Three items have crossed my email inbox over recent weeks that may be of interest to PowerBlog readers. The first two are from the Program in Early American Economy & Society (PEAES).

The Seventh Annual Conference of the Program in Early American Economy & Society conference is titled, “Markets & Morality: Intersections of Economy, Ethics, and Religion in Early North America.” The conference will be held on November 7, 2008, at the Library Company in Philadelphia, PA. There are a number of sessions that look promising, including papers like “The Moral Economy of Competition in Early National New England,” from Jason Opal of Colby College and “A Wealth of Notions: Interpreting Economy and Morality in Early America,” by Christopher Clark, University of Connecticut.

PEAES has also announced its fellowships for 2009-2010, including a resident post-doctoral research fellowship with a stipend of $40,000, a research dissertation fellowship with a stipend of $20,000, and four to six short-term fellowships to scholars at any level of scholarly or professional achievement with stipends of $2,000 each.

Finally, Harvard University will also be hosting a graduate student conference from November 6-8, 2008, titled, “The History of Capitalism in the United States.” The conference is “intended as a forum in which to encourage dialogue, debate and more inclusive approaches to the writing of the history of capitalism in the United States.”

Is this supposed to be capitalism?

Geoff Colvin writes that a motivating factor in the recent crash in corporate profits, as well as the sharp decline in home values, was the phenomenon that “people began to believe that the more they borrowed, the better off they would be. Their thinking went like this: With the cost of capital so low and asset prices rising steadily, risk was evaporating.”

The precipitating cause of the downturn was that consumers “began to live within their means, shutting down the profit-growth machine.”

Any business or industry profit model that depends on consumers driving themselves deeper and deeper in debt is morally flawed and economically unsustainable. That’s not capitalism, that’s consumerism.

Compare the latter with the former, represented by this statement of a first principle of capitalism, “Thrift the First Duty”:

...thrift is mainly at the bottom of all improvement. Without it no railroads, no canals, no ships, no telegraphs, no churches, no universities, no schools, no newspapers, nothing great or costly could we have. Man must exercise thrift and save before he can produce anything material of great value. There was nothing built, no great progress made, as long as man remained a thriftless savage. The civilized man has no clearer duty than from early life to keep steadily in view the necessity of providing for the future of himself and those dependent on upon him. There are few rules more salutary than that which has been followed by most wise and good men, namely, “that expenses should be less than income.” In other words, one should be a civilized man, saving something, and not a savage, consuming every day all that which he has earned.

You don’t need to agree with Andrew Carnegie about everything to recognize the truth of these statements. Thrift is one of the things that separates civilized capitalism from savage consumerism.

From a review in the New Yorker magazine (HT) of David Levering Lewis, God’s Crucible: Islam and the Making of Europe, 570 to 1215, in which the author

clearly regrets that the Arabs did not go on to conquer the rest of Europe. The halting of their advance was instrumental, he writes, in creating “an economically retarded, balkanized, and fratricidal Europe that . . . made virtues out of hereditary aristocracy, persecutory religious intolerance, cultural particularism, and perpetual war.” It was “one of the most significant losses in world history and certainly the most consequential since the fall of the Roman Empire.” This is a bold hypothesis.

To say the least. It is of course true that in the twelfth and thirteenth centuries Muslims had been in possession of a number of Aristotle’s works in Arabic that were not readily available in the Latin West. It isn’t so clear, however, that the depth and breadth of Greek philosophy and the classical virtues were saved by Islamic philosophers during the West’s “dark” ages. There’s much more on that here, including this summary:

The Arabic translations, although they did serve as an early reintroduction for some Western Europeans to Greek thought, didn’t “save” Greek knowledge as it had never been lost. It had been preserved in an unbroken line since Classical times by Greek, Byzantine Christians, who still considered themselves Romans, and it could be recovered there. There was extensive contact between Eastern and Western Christians at this time; sometimes amiable, sometimes less so and occasionally downright hostile, but contact nonetheless. The permanent recovery of Greek and Classical learning was undertaken as a direct transmission from Greek, Orthodox Christians to Western, Latin Christians. There were no Muslim middlemen involved.

In any case, here’s the take of the New Yorker reviewer on Lewis’ book:

I can foresee a time when another matter important to us, the threat of ecological catastrophe, will prompt a historian to write a book in praise of the early Europeans whom Lewis finds so inferior to the Muslims. The Franks lived in uncleared forests, while the Muslims built fine cities, with palaces and aqueducts? All the better for the earth. The Franks were fond of incest? Endogamy keeps societies small, prevents the growth of rapacious nation-states. The same goes for the Franks’ largely barter economy. Trade such as the Muslims practiced—far-flung and transacted with money—leads to consolidation. That’s how we got global corporations.

So, the development of free market economies so often attributed to Western civilization are actually due to Muslim nation-states...and for that reason we ought to prefer European culture!

How refreshing!

When I lived in Egypt one of the Egyptian drivers for diplomats at the American Embassy in Cairo explained how people had to wait five to seven years for a phone. He proudly stated he was on the list, but poked fun at the long wait for service. Of course, he also added that you might be able to speed the process up by a few months with bribes, or as it is more affectionately knows as in Egypt, “baksheesh.”

Ronald Reagan loved to tell jokes about the former Soviet Union, especially about the stark differences between the United States and Soviet economic systems. It was a tactic he often used to take the hard edge off his criticism of the Soviets, while still drawing sharp contrasts between the competing systems. It also deftly showed his solidarity or sympathy with the Russian people.

Often to the horror of some of his top foreign policy advisers, he loved delivering the jokes directly to Mikhail Gorbachev at summit meetings. Gorbachev would politely smile or sometimes counter by adding that the joke was just a caricature of the Soviet system. But Reagan had carefully collected many of the jokes from former citizens of the Soviet Union, diplomatic officials, and some of them were passed to him by the CIA. Many of them were real jokes that had circulated inside the Soviet Union.

Many of Reagan’s jokes were a critique of the insufficiency of the Soviet system.

A Russian man goes to the official agency, puts down his money and is told that he can obtain delivery of his automobile in exactly 10 years. “Morning or afternoon,” the purchaser asks. “Ten years from now, what difference does it make?” replies the clerk. “Well,” says the car-buyer, “the plumber’s coming in the morning.”

Another joke Reagan liked to deliver summed up his thoughts well. Two Russians are walking down the street, and one says, “Comrade, have we reached the highest state of communism?” “Oh, no,” the other replies. “I think things are going to get a lot worse.”

Continue reading "Ronald Reagan on Free Enterprise "

Related to John’s post about “natural” capitalism (and as I previously promised in the context of the “new” evangelicalism), I’d like to point to this summary of the contemporary situation from Alasdair MacIntyre’s After Virtue, speaking of a left/right political divide:

This bifurcation is itself an important clue to the central characteristics of modern societies and one which may enable us to avoid being deceived by their own internal political debates. Those debates are often staged in terms of a supposed opposition between individualism and collectivism, each appearing in a variety of doctrinal forms. On the one side there appear the self-defined protagonists of individual liberty, on the other the self-defined protagonists of planning and regulation, of the goods which are available through bureaucratic organization. But in fact what is crucial is that on which the contending parties agree, namely that there are only two alternative modes of social life open to us, one in which the free and arbitrary choices of individuals are sovereign and one in which the bureaucracy is sovereign, precisely so that it may limit the free and arbitrary choices of individuals. Given this deep cultural agreement, it is unsurprising that the politics of modern societies oscillate between a freedom which is nothing but a lack of regulation of individual behavior and forms of collectivist control designed only to limit the anarchy of self-interest. The consequences of a victory by one side or the other are often of the highest immediate importance; but, as Solzhenitzyn has understood so well, both ways of life are in the long run intolerable. Thus the society in which we live is one in which bureaucracy and individualism are partners as well as antagonists. And it is the cultural climate of this bureaucratic individualism that the emotivist self is naturally at home.

There has been a lot of confusion over Mike Huckabee’s invocation of the term “vertical politics,” but I think it is one attempt (perhaps futile) to come to terms with this feature of modern political life. The fact that the chattering classes exist in a two-dimensional realm explains why they have trouble understanding such attempts at transcending a binary political continuum. Such attempts at transcendence seem to me to be necessary given a view that holds to a hierarchy of moral goods (perhaps a minority view, nowadays).

Over at the OrthodoxNet.org blog, editor Chris Banescu had an entertaining exchange in the comment boxes with a writer who asserted that “capitalism can be just as infected with materialism and the concomitant need to tyrannize as communism.”

Here is Chris’ response:

Capitalism is really not an ideology. It simply describes reality, like mathematics and economics describe reality. It’s a word that explains how free human beings interact voluntarily with one another to exchange value and how they invest the excess of the fruits of their labors to produce more or gain more value. It is value and morally neutral.

You are positing your argument from the Marxist and leftist ideological point of view that made up this bogeyman they called “capitalism” as if it was some alien force dreamed up by rich to oppress the poor. That is a lie. You should know better than that.

On the other hand you are right that materialism is a moral failure, but that is the fault of the moral choice of individuals and groups, not the fault of capitalism. That’s like saying that it’s the fault of mathematics when someone does a wrong addition or multiplication, or the fault of accounting when someone embezzles money from their employer and writes down the incorrect cash register total.

When man deposits his money in a bank and requires interest payments, he is practicing capitalism!

When he buys food, clothing, furniture, medicine, etc.. from someone who produced it, he is practicing capitalism!

When he expects to be paid a fair salary for the work that he’s doing, he is practicing capitalism!

When he is the beneficiary of any retirement or pension fund, he is practicing capitalism!

When he buys property and hopes value will increase, he is practicing capitalism!

When he lends money to someone else and wants interest in return, he is practicing capitalism!

When he invents something new and unique and wants to sell it to someone else for a profit, he is practicing capitalism!

When he is the beneficiary of any government program providing social assistance, he directly benefits from others who practiced capitalism and created the profits the gov’t can now use and distribute to those in need!

When Churches and Synagogues get donations from people who first had to work and earn it, they are the beneficiaries of capitalism.

Even communists and socialists rely on capitalism to actually produce anything of value and generate the value and returns that fund and fuel their governments.

The 2008 Acton Lecture Series kicked off yesterday in Grand Rapids, Michigan with an address by Dr. Jennifer Roback Morse entitled “Freedom, the Family and the Market: A Humane Response to the Socialist Attack on the Family.”

Morse, an Acton Senior Fellow in Economics, described how the socialist ideal of equality has played an independent role in the breakdown of the family, arguing that socialism has attacked the family directly, and has adopted policies that have led to demographic collapse. By contrast, Christianity and capitalism offer more appealing solutions to the problems socialism claims to solve, and a more humane approach to dealing with issues of family and gender.

If you weren’t able to attend in person, you can download the audio here (11 mb mp3 file). And don’t forget to set aside some time on February 14 to attend the next Acton Lecture Series event, featuring Dr. Glenn Sunshine’s talk on “Wealth, Work and the Church.”

Update: Video of the lecture is available below.

Rev. Robert A. Sirico is interviewed by James Freeman, assistant editor of the Wall Street Journal’s editorial page, about markets and morality and about the Acton Institute’s Call of the Entrepreneur documentary.

Pat Sangimino wrote an article for the Wichita Business Journal titled, “Documentary seeks to dispel negative images of entrepreneurs ” (subscription required). A premiere of The Call of the Entrepreneur took place in Wichita, Kan., on November 14th. Sangimino noted in his piece:

Some consider Wichita to be the Midwest’s cradle of entrepreneurship. Evidence of that is the original Pizza Hut building, which was moved to the Wichita State University campus in 1984 to serve as a reminder of what can happen to those who dare to dream and are willing to take a chance.

The screening was sponsored locally by the Flint Hills Center for Public Policy. The Center is a think tank dedicated to the constitutional principles of limited government, open markets, and individual freedom and responsibility.

Another noteworthy quote from the article:

The documentary’s three examples of business success could easily be compared with those of Dan and Frank Carney and Pizza Hut, Tom Devlin and Rent-A-Center or Jack DeBoer and his hotels, among others — tales that have become part of Wichita’s enterprise lore.

Washington Post columnist Robert J. Samuelson discusses a new book on economic history that looks at the poverty problem from the perspective of “nature vs. nurture.”

Comes now Gregory Clark, an economist who interestingly takes the side of culture. In an important new book, “ A Farewell to Alms: A Brief Economic History of the World,” Clark suggests that much of the world’s remaining poverty is semi-permanent. Modern technology and management are widely available, but many societies can’t take advantage because their values and social organization are antagonistic. Prescribing economically sensible policies (open markets, secure property rights, sound money) can’t overcome this bedrock resistance.

“There is no simple economic medicine that will guarantee growth, and even complicated economic surgery offers no clear prospect of relief for societies afflicted with poverty,” he writes. Various forms of foreign assistance “may disappear into the pockets of Western consultants and the corrupt rulers of these societies.” Because some societies encourage growth and some don’t, the gap between the richest nations and the poorest is actually greater today (50 to 1) than in 1800 (4 to 1), Clark estimates.

Samuelson notes that “Clark’s theory is controversial and, at best, needs to be qualified.” In his column, The Global Poverty Trap, Samuelson summarizes Clark’s view: “Capitalism in its many variants has been shown, he notes, to be a prodigious generator of wealth. But it will not spring forth magically from a few big industrial projects or cookie-cutter policies imposed by outside experts. It’s culture that nourishes productive policies and behavior.”