In the first installment of this series (Income Inequality 101) I established some indicators, which determine the health of a producing society:
- The society must be able to expand in order to survive.
- To accomplish that, it needs an instrument of expansion that creates a surplus.
- Whoever controls the surplus controls how it will be invested and if it will be invested in new inventions or new ways of doing things, which will help the society expand.
- The instrument of expansion eventually becomes an institution at which time expansion either slows down or stops completely, a precursor to the collapse of the society.
- An institution can be reformed, circumvented, or perhaps require a revolution to make it viable once again.
Let’s start with expansion. A society has six principal cultural categories, which often overlap or become dominant or recessive as the producing society evolves into a civilization:
- The need for group security – military
- The need to organize power relationships – political
- The need for material wealth – economic
- The need for companionship – social
- The need for psychological certainty – beliefs (religion)
- The need for understanding – intellectual
Expansion by a society is often interpreted to mean an expansion in the territory it controls (military,) or people it has conquered and how they will be assimilated or controlled (political and social.) It can expand through the dissemination of beliefs (religion,) but it can also mean an expansion in ideas, art, and literature (intellectual.) Most common, however, is the acquisition of wealth (economic.) Expansion can happen in any or all categories, at the same time or at different times. But expansion has to occur if the society is to remain vibrant. The only way that can happen is if the instrument of expansion provides a surplus and that surplus in invested in invention and innovation.
In Western Civilization, as in all civilizations before it, the instruments of expansion inevitably became institutions. Fortunately, each institution was reformed, though seldom peacefully. The institution of feudalism (where Lords extracted payment from their serfs) was reformed by mercantilism.
Mercantilism, as I view it, was the long protracted end result of the guild system. Guilds started out innocently enough in the Middle Ages. It was only natural that artisans would create associations to control who practiced their craft in their town and how they practiced the craft. Perhaps the motives were altruistic at first, but they became self-serving. The same applied to the merchants who created fraternities in order to minimize competition. Over the course of the next few hundred years, the associations became cartels and the fraternities became secret societies.
They did create a surplus… but the surplus was social and political, not economic. It was the beginning of Good Ol’ Boys’ Clubs… Freemasons, Skull and Bones, Bilderberg Group, Rosicrucian, Golden Dawn, Ancient Order of Druids, Fraternal Order of Whatever. However, they did nothing to invest in invention, innovation, or the exchange of technology with others, especially outsiders. They did nothing to raise the standard of living for the rest of society. They had become institutions. Most importantly, they were against free trade and trade was at the heart of mercantilism, a system more political than economic and whose modus operandi was accumulating a surplus of money through trade with other countries.
Mercantilism circumvented the Guilds by creating this different instrument for creating a surplus… foreign trade. The problem was, to create the surplus, society had to make sure the balance of trade was in their favor. Mercantilism accomplished this through hundreds, if not thousands of laws regulating trade, establishing tariffs, blockading ships, monopolization, colonization, war, and restrictions so severe, they inhibited the investment of surplus into new inventions, and certainly did not contribute to the betterment of mankind.
In the meantime, the political and social surpluses these secret societies created did not go to waste. Over the years, they consolidated their social and political power and exerted their influence on the other levels of society through their considerable, though “secret” influence on those who would be the leaders of society. They were very instrumental in helping make decisions that affected the other facets of the culture, albeit through the “back door.” Do not think for a moment that “dark” money is a recent development. Secret societies exist today in Britain, Germany, France, United States and many other places. Their influence in keeping their “vested interests” intact has been a successful centuries-old effort to maintain their institutions… through “dark” money, corruption, and even assassination.
Enter the “instrument of expansion” called Capitalism to replace the “institution” of mercantilism. Capitalism created the surplus necessary for Western Civilization to expand by a more sophisticated cost/profit system. As long as a tradesman, craftsman, or farmer could sell his products for more than it cost him to produce; the profit provided him the means with which to support himself and his family and still have enough money left over to reinvest in more supplies, seeds, or the leisure time necessary to create more efficient methods of production. Society was in relative balance. On a grander scale, this leisure time allowed for invention and innovation called industrialization.
Industrialization came to Great Britain sometime in the mid 18th Century. Some called it a revolution, when really it was another circumvention taking a couple of centuries to mature. It grew up alongside the simple profit system of hand production. The Industrial “Revolution” included the transition from hand-produced products to machine-produced products. There were new methods in the manufacture of chemicals and new processes for making iron. There was an exponential increase in the use of power from water and steam and a transition from wood to coal as the primary fuel.
Some have said that the Industrial Revolution was the greatest event in the history of Civilization since the domestication of animals and agriculture. Yet we must remember that those who control the surplus control everything else. We should be grateful, I suppose, that capitalism had yet to become an institution, and those who did control the surplus were willing to invest it in even more innovations and inventions; in the sciences, technology, processes, infrastructure, etc.
It certainly didn’t happen overnight. At first the standards of living for most of the population had only gotten a little better and wages rose very little. But by the time Industrialization reached the rest of Western Europe, and then America in the late 18th and early 19th Centuries, average incomes began to grow at an unprecedented rate and life spans were considerably longer. Some economists have said that the industrial revolution was the first time in history that masses of ordinary people experienced sustained economic growth.
During this time in the United States, there was unprecedented expansion in almost all of the cultural categories I’ve mentioned: intellectual, social, economic, religious, and political. The only category that did not expand to the extent the others did was the military, called the Regular Army, comprised mainly of state militias and volunteers. All together they numbered approximately 10,000 souls. Perhaps this relatively small number is because there were no serious threats to our national security from the “outside.” The threat would come from the inside instead.
I should be more specific and mention here that industrialization arrived in New England and other northern states. It was not embraced nearly as much in the South. The South had an entirely different instrument of expansion for producing a surplus. It was called Slavery. But the surplus that slavery provided to plantation owners was not reinvested in either the welfare of the general population, or in invention and innovation. The surplus remained in the pockets of the landowners, though they did invest in one particular invention.
A man from the North named Eli Whitney invented the cotton gin, one of the most dramatic inventions of the industrial revolution. This is the one innovation the South adopted with vigor. Before its invention, slavery had actually been in decline. But the cotton gin made it possible to grow and harvest “short” cotton, which had been disregarded as unprofitable up until that time. After the implementation of the cotton gin, the demand for slaves increased, and the institution of slavery was strengthened. This one innovation has been credited with being an important, if unintended cause of the Civil War, which in effect was the revolution that would destroy the institution of slavery.
The Civil War is America’s deadliest war to date. The Civil War was one of the earliest industrial wars, extensively employing railroads, the telegraph, steamships, and mass-produced weapons. It took the lives of 750,000 men and an untold number of civilians. The civil war also made a small number of men very, very rich! Among them were J. Pierpont Morgan, John D. Rockefeller, Andrew Carnegie, James Mellon, Philip Armour, Jay Gould and Jay Cooke.
All of them could be considered war profiteers and their fortunes, families, and corporations live on today and still greatly influence our society, culture, and lives. When you investigate any of the behemoth financial, energy, agricultural, communications, industrial or shipping corporations that seem to dominate our landscape, don’t be surprised to find one of these names somewhere hidden among their Boards of Directors or major stockholders.
In the third and final installment in this series, I will continue to explore the reasons for the income inequality that exists today and the impending collapse of the institution known as Corporate Capitalism and its tentacles called Globalization.
The Unapologetic Hippie
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