In the previous posting on this subject, we closed by noting that some new ideas had entered the general culture. As a rule, prior to the middle of the nineteenth century people got rich to be able to live “the good life” (which didn’t mean quite what it meant to Aristotle, who referred to the “good life of virtue”), which required wealth and power to be able to obtain the goods and services that went along with a materially good life. This meant as soon as they had “enough,” they could stop accumulating wealth, and then sit back and enjoy it.
By the time Ebenezer Scrooge came along, however, this was changing. People now often wanted power for the sake of power itself, not for what power could give them. What changed?
One possibility is that prior to the Industrial Revolution the rich needed “the poor” to provide them with the goods and services they needed to live the (materially) good life. Human labor was the primary mode of production. As Adam Smith explained in his “invisible hand” argument, it didn’t matter how “greedy and rapacious” the rich might be, they simply could not satisfy their wants and needs without employing “the poor.” As a result, “the wealth of nations” ended up being as equitably distributed as if ownership of capital was broadly distributed.
Then came the Industrial Revolution. Technology could phenomenally out-produce human labor and the rich no longer needed “the poor” to satisfy their every want and need. They became more and more removed from ordinary life — something that today has become surreal as the rich have become almost completely disconnected from reality. Power became desired not because it was necessary to gain material wants and needs, but because it would allow the rich to control the poor without employing them.
Think about that. When the rich needed the poor to satisfy their wants and needs, the fact that the rich were the poor’s income source allowed the rich to control the poor — but it was limited to the poor who were directly dependent on the rich for their income. Everyone else was independent of the rich. Increasing one’s power over others meant getting into politics, not increasing one’s wealth, as wealth gave only limited scope for the exercise of power.
If the rich don’t need the poor to satisfy their wants and needs, their direct control over others decreases greatly . . . but has the potential of increasing immensely indirectly if one’s wealth becomes so great that it affects the entire economy; the ultra-rich become “too rich to be poor” because their influence spreads far beyond those relatively few directly dependent on them. This phenomenon accelerates the faster technology develops and the more concentrated capital ownership becomes.
In the distorted society that develops as ownership and thus power becomes super-concentrated, being rich becomes seen as a virtue in and of itself. The rich become, as Walter Bagehot declared in 1867 in The English Constitution, a chosen people [emphasis Bagehot’s], specially selected by God to rule the rest of humanity. They control money, credit, politics, education, and everything else.
Ironically, this often results in the bizarre situation in which it is not really the rich who are in power, but those who manage the rich who are the real power behind the thrones. As Pope Pius XI noted in Quadragesimo Anno,
105. 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.
106. This dictatorship is being most forcibly exercised by those who, since they hold the money and completely control it, control credit also and rule the lending of money. Hence they regulate the flow, so to speak, of the life-blood whereby the entire economic system lives, and have so firmly in their grasp the soul, as it were, of economic life that no one can breathe against their will.
107. This concentration of power and might, the characteristic mark, as it were, of contemporary economic life, is the fruit that the unlimited freedom of struggle among competitors has of its own nature produced, and which lets only the strongest survive; and this is often the same as saying, those who fight the most violently, those who give least heed to their conscience.
108. This accumulation of might and of power generates in turn three kinds of conflict. First, there is the struggle for economic supremacy itself; then there is the bitter fight to gain supremacy over the State in order to use in economic struggles its resources and authority; finally there is conflict between States themselves, not only because countries employ their power and shape their policies to promote every economic advantage of their citizens, but also because they seek to decide political controversies that arise among nations through the use of their economic supremacy and strength.
As a result, many people today are convinced the world cannot run without the rich being rich. Is that, however, the truth? That’s what we’ll look at next week.
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