God is a Capitalist

by Roger McKinney

  The Hollander Pieter de la Court would have agreed with this assessment of the nobility. De la Court had served in several government positions in Holland under the leadership of Johan de Witt. The Dutch Republic became a true republic after the assassination of Prince William of Orange, who had led the rebellion against Spain, and the ascension of the Grand Pensionary Johan van Oldenbarnevelt to political leadership. The war for independence lasted eighty years with a twelve year truce in the middle. In spite of continuous war, the republic under the brilliant leadership of Oldenbarnevelt with the help of Hugo Grotius was transformed into one of the wealthiest and most powerful nations in Europe.

  Prince Maurice, grandson of the first William, ended the republican government through a coup d’ etat in 1618. He had Oldenbarnevelt executed and Grotius jailed. The monarchy lasted until the death of William II and the revival of the power of the Grand Pensionary under Johan de Witt in 1650, whose rule ushered in the zenith of power and wealth for the Dutch. That republic died in another coup by Prince William III who ignited the envy of mobs against the leadership of the Republic, including de la Court. Rioting rabble murdered De Witt and his brother, tore out their hearts and ate them raw, after which the Prince apologized for the sluggishness of his military in coming to the aid of the victims. De la Court fled to France to escape a similar fate. In exile, he wrote The True Interest and Political Maxims, of the Republic of Holland,published in 1662.

  De la Court identified the source of Holland’s wealth as “traffick,” shipping, fishing, and manufacturing. By traffick, “I mean the buying of anything to sell again, whether for consumption at home, or to be sold abroad, without altering its property, as buying in foreign countries cheap to sell dearer abroad;” His book compares the growth of those sources of wealth in the republic with their ruin under the monarchs. De la Court used examples from ancient and classical history as well as recent Dutch history to bolster his points. He concluded that the rulers of a republic need to please the people in order to remain in power and so will promote the commercial activities that made Holland wealthy and able to afford a militarily capable of defending its borders.

  It follows then to be the duty of the governours of republicks to seek for great cities, and to make them as populous and strong as possible, that so all rulers and magistrates, and likewise all others that serve the publick either in country or city, may thereby gain the more power, honour and benefit, and more safely possess it, whether in peace or war: and this is the reason why commonly we see that all republicks thrive and flourish far more in arts, manufacture, traffick, populousness and strength, than the dominions and cities of monarchs: for where there is liberty, there will be riches and people.

  Monarchs, on the other hand, impoverish cities, destroy trade and burden the nation with debt through long and expensive wars in order to prevent cities from gaining power and challenging the monarch’s rule:

  For then it follows as truly from the said general maxims of all rulers, that the next duty of monarchs, and supreme magistrates, is to take special care that their subjects may not be like generous and mettlesome horses, which, when they cannot be commanded by the rider, but are too headstrong, wanton, and powerful for their master, they reduce and keep so tame and manageable, as not to refuse the bit and bridle, I mean taxes and obedience. For which end it is highly necessary to prevent the greatness and power of their cities, that they may not out of their own wealth be able to raise and maintain an army in the field, not only to repel all foreign power, but also to make head against their own lord, or expel him.

  De la Court offered as evidence the waste and incompetence of the princes of the Dutch Republic in handling the land wars against Spain and France, which caused the debt burden of the state to explode and the tax burden to become unbearable. His longest attack he saved for the fraud and incompetence the princes practiced in their duties of clearing the seas of pirates. He noted that Holland required a small number of ships to clear the sea lanes when it shouldered the responsibility alone. But under the dictatorship of the princes, vast armadas with budgets that ruined the treasury proved insufficient for the job and allowed pirates to ravage shipping from Amsterdam. He claimed the princes were negligent on purpose in order to weaken the finances of Holland because it opposed monarchical rule most of the time.

  De la Court anticipated the political economics championed by Nobel Prize winner Patrick Buchanan known as “public choice theory” almost three centuries in advance. Buchanan argued that selfishness and not the public interest motivates politicians. De la Court warned his countrymen that monarchs often satisfy their selfishness by creating monopolies:

  As concerning the freedom of all inhabitants to set up their trades everywhere in Holland, without molestation from the burgers, select companies, and guilds; this is not at all to be expected under a monarchical government. For everyone knows that at court all favours, privileges and monopolies are to be had by friendship, or else by gifts and contracts, for the king’s profit, and that of the favourites and courtiers.”

  For example, the Dutch had given the East India Company a monopoly on all trade with the Far East, but de la Court pointed out that the revenue to the state from the monopoly was tiny compared to that from the other sectors of the economy:

  For it cannot be denied, that the free Eastern trade alone, the herring-fishing alone, and the French trade alone, produce ten times more profit to the state, and the commonality of Holland, than twelve or sixteen ships which yearly sail from Holland to the East-Indies do now yield to the state, and the inhabitants.

  The princes found the support they needed to overthrow the republican government and maintain their power from unscrupulous people and even the clergy:

  For not only officers, courtiers, idle gentry, and soldiery, but also all those that would be such, knowing that under the worst government they use to fare best, because they hope that with impunity they may plunder and rifle the citizens and country people, and so by the corruption of the government enrich themselves, or attain to grandeur, they cry up [promote] monarchical government for their private interest to the very heavens: although God did at first mercifully institute no other but a commonwealth government, and afterwards in his wrath appointed one sovereign over them. 1 Sam. 1. 8, 12.

  Yet for all this, those blood-suckers of the state, and, indeed of mankind, dare to speak of republicks with the utmost contempt, make a mountain of every molehill, discourse of the defects of them at large, and conceal all that is good in them, because they know none will punish them for what they say: wherefore all the rabble (according to the old Latin verse) being void of knowledge and judgment, and therefore inclining to the weather or safer side, and mightily valuing the vain and empty pomp of kings and princes, say amen to it; especially when kept in ignorance, and irritated against the lawful government by preachers, who aim at dominion, or would introduce an independent and arbitrary power of church-government;

  For fans of Max Weber’s thesis that Calvinism created capitalism, it is ironic that the Calvinists in the Dutch Republic championed the monarchy and opposed free markets. The non-Calvinist Protestants endorsed the republic and free markets. Honest citizens who supported the republic were afraid to discuss the weather let alone express their opinions about the princes out of fear of reprisal from the nobility:

  Nay there are few inhabitants of a perfect free state to be found, that are inclinable to instruct and teach others how much better a republick is than a monarchy, or one supreme head, because they know no body will reward them for it; and that on the other side, kings, princes, and great men are so dangerous to be conversed with, that even their friends can scarcely talk with them of the wind and weather, but at the hazard of their lives; and kings with their long arms can give heavy blows.

  Another way the nobility had destroyed the foundations of economic growth was by perverting the law. De la Court wrote that before the revolt against Spain, the earls of the Netherlands, called statholders,
sold the offices of judges and bailiffs to the highest bidders. Appeals of judges’ decisions went to the earl himself, who acted as the supreme court. The law demanded that criminals who forfeited their lives also forfeited their estates to the earl. As a result, many innocent people were tried and convicted for the sole purpose of enriching the earl and his partners in crime. De la Court charged that these earls “stood much upon enlarging of their power and profit, and but very little on the welfare of the common people.”

  The perversion of law mentioned by de la Court was not unique to the Dutch Republic. Throughout Europe the landed aristocracy oversaw the police, judiciary and civil government on their lands, so a noble might preside over the arrest, trial and punishment of peasants under him. Most countries in Europe had separate laws for the nobility exempted them from taxes and many of the laws that applied to commoners. The contempt in which the nobility held business; their obsession with conspicuous consumption; the ignoble means they admired for gaining wealth, and their abuse of power all contributed to making property insecure, regardless of the written law, for anyone who managed to accumulate a little, thereby keeping people poor and preventing economic development. And as Schoeck noted, the nobility suffered from extreme envy of each other, but especially of any commoner who might grow nearly as wealthy as them.

  Urban life

  One to 2 percent of the population belonged to the clergy and another 2 percent to the aristocracy, both of which owned most of the land. The nobility owned between two thirds and 95 percent of the wealth. Peasants made up between 65 percent and 85 percent of the population. The rest lived in towns where about half the urban population was laborers. City life was so unhealthy that as late as 1750 most cities recorded more deaths than births. Towns grew through immigration. Artisans typified the urban resident with a thin veneer of wealthy merchants at the top and a large group of laborers and beggars at the bottom.

  As Mises wrote, mass production is a defining characteristic of capitalism and it did not exist in pre-industrial cities. Mass production is production for the masses as well as production of large volumes of cheap, identical goods. The process characterizes capitalism because it reduces the cost of production and therefore prices so that the masses can afford to buy them. The history of capitalism has been the progress in making available to the masses things only the wealthy could afford. For example, the simple marshmallow was so expense when first invented that only the wealthy aristocracy could afford it. Instead of mass production, artisans hand crafted all goods except those made at home in pre-industrial Europe. Each good was unique and intended for sale to the nobility or wealthy merchants because artisans, laborers, beggars and peasants, the vast majority of the population, could not afford it.

  After the tenth century, artisans organized into guilds or associations. Social, political, and economic life for artisans revolved around the guilds, which often provided for the welfare of widows, orphans, and those members who could no longer work. In terms of economic growth, guilds filled the same role in Europe as in the Ottoman Empire. They stifled competition, regulated wages, prices and quality standards, blocked entry into their fields and maintained monopolies on their particular industries, all with the power of city governments behind them. Guilds outlawed competition among guild members in order to ensure that members earned the income they deemed appropriate for their status in society. Being very class-conscious and consumed with envy, medieval society ferociously defended gross inequalities in income between classes lest lower classes become uppity and achieve wealth comparable to that of the higher classes. But they refused to tolerate inequality within classes, such as one brewer making more money than another, a clear manifestation of envy.

  Often, the city council controlled the local guilds and manipulated their rules to favor local producers. Cities barred non-citizens from starting new businesses and from doing any trading within the city except through the services of local business people. De la Court observed that persecuted Protestants fleeing Antwerp would have preferred settling in England, but the English charged double the taxes on foreigners and excluded them from all guilds, halls of trade and manufacturing. They settled in Holland in spite of the high taxes.

  Cities levied heavy duties on goods imported from neighboring towns and forced local farmers to sell their crops to merchants within the city. But with all of these hindrances to economic growth, arguably the most damaging were the tolls charged on the transportation of goods between cities. Hecksher in his book on mercantilism wrote that tolls, “more than any other measure of economic policy, affected the most valuable part of trade, that moving along the chief rivers, which constituted almost the only long-distance natural means of communications before the invention of the compass. Consequently, medieval trade was much more restricted than was warranted by purely technical difficulties.”

  Travelers could smell cities long before they came into view. Many cities outlawed the dumping of human waste in the streets, but it had to go somewhere so it piled up in courtyards and sometimes close to wells. The engines of transportation left city streets full of horse manure. Pigs consumed the garbage for city residents and left behind their own waste. Traffic pulverized both into a fine powder that hung in the air for residents to breathe. Disease spread rapidly as a result of the congestion, lack of sanitary conditions and pour nutrition.

  Life expectancy was low because of infant mortality and childhood diseases, both of which chronic undernourishment made worse. Most people consumed 50 percent to 75 percent of their calories from bread. Urban workers often spent half their wages on food. Two consecutive bad harvests would cause famine and mass starvation. In the 300 years before 1750, Tuscany suffered one hundred years of famine and just sixteen bountiful years. France endured sixteen years of famine nationally during the eighteenth century and many more local ones due to poor transportation.

  The Church

  The earlier section described the history of how the Church replaced ancient society and its hierarchical structure of status with one less stratified and organized around individual rights. This section will present the Church’s role in the treatment of commerce and property. We have discussed the roles of lords, peasants and cities in the medieval economy. The third major concentration of economic power in the middle ages lay in the hands of the Catholic Church. As difficult as it is for our modern secular society to accept, people throughout history have feared hell and longed for heaven. The Church held the keys to both, and therefore enjoyed enormous power over the hearts and minds of peasants, nobility and merchants.

  In spite of the progress of Christianity in many areas, theologians found their minds shackled by pagan economics and unable or unwilling to adapt it to the faith in the same way they had translated Stoic philosophy into Christian individualism. As a result, they uncritically rejected most commerce as evil, except for the long distance transport of goods, while glorifying agriculture. This quote from Cicero provided by Richard Ebeling in his article “Anti-Commerce and Quietism in Ancient Rome” summarizes pagan and Christian economics for centuries:

  Now in regard to trade and other means of livelihood, which ones are to be considered becoming of a gentleman and which ones are vulgar, we have been taught, in general as follows: First those means of livelihood are rejected as undesirable which incur people’s ill-will, such as those of tax-gatherers and usurers [money-lenders]. Unbecoming to a gentleman, also, and vulgar, are the means of livelihood of all hired workmen whom we pay for mere manual labor, not for artistic skill; for in this case the very wages they receive is a pledge of their slavery.

  Vulgar we must consider also those who buy from wholesale merchants to retail immediately; for they would get no profits without a great deal of downright lying; and verily there is no action that is meaner than misrepresentation. And all mechanics are engaged in vulgar trades; for no workshop can have anything liberal about it. Least respectable of all are those trades that cater to sensual pleasures: Fishmonger
s, butchers, cooks, poulterers, and fishermen. Add to these if you please, the perfumers, dancers, and the whole corp of ballet. But the profession in which either a higher degree of intelligence is required or from which no small benefit to society is derived – medicine, and architecture, for example, and teaching – they are proper for those whose social position they become.

  Trade, if it is on a small scale, is to be considered vulgar; but if wholesale and on a large scale, importing large quantities from all parts of the world and distributing to many without misrepresentation, it is not to be greatly disparaged. Nay, it even seems to deserve the highest respect, if those who are engaged in it, are satisfied with the fortunes they have, and make their way from the port to the country estate, as they have often made it from the sea to the port.

  But of all the occupations by which gain is secured, none is better than agriculture, none more profitable, none more delightful, and none more becoming to a freeman.