Wednesday, November 11, 2009

Capitalism, God, and Greed Part III

Murray Rothbard explains the concept behind money in The Mystery of Banking, "Money—as an element in every exchange—permits man to overcome all the immense difficulties of barter. The egg dealer doesn't have to seek a shoemaker who enjoys eggs; and I don't have to find a newsdealer or a grocer who wants to hear some economics lectures. All we need do is exchange our goods or services for money, for the money commodity. We can do so in the confidence that we can take this universally desired commodity and exchange it for any goods that we need." (page 5)

Historically money has always been representative. Money was limited by productive capacity, and therefore limited by resources. There were intrinsic limits to money, and therefore limits to wealth. But man's longing for wealth, ease, and "absolute sovereignty" in the words of Wendell Berry, were unlimited.

Herbert Schlossberg writes in Idols For Destruction, "When gold and silver were the only money, technology could not meet the challenge of imitating it. But when paper was given the power to command economic goods, people could mimic the official press with the unofficial one. This modern form of theft, like all others, comes from envying the possessions of other people and the coveting that impels one to obtain them. " (page 91)

The use of technology in managing money has in no way benefited society long term. It has led to inflation, which Schlossberg denounces, as the Bible itself denounces. "A society that inflates its currency tampers with a moral value. If the economic system lacks the basic honesty that permits economic transactions to reward both seller and buyer, lender and borrower, there can be no sense of justice. It seems right then to seek advantage at the expense of others. Henry Wallich, a member of the Federal Reserve Board, which has proved itself incapable of providing honest money, recently said that prices expressed in dollars no longer mean what they say. "Inflation is like a country where nobody speaks the truth." He compared the use of the inflating dollar with the making of contracts in which the measures of quantity frequently shrink. The Hebrew prophets denounced those changeable weights and measures as a form of oppression that merited judgment. Yet the Federal Reserve Act reads, in part, "to furnish an elastic currency." (page 101)

As Schlossberg says, "Inflation is both a cause and effect of moral decline. The citizens like it because they perceive that it gives them something for nothing. Like many of the policies of the modern social democracies, it transfers wealth from some people to others." The motivation of the inflationist is clear, as is the result: "This modern version of alchemy is what Ludwig von Mises used to call "the philosophy of stones into bread," referring to the temptation of Jesus. That is the alchemist's trick of creating something of value without work. Whether the wizard mutters incantations, mixes formulas, or runs printing presses, he attempts to produce bread without bothering to plow, sow, reap, grind, and bake. He tries to create value ex nihilo and imitate the creative power of God. What he really accomplishes is the taking of someone else's bread." (page 92)

What we are now witnessing, and as both Schlossberg and Berry would argue, is the taking of our children's bread. Berry writes, "When supposed future needs are used to justify misbehavior in the present, as is the tendency with us, then we are both perverting the present and diminishing the future. But the most prolific source of justification for exploitive behavior has been the future. The exploitive mind characteristically puts itself in charge of the future. The future is a time that cannot conceivably be reached except by industrial progress and economic growth. The future, so full of material blessings, is nevertheless threatened with dire shortages of food, energy, and security unless we exploit the earth even more "freely," with greater speed and less caution. The obvious paradoxes involved in this—that we are using up future necessities in order to make a more abundant future; that final loss has been made a calculated strategy of annual gain—have so far been understood to not great effect… It is as if the future is a newly discovered continent which the corporations are colonizing. They have made "redskins" of our descendants, holding them subject to alien values, while their land is plundered of anything that can be shipped home and sold." (Unsettling of Culture page 58)

To be continued...

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