Posted by: mulrickillion | December 15, 2011

Finance in Parrot Talk, Part II

By Anthony de Jasay, Library of Economics and Liberty, Dec 5, 2011 —

In a breath-taking "Note on the Reform of the International Financial and Monetary System in the Context Of Global Public Authority" issued by the Pontifical Council for Justice and Peace on 24th October 2011,1 this institution of the Holy See took it upon itself to urge the imposition of a tax on financial transactions (the notorious Tobin tax advocated mainly by Germany and France, dismissed by Great Britain and mostly ignored by the United States of America), the separation of retail and investment banking, and the strengthening of the equity capital ("recapitalisation") of the banking system. If the International Chamber of Commerce issued a statement calling for brotherly love and charity and the regular practice of the sacraments, we should find it incongruous and out of place. However, the Holy See has since Leo XIII’s encyclical of 1891 accustomed us to Church advocacy of large departures from a laisser faire free contract economy. (The Catholic "Club Med" countries of Southern Europe are paying a heavy price for following this advocacy).  

In last month’s column in this place, I discussed the power of what I call "parrot talk" to establish dubious or downright false propositions by ever wider repetition as undisputed truths. In the present column, I will try and dissect two particularly noxious ideas taken up by parrot talk in government, academe and (as shown above) the Church, which are accepted by majority opinion, distort reality and do considerable damage.

"Finanzkapitalismus"

German parrot talk has achieved the feat of uniting in a single word two much hated ideas that in other languages would take two or more to express.

There must be some people, though not very many, who would be happier as cavemen or nomadic herdsmen battling periodic famine and the cruelty of the elements than be denizens of our urban civilisation. For the rest of us, however, the populist dreams of abolishing the "dominance of money and the dictatorship of market", as well as seeking "production for real needs, not for profit" should and can be dismissed as irrational ranting. It would be rational if we harboured a strong streak of masochism that could be satisfied by self-inflicted economic and social pain. Such pain, best exemplified in the kind of life the people of the Soviet Union lived for far too long, is suffered when the attempt is made to eliminate finance from the so-called "real" economy. Finance and capitalism have always flourished together. Stretching ideas a bit, each can be imagined without the other. The result, though, looks painfully contrived. Quantitative economic planning by input-output matrices using only shadow prices, on the one hand, and market socialism on the other, are examples of such contrived monstrosities.

The steady steam of parrot-talk charges come under two headings. One is morality. Capitalism is immoral because it promotes immoral conduct in pursuit of a morally worthless objective, profit. . . .

Anthony de Jasay, Finance in Parrot Talk, Part II | Library of Economics and Liberty

>> See also Finance in Parrot Talk, Part I

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