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Macdonald was born in New York City and was educated at Phillips Exeter Academy and Yale University. His first job was as a trainee executive for Macy's but he soon moved to Time, where he was offered a position by his fellow Yale alumnus Henry Luce. From 1929 Macdonald was an associate editor at Luce's ambitious Fortune, an unexpected position for someone with Macdonald's literary interests. Like many writers on Fortune, his politics were radicalized by the Great Depression. He resigned from the magazine in 1936 over an editorial dispute, when the magazine's executives severely edited the last installment of his extended four-part attack on U.S. Steel.
In 1934, he married Nancy Gardiner Rodman (1910-1996), sister of Selden Rodman.
Macdonald went on to edit Partisan Review from 1937 to 1943, but quit to start his own rival journal Politics from 1944 through 1949. As an editor he helped foster diverse voices such as Lionel Trilling, Mary McCarthy, George Orwell, Bruno Bettelheim, and C. Wright Mills. All along he was contributing to The New Yorker as a staff writer and to Esquire as film critic, gradually becoming famous enough to supply movie reviews on The Today Show in the 1960s.
Macdonald deserted Trotskyism, like many intellectuals of the time, and embraced pacifism and individualist anarchism. In the 1950s, he was fiercely anti-Soviet, maintaining a relationship with the anti-Soviet and more generally anti-Communist Congress for Cultural Freedom. At one stage being considered a possible editor of the group's magazine Encounter, though nothing came of this. Later still, he was an even fiercer opponent of the Vietnam War and a great enthusiast for the student radicals of the 1960s like Abbie Hoffman. Showing characteristic unpredictability, he combined this new-found political radicalism with a cultural conservatism that paralleled Gy├Ârgy Luk├¡cs's.
Most often thought of as a writer for The New Yorker, Macdonald also published more than thirty essays and reviews in The New York Review of Books, starting with that periodical's first issue of 1 February 1963. When Hannah Arendt was asked to write a brief introduction to a reprint of Macdonald's politics, her thoughts ("He's All Dwight") appeared in NYRB on 1 August 1968.
Leon Trotsky is alleged to have said, "Everyone has the right to be stupid, but comrade Macdonald abuses the privilege" - a remark that reportedly delighted Macdonald. Some, such as John Lukacs, reckon that Macdonald probably invented the remark and attributed it to Trotsky. Macdonald's biographer Michael Wreszin was unable to find any source for the epigram except Macdonald himself.
During the Columbia University protests of 1968, Macdonald expressed disappointment about the many red flags on campus that symbolized revolution. He complained that there were no black flags to reflect "my anarchist tastes."
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