In the world according to Romney
In this land of milk and honey
Selective memory is best
When belief is put to the test
Though now Mitt’s berated
For saying it’s jobs he created
When in fact he destroyed them
And pensions were crème de la crème
Still, he denounced us as envious
And not himself as devious
All the recent political theater of the Republican primary season makes Broadway and Hollywood seem real. One must suspend disbelief in order to endure a single debate and watch them each push and shove to enter and exit stage far right. Finally, on last Sunday’s performance, “Bain” and “Romney” were used to form a sentence. Romney has touted his extraordinary ability and experience in creating jobs. Let us look at that startling claim to see where it could possibly have arisen. His competitors questioned Mitt’s boast and yet it has been the lynch pin of his campaign. What happens when a company like Bain enters the door of a struggling corporation? It depends. If you are speaking about Bain Venture Capital, then Bain might provide money to expand business or encourage new sector entry or growth. On the other hand, if it is Bain Capital Private Equity at the door, look for a leveraged buyout by a known raider. Also look for the dark side of capitalism where employees are merely pawns that might be fired to enrich Bain. Bain will acquire and then disassemble the company and sell the pieces. It will also examine those assets for potential changes. Normally, a pension fund is a liability in accounting terms since that money is owed employees at some future date. Private equity firms don’t view pensions that way. Those firms, or vulture capitalists, as Rick Perry called them, see pension funds as assets to be saved from the clutches of employees and used for Bain’s profits. That is what happened when Bain bought GST Steel in Kansas City. Bain took much of the pension money for its profit and then the government agency Pension Benefit Guaranty Corporation had to bail out the pension fund at the expense of American taxpayers. This should not be used as a boast, but a source of shame for Bain and Romney. Is it capitalism to push liabilities to the government or is it greed and corporate socialism?
The current Romney charge that criticisms of his profiteering are “envy” and not righteous indignation pours salt in the wound that he created. It actually condemns criticism and makes it appear that anybody noting the pain he has caused in thousands of families is due to envy of the people so affected and not to Romney’s unique ethics. In effect, he is also claiming that criticism of his ethics is a criticism of capitalism itself. It is not. It is a criticism of Phony Capitalism that pretends to be taking risks to generate profits, but instead is transferring risks to workers and to the government. It is also heartless because those were real people whom he fired and they supported real families living real lives of suffering and pain that Romney has never experienced. His attempt to express identification with people getting pink slips by saying that he feared a pink slip in his life is an creepy joke given that he has never had to fear any economic threat. Let me cite a few examples.
GST Steel eventually lost all 750 jobs in Kansas City and in no small part because Bain and Romney saddled CST with debt and Bain and Romney essentially confiscated $44 Million from the CST pension fund that later had to be made up by taxpayers through the US government Pension Benefit Guaranty Corporation (PBGC). That is a federal bailout going into profits for Bain and the loss of jobs for the steelworkers. Think about it. While corporations normally regard pension funds as liabilities that must be funded, Romney’s Bain saw pension funds as an asset. In accounting, they are on opposite sides of the ledger. In reality, not all the money Romney took was returned by PBGC, so workers each lost about $400/month in their eventual pension benefits. No wonder Romney likes firing people. It means money in his pockets. Romney boasted of creating 100,000 jobs, (80% through Staples), although Bain has never verified that number. He speaks of net/net meaning that all losses have been subtracted from spinoff jobs “created.” Hmm. Romney neglects to mention that the 750 jobs at GST Steel resulted in a cascade of lost jobs at the energy companies and the supply companies that did business with GST. Look closely. Bain and Romney issued bonds after purchasing GST (changing the name from Armco). While making improvements, they also took $36 Million as a dividend to Bain. That is the nature of private equity. Private equity does not create jobs. It creates profit unrelated to jobs. Venture capital is completely different. It may actually create jobs. The jobs lost at GST, were lost by Bain Capital Private Equity, the vulture side of Bain. To show you the balance of business, only about 2.3% of Bain’s business is done by Bain Venture Capital. In other words, vulture capital does over 97% of the business for Bain. Romney has not differentiated between the two nor has he indicated the huge imbalance toward vulture capitalism. Additionally, Bain took its profits directly while socializing losses (as in socialism) by increasing local taxes, increasing borrowing costs for others and using the Pension Benefit Guaranty Corporation to pay greatly reduced pensions to fired workers Was it legal? Yes. Was it ethical? Hmm. Did it create jobs? Probably not here in the USA.
Without going through all the details, Bain essentially did the same maneuver on Ampad by going in and charging Ampad for consulting and having them purchase lots of other office supply companies. In 1992 Bain bought Ampad for $5 Million. In 1993, Ampad had debt of $11 Million. By 1999, Ampad was in debt by $400 Million. Highly leveraged? Worse, Ampad was paying Bain high management fees along the way. Hundreds of employees were laid off and Ampad was put into competition with Staples for the same market while having less purchasing power. Who bankrolled Staples? Why it was Bain, of course. Conflict of interest you say? Not exactly, if your sole interest is making money, there can be no conflict of interest. Are not layoffs and bankruptcy problems? Not for Bain. Bain sold stock and the nearly 400 layoffs were simply a cost of bad management for which Bain was highly rewarded with a profit of over $100 Million. Jobs were outsourced and Bain made money without creating a US job.
Taxes? The Congress in its wisdom taxes profits from raiding companies like Bain Capital Private Equity at 15% not the 35% that you might assume. You may be wondering why “Mittens” has not divulged his tax returns despite calls to do so. He has compared his situation to that of the late Ted Kennedy who had his money in a blind trust meaning that if he divulged his tax return, he would have to reinvest his money in order to avoid interest conflicts in his Senate decisions. Mittens holds no government position so that, even if he had a blind trust then there would be no conflict of interest. How dare you ask? Besides, what if he paid no taxes? That is none of your business.
Now we hear cries from Senator McCain and others that attacking Mittens Romney is directly attacking our fundamental capitalist economic system. I don’t think so. Even the idea that Romney was picking winners and losers while having taxpayers pick up the tab flies against the advertised strength of capitalism of being rewarded for risk without government. Romney has scalded Obama for bailing out GM and Chrysler and yet jobs were saved and workers shared in the process of reducing demands to ensure survival instead of another bankruptcy. He has yet to take responsibility for his heartless creating of weak companies and then devouring the highly leveraged carcasses he created. Employees had no role except as victims. Crony Corporate Socialism as practiced by Romney and Bain should not be confused with Capitalism. Mussolini would love Romney for his corporatism, but we must call it what it is and it does not create jobs. It is essentially high finance with other people’s money. Remember Wall Street that was too big to fail but was bailed out by GW Bush? Conservatism or Corporatism?
Mittens says that any criticism is Romney Envy? No, he really does not get it. Maybe people felt fear or even hate, but envy? Maybe people envied their outsourced jobs? Governor Romney paid corporations incentives for moving to Massachusetts at the expense of taxpayers and the losing states. Mittens needs to level with us and admit that he created lots of profit for himself and Bain, but please, spare us the phony economics lesson on jobs. Just think of this on a national scale. Ouch.
Peace,
George Giacoppe
13 January 2012
Showing posts with label capitalism. Show all posts
Showing posts with label capitalism. Show all posts
Saturday, January 14, 2012
Thursday, December 08, 2011
Occupying Everywhere
Police nationwide having moved in, at this point (Police on Dec. 7 finally attacked and destroyed the Occupation in downtown San Francisco), the Occupiers in public spaces of dozens and dozens of American cities have been forced to leave. But is this the end, as many have feared?
Not quite. In what some have called the next logical and brilliant move, the Occupiers have shifted their locus (not their focus) to the core of the crisis: bank foreclosures of homes. As Stephen Lerner, an organizer with SEIU, says: “…we’ve occupied public space — now we need to occupy private space that’s been stolen by banks.” Sean Barry of VOCAL-NY adds: “One of our messages is that there’s more empty homes that banks are sitting on than there are homeless families.”
Still, some might think, ‘oh, foreclosures; that’s old hat, a story that’s over.’ But it isn’t. According to many insiders, the banks have yet to foreclose on the majority of homes in the U.S., perhaps as many as 4 million more. More than that, the AP reports in its story on foreclosure occupations that “Nearly a quarter of all U.S. homeowners with mortgages are now underwater, representing nearly 11 million homes” (CT Post, December 6). That’s 11 million homes, folks, 1 out of 4. Talk about the Great Depression. Which is what, by the way, Rachel Maddow did on a recent MSNBC show (well worth watching). As an introduction to her sympathetic segment on the Occupy Foreclosures movement, she showed news reports and movie clips of exactly the same kind of resistance during the early 1930s when millions of Americans were losing their homes and farms. Huge crowds would show up and resist not just passively or peacefully, but by first putting the furniture that had been removed by authorities back into the homes, and then by throwing rocks and utensils and farm implements at police arriving to enforce the evictions. These people were pissed off and they were serious.
So, it seems, are today’s occupiers. The AP report cited above claims that homes in more than 25 cities were involved in Tuesday’s protests. And more are on the way. Said one of the Seattle organizers: “It's pretty clear that the fight is against the banks, and the Occupy movement is about occupying spaces. So occupying a space that should belong to homeowners but belongs to the banks seems like the logical next step for the Occupy movement.” In response, Seattle police spokesman Sean Whitcomb insisted that occupying private property represented the same violation—trespassing—that occupying public space did. The police response, and the penalties, would be the same. But the occupiers are unfazed. In Atlanta, protesters disrupted a home auction of foreclosed properties with whistles and sirens. Several individual home foreclosures have already been stopped, and the evictees given more time to try to work out a deal with the banks. One woman in Cleveland expressed gratitude to the occupiers, who came and camped out in tents in her backyard, frightening off officials who were supposed to come and evict her. She was still in her home on December 6 (see Maddow video). Moreover, the Occupiers have joined forces with groups that have been active for several years (Take Back the Land, Viva Urbana) in defending homes against evictions—supplying fresh and enthusiastic troops for the earlier efforts. The movement also derives encouragement and tactics from movements in other countries like Spain, where the 15M movement has stopped hundreds of evictions and occupied vacant buildings.
That this movement has moral authority can be seen by what NY Times columnist Nicholas Kristof wrote in a recent interview with a Chase banker named Theckston:
He (Theckston) says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.
These less-savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up. (Kristof cited by Sarah Seltzer, Alternet, Dec. 5)
We’ve all heard accusations about this type of cruel and intentional fraud, but to hear an admission of it of from one of the bankers involved is stunning.
This—the moral authority they have, both currently and historically—is why the Occupy movement has the powers-that-be scrambling for ways to de-legitimize it. I mentioned in my last blog the rumor about a public relations firm being hired by bankers. More recently, Republican talking-points guru, Frank Luntz, expressed his concern about it to the Republican Governors Association meeting in Orlando: “I’m so scared of this anti-Wall Street effort. I’m frightened to death,” he said, and offered 10 tips on what specific language to use to counter it. First and foremost, “Don’t say ‘capitalism.’ Use ‘economic freedom’ or ‘free market’ instead.” Now this is really interesting: even the Republicans are admitting that the American public now thinks ‘capitalism’ is immoral! And if Republicans are seen as “defenders of ‘Wall Street’,” says Luntz, “we’ve got a problem.”
Karl Marx must be smiling. Imagine, the Republican Party, that bastion of mindless boosterism, is running away from capitalism as a concept. Moreover, Luntz also advises Repubs not to say government ‘taxes the rich;’ instead say government ‘takes from the rich,’ because Americans respond favorably to ‘taxing the rich.’ By God, I sure hope the clueless, pusillanimous Democrats have read this. Because Luntz urges other verbal subterfuge as well, and all reflect two things: the Republicans are vulnerable and scared (as well they should be, their policies having brought this nation to the brink of disaster), and at the other end, have thoroughly absorbed the lessons of the TV age about framing a message properly, while Democrats have not. Now, finally, there’s a golden opportunity to hang the Republicans with the real message and practice they and their financial masters have been promoting for years: advancing the cause of the 1% at the expense of the 99%.
So far, the only element in the nation that has understood this, and been willing to act on it, are the Occupiers. We can only hope that the American people in ever greater numbers will begin to get it as well, and that the hapless talking heads they elect to public office will follow. The only question is, how much of everywhere has to be occupied and how many of the rest of us have to jailed before the worm turns?
Lawrence DiStasi
Not quite. In what some have called the next logical and brilliant move, the Occupiers have shifted their locus (not their focus) to the core of the crisis: bank foreclosures of homes. As Stephen Lerner, an organizer with SEIU, says: “…we’ve occupied public space — now we need to occupy private space that’s been stolen by banks.” Sean Barry of VOCAL-NY adds: “One of our messages is that there’s more empty homes that banks are sitting on than there are homeless families.”
Still, some might think, ‘oh, foreclosures; that’s old hat, a story that’s over.’ But it isn’t. According to many insiders, the banks have yet to foreclose on the majority of homes in the U.S., perhaps as many as 4 million more. More than that, the AP reports in its story on foreclosure occupations that “Nearly a quarter of all U.S. homeowners with mortgages are now underwater, representing nearly 11 million homes” (CT Post, December 6). That’s 11 million homes, folks, 1 out of 4. Talk about the Great Depression. Which is what, by the way, Rachel Maddow did on a recent MSNBC show (well worth watching). As an introduction to her sympathetic segment on the Occupy Foreclosures movement, she showed news reports and movie clips of exactly the same kind of resistance during the early 1930s when millions of Americans were losing their homes and farms. Huge crowds would show up and resist not just passively or peacefully, but by first putting the furniture that had been removed by authorities back into the homes, and then by throwing rocks and utensils and farm implements at police arriving to enforce the evictions. These people were pissed off and they were serious.
So, it seems, are today’s occupiers. The AP report cited above claims that homes in more than 25 cities were involved in Tuesday’s protests. And more are on the way. Said one of the Seattle organizers: “It's pretty clear that the fight is against the banks, and the Occupy movement is about occupying spaces. So occupying a space that should belong to homeowners but belongs to the banks seems like the logical next step for the Occupy movement.” In response, Seattle police spokesman Sean Whitcomb insisted that occupying private property represented the same violation—trespassing—that occupying public space did. The police response, and the penalties, would be the same. But the occupiers are unfazed. In Atlanta, protesters disrupted a home auction of foreclosed properties with whistles and sirens. Several individual home foreclosures have already been stopped, and the evictees given more time to try to work out a deal with the banks. One woman in Cleveland expressed gratitude to the occupiers, who came and camped out in tents in her backyard, frightening off officials who were supposed to come and evict her. She was still in her home on December 6 (see Maddow video). Moreover, the Occupiers have joined forces with groups that have been active for several years (Take Back the Land, Viva Urbana) in defending homes against evictions—supplying fresh and enthusiastic troops for the earlier efforts. The movement also derives encouragement and tactics from movements in other countries like Spain, where the 15M movement has stopped hundreds of evictions and occupied vacant buildings.
That this movement has moral authority can be seen by what NY Times columnist Nicholas Kristof wrote in a recent interview with a Chase banker named Theckston:
He (Theckston) says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.
These less-savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up. (Kristof cited by Sarah Seltzer, Alternet, Dec. 5)
We’ve all heard accusations about this type of cruel and intentional fraud, but to hear an admission of it of from one of the bankers involved is stunning.
This—the moral authority they have, both currently and historically—is why the Occupy movement has the powers-that-be scrambling for ways to de-legitimize it. I mentioned in my last blog the rumor about a public relations firm being hired by bankers. More recently, Republican talking-points guru, Frank Luntz, expressed his concern about it to the Republican Governors Association meeting in Orlando: “I’m so scared of this anti-Wall Street effort. I’m frightened to death,” he said, and offered 10 tips on what specific language to use to counter it. First and foremost, “Don’t say ‘capitalism.’ Use ‘economic freedom’ or ‘free market’ instead.” Now this is really interesting: even the Republicans are admitting that the American public now thinks ‘capitalism’ is immoral! And if Republicans are seen as “defenders of ‘Wall Street’,” says Luntz, “we’ve got a problem.”
Karl Marx must be smiling. Imagine, the Republican Party, that bastion of mindless boosterism, is running away from capitalism as a concept. Moreover, Luntz also advises Repubs not to say government ‘taxes the rich;’ instead say government ‘takes from the rich,’ because Americans respond favorably to ‘taxing the rich.’ By God, I sure hope the clueless, pusillanimous Democrats have read this. Because Luntz urges other verbal subterfuge as well, and all reflect two things: the Republicans are vulnerable and scared (as well they should be, their policies having brought this nation to the brink of disaster), and at the other end, have thoroughly absorbed the lessons of the TV age about framing a message properly, while Democrats have not. Now, finally, there’s a golden opportunity to hang the Republicans with the real message and practice they and their financial masters have been promoting for years: advancing the cause of the 1% at the expense of the 99%.
So far, the only element in the nation that has understood this, and been willing to act on it, are the Occupiers. We can only hope that the American people in ever greater numbers will begin to get it as well, and that the hapless talking heads they elect to public office will follow. The only question is, how much of everywhere has to be occupied and how many of the rest of us have to jailed before the worm turns?
Lawrence DiStasi
Sunday, September 11, 2011
The Spirit of Capitalism
I have been reading Max Weber’s seminal work, The Protestant Ethic and the Spirit of Capitalism lately and it illuminates a great deal about the spirit of our times—a spirit that has been termed The Age of Greed by Jeff Madrick in his recent book of that name. And while what Madrick describes is really the transformation in the last 40 years of America from an industrialized society to a financialized one, it doesn’t address the origins that interest me here. Weber was interested in this too. His question really was not only ‘why do people work to begin with’ (primary cultures had no concept called “work” at all and only exerted themselves periodically in war or in short-term hunting and gathering), but more relevant to his time, ‘why do people in modern society identify themselves as laborers?’ How was it possible for western culture to transform itself from a traditional culture where labor hardly existed except as part of a manorial household, to post-1600s capitalist society where free laborers are yoked to paying jobs in capitalistic enterprises? More specifically, how could a state of mind that Weber finds best illustrated in Ben Franklin (a penny saved is a penny earned; time is money; credit is money—i.e. it is a duty to increase one’s capital) come to be adopted by whole societies when, in the Middle Ages and before, that state of mind would “have been proscribed as the lowest sort of avarice?” As sinful greed? To illustrate how remarkable this is, Weber compares traditional laborers with modern laborers. A farm owner, for example, who pays his workers at a piece-rate (like modern farm workers paid at so much per bushel), thinks to increase production by increasing rates. This works with modern workers, but when applied to traditional laborers, the increased rate backfires. The traditional worker, that is, not only does not increase his work rate, he decreases it—he works slower so as to still earn the same daily amount. As Weber summarizes it, “the opportunity of earning more was less attractive than that of working less.” Thus the attitude of traditionalism:
A man does not “by nature” wish to earn more and more money, but simply to live as he is accustomed to live and to earn as much as is necessary for that purpose. (60)
Weber then devotes his entire book to explaining how Protestantism, especially the Calvinist branch of the Reformation, changed this traditionalist attitude towards work. While a “surplus population which it can hire cheaply” is necessary for capitalism to develop and thrive, so, he says, is a “developed sense of responsibility.” That is, for capitalism to work, “labour must…be performed as if it were an absolute end in itself, a calling.” Far from being natural, or even the product of high or low wages, this attitude “can only be the product of a long and arduous process of education” (62). And the educating body was, originally at least, Protestantism. It is important to note that this education in work did not, at least at first, involve an education in greed, much less enjoyment. To the contrary, Weber makes clear that the essential ingredient, in the beginning, involved a kind of asceticism—not the asceticism of the monastery, but an asceticism in the world. To make labor a calling, that is, meant making labor an obligation in the service of God, of salvation. One was schooled in the idea that hard and constant work was an end in itself, the way of salvation for the average person, and that saving the money one earned was part of that obligation. In order to save, of course, one had to be frugal, buying only what was absolutely necessary. The asceticism that had been the mark of the otherworldly Catholic monastery, that is, was brought into the world. So one worked, one saved (“a penny saved is a penny earned”) and one eventually prospered. It is a commonplace that in the American colonies during the Puritan period (Boston, etc.), these essential elements were merged in such a way that prospering in business became synonymous with salvation—or rather, prospering became a sign of salvation. This is because though election (salvation) or damnation was pre-determined by God, the actual judgment was uncertain, and this uncertainty was almost intolerable. One’s prosperity thus became a sign, a way for the uncertainty to be resolved. The opposite was also true: poverty became a sign of damnation, making the poor doubly damned—both in this world and the next. The sad truth is that many Americans still maintain these essential attitudes.
Work as a calling then, work as a duty, and success in work as a sign of salvation are the essential elements of the Protestant ethic. They are also the essential elements of the spirit of capitalism. As Weber puts it,
the expansion of modern capitalism is not in the first instance a question of the origin of the capital sums which were available…but, above all, of the development of the spirit of capitalism (68).
This is not to say that Protestantism ignored the dangers of wealth. Weber cites the writings of Richard Baxter as illustrative. And there, the key to this danger involved idleness and the temptations of the flesh it exposed one to. As Weber interprets Baxter, “Waste of time is thus the first and in principle the deadliest of sins….Loss of time through sociability, idle talk, luxury, more sleep than is necessary for health..is worthy of absolute moral condemnation” (157). A person was thus led to work constantly, to save what he earned, never to enjoy the fruits of his labor, but rather invest those savings as an entrepreneur in new opportunities for more work (and wealth). So while the ethic frowned on wealth and the luxuries it fostered, it at the same time had the “psychological effect of freeing the acquisition of goods from the inhibitions of the traditionalist ethic. It broke the bonds of the impulse of acquisition in that it not only legalized it, but looked upon it as directly willed by God” (171).
Weber ends his work with the ironic contradiction involved in this religiously inspired ethic. He quotes John Wesley, the co-founder of Methodism, as follows:
“I fear, wherever riches have increased, the essence of religion has decreased in the same proportion. Therefore I do not see how it is possible, in the nature of things, for any revival of true religion to continue long. For religion must necessarily produce both industry and frugality, and these cannot but produce riches. But as riches increase, so will pride, anger, and love of the world in all its branches….So, although the form of religion remains, the spirit is swiftly vanishing away.” (175)
The protestant entrepreneur, in this way, not only won the “feeling of God’s grace” for doing his duty in getting rich, but also a supply of “sober, conscientious, and unusually industrious workmen, who clung to their work as to a life purpose willed by God.” This ethic comforted the capitalist entrepreneur as well that the “unequal distribution of the goods of this world was a special dispensation of Divine Providence.” For had not Calvin himself said that ‘only when people, i.e. the mass of laborers and craftsmen, were poor did they remain obedient to God?’ (177). He had. So low wages, themselves, had been rationalized and justified by the divine.
The Protestant ethic, in sum, according to Weber, not only sanctified labor as a calling enabling a worker to be certain of his election, it also legalized, for the capitalist, the “exploitation of this specific willingness to work.” A Daily Double if there ever was one.
It takes little to see how these attitudes and rationalizations are still in use today. America sanctifies capitalism as literally the manifestation of both God’s will and the natural order of things. American media also lionizes those entrepreneurs who, at least according to their own myth, raise themselves by their own bootstraps to become rich—to become “elect” in modern society’s terms. Finally, American capitalism rationalizes the unequal distribution of wealth and goods in this world as simply the workings of natural or divine laws with which mere humans cannot quarrel.
To Max Weber’s credit, he ends his study with a scathing reminder that though this ethic began in the cloak of saintliness, its apotheosis in industrial capitalism became “an iron cage.” Had he known about capitalism’s most recent metamorphosis into an ongoing financial heist creating ever more inequality, his critique would have been far more savage.
Lawrence DiStasi
A man does not “by nature” wish to earn more and more money, but simply to live as he is accustomed to live and to earn as much as is necessary for that purpose. (60)
Weber then devotes his entire book to explaining how Protestantism, especially the Calvinist branch of the Reformation, changed this traditionalist attitude towards work. While a “surplus population which it can hire cheaply” is necessary for capitalism to develop and thrive, so, he says, is a “developed sense of responsibility.” That is, for capitalism to work, “labour must…be performed as if it were an absolute end in itself, a calling.” Far from being natural, or even the product of high or low wages, this attitude “can only be the product of a long and arduous process of education” (62). And the educating body was, originally at least, Protestantism. It is important to note that this education in work did not, at least at first, involve an education in greed, much less enjoyment. To the contrary, Weber makes clear that the essential ingredient, in the beginning, involved a kind of asceticism—not the asceticism of the monastery, but an asceticism in the world. To make labor a calling, that is, meant making labor an obligation in the service of God, of salvation. One was schooled in the idea that hard and constant work was an end in itself, the way of salvation for the average person, and that saving the money one earned was part of that obligation. In order to save, of course, one had to be frugal, buying only what was absolutely necessary. The asceticism that had been the mark of the otherworldly Catholic monastery, that is, was brought into the world. So one worked, one saved (“a penny saved is a penny earned”) and one eventually prospered. It is a commonplace that in the American colonies during the Puritan period (Boston, etc.), these essential elements were merged in such a way that prospering in business became synonymous with salvation—or rather, prospering became a sign of salvation. This is because though election (salvation) or damnation was pre-determined by God, the actual judgment was uncertain, and this uncertainty was almost intolerable. One’s prosperity thus became a sign, a way for the uncertainty to be resolved. The opposite was also true: poverty became a sign of damnation, making the poor doubly damned—both in this world and the next. The sad truth is that many Americans still maintain these essential attitudes.
Work as a calling then, work as a duty, and success in work as a sign of salvation are the essential elements of the Protestant ethic. They are also the essential elements of the spirit of capitalism. As Weber puts it,
the expansion of modern capitalism is not in the first instance a question of the origin of the capital sums which were available…but, above all, of the development of the spirit of capitalism (68).
This is not to say that Protestantism ignored the dangers of wealth. Weber cites the writings of Richard Baxter as illustrative. And there, the key to this danger involved idleness and the temptations of the flesh it exposed one to. As Weber interprets Baxter, “Waste of time is thus the first and in principle the deadliest of sins….Loss of time through sociability, idle talk, luxury, more sleep than is necessary for health..is worthy of absolute moral condemnation” (157). A person was thus led to work constantly, to save what he earned, never to enjoy the fruits of his labor, but rather invest those savings as an entrepreneur in new opportunities for more work (and wealth). So while the ethic frowned on wealth and the luxuries it fostered, it at the same time had the “psychological effect of freeing the acquisition of goods from the inhibitions of the traditionalist ethic. It broke the bonds of the impulse of acquisition in that it not only legalized it, but looked upon it as directly willed by God” (171).
Weber ends his work with the ironic contradiction involved in this religiously inspired ethic. He quotes John Wesley, the co-founder of Methodism, as follows:
“I fear, wherever riches have increased, the essence of religion has decreased in the same proportion. Therefore I do not see how it is possible, in the nature of things, for any revival of true religion to continue long. For religion must necessarily produce both industry and frugality, and these cannot but produce riches. But as riches increase, so will pride, anger, and love of the world in all its branches….So, although the form of religion remains, the spirit is swiftly vanishing away.” (175)
The protestant entrepreneur, in this way, not only won the “feeling of God’s grace” for doing his duty in getting rich, but also a supply of “sober, conscientious, and unusually industrious workmen, who clung to their work as to a life purpose willed by God.” This ethic comforted the capitalist entrepreneur as well that the “unequal distribution of the goods of this world was a special dispensation of Divine Providence.” For had not Calvin himself said that ‘only when people, i.e. the mass of laborers and craftsmen, were poor did they remain obedient to God?’ (177). He had. So low wages, themselves, had been rationalized and justified by the divine.
The Protestant ethic, in sum, according to Weber, not only sanctified labor as a calling enabling a worker to be certain of his election, it also legalized, for the capitalist, the “exploitation of this specific willingness to work.” A Daily Double if there ever was one.
It takes little to see how these attitudes and rationalizations are still in use today. America sanctifies capitalism as literally the manifestation of both God’s will and the natural order of things. American media also lionizes those entrepreneurs who, at least according to their own myth, raise themselves by their own bootstraps to become rich—to become “elect” in modern society’s terms. Finally, American capitalism rationalizes the unequal distribution of wealth and goods in this world as simply the workings of natural or divine laws with which mere humans cannot quarrel.
To Max Weber’s credit, he ends his study with a scathing reminder that though this ethic began in the cloak of saintliness, its apotheosis in industrial capitalism became “an iron cage.” Had he known about capitalism’s most recent metamorphosis into an ongoing financial heist creating ever more inequality, his critique would have been far more savage.
Lawrence DiStasi
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