Steering a Middle Course (Pt.1)

The Renaissance humanist Erasmus said, “He does not sail badly who steers a middle course.” Timely advice. The three reigning models of economics are off course. What does a middle course look like? Lord Moulton described it in 1921.

In 1921, British parliamentarian John Fletcher Moulton addressed the subject of what makes a society flourish. He imagined a circle in which every nation has three “domains” nestled side by side. On the far left is law, “where our actions are prescribed by laws binding upon us which must be obeyed.” On the far right is free choice, where we’re free to do as we please.1 Both have a proper role, but the middle domain is “where our actions are not prescribed by law nor are we free to behave in any way we choose.” It’s where we are “obedient to the unenforceable.” The breadth of this middle course is what makes a society great.

And therein lies several challenges.

First, the middle course is ultimately unenforceable. Nations can’t legislate goodness. Nor can they simply say Liberté! (google: French Revolution). Unbridled freedom and unduly burdensome laws do not make great nations. It’s like a great marriage. Faithfulness to vows is non-negotiable. But it’s also unenforceable. If a spouse seeks to have an affair, they’ll find a way to do it and no law on earth can stop him or her.

That’s the first challenge – the middle course is ultimately unenforceable.

The second is that three domains are not static. They’re in tension with each other, with the domain of free choice and law routinely trying to encroach on the middle. Example A: As a nation prospers, the wealthy typically try to enlarge the domain of free choice. Increased liberty means increased money for investing as well as indulging. This leads to growing income disparities. Those on the lower rungs push back by trying to enlarge the domain of law. They look to government to redress inequities. The loser is the middle course. It shrinks on both sides. So does a nation’s greatness.

That’s the second challenge – the domains are dynamic. But there’s more.

The third is that the middle course is the most difficult domain to enlarge. Free choice is relatively easy as it appeals to American individualism and liberty. Law is also easy to expand as have-nots look to elected officials to yank a nation’s levers of power in their favor. The middle course is most difficult to enlarge because it does not make an appeal for unbridled liberty or unchecked power.

It is this struggle that Moulton addressed in 1921. In the decade of the 1920s, the United States became the wealthiest country in the world. Crony and collusive capitalism marked the fifty-year period preceding The Roaring Twenties. Crony capitalism occurs when those on top take care of each other at shareholder expense (google: “golden parachutes”). Collusive capitalism is where corporations create a competitive advantage through the cooperation of regulators or politicians (google: “earmarks”). The progressive movement, led by Woodrow Wilson, President of the United States from 1913 to 1921, sought to curb these two corruptions of capitalism by increasing the domain of law. Moulton saw the middle shrinking.

The Great Depression of 1929 and World War II put Moulton’s message on pause. It was not until 1954 that the economy returned to 1929 levels. With the economy reinvigorated, the struggle for the middle resumed. We see the fruits 60 years later. The wealthiest Americans – those with earnings in the top 20 percent – contribute on average only 1.3 percent of their income to charity. Crony and collusive capitalism.

Proponents of “fairness” react. That’s why every president for the last 60 years, Democrat and Republican, from FDR to Barack Obama, has expanded the domain of law. It’s collectivism, the third of the three reigning Western models of economics. Collectivists are cheered by Thomas Pikkety, a professor at the Paris School of Economics, who advocates for an 80 percent tax rate on incomes above $500,000 to “put an end to such incomes.”2 Few, however, notice the vanishing middle course.

If Moulton was close to the truth, how does a nation steer a middle course? The answer is found in anthropology and theology. Ancient Greece struggled to come to grips with their vanishing middle course. Historians say the Early Church corrected “the unfinished psychology of the Greeks.” Rooted in the Jewish tradition, Christian thinkers introduced the dynamic of human conscience. Acting in good conscience is essentially obedience to the unenforceable. A nation flourishes when it steers middle course, including having its center institutions practice conscientious capitalism.

Given the failure of our three prevailing models of economics, David Smick thinks we need a “big think” solution for capitalism. He predicted the 2008 financial meltdown two years before it happened, retelling the story in his book, The World is Curved. The three prevailing models of economists are not “big think.” They encroach on the middle course. Conscientious capitalism is “big think.” Over the next few weeks I’ll describe it.

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1 Quotations are from a speech delivered by Lord Moulton at the Authors’ Club in London and reprinted under the title “Law and Manners” in the July 1924 edition of Atlantic Monthly.
2 Thomas Piketty, Capital in the Twenty-First Century (Cambridge: Belknap/Harvard, 2014).

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8 Comments

  1. Why ‘collectivism’ and not community ? A compassionate community living by a spiritual law of love written on their hearts, bearing the fruit of self-control. The chalenge being the stranger, orphan, widow and lost. The focus humanity and not Caesar !

  2. Excellent essay, Mike. Galatians 5:1 and 5:13 have meant a lot to me personally, but also apply to what you wrote. The former states that Jesus sets us free. God values our freedom enough to ask his Son to die for it. The latter instructs us in how to use the freedom: not to indulge in the sinful nature, but to serve one another in love. This is a middle course based on unenforceable conscience, but it is also a radical and powerful way of living.

  3. Great post, Mike, but I would observe that it is not only the have-nots who would yank the levers of power to move wealth their way. A case could be made that some of the haves are very skilled at this sport as well, perhaps more skilled than the have-nots. Crony capitalism often involves collusion with government as well as against it.

  4. @Barnabus: Collectivism is enforced community. The problem with communities is that it is difficult to know and appreciate large numbers of people. We tend to ignore people we don’t know and therefore justify our actions against “strangers” Most businesses work well for everyone if the boss knows each worker personally.

    Collectivism’s weakness is that by assuming everyone is equal, it does not reward uniqueness. The clever worker who is more efficient is ostracized by the team because he is showing up everyone else.

    @Mike: Looking forward to your description of Conscientious Capitalism.

  5. Hey Mike,

    As one who is ‘unschooled’ in economic theory i look forward to the following posts. I have had David Smick’s book on my bookshelf for about a year now. I think I may pick it up this summer.

  6. I appreciate your observations Tom. IMO uniqueness by nature celebrates diversity, community by nature provides opportunity for equity. Grace and mercy oiling the mechanism, preventing enforcement. Class and caste demarcation as one extreme and institutional cloning another. Important tension between self and other. Wealth and poverty. Blessed are ….

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