Sam Bankman-Fried founded crypto exchange FTX and vaulted to viral fame, even earning the three-letter moniker of SBF usually reserved for progressive “saints.” But success was fleeting. In his recent trial, a jury found him guilty of 7 counts of fraud as well as stealing 8 billion dollars from customers. You may have followed the SBF saga for a few reasons: an interest in cryptocurrency, a keen eye for business trends, or plain old schadenfreude. But the business leaders who shared his giving philosophy of effective altruism have watched the unfolding scandal from another angle.In light of his public fall from grace, effective altruism’s followers have called for their philosophy’s rehabilitation. This school of thought promoted philanthropic utilitarianism, or giving to causes that will do the most good for the most people. Whether SBF is a true believer in the philosophy may never be known, but that doesn’t prevent us from assessing its validity in theory and practice.
As a movement, Effective Altruism was inspired by philosopher Peter Singer. His essay on Famine, Affluence, and Morality, about how to apply utilitarianism to modern problems like world hunger, is one of the movement’s foundational texts. Singer argued for a greater focus on solving large scale problems through increased giving commitments even if the problem is distant to us. Effective altruism formed as a movement in the 2000s and grew in influence, especially among young, tech-driven entrepreneurs. The Scottish philosopher Will MacAskill, who is the closest thing to a spiritual leader of effective altruism, convinced Bankman-Fried over a lunch together to adopt effective altruism. This meal proved to be a pivotal moment in his life. He, along with many other entrepreneurs, adopted the so-called earn-to-give strategy, where they try to make the most money possible in order to give it away. The money should be used to increase pleasure and decrease pain for the greatest number of people. The organization Giving What We Can, consists of members who pledge to give at least 10% away to “effective” causes. In addition to Singer, MacAskill, and SBF, signatories include Facebook co-founder Dustin Moskovitz, Nobel-winning economist Michael Kremer, and atheist philosopher Sam Harris. These signatories typify the elite, educated, and largely secular followers of effective altruism.
The appeal is clear — with so many opportunities for philanthropists to give, why not focus on the most effective, bang-for-your-billions solutions? While we can all agree that we should focus on approaches that help instead of harm, effective altruism goes deeper in arguing that the goal of giving should be the most good for the most people. There is no higher good than increasing pleasure and decreasing pain for the greatest number. This sometimes leads to extreme conclusions. Will MacAskill has argued that if you were faced with a situation where there was a house on fire and you only could choose between saving a child and a painting by Picasso, you should save the painting. After all, it could be sold to raise money to save more children.
SBF’s parents raised their children with utilitarian principles and directly influenced Sam’s commitment to this philosophy. His mother, Barbara Fried, a law professor at Stanford wrote in defense of utilitarianism as an encompassing ethical theory. In her description of her son’s philosophical commitments, she explained “The strict version of utilitarianism pursues that goal by throwing everyone’s well-being into the same hopper, aggregating all gains and losses to well-being from different policy options, and then choosing the one that offers the greatest good.” She also promotes the idea in the field of criminal justice that you cannot be held responsible for your actions because of determining forces outside of your control. This stance is dominant among consequentialist philosophers.
This might sound like a theory from the ivory tower, but the results of the idea are very practical. If we follow the natural conclusions, as long as you do good with the money you earn, does it matter whether you’ve earned it through fraud? You could easily justify breaking small rules to make more money to give away. The idea is even scalable; as long as you give large sums of money away, you can break large rules.
This justification reflects what happened on the ground at FTX and Alameda Research, the investment arm of FTX. Bankman-Fried regularly spoke about urgent philanthropic needs and how his money would be used for good both internally and externally. His employees then could be justified for overlooking rules, “moving fast,” and “breaking things.” As long as his minor transgressions were overshadowed by supposed major wins for humanity, all was well.
Actions that may have faced questions, such as the total lack of accounting oversight, became necessary steps to larger moral wins. Because his employees viewed him as a moral arbiter, his words held immense sway. As I’ve written before, the type of power, especially moral power, we give to our leaders is of vital importance to the health of our business sector.
SBF wielded moral power with aplomb. According to a leaked transcript of remarks he planned to give as congressional testimony, he opined, “As a believer in the Effective Altruism Movement, my primary goal has never been personal enrichment; I’m motivated by a commitment to help bring happiness and alleviate suffering for others. My personal donations, which starting (sic) in 2014 when I was working on Wall Street, vastly outstrip what’s left in my bank account.”
But the trial revealed the shallowness of this rhetoric. Caroline Ellison, SBF’s on-and-off romantic partner and head of Alameda Research revealed in her testimony that Sam directed her and other staff to commit crimes. She directly tied these crimes to his utilitarian commitments saying, "He didn't think rules like 'don't lie' or 'don't steal' fit into that framework.” Such rules were below him. He had become the arbiter of what would create the most good for the most people. Will MacAskill and others in the effective altruism world, are trying to feverishly distance themselves from SBF, and assert that they are not advocating for an end-justify-the-means approach. But that approach is inherent in any project that seeks to carry out utilitarianism in practice.
Another weakness of effective altruism, beyond its utilitarian roots, is its methodology of pure empiricism. The focus of giving, it asserts, should be on outcomes that are purely measurable. In order to achieve the most good for the most people, philanthropists must compare the measurable outcomes of different giving options . This raises the question of what outputs are being measured. Do we care about total life-hours preserved? Should we include quality of life? How can we balance when different people gain pleasure from competing factors? These calculations are not value-free; they just mask the moral decision making behind other justifications. Students of effective altruism will focus on overlooked problems in international aid — think solutions like bed nets to prevent malaria. But they ignore the deeper cultural questions about development. For instance, we know that the protection of the rule of law and basic property rights are essential for lifting people out of poverty. We cannot measure the cultural values that must underpin such protections. There is significant nuance in different contexts that belies a focus on efficiency. These are the problems that organizations such as the Gates Foundation have run into as they attempt top-down cultural changes in many developing nations. Pure empiricism can’t shed light on these types of questions.
The people and institutions we hold up as ideals matter. These standards of business and philanthropy may be new, even sexy. They could not, however, stand up to the scrutiny of time and application and they cannot move us forward from this crisis.They also lack a deeper understanding of virtue, especially how personal character fits into the broader category of ethics. An older, more stalwart ethic can inform this moment when we face widespread abuse and fraud in business and beyond.
In what way should we act to be virtuous? Effective altruism seeks to answer this question according to utilitarian principles. An ethic based on Aristotle’s writings, often called virtue ethics, points in a very different direction. Becoming a virtuous person is not about turning into a pleasure-maximizing-automaton but making consistent choices that, over time, form you into a virtuous person. This tradition, continued from Greek philosophy through the history of the church, emphasizes matching our emotion with our reason. Over time we learn to love what is good and we can more and more easily choose it.
Bankman-Fried has openly discussed a lack of emotion in his everyday life. He was both taught this as a child and seemed to cultivate it as an adult. So a holistic vision of virtue would be a foreign concept to him, and it may seem archaic or too cute to a modern reader, but it promises a far more workable path forward than the alternative.
First, it allows us to treat people with compassion, in other words, treat them as people. At a personal level we can know the real problems that they face and work to address them. We can care for fellow humans in a way that is truly not measurable. This allows us to face problems in front of us without having to obsess over a calculus that might suggest an efficiency-maximizing alternative. We can escape that paralysis by taking concrete actions against visible problems. The second great commandment, “Loving your neighbor as yourself,” means at the least addressing needs that are right in front of you. How freeing to be able to focus on doing some good wherever we are.
Second, this model of caring for others — call it philanthropy — is applicable to all people. You don’t need a billion dollars to make virtuous choices. Effective altruism really only applies to a handful of billionaires. Only they have the amount of wealth required to manipulate social problems at large scale and measure the outputs. I don’t mean to suggest that their money can’t be used in creative ways to solve big problems. But as an encompassing framework, effective altruism fails to find relevance to charity beyond billionaires.
Third, virtue ethics does not instrumentalize business as a necessary evil. That’s different from effective altruism, which sees business not as a good which can solve problems, but as a means to the end of calculated giving. And this is an important difference. Business leaders can focus on the good they can do for their customers and to the people they employ. Even if Bankman-Fried did good in his charitable work, he did profound ill to both of those groups. When business leaders have a higher vision of their work, they are both more inspired to do good and are more easily held accountable.
Finally, although effective altruism claims to support overlooked solutions, in practice the movement tends to focus on only a handful of causes: nuclear war, the next pandemic, animal rights, and the threats from AI seem to always come up in their main forum. We need a variety of approaches to a myriad of problems that we face, and I have more confidence in the decentralized individuals and organizations that are working in their communities to do just that.
Some bad ideas create their own downfall, and effective altruism looks like one of them. As we brush ourselves off from another bad fall, let’s move forward with a more reliable approach to business and philanthropy.
Noah C. Gould is the Alumni & Student Programs Manager at the Acton Institute and a Contributor for Young Voices.