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July 22, 2014

When you mention the word “the market” and the term “virtue” in the same breath these days, you are likely to be laughed out of the room, and rightly so, since your listeners have probably been party and/or witness to the worst brutalities inherent in the capitalist system (and their brutalities are legion both in length and depth and currently accelerating at breakneck speed as I write this). It was not always thus (or at least there were pretenses to the contrary) even with Dickens’s stories of child labor, the saga of Oliver Twist, and other decidedly non-virtuous means of treating our fellow human beings both before and after the Industrial Revolution which in turn gave us reactionaries such as Marx and Engels.
Other “virtues” in the American economy in that 19th century of greed and mistreatment of fellow human beings which included the Gilded Age, a Civil War and multiple banking panics due to under-regulation include, of course, slavery in America, indentured servant status and debtors’ prisons in England and other such jurisdictions dedicated to (it says here) “virtue” in the market. From such a “virtuous” system we drew the usual dissent and inevitable reactionaries from right to left, communist riots and a new breed of anti-capitalist revolutionaries. One can only guess at this time what the dissenters and revolutionaries will look like tomorrow in their inevitable response to the excesses of the few in the market today, a matter of when and not if.
The classical economists, and Adam Smith in particular (known by some as the father of economics), assumed virtue in the workings of the market (even as such men were competitive), the presence of invisible hands and comparative advantage in the marketplace as well as other “natural laws” at work among other such rules of commerce having to do with the provision of goods and services in a “free market.” Other than some royal charters (and thus a monopoly by order of the Crown) like East India Tea Company fronting for kings and queens who got a large piece of the action in a protection racket akin to that of the Mafia with monopoly trade to India and China, I presume there was still some possibility for honest competition among those not favored by royalty, since real competition and monopoly are polar opposites which cannot co-exist in the same market. (So now that you don’t have any competition, what are your shipping rates from Bombay and Shanghai, sir?)
I find it interesting, for instance, that Adam Smith published his famous book in England, The Wealth of the Nations, in 1776, the first official year of the American Revolution. For our purposes here, I note more importantly for my discussion the fact that this classical text in economic history came only three years before East India Tea was granted a royal charter of monopoly for the Chinese opium trade. Since English royalty was appointed and ordered to serve by God, I suppose anti-monopoly and restraint of trade charges could not be filed against a commercial entity appointed by God’s direct representative – so much for honest competition in a free market.
In 1779, while the American Revolution was proceeding full bore and Adam Smith had just published his great book three years before, the Crown bestowed a monopoly to East India Tea for all opium trade in China. Opium’s popularity in China depleted imperial reserves and their trade was banned. English users liked their fixes, too (see Arthur Conan Doyle later on), and when finally in 1839 the Chinese seized and destroyed more than 20,000 chests of opium, the First Opium War was on, which was concluded by the Treaty of Nanjing in 1842 which granted new privileges to foreigners. A Second Opium War between 1856 and 1860 led to temporary British and French occupation of Beijing in 1860 (just as our Civil War was beginning to crank up). Kings and ultimately Queen Victoria had a good thing going with their dope sponsorship. (The English are still into money-laundering today. The British Bank Barclays’s was fined heavily a few years ago for laundering Mexican drug gang money through an American affiliate, among other such things as clearing finance through an American affiliate with an Iran under sanction etc.).
The then current Qing dynasty at the end of the 19th century was having problems of its own and resentment against foreigners was at fever pitch. A group called “Boxers” began to murder Chinese Christians and even laid siege to foreign legations in Beijing. European states sent a large international army to put down the Boxer rebellion.
It is interesting to see how the Boxers were given their Occidental name. Those Chinese who hated foreigners as the 19th century was turning into the 20th were called Yihe Quan, which means Righteous and Harmonious Fists, which translated into “Boxers” for the European colonial powers of the day and its place in history.
I really like to dabble in economic history and it is fun to occasionally research a topic for publication such as I have done today. Today’s excursion involved a short story in how those appointed by God get a cut of the take in drug traffic of the day. Here and now we have a “War on Drugs.” Adam Smith preaches virtue while royalty awards monopolies and the Wall Street paper shufflers continue to pretend their non-productive efforts are virtuous and contribute to the common good. We are told that sending jobs elsewhere will result in prosperity. We are told that China, the Charles Manson of economic conduct, will be good; to just trust them until Wall Street can milk that cheap labor until the situation changes and a new trade treaty (the TPP) proves necessary etc. etc. etc. Can you spell C-O-N?
It’s a strange economic world we live in, eh? Or is it? That may depend upon the standard for contrast. One could argue that with a basically unregulated economy and rampant greed in the marketplace that such an outcome was to have been expected since virtue cannot spring out of greed through natural law. To wax philosophical, if it cannot, then we have another rationale for Piketty’s r > g formula which predicts the end of capitalism (unless attended) as a natural consequence of a contradiction in the capitalist system itself, but one far less provable than his massive research proves, and it is this (and I’m sure Adam Smith would agree if here today): IT IS NOT THE RIGHT WAY TO RUN A MARKET, whether free, mixed or controlled, and as Mammy noted in Gone With The Wind, “it jus’ tain’t fittin’, that’s all!” GERALD E


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