30 January 2012

Social class in America and a VERY brief history of Capitalism

“None are more hopelessly enslaved than those who falsely believe they are free.” (Johann Wolfgang van Goethe)

To paraphrase Ben Martin in “The Patriot”, when the United States was founded, we traded one tyrant three thousand miles away for three thousand tyrants one mile away.  A national legislature made up of “Commons”, but not actual common people.  The Third Estate as our French cousins called it.

From medieval to early modern times, legislatures of European governments were divided into three distinct categories, more or less the same in all countries with only a few variations.  In the Estates General of France, for example, the First Estate was the clergy, particularly the higher clergy.  The Second Estate was the hereditary nobility.  The Third Estate was the “commoners” as a collective body, dominated by the wealthiest of the wealthy, almost all of them town-dwellers, or “bourgeoisie”, but including rich rural landholders and rentiers of the other-than-hereditary-aristocrat variety.

In Scotland, the Community of the Realm was divided into Prelates, Lairds, and Burghers, the latter being the same as the Third Estate.  In England, Parliament was made up of Lords Spiritual, Lords Temporal, and Commons, in this case including knights without other title along with burghers from the towns.  The Imperial Diet of the Holy Roman Empire included Clergy, Nobility, and Burghers.

You can readily see the theocratic nature of European society at the time these legislatures were first composed in the fact that the first order was clerical in all cases.  As for the Third Estate, to give a general name for the same class in all countries, it and its electors were confined to the richest non-aristocrats, corresponding to what in ancient Rome became the equites, the richest of the rich plebes, equal in all but DNA to the patricii.

The same sort of men who belonged to the Third Estate in Europe made up the colonial legislatures in America as well as their entire electorate.  In truth, the only effective change in regime between the colonies under the United Kingdom and the new government of the United States was the abandonment of recognition of hereditary nobility.  Since all the hereditary nobility was several thousand miles across the Atlantic, the real change in that case was virtually nonexistent.

Now, with the Constitution of 1789 and the Bill of Rights of 1791, the First Estate (the clergy) and its influence were forever barred from government.  That was indeed a significant advance for humanity, though in practical terms, the clergy in most of Europe took very little actual hands-on role in government by this time, the exceptions being Spain and Italy (in France their main influence was as landlords).

So, the “new nation, conceived in liberty”, founded on the principle of “government of the people, by the people, and for the people” and based on the foundation that “all men are created equal”, was actually ruled by a tiny minority of extremely wealthy trade merchants and slave-holding plantation owners (the two of which easily fit the parameters for inclusion in France’s Third Estate) who had little more than contempt for and often great fear of its toiling “tired, poor, huddled masses yearning to breathe free”.

Read the essays in The Federalist Papers written by Alexander Hamilton and John Jay (as opposed to those written by James Madison), and you will see exactly what I mean.  The future Secretary of the Treasury had, in fact, spearheaded an attempt to make the nation a constitutional monarchy with Bonnie Prince Charlie, the Stuart pretender to the throne of the United Kingdom formally known as Charles Edward Louis John Casimir Sylvester Severino Maria Stuart, as its titular ruler.

In his aborted venture, Hamilton had the full support of the Continental Congress and of the most prominent man politically in the former colonies, the future first President of the  United States His Excellency George Washington.  To be sure, there were voices of a much more genuinely democratic nature such as Thomas Paine, who failed to see Washington’s true colors until his own imprisonment and near-execution during the Reign of Terror in France, but these were the rare exception rather than the rule.

(To be fair, George Washington did lean toward republican sympathies, but he was most certainly a man of his own class rather than of the people.)

In other words, the overwhelming 99% majority of persons inside its borders of the brand new United States of America were without franchise, with no Estate, and virtual outcastes, or untouchables if you will, in their own land, at the mercy of the 1% above them.

Along with many other people, I have often wondered about where the iconic division of society into 1% over 99%, much-repeated since the Occupy Wall Street movement was launched, came from.   Since it’s been nearly three decades since I graduated the University of Tennessee at Chattanooga (UTC), not too much of what I studied in my sociology classes is bubbling up close to the surface.  It was only when I was reviewing articles on social class in America that I realized that nearly all sociologists commenting on the subject identify a class of people at the top comprised of approximately 1% of the population.

No matter how they divide up the rest of the population, and no two sociologists agree on the number of classes, what to name them, what characteristics make up the members of each level, all agree that there is a 1% group atop a pyramid of the other 99%.  What to call this elite clique none can agree on, however, some sociologist using the designation “the upper class”, others calling it “the super-rich”, some by the quasi-Marxist name “the capitalist class”.

These are the people Marx and Engels called the “bourgeoisie”, or sometimes more specifically the “haute-bourgeoisie” to distinguish them from their admirers and would-be imitators, the petite-bourgeoisie.  The word “bourgeoisie” had already acquired a meaning similar to the one with which the two founders of Marxism used it.  Originally, the word simply meant “town-dweller”.  Later, particularly after monarchs began to gather together assemblies of notables from around the country, its definition became more restricted, eventually confined to something resembling today’s “1%”.

For Marx and Engels, the term bourgeoisie referred almost exclusively to industrial capitalists, the owners of the means of production as private property.  Though they both occasionally referred to “finance capitalism” and “rentier capitalism”, for the two of them the primary struggle was against industrial capitalists, so the undifferentiated word bourgeoisie meant them.

“Private property”, by the way, does not refer to a person’s house (no matter how grandiose) or car or clothes or silverware or computer or books or anything of the kind.  All those objects are personal property.  As opposed to public property, private property is anything from which capital can be used to make a profit that is owned by one or more private individuals.  Now public property, its opposite, is anything collectively owned by the greater body of citizenry for the benefit of all its members, whether it be government buildings, parks, roadways, or public corporations indistinguishable from their private counterparts.

No socialist of any reputable and non-extreme variety has at any time recommended the abolition of personal property.

The narrow focus of Marx and Engels on industrial capitalism, i.e. that involving industrial manufacturing, obscured the role of the capitalist financial system in creating the conditions under which both industrial capitalism and rentier capitalism flourished.  Lenin dealt with it more extensively, but even though he correctly acknowledges that by his time finance capitalism had surpassed the former, he shared their mistake in making the latter its child rather than its parent.

Incidentally, Lenin also came up with the concept of imperialism as a latter-day stage of capitalism, and some less flexibly minded advocates of Leninism argue that imperialism did not exist before the capitalistic “Age of Imperialism”, which lasted 1870-1914.

First, let’s be clear about the three different capitalisms.

Industrial capitalism is the use of man-made goods to produce other man-made goods of higher value derived primarily from the labor put into their manufacture with that surplus value primarily used as profit to the bourgeois owner(s) of the private property.

Rentier capitalism, by the way, involves the bourgeoisie in question receiving income primarily from real property-based sources in rent, intellectual property rights, dividends, fees, and capital gains.  You know, the way Mitt Romney gets all his income.

Finance capitalism, the “mother” of all other capitalisms and of the bourgeoisie in the modern sense of the term, refers to individuals deriving their income from buying, selling, and/or investing in stocks, bonds, futures, other derivatives, currencies, and the loan of money at interest.  Insurance companies also fall under this heading.

Needless to say, a member of the bourgeoisie can benefit from any two or all three varieties of capitalism and most do so.

The roots of modern capitalism go back to what might be called among the most medieval of circumstances.  Except for the Inquisition, the Crusades were among the most barbaric, narrow-minded, and superstitious of actions carried out by the West.  On the other hand, they were instigated by the appeal in 1095 of the Roman emperor at Constantinople, Basileus Alexios I Sebastos, to Pope Urban II at the Lateran Palace for help against the Seljuk Turks who by now occupied much of Anatolia.

Similar to the appeal 1169 of Dermot MacMurrough to Richard de Clare (Strongbow) for help regaining his kingdom of Leinster from which he had been deposed by Rory O’Connor, the High King of Ireland.  Look how that turned out for the Irish.

Constantinople had been the primary capital, now sole capital, of the Imperium Romanum or Basilea Rhomain since the time of Diocletian.  Its emperor, bureaucracy, and population considered it and themselves Roman, every bit as much as their Western counterparts still considered themselves.  Even their primary enemies, the Seljuk Turks, thought of them and their territory as Roman, using the name Rhum.

The Crusades lasted 1095-1291, and during that time the powers-that-be needed to move huge amounts of men and material across vast spaces and several international borders, and therefore needed a system to arise since none then existed.  In addition, once territories were established in the Levant, pilgrims and tourists needed both protection and a way to shift money without it being vulnerable to theft.

Of the five military orders that arose to fight the Crusades, the Knights Templar were the largest and most diverse, with the widest holdings and the biggest coffers.  Therefore, it is not too surprising that their ingenious brothers developed the system of finance which serves as the foundation for modern banking.  They allowed others to deposit their wealth, issued letters of credit, and gave it back to them as needed, with, of course, fees for their services.  They even exploited loopholes in Church law and of the various nations in Europe to lend money at interest.

Not surprisingly, this last improvement in their services eventually brought about the Templars’ downfall, due to massive outstanding loans made to leaders and governments across Europe, in particular to Philip IV of France and to the See of Rome.  Its leadership was destroyed, its possessions seized, its wealth redistributed.

The Knights Hospitaller and other orders had been likewise dabbling in banking, but to a much lesser extent.  They quickly divested themselves of those businesses.

Besides Philip IV and Pope Boniface VIII (and the Knights Hospitaller), the primary beneficiaries of the Templars’ demise were the Italian maritime republics of Venice, Genoa, Pisa, Amalfi, Florence, Ancona, and Ragusa (in Dalmatia but influenced by Venice).  Independent, each had originated in the late 6th century as a ducatas (territory ruled by a dux) under the Roman Empire’s Exarchate of Italiae.  By the 9th century, all had successfully broken away.

All these republics took over the financial system abandoned by the Templars upon their demise.  They even enhanced some of its conveniences and methods of gaining profits, most especially inventing new legal fictions for charging credit.  Their coastal locations and easy access to exploit maritime trade helped make the republics the richest “countires” in Europe and launch the Italian Renaissance.

More than any of the others, the Republic of Venice benefitted from the Crusades, with its holdings and sources of revenue greatly enhanced.  With it in the unquestioned dominant role, Venice these coastal city-states in controlling nearly all the trade in the Mediterranean Sea and overland to the Far East.  For that reason, nations desiring to cash in on trade from the East or bypass that trade to go directly to the source began searching the globe.

Thus began the Age of Exploration.  A century and a half into this era, 250 men came together to share the financial risk of their attempt to bypass the similar stranglehold of the Dutch Republic on trade in the North Sea.  Their aim was trade with Russia.  Each of the 250 had a share of ownership proportional to their investment called a “stock”.

The company, chartered in 1553, was the Company of Merchant Adventurers to New Lands, and a couple of years later it became the Muscovy Company.  It is the first known joint-stock company.  Several more followed, and in 1600 the London government issued a charter for the English (later British) East India Company.

The Dutch Republic followed with its own East India Company in 1602.  Eventually so did Denmark (1616), Portugal (1628), France (1664), and Sweden (1731).  The Dutch East India Company’s innovation was the stock exchange where people could trade shares, speculate about the company’s fortunes, etc.

Joint stock companies served as the primary means for financing the colonization of the Americas.  The Virginia Company, Massachusetts Bay Company, and Hudson’s Bay Company for England, the New Netherlands Company, the West India Companies of the Dutch Republic, Denmark, Sweden, and France, the New Sweden Company, the Company of New France, France’s Mississippi Company, and Scotland’s Company of Trading to Africa and the Indies were all joint-stock capitalist companies for commerce and colonization of varying degrees of success.

Beyond question the most successful and profitable of them all, the British East India Company became the very epitome of the very worst features of capitalist imperialism and monopoly.  It became a virtual private state unto itself, eventually holding in its grasp the entire Empire of India, with the full force of the crown backing it up.

Its monopoly over the triangular commerce in the Atlantic, as far as the United Kingdom’s American colonies were concerned, helped lead to the American Revolution.  In particular, its monopoly over import-export trade and the London Parliament’s passage of the Tea Act on its behalf led to the First Boston Tea Party of 1773, Second Boston Tea Party of 1774, and Chestertown Tea Party of 1774.

With the victory of the American bourgeoisie, the aristocracy became extinct and the clergy irrelevant for the time being.  Only the Third Estate remained.  The new elite named its new capital New Rome, later changing it to what it is now.  It named many of the features of the city for one’s in the ancient Rome, designed its Mall after the Forum, and made the rotunda in its Capitol building a replica of the Temple of Vesta.  Congress first came to order on Christmas Day 1789, and the mail ran every Sunday until after the Civil War.

Gradually, however, the bourgeois elite realized they needed to pacify the proletarian majority and therefore began to enfranchise more of its members as well as give religion more free reign.  In particular regarding the latter, religion became one of the chief justifications for the continuation of slavery, which in turn became one of the chief reasons why the South, once the least religious regions on the continent with inhabitants indifferent at best, became the Bible Belt it is now.

In spite of the increase in the franchise (i.e. right to vote), the average citizen has little more say in government than the holder of a life insurance policy has over the companies in which he holds a share by virtue of that policy.  That and the myth (a la Horatio Alger) that America is a meritocracy where someone can pull themselves up by their bootstraps, work hard, obey all the rules, and do well, serve to keep the 99% in place.

Should any attempt to protest that society is unfair, that too many resources are being wasted on profligate parasites pursuing personal pleasure and comfort and security regardless of the harm to the welfare of the general public, there is always the shame of being poor.  The shame of having to admit that one is not, in fact, merely a temporarily embarrassed rich person.  That you are merely one of the “wretched refuse” of America’s teeming shore, yearning to be free.

No comments: