Wednesday, May 29, 2013

The Dictatorship of Money, IV: The Turning Point.1

Right off the bat, we have to admit that the title of this particular posting is misleading.  With respect to the change in the understanding of private property (and, by extension, of the whole of the natural law) has had not one, but at least two “turning points.”

The first that we know about was during the Reformation.  Whether it was due to the Reformation, the Reformation was due to it, or simply happened at the same time is not relevant to this discussion.  Whatever the reason, the belief spread rapidly that rights were no longer inherent in the human person by nature, but that rights were somehow vested directly in the State or, worse, in the person of a divine right ruler.

We see this theory most clearly expressed in the totalitarian philosophy of Thomas Hobbes, again, especially in Hobbes’s views on private property.  This is laid out quite clearly in Leviathan.  In Chapter XXIX in which he lists the “Those Things that Weaken, or Tend to the Dissolution of a Common-Wealth,” Hobbes declared,

“Attributing Of Absolute Propriety To The Subjects

“A Fifth doctrine, that tendeth to the Dissolution of a Common-wealth, is, ‘That every private man has an absolute Propriety in his Goods; such, as excludeth the Right of the Soveraign.’ Every man has indeed a Propriety that excludes the Right of every other Subject: And he has it onely from the Soveraign Power; without the protection whereof, every other man should have equall Right to the same. But if the Right of the Soveraign also be excluded, he cannot performe the office they have put him into; which is, to defend them both from forraign enemies, and from the injuries of one another; and consequently there is no longer a Common-wealth.

“And if the Propriety of Subjects, exclude not the Right of the Soveraign Representative to their Goods; much lesse to their offices of Judicature, or Execution, in which they Represent the Soveraign himselfe.”

Thus we have the intrusion of the idea that private individuals don’t really own anything.  As John Locke responded to Hobbes’s theory in Locke’s Second Treatise on Government,

“Sect. 140. It is true, governments cannot be supported without great charge, and it is fit every one who enjoys his share of the protection, should pay out of his estate his proportion for the maintenance of it. But still it must be with his own consent, i.e. the consent of the majority, giving it either by themselves, or their representatives chosen by them: for if any one shall claim a power to lay and levy taxes on the people, by his own authority, and without such consent of the people, he thereby invades the fundamental law of property, and subverts the end of government: for what property have I in that, which another may by right take, when he pleases, to himself?”

Hobbes’s theory, however, was solidly integrated into both political and economic thought in England by the middle of the 19th century.  This was a time when the British parliament was busily dismantling what had long been considered the glory of England: Magna Charta.  Walter Bagehot lauded Hobbes in his pivotal work, The English Constitution (1867), sneered at Magna Charta, and ridiculed the Constitution of the United States because it did not provide for a dictator in times of need.

Just as Adam Smith applied his ethical philosophy detailed in The Theory of Moral Sentiments (1757) in The Wealth of Nations (1776), Hobbes’s applied his political theories detailed in The English Constitution in Lombard Street: A Description of the Money Market (1873).  Lombard Street is virtually a “bible” for a past savings-based model of modern mercantilism.

Today, mercantilism is combined with a redefinition of private property.  This is a necessity when economic growth is constrained by what Louis Kelso and Mortimer Adler called the slavery of past savings.  What necessarily results is some version of the Servile State: a condition of society in which the great mass of humanity is forced to subsist on wages and welfare alone.  Those who do not own capital are necessarily forced into a condition of dependency, “a yoke little better than that of slavery itself.” (Rerum Novarum, § 3.)

In the class of “non-owners of capital” we necessarily include those who are owners of capital only in a nominal sense, and whose capital is controlled by others.  It was these controlling non-owners to whom Pius XI referred when he declared,

In the first place, it is obvious that not only is wealth concentrated in our times but an immense power and despotic economic dictatorship is consolidated in the hands of a few, who often are not owners but only the trustees and managing directors of invested funds which they administer according to their own arbitrary will and pleasure.” (Quadragesimo Anno, § 105.)

We have to insert a caveat here.  Hilaire Belloc believed that the Servile State was a condition in which people were constrained by the government to work for private employers solely for wages, willy nilly.  We believe that the rapid growth of State power through widespread dependence on government for redistribution of existing wealth, primarily through control of money and credit and distortion of the tax system, has resulted in a condition of society in which people are forced either to work for wages provided by either private employers or (increasingly) government, or on welfare provided by the government, circumventing or undermining private charity.  This broadens Belloc’s definition of the Servile State to allow for the expansion of government into all aspects of life, but it retains the chief characteristic emphasized by Belloc: the condition of dependency or servility.

The point to this is that Bagehot’s elitist political philosophy and complete reliance on past savings as the only source for financing new capital formation was a strong influence on the most important economist of the 20th century.  The theories of this economist have led the world to the brink of global bankruptcy: John Maynard Keynes.


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