One of the inevitable questions to have attended the abrupt undoing of the erstwhile billionaire Sam Bankman-Fried—the overnight collapse of his cryptocurrency exchange, FTX, and its intertwined sister organization, the trading firm Alameda Research—concerns that of the part in the fiasco played by ideas. Neither Bernie Madoff, Kenneth Lay, nor Jeff Skilling was, to the best of my knowledge, associated with a particular philosophical tradition. Bankman-Fried has, however, identified himself as an adept of effective altruism, the utilitarian-flavored philanthropic social movement. Bankman-Fried first encountered effective altruism, or E.A., as an M.I.T. undergraduate, when he was introduced to the Oxford philosopher Will MacAskill. E.A. leaders recruited Bankman-Fried as someone likely to make a lot of money that he might then give away for the betterment of the world. In less than a decade, the investment seemed to have proved auspicious: Bankman-Fried became the movement’s most prominent donor, promising to eventually donate almost all of his net worth, which was once estimated at twenty-six billion dollars. He has said, on multiple occasions, that his consideration for the lives of others aroused his appetite for financial risk: had he been working merely for his own pleasure, he might have comfortably retired a minor billionaire, but there is no diminishing marginal utility to each additional dollar earned to redeem the world.
He flipped the coin—or, rather, a lot of coins, many of which he had himself invented—until he lost. Unfortunately, it seems he was playing with someone else’s money: FTX’s customer deposits were commingled with Alameda’s own funds, where they were apparently used to shore up bad trades and ill-advised investments. The whole operation lost something like eight billion to ten billion dollars, if not more. (Bankman-Fried has said that poor labelling of accounts was to blame. His spokesperson told me that the meltdown was the result of a “large market crash,” and said, “Mr. Bankman-Fried never knowingly used FTX deposits to shore up any trades or investments.”) Critics of E.A. have delighted in Schadenfreude, as if the mask of optimized benevolence has slipped to reveal the naked will to power. When Bankman-Fried participated in a direct-message interview with Vox’s Kelsey Piper, earlier this month, his casually dismissive comments about “ethics” were immediately taken as confirmation that E.A. was a sham—a convenient alibi for greed and the lust to dominate. For those of us who are secretly unsure whether we’re decent people, this came as a reassuring development. The elementary tenet of effective altruism—that privileged Westerners could be doing considerably more good in the world than most of us do—could be discarded as self-serving cant. (The spokesperson said, “Mr. Bankman-Fried does in fact deeply believe in Effective Altruism, and always has, but he thinks that there are many things that companies do—specifically highly regulated ones—around the edges to attempt to appear as ‘good actors.’ ”)
Within E.A. circles, the prevailing mood has been one of raw anguish. Within a day or two of the initial revelations, one longtime leader took to the E.A. Forum, the movement’s internal bulletin board, to offer mental-health services: “If you’re personally affected by what’s happening, the community health team wants to be here for you. We’ve already heard from people who are feeling worried, angry, or sad.” For the most part, the possibility of the movement’s responsibility in the affair has been taken up with seriousness and subtlety. There is no evidence that anyone in E.A. was aware of the artifice that propped up Bankman-Fried’s empire, but community members have been troubled by the idea that there may have been a path from their shared philosophical underpinnings to Bankman-Fried’s deceit. Some have argued that what Bankman-Fried seemed, in his enigmatic way, to be saying to Vox was not that his vow to uphold E.A.’s ideals was merely a cover story but something like the opposite: he was, in fact, so committed to the greatest good for the greatest number that he was unwilling to observe the kinds of everyday ethical niceties that hedge naïve utilitarian calculations. MacAskill noted that nowhere in the E.A. canon are the means advertised to justify the ends. Moral integrity was a good in and of itself.
This is true enough as far as it goes, but, as MacAskill himself is painfully aware, this has always represented an unstable equilibrium. On the one hand, what makes the movement distinct is its demand for absolute moral rigor, a willingness, as they like to put it, to “bite the philosophical bullet” and accept that their logic might precipitate extremes of thought and even behavior—to the idea, to take one example, that any dollar one spends on oneself beyond basic survival is a dollar taken away from a child who does not have enough to eat. On the other hand, effective altruists, or E.A.s, have recognized from the beginning that there are often both pragmatic and ethical reasons to defer to moral common sense. This enduring conflict—between trying to be the best possible person and trying to act like a normal good person—has put them in a strange position. If they lean too hard in the direction of doing the optimal good, their movement would be excessively demanding, and thus not only very small but potentially ruthless; if they lean too hard in the direction of just trying to be good people, their movement would not be anything special. Put crudely, it can seem as if either their ideas conduce to a means-end rationality—someone like Bankman-Fried might very well have felt justified in bilking unsophisticated investors out of money that could be put to better use funding, say, pandemic preparedness—or their ideas conduce to nothing in particular at all.
There are a few different ways to look at this underlying tension. The most cynical is to accuse them of the “motte-and-bailey fallacy”—that they shuttle at their convenience between a strong but controversial claim (that all actions ought to be evaluated by their consequences alone) and a weaker but palatable one (that of course other considerations, such as personal virtue, matter). A more charitable interpretation is to suggest, to invert Flaubert, that they are violent and original in their seminar-room work such that they might be marginally better than regular and bourgeois in their lives. To point this out is not to condemn them on the grounds of cowardice. What has made E.A. special has less to do with the community’s scholarly contributions than with the unusual subculture they have cultivated. E.A.s have been expected to live relatively simply, to confront the reality of suffering, and to do something to remediate it. And many truly did, and do. Some observers have argued that this scandal will be good for E.A., because their compromised institutions might die off such that their ideals will flourish elsewhere. But this perspective, to me, misses the point. The broader culture is marked by neither a widespread sensitivity to misery nor a pervasive sense of obligation to do something practical about it, and for all of its faults the culture of E.A. was. One didn’t have to agree with everything they did to believe that they created a worthwhile role for themselves and acquitted themselves honorably.
MacAskill, whom I profiled this year, understood, perhaps better than anyone, that the endurance of the movement rested on a fragile foundation of social norms—not what they argued but how they lived. In the course of the time I spent with him this past spring, he returned again and again to his worry that something crucial had perhaps been lost as their initial code of frugality gave way to material abundance; they were no longer a group of kids in a basement eating Sainsbury’s baguettes for lunch but a set of real institutions with real money, proximity to power, and catered vegan buffets. Caroline Ellison, the former C.E.O. of Alameda Research, who also once dated Bankman-Fried, argued on the E.A. Forum, last spring, that frugality was a vestigial concern; there were, she claimed, less costly ways to indicate one’s alignment with the underlying cause. In his own lengthy post on the subject, MacAskill argued that such signals had to be at least minimally costly if they were to feel substantive. MacAskill’s centrality to the community has had somewhat less to do with his intellectual contributions than it has with how appealingly and charismatically he has been able to model righteous conduct. When young E.A.s needed guidance—about whether it was defensible, say, to pay for private lodgings for a conference—they looked to MacAskill’s personal example for instruction.
In retrospect, the most important issue facing the community may not have been the erosion of norms around frugality but of those around honesty. The story commonly told about Bankman-Fried was that he drove a beat-up Toyota Corolla, slept on a beanbag, and had nine roommates. MacAskill repeated this fable to me, characterizing it as evidence of Bankman-Fried’s profound commitment to the cause. What he did not mention, and what came out only in the last few weeks, is that Bankman-Fried and his roommates were living in a forty-million-dollar penthouse in a gated community in the Bahamas—part of a total local property portfolio worth an estimated three hundred million dollars. His parents, professors at Stanford Law, owned a vacation condominium worth millions of dollars. (Bankman-Fried has said the properties were necessary to insure that his “top Silicon Valley employees” had “an easy way to find a comfortable life” on the island. His spokesperson told me, “Mr. Bankman and Ms. Fried have offered to give up any ownership interest they may have in the home.”) All of these were indeed costly signals, though what they signalled couldn’t easily be reconciled with the E.A. covenant. (When asked about the discrepancies in Bankman-Fried’s narrative, MacAskill responded, “The impression I gave of Sam in interviews was my honest impression: that he did drive a Corolla, he did have nine roommates, and—given his wealth—he did not live particularly extravagantly.”)
Still, E.A. leadership ratified a mythology about Bankman-Fried that was simply not the case. One senior member of the community told me that the peculiar contradictions of Bankman-Fried’s life style were widely known but somehow unexamined: it was true that he drove a beat-up Corolla, but it was also true, if underemphasized, that he enjoyed a sumptuary existence—not only the lavish penthouse but the use of such appurtenances as a private jet. “The problem was that there was a story about his frugality that was something adjacent to a lie—or at the very least left listeners with a very wrong impression, which is roughly as harmful as lying,” he said. “I guess it started as a story about something else—perhaps his bad car and long working hours. But in time there were these two versions of S.B.F. that didn’t quite add up, and you only heard one of them. I knew, for example, that he slept on my friend’s couch, and wasn’t somebody who put on airs, but I also have the memory of knowing S.B.F. actually did have nice stuff—and it was only that first part that I repeated, because it was just a thing you said. I don’t blame people for getting this wrong, but as a community we communicated badly, and at a large enough scale that we supported the false S.B.F. narrative. We let people believe he was a saint, when in reality he lived like a pretty standard workaholic billionaire.”
The senior community member continued, “He was frugal at times and spendthrift at times, seemingly in service to his work. I don’t sense there is an easy single narrative here.” It’s easy to imagine how senior E.A.s, many of whom made repeated visits to the Bahamas, might have justified his expenditures: the properties may have been portrayed as sound real-estate investments, and Bankman-Fried needed fitting places to host such figures as Bill Clinton and Tony Blair, who came to speak at a conference he co-hosted with Anthony Scaramucci this past spring. In a widely amplified story, Fox Business reported that Bankman-Fried owned a yacht; the claim was attributed to a local yachtsman, who said he frequently spotted Bankman-Fried at the marina, and Bankman-Fried’s spokesman categorically denied that his client had himself ever “owned” a boat. The outlet also drew on accounts from local restaurant workers to allege that he spent thousands of dollars a day on fancy catered lunches for his company; the spokesperson pointed out that this does not seem particularly outlandish for a firm that employed more than a hundred people. But if the extent of Bankman-Fried’s profligacy has been exaggerated, it may be because his penthouse and the private jet provided an invitation. In Jewish law, there is a concept called “mar’it ayin” designed to address this kind of ambiguity: you don’t eat fake bacon, for example, because a passerby might see you and conclude you’re eating real bacon. The reason for this law isn’t primarily to protect the reputation of the fake-bacon-eater; it’s to sustain the norms of the whole community. The passerby might decide that, if it was O.K. for you to eat bacon, it’s O.K. for him to do it, too. When important norms—of frugality, and the honesty with which it was discussed—are seen as violated, the survival of the culture is imperilled.
Not everyone in the community believed that it was benign to indulge billionaire sponsors. Last year, Carla Zoe Cremer, a Ph.D. student at Oxford, expressed public unease about the potential for corruption—epistemic and otherwise—and proposed a set of reforms, including whistle-blower protection and the broad democratization of E.A.’s command structure, which seemed liable to engender unwarranted trust in authority figures. “My recommendations were not intended to catch a specific risk, precisely because specific risks are hard to predict,” she told me recently. “But, yes, would we have been less likely to see this crash if we had incentivized whistle-blowers or diversified the portfolio to be less reliant on a few central donors? I believe so.” Josh Morrison, the founder of an organization that promotes challenge trials for vaccines, warned earlier this year on the E.A. Forum about the increasing “Ponzi-ishness” of a movement overly devoted to its own proliferation, and the ensuing possibility that priorities would shift if the community came to overvalue perks and status: “I think virtue tends to be very situationally dependent and that very admirable people can do bad things and deceive if it’s in their interest to do so.” As he put it to me, “Due to a combination of immaturity, naïveté, self-interest, and irrational exuberance, the E.A. community disregarded the risks of tying itself to an aggressive businessman in a lawless industry.”
There was not only a reason (money) to overlook Bankman-Fried’s more dubious qualities but also a major precedent for doing so. In 2017, Bankman-Fried launched Alameda Research as an explicitly E.A.-minded proprietary trading firm. As one early Alameda employee told me, “Something really amazing happened. Because we were all E.A.s, and we all believed ourselves to be value-aligned—we were all on the same team, making money not for ourselves but to make the world better. . . . I’ve been in startups my whole career, and this was something I’d never seen before: everyone was genuinely just trying to do their part, and trying to do it as efficiently and effectively as they could, and just trusting that we were all on the same team. And the reason I was as upset with Sam as I was is because, in my view, he defected. Everyone played ‘coöperate’ for months and he defected and destroyed the commons.”