At America’s southern border there are thousands of refugees from societies that have collapsed into utter chaos. In America, we can see the same collapse occurring. Acts of violence, anger, lies, misrepresentation and plotting and plodding conspiracy are everywhere and in every form by every group. The lust for money, power, superiority, selfishness, self-righteousness, pride and fear are the ingredients of a toxic stew. We have become a nation divided. There is nothing about these gloomy words that are easily disputed, and if I were to extrapolate upon them it would be easy to list specifically how every sector of society has failed: churches, universities, local government, state government, federal government, political parties, the police, corporations, bankers, unions, individuals, sport teams, publishing, technology companies, newspaper, radio and television and the courts. We have finally arrived full-on at the difficult task of self-government, and its underlying irony: The wise don’t need laws, and the unwise won’t follow them.
When Adam Smith wrote his book The Wealth of Nations, the wealth enjoyed was the existence of a social contract. Similarly, Karl Marx wrote in favor of a social contract and the end of class conflict. Their politics and economic theories are more aligned than different: They both condemned cruelty and cronyism and the reckless pursuit of profit. The Constitution, opening with the words, We The People, establishes both the existence and the importance of the social contract. The Bible is replete with the tales of societies that both lost and rediscovered the social contract. When Athens gave birth to democracy, it was an attempt to renew the lost social contract.
We need to ask ourselves, who are we and how did we get here? If you take a look at the long arc of history, the answer may surprise you. There is nothing new about the challenges we face today, depressing as they may be. Technology has improved, populations have swelled, but the ability to make mistakes and amplify them to a point of crisis is common. Cheer up! If other societies can get their house in order, then so can we. However, chances are you will need to change your thinking about everything. Ironically, it is at the same point in time when people were willing to change their thinking about everything that we find one root of our current problem: the birth of modern finance began three hundred years ago.
The reforms authored by John Law in France in 1720 set the stage for the withering of monarchial-feudalism. It would still take two centuries before it reached Russia in the Bolshevik revolution. If you think the dividing line in modern times is between capitalism and socialism, then you are mistaken. Our economic system is best described as Feudalism 2.0. The new lords are the new billionaires. Corporations and patents and copyrights are the new landholdings and privileges. Government, as ever, is incapable of managing a system it fails to understand.
The problems of the modern world are the same problems as the ancient world. Money and power divides society. War follows trade routes, and economic survival is the basis of all tribalism. People self-segregate into divided communities and generate new narrow social contracts. The division of labor eventually becomes a division of understanding, and the banality of exploitation becomes the primary method of survival. Whether enforced by pen or sword, the imperfect status quo becomes of paramount importance. As the economic system churns cycles of volatility, fear increases, and the destructive behaviors required for survival spread. It becomes impossible to escape the consequences of our own actions, yet there is no way to stop, except collectively, which is impossible because the social contract is but a distant memory.
In the past, societies have begun anew with the forgiveness of debt. That is what Solon did in Athens, and Neminiah did in the Bible. As a practical matter, revolutions erase debts. When Cromwell revolted in England, he failed to forgive debts after his victory, and so the revolution eventually failed. The big problem is not political, it is economic. The daily economics of small transactions drives the politics. Profit introduces an imbalance, and time allows it to compound. Those with any advantage fear losing it, and so every proposal involves shifting a burden rather than an actual solution. America has had one civil war, but has never forgiven debts. This may be a testament to the strength of democracy, but it is more likely because of the wealth of the land taken from Native Americans. Theft acts as a grease softening internal tribal conflict. Many ancient societies thrived through plunder. We have also established a new realm of possession: intellectual property. As absurd as it is to claim ownership of an idea, no past societies could generate wealth in such a way. It created an entire new battlefield for conflict. When one considers the arrival of the printing press, widespread literacy, and industrial and technical advances, the last three hundred years of modern finance are unique and amazing, yet we are burdened by our choices. The accounting is insane. Paper money has made both debt and inflation infinite, and double-entry bookkeeping, discovered in the 16th century, keeps track of our madness. While the mad frenzy for colored dirt like gold and jewels which was a hallmark of monarchy and feudalism has been reduced, the hunger has been replaced with extractive industries to fuel modern technologies.
While men think deeply and grapple with large abstract questions, the thing that always concerns them first is their own physical comfort. All systems of invention service this need, including the division of labor. We cannot allow a division of understanding, and a division of reward, to continue to justify the destruction of the social contract. Many hands make light work. If life is hard for some, then we have failed somewhere. We cannot afford to ignore the problems that are festering. A chain is only as strong as its weakest link, and any and all suffering is a sign of where something is wrong. People suffer as a result of their own choices as well as outside agents. We need to begin the process of healing, separating the wheat from the chaff, and putting this ugly period of partisan politics and economic volatility and conflict and crime in the trashcan of history. What has happened in America’s client states is now happening here. We need to escape from feudalism once and for all. If people are willing to let go of the past, then a much better world is possible.