Authors: Jeremy Rifkin
Today, in the sunset of the fossil fuel era, the oil industry remains the most concentrated industry in the world, followed closely by the telecommunications and the electrical power generation and distribution industry. Virtually all the other industries that depend on the fossil fuel/telecommunications matrix require, by necessity, huge capital expenditures to establish sufficient vertical integration and accompanying economies of scale to recoup their investments and are therefore forced to manage their own far-flung activities using highly rationalizing command-and-control processes.
Three of the four largest shareholding companies in the world today are oil companies—Royal Dutch Shell, ExxonMobil, and BP. Underneath the oil giants are ten banks—JPMorgan Chase, Goldman Sachs, BOA Merrill Lynch, Morgan Stanley, Citigroup, Deutsche Bank, Credit Suisse, Barclays Capital, UBS, and Wells Fargo Securities—that control nearly 60 percent of the worldwide investment banking market.
56
And, as mentioned in chapter 1, beneath the financial investors are 500 globally traded companies—with combined revenue of $22.5 trillion, which is equal to one-third of the world’s $62 trillion GDP—that are inextricably connected to and dependent on fossil fuel energy, global telecommunications, and the world’s electricity grid for their very existence.
57
In no other period of
history have so few institutions wielded so much economic power over the lives of so many people.
This unprecedented—and unimaginable—concentration of economic power was not just happenstance or a byproduct of man’s insatiable avarice. Nor can it be rationalized away by simply blaming deregulation or finding fault with political ineptitude or, worse still, political collusion and enablement—although these were all contributing factors to its growth. Rather, on a more fundamental level, it flowed inexorably from the communication/energy matrices that were the foundation of the First and Second Industrial Revolutions.
Like it or not, giant, vertically integrated corporate enterprises were the most efficient means of organizing the production and distribution of mass produced goods and services. Bringing together supply chains, production processes, and distribution channels in vertically integrated companies under centralized management dramatically reduced transaction costs, increased efficiencies and productivity, lowered the marginal cost of production and distribution, and, for the most part, lowered the price of goods and services to consumers, allowing the economy to flourish. While those at the top of the corporate pyramid disproportionately benefited from the increasing returns on investment, it’s only fair to acknowledge that the lives of millions of consumers also improved appreciably in industrialized nations.
Chapter Four
Human Nature through a Capitalist Lens
W
hat’s most remarkable about the concentration of economic power in the hands of a few corporate players in each industry is how little public angst it has generated—at least in the United States—over the course of the nineteenth and twentieth centuries. While the labor unions’ struggles against corporate power were bitterly fought, they never attracted a majority of the workforce to their cause. Although there have also been occasional populist uprisings challenging the unbridled corporate control exercised over the economic life of society—the most recent being the Occupy Movement, with its rallying cry of the 99 percent versus the 1 percent—such outbursts have generally been few and far between and led to only mild regulatory reforms that did little to curb the concentration of power.
To some extent, the criticism was muted because these large, vertically integrated corporate enterprises succeeded in bringing ever-cheaper products and services to the market, spawned millions of jobs, and improved the standard of living of working people throughout the industrial world.
There is, however, an additional and more subtle factor at play that has proven to be every bit as effective in dampening potential public opposition. The First and Second Industrial Revolutions brought with them an all-encompassing world view that legitimized the economic system by suggesting that its workings are a reflection of the way nature itself is organized and, therefore, unimpeachable.
Rethinking Salvation
The practice of legitimizing economic paradigms by creating grand cosmological narratives to accompany them is an age-old practice. Contemporary historians point to St. Thomas Aquinas’s description of creation as a Great Chain of Being during the feudal era as a good example of the process of framing a cosmology that legitimizes the existing social order. Aquinas argued that the proper workings of nature depend on a labyrinth of obligations among God’s creatures. While each creature differs in intellect and capabilities, the diversity and inequality is essential to the orderly functioning of the overall system. If all creatures were equal, St. Thomas reasoned, than they could not act for the advantage of others. By making each creature different, God established a hierarchy of obligations in nature that, if faithfully carried out, allowed the Creation to flourish.
St. Thomas’s description of God’s creation bears a striking resemblance to the way feudal society was set up: everyone’s individual survival depended on them faithfully performing their duties within a rigidly defined social hierarchy. Serfs, knights, lords, and the pope were all unequal in degree and kind but obligated to serve others by the feudal bonds of fealty. The performance of their duties according to their place on the hierarchy paid homage to the perfection of God’s creation.
The late historian Robert Hoyt of the University of Minnesota summed up the mirror relationship between the organization of feudal society and the Great Chain of Being:
The basic idea that the created universe was a hierarchy, in which all created beings were assigned a proper rank and station, was congenial with the feudal notion of status within the feudal hierarchy, where every member had his proper rank with its attendant rights and duties.
1
The cosmology of the Protestant Reformation that accompanied the soft proto-industrial revolution of the late medieval era performed a similar legitimizing role. Martin Luther launched a frontal attack on the church’s notion of the Great Chain of Being, arguing that it legitimized the corrupt hierarchal rule of the pope and the papal administration over the lives of the faithful. The Protestant theologian replaced the church’s feudal cosmology with a worldview centered on the personal relationship of each believer with Christ. The democratization of worship fit well with the new communication/energy matrix that was empowering the new burgher class.
Luther accused the pope of being the Antichrist and warned that the Catholic church was neither God’s chosen emissary on Earth nor the anointed intermediary by which the faithful could communicate with the Lord. Nor could church leaders legitimately claim the power to intercede with God on behalf of their parishioners and assure salvation in the next world.
Instead, Luther called for the priesthood of all believers. He argued that each man and woman stands alone before God. Armed with the Bible, every Christian had a personal responsibility to interpret the word of God, without relying on church authority to decipher the meaning of the text and assume the role of gatekeeper to heaven. Luther’s admonition spawned the first mass-literacy campaign in world history, as converts to Protestantism quickly learned to read in order to interpret God’s word in the Bible.
Luther also changed the rules for salvation. The church had long taught that performing good works along with receiving the church’s sacraments would help secure a place in heaven for believers. Luther, by contrast, argued that one can’t win a place in heaven by racking up good works on Earth. Rather, according to Luther, one’s ultimate fate is sealed at the very get-go, that every individual is either elected to salvation or damned at birth by God. But then the question is: How does one live with the terrible anxiety of not knowing what awaits him? Luther’s answer was that accepting one’s calling in life and performing one’s role fully and without a lapse might be a sign that one had been elected to salvation.
John Calvin went a step further, calling on his followers to continuously work at improving their lot in life as a sign of possible election. By contending that each individual was duty-bound to improve his or her calling, Protestant theologians unwittingly lent theological support to the new spirit of entrepreneurialism. Implicit was the assumption that bettering one’s economic lot was a reflection of one’s proper relationship with God and the natural order.
Although neither Luther nor Calvin had any intention of despiritualizing the faithful and creating
homo economicus
, eventually the idea of improving one’s calling became indistinguishable from improving one’s economic fortunes. The new emphasis on diligence, hard work, and frugality metamorphosed over the course of the sixteenth and seventeenth centuries into the more economically laden term of being “more productive.” Self-worth became less about being of good character in the eyes of God and more about being productive in the new market exchange economy.
In time, the idea of each person standing alone with their Lord began to take a back seat to the notion of each person standing alone in the marketplace. Self-worth was now to be measured by self-interest, which, in turn, was measured by the accumulation of property and wealth by cunning dealings in the new market economy. Max Weber referred to this process that created the new man and woman of the market as “the Protestant [work] ethic.”
2
The new commercial zeal spilled over, bringing increasing numbers of Catholics and others into the market fold. Where previously one’s place on the rungs of the Great Chain of Being that made up God’s creation had defined one’s life journey in the feudal era, the new autonomous individual of the soft market economy came to define his journey by the amassing of private property in the marketplace.
The Enlightenment View of Human Nature
By the end of the soft market era in the late eighteenth century, a new cosmology had begun to emerge that would give the new man and woman of the market an overarching narrative powerful enough to push the Christian cosmology nearer to the sideline of history.
John Locke, the great Enlightenment philosopher, led the charge, presenting a spirited defense of private property, arguing that its pursuit was a more accurate reflection of man’s “inherent nature” than communal management of the feudal commons. Locke argued that each person creates his own property by adding his labor to the raw material of nature, transforming it into things of value. Although Locke acknowledged that in the primal state of nature all the Earth was held in common by human beings and our fellow creatures, he explained in
Two Treatises of Government
that each individual also “has a
property
in his own
person
: [and] this no body has any right to but himself.”
3
Locke made the case that private property is a natural right, and therefore, any repudiation of it would be tantamount to rejecting the natural order of things and denying the laws of nature.
Locke reasoned that
whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his
labour
with, and joined to it something that is his own, and thereby makes it his
property.
It being by him removed from the common state nature hath placed it in, it hath by this
labour
something annexed to it, that excludes the common right of other men: for his
labour
being the unquestionable property of the labourer, no man but he can have a right to what is once joined to, at least where there is enough, and as good, left in common for others.
4
Locke then used his theory of the natural right to private property to tear apart the feudal property regime based on proprietary obligations on the commons.
He, who appropriates land to himself by his labour, does not lessen, but increases the common stock of mankind: for the provisions serving to the support of human life, produced by one acre of inclosed and cultivated land, are . . . ten times more than those which are yielded by an acre of land of an equal richness lying waste in common. And therefore he that incloses land, and has a greater plenty of the conveniences of life from ten acres, than he could have from an hundred left to nature, may truly be said to give ninety acres to mankind.
5
In this brief essay, Locke articulated the emerging cosmological narrative that would accompany the modern market economy. The natural
order of things was no longer to be found in Christianity’s Great Chain of Being but, rather, in the natural right to create private property by the sweat of one’s own brow.
Adam Smith followed on the heels of Locke. In a final rebuff to the communal life exercised on the feudal commons, he declared that market behavior represents people’s true nature. Smith wrote that
every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society.
6
The social critic R. H. Tawney would later write of the momentous change that took European society from a feudal to a market economy and from a theocratic to an economic worldview. He observed that after the fall of the Christian-centered universe, what was left “was private rights and private interests, the material of a society rather than a society itself.” Private property exchanged in the market economy was henceforth “taken for granted as the fundamentals upon which social organization was to be based, and about which no further argument was admissible.”
7
Max Weber was even more harsh, arguing that the replacement of spiritual values with economic ones in the changeover from a Christian-centered universe to a materialist one represented “the disenchantment of the world.”
8
In fairness, it should be noted that despite the terrible toll in human suffering brought on by the enclosure of the commons and the letting loose of millions of peasants from their ancestral land to make their own way in a new urban world not yet ready to absorb their labor, the shift to a market economy did eventually improve the lot of the average person in ways that would be unfathomable to families living on the feudal commons.
The shift from a purely market-exchange economy in the late medieval era to a capitalist economy by the mid-nineteenth century posed serious problems in regard to the notion of property. Recall Locke’s natural right theory that what a person adds to nature by his own labor belongs to him alone in the form of private property. Locke’s theory fit well in the simple market-exchange economy of the late medieval era in which virtually everything sold and bought in the marketplace was the product of an individual or family’s own labor.
The coming of capitalism, however, fundamentally changed the economic model. As mentioned, craftsmen were stripped of their tools by capitalists and turned into free laborers, reclaiming only a portion of the labor they expended in the form of a wage. The remainder of the labor value in the product went to the company in the form of profit. Ownership was also transformed. The new owners were shareholder investors whose own labor never went into the product at all and who had little to no say
over the management of the company, but who still received dividends from the profit appropriated from the workers’ surplus labor. The dilemma is transparent. Were the workers being deprived of their natural right to full ownership and disposition of the products they created with their own labor? Feeble attempts were made to justify the appropriation of the workers’ surplus labor value by arguing that capital is stored-up labor and that therefore investors are, in a more indirect sense, “adding” their past labor to the process. Such justification appeared to be a thin reed and didn’t hold up. Richard Schlatter keenly observed that
the classical school, beginning with the assumption that labour was the creator of property, was unable to construct an economic theory which was both consistent and did not lead to the conclusion that the man who profited without working was necessarily robbing the workman.
9
Socialist militants, whose collective voice was gaining strength across Europe by the 1840s, picked up on the contradiction, which threatened to sever classical economic theory from capitalism. The socialists castigated capitalism as an outlier, while praising the claims of classical economic theory that every individual has a natural right to own the full fruits of his or her own labor.