20201118 Source of funds, source of wealth and unexplained wealth.

20201118 Source of funds, source of wealth and unexplained wealth.

Nigel Morris-Cotterill

When Des Hellicar-Bowman referred to a 19th Century book, "The Theory of the Leisure Classes" by Thorstein Veblen, I knew it would be good because Mr Hellicar-Bowman and I take a similar view of financial crime in that it the only way to understand it and therefore to effectively counter it is to make a broad study of everything to do with it, including those things that appear to be only peripherally relevant. The book is obliquely applicable to financial crime but it is directly relevant to how we view assets and source of funds and source of wealth. Here's what I found....

By the end of the 1900s, politics was in a state of flux. Marx was dead and his work becoming more influential by the day. He had been one of a number of proto-communists who would later be quoted as the founders of the revolutions that would sweep much of the world, especially those where forms of feudalism persisted. Marx had fallen out with Pierre-Joseph Proudhon and having first enthusiastically embraced Proudhon's "property is theft" statement, later argued against it (which is bizarre because these days the expression is most often mis-attributed to Marx. But in the late 1900s, revolution was still at least a decade away and the biggest threat to order was from a largely pan-European movement of anarchists which, in today's terms, we can properly consider to be the first modern terrorists as a result of their widespread bombing campaigns and attempts at assassination of both politicians and royalty in pursuit of revolutionary change.

Veblen's book is both a riposte to anarchic revolution and an encouragement to a broadly socialist agenda.

Despite his name, Veblen was American and educated there. English (there being much in common between English and American when he was writing) was his first language and he is highly articulate. That's important because the ideas that he held were not common in the USA at that time - indeed, even today, obvious socialism sinks presidential campaigns faster than overt corruption and criminal conduct. Veblen will have been able to publish because he did not use the language of communism or, even, socialism. He presented his views as as an understanding of social structure and liberal reform, an approach that, again today, in 2020, we see as being the winning strategy in US Elections.

For this reason, Veblen would write in terms more palatable to his American audience than those of European radicals, including Marx.

And so, Veblen does not repeat the "property is theft" statement verbatim, not for him the quick and dirty slogan to appeal to a largely poorly, or un-,educated proletariat: no, he said the same thing in a different way "Property set out with being booty held as trophies of the successful raid." Same thing, more words. American academics are still doing the same: Taleb's Black Swan is, essentially, Rumsfeld's "unknown unknowns" speech in a far more pompous and pretentious style.

There is much in Veblen's writing that today's hashtag feminists would find highly supportive of their campaigns, although they would probably have to change their all-too-often one dimensional mind-sets to see why.

For example "there is reason to believe that the institution of ownership has begun with the ownership of persons, primarily women. The incentives to acquiring such property have apparently been: (1) a propensity for dominance and coercion; (2) the utility of these persons as evidence of the prowess of the owner; (3) the utility of their services." This, by any other name, would be seen as the essence of slavery and, in today's context, the trafficking of persons, particularly women.

On the symbolism of displays of wealth, Veblen says :

"Tangible evidences of prowess--trophies--find a place in men's habits of thought as an essential feature of the paraphernalia of life. Booty, trophies of the chase or of the raid, come to be prized as evidence of pre-eminent force. Aggression becomes the accredited form of action, and booty serves as prima facie evidence of successful aggression. As accepted at this cultural stage, the accredited, worthy form of self-assertion is contest; and useful articles or services obtained by seizure or compulsion, serve as a conventional evidence of successful contest."

Then, he makes, with subtlety, his pitch about the social acceptability of accumulated wealth (historically seen as "worthy") and earned wealth (historically seen as "unworthy"). His mission is clear: to reverse that view so that those things which are earned by means of one's own labour are in some way as more reflective of the kind of society he promoted: "the obtaining of goods by other methods than seizure comes to be accounted unworthy of man in his best estate. The performance of productive work, or employment in personal service, falls under the same odium for the same reason. An invidious distinction in this way arises between exploit and acquisition on the other hand. Labour acquires a character of irksomeness by virtue of the indignity imputed to it."

He was right; and he's right today. We, as a society, tend to look down on those who work hard for little reward so that others may enjoy the fruits of - usually - someone else's labour, be that an ancestor or tens of thousands of people screwing gear-knobs into cars, for example. And yet, if it were not for those people, our cultured, comfortable way of life would not be possible. The extent to which so many people are dependent on "the little people" has been thrown into sharp focus during the various restrictions placed on populations by responses by governments to CoVid-19. The dramatic expansion of on-line ordering of everything from fully cooked meals to condoms, from books to streamed films has demonstrated that, for many many people, they are so far removed from the actual activities that keep them alive that Veblen had a point when he said "Under this common-sense barbarian appreciation of worth or honour, the taking of life--the killing of formidable competitors, whether brute or human--is honourable in the highest degree. And this high office of slaughter, as an expression of the slayer's prepotence, casts a glamour of worth over every act of slaughter and over all the tools and accessories of the act. Arms are honourable, and the use of them, even in seeking the life of the meanest creatures of the fields, becomes a honorific employment. At the same time, employment in industry becomes correspondingly odious, and, in the common-sense apprehension, the handling of the tools and implements of industry falls beneath the dignity of able-bodied men. Labour becomes irksome."

So, sitting in an office shouting "greed is good" is worthy because it's aggressive trophy hunting; growing vegetables to feed the office worker and his family is not, Veblen argues.

But he also argues that this position should be reversed.