By Glenn Stehle
In my last post I gave a brief history of the long tradition of religious austerianism in Western civilization, explaining that all too often what austerianism amounted to was austerity for the lower orders of society, and luxury and opulence for the upper orders. But is there a parallel tradition of secular austeriansim? In this post I will argue that there is.
The following quote by Thomas Malthus recently caught my eye:
A man who is born into a world already possessed, if he cannot get subsistence from his parents on whom he has a just demand, and if the society do not want his labour, has no claim of right to the smallest portion of food, and, in fact, has no business to be where he is. At nature’s mighty feast there is no vacant cover for him. She tells him to be gone, and will quickly execute her own orders, if he does not work upon the compassion of some of her guests. If these guests get up and make room for him, other intruders immediately appear demanding the same favour. The report of a provision for all that come, fills the hall with numerous claimants. The order and harmony of the feast is disturbed, the plenty that before reigned is changed into scarcity; and the happiness of the guests is destroyed by the spectacle of misery and dependence in every part of the hall, and by the clamorous importunity of those, who are justly enraged at not finding the provision which they had been taught to expect. The guests learn too late their error, in counter-acting those strict orders to all intruders, issued by the great mistress of the feast, who, wishing that all guests should have plenty, and knowing she could not provide for unlimited numbers, humanely refused to admit fresh comers when her table was already full.
Malthus was masterful at crafting what Stephen Toulmin called “cosmopolitical arguments,” a type of special-interest pleading whose advocacy is so subtle as to often go undetected. “The function of cosmopolitical arguments is to show members of the lower orders that their dreams of democracy are against nature; or conversely to reassure the upper class that they are superior citizens by nature,” Toulmin explains in Cosmopolis: The Agenda of Modernity. Cosmopolitical arguments were needed because, since the eighteenth century, the authority of God as a source of absolute truths of the world – the essence of the historic claim to authority of the Christian religion — had been superseded in many areas of society by the rise of science (Robert H. Nelson, Economics as Religion: from Samuelson to Chicago and Beyond). For this reason new secular-scientific arguments had to be found to replace the old religious ones, which had lost their authority to bestow moral and intellectual legitimacy upon the social and economic order.
Enter Thomas Malthus.
As Robert L. Heilbroner explains, in the first decades of the 19th century it became evident to the Worldly Philosophers that rentiers and industrial capitalists (Robert L. Heilbroner, The Worldly Philosophers) Malthus would become the great defender and champion of the rentiers, and David Ricardo the champion of the rising industrial capitalists. “Rents,” said Malthus in his Principles of Political Economy, which appeared three years after Ricardo’s On the Principles of Political Economy and Taxation (1817), “are the reward of present valour and wisdom, as well as of past strength and cunning.”
Conspicuously missing from this mutually sustaining folie à deux between Malthus and Ricardo, however, was labor, which was systematically demonized and had its interests summarily dismissed by both. As Heilbroner points out, a great London banker of the time, Alexander Baring, declared in Parliament that “the labourer had no interest in this question” because “he will get dry bread in the one case and dry bread in the other.” This was deemed so because of the immutable nature of the workers.
After all, as Heilbroner goes on to explain, “although Malthus and Ricardo disagreed on almost everything, they did not disagree about what Malthus had to say about population.” If the demand for labor increased, both Malthus and Ricardo argued, this would have the effect of boosting wages. However, they both agreed, this “would soon tempt the incorrigible working orders to avail themselves of those treacherous delights of domestic society and so to undo their advantage by flooding the market with still more workers.” Therefore the workers “just barely subsisted.” And this was fated, predestined, and nothing could be done about it. Furthermore, this was not the fault of the industrial capitalist or the rentier, but was caused by the nature of the workers, “since it was only the worker’s own blindness that drove him to multiply his numbers.”
Beyond this point of agreement, however, Ricardo and Malthus parted ways, for Malthus was the great champion of the rentiers, or more specifically the owners of the land upon which corn was grown. If market forces were allowed to work unimpeded, a scarcity of corn meant high corn prices, which meant a windfall for Malthus’s hallowed land owners, who constituted the principle rentier class of the day. Malthus thus became quite the fan and advocate of scarcity.
Scarcity was to be achieved through the Corn Laws, which placed severe limitations on the importation of corn into Britain and created an acute scarcity of corn. “By 1813 the situation had gotten out of hand,” Heilbroner explains. “Bad crops and the war with Napoleon conspired to bring about virtual famine prices.” A bushel of corn in Britain cost the equivalent of twice the average worker’s weekly wage. In comparison, in the US the highest price corn ever achieved amounted to 1/8 of the average worker’s weekly wage.
“Patently, the price of grain was fantastic, and what to do about it became a question of enormous moment to the country,” Heilbroner continues. “Parliament studied the situation carefully – and came up with the solution that the duty on foreign grain should be raised still higher!”
Malthus was all in favor of this. He wrote an essay, “The Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn,” explaining his support. It is a masterwork of special-interest pleading, exuding all the wonderful things that would derive from the scarcity of corn and the exorbitant price it had achieved. In Malthus’s estimation, there was scarcely any sector of society that would not benefit from the scarcity of corn, its high prices, and the transformation of British corn production towards corn independence. “I firmly believe that, in the actual state of Europe, and under the actual circumstances of our present situation,” he counsels, “it is our wisest policy to grow our own average supply of corn; and, in so doing, I feel persuaded that the country has ample resources for a great and continued increase of population, of power, of wealth, and of happiness.”
If we fast-forward the clock 160 years, we see a redux of Malthus’s call to action in Carter’s Crisis of Confidence Speech. But whereas with Malthus the proximate goal is corn scarcity with the ultimate goal being corn independence, with Carter it is energy scarcity with energy independence.
“We believed that our nation’s resources were limitless until 1973, when we had to face a growing dependence on foreign oil,” Carter begins. But we’re not to worry, because, according to Carter: “Energy will be the immediate test of our ability to unite this nation, and it can also be the standard around which we rally. On the battlefield of energy we can win for our nation a new confidence, and we can seize control again of our common destiny.” And, just like Malthus, to insure that the scarcity is permanent and will not disappear due to cheap imports, “Beginning this moment, this nation will never use more foreign oil than we did in 1977 — never. From now on, every new addition to our demand for energy will be met from our own production and our own conservation…. To ensure that we meet these targets, I will use my presidential authority to set import quotas.”
Of course, just like as was the case with Malthus, few of Carter’s predictions came true. With Malthus, better crops ensued, Napoleon was defeated, corn prices subsided toward more normal levels, and the Corn Laws were eventually repealed. With Carter, two things happened.
First, Volker unleashed his war on working men and women with his brutal monetary policy beginning in 1979, precipitating a world-wide recession. As a result, oil demand plummeted from 64.0 MMBOPD in 1979 to 57.6 MMBOPD in 1983, and along with it oil prices, from $38/Bbl in 1979 to $14.64 in 1986 (From 1982 to 1985 OPEC attempted to set production quotas low enough to stabilize prices. Repeated failures occurred because various members of OPEC would produce beyond their quotas. Saudi Arabia acted as the swing producer cutting its production to stem the free falling prices. In August of 1985 they tired of this role and linked their oil prices to the spot market and in early 1986 increased production from 2 MMBPD to 5 MMBPD).
Second, Reagan carried through with the Reagan version of the Carter Doctrine, which resulted in the militarization of US energy policy. This ushered in an era of productivity-destroying militarism financed by running large trade deficits. Chris P. Dialynas and Marshall Auerback variously called it “guns AND butter foreign policy,” “the military option“ and “an increasingly militaristic foreign policy,” all financed with “a cheap form of war finance, a particularly important consideration as the U.S. has gradually militarized its energy policy” (Chris P. Dialynas and Marshall Auerback, “Renegade Economics: The Bretton Woods II Fiction”). Carter’s Crisis of Confidence speech seemed to foretell these future events when he stated: “And this one from a labor leader got to the heart of it: ‘The real issue is freedom. We must deal with the energy problem on a war footing’.” It was Reagan who would fully complete the strategic reorientation towards a “guns AND butter” foreign policy, the idea being that the “United States would rely on military might to keep order in the Gulf and maintain the flow of oil, thereby mitigating the implications of American energy dependence” and prolonging “the empire of consumption’s lease on life.” (Andrew J. Bacevich, The Limits of Power).
The militarization of energy policy appeared to work quite well for a couple of decades. However, as world oil demand began bumping up against world oil supply once again in the early naughties and the US suffered disastrous losses in its resource wars in Iraq and Afghanistan, it is not at all clear that the US will be able to rely on military might to keep order in the Gulf and maintain the flow of oil.
Carter, just like Malthus, was interested in using the power of government to bestow windfalls upon pet constituencies. Carter’s proposed energy system transformation amounted to little more than lavish pork barrel spending on projects of questionable economic and environmental merit. “To give us energy security,” Carter implored, “I am asking for the most massive peacetime commitment of funds and resources in our nation’s history to develop America’s own alternative sources of fuel — from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun.” But now, and with the benefit of hindsight, we can readily see that a better shortlist of non-solutions to energy and environmental problems, driven by politics and special interests, would be difficult to come up with. The money to transform the energy system was to come from a massive new tax on the oil and gas industry. “These efforts will cost money, a lot of money,” Carter said, “and that is why Congress must enact the windfall profits tax without delay.”