(*)
Clark
Carlton was reared as a Southern Baptist in middle Tennessee.
He was enrolled as a Raymond Brian Brown Memorial Scholar at
the Southeastern Baptist Theological Seminary in Wake Forest,
NC when he converted to the Orthodox Church.
Clark earned his B.A. in philosophy from Carson-Newman
College in Jefferson City, TN and and M.Div. from St
Vladimir’s Orthodox Theological Seminary in NY, where he
studied under the renowned church historian, Fr John
Meyendorff. He also holds an M.A. and Ph.D. in Early
Christian Studies from the Catholic University of America in
Washington, DC.
At present, Clark is assistant professor of philosophy at
Tennessee Tech University, where he teaches the history of
philosophy as well as philosophy of religion and logic. He
writes on a number of subjects and has had articles
published in the Journal of Christian Bioethics, St
Vladimir’s Theological Quarterly, and the Journal of Early
Christian Studies.
Clark is also the author of “The Faith” series from Regina
Orthodox Press: The Faith: Understanding Orthodox
Christianity; The Way: What Every Protestant Should Know
about the Orthodox Church; The Truth: What every Roman
Catholic Should Know about the Orthodox Church; and The Life:
The Orthodox Doctrine of Salvation.
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"Come now, and let us
reason together, saith the Lord. Though your sins be
as scarlet, they shall be as white as snow; though
they be red like crimson, they shall be as wool. If
you be willing and obedient, you shall eat the good
of the land."
Hello and welcome once again to Faith and Philosophy. This
week's topic is The Naked Public Square Part Five
– The Market Place.
Last time, I said that capitalism and socialism had more or
less morphed into the same thing.
Today, I want to explain that and in the process explain why
so called progressive political solutions are nothing of the
kind and only serve to reinforce an already rotten system.
I will also suggest some ways in which we might achieve a
more fair and workable economic system or at the very least,
some ways in which we might be able to survive the coming
collapse of the system in place now.
Before getting into the meat of the topic, I want to frame
the discussion by beginning with an observation made by the
Vanderbilt Agrarians in "I'll Take My Stand". They pointed
out that it was a grave mistake to think that industrialized
labor and small farmers and shopkeepers were in the same
economic vote vis-à-vis the capitalist owners of industry.
In other words, the agrarians argued that farmers and small
freeholders did not share the same economic interest as
industrialized labor. For all of their fights with
management and ownership, the fact is that big labor is in
the same boat as big business. Farmers and small freeholders
on the hand are inherently at odds with both big labor and
big business, especially big finance.
This is significant because during the first half of the
20th century, the Democratic Party became increasingly the
party of big labor. Up until 1932, the Democratic platform
was generally conservative. Look up the '32 platform some
time. You will see that while FDR ran on a conservative
platform against the Republicans, he did the exact opposite
as President. That election
-
and remember that FDR was from a Republican family-
marked the end of any real two-party system in this country.
As George Wallace once famously observed, "There isn't a
dime's worth of difference between the Democrats and
Republicans."
If we think of the Republican Party as the party of big
business and finance and it has always been thus, and of the
Democratic Party is the party of big labor which it has been
since the Depression.
If we remember the observation of the Vanderbilt Agrarians,
then it becomes clear that the two parties are merely two
sides of the same coin.
They do not represent fundamentally different approaches to
governance. I should also add that neither of them
represents the economic interest of farmers and small
freeholders.
I'm going to come back to this, but for right now I want us
to think about the relationship between capitalism and
socialism. I've already dealt with this in part in a
previous podcast entitled "My
Two Cents on Capitalism."
Marx taught that capitalism was unnecessary stage in the
historical dialectic that would eventually lead toward a
communist Utopia. Capitalism was necessary in order to break
down the old traditional social and economic order. Once the
old order was gone, capitalism would follow its logical end
by creating a society in which only two fundamental classes
remained. A very small class of haves, the bourgeoisie and
the very large class of have nots, the proletariat.
Because of the great disparity of wealth and privilege
between the two, the proletariat would rise up, overthrow
the bourgeoisie and establish a classless society and the
rest as they say would quite literally be the end of
history. That is, the end of the class struggle.
I tell my students that Marx was an absolutely brilliant
social critic and he was. It is a grave mistake to simply
dismiss him as so many Americans are wont to do. But as a
philosopher and prognosticator, he was pretty awful.
Obviously, history has not turned out as he predicted.
To begin with, the two major countries that had communist
revolutions were not capitalist countries. The revolution
should have taken place in Germany and England, not in
Russia and China.
Occasionally, you will hear a classical Marxist, not that
there are too many of them left, argue that communism didn't
fail, it hasn't been tried yet. Well, there's a grain of
truth to that, but the fact that no capitalist country had a
true proletarian revolution puts a lie to Marx's theory
about the historical inevitability of communism.
The other
thing that has put a lie to Marx's historical determinism is
the fact that capitalism and socialism have effectively
morphed into the same thing.
I said in the
earlier podcast
that it was a mistake to define capitalism as private
property in free markets because capitalism actually tends
to just the opposite. Well, let's see how this works.
You're all aware of the recent, shall we say fluctuations
that have taken place in the stock market. Now, why should
John Q Public care about what goes on in the stock market?
We already know the answer. Because John Q, if he has any
savings at all, his retirement is tied up in the stock
market.
If you have a pension fund or a 401K or an IRA, chances are,
your retirement just took a big hit. I'm sorry to tell you
this, but it's going to get worse. I'll be shocked if the
Dow isn't under 10,000 before the end of the year.
Now, the glory of the stock market is that it allows
ordinary John Qs to participate in the capitalist system. If
you own one share of anything, you are now a capitalist;
Congratulations! At first glance, this sounds really great.
Capitalism has defeated the threat of socialism by widely
distributing property in the form of stock ownership.
This is why we have not had a proletarian revolution here.
The proletariat's entire economic future is now tied up in
the stock market. But I'm going to argue that
this wide
distribution of stock ownership is actually a form of
socialized,
not private ownership.
The sequel to "I'll Take My Stand" was called, "Who Owns
America?" In that volume, co-editor Allen Tate has a
marvelous article on the nature of property. I've mentioned
this before. Tate argues that for property to be real
private property, one must have effective control over it.
Otherwise, it is merely nominal ownership, a kind of legal
fiction. This applies directly to the ownership of stock.
Let's say, you own 100 shares of Coca-Cola. If you wrote the
CEO of Coke a letter with your suggestions about the
direction of the company, would he care? If you attended a
stockholder's meeting, would you get a chance to be heard?
Did I mention that there are 2.3 billion shares of Coke's
stock outstanding? Yes, technically you are part owner of
the Coca-Cola Company. But 100 shares out of 2.3 billion is
a percentage so small I couldn't get my handheld calculator
to show it. You have no effective control. At most, you have
the ability to buy or sell the stock.
But many people who are invested in the stock market do not
even have that power. If your retirement is in a pension
plan or a 401K, then you cannot choose which stocks you want
to own. Those decisions are made for you by fund managers.
I have a retirement plan at work that is managed by ING. I
have a select number of different funds I can choose from
but I cannot pick individual stocks. I cannot buy
commodities nor can I transfer money out of that account
into my own self-directed IRA. I can only choose from what
ING decides to offer. It is the fund managers that have all
the power.
Now some of these funds are so big, managers can literally
get corporate CEOs hired and fired. Moreover, some of these
fund managers can actually manipulate the market simply
because of their size.
Now, what happens if a company goes bust and the stock
holders are left with useless stock because it's either too
late to sell it or like me, they have little control over
what's actually in their portfolio?
This is exactly what happened in Enron and WorldCom. You
say, "Well, the executives from those companies got jail
time." Well, good. But did that restore anyone's life
savings?
What we have then is a capitalist system in which the bulk
of the capital is in the form of socialized stock ownership,
which is controlled by a handful of people. Is that really
anyone's idea of private property and free markets?
Moreover, what has been driving the stock market for lo
these many years is cheap money.
While your hard-earned retirement dollars have gone to buy
your token shares of Coca-Cola, the actual price of the
stock market is buoyed not by real people's real income,
so-called retail investors, but by an infusion of digital
money created by the Federal Reserve.
The only reason we don't have runaway inflation right now is
that most of the money created as part of QE1 and QE2 went
into the stock market. That's how it was able to bounce back
so miraculously after the crash of 2008 without the economy
actually improving, but this can't last forever.
When it comes to an end, things are going to get ugly. We've
gotten a foretaste of that the last couple of weeks.
So then, what is to be done?
Well, progressives are clamoring for higher taxes on the
rich and more government spending on social programs.
Leaving aside the obvious rebuttals and the fact that the
super rich will always be able to avoid taxes and that
profligate spending and money printing is what created a lot
of the problems in the first place.
The more damning criticism is that these so-called
progressive solutions are nothing of the kind. They would do
nothing to address the inequities that are inherent in the
system and would on the contrary simply exacerbate them over
the long term.
Let's return to the observation with which I began, namely
that big labor and big business were in the same boat
together and that their interests are inherently contrary to
those of the farmer and small freeholder.
The same thing applies here. Progressivism and capitalism
are not antagonists, they are the same thing. Capitalism has
always been sold as a progressive economic system. One
cannot, therefore, cure the ills of capitalism homeopathically, that is, with more capitalism even if you
dress it up and call it progressivism. The only way to fix
this mess is by a return to a wide distribution of real
property, that is, property over which one has effective
control.
Obviously, I have a good deal of sympathy with the English
distributists. But one aspect of distributists' philosophy
that has always left me cold is that many distributists,
especially the contemporaries, tend towards the
redistribution of wealth. I think that's a dangerous path to
go down. Many distributists and many of the Southern
agrarians for that matter actually welcomed the new deal
initially. They thought it was going to right the ship but
they soon found out that they were wrong.
I would argue that if we could make the necessary structural
changes and restore some fiscal sanity to the country, there
would be a natural devolution of economic activity and
therefore wealth away from centralized concentrations in the
form of corporations and back toward the local and the
particular.
But what sort of structure changes would be needed? Well, to
start with, corporations are not natural persons and should
not be treated as natural persons under the law. Making this
change would alter the playing field considerably and would
deprive corporations of many of the unnatural legal and
financial advantages they have over small freeholders.
Second, the only thing one should be allowed to do with
stock is buy it or sell it.
Options, derivatives, futures, credit, defaults, swaps, et
cetera, should be outlawed for what they are:
gambling
instruments.
My good lawyer friend, whose best ideas I often steal for
this podcast, tells me that in English common law, there is
a long tradition of the state refusing to enforce certain
kinds of contracts. He cited credit default swaps as an
example of what should not be accepted, but I would go even
further.
There's a reason Kennesaw Mountain Landis came down like a
ton of bricks on Shoeless Joe and the rest of the Black Sox.
At the very hint that baseball players might be involved in
gambling on the games undermine the very integrity of the
sport itself.
The same applies here. The fact that brokers can legally
engage in all sorts of side bets, casts the integrity of the
market itself into doubt. This business with credit default
swaps just proves the markets are rigged. Swim at your own
risk.
Third, the Glass-Steagall Act needs to be reinstated. This
was depression era banking legislations sponsored by two
Southern legislators. The main provision prohibited
commercial or retail banks from engaging in investment
banking or offering other financial services such as
insurance.
This wall of separation between commercial and investment
banking was taken down in 1999. Republicans sponsored the
legislation but Bill Clinton signed it into law. Remember,
not a dime's worth a difference.
As a result, retail bankers could now write mortgages and
then as investment bankers bundled them into securities and
sell them. And if that was not enough, they could create
insurance on them, those credit default swaps. Because they
knew the loans were bad in the first place. A pretty sweet
deal, if you're Goldman Sachs.
Fourth, congress must remove the Federal Reserve's monopoly
on printing money. The Federal Reserve is not a department
of the government. It is a cartel of private banks to which
congress has given a monopoly on money printing.
You've heard a lot about quantitative easing the last couple
of years. Let me explain it to you in a nutshell.
Quantitative easing is when the Federal Reserve prints money
out of thin air because they can and then loans that money
to the Federal Government at interest. Again, pretty sweet
deal if you're a Federal Reserve Bank.
Last, and this is tied directly to number four. The money
supply has to be backed by something other than the good
wishes of the Federal Government. Whether it's gold or
silver or a combination of the two or land, the point is,
currency has got to be backed by something that is real,
tangible and most importantly, limited.
Since the Federal Reserve was created in the early part of
the 20th Century, the dollar has lost more than 85% of its
value. Why? Because we keep printing money and since we are
no longer on the gold standard, there is literally no limit
to the number of dollars that the Federal Reserve can print.
The problem is, the more there is of anything, the less
valuable it becomes. What we are doing, as Jefferson pointed
out more than 200 years ago, is stealing from our children
and grandchildren. This must stop. But it will not stop
until the currency is anchored to something real.
I don't know what the future holds for us economically. I
don't have a crystal ball. Though I'm convinced that it's
going to be a very bumpy ride. But one thing is perfectly
clear to me however. It is insane to argue that we can solve
the problems and yes, inequalities created by massive debt
and profligate spending by even more spending and more debt.
Check out the recent editorials in the New York Times if you
want to see this kind of craziness for yourself.
Next time, I'm going to talk about how we as families,
parishes and diocese can help prepare ourselves for this
uncertain future. I will also address the topic of social
welfare from an Orthodox and Agrarian perspective.
Until then, may our great God and Savior Jesus Christ,
through the intercessions of St. Innocent of Alaska, the
blessed Elder Sophrony, and all of the saints, have mercy
upon us and grant us a rich entrance into His Eternal
Kingdom.