Catholic Tea Party Economics
Frank Cocozzelli printable version print page     Bookmark and Share
Sun Aug 15, 2010 at 03:14:36 PM EST
In my last post I discussed how the Catholic Right now seems to be decoupling from the neoconservative philosophy of empire and behind-the-scenes philosopher elites, and hooking up with paleo-conservative elements of the Tea Party movement.

While there are significant philosophical differences between these tendencies, they both believe in a form of laissez-faire capitalism steeped deeply in the neo-platonic notion of knowing one's place in society. This shift reveals what many suspect: That the leadership of the Catholic Right - like much of the Religious Right movement - is using faith as a tool to accomplish a laissez-faire economic agenda.

 While there is a distinct and identifiable trend here, the Tea Party movement defies easy characterizations. Tea Partiers often hold contradictory opinions - for example, wanting to preserve their Social Security benefits while opposing  "big government programs." Their leadership, however, know exactly what they want - laissez-faire, "casino" capitalism - and what they don't want - Keynesian capitalism.

As I previously noted, GOP insider Deal Hudson has gone so far as to call for "a Catholic Tea Party" faction.

With that in mind, I have been reading up on John Maynard Keynes. I am currently working through his Magnum opus, The General Theory of Employment, Interest and Money, which was published in 1936 during the Great Depression. It is often difficult reading, but it is well worth the effort. And in order to understand how Keynesian economics can be successfully applied to correct today's economic woes I have read and reread both economist Paul Davidson's The Keynes Solution: The Path to Global Economic Prosperity as well as 's Keynes: The Return of the Master.

You may by now be asking yourself why I would dust off these tomes in search of answers to contemporary economic problems.  The answer is simple: Because Keynesian economic principles explain many of the fallacies of laissez-faire capitalism while offering an alternative way to help a market economy to function in a more robust and healthy manner. In short, Keynes proposed an alternate style of capitalism, one instilled with healthy doses of realism, self-discipline and fairness. It is also a potent weapon to blunt Christian Tea Party laissez-faire economics. As we will explore in an upcoming related post, Keynes' belief in "living a reasonable life" strongly echoes Monsignor John A. Ryan's Distributive Justice goals..

But before we can apply Keynes's solutions as "a refudiation" of Tea Party economic policies, we must first understand what is in need of refudiating.

Hayek's Ghost

What most Tea Partiers advocate is a form of Austrian School flavored libertarian economics, epitomized by the life and work of the movement's new hero,, economist F.A. Hayek (1889-1992). Hayek is often remembered for his 1944 book Road to Serfdom, a defense of laissez-faire and dire warning about where New Deal liberalism and British Labour would lead - dictatorship; an outcome already refudiated by history.

But the Austrian-born economist is also known for his theory of spontaneous order, defined by the Online Library of Liberty as "...an order which emerges as result of the voluntary activities of individuals and not one which is created by a government, is a key idea in the classical liberal and free market tradition." As one modern Keynesian put it, "In other words, government economic policy is the problem, the free market is the solution."

This is very much the essence of Classical and its progeny, libertarian economic thought.  Its mantra is that government efforts to jump-start stagnate economies can only throw off the equilibrium or natural order of business. Unlike Keynes who believed that it was government's role to ensure enough demand so that wages - and thus, the standard of living - do not decrease, today's laissez-faire advocates subscribe to Say's Law; the belief that supply creates demand.

"Let the system take care of itself and damn the human consequences." It echoes the harsh advice Secretary of the Treasury Andrew Mellon gave President Hoover at the outset of the Great Depression, "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate." The belief being that when available jobs pay less, workers will be required to take less pay. This "equilibrium" will the supposedly restore boom times. It is in this callous way markets "correct themselves."

Calvinist Libertarianism

But boom times for whom? Keynes pointed out in chapter 19, page 262 of The General Theory:

What will be the effect of this redistribution on the propensity to consume for the community as a whole? The transfer from wage-earners to other factors is likely to diminish the propensity to consume. The effect of the transfer from entrepreneurs to rentiers [a rentier is a person who lives on income from property or investments.] is more open to doubt. But if rentiers represent on the whole the richer section of the community and those whose standard of life is least flexible, then the effect of this also will be unfavourable.

Beyond that, such laissez-faire dogma calls for a world where there are no labor contracts; one where workers must docilely accept lower wages. That is why we hear conservative economists such as Amity Schlaes make the bogus claim that FDR's support for unionization supposedly prolonged the Great Depression.

Laissez-faire is nothing less than an economic form of Calvinism, replete with its belief in predestination. It is a theory that preaches that the past is a shadow of the future and that government has no role in addressing future economic uncertainty. And if government does attempt to address unseen contingencies, it will only aggravate things a delay a return to prosperity? Why? Because laissez-faire advocates believe that economics operates pursuant to an ergodic axiom - that the outcomes are predetermined.

The inherent absurdity of this proposition is not lost on Keynesian economist Paul Davidson:

The assumption that the economy is governed by an ergodic stochastic process means that the future path of the economy is already predetermined and can not be changed by human action today. Astronomers insist that the future path of the planets around the sun and the moon around the earth has been predetermined since the moment of the Big Bang beginning of the universe. Nothing humans can do can change the predetermined path of these heavenly bodies. This "Big Bang" astronomy theory means that the  "hard science" of astronomy relies on the ergodic axiom.  Consequently by using past measurements of the speed and direction of heavenly bodies, astronomical scientists can accurately predict the time (usually within seconds) of when the next solar eclipse will be observable on the earth.

Assuming that this hard science astronomy is applicable to the heavenly bodies of our universe, then it should be obvious that the United States Congress can not pass legislation that will actually prevent future solar eclipses from occurring even if the legislation is designed to obtain more sunshine to improve agriculture crop production. In a similar vein, if, as [Paul] Samuelson claims, economics is a "hard science" based on the ergodic axiom, then Congress can neither pass a law preventing the next eclipse nor pass a law to prevent the preprogrammed next systemic financial crisis. The result is a belief in a laissez-faire non government intervention policy as the only correct policy.

And why is this theory so appealing to advocates of laissez-faire? Again, Paul Davidson explains:

Thus, for example, it is often argued that the government creates unemployment in the private sector when it passes legislation that all workers are entitled to at least  minimum wage that cannot be lowered even if unemployed workers are willing to work for less rather than starve. Similarly if government passes legislation that protects and encourages unionization, the effect will be to push wages up so high that profit opportunities will be ultimately eliminated and unemployment of workers assured. Thus, it follows from classical theory, that  the market, and not the government should decide what wage rate should be the minimum that workers should receive. Consistency therefore would require arguing that government should never constrain the pay of top management but rather should leave it to the market to determine the value of CEOs. Is it not surprising that these CEO's then hire these classical economists as consultants?

This is what Tea Party advocates such as Dick Armey and Matt Kibbe mean when they demand "Give us liberty!". It is liberty for a select, fortunate few; the freedom from having profit distributed based upon merit, contribution or special skills but instead via unchecked power.

Such casino capitalism (Keynes's term) has been at the foundation of GOP politics for the last thirty years. As the editor of the journal U.S. Catholic Bryan Cones  observed of Hudson:

Can we just be honest here? Deal Hudson is a Republican. He thinks everyone should be a Republican, and he thinks if you're a Catholic, you should be a Republican because the only issues you should ever cast a vote on are abortion and gay marriage (as if the GOP is really pure in practice on either of those issues).

Thus, it is a no-brainer for Hudson the GOP insider to serve up über-orthodox Catholic agenda with some hot Tea Party rhetoric.

In the next installment Keynes's principles will be examined as a means to refute the Religious Right.

Related Posts:
Catholic Right: Are the Neo-Cons Out and the Tea-Partiers In?




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But with that said, we need to be able to discuss what the other side believes.

All too often we name laissez-faire as the culprit for the current state of the economy, but we often fail to explain why. Once we begin to explain that their definition of freedom and of liberty means working folks are supposed to have decreasing incomes, we'll see just how many folks will be willing to join their tea party.

by Frank Cocozzelli on Sun Aug 15, 2010 at 03:24:16 PM EST

... this is why I have been wading through volumes of Rushdoony, including his 800+ page The Institutes of Biblical Law.  For many years I have read excerpts and also Rushdoony's writings at Chalcedon, etc.  I've also read large quantities (but not nearly all) of Gary North's writings including his Lew Rockwell posts. For those who don't know that website, Rockwell is the founder of the Ludwig von Mises Institute which promotes Austrian School economics.

Rushdoony and North's writings explain how theocratic and liberty can be uttered in the same breath.

by Rachel Tabachnick on Sun Aug 15, 2010 at 07:52:05 PM EST
Parent

That explains quite a lot.

Thank you Rachel!

by Frank Cocozzelli on Sun Aug 15, 2010 at 08:34:52 PM EST
Parent


Have you read James Wesley Rawles's book "How to Survive the End of the World?" I mention it as he professes to be a follower of Gary North. I read it, and it is consistent with the "sky is falling" sort of items we see with the Tea Party folks.

by khughes1963 on Sun Aug 15, 2010 at 09:30:10 PM EST
Parent


Great work, as always, Mr. Cocozzelli. And, as a union retiree, I am particularly interested in how to argue against the laissez-faire-style of capitalism favored by those on the right.

Credit where it's deserved, however. What could be a more perfect vehicle for delivering up the people to corporate slavery than to preach that this is how God wants things to be?



by trog69 on Thu Aug 19, 2010 at 04:27:04 PM EST
Parent


The "leadership" in the Church wants us to return to a pre-Vatican II defensive and fearful outlook, and the Catholic theocons want to join the tea partiers. It appears to be part of a single unified and mistaken whole. You have just illustrated precisely what is wrong with this mindset, "liberty" for the few and penury for the many. Not to put too fine a point on it, but I think the tea partiers are espousing a sort of magical thinking of the sort we usually see with the peddlers of the prosperity gospel.

by khughes1963 on Sun Aug 15, 2010 at 09:27:28 PM EST

I sincerely hope Paul Davidson has a better grasp on economics than he does of the "hard" sciences.

Astronomers insist that the future path of the planets around the sun and the moon around the earth has been predetermined since the moment of the Big Bang beginning of the universe.

Ouch! Run that past any working astronomer or cosmologist - but bring along enough money to buy a big lunch, because you're going to be in for a lecture and a half.

Back to the main topic: though I for one don't know much about ties between the Catholic hierarchy and the C Street "Family" (other than the overlap of both with the Republican Party), it should be mentioned that the Family's roots also rise from anti-labor crusades of the Red Scare and the Depression.

As for Keynes, he would be dismissed instantly by teabaggers of all sects simply for having been bisexual. Analyzing the fit of his theories to actual economic factors is strictly an exercise for the reality-based community.

You don't have to be a Marxist to see religion's history as a tool of controlling the majority for the benefit of a small elite. Kudos to Cocozzelli for bringing the details up to date!

by Pierce R Butler on Tue Aug 17, 2010 at 12:54:06 PM EST

I read Invisible Hands, the Businessmen's Crusade against the New Deal, by Kim Phillips-Fein, just prior to my presentation at the Keystone Progress conference, (link to presentation summary).  My presentation was on the current embrace of "Biblical Capitalism" and its impact on economic policy and the book was a good resource.

It provides an overview of the efforts of business leaders to enroll fundamentalists to participate in fighting to overturn New Deal legislation.  The author includes a reference to Abraham Vereide who founded The Family, but also organizations like Spiritual Mobilization founded by J. Howard Pew, which worked to promote laissez-faire capitalism among religious leaders.  According to Phillips-Fein, Pew wanted to raise the money to send every minister a copy of Hayek's Road to Serfdom.


by Rachel Tabachnick on Wed Aug 18, 2010 at 03:38:12 PM EST
Parent



I wonder what Pope Leo XIII would have thought of all this. He seemed to have some compassion for  the working man.
Jim of Olym

by rdrjames on Sun Aug 22, 2010 at 07:58:24 PM EST


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