The Russian Empire

Posted by PITHOCRATES - February 11th, 2014

History 101

The Europeans built Larger Ships and used Advanced Navigational Skills to sail from Europe to the Far East

The Anatolian peninsula (roughly the area of modern day Turkey) has long been a trade crossroads.  It’s where the Black Sea (and the rivers into Europe and Russia) met the Mediterranean Sea.  It’s where Europe met Asia.  Where East met West.  All important long-distant trade traveled through the Anatolian peninsula.  Right through the Bosporus.  The straits between East and West.

The Greeks, the Persians, the Romans and the Ottoman Turks all coveted this region.  When the Western Roman Empire fell the great Italian city-states rose.  They dominated the Mediterranean.  And the trade through the Bosporus.  Where the Silk Road for centuries brought riches from the Far East into Europe.  The Italian merchant banks controlled that trade.  Until the Eastern Roman Empire (the Byzantine Empire) fell to the Ottoman Turks.  Which, lucky for the Europeans, happened at the time of the Renaissance.  Bringing an end to the Middle Ages.  And ushering in the modern era.

It started in Italy.  And then spread into Europe.  A rebirth (hence Renaissance) of all that Greek learning.  Which shifted the trading center from the eastern Mediterranean to Europe.  Where the Europeans built larger ships and used advanced navigational skills to sail from Europe to the Far East.  Bypassing the Silk Road.  And the Ottoman Turks in the Anatolian peninsula.  Making the Europeans the new rich traders.  Knowledge and wealth created more ships for trade.  And advanced armies and navies.  Making the Europeans the masters of the world.

Peter the Great pulled Russia out of the Middle Ages by making it more European

While the Mediterranean and European nations were ushering in the modern world not all of Asia followed them.  Russia in particular remained in the Middle Ages.  A vast land full of disparate peoples.  Not a unique and singular Russian people.  Until Ivan the Terrible came along.  The Grand Prince of Moscow from 1533 to 1547.  Then Tsar of All the Russians.  Ivan the Terrible united Russia by conquering it.  But at a cost.  Continuous wars killed a lot of Russian people.  Which left a lot of farmland fallow.  Giving Russia a chronic problem they would have for centuries.  The struggle to feed themselves.

Tsar Peter the Great (1682 – 1725) modernized Russia.  To be a more modern country like those in Europe.  He even went to Europe incognito to learn as much as he could about advanced European ways.  And had Europeans help him pull Russia out of the Middle Ages.  He made his army to be like European armies.  Learned about shipbuilding.  And built a Russian navy.  Which was a problem as the only access to the sea Russia had was the Arctic Ocean via the White Sea.  Which meant, of course, war and conquest.  He fought the Swedes for access to the Baltic Sea.  And he fought the Ottoman Turks for access to the Black Sea.

The disparate people of Russia were not all that happy with his ideas or the money he spent.  So he brutally suppressed any discontent.  Peter built his navy.  And a new capital on the Baltic Sea.  Saint Petersburg.  A European cultural center.  And the Imperial capital of Russia.  He also attacked the Ottoman Empire.  And lost.  Losing his Black Sea ports.  But Russia would return to fight the Ottoman Turks.  Under Catherine the Great.

The Bolsheviks killed Tsar Nicholas and his Family and ushered in the Oppressive Soviet Union

Catherine the Great ruled during Russia’s Golden Age.  Continuing the work started by Peter the Great to modernize Russia.  Making Russia a great European power.  Through military conquest.  And diplomacy.  She was even an international mediator.  And established the League of Armed Neutrality to protect neutral shipping from British attacks during the American Revolutionary War.

Catherine pushed Russia’s borders out largely at the expense of the Ottoman Empire.  And the Polish–Lithuanian Commonwealth.  These conquests cost, though.  And she turned to the nobility to pay for them.  In return she supported the nobility.  But the wealth she got form the nobility came from the serfs (basically slave laborers) working their land.  Which took a lot of work to pay for her conquests.  Leading to a peasant uprising or two.  But serfdom would continue in Russia.  Tsar Alexander I advanced the status of Russia with his defeat of Napoleon.  They even called him the Savior of Europe.  But serfdom remained as the Industrial Revolution took off in Europe.  Halting the modernization of Russia.

Tsar Alexander II emancipated the serfs in 1861.  Ending the landed aristocracy’s monopoly of power.  Serfs left their lands.  And moved into the cities.  Selling their labor.  Industrializing Russia.  Still, their freedom favored the landed aristocracy.  Who were compensated for their serfs’ freedom with a tax paid by the freed serfs.  Which little improved the life of the freed serfs.  And did little to ease the revolutionary fervor long simmering in the Russian people.  Especially those outside the nobility.

When Tsar Nicholas II entered Russia into World War I things did not go well for Russia.  Military losses, food shortages, fuel shortages, inflation and striking factory workers made the nation ripe for revolution.  Tsar Nicholas went off to command the Russian Army personally.  Leaving his wife Alexandra to run the country in his absence.  Who turned to Grigori Rasputin for help.  Which didn’t help quell the revolutionary fervor simmering in the Russian people.  They didn’t like Rasputin.  Or the Tsar.  And made Tsar Nicholas the last emperor of the Russian Empire.  Which the Bolsheviks made permanent.  By killing Nicholas and his entire family.  Which ultimately ushered in the Soviet Union.  One of the most oppressive regimes of all time.


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FUNDAMENTAL TRUTH #32: “America is great but it can’t make bad ideology good.” -Old Pithy

Posted by PITHOCRATES - September 21st, 2010

We’ve Always Done Things This Way

The Old World was set in her ways.  Change didn’t come easy.  When it came it often spanned centuries.  But not always.  As the Roman Empire incorporated new territories into the empire, she modernized those new territories.  Roads.  Fresh water.  Sanitation.  Rule of law.  Markets.  The things that made cites better.  Civilizations better.  But as a civilization grows, so does its government.  And as government grows, taxes inevitably become more onerous.

A sprawling empire required a sprawling bureaucracy to control it.  And a huge standing army to protect it from without.  And to police it from within.  When you expand and conquer new territory, the spoils of conquest can fund your empire.  When your borders are relatively static, though, you have to use alternative sources of funding.  Taxation.  As the tax burden grew, dissatisfaction grew.  Fewer citizens volunteered to serve in Rome’s legions.  So Rome relied more and more on hired armies.  This increased the cost of empire.  And it increased taxation.  The tax burden grew so great that people gave up their small farms and worked for the bigger farms.  Worked for the rich landowners.  Some tried to quit farming all together.  This caused problems in trying to feed Rome’s legions.  And her bureaucracy.  The food supply became so critical that the Romans wrote new laws forbidding people to leave their farms.  Farmers were bound to the land.  They could never leave.  If you were born on the land you would farm the land.  Forever.

During the decline of the Western Roman Empire you saw the rise of the economic system that would dominate the Middle Ages.  Feudalism.  As the Western Empire declined, the power began to shift to the rich landowners.  As did loyalties.  As the empire further disintegrated, the power of Rome could no longer protect you.  Or feed you.  And thus food and protection became the foundation of feudalism.  Land owners, the nobles (i.e., lords), would let you work their lands.  The bulk of the proceeds went to the landlord.  But you also had a portion of the manor to farm for yourself.  In exchange for the use of a lord’s land you provided military service to the lord.  When needed to protect the lord and his lands.  Property rights allowed the lord’s sons to inherit the estate upon his death.  So property ownership became hereditary.  As did the nobility.   And so it would be for centuries.

England Leads the Way

From the nobles arose one.  A dominant one.  A ruler of nobles.  A king.  A king consolidated the many nobles’ estates into a kingdom.  A country.  And the king became sovereign.  The supreme authority.  The nobles pledged their loyalty to the king.  Provided for the king.  And fought for him when necessary.  Thus the few, the many and the one.  The masses (the many) served the lords and worked on their estates.  The lords (the few) were the wealthy land owners who served the king.  The king (the one) ruled the kingdom.

Thus the European monarchy was born.  In France it was absolute.  In England, in 1215, the nobles met King John on the meadow at Runnymede.  And the king reluctantly set his seal to the Magna Carta.  In England, there would be limits to the sovereign’s power.  The king may be king, but the nobles held the wealth.  And with it a lot of power.  Sometimes they saw things differently.  And the little people, the masses, often saw things differently than did the king and lords.  These different interests were reconciled, in time, by king and Parliament, a two-house or bicameral legislature (comprised of the House of Commons and the House of Lords). 

England was the place to be.  Rule of law.  Bill of rights.  Commerce.  Banking.  Capitalism.  Liberty.  Food.  Security.  Your common everyday Englishman had a better quality of life than your common everyday [insert any other European national here].  As transoceanic trade took off, the great European powers collided with each other.  Fought for that lucrative trade.  In the Old World.  And in the New World.  These wars became very expensive.  And some lasted for years.  Like the Seven Years War.  Which the British won.  And took many French possessions throughout the world.  But at a huge cost.  She incurred a great debt.  Especially in securing one of her colonies.  British North America.

Tea Anyone?

So England taxed her British American subjects.  Only problem was, these English subjects had no representation in Parliament.  And this was very un-English.  Taxation without representation.  This caused tension.  Also, Great Britain’s mercantilist policies were also rubbing the colonists the wrong way.  America was growing.  And she wanted free trade.  But that was impossible when the home country maintained a favorable balance of trade at your expense.  And had the Royal Navy to enforce it.  As a colony, everything had to ship to/from England ports on English ships so England could accumulate bullion.  The British protected their industries.  Her colonies fed raw materials to these industries.  And that’s all they did.

Trouble brewed for a while.  When Great Britain legislated what type of tea they could drink (only British East Indian tea), the American colonists had had enough.   There was a tea party in Boston, a revolution and formal independence.  And then a new nation.  With a bicameral legislation.  An executive.  And a judiciary.  It wasn’t quite Parliament, but was very similar in function.  The president was the one.  The Senate was the few.  And the House of Representatives were the many.  But there were key differences.  There was no king.  No hereditary nobility.  And there would be no mercantilism.  Despite Alexander Hamilton’s best efforts.

Let’s Just Agree to Disagree

Getting the colonies to come together to declare their independence was not easy.  It helped that there was already a shooting war going on.  Lexington and Concord.  Bunker Hill.  The coastal towns the British burnt and left in ruins.  They were already fighting a rebellion.  The declaration was almost a moot point.  But it was important.  And, after some arm twisting, they voted for independence and posted their Declaration of Independence.  But that was then.  After the Revolutionary War, there was no such unifying force.  Everyone was back to looking out for number one.  Well, most. 

Locked in a Philadelphia hall during a sweltering summer thick with horseflies, a collection of America’s finest worked to create a new government.  George Washington, Ben Franklin, Alexander Hamilton, James Madison, to name just a few, could hardly agree on anything.  The Constitution they created was not great in their eyes.  But it was probably the best that they could do.  So acknowledged, they sent it to the states for ratification.  The odds were against them.  It would take some persuading.  And persuading they did.  Hamilton and Madison (and John Jay) wrote a series of essays appearing in newspapers to make the case for ratification.  They addressed and answered all arguments against ratification.  (You can read these today in the Federalist Papers.)  And this effort was successful.  The states ratified the constitution.  There was now a nation known as the United States of America.

Our first Secretary of the Treasury was Alexander Hamilton.  A capitalist genius.  And a great admirer of the British Empire.  Being a recent transplant to the American Colonies, he had no deep-seated resentment of the former mother country.  In fact, he wanted to emulate her.  She was the greatest empire in the world.  She was obviously doing something right.  But he pushed too far.  His mercantilist plans were a bit much for some.  Especially the ‘simple’ farmers of the South.  The planter elite.  Led by Thomas Jefferson (covertly) and James Madison (overtly), they fought Hamilton tooth and nail and did everything to destroy him.  (After seeing his plans Madison switched to the opposition.)    And ultimately, did.  When Aaron Burr shot him in a duel on the field of honor at Weehawken, New Jersey, across the Hudson from New York City.  All because Hamilton tried everything within his power to keep him from becoming president of the United States and governor of New York.  Because he was on unprincipled man.  Burr took offense to that.  And, well, the scoundrel challenged him to a duel and killed him.  But I digress.

The American Ideology

The American ideology is simple.  It includes things that have been proven to work.  And excludes things that have been proven not to.  A large, diverse people make up America.  So at the heart of our ideology is that we agree to disagree. 

We don’t have kings or nobility.  We don’t have an entitled class.  No hereditary rights.  Here, it doesn’t matter who your father was.  Or what group you belong to (religious, societal, etc.).  No one person is better than another. 

We have property rights and live under the rule of law.  We honor legal contracts.  We built our nation on laissez faire capitalism.  Free markets.  With a minimum of government interference.  We do what we want and respect that others do what they want.  And we are free to do this as long as we play by the rule of law.

It was a long road getting here.  We took the best history had to offer.  And rejected the worst that history included.  Nations who did likewise went on to greatness, too (like the United Kingdom and Northern Ireland, Canada, Australia, etc.).  Those who didn’t have been repositories of great suffering and human bondage (North Korea, Cuba, The People’s Republic of China, the Soviet Union, etc.).  Of the latter nations, please note that life is getting much better in China and the former Soviet Union with the introduction of capitalism and free markets.  And it’s not in North Korea and Cuba where these governments stubbornly cling to failed policies to keep their governments in power.  Whatever the cost is to their people.

It’s the Ideology, Stupid

Good ideology makes good nations.  Bad ideology makes bad nations.  A good nation can NOT take bad ideology and make it good.  A good nation that implements bad ideology will only make that good nation bad.  All people have the capacity for greatness.  And that greatness will shine through if the government doesn’t suppress it.   To see this all we have to do is look to history.  It’s all there.  The good.  The bad.  And the ugly.


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LESSONS LEARNED #14: “Christianity does not beget antidisestablishmentarianism.” -Old Pithy

Posted by PITHOCRATES - May 20th, 2010

THE FOUNDING FATHERS were literate.  As many in British America were.  They knew their history.  Europe’s history.  And Antiquity’s.  They read books.  They knew that a Macedonian conquered a weak confederation of Greek city-states.  That Julius Caesar marched into Rome at the head of a professional Roman Army and put an end to the Roman Republic.  That large standing armies and a bloated bureaucracy bankrupted the Roman Empire and led to her demise.  That differences in religious opinion plunged nations into war.  And they were very conscious that history repeats itself.

They studied history and applied the lessons they learned to the founding of a new nation.  And they were blessed with a blank canvas.  There were not centuries of past wrongs to right.  No grudges.  No bad blood.  They had an ocean between them and that past.  Europe may have still been fighting each other, but it was just too costly to extend that fight across an ocean.  At least, not in any large scale action.  And they had vast tracts of land to the west waiting for them to settle.  Growing space.  True, there were indigenous people on some of that land, but there was so much more land than people (even today vast tracts are uninhabited).  Not like in Europe.  There, if a nation left the confines of her borders, it bumped into another.  And, typically, professional armies did the bumping.

So there they were, the Founding Fathers, on a new continent ripe with possibilities.  They had land, resources, knowledge and timing.  It was as if God said that now was the time for a great new civilization to begin.  Or so many felt then. 

THE FATHER OF Christianity was a Jew.  A Rabbi.  Born and raised in a part of the Roman Empire that was a royal pain in the ass to them.  The Jews just did not readily submit to Roman rule.  And the Emperor was growing tired of this thorn in his side. 

The hapless procurator for this troublesome land was Pontius Pilate.  He may have been cruel.  He may have been just (in the context of the times).  He may have tried his best to keep the peace.  But he was certain to fail.  Don’t rule hard enough and order breaks down and Rome is unhappy.  Push too hard and it may cause open rebellion.  Again.  And Rome is unhappy.  Damned if he does.  Damned if he doesn’t.

Long story short, the Romans crucify Jesus Christ.  And a religion is born. 

THE CHRISTIANS WOULD became as big a pain in the ass as the Jews were for the Roman Empire.  Christ’s apostles spread His message and Christian pockets developed in the Empire.  And the Romans persecuted them.  Until one day.

The Roman Empire was in civil war.  Constantine approached the River Tiber.  Across lay Rome and Maxentius.  They would meet in battle in the morning.  Before that battle, though, Constantine had a vision.  He saw a Christian symbol.  The Christian god appeared to him.  He was to advance his armies behind this symbol.  Or so the story goes.  Anyway, Constantine did win the Battle of the Milvian Bridge.  He proclaimed that the Christian god made that victory possible.  And he would subsequently convert to Christianity.

The Roman Empire would give up its pagan past and become Christian.  Constantine would build a great Christian city and name it after himself.  Constantinople (modern day Istanbul).  Christianity would spread throughout the civilized world. Even to the place where he became emperor.  Britain.  A Christian Monk would take the religion into the hostile lands north of Hadrian’s Wall (Scotland).   There he founded a monastery called Candida Casa.  His successor at the monastery, Caranoc, probably introduced Christianity to Ireland.  St. Patrick’s missionary work took over from Caranoc.

ONE OF THE surviving institutions of the Roman Empire was the Catholic Church.  With the structure and order of Roman rule gone, it was the one uniting force that transcended the diverse remnants of the empire.  King Clovis converted to Catholicism and united the Gallic people.  Charlemagne built on this consolidation and created the French and German monarchies, setting the stage for modern, Christian Europe.

The Catholic Church was the bedrock of life in the Middle Ages.  It soothed and comforted.  It gave hope and meaning during difficult times.  Civilization became civilized when Christianized.  People lived by the Golden Rule.  They helped each other.  Christian kings ruled more compassionately, for the afterlife was important to both ruler and ruled.  A king may answer to no man, but a Christian king answered to God. And in Europe, that was the Pope, who ruled spiritually in God’s temporal world.

The Pope may be the last word on things spiritual, but he was still a man.  And like all men, power tends to corrupt.  And it would be a German priest to point this out in a grand way.

IT WAS THE 16th century and the Renaissance was under way.  Everyone was catching the fever.  Even the Pope.  Pope Leo X was renovating his St. Peter digs in the new style.  Paid for, in part, by the selling of indulgences.  You say you’ve sinned?  But you still want to go to heaven?  No problem.  I can help you.  I can forgive you.  For a nominal fee.  And really, now, can you put a price on personal salvation?  I mean, sure, you can risk eternal damnation.  But why take the chance?  Buy an indulgence today.

Or so went some kind of sales pitch.  Which caused a problem for a German priest.  Martin Luther.  He didn’t believe you could buy your way into heaven.  So he said it.  The king wasn’t wearing any clothes.  I mean, the Pope was wrong.  He nailed up his Ninety-Five Theses in 1517 and the Protestant movement was afoot.  Caused a reverberation or two.  Plunged Europe into war.  Catholic versus protestant.  Reformer versus counter-reformer.

Luther translated the Latin Bible into the common German spoken in his country.  Over in England, they were translating the Bible, too.  And speaking of England.

HENRY VIII WANTED a son.  As kings are wont to do.  But he wasn’t having any luck.  He needed a new wife.  So he wanted a divorce.  Couldn’t get one.  So he said goodbye to Rome and opened the Church of England.  He got his divorce.   And a new baby.  Another girl.

The story of England’s break with Rome is a bit more complicated than this.  Henry VIII was a Catholic.  He even persecuted Protestants.  But his third wife was a German princess married for political reasons.  And his new Church leaned Protestant.  He did a lot of things that Luther said to do.  And he hated Luther.  His subjects were even reading an English translation of the Bible.  But then the politics changed and he divorced Anne of Cleves.  And the Church swung back to Catholicism.

When Henry VIII died, Edward VI assumed the throne.  And the Church swung back to Protestant.  When he died, his sister took the throne.  His Catholic sister.  Queen Mary.  And the Church swung back to Catholicism.  People didn’t mind.  Hey, they were Catholics far longer than they were Protestants.  Then she married the Catholic King of Spain.  Started burning Protestants at the stake.  Went to war with France in support of Spain.  And lost English land on the continent in the process.  The people didn’t take kindly to this.

Then came Queen Elizabeth.  She swung the Church back to Protestant.  And the Pope thanked her for that by excommunicating her.  Pope Paul V sent missionaries into England to agitate and return England to Catholicism.  Elizabeth countered by making life very difficult for Catholics.  But the Catholics weren’t the only ones unhappy with Elizabeth.

The Puritans were Calvinists who were extremely anti-Catholic.  Yes, she swung the Church of England back to Protestantism, but it still had some Catholic flourishes (bishops, priest vestments, candles, some saints’ days and feasts, transubstantiation, etc.).  As Supreme Governor of the Church, these Puritans were challenging her authority.  So she arrested and executed them.

YOU GET THE picture.  The tug of war between Catholicism and Protestantism was a long and bloody one.  And it involved outsiders.  Catholic France was stirring up trouble in Protestant Scotland.  Mary, Queen of Scots, cousin of Elizabeth, even plotted against her cousin to take her throne (and make Scotland and England Catholic).  She failed and Elizabeth chopped her head off.

Meanwhile, Catholic Spain was stirring up trouble in Ireland.  She hated England for their break from Rome.  Wanted to bring her back to the Catholic fold.  The Catholic Irish did not like Protestant English rule. There was rebellion in Ulster.  Spain helped the rebels.  The English suppressed the rebellion.  To dilute this Catholic hotspot from causing further disturbances, England settled Ulster with Protestants.

Spain also wanted vengeance for the looting of Spanish ships (filled with gold and silver looted from the New World) by English pirates.  Spain assembled a great fleet (The Great Armada) for the invasion of England.  It was defeated.  England escaped Catholic Spanish subjugation.

SO THERE YOU have it.  Kindling for civil war in England as well as world war across the continent and in the New World as the Old World fought to colonize it.  And that history would be a bloody one.  A lot of wrongs to right.  A lot of bad blood.  A lot of grudges.  And the Founding Fathers wanted no part of it.

When the British defeated the French on the Plains of Abraham outside Quebec City, Catholic French Canada became British.  To appease the local French inhabitants, though, the British passed the Quebec Act.  And let them keep their French heritage.  Je me souviens (I remember, motto of both Quebec Province and the Royal 22e Régiment).  One part of the Quebec Act expanded Canadian territory into lands that the Americans were planning to settle.  Another part guaranteed the free practice of Catholicism.  Right in British America’s backyard.  Which was a Protestant backyard.  This infuriated the Americans.  The Protestant-Catholic simmering hatred did make it to the New World.  This was one of the last of British insults that eventually led to the Revolutionary War.

But that was the peak of anti-catholic rhetoric in America.  After the war, the states would eventually disestablish their churches.  Catholic and Protestant would live peacefully together.  Along with Baptists.  And Jews.  And any other denomination.  And religion flourished.  Especially Christianity.  By not establishing Protestantism or Catholicism, both flourished.  The new nation blossomed.  And America became that city on a hill.  If you go by immigration records.  And one day America would even have a Catholic president.  JFK.


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FUNDAMENTAL TRUTH #11: “Before you condemn capitalism, imagine a world without professional sports, movies, cell phones and tampons.” -Old Pithy

Posted by PITHOCRATES - April 27th, 2010

PEOPLE HAVE SOME strong opinions about capitalism.  Both good and bad.  So what is it?  What is capitalism?

Merriman Webster OnLine defines it as:

An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

To explain this let’s start by explaining what it replaced.  In fact, let’s go further back.  A few hundred years when life truly sucked by our standards.  During the Middle Ages, people barely lived.  People worked very hard and had little time off.  When they did they usually spent it sleeping, being sick, dying or being dead.  You grew or killed what you ate.  You built your own house.  You made your own clothes.  You died probably no further than a short walk from where you were born.  And you worked your whole life somewhere in between.

Think of peasant or serf.  That’s what most were.  Tied to the land.  You had no choices.  If you were born on the land you worked the land.  Until you died.  The land owned you and someone owned the land.  You worked the land at the grace of the owner.  You helped produce his food and, in return, he let you have a small parcel of land to grow your food.  There was a bond of loyalty between landlord and tenant.  Land and protection in exchange for backbreaking, never-ending labor.  Doesn’t sound good until you consider the alternative.  Death by famine.  Or death by murder at the hands of roving bands of outlaws.

Improvements in farming led to more food production.  Eventually, there were food surpluses.  This meant not everyone had to farm.  Some could do other things.  And did.  They became specialists.  Artisans.  Craftsmen.  Cities grew in response to commerce.  People went to market to trade for things they wanted.  Then they started using money, which made getting the things they wanted easier (it’s easier to go to the market with a coin purse than with a sack of grain or a side of beef).  Life got better.  People enjoyed some of it.

THUS BEGAN THE rise of a middle class.  Those city folk making things or doing something.  They were good at what they did and people gladly paid for what they did.  These specialists then improved what they did and thought of new things to do.  They created things to make their work easier.  These individual specialists grew into manufacturing shops.  The cost of production only limited their output.  And banking solved that problem.

Alexander Hamilton, one of America’s Founding Fathers, was a capitalist.  And he thought big.  Money is nice but what can it get you?  A few things for the home?  Something for the wife?  Maybe some new farm tools.  Good stuff, yes, but nothing big.  Lots of little sums of money all over the place can buy lots of little things.  But when you pool lots of little sums of money you get one big-ass pile of it.  That money is now capital.  And you can do big things with it.

And that’s what banking has given us.  People with ideas, entrepreneurs, could now borrow money to bring their ideas to market.  And this is, in a nutshell, capitalism.  The free flow of ideas and capital to make life better.  Making life better wasn’t necessarily the objective; it’s just the natural consequence of people mutually partaking in a free market.

BUT WHAT ABOUT the Soviet Union?  Didn’t they do big things, too?  They built jetliners.  They had a space program.  They had factories.  They did these and other things without capitalism.  They did these things for the good of the people, not for profits.  Isn’t that better?

Talk to someone who wiped their ass with Soviet-era toilet paper.  Let me save you the trouble.  It didn’t feel good.  Unless you enjoy the feel of sandpaper back there.  And to add insult to injury, you had to wait in line to get that toilet paper.  If it was available.

When you think of the Soviet economy you have to think of stores with empty shelves and warehouses full of stuff no one wants.  This is what a command economy does for you.  Some bureaucrat, not the consumer, determines what to sell.  And one person simply cannot figure out what a hundred million plus want.  To get an idea of how difficult this is, pick a movie that 4 of your friends would love to see.  Pick a couple of guys and a couple of girls.  For diversity.  And remove the possibility of sex completely from the equation.  Now pick.  Not so easy, is it?  Now try to pick a movie a hundred million people would love to see.  Can’t do it, can you?  No one can.  Because people are diverse.  One size doesn’t fit all.

Soviet president Mikhail Gorbachev asked Margaret Thatcher how she made sure her people had enough food to eat.  The Soviets were having difficulty feeding theirs.  In fact, they were importing grain from their archenemy.  The United States.  The answer to Gorbachev’s answer was that Thatcher did nothing to feed her people.  The free market fed her people.  Capitalism.

As far as those other big things the Soviets did, they acquired a lot of the knowledge to do those things through an elaborate network of espionage.  They stole technology and copied it.  And they were the first into space because their captured Nazi rocket scientists did it before our captured Nazi rocket scientists did.  (The seed of the space industry was the Nazi V-2 rocket that reigned terror on London and other cities during World War II).

(Lest you think that I’m ripping on the Soviet/Russian people, I’m not.  Just their economic system during the Soviet era.  Their people have suffered.  And persevered.  It was them after all who first threw back Napoleon in Europe.  And it was them who first threw back the Nazis in Europe.  They gave us Pyotr Ilyich Tchaikovsky, Sergei Rachmaninoff, Leo Tolstoy, Fyodor Dostoyevsky, Mikhail Dolivo-Dobrovolsky and, of course, Maria Sharapova to name just a few of the greats.  Good people.  Just sometimes bad government.  As in most nations.  Even in the U.S.)

SO WHAT IS the basic difference between capitalism and a command economy like that of the former Soviet Union?  Probably the freedom to take and accept risk.  Bankers take a risk in loaning money.  They analyze the risk.  If the return on the loan is greater than the risk, they’ll make the loan.  It’s their call.  And they’re pretty good.  Their successes are far greater than their failures.

Some loans are riskier than others.  There’s a greater chance of failure.  But it could also be the next, say, Microsoft.  Or Apple.  If so, even though there’s great risk, the potential of reward is so great that people will want to loan money.  They’ll buy junk bonds (high risk/high yield) or an initial public offering of stock.  They’ll risk their money for a greater return on their investment.  If it pays off.  And they don’t always do.  But good ideas with potential typically find financing.  And investors typically make more money than they lose.  It’s a pretty good system.  Capitalism.

WHEN YOU HAVE risk takers who choose to participate in the free flow of ideas and capital, great things happen.  Modern AC electrical power that we take for granted is invented (thank you Nikola Tesla for the genius and George Westinghouse for taking the risk).  You develop modern commercial jet aviation (thank you Boeing for the 707, 727, 737, 747, well, you get the picture).  You transform the world when you add impurities to semiconducting material and sandwich them together (thank you John Bardeen, Walter H. Brattain and William B. Shockley for the transistor).

These great things, along with others, give us professional sports (stadiums, transportation to and from the stadium, jetliners to take teams to other stadiums, oil exploration and refining for jet and car fuel, etc.).  They give us movies (financing, cameras and production equipment, special effects, theaters, popcorn, DVDs for home viewing, etc.).  They give us cell phones (cellular towers, switching networks, compact and long lasting batteries, interactive handheld devices, voicemail, email, texting, etc.).  And they liberated women to do whatever they want wherever they want by making feminine hygiene protection portable and plentiful (mass production, rail and truck transport, retail and vending outlets, etc.) and by providing convenient privacy (public toilet facilities with vending machines and disposal bins). 

Imagine any of these things provided by the same people who renew our driver’s license.  Do you think any of it would be as good?  Or do you think it would be more like Soviet-era life?  There’s so much we take for granted in capitalism because we can.  It’s a system that works on basic human nature.  It doesn’t require sacrifice.  It doesn’t depend on consensus.  It just needs the free flow of ideas and capital.  And great things follow.


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