Were the officers of the army to oppose with the same zeal and unanimity any reduction in the numbers of forces with which master manufacturers set themselves against every law that is likely to increase the number of their rivals in the home market; were the former to animate their soldiers in the same manner as the latter enflame their workmen to attack with violence and outrage the proposers of any such regulation, to attempt to reduce the army would be as dangerous as it has now become to attempt to diminish in any respect the monopoly which our manufacturers have obtained against us. This monopoly has so much increased the number of some particular tribes of them that, like an overgrown standing army, they have become formidable to the government, and upon many occasions intimidate the legislature. The Member of Parliament who supports every proposal for strengthening this monopoly is sure to acquire not only the reputation of understanding trade, but great popularity and influence with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest public services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists.
Adam Smith, the Wealth of Nations.
In credit, the man himself, instead of metal or paper, has become the mediator of exchange, not however as a man, but as the mode of existence of capital and interest. The medium of exchange, therefore, has certainly returned out of its material form and been put back in man, but only because the man himself has been put outside himself and has himself assumed a material form. Within the credit relationship, it is not the case that money is transcended in man, but that man himself is turned into money, or money is incorporated in him. Human individuality, human morality itself, has become both an object of commerce and the material in which money exists. Instead of money, or paper, it is my own personal existence, my flesh and blood, my social virtue and importance, which constitutes the material, corporeal form of the spirit of money. Credit no longer resolves the value of money into money but into human flesh and the human heart. Such is the extent to which all progress and all inconsistencies within a false system are extreme retrogression and the extreme consequence of vileness.
Within the credit system, its nature, estranged from man, under the appearance of an extreme economic appreciation of man, operates in a double way:
1) The antithesis between capitalist and worker, between big and small capitalists, becomes still greater since credit is given only to him who already has, and is a new opportunity of accumulation for the rich man, or since the poor man finds that the arbitrary discretion of the rich man and the latter’s judgment over him confirm or deny his entire existence and that his existence is wholly dependent on this contingency.
2) Mutual dissimulation, hypocrisy and sanctimoniousness are carried to extreme lengths, so that on the man without credit is pronounced not only the simple judgment that he is poor, but in addition a pejorative moral judgment that he possesses no trust, no recognition, and therefore is a social pariah, a bad man, and in addition to his privation, the poor man undergoes this humiliation and the humiliating necessity of having to ask the rich man for credit.
3) Since, owing to this completely nominal existence of money, counterfeiting cannot be undertaken by man in any other material than his own person, he has to make himself into counterfeit coin, obtain credit by stealth, by lying, etc., and this credit relationship – both on the part of the man who trusts and of the man who needs trust – becomes an object of commerce, an object of mutual deception and misuse. Here it is also glaringly evident that distrust is the basis of economic trust; distrustful calculation whether credit ought to be given or not; spying into the secrets of the private life, etc., of the one seeking credit; the disclosure of temporary straits in order to overthrow a rival by a sudden shattering of his credit, etc. The whole system of bankruptcy, spurious enterprises, etc…. As regards government loans, the state occupies exactly the same place as the man does in the earlier example…. In the game with government securities it is seen how the state has become the plaything of businessmen, etc.
4) The credit system finally has its completion in the banking system. The creation of bankers, the political domination of the bank, the concentration of wealth in these hands, this economic Areopagus of the nation, is the worthy completion of the money system.
Owing to the fact that in the credit system the moral recognition of a man, as also trust in the state, etc., take the form of credit, the secret contained in the lie of moral recognition, the immoral vileness of this morality, as also the sanctimoniousness and egoism of that trust in the state, become evident and show themselves for what they really are.
Karl Marx, Comments on James Mill,
Éléments D’économie Politique
We may reflect also on the profundity of the evil thus revealed; how these alternations of monetary tides prejudice the essential function of a marketing system which consists in the selection of the most profitable lines of production. During a boom with general profits inflated, all enterprises flourish, however improvidently undertaken; while in a slump degenerating into a panic it will often not be the really unprofitable firms which are eliminated but those which
by accident or by speculative mistake may have delayed too long the calling in of their loaned assets. The effect of this unjust and unreasonable situation in discrediting the free market as a supreme guide of economic policy leads up to the great dislocations of contemporary social history. These paradoxical relationships are responsible for the fact that such anticommercial measures as tariffs, currency restrictions and immigration barriers may offer real advantages to a nation which sets them up against its neighbours; that subsidies, restriction of production and other monopolistic devices of extortion may gain real social value; that thrift may spell paralysis, and competition become a scramble for safety. In fact, they invalidate every moral and social standard of a commercial system based on free individual bargains, replacing them by the predatory maxims of economic power; and thus become largely responsible for the consequent public revulsion from commercial liberalism in favour of a totalitarian government of economic life.
Economics by Motion Symbols
Author(s): M. Polanyi
Source: The Review of Economic Studies, Vol. 8, No. 1 (Oct., 1940), pp. 1-19