Login
This is the final essay of four in a series by James E. Hartley on what literature can teach us about economics. You can read the first here, second here, and third here.
Nobody ever stopped him in the street to say, with gladsome looks, “My dear Scrooge, how are you? When will you come to see me?” No beggars implored him to bestow a trifle, no children asked him what it was o’clock, no man or woman ever once in all his life inquired the way to such and such a place, of Scrooge. Even the blind men’s dogs appeared to know him; and when they saw him coming on, would tug their owners into doorways and up courts; and then would wag their tails as though they said, “No eye at all is better than an evil eye, dark master!”
But what did Scrooge care! It was the very thing he liked.
(Dickens, A Christmas Carol)
Over the course of this series of essays, we have been exploring why it is that people object to an unequal distribution of wealth. We saw in the first essay that the objection is not limited to concern for people living in poverty. In the next two essays, we saw that while there are related complaints about the sources of great wealth, such complaints are not well grounded. So, what is it? Is it that wealthy people are inherently more wicked?
Once again, we turn to literature to guide us. Consider Charles Dickens’s A Christmas Carol. If one is looking for an exemplar of the despicable rich, one can do no better than Ebenezer Scrooge. The first description of him is “a squeezing, wrenching, grasping, scraping, clutching, covetous, old sinner!”
If this portrait of Scrooge is underneath the complaints about unequal wealth, it is not hard to understand the problem. Do people like him really deserve to be the wealthiest people in town? Why should Scrooge be able to lord over his clerk, the impossibly charming Bob Cratchit? In the depths of winter, Bob is working next to a fire that amounts to nothing more than a single coal because Scrooge refuses to let him add another. The entire set-up of this story is designed to raise the complaint about the horrible distribution of wealth in Victorian England.
If the Scrooge at the beginning of the story is the example of what is wrong with wealth inequality, then why doesn’t the story end with Scrooge losing his wealth?
But Dickens is clever. As everyone knows, A Christmas Carol ends on such a happy note that it can only be described as Dickensian. After the ghostly visitors, Scrooge is a reformed man. The final description of Scrooge: “He became as good a friend, as good a master, and as good a man, as the good old city knew, or any other good old city, town, borough, in the good old world.” You would love to know this reformed Scrooge; you would enjoy having dinner, even Christmas dinner, with him.
What is so clever about this ending? Scrooge is every bit as rich at the end of the story as he was at the beginning of the story. If the Scrooge at the beginning of the story is the example of what is wrong with wealth inequality, then why doesn’t the story end with Scrooge losing his wealth?
Bad Scrooge, Good Scrooge
If Scrooge is any indication, it is not the source of wealth or the existence of wealth that rouses our opprobrium. The difference between Scrooge at the outset and Scrooge at the end is neither how wealthy he is, nor how he earned his wealth. He doesn’t become poor or change jobs, and yet we move from abhorring him to loving him. What changes? The only difference between Scrooge at the beginning and end of the story is what he does with his wealth. Scrooge learns to be charitable.
The masterly Dickens sets up the contrast beautifully. As the story begins, we learn that Scrooge is a very unpleasant person, someone not worthy of emulating and someone with whom you would rather not spend time. Scrooge is not just a terrible person; he is a terrible rich person. His riches seem to be the source of his badness.
The defining scene comes early, as Scrooge is in his office and two “portly gentlemen, pleasant to behold” come in. The conversation is worth quoting at length both because it is illustrative and because, well, it is Dickens at his best:
“At this festive season of the year, Mr. Scrooge,” said the gentleman, taking up a pen, “it is more than usually desirable that we should make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”
“Are there no prisons?” asked Scrooge.
“Plenty of prisons,” said the gentleman, laying down the pen again. . . .
Scrooge goes on to ask if the workhouses and other institutions for the sequestering of the poor are “still in operation,” and the gentleman assures him they are.
“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”
“Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude,” returned the gentleman, “a few of us are endeavouring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”
“Nothing!” Scrooge replied.
“You wish to be anonymous?”
“I wish to be left alone,” said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas and I can’t afford to make idle people merry. I help to support the establishments I have mentioned—they cost enough; and those who are badly off must go there.”
“Many can’t go there; and many would rather die.”
“If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population. Besides—excuse me—I don’t know that.”
Why be charitable when there is plenty of prison and workhouse space to go around? After this passage, what redemption is possible for Scrooge?
Scrooge meets one of these gentlemen at the end of the story, and immediately goes up to him offering an astonishingly large gift to this enterprise to help the poor and destitute. The reader’s heart is warmed. Similarly, Scrooge tell Bob Cratchit that he is not only going to give Bob a raise but also, in a perfect small detail, he tells Bob to build a roaring fire and get a brand new coal scuttle. Wealth inequality, therefore, seems like less of a problem when the wealthy are generous.
The Gospel of Wealth
Andrew Carnegie reflects on how wealth inequality benefits everyone in his short essay “The Gospel of Wealth.” Suppose wealth is created because of the ingenuity and hard work of some set of people. Moreover, when those people get more wealth, they are able to use it to generate even more wealth by expanding the scope in which they can apply their particular genius and work ethic. The creation of this wealth is a benefit to all. But suppose also, that as the wealth is created, a large amount of it accrues to these innovative and entrepreneurial people.
Carnegie notes the difference between the creation of wealth and the distribution of wealth. Surely, Carnegie argues, a society should do all that it can to encourage the creation of wealth. But, when extraordinary wealth is created, it inevitably ends up being distributed unequally. We should not discourage this wealth creation, but we should think more carefully about the final disposition of the wealth.
Carnegie notes three possibilities for the disposition of vast fortunes: first, the wealth could be given to heirs; second, the wealth could be appropriated by the government and used for public purposes; or third, the wealth could be voluntarily given away during the earner’s lifetime. All too often, Carnegie notes, the debate is entirely about the relative merits of the first two possibilities. Carnegie does not like either of those options. The heirs of the person who earned the wealth are rarely good stewards of the wealth after they inherit it. One should not bequeath great wealth to the idle and feckless. Similarly, the government has not proven itself to be a good steward of public resources.
The final option, however, has enormous benefits for society. If the talented earn vast fortunes and then set out to distribute those fortunes in ways that will genuinely benefit the poor, then who would complain? “Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them through the course of many years in trifling amounts.”
Now imagine a society in which everyone who is wealthy acted in the manner suggested by Carnegie. Pick your least favorite billionaire and ask yourself if your opinion would change if you knew that before the person died, all of that person’s wealth, all of it, would be voluntarily given to things that benefited the poor. Benefiting the poor does not have to mean cash grants; Carnegie, for example, built public libraries in small towns across the country. If every rich person acted like that, would anyone still be concerned about the distribution of wealth in a society?
If the talented earn vast fortunes and then set out to distribute those fortunes in ways that will genuinely benefit the poor, then who would complain?
On Charity
If this is right, then there is a massive unstated assumption at the heart of the debate about wealth. If one assumes that the wealthy are shallow, selfish people unconcerned about the welfare of others, then the fact that these morally reprehensible people have acquired great wealth will seem like a social problem. If on the other hand, the wealthy are all kindly, benevolent people who are creating wealth through investment and hard work and then give all that wealth away to help others, then great wealth suddenly does not seem like such a problem. In the latter case, we might actually prefer the greater inequality because the good for the poor will be greater than if the wealth were more evenly distributed.
Why has this underlying feature of the debate about the distribution of wealth been so obscured in the public debate? If the problem is not inequality per se or that wealth has been acquired by improper means but rather that the stereotypical wealthy person is not using the wealth to help others, then why do we talk about wealth distribution instead of talking about the lack of charity among the rich?
I am afraid the answer is simpler than we would like to admit. Imagine someone living in the wealthiest country in the history of the world, someone whose wealth vastly exceeds the dollar a day level that defines global poverty. Now ask: if we are worried about wealth inequality because we don’t think the wealthy are using their wealth to help others, then it seems worth asking, “Who are the wealthy people?” Can I, the writer of this essay, and you, the reader of this essay, afford to give $20 more than we are giving to something that will genuinely benefit those less fortunate? Would any of us really argue we cannot do that? It is an uncomfortable question, to be sure.
As C. S. Lewis put it in Mere Christianity:
I do not believe one can settle how much we ought to give. I am afraid the only safe rule is to give more than we can spare. In other words, if our expenditure on comforts, luxuries, amusements, etc, is up to the standard common among those with the same income as our own, we are probably giving away too little. If our charities do not at all pinch or hamper us, I should say they are too small. There ought to be things we should like to do and cannot do because our charitable expenditure excludes them.
The next time you are involved in a discussion about wealth distribution, no matter which argument you take, why not consider increasing your own private charitable efforts just a bit? Embrace your inner reformed Scrooge.
Today’s essay is the third of four in a series by James E. Hartley on what literature can teach us about economics. You can read the first here and the second here.
On Wall Street he and a few others—how many?—three hundred, four hundred, five hundred?—had become precisely that, … Masters of the Universe. There was … no limit whatsoever. … Moving the lever that moves the world was what he was doing.
That was Sherman McCoy in Tom Wolfe’s brilliant 1987 novel, The Bonfire of the Vanities. As an expression of the age, it is right up there with Gordon Gekko’s “greed is good” from Oliver Stone’s 1987 Wall Street.
Over time, the popular perception of bankers as soulless and depraved hasn’t changed a bit. In 2011 a protest about wealth distribution was dubbed Occupy Wall Street. Interestingly, no protests targeted the industries that generate even greater wealth: Silicon Valley, Hollywood, and major sports stadiums. Nor were the protests in the parking lots at Wal-Mart, Target, or Home Depot. The anger about wealth distribution was directed straight at bankers.
As we have seen over the last couple of essays in this series, the contemporary discussion about wealth distribution is not really about inequality per se. Underneath the discussion about wealth distribution is an often unstated belief that high levels of wealth were not earned in an appropriate manner. One avenue of this discontent is the latent belief that merchant activity is immoral, violating the principle that goods should always sell for their “just price.” The belief that a good has an inherently just price has vanished, but the implications of that belief still linger a bit.
The most vehement criticisms of wealth are translated into criticisms of the financial industry. When, and why, did the financial sector begin to arouse such ire?
The Financier
Complaints about bankers long predate Sherman McCoy and Gordon Gekko. American history is filled with complaints about Main Street versus Wall Street. Andrew Jackson’s fight against the Second Bank of the United States is part of the lore. Banking regulation is littered with measures attempting to prevent banks from becoming large and potentially powerful.
Theodore Dreiser’s 1912 novel, The Financier, depicts the longstanding view of bankers, which makes the fictional 1980s bankers look tame and mild-mannered. The Financier is the story of Frank Cowperwood, who rises from humble origins to become the titular financier.
In the first chapter, Dreiser provides an unforgettable portrait of Cowperwood. At the age of ten, young Frank regularly passed by a fish market. “One day he saw a squid and a lobster put into the tank, and in connection with them was witness to a tragedy which stayed with him all his life and cleared things up considerably intellectually.” A few days later, the drama was done; the lobster had carved up the squid. Frank’s life was set:
“The squid couldn’t kill the lobster—he had no weapon. The lobster could kill the squid—he was heavily armed. There was nothing for the squid to feed on; the lobster had the squid as prey. What was the result to be? What else could it be? He didn’t have a chance,” he concluded firmly, as he trotted on homeward.
That is on page 5 of the novel. The next 500 pages are a record of how Frank became a lobster. Through prosperous times and crises, Frank rises and falls and rises again in the mysterious world of finance. He is deeply involved in shady backroom deals and with corrupt politicians.
It is a devastating portrait of a financier. The true nature of Cowperwood’s soul becomes obvious when he is charged with embezzlement and larceny of public funds.
Cowperwood, despite various solemn thoughts concerning a possible period of incarceration which this hue and cry now suggested, and what that meant to his parents, his wife and children, his business associates, and his friends, was as calm and collected as one might assume his great mental resources would permit him to be. During all this whirl of disaster he had never once lost his head or his courage. That thing conscience, which obsesses and rides some people to destruction, did not trouble him at all. He had no consciousness of what is currently known as sin. There were just two faces to the shield of life from the point of view of his peculiar mind—strength and weakness. Right and wrong? He did not know about those. They were bound up in metaphysical abstrusities about which he did not care to bother. Good and evil? Those were toys of clerics, by which they made money.
It isn’t just Frank, though. The novel has many soulless financiers, caring nothing about anyone around them.
The Sin of Usury
Dreiser paints a bleak picture of finance. Yet, on closer inspection, it is hard to see what is so particularly immoral about bankers. For one thing, other professions can lead to riches, too: why does a rich banker’s wealth seem more inappropriately acquired than a rich computer programmer’s, for example?
Furthermore, everyone benefits from banking and finance. Some people want to save and others want to borrow, and the financier comes along to help the savers and borrowers find each other. There are enormous cost advantages to their work. Suppose you want to buy a house and need to borrow a few hundred thousand dollars. To whom would you go? Your friends or your family? If you asked complete strangers, would they lend to you? At the very moment you realize you would never be able to buy a house, a friendly financier comes along and lends you funds borrowed from people you have never seen. The same thing happens for a business that wants to expand its operations or someone who wants to go to college or buy a car. Financiers seem so useful. So why such hatred for the ones that are successful?
Moral suspicion of bankers’ wealth is quite ancient. In fact, modern mistrust of banks is tame compared to ancient criticisms of it. Here is Aristotle:
The most hated [means of earning income], and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And the term usury which means the birth of money from money is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of making money this is the most unnatural.
If you thought that was harsh, look at the list of sins to which the prophet Ezekiel compares collecting interest:
Behold, the princes of Israel in you, every one according to his power, have been bent on shedding blood. Father and mother are treated with contempt in you; the sojourner suffers extortion in your midst; the fatherless and the widow are wronged in you. You have despised my holy things and profaned my Sabbaths. There are men in you who slander to shed blood, and people in you who eat on the mountains; they commit lewdness in your midst. In you men uncover their fathers’ nakedness; in you they violate women who are unclean in their menstrual impurity. One commits abomination with his neighbor’s wife; another lewdly defiles his daughter-in-law; another in you violates his sister, his father’s daughter. In you they take bribes to shed blood; you take interest and profit and make gain of your neighbors by extortion; but me you have forgotten, declares the Lord GOD. (Ezekiel 22:6–12, ESV)
Aristotle and Ezekiel are not outliers. It is difficult to find anyone before around 1600 who said anything different about bankers.
Indeed, just go back a few hundred years and everyone (everyone!) would have agreed that your banker was doing something worthy of absolute condemnation by charging you interest on your student loans and home mortgage. You would be right to be indignant about the wealth gained by those godless bloodsuckers. Before you become too indignant, however, remember: if you are collecting interest on your checking or savings accounts, you are every bit as worthy of condemnation as the people from whom you borrowed. No wonder bankers generated such ire; their entire job is arranging to pay one set of horrible people interest in order to charge interest to another set of people.
Just go back a few hundred years and everyone (everyone!) would have agreed that your banker was doing something worthy of absolute condemnation by charging you interest on your student loans and home mortgage.
This idea that collecting interest on your savings account is as bad as those things Ezekiel lists strikes the modern ear as quite odd. If you are like most people, you never knew you were doing something tantamount to murder when you received your interest payments. Why did everyone think interest was so wrong?
The argument about the immorality of usury begins with the idea of a just price. In this case, however, it is very easy to determine the just price. How much is a $20 bill worth? Imagine you needed to break a $20. You would expect four $5 bills, or two $10 bills. If you demanded more than $20, or someone offered less, would you consider that a fair exchange? Perhaps you are so desperate you might agree to be cheated, but your agreement doesn’t change the nature of the wrong.
Interest is exactly that situation. I lend you one sum of money and then demand a larger sum in exchange. I lend you a bottle of wine and then expect two bottles of wine in exchange. In both cases, I am demanding more in return than the amount I gave you. That is deeply immoral. Regardless of what we think about this today, for many generations before us, there was an obvious reason to despise bankers; they are ignoring Christ Himself and refusing to lend expecting nothing in return.
Is Usury Still a Sin?
We clearly no longer live in an age when most people believe charging interest is a vile sin. What changed? Some time around the early eighteenth century, there was an increasing acceptance of the idea of charging interest. It is almost certainly not a coincidence that this change in the moral code coincided with the first glimpses of the Industrial Revolution.
Consider the difference in the nature of loans in a rural agricultural society and a modern industrial society. Why would a farmer in 400 BC want to borrow funds? The most probable answer is that the money is necessary to buy food. In such a world, charging interest is equivalent to charging higher prices for food to poor people than to wealthier people who do not need to borrow. Now compare someone wanting to borrow money in order to build a new factory that will produce cloth to be sold at a profit. Is it really wrong for a person who has saved enough funds to pay the cost of a new factory to ask for a portion of the returns from that factory? Why should anyone lend with no expectation of a return to someone who is going to use the loan to reap profits?
In an agricultural society, charging interest is equivalent to charging higher prices for food to poor people than to wealthier people who do not need to borrow.
As the nature of the economy changed, the purpose of a loan underwent a massive transformation. It is rather difficult in a modern economy to simply adopt the older prohibition on usury. Once upon a time, people condemned all merchant activity and all banking activity, but as we have seen, the rationale for those condemnations has been obviated by developments in the economy. This is why you feel zero moral guilt from charging interest on your savings account; the institution to which you are lending is using your funds to generate a profit stream and, unless charging interest is inherently immoral, there is no reason why you should not share in the wealth.
Dreiser’s novel still offers a moral lesson, but it is not a lesson about finance. Frank Cowperwood’s occupation is not the source of his immorality. If he had become a grocer or a lawyer, his complete lack of a conscience would have been no less blameworthy. In an era in which everyone believed that financiers were inherently immoral, this important moral lesson of the novel could easily be lost. It is only when we realize that there is nothing inherently immoral about banking that we can realize the universality of The Financier. Bankers aren’t the only workers in high-profit sectors who behave badly, so the unique distrust about bankers is largely vestigial.
However, this raises another related question: why do people distrust the wealthy? In the final essay in this series, we will look to Ebenezer Scrooge for an explanation.
Today’s essay is the second of four in a series by James E. Hartley on what literature can teach us about economics. You can read the first here.
Now comes deceit betwixt merchant and merchant. And thou shalt understand that merchandise is in many sorts; that one is bodily, and that other is ghostly; that one is honest and lawful, and that other is dishonest and unlawful. Of that bodily merchandise that is lawful and honest is this: that, whereas God has ordained that a reign or a country is sufficient to himself, then is it honest and lawful that of the abundance of this country, men help another country that is more needy. And therefore there must be merchants to bring from that one country to that other their merchandises. That other merchandise, that men exercise with fraud and treachery and deceit, with lies and false oaths, is cursed and damnable.
—Chaucer, “The Parson’s Tale”
Last week, we looked at the current discussion of the nature of wealth by exploring the very old idea that wealth is not distributed properly. As we saw, that idea was as common in ancient Athens as it is today. We also saw that to a significant degree, the proper distribution of wealth hinges on the question whether high levels of wealth are acquired in an appropriate manner or not.
Everyone knows that some fortunes are made by illicit means, and few (if any) defend thieves. But, is wealth acquisition by people engaged in perfectly legal business ever immoral? For example, if the price of oil rises because of a disruption to the supply chain or production, there are loud cries of price gouging. The accusation of price gouging hinges on the idea that there is an inherently “just price” that the seller is departing from. Price gouging is thought to be immoral because buyers are being charged far more than the appropriate price. One implication of this view is that making a profit (especially a large one) is wrong because it probably means that the seller is charging far more than the good’s “just price.”
This idea that selling goods for more than the just price is immoral is ancient, and it was expounded by a variety Christian thinkers beginning with the Church fathers and culminating in Aquinas. Chaucer’s The Canterbury Tales illustrates this view, giving examples of how greed and desire for profit are morally blameworthy. As we will see, the “just price” framework doesn’t map neatly onto economies, but its legacy lingers on anachronistically in today’s economic debates.
The accusation of price gouging hinges on the idea that there is an inherent “just price” that the seller is departing from.
The Just Price
When Chaucer describes the pilgrims in the “General Prologue,” he labels them by their job titles rather than their names. Chaucer’s age was a time of great change in the economic life of Europe. Earlier generations primarily comprised rural, agricultural workers. In those days, life was inextricably tied to the land. One worked outside, and a person’s willingness to work hard was an essential part of his or her moral character. Chaucer portrays this earlier age through his ploughman, a common rural laborer, who is a model of hard work and impeccable Christian virtue.
Chaucer’s contemporaries would have recognized the ploughman as a relic of a bygone era. By Chaucer’s time, economic life was becoming increasingly dominated by the towns. Craftsmen had begun to eclipse ploughmen as the paradigmatic profession. As craftsmen grew in importance, they organized themselves into guilds, associations that regulated both the method of production and the products sold. To work in a medieval town meant to join a guild whose power over what you could do was great. Specialization was the rule, and jobs were rigidly defined. Chaucer includes a quintet of guildsmen among his pilgrims, whose characters are clearly antithetical to the ploughman’s. Rather than quietly committing to work hard, the guildsmen are obsessed with status. These guildsmen are also obviously all prosperous. Interestingly, for all their moral shortcomings, there is no hint that their professions rely on scams or cheating. Chaucer does seem to condemn the guildsmen’s desire for gain and their avarice. But their occupations themselves are seemingly innocuous.
In this historical era, then, economic life is rigidly divided into specific professions. Hovering on the fringes of this economy, though, was a profession that was inherently morally suspect: the merchant. Merchants were people who would buy goods from one person with the intention of selling them to another. By buying an item for a lower price and selling it for a higher price, the merchant could make some profit.
As everyone at the time knew, any individual who buys a good to resell it for a profit was worthy of great condemnation. For example, the sixth-century Roman statesman Cassiodorus declared that merchants were an abomination. Similarly, in remarks falsely attributed to St. John Chrysostom explaining why Christ cast people from the temple in Matthew 21, we read: “He that buys a thing in order that he may sell it, entire and unchanged at a profit, is the trader who is cast out of God’s temple.”
As everyone at the time knew, any individual who buys a good to resell it for a profit was worthy of great condemnation.
Condemnations like those in the preceding paragraph strike the modern ear as rather odd. After all, reselling products is exactly what retail stores do all the time. To understand why the activities of the merchant are inherently problematic, we need to look back at medieval economic theory, beginning with the idea of the just price. All goods have an inherent price; the price of the good is, in essence, a property of the good, much like the color and shape are properties of the good.
Because each item has a just price, it is inherently unjust to sell an item for more than its true value. As Aquinas explains, “Therefore if either the price exceed the quantity of the thing’s worth, or, conversely, the thing exceed the price, there is no longer the equality of justice: and consequently, to sell a thing for more than its worth, or to buy it for less than its worth, is in itself unjust and unlawful.” It is thus not only unjust for a seller to demand more than the just price for a product, it is immoral for someone to pay less than the just price for a product. To demand more or pay less than the just price is a form of theft.
Merchants have long been considered dishonorable because their practice tended toward injustice of this sort. Plato notes, “all that relates to retail trade and merchandize, and keeping of taverns, is denounced and numbered among dishonorable things.” Similarly, Aristotle would ban any merchants from the state, since “such a life is ignoble and inimical to virtue.” The early Church Fathers completely agreed: Ambrose, Tertullian, Leo the Great, and others roundly condemned the activities of merchants because their activities inherently tended toward cheating, lying, and enhancing greed.
By the time we get to the thirteenth century, the idea of the just price was well established. Aquinas follows Augustine in finding some exceptions to the blanket prohibition on selling a product for more than the price for which it was acquired. But any merchant whose motive is solely to enrich himself by his trading activity is acting in a thoroughly immoral and completely indefensible manner; this latter sort of trading is “justly deserving of blame, because, considered in itself, it satisfies the greed for gain, which knows no limit and tends to infinity.”
When we first meet the Merchant in The Canterbury Tales, we know immediately from the description of him into which category he falls.
A merchant was there, on a high-saddled horse:
He’d a forked beard, a many-coloured dress,
And on his head a Flanders beaver hat,
Boots with expensive clasps, and buckled neatly.
He gave out his opinions pompously,
Kept talking of the profits that he’d made,
How, at all costs, the sea should be policed
From Middleburg in Holland to Harwich.
At money-changing he was an expert;
He dealt in French gold florins on the quiet.
This worthy citizen could use his head:
No one could tell whether he was in debt,
So impressive and dignified his bearing
As he went about his loans and bargaining.
He was a really estimable man,
But the fact is I never learnt his name.(This and following: David Wright translation)
A contemporary of Chaucer would immediately recognize that the Merchant is a villainous fellow. The forked beard makes us think of the forked tongue of a serpent, much like that in the Garden of Eden, which was “more crafty than any other best of the field” (Genesis 3:1, ESV) and inherently deceitful. His dress indicates great wealth, he talks of nothing but his profits, and his financial dealings are sometimes illicit. This particular merchant is thus constructed in a way to alert the reader that he does not meet any of Aquinas’s exemptions to the prohibition on trading; the Merchant is clearly profiting far beyond necessity, using the profits to buy luxurious goods for himself, and obviously trading with the sole intention of making such profits. Indeed, the Narrator concludes by noting with an air of sarcasm that while the Merchant was obviously an esteemed figure, the Narrator never even learned his name; never once on the pilgrimage does the Narrator stoop to a conversation with this despicable fellow. The Merchant is clearly the outcast.
The Merchant’s tale adds an element of comedy to the situation. The Merchant begins his tale by relating his marital problems; stating that he finds it too depressing to talk about his own life, he launches into a story of another’s problems in marriage (though it’s obvious this “other” person’s marital problems are actually the Merchant’s own).
The “Merchant’s Tale” is a story of “fraud and treachery and deceit, with lies and false oaths” to which the protagonist, January, is subjected by his wife May and her lover Damian. January is literally blind for much of the story, and his wife takes advantage of him. As the pilgrims’ host notes in the epilogue to the tale.
‘Now God have mercy on us!’ cried our host,
May the Lord keep me from a wife like that!
Just look what stratagems and subtleties
There are in women! Busier than bees
To diddle us poor fellows. On my oath,
They never miss a chance to twist the truth
That’s clear enough from this good merchant’s tale.’
This is not merely an accurate summary of the “Merchant’s Tale.” If you switch “a wife” and “women” to “merchants” in that passage, you would have a very good summary of the complaints about merchants’ activities in the fourteenth century. The “Merchant’s Tale” is thus an elaborate joke on the Merchant himself. The reader, knowing that merchants are full of deceit and will never pass up the opportunity to cheat another, are regaled with a tale told by the Merchant himself in which the Merchant is subjected to the very fraud he habitually practices on others.
Chaucer’s equating of the activity of merchants with adultery and infidelity is not unique to “The Merchant’s Tale.” It runs throughout The Canterbury Tales. If objects do indeed have a just price, then as the Roman Catholic Church once decreed, it is impossible for a merchant to attain salvation without first abandoning such an abhorrent occupation.
The Legacy of the Just Price
As economies developed, the idea that a commodity has an inherently just price faded away. It is, for example, difficult to determine a just price for a good with a very complicated production process. We now think of the value of a thing as being a price on which a buyer and seller agree. But, the legacy of this idea of a just price lingers in the popular imagination. It is an odd lingering notion, however. If asked, few people would be able to explain when a price is just. Yet, when the price is high, they do not hesitate to call it “unfair price gouging.”
The act of buying low and selling high is not inherently immoral, but cheating and deception are still quite wrong.
But what about when the price is unusually low? Is it immoral to buy a good for a really low price? If there is a just price for a good, then charging more or paying less than that price is equally immoral. This lingering notion of a just price has an odd modern feature. When a seller profits from a high price, it is wrong, but when I profit by buying something at a low price, it is simply shrewd dealing?
Chaucer’s comparisons of the activities of merchants to adultery is a useful way of separating merchant activity itself from immoral activity. It is not the sexual act itself that makes adultery wrong, but rather the context of sex that can make it wrong (i.e., sex with someone other than one’s spouse). Similarly, the act of buying low and selling high is not inherently immoral, but cheating and deception are still quite wrong.
Are the wealthy in modern society as inherently morally suspect as the Merchant in Chaucer? Clearly not. Nonetheless, even though Chaucer is still instructive in many ways, insofar as the complaints about wealth are a vestige of the old complaints about merchants engaged in buying low and selling high, they are relying on an economic paradigm that is just no longer here.
Obviously, our discomfort with exorbitant profiteering has little to do with people who get wealthy by running retail sales outlets. Maybe there is some other source of wealth that undergirds the suspicions about the morality of wealth. We will discuss that in a future essay.
Today’s essay is the first of four in a series by James E. Hartley on what literature can teach us about economics.
It’s because of you that anybody possesses
Anything radiant or beautiful or pleasing to mankind.
It’s all from wealth that these things stand.—Chremylus talking to Plutus, the God of Wealth in Aristophanes’ Plutus (Wealth)
As a recent symposium at Public Discourse made clear, wealth is a subject on the minds of many. To say that wealth is desirable is about as obvious as a statement can be. As I tell my students if they object, if you have a lot of wealth, you can always give it to your favorite charity (the publisher of Public Discourse, obviously). Yet for something so universally desired, wealth generates a lot of controversy. Why? In this and succeeding essays, we will isolate the aspects of the wealth debate in order to figure this out.
Much of the perennial controversy surrounding wealth is about the way it’s distributed. What is the proper distribution of wealth in a society? Would a random distribution be acceptable? If you casually ask people, there are two popular answers: 1) distribute it equally and 2) distribute it to whoever earned it. Which one is just? It is amazing how quickly discussions of this matter revert to the oft-debated: “Capitalism: Good or Evil?”
But, this discussion of capitalism is a red herring. Aristophanes, the fifth-century-BC comic Greek playwright, devoted an entire play to the matter. This play was written roughly two thousand years before there was anything that anyone would describe as a capitalist economic system, but the issues in the play about just distribution of wealth remain relevant today. Understanding this question of wealth distribution seems essential to building a good society, regardless of how its economy is organized.
Plutus, the God of Wealth
At the start of the play, Chremylus has just left Delphi after asking the oracle how to end his state of perpetual poverty. He is told to follow the first person he meets, who turns out to be a blind man. Chremylus and his servant Cario accost the blind man and discover he is Plutus, the God of Wealth, prompting the following exchange:
Chremylus: But tell me, how did you manage to fall so low?
Plutus: The work of Zeus. He’s envious of mankind.
When I was a kid, I swore I’d only visit the homes
Of respectable, intelligent, honorable people.
Zeus responded by making me blind, so I could never tell
Which were which. It just goes to show
How much he resents decent folk.
Note the moral assumptions undergirding this exchange. It makes good sense that Plutus should distribute wealth to the morally good, the respectable, intelligent, honorable people. When Chremylus asks what he could have done in his life to become wealthy, the answer is that there is nothing at all he could have done. The God of Wealth is blind. Wealth is distributed randomly.
But this is about to change. Inviting Plutus to his home, Chremylus not only becomes wealthy himself, but has the means to distribute the blessings of Plutus to others. He and Cario set out to bring Plutus to the god of healing so that Wealth can regain his eyesight. As his friends gather to hear the announcement that Wealth will soon be coming their way, an old crone enters the gathering, announcing that she is Poverty. Chremylus proudly announces that he will soon be kicking Poverty out of Greece, to which Poverty surprisingly responds:
Kicking me out of Greece?
Poor humanity! Nothing could be worse.
Let’s examine the idea together right now,
And if I can’t prove to you
That I’m the source of every blessing
And that it’s I who sustain you,
Feel free to do with me whatever you like.
A debate commences. Is Wealth or Poverty the source of all good things? On the one side, Chremylus explains that when Plutus can see again, “that’ll make everyone kind and rich/ and godly too—/ Surely something that nothing could match/ or ever outdo.” It is obvious to Chremylus that Wealth is good.
Poverty explains that Chremylus is a fool, arguing that Poverty is much better than Wealth at providing good things.
Because if Wealth does see again
and can begin
To give himself to everyone
equally,
No one will practice the arts and crafts
ever again.
For once these have gone, who’ll be
at all ready
To ply the forge, to build ships,
do tailoring
Make wheels or shoes, do bricklaying,
or come to grips
With washing clothes
or leather tanning?
Who will wish
To plow the earth and gather in
the harvesting
Of Demeter’s generosity
once you can
Succumb to inactivity
and do nothing?
There lies an interesting choice. Chremylus argues that wealth should be freely distributed to everyone who is good. Poverty argues that wealth should go to people who are working hard to avoid being poor. Would you prefer to live in a society where everyone has access to becoming wealthy and idle, and where work and wealth are no longer tied to one another? Or would you opt for a society where people are industrious and active because they fear the cold grip of Poverty? In the wealthy society, who will make all the products that all the idle rich want? But would it be better for everyone to continually live in fear of Poverty and spend their days trying to avoid that old crone?
Poverty is unpersuasive within the play. Plutus regains his sight. The dishonest and corrupt are really unhappy in this new world because wealth and riches are no longer within reach for them. Then Hermes appears to explain that Zeus and the other gods are also upset. Now that everyone has access to wealth, nobody feels any need to make sacrifices to the other gods. The play then ends as Plutus takes his place in the Acropolis.
Is this a happy ending? The play is a comedy, and thus Chremylus ends up quite happy: he is now wealthy. But Aristophanes does something subtle here: Chremylus never answered Poverty’s argument about the downsides of acquiring wealth without work. We never see what happens after the play ends. Does everyone live happily ever after? Or does the fact that nobody fears Poverty mean that there is no longer any actual wealth because people no longer make anything?
One thing we learn from Aristophanes here is that a society’s just level of wealth is not merely a matter of finding the right technical redistribution mechanism; rather, any arrangement of wealth distribution involves sets of political, moral, and material tradeoffs, and no single arrangement will be universally acceptable to every society.
The Lingering Problem
The questions raised in this play are no different from the ones with which we wrestle 2,500 years later. Today’s debates are captured in Aristophanes’ Plutus. There are many people who look at the society and say with Cario, “Even the blind could see that in our day/ the secret of success is to make sure you’re rotten to the core.” If you believe that high wealth is currently going to unscrupulous people, then the idea that wealth should be distributed to those who acquire it is fundamentally problematic. We all agree that thieves do not merit the wealth they acquire. But, on the other hand, there are few (if any) people who truly believe that the distribution of wealth should always be perfectly equal. Let’s say we decide to distribute all wealth perfectly evenly in March 2023. By March 2024, you will find radical wealth inequality. Some people will have purchased a house, and some people will have squandered it all on riotous living. Much of our wealth lives and dies by our choices. Would anyone argue that the wealth levels should be equalized again one year later?
Any quick answers to how wealth should be distributed are thus woefully incomplete. People who say they want an equal distribution of wealth really mean “more equal than the current distribution.” Those who say wealth should be distributed to those who earn it really mean “those who earn it by appropriate means.” In other words, it is not as obvious as we might think that the two sides of this debate are as totally irreconcilable as they might seem.
To get at the differences in views on the proper distribution of wealth, it helps to rephrase the question a bit. Consider the following scenario. A country starts with a perfectly equal distribution of wealth in which everyone has exactly $200,000. There are two options for the future:
(Note for those concerned about inflation: assume all the numbers are in real terms, so this increase in wealth is an actual increase in purchasing power.)
Which option would you choose?
Absolute vs. Relative Wealth
I have asked this question in many different places over the years, and the audience almost invariably is evenly split. Why? It turns out that when we talk about wealth distribution two very different issues get conflated. Is it the absolute level of wealth that matters, or the relative amount of wealth? If I doubled your wealth but tripled the wealth of your neighbors, are you happier?
Those who are concerned with the relative amount of wealth tend to focus on the idea that those on the upper end of the distribution have unjustly appropriated wealth from those on the lower end. There is an implicit belief that in a fairer world, wealth would naturally be more equal. As Aristophanes shows, this idea that wealth is unfairly distributed long predates anything we could call “capitalism.” When some are wealthier than others, those whose primary concern is with relative levels of wealth will object. Some would even accept lower absolute levels of wealth in exchange for more equality.
Those who think the absolute level of wealth is more important tend to focus, like Aristophanes’ Poverty, on the fact that it requires work in order to generate wealth. (Even things that do grow on trees must be harvested in order to generate wealth for an individual.) To these people, the argument for leveling the amount of wealth is tantamount to removing the incentive to generate wealth in the first place. The reward of a less equal wealth distribution is higher wealth for everyone since inequality makes us worker harder and produce more things.
Again, we do not know whether Poverty’s warning about the dire consequences of wealth equality ever materialized. However, to reiterate: what Aristophanes suggests to us is that, like so many political matters, there are tradeoffs involved in the absolute-versus-relative-wealth debate. There is no obvious, universally desirable solution: different societies will tolerate different levels of inequality and might be willing to sacrifice different levels of absolute wealth. Nonetheless, the warning from Aristophanes’ Poverty is clear: absolute equality means absolute destitution.
As Aristophanes points out, this idea that wealth is unfairly distributed long predates anything we could call “capitalism.”
Fair Play
But despite disagreements over absolute and relative wealth, one thing almost universally agreed upon is that wealth must be acquired by morally appropriate means. If wealth is generated by a tyrannical Pharaoh enslaving the descendants of Jacob, the resulting inequality would be acceptable to almost no one. Is the monopolist who produces a life-saving drug entitled to keep the profits from a government-enforced patent? Is the godfather of a successful gaming and alcohol distribution empire entitled to the fruits of his labors?
In other words, how one acquires wealth matters at least as much as the way wealth is distributed. In the aggregate, a society’s percentage of wealth acquired by immoral means is in many ways a reflection of how unjust that society is.
The question whether a large percentage of wealth has been immorally acquired requires an examination of what counts as moral economic activity and what doesn’t. We will study that matter in a pair of subsequent essays, using Chaucer and Dreiser as our guides.
FreshRSS 