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  Road to the Middle Class
Friday April 18, 2014 
by Christopher Chantrill Follow chrischantrill on Twitter

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The Greater Separation of Powers

If the separation of church and state is so good, why would not the separation of economy and state prove equally beneficial and necessary?

In the Federalist Papers 47, James Madison quotes the famous dictum of Montesquieu:

When the legislative and executive powers are united in the same person or body... there can be no liberty, because apprehensions may arise lest the same monarch or senate should enact tyrannical laws to execute them in a tyrannical manner.1

It was Montesquieu’s concern about united powers that inspired the founding fathers to write a constitution in which the legislative, executive, and judicial powers were separated, as far as possible, into three separate branches of government.  Above all, of course, they wanted to perfect the partial separation of powers in the British Constitution, where the executive is appointed out of Parliament and the judiciary is half in and half out of the House of Lords.

But many Americans felt that the constitution as written did not go far enough in its separation of powers.  They wanted not just to separate the powers of government but to separate the religious power from the political power.  To mollify these opponents to ratification Madison proposed a Bill of Rights, including a clause to prohibit an establishment of religion, a government-sponsored church.  Then in 1802, in a famous letter to Baptists in Danbury, Connecticut, President Thomas Jefferson first introduced the idea of the separation between church and state.

I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should “make no law respecting an establishment of religion, or prohibiting the free exercise thereof”, thus building a wall of separation between Church & State.

The First Amendment and Jefferson’s letter extended the doctrine of separation of powers.  It introduced the notion that the defense against tyranny must forbid a condominium between politicians and divines, that there should be a distance between institutions of moral power and institutions of political power.  The founders wanted to deny government the strategic advantage of a combined army of religious and political troops.  Today, people express this fear about a too-close relationship between church and state when they warn against the danger of “legislating morality” or of a “theocracy.” In these slogans people express the universal fear of the moral traditions of others, though they also betray their ignorance of the fact that every law must be inspired by a notion of the good, and that any idea of the good must have come from some moral tradition.

In its program of power limitation, the Bill of Rights stopped at a prohibition of an establishment of religion.  But at the ratification of the US Constitution and afterward, many anti-Federalists were concerned about another potential coalition of power, that between government and commerce.  This fear was articulated by Thomas Jefferson, landowner, who believed in the virtues of agriculture and feared the power of cities and banks.  

[F]or the general operations of manufacture, let our workshops remain in Europe... The mobs of great cities add just so much to the support of pure government, as sores do to the strength of the human body.2

When Alexander Hamilton, first Secretary of the Treasury, unveiled and then implemented his financial system in the early 1790s, Jeffersonians were horrified.  They were afraid that his system would make the federal government too strong and the commercial sector too strong as well.

Hamilton’s financial system rolled out in two stages, each heralded by a report written mostly by himself.  First, in the 3,000 word First Report on the Public Credit he proposed to refinance the revolutionary war debts, both the debt issued by the Continental Congress and the states, with United States bonds funded by new federal excise taxes and import tariffs.3  Second, in the Second Report on Public Credit, he proposed a national bank, modeled on the Bank of England, to act as the government’s banker and thereby to sit atop the credit system.  His system was not, of course, an original work, but an attempt to copy the British financial system that had made Britain into the most powerful nation in the world in the century since the Glorious Revolution of 1688.  British finance, of course, was merely a copy of Dutch finance, imported into Britain from the Dutch Republic by the Dutch William Prince of Orange, later Britain’s King William III, and a 500 ship invasion force.

Hamilton’s system proved everyone right.  It made the federal government strong, and it laid the foundation for a strong economy with a vibrant financial system.  The rock-solid credit of the United States government made the government immensely powerful, and created a firm foundation for a powerful commercial and financial sector.  When Jefferson became president in 1801 he found that it was too late to change Hamilton’s work.  He encouraged his Treasury Secretary to change Hamilton’s policies, but Albert Gallatin demurred.  “I have found the most perfect system ever formed,” he said.4  System is domination.

Hamilton’s financial system created a symbiotic relationship between government and finance.  The rock-solid US Treasury bonds proved to be excellent as collateral, thus strengthening confidence in banks and the credit system; the expanding economy increased the power of the federal government, and consequently its ability to borrow and tax.  President Jefferson was an early beneficiary of this power.  His Louisiana Purchase of 1803 was was paid to Napoleonic France with $3 million in gold, with the balance of the $15 million in the proceeds from US Treasury bonds.  The power of the United States government ever since has been based upon its financial power, and since then it has always been there when the American people needed it, especially when it came to winning wars.  

But the power of government has also been an irresistible temptation.  On the one hand, countless moral activists have sought to use the wealth thrown up by the economic sector to enact their moral agenda using the power of government.  On the other hand, countless economic actors have sought to use the power of government to enhance their economic prospects by using the language of moral activists.

In the United States in 2008 the governments at all levels spent approximately 7.2 percent of GDP on the basic functions of government, the defense against enemies foreign and domestic.  But they spent 21.5 percent of GDP on an array of social programs, from government pensions to government health care, government education, and government welfare.5  This is the fruit of a century and more of moral activism.  The activists have asserted that the economic sector and the moral-cultural sector cannot be trusted to allocate resources towards these social activities without compulsion, and so they have built an administrative system to dominate the American people and force upon the nation their moral vision.

 Meanwhile countless economic interests and activists have sought to use the power of government to enact or subsidize their uneconomic pet projects, whether canals, railroads, dams, bridges, affordable housing, synthetic fuels, biofuels, or clean energy.  They justify their projects on every basis from national defense to saving the planet from global warming, arguing that the economic sector cannot be trusted to allocate properly the resources needed for these social activities.  

The record of the last century has put the lie to these claims for political competence.  The government does a pretty bad job of providing social services, as the bankruptcy of its entitlement programs and the decay of its education programs prove, and it does a pretty bad job of providing economic services, as the failure of its economic initiatives prove, from mortgage subsidy to energy.  An entire department of scholarship has grown up to explain why government necessarily must fail at social work and at economic work.

So the time has come to extend Jefferson’s thinking.  If the separation of church and state is so good, why would not the separation of economy and state prove equally beneficial and necessary?  Just as Americans have decided that religion is too powerful a force to be entrusted to politicians, so also a new generation may decide, after the experience of the last century, that the economy is too important to be the plaything of people whose devotion is to reelection and political power.  Why, after all, should political activists, whose profession is the exploration and exploitation of the divisions between people, have anything to contribute to the world of products and services, based upon the ability to invent and produce goods and services that other people want to buy and consume?

If the United States should decide to add the separation of economy and state to its traditional separation of church and state, then Americans need to think about what that would mean and how it would work.  

Earlier in this book we have talked as though the economic sector should be thought of as different from the political sector.  Fortunately Michael Novak has written a book that explores what such a differentiation means.  In The Spirit of Democratic Capitalism he analyzes the modern differentiation of society from its ancient compactness.  He asserts that in the modern world, in the social and cultural space of democratic capitalism, human society is differentiated into three social sectors.

What do I mean by “democratic capitalism”?  I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.6

It is important to appreciate just how radical Novak’s notion is.  All traditional, agricultural societies, he writes, impose “a collective sense of what is good and true... [E]very decisive economic, political and moral-cultural power is exercised by one set of authorities.”7  Bureaucrats of the state and the church control the economic sector.  At the same time the clergy meddle in politics and the politicians meddle in religion.

It is a distinctive invention of democratic capitalism to have conceived a way of differentiating three major spheres of life and to have assigned to each relatively autonomous networks of institutions.8

This differentiation of the major spheres of life is extremely beneficial when it comes to the age-old problem of human socialization: ambitious people with a taste for power, for “men like power and will seize it if they can.” The differentiated world of democratic capitalism has a plan for them.

This differentiation of systems sets individuals possessed of the will-to-power on three separate tracks.  Political activists may complete for eminence in the political system, economic activists in the economic system, religious activists and intellectuals in various parts of the moral-cultural system.  But the powers of each of the three systems over the others, while in each case substantial, are firmly limited.9

Ambitious people are able to climb the greasy pole, but they must specialize in the means of ascent peculiar to their chosen pole and having made their decision, but forego the opportunities for money, power, and the love of beautiful women afforded by the climbers of the other poles.  Anyway, eminent moralists usually lack the skills of the practical politician, and successful businessmen notoriously fail to succeed in politics.

There is only one problem with Novak’s vision.  It remains cloistered in his excellent book.  It is not a “meme” that has penetrated beyond Novak’s readers.  It seems clear that society has evolved into a differentiated system or organism in which there are at least three recognizable sectors: political, economic, and moral-cultural.  But very few people experience modern social arrangements in that way, or want to do something about it.

Further, many people do not experience the differentiation of human society into three co-equal sectors as a good thing at all.  They see it as a dangerous collapse of order.  Particularly in the moral-cultural elite, many people shrink from any idea that the economic sector should be a co-equal sector that shares power and prestige with the political and moral-cultural sectors.  They believe that the economic sector is a dangerous monster, threatening all the time to break its shackles and return the modern world to the law of the jungle.  They believe that the economic sector must be kept in subjection by a condominium between practical politicians in the political sector and the intelligent and ethical intellectuals in the moral-cultural sector.

In many ways it is understandable that elites have reacted with fear to the sudden transformation in human life over the last two centuries.  The sudden emergence of giant economic institutions, the huge migration from the countryside to the city, the remarkable power of capital markets to control economic life, the blind power of the price system, all these events are unprecedented in human history. But if we have learned one thing in the last two centuries it is that we resist the new order at our peril.  We have seen where resistance to democratic capitalism leads.  It leads to the collapse of the pluralism of the three-sector society.  It leads unremarkably and repeatedly, ever since the French Revolution, to totalitarianism, the atavistic attempt to collapse the three-sector society back into a unitary state where politics, economics, and the moral-cultural are reunited in their compact origin.

Perhaps we need not plumb the depths of human psychology to explain these favorable views of totalitarianism...  The desire to escape pluralism, rather than its acceptance, is the norm in man’s history...  [In a plural political system] [w]e choose, through both reason and morality, the mutual limitation under law of our desire for power.  But, following our natural inclination, what person would not choose absolute power, if he could be sure it would always be his own and never another’s?10

We must make explicit what is implicit in the daily practice of democratic capitalism and what is hinted at in terms like “free enterprise” and “market economy.” We need a new name into which we can breathe a new vision of the society we wish to build, a word that expresses the idea of three equal sectors of society, jealous and independent, but intertwined and respectful, and anchored by a Greater Separation of Powers that expresses a great social compact: the mutual limitation under law and in each heart of our desire for power.  It is a society in which not merely government is limited by the separation of powers between legislative, executive, and judicial branches, but power across society itself is limited by a separation of powers between the political sector, the economic sector, and the moral-cultural sector.  When we say “greater separation of powers” we mean a wall of separation between the moral-cultural sector and the political sector, not just Jefferson’s wall of separation between church and state.  We mean a wall of separation between the political sector and the economic sector, and an end to “crony capitalism” by which the political sector forces the economic sector to pay tribute to political power and the economic sector sucks up to political power in the hope of favors.

The separation of church and state, obliquely suggested in the First Amendment to the US Constitution, was conceived at a time when thinkers and citizens were deeply conscious of the dangers of combining the religious power with the political power.  Advanced thinkers knew that they did not want their money funding an established church and they did not want priests from an established church having political power over them.  Nevertheless, our national elites have never hesitated to trespass from the moral-cultural sector into the political sector and from the political sector into the moral-cultural sector when it served their power interests.  The first breach of the wall of separation occurred in education.

The US common school movement of the 19th century was, from its inception, driven by religious and cultural power motives.  The agitation for common schools mounted in the 1830s by Horace Mann and others was a naked attempt to get political control of child education.  Apart from the fact that Mann boasted that his system would reduce the crime rate — presumably because of superior moral education — the common school movement was also an attempt by Harvard Unitarians to dilute the moral influence of the dominant Puritan churches in New England.  The Congregationalists and Presbyterians, for their part, were more worried about the moral education of the Irish Catholics.  They aimed to reform them by teaching Bible studies in the new government schools out of the Protestant Bible.  All this took place before the appearance of the now familiar “secular” religions like communism, socialism, and progressivism in the mid 19th century.

The French Revolution was an early sign that, with the decline of belief in a personal God, modern political movements would combine the features of religious and political movements.  The French Revolutionaries were open about substituting the worship of Reason for the worship of God, and they created secular rituals and festivals to create a quasi-religious cult around their political movement for liberty, equality, and fraternity.  The cathedral of Notre Dame in Paris was converted, for a while, into a Temple of Reason.  

But that was just the beginning.  The 19th century spawned numerous secular movements and many of them sought to collapse the religious and the political into a single unitary force.  Marxism wanted to replace the coalition of church and state with a single political elite that would dominate all sectors of society.  Auguste Comte’s Positivism and his “religion of humanity” were a big draw for the educated youth of mid century.  Then non-revolutionary Socialism came to dominate the minds of educated youth in the late 19th century, with its variants such as American Progressivism and British Fabianism.  At the turn of the century Nietzsche captivated young minds with a religion of self-worship; it developed into the radical individualism for intellectuals advertised by Jean-Paul Sartre in the mid 20th century.  Bolshevism and Fascism established a model for any charismatic political leader in the 20th century to follow: a personal messianic cult that could combine religious and political elements in a unique package of self-deification and statolatry.  And after Sartre came the New Left, the Hippie movement, the New Age movement, the environmental movement, and the global warming movement.  Ours is a great age of secular religions.

Yet secularist intellectuals such as Steve Bruce argue that religion is in a permanent decline in the sense that we experience today “fewer people... influenced by religious beliefs” and can expect an endpoint of “widespread indifference” to religious ideas, i.e., religious ideas predicated on supernatural powers or events.11

This kind of thinking does not occur in a vacuum.  If you define religion as a belief in the supernatural, and churches as places where religious people create a community, then the separation of church and state means the separation of state only from moral communities that worship a supernatural being.  But the issue of the separation of church and state is larger than that.  Its purpose is to dramatize the danger of any dominant moral-cultural community, whether “religious” or “secular,” from forming an alliance with the political sector and using the power of the government to repress other moral-cultural communities and world views.

All moral-cultural views, whether from a church of Christian believers or a group of secularist activists, attempt to frame a vision of the meaning of human life and create principles and precepts to guide the faithful in their lives.  This applies to a Pentecostal church of women in a Third World slum trying to be saved in Christ to build a life of discipline and decency in the city; it applies equally to an environmental group agitating for people to live simply so that others may simply live and we can all save the planet.  It is just as much the “legislating of morality” for the one group to lobby for Sunday blue laws as it is for the other to lobby for criminal penalties against a failure to recycle.

There is at least a grudging agreement among elites that religion should not dominate politics — certainly not other peoples’ religions.  The idea of the separation of church and state is accepted, in principle, however much it is betrayed by the temptations of power, and the na├»ve failure to understand modern secularism as religion.  But the separation of economy and state is a far more radical notion.  No politician feels shame in attacking banks or corporations, and no amateur hesitates before advancing proposals to reform business practices.  No intellectual hesitates to assume moral superiority over business owners and managers.  Why is this?  

The fact is that people are afraid of business.  They are afraid of its power, afraid of its wealth, afraid of its dynamism, and afraid of its inscrutability. They feel that the economic sector is a raging beast that must be kept under tight control lest it get loose and ravage the land like the Bull of Heaven sent by the goddess Ishtar into the Mesopotamia of Gilgamish.  The writers of Fabian Essays in Socialism were also afraid.  “The Period of Anarchy,” written by Sidney Webb, painted a lurid picture of life under the power of business at the height of the Industrial Revolution.

The result of the industrial revolution, with its dissolution of mediaevalism amid an impetuous reaction against the bureaucratic tyranny of the past, was to leave all the new elements of society in a state of unrestrained license... No sentimental regulations hindered the free employment of land and capital to the greatest possible pecuniary gain of the proprietors, however many lives of men, women and children were used up in the process...

Women working half naked in the coal mines; young children dragging trucks all day in the foul atmosphere of the underground galleries; infants bound to the loom for fifteen hours in the heated air of the cotton mill, and kept awake only by the overlooker’s lash... complete absence of the sanitary provisions necessary to a rapidly growing population: these and other nameless iniquities will be found recorded as the results of freedom of contract and complete laisser faire in the impartial pages of successive blue-book reports.12

The narrative of left-wing reformers has not changed from that day to this.  And they are unanimous that it was economic regulation, the limiting of working hours, ending child labor, empowering unions, taxing industry for social benefits that saved ordinary people from their economic subjection back in the cruel days of unregulated laissez-faire.

Mr Herbert Spencer and those who agree in his worship of Individualism, apparently desire to bring back the legal position which made possible the “white slavery” of which the “sins of legislators” have deprived us; but no serious attempt has ever been made to get repealed any one of the Factory Acts.13

Of course, people are right to be afraid.  Business is a revolutionary force that continually upsets established economic relations, and never more so than the moment a country first converts from an agricultural society to the culture of democratic capitalism. It can demolish the economic status of any established player, from a great public corporation down to an ordinary worker slow to adapt to the new skills and techniques.  

But then religion also is a revolutionary force.  It sets the moral agenda under which social life and politics operate.  So is politics, the endless conflict between the Ins and the Outs for the right to defend a territory from enemies foreign and domestic, and to force a living from a cruel world.  So also is science.  Without the revolution in science there would be no modern transportation and communications.  It is because business is so powerful that Michael Novak assigns it its own sector in his three-sector model of modern society.  And it is the power of the economic sector that requires its separation from the political sector so that its power of its systems may not be joined in unholy alliance with the politicians or with the moralists.

Each sector of society has its defining principle.  For the political sector it is force: people go to government for protection; they want government to use its force on their behalf.  For the moral-cultural sector it is the mystery of meaning for the human condition: what does life mean and what should we do together to give our own lives meaning?  For the economic sector it is trust: people may choose a business for products based upon an advertising message; they continue to patronize a supplier only upon a relationship of trust.

What would our modern society look like with a formal recognition of the Greater Separation of Powers, with an expansion of the separation of church and state into the separation of moral-cultural sector and political sector, and a formal declaration of the separation of business and state, the separation of the economic and political sectors?  It would be a society founded upon a robust and thriving Civil Society.  It would be a society that resonated to the cultural message of society as a contract between the dead, the living and the generations yet unborn; it would be a society where people freely worked for others in the faith that society would reward those that meet the needs of others; it would be a society that believed in limited government and the separation of powers.

1Hamilton, Madison, Jay, The Federalist Papers, Mentor, p. 271

2Thomas Jefferson, Notes on the State of Virginia, p.  291.

3Treasury Department, First Report on the Public Credit. http://www.wwnorton.com/college/history/archive/resources/documents/ch08_02.htm

4Ron Chernow, Alexander Hamilton, p. 647.

5Christopher Chantrill, usgovernmentspending.com. http://www.usgovernmentspending.com/year_spending_2008USpn

6Michael Novak, The Spirit of Democratic Capitalism,  p.14

7Ibid., p. 49.

8Ibid., p. 56.

9Ibid., p. 56.

10Jean-Francois Revel, The Totalitarian Temptation, p. 27.

11Steve Bruce, God is Dead, p. 2, p.42.

12G. Bernard Shaw (ed.), Fabian Essays in Socialism, p. 40-41.

13Ibid., p. 41.

Christopher Chantrill blogs at www.americanmanifesto.org.

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The Crisis of the Administrative State
It wasn’t supposed to be like this.

Government and the Technology of Power
If you scratch a social reformer, you will likely discover a plan for more government.

Business, Slavery, and Trust
Business is all about trust and relationship.

Freebooters and Freeloaders
The modern welfare state encourages freeloaders.

The Bonds of Faith
No society known to anthropology or history lacked religion.

A Critique of Social Mechanics
The problem with human society reduced to system.

The Paradox of Individualism
The left has always damned individualism as the celebration of selfihsness. But is it?

From Multitude to Civil Society
The larger the government, the smaller the society.

The Answer is Civil Society
In between the separated powers.

The Greater Separation of Powers
If you want to limit power then you must limit power.

Conservatism Three by Three
Conservatism, political, economics, and cultural.

The Culture of Involvement
Imagining lives without the welfare state

The Poor Without the Welfare State
Can the poor thrive without the welfare state?

The Middle Class Without The Welfare State
How would the middle class live without all those middle-class entitlements?

From Freeloaders to Free Givers
The path to the future lies through moral movements.

The Real Meaning of Society
Broadening the horizon of cooperation in the “last best hope of man on earth.”

conservative manifesto


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 TAGS


Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings, and that a refusal to use the means appointed was a damning sin.”
Finke, Stark, The Churching of America, 1776-1990


Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society


Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State


Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures


German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate. 
F.S.C. Northrop, The Meeting of East and West


Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities


Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.”  —Freddy Arbuthnot
Dorothy L. Sayers, Strong Poison


Democratic Capitalism

I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
Michael Novak, The Spirit of Democratic Capitalism


Action

The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
Ludwig von Mises, Human Action


Churches

[In the] higher Christian churches... they saunter through the liturgy like Mohawks along a string of scaffolding who have long since forgotten their danger. If God were to blast such a service to bits, the congregation would be, I believe, genuinely shocked. But in the low churches you expect it every minute.
Annie Dillard, Holy the Firm


Conversion

“When we received Christ,” Phil added, “all of a sudden we now had a rule book to go by, and when we had problems the preacher was right there to give us the answers.”
James M. Ault, Jr., Spirit and Flesh


Living Law

The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital


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©2011 Christopher Chantrill