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The Failure of Keynesianism – Ludwig von Mises Institute Canada
The Failure of Keynesianism – Ludwig von Mises Institute Canada.
It’s hard not to agree with the old aphorism “history doesn’t repeat itself, but it does rhyme.” It’s nice to think we learn from our mistakes; yet we always seem to repeat them at some later date.
Reading the daily news, you would be hard-pressed to find mention that there is still an employment crisis unfolding in many industrialized countries. The New York Times recently reported that employers in the United States hired only 175,000 workers in February. This is apparently a cause for celebration among economists. The unemployment rate in the U.S. still remains at an historic high of 6.7%, and there appears to be no date in sight for a return of full employment, but no matter; the economy is supposedly gaining steam.
The only problem is, nobody seems to care much anymore. High unemployment is a constant reality now. Nearly six years of slagging job creation has created a cloud of apathy for most people. It’s just accepted that not everyone who wants to find work will be able to; or they will wander from low-wage job to low-wage job without any kind of security.
The current economic malaise is reminiscent of what the Great Depression was like. Persistently high unemployment with no conceivable end; massive government intervention in the marketplace; a changing industrial landscape; and even social and cultural transformation. We’re less than a century removed from the biggest economic hardship ever faced in America, and the same mishaps are unfolding in front of our eyes.
Then and now, something has remained perennial: the utter incompetence on government’s part to cure economic stagnation.
Newscasters, state officials, and academic economists all tell us government is capable of spending us into prosperity. No matter how much dough is thrown at the glob known as the “economy,” large numbers of people remain out of work. During the Depression, the glut of joblessness lasted for nearly fifteen years. Uncle Sam spent like a drunken sailor while swallowing up much of the economy in fascist scheme after fascist scheme.
The very same thing goes on today, all at the behest of Keynesian-type political actors who provide the intellectual ammunition necessary to justify government’s outstretched hand. With neatly obscure formulas and obtuse language, the apparatchik darlings of Keynes love branding themselves as deep-thinking scientists capable of engineering the perfect economy. When their policy is put to work, we get the opposite. Job creation stagnates, living standards slump, and misery spreads. The siphons of entrepreneurial growth don’t pump; they are bogged down with the grimy sludge of currency manipulation and government hubris.
After decades of constant failure, I mean this wholeheartedly: the followers of the Keynesian school don’t have a damn clue on how to fix the economy. Why my gauche phrasing? Their policy prescription is a complete and total failure. The Great Depression; the stagflation of the 1970s; the Great Recession we see today; in each instance, Washington was impotent to reverse the damage. Keynesians are either pathetically ignorant, or maliciously deceptive.
Taking rhetorical shots doesn’t mean much without some evidence. So let’s meet the Keynesians on their terms. First, economic science itself will be interpreted through the lens of positivism. That means data, in whatever form, will be used to justify whether something works or not. Of course the assumption will be made that spending is the driver of economic prosperity – not saving or investment. The same goes for boundless money printing, which is said to infuse the “animal spirits” with a rejuvenating elixir.
So what have they got for successes? Keynesians used to tout the efforts of Franklin Roosevelt (not so much Herbert Hoover, who was proto-Rooseveltian) during the Great Depression as vindication for their theory. I remember being told in no uncertain terms that Uncle Sam stepped up to save the downtrodden from excess capitalism in my American Presidency 301 class. Sure, it wasn’t an economics course; but it’s the same tale spun by economists anyway.
What does the data say? From 1931 to 1940, the unemployment rate never went south of 10%. From the onset of the Depression, Washington spending went up 97% under the Hoover Administration. According to the White House’s official statistics, the federal budget increased from $3.5 billion in 1931 to $13.6 billion in 1941, jumping in size year after year. A combination of deficit spending and tax hikes (admittedly not a Keynesian remedy) allowed for this gorge in consumption. Meanwhile, the Federal Reserve goosed the economy by first stabilizing the monetary base and increasing the supply of money after the initial contraction during the Depression’s early years. According to the Historic Statistics of the United States, the Federal Reserve increased its holding of U.S. securities from $510 million in 1929 to over $6 billion in 1942. During the same period, the central bank’s balance sheet went from about $5.5 billion to $29 billion.
That’s no small stimulus. And yet the unemployment rate failed to drop significantly during the Depression years. Most of Keynes’s disciples admit that nearly fifteen years of high unemployment leaves much to be desired on the part of muscular government. The counterfactual is then deployed that Roosevelt’s domestic efforts lightened the economic burden foisted upon America. What finally put the Depression to bed, they argue, was the incredible amount of spending during World War II.
But as economic historian Robert Higgs shows, measures of economic performance were highly skewed during wartime. Unemployment fell and production ramped up, but this was due to the draft and building of armaments. Rationing was widespread to the point where basic foodstuffs and toiletries were scarce. If a wartime economy counts as prosperity, then the homeless today are the living embodiment of luxury.
World War II is a bunk fantasy that in no way proves the Keynesian theory correct. The same goes for the fascist orgy known as the New Deal. Fast-forward to today, and the same charlatans are preaching from the gospel of government interventionism. They implore Washington to fight back against the Great Recession with the same blunted tools: spending and money printing.
When the housing bubble burst and the economy began to tank, then-Chairman of the Federal Reserve Ben Bernanke and crew nearly tripled the central bank’s balance sheet. As of right now, the Fed’s sheet stands at about $4 trillion. In 2008, it was at $800 billion. Not to be outdone, the federal government ramped up spending by running nearly-trilliondollar deficits year-after-year. Once again, all this effort has only made a slight dent in the unemployment rate.
From a strictly empirical perspective, the Keynesian theory is a disaster. Positivism wise, it’s a smoldering train wreck. You would be hard-pressed to comb through historical data and find great instances where government intervention succeeded in lowering employment without creating the conditions for another downturn further down the line.
No matter how you spin it, Keynesianism is nothing but snake oil sold to susceptible political figures. Its practitioners feign using the scientific method. But they are driven just as much by logical theory as those haughty Austrian school economists who deduce truth from self-evident axioms. The only difference is that one theory is correct. And if the Keynesians want to keep pulling up data to make their case, they are standing on awfully flimsy ground.
James E. Miller is editor-in-chief of the Ludwig von Mises Institute of Canada. Send him mail
The Animal Spirits Page: How monetary policy drives foreign policy
The Animal Spirits Page: How monetary policy drives foreign policy.
It should now be evident that America’s foreign policy is to an extent being driven by our banking mess. Again and again, we see Washington, including Wall Street’s handmaiden, the Fed, exporting monetary chaos implicitely in order to weaken the status of potentially competing reserve currencies:
- Wall Street sent a tsunami of bad AAA-rated mortgage debt to Europe, much to Germany, the locus of power for the Euro (and again, implicit admission of guilt is seen in the apparent fronting of billions of bailout dollars to the European banks by the Fed after the crisis);
- Washington has apparently fomented or supported a coup in the Ukraine that increases the likelihood of war in Europe dramatically therefore sending the gigantic pools of liquid financial assets in the world scurrying into the greenback and US Treasuries, which the Chinese have stopped gobbling up;
- the other factor is that the military-industrial complex needs war to get its funding, and when drone-bombing rag-heads can’t provoke a serious attack, destabilizing a former Eastern bloc nation and provoking a somewhat justifiably paranoid Russian leader into military action guarantees at least a shot in the arm of crisis funding.
Russia has repeatedly stated over the past decades that an EU move on the Ukraine crosses a red line. The EU ignored the warning, and with the US’s help and the ire of Ukrainians sick of a corrupt government crossed Putin’s red line. What the Ukrainians want is democracy and relief from their corrupt plutocrats (see previous post’s article by Paul Craig Roberts).
The US has no compelling strategic interest in the Ukraine, or in the Crimea remaining part of the Ukraine. Yes, the Ukraine has been looted by its oligarchs, just as Russia was, and just as the US is being looted by its oligarchs right now; incomes of a majority of American households are falling so the banks can collect on bad debts. It would be nice for people everywhere if they could break the grip of the plutocrats over their livelihoods. In the Ukraine, to substitute debt servitude to Western banks for the domination of the oligarchs would only accelerate the collapse of the EU. And it’s not clear the EU, if it offers help, won’t be ripped off by the oligarchs as well. The new government in the Ukraine has already increased the power of the oligarchs by giving them provinces to rule, so it’s not clear the Western “rescuers” are even able to help solve the fundamental problem at all, and might end up losing their shirts again, as they have in Greece, Portugal, et al.
Until democratic governments around the world become strong enough to counteract the power of the plutocratsby taxing them, both their income and their wealth (as Sweden does) the revolving looting of sovereign governments and demolition of middle classes by the plutocrats and their corporations will continue.
A couple of posts ago I said the scariest thing I’ve heard recently was Catherine Anne Fitts saying what the world needs now is a global debt for equity swap. I should say I generally like Ms. Fitts’ analysis and suspect she may even have misspoken when she made this comment. Such a move would concentrate ownership of the world’s assets sufficiently to create even more of a Plantation Earth than we have currently.
She identified the problem, but not the solution. What the world needs now is a global jubilee, debt forgiveness. The debt that the Fed is shoving under the carpet via QE is what is known in banking circles as “bad debt.” It is loans that never should have been made because they will never be repaid. In honest not crony capitalism such debts come out of the profits (as losses) of the banks that made them. In crony capitalism, with a central bank controlled by the banks, such debts are “paid back” by being monetized and put on the backs of the taxpayers either directly or through inflation.
The austerity programs Europe has put in place so that Wall Street and European banks can be paid back bad debts have destroyed more than one economy and more are probably yet to fall. (The idea promoted ten plus years ago of “convergence” of interest rates in the EU between periphery and core caused me to gag at the time.) Debt slavery to Western banks is not the answer. (China is apparently making similar mistakes; it will be interesting to see what they do with the bad debt. I suspect their strong central government will tell the bankers to go stuff it.) Ms. Fitts suggests that sooner or later the plutocrats will destroy the banks in order to buy them cheap and collect the rents themselves, canny suggestion indeed.
Chaos in the world = a strong dollar. Until it doesn’t. Chaos has a way of being unpredictable.
Capitalism has killed democracy. “Free” markets dominated by monopolies and oligopolies are not what Adam Smith had in mind. It’s time for democracy to be reborn. There are degrees of economic inequality that are simply immoral and destructive and humankind has the right to reject them. When the top 85 families own as much as the bottom 3.5 billion people, as recently reported, we have reached such a point.
The Great Change: Sunblock
“We continue to be amazed at how many commentators, otherwise very thoughtful and well-informed, seem to think that humans will find technological solutions, such as super-efficient appliances and mag-lev light rail, to cure the impending energy shortfall. That won’t happen, and our Ponzi money system is why.”
Ted Glick, in “Making a Renewable Energy Revolution,” Future Hope, March 2, 2014, writes:
A climate revolutionary is someone who works for a rapid and just transition away from oil, coal, gas and nukes to an economy powered primarily by wind, solar and geothermal energy, with energy sources increasingly decentralized and community-based, with society-wide energy conservation and energy efficiency, and with a conscious plan to ensure that this transition is done in a way which creates living wage jobs both for the currently unemployed and for workers in the fossil fuel industry who lose their jobs because of the shift to renewables. There are tens, if not hundreds, of thousands of activists in the United States who I believe are in general agreement with this perspective. They are part of the numerous local, state, regional and national groups which prioritize the climate issue in some way.
Don’t get us wrong. We admire Ted Glick.
We have been bullish on transitioning the world back to solar energy since the late 1960s, when we bought our first solar cells and started tinkering with wind generators. By the early 70s, when we started Global Village Institute as ‘Global Village Technology,’ we were constructing concentrating arrays using Fresnel lenses and exotic gallium arsenide silicon chips and bending our own windmill blades on self-made presses, as our copies of Soft Energy Paths and The Mother Earth News grew dog-eared. In the 80s we enjoyed a steady diet of encouragement from Barry Commoner, Bill Mollison and Denis Hayes and hoped fervently that the world would beat the last remaining blades of fossil sunlight into solar plowshares.
A half-century later, we are likely seeing the end of that dream, not for want of desire, but from simple arithmetic. Industrial scale renewable energy will inevitably decline. Don’t mistake this prediction as saying we are at peak renewables. Quite the contrary. Perhaps even the nascent industry has a good ways to go, borne on the wings of capital flight from fossil and nuclear, and much good can yet be accomplished. But as a share of overall energy production, renewables are still in the trough that they slid into at mid-Nineteenth Century. On a straight-line chart, they could climb out of that slump by mid- to late-Twenty-First Century. What we won’t have, though, is the technological civilization Ted Glick takes for granted. The renewable energy source with the biggest market share will be firewood.
How long the solar and wind farm phenomena persist will depend on how long our current ‘extend and pretend’ debt-based global economic paradigm can be sustained. Maybe another month. Maybe half a century. But when that is done, we will be back once more to something approaching fully solar. You can take that to the bank.
Lets run a few numbers to demonstrate.
Energy keeps our economy running. Energy is also what we use to obtain more energy. The more energy we use to obtain more energy, the less we have for anything else. That dilemma was most recently explained in superlative detail by Steve Kopits in a talk at Columbia University in February.
The trend is already clear: the energy of the future will have lower energy return on energy invested — EROEI — than the energy of the past. Apart from some rare abiogenic sources, all fossil fuels are biofuels — from plants and animals that grew and harvested sunlight over millions of years. All renewables derive from the current energy flux (sunlight, wind, tides, plant growth, or heat from the earth) in real time. Renewables have low EROEI compared to high-carbon fuels such as coal and oil. In some cases — the Alberta Tar Sands, many shale oil plays, new nuclear — the EROEI may even be net minus. What is being purchased with greater nature-debt is time.
Jeff Vail, in a 2009 post, offered these two examples:
Basic data: 1.2 MW array installed 2009 in Los Angeles, cost $16.5 million up front (ignoring rebates/tax credits/incentives), projected financial return of $550,000 per year. At the rough California rate of $.15 per KWh, that’s about 4 GWh per year (conservative).
Price-Estimated-EROEI Calculation: The $16.5 million up-front is, at $0.09/KWh (here using national average, as there’s no reason to think that manufacturers would use primarily California peaking power to build this system), an input of 183 GWh through installation (I’m ignoring the relatively small maintenance costs here, which will also make the figure more conservative). If we assume a life-span of 40 years, then the energy output of this system is 160 GWh. That’s a price-estimated EROEI of 0.87:1.
Wind Example: I’ve had a more difficult time finding a recent wind project where good data (on both cost and actual, as opposed to nameplate, output) is available. As a result, I’ve chosen a 2000 Danish offshore wind project at Middelgrunden. While up-front expenses may be higher off-shore (making the resulting EROEI more accurate for offshore projects than on-shore), I think this is a relatively modern installation (2MW turbines).
Basic data: Cost of $60 million, annual energy output 85 GWh. Price-Estimated-EROEI Calculation: At the US national average rate for electricity ($0.09/KWh), the $60 million up-front energy investment works out to 666 GWh. Using a life-span of 25 years (and assuming zero maintenance, grid, or storage investment, making the result artificially high), the energy output comes to 2125 GWH. That’s a price-estimated-EROEI of 3.2:1.
While it might have been possible to build a Maya-type or Roman-type civilization on an EROEI of 3:1, it is not possible to sustain modern technological complexity on anything much below 5:1. Remember, we put men on the moon and laid internet fiber cables under the oceans when EROEI was 100:1, so even 5:1 is pretty speculative, and would likely require some significant technological leaps that have not occurred despite vast capital being thrown at them, and now seem unlikely (i.e.: “fairy dust”).
One bellweather is air travel. Since Peak Oil was hit globally in 2005, airlines have been operating on the edge of bankruptcy, cutting amenities to allocate more cash to purchasing fuel. It has been reportedthat without the quick and dirty impact of US shale oil in 2012, some airlines would have already gone into receivership.
We continue to be amazed at how many commentators, otherwise very thoughtful and well-informed, seem to think that humans will find technological solutions, such as super-efficient appliances and mag-lev light rail, to cure the impending energy shortfall. That won’t happen, and the Ponzi money/debt system is why, but frankly, we find it difficult to imagine a civilization approaching ours in complexity being able to subsist on daily solar income in much the same style it had on that 500-million year fossil energy trust fund, even if money were magically reformed.
Since 2008 it has become clear that the timing of the crash of our oil-dependent civilization comes around to the fate of a single indicator. It comes down to James Carville’s famous imperative for the Clinton Campaign: “It’s The Economy Stupid!” We can count ourselves lucky, from a climate standpoint, that globalization was still relatively young when the party ran out of ice and had to break up.
All political systems exist to concentrate wealth at the center at the expense of the periphery. So to maintain their complex central operating systems and lavish gifts upon their extremely wealthy and wasteful bazillionaires, London, New York, Stockholm, Moscow and Beijing sucked wealth out of very large moneysheds — Africa, South America, Eastern Europe, Asia and Australia. When they can’t do that anymore — because the EROEI crisis has become a financial crisis — the sell orders will start to cascade. Distant trading relationships have a hard time remaining stable. Empire centers have to start maintaining their unsustainably high standards of living by sucking up marginal wealth from smaller, closer areas. This is what happened in ancient Rome and is now happening on the European periphery. That strategy only gets you so far before the local wealth is completely exhausted and there is nothing left to drain.
This is the soft underbelly of industrial scale renewable energy. It is not shortages of rare earths or energy inputs to make solar cells and windmills. It is the ability to finance production when your economic system is in free fall.
My letter to the NY Times re: The Lawless Fed – Ludwig von Mises Institute Canada
My letter to the NY Times re: The Lawless Fed – Ludwig von Mises Institute Canada.
Re: Fed’s Aid in 2008 Crisis Stretched Worldwide
Your article about the Fed’s actions in 2008 to lend $580 billion in so-called “swap lines” to central banks internationally sounds a note of triumphalism that is completely unwarranted. The Fed had no authority to lend to these entities, despite its attempts to justify its action as lending against collateral. In any regard, if the collateral against which the Fed lent dollars was so strong and, as your article states, the American taxpayers actually made money on the deal, why did the Fed need to get involved at all? The obvious answer is that the Fed took an illegal risk that fortunately worked out. New York Fed President Timothy Geithner’s chest puffing statement that “the privilege of being the reserve currency comes with some burdens” is especially troubling in that we may assume that in the future the Fed will engage in similar risky adventures. One final note…what caused the 2008 crisis in the first place? Your article identifies it perfectly: “The root cause of the problem was this: Global banks did lots of business in dollars–buying up United States mortgaged-backed securities,…” And what initiated the massive issuance of these soon-to-be-worthless mortgaged-backed securities? Fed money printing. So, please, let’s not call the Fed a hero, when it really caused the crisis that led to its illegal actions.
Patrick Barron is a consultant to the banking industry. He teaches Austrian school economics at the University of Iowa and Bank Managemant Simulation for the Graduate School of Banking, University of Wisconsin. Visit his blog. Send him mail.
Ponzi World (Over 3 Billion NOT Served): Self-Imploding Capitalism
Ponzi World (Over 3 Billion NOT Served): Self-Imploding Capitalism.
Too late. I already opted for the first option years ago. It was a choice between a low return on capital or no return of capital, so I chose the former. Everyone thinks that they will be that one guy who gets out at the very top – you know, like Alan Greenspan. Fortunately, you don’t have to be a retiring Central Bankster to realize that a set of widely ignored factors have coalesced to make meltdown inevitable.
Capitalism taken to the logical extent possible will inevitably self-implode with extreme dislocation.
Carry Trades Unwinding
First off, carry trade unwind risk was always the greatest risk created by Quantitative Easing and despite the rolling dislocations in Emerging Markets, it’s still being ignored. These various high risk Emerging Market countries were primary beneficiaries of Fed largesse as it temporarily propped up their currencies and their debt markets. Now during the unwind phase, the currencies are collapsing and interest rates are rising. Meanwhile, investors are just starting to realize that these trade deficits (current account balances) are totally unsustainable. In a desperate attempt to stabilize its currency, Turkey raised interest rates by 4% overnight which of course will kill the economy. This is all just deja vu of the 1997 currency crisis which started in Thailand and spread throughout Asia.
Don’t Worry. Be Happy
“China is being engulfed in a financial crisis that might end up in its own version of the credit crunch. There are running battles on the streets on Bangkok and Kiev as authoritarian regimes totter. Turkey is sinking, and may soon not be able to fund its current account deficit. Argentina is going through another currency crisis. There is no shortage of drama coming out of the emerging markets. And there is no shortage of reasons for the markets to work them themselves up into a panic.” (“Why An Emerging Markets Crash Wouldn’t Matter”)
Key Stock Market Risks
The Two Faces of Empire | Greg Grandin
The Two Faces of Empire | Greg Grandin.
Melville Knew Them, We Still Live With Them
Cross-posted with TomDispatch.com
A captain ready to drive himself and all around him to ruin in the hunt for a white whale. It’s a well-known story, and over the years, mad Ahab in Herman Melville’s most famous novel, Moby-Dick, has been used as an exemplar of unhinged American power, most recently of George W. Bush’s disastrous invasion of Iraq.
But what’s really frightening isn’t our Ahabs, the hawks who periodically want to bomb some poor country, be it Vietnam or Afghanistan, back to the Stone Age. The respectable types are the true “terror of our age,” as Noam Chomsky called them collectively nearly 50 years ago. The really scary characters are our soberest politicians, scholars, journalists,professionals, and managers, men and women (though mostly men) who imagine themselves as morally serious, and then enable the wars, devastate the planet, and rationalize the atrocities. They are a type that has been with us for a long time. More than a century and a half ago, Melville, who had a captain for every face of empire, found their perfect expression — for his moment and ours.
For the last six years, I’ve been researching the life of an American seal killer, a ship captain named Amasa Delano who, in the 1790s, was among the earliest New Englanders to sail into the South Pacific. Money was flush, seals were many, and Delano and his fellow ship captains established the first unofficial U.S. colonies on islands off the coast of Chile. They operated under an informal council of captains, divvied up territory, enforced debt contracts, celebrated the Fourth of July, and set up ad hoc courts of law. When no bible was available, the collected works of William Shakespeare, found in the libraries of most ships, were used to swear oaths.
From his first expedition, Delano took hundreds of thousands of sealskins to China, where he traded them for spices, ceramics, and tea to bring back to Boston. During a second, failed voyage, however, an event took place that would make Amasa notorious — at least among the readers of the fiction of Herman Melville.
Here’s what happened: One day in February 1805 in the South Pacific, Amasa Delano spent nearly a full day on board a battered Spanish slave ship, conversing with its captain, helping with repairs, and distributing food and water to its thirsty and starving voyagers, a handful of Spaniards and about 70 West African men and women he thought were slaves. They weren’t.
Those West Africans had rebelled weeks earlier, killing most of the Spanish crew, along with the slaver taking them to Peru to be sold, and demanded to be returned to Senegal. When they spotted Delano’s ship, they came up with a plan: let him board and act as if they were still slaves, buying time to seize the sealer’s vessel and supplies. Remarkably, for nine hours, Delano, an experienced mariner and distant relative of future president Franklin Delano Roosevelt, was convinced that he was on a distressed but otherwise normally functioning slave ship.
Having barely survived the encounter, he wrote about the experience in his memoir, which Melville read and turned into what many consider his “other” masterpiece. Published in 1855, on the eve of the Civil War, Benito Cereno is one of the darkest stories in American literature. It’s told from the perspective of Amasa Delano as he wanders lost through a shadow world of his own racial prejudices.
One of the things that attracted Melville to the historical Amasa was undoubtedly the juxtaposition between his cheerful self-regard — he considers himself a modern man, a liberal opposed to slavery — and his complete obliviousness to the social world around him. The real Amasa was well meaning, judicious, temperate, and modest.
In other words, he was no Ahab, whose vengeful pursuit of a metaphysical whale has beenused as an allegory for every American excess, every catastrophic war, every disastrous environmental policy, from Vietnam and Iraq to the explosion of the BP oil rig in the Gulf of Mexico in 2010.
Ahab, whose peg-legged pacing of the quarterdeck of his doomed ship enters the dreams of his men sleeping below like the “crunching teeth of sharks.” Ahab, whose monomania is an extension of the individualism born out of American expansion and whose rage is that of an ego that refuses to be limited by nature’s frontier. “Our Ahab,” as a soldier in Oliver Stone’s movie Platoon calls a ruthless sergeant who senselessly murders innocent Vietnamese.
Ahab is certainly one face of American power. In the course of writing a book on the history that inspired Benito Cereno, I’ve come to think of it as not the most frightening — or even the most destructive of American faces. Consider Amasa.
Since the end of the Cold War, extractive capitalism has spread over our post-industrialized world with a predatory force that would shock even Karl Marx. From the mineral-rich Congo to the open-pit gold mines of Guatemala, from Chile’s until recently pristinePatagonia to the fracking fields of Pennsylvania and the melting Arctic north, there is no crevice where some useful rock, liquid, or gas can hide, no jungle forbidden enough to keep out the oil rigs and elephant killers, no citadel-like glacier, no hard-baked shale that can’t be cracked open, no ocean that can’t be poisoned.
And Amasa was there at the beginning. Seal fur may not have been the world’s first valuable natural resource, but sealing represented one of young America’s first experiences of boom-and-bust resource extraction beyond its borders.
With increasing frequency starting in the early 1790s and then in a mad rush beginning in 1798, ships left New Haven, Norwich, Stonington, New London, and Boston, heading for the great half-moon archipelago of remote islands running from Argentina in the Atlantic to Chile in the Pacific. They were on the hunt for the fur seal, which wears a layer of velvety down like an undergarment just below an outer coat of stiff gray-black hair.
In Moby-Dick, Melville portrayed whaling as the American industry. Brutal and bloody but also humanizing, work on a whale ship required intense coordination and camaraderie. Out of the gruesomeness of the hunt, the peeling of the whale’s skin from its carcass, and the hellish boil of the blubber or fat, something sublime emerged: human solidarity among the workers. And like the whale oil that lit the lamps of the world, divinity itself glowed from the labor: “Thou shalt see it shining in the arm that wields a pick or drives a spike; that democratic dignity which, on all hands, radiates without end from God.”
Sealing was something else entirely. It called to mind not industrial democracy but the isolation and violence of conquest, settler colonialism, and warfare. Whaling took place in a watery commons open to all. Sealing took place on land. Sealers seized territory, fought one another to keep it, and pulled out what wealth they could as fast as they could before abandoning their empty and wasted island claims. The process pitted desperate sailors against equally desperate officers in as all-or-nothing a system of labor relations as can be imagined.
In other words, whaling may have represented the promethean power of proto-industrialism, with all the good (solidarity, interconnectedness, and democracy) and bad (the exploitation of men and nature) that went with it, but sealing better predicted today’s postindustrial extracted, hunted, drilled, fracked, hot, and strip-mined world.
Seals were killed by the millions and with a shocking casualness. A group of sealers would get between the water and the rookeries and simply start clubbing. A single seal makes a noise like a cow or a dog, but tens of thousands of them together, so witnesses testified, sound like a Pacific cyclone. Once we “began the work of death,” one sealer remembered, “the battle caused me considerable terror.”
South Pacific beaches came to look like Dante’s Inferno. As the clubbing proceeded, mountains of skinned, reeking carcasses piled up and the sands ran red with torrents of blood. The killing was unceasing, continuing into the night by the light of bonfires kindled with the corpses of seals and penguins.
And keep in mind that this massive kill-off took place not for something like whale oil, used by all for light and fire. Seal fur was harvested to warm the wealthy and meet a demand created by a new phase of capitalism: conspicuous consumption. Pelts were used for ladies’ capes, coats, muffs, and mittens, and gentlemen’s waistcoats. The fur of baby pups wasn’t much valued, so some beaches were simply turned into seal orphanages, with thousands of newborns left to starve to death. In a pinch though, their downy fur, too, could be used — to make wallets.
Occasionally, elephant seals would be taken for their oil in an even more horrific manner: when they opened their mouths to bellow, their hunters would toss rocks in and then begin to stab them with long lances. Pierced in multiple places like Saint Sebastian, the animals’ high-pressured circulatory system gushed “fountains of blood, spouting to a considerable distance.”
At first the frenetic pace of the killing didn’t matter: there were so many seals. On one island alone, Amasa Delano estimated, there were “two to three millions of them” when New Englanders first arrived to make “a business of killing seals.”
“If many of them were killed in a night,” wrote one observer, “they would not be missed in the morning.” It did indeed seem as if you could kill every one in sight one day, then start afresh the next. Within just a few years, though, Amasa and his fellow sealers had taken so many seal skins to China that Canton’s warehouses couldn’t hold them. They began to pile up on the docks, rotting in the rain, and their market price crashed.
To make up the margin, sealers further accelerated the pace of the killing — until there was nothing left to kill. In this way, oversupply and extinction went hand in hand. In the process, cooperation among sealers gave way to bloody battles over thinning rookeries. Previously, it only took a few weeks and a handful of men to fill a ship’s hold with skins. As those rookeries began to disappear, however, more and more men were needed to find and kill the required number of seals and they were often left on desolate islands for two- or three-year stretches, living alone in miserable huts in dreary weather, wondering if their ships were ever going to return for them.
“On island after island, coast after coast,” one historian wrote, “the seals had been destroyed to the last available pup, on the supposition that if sealer Tom did not kill every seal in sight, sealer Dick or sealer Harry would not be so squeamish.” By 1804, on the very island where Amasa estimated that there had been millions of seals, there were more sailors than prey. Two years later, there were no seals at all.
The Machinery of Civilization
There exists a near perfect inverse symmetry between the real Amasa and the fictional Ahab, with each representing a face of the American Empire. Amasa is virtuous, Ahab vengeful. Amasa seems trapped by the shallowness of his perception of the world. Ahab is profound; he peers into the depths. Amasa can’t see evil (especially his own). Ahab sees only nature’s “intangible malignity.”
Both are representatives of the most predatory industries of their day, their ships carrying what Delano once called the “machinery of civilization” to the Pacific, using steel, iron, and fire to kill animals and transform their corpses into value on the spot.
Yet Ahab is the exception, a rebel who hunts his white whale against all rational economic logic. He has hijacked the “machinery” that his ship represents and rioted against “civilization.” He pursues his quixotic chase in violation of the contract he has with his employers. When his first mate, Starbuck, insists that his obsession will hurt the profits of the ship’s owners, Ahab dismisses the concern: “Let the owners stand on Nantucket beach and outyell the Typhoons. What cares Ahab? Owners, Owners? Thou art always prating to me, Starbuck, about those miserly owners, as if the owners were my conscience.”
Insurgents like Ahab, however dangerous to the people around them, are not the primary drivers of destruction. They are not the ones who will hunt animals to near extinction — or who are today forcing the world to the brink. Those would be the men who never dissent, who either at the frontlines of extraction or in the corporate backrooms administer the destruction of the planet, day in, day out, inexorably, unsensationally without notice, their actions controlled by an ever greater series of financial abstractions and calculations made in the stock exchanges of New York, London, and Shanghai.
If Ahab is still the exception, Delano is still the rule. Throughout his long memoir, he reveals himself as ever faithful to the customs and institutions of maritime law, unwilling to take any action that would injure the interests of his investors and insurers. “All bad consequences,” he wrote, describing the importance of protecting property rights, “may be avoided by one who has a knowledge of his duty, and is disposed faithfully to obey its dictates.”
It is in Delano’s reaction to the West African rebels, once he finally realizes he has been the target of an elaborately staged con, that the distinction separating the sealer from the whaler becomes clear. The mesmeric Ahab — the “thunder-cloven old oak” — has been taken as a prototype of the twentieth-century totalitarian, a one-legged Hitler or Stalin who uses an emotional magnetism to convince his men to willingly follow him on his doomed hunt for Moby Dick.
Delano is not a demagogue. His authority is rooted in a much more common form of power: the control of labor and the conversion of diminishing natural resources into marketable items. As seals disappeared, however, so too did his authority. His men first began to grouse and then conspire. In turn, Delano had to rely ever more on physical punishment, on floggings even for the most minor of offences, to maintain control of his ship — until, that is, he came across the Spanish slaver. Delano might have been personally opposed to slavery, yet once he realized he had been played for a fool, he organized his men to retake the slave ship and violently pacify the rebels. In the process, they disemboweled some of the rebels and left them writhing in their viscera, using their sealing lances, which Delano described as “exceedingly sharp and as bright as a gentleman’s sword.”
Caught in the pincers of supply and demand, trapped in the vortex of ecological exhaustion, with no seals left to kill, no money to be made, and his own crew on the brink of mutiny, Delano rallied his men to the chase — not of a white whale but of black rebels. In the process, he reestablished his fraying authority. As for the surviving rebels, Delano re-enslaved them. Propriety, of course, meant returning them and the ship to its owners.
Our Amasas, Ourselves
With Ahab, Melville looked to the past, basing his obsessed captain on Lucifer, the fallen angel in revolt against the heavens, and associating him with America’s “manifest destiny,” with the nation’s restless drive beyond its borders. With Amasa, Melville glimpsed the future. Drawing on the memoirs of a real captain, he created a new literary archetype, a moral man sure of his righteousness yet unable to link cause to effect, oblivious to the consequences of his actions even as he careens toward catastrophe.
They are still with us, our Amasas. They have knowledge of their duty and are disposed faithfully to follow its dictates, even unto the ends of the Earth.
TomDispatch regular Greg Grandin’s new book, The Empire of Necessity: Slavery, Freedom, and Deception in the New World, has just been published.