THREE TITLES for the PRICE OF ONE.
Take our friends the du Ponts, the powder people – didn’t one of them testify before a Senate committee recently that their powder won the war? Or saved the world for democracy? Or something? How did they do in the war? They were a patriotic corporation. The General Chemical Company averaged a profit for the three years before the war of a little over $800,000 a year. American Sugar Refining Company averaged $2,000,000 a year for the three years before the war. The Administration names a committee – with the War and Navy Departments ably represented under the chairmanship of a Wall Street speculator – to limit profits in war time. After the Civil War no new medals were issued until the Spanish-American War.In the World War, we used propaganda to make the boys accept conscription. So capital won’t permit the taking of the profit out of war until the people – those who do the suffering and still pay the price – make up their minds that those they elect to office shall do their bidding, and not that of the profiteers. Another step necessary in this fight to smash the war racket is the limited plebiscite to determine whether a war should be declared. There wouldn’t be very much sense in having a 76-year-old president of a munitions factory or the flat-footed head of an international banking firm or the cross-eyed manager of a uniform manufacturing plant – all of whom see visions of tremendous profits in the event of war – voting on whether the nation should go to war or not. To summarize: Three steps must be taken to smash the war racket. Looking back, Woodrow Wilson was re-elected president in 1916 on a platform that he had “Kept us out of war” and on the implied promise that he would “Keep us out of war.” Yet, five months later he asked Congress to declare war on Germany. Had secrecy been outlawed as far as war negotiations were concerned, and had the press been invited to be present at that conference, or had radio been available to broadcast the proceedings, America never would have entered the World War. Very little has been accomplished to assure us that the World War was really the war to end all wars.
The term “Invisible hand” is a metaphor for how, in a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large. BREAKING DOWN ‘Invisible Hand’ There are two critical ideas behind the invisible hand. First, voluntary trades in a free market produce unintentional and widespread benefits. Each free exchange creates signals about which goods and services are valuable and how difficult they are to bring to market. “Every individual necessarily labors to render the annual revenue of the society as great as he can … He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention … By pursuing his own interests, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” Smith only mentioned the invisible hand three times and just once in “The Wealth of Nations,” leaving a rather nebulous concept. Later economists better explained Smith’s invisible hand, especially F.A. Hayek’s “Spontaneous order” and Joseph Schumpeter’s “Creative destruction.” This is well-demonstrated through a famous example in Richard Cantillon’s “An Essay on Economic Theory”, the book from which Smith developed his invisible hand concept. The successful farmers introduced better equipment and techniques, and brought to market only those goods for which consumers were willing to pay. Smith’s invisible hand became one of the primary justifications for an economic system of free market capitalism. Even government rules sometimes try to incorporate the invisible hand. Former Fed Chairman Ben Bernanke explained the “Market-based approach is regulation by the invisible hand” which “Aims to align the incentives of market participants with the objectives of the regulator.”
The Catholic work ethic
Like all Lutherans, each Sunday I was further enlightened about Catholic wickedness and about how Martin Luther had set us free to think for ourselves and to seek knowledge, thereby bringing about the modern world. Although I had outgrown much of this by the time I entered graduate school, once there I was instructed in depth and detail in the gospel of Max Weber: that Protestantism gave birth to a unique work ethic that spawned capitalism, and thus it is that modernity is a direct result of the Reformation. Even now, Weber’s thesis of the “Protestant work ethic” lives on among sociologists, being recounted in detail in every introductory textbook on the market. According to Weber, Protestants dominated the capitalist economy of the West because of all the world’s religions only Protestantism provided a moral vision that led people to restrain their material consumption while vigorously seeking wealth. Weber argued that prior to the Reformation restraint on consumption was invariably linked to asceticism and to condemnations of commerce. Conversely, the pursuit of wealth was linked to profligate consumption. Weber claimed that the Protestant ethic shattered these traditional linkages, creating a culture of frugal entrepreneurs content to systematically reinvest profits in order to pursue ever greater wealth; and therein lies the key to capitalism and the path to modernity. As a great deal of subsequent research has demonstrated, Catholic areas of western Europe did not lag in their industrial development. Fully developed capitalism had appeared in Europe many centuries before the Reformation. Everyone writing on capitalism accepts that it rests upon free markets, secure property rights and free labour. By this definition, capitalism was a very Catholic invention: it first appeared in the great Catholic monastic estates, way back in the 9th century. The Catholic Herald is your essential weekly guide to the Catholic world; latest news, incisive opinion, expert analysis and spiritual reflection.