Box Score: Money 2, Value 1

Coming of age in the Reagan era, I failed to understand what I was witnessing. America abandoned manufacturing for services and ended up in a time warp.

As a corporate-level software consultant, my father Karl saw elements of this up close. Invited as a fellow traveler by the president of Wiley & Sons (the journal publisher), Karl sat in on the annual shareholder meeting. A careful investment plan charted growth in assets and employment. During the discussion, the CFO queried, “And what is the annualized rate of return on your plan?” With the follow-on to the response, “I can take that same money and make three times as much in the stock market.”

In that era, the stock market still reflected an investment in other people’s ingenuity. This year, as we approached the election, one Trumpie threatened, “Well, if Biden wins, you can be sure the stock market is going to tank!” The inescapable corollary is that the stock market is no longer an economic bell-weather but an instrument of political influence.

That influence is maintained through the ties between the Federal Reserve and the large banks. We are in the mind-numbing reality that the people that take care of our money no longer profit from making it grow, they profit by making it move. That may seem impossible, but the volume of real estate, trade, and government debt is so enormous that simply the placement fees run into the tens of billions of dollars annually.

The bind for the public is that the money center banks hold no interest in seeing the debt reduced. In fact, the Dow weathered recent financial crises because the Federal Reserve issued borrowing authority that the banks loaned to corporations to buy back stock. The value of stock is now linked to corporate debt.

And in the chaos only the financial system has a guaranteed benefit.

Was this intentional? Hardly, but it was inevitable. This is trumpeted by the liberal economists, but they misdiagnose the problem. I hope with this post to steer them in the right direction.

The liberal economists blame “capitalism.” Capitalism, coined by Adam Smith, is a recent innovation, seeing an effective implementation only in the industrialization of the Western world in the late 1800’s. Capitalism was actually a liberalizing social contract. It held that money and labor could collaborate to improve productivity. Higher productivity meant more money for investors and lower costs for labor. It was a win-win scenario.

Capitalism disproved the precepts of Malthus, who held that population growth would always overwhelm the benefits of productivity gains. In part, however, Malthus was proven right because political power was held by the moneyed noble class. Market control was awarded by royal writ, and once secured ensured resistance to innovation that might lead to diversification of supply. Stability of prices was also important to the nobility and their retinues, often sustained by stipends.

The crack in this hermetic system was warfare, and it was to finance their conflicts that the nobility turned to the banking system, leading to the coupling of political and financial interests that suppressed the development of liberal societies.

So the “Box Score” reads as it is because capitalism is now revealed as a brief interlude in the narrow marriage of politics and finance. It was an interlude during which finance married itself to the production of value and the growth of liberal societies.

Regardless of the outcome, the 2020 election proves at least one thing: that Donald Trump is a symptom, rather than a cause. The disease that created him is a return to the festering myopia of political and financial calculations freed from a concern for value or sustainability. Trump is used as a tool by that system to distract attention from the wizards behind the curtain. He is a live facsimile of the special effects in the Wizard of Oz.

How does this manifest in practical terms? Consider real estate. I was told recently that I had to get in the market, because prices would only go up. Looking over the finance package, I noted with surprise that is allocated 50% of my income to real estate costs, rather than the 30% typical of my youth. So the reason that real estate prices are going up is because the Federal Reserve, through Fannie Mae and Freddie Mac, is issuing loans that allocate more of our income to the payment of interest. The increase in home prices has nothing to do with value – it follows from a systematic manipulation of political and financial levers to ensure that we are indebted.

But the fault is not with capitalism. Capitalism was a God-send. The fault is with something I would call “monetarism” – the pursuit of wealth in the absence of any concern for value.

The economic historian should recognize this plague. What should give pause to the rest of us is the proof, in the results of the 2020 election, that the disease is worse that an out-of-control pandemic that has the potential to kill millions of Americans.

I hope that our democracy survives while our liberalizing politicians adapt to that lesson.

Response to “Are Christianity and Capitalism Compatible?”

Source post is here.


Thanks for the link back to my post.

A comment on the history of economics (see Nasar’s “The Grand Pursuit”), motivated primarily by the principle that just as we should not hold Christ responsible for all the terrible things done in his name, so we should not hold Adam Smith responsible for all the things done in his name.

At the beginning of the 19th century, economic thought was dominated by Malthus. The “dismal science” held that there was no escape from widespread poverty, because the growth of systems of production appeared incapable of keeping pace with population growth at the subsistence level. This meant that, no matter how freely owners distributed profits to the workers, population would continue to grow until poverty imposed a constraint on lifespan. This justified much of conservative thought of the era, which held that sustaining the institutions of the state in the face of ravenous poverty was essential, lest the entire body of humanity be reduced to barbarism

Capitalism found a way out of this dilemma, essentially by supplementing the productive capacity of individual workers with machinery. The upshot was that, while wages per piece produced fell (as decried by Marx), the cost of goods fell even faster. This instituted an era of enormous growth in the global standard of living and average life span.

Unfortunately, this boon comes largely from our harvest of the bounty of the Earth – in the West, each of us consumes energy equivalent to 200 man-years of labor. This has been indulged without a mind to sustainability, so it looks as though we are likely to return to Malthusian economic outcomes in the near future.

I would note that the economic practices of the early Christian communities did not focus on the mechanisms of production or the issues of sustainability. These were beyond the ken of all except the most sophisticated members of society. In fact, the Fall of Rome and the ensuing deurbanization and decay of the social order was so traumatic to the Church fathers that they spent the next 1500 years trying to reestablish the Roman Empire, which they saw as the first Christian nation and therefore “God’s kingdom on earth.”

So I would suggest that capitalism, with its hopeful, rational and scientific view of productive processes, is not incompatible with Christianity. We are still left with two problems to confront: maturity regarding procreative opportunity (each of us needs to ask “can I actually love a child into the future he/she deserves?” and discipline ourselves accordingly), and fairness in the distribution of wealth, which currently is seriously out of whack in America.

Warriors and Healers

In The Soul Comes First, I interpret the Bible as the story of the investment made by unconditional love to organize matter with the goal of allowing spirit to purge itself of selfishness. That process is manifested in all of the physical processes of this reality, spanning history from stellar evolution to the knowledge economy.

The apparent contradiction is that these processes appear superficially to reward selfishness. The most impressive lights in the sky are the giant stars. It is the massive dinosaurs that capture our attention as the pinnacle of pre-human history. And civilizations are recognized for the geographical extent that allows them to acquire resources to support promotion of their culture, with limited weight given to the degree to which the benefits of power were distributed to the common citizen.

The antidote to selfishness is rapid energetic collapse. The stellar giant, in a fraction of the time allotted to its lesser peers, exhausts its nuclear fuel and collapses, ejecting its hoarded mass in a supernova that populates the heavens with heavy elements that become the seeds of planets. While the dinosaurs (and other giant life-forms) are prolific consumers of biomass, the biophysics of large life-forms ensures that they are vulnerable to ecological stresses, among which include the global effects of asteroid impacts and ash spewed from volcanic vents. In human history, great civilizations collapse when vulnerable urban populations face the collapse of agricultural and energy supplies, whether due to the accumulation of clay on irrigated land, loss of soil following destruction of natural flora, or the burning of energy stored in biomass faster than the rate of replenishment.

Humanity has been granted two great boons that allow it the opportunity to escape this course. The first is the mammalian amygdala, which includes among its affects social bonding that causes us to mourn the loss of our intimates. The second is the intelligence that allows us to understand causation, and thus to manage our lives to minimize painful experiences, extending to the loss of our intimates.

In The Empathic Civilization, Jeremy Rifkin posits the possibility of a transition from predatory consumption to empathic sustainability. Rifkin catalogs the technological capabilities that make the latter possible: global information systems that expand the geographical reach of our intimacy, materials science and engineering that will allow us to tap into reusable sources of energy, and modelling methods that will allow us to design economic systems that are sustainable given the known limits of raw material supplies.

In my experience, the manifestation of that potential collides in the tension between the warrior and the healer. As I explain below, these are behaviors that both support the transition to sustainability but that often contradict each other’s expression.

In the early stages of cultural development, the natural context is dominated by predators. Survival of a species lacking either prolific breeding or natural armaments requires tools that can be used to defend against predation. Naturally, these same tools, sufficient to protect against species that survive by destruction of weaker animals, empower the wielders to become predators themselves. As technology advances, the destructiveness of weapons makes organization of their deployment a source of social power. There is no great civilization in human history whose origins cannot be traced either to a monopoly on weapons technology or to superior military organization.

The warrior culture is a domestication of the primitive predatory impulse with the goal of protecting access to the resources required to sustain civilization. A true manifestation of this culture dates only to the Cold War era, when military planners in the West realized that generalized conflict, always guaranteed to produce a loser, no longer even produced a winner. Furthermore, the complexity of modern weapons systems ensures that maintaining and deploying military dominance requires the involvement of a citizenry firmly committed to the survival of the society. In fact, while the warrior is often the recipient of sophisticated training in the use of destructive force, they rarely possess the intellectual skills to design and manufacture modern weapons. Thus the Cold War was not just a struggle over the efficacy of planned vs. liberal economies. It was also proof that in the modern military-industrial economies, nations that turn military force against their citizens (tyrannies) cannot compete with nations that cultivate a warrior class.

The problem with this social contract is that it preserves our focus on the dominant threat to the stability of civilizations – homo sapiens sapiens itself. It simply ensures that our predatory impulses remain focused on those parts of the ecosystem that lack political representation. Thus, while Europe responds to Russian adventurism in Georgia and the Ukraine by seeking alternative supplies of fossil fuel, still the world failed to control effectively carbon dioxide emissions that some predicted (as far back as 1950) would undermine ecological sustainability all across the globe (much as did the asteroid that triggered the extinction of the dinosaurs). Even now, most of the larger wild species have been decimated, being replaced by domesticated herds.

As a result, we are faced with a future that is going to require extensive investment in healing of broken ecologies. This requires another huge leap in human culture. The psychological force that motivates the healer is empathy, or compassion.

Working ecosystems are enormously complex. The biogeneticists struggle even to control the metabolism of the cyanobacteria in flooded iron mines. The biochemistry that leads to cyanide production has a multitude of pathways – remove one protein catalyst and another pathway springs up in its place. The only means of control appears to be annihilation – make the environment so poisonous that even bacteria cannot survive. But that would be to introduce poisons to the environment worse even than cyanide.

Given this overwhelming Rube-Goldbergesque complexity, accreted through billenia of random trial and error, the only means of assessing the wellness of an ecosystem is to engage spiritually with a sense of its workingness.

The fundamental disconnect is that, while western economies proclaim the domestication of war, the forces that drive conflict – scarcity of resources that make the daily lives of most humans a desperate search for basic necessities – have not been resolved. Desperate people adopt predatory behaviors, stealing sustenance from one another, and the surviving communities celebrate the strength of the predator. This is visible in Russian idolization of Vladimir Putin, and in lionization of third-world potentates all across the globe.

In the framework that I have defined, we cannot escape the reality that the workingness of the ecosystems that sustain human life are irretrievably broken. This spawns predators, which the warriors of the West beat down in order to secure access to resources needed to sustain our unstable societies. But the healer recognizes that the problem is one of sustainability, and the only way to ensure peace, over the long term, is either to annihilate the exploited populations (a la the Third Reich) or provide them the resources to create a sustainable society.

Of course, the warrior looks at the latter proposal and says: “But we just finished destroying this threat, and now you want to go and stand them on their feet and give them the power to attack us again? Do you understand how many of us have surrendered our futures to protecting you? And you want to do what?”

And of course the healer says: “But have you been to see these people? How can you ignore their suffering?”

In America, to this point the warriors have been given priority. The era since the Vietnam War has seen a steady erosion of the influence of the Department of State in deference to the Department of Defense. This slide was reversed only recently by the Obama Administration. There is some justification for allowing the leaders of those sacrificed in military conflict to control the adventurism of inexperienced civilians. While Muslim extremists make much of the revelation that the Bush Administration asked military planners to chart the conquest of the tyrannies of the Middle East from Iran to Libya, my understanding is that the carefully couched response was, in effect, “Are your out of your fucking minds?!?”

While I celebrate the ascendancy of economic containment over military conflict, I attend still the creation of institutions that extend that practice to cultures that exploit ecosystems. It is only then that healers will have the opportunity to address the root cause of predatory behavior, and thereby justify the reallocation of resources from military competition to cultural development. Predation is not the only urge that destabilizes ecosystems – so too does procreation. It is only when the vast majority of humanity has the psychological strength to subject all such urges to rational control will the ultimate goal of global sustainability be secured, and the healers be able to succeed in their essential work.

Until then, warriors, please recognize that it is for your children that healers assume these risks. And healers, recognizes that the warrior’s anxiety has a rational basis.