My Two Cents on Capitalism
November 12, 2009 Length: 14:35
Clark debunks two myths about capitalism.
Come now, and let us reason together, saith the Lord. Though your sins be as scarlet, they shall be as white as snow; though they be red like crimson, they shall be as wool. If you be willing and obedient, you shall eat the good of the land.
Hello, and welcome once again to Faith and Philosophy. Today’s topic is “My Two Cents on Capitalism.” I’m going to return to the topic of theological language in future podcasts, and when I do, I want to focus specifically on the Scriptures and how we are to read them.
But today I want to take a little detour. I’ve been catching up on various podcasts, here on AFR, recently. And I was intrigued by a series of podcasts on capitalism. So while the topic is fresh in my mind, I wanted to throw in my two cents.
What follows is not intended to be a refutation of any one thing, said by any one person. Rather my comments are aimed more at clarifying the terms and issues that have been raised. The one criticism I will make of the previous discussions is that there was a lack of historical context. Trying to define terms abstractly, without reference to their historical development, will inevitably lead to distortions.
Basically, I want to explode two myths surrounding capitalism, hence my two cents. The first myth is that capitalism depends on private property and free markets. The second is that progressivism and socialism are real alternatives to capitalism.
Let’s start with the first myth, and this is sure to raise a few hackles. Historically capitalism has proven to be the enemy of private property, not its champion. Yes, yes I know. We have all heard people define capitalism as the private ownership of property, over against socialism which is the public ownership of capital.
But that definition is both misleading and misserving. People owner private property for millennia prior to the onset of capitalism. The Roman recognized private ownership, as did the Greeks and the Jews. Private property is not a modern invention. Indeed, classical republicanism depended on the private ownership of property and, therefore, on the virtues of the property holding citizen class.
Karl Marx welcomed and praised capitalism. I bet you didn’t hear that in government schools. But you say, Marx wanted to eliminate all private property. And so he did. But he saw capitalism as a necessary stage in the socioeconomic development of mankind—a development which he believed was leading inexorably toward a communist utopia.
In other words, capitalism is essential to the concentration of property in the hands of a few. This does two things from the communist perspective. It accentuates socioeconomic inequalities to the point where the proletariat will rise up in revolution, and it makes the transition to communism easier because so few have property in the first place.
Moreover, capitalism thrives only in controlled markets, not free markets. Some of the previous discussion focused on laissez-faire capitalism. Let’s get one thing clear. There is no such thing. Never has been. Never will. Laissez-faire capitalism is a libertarian fantasy, and libertarians have been correctly describes as utopians of the right.
Capitalism, as it developed historically, is not rooted in the exchange of the free market, but in the manipulation of the market by governments for the benefits of capitalists—or at least, some capitalists.
First of all, capitalism can only exist where the economy has been monetized. It would be impossible in a barter economy. Now a monetized economy necessitates a monetary system of some sort, which will eventually require a banking system and, just as important, some sort of political or governmental backing for the money.
From the very beginning, capitalists relied on governments to benefit them through monetary tax and trade policies. Capitalism and mercantilism go hand in hand. The robber barons of the gilded age did not get filthy rich by manipulating free markets. They got rich thanks to federal monetary policy, tax policy, public spending on things like railroads, and high tariffs that protected them from free competition.
Frankly, it is impossible to get as rich as the Vanderbilts or Rockefellers or even the Bill Gates or Warren Buffetts of the world without massive government manipulation of the markets—especially through monetary and tax policy. Some people get rich because of these manipulations. Others suffer loss. It has nothing to do with survival of the fittest. It has to do with who you know and how well you can manipulate the system in your own favor.
This brings me to the second myth—namely that progressivism and socialism offer genuine alternatives to capitalism. If capitalism really were concerned with private property and free markets, they would be an alternative. But as capitalism actually promotes the concentration of wealth and the socialization of the riskier aspects of the economy, progressivism and socialism turn out to be just a different side of the same corrupt economic system.
I’ve often said that evangelicals constitute the single dumbest voting block in the U.S., because they can almost always be counted on to vote against their own long-term interest—just as long as a politician says something nice about Jesus and pretends to oppose abortion. Second to evangelicals, however, I would have to rate self-professed progressives, who really believe that because they support things like government regulation and universal health care insurance that they are standing up to the corporate elites in the name of the little man. Utter and complete horse manure.
Let me give you one example. This year the Congress gave the FDA the ability to regulate tobacco—a victory for consumers and health advocates over big, bad tobacco companies, right? Well, not quite. What turned the tide is when the big companies dropped their opposition to the bill. They reasoned that the new regulations would give them a competitive advantage over smaller tobacco companies, since the inevitable FDA regulations would be more onerous for small producers.
Indeed, in most cases, government regulation of industry tends to benefit large corporations and place greater burdens on small companies. All of this can be seen if we look at the history of the United States. Contrary to our school book mythology, the first settlers were not all religious minorities looking for freedom.
Both the Massachusetts Bay Company and the Virginia Company were for-profit corporations with stockholders back in England, who were expecting a handsome return on their investments. From the very beginning, however, they were tensions between the colonists and their corporate overlords. What most people don’t realize is that a good deal of the parliamentary legislation, of which the colonists complained so bitterly, was passed at the behest of and for the explicit benefit of the East India Company.
By the end of the 18th century, the East India Company had become so rich and powerful—it had its own army and navy at one point—it pretty much had Parliament and the Crown bought and paid for. Thus when the colonists complained of tyranny, it was really corporate tyranny, though manifest through the acts of a puppet Parliament.
When the colonists achieved independence, two distinct paths lay before them. Jefferson wanted a complete break with the old mercantilist, capitalist system. He envisioned a republic of smaller republics, based on widespread ownership of farm property and small businesses. He warned of dire consequences if the stockjobbers and bankers ever got the upper hand. He believed that for property rights and freedom to be preserved, political power must be as decentralized as possible.
On the other side of the debate was Alexander Hamilton. He wanted to reproduce English mercantilism on this side of the Atlantic and to beat the English at their own game. He envisioned the United States as an economic and military juggernaut. To accomplish this however, both political power and financial capital would have to be concentrated.
For the first half of the 19th century, the Jeffersonians held the Hamiltonians at bay, for the most part. But in 1860, all of that changed. The election of Abraham Lincoln placed the U.S. firmly on the path toward becoming a mercantilist empire, and we’ve been paying the price for this ever since.
Let me explode one more myth here. The Republican Party is not now and has never been a conservative party. It was founded in the 1850s and remains to this day a coalition of corporate elites and social progressives. The Republican program of a national bank, publicly funded internal improvements, and high protective tariffs created not only unprecedented wealth in this country; it also created unprecedented corruption—both private and governmental.
The progressive reforms of the first part of the 20th century were not a repudiation of mercantilist capitalism, merely a retrenchment along different lines. Government regulation became the price for government largesse. Let’s not forget that Republican Teddy Roosevelt was one of the founders of the Progressive Party.
Up until 1932, the Democratic Party was still the more conservative of the two parties, but that changed with the election of F.D.R., whose family, let us not forget, had been Republican. Take a look at the Democratic platform of 1932. It is almost the mirror opposite of what F.D.R. actually did in office. The election of 1932 was one of the great swindles of all time.
All of this explains, by the way, why President Obama’s actual policies differ little from those of George Bush. Obama supported the bailout plan before taking office, and his administration has continued the same disastrous policies of bailing out the banks and debasing the dollars in the bank accounts of people who actually have to work for a living. Nothing has changed.
To return to a question raised by earlier podcasts, is capitalism compatible with Orthodox Christianity? Well, the answer is no. But progressivism does not offer a real alternative. Capitalism is a modernist economic system and progressivism is a modernist palliative—not an alternative.
The only real alternative to capitalism is something along the lines of what Jefferson envisioned. This is similar to the vision of the Catholic distributivists, such as Belloc and Chesterton, and to the third way of the Protestant economist Wilhelm Röpke. The foundation of such a system is widespread property ownership and decentralized government.
I should point out here that the Greek word oiconomia means household management. Wall Street is not the economy. The economy is how you provide for yourself and your family and how you treat your neighbors in the process. It’s becoming increasingly difficult, however, to provide for ourselves when our savings are devalued by government policies and our small farms and businesses are regulated within an inch of their lives to the advantage of big corporations.
I’d like to conclude with some comments concerning the Protestant, Wilhelm Röpke. These are made by Ralph Ansel in a very good article he wrote:
For a Protestant who holds the situation created by the Reformation to be one of the greatest calamities in history, he must have difficulty finding his religious home either in contemporary Protestantism, which in its disruption and lack of orientation is worse than ever before, or in contemporary post-Reformation Catholicism. All he can do is to reassemble, in himself, the essential elements of pre-Reformation, undivided Christianity. And in this, I think I am one of a company of men whose goodwill, at least, is beyond dispute.
We know of course that undivided Christianity does not need to be, indeed cannot be, reassembled because it already exists within the Orthodox Church. But this passage is a reminder that the solution to modern man’s economic dilemmas lie not in modernism, but in the faith and life once delivered to the Saints.
Orthodoxy, alone, is capable of offering not only a critique of modernity, but of pointing us to real solutions. We cannot bear the witness to the truth that the world needs, however, as long as we continue to try to make peace with political and economic systems that, by their very nature, undermine the faith we hold and the life we endeavor to lead.
And now may our great God and Savior, Jesus Christ, through the intercessions of St. Innocent of Alaska and of the Blessed Elder Sophrony Sakharov, have mercy upon us all and grant us a rich entrance into His eternal Kingdom.
"It is a wonderful way to remain grounded in the teachings of the Church. I also listen to AFR at work. It has been such a blessing with such a wide variety of lessons and teachers. I am very glad to see the addition of the saint for the day. I was hoping for this!"