State of Mankind

A New Way Of Thinking

Monopoly Capitalism

No, this isn’t quite as fun as the board game where you get to collect $200 simply for passing ‘go’, but hang in there as we cover the last couple of economic changes of the West in order to build a base from which to fully discuss the United Order. 

Once again, going back to Tragedy &  Hope, Quigley explains the development of Monopoly Capitalism:

“This conflict of interests between bankers and industrialists has resulted in most European countries in the subordination of the former either to the latter or to the government (after 1931).  This subordination was accomplished by the adoption of “unorthodox financial policies”–that is, financial policies not in accordance with the short-run interests of bankers.  This shift by which bankers were made subordinate reflected a fundamental development in modern economic history–a development which can be described as the growth from financial capitalism to monopoly capitalism.” (Page 62)

Let’s take a second to be clear about what changed here.  “Orthodox” financial policies refers to the gold standard and deflation.  The bankers, according to Quigley (and I have some disagreement with him), wanted deflation because they dealt in money, so making money worth more and more was in their interest.  The industrialists wanted inflation because this makes money worth less and less, but the goods they sell worth more and more.  I, personally, question why the bankers would be against inflation (called money printing), as this essentially allows them to sell nothing for something (money made from thin air for a return that could actually purchase goods).  We also need to remember that while J.P. Morgan was pretty much just a banker, others such as Rockefeller and Carnegie were industrialists.  Regardless of whether my view of banking is correct or not, this development from financial to monopoly capitalism or from orthodox to unorthodox financial policies (this is also closely related to Keynesian economics) did not significantly change the power players who attempt to run the world.  It did, however, change relationships between business and labor.  Quigley explains:

“We have pointed out that the class struggles between capitalists and the laboring masses were of great importance in the early stages of industrialism.  In these early stages the productive process was more dependent on hand labor and less dependent on elaborate equipment than it became later.  Moreover, in these early stages, labor was unorganized (and thus competitive), while the capitalists were unmonopolized (and thus competitive).  As the process of industrialization advanced, however, wages became a decreasing portion of productive costs, and other costs, especially the costs of equipment for mass production, for the technical management required by such equipment, and for the advertising and merchandising costs required for mass consumption became more and more important.  All of these things made planning of increasing significance in the productive process.  Such planning made it necessary to reduce the number of uncontrolled factors in the productive process to a minimum while seeking to control as many of these factors as possible.  An industry which had hundreds of millions of dollars (or even billions) in equipment and plant, as did the steel industry, automobiles, chemicals, or electrical utilities, had to be able to plan, in advance, the rate and the amount of usage that equipment would receive.  This need led to monopoly, which was, essentially, an effort to control both prices and sales by removing competition from the market.  Once such competition had been removed from the market, or substantially reduced, it became both possible and helpful for labor to be unionized.

Unionized labor helped planning by providing fixed wages for a fixed period into the future and by providing a better trained as well as a more highly disciplined labor force.  Moreover, unionized labor helped planning by establishing the same wages, conditions, hours (and thus costs) on an industrywide basis.  In this way unionized labor and monopolized industry ceased to be enemies, and became partners in a planning project centered on a very expensive and complex technological plant.” (Page 383)

Not many people really come to realize the reality and importance of the alliance of big business and unionized labor.  It does become obvious as one studies tax exempt political organizations.  Quigley explains the results:

“…the great problem of advanced industrial societies became, not the exploitation of laborers by capitalists, but the exploitation of unorganized consumers (of the professional and lower-middle-class levels) by unionized labor and monopolized managers acting in concert.  The influence of these last two groups on the state in an advanced industrial country also served to increase their ability to obtain what they wished from society as a whole.” (Pages 381-382)

Quigley has already established that government policy, especially that of unorthodox finance helped to create monopoly capitalism.   This, in turn, increased the amount of influence that monopoly capitalism had on the government.  A quick note on how this works is in order.  Inflation or an increase in money supply relative to goods devalues savings.  Thus the individual is encouraged to be a consumer and a debtor rather than a saver.  This manipulation causes an increase in goods sold, especially when government acts as a consumer and debt spends, generally making contracts with big business.  It also gives easy access to credit for large industry to expand and produce more.  However, on the flip side, the small business or aspiring small businessman who is trying to save to get started or grow (as they can’t assume the same debt risk as large business), has his profits or savings reduced and cannot compete with large business.  This is a nutshell summary, but hopefully shows the dangers and manipulations that occur when money and government merge forces.  This moves to regulations and other market manipulations to aid big business at the expense of others.  Clair Wilcox explains in Competition and Monopoly in American Industry:

“It should be noted, moreover, that monopoly is frequently the product of factors other than the lower costs of greater size.  It is attained through collusive agreement and promoted by public policies.  When these agreements are invalidated and when these policies are reversed, competitive conditions can be restored.”

 OK, we’re getting near the point of saturation on monopoly capitalism, so I’ll toss out a few thoughts on Keynesian economics, bankers and capitalism in general to conclude.  In our search for principles that bring us closer to the United Order, I think Keynesian economics are simply the bottom of the barrel.  While the gold standard may have been impractical and not able to fund a growing economy, the switch to money printing and inflation has made financial incentive for people to become debtors and consumers.  There is disagreement as to whether the increase in production cancels out the debt or not.  If it doesn’t cancel out the debt, then we are in real trouble of total collapse.  If it does cancel out the debt, if it works like it’s supposed to, then I think we are in an even worse position of being degraded from spiritual beings who should be seeking to become like our Savior to slaves who must produce ever more and consume ever more to avoid collapse.  Perhaps the extreme far left group The Invisible Committee summed it up best in their book The Coming Insurrection, when they say, “The world would not be moving so fast if it didn’t have to constantly outrun its own collapse.”  I believe that Keynesian economics (supported by both our major parties since the 1930’s) have taken us far from the mentality that we should have, and moved us to simple materialism.  Whether it has made us rich or slaves is beside the point, in my opinion.

This brings me to the bankers.  Quigley believes they lost power to the industrialists with these changes.  While, if he is correct,  this doesn’t change the power structure that runs the world, I have a hard time believing this is exactly the case.  We owe most of our National Debt to the Federal Reserve, which is actually a private bank.  Are we already slaves, purchased with debt money created out of thin air by the bankers?  Slaves of a system that has turned charity into robotic producing and consuming to prop up a system that fills our homes with junk for the landfill?  I can’t escape the thought that perhaps Moroni was referring to this system, and how we tend to get suckered into it, when he writes about seeing our day in Mormon 8: 37-38 (emphasis mine):

“For behold, ye do love money, and your substance, and your fine apparel, and the adorning of your churches, more than ye love the poor and the needy, the sick and the afflicted.  O ye pollutions, ye hypocrites, ye teachers, who SELL YOURSELVES FOR THAT WHICH WILL CANKER, why have you polluted the holy church of God?…”

We will explore some of these things further when we look at the Pluralist Economy, which Quigley describes as the actual economy in which we live.  He didn’t consider the pluralist economy to be capitalism.  I don’t consider monopoly capitalism to be anything like a free or fair market, as it was the beginning of distorting the playing field to the advantage of those with power.

As we look at the various forms of capitalism, we see some good and bad.  Industrial capitalism produced goods, but resulted in huge class divisions.  Financial capitalism brought about more equality and perhaps the greatest known economic freedom, but also allowed for the misuse by those who sought power.  Those same people began to merge with the governments and created monopoly capitalism through finance and regulation from which I see no basic good.  This all happened before any of us under 80 years old was born.  As usual, we end with questions.  What was the past like?  Are we even able to comprehend it, being generations from memory?  Was the move to the pluralist economy a good move or a mistake?  How does all this end up, and finally, how do we live through it all and keep our hearts toward what the Lord wants?

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  1. Brinton, I’ve followed your site for some time and like what I see. I just want to encourage you to keep up the good work!

    Reply
  2. Brinton

     /  August 10, 2012

    Thanks!

    Reply

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