Wall Street and the Founding Fathers

Yesterday's New York Times provides a nice, anecdotal (and I mean that in a good way), look into the worldview of Wall Street businesspeople who supported Obama for president, but now are turning on him over financial reform and his rhetorical corporate America. Of particular note for this blog is the contention by hedge fund manager Daniel Loeb that “[a]s every student of American history knows, this country’s core founding principles included nonpunitive taxation, constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination."

Statements such as these go to what should be a core "banalogical rule": if someone is claiming their political views are the direct inheritance of the founding generation and its principles, it's likely they're oversimplifying. What makes the Founding Fathers a perpetual source of fascination and debate is that they were extremely complicated and even contradictory thinkers. Let's take as an example Thomas Jefferson, given that some of his pronouncements found themselves recruited for the complaints of businesspeople on Wall Street. Here are two Jefferson quotes on economics:

(1) "Having always observed that public works are much less advantageously managed than the same are by private hands, I have thought it better for the public to go to market for whatever it wants which is to be found there; for there competition brings it down to the minimum of value." --Thomas Jefferson to William B. Bibb, 1808. ME 12:107

(2) "Money and not morality is the principle of commerce and commercial nations... Justice, honor, faith, must yield to the necessity of keeping themselves in place. The question whether a measure is moral is never asked, but whether it will nourish the avarice of their merchants."
--Thomas Jefferson to John Langdon, 1810. (*) ME 12:376

Do those two quotes make sense in the modern left-right context? Potentially, but not easily. However, in the late 18th and early 19th centuries, in an era when merchants and large-scale businesses were only beginning to emerge, they did. Taking Jefferson and his fellow republicans as a case study, we find that the views on economics debated by the founding generation mixed a variety of viewpoints that today we associate with left and right into patterns very different than today.

Jeffersonians certainly expressed some views which fit in well with conservative politics, as seen in the first quote. Jefferson was a strong proponent of free trade and territorial expansion to provide more lands for production. Support of such policies also led Jefferson to promote an aggressive foreign policy aimed at assisting U.S. export interests, something associated with both political parties, but often criticized from a progressive perspective. Jeffersonians also opposed government subsidies to businesses, seeing them as helping to breed monopolies which undermined a real free market system. One can also find in Jefferson's opinion on the constitutionality of a national bank his fears about excessive federal government power being employed in regulating commerce.

At the same time, Jeffersonians expressed grave doubts about merchants and manufacturers, questioning their loyalty and very morality, as well as criticizing wealth inequality as a major threat to nation and justice. As one example, take this quote from James Madison, who, in speaking about the future of the nation, urged that laws be passed "which, without violating the rights of poverty, reduce extreme wealth to a state of mediocrity and raise extreme indigence to a state of comfort." To those who might find the part about property rights a counter, one can find concrete expressions of Madison's view in places such as his support for a wealth tax in Federalist No. 21. Jefferson similarly advocated versions of progressive taxation and worried constantly about the "misery" wealth inequalities created, as well as the dangers to a fair republic they represented. As the modern corporation began to take form in the early nineteenth century, Jefferson grew increasingly concerned and his writings showed at least as much antipathy to early "big business" as to "big government." As an example, in 1816 he declared that "I hope we shall crush… in its birth the aristocracy of our moneyed corporations."

What to make of this? Well, to put succinctly, Jeffersonians feared concentrated power - they believed a nation of independent farmers (white ones of course, slaves inhabited essentially a different universe), neither particularly wealthy nor poor, mostly unrestrained by government but also protected from the greed of merchants, represented the most just path for the future. Try grafting that into our modern, post-industrial national situation.

That said, I do not mean to imply that the thoughts of the founding generation bear no relevance on today. Many of the larger dynamics they faced are still issues today. Let's just remember they were complex people in a different time before enrolling them into today's fights.

"Business, always business": The Wire and the History of U.S. Capitalism

WARNING: SPOILERS AHEAD

The Wire is that rare cultural creation that is even better than the overwhelming praise would suggest. The show's explorations of urban inequalities, the failures of institutions, and the ambiguities of how people survive (and don't) are truly epic, yet manage to stay grounded in the experiences of its many and sharply drawn characters. Central to the show however is the emphasis David Simon, Ed Burns and co. place on the failures of the current economic model to provide opportunity and decent lives for so many people. One only need to watch the tragic story of Frank Sobotka, head of a local dockworkers’ union, to get a sense of Simon’s deep understanding of the way, particularly since the Reagan presidency, that the "profits before all" economic model has bred an increasingly unequal and in many ways dysfunctional society.

One of The Wire's main arguments centers on how deindustrialization and the failure (as of yet) for the transforming economy or our political system to ensure some matter of economic security for everyone (especially people of color in urban centers) contributes mightily to creating the array of issues associated with illegal drugs. Ironically (as the creators take delight in pointing out), although the drug trade exists outside many societal norms, it is at the same time as thoroughly capitalistic an enterprise as selling footwear or electronics. One can imagine a world in which, if they were legal, some of the despised drug kingpins might be hailed as innovative CEOs.

Building on the idea that the depictions of the drug gangs can teach us about business dynamics, I would like to suggest that watching The Wire contains lessons not only about the present, but also the past. As I plan to help show in a series of posts, watched at a metaphorical level,The Wire presents a solid introduction to the history of how organizational structures and the worldviews of U.S. business have transformed repeatedly over the past hundred years. That may sound a bit outlandish, but given that one of the leading scholars of the urban crisis in the United States, William Julius Wilson, is teaching an entire class based on the show, perhaps not. I'll have more to say about this, but for the moment, here's a sneak peak of what's to come:

1) "Games beyond the game": Avon, Stringer, and the Rise of the Corporation

2) "Making sense of this game": Prop Joe, Stringer, and the Post-War "Consensus"

3) "I ain't been one for meets no how": Marlo and the Robber Barons

4) "And of course, I'm not even Greek": The "Greeks" and the Multinational Corporation

Gay marriage opponents and the USSR

Maggie Gallagher, Chair of the anti-gay marriage group the National Organization for Marriage (NOM) called the overturning of Prop 8 by activist leftist judge (who in fact was a Reagan appointee recommended by Ed Meese) a "Soviet" style takeover. Which makes some sense as a metaphor but also raises a funny little historical issue. See, I know the specter of communism is supposed to be an indictment of liberalism, but if one looks at the actual policies of the U.S.S.R., they were actually much more in line with right-wingers on homosexuality. Starting in the Stalinist era, homosexuality was in fact illegal under Article 121 of the Soviet criminal code which made sexual relations among men punishable by a five year prison term. Communist propaganda not only in the USSR, but throughout Eastern Europe and also in Cuba (though its policies have dramatically shifted in more recent decades) depicted homosexuality as one more negative symptom of capitalism, painting it as a form of "bourgeois decadence." While all of this is certainly much more harsh than what NOM would like to see, perhaps in this area, Ms. Gallagher should rethink what a "Soviet-style" takeover would really mean.