Orthodox Outlet for Dogmatic Enquiries Events and Society & Philosophy


Debunking  Capitalism

Part II: 

The Marketplace

by:  Clark Carlton (*)

Source:  http://ancientfaith.com/podcasts/carlton/the_naked_public_square_part_five_the_marketplace



(*) 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.



"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 FiveThe 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.



For more information please read the following articles:

ñ Debunking (two myths on) Capitalism Part I

ñ Capitalism as the offspring of Western Metaphysics

ñ Capitalism’s ideology

ñ Interest, Usury, Capitalism

ñ A World Split Apart

ñ Christianity, Marxism and Love

ñ Marxist practice and Christian Love



Article published in English on: 7-10-2011.

Last update: 7-10-2011.