Dear Unknown Friends:

We are serializing Eli Siegel’s lecture of August 23, 1972—with its important understanding of a famous economist and of the purpose people and economics need to have. In Good Will Is in Poetry, Mr. Siegel shows the relation, unseen before, among three things: Adam Smith’s The Wealth of Nations of 1776; Smith’s earlier, so different, work, The Theory of Moral Sentiments; and the writings of the poet Shelley. All three, Mr. Siegel makes clear, are about the need for good will. And good will is no soupy, greeting card affair, but the most practical, tough, critical purpose one can have. It’s “the desire to have something else stronger and more beautiful, for this desire makes oneself stronger and more beautiful.”

In The Wealth of Nations there are some passages about ill will. But Mr. Siegel shows that as Smith describes the functioning of economics as such, he is describing good will. It is what Mr. Siegel calls “mechanical” good will; it is an underlying good will: for instance, the fact that one person produces what’s needed by and can strengthen another; the fact that a nation, through what it exports, does good to the receiving nation and is in turn strengthened by products it imports from that second nation.

Meanwhile, as the economics of the world has taken place, people have not been true to that underlying good will. They have had a motive contrary to it: the motive of contempt, “the addition to self through the lessening of something else.” Contempt, Aesthetic Realism explains, is the source of all the injustice in human history, from a girl’s humiliating another girl in the schoolyard; to racism; to the exploitation of one’s fellow humans in the field of jobs, wages, buying and selling.

Economic Contempt

In his Goodbye Profit System lectures, begun in 1970, Mr. Siegel showed that contempt is the motive that made for and pervades the profit system. When you look at someone in terms of profit—how you can make as much money from him as possible—your desire is not that this person fare well. Your desire is that he be in a position of weakness, desperation—so he’ll accept a much lower wage than he wants, work for painfully long hours, and be afraid to complain that the work conditions are dangerous.

The profit motive is contempt. It has had bosses, who presented themselves as good family men, hire little children to work in factories and mines, or to use their small fingers manufacturing rugs—because more profit could be made from a child than from someone older. Contempt-as-the-profit-motive had a businessman adulterate bread with sawdust and hope people were too stupid to notice. Contempt-as-the-profit-motive is what has made the persons running tobacco companies promote cigarettes while hiding their knowledge that cigarettes cause cancer.

And it was in those Goodbye Profit System lectures that Mr. Siegel showed: after thousands of years, economics motivated by contempt no longer works! Making profits from the work of others has become harder and harder. He said: “In May 1970, the conduct of industry on the basis of ill will has been shown to be inefficient.” And he explained that this failure would never change: there would be no recovery until economics was conducted on the basis of good will. “I wish I could call it something else,” he said, “—good will and ill will are such pale words; but that is what it’s about.”

Debt in America

Today—with people working longer hours for less pay, with pensions being lost, with American jobs now being done in Guatemala or Indonesia or India—life is replete with instances of the profit system’s failure. But I’ll comment a little on a recent issue of the New York Times Magazine, because in itself it is enough to show that Mr. Siegel was right: though a lot has happened since 1970, and the stock market has risen and fallen many times, and we have wonderful technology and cyberspace, the profit system has not recovered. The New York Times Magazine of June 11 is given entirely to articles on the subject of debt—the debt of Americans and America herself.

In an article titled “Reasons to Worry,” writer Niall Ferguson tells us that the national debt of the United States is 5.6 trillion dollars, and that “the United States has become the world’s biggest debtor.” Also—more and more, American assets are becoming owned by foreigners. Non-Americans own much more of America than Americans own assets of other countries. Ferguson says:

There has been an immense rise in foreign ownership of American securities of all kinds, but especially government bonds….What this means is that foreigners are accumulating large claims on the future output of the United States.

An America in massive and growing debt, and increasingly owned by non-Americans, does indicate that a way of economics in this nation is in much trouble. The deep reason is in a quiet statement from another article.

Disgusted by Ill Will

Mr. Siegel explained that ethics and efficiency are inseparable: economics based on using people contemptuously has failed because it is unethical. In an article titled “My Debt, Their Asset,” we see some of the true American revulsion at this bad ethics. The author, Walter Kirn, tells about taking out a mortgage at a local bank he saw as friendly—then finding that the bank sold his mortgage to a company in another state. He writes: “To me it came as a thunderous revelation: my debts were other people’s assets! I couldn’t stop pondering this unnerving concept.”

What unnerved Mr. Kirn was a sudden sight of the basis of the profit system. “My debts were other people’s assets” is a form of: my weakness is someone else’s strength; my loss is someone else’s gain; that guy wants me to be in difficulty so he can make profit from me. This is the basis of a way of economics, and when a person sees it clearly, when it’s not hidden under euphemisms and decorations and panoply, the person finds it very ugly.

Why Are They Borrowing?

Then, there is the huge fact told of in these sentences by Niall Ferguson:

Ordinary American households have…gone on prodigious borrowing sprees….Not only do Americans borrow as never before; they also save remarkably little. The impressive resilience of American consumer spending in the past 15 years has been based partly on a collapse in the personal savings rate from around 7.5 percent of income to below zero.

People don’t save, and go into debt, for various reasons. They may simply not earn enough money to meet their needs; there are millions of Americans in that horrible situation. Another reason is: a person can feel, There are things I want—not necessities, but things I want—and I should have them, whether I can afford them or not. That way of mind of course can be criticized. It’s likely careless and may be grabby. But we have to see what more may be behind it.

I think that those “prodigious borrowing sprees” of American households are a gigantic unarticulated objection to the economics now present in America. Mr. Siegel spoke in the 1970s about a feeling in people of “protest against the way jobs were had and profits were made.” A big form today of that unarticulated protest is the fact that Americans simply are not willing to live poorly. They feel there are things they deserve, and they will have them, and use credit cards for that purpose.

The big matter in all this spending is: “I deserve that car, those clothes, that entertainment system, that college education for my children. My wife and I are both working hard and we don’t earn enough to pay for those things. But I don’t accept that situation! Other people have such things, and we’re as good as they are—we should have them too. The good things of this world should be ours as much as anybody’s. I may seem to accept the job I have at the salary I’m paid—but I really don’t accept it. I don’t accept the idea that my work is being used to make somebody else rich, and I have to deprive myself. I won’t do it!”

Much, then, of American consumer spending on borrowed money has large anger in it, and is really a saying, “We don’t like the ill will in American economics!” Going into debt, of course, is not the most useful way to say that. But Americans, whether they’re in debt or not, are looking for good will. They’re looking for it in their personal lives, but also in the field of jobs, how they’re seen in the workplace, how they’re valued and paid. Good will is a beautiful thing to look for—but it’s also the only efficient thing. And Americans, being human and patriotic, won’t be satisfied until they get it.

—Ellen Reiss, Aesthetic Realism
Chairman of Education

Pain & Good Will in Economics

By Eli Siegel

I go for a while from The Theory of Moral Sentiments to The Wealth of Nations again. The relation of the two works matters at this time very much. They do seem, offhand, exceedingly different.

In The Wealth of Nations, while Smith goes deeply for geographical good will, he also is aware of the unethical keenness in this world, and occasionally he gets very analytic.

Wages Are Looked At

When television came along, people felt that the wages in television were higher than in radio, and they had been higher in radio than in more established businesses of the past. Smith writes about that idea in the chapter “Of Wages and Profit”:

Where all other circumstances are equal, wages are generally higher in new than in old trades. When a projector attempts to establish a new manufacture, he must at first entice his workmen from other employments by higher wages.

So if a person wanted someone to work making autos who had been working with horses, he’d have to give him more money for a while. Later it was so with airplanes.

Manufactures for which the demand arises altogether from fashion and fancy, are continually changing, and seldom last long enough to be considered as old established manufactures.

There were some products manufactured that simply didn’t go so well. Once a person thought he would sell a great number of clocks by having something come out and say the Lord’s Prayer. But he was wrong. And somebody worked on an umbrella which, when you opened it, would say hello.

Smith Says You’re Paid Less
If You Make Things People Need!

Those [products], on the contrary, for which the demand arises chiefly from use or necessity, are less liable to change, and the same form or fabric may continue in demand for whole centuries together.

That is why people in the food business still look down on every other business. They know the cinema may go down, books may not sell, even newspapers may not be bought; but good old food, food, food—the old maw has to be satisfied, the pleasures and needs of the gullet.

The wages of labour, therefore, are likely to be higher in manufactures of the former [i.e., goods based on fashion], than in those of the latter kind [i.e., goods based on need].

So if someone were going to manufacture another kind of snuff box, maybe with two compartments, one of which keeps stamps and the other snuff, he’d have to offer more wages.

Silver & Ill Will

Then, there’s a lot about silver. Silver has a history. Smith tells us, among many other things, that when silver was discovered in Peru, the silver mines of Europe were seen as less valuable, and they were abandoned. Then other places had silver discovered in them, the chief of which—a famous place in the history of the America below the equator—is Potosí, in Bolivia. This is Smith about silver:

After the discovery of the mines of Peru, the silver mines of Europe were, the greater part of them, abandoned. The value of silver was so much reduced that their produce could no longer pay the expence of working them, or replace, with a profit, the food, cloaths, lodging and other necessaries which were consumed in that operation.

Here Smith is like Marx. You have to think as a capitalist: on what conditions can I get the most labor out of you?—and if I pay you so little that your food will make you weak instead of strong, it’s not worthwhile for me.

This was the case too with the mines of Cuba and St. Domingo, and even with the ancient mines of Peru, after the discovery of those of Potosi.

Then silver was found in North America, in Nevada— the Comstock Lode—and Montana.

Economic Things Are Related

In the same way that there are interchanges and confrontations, thoughts about each other by individuals, which Smith describes in The Theory of Moral Sentiments, so there are all kinds of relations in The Wealth of Nations, and they are taking. There’s a question of what is the relation between stock—cattle—and land. A farmer very often had to ask, How can I have oxen, cows, horses—these are stock—and, in certain places, sheep? Smith talks about tenant farmers who are poor:

The same rise of price which would render it advantageous for them to maintain a greater stock, render[s] it more difficult for them to acquire it.

In Balzac’s story “The Atheist’s Mass,” the water carrier’s whole life depends on whether he can have a horse to pull his cart or has to carry the water himself. But this section of the book shows Smith’s interest in what animals, what stock, what cattle a farmer could get, needed to get.

The Importation of Goods

The importation of goods is made ever so interesting by Smith. That is seen as the main matter in The Wealth of Nations: that there should not be a restriction by governments on the production of things and the selling of things to other countries.

When the produce of any particular branch of industry exceeds what the demand of the country requires, the surplus must be sent abroad, and exchanged for something for which there is a demand at home. Without such exportation, a part of the productive labour of the country must cease, and the value of its annual produce diminish.

That is, if France can produce wines but isn’t so good at producing typewriters, and another country does better at producing typewriters, then, some way or other, France’s wines must be exchanged for typewriters. Very indirectly, maybe with the interposition of money.

The land and labour of Great Britain produce generally more corn, woollens, and hard ware, than the demand of the home-market requires. The surplus part of them, therefore, must be sent abroad, and exchanged for something for which there is a demand at home. It is only by means of such exportation, that this surplus can acquire a value sufficient to compensate the labour and expence of producing it.

France at this time couldn’t have its own tobacco. Consequently, some of the tobacco coming from Virginia and Maryland had to get to France. There have been motion pictures in which, in American history, persons are seen rolling hogsheads of tobacco down to the river and the ship.

About ninety-six thousand hogsheads of tobacco are annually purchased in Virginia and Maryland, with part of the surplus produce of British industry. But the demand of Great Britain does not require, perhaps, more than fourteen thousand.

That’s good for Smith to know—that Great Britain needs only 14,000 hogsheads of tobacco a year.

If the remaining eighty-two thousand, therefore, could not be sent abroad and exchanged for something more in demand at home, the importation of them must cease immediately.

—Which would make some people in Maryland and Virginia sad. That also has a relation to good will, because trade changing in one country affects other places and people.

There’s a great deal written about this, the interchange among all the countries of work done here with work done there, and the feeling one should have about it.

The Purpose of Smith

The general purpose of Smith—and this hasn’t been noted enough—is that industry forces good will. That is the message or the import of Goodbye Profit System now, only it’s more intent on showing that industry cannot go on without good will. There was a form of good will described by Smith earlier—because people needed what other people had and could make.