Category: Economics

From the Mailbag … What’s the Difference Between Capitalism and Corporatism?

“I felt it my duty to take, and to inflict upon the reader, considerable trouble in order to lead up effectively to my paradoxical conclusion: capitalism is being killed by its achievements…Capitalism, inevitably and by virtue of the very logic its civilization creates, educates and subsidizes a vested interest in social unrest.”

Joseph Schumpeter, 1942

“Capitalism knows only one color: that color is green; all else is necessarily subservient to it, hence, race, gender and ethnicity cannot be considered within it.”

Thomas Sowell

“‘Capitalism’ has become something different and distinct from free market ideas about exchange, private property, etc. It is an ideological enemy of traditionalists and buttresses the egalitarian acid eating away the foundations of social order.

“The hostility of capitalism toward tradition is clear enough in its reduction of all social issues to economic ones. Moreover, like communism, capitalism is based on an egalitarianism that refuses to distinguish between one consumer’s dollar and another. The reductionism and egalitarianism inherent in capitalism explain its destructive impact on social institutions.”

Samuel Francis

Pastor,

Can you explain what the differences are between Capitalism and Corporatism?

Morgan

Hello Morgan,

The basic difference between the two is that Capitalism believes that the market exists and so should serve the particular people group it is in service of and not that the particular people group exists for the sake of the market. In the former people are the servants of the Corporate monetary structures while in the latter the economic structures are to serve the people. So, for example, while Capitalism would say that even though immigration might help increase the Gross Domestic Product (GDP) it still should not be embraced because immigration would and does hurt the particular people group that the market is supposed to be serving. This is what Thomas Sowell was getting at in his quote above.

Another, similar example of Corporatism vs. Capitalism is that inasmuch as Corporatism only cares about profit, it will sacrifice all other principles in the pursuit of economic gain. Corporatism only sees the bottom line of profit and loss in terms of finances whereas Capitalism, at its best, understands that it private markets must serve a larger end. So, for example, if the Corporatist can make more money by feeding women into the labor force to compete with men, therefore increasing the labor force in terms of numbers with the result that lesser wages can be paid since there are more people available to do the same amount of work, meaning that the Corporations will have a larger profit because their labor expense will be reduced that is was Corporatism will do. This is what Samuel Francis’ quotes above are getting at. Corporatism only see the bottom line in terms of profit. Capitalism at its best understands that it is not its own end or purpose.

Corporatism, unlike Capitalism, has no problem with what is called “creative destruction.” Corporatism is prone to constant change and social revolution since it is constantly asking, “What can be changed so that we, as Corporate Owners, can make even more money.” This means that Corporatism eats tradition, in pursuit of profitable innovation. Capitalism, on the other hand, in its best expression, served tradition by providing goods at just prices giving out just wages. It’s reason for existence was not the bottom line, but was the health and good of the community wherein it existed. We are living through an example of this wherein we are being told that for the sake of profit the State will give out a universal basic income as the Corporations rake in their Billions of dollars.

Another distinction between Corporatism and Capitalism is that in Corporatism you have an alliance between Government, Big Labor, Big Banks, and Big Business with the purpose of controlling how the financial machine of the social order works. In older parlance they are “in cahoots” (or in bed) with one another. The person left out of this arrangement is the small business owner, the small craftsmen, and the private entrepreneur – these people make up a substantial number of the population.

So, you see Morgan, that Capitalism is a more decentralized economic system that promotes private innovation through local competition. Corporatism, on the other hand, is not so interested in innovation but prefers top down planning that gives an even product as dictated and controlled by the mega banking, government, labor, and business interests in a nation. Because of this difference capitalism can more easily adjust to and provide the goods for new demands. Corporatism on the other hand, because it is centralized and top down plan oriented does not adjust well to meeting unexpected changes in terms of sudden new demands in the marketplace.

The important thing to keep in mind is that Corporatism is more of a top down economic structure that seeks to control the market for the good of the profiteer (pirate?) class in the social order. Capitalism, on the other hand, is decentralized and sees the states only role as enforcing private contracts and insuring a level economic playing field wherein all can compete. Capitalism insisted that the State governs best in economics where it governs least. Corporatism insists that a nation’s economics needs the State’s guiding and involved (menacing?) hand. At the end of the day corporatism and capitalism as competing systems shape how wealth is distributed, how economic decisions are made, and consequently how social orders function.

Clearly, while at one time we may have had a Capitalist system, it has been decades (since the arrival of the Federal Reserve in 1913) since Corporatism took over our economic landscape. Big Banks (Federal Reserve – which is NOT Federal and has no Reserves), Big Business (Wall Street), Big Government (Federal Government), and Big Labor (Labor Unions) now shape our economic system. This means that we are really no longer a people conversant with Liberty.

Another thing that should be noted before signing off here Morgan is that Communism and Corporatism in history have often worked hand in glove. It is true that Communism is opposed to genuine Capitalism but it is NOT true that Communism is opposed to Corporatism. In point of fact the economic cooperation between the USSR and the USA during the Cold War is evidence of this truism. This cooperation preexist the Cold War as well as Antony Sutton’s trilogy of books reveal.

Wall Street & The Rise of Hitler
Wall Street & The Rise of FDR
Wall Street & the Bolshevik Revolution

Morgan, even if your great grandparents were alive they would not remember a time when Corporatism and not Capitalism was the economic structure of our nation.

Much more could be said here but this gives you a start on the differences between Corporatism and Capitalism.

Rushdoony Speaks From The Grave; “Theonomy/Reconstructionism Is Opposed To Movement Libertarianism”

 Lately, in some quarters (like the Natural Law fanboys) there has been a ear worm that has been issuing forth. The complaint they have been ginning up is that Theonomy is inherently Libertarian. Upon making that accusation they then turn a use that accusation as a foundational attack on the whole theonomic movement.

Now, this accusation suffers by being half true and so therefore totally false. It is true that some of those called “theonomists” did indeed embrace what I will call movement Libertarianism. Gary North is the most obvious example. Others, who were originally in Rushdoony’s orbit, include chaps like Andrew Sandlin, likewise had the fault of being more Libertarian than Theonomic. This would include Doug Wilson. We even see some of this in Greg Bahnsen.

However, what might be true of Rushdoony’s Lieutenants was not true of Rush himself. As we will see below by quoting Rush, Rush made distinctions between movement Libertarianism and the Libertarianism that he was championing. Rushdoony, and so Theonomy, is not necessarily Libertarian, though it is true that the 2nd generation Reconstructionists have twisted it to make it so. Because that is true, it is understandable that people would accuse theonomy as being “Libertarian.” Understandable, but still not true.

Part of the problem here is the greater project of Fusionism that occurred in the post WW II conservative movement. The post war conservative movement, in order to build heft, sought to meld together several ideological disciplines into one cohesive whole in order to resist the New Deal Liberal phalanx.  One of those ideological disciplines that Fusionism fused into this “Conservative” movement was Libertarianism. What can we observe here except to say that “Politics makes strange bedfellows.”

Anyway Rushdoony agreed with the Libertarian principle of limited, diffuse, and decentralized government but Rush did not agree that the Libertarian idea of the Free Market should govern all. Such a conviction would have completely overturned the idea of theonomy.

Indeed, so opposed to movement Libertarianism was RJR that one of Rush’s main foils when he lectures on movement Libertarianism is a chap named Max Stirner. Stirner was an early opponent of Karl Marx, and that because Stirner took Marx’s principle to their logical conclusions — Libertarian conclusions that contradicted Marx’s unitary state. RJR says that Marx hated Stirner more than any of his opponents. Rush demonstrates how Stirner’s ultra Libertarianism (Anarchy) was correct vis-a-vis Marx given Marx’s presuppositions. For that reason, Rush was opposed to both Marx’s collectivism and Stirner’s Anarchy since both reasoned from shared core principles. In brief Rush was not Libertarian except in a very definite limited sense.

One can go to the pocketcollege.com website and find all this out for themselves by searching for “Max Stirner Libertarianism.”

Having laid this foundation, I will give one RJR quote on Libertarianism that demonstrates that the accusation that theonomy is inherently Libertarian is just a unlearned statement though I do concede that many of the latter day Theonomists are more Libertarian then they are disciples of Rushdoony.

Was RJR a Libertarian? You read this quote from Roots of Reconstruction and tell me.

“Reality, in brief was reduced to a particular institution or discipline of which men were the governors or interpreters.

This same fallacy has marked economics, in that all too many free market advocates under the influence of the philosophy of immanentism, have taken this one sphere of law and absolutized it as the only law. We do agree with classical economics as economics (this is a reference to Libertarian Economics of the Misean school), but not as a religious philosophy. When it is converted into a religious philosophy of immanence, it denies validity to any transcendental law of God and to all other institutions and orders of life unless they pass the test of the free market. Free market economics then becomes totalitarian and absolutist: it becomes idolatry. Some hold that the family and prostitution, and normal and perverted sexuality, must compete on a free market basis. Narcotics and good food are reduced to the same free market test. In brief, anything and everything goes, because there is only one law, the free market. (0ne person contends that there should be no title to property, but only the right of access by everyone who is able to command the power and money to take the property, in other words, a free market to power and violence as well.) Any value derived from any other sphere, or any principled judgment derived from a transcendental order, from God, must compete on a free market basis it is held. This is simply saying that the free market is god, and that it is the absolute and sole value in the universe. It assumes there is no God beyond the market, no other law, no other value, than the free market. Moreover, because the free market has its truth in the economic sphere, they sit back smugly, satisfied that they have the key to life. The Marxists no less than other Totalitarians stress one or two partial “Truths”, which they use to exclude all truth and God, and the same is true of those who reduce the world to matter. The free market religionists are really great enemies of free market economics, in that they pervert an instrument of freedom into a form of totalitarianism. It is not surprising that many free market religionists have in recent years been very congenial to the New Left; both are alike in their strident totalitarianism.”

R. J. Rushdoony

Roots of Reconstruction — pg. 809-810

1972

Elsewhere in his lectures Rushdoony could say of Libertarianism;

 

[Rushdoony] “Sometime back without realizing all the implications of what I said I described libertarian thinking with its free market thinking and all as economic totalitarianism, because they were taking a few good ideas in economics and making them apply to every area of life. They were saying there should be a free market in sex so that all practices, for example, could be equally tolerated and approved. And this was taking one idea and extending it and saying every area has to be ruled by this sole economic concept….”

______________________

(Audience) Now where do you put the Libertarian in? Those that are not Christian-(unintelligible)

(Rushdoony) The libertarians are humanist to the core.

(Audience) (Unintelligible) –they don’t want any government.

(Rushdoony) That’s true, but they are looking to man. In other words, each man is capable, he doesn’t need the state. But the answer Marx said: it’s either this kind of total anarchism, or total statism. And he said, total statism makes more sense. So Marx was ready to agree with these libertarians, only he said it’s not as workable, it leads to all kinds of problems, so why not total statism? And instead of a lot of little gods running around have one big collective god and you’re better off.

In his Institutes of Biblical Law Rushdoony wrote against movement Libertarianism,

“A society without coercion is often dreamed of by humanistic revolutionists. Anarchism is of course that philosophy which maintains that man can find fulfilment only in a nonstatist, voluntaristic, and noncoercive society. Libertarianism is increasingly an openly anarchistic and relativistic philosophy…Modern libertarianism rests on a radical relativism: no law or standard exists apart from man himself…If all men are angels, then a total free market of ideas and practices will produce only an angelic community. But if all men are sinners in need of Christ’s redemption, then a free market of ideas and practices will produce only a chaos of evil and anarchy. Both the libertarian and the biblical positions rest on faith, the one on faith in the natural goodness of man, the other on God’s revelation concerning man’s sinful state and glorious potential in Christ.”

R. J. Rushdoony
Institutes of Biblical Law

 

This old blog post likewises touches some of these matters;

Rushdoony and the Limits of a Limitless Libertarianism.

 

A Biblical Approach to Price Gouging

“You shall not charge interest on loans to your brother, interest on money, interest on food, interest on anything that is lent for interest. You may charge a foreigner interest, but you may not charge your brother interest, that the Lord your God may bless you in all that you undertake in the land that you are entering to take possession of it.” 

Deuteronomy 23:19-20

110. What does God forbid in the eighth commandment?

Not only such theft and robbery as are punished by the magistrate; but God views as theft all wicked tricks and devices, whereby we seek to draw to ourselves our neighbor’s goods, whether by force or with show of right, such as unjust weights, ells, measures, wares, coins, usury, or any means forbidden of God; so moreover all covetousness, and all useless waste of His gifts. 

Heidelberg Catechism 

The issue has come up recently whether or not it is Biblical to engage in price gouging. The thinking on the part of some is that price gouging is always perfectly legitimate except possibly for cases where charity is needed for the poor.

I, however, do not agree with that reasoning. I believe, based on a principle that is found in the Deuteronomy passage above that price gouging while allowable is not universally allowable.

In the passage above having different fiscal dealings with different groups of people is clearly limned as acceptable. A foreigner may be charged usury because in such a way a foreigner is decapitalized in favor of God’s people who are capitalized. Usury was a means of taking dominion over the wicked and God’s law clearly allows for such dominion.

“the wealth of the sinner is stored up for the righteous”

However, that very same usury could not be practiced on someone who was part of the covenant community because at that point the person charging usury is capitalizing himself at the expense of his brother.

It seems, therefore, we have a principle here that would apply to price gouging when it comes to fiscal interaction. Price gouging is acceptable when practiced upon those outside of the covenant community but when practiced on someone who shares a common faith in Christ it is not acceptable lest God not bless in all that they undertake.

So, the law concerning usury was kinda a split the difference approach establishing a key spiritual principle of distinction between those inside and outside the covenant/national community. Here we must articulate that with regard to this law, the covenant and ethnic/national community were basically treated as synonymous. This is to say that the covenant community that we are not allowed to decapitalize is inclusive of those who are part of a shared people group but who may not affirm the Christian faith. Even here, not all of Israel is of Israel so to speak. This is as simple as to say that a son would not price gouge his mother even if she didn’t share a common faith.

Per the Heidelberg catechism quoted above, I think a strong argument can be made gouging is a form of theft, especially when used against one’s own people, analogous to the usury case cited. We must be on guard certainly against the market idolatry so prevalent among Libertarians today and strive to look at the matter from a Biblical perspective. The market, comprised as it is of buyers and sellers is not Sovereign if only because the Market is comprised only of humans. To make the Market sovereign then is to make man sovereign then and is to give us a form of humanism. While the dynamics of a free market must certainly be taken into consideration those demands do not get the final word. Entrusting everything to a sovereign market only turns man into Homo Economicus wherein the only consideration is shekels.

For the Christian man as Homo Economicus is to be eschewed as economic theories centered on man as Homo Economicus (economic man), is a concept that teaches that humans are consistently rational and as such are narrowly self-interested actors who consistently pursue their subjectively determined self-centered ends. Yet, the Christian is to be the man who pursues not only his own needs but also the needs of his brethren. Price gouging those who have a shared faith and / or a shared ethnicity is hardly a case of not thinking only of our own needs but also the needs of the brethren (Philippians 2:4). We must not fall into the Gordon Gecko thinking that “greed is good,” forgetting that “the love of money is the root of all kinds of evil.”

It is interesting that the same people making videos explaining the goodness of all price gouging are the same people who support usury hammer and tong.

Price gouging has been practiced repeatedly in history. In 1862 Major General Ulysses S. Grant issued general order #11 prohibiting the presence of all Jews in the theater he was serving in for the precise problem of the price gouging in cotton in which they were involved.

Likewise, Carpetbaggers and Scalawags took advantage of price gouging during the era of deconstruction to decapitalize the defeated Christian south and in the usage of this price gouging, Southern Christians went from being the head of the social order to being the tail of the social order. This proves, as mentioned earlier, that price gouging, like usury, decapitalizes who is subjected to it and capitalizes those who use it.

So, to make this all concrete let us consider an example. If one had ice in an area that had no power that ice becomes important to someone who needs to store insulin. For Christians selling ice their consideration, per the Scripture above, would be to consider the needs of the household of faith by charging a few lesser shekels vis-a-vis the household of those outside the covenant who would be able to pony up with a many more shekels. This would fulfill God’s command to the Church to ‘care for one another.’ In this example, the Christ hater would have to pay a more substantial per unit price of whatever product is being sold. The Christian, on the other hand, should be given a break and sold the same product as still for a profit but a lesser profit than what would be asked of the buyer outside the covenant. In the former case the Gougers makes a profit in the latter case profit is still made but not as much.

I will gladly concede that in a social order like ours it is extremely difficult to make these distinctions once the gouging begins, but I would hope that some effort to that end might be employed. For example, a Christian who owns a hardware store or gas station in the affected area could go out of his way to not make as great a profit of off fellow members of his Church as he would those he knows are opposed to Christianity but still make a handsome profit.

Now having said all this I do not think the State has any place making laws against price gouging.  Anti-gouging laws would likely make the prices even higher because laws against gouging increase the risk and with an increase of risk the prices go up correspondingly to offset the risk involved. Also, all because anti-price gouging laws exist, doesn’t mean that gouging won’t happen. The black market (which is the free market) will always exist.

Gouging is likely an inescapable reality. It is the way the market works and you can’t make the market unwork by making laws. But woe is the man who prioritizes his huge profit at the expense of those who share a common faith.

Economics 101 Thursday Class Assignments

Interviews for Lessons 2, 3, 4

https://mises.org/library/economics-one-lesson-0

Listen to the first 30 minutes of this lecture

Vocabulary

Apprise
jingoistic
oblique
jocular
garrulity
wend
putative
pyrrhic
quagmire
dementia

Remember your reading Assignment in “Economics In One Lesson,” and your summary notes.

Crony Capitalism … Then and Now

“The mainstream (liberal) historians make much of the working class crisis of the 1870’s – 1890’s, saying that during those decades the federal government was obviously being run to satisfy the selfish interests of the Northern capitalists — and the workers subsequently endured cruel working conditions and bare subsistence. Further, the economy was grinding to a halt because workers and farmers weren’t earning enough to buy the vast array of products being manufactured. And all of that is quite true.

But then historians trot out the Progressive movement cited here to prove that the intrusive, unconstitutional, industrially-oriented big government created by Lincoln and the Radical Republicans in the 1860’s had been justified after all, because under Theodore Roosevelt it could and did react to the needs of the country after the turn of the century by haltering the capitalists. Those historians then have gusty editorial sighs of relief: the system worked! Big government did right, and thereby prevented the class warfare revolution of the poor which otherwise would surely have destroyed the United States. Therefore, they argue, the liberal’s socialistic government of today has precedent and is equally necessary and justifiable.

But in fact, those reform measures from 1887 onward were carefully designed to do very little to restrain the capitalists, even though they expanded the power of the federal government considerably. Viewed close up, they were mostly worthwhile-but-token measures…. None of that (what really turned the US economy around during the early progressive era) resulted from the socialist movement, or from big government per se.”

Frank Conner
The South Under Siege; 1830-2000 — pg. 237-238

______________

A few observations

1.) These united States have been living with Corporatism to one degree or another for over a century and a half now. The “haltering capitalists” that Conner speaks of is the Gilded Age Robber Barons like Morgan, Rockefeller, Carnegie et. al. These men made their fortunes by being in bed with the Federal Government and manipulating it to pass legislation favorable to them at the expense of any potential competition. In point of fact these men were not “haltering capitalists” but “haltering socialists of the Corporatist variety (Crony Capitalism).

The Corporatism that we have today is merely a continuation of the Corporatism that gripped this Nation as a consequence of the War against the Constitution. This war was funded by Northern Crony Capitalists as they funded Lincoln’s war in order to turn the South into a colonial farm to be milked to the profit of the Crony Capitalists of the Railroad, Textile Mills, and Shipping variety.

2.) Note the pattern. The Feds create the problem. Then they decry the problem blaming the problem they created on Capitalism. Then they offer solutions that will enrich themselves and their Crony Capitalists – Socialists partners. Finally, when the Fed’s solution does not work and only magnifies the problem they again raise a hue and cry about the problem blaming their failed policies that have enhanced and magnified the problem to be the fault of Capitalism, when in point of fact, the fault is that free markets have not been allowed the opportunity to address the problem. This program of blame is being repeated right now with Health Care. Health Care has not failed because of Capitalism. Health Care has failed because the Government involved itself. The solution that the Government has created now (Obama-care) is designed to fail so that the Government can come back and blame somebody in the Capitalist tent with the purpose of finally arriving at the Socialist Single payer program.

Which itself will not work.

3.) Court Historians are epic liars. Our court Historian liars are as responsible for this Corporatist cycle of failure as much if not more than the Feds and the Crony Capitalists. The lying Court Historians keep blowing smoke so that the American public never wake up to the fact that the liberal-progressive-leftist-cultural Marxist-Centralized-Omnipresent Government has never succeeded in “fixing an economy.” Naturally, the court Historians always give credit to the Feds for coming through but the credit inevitably really goes to some free market aspect that survived and flourished despite the repeated attempt by the Feds and the Crony Capitalists – Socialists to choke it out.

4.) All of this suggests that today the people exist, as cattle, for the Government and the Crony Capitalists to milk at their leisure. Those who are not of the Politician and the Elite mega Corporatist class exist as grist to enrich them.

The answer to all this is to smash both Centralized Government and the Elite mega Corporatist class because they are both Marxist to the core in their economics. The failure of the rank and file American is that they tend to see one of the other of these players as the problem instead of understanding that they are both the problem. Consequently, some Americans see the Mega Corporatists as a problem and so they offer the answer of bigger Government to control the Corporatists but these Americans don’t realize that the bigger the Feds are made the better it is for the Corporatists. Similarly, other Americans get ahold of the other end of the stick and suggest that the way to end the problem is to empower the Mega-Corporatists as “Capitalists” and to shrink the Feds. However, empowering the Mega-Corporatists as Capitalists is to, at the same time, empower the FEDS. Both the Mega Corporatists and the FEDS have to be broken at the same time.