Dear Unknown Friends:

Here is the first part of It Weakens, a 1971 lecture by Eli Siegel. The “it” in the title is the profit system. And in his Goodbye Profit System lectures of the 1970s, of which this is one, Mr. Siegel explained that a way of economics based on seeing people in terms of how much pecuniary profit one can make from them—from their needs and their labor—had finally and irremediably failed. Persons might keep the profit way going a while longer, through various governmental proppings up and through fiscal maneuverings, but its ailment was terminal. Profit-based economics was fundamentally caput, and could be kept in motion only through inflicting increasing pain on people. That is the state of the world, four decades later.

Eli Siegel differs from every other economist in his showing that economics is essentially, and in every detail, a matter of ethics; also a matter of aesthetics. He explained that the large fight in human history is the same as the fight within every person. It is the fight between contempt and respect. It is: the desire to get “a false importance or glory from the lessening of things not [your]self” versus the desire to value what’s not you, see its meaning, be fair to it as a means of finding out and expressing who you are.

In the Goodbye Profit System lectures, Mr. Siegel described with great particularity the many reasons why that form of contempt which is profit economics is no longer succeeding. However, the underlying reason, he said, is that it is against what reality and the human self are. In his book Self and World there is this sentence, which I love:

The world was meant to be known, to be felt, not to be parcelled out into huge segments or lesser segments for the complacent but deleterious delectation of some and the domination and manipulation of others. [Pp. 279-280]

I’ll comment on some of the matters Mr. Siegel speaks about in this section of It Weakens, and mention ways they are with us today.

Debt & a Generation

There is the matter of credit. Forty years after this lecture, the vast, encompassing debt Americans are in is certainly a sign of a nation’s economic failure. An aspect of debt, new in the history of the world, is the pervasive agony involving college loans. Millions of young people borrowed thousands of dollars to go to college. They graduated, and now find themselves saddled with a huge debt they can’t pay, because they can’t find jobs or are working at such low-paying jobs that they can barely afford housing and food.

Most of these young people did not see themselves as particularly anti-profit-system. In fact, quite a number took on the loans because they hoped to have thriving careers in business or finance; they were go-getters. Yet now ever so many of these and other recent graduates feel they were bamboozled. They’re furious that their need for education was seen, ruthlessly, in terms of what someone could make them pay. They’re angry that what’s considered valuable is the money they owe, not the knowledge and abilities they have.

A century ago, most young people in America did not see themselves as going after higher education. Part of what Mr. Siegel described as the force of ethics working in the world is the fact that more and more people feel they have the right to learn, and to have lives and careers based on a certain sizable knowledge. Just as millions of Americans felt they had a right to a home, and went into debt in order to get one, so young people have felt knowledge was a right, whether they could pay for it immediately or not. So much personal debt exists because of the ethical question Mr. Siegel gave form to: “What does a person deserve by being a person?” People feel they deserve things by being alive, including a decent home and knowledge. They are right. But in a profit-based system, not everyone can afford these; only a few can. Ethics, in the form of an increasing sense of what people deserve, has come into collision with the profit system. And the result is, among other things, unprecedented personal debt.

I may as well say simply: it is absurd, shameful, un-American for people to have to pay large fees to learn about the world they were born into—to get knowledge, which nobody owns and to which everyone has a right. As profits for companies, stockholders, owners have become much harder to obtain, there’s been an effort to turn both higher and lower education into a field for wringing a lot of money from the American people and putting that money in private hands.

The college loan matter has angered a sizable number of people of a whole generation. It has made them feel something is immensely wrong and immoral about how our economy is run. Some of these people are taking part in the Occupy Wall Street demonstrations, in Manhattan and elsewhere.

What about People in Finance?

Meanwhile, in the financial offices near the center of the New York demonstrations, many of the persons who seem to represent Wall Street itself are in deep, often unspoken agreement with the protesters. For one thing, they, the financial workers, are worried about their own jobs. And they don’t like how they’re seen and used by their own bosses. And the bosses don’t like how they’re used by those to whom they report. They all feel they’re being used to line someone else’s pockets, and they resent it. A person can be cold to the feelings of others, can like looking down on people, and can yet feel truly that he or she is being used contemptuously by someone.

Last month Goldman Sachs reported a loss. It seems the mighty investment bank is in trouble, and many of its workers will lose their jobs. A front page article in the October 19 New York Times notes that

Wall Street…is expected to lay off an additional 10,000 employees in the area by 2012, bringing total layoffs since 2008 to 32,000.

Each of these laid-off, or to be laid-off, employees is an individual. Each once saw the profit way as a means of faring well in this world. What are their feelings now? The feelings include anger, bitterness, and the sense that “I was fooled!”—The Times writes:

While protesters a few blocks away were denouncing greed and “too big to fail” banks, the institutions themselves were coming to grips with the current diminished reality.

“Diminished reality” is a cute euphemism for the failure of profit economics. Meanwhile, this sentence gives evidence that the opposition to the profit way is not coming only, or even mostly, from protesters. It’s coming from reality and history itself. The opposition is also in many once-gung-ho profit-seekers, who may not admit their objection but have it.

And the Police

At the beginning of the 1971 lecture, Mr. Siegel refers to a strike by the NewYork City police. Today more than ever in America, police officers and firefighters (who have generally been conservative politically) have taken to the streets in protest of how they’re being treated economically by their employers, who happen to be municipal and county governments.

Mr. Siegel speaks about the relation between government and private companies, and government and people. The question about government today is not really a question of “big” government versus “small.” Putting it that way is a fake. It’s a question of what is the purpose of government, and whom should government protect. There is greater clarity across America now that governments, local and wider, have been trying to protect private profit. They have used the people’s money to bolster various private companies, through subsidies, tax breaks, outsourcing. To have the funds to do so, they have fired workers, and tried to undo hard-earned pensions and slash wages, including those of teachers and first responders.

So while police officers may confront Occupy Wall Street protesters, they have been protesting themselves, pretty much in the same cause. In Nassau County, Long Island, the police were fervent demonstrators at a rally opposing the county executive’s attempt to re-negotiate union contracts and cut health benefits. An October 17 NBC report presented the president of the Nassau PBA (Police Benevolent Association) speaking passionately about this attempt to take money from workers. He said, “It’s un-American, a violation of the Constitution.” And the NYC PBA president warned, “We will draw a line in the sand here!”

Aesthetic Economics

This Aesthetic Realism principle is true about economics, as it is true about everything else in the world: “All beauty is a making one of opposites, and the making one of opposites is what we are going after in ourselves.” In It Weakens Mr. Siegel speaks about opposites in banking. Then, there are the big opposites in our economy: one and many; and self and world, in the form of people and the American land. It is a great, thrilling, beautiful fact that the only way for our economy to fare well is for it to be aesthetic, make these opposites one. Our economy has to be based on justice to each individual person and all people at once. It has to be based on seeing that the American land with its wealth should be owned by the American people. That is what citizens in homes, offices, streets, and parks are asking for, and what history is saying has to be.

It was in this 1971 lecture that Mr. Siegel first read his “Snappy Economics: Six Instances.” They are “snappy”; but they are exact, and show that when something with the possibility of evil is described accurately and with style, we can see what that evil is. These instances have his humor, his true lightheartedness, as does the lecture as a whole. No scholar, no educator, was more serious—or more intensely against cruelty and lies. Yet his love of justice and reality was so sincere that it was present always. This issue is being published near the 33rd anniversary of his death. What he saw, and presented greatly in Aesthetic Realism, is what America and the world need.

—Ellen Reiss, Aesthetic Realism
Chairman of Education

It Weakens

By Eli Siegel

People in New York and everywhere in the country have been taken by the walk away from their job—the precinct desertion—by our Finest. Deeply, it is a questioning of the profit system. That the city could not maintain outwardly better relations with the police is a sign that the means needed to make such better relations is not as smoothly available as used to be.

The relation of government—municipal government, state government, and national government—to people and to private industry is something which hasn’t been made clear yet. There is such a relation, and it is everywhere present. That policemen should be going through a job action in New York, and that it couldn’t be prevented—and also that a claim of the police was upheld by a lower court and denied by a higher court—all of this is a sign that the financial basis of our government is not as strong, sound, smooth as it might be.

The basis of any phase of government has been, from the beginning, the well-equipped, the well-heeled, and the “respectable” citizens. Occasionally there have been eruptions—such as the taking of the Bastille by persons who didn’t study government, but that is something out of the customary line. Now this job action is occurring, and it happens that the government itself doesn’t know wholly what is going on. I’m saying this very carefully. When I say in my title “It Weakens,” I mean that, in the same way as monarchy could be said to weaken after the French Revolution, so something called the profit system is weakening.

What They Are

I have gotten together, for the purpose of sport, also learning, some descriptions of key things in economics. Essentially, the descriptions are sober, but they’re given a certain tang. I don’t think they really can be objected to; there’s no great bias. There is an ethical twist, but no great bias:

Snappy Economics: Six Instances

1. a bank. A bank is an outfit which borrows money at a certain rate and loans it at a rate higher than that.

2. rent. Rent is what you get for letting the house, which labor made, or the land, which God made, be used by people who may need it more than you do.

3. interest. Interest is the money you get from the use of the money you have by people who may need it more in some way.

4. profit. Profit is what you get for paying people less for their work than what it produces, or from selling the product of work for more than you paid for that work.

5. capital. Capital is that the working with which by other people can make money for you.

6. inflation. Inflation is a state where it is easier to have money than to get the things you want.

All of the things described are in process of change, and profit can be seen as the culmination of all the rest. The other matter in economics—the supplying of a need—is something that goes on in any means of economics whatsoever. That is, people need something and they get it in one fashion or another.

Government & Banks

In Ault and Eberling’s Principles and Problems of Economics,* we’ve come to a most difficult aspect of economics: banks. What I say in my description is not the whole story—that what banks do is loan money after borrowing it. They also have it. But they do loan money, and banks make most of their money that way.

In 1913 there came to be a socialistic aspect to banking with the Federal Reserve System: the government did exercise some control over banks. Ault and Eberling write about that. In the Federal Reserve Act there was some attempt to safeguard both the banks themselves and borrowers, or anyone who had transactions with the bank. It is elaborate, but it is the government stepping in, as it has stepped in in many ways elsewhere—in housing, health, education.

The meaning of the Federal Reserve Act of 1913 is present now. The Federal Reserve Banks are the watchful eye of the government using various bankers, seeing that the banking system doesn’t undergo any great catastrophe. In 1933, the Federal Reserve Act was strengthened by the guarantee of deposits, through the Glass-Steagall Act. And that, in turn, has been strengthened by the wish of the government to protect investors in Wall Street. The government has stepped in there, and that is one of the reasons that the stock market has been acting the way it has, with stocks rising. There’s an attempt to insure the investments of individuals in Wall Street. The government taking part there is in at least one leg of its pants. That leg is socialistic. You can call the other something else. The government is wearing a kind of Renaissance costume: one trouser leg would be yellow and the other blue.

But a study of the Federal Reserve Act, which was passed in a pretty collectivistic administration, in the first year of Wilson’s presidency, 1913, is something that would make one think the government was taking a hand in the banking systems of America, and that much in the business going on in America.

Banking and Opposites

There are two opposites that Polonius mentioned: “Neither a borrower nor a lender be.” That has been disobeyed by anybody who has had any money at all, or wanted any. But they are still two opposites, borrowing and lending. To borrow means to have intake. To lend means outgo. So we have in and out, two fundamental opposites, without which reality could not be what it is.

Something the Federal Reserve Act was for was an elastic currency, which is one of the most mysterious things. But elasticity, too, is a oneness of opposites, with the being able to go backward and forward, or down and up.

Also, in the 1820s, before the first big panic in America, there was a phrase about banking that you’ll still see in the histories, which is the opposite of reserve: wildcat. Banks, like other things, have to do with reserve and also with wildcat. So you have everything.

The three things about money correspond to the three things about anything else: you have it, or you let it go, or it comes to you. Letting it go and it comes to you have phases that are not just the spending of it. That is, when you either borrow money or lend money, you are not spending it. You retain a hold on it. So borrowing and lending are more subtle phases of letting go and getting.

There Is Credit

The history of civilization is concerned with borrowing and lending, and that possibility of borrowing and lending and having which is credit. Credit can be defined, for the moment, as the belief people have that you will pay what you owe. Having credit more and more goes toward the having of the money itself. That is, if you have 100 percent credit it means you have the money. If a person had complete credit, he could go to any barroom, order any drink, and get it right away, without even having to show a credit card. The purpose of a credit card is to make credit more and more like money, like having it: to make the possible having of it the same as having it. Well, economics does get to philosophic and ethical matters.