to 1993. Tarnoff had been a Foreign Service officer who rose through the ranks, becoming a special assistant to both Secretary of State Muskie and Secretary of State Vance. He later became the executive director of the World Affairs Council of Northern California. President Clinton appointed Tarnoff to the position of Undersecretary of State for Political Affairs while he was CFR president. He then resigned as CFR president to serve in the government from 1993 to 1997.
Leslie H. Gelb succeeded Tarnoff and served as Council president until 2003. Prior to becoming president of the CFR, Gelb had a career in both the State and Defense Departments, then was hired by the New York Times as a national security correspondent, editorial page editor, and columnist. In between government postings, he taught at the college level and was associated with the Brookings Institution and Carnegie Endowment. He wrote a number of books before and after serving as CFR president, including Power Rules: How Common Sense Can Rescue American Foreign Policy.80
In a feature article in the Financial Times, Richard N. Haass was called “one of the most prominent members of the US foreign policy establishment . . . president of the Council on Foreign Relations, the influential New York think tank.” He and his wife live on the Upper East Side of New York, near the CFR headquarters and Central Park, and also have a 300-year-old country house north of Manhattan.81 Haass was a Rhodes Scholar, and earned a master’s and doctorate from Oxford University, later teaching at the college level. Prior to being named CFR president, Haass was in and out of government, first as Special Assistant to George H. W. Bush and as part of the National Security Council. He received the Presidential Citizens Medal for helping to develop plans for the first invasion of Iraq, Operation Desert Storm. During the Clinton years he was out of government, working as a senior associate at the Carnegie Endowment and as a vice president and director of foreign policy studies at the Brookings Institution. When George W. Bush took office, Republican Haass was again brought into government, this time as Director of Policy Planning at the Department of State and a close adviser to Secretary of State Colin Powell. He left that position to become president of the Council.
In 2007 Haass was asked to join the board of directors of the Fortress Investment Group, a global investment management firm with over a thousand institutional and private investors. According to Forbes, in 2011 alone he received $210,000 in compensation from Fortress, including stock grants. He is the author of eleven books on American foreign policy, including The Opportunity: America’s Moment to Alter History’s Course.82
Haass in April 2013 wrote positively about Margaret Thatcher, the British conservative leader, stating that the United States should “take to heart” how she got “Britain’s economy back on track.” Haass sums up the central elements of Thatcher’s program that he favors as follows: “privatization, lower taxes on income, a reduced role for trade unions—in short, the successful trimming of the role of government in the economy.”83
One hundred and three, 61.7 percent, or almost two-thirds, of all 167 CFR directors during the 1976–2013 years have been capitalists: they had assets of over $10 million, were longtime officers or directors of major U.S. corporations, or a principal of a major law firm. They inherited or married wealth or made all or key parts of their careers as power wielders in the capitalist-class-dominated corporate world. A number of these individuals are also known to be billionaires or near billionaires. One pattern for capitalist-class CFR directors has been a close connection to one of the big New York or regional commercial or investment banks—Chase Manhattan/JPMorgan Chase, Citibank/Citicorp, Lehman Brothers, Goldman Sachs, Morgan Stanley, Manufacturers Hanover, Lazard Brothers, First Chicago, Dillon Reed, First Boston, Brown Brothers Harriman, American Express, and Bank One. A second important group of finance capitalists were involved in the lucrative “shadow banking” system of private equity, mutual funds, hedge funds, and other investment vehicles, especially the biggest ones such as the Blackstone Group, Carlyle, Blackrock, the Soros Fund, and Kohlberg Kravis & Roberts. A third group are the CEOs or directors of a variety of giant corporations, including oil, pharmaceuticals, foods, telecommunications, technology, news/information, airlines, utilities, hotels, and manufacturing. Another, less common relationship to the capitalist class was as an officer with one of the Federal Reserve Banks, the New York Stock Exchange, or a principal of a major law firm. Several were also directors of insurance companies, and some also worked as directors of both financial and non-financial corporations, in financial corporations or academia, then in and out of government.
The CFR also depends upon the expertise of well-educated professionals—academics, lawyers, consultants, journalists and government officials—to develop and implement the initiatives and strategies best suited to the continuation and strengthening of capitalist-class rule. There are many former professional-class directors of the Council whose knowledge, intellectual skills, and judgment have resulted in their assimilation into the capitalist class. The primary criterion for such status is directorships in top corporations or law firms, which brings great wealth. The CFR directors discussed in depth below include several examples. It is inevitable that others, due at least in part to their connections developed as CFR board members, will in the future be brought more directly into the top levels of the corporate capitalist class either as officers or directors of leading firms or as owners of their own businesses directly serving this world. As this occurs, they will more and more directly reflect the needs, interests, and ideology of the capitalist class, and will become fully assimilated into this class.
Below is a list of the twelve longest serving CFR directors during the 1976–2014 years. Six have already been profiled here as part of the top leadership. The other six, representative of both the capitalist class and assimilating professional class directors of the Council, are profiled below.84
1.David Rockefeller, commercial banker, 36 years, 1949–1985
2.Peter G. Peterson, shadow banker, 34 years, 1973–2007
3.Carla A. Hills, corporate director, business consultant, 20 years, 1994–
4.Karen E. House, journalist, publisher, 16 years, 1987–1998 and 2003–2008
5.Maurice Greenberg, insurance executive, 15 years, 1992–2002 and 2004–2009
6.Cyrus Vance, Wall Street lawyer, 15 years, 1968–1976 and 1981–1987
7.Paul Volcker, commercial banker, 15 years, 1975–1979 and 1988–1999
8.Martin Feldstein, Harvard professor, 16 years, 1998–
9.Robert Rubin, investment banker, 14 years, 2000–
10.Richard Holbrooke, investment banker, 13 years, 1991–1993, 1996–1999, 2001–2009
11.Robert Hormats, investment banker, 13 years, 1991–2004
12.Steven Stamas, oil company executive, 12 years, 1977–1989
In the 1987 board election, the CFR directors chose eight names from a list of over two hundred individuals suggested by Council members for eight seats on the board. These were Karen Elliott House, Richard B. Cheney, Robert F. Erburu, Donald F. McHenry, Peter G. Peterson, William D. Rogers, Glenn E. Watts, and Walter B. Wriston. In the election held in April 1987, all eight were elected by the members.85 House, who first became a CFR member in 1978, immediately began to serve on the membership committee of the board, a committee she frequently served on in subsequent years, but was also on the Executive and Foreign Affairs committees.86 House also showed her support for the organization by frequently contributing between $1,000 and $10,000 (above and beyond regular dues) to the organization as part of the “Annual Giving” fund drive.87
House, who started out as a journalist with the hawkish, neoliberal Wall Street Journal—rising successively to foreign editor (1984), president of Dow Jones International (1995), and publisher of this newspaper in 2002—represents an example of the professional class rising into the ranks of the capitalist class. Her expertise was the Middle East, especially the oil giant Saudi Arabia, and for decades she wrote prize-winning stories and then a book on this part of the globe. Her knowledge and insight, especially into the inner workings of the powerful Saudi monarchy, was likely one of the things that made her valuable to the Council and its leadership. She also spent time as a senior fellow at Harvard’s Belfer Center, endowed by CFR member Robert A. Belfer, part of the family that owned and controlled Belco Petroleum, which merged with another company to form Enron.
Educated at Princeton, Harvard, and the London School of Economics, Volcker spent his career as a banker, especially at the Chase Manhattan Bank where he reached the status of vice president, and within the federal government, mostly in the Treasury Department, but also as president of the Federal Reserve Bank of New York (1975–79) and chair of the Board of Governors of the Federal Reserve system (1979–87). He served as a CFR director before and after being head of the Fed. As chair of the Federal Reserve, he had an important role in the rise of neoliberalism, which will be discussed in chapter 5. He has had strong connections to the Rockefeller family for many years, working as an assistant to David Rockefeller at Chase Manhattan, then later as one of several trustees directly overseeing the Rockefeller family fortune. Volcker was also chair of the Group of Thirty, a founding member of the Trilateral Commission, and a longtime member of the Bilderberg Group.
Feldstein is another example of an academic who recently successfully made his way into the capitalist class. He received his BA at Harvard and earned a PhD at Oxford. An economist, for thirty years he was president and CEO of the National Bureau of Economic Research, with time out to serve as chairman of Ronald Reagan’s Council of Economic Advisers (1982–84). He was also a professor of Economics at Harvard for many years. While serving in these public and private positions, he was on the boards of directors of several major corporations, among them JPMorgan, TRW, Eli Lilly, and American International Group (AIG). He served for twenty-two years on AIG’s board and a decade on the Lilly board. Income plus stock options from his service on corporate boards together with his income from other sourses, such as Harvard University, the Bureau of Economic Research, and the federal government, allowed his net worth to grow substantially over recent decades.88 At the same time he was receiving large compensation packages from multiple sources, Feldstein, as a conservative economist, was avidly advocating the privatization of Social Security as part of “entitlement reform.” Equally hypocritical, he was on the board of directors of AIG when it received a taxpayer-funded bailout from the federal government amounting to no less than $185 billion, at least some of which likely went into his own pocket in the form of a large compensation package. Feldstein is also well connected internationally, serving on the Trilateral Commission and Group of 30.
Holbrooke was initially part of the professional class, serving in the federal government. He then was recruited to top corporate boards in the financial sector, thereby rising into the capitalist class. He received his BA from Brown and immediately went into the Foreign Service, becoming an expert on Vietnam. During the 1962–69 years he worked on a variety of tasks as part of the U.S. counterinsurgency war, starting with rural “pacification” in the Mekong Delta, then “Operation Phoenix,” which organized the murder of tens of thousands of Vietnamese. Holbrooke also advised the U.S. ambassadors in Saigon, as well as President Johnson, and he ended this period in his life with the Paris Peace Talks as well as writing a volume of the Pentagon Papers. During the 1970s he was a journalist and State Department official in the Carter administration. In 1981 he joined the financial capitalist world as a senior adviser at Lehman Brothers. Within a few years he was Managing Director of this firm, serving in that role until 1993. He also served on the boards of American International Group (AIG), Suisse First Boston (vice chair), and Perseus LLC (vice chair). He was also a Trilateral Commissioner. Holbrooke later returned to government service in a variety of diplomatic roles: ambassador to Germany, ambassador to the United Nations, Bosnian Peace Negotiator, and U.S. Special Representative for Afghanistan and Pakistan, which was his position when he died of a heart attack in 2010. During Bush’s run-up to the war on Iraq in 2002, Holbrooke strongly favored attacking Iraq, and in secret meetings with congressional Democrats he advised them in no uncertain terms to support the coming war. In short, Holbrooke was a hawk his entire life.
Hormats attended private schools where he received his BA (Tufts) and MA and PhD (Fletcher School of Law and Diplomacy). His initial career line was in the federal government, at the National Security Council, working with, in turn, National Security advisers Kissinger, Brzezinski, and Scowcroft. Then he worked in the Department of State as an adviser on the international economy. He joined Goldman Sachs in 1982, working for the firm for over twenty-five years and rising to the position of vice chair. In 2009 he was chosen by President Obama to be Undersecretary of State for Economic Growth, Energy and the Environment, a position he held until 2013, when he left the government and became vice chair of Kissinger Associates, a private consulting firm headed by Henry A. Kissinger. He has also been a member of the Trilateral Commission.
Stamas was a Harvard graduate who went on to be a Rhodes Scholar at Oxford University. He also earned his doctorate at Harvard. Following a brief stint with the federal government, he joined Exxon Corporation, eventually rising to become a vice president. He was also a vice chair of Rockefeller University and a trustee and chair of the American Assembly.89
In addition to the capitalist-class top leaders and directors of the CFR, many Council members belong to the capitalist class. The fact that the CFR has always been headquartered in New York, by far the richest city in the United States as measured by number of billionaires and multimillionaires, is telling when combined with other data. According to the 2014 CFR Annual Report, there were a total of 1,604 “business” members in the CFR in 2014, by far the single largest group.90 Professors, fellows, and researchers composed the second-largest group with 896 members. Although some of the business group are lower-level staff members of corporations and smaller businesses, a large fraction are part of the capitalist class, but we do not know exactly how many or who they are. Members of the capitalist class tend to be secretive about their wealth, and with over 4,600 current members in 2012, and almost 5,000 in 2014, a study of every CFR member, his or her occupation, wealth, and corporate connections is hardly feasible.91
The CFR has a clear bias toward accepting potential members who are wealthy and is an organization where members can meet, network, and form alliances with others who are also rich and powerful, further reinforcing the unity of those at the peak of the U.S. class system. Again, it should be stressed that though a variety of capitalists are represented in the Council, there is a strong tendency for financial capitalists—those who own and manipulate capital in its most abstract forms, such as stocks, bonds, trusts, hedge funds, and insurance, what can be labeled “fictitious capital”—to be most prominent in the leadership and, most likely, the membership of the CFR. The holders of functioning capital, invested in the ownership of the factories and equipment that puts labor in motion to produce commodities, are also well represented in the CFR but are less central to the organization.
This chapter has illustrated in detail some central facts about the CFR, and why it is Wall Street’s think tank. First, in terms of its leadership, history, financing, and much of its membership, it is a top-down capitalist-class organization representing the system of monopoly finance capitalism. Second, finance capital plays a central role in the organization, especially in leadership and funding. Third, what is best called a professional class also plays an important part; most of the Council’s presidents are from this class, along with a substantial minority of its leadership and a large part of its membership. This professional class, with its intellectual skills, includes some who are clearly on their way into the capitalist class through the connections available to CFR leaders (especially by being invited to join corporate boards), and others who apparently are satisfied with just their professional work. The next chapter will review the internal history of the CFR during the thirty-eight years from 1976 to 2014, illustrating what Wall Street’s think tank actually does.