“Frontier Capitalism” is the label that Naomi Klein* has affixed to our current economy. She posits that the inherent but limited rules of Laissez Faire capitalism leaves production and consumption to be no more sophisticated than what the people, such as North American settlers during the 1800’s, recognized as the Industrial Revolution set in.** It is this label that she’s applied to not just the current economic misgivings of the U. S. but the modern globalized economy in general.
Insight into the root circumstances of this frontier capitalism comes from Moses Coady (1882 –1959). A priest and adult educator, he was best known for his cooperative entrepreneur role in the Antigonish Movement. In his 1939 book “Masters of Our Own Destiny,”*** he wrote:
“By this indifference or lack of foresight, the people relinquished their consumer rights, which were all that had remained to them. Before the industrial revolution, they had domestic economy or home production. Shoes, clothing, foodstuffs—everything needed for subsistence living—was made or produced at home. Even then, a few enterprising people saw opportunities for profit in servicing the rest. They set up grist mills, blacksmith shops, and the like, and the people gave them carte blanche to do so. But results were not disastrous. The system was still one of small-scale production, and it could not grow indefinitely. Then came Watt and Whitney and Hargreaves and the factories, and production was taken from the homes and small establishments and concentrated in the large centers. Production soon slipped out of the control of the people. Consumption only was left—and they sacrificed even that when they saw the ambitious camp-follower build his first log store and write his own price tags. This was their great default. They failed to claim control of their consumer business and of their own money, and allowed an error to creep into the foundation of our economic structure.”
“This idea of the default may be brought out more clearly by an example from the material world about us. Suppose a man wants to build a smokestack 150 feet high. In laying the foundation, his workmen are careless and allow it to get somewhat out of plumb. The mistake is scarcely visible to the naked eye at first. When the stack is thirty feet high, it is clear that it tilts a little, but it is still firm and so the building goes on. But by the time it has gone up one hundred and fifty feet, it has become a dizzily leaning tower! The very builders are afraid of it. It is an ominous threatening thing. They hasten to prop it up. Finding no props long enough, they resort to guy wires. Long, heavy wires are anchored into the ground and attached to the stack, not far from the top. There is now less danger of catastrophe but the structure is still far from safe. It leans crazily, menacing all within range, for it has grown beyond their power to repair it as it stands. It has to be rebuilt to be put back into plumb. The economic smokestack that we have built in the last 150 years is just such a leaning menace. In the beginning, an error was allowed to creep in and the structure rose at an angle that grew more and more apparent as time went on. When the people awoke to a realization of their peril they ran for the guy wires to hold up the leaning terror. The various handouts and pensions, unemployment insurance and the rusty old wire of the dole were prominent, but the ugly thing they had allowed to grow out of their control now hangs over us all—a threatening monstrosity.”
The error in the “foundation of our economic structure” includes permitting individual capitalists to seize business opportunities. While the error may have started on the plains and in the frontier towns, it expanded to the investor and monied interests of the cattle, railroad, gold, lumber, fur, and oil industries of the 1800’s. The error and its threats are seen today in the technology (the late 1990’s tech bubble), telecommunications (Worldcom), energy (Enron, BP, and oil in general), housing (the current housing market), and finance industries (Bear Stearns, Lehman Brothers, TARP, AIG, and a $2 Billion loss by JP Morgan Chase, which JPMC didn’t even see coming).
It is a harsh reality because Americans like to think we have made Progress©. Our society provides redress of grievances through courts of law, a social safety net of welfare programs, and widespread public education and post-secondary opportunities. Nevertheless the foundation of our society is still unsound; the truth is gaining wider acceptance that Civilization’s best programs cannot fix what is fundamentally flawed.
I’ll leave you with the following tease of my next post: What was and is people’s great default? And what does Coady suggest by the title of his book?
Citations & Notes:
* Klein, Naomi, “The Shock Doctrine: The Rise of Disaster Capitalism” Metropolitan Books (September 18, 2007), ISBN-10: 0805079831, ISBN-13: 978-0805079838.
** The frontier capitalism analysis applies to more than the U.S. and its history; many countries have recognized such periods of development.
*** Note that the link above and here for “Masters of their own Destiny” by M. M. Coady will take you to the www.Scribd.com website with the full text of the book, which may be read online or downloaded as text or pdf.
