"Conditions Favorable to General Hostility":
the Rich-Poor Income Gap, Personal Debt, Unemployment, and Bankruptcies
The gap between the average
incomes of rich and poor families has increased substantially. In Canada, one of the
richest countries in the world, the gap between the highest and lowest quintiles soared to
$63,732 in 1993. The income gap is only one aspect of the problem. The debt outstanding of
persons and unincorporated business, as percent of personal disposable income, skyrocketed
to about 100.9% in 1994! And, the ranks of the unemployed, underemployed, and homeless
have swelled beyond belief. To compensate for the ravages of the marketplace, governments
have been forced to increase transfers to families -- and, here's the deep irony, to
borrow from the Money Trust.
Christmas. An ungodly number of people went
homeless in Toronto -- Canada's financial capital -- around Christmas 1995. While
temperatures dipped below -20º C, many freewilled beggars had no place to stay but in
sleeping bags on sidewalks,-- ironically, not too far from automatic banking machines!
A few froze to death. Now, let the Nobel Prize winners tell the unemployed, the wandering
poor, the homeless hungry beggar about the benefits of the marketplace -- and of
Anger. Justice has always been imperfect.
But, when imperfection verged on usurpation and tyranny, it gave rise to rebellion.
Historical evidence shows very clearly how the anger of the oppressed (the
"mob") has been mobilized against the ruling rich. Resentment against slavery,
unequal rights, breaches of covenants by the powerful, harsh controls, excessive
harassments by creditors, arrogant extortions and coercions, bankruptcies, foreclosures,
usurpations or confiscations of property, high taxes, hunger and unemployment, etc., have
often turned into insurrection -- in England, in Ireland, in the English colonies, in
France, etc. In the case of the English colonies, for example, statistics from Howard Zinn
indicate that between 1676 (Bacon's Rebellion) and 1760, there were eighteen uprisings,
six black rebellions, and forty riots.1
War. In Leviathan, the British
philosopher Thomas Hobbes gave a theory of rights, obligations, and power. He analyzed the
nature of man, man's restless desire for power, and the role of competition and contracts
in human affairs. Most importantly, he sought the fundamental relationship between the Laws
of Nature and Peace. Without such laws, he argued, there would be no peace.
Without them, civil society would be impossible.
To help us better
understand these laws, Hobbes proposed that we use a simple rule -- which I strongly
recommend to today's lenders --: "Do not that to another, which thou wouldest not
have done to thy selfe"2 [italics in the original; original
spelling retained]. If contracts obliged men to become preys to lenders, or if
laws protected lenders but not borrowers, then, following Hobbes, it is not Peace
lenders would be seeking, but WAR.3
The problems from rapacious
Capitalism are not new. Joseph A. Schumpeter warned that Capitalism would be destroyed by
its very successes.4 "Creative
destruction," which in the capitalist order manifests itself in the form of excessive
consumer and small business bankruptcies, has not only become untenable, it has become a
"recipe for breeding social unrest."5
Associations. Big Banks
appear to have sensed Schumpeter's warning regarding "conditions favorable to general
hostility." It should be interesting to see if future heads of Bankers Associations
would be recruited increasingly from intelligence or spy agencies.
How should Big Money deal
with the hostile reactions of citizens against the perniciousness of the marketplace? This
is not an easy challenge. Creative destruction no longer tyrannizes the little guy
exclusively; it tyrannizes whole sectors of the economy, whole economies -- even
governments and nations.
See Howard Zinn, A People's History of the United States, 1492-Present, 1995,
at 39 (Bacon's Rebellion), and 59 (uprising and rebellion statistics).
2 See Thomas Hobbes, Leviathan,
edited with an Introduction by C.B. Macpherson, 1968, at 214.
3 Ibid., at
215 (not Peace, but War).
4 See Joseph A.
Schumpeter, Capitalism, Socialism and Democracy (1942), with a new Introduction by
Tom Bottomore, 1976, at ix, and 59-64 (Can Capitalism Survive?), especially at 61
("Can capitalism survive? No. I do not think it can").
5 Ibid., at
81-86 (The Process of Creative Destruction), and 143-155 (Growing Hostility), especially
145 ("individual insecurity . . . is of course the best recipe for breeding social