Comments – Heaven help us if profits triumph (there’s wealth and there’s wealth)
by Luigino Bruni
Published in Avvenire 17/07/2012
If we wish to understand, and then perhaps manage this crisis of capitalism, there is the urgency to back-track and reflect on the meaning of wealth, of the market, and of stock profit. Ethical and civil judgement on wealth has gone through various phases in the course of history. In the ancient world the individual quest for riches was considered both a private (avarice), and a public vice of the social body. In a static world, without social mobility and without markets, wealth is essentially a matter of income, of advantages tied to status or to positions of acquired privileges, which do not drive, either directly or indirectly, towards economic and social progress.
From this point of view then, the unanimous condemnation of love of money which is found in all traditional cultures, is a judgement that changed only when the state or the city got wealthy, (it is not by chance that the first type of legitimate interest was on the stocks of the public debt of Italian cities.)
Attitudes towards wealth started to change when the first proto forms of economy of the market, appeared in Europe during the second medieval age. The idea started to take root that the pursuit of wealth, while remaining generally an individual vice, could within certain limits, be a sort of public virtue.
An alchemy caused above all by the market, which creates a new form of wealth no longer based on positional income, but on commercial and industrial income. In fact, when wealth comes from income flows and is no longer tied only to the stocks (profits), the quest for wealth produces, indirectly and without any single person’s intention, positive social effects, since it makes money go around, creates work and opportunity for many, a characteristic of the markets already grasped by the Franciscans centuries before Adam Smith. In a static and feudal world, for example, when a prince leads a luxurious life (individual vice), and consumes goods, he does not create any (overflow, fall-out?) round about the palace because he has slaves and servants who provide goods and services for him, and they will always remain slaves and servants. If, instead, that prince starts to hire and pay, artists, artisans, cooks and maids..., that same luxurious consumption starts to become, to some extent, civil and productive, because the existence of markets allows wealth to spread and redistribute itself through work.
The new market ethic, then, legitimizes the economic exchange because of its civil and economic fruits of social mobility and the enveloping of persons who are now included in the social game, since those who possess riches, in order to consume them, must of necessity share a part of them with their fellow citizens, not only for taxation purposes but also for social interdependence.
The rich have always needed the poor, but in a world where division of work exists, the rich man uses the ‘poor’ through the market, and this changes profoundly the social bond, and can truly start democracy. When our farming grandfathers and semi-servants of masters entered for the first time in a factory and started to receive a paycheck, on that day a fundamental step was taken for their lives and for democracy. The motivations and the intentions of those entrepreneurs and businessmen might have remained questionable, but what mattered most, also morally, were the social consequences of their actions, among which the possibility that the sons and daughters of those workers could become engineers and politicians.
Capitalism was able to stand until a few decades ago due to this dynamic equilibrium between the rich and the poor, because it was also known that, within certain limits, the role of rich and poor could alternate with the passage of time, as was understood with extreme clarity and beauty by Antonio Genovesi in 1765 concerning the effects of the ‘game’ of the market in modern society: ‘This game, where the arts are protected and traffic is free, generates three effects: 1. It makes feudal slavery go around. 2. It lifts up that part of humankind who suffers for the pressure of the other, who is above. 3. It brings to ruin the old established families and it lifts up other new ones. You cannot thumb your nose at nature for long. Luxury comes because the rich need to give back to the poor that which they took by stealth from the common patrimony.’
However, after a couple of centuries, we are returning to a too feudal-like situation, because the center of the system is, once more, profit. When the social axis swings from one of work and business to that of profit, the enrichment of some no longer produces more social advantages for many, since the fall-out of that ‘wealth’ in the territories and surrounding economy are severely reduced or annulled. In a world founded on profit, getting rich is once again a private and a public vice. Today, the new rich no longer need the ‘poor’ of their cities, because they live in segregated ones, acquiring goods from the world over, and pay their taxes where and if, they please.
An impermeable veil has been raised inside the new cities of financial capitalism, which no longer permits the passage of wealth and social mobility. The chain of social interdependence of the last centuries, on which the market economy was founded, is breaking, with dire consequences for democracy which we are not yet able to see, but which will certainly be of epochal dimensions.
All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.
