THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Monday, January 18, 2010

The Political Animal, Part XXI

In the previous posting in this series we discovered that a society had developed in the United States of the 1830s that appeared to adhere more closely to the natural moral law based on the divine Intellect (Nature) than any previous arrangement in history. As Alexis de Tocqueville analyzed the situation, "By the side of every religion is to be found a political opinion, which is connected with it by affinity. If the human mind be left to follow its own bent, it will regulate the temporal and spiritual institutions of society in a uniform manner, and man will endeavor, if I may so speak, to harmonize earth with heaven." ("Causes Which Tend to Maintain Democracy: Religion Considered as a Political Institution Which Powerfully Contributes to the Maintenance of a Democratic Republic Among the Americans," Volume I, Ch. XVII)

Surprisingly, perhaps even shockingly to today's liberal who detects a lurking and insidious evil in public displays or expressions of religion of any sect, but who singles out the Catholic Church as especially obnoxious in this regard, de Tocqueville professed to see in Catholicism a particular affinity for and support of the best in American democracy. According to de Tocqueville, the Catholic population of the United States, particularly those of Irish birth or descent, while a minority, provided the country with a solid core of citizens who were, at one and the same time, both independent minded, and submissive to good laws that promoted equality and social order. De Tocqueville claimed that in America, even where strict observance of Catholic practices according to the letter of the law faded or was non-existent (as among Protestants and adherents of other faiths), nowhere was there stronger adherence to the spirit of Catholicism, even among non-Catholics, particularly when conforming political institutions to the precepts of the natural moral law. (Ibid.)

Nor was de Tocqueville alone in his opinion that Americans had somehow reconciled humanity's social and individual natures. Immediately following the Civil War, Orestes Brownson published his own study of the United States, The American Republic (1865). Brownson, with Emerson and Thoreau considered one of the "top three" Transcendentalists in the United States until he converted to Catholicism in the 1840s and was swept under the rug of history, was even more explicit than de Tocqueville in his belief that America represented something genuinely new.

Once the country corrected (more or less) its "original sin" of chattel slavery with the bloodiest war in American history, the stage was set for America to fulfill its true purpose. Brownson believed that the United States was chosen by God to continue reconciling humanity's individual and social natures and provide, as far as humanly possible, the ideal environment within which man could become more fully himself. As Brownson put it in the introduction to the book that he considered his finest achievement,

The United States, or the American Republic, has a mission, and is chosen of God for the realization of a great idea. It has been chosen not only to continue the work assigned to Greece and Rome, but to accomplish a greater work than was assigned to either. In art, it will prove false to its mission if it do not rival Greece; and in science and philosophy, if it do not surpass it. In the State, in law, in jurisprudence, it must continue and surpass Rome. Its idea is liberty, indeed, but liberty with law, and law with liberty. Yet its mission is not so much the realization of liberty as the realization of the true idea of the State, which secures at once the authority of the public and the freedom of the individual — the sovereignty of the people without social despotism, and individual freedom without anarchy. In other words, its mission is to bring out in its life the dialectic union of authority and liberty, of the natural rights of man and those of society. The Greek and Roman republics asserted the State to the detriment of individual freedom; modern republics either do the same, or assert individual freedom to the detriment of the State. The American republic has been instituted by Providence to realize the freedom of each with advantage to the other. (Orestes Brownson, "Introduction," The American Republic, 1865)
Despite some vagueness in terminology regarding social rights, Democracy in America and The American Republic share common assumptions. Chief among these is that the human person and thus the State, a human artifact, are based on and must conform to God's Nature, even when not following someone's interpretation of what may (or may not) be God's Will. Where de Tocqueville focused on the sociological aspects of a government of the people, by the people, and for the people, however, Brownson explored political philosophy and science.

De Tocqueville and Brownson are not in competition. Both Democracy in America and The American Republic should be read as necessary complements to each other. De Tocqueville, for example, appears to assume as a given that when he refers to "Catholic political philosophy" his predominantly French and presumably Catholic readers know what he is talking about. On the other hand, Brownson, addressing an audience composed largely of non-Catholics, went to great lengths to explain of what that philosophy consists and why the American republic embodies Catholic political philosophy to a greater degree than any previous State in history.

Similarly, Brownson's audience in 1865 consisted primarily of small landowners and other proprietors who were fully aware of the importance of private property as the chief support for other natural rights, such as life, liberty, and pursuit of happiness (i.e., the acquisition and development of virtue). Other than to explain some technicalities about property and its importance as a natural right and to condemn both socialism and capitalism, Brownson spent very little space on ownership and private property. Nevertheless, he clearly considered widespread direct ownership of the means of production critical to the survival of a healthy State and a moral social order — hence his devastating critique of what he considered the deadly poison of socialism:
It wears a pious aspect, it has divine words on its lips, and almost unction in its speech. It is not easy for the unlearned to detect its fallacy, and the great body of the people are prepared to receive it as Christian truth. We cannot deny it without seeming to them to be warring against the true interests of society, and also against the Gospel of our Lord. Never was heresy more subtle, more adroit, better fitted for success. How skillfully it flatters the people! It is said, the saints shall judge the world. By the change of a word, the people are transformed into saints, and invested with the saintly character and office. How adroitly, too, it appeals to the people's envy and hatred of their superiors, and to their love of the world, without shocking their orthodoxy or wounding their piety! Surely Satan has here, in Socialism, done his best, almost outdone himself, and would, if it were possible, deceive the very elect, so that no flesh should be saved. (Essays and Reviews Chiefly on Theology, Politics, and Socialism, 1852.)
Brownson, of course, didn't have to deal with today's modernists and positivists and their word games, or the circumlocutions employed by both capitalists and socialists to try and whitewash their dogmatic beliefs under different names, such as "democratic capitalism (or socialism)," "solidarism," or even "Christian socialism." No, Brownson knew exactly what socialism is, and defined it the same way as Karl Marx in The Communist Manifesto: the abolition of private property in the means of production. In the America of Brownson's day, no person considered sane questioned the importance of private property in the means of production, whether or not he or she agreed that direct ownership of capital should be widespread.

De Tocqueville, on the other hand, wrote primarily for a French and English audience, both countries in which the tradition of small ownership had been eroded for centuries, as William Cobbett frequently pointed out in his polemical works. Consequently, de Tocqueville stressed far more than Brownson the importance of widespread direct ownership of the means of production as the chief support for other natural rights.

The problem, of course, is obvious, at least in hindsight. The Industrial Revolution had received a great impetus in the United States due to the Civil War. Many authorities, then as now, credited the Union victory to the industrial and commercial might of the North. In mid-century, however, relatively few people were directly engaged in industrial and commercial enterprises, even as wage earners. Contrary to the assertions of David Christy in Cotton is King (1855), even in the South before the war, relatively few people — including slaves — were employed on plantations engaged in the production of goods, services, and commodities for the international market. Most slaveholders owned less than a dozen slaves, usually only one or two, and were engaged in subsistence agriculture or production of goods and services for the local market. The vast majority of the population, North and South, were engaged in subsistence agriculture, artisan type production of goods, or kept small shops.

All of this changed with Abraham Lincoln's 1862 Homestead Act and the opening of the "Great American Desert" to settlement — and as a vast new market for the goods being produced in the increasingly industrialized East. The Homestead Act changed the essential character of American agriculture from subsistence farming supplemented with small "cash crops," to production primarily for market, with basic necessities purchased instead of being homegrown. (Laura Ingalls Wilder brilliantly chronicled this change in her "Little House" books.) [This assumption is so engrained in American tax and agricultural policy that in 1948, the decision in the landmark case Wickard v. Filburn (317 U.S. 111 (1942)), that greatly increased the economic power of the federal government, held that all agricultural production, even that which was consumed on the farm where it was produced, was subject to the interstate commerce clause, whether or not it was produced for market.] Similarly, as the settlement of the West opened up a new market, the pace of industrialization increased. Settlement and industrialization not only complemented each other, neither would have been possible — or, at least, as successful — without the other.

Unfortunately, while agricultural capital — land — was broadly owned, with the ownership base rapidly expanding due to the Homestead Act, ownership of the new and growing commercial and industrial enterprises was becoming increasingly concentrated. By 1905, when Judge Peter Stenger Grosscup, one of Theodore Roosevelt's "Trust Busters," wrote a series of articles addressing the situation, small ownership of commerce and industry had, for all practical purposes, disappeared as a feature of American life.

Concentration of ownership of what was becoming responsible for the bulk of production of marketable goods, services, and commodities built a serious conflict into the system. As Louis Kelso and Mortimer Adler pointed out three-quarters of a century later (The Capitalist Manifesto, 1958, and The New Capitalists, 1961), concentrated ownership is not due to some law of nature, as both capitalists and socialists assume even to this day. On the contrary, concentrated ownership of the means of production is directly attributable to a profound misunderstanding of money and credit, and thus a misapplication of incorrect assumptions to the task of financing capital formation, whether that capital is in the form of industrial, commercial, or agricultural assets.

This misunderstanding about money and credit has a profound influence on how people view the political process. Nowhere is this more evident than in the work of two Englishmen, Walter Bagehot and Albert Venn Dicey. Briefly (for this is not the place to get into an in-depth analysis of the differences between the two), Bagehot, who expressed great disdain for the United States, was a firm adherent of State-controlled monopoly capitalism (described in his book, Lombard Street, 1873) — with the State itself controlled by "the money interests." Clearly taking the "law is will" position (lex voluntas), Bagehot advocated a form of "democracy" in which, consistent with the principles laid out by Thomas Hobbes in Leviathan, the commercial and financial elite rather than the hereditary monarchy or aristocracy controlled the country, as was the case in India before the Great Mutiny (The English Constitution, 1867). Not surprisingly, Bagehot was an adherent of the British Currency School, defining "money" essentially as a State-authorized purchase order.

Dicey, Bagehot's most effective philosophical opponent, was a firm believer in the rule of law, and popularized the concept on both sides of the Atlantic. A great admirer of the United States (unlike Bagehot, who never visited America, Dicey paid an extended visit to the U.S. in the 1870s), Dicey unfortunately avoided the economic issue, focusing on purely political matters. This may have been as a result of the inevitable conflict between a democratic political system, and an absolutist economic system.

For whatever reason, Dicey, a firm adherent of the law is reason position (lex ratio), did not address the problems inherent in applying the elitist and undemocratic principles of the Currency School to a presumably democratic political system. Dicey's classic, An Introduction to the Study of the Law of the Constitution (1886), simply avoids the whole issue of economics, although he was appointed one of the first professors at the new London School of Economics in 1896. Dicey's Conflict of Laws, published that same year, concentrates largely on what is today known as "business law," and does not discuss the conflict between the two schools of monetary thought. On the other hand, Lectures on the Relation Between Law and Public Opinion in England During the Nineteenth Century (1905) is a brilliant analysis of the principle of subsidiarity, and its relation to the sovereignty of the individual manifested through membership in groups.

Incorrect assumptions about money, credit, and finance were built into the American system following the Civil War. Part of this was due to Treasury Secretary Salmon Chase's controversial decision to finance the Union war effort primarily through borrowing instead of taxation. There was, however, also the problem of the chaotic banking system, a situation made infinitely worse by the President Andrew Jackson's pyrrhic victory in his war against the Second Bank of the United States in the previous generation.

The National Bank Act of 1864, modeled on the British Bank Charter Act of 1844, did bring a measure of order to the financial system. Unfortunately the National Bank Act, in common with Sir Robert Peel's Bank Charter Act, embodied two false assumptions about money, credit, and finance that were to have serious repercussions in the decades to come, culminating in the "Panic of 1907."

These were, one, that "money," contrary to the natural moral law based on the Intellect, is and can only be a purchase order issued by the State or a State-authorized individual or entity. Two, that capital formation can only be financed out of existing accumulations of savings. With this in mind, the subtitle of Kelso and Adler's above-referenced second book, The New Capitalists, is revealing: "A Proposal to Free Economic Growth from the Slavery of Savings."

These two assumptions, widely accepted even today, flatly contradict the true nature of money as anything that can be used in settlement of a debt, and the science of finance as based on a regulated system of secured promises, with or without existing accumulations of savings. These elitist assumptions about money and credit — the life's blood of the community — came into direct conflict with the democratic American political system, with results that became ever more destructive of political and social stability as the century wore on.

Unfortunately, as the damage increased, people began to forget or ignore the basic principles and "rules" of democracy in America as discerned by de Tocqueville, and the true origin and transmission of the sovereign power as described by Brownson. In view of the apparent helplessness of the individual seemingly trapped in an impersonal system, people began to look to the State as the agency that alone could ameliorate the increasing disorder in society. We will begin to look at some of the responses to this disorder in the next posting in this series.