"Justly Discredited"
Ψεγομένη Δικαίως,
Trade, Moneylending, & Capital

But the branch [of the art of wealthgetting, τέχνη χρηματιστική, tékhnê khrêmatistiké] connected with exchange [μεταβλητική, metablêtiké] is justly [δικαίως, dikaíôs] discredited [ψεγομένη, psegoménê, "blamed," "censured"] (for it is not in accordance with nature [οὐ κατὰ φύσιν, ou katà phýsin], but involves men's taking things from one another). As this is so, usury [ὀβολοστατική, obolostatiké, "obol weighing"] is most reasonably hated, because its gain comes from money [νόμισμα, nómisma] itself and not from that for the sake of which money was invented. For money was brought into existence for the purpose of exchange, but interest [τόκος, tókos] increases the amount of the money itself (and this is the actual origin of the Greek word:  offspring resembles parent, and interest is money born of money); consequently this form of the business of getting wealth [χρηματισμός, khrêmatismós] is of all forms the most contrary to nature.

Aristotle, Politics, Book I, Chapter 3 (H. Rackham, Loeb Classical Library, 1950, 1998, p.51, color added)

ἔδει οὖν σε βαλεῖν τὸ ἀργύριόν μου τοῖς τραπεζίταις,
καὶ ἐλθὼν ἐγὼ ἐκομισάμην ἂν τὸ ἐμὸν σὺν τόκῳ

Oportuit ergo te mittere pecuniam meam nummulariis,
et veniens ego recepissem utique quod meum est cum usura.

Then you ought to have invested my money with the bankers, and at my coming I should have received what was my own with interest.

Matthew 25:27; see "bankers' tables" in the Apology

Since only actions aimed at perceived benefit to others were, to Aristotle's mind, morally approved, actions solely for personal gain must be bad. That commercial considerations may not have affected the daily activities of most people does not mean however that over any prolonged period their very lives did not depend on the functioning of a trade that enabled them to buy essentials. That production for gain which Aristotle denounced as unnatural had -- long before his time -- already become the foundation of an extended order far transcending the known needs of other persons.

F.A. Hayek (1899-1992), The Fatal Conceit, The Errors of Socialism (University of Chicago Press, 1988, 1991, p.46)

A curious feature of Greek influence on Christianity is the moral condemnation of trade and finance. This does not originate in Judaism, where (as in Islam) money and trade have always been legitimate, nor in primitive Christianity, which grew up as an urban religion among what was actually a prosperous middle class -- with Matthew 25:27, as we see above, condemning someone who does not take advantage of the interest paid by the bankers. Instead, the whole moral discourse of suspicion and condemnation of trade and money derives from Greek philosophy. While it may be assumed that the later Christian attitude went along with its world-denying and monastic tradition, we see a lot less of that in the East, in Constantinople, where a cash economy continued through the Middle Ages and the life of the City was much consumed with trade, while monasticism, of course, was taken no less seriously than in the West. Instead, the Latin West, under the influence of the former Neoplatonist, Augustine, and where the cash economy collapsed into subsistence agriculture, became the venue of suspicion of merchants, money, and cities, especially when these came to be associated with the Jewish merchants who, welcomed or not, nevertheless were able to travel and function in Christian areas where, for instance, Muslims were never allowed. After a modern economy developed in the West, money, buying, and selling, when these were regarded as bad things, continued to be associated with the Jews, as we see from the Enlightenment (e.g. Kant and Fries) to Marx to the socialist left of the present. The vitriol and violence directed against the Jews, however, finds no counterpart in the regard of defenders of Capitalism for the Greek philosophers, particularly Plato and Aristotle, who did so much to delegitimize merchants and bankers. When even Jefferson still valorized rural life and distrusted bankers and "stock-jobbers," and the modern left constantly seeks to shift the blame for the failures and irrationality of government over to bankers, brokers, and corporations, while American universities have become hotbeds of Marxism and anti-Semitism, the terms of the debate have really changed very little.

Ἐγκλινοβάραγγος (Enklinobarangus)

If craftsmen and blacksmiths were feared for transforming material substance, if traders were feared for transforming such intangible qualities as value, how much more will the banker be feared for the transformations he effects with the most abstract and immaterial of all economic institutions? Thus we reach the climax of the progressive replacement of the perceivable and concrete by abstract concepts shaping rules guiding activity:  money and its institutions seem to be beyond the boundary of laudable and understandable physical efforts of creation, in a realm where the comprehension of the concrete ceases and incomprehensible abstractions rule.

Thus the subject at once bewilders specialists and offends moralists...

F.A. Hayek (ibid., p.102)

No man is an Iland, intire of it selfe; every man is a peece of the Continent, a part of the maine; if a clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were... Any mans death diminishes me because I am involved in Mankinde. And therefore never send to know for whom the bells tolls; it tolls for thee.

John Donne (1572-1631)

The long quote from Aristotle above nicely combines moral condemnations of trade and of moneylending with interest, with reasons against each. This provides an excellent starting point for a consideration of the manner in which worthy economic acitivites and institutions would be morally condemned over history.

Aristotle's judgment of "not according to nature" (οὐ κατὰ φύσιν, ou katà phýsin) is applied to both trade and moneylending. This could involve the view that these activites simply occur by custom or art, and not naturally, which would not mean there was anything really wrong with them, or that there is something adverse to human nature in them, which would be bad. It sounds like the latter judgment is more like it. Why exchange in trade is against nature is explained with the characterization that it "involves men's taking things from one another [ἀπ᾽ ἀλλήλων, ap' allélôn]." This seems insufficient, since it makes trading sound like theft, where men take things from each other against their will and without a real exchange of value. We are thus missing an essential distinction. Its absence, however, may reveal something. Ancient condemnations of trade, as in St. Augustine, expect that the temptation to fraud and cheating in such business is overwhelming. Thus, whether trade otherwise has beneficial results or not, the conscientious person will avoid it [note].
Freedom from Want, 1943, Norman Rockwell (1894-1978), National Archives at College Park

Not everyone, or even Aristotle, condemned trade and exchange completely. They tended to understand that there were benefits from it. Items not available in one location could be conveyed there by merchants. These might even be essentials for various worthy purposes. Few could argue with the movement of food or iron, and merchants could hardly be expected to accomplish this without compensation. However, the movement and acquisition of foreign goods was regarded as a mixed blessing. First of all, it brought foreigners, whom many Greeks regarded as a bad influence. Most importantly, it made possible the acquisition of many things that Greek philosophers thought were "unnecessary" and therefore corrupting. Plato regarded unlimited desire as the root of all evil. The development of desires and needs unrelated to worthy purposes was for him the worst possible thing that could happen to an individual or a city. Trade and its temptations therefore would be the most dangerous source of "unnecessary desires," posing a grave and seductive threat to virtue and polity.

While Plato's caution is heavy with the paternalism of his political philosophy, moral distaste for "unnecessary desires" persists in recent times, visited upon commercial culture in general and on advertising in particular. Complaints about "consumerism" usually mean accusations that people buy a lot of things that they don't need, and advertising is frequently blamed (by John Kenneth Galbraith, for instance) for engendering (and engineering) desires that people would not have had otherwise. Since "Who cares?" might be the natural reaction to such complaints, behind them are usually other layers of objections, that unnecessary desires are not benign and trivial because (1) they stress the environment, causing an "unsustainable" use of resources and generating excessive pollution, (2) they mean resources are used by rich countries for luxuries and so are denied to poor countries for necessities, perpetuating poverty and starvation, and (3) they mystify and distract consumers from more worthy purposes, like fighting racism, sexism, classism, etc.

Behind these objections are an equal number of misconceptions.

  1. The availability of resources can be determined by their cost. More than thirty years ago economist Julian Simon (1932-1998) offered a bet to environmental doomsayer Paul Ehrlich that a basket of commodities, of Ehrlich's choice, would cost less after ten years, from 1980 to 1990. Ehrlich took the bet. And lost it. Meanwhile the mass starvation that Ehrlich had predicted for the 80's didn't happen. Resources tend to be discovered as they are needed, and over time technology makes their recovery more economical. Oil prices spike occasionally because OPEC tries to enforce a monopoly, or because people in modern America don't want oil refineries in their backyards, limiting supply of refined products, or because, as in California, specialized mixes of fuel are required at different times of the year for pollution control, mixes that are made only in California refineries (which no one wants in their backyards). Natural resources are thus rather less limited, to say the least, than the doomsters suppose (though in 2004 we have a brand new prediction that oil will run out in ten years). One suspects that they want resources to be limited enough to lend force to their objections (whose real source is moral) to consumption. As for pollution, wealthier is not only healthier (people live longer) but cleaner. Publicity, torts, and laws target pollution in capitalist countries, while the worst pollution ever was in Communist ones, with the Soviet Union actually dumping nuclear waste into rivers and lakes, and the landscape, with everything in it, turned black from coal burning in Romania. These appalling practices and developments were unknown to the West at the time and have now been conveniently forgotten, with the bien pensants only remembering the myth that planned economies, free of greed, would never countenance pollution.

  2. Since the United States exports food, it is not clear how the manufacture of cell-phones or DVD players denies food to African countries. Objections of this sort tend to derive from a crude Cargo Cult sort of economics [note], in which wealth is a fixed quantity, to be "distributed" fairly among equal claimants in the human community. Wealth, however, is created, not found; and it is created by human enterprise and exchange. Consumer products thus add, not substract, from human wealth, as even Karl Marx would have understood; and if the poor in Haiti or Chad could mass produce some appealing commodity, then they would enter modern life. Gandhi expressed the common misconception in this respect by saying that we should "live simply so that others can simply live" (a line I've seen quoted by the actor and environmental activist Ed Begley Jr. in an appearance at my own institution, Valley College). However, living simply can easily affect others, in a Chinese saying, by denying them "their rice bowl," i.e. taking away their means of subsistence. While we want others to have food and other necessities, their only hope of independence and self-reliance is not to be given such things but to create something that others want, enabling them to exchange their goods for both necessities and luxuries. The truth, however, is that many of those who believe that somehow the West (and Japan) has impoverished poor countries nevertheless don't want such countries to enjoy a commercial economy. This would merely visit a vulgar "consumerism" on them. Better that they remain poor and virtuous, like Cuba or North Korea. So the objection boils down to, not any real impoverishment of Third World countries, but, again, moral objections to "unnecessary desires."

  3. The idea that there are better things consumers could be doing if they were not distracted by consumer products is simply paternalism and political moralism at its worst. If people are not constantly and grimly fighting for some politicial cause, then they must suffer from "false consciousness," mystified by their capitalist oppressors. The conception, indeed, is of a totalitarian society, where all have the same purposes and work cooperatively, jointly, and collectively to achieve them. The "mass" culture of consumerism can then return to the authentic folk culture that activists hate to see vanish in Third World countries -- vanishing, of course, because the people of Third World countries often prefer T-shirts, radios, and other consumer products over the meager contents of their traditional cultures (unless they can turn traditional products into consumer items -- unfortunately this usually means merely craft artwork that is sold to an elite, not a mass, market). But, of course, whatever they actually prefer is something that can be suppressed by the righteous and virtuous political action of the activists. Amazonian Indians should be proud of a mesolithic existence.

At the bottom of the Greek and other ancient objections to trade was the idea that traders don't really add any value to the items they deal in. They take from the maker and convey to the buyer, but they have not made anything themselves. This makes them parasites. Although philosophers like Plato did recognize that moving the goods itself adds value to them, it was very hard to shake the overall impression that traders didn't do anything essential or necessary.

Curiously, Islâm, from whose moralism we might expect similar attitudes about trade, instead has only positive things to say. Thus, the Qur'ân asserts, "It is no sin for you to seek the bounty of our Lord [by trading]" [2:198]. The annual pilgrimage to Mecca always doubled as a trade fair, with people bringing goods from all over the Islamic world, in part to finance the pilgrimage itself, which could be ruinously expensive. We can imagine that this benign attitude towards business was a function, perhaps in great measure, of the Prophet Muḥammad himself having engaged in trade.

If the feeling among moralists was that traders didn't do anything essential or necessary with trade, how much more so with moneylending (where Islâm did find a problem). As Aristotle says, charging interest ("usury," obolostatiké, "obol weighing"), is "reasonably hated." If traders are parasites on goods, the moneylenders are parasites on money, which itself is parasitic on trade -- since "money was brought into existence for the purpose of exchange." If exchange itself is contrary to nature, moneylending is "of all forms the most contrary to nature." There were few to disagree with this during the Middle Ages. Islâmic Law prohibited (and prohibits) charging interest, the Catholic Church and most Christian states prohibited the charging of interest by Christians, and even Judaism prohibited Jews from charging interest against other Jews. Since Jews then could loan money with interest to Christians and Muslims, they acquired a reputation as the moneylenders in Europe and the Middle East. This haunted Jews long after most Christians had given up the idea that there was anything wrong with lending money and charging interest -- except, of course, among those, not always Christians, who continued to think that either interest or money or both were wrongful or unnecessary.

Finance is still widely misunderstood and disliked, even by people who otherwise have no complaint about capitalism. A good example of that was Henry Ford, who revolutionized mass production and created an automobile that could be sold to a mass market ($300 for a Model T Ford in 1920 -- perhaps only $3000 in 1999 dollars). Ford didn't like bankers and finance, and thought of all of them as largely devices of an international Jewish conspiracy. One fan of Ford's writings about this was no less than Adolf Hitler. (Ford went quiet with his charges before that mortifying tribute, either because he thought better of it or just to avoid lawsuits.) Without any moral objections to exchange, Ford retained the ancient condemnation of moneylending and associated it with its Mediaeval exemplars. For the man who said "History is bunk," this is a good example of how much trouble one can get into by combining confused history with confused economics and morality.

As a recommendation of prudence, Benjamin Franklin said, "Never a borrower nor a lender be." However, not much very serious would ever get done economically without borrowing and lending. Even if one accumulates capital slowly until a large investment can be made without borrowing, success then means a larger accumulation of capital which will need to be disposed of in some way. People imagine that they would just put it in the bank. The bank, however, then has to worry what to do with it, especially if people expect to be paid interest on their money! So they loan it. Either way, the problem is what to do with money if one is not simply going to buy commodities for one's own use (or give it away, a favorite alternative for the very rich). It is to be invested, with the purpose of acquiring income. This can be done by buying land or buying a business, which directly provides one with rents or profits, but also requires some considerable supervision, if not substantial business skills to use property or run a business. Most people who already have money would like something simpler -- and buying one business after another with profits would result in a commercial conglomerate that one person could not supervise.

Making loans means becoming a banker, which also requires considerable business skills. Buying stocks and bonds also requires knowledge and supervision, but much less than with the other things. This means that investment need not be a full time job, which is just the idea for someone who has aleady made their money. The market for stocks and bonds, however, is a level of finance that is already a further step removed from simple loans/moneylending. We can imagine Aristotle becoming even more indignant about such things. Indeed, we find Thomas Jefferson frequently complaining about "stock jobbers" (i.e. stock brokers), and fury over "speculators" became the principal public and political response to the Great Depression. Franklin Roosevelt, like most subsequent "liberal" opinion, clearly blamed financial markets for the stock market Crash of 1929 and the subsequent Depression. Neither understood or trusted what such people were doing.

We see something similar in the movie Pretty Woman [1990], where Richard Gere plays a businessman who buys up companies and then breaks them up and sells off the parts for a profit. This kind of economic activity is called "arbitrage." This is presented in the movie, as such things are in the press generally, as a useless, evil thing, that destroys jobs and wrecks business -- the "greed" of the 80's. In the movie, Julia Roberts even compares it to stealing cars and selling the parts. In fact, it is a useful thing, which easily creates jobs and increases production. A company can be broken up and sold for a profit only if it is worth less than what the sum of what its parts are worth individually. But if a company is worth less than the sum of its parts, then breaking up the company frees capital that can be used for other investment purposes, including creating jobs in other companies or industries. Otherwise the capital is locked up and useless. Julia Roberts' analogy to stealing a car and selling the parts is false since nothing is being stolen when you buy a company: If you buy a car and sell the parts for a profit, that would be a good, and honest, business, and is often done. Richard Gere's character also wanted (initially) to demolish a shipyard and sell the land for others purposes. If such a move would be profitable, then clearly the land was worth more for the other purposes than for the shipyard, capital was again being uselessly tied up, and the shipyard would be economically more valuable located somewhere else. The movie Pretty Woman thus presents an ideological view that is hostile to capital and ignorant of its purpose -- all too common in Hollywood movies.

Here, Julia Robert's comparison to car theft recalls Aristotle's failure to distinguish between exchange and theft. While most people in the West and Far East now take loans and interest for granted, more sophisticated financial instruments and activities, like commodity futures or arbitrage, may still be viewed with suspicion and disapproval. This suspicion had grave financial consequences when financier Michael Milkin, the "king of junk bonds," was prosecuted for technical trading violations but was widely regarded as guilty of fraud for trading in junk bonds at all. However, there was nothing wrong with junk bonds, except that they were, and are, riskier than rated bonds. Because of the widespread idea that junk bonds were themselves fraudulent and worthless, Congress required that Savings and Loan institutions sell off their junk bond investments. Such forced sales, of course, drove down prices and meant that most Savings and Loans took nothing but losses, often serious losses, on their investments. Savings and Loans were already in financial trouble because the inflation of the 1970's had rendered their traditonal low interest loans worthless. The result was the collapse of the entire Savings and Loan industry, requiring billions of dollars from the government in payoffs for the federally insured (up to $100,000) accounts at the Savings and Loans. In evident public and political discourse, the blame for this has never properly been laid at the feet of the government. Just more "greed" of the 80's.

Condemnation of trade, charging interest, and modern financial instruments, however, has done nowhere near as much damage, in poverty and in lives, as the condemnation of capital itself. Marx called capitalism "capitalism" just because it was based on the existence of capital -- Adam Smith had called it the "natural system of liberty." Since Marx did not believe that capital needed to exist, he could reject the value of owners of capital, managers of capital (both "capitalists"), and even of money, which assigns a numerical value to capital -- as well as serving as the medium of exchange and interest -- where Marx, as we might expect, follows Aristotle in condemning them. When Lenin tried abolishing private business and money altogether, however, the Russian economy simply collapsed. Even allowing money and some private enterprise, however, the Soviet Union never allowed capital markets, private investment, or private employment. The idea was that, as capital was a fiction, concerns about capital and profit could be ignored. The result of this was simply a country that ground down through capital depreciation -- i.e. things wore out, nothing new was ever done, every business needed a subsidy, and so, like a starving person metabolizing protein, the country consumed its own capital rather than generating any new wealth. Those who now deny that the Soviet Union was "real" Marxism cannot admit that the Soviet Union always operated on such undeniable Marxist principles -- or that a purer "real" Marxism, without money and prices, tried by Lenin, had already failed disastrously in 1920 [note].

Like many people who don't know what to do with capital, and who don't know what is done with capital, Marx simply supposed that there was nothing to do with capital except what was aleady being done. Thus, if the English built railroads, the only way new capital could be invested would be to build railroads elsewhere. That, indeed, is what the English often did; but, once enough railroads were built everywhere, then, presumably, the English wouldn't know what else to do. Financial panic and the fall of capitalism would result. This is a simplied but not unfair summary of Marxism. What Marx and recent critics of capitalism haven't comprehended is that imagination is the source of new investment and new wealth. The British stumbled as the "workshop of the world" just because British investors had difficulty moving in their minds beyond steam and rail. Henry Ford was American, and, as we can imagine seeing in the reverse of the 1914 Federal Reserve $20 Note, the car and airplane are preparing to surge past the steam locomotive. Diesel engines eventually would replace steam in trains and ships also. From imagination come the new products that tend to distinguish the decades, like radio in the 1920's, VCR's in the 1980's, or personal computers in the 1990's, and also new ways of producing products, so that less labor is necessary for greater production. Imagination, also, tends to be found in the more eager, yearning, and (sometimes literally) hungry, which is why about half of all new American millionaires are foreign born. Natives always tend to become comfortable and complacent and expect that their earnings and welfare are by right and custom. Eager immigrants, like Jews, Chinese, Koreans, (East) Indians, etc., are pushy and offensive, throwing their betters (i.e. natives) out of work. A society open to immigrants, and into which they can blend with relative ease, thus perpetually renews itself -- as the United States has done for most of its history.

Just what imagination can do for innovation and productivity is something that can only really be understood by those who do it, and the successful entrepreneur or venture capitalist needs to have some clue. The critic who thinks that capitalists will run out of uses for capital doesn't. But if, to the likes of Marx, capital is a superfluous interposition between labor and consumption, what is it actually? It is, after, the value of objects, particularly the value of productive assets (capital assets), in the estimation of individuals who value them. Marx is often said to have a "labor theory of value," something that seems to go back to John Locke. Most people easily understand that labor, however, does not necessarily bestow any value on objects. Crackpots can devote years of effort to projects that are completely worthless to others. Even Marx, however, understood this, and his formula is actually that value derives from "socially necessary labor." "Socially necessary" can easily eliminate the value of the crackpot creations and discount the contribution of wasteful overwork. It also echoes Plato's "unnecessary desires" rhetoric:  it is not really labor that makes for value, but what is "socially necessary." How what is "socially necessary" is then determined is the problem. What people buy as a matter of fact in the market cannot be allowed, since they can be deceived by marketing or by their own inappropriate desires. What is to be allowed might be voted on, which sounds like the right approach in a thoroughly political society, but this could only be allowed when a majority can be counted on to have the right political consciousness. "False consciousness" can only be avoided if we only allow the wise and the good to decide what is "socially necessary." This is what political elites always want, and it simply turns Marxism to the truly Mediaeval political moralism and paternalism -- the obvious preference of leftist activists.

From Aristotle to Marx to their living brethren, what we see are people who don't like most of what other people want and who particularly don't like the people who produce and provide it for them -- the traders, the moneylenders (bankers/financiers/brokers), and the capitalists (entrepreneurs/industrialists). In a Cargo Cult economics, goods just appear, or are easily created by the simple and pure (i.e. simple farmers or proletarian workers), and properly rain down on all without insidious and unfair distinctions between the productive and the non-productive. Of course, what we see when attempts have been made to impose these ideas in real societies is that political elites, and wise and the good who make the disinterested judgments for the good of others, cannot be expected to live like, well, hoi polloi, since this would be beneath the dignity of government, might expose them to violence from reactionaries, or would waste their time as the people's business calls. So they really need special privileges and elevated, isolated living arrangements. Unfortunately, although these pretentions are most justly to be discredited, blamed, censured, and hated, we still see the likes of Oliver Stone and even Steven Spielberg fawning over Fidel Castro, and in 2003 the occasional anti-war activist even had kind things to say about Saddam Hussein (after all, the status of women was better in Iraq than in Afghanistan or Saudi Arabia -- at least the women who had not been beaten, raped, or murdered). The danger of these people is now as great as it has ever been, even as the rhetoric against capital, finance, and corporations (not to mention Jews) is as heated as it has been since the Fall of Communism.

Nevertheless, the disadvantages of anti-commercial ideology are heavy. When those who hated capital and consumption (and Jews) in the 20th century murdered some hundred million people, and the poster children for the struggle against international capitalism and America are now fanatical Islamic terrorists, this puts recent enthusiasts in an awkward position. Most of them are too dense and shameless to appreciate it, and far too many Americans are taken in by moralistic and paternalistic rhetoric, but it is, at least, easily exposed, by those with the wit and profile to enunciate the issues publicly. Unfortunately, there are actually damn few of them. So the struggle continues.

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Justly Discredited, Capital, Trade, & Moneylending, Note 1

There may not be too many readers who have had the chance I had (in 1969-1970) to buy things in traditional Arab markets in Lebanon, Egypt, and Syria. One of my experiences was in a shop in Aleppo, when I had to give a fairly large note to the shopkeeper for a purchase that had been negotiated in Arabic. He called a young boy to the front to take the note back to the shop safe for change. I noticed from his instructions (in Arabic) that he asked for less money in change than was owing to me. He may not have thought that my command of the language was good enough to understand him. My Arabic, indeed, wasn't all that good, but it was good enough to know what he said. When the boy brought the money up, and it was passed on to me, I said that this was not the correct amount, and that I should get back more change. The shopkeeper looked at me for a moment and then called to the boy to bring the extra money. One might think that such a man would be embarrassed to be found out in trying to short-change a customer. Instead, he looked me in the eye and shook my hand. By not being cheated, I had gained respect.

So what is one to think of this kind of thing? In a culture of bargaining, one is respected for being a good bargainer. P.T. Barnum said it all, "Never give a sucker an even break." Is this just a "stereotype"? No, it is a cultural practice, a very ancient one. But it also means that a naive person is just asking to be taken, though more people may take advantage of that than others. Attributing these practices and attitudes to Arabs, or, has traditionally been done, to Jews (as we even see in Kant), may seem hostile to those who don't know what traditional Middle Eastern society is like, but it can hardly be so when one is aware that, in fact, such a society is morally superior to the kind, now all too familiar, where all prices are fixed by the State and farmers and businesses (or Detroit) are bankrupted, crippling society, because they cannot turn a profit, or even break even. The moral perversity, viciousness, and stupidity of the latter is rarely exposed in Hollywood movies or television, while the "greedy" businessman, as previously the "greedy" Jew, turns up as the villain in a wildly disproportional number of stories.

The naive person wandering into a Middle Eastern market, and discovering that all the prices may be fluid and negotiable, may be alarmed and disconcerted. After buying something, and discovering that someone else has actually gotten it for less, may very well provoke a sense that one has been cheated and taken. This is certainly what St. Augustine had in mind when he thought that business was intrinsically morally corrupt. On the other hand, people who make regular purchases in a market know what the prices tend to be, and the custom of bargaining applies "market" pressure to the prices and serves to keep them, indeed, honest -- or to accurately reflect supply and demand. In being taken, the naive person is being initiated, or hazed, and taught a valuable lesson. Perhaps Augustine did not need to make his own daily purchases. As the Bishop of Hippo he probably had servants who spent the actual money.

Also, the advantage may be reversed. A friend of mine was offered a rug in the market in Aleppo for 300 Syrian pounds, or more (it was a long time ago). She had no desire for a rug, and no intention of buying one. The price began falling. We left the shop. We were pursued down the street. Eventually the price came down to £50, which at the time was only $12.50. So she bought it. I think it was worth a lot more than that. I had the honor of carrying it back to Beirut, where it was shipped home -- probably at greater expense than its purchase price.

A noteworthy thing about Islâm is that, although charging interest is absolutely forbidden by Islamic Law, there isn't a hint of condemnation or disapproval of trade or business in general. Indeed, the Prophet Muḥammad himself was a merchant, and he never suffered the slightest pang or reproach that he was engaged in anything unethical or reprehensible. That being the case, and the practices of merchants in the market being quite open and respectable, one does wonder at the modern economic backwardness of the Middle East. One problem was the failure of Islamic Law to provide for durable corporate entities. Partnerships were allowed, but the death of a partner meant that the assets needed to be dispersed among the heirs. They couldn't just be given stock in the company. In the absence of a robust banking industry, which is not likely to be possible given the prohibition of interest, and the absence of a stock market, since there are no joint-stock companies, the effect of all this would have been to prevent the accumulation of capital. Since the Left doesn't understand capital, they are not going to worry about that; but the inability to concentrate capital means that economic investment and development will be stifled, which is just what we see.

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Justly Discredited, Capital, Trade, & Moneylending, Note 2;
Cargo Cult Economics

Rather as Newton discovered the invisible forces known as the laws of gravity, and Freud laid bare the workings of an invisible phenomenon known as the unconscious, so Marx unmasked our everyday life to reveal an imperceptible entity known as the capitalist mode of production.

Terry Eagleton, Distinguished Professor of English Literature, Lancaster University, Why Marx was Right [Yale University Press, 2012] [note]

Implicit in much discussion of "income distribution" statistics is the notion that certain income brackets receive not only a higher share of total income but do so at the expense of lower income brackets. That is, "the poor" are made poorer by "the rich" who become richer, according to this view [i.e. it's a "zero sum game"]. Some, such as Washington Post columnist Eugene Robinson [], have made this claim explicit, as when he said, "The rich are getting richer at the expense not only of the poor but of the middle class as well." These non-"rich" are referred to as "long-suffering victims" of the "upper crust" who have been "waging an undeclared but devastating war" against them...

The rising absolute real income in the bottom quintile [i.e. "the poor"] happened over the years, while the number of billionaires has been growing -- and, according to people like Eugene Robinson, prospering at the expense of the poor, against whom the rich were "waging war." However, since most households in the bottom 20 percent in income have no one working, it is not clear what "the rich" can be taking from those who are producing nothing.

Thomas Sowell, Wealth, Poverty and Politics, An International Perspective [Basic Books, 2015, pp.184-185]

The original Cargo Cult developed in New Guinea after World War II. During the war, the Melanesian locals, who lived at a mesolithic or neolithic level of culture, saw airplanes arrive and disgorge vast quantities of "cargo." They did not understand that these things had to be manufactured and that the airplanes themselves were artifacts. They believed that the planes and the cargo were gifts from the gods, brought down to earth by ritual invocations. There were incidents where the crew members of aircraft were murdered because the locals thought they were no more than supernumeraries to the divine operation. When the modern armies left and the cargo stopped arriving, the "Cargo Cult" was a religious attempt to reproduce the invocations and effect the continued blessing of the gods. Not surprisingly, it didn't work.

People who like (some of) the products of a modern economy but don't like the entrepreneuers, industrialists, and financiers who make it all possible end up with something rather like the beliefs of the Cargo Cultists. There are several forms of this:

  1. One uses the fundamental principle that natural resources are themselves wealth -- for which Third World countries are never paid enough (except, I suppose, Saudi Arabia). Thus, we see former Vice President Al Gore saying that one of the problems of the international order is "the ongoing redistribution of wealth globally from the poor to the wealthy" [An Inconvenient Truth, The Planetary Emergency of Global Warming and What We Can Do about It, Al Gore & Melcher Media, Rodale Press, 2006, p.13]. So what is the "wealth" that is being moved from poor countries to wealthy ones? They are certainly not being looted of ipods or refrigerators. So there must be piles of goods there, "resources," that already count as wealth and that somehow are being improperly moved. Perhaps if the resources stayed where they are, they would miraculously transform into ipods and refrigerators.

    But if the complaint is that the poor countries are not being paid enough for their resources, we still have the problem that many countries that are wealthy from oil still don't produce anything else. The total non-petroleum exports of the entire Arab world are less than those of Finland. What the Saudis do with their money does not seem to involve any investment in native industries that make any contribution to the international economy. And they spend money on religious education and propaganda in their own radical Wahhabî sect that has helped promote terrorism -- even while unemployment and labor force participation in the Kingdom are dismal. At the same time, Hugo Chavez was able to all but destroy the economy of Venezuela because oil revenues could cover the loss, and also subsidize the money pit of Communist Cuba -- even while the oil industry itself was being undermined by the politicization of its management, resulting in less revenue for the government and for Cuba. When it became hard to find toilet paper in the stores, the Chavistas blamed some sort of conspiracy to withhold it. Now it is hard to find food.

    The fallacy involved in talk about "natural resources" usually involves ignoring two things:  (1) Natural resources are worth nothing unless you know what to do with them. Petroleum was usually a nuisance until it was discovered that it could be refined and burned. This knowledge involves a certain kind of capital, as a certain kind of human capital, namely the knowledge and imagination it takes to think of new products and processes. And (2) Natural resources must be recovered, which takes money, investment, equipment, all of which involve capital, and the knowledge of how it is to be done, which is the human capital of knowledge and imagination again. The way some people talk, you would think that the whole value of the finished industries is owed to those who happen to have the "natural resources" under their land, but who otherwise never would have done anything about it. Now it is hard to find food.

    But the Cargo Cultists may have something else in mind. When we hear complaints about the United States using more than its share of natural resources, we should realize that markets and usefullness are irrelevant to this kind of thinking. Everyone should have an equal share of natural resources, even if they have no idea what to do with them. Indeed, we might be better off if they don't know what to do with them; for, since natural resources are fixed, found, limited, and finite, they must be used sparingly. By using more than their share, Americans practice "overconsumption," which wastes resources and pollutes the Earth. The goal is virtuous poverty; and if Zimbabwe, for instance, doesn't know how to use its resources, then Americans should share their production, for which, given the total economic production of the planet, Zimbabwe has an equal claim to its share (since produciton, as we will shortly see, is also a fixed and found quantity).

    Natural resources, on the other hand, have a habit of not being as limited and finite as the Cultists seem to think. As we have seen, Julian Simon won his bet with doomster Paul Ehrlich. The dynamic in these matters is revealed by the history of oil, which, since the earliest days of the oil industry, has constantly been said to be about to run out. In the 1970's, with gas rationing and long lines, it looked like that was happening; but when Ronald Reagan removed price controls, supplies went up and, in short order, prices went down (to stay down more than 20 years). With prices again going up on oil in the 2000's (although no noticeable shortages), doomsters again began to predict "Peak Oil," i.e. the supplies would begin an inevitable decline. However, just as fools like Paul Krugman were exulting in the coming misery, prices fell precipitously because of technological breakthroughs that have put the United States on the path to being the largest producer of oil (again) in the world.

    Thus, natural resources have a way suddenly becoming more abundant, and this is because the ways they are used and the ways they are extracted are a matter of human imagination, whose power is actually unlimited. The Cargo Cultists never contribute an iota to this process, but they rely entirely on a paradigm of hoarding and theft -- i.e. your productivity is "hoarding," while my theft is "redistribution."

  2. Another form of Cargo Cult economics is the idea that the goods produced by an economy are fixed and "found" quantities, rather like "natural resources." This is the "pie" we keep hearing about in politics, and the Marxist principle of "to each according to his need" implies that some piece of the "pie" is owed to everyone just in proportion to their "need." Again, this ignores the role of capital, both material and human, to the point that any role of capital, knowledge, or imagination is eliminated and that any function beyond the bare labor necessary to produce or distribute goods is superfluous -- a folly of which even Lenin was swiftly disillusioned.

    When capital is ignored and disparaged and suppressed, the result removes the incentive for anyone to ever produce anything, let alone produce anything new. Thus, no new consumer product was ever created in the Soviet Block, and there where chronic shortages of everything. The people who might have worked to increase production and innovation were given no reason to do so, and risked positive vilification, if not imprisonment or excecution, if they ever enjoyed the slighted degree of personal success. In socialism, the principle is that personal success is unworthy and even criminal, so that everyone should work only for the benefit of others. This sounds nice until one realizes that, (1) it doesn't work, and (2) that the "benefit of others" ends up meaning the benefit of the political and bureaucratic elite, and not that of the mass of the people who otherwise would have benefited from a market and consumer economy.

    Thus, treating production as something that is fixed and found results both in goods actually disappearing, and in new kinds of goods never appearing. That the elite benefits while others don't may ultimately be noticed, but now there are also Environmentalist activists who actually want production destroyed, because they believe people should live in virtuous poverty, because consumer goods and wealth exploit and damage the planet. In this way, the impoverished totalitarian police state of Cuba has been praised as "ecotopia," where the Castros, wallowing in luxury, prevent most Cubans from destroying the planet with consumer products.

    In late 2015 there have been ugly incidents of students, and their faculty facilitators, attacking free speech at American colleges and universities, with cowardly administrators mostly failing to resist -- indeed, for years the administators themselves have constantly attempted to impose illegal "speech codes" on students and faculty. This all is not particularly new, but it now seems marked by a new level of self-righteousness and hysteria. And there is an economic aspect, which we should expect from campus radicals. They want free education and forgiveness of student debt. This is at a time when the cost of higher eduction has inflated beyond bounds -- thanks to government subsidies and the ease of student debt -- while the value of higher education for future employment has become questionable, even as absurd amounts of debt cannot be discharged through bankruptcy. The whole economic future of students is compromised, even as their degrees lead to no particular income advantage. The clueless students activists, however, are comfortable with "education" that is nothing but political indoctrination, without any economic value -- or even any value as traditional "liberal" education, which is the knowledge of a free person, rather than a blind Stalinist minion. Since they want to tax the rich to pay for their increasingly worthless colleges degrees, we see Cargo Cult economics peek out from their rhetoric. Thus, one student leader referred to the "hoarding" of wealth by the "1%," as though they just had rooms full of money or gold, like the treasure of Smaug in The Hobbit. Since this student was talking about increasing income taxes, and didn't mention a wealth tax, such as that advocated by Thomas Piketty, she obviously had no idea what the rich do with their wealth or how they earn income from it. Smaug's treasure paid no interest. Of course, if the student got a clue and decided to tax wealth as well as income, then the wealthy would need to liquidate their investments, which would deprive the economy of capital, which might well put the parents of the student out of work. But we can see here the depths of folly and ignorance produced by modern "higher education."

  3. A third version of Cargo Cult economics is now embodied in the notion of "income redistribution," which depends on the idea that income is a fixed and found quantity. Like the pile of fixed and found wealth, this was "distributed" one way and now needs to be "distributed" another way, to reduce "income inequality." But income is not, of course, any more than wealth or production, a fixed or found quantity. It is volatile. When people are deprived of the fruit of their labor, which is what "redistribution" is all about, they lose the incentive to produce wealth in the first place. The income that is stolen by the political class, which is what "redistribution" is all about, will evaporate. This affects far more than capitalists or entrepreneurs. Everyone who earns an income is impacted when government, in line with this ideology, seeks to fix wages. All the evils of price fixing follow. And since the idea is to drive up the wages of the poor and deserving, this generally prices them out of the job market, leaving them with less income than before. At the same time, people with incomes assigned by right begin to treat their jobs as sinecures, for which they actually do not need to be productive or even competent. This was once called the "British disease," as British union workers actually worked little or not at all. This was improved, although the attitude was not abolished, by Margaret Thatcher. Now it is characteristic of American education.

    Thus, in the reference to Al Gore above, he may have been thinking, not just about natural resources, but that foreign business exploits third world countries by hiring people at low wages to make products that are sold elsewhere. Perhaps this is what "redistributes" wealth in the way he describes. However, if the third world workers otherwise wouldn't have jobs, or if they will be forced into prostitution instead, and if they are well paid by local standards, then the net effect is an improvement in their lot, and their wealth increases. In freer economies, the workers soon start their own businesses, which become targets of envy by the Left (e.g. Chinese in Southeast Asia, Indians in East Africa, Jews in Eastern Europe, or Koreans in Harlem).

  4. Finally, we get something that is not quite a version of wealth, but is seen as a source of it in daily life, namely jobs. Much of modern political discourse revolves around the apparent assumption that jobs are a fixed and found quantity. This is, of course, related to wages, as above. Jobs get treated like feudal "livings," which were based on land and rents, so that there was a sense, certainly under the economic conditions of the time, that these things were fixed, as much fixed as feudal domains and peasants attached to the land. Under modern conditions, the whole idea suffers from multiple absurdities. First of all, the number of jobs simply depends on supply and demand. As wages fall to a market clearing level, the number of people hired rises to "full employment," which has often been seen at or below 2% unemployment. This can be confirmed in many historical employment statistics. Of course, as we have seen, the goal of much of politics is to drive up wages, either on the principle that this is owed to the workers or on the theory of Demand Side economics that the economy grows through higher wages. Of course, driving up wages by political fiat and price fixing simply prices low wage workers out of the market and generates greater unemployment. This was evident in Sweden, before the Swedes reformed their labor market, and is still evident in France. In fact, it is what created and perpetuated the Great Depression; yet this is still a lesson unlearned in American politics. The objection that falling wages means that workers become poorer is false, since what wages can buy depends on their value, not on their nominal quantity. Wages buy any amount of wealth depending on production, and production depends on Say's Law, whose operation is now systematically obstructed by "progressive" politics.

A attendant characteristic of the Cargo Cult belief that resources, wealth, production, and income are fixed and found quantities is the view that economics is a zero sum game, which means that the gain of one person is the loss of another, while the quantity of wealth, income, etc. remains the same. However, free exchange means that transactions are positive sum games, where value increases for both parties in the transaction, as Benjamin Franklin had already recognized (although he had never heard of Game Theory). On the other hand, in forced exchanges, like robbery, taxation, and "income redistribution," the result is a negative sum game, where the value declines for both parties, for one simply because of its loss, for the another because, especially for bureaucrats and politicians, looted wealth is never worth as much in their calculation as it was for its original owner, whether the looters are overt criminals or act under the color of legal authority. After all, easy come, easy go; and while those who earn wealth are aware of what it took to get it, politicians and activists just see it as fruit falling from the trees.

A dramatic example of this was the infamous Supreme Court case Kelo v. City of New London [2005]. The Court ruled that private property, including a neighborhood of homes, could be condemned by the City of New London, Connecticut, just so an industrial project in the area could generate more tax revenue. As it happened, the project fell through, which means that today (2015) the neighborhood is empty and desolate, generating no tax revenue, and constituting no value for anyone. The City of New London, in its wisdom, with the Supreme Court as a conscious accomplice, completely destroyed, for the time being, the value of the area -- a negative sum game indeed. Thus, the value even of land itself, dignified with the character of "real estate" (a "natural resource"), is itself volatile and can be ruined and evaporate through forced, politically motivated transactions. Verily, they have their reward.

The ultimate outcome of "redistribution" is thus simply poverty, as the economically productive are vilified, looted, and eventually drop out or move away -- or have actually been killed, as in the Stalinist "kulak" campaign against farmers. Since this is clearly what happened in Cuba, which is now nearly the poorest country in the Western Hemisphere (but for Haiti), the most instructive result is the complacency of the American Left for this manifest outcome. They return from trips to Cuba with a bogus narrative about literacy or medical care but gloss over the obvious impoverishment of the island -- next to the privileges of the elite (among whom they themselves count). And this is what they clearly want for the United States -- what even Pope Francis now seems to want for the world -- along with the totalitarian police state that enforces the poverty of Cubans and the privilege of the Castros and Communists.

The truth is that as long as the political looters are comfortable themselves, they actually don't care about the consequences of their policies for the rest of society, even as they themselves, by their own lifestyles, expose their hypocrisy about "income inequality." The idea that private economic activity generates the wealth of society is obviously something that is not only incomprehensible but also is detested by the likes of Elizabeth Warren (D-MA), let alone overt Socialists like Bernie Sanders (CP-VT). At the same time, Democrats don't like to be labeled with advocating "income redistribution," although they are closer now to owning up to it. When Barack Obama was running for President in 2008, his incautious answer to a question by "Joe the Plumber" Wurzelbacher, which implied "income redistribution," resulted, not in a frank admission of Obama's anti-capitalist ideology, but in a nasty campaign of vilification against "Joe." This one episode exposed both the dishonesty and the real malevolence of these people.

A Death in the Rainforest, by Don Kulick

A fascinating update to the story of the Cargo Cult, and its reception by a Western liberal, is A Death in the Rainforest, How a Language and a Way of Life Came to an End in Papua New Guinea by Don Kulick [Algonquin Books of Chapel Hill, Chapel Hill, North Carolina, 2019]. Kulick is a scholar in linguistics and anthropology whose original project, for his doctorate, was to study the unique language, Tayap, of the village of Gapun in Papua New Guinea. His association with the village, over a period of thirty years, primarily was to study the problem of languages like Tayap, one of hundreds of languages in New Guinea, dying out, primarily under the influence of the spread of Tok Pisin ("Talk Pidgin," although this is not, technically, a pidgin language), the official language of Papua New Guinea.

At the same time, however, Kulick cannot avoid the more familiar job of an anthropologist, which is to study the culture and the life of the people in the village. Kulick observes that recently this venerable approach has been out of favor in anthropology, which doesn't like the idea of white Westerners observing the life of Third World "people of color." This presumably involves some sort of Orientalism, Colonialism, or Imperialism -- i.e. the political crimes of the modern Left. Kulick, an American who has ended up at Swedish universities, has little patience with this; and, of course, avoiding traditional anthropology would result in much of the traditional culture of Third World peoples being lost and forgotten, expecially in a period when cultural change, under "globalization," has been rapid.

Kulick also has little patience with a lot of other popular conceits. Thus, the "rainforest" is a wonderful place, the "lungs of the planet," with marvelous diversity of life, etc. Nature at her best. On the other hand, a "jungle" is a threatening, dangerous place, probably populated with head hunters. Obviously this is the result of some kind of racist smear. However, Kulick points out, the environment of Gapun is much more like the dangerous "jungle" than like the romanticized "rainforest." The people of Gapun suffer from endemic malaria and rarely live to old age. Their environment is on land that is largely mud, frequently flooded, with leeches, snakes ("Death Adders"), and crocodiles all over the place. And the villagers used to be actually be head hunters, in a culture of constant warfare with neighboring villages. The villagers know that there is a better life elsewhere, but their isolation, many hours up small rivers and through swamps, prevents their full participation in the modern world. Nevertheless, they benefit from artifacts like cooking pots, steel knives, mosquito nets, and even flashlights -- but replacing batteries can be a problem.

At the same time, the villagers have defective ideas about what the outer world is like -- although their language is declining just because of their correct understanding that they need Tok Pisin, or even English, to make their way anywhere else (the "Death in the Rainforest" of the book title). But the Cargo Cult, which failed as a means of attracting Cargo, has transmuted into eschatological religious beliefs. When the villagers die, they are thought to go to the afterlife. Which begins in Belgium. There they live in modern houses, with running water and electricity, and can summon anything they need by pushing a button. But they must go to school to learn English. Once that is accomplished, they proceed to heaven, which is Rome, where they are given a modern job, like being an accountant. Oh, and at death they shed their black skins and become white.

Apart from the appalling idea that the people of Papua New Guinea will become white at death (so is it "Orientalism" for Westerners to dismiss such an indigenous belief? Are the people of New Guinea "white supremacists"?), the most striking thing about this is that it continues the magical thinking evident in the original Cargo Cult. What it takes to manufacture "Cargo" still escapes the understanding of the villagers. Even the major cities of Papua New Guinea, like Lae or Rabaul (fierce battlefields in World War II), do not display enough of an industrial economy to enlighten even villagers who have been there.

The desire to enter the modern world, in the here and now, still takes on curious permutations. A villager attended a conference on sustainability or global warming and came away with the confused idea that villagers should cut down the (useful fruit) trees around their houses, demolish the houses, and rebuild them along an open central street. Automobiles would arrive to drive on the street. The result was the subsequent need to enter the (dangerous) forest to obtain the fruit that used to grow nearby, while the central street, in bright sunlight, attracted Death Adders, which liked the warmth, while, of course, no automobiles were able to make their way to the village through the rivers and swamps. This tragicomic event obviously reflects terms much like those of the original Cargo Cult. This happened while Kulick was away, but the villagers rarely accepted his advice even when he was present.

Don Kulick himself, since he is white, was identified as the reincarnation, if not the actual ghost, of a deceased villager. This made it easier for him to fit into the life of the village, but it also made him part of the larger eschatological picture, and it allowed dangerous rumours to arise that he had access, or had with him, unlimited amounts of money. This led to an attack on the village and on him by bandits, "rascals," who actually killed a villager. Altlhough Kulick feels guilty for occasioning this killing, the lawlessness is becoming more general in Papua New Guinea, where the central government is enfeebled and there is danger of the place becoming a "failed state," like Somalia. This does not bode well for the future economic development, or even the safety, of the village. Meanwhile, the villagers would ignore Kulick's advice, often about swindles perpetrated against them, with the reflection that he had not been privy, for some reason, to the real secrets of the white world.

Because of his eschatological connection, Kulick is apparoached by a villager, Luke, to carry a letter to his deceased father, Monei, who had actually invited Kulick back to the village, after a lapse of 14 years, for his final stay. Since Monei was then believed to benefit from all the abundance of the outer world, Luke asks him to send various goods, like a satellite phone, a flashlight, and the equivalent of about $20,000 in cash. Oh, and don't forget to let him know his mobile phone number. Kulick can only tell Luke that "I'll do my best" to deliver this letter.

This occasions painful reflections on the part of Kulick for the tragedy of life in the village of Gapun:

I read Luke's letter as an entreaty to white-skinned people everywhere. I see it as an appeal. I think it is a guileless call to acknowledge the privilege that white skin has acquired, and a gentle request that white people recognize that vast inequalities that we have begotten around the world. Most of all, it seems to me that Luke's letter is a heartfelt plea to begin to redress those inequalities by giving something back. [p.238]

From this, we might wonder what Kulick expects "white" outsiders to do -- forgetting that globalization and development in the Third World now often involve the Chinese, if not the Japanese, Koreans, Indians, and other people arguably not "white." And we get the cliché about "giving something back," which ought to raise the question exactly what has been "taken" from Gapun. No one has come in to loot their limited possessions, certainly not white people. Arguably, they have been "robbed" of their traditional culture; but then their way of life, daily farming, hunting, and eating, actually have not been changed that much (contrary to the "a Way of Life Came to an End" in the book subtitle). What has changed are their expectations. They know that a better life exists, and they would like to be part of it. But giving them these ideas is part and parcel of "robbing" them of their traditional culture. Does Kulick think that they should have been kept in ignorance of the outer world? Does he believe, as the saying goes, that "the Wogs should stay Wogs"? But this is otherwise regarded as one of the worst, most condescending, colonialist attitudes.

And so what is the origin of these "inequalities"? It is not because Papua New Guinea is being "expoited." Hardly. There are no sweatshops in Gapun. "Inequalities" exist because other places in the world have experienced the Industrial Revolution and the benefits of international trade. As ways of life, these have not arrived yet in the village of Gapun, although some of their products have; and, frankly, it is hard to know how the painfully isolated and inaccessible village could become a real part of cosmopolitan industry and trade. The villagers would really need to leave and go where industry and trade exist.

Despite his attack of liberal guilt over his "privilege," Don Kulick has no answers, or even suggestions, how the people of Gapun can achieve their dreams in the absence of the effectiveness of their magical and eschatological beliefs. Perhaps the villagers can be given a button, as in Belgium, that will call Amazon.com to parachute in all the Cargo that the villagers would like. This can be done, given someone else's money. How it is morally edifying is another question. If a billionaire philanthropist wants to make this possible and endow a modern life for the village, more power to him. But guilt implies obligation. Kulick could well mean that some factory worker in Ohio should pay taxes to "redress those inequalities," so that people in New Guinea can live the life for which the worker must arise at dawn and work an eight hour day. This is the danger of careless reflections like those of Don Kulick. And the philanthropist better drop weapons and ammunition into the village. When word gets around, the "rascals" are going to come looking for all that Cargo.

Political Economy



The Working Class

Listening to common political discourse, everyone should understand what it means when someone speaks of the "working class," i.e. that anyone who is not a wage laborer, meaning managers, professionals, investors, all kinds of businessmen (from shopkeepers to industrialists), etc., don't really work. They are parasites. This is only slightly more sophisticated than the original Cargo Cult, with faith invested, not in the gods, but in the technological acumen of the ordinary blue collar worker. The ordinary worker, however, who rises above this merely mythic attribute to do something genuinely creative will become a hated entrepreneur -- the way that successful farmers under Stalin were instantly branded as "kulak" class enemies and eliminated (actually starved to death). It is only to Marxism that capitalists do not belong to the "working class." In the British aristocratic tradition, a "gentleman" is only the person without any regular trade or profession. This put capitalists and anyone engaged in "trade" into the "working class." The Church, of course, was not a "profession" in the modern sense, because clerical office, including academic office, was a feudal endowment. Such offices could even be bestowed, as "sinecures," without any need to carry out clerical duties. "Public service" in the United States is now approaching this level of privilege.

Gentlemen and the Working Class

English Department Marxism

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Copyright (c) 2004, 2008, 2010, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020 Kelley L. Ross, Ph.D. All Rights Reserved

Justly Discredited, Capital, Trade, & Moneylending, Note 3

The diehards who also say that the totalitarian police state of the Soviet Union was not "real" Marxism also cannot admit that one simple feature of Marxism makes totalitarianism necessary:  the rejection of civil society. This goes back to Rousseau -- helping to explain the Terror of the French Revolution. Since civil society is the sphere of private activity, its abolition and replacement by political society means that nothing private remains. That is already the essence of totalitarianism; and the moralistic practice of the trendy Left, which regards everything as political and sometimes incautiously reveals its hostility to free speech, does nothing to contradict this implication.

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Justly Discredited, Capital, Trade, & Moneylending, Note 4;
English Department Marxism

Rather as Newton discovered the invisible forces known as the laws of gravity, and Freud laid bare the workings of an invisible phenomenon known as the unconscious, so Marx unmasked our everyday life to reveal an imperceptible entity known as the capitalist mode of production.

Terry Eagleton, Distinguished Professor of English Literature, Lancaster University, Why Marx was Right [Yale University Press, 2012]

But bright young women and men still aspire to be full-time truth-seekers in our corrupt, capitalist world.

John Horgan, "Cross-Check, Opinion," December 9, 2019; Horgan is a "science journalist" with a degree from the Columbia University School of Journalism, which qualifies as the equivalent in ideology of an English Department. If the "corruption" that exists is from government and rent seekers, then the term "capitalist" is irrelevant. Horgan, of course, is "virtue signalling" to his peers, and he implies otherwise.

English Department Marxists see political economy as a morality tale. Capitalists are wicked. This is not Marxism. The form of economic activity in Marx is determined by the material conditions of production, regardless of the will, intentions, or goodness of the economic participants. Only when those conditions change can the mode of production change.

What Marx overlooked was that those material conditions of production must be ranked according to a dimension of value, and that value is capital, including human capital. This is something that cannot be represented by quantity of labor alone, as Marx himself realized.

Marx's denial of the existence and necessity of capital means that his own theory does not contain a variable to explain improved modes of production and increased productivity. His recourse would certainly be the Hegelian dialectic; but the gibberish of "dialectic" alone is not going to be sufficient. Thus, the dialectic cannot produce or reproduce what it was that James Watt, or John D. Rockefeller, or Henry Ford, or Steve Jobs did for technology and economic production, to the benefit of all.

Ἐγκλινοβάραγγος (Enklinobarangus)

After the epigraph above by the British English professor Terry Eagleton (b.1943), I might have a look at one of the principal exemplars of English Department Marxism in the United States, Fredric Jameson (b.1934), a professor of Comparative Literature and Romance Studies at Duke University, responsible for a book with the interesting title Postmodernism, or, The Cultural Logic of Late Capitalism [1991]. The reference to "late capitalism" in the title is typical of the genre, embodying a conceit that capitalism has somehow almost run its course, which means the communist revolution must be imminent. Unfortunately, as the book was being published, Communism in Eastern Europe and the Soviet Union was itself collapsing, followed by a decade of strong economic growth in the United States, with whole new industries of computer technology emerging. The failures of socialism, of course, have not dented the convictions of pople like Terry Eagleton or Fredric Jameson -- with the former's Why Marx was Right book published in 2012, long after any sensible person should have discerned the poverty, misery, and stagnation induced and perpetuated by socialism. Needless to say, the ideological support of people like this have enabled the whole terrible experience to be reinacted in a place like Venezuela, where people are starving and rioting in 2017.

Reading about the sublime, I came across an excerpt from Jameson's book, with some characteristic and revealing statements ["Postmodernism, or, The Cultural Logic of Late Capitalism," 1991, The Sublime, Documents of Contemporary Art, edited by Simon Morley, Whitechapel Gallery & The MIT Press, 2010, pp.141-136]. In the most intriguing passage, Jameson begins considering a quotation from an even earlier Marxist, the Trotskyite Ernest Mandel (1923-1995), and his 1978 book, Late Capitalism. Perhaps Mandel introduced this term, at a time when the United States was enduring Jimmy Carter's "stagflation," when quite a few economists thought that the Soviet economy was running successfully as the second largest in the world, but when the Soviet need for American grain betrayed that something wasn't quite right. That subsequent history should have discredited someone like Mandel, however, would require the sort of discernment obviously lacking in Fredric Jameson and Terry Eagleton.

Technological development is however on the Marxist view the result of the development of capital rather than some ultimately determining instance in its own right. It will therefore be appropriate to distinguish several generations of machine power, several stages of technological revolution within capital itself. I here follow Ernest Mandel, who outlines three such fundamental breaks or quantum leaps in the evolution of machinery under capital: [p.143]

This looks like nonsense, and it is what we might expect from people in literature who are mesmerized by language and jargon but actually don't really know anything about technology, economics, philosophy, or history -- things they didn't need for their literature degrees and certainly don't need to practice their current craft. If technological development represents a real increase in the quantity and quality of production, then it is precisely a "determining instance in its own right," and cannot be due, according to Marx himself, to capital, which is itself a fiction. And if capital, as a real thing, is necessary for technological and economic development (as, actually, it is), then this simply refutes all of Marxism.

It should not be forgotten that industrial civilization is what Marx believed made possible the end of class struggle. Mere machines take over the tasks that previous modes of production had required be performed by slaves or exploited workers. What capitalism did with its machines and their production is what really constituted "capitalism." After the revolution, all the machines will still be there, run by and benefiting the workers, who miraculously gain an understanding of the system of production within which they work. Stages of technological development thus simply catalogue the inheritance due to the workers -- even as Mandel seems to have missed the point that all real work in Marxism is done by the workers, which means that "quantum leaps in the evolution of machinery" are due to the workers, not capitalists.

Jameson continues with his Mandel quote:

The fundamental revolutions in power technology -- the technology of the production of motive machines by machines -- thus appears as the determinant moment in revolutions of technology as a whole. Machine production of steam-driven motors since 1848; machine production of electric and combustion motors since the 90s of the ninteenth century; machine production of electronic and nuclear-powered apparatuses since the 40s of the twentieth century -- these are the three general revolutions in technology engendered by the capitalist mode of production since the 'original' industrial revolution of the late eighteenth century. -- Late Capitalism (London 1978) 118 [ibid.]

I dare say that from a Marxist point of view, this is all entirely irrelevant. Marx knew about railroads. Lenin knew about electricity and automobiles. All that these technologies meant to them is that they would be inherited by their rightful owners, the Proletariat under Communism. They were not something held in a proprietary fashion by capitalism, or mere epiphenomena of its mode of production. Why Jameson or Mandel make of an issue of this may come out in Jameson's subsequent remarks.

This periodization underscores the general thesis of Mandel's book Late Capitalism: namely, that there have been three fundamental moments it [sic, in?] capitalism, each one marking a dialectical expansion over the previous stage. These are market capitalism, the monopoly stage or the stage of imperialism, and our own, wrongly called postindustrial, but what might better be termed multinational, capital. I have already pointed out that Mandel's intervention in the post-industrial debate involves the proposition that late or multinational or consumer capitalism, far from being inconsistent with Marx's great nineteenth-century analysis, constitutes, on the contrary, the purest form of capital yet to have emerged, a prodigious expansion of capital into hitherto uncommodified areas. This purer capitalism of our own time eliminates the enclaves of precapitalist organization it had hitherto tolerated and exploited in a tributary way. One is tempted to speak in this connection of a new and historically original penetration and colonization of Nature and the Unconscious: that is, the destruction of pre-capitalist Third World agriculture by the Green Revolution, and the rise of the media and advertising industry. At any rate, it will also have been clear that my own cultural periodization of the stages of realism, modernism and postmodernism is both inspired and confirmed by Mandel's tripartite scheme. [ibid.]

Having read this remarkable passage, one wonders if Mr. Jameson has ever heard the phrase used by Karl Marx, "the idiocy of rural life." Also, what would Jameson consider the collectivization of agriculture by Stalin or by Mao if not the "destruction of pre-capitalist Third World agriculture"? Does he know about the collectivization of agriculture by Stalin and Mao? The drift we get here is that the "destruction of pre-capitalist Third World agriculture by the Green Revolution" was bad, part of capitalist exploitation, when this would probably greatly surprise India, whose stagnating economy labored under the kinds of socialist inhibitions probably favored by Mr. Jameson, while the benefits of the Green Revolution actually enabled India, and many other countries, to feed itself. Real "Third World agriculture," largely meaning subsistence agriculture, was a "mode of production" subject to period crop failure and starvation, such as had always been the lot of India.

One might then wonder, "Does this fellow know what he is talking about?" More assuredly not. The Green Revolution was a function of "capital" only in terms of the money that went into the research that created it. But reading this passage, I am left with the impression that "uncommodified areas" were violated by the "prodigious expansion of capital," something that never would have happened under an enlightened socialism. Perhaps the way Stalin made the Soviet Union unable to feed itself. I wonder. Otherwise, "Mandel's tripartite scheme" is meaningless in terms of a Marxist analysis of the "contradictions" of capitalism or the dialectical historical necessities that will produce the communist revolution. If "purer capitalism" simply means the spread of capitalism into the Third World, well, Marx was seeing that already in British India, and he regarded the industrialization of any economy as good, while Lenin wrote all about it in Imperialism. The idea of "late or multinational or consumer capitalism" is indeed consistent with "Marx's great nineteenth-century analysis" because it is more or less irrelevant to it. Lenin could at least argue that colonialism and imperialism had delayed the revolution because the expoitation of colonies could be used to buy off the Proletariat back in Europe and America. It is not clear that Mandel or Jameson have even thought that far, or how the benefit to India of the Green Revolution either delays or promotes the revolution.

Thus, while Lenin thought that imperialism derailed the revolution, there is nothing here about "Mandel's tripartite scheme" that involves anything but a natural development of technology that would have delighted Marx and Lenin as much as anyone else. Lenin was as excited about "rural electrification" as any New Dealer. So, we really must ask if Fredric Jameson thinks it would have been better if "pre-capitalist Third World agriculture" would not have been destroyed? Is he thinking that technological development, creating the "purest" form of capitalism (whatever that means), is something as alienating and undesirable as capitalism itself? Does he want India to reverse and prepudiate the Green Revolution? We don't get a clear statement here one way or another, but the drift seems to be that the "stages" in the technological development of capital represent an ever greater distortion of the economic conditions we would have seen under socialism. Indeed, economic conditions in the Soviet Union, without capitalist exploitation, remained largely those of a Third World country, with the Potemkin villages of Moscow and Leningrad showing somewhat better conditions for foreigners, thanks to the exploitation (i.e. looting) of the rest of the country.

Thus, Fredric Jameson's English Department Marxism, besides being innocent of any real knowledge of history or economics, doesn't even make much sense as Marxism. He seems unaware of the purpose of the communist revolution, which is to deliver the industrial civilization created by capitalism into the hands of the workers. Instead, as with everyone who disparages "consumerism," the idea may turn out to be a valorization of the poverty that has been long and is currently still on display in Cuba and North Korea. Not that Fredric Jameson wants to live in such poverty. Just the rest of us.

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