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)