The Wolves are Beginning to Feed

Rapacious Capitalists and Their Running Dogs

When a moral imperative is providing a backbone to a capitalist—beware. Of course, not all moral imperatives are wrong. But there remains a sneaking suspicion that the capitalist will attempt to use the moral imperative to skew the market in his favour, weakening competitors and fleecing the public accordingly.

Adam Smith saw this with astounding clarity. Having a realistic view of human nature, Smith characterised capitalists as being motivated by a “mean rapacity”. He said that when in a group, businessmen “seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” (Adam Smith, Wealth of Nations, [New York: Modern Library, 1937], p.128.) The only way to restrain such rapacity was to keep the economy open and subject to full blooded competition. It is the dynamic of competition which restrains and controls the innate rapacity of human beings.

When a capitalist pronounces or seizes upon a moral imperative for their particular good or service, however, all bets are off. For almost inevitably they will turn to the political realm to secure particular non-competitive advantage, subsidy, or protection, for their business on the grounds of a greater good or a higher purpose.

In recent days we have been treated to the ugly spectacle of Patricia Woertz, CEO of Archer Daniels Midland Corporation, which just happens to be the largest ethanol producer in the United States, telling us that it would be a terrible mistake to pull back from producing biofuels. (CNN Money, “Archer Daniels Defends Ethanol,” 30th April, 2008) This is an industry which has been built by government subsidies and tax relief. Federal tax breaks alone amounted to $3.2bn last year. Then, on top of that, we have to add the guaranteed minimum price which the Federal government will pay for raw materials and a multitude of related subsidies and supports. Archer Daniels spent just short of a million dollars lobbying the US Federal Government to secure subsidies and government favours for its business.

But, says Woertz, all this is to the good. Why? Because it will “ensure” that the US will be able to meet the rising demand for energy. Adopting the garb of the humanitarian statesman, Woertz issued a litany of warnings about bad consequences that would flow if the US government pulled back from its subsidies to biofuel (that is, to her company). This would be “wrong. It's foolish. I think it's dangerous. I think it's a mistake.”

Yup, we get the picture. But wrong for whom; dangerous for whom? may we inquire.

The problem, according to Woertz, is the stupid, inefficient market. It is the high price of oil which has driven up food prices, not the plague of locusts that is the biofuel industry. Oh, yes—and what has caused the linkage between food and oil prices in the global market? Your company has—because you are rapaciously taking grain out of the food production chain and converting it to ethanol—all the while subsidised and funded by the Federal Government. No, the market is very efficient. It is responding accurately to the gross distortions which Woertz and her ilk have introduced.

But, then, the kicker: “Retreat from biofuels is just an empty gesture. That won't fill anybody's stomach and won't fill anybody's gas tanks,” said Woertz. To which we need to ask a simple moral question of Woertz and her political cronies: which is morally more important—food in the stomach or gas in the tank? In case it has not occurred to you, people can survive without gas in the tank, but no food is lethal. For the solution to the current food crisis which is already causing severe suffering—and looks likely to result in an horrendous global catastrophe—is simple. If the morally and ethically bankrupt ethanol industry were to stop consuming 30 percent of US corn production—as it currently does—and the figure is going to rise rapidly every year from now on—global prices of grains would ease immediately. Within a year, every staple food price would have fallen sharply around the globe—grains, meat, dairy, fish, and vegetables. Vulnerable lives would be saved.

This is a man made crisis. It is an artificially engendered crisis. It is the confluence of loopy global warming fears, coupled with inhuman greenist utopianism, politicians seeking to curry electoral favour by trumpeting “think big” visions, and of capitalists seeking to take advantage and make what is in effect, blood money.

Adam Smith was right. Beware the capitalist trumpeting a moral imperative and his politician-running dogs. A mean and cruel rapacity is being cloaked. In the end, the wolves will come out to feed. They have now emerged and are starting to feed on the carcases of the destitute and the vulnerable the poor, and the wretched of the earth.