Toward a Political Economy of Oligarchy
Cross-posted from Real Economics.
From his lifetime study of the pamphlets, speeches, sermons, and newspaper commentaries that fueled the American Revolution, one of the conclusions Bernard Bailyn (the Harvard historian who was twice awarded a Pulitzer Prize, including for The Ideological Origins of the American Revolution) reached was that “To the colonists the most important of these publicists and intellectual middlemen were those spokesmen for extreme libertarianism, John Trenchard (1662-1723) and Thomas Gordon (d. 1750).” According to Bailyn, in the colonies, the entire corpus of their work were
republished entire or in part again and again, ‘quoted in every colonial newspaper from Boston to Savannah,’ and referred to repeatedly in the pamphlet literature, the writings of Trenchard and Gordon ranked with the treatises of Locke as the most authoritative statement of nature of political liberty and above Locke as an exposition of the social sources of the threats it faced.
I emphasize the last part of that quote, because I have been trying to revive the original founding era idea that the rich are as much a danger to the survival of a republic as is a standing army. This is especially important now, as it we need desperately to repair the ideological foundations for taxing the rich as a means of redressing the great economic imbalances the they have created with their near monopoly on political power. In the Founding era of the United States, the Founders had developed a "political economy of aristocracy, as Professor James L. Huston explains in "The American Revolutionaries, the Political Economy of Aristocracy, and the American Concept of the Distribution of Wealth, 1765-19000" (The American Historical Review, Vol. 98, No. 4 (Oct., 1993), pp. 1079-1105):
The revolutionaries’ concern over the distribution of wealth was prompted by a tenet in the broad and vague political philosophy of republicanism. In contrast to nations in which monarchs and aristocrats dominate the state, republics embodied the ideal of equality among citizens in political affairs, the equality taking the form of citizen participation in the election of officials who formulated the laws. Drawing largely on the work of seventeenth-century republican theorist James Harrington, Americans believed that if property were concentrated in the hands of a few in a republic, those few would use their wealth to control other citizens, seize political power, and warp the republic into an oligarchy. Thus to avoid descent into despotism or oligarchy, republics had to possess an equitable distribution of wealth....
The answer to how the social system of aristocracy generated wealth inequality was easily found. American political leaders applied the labor theory of property or value; an unjust distribution resulted when a few were able to transfer the fruits of other persons’ labor to themselves. Aristocrats (non-workers and therefore non-producers) stole the fruits of labor from the masses of toilers (laborers and therefore producers). Aristocrats effected the transference by political means. It was control of politics that enabled aristocrats to steal the fruits of labor, to enrich themselves and pauperize the multitudes. By the time of the writing of the Constitution, literate Americans had clearly voiced the idea that a misdistribution of wealth was almost entirely a political act.
So it is more than merely interesting, especially given our times of financial and economic crises, that Gordon’s and Trenchard’s Cato’s Letters, were “a searing indictment of eighteenth-century English politics and society written in response to the South Sea Bubble crisis…” In other words,, one of the most important works of English political theory that inspired the American Revolution, was written in response to the world's largest financial fraud and crisis up to that time.
In The Machiavellian Moment,: Florentine Political Thought and the Atlantic Republican Tradition (Princeton: 1975, reprinted 2003), (See also my Machiavelli and the survival of republics) J.G.A. Pocock observes that Cato’s Letters and The Independent Whig (a weekly periodical founded in 1720 by Trenchard and Gordon), “formed some of the most widely distributed political reading of the contemporary American colonists. Cato was mainly bent on diagnosing and proposing to remedy the state of national corruption revealed by the failure of the South Sea Company…” (p 468) Further, Pocock writes, “It was neither accidental nor surprising that an old adversary of the standing army should find himself denouncing a gigantic job of the “monied interest” since the two were taken to be at bottom one and the same phenomena."
Back in December 2008, I wrote Need to be ruthless and punitive toward Wall Street. But, I'm not one of President Obama's advisers, and what we got instead was the President praising JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein as "savvy businessmen."
Obama's acceptance of these vicious financial predators as acceptable models of business acumen underscores the urgent need to revive the Revolutionary republican (with small "r") understanding of the political economy of oligarchy, and how the rich destroy a republic from within.
But we need to update and strengthen that understanding to fit our own times, by bringing together the idea of economic rent, with modern scientific understanding of our natural environment, and the limitations and constraints that environment imposes on economic activity. It is in any individual's self-interest to preserve that in which they are most invested; but the rich pose a particular danger because their self-interest often leads them to attempt to protect and preserve entire modes of economic activity that society needs to move past in order to avoid colliding with the limitations of natural resources inherent in any specific mode of technology. No more clear example can be imagined that the Koch family interest pouring hundreds of millions and billions of dollars into conservative think tanks and political lobbies that not only deny global climate change, but also actively oppose the development of clean energy technologies. But a more instructive example may be the Walton family interests, which seek to avoid the development of public understanding of how the Wal-Mart business model shifts much of its employment costs onto the government - a modern twist on the methods by which the wealthy "pauperize the multitudes" identified in the Founders' political economy of aristocracy.
The first line of defense of today's rich oligarchs is the conservative movement, which refuses to recognize the moral turpitude of the economic practices of speculation, rent-seeking, and usury. Just how dangerous the conservative movement is can be judged by the recent candidacy - for the higesth office in the republic - of Mitt Romney, a "private equity" scoundrel who conservatives rallied around and defended as a "job creator." It is in this light that I offer you the following quote, from the first few pages of Cato's letters; or, Essays on liberty, highlighting the fury of Trenchard and Gordon at the monied interests of their time. How much of it is polemical hyperbole is for you to judge, but as Chris Hedges has repeatedly noted, it used to be that financial speculators actually were hung. Remember, as noted at the beginning, Trenchard and Gordon were writing in reaction to the financial and economic crises caused by the South Sea Bubble.
…. Nations should be quick in their Resentments, and severe in their Judgments. As never Nation was more abused than ours has been of late by the dirty Race of Money Changers; so never Nation could, with a better Grace, with more Justice, or greater Security, take its full Vengeance, than ours can upon its detested Foes. Sometimes the Greatness and Popularity of the Offenders make strict Justice unadviseable, because unsafe; but here it is not so; you may, at present, load every Gallows in England with Directors and Stock Jobbers, without the Assistance of a Sheriff's Guard, or so much as a Sigh from an Old Woman, though accustomed perhaps to shed Tears at the untimely Demise of a common Felon or Murderer. A thousand Stock Jobbers, well trussed up, beside the diverting Sight, would be a cheap Sacrifice to the Manes of Trade; it would be one certain Expedient to soften the Rage of the People; and to convince them, that the future Direction of their Wealth and Estates shall be put into the Hands of those who, will as effectually study to promote the General Benefit and Publick Good, as others have, lately, most infamously sacrificed Both to their own private Advantage. Something is certainly due to both the former. The Resurrection of Honesty and Industry, can never be hoped for, while this Sort of Vermin is suffered to crawl about, tainting our Air, and putting every thing out of Course, subsisting by Lies, and practising vile Tricks, low in their Nature, and mischievous in their Consequences.
… A free People are kept so by no other Means than an equal Distribution of Property; every Man who has a Share of Property having a proportionable Share of Power; and the first Seeds of Anarchy, which for the most part ends in Tyranny, are produced from hence, that some are ungovernably rich, and many more are miserably poor; that is some are Masters of all Means of Oppression, and others want all the Means of Self-defence.
…. they are manifest Enemies to God and Man, no Man can call them his Neighbours: They are Rogues of Prey, they are Stock Jobbers, they are a Conspiracy of Stock Jobbers! A Name which carries along with it such a detestable and deadly Image, that it exceeds all human Invention to aggravate it; nor can Nature, with all her Variety and Stores, furnish out any Thing to illustrate its Deformities; nay, it gains visible Advantage by the worst comparisons that you can make. Your Terror lessens when you liken them to Crocodiles and Canibals who feed for Hunger on human Bodies.
….These Monsters therefore stand single in the Creation: They are Stock Jobbers; they have served a whole People as Satan served Job, and so far the Devil is injured, by any Analogy that you can make between him and them.
Well; but Monsters as they are, what would you do with them? The Answer is short and at hand, Hang them; for, whatever they deserve, I would have no new Tortures invented, nor any new Death devised. In this, I think I shew Moderation; let them only be hanged, but hanged speedily. As to their Wealth, as it is the manifest Plunder of the People, let it be restored to the People and let the Publick be their Heirs: the only Method by which the Publick is ever like to get Millions by them, or indeed any Thing.
But, say some, when did you ever See Rogues Covered with Wealth, brought to the Axe or the Gallows? I own that the Example is rare, more is the Shame of this Nation, which has had such rich Temptations, and such frequent Opportunities; we have had publiek Guilt in abundance, God knows often protected by Party, and often by Money. Faction on one Side, and Riches on the other, have, as it were made a Lane for the Great Criminals to escape...
What delicious historical irony that the financial vehicles created to rescue Wall Streeter from the crisis they created, was named for the alley behind Wall Street, Maiden Lane.