American history has been married to the history of money since its founding, albeit what began as an experiment, a revolution or rebellion to overthrow an economic system predicated upon exploitation and inequality has changed over a period of 237 years into one of the most exploitative and unequal countries on Earth. The original thirteen colonies were intended to be nothing more than sweat shops for British plutocrats who worked in tandem with government to enrich themselves while consolidating state power, and they accomplished this through a series of economic reforms that would later be branded as “mercantilism.” The constituent parts of mercantilism are many and varied but can be categorized into a handful of systems that include - but are not limited to - taxation, off-shoring, debt and monopoly. “Free-trade,” which gained popularity during The Gilded Age and has become the sine qua non of finance today, is nothing more than a modest expansion upon the aforementioned themes with one significant exception. “Free-trade” cut the umbilicus that attached private interests to state interests. What began as an illicit affair between government and a conniving merchant class evolved into an abusive relationship, ending in marital rape. Today we find ourselves in a twisted situation in which the “government of the people, for the people, by the people” is shackled to a pipe in the basement closet, forced to shit in a bucket and cry herself to sleep at night.
Mercantilism, the symbiotic parasite that short-circuited the higher brain functions of 17th century liberal thought and marched its Frankenstein body into the 21st century with a Patriot missile strapped to its back, allowed heads of state to raise massive armies, rob indigenous peoples of land, life and culture, enslave minorities and foreigners, subjugate and control the masses and consolidate existing power structures. A merchant-class of schemers and con-men would gladly organize the tradesmen, laborers and farmers to advance the imperialistic ambitions of government, they would gladly engineer a society of docile slaves and cannon fodder for God and Country, but their cooperation would come at a price: government would cede a measure of its power. This unholy pact is at the core of Mercantilism, the foundation upon which modern finance is built, a truly revolutionary force that has its beginnings in the most vile examples of humanity.
The mercantilist formula is fairly simple.
A central bank establishes a system of credit, or debt, that’s leveraged by an aristocratic class to force private entities and government bureaus (the military) to increase production, expansion and acquisition. Government raises revenue by passing a tariff, or de facto sales tax, that’s packaged into subsidies for government-sanctioned monopolies and cartels. In other words, government siphons money from the poor and gives it to the wealthy. Monopolies then offshore labor to maximize profits and the resulting swath of unemployed are left to compete for work in a dwindling job market, and as wages plummet and jobs disappear, spending decreases, the economy stagnates, savings accounts are tapped and the masses must borrow from the same banking cartels and state bureaus that placed them in positions of need to satisfy basic living expenses. The resulting fallout paves the way for massive societal restructuring that reinforces existing power structures, the status quo.
And what of government debt? Well, “Conquer, baby, conquer.”
Although the rhetoric of “free trade” has painted a picture of constant struggle for improvement using vague language, words like “efficiency,” “progress” and “job creation,” “Free trade” (touted by Adam Smith as a departure from mercantilism) actually expands upon a societal model that’s inherently exploitative, unequal and imperialistic. If you confused Wealth of Nations for a primer on farmers markets after having listened to some student of modern economic theory wax on about Adam Smith for longer than three minutes, you wouldn’t be remiss. The language of “free trade” is inherently misleading.
It’s true that Smith denounces “monopoly” and “corporation,” but he doesn’t use those words how we use them today. Adam Smith’s “monopoly,” whether he refers to an exclusive right of trade or a tax on foreign goods, is invariably a gift from government, yet Smith neglects to mention the monopoly that evolves independently of government, that rivals government, and although he expresses trepidation for the corporate entity, the eighteenth century corporation would be called a “union,” “cooperative” or “non-profit” today. Contrary to popular belief, Smith outlines in astounding detail the formula for the modern monopoly (private monopoly) in his economic treatise and he dubs it a “great improvement in the productive powers of labour,” an improvement that forfeits collective knowledge for efficiency, self-respect for self-interest and independence for power.
According to Smith, rent, wages and profit are “the three great, original, and constituent orders of every civilized society.” Customer satisfaction trumps workers’ rights, higher profits trump higher wages and cheap labor trumps skilled labor. Men and women who work for themselves and trade with one another flounder in a “rude state of society.” Farmers, artisans and workers of all stripes are expected to accept their lots in life no matter how difficult or tenuous those lives may be.
Smith plays a semantic shell game with the reader. He describes unions and cooperatives, which he calls “monopolies” and “special interests,” as a conspiracy by tradesmen to raise prices, but he never explains why working men would conspire to raise prices upon themselves. He describes “free traders” as poor gypsies, then protests the government monopoly of shipping routes, yet only governments and wealthy aristocrats can afford to move tankers of oil across oceans.
“The demand for those who live by wages . . . naturally increases with the increase of national wealth, and cannot possibly increase without it,” Smith says. If that were true, every American would be gainfully employed. Smith even has the balls to impute that a decrease in rent naturally follows a decrease in wages. Have you ever heard of a landlord lowering rents because you were laid off? Smith is clever. In places throughout his thesis, he praises free trade while condemning it in others. He cautions against colonization in one chapter, then warns that the American colonies would injure themselves financially if they were to realize their independence in another. The most misleading of Smith’s statements is also his most famous.
“But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or rather is precisely the same thing with that exchangeable value. As every individual, therefore, endeavours as much as he can, both to employ his capital in the support of domestic industry, and so to direct that industry that its produce maybe of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, 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. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest, 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. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.”
Smith begins his long and circuitous argument by describing gross national product, the value of all products and services generated per annum by labor and property in a given polity, then follows with a celebration of egotism, a glaring - but cleverly placed - non sequitor, the assumption that greed generates maximum yield. He emphasizes domestic industry, yet both celebrates foreign markets and the efficiency of cheap labor elsewhere in his thesis. After having planted the connection between self-interest and national wealth in the minds of his readers, Smith makes a cognitive leap of surprising proportions: “By pursuing his own interest, [the merchant] frequently promotes that of the society more effectually than when he really intends to promote it.” Now, greed not only generates maximum yield, it serves the common good. Right when you think there has never been a man more estranged from reality, he plunges deeper into the absurd. No businessman ever intends to promote the welfare of others, he says, nor has he ever “known much good done by those who . . . trade for the public good.” In other words, if you want to help other people, look out for yourself. It begs the question: how does a merchant, by pursuing his own self-interest, promote the welfare of others? Smith replies with an invention, an abstraction, a contrivance, stratagem or grift: the gluttonous impulse may tempt us to betray our neighbor for profit, but the invisible hand of the market will always guide the avarice of men towards the common good.
What “invisible hand?” The author never tells us, but most economists agree that Smith refers to “supply” and “demand,” yet when Smith discusses supply and demand, he reduces people to a quantity, a resource to be acquired, discarded, utilized and managed. “It is only among the inferior ranks of people,” he writes, “that the scantiness of subsistence can set limits to the further multiplication of the human species; and it can do so in no other way than by destroying a great part of the children which their fruitful marriages produce.” The invisible hand removes bread from the mouths of children for the betterment of society. The invisible hand is clean and well-manicured. It hasn’t the strength to manufacture jobs in the event of a depression, but it can encourage jobs to appear by doing nothing and allowing the poor to die. Adam Smith has devised a narrative that provides gentlemen of privilege with a rationale for exploiting the masses to further entrench and expand their influence and power. He’s the penultimate cheerleader of social Darwinism, yet few people today will acknowledge it.
The popular imagination of today depicts Adam Smith as a holistic and beneficent sociologist, an astute and worldly observer of trade and competent mathematician. Adam Smith was a carpetbagger, a con-man or - at best - a wordsmith and propagandist. Today’s wholesome portrayal of “free trade” conjures images of a farmer’s market bustling with customers, customers beguiled by the low prices and quality produce of competitive trade and honest labor, a jubilee of farmers, butchers and bakers who mutually benefit from an abundance of demand. Such arcadian scenes can be found in niches throughout The United States and Europe, but in comparison to less affluent countries, public markets are rare, and one would have to scour the annals of history to uncover a time when the majority of people around the globe were self-employed, traded locally and engaged in an actual free and democratized commerce.
https://medium.com/...