Filthy Lucre

For hundreds of years in the West it was deemed vulgar to be involved in the making of more money than was required to live on, including lending at interest or simply hoarding. The notion that one would spend his or her time simply accumulating money and wealth was regarded, not only by the Christian Church but also by those “in the know” as beneath contempt. In Dante’s Inferno, for example, the usurers are placed beneath the murderers because they commit a sin against God, whereas murderers only commit a sin against man. Those who lend money at interest seek to make money appear where there was none before, creating money without laboring in any way, creating money ex nihilo. Only God can do this, it was thought. When man seeks to copy God he has stepped beyond a moral barrier that condemns him to eternal perdition. In Dante’s poem the usurers sit at the edge of a burning pit with heavy bags of gold around their necks, waiting for the gold to increase, presumably.

There can be no doubt that the deep prejudices that folks like Adolph Hitler drew upon against the Jews in Europe was based, in part at least, on the fact that the Jews saw nothing wrong with usury or the making of money while those who did not espouse that particular religious view were told in no uncertain terms that it was contemptible and trifling and even vulgar. There was one Jew, of course, who founded a new religion based on the notion that it is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of Heaven. But he was an exception and has been widely ignored, especially of late. In any event, the accumulation of wealth as an end in itself was regarded as de-humanizing and even immoral.

How did this view change? How did we get from looking down at money-gatherers to regarding them as the most successful people on earth and worthy not only of our respect but even, in some cases, of our adoration? Bill Gates and Warren Buffet are held in high esteem in our culture. We even have elected a president whose only possible claim to that office is that he was a successful (?) businessman. They are examples of the fact that anyone can “make it” in America. The Horatio Alger myth lives on, though it gets a bit weaker when we discover that many were born with a silver spoon in their tiny mouths and we also discover that Balzac was right: where there’s a fortune there must have been a crime.

In any event, the attitude toward “filthy lucre” has changed radically and it is down to people like John Locke, Adam Smith, and John Calvin. The changes in attitude came in two stages. Firstly, the notion that the acquisition of great wealth, once regarded as a sign of grubby self-seeking greed, had been replaced by the eighteenth century, when capitalism was aborning, by the notion that the accumulation of great wealth was an example of virtuous behavior  — a point of view we find expressed again and again in Adam Smith who wrote that “probity and punctuality are virtues that invariably accompany the introduction of commercial relations into society.” And, secondly, it was said that commerce benefits not only the one who engages directly in the activity, but it benefits everyone else around him as well. It has a “trickle down” effect, if you will. Smith worried that capitalism displaced centuries-old morality, but he felt that, in the end, it was worth the trade-off.

But even before Smith we read that John Locke worried about the possibility that in a state of nature a man could accrue to himself more of nature’s bounty than he could possibly need and in the process leave little or nothing for his fellow humans. This was not a good thing. But once gold and silver were taken to be true wealth and John Calvin insisted that the gaining of wealth was a sign of God’s grace and favor, this no longer was a problem; now one could accumulate as much as he wanted whether he could ever spend it in his lifetime or not. It would never spoil and, presumably, there was plenty left for others to accrue as well. So was born the “Protestant work ethic.”

Thus, in our day, we have heroes who would have been pilloried in earlier times. We now regard the making and hoarding of money as not only acceptable but also as a sign of intelligence, imagination, and hard work, worthy of admiration, a measure of success. In the process the accumulation of capital, has become at the very least an a-moral activity, even though folks like Karl Marx continued to regarded it as immoral — because it necessarily involves the taking it way from others who need it more, who earned it, and therefore deserve to have it. This happens under capitalism in the form of the creation of “surplus value” which we have come to dismiss as, simply, “the earnings of capital.” The wealthy see their immense profits as something they have earned and therefore deserve, whereas others (like Marx) might view it as coming at the cost of unethical acts that involve the exploitation of those who actually do the work necessary to produce the wealth in the first place.

But no matter which way we look at it, the making and hoarding or money, no matter how great the hoard, is now viewed in our culture as a good thing. It is no longer “contemptible and trifling,” unworthy of human beings who have been touched by the hand of God. It is no longer “vulgar.” At the very least it is clear that the making of filthy lucre has become “demoralized.” Ethics and economics simply do not mix in our current commodified culture. No longer do the usurers have to worry about  being placed in a burning pit with heavy bags of gold around their necks through eternity. Now they build high-priced, low-quality mini-mansions, swim in their own swimming pools, and drive large, powerful gas-guzzling cars to Church every Sunday for an hour.  And the rest of us admire them and want to be just like them.

The Capitalist Myth

As the wealthy accrue more and more power, the middle class disappears, and the number of poor and homeless increases there are those that still cling to the myth that we live in a capitalistic economy that rewards those with grit and determination. The poor are poor because they lack gumption: they are so by virtue of their unwillingness to work hard and achieve the success that is there for anyone who truly wants it. This is the old “Horatio Alger” fiction that went out with gas lights. But it lingers in the minds of the very wealthy who like to think they live in a free-enterprise system that has made it possible for them to have earned their wealth and position by virtue of their own intelligence, determination and will-power. Some have, of course, but a great many have simply been downright lucky.

In any event, the fiction that we live in an economy that can be described as “free-enterprise capitalism” is just that, a myth. Joseph Schumpeter wrote about it in the 1940s and he pointed out that even back then capitalism in this country was being slowly displaced by socialism (gasp!!). And that was at a time when the middle class had political clout and was a significant part of our economy and there was real competition among a wide variety of businesses.  Schumpeter put this notion forward in his remarkable book Capitalism, Socialism and Democracy where he also pointed out that today’s politician is a professional whose only qualification for public office  (and only genuine concern) is that he is able to get himself (or herself) elected. Schumpeter also has a number of wonderfully pithy comments about classical political philosophy and the notions of the Common Good and the General Will — the latter of which he insists should more accurately be called the “manufactured will,” constructed by the media in general and advertising in particular. He has a rather low opinion of ordinary citizens and the effort they put into political involvement.

“The ordinary citizen musing over national affairs. . . is a member of an unworkable committee, the committee of the whole nation, [on which] he expends less disciplined effort on mastering a political problem than he expends on a game of bridge. . . .Thus the typical citizen drops to a lower level of mental performance as soon as he enters the political field. He argues and analyzes in a way which he would readily recognize as infantile within the sphere of his own real interest. He becomes a primitive again. His thinking becomes associative and affective.”

But I digress. To support Schumpeter’s claim about the demise of capitalism, consider that capitalism had devolved to the point that private property — which John Locke and Adam Smith regarded as the cornerstone of capitalism — has disappeared. The banks now own our homes and we lease our cars; we buy things on credit and owe thousands of dollars to merchants as we continue to “buy” things we may never actually pay for and certainly cannot be said to own in any meaningful sense of that term. Consider also that the concept of “family,” another cornerstone of capitalist societies, has become radically altered as many couples do not get married or raise children and many who do get married end in divorce; in general the family has evaporated as the need for children disappeared with the agrarian society of years past which gradually morphed into a commodified culture in which both parents went to work and sent what children they had off to day care. Before farms became highly mechanized farmers needed a large number of children, accountants do not.  As Schumpeter says, many couples now apply a rationalized “utilitarian calculus” to the question of raising children and decide “Why should we stunt our ambitions and impoverish our lives in order to be insulted and looked down upon in our old age?” Indeed. But bear in mind that both family and private property helped to define capitalism during the Victorian era when capitalism reached its apogee — and came under withering criticism by thinkers as diverse as Charles Dickens and Karl Marx.

Further, open competition among businesses has become a thing of the past as well. It was safely laid to rest by F.D.R. in the 1930s, especially in his “New Deal” which included such acts as the National Industrial Recovery Act designed to end “cutthroat competition” within major industries. In any event, meaningful competition in business is a bit of a joke any more as the corporations have taken over and are busily running small businesses out the economic back door — an estimated 200,000 small businesses went under during the recent recession. With the collusion of obliging legislators, the corporations can withstand years of weak economic times; small businesses cannot. And on the agrarian front the private farms are being taken over by the corporations as well. It is calculated that more than 90% of the corn now produced in this country is produced on corporate farms. One might even argue that the corporations are writing the epitaph of the democratic process as well as the economic one as they continue to buy politicians and commandeer the political process.

In any event, it is time to admit that free-enterprise capitalism, if not Democracy, is a thing of the past. If we can agree that Socialism is an economic system in which the government owns the means of production, as Marx defined it, and we can agree that the corporations now own our government, we can perhaps conclude that our economic system is socialistic, in a peculiar sense of that term. And to coin an ugly term to describe our ugly political system, we have devolved from a Democratic Republic to become a corporatocracy. The notion that we are no longer a democracy may be debatable; the claim that free-enterprise capitalism is a fiction is not.

Unequal Opportunities

The number of words that have poured forth after Romney’s gaffe about the 47% of Americans who don’t pay taxes (the “Obama supporters”) makes me somewhat reluctant to add my two cents worth. This is especially so since I have already addressed this issue. But that has never stopped me before, so I will push ahead!

Any number of commentators have mentioned that the 47% of Americans who supposedly don’t pay taxes do, in fact, do so — including payroll, sales, excise, and property taxes; the benefits they receive, such as social security and medicare are from money they paid in when times were better. The people who don’t pay taxes, relatively speaking, are the wealthy folks like Mitt Romney who have a smaller percentage of their income taxed than do the folks like you and me. But that being said there was the other part of Romney’s speech that was equally troubling. I speak about the conviction of Mitt Romney and the wealthy in general that they made it on their own — you know, born on third base convinced they hit a triple. That of course is hogwash. No one makes it on his own and studies have shown that those who make it big time in this country are the ones who had a foot up at the start — the rich just get richer. This is no longer a country of equal opportunity, though the Romney camp would insist that the poor are simply lazy and could make it if they just got off their collective butts and borrowed $20,000 from their parents to open their own business. [He actually said that and please note his assumption that the average young person out there can simply ask Mom and Dad for $20,000! This tells us a great deal about the world Mitt Romney lives in.]

One of the people to shed the most light on this subject is Joseph Stiglitz, the Nobel Prize-winning economist who wrote the following paragraph as part of a lengthy rebuttal of Romney’s speech to well-healed Republicans:

…, many of those receiving benefits are our young — providing them education and health (even if they or their parents don’t pay taxes) are investments in our future. America is the country with the least equality of opportunity of any of the advanced countries for which there is data. A child’s life prospects are more dependent on the income and education of his parents than in these other countries. While the American Dream may have become a myth, it doesn’t have to be that way. Children shouldn’t have to depend on the wealth of their parents to get the education or health care they need to live up to their potential.

This is an important point in my mind. I have remarked before about the death of the Horatio Alger myth but wasn’t aware of the studies Stiglitz refers to. We need to think about the fact that this country was conceived as a community of persons brought together by common interests and hopes. We need to take care of one another when we are down and out — not turn our backs on each other. The founders deeply believed in the notion of “public virtue” which takes us outside of ourselves and leads to selfless acts of kindness — all of which strengthen the community as a whole.

But by 1816 Thomas Jefferson, for one, was already beginning to worry about the lack of public virtue in the form of narrow self-interest exhibited by the increasing numbers of corporations hell-bent on making as much money as possible. He hoped “that we shall take warning and crush at its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and bid defiance to the laws of the country.” To which Mitt Romney replies: “Corporations are people too.” In any event, those who run our largest corporations are the immensely rich who do not care in the least about community and would insist they made it to the top of the pyramid on their own.

However, if someone makes it big he assuredly owes it to those — in addition to his parents —  who made it possible. To turn one’s back on others who fall on hard times and ignore them as lazy and unmotivated is to ignore the fact that as a community each of us depends on others along the way. Romney’s attitudes, reflected in numerous comments he has made (in or out of context) reveal him to be a man with no sense of history and no awareness of the innumerable people who have helped him get where he is today.

Prognosis Negative

I haven’t seen the latest medical report, but the patient is in a coma and on life support so the prognosis can’t be good. The patient, of course, is the American democratic system and it is very sick if not near death. It waits for a champion on a white horse to rescue it — or perhaps miracle drugs, or a transfusion of new blood. As bad as things are at present they will get much worse if the Republicans have their way — judging by what they say.

In an interesting op-ed piece in the New York Times, David Books had a close look at the recent Republican National Convention and he had many astute observations to make. The one that interested me the most was the following:

But there is a flaw in the vision the Republicans offered in Tampa. It is contained in its rampant hyperindividualism. Speaker after speaker celebrated the solitary and heroic individual. There was almost no talk of community and compassionate conservatism. There was certainly no conservatism as Edmund Burke understood it, in which individuals are embedded in webs of customs, traditions, habits and governing institutions.

Today’s Republicans strongly believe that individuals determine their own fates. In a Pew Research Center poll, for example, 57 percent of Republicans believe people are poor because they don’t work hard. Only 28 percent believe

people are poor because of circumstances beyond their

control. These Republicans believe that if only government gets out of the way, then people’s innate qualities will enable them to flourish.

We should have seen this coming, of course. When the presumptive Vice Presidential candidate tells us his favorite “philosopher” is Ayn Rand who advocates cut-throat capitalism we should have taken note. This group doesn’t care about people or the planet. There is no talk about the importance of educating the young or taking care of the poor. The latter are simply hoist by their own petard: they are lazy and unmotivated and that’s why they are poor. If they had any gumption they would be wealthy like us. This is not only a twisted, and even shrunken, view of the world, it is also a bit sick.

As Brooks suggests, the truly distressing echo resonating from the Republican rhetoric is the lack of compassion and concern for those who need our help. The chest thumping and braggadocio of the wealthy who honestly believe they made it on their own and everyone else should do and be exactly like them or there is something wrong with them is either delusional or downright stupid. This is especially so when one looks around and sees the talented and gifted people who are struggling to keep their heads above water as against the many stupid and uncaring people with great wealth who seem only to be able to gloat.

There are good people who need help and often the only institution that is in a position to deliver that help is the government, whether we like it or not. We tie the hands of government and reduce the effectiveness of social programs at our own peril: there but for the grace of God goes you or I. Even if people don’t respond to the call for charity and love of our fellow human beings, one would think they would respond to enlightened self-interest. We all benefit from a healthy government rooted in the concept of the common good.

If government “gets out of the way” we all run the risk of going down for the third time. The day of Horatio Alger is past. The day of progressive economic theorizing is past. We need to rein in our greed and self-interest and try to see the broader canvas. We need to develop new economies of sustainability and conservation — in the true sense of this term. And we need to care about one another. If we can’t see these things then the patient is beyond hope. Not even the most miraculous of drugs can save him.

The “Deserving” 1%

The topic of the 1% who control 40% of this country’s wealth has been worn to death. But that doesn’t mean people will stop talking about it, or that they should. A good friend of mine was recounting a story he heard about the “amazing 1%” who are getting bad press when, in fact, they deserve their immense wealth because of their creativity, initiative,  and intelligence. He couldn’t recall his source, so I can’t tell you where he heard this. But no matter. I want to deal with the broad issue and it really doesn’t matter where the story comes from.

To begin with, it is a bit a bit outrageous to say that all of those who comprise the top 1% of the wealthy in this country are deserving of their wealth because of their creativity and ingenuity. Clearly, that is a half-truth, at best. Some, perhaps many, of those people deserve to be wealthy, because their ability should be rewarded. Whether this means their abilities deserve the hundreds of millions of dollars it translates into is another question when there are thousands of people in this country who cannot put food on the table. The “poverty level” is defined in terms of an income of $22,350.00/year  for a family of four — and more than 15% of this country is at or below that level. That’s nearly forty-seven million people! Further, it is estimated that there are 750,000 homeless in this country. Clearly there is a moral issue here: it’s a zero-sum game. The chances of those at the bottom of the financial pile ever getting on their feet, much less to the top, are slim to none.

The suggestion of the claim that the top 1% deserve their wealth is that the bottom 99% deserve to be deprived. This is nonsense, of course. There are a great many, thousands I dare to say, who deserve to be wealthy but who never will be because they have been denied the opportunity. Does one think for a moment that those in the top 1% didn’t have an advantage? I recall one of my former students who “made it” in the business world after two out-and-out failures. Each time he failed his millionaire father bailed him out and helped him start again. And yet in the years after his success he insisted that those in need deserved to be there– otherwise they would have worked their way up as he had. I’m not sure what you say to a person who makes such an outrageous claim. We eventually stopped talking.

For every member of the top 1% like Bill Gates who made it “big time” on the basis of his genius and determination, there are thousands of others who are there by virtue of birth, opportunity, luck, parental assistance and/or (dare I say it?) lies and deception. Recall Mitt Romney’s advice to recent college graduates that they should borrow $20,000.00 from their parents and start their own business. The man lives in a different world from the rest of us. How many people could do that? Only those who already have a leg-up.

The half-truth that those who have great wealth deserve it translates into the certainty that there are some wealthy people who deserve to be rewarded for their abilities. That the  huge reward is well deserved in the case of the 1% is highly doubtful in face of the obvious fact that there are so many who must do without and the related fact that so many of those who have great wealth did little if anything to deserve it.

But in the end, the problem is not reducible to moral quibbling. The huge disparity in wealth between the very rich and the very poor in this country coupled with the widening gap between the “haves” and the “have-nots” have serious implications with respect to the very survival of this society — as I have mentioned in previous blogs. The moral issue can be ignored, as so many are able to do in this society. But the question of our survival as “the land of opportunity,” where generations of immigrants have realized their dreams, where Horatio Algers were found on every hand, is yet to be answered.