On Sophistry, Philosophy and Economics

While the modern definition of sophistry refers to specious and deceptive argumentation, it originates from the Greek word sophos or sophia meaning to be “wise” or “wisdom.” In the second half of the 5th century BC, sophists were intellectuals of Athens who claimed that they possessed wisdom. However, as German Catholic philosopher Josef Pieper puts it, “the words “philosophy” and “philosopher” were coined, according to legend, by Pythagoras. And they were intended to stand in an emphatic contrast with “sophia” and “sophos”: no man is wise and knowing, only God. And so the most that man can do is call someone a loving searcher of the truth, philo-sophos.

‘The School of Athens’ by Rafael Santi

Thus sophistry is directly contrary to the intellectual tradition of philosophy and of Socrates and Plato who saw themselves, not as possessing wisdom, but as pursuers of wisdom. Instead, in the philosophical tradition wisdom was not something that could ever be possessed by mortal man, no matter how vigorously the philosopher pursued it. So, while the sophist is fueled by the ambition to possess knowledge, the philosopher treads down an endless road, and the fuel that burns in his heart is wonder: wonder at the world, at creation itself – and hope. The sophist sees the world through a microscope: reducing creation to numbers and chemicals and mass and wavelengths. The philosopher, in that experience that we’ve all felt at some time in at least some small way, transcends the environment of the sophist and finds wonder in the world, and in the philosopher’s heart burns the hope of expanding this enlightenment – not to dominate the world, but to see it in ever greater circles of experience. Thus, the philosopher grasps a reality that expands to infinity, and is far more human, more fulfilling, than that finite environment of the domineering sophist.

The dichotomy between sophistry and philosophy is an important one in itself but it parallels another dichotomy in economics, a subject matter more pertinent to this blog. Namely, it parallels a stark difference between classical liberalism (similar to the libertarianism of today) and collectivism which is of supreme importance. Collectivism, and other structures like corporatism (a capitalist economic model) and despotism in nearly all forms, represents a centrally planned economy in which a solitary leader or a small minority of elites are, often under the guise of benevolence, in charge of making all of the decisions for society, “planning” and regulating society from their center of power. This correlates well with sophist thought, whose ultimate desire is the possession of wisdom and knowledge – for, as we’re all told, knowledge is power, and the sophist seeks knowledge, not for its own sake, but as a means to whatever end that the sophist has in mind. So, too, with the central planners: they have the power and, through their empire of bureaucrats, they seek to regulate and control the flow of information, to analyze every bit of information coming in so as to, from their center of command, better regulate all the capital and all the labor forces below them. The economy is one great machine and the central planners are its machinists.

However, the economy is not a machine. Neither is it merely an abstraction. Its a living, breathing, real thing: namely, you and me. The “economy” is the world and everything in it: all of its natural resources from minerals and gases to plants and animals, but most importantly, the “economy” is made up of human beings. So that, while the economy of the capital of the world may possibly be reduced to the status of a machine, run by machinists in a precise, calculating way from far off, the human race, with its human nature, religion, culture and civilization, can never be reduced to such simplistic terms. Only God can possess such wisdom and knowledge. Only God could possibly regulate society without inadvertently pulling every member of humanity down to the lowest standard of living over time. As Austrian economist Friedrich von Hayek so wisely stated: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Conversely, classical liberalism bases its economic theory on the foundation of private property – not because government has no authority over its citizens or their property (it does possess the authority of eminent domain, to take property with just compensation to the owner for public use if it benefits the common good) but because the kind of knowledge and power necessary to “run” an economy can never be possessed. With property largely controlled by private individuals, ideally in the hands of as many people as possible, power is decentralized so that the public interest becomes manifest in the collective actions of all individuals working independently in their own self-interests. Is this a model of perfect efficiency? No, but one of the first axioms of economics is that in any economy there will always be unmet needs because we are not perfect and because all resources are limited. Only the sophist seeks the “perfect model,” to reduce the world to a formula. Instead, the free-market model represents the most efficient economy possible, by eliminating the need for anyone to actually possess the unpossessable knowledge necessary to centrally plan society. While central planners, in typical sophist fashion, seek to possess and change their environment, the classical liberal actively pursues a greater understanding of the world and changes his economic model to reflect it. Thus, we have the fluid model of the classical liberal in which each individual, each family, has the liberty to respond to the world as their own specialized knowledge dictates according to their own very specific and unique needs. The aggregate of these billions of daily responses by millions of people is what we call the free-market and no central planner, even with a bureaucratic empire at his fingertips, could ever replicate such a process or hope to possess the near-infinite variables and data points that went into shaping the market.

Therefore, in this regard, it is in the tradition of philosophy that the free-market or free-trade economics of classical liberalism has its roots while the foundation of the central planners’ world, whether in the form of socialism, corporate fascism or some other despotism, is built upon the folly of the sophist.

The Economy of Greed

“God must love the common people – He made so many of them.” – Abraham Lincoln

The dynamics of the free-market combined with a strong rule of law necessitates that man must serve others in order to earn a livelihood, to please consumers to make money. Only by providing a good or service better, with more ease of use for the consumer, and for less, can a man expect to get rich.

Contrast this with Corporate America. With big government and massive federal bureaucracies that employ literally millions of Americans just to regulate the many aspects of a national economy, massive corporations counterintuitively gain power over consumers and industries as well. Why? Because the supposed “middle ground” between a free market society and socialism called Corporatism allows and even incentivizes men to get rich by buying off the politicians and bureaucracies that control so much. Its not a coincidence that many board members of government bureaucracies are also the CEOs of the very companies they’re meant to regulate. Massive corporations thus manipulate government regulations and use their political connections to receive subsidies and bail outs from Congress. Corporations that would fail in a free-market because of their repeated mistakes are instead fed with the money earned by the sweat of the American people and become leeches on society.

The government thus enables greedy people to build empires on the backs of the 99%. This is precisely the kind of anti-social behavior a free-market  can practically eliminate.

However, even if every issue brought to Congress wasn’t politicized for the purpose of advancing careers, gaining personal benefits and pushing ideologies, even if we could ensure that the intentions of every politician and every bureaucrat were pure and just then centrally planned economies like Corporatism or Socialism would still only lead to dismal failure. Why? Because, as the old saying goes, the road to Hell is paved with good intentions. What matters, is not mere intentions (though we should always have the best intentions at heart) but actual actions and their consequences. The economy of a whole nation is incredibly sophisticated and every action has unintended consequences. Is price regulation with the intent of providing affordable goods and services a good idea if it means no one has pants but the market is being flooded with millions of buttons? These are exactly the kind of situations that plagued Soviet Russia. While warehouses were crammed with an overabundance of certain goods that no one was buying, people would line the streets for hours waiting for some much needed good in high demand but short supply.

It is precisely because of the sheer complexity of economics that the politician’s job regarding the economy is so simple: protect rights and prevent anti-social behaviors (like the pursuit of monopolies for example) – because to centrally plan a national economy is far beyond the competency of any human being, or even an army of human beings like that needed to run our bureaucracies. We don’t need, for example, a President who can “run the country” but one who will create the conditions necessary to allow each individual to make his or her own decisions and thus each affect the economy in their own small way. Because only God could possibly manage the infinite variables of a national economy without treading the path towards rampant poverty for all.

Instead of putting our faith in central planning, where the conceited few on the top make the decisions for everyone else we should instead relinquish the mirage of control. In a free-market society the masses make the decisions. No one person or group of people is in control pulling the strings. Instead, our society must be allowed to adjust to the practically infinite variables of our economy based on the trillions of little decisions made by 311 million Americans everyday.

By divvying up the economic power of a nation among millions it thus becomes very difficult for the CEO of a massive company or the regulatory board of a leviathan bureaucracy to seize control, to cheat or exploit, or to, in any other way, effectively act on dispositions of greed. No amount of economic intervention can eliminate greed but with a free-market and strong rule of law we can at least render it impotent.

Because, it is liberty and not Nietzsche’s Ubermensch, his superman, that is the prerequisite to economic prosperity.

The Face of True Capitalism

“I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks]  . . .  will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” — Thomas Jefferson — The Debate Over The Recharter Of The Bank Bill, (1809)

Capitalism is the economic model of choice here in the United States and is considered antithetical to other models such as fascism or socialism. However, there is a lot of confusion regarding what constitutes “capitalism,” exactly. And does it even work? Most people think of economic models on a spectrum with socialism on one end and capitalism way on the other side. However, what people don’t usually consider is that maybe there’s more than one type of capitalism. The particular capitalist breed that dominates America is really corporate capitalism. Nothing is local anymore. If a product is tainted the subsequent recall is often nationwide, affecting hundreds of millions of people. This should come as no surprise when you realize that, for example, 5 massive corporations own 62% of the hog industry – and the same consolidation of capital is present across virtually every industry. Compare this to little over a half century ago when that same 62% would have been spread across thousands of local businesses. This trend has resulted in the consolidation of wealth and power to the point that 147 “super-entities,” mostly banks, control 40% of the world’s wealth. Austrian economist Friedrich von Hayek argued that socialism and fascism were fundamentally the same in that both were grounded in central-planning – I would add corporatism to that list of centrally controlled systems. Central planning, whether by government or corporate decree, is diametrically opposed to Catholic social teaching as it treats man as mere capital to be controlled by a few ruling class elites thus denying such aspects of human nature like self-determination and, sadly at times, basic human dignity.

Corporatism is the end result of capitalism that allows for unjust practice. The capitalist alternative then is distributism which seeks to establish a “society of owners” and thereby decentralize wealth and power. This is not socialism which demands redistribution of wealth to everyone equally to create one solitary economic class (indeed, the term “distributism” is somewhat of a misnomer). Instead, according to distributist theorist Hillaire Belloc, the distributive state contains “an agglomeration of families of varying wealth, but by far the greater number of owners of the means of production.” This distribution does not extend to all property, but only to productive property, namely, the things needed for man to survive including land, tools, etc. Thus, each man can be alloted what he needs to make his own livelihood. This is less of an economic system to be enforced like socialism or corporatism and more of an individual and cultural aspiration.

It would be both wrong and ineffective for the government to attempt to instill a distributist society as it might a fascist or corporate one because unlike fascism or corporatism it is not a systems-oriented economic theory but an individual-focused theory, deeply grounded in the principles of subsidiarity and solidarity. Instead, the role of government should be to enable distributism through several different means. First, the government must remove the obstacles to a truly free market that it has created. This means no more bailouts, ending the treatment of corporations as people, and eliminating the bureaucracy which CEOs manipulate to regulate industry in such a way as to stifle emergent entrepreneurship. Secondly, our government must return to its original purpose of defending individual liberty in order to eliminate the unjust practices of “greed is good” corporatism. Our government must especially take a stand in defense of the individual’s right to property, including ending the property tax and prohibiting anti-production investments meant to stop competitors. These interventions will then grant a greater freedom of choice by individuals to control their own production in the form of wealth-producing property if they so choose – because ultimately distributism must be an individual choice and a cultural movement towards a different way of life. This isn’t just about economics, this is about affording a lifestyle that incorporates all aspects of human nature. Thomas Storck argued that “both socialism and capitalism are products of the European Enlightenment and are thus modernizing and anti-traditional forces. In contrast, distributism seeks to subordinate economic activity to human life as a whole, to our spiritual life, our intellectual life, our family life”. The capitalism of faceless corporation is failing, so let us turn instead to the true capitalism of the family: distributism.