September 29, 2011

The Eminently Real Free Market (XXXVIII): Sketchy Stories (26): The Corporation as “Sociopath” (3)

Not being a man to let his ignorance on any subject hold him back, Mr. Ferrara then decides to attack “corporate advertising” with a zeal that would have made the late John Kenneth Galbraith blush.
. . . shielded from censorship by the courts, . . . [corporate advertising] has created an entire mass culture of “happiness” through the satisfaction of an ever-expanding catalogue of stimulated desires. Here the Austrians argue that the advertising on which corporations spend billions has no influence on human will but merely provides “information,” and that consumers besieged by commercial messages from infancy “freely” choose every single thing they buy, including goods and services that waste vast amounts of their time, addict them, ruin their health, corrupt their morals, and kill both body and soul. (26)
If Mr. Ferrara does not favor “censorship [of advertising] by the courts,” he should not have mentioned it, thereby putting that unhappy thought in the reader’s head. If he does favor such censorship, however, he should have said so plainly. But then, that’s only one of ten ideas he decided to throw into that one sentence. That’s what propagandists do.
No Austrian ever said that advertising has no influence on human will and, of course, Mr. Ferrara, our arbiter of waste, morals, health, and happiness, doesn’t cite any.
All information conveyed in advertising, whether relevant or irrelevant to making a sound judgment about the product or service, influences the recipient. What a person does with that information will depend on his or her moral development, background knowledge, etc. We choose as we please, but rarely (if ever) please as we please, for as we form habits, seeking or resisting God’s grace, the effective range of choice for each of us narrows.
But however constricted that range may be, it is never zero. That is, behaviorism is not true, and no Christian should give credence to that ideology, as Mr. Ferrara’s anti-advertising tirade implicitly does.

To Be Continued

September 28, 2011

The Eminently Real Free Market (XXXVII): Sketchy Stories (25): The Corporation as “Sociopath” (2)

No sooner does Mr. Ferrara acknowledge that the “very existence” of multinational corporations “would be impossible without government support” (25-26)—which inspires an anarchistic thought or two—than he reveals his grasp of economics by declaring that corporations
do not passively abide by “market forces.” Rather, they direct them with State assistance. (26)
It is hard to know what to make of this. He is saying either that there are market forces that corporations can and do direct as, say, a cop directs traffic; or that corporations direct only so-called “market forces,” which strips the assertion of content and interest.  But which does he mean?
Of course, market forces—shorthand for “the totality of trades being made right now, followed by the totality of trades to be made immediately thereafter, etc.”—are beyond the ken of human beings, whether organized as governments or corporations, to direct.
Perhaps he meant to write that market players are not above trying to influence market events in the short term (often foolishly unmindful of the consequences). That is, they seek advantages over the rivals in the market that have nothing to do with improving the intrinsic appeal of their products or services, whether by way of higher quality or lower price. They may, for example, seek to restrict supply or entry into a market “with State assistance.” 
(Sort of the way the Church can influence, and historically sometimes has influenced, the religious choices of its citizens “with State assistance.” The Catholic confessional state of Mr. Ferrara’s longing can’t actually direct such behavior, but it can influence it.)
But Mr. Ferrara didn’t say the corporations with State assistance seek to influence markets. He said they direct them.
To Be Continued

September 23, 2011

The Eminently Real Free Market (XXXVI): Sketchy Stories (24): The Corporation as “Sociopath” (1)

Given Mr. Ferrara’s stated purpose, namely, to demonstrate the incompatibility of Catholic teaching and Austro-libertarianism, it is hard to regard the material in Part 1 as anything other than one, long Emily Litella-like ignoratio elenchi. Besides misrepresenting everything Austro-libertarian, his only counterpoint so far is a farrago of non-Catholic opinion.
In a particularly egregious appeal to emotion riddled with reification and false juxtaposition, Mr. Ferrara judges it to be “morally bizarre” that
corporations, the exclusive vehicle of worldwide “free” market activity today, are immortal “legal persons” under the meaning of the law with all the rights of human beings, yet are not subject to incarceration for their crimes, whereas millions of unborn children put to death all over the world by machines and drugs sold to abortionists on the “free” market—by corporations—do not even have the right to life. (25)
How cautiously he proceeds. The implicit syllogism is: abortion is murder; corporations trade in abortifacients; ergo, corporations are accessories to murder—a propagandistic gem worthy of Goebbels and Ehrenburg, and unworthy of critical reply. When he writes like that, which is almost always, Mr. Ferrara reminds us of no one more than the so-called New Atheists.*
Mr. Ferrara shows no interest in understanding the networks of trade that human persons spontaneously generate in the peaceful pursuit of their ends. This lack of interest in what his adversaries in controversy actually defend effectively concedes the case to the latter, who are keen to remove impediments to markets that fallen human beings have erected. Mr. Ferrara is fixated on the hampered market, which hampering Austro-libertarians have always condemned. And so:
The demise of Enron and the Meltdown have made it clear to the world that these gigantic entities are not operating in a “free” market but rather in a vast supranational fiefdom, built upon government privileges, whose collapse could wreck entire nations. (25)
Exactly, they’re operating on hampered markets, but the darkness does not overcome the light. The hampering is not absolute. The economies of the world are, as they say, “mixed,” so the analysis of how the various factors—voluntary trade and politically inspired trade-hampering privilege—is complicated. To say so does not reflect double-mindedness or forgetfulness about what one is saying “from one moment to the next” as Mr. Ferrara impudently insinuates (inspired by Kevin Carson).
And it was not government alone that caused the Meltdown, but also “free” market actors, hiding behind the corporate veil, who created and sold on an immense international scale a web of interlocked “toxic assets,” traded with the lacunae of securities regulations. (See Chapter 13) (25)
But Austro-libertarians never said it was “government alone.” They have rather argued that it was government in the first place, that is, governmental policy as the indispensable prime mover and sine qua non without which the other historical factors that crowd the pages of Mr. Ferrara’s yellow journalism could not have even arisen, let alone conspired, to cause the Meltdown. His acknowledgement that the “very existence” of multinational corporations “would be impossible without government support” (25-26) provokes the anarcho-Catholic to ask: What governmentally provided goods compensate for that evil? And: So why do you rationalize and tolerate the existence of that intrinsic moral hazard?
Without the Act of Congress that authorized the creation of the Federal Reserve System, bankers could have hoped that their cartelizing desires would be satisfied one day in a central bank. There would, however, have been no legal protection for that racket from market forces, which inexorably erode such collusions of convenience. (The most efficient producer in any cartel is usually the first cartel member to have second thoughts about the arrangement, and on free markets that firm is free to break ranks.) On this point Mr. Ferrara’s next sketchy story will outline much of what every Austro-libertarian has known for most of the last century.
No, not government alone, for in themselves, no governmental personnel can produce the cartel's economic effects, that is, lower quality at higher prices. Only the cartel itself, and the market players who are at its mercy, can do that.
Facilitated by legal tender laws, the Federal Reserve functions as a central planner and therefore as a market signal-distorter. As fallen human beings, market players are indeed motivated by greed, but greed is necessarily balanced by fear of loss—unless a market-hampering agency enters the scene to take fear out of the equation (to cite again Peter Schiff’s memorable aphorism**).
As we shall see a few posts from now, Mr. Ferrara showers his reader with historical details but offers no explanans alternative to the Austrian that relates the facts intelligibly.
To Be Continued

* “The books by [Richard] Dawkins, [Sam] Harris, and [Christopher] Hitchens are not mild treatises like those that trickle tentatively, and often unreadably, from departments of philosophy. They are works of passion, and I suspect that most philosophers would be embarrassed by their intemperate style of presentation.  So I do not expect that philosophers will recommend these writings to their own students either, although the books might usefully serve as case studies for classes in critical thinking.” John F. Haught, God and the New Atheism: a Critical Response to Dawkins, Harris, and Hitchens, Westminster John Knox Press, 2008, 25.
** We’ve quoted this once before, but it bears repeating given the present context:
Just as prices in a free market are set by supply and demand, financial and real estate markets are governed by the opposing tension between greed and fear. Everyone wants to make money, but everyone is also afraid of losing what he has. Although few would ascribe their desire for prosperity to greed, it is simply a rose by another name. Greed is the elemental motivation for the economic risk-taking and hard work that are essential to a vibrant economy.
But over the past generation, government has removed the necessary counterbalance of fear from the equation. Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow—until it could grow no more.
Peter Schiff, “Don’t Blame Capitalism,” The Washington Post, October 16, 2008

September 21, 2011

Interlude: Father John F. Maxwell's "Slavery and the Catholic Church"

In 1966, Archbishop Cyril Cowderoy of Southwark released Father John Francis Maxwell from pastoral duties for the next seven years for the study of various moral questions. One publication that resulted from that research was Slavery and the Catholic Church: The History of Catholic Teaching concerning the Moral Legitimacy of the Institution of Slavery, which we have made use of in an earlier post.  

Slavery and the Catholic Church was published in 1975 in Chichester (UK) by Barry Rose in association with the Anti-Slavery Society for the Protection of Human Rights. Richard Wilberforce (1907-2003) the Right Honorable Lord (later Baron) Wilberforce, great-great-grandson of abolitionist William Wilberforce, provided the Foreword. This book bears the imprimatur of Archbishop Cowderoy. (Mr. Ferrara would not, of course, be impressed: "an episcopal imprimatur" is no "guarantee of orthodoxy these days," he recently opined.)

As promised, we have posted a scanned photocopy on our website* of this long out-of-print and, still indispensable, survey. We will provide a machine-readable, searchable copy of the text in the not-too-distant future. May an actual documentary history of its subject supersede it one day

As we say in the prefatory note to the text, Father Maxwell's study "provides ample material for testing the proposition that official Catholic teaching never changes or, if it does, the change amounts to merely a 'development' or explication, but never a reversal, of earlier teaching."

* We thank Daniel Coleman for reducing our previously posted several groups of scans to one document.

September 19, 2011

The Eminently Real Free Market (XXXV): Sketchy Stories (23): Slavery for the Corporation?

Yesterday, while enjoying the sights, sounds, smells, and tastes of the annual San Gennaro Festival in New York’s Little Italy, we paused in the Mulberry Street courtyard behind Most Precious Blood Church to peruse the tables displaying various trinkets. Having walked from one end of the festival to the other from Prince to Canal Street, we were in need of some nourishment. As we did an about-face, the eatery announcing the availability of espresso, cappuccino, and gelato directly across the street was, Lo!, Bella Ferrara Café. (Yes, French, not Italian spelling.) Our blogging duties rudely tugged, and to them we now return.
* * *
The reader who takes Mr. Ferrara’s sketchy stories seriously searches in vain for any Catholic case against Austro-libertarianism as a political option. That is, after all, TCATL’s focal point to which all of its parts should have been ordered. We are slogging through his sketchy stories to see whether Austro-libertarians actually support, implicitly if not explicitly, the evils that those stories allegedly illustrate.
(And so those who wonder why we are “only” up to page 23 should ask what Mr. Ferrara is doing in the 41 pages that precede anything that begins to look like a Catholic argument. Those pages do, however, reveal his notion of the ethics of discourse, and we are pleased to make a topic out of that.)
Unfortunately for the determined reader, however, not only does Mr. Ferrara not even argue for such support, but the sources he draws upon to buttress his insinuations are not even Catholic. We have seen that in his use of the writings of Kevin Carson, Joel Bakan, and Charles Beard. This habit is on display in his fifth sketchy story, which concerns: "The rise of the limited liability, publicly held corporation." (23)
The LLC is the distinctive invention of liberal societies, according to prolific pro-market (but non-libertarian) Catholic scholar Michael Novak, whom Mr. Ferrara disparagingly calls a “hyper-capitalist.” (23) (Would Mr. Ferrara like to be referred to as a hyper-Catholic?)
What is the problem with the idea of a legal person to which no personal liability attaches? (24)
With the rise of the publicly held limited liability corporation, capitalists achieved the ability to amass capital without limitation, operate anywhere in the world, and undertake without personal liability ventures that would have been considered immorally reckless (sic; as opposed to morally reckless?) during all the centuries of Christendom (24. Emphasis in the original.)
Those were the centuries, we recall, when the slave trade blended into the soundtrack of the life of Christendom. The Catholic monarchs who acquiesced, and worse, in that trade certainly enjoyed limited liability. State personnel always have and always will. If Mr. Ferrara has a problem with that state of affairs, it would be good for him to say so.
That inconvenient episode aside, he never makes a topic out of the alternative to the limited liability corporation, which occurs to any half-awake reader, namely, the unlimited liability corporation.
If those who pool their capital to undertake a large-scale enterprise can be personally sued for harm that might befall anyone due to its operations, they would stand to lose not only their investment, but also their shirt, so to speak. Under those circumstances, it is highly unlikely that the enterprise would be undertaken. That is, there would be very little “amassing of capital.”
Now, we expect an anti-capitalist writer to favor policies that inhibit the pooling of capital, even if the inhibition keeps productivity and living standards lower than they would be without it. We do, however, also expect him to take responsibility for that preference. How far, for example, would Mr. Ferrara extend the law of conspiracy so that liabilities attach to the actions of corporate personnel as such? Instead of exploring such issues, Mr. Ferrara prefers to give currency, once again, to the thoughts of that paragon of impartiality, Joel Bakan: “by leveraging their freedom from the bonds of location . . . could now dictate the economic policies of government.”*
Not long ago, however, Mr. Ferrara told us that one of the evils allegedly attending the Industrial Revolution was the state terror that “prevent[ed laborers] . . . from moving about in search of higher wages.” Those are the words of Kevin Carson, another non-Catholic muse of Mr. Ferrara’s. Why, if we may ask, may not the corporation enjoy the freedom from the “bonds of location,” which freedom is held to be a personal right? Does he favor slavery for corporations?
Out-of-the-blue Mr. Ferrara asks:
How can the market be “free” when its fundamental business unit, created and advantaged by legislative and judicial fiat, shields its human officers, directors and investors from the normal consequences of misdeeds and bad judgments?” (24)
Didn’t he really mean to ask “How can the market be free . . .” (without scare quotes)?
No truly free market, which would be one on which no legislative or judicial fiat either creates corporations or advantages one over another, would shield a corporation's officers, directors, and investors from the consequences of any aggression they may commit under the color of limited liability. There would be no government as we know it, and therefore no “friends in government,” to grant subsidies.** The term “bad judgment” is ambiguous, however, and should not be confused with a bad will. The parties that pool their capital for the purpose of corporate investment put that capital at risk, which may very well amount to being at the mercy of bad judgment. There is no shield from market consequences for bad judgment, nor in the law for aggression.
From there Mr. Ferrara leaps to the financial meltdown of 2008 as confirmatory of the theory of the corporation that he selectively borrows from others.
. . . the very governments that purport to regulate them grant them regulatory exemptions and other market-skewing privileges not available to small businesses. The mere threat that a corporate hegemon will pack up and leave, or go bankrupt, is often sufficient to extract what it wishes from government at all levels. (24)
Have we caught Mr. Ferrara implicitly affirming the reality the free market? After all, if the latter is an illusion, no privilege can skew it. In any case, his value judgments are merely implicit: he has not argued for them. The reader is apparently expected to go with the flow, occasionally nodding his head in agreement. And so, for instance, speaking of “hegemons,” is it better for a government to be so powerful as to prevent a corporation from packing up and leaving, to “bind” it to a “location” like the English government once did those hapless laborers?
The method of the propagandist, however, is not to enter into the thought of others and wrestle with it before assessing it, but to take the parts he likes, cafeteria-style, and discard the rest. (During the Cold War, Soviet propagandists would ransack the news for quotes from many people in the news who said something that could be construed as support for the Soviet position on X, Y, or Z, thereby creating an impression of a chorus of support.) Mr. Ferrara does not pay attention to the diverse non-Catholic worldviews underlying the works he ransacks. And so, for example, he elects Kevin Carson the left-libertarian as “the man” for one purpose, Joel Bakan the democratic socialist for another, and quasi-Marxist Charles Beard for yet another. When it comes to the corporation, the man of the hour is “legal commentator” Daniel J. H. Greenwood, whom he quotes to support his leftoid demonizing of the corporation.***
Professor Greenwood does not, note well, share Mr. Ferrara’s presuppositions about God, man and state, but is a democratic socialist theoretician—Dissent is one of his literary venues—whose argument against the corporation is presuppositionally democratic. That is, democracy is the unquestioned assumption underlying his academic brief against the corporation. Since it is not Mr. Ferrara’s, however, why does he quote Professor Greenwood? How does that help Catholics form an opinion about Austro-libertarianism? That is, in the light of Mr. Ferrara's Catholic and anti-democratic worldview, why should a Catholic care what non-Catholic and pro-democratic Professor Greenwood has written on the corporation?
There are two most important differences [Professor Greenwood writes] between a democracy and the other forms of government. First, democracies take their citizens to be the ends of the law: the good of the citizen is the good of the state. In a democracy, the citizens are never only tools to some goal greater than themselves, means simply to be exploited, or strangers to be treated entirely at arms [sic] length. Second, democracies allow the citizens to debate and decide their own good; it is not imposed on them by government or some supra-governmental movement. Democracies do not have established churches, in the broadest sense.
Well, “in the broadest sense” Professor Greenwood is excluding as incompatible with democracy not only a state-established church, or “confessional state” to borrow Mr. Ferrara’s terminology, but also any undefined “imposition” by “some supra-governmental movement” on citizens. That is, the words of Mr. Ferrara’s academic expert are not reassuring to a Catholic, and so perhaps we were being generous in characterizing its author as merely non-Catholic. For should there arise a “democratic consensus” to the effect that the preaching of the Gospel tends to undermine the efficacy of that consensus, citizens would be within their democratic rights, according to Professor Greenwood, to resist such “imposition.”
The note Professor Greenwood attaches to this description of democracy takes us to another article of his, one that “begin[s] to explain the theory of democracy as partnership,”****. There we find this personal credo, remarkable for a peer reviewed academic journal (or maybe not so remarkable):
. . . I place myself firmly in the pluralistic tradition of the United States Constitution: our different decision-making systems serve irreducibly different values, and that is the way it should be. (863)
Should? Where did that come from? On the sacred subject of democracy, Professor Greenwood is neither a pluralist nor relativist, but quite the monist and absolutist. We are not inclined to cut him any slack.*****
But why on Earth does Mr. Ferrara—a chief columnist for The Remnant, whose writers regularly denounce pluralism as symptomatic of the Americanist heresy—recommend the opinion of this pluralist to his Catholic readers? Is it because his worldview is internally incoherent?
Maybe. But there's a simpler hypothesis. In the war Mr. Ferrara has decided to wage on Austro-libertarianism, such apparent incoherence doesn't matter. What matters is that one has a stick with which to beat them. What Mr. Ferrara thinks he can get away with, he will try.
To Be Continued

* The Corporation, 22. “Now,” Mr. Bakan writes, as though the powerful had resisted the temptation to dictate until the modern age. Let us hear him further. To remain in a location voluntarily, as opposed to being forced to stay, those responsible for investing the corporation’s assets must find it attractive:
To remain attractive, whether to keep investment within their jurisdictions or to lure new investment to them, governments would now have to compete among themselves to persuade corporations that they provided the most business-friendly policies. A resulting “battle to the bottom” would see them ratchet down regulatory regimes—particularly those that protect workers and the environment—reduce taxes, and roll back social programs, often with reckless disregard for the consequences. (Ibid., 22)
Maybe even immorally reckless disregard. The Bakans of this world support the imposition of taxes and social programs in violation of property rights with reckless disregard for consequences; the Austro-libertarian supports the repeal of both types of aggression because justice demands it, regardless of consequences. Note well that it is for Mr. Bakan’s support for “bonds of location” that Mr. Ferrara cites him.
** That libertarians have long recognized, and condemned, corporate lobbying and subsidy-seeking is another inconvenient fact that Mr. Ferrara ignores (when he’s not repeating Mr. Carson’s mocking “diagnosis” of “vulgar” libertarians as absent- or double-minded, which says more about Mr. Ferrara than it does about the targets of his perjoratives). See the literature cited in Walter Block and J. H. Huebert, “Defending Corporations,” Cumberland Law Review, 39:2, 377, n. 75. See also agriculture economist Richard W. Wilcke’s anti-lobbying study, “An Appropriate Ethical Model for Business and a Critique of Milton Friedman’s Thesis,” The Independent Review, IX:2, Fall 2004, 187–209.
*** “Markets and Democracy: the Illegitimacy of Corporate Law,” University of Missouri Kansas City Law Review, vol. 74, 2005, 102.
***** As we shall see later, Mr. Ferrara is a qualified admirer of Austro-libertarian Hans-Hermann Hoppe’s Democracy: The God that Failed. He believes Dr. Hoppe made a compelling case for the moral inferiority of democracy to monarchy with respect to the exhaustion of state resources. The charitably disposed reader might reasonably expect Mr. Ferrara to qualify his citation of Professor Greenwood, if only to clarify the difference between the latter’s democratic worldview from his own. But a propagandist is concerned only with the intended immediate effect of the cited work, not with the burden of living up to such a reader's expectation.

September 12, 2011

The Eminently Real Free Market (XXXIV): Sketchy Stories (22): Shall We Prefer Government by Naked Coercion?

The last paragraph of Mr. Ferrara’s fourth sketchy story contains three sentences, each of them a puzzle:
The U.S. Constitution, largely inspired by Lockean theories of “liberty,” contained a clause that required the interstate rendition of escaped slaves to the owners of these human chattels, a clause that stood until the adoption of the Thirteenth Amendment in 1865, abolishing slavery in the United States. (23)
Does Mr. Ferrara accept the sturdiness of the word “liberty”? One wonders, since he almost never sends it outdoors without its scare-quote jacket. It is sheer obfuscation to insinuate that John Locke did not have a theory of that real object, liberty, whatever that theory's imperfections. We can comprehend each other’s criticisms only if our words pick out the same things in our common experience.
And it was Congress, not the “free” market, that provided the Fugitive Slave Acton of 1793 and the Fugitive Slave Law of 1850, both of which mandated the return of escaped slaves pursuant to the Constitution’s unamended text, the latter statute requiring federal marshals to effect the forcible repossession of human chattels. (23)
It is hard to make out Mr. Ferrara’s intended irony here. Would it have been better if the free market, excuse me, the “free” market had provided those laws? Was it morally inferior to Congress for not having done so?
Without suggesting in any way that Lincoln was justified in waging total war on the South at the costs of 600,000 lives, it has to be said that the stated legal pretext for southern secession was the federal government’s failure to assist the “free” market by compelling the states to honor the constitutionally and statutorily mandated rendition of escaped slaves. (23)
In the reference note attached to this paragraph, Mr. Ferrara quotes from several southern declarations of secession. While we catch our breath, we ask again how they might bear on a Catholic’s assessment of Austro-libertarianism. Is Mr. Ferrara just indulging his interest in the legal dimension of early American history at the expense of his reader’s? Whatever the answer, it is hard to see how he could satisfy the latter interest without addressing centuries of Catholic apologetics and involvement in, on the demand-side at the highest levels, the slave trade.
The northern manufacturers did have a pact with southern plantation owners against British rule, a pact that not only acquiesced in but explicitly recognized in law the right of an American, post-colonial rule, to own certain human beings. The southerners who entered into this alliance were given to understand that should their legal property wander away from their territory, their northern confederates would help that property find its way back. 
A thoroughly shameful ingredient of human and American history, all agreed. Now, what has this to do with the price of Boston tea? Before America was founded as an independent country, there were Christians in its territory who were cordially opposed to slavery, and they left evidence of their activity as early as 1688. These abolitionists were Quakers, however, not Catholics. The latter distinguished themselves as anti-abolitionists.
Before that reference note (attached to the numeral 600,000), Mr. Ferrara attaches one wherein he enlarges upon his loathing of Lockean “consent” and with much hand-waving promotes a book whose arguments we cannot examine:
As I argue in Liberty: the God that Failed, it was the height of absurdity for Lincoln to contend that the immediate descendants of the same Protestant revolutionaries who had overthrown King George on account of such grievances as a trifling tea tax of the local quartering of troops in riot-torn Boston, were somehow bound in perpetuity, under pain of death, to a central government in Washington, D.C.—a government, moreover, to which they had supposedly “consented” under Locke’s nonsensical theory of sovereignty as “government by consent of the governed.” But such are the absurdities unleashed by the revolutions Austro-libertarians hails as great triumphs for “liberty,” even as they bemoan the rise of the “statism” those same revolutions made possible. (330 n. 37)
We are hardly obliged to analyze a string of gratuitous assertions, but let’s take note of how Mr. Ferrara goes about his propagandistic business.
Surely Mr. Ferrara knows that those grievances were merely symptomatic of widespread colonist distaste for being ruled from abroad—that is, for being colonists—although making light of the disutility that any imperial measure represented is uncalled for. 
It is not clear, however, that Mr. Ferrara even believes the colonists ought to have thrown off British rule in the first place, even failing any return of England to the status of a Catholic confessional state. Between one group of Protestants and another, it seems, he has no preference.
Upon being parsed, that run-on sentence ironically confirms the anarchist suspicion that governments or states—or rather the people who run them, be they deistic presidents or Catholic kings—cannot be trusted to keep the promises they make to the governed or even to each other. Was it Mr. Ferrara’s intention to confirm that suspicion? Probably not.
It is not clear to this anarcho-Catholic that Lincoln’s federalist-centralist presupposition was more “absurd,” or at least less morally warranted, than George III’s imperial one, but then Mr. Ferrara’s sentence is not a model of clear expression.
The matter might be put this way: if good-life seeking (eudaimonia) is the standard of the good in human affairs, then moving from colonial to republican status was arguably a step in the right direction. Why? Because that direction was libertarian and good-life seeking requires liberty, i.e., the right or jus to use one’s property as one sees fit, uncoerced by another. (That logically rules out using one’s property to coerce others regarding the use of theirs.) 
Toward the end of exposing the futility of the goal of “self-limiting government,” that move (from colonial subjects to independent nation) was probably pedagogically necessary. But Mr. Ferrara directed his theatrical laughter, not at the propensity of rulers to self-aggrandize—for that vice has not ensnared only deists and Protestants—but at the notion of “the consent of the governed,” arguably the least morally objectionable aspect of an admittedly hopeless program.
Instead of throwing around hyperbolic language like “height of absurdity,” “nonsensical theory,” and “absurdities,” he might have reviewed, or promised to review, an extended (1,616-page) study of the American Revolution by a leading Austro-libertarian. We refer, of course, to Murray N. Rothbard’s four-volume Conceived in Liberty, from which we quoted the other day and whose Wiki entry has links to free .pdf’s of all four tomes. (Here’s the ad copy of the one-volume unabridged edition.) Perhaps Mr. Ferrara is saving his analysis of them until the publication of  his Liberty. (We’re surprised he didn’t put scare quotes in that title.)
It pertains to the dignity of a divine image-bearing creature above the age of reason to be asked his or her consent for the use of his or her labor or property.  The notion is at the heart of covenant-making, e.g., marriage, and of covenant-breaking, e.g., sin. Now, one may not withdraw one's consent if, after giving it, another in good faith committed his person or property. This obtains in all contractual undertakings: one may not “withdraw one’s consent” to pay one’s bills! Apart from those circumstances, however, one may without prejudice withdraw any consent one may have given to any state of affairs involving himself or herself.
As for the phrase "the consent of the governed." Rulers may be blamed for traducing the principle they pretend to honor. They may justly be shamed for stretching the meaning of “consent” beyond reason so that a generation of the long-dead may be said to have “bound” the living, which bonds take the form of taxation, regulation, and conscriptionand then for insisting to their hapless subjects that the latter are only taxing, regulating, and conscripting themselves (which, lamentably, so many of the “themselves” foolishly believe).
But not for enunciating it.

September 7, 2011

The Eminently Real Free Market (XXXIII): Sketchy Stories (21): Class, Caste, and Clash; or: Rothbard Shaves Ferrara’s Quasi-Marxist “Beard”

While it is possible to write a history of the Catholic Church (or of any institution and its key documents) that considers only the material interests of the participants in the recorded events, such a narrative would necessarily distort its object. That is because material interests—including the interest in acquiring authority over others, justly or unjustly, to steer the allocation of scarce resources in one’s preferred way—are real, but do not exhaust the class of human interests.
Every human being’s interest in enjoying material goods competes with equally real interests in truth, beauty, and goodness (to which last transcendental we refer justice as the virtue that orders the actions of persons toward the good of personal rights [jures]). We normally strive to coordinate the pursuit of these interests, so that one’s honoring of those transcendentals does not obstruct one’s pursuit of the good life (eudaimonia) and its constituent goods. The story of our lives is how we manage that competition. And so while there might be an “economistic” analysis of the “secular” history of the Catholic Church, focusing on the venality of many of its representatives over the centuries, there can be none of the spread of the Gospel and its martyrs.
Just as crass material interests can assert themselves in the conduct of members of the Body of Christ, so ideal (or “ideological”) interest can find their head in movements of people who do not enjoy Her divine favor and protection.
When we turn to sketchy story number 4, we find Mr. Ferrara once again venturing out into a field for specialists with no obvious connection to a “defense of the Catholic Church’s teaching on man, economy, and state” (the subtitle of TCATL):
The protections for creditors and slave-owners built into the United States Constitution. (22)
For eighteen centuries, as we have seen, such protections were also built into the actual constitution of the Catholic Church, as evidenced by many documents, but that did not stop her from preaching the Gospel or dispensing the sacraments. In the fullness of time She adjusted Her constitution to achieve greater conformity with the logos of the Gospel. We will return to this in future posts.
Mr. Ferrara goes on to note what we Austro-libertarians have no difficulty noting, namely, that government confers advantages on its friends. Why he and others don’t draw the anarchist inference from the intrinsic moral hazard that is government remains a mystery. We are sorry the Founding Fathers didn't.
It was hardly the “free” market that favored the holders of worthless securities of the Continental Congress by redeeming them at par value, forbade the states to issue paper currency and required them to allow only specie (gold and silver coins) as payment for debts, forbade the states to impair contracts for private debt or commercial exchanges, preempted any state regulation of interstate and foreign commerce, required the return of escaped slaves, and guaranteed the continuation of the slave trade for at least another twenty years. (22; the reference note cites several articles of the U.S. Constitution)
No, a free market didn’t do any of those things. People do things on more or less free markets. Austro-libertarians do, of course, prefer legal tender laws that require payment in gold or silver rather than those that privilege paper currency that can be produced more promiscuously, and fraudulently, than gold and silver can be mined, refined, and minted. They'd rather, however, not have any legal tender laws at all. Let people use whatever they want as money. What’s wrong with that?
Mr. Ferrara's criticism of particular interferences with markets is a tad disingenuous, for it is clear that he just prefers different modes of hampering. That is, he has no problem with hampering per se, for “true freedom” (as he defines it) at times calls for a dollop thereof. The voluntary or involuntary aspect of a trade seems to be for him its least important aspect: liberty is, after all, the “god that failed” (apparently the title of his next literary adventure. See 330 n. 37). He disguises that agenda when he professes that he is only exposing the hypocrisy of defenders of free markets. And as we saw earlier in this blog’s history, the distinction between “spiritual freedom” and “political freedom” only makes for confusion.
Equally disingenuous is his implicit solicitude for slaves, for (as we saw earlier) the Vatican, the font of Catholic Social Teaching, was still officially affirming the compatibility of slavery, and its attendant fugitive slave edicts, with “the natural and divine law”—not two decades after the ratification of the U.S. Constitution, but even a year after Appomattox. Why demonize the Founding Fathers but give the Vicars of Christ a pass on slavery? What’s bad for the gander is bad for the goose.
And then, out of the blue, comes an endorsement of an old historical thesis:
Despite a fusillade of critical reviews of Charles A. Beard’s famous “economic interpretation” of the Constitution, his basic thesis remains intact: the Constitution is an economic document crafted to serve business interests either possessed or represented by the fifty-five delegates to the Constitutional Convention. (23)
Why does a Catholic writer trying to dissuade Catholics from Austro-libertarianism and promote the Catholic teaching feel compelled to dredge up and defend Beard’s economistic thesis? When one first entertains it, "Catholic thought" is not the first description that comes to mind.
No reason is given. We suppose he just felt like it.*
Well, we feel like closing with Murray Rothbard’s thoughts on Beard. These polished thoughts of a precocious 28-year-old provide the perfect prophylactic against our Catholic polymath's intellectual confusion. Rothbard’s trenchant criticisms are worth publishing at the slightest provocation but in fact, for the reason offered in the first paragraph above, they can inform a just evaluation of the Catholic Church no less than of the American Revolution. It is ironic that Mr. Ferrara uncritically admires Beard’s quasi-Marxist thesis which, on the relevant point, bears affinity to the thought of Founding Father James Madison.

Marxism and Charles Beard**
Murray N. Rothbard
An evaluation of the extent of Marxist ideas in the work of Charles A. Beard is an extraordinarily difficult task. Due to his remarkably prolific output over the years, and the changes that took place in his ideas, I can do no more here than indicate some of the points that would be significant in any full-scale attempt to evaluate Beard’s writings and influence as a whole.
In the first place, it cannot be denied that Beard was an out-and-out socialist. His socialism was of the nationalist variety, garbed in the trappings of complete central planning. Beard was one of the major and more extreme prophets of the New Deal, at least in its “domestic” sphere. A glance, for example, at chapter 13 of his Open Door at Home (New York, 1935) indicates clearly and definitely his collectivist proposals. Probably his chief difference from other rabid New Dealers was his consistency in advocating tariffs and exchange control.
Beard’s political views are not at issue here, however, but rather his view of history as related to the Marxian view. Perhaps the best way of approaching his views of history is to consider his famous An Economic Interpretation of the Constitution of the United States (1913) and his new introduction to the revised edition of 1935. Beard states in these pages that when he approached American history in 1913 there were three dominant interpretative schools in American history. One, which he rather sneeringly referred to as the belief in divine guidance peculiarly granted to America, was, he asserted, typified by George Bancroft; the second was the “Teutonic” belief in the peculiar genius of the Anglo-Saxon race, typified by the Englishman [William] Stubbs; and the third were those pure fact-grubbers who merely presented a series of facts, without explanation. He was particularly disgusted with the consequently prevailing view of the Constitution among historians as a quasi-divine instrument. Beard claims that his famous economic interpretation was inspired not by Marx, as many historians had charged, but by James Madison’s famous Federalist No. 10. Beard quotes a passage from Madison which more or less sums up his new orientation:
So strong is this propensity of mankind to fall into mutual animosities, that . . . the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions and excite their most violent conflicts. But the most common and durable source of factions has been the various and unequal distribution of property. Those who hold and those who are without property have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests forms the principal task of modern legislation. . . .
This concept of clashes of economic interest was applied to the struggle over the Constitution by Beard, and later to other problems, including the whole sweep of American history in the Rise of American Civilization (1927). In his works, his use of economic interest was on a class basis, as has been indicated, and stressing the distinction between the propertied and the nonpropertied, although like Marx before him, he was forced to use various subdivisions, such as the “capitalist” (money and securities) interest as opposed to the “landed” interest, and, particularly, the creditors as against the debtors.
In defending himself against the charge of Marxism, he agreed that his position was similar to Marx in the matter of class conflict and history, but asserted that Marx, in this case, was also following in the Madison tradition. In particular, Beard cited as in this “economic interpretation” tradition the seventeenth-century English political philosopher [James] Harrington; Madison; the Federalists, including Chief Justice Marshall; and the historian Richard Hildreth. All of these antedated Marx.
In this claim to be the inheritor of the Federalist Party interpretation of American history, Beard was correct. The Federalist view of the struggle over the Constitution was that it represented a class conflict between wealthy commercial capitalist creditors on the one hand and poor agrarian debtors on the other. This Federalist interpretation was carried on and applied throughout early-nineteenth-century American politics to the agitation over paper money, over stay laws for debts, over land policies, over the tariff, etc. It was carried on by Whig historians (National Republicans) such as [Richard] Hildreth.
The difference between the attitude taken by the Federalists and Whigs to these struggles, as against later twentieth-century socialists, was that the former favored the allegedly “capitalist” side, while the latter favored the allegedly “agrarian” or “anticapitalist” side. But despite the vast political differences, the economic and class interpretations of history were the same by both camps. Both the eighteenth- and nineteenth-century Federalists and Whigs, and the latter-day socialists believed that the poor debtor farmers were anti-tariff, pro–paper money, anti–Central Bank, anti-Constitution, etc.; while the rich capitalist creditors were pro-tariff, anti–paper money, pro–Central Bank, pro-Constitution.
Beard could not bring himself to believe that any of the contenders actually believed in such vague abstractions as states’ rights, national unity, general welfare, etc. He believed it much more likely that they were really motivated by their immediate economic class interest. Thus, manufacturers would tend to be pro-tariff, farmers opposed, creditors for hard money, debtors for paper money, etc. In answering the charges of Marxism leveled by Professor T. C. Smith, who dealt with clashes of ideas in political history, Beard objects that Smith “does not say how those (ideas) . . . got into American heads” and does not show that they may [not] have been “conditioned if not determined by economic interests and activities.” Beard told historians that when we see people advocating or resisting political changes in terms of abstract theories such as states’ rights or national power, we should ask the question, what interests are behind them—to whose advantage will changes, or maintenance of status quo, accrue?
Accepting the Federalist-Whig tradition, Beard termed the Constitution the instrument of the propertied class to protect itself from the nonpropertied. In general, government itself is based on the making of rules and the defense of property relations. Beard also cited [Rudolf von] Jhering and [Ferdinand] Lassalle as predecessors in this type of analysis. In sum, he declared that party doctrines and so-called political principles “originate in the sentiments and views which the possession of various kinds of property creates in the minds of the possessors.”
Baldly, his class-interest doctrine is sheer nonsense, both methodologically and for American history. There are no homogeneous classes on the market, only individual interests. Indeed, the alleged “classes” on the market are usually the ones in strongest competition with each other. There is no basic conflict of interest between the propertied and the nonpropertied; in the first place, they are not rigid “classes” on the free market; secondly, it is one of the great truths of economics that the nonpropertied as well as, if not even more than, the propertied benefit from the free market economy based on the defense of the rights of private property. On the free market, therefore, there are no clashing class interests.
As Professor Mises has pointed out, the basic difference almost never explained is between “class” and “caste.” The class-conflict theorists, from Madison to Beard through Marx, use analysis appropriate only to the latter applied to the former. Where certain groups are specially privileged or specially disabled through the coercive power of the state, they become castes, and these castes are definitely in conflict. While on the free market, one man’s gain is another man’s gain, wherever government intervenes and establishes favored and unfavored castes, one man’s or one caste’s gain is another caste’s loss. Where government intervenes, there is inevitable “caste conflict.” Thus, if wool manufacturers ask for a tariff on wool and fail to get it from the State, they remain diverse individuals competing on the market; but if they do get it from the State, they become a privileged caste with a common interest against other castes.
Here it should be pointed out that Professor Richard Hofstadter, a Beard disciple, has applied the class-struggle theories to Calhoun, making Calhoun to appear an ancestor of Marx. On the contrary, Calhoun in essence had the caste theory, although he used the term class. Calhoun defined the ruling caste as being the caste that receives more in government subsidy than it pays in taxes, while the ruled caste are the people who pay more in taxes than they receive from the government.
Furthermore, it is nonsense to assert that men will always follow their immediate monetary interest, that all other ideals are pure sham. This is flagrant error. Rather than being motivated by objective monetary interest, in fact, man is motivated by all sorts of ideas, including ideas about his monetary advancement. But even there, the latter are not necessarily controlling. This notion of so-called purely “economic” motivation is not specifically Marxism, which concentrates more on the productive forces, but Marx himself made much use of this technique, which verges closely on polylogism. When abstract ideas are written off and reduced to their alleged “economic” motives, this is a Marxist polylogism, and something I am sure the Federalists never committed. A particularly flagrant use of polylogism by Beard is his dismissal of Bancroft’s religious view by calling it “his deference to the susceptibilities of the social class from which he sprung.”
Beard’s specific class analysis was completely erroneous as well. Thus, as [Joseph] Dorfman and others have shown, in all of the early American controversies cited above, there were capitalists, merchants, manufacturers, farmers, etc. on both sides of each issue. It is obvious theoretically, and illustrated historically, that various “capitalists” will favor, as well as oppose, paper money in any given period. It is absurd to consider debtors as confined to poor, or to farmers. There were, even in those days, a great many wealthy debtors. Furthermore, it is impossible without minute investigation of a man’s financial record to say whether or not any given merchant was a “debtor” or “creditor” at any given time. The so-called “class lines” of this favorite class of the historians were almost ludicrously fluid.
Despite these overwhelming defects, Beard did make an important contribution to historiography. If material motives are not the whole story, they are certainly part of it, and in the time that Beard began his work, this area was almost completely neglected by American historians. Furthermore, it is precisely these pecuniary motives that the various figures on the historical stage will be most inclined to conceal. If people hold certain political views from a mixture of motives, they will almost always proclaim their “idealistic” motives and hide their “personal interest” in the matter. Beard performed a great service in impelling historians to devote their attention to uncovering the latter factors.
This is particularly true in the historiography of the Constitution, where an almost ludicrous myth had been created about the Founding Fathers. Beard pointed out that there were excellent caste reasons why holders of government securities, for example, were anxious to create a strong central government with tax powers to greatly increase the value of their bonds, which had been heavily in arrears of interest; why speculators in western lands wished to create a strong government to crush the Indian tribes in the West so that their lands would rise in value; why the politically powerful society of army officers agitated for a central-taxing government both for increase in the value of their old bonds and to spur the creation of a larger army, etc. Certainly it is no more than common sense for the historian to take such motives into account when evaluating the historical role of people, provided of course that this is not taken as eliminating the need for examining the validity of their ideas on their own grounds. It is probable that Beard deliberately overstated his Marxian position because of the general neglect of the monetary motives. In later works he toned down his position considerably until in the Open Door at Home he declared that ideas and interests were equally determining and mutually interacting.

* Mr. Ferrara’s one cited source on Beard is Alan Gibson, “Whatever Happened to the Economic Interpretation: Beard's Thesis and the Legacy of Empirical Analysis.” An online version is available here. Professor Gibson, who teaches at California State University at Chico, delivered this paper at the Midwest Political Science Association meeting in April 2004. We would be happy to cite evidence of its publication in a peer reviewed journal if we had information to that effect.
** “Marxism and Charles Beard,” April 1954. Text taken from Strictly Confidential: The Private Volker Fund Memos of Murray N. Rothbard, edited by David Gordon. Ludwig von Mises Institute, 2010, 69-75.
Historian Joseph Stromberg did not have access to this earlier, well-rounded assessment of Beard when he wrote “Charles Austin Beard: The Historian as American Nationalist” (, November 9, 1999), in which he wrote that Rothbard “always acknowledged a debt to Beard” (but without citing instances). He almost certainly, however, had at hand Rothbard’s later, shorter, but complementary critique of the “Charles Beard-Carl Becker ‘economic determinist’ model of human motivation . . . so fruitful and penetrating when applied to statist actions of the American government, [but which] fails signally when applied to the great antistatist events of the American Revolution.” It appeared in Rothbard’s Conceived in Liberty, Volume III: Advance to Revolution, 1960-1775, Arlington House, 1976, 354. Rothbard continues:
The Beard-Becker approach sought to apply an economic determinist framework to the American Revolution, and specifically a framework of inherent conflict between various major economic classes. The vital flaws in the Beard-Becker model were twofold. First, they did not understand the necessarily primary role of ideas in guiding any revolutionary or opposition movement. Second, they did not understand that there are no inherent economic conflicts in the free market; without government intrusion, there is no reason for merchants, framers, landlords, et al. to be at loggerheads. Conflict is created only between those classes that rule the state and those that are exploited by the state. Not understanding this crucial point, the Beard-Becker historians framed their analysis in terms of the allegedly conflicting class interests of, in particular, merchants and farmers. Since the merchants clearly led the way in revolutionary agitation, the Beard-Becker approach was bound to conclude that the merchants, in agitating for revolution, were aggressively pushing their class interests at the expense of the deluded farmers.
But now the economic determinists were confronted by a basic problem: If indeed the Revolution was against the class interest of the mass of the farmers, why did the latter support the revolutionary movement? To this key question the determinists had two answers. One was the common, mistaken view . . . that the Revolution was supported only by a minority of the population. Their second answer was that the farmers were deluded into such support by the “propaganda” beamed at them by the upper classes. In effect, these historians transferred the analysis of the role of ideology as a rationalization of class interests from its proper use in explaining state action, to a fallacious use in trying to understand antistate mass movements. In this approach, they relied on the jejune theory of “propaganda,” pervasive in the 1920s and 1930s under the influence of Harold Lasswell: namely, that no one sincerely holds any ideas or ideology, and therefore, that no ideological statements whatever can be taken at face value, but must be regarded only as insincere rhetoric for the purposes of “propaganda.” Again, the Beard-Becker school was trapped by its failure to give any primary role to ideas in history. (Ibid., 354-355)