Cantillon and The Class War

Re-edited Article Originally Published in The Mallard August 14th 2021

Whilst watching Tho Bishop’s recent talk at Mises U The Case for Economic Populism, which I would highly recommend to those who have not seen it, there was a fantastic quote used by Tho from William M Gouge a prominent figure in hard money advocacy during the early 1800’s. Who stated that the system of banking is the “...foundation of artificial inequality of wealth, and thereby of artificial inequality of power.”. At a time when lucrative land grabs were being passed out to friends of the state at discounted rates under the proviso of railway infrastructure projects this dynamic was more obvious and easier to wrap one’s head round. One could much more simply identify the them to our us. However in the era of woke capital and fully unchained fractional reserve banking the dynamic is much more confusing and given the injection of power into the equation one might suggest that it is deliberately so.

First we must identify and begin to understand the very economic phenomena that allows for this inequality to exist, for those unaware it goes by the name of the Cantillon effect. Richard Cantillon was born into Irish landed gentry around the 1680’s and soon became involved, much like many other affluent Catholics at the time, in European banking. During this Cantillon witnessed the implementation of a new paper money within the French economy to fund debts for projects within the colonies and more specifically the events that lead to the Mississippi bubble. As the crash of 1720 reared its head and laid waste to a number of Cantillon’s associates, the man himself had plenty reason to be happy. Not only had he sold off many of the inflated assets that he had acquired at the time, he had also loaned his money out so that it may be repaid to him during a period of deflation. It is speculated that this series of events may have led Cantillon to become the richest man in the world at the time, and subsequently led to him having many enemies—one of the theories posited for his unexpected demise. See Rothbard’s Economic Thought before Adam Smith for more on this.

So how did he do it? How did one man manage to outwit his peers who we ought to expect to be highly educated in matters of finance? The best part is that before his death in 1734 he told us. Cantillon wrote a treatise Essai sur la Nature du Commerce en Général (Essay on the Nature of Trade in General). His writing was grounded within the work of the catholic scholastics before him, allowing him to develop these ideas even further and help push forward proto-Austrian ideas. The most important of which takes his namesake, the Cantillon effect, or as it is more technically understood the non-neutrality of money. The general idea of this non-neutrality is that when new money enters an existing economy those who receive the new money first can garner more utility from its use than those who receive the money second, so on and so forth until all hands within the economy have come across this new money. This means that the first users of this money can purchase goods at their current price, ceteris paribus, this will cause the price of any good purchased with this new money to increase at the same time those still buying said goods must purchase at an inflated price—with a non-inflated supply of money. This effect carries on, sometimes right through an economy until those who have no access to this new money are in theory left materially worse off than they would have otherwise been.

This is the non-neutral aspect of money in regards to economic theory, however this isn’t where the lack of neutrality ends. It should be obvious now that there is the clear issue of who gets this new money and possibly even under what conditions are they allowed access to it? Given the modern state’s propensity to monopolise the money supply and engage in financial malpractice normally excused under the auspices of central banking, it is evident that money is politically non-neutral and that through it’s distribution or lack of distribution that the state and its banking system creates an “...artificial inequality of power.”

“..the state is an organ of class rule, an organ for the oppression of one class by another: it is the creation of ‘order’, which legalises and perpetuates this oppression by moderating the conflict…” - Lenin: State and Revolution

Why wouldn’t it? As identified by a number of thinkers across the political spectrum the state is an entity which seeks to both agitate and moderate, it lifts those whose support it see’s as convenient up, and leaves those it see as troublesome by the wayside. Better yet it allows some of its populace to make simple riches with free money whilst they slowly but surely plunder those around them à la Frédéric Bastiat. Ultimately subjugating sections of society to financial tyranny. When laid out so simply it becomes somewhat marvelling that such a dynamic can be so sorely misunderstood. Neither the capitalists in question have clean hands nor do the agitated underclass truly get a look into who and what facilitates this relationship, this only becomes more complex as we throw ideology into the situation, or begin to inject the manufactured social movements indicative of a dying modern state, yet it can still be unravelled.

The most modern and up to date arrangement for this process is referred to as Woke Capital, which on the face of it seems true but is an entirely misleading statement. Neither are the financiers genuine in their beliefs nor are they holding anything we may consider as capital proper. No saving, no long term planning and most importantly no deferred gratification is involved in the majority of financial markets, each and every one is a wash with government backed fiat substitutes. For what would have at one point been redeemable in precious metals. So they may be better referred to as fiat Machiavellians, not only are their money and beliefs false but their position is still way below what one might suggest as sovereign. Investment banks the world over have allowed for their marketing and HR departments to become clogged with woke-oids, with almost no progressive cause going unspoken of. Some firms even go to the lengths of being “...ahead of the curve…” in terms of segmenting resources to care for any of the next progressive fads.

“Goldman presents itself as being ahead of the curve on lesbian, gay, bisexual and transgender issues. It has offered health and relocation benefits to same-sex couples since 2000. It expanded its employee medical plan to cover gender reassignment surgery and hormone therapy in 2007… This year, Goldman’s former chief executive, Lloyd Blankfein, received the Ally Award from the Lesbian, Gay, Bisexual & Transgender Community Center, a 35-year-old institution that supports the L.G.B.T. community in New York City.” New York Times

And of course the press pays lip service to this, outlets clammer at any opportunity to infantilise both the subject and the reader so that no one is left with an impression that isn’t, “Woe unto the gays for they are so strong and have tried so hard, yet we simpletons will still not give them enough”. All the while the Goldman, Morgan, Barclays et al. line their pockets throwing the occasional tid bit at whatever cause needs supporting that month. Through this process they create a smokescreen, instead of decrying the lack of quality work or the rejection of responsibility and meritocracy one instead becomes agitated by the rainbow clad martyrs. Which was of course the idea all along, no bank executive or trading floor manager gives two hoots about trans-kids, AIDS or racial justice. As long as they say what progressive zealots want there need be no further consideration.

All the while these zealots presume that they are winning, they believe that their cultural marxism has somehow subjugated the so-called capitalist class into submission and that any moment now the trading floors will down tools and strike with the masses. If it was a movie you would have to suspend your belief for the clumsiness of the twist, as if these zealots somehow couldn’t see who they are being supported by and what fortunes these supporters are making. It is for this reason that I invoked the term fiat Machiavellians, the financial class makes use of the progressives like cannon fodder. Realigning aggravated populists towards social progressivism instead of the very mechanism that keeps it afloat. I’m afraid this isn’t even the end of the deception, whilst the socialists help their supposedly sworn foe run rings around the common man. The common man even if he is clever enough to see through the façade of progressive pleasantries, he is still tricked into believing that the source of his strife is indeed the bankers and investors, but the bankers and investors alone. The state apparatus designed to keep overleveraged and greedy firms alive never comes into consideration (Not to mention the effect of ESG compliance scores on the valuation of firms). The layered levels of deception create a number of limited hangouts behind which each offending member can attempt to hide behind, ridding the situation of accountability and workable solutions. At the same time a subset of new Machiavellian actors, the outliers within social pressure groups who think for themselves, before the cause, can be brought into the fold if they can identify what to signal to and when. The cynical support of ascendant cultural causes by financiers is by no means a new phenomenon, if anything it is one of the key things to understand so one can unravel narratives of the progressive era. 

One might suggest that there is even a Cantillon-esque effect within the implementation of increasingly progressive social policy; those who introduce said policy may never live to see the ramifications of what sort of society develops under such policy, yet they still accrue the social capital from the implementation. They become supposed visionaries and forward thinkers without ever having to live with the consequences of their social engineering. Much like the original progressives who never had to raise a family in a nation burdened by welfare statism.

“If it wasn’t industrialism or mass movements of the working class that brought the welfare state to America, what was it? Where are we to look for the causal forces? In the first place, we must realize that the two most powerful motivations in human history have always been ideology (including religious doctrine), and economic interest, and that a joining of these two motivations can be downright irresistible. It was these two forces that joined powerfully together to bring about the welfare state.” - Rothbard: The Progressive Era

The pattern is plain and has been repeated time and time again, as long as inane social causes can dominate conversation—whilst those trod upon remain in the dark. There is no reason I can see that it won't continue for the foreseeable. With the ongoing implementation of ever more totalising, universalising and nebulous causes: Covid, Global inequality and Environmentalism. We should only expect the financial operators of the world to centralise and consolidate further, during a period in which their cannon fodder becomes ever more bombastic and distracting. Financial institutes will become de facto state arms whilst remaining rhetorically and de jure all the more entrenched in “late stage capitalism”. Once again the synthesis of state and commerce brings about abject misery for all those not ideologically committed to the zealotry of the week, or cogs within the managerialist nightmare.

As we move past the fad of LGBTQ+ nonsense expect to be swamped in one word, and one word only for about the next decade, that being “sustainability”. As organisations like BlackRock, whose “risk averse” strategy could only exist in a situation awash with non-neutral money, move towards a total $10 trillion of managed assets. That’s roughly half of US GDP in 2019. It’ll be no surprise to me when it turns out that we have not heard the last of Extinction Rebellion, and that the privileged position of chief sacrificial lamb grants them immunity from acts the common man would never see the light of day again for. The improperly framed them us dynamic will still rule common discourse meanwhile the powers that be arbitrate merrily as if they are somehow neutral independent actors in all of this, under the implicit threat that it will swap one set of stooges for another at the drop of a hat. Not only will the progressive zealots continue to parrot the corrupted words of the financiers, so too will the individual financiers parrot the words of the central institutions they serve.

“At BlackRock, we define sustainable investing as the combination of traditional investment approaches with ESG insights to mitigate risk and enhance long-term return. With this in mind, many of our clients turn to Blackrock for sustainable investment solutions. We believe sustainability-related issues – ranging from board composition to human capital management to climate risks and opportunities – have real financial impacts. We are passionate about providing our clients with a clear picture of the relationship between sustainability issues, risk and long-term financial performance. With this picture in focus, we deliver investment solutions that empower our clients to better meet their financial objectives.” - BlackRock mission statement

“Rather than coming across as a plain fraud and parasite, in pursuing an easy-credit policy you can even pretend that you are engaged in the selfless task of ‘investing in the future’ (rather than spending on present frivolities) and ‘healing’ economic crises (rather than causing them). What a world we live in!” - Hans Hermann Hoppe: The Great Fiction

Additional Writing as of 07/06/2022

Whilst rereading and giving this article a brief re-edit, it was good to evaluate what I had and hadn’t got right about the relationship between Wokism, international finance and national government—and to further see how my own writing has developed.

It has become all the more clear as of late that national governments are almost entirely stripped of sovereignty, only now being able to implement exceptional states dictated by global institutions. This may in part be why I failed to mention the Central, Subsidiary and Periphery relationship that is involved in Woke Capital as the delineation between each becomes more murky when one has to insert the extra factor of globalism. One can jump straight to swapping national for international governance, and while this can be a useful for analysis, the complete rejection of the nation state as sovereign feels defeatist.

The model adapted from Bertrand de Jouvenel and further developed by CA Bond in Nemesis still works, one must replace the Central powers with the mish-mash of high level Public-Private-Partnership projects who seem to be the chief coordinators of Western societies. Allowing for the Subsidiary powers to be represented by the owner-entrepreneur businesses, the self employed and the last naturally ascending members of the middle class. It becomes clear then how power is stripped from these Subsidiaries in the name of Periphery groups such as racial and sexual minorities, who are only empowered for as long as they carry out the central powers bidding by attacking and subverting the albeit tiny reactionary forces existing in the Subsidiaries.