Artifice
Tuesday, August 9, 2011
London's Burning (and not with boredom!)
Saturday, July 2, 2011
The Power of Myth
Sunday, March 27, 2011
The Role of the Centralization of Banking Power in Increasing the Severity of Panics
The banking panics of the Gilded Age were caused by the vast power of New York City banks to control the economy through control of the money and credit supply. These were symptoms of the National Banking System that had existed since the Civil War. Due to federal legislation, interior banks could only earn interest on their reserves by depositing them with larger national banks in New York City. When planting season arrived and the farmers needed credit, the interior banks would rely on the New York City banks to return their deposits and provide them with liquidity. This gave the New York City banks power over a large percent of the nation's capital, which gave them the opportunity to exert tremendous influence over the stock market and play speculative games for profit. During panics, these irresponsible investments would come to light, and the New York City banks would be unable to provide money to the interior banks. This would cause a contraction of the money supply throughout the whole country, which would decrease employment, prices, and investment. The rigid gold standard made these panics even worse because it did not allow for sufficient expansion of the money supply during times when the demand for credit was high. Nevertheless, there were many methods of providing liquidity during crises which effectively reduced the severity of these panics. The US Treasury, for example, would buy bonds back early and make deposits to shore up the reserves of shaky financial institutions. In addition, the actions of the New York Clearing House (NYCH) strongly affected the severity of the banking panics of the Gilded Age. The movements for banking reform in the early 1900s were strongly motivated by the need for a more elastic currency, but the reform movement did not attack the gold standard for constricting the money supply, and it did not attack the National Banking System for centralizing banking power in New York. Mainly spearheaded by big bankers, the reform movement instead fought for centralized coordination of banking power to create this much needed elasticity, and the Federal Reserve System replaced the National Banking System in 1913. Pooling gold and reserves in a central bank would reduce transactions costs, make it easier to expand and contract the money supply in reaction to the market, and create a system which was not biased against interior banks, but it would also lead to uniformity in the economy rather than diversity and centralized control of the economic fate of the nation.
The National Banking System had already increased the severity of the panics of the Gilded Age by concentrating banking power in New York City, yet the banking reform movement further centralized banking power by enacting the Federal Reserve System. In the National Banking system, rural banks had to keep their reserves in city banks if they wanted to earn interest, and city banks had to keep their reserves in New York City banks in order to earn interest. The New York bankers would use the interior banks' deposits to invest in the stock market, attempting to use their massive power over other people's money to affect market trends for speculative profit. If the New York banks had over-invested and could not meet the volatile credit demands of the interior banks, there was the danger of a panic. Louis Brandeis demonized JP Morgan and the New York Money Trust, claiming that “a main cause of these large fortunes is the huge toll taken by those who control the avenues to capital and to investors.” Brandeis recognized that the bankers in New York were using their control of credit for personal gain, and he endorsed legislation to make their activities and profits transparent to the public. Brandeis encouraged states to act as their own banks in order to cut out the middlemen, but government intervention would actually increase the power of the Money Trust. Some have argued that the Money Trust was quite incapable of controlling competition through their management of credit before the Federal Reserve System, and that the banking reform movement was the big bankers' reaction to the decentralization of power which was the trend after the mergers of 1901.1
The increased power of the federal government over banking which came with the passage of the Federal Reserve Act simply increased the power of the big banks, since they could control legislation most easily at the federal level. The big bankers had most strongly supported the Aldrich Bill, which proposed the creation of a National Reserve Association run by bankers to issue the country's currency, set interest rates, and centrally regulate the whole country's money supply. Since the Aldrich Bill had given bankers the responsibility of choosing the managers of the central bank, it evoked much public criticism, and the Glass-Owen Bill would ultimately pass as the Federal Reserve Act under Wilson. While the Glass-Owen Bill gave more control of the Federal Reserve System to political appointees, it was similar to the Aldrich Bill in that it still created a central bank to coordinate the nation's access to credit, and "in certain spots even the language of the two bills was identical." The power of New York bankers had begun to decrease after the 1890s, and the banking reform effort which created the Federal Reserve System was meant to offset the decentralization of banking power. In fact, the Glass-Own Bill centralized banking power even further than the Aldrich Bill had proposed to, enacting national rather than regional control. Aldrich though that the Glass-Owen Bill would “be the first and most important step toward changing our form of government from a democracy to an autocracy,” making it clear that the Federal Reserve Board would determine the entire nation's livelihood. Ben Bernanke agreed with Milton Friedman's assessment that the Federal Reserve Board's irresponsible decisions in setting the interest rate exacerbated the Great Depression, and he promised it would never happen again, but why didn't he criticize the structural issues which give so much monopolistic power to one governing board, how can he vouch for the future chairmen? While the Federal Reserve Act would dismantle the National Banking System's pyramidal structure and level interest rates to the benefit of the South and West, its greatest advantage would be its ability to expand and contract the money supply based on the needs of the market. It would be impossible for the central planners to detect the needs of the market, however, because nobody, not even elected experts, can predict the future, and the flexibility and adaptability of money markets under free banking is preferable to the minor reduction in transactions costs achieved under central banking.2
While it would be easier to control the money supply under the Federal Reserve System, there were already a variety of methods which had provided for monetary expansion during crises. Clearing houses emerged as a simple way for banks to clear checks but they soon began to take on the functions of a lender of last resort. The panic of 1873 was solved quickly because the New York banks had pooled their reserves in the NYCH and had sufficient access to money and credit. The panics of 1884 and 1890 (I know what you're saying: what panics?) were ameliorated by the use of clearing house loan certificates, which acted as an internal currency for bankers and freed up money for public circulation. Benjamin Tucker's Liberty, a contemporary magazine, had recognized that these clearing house certificates were so effective because they had increased the money supply with currency that was not redeemable in gold. These certificates were not allowed to circulate among the public because the federal government would levy a ten percent tax on these notes and indirectly prohibit them. While Brandeis recognized that the federal government was taxing private and state bank notes out of existence, he did not consider the malicious effect this had on restricting credit when it was in high demand. In addition to the reserve pooling and the loan certificates of the clearing house, elasticity was also provided by the US Treasury, which “would often shift gold and currency to different regions” in order to provide credit where it was needed the most. During the Panic of 1907, Roosevelt's Treasury would provide credit to banks without any guidelines about how to spend it, using public money to insulate the bankers from their monetary mismanagement. The actions of the clearing houses and the US Treasury in expanding the money supply determined the severity of the panics of the Gilded Age, and the failure of the NYCH in ameliorating the Panic of 1907 can be seen as the catalyst which drove the banking establishment to clamor for a public lender of last resort.3
The devastating Panic of 1907 was so destructive because the NYCH, the traditional lender of last resort, refused to save the Knickerbocker Trust. There had not been a clearing house for the trusts, even though they carried out many of the same functions as banks, and the NYCH did not want to take responsibility for this one. The closure of Mercantile Bank, which had occurred due to a failed attempt to corner the market on United Copper Company stock, caused the subsequent failure of other banks which endangered the liquidity of Knickerbocker Trust. Even though there were adequate reserves, the NYCH had suspended cash payments to depositors for three weeks, and this only drove to worsen the panic. In addition, the NYCH refused to use loan certificates to increase the supply of credit during this severe crisis. The Knickerbocker Trust was finally saved when JP Morgan personally provided a loan, using its securities and assets as collateral. With the support of US Treasury deposits, Morgan was able to pool enough money to shore up the Knickerbocker Trust and prevent further bank runs and failures. The refusal of the NYCH to cooperate with the banks and expand the money supply increased the severity of the panic to such an extent that people began to look to the government to provide clearing house services for the banking industry.4
Bankers understood that severe panics could be avoided if the money supply could expand and contract based on the needs of the market. The National Banking System had caused such a concentration of money in the hands of New York bankers that the entire economy of the nation was reliant on the cash reserves in New York, which fluctuated radically based on the stock market trends. This inextricably tied the fate of the interior banks to the fate of the New York banks. Essentially, such a large amount of resources were under the control of so few banks that failure became an impossible option for the larger banks and trusts. In light of the centralized coordination of so much money, certain institutions became so large and essential that only the government could provide the guarantee that the bankers were looking for. A Federal Reserve System could be beneficial because it would be easier to expand and contract the money supply when necessary, but the fate of America's economy would be completely reliant on the wisdom of the Federal Reserve Board's decisions. These central planners would need to be able to predict future market trends in order to know exactly when to expand and contract the money supply for the benefit of the public interest. If the interest rates were set too low during periods of over-investment, a recession would be caused by the liquidation of these bad investments, and if the interest rates were set too high during recessions, there would not be enough credit to maintain price levels and employment. The Federal Reserve System, which mandates that the whole country's interest rate is to be set by one monopolistic governing board, does not allow for individual choice or secession, and this is a problem because the fear of losing customers to competition is the most effective check on irresponsible management. Without competition, public oversight is the only method of ensuring that the central planners are at least trying to act in the public interest, but the Fed's activities are not even transparent to the public! Even if we gain the right to audit the Fed, this will be insufficient because the uniformity of policy and the lack of diverse experimentation will still remain, and this deprives us from essential information which allows us to understand what is in our interest. In conjunction with the US Treasury, clearing houses were already providing the liquidity that was needed to protect the nation from panics and recessions. This kept the panics of the Gilded Age contained and small in comparison to later recessions. To solve the remaining elasticity problems, the reform should have focused on eliminating the ten percent tax on private and state-chartered bank notes to increase the flexibility of the money supply. In addition, the gold standard should have been lifted to allow money to be created with any sort of asset as collateral. Instead, big bankers guided reform to increase rather than decrease the centralization of banking power, and reliance on fewer and fewer banking institutions would lead to even more severe recessions and depressions.5
1Robert F. Bruner and Sean D. Carr, The Panic of 1907: Lessons Learned from the Market's Perfect Storm (Hoboken: John Wiley and Sons, Inc., 2007), p. 58; Elmus Wicker, Banking Panics of the Gilded Age (Cambridge: Cambridge University Press, 2000), p. 120; Louis Brandeis, Other People's Money; Gabriel Kolko, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 (London: The Free Press of Glencoe, 1963), p. 146.
2Bruner and Carr, The Panic of 1907, p. 58; Brandeis, Other People's Money; E.W. Kemmerer, “Some Public Aspects of the Aldrich Plan of Banking Reform,” Journal of Political Economy (December 1911); Kolko, The Triumph of Conservatism, p. 251-3, 247, 244, 248; Kemmerer, “Aldrich Plan,” Journal of Political Economy.
3Wicker, Banking Panics of the Gilded Age, p. 16, 34, Bruner and Carr, The Panic of 1907, p. 107; “A Panic and its Lessons,” Liberty (December 1907), p. 9-10; Brandeis, Other People's Money; Wicker, Banking Panics of the Gilded Age, p. 115, Bruner and Carr, The Panic of 1907, p. 58-9, Kolko, The Triumph of Conservatism, p. 154; “A Panic and its Lessons,” Liberty, p. 9-10.
4Bruner and Carr, The Panic of 1907, p. 71-3, Wicker, Banking Panics of the Gilded Age, p. 84, Bruner and Carr, The Panic of 1907, p. 90-1, Wicker, Banking Panics of the Gilded Age, p. 111-3.
5William B. Greene, Mutual Banking.
Authority's Sacrifice of the Individual
Kobayashi Masaki's films criticized the cruelty of unchecked power. They show that authorities usually force the people to compromise their morals and sacrifice a part of themselves for the benefit of a greater organization or cause. The authorities use coercive tactics such as beating and kidnapping to carry out their masters' orders and to advance their own positions. These leaders merely need to maintain a pristine reputation among their superiors in order to keep their positions, and these superiors were typically far removed from the situation and aloof, making them unresponsive to the plight of the people. In his ten hour World War II epic The Human Condition, Kobayashi portrays a man named Kaji who is trying to bring justice into managing the workers. The military gives Kaji command of a portion of workers in an ore mine because he had written that production would increase if the workers were given better working conditions and a role in the decision-making process. If the managers negotiated with the workers rationally and treated them reasonably, there would be increased motivation and morale among the workers which would manifest itself in increased production. Kaji has difficulty putting his theory into practice because he is given command of a work unit composed of enslaved prisoners of war, and no amount of rational negotiation would allow them to forget their captivity. When Kaji is forced to witness the execution of some prisoners of war who were falsely accused of attempting to escape, he realizes that he cannot sit idly by while such injustice is carried out. His vocal opposition to the execution soon turns into a loud protest from the other prisoners of war, and fear causes the authorities to stop the execution. Kaji is forced into military service and can only hope that men will have their freedom soon.
Kobayashi criticized authority for suppressing people's individual decisions, adding that forcing individuals to go against their inclinations actually damages an organization. In Samurai Rebellion, for example, a strong samurai revolts and kills many of his master's soldiers because his master kidnaps his son's wife, suppressing their “beautiful love” that he would defend at any cost. In Seppuku, a lord does not permit a samurai a few days rest before committing suicide, and as a result his father gets revenge by defiling the lord's honor and defeating many of his men. Incurring the people's wrath by suppressing their freedom and forcing them to act against their inclinations proved to be damaging to these samurai lords, who were severely damaged by revolts against their cruel leadership. In The Human Condition, Kaji admits that better food and better living quarters would motivate the workers, but says that treating them like slaves and profiting off of their labor crushes their spirit more. Even though the Japanese give women to the prisoners of war to satisfy their bodily lust and to give them an incentive to work, this does not prevent them from attempting escapes, since freedom is what they truly desire. Beatings and executions only increase their desire to escape from this work, and “no matter what, they'll manage to escape” if they want to. When Kaji becomes a prisoner of war himself at a Soviet labor camp, he admits that “socialism is better than fascism,” but he still has reason to criticize the Soviets for treating individuals poorly in the interest of the higher organization. Even though the Soviets are responsive to prisoner complaints and try to stop beatings, they still direct orders from the top down and do not rationally negotiate with the prisoners to make policy. While the Soviets say that they must destroy human lives out of necessity, Kaji cannot condone any act of exploitation because it “forms a breeding ground of distrust that can't be wiped out.” Even though the Soviets believe that forcing conformity on the group is necessary for their survival, Kaji believes that suppressing an individual's morality is wrong in every situation because of the resentment it engenders, which ultimately damages morale and decreases productivity.
Kaji's inability to cope with his positions of authority shows that Kobayashi has a pessimistic view on whether the cruel authorities can simply be replaced with good men. While many of the leaders recognize Kaji's passion and put him into positions of authority, Kaji is unable to fulfill the role because it requires him to enforce orders from above that he typically does not agree with. His friend tries to convince him that accepting a leadership role in the government would allow him to “lead the sheep to greener pastures,” but he cannot keep his position or move up because he would have to defend the unjust actions of his superiors to do so. No good men would be able to tolerate the “conflict between work and self” that comes with a position of authority. In other words, the system is such that only cruel men who can enforce orders that are against their morals flourish in positions of power.
In Kobayashi's films, the only method of combating unjust authorities is to expose their misdeeds and compromise the security of their positions, but the higher authorities are typically so far removed from the situation that they are unwilling to expose any misconduct under them. In Samurai Rebellion, when the main character shows insubordination, the lord fears what would happen “if the other clans hear” of his breach of etiquette. While other samurai agree that the kidnapping is intolerable, they still follow the tyrannical ruler's directives because of his power, which is so absolute that they would not dare to try “pushing their thoughts through.” The main character cannot expose the lord's cruelty on his own because people were not free to leave the domain to possibly appeal to the Tokugawa in Edo. In Seppuku, the main character puts a lord and his samurai to shame and damages the lord's reputation among his own men, but this does not compromise the lord's position because he is backed by the power of the distant central authority. With the Tokugawa emblem symbolically looming in the background, the lord is able to keep the entire shameful incident secret from his peers and masters, so his position of authority is secure and there is no check to his cruelty.
Beyond his criticism of unchecked authority, Kobayashi explores methods of self-management of the lower classes in The Human Condition. When Kaji is given charge of a group of miners, he lets them choose leaders among themselves who will take part in the decision-making process. Allowing the workers to choose their own representatives is the first step that Kaji takes to introduce democracy and self-rule within his work unit. The Soviets also use this strategy, employing a Japanese representative to convey their orders so that the workers will feel as if the leaders are responsive to their concerns, which will boost their morale and productivity. When Kaji is promoted to private first class and is given control of a military unit, his compassion and concern toward the recruits led one of them say that “we feel safer with you here.” This shows that humane treatment and decision-making through dialogue and negotiation boosts the workers' spirits to a significant extent. In addition, when one of the characters says that “punishment should be per regulations,” Kobayashi is saying that arbitrary punishment is disruptive and disheartening when it is at the authorities' own discretion and the predetermined procedures and rules are unclear.
These films emphasize the irrationality of absolute authority and unchecked power. Kobayashi goes so far as to claim that any action which forces an individual to go against his morals or inclinations is wrong since it involves suffering and resentment which is significant to that individual. This violation of free will can only be eliminated if the authorities' directives are optional. Under coercive monopolies, threatening the leader's position by exposing his misdeeds and ruining his reputation among his peers and superiors is the only way to make authorities do the right thing. Even this is shown to be ineffective because the decision-makers are typically far off or disconnected from the actual situation at the local level. All of this destroys the workers' spirits and causes them to engage in protest and sabotage, which radically decreases efficiency. Kaji attempts to solve this problem and unleash the productive potential of the workers by granting them elements of self-governance, but the effectiveness of these reforms cannot be measured due to the fact that Kaji would quickly lose his positions of power as a result of moral indignation toward a peer or superior. Kaji is never able to experience Japan's transformation into “a country...where men are free,” although his hope for such freedom is never extinguished.
Friday, February 18, 2011
Humans' Inherently Self-Interested Perspectives
Many of the works of Kurosawa Akira convey the idea that humans have an inability to see the world objectively. Due to the fact that humans can only discern truth from their own biased perspectives, they act in self-interested ways whether they are actually trying to or not. As a result, Kurosawa seems to believe that people expend all of their energy to protect their own positions and increase their own power. In the first place, humans tend to act selfishly because they feel as if it is the only way to get ahead in this competitive world, but they would even act this way if they were attempting to do good because they are inherently delusional. Our goals and moral values are self-defined by the judgments that stem from our own individual perspectives, so people in positions of authority will inevitably use their power in self-interested ways, whether they are actually trying to act in the public interest or not. This causes Kurosawa to question the justice of unchecked authority, seeing that it inevitably leads to selfish abuses of power.
First of all, Kurosawa is quite pessimistic about the righteousness of humans. In Rashomon, for example, one of the characters says that "everyone is selfish and dishonest, making excuses." Kurosawa does not seem hopeful that humans can escape from this selfishness. When a samurai in Ran decides to split up his fief among his sons, hoping that they'll rule together cooperatively, one of the sons says that trusting "in our undying fidelity is nothing but madness and senility." As the sons proceed to fight one another to gain power over the whole realm, it is clear that this selfishness stems from the belief that one's position of power is always in jeopardy. As a result, one must secure one's power at all costs to pre-empt the ambitious usurpers. In Throne of Blood, for example, the samurai's wife convinces him that he must kill his close friend to prevent him from seizing power. She paints a portrait of the world in which "parents will kill children and children their parents to advance themselves in this world," and as a result the samurai kills his dearest ally.
Kurosawa believes that humans cannot leave their selfishness behind because of their inability to see the truth clearly, which leads them to have distorted morals and values. We are lead to believe that every account of the murder in Rashomon is a lie when one of the characters says that "it's human to lie, most of the time we can't even be honest with ourselves." Rather than attempting to see the objective truth, humans "just want to forget the bad stuff and believe in the made up good stuff, it's easier that way." This clearly shows that people choose to conceive the world in ways that are convenient and self-beneficial, whether they are trying to or not. In Ikiru, the main character justifies his meaningless work as a bureaucrat by saying that "I was a mummy for my son." He considered it to be righteous to accumulate money and power for the sake of his son. Maintaining the comfort and security of one's family is one of the primary justifications for acting in ways that are selfish and wrong from an outside perspective. In The Bad Sleep Well, the vice president who was misusing public funds and taking kick-backs was unwilling to step down from his position of power because his family would suffer and have to give up their luxuries if he did. The executive is able to live free from regret because he has such a distorted perspective of righteousness, and these delusions are what allow him to act in ways that are not in the public interest. In Rashomon, when one of the characters ponders whether anyone is good, saying that "maybe goodness is make-believe," Kurosawa questions the entire basis of authority, asking whether there are any righteous actions that are definitely good for the people.
Kurosawa observes that all unchecked authority and unquestioning obedience begets selfishness, evil, and inefficiency. In The Bad Sleep Well, loyalty and devotion to superiors leads executives to kill themselves in the interest of the corporation at large. If they had questioned the authorities, however, they may have realized that their suicides simply protected the power and positions of their bosses to the ultimate detriment of the corporation and society at large. The main character believes that exposing his evil deeds is "the only way he'll ever make up for what he's done." Kurosawa conveys the belief that the only way to keep authorities in check is to open all of their actions to public oversight and scrutiny. In Ikiru, for example, the main character is able to get the park built because the deputy mayor was subject to a public election, and ignoring the request would have looked bad and may have jeopardized his position of power. As the deputy mayor shrugs off the initial request to build a park and instead starts talking about geisha and luxurious entertainment, it is clear that his priorities are selfish rather than selfless.
More specifically, Kurosawa takes a highly critical stace toward government bureaucracy because of the subservience and the deadening mentality that it breeds. The main character's accomplice in The Bad Sleep Well believes that "corruption continues unchecked, and the fat cats brazenly steal public funds" because "a good official never implicates a superior, no matter what the cost." They find it incredible that these officials refuse to hate their superiors even after being "offered up as scapegoats." When one of the officials explains that "unmasking a superior is impossible," the main character believes that "he's not human, the bureaucracy transformed him." Kurosawa conveys the idea that the unthinking subservience engendered by bureaucratic values strips people of their humanity. Even the vice president, who acts so selfishly when dealing with his underlings, is willing to kill himself to protect his boss. Ikiru clearly conveys the theme that bureaucrats have been deadened by their subservient work and are only interested in ensuring their own positions of power. Nobody even thinks to report the section chief when he is absent for an extended period, and everyone is flabbergasted when he asks the deputy mayor to reconsider his position on building a new park. Typically, they give unconditional devotion to their bosses in order to protect their positions in the bureaucracy. Their individual initiative is suppressed, as "doing anything but nothing is radical" according to bureaucratic values. In addition, Kurosawa conveys the idea that bureaucrats are only motivated to advance their own positions of power, as one of the characters says that "only a bureaucrat schemes to replace his boss as soon as he's out." Ultimately, the work deadens their spirits and makes them slow, inactive, and inefficient. This is clearly shown by the run-around given to the group of women, who are continually given new papers to fill out and new offices to go to until they are back where they began without anything accomplished. One of the characters even says that "to clean a garbage can, we need a garbage can of paperwork." The section chief in this film was able to risk his position and question his bosses because he knew that he was going to die soon, and even after his co-workers realize this they cannot change their ways and get something done for the public interest, as they keep giving the public the run-around.
Kurosawa takes a strong stance against authority and against the bureaucracy in particular. First of all, he conveys the idea that our conceptions of the public good are subjective, and that there are no absolute values that the public should be striving to fulfill. Beyond this passing idea, Kurosawa portrays the powerful as completely selfish and motivated by power. He shows that the only checks that prevent abusive authorities are public oversight of their activities and self-government. The ability to criticize our leaders and expose their bad deeds is essential, yet in the bureaucracy loyalty and obedience "to the bitter end" is shown to breed selfish abuses of power.
Sunday, December 5, 2010
The Role of Big Business and the State in Usurping the Provision of Social Security from Fraternal Societies and Suppressing Mutual Aid
The increased severity of America's recessions under the National Banking System, which had replaced the Jacksonian Free Banking era during the Civil War, had created a strong desire for consistent economic security during the Gilded Age. The increasingly cyclical nature of the economy, riddled with unsustainable booms that resulted in catastrophic busts, drove the poor to organize fraternal societies for mutual aid, and by 1920 over one-fourth of American males were members. These societies were similar to the order of the Freemasons but emphasized the organization's role as provider of sick benefits and social security in times of need. Due to a constant need for money, members were educated in the values of thrift and reciprocity. These societies were quite selective of their members since free riders threatened the economic viability of these organizations. In addition, aid was rationed on a case-by-case basis, and requests for benefits were often denied if the person was deemed unworthy by the elected administrators of the fraternal lodge. The benefits of fraternal society membership were not charity, which was considered degrading because it fostered dependence on others. Instead, drawing benefits in times of trouble was seen as the right of any good dues-paying member. Commercial insurance and medical societies such as the American Medical Association felt threatened by the fraternal societies' cheap insurance rates and subscription-based doctors. As a result, these interest groups lobbied government to enact legislation which increased certification requirements to minimize competition from cheaper health care alternatives. With the increased government activism during the Progressive Era and the New Deal, which mandated employer-based pensions and workmen's compensation, fraternal society membership declined. The triumph of employer-based commercial health insurance was a result of its collusion with the state. Medical societies imposed sanctions on lodge doctors and urged the government to regulate these societies out of existence, allowing employer-based insurance to corner the health care market through government privilege rather than inherent economic efficiency.
Many people justified their opposition to fraternal societies by claiming that they were financially unsound, but on closer examination they were able to adjust to economic downturns. A candidate for Attorney General accused cheap lodge insurance of being prone to failure and fraud1. While there were examples of fraternal societies which could not keep up with their benefits payments and went bankrupt2, most were able to reassess their rates and continue functioning, even during times of difficulty and demography decline. One major problem was that they promised consistently low rates that they could not deliver, and this drove members away. Fraternal societies began by assessing their insurance rates at one low cost for all members, but economic necessity forced them to adjust and adopt a system with graded rates based on age. There had been an actuarial crisis within American fraternal societies in the 1890s and 1900s, and as a result they had to use the British friendly society as a model for financial soundness. Increasing regulation of rates and increasing cash reserve requirements for fraternal societies forced them to maintain economic viability. While commercial insurance may have been more statistically sound due to its highly variable premiums and deductibles, the decline of the fraternal societies cannot easily be explained by inherent financial problems. Otherwise, the Security Benefit Association would not have been able to operate a hospital that charged a quarter of the average rate for a room3.
Medical societies were afraid that the fraternal societies' cheap rates would threaten their own ability to make money, so they sanctioned lodge doctors and launched campaigns against lodge practice to discredit and destroy these organizations. The American Medical Association, for example, blacklisted all doctors who entered into a lodge contract and denied them access to their hospitals. The fraternal societies were able to maintain such cheap rates because they paid a doctor a steady salary to provide moderate medical care to all of the members. These contract doctors could not charge nearly as much as the fee-for-service doctors, who changed their rates based on the person and procedure, but these contracts were desirable because they ensured consistent employment. Organized doctors wanted to maintain their elite status and prestige, so they claimed that the lodge doctors were untrained, overworked, and unfit to practice medicine. While lodge doctors may have graduated from apprenticeship-style proprietary schools rather than universities, they still had to receive certification to practice, which the states made increasingly difficult for them. Well organized doctors also disdained the idea that contract doctors had to be responsive to their patients' needs. As a result of their disgust for lodge contracts, the professional medical community embraced the fee-for-service method of commercial insurance. The alliance between organized medicine and commercial insurance would begin a trend of using the government's coercive power to destroy the competition that was coming from fraternal societies' insurance plans. The Ohio State Medical Society, for example, pushed through legislation which would prevent organized labor from creating health centers4.
The state began its interference into the insurance market by encouraging the purchase of employer-based commercial insurance. They did this by subsidizing these companies and mandating workmen's compensation, pensions, and other employer-based social security. In addition, businesses embraced commercial group insurance so that the workers could not provide for themselves independently of their employers, which gave them increased bargaining power. This trend reduced fraternal society membership by decreasing the need for fraternal insurance, especially during times of high employment. Due to the fact that fraternal societies would not engage in political coercion to promote their institutions, expensive commercial insurance was forced upon the workers, which removed their need for cheaper health care. Contractual medical treatment at health centers was too cheap to compete with, so businesses had the government force employer-based insurance upon the workers, removing their need for fraternal health care5.
In addition to encouraging employer-based commercial insurance, states imposed regulations and licensing requirements which made it difficult for fraternal health insurance to exist. Pennsylvania, for example, revoked the licenses of thirteen fraternal orders in 1926 due to their lapses on benefits payments and their high administrative costs6. The state courts almost always decided to take the side of organized medicine, and the medical societies were given the power to set the rules of their profession. Increasingly tight certification requirements led to a decline in the number of doctors per capita in the United States between the 1900s and the 1920s. Fraternalists charged that the government was regulating their societies in order to destroy their cheap competition. A particularly petty example was a bill that was proposed to prohibit all fraternal life insurance orders from using the US postal service. Regardless of such obvious antagonism, some fraternalists had lost much of their suspicion of interventionist legislation during the Progressive Era. Government laws prohibited certain types of insurance from being sold by fraternal societies, such as endowment insurance7. Legislation ended up mandating business-controlled programs and promoted the commercial insurance trade, and in this way businesses were able to increase their bargaining power in relation to labor by gaining control of the workers' health insurance and social security.
The final step in the decline of fraternal societies came with the state's assumption of social security responsibilities from businesses and private charities. Instead of providing subsidies to private organizations, an increasingly interventionist federal government began to take charge of providing economic security to the people. One of the primary appeals of fraternal societies in the 1930s was their provision of “cradle to the grave” protection to members. Yet by the 1940s, public assistance programs removed the need for private provision of orphanages and retirement homes. There were even examples of the federal government directly taking charge of fraternal facilities, as the government bought fraternal hospitals and often turned them into free clinics for the poor8.
In the end, the poor workers were unable to stand together on the issue of insurance provision. Instead of organizing to lobby for fraternal societies' voluntary provision of sick benefits and social security, some of the poorer labor unions endorsed compulsory, state-provided health insurance9. While this seemed to be a desirable alternative to the instability of employment-based social security, these entitlement programs legitimized the state's use of coercion. This was what allowed the states to legislate the fraternal health insurance orders out of existence by imposing stringent certification and licensing requirements which only the most privileged commercial insurance companies could pass.
Contrary to the opinions of many government officials, fraternal societies were able to deliver an enormous amount of health care and sick benefits without the danger of financial insolvency. While medical societies and members of the commercial insurance industry questioned the quality of the fraternal societies' doctors and accounting methods, these orders were able to survive through the actuarial crisis of the 1890s and 1900s through strict readjustment. Doctors were elected to their positions within fraternal societies, so there was enough competition to guarantee a proficient doctor at a low price. American fraternal societies raised their reserves and adopted the actuarial conventions of British friendly societies, which had been proven to withstand economic downturns. The fraternal societies fared quite well during the Great Depression in comparison to other businesses. Instead of being frustrated by financial difficulties, the fraternal societies' problems began with the antagonism of medical societies such as the American Medical Association. These organized doctors attempted to end the salaried contract service of lodge doctors and establish fee-for-service practice as the only legitimate payment method. This would preserve doctors' incomes and insulate them from listening to the needs and demands of their patients. Medical societies lobbied the government for stricter licensing laws so that there would be less doctors and less cheap competition. Medical societies allied with insurance companies in lobbying the government to compel employers to provide social security such as workmen's compensation and pensions. Businesses had usurped the power of providing social security, and as a result security and health insurance were tied to having employment. This was shown to be inadequate when economic downturns created unemployment and deprived Americans of economic security, and the Federal government began expanding its own role in providing social security. Ultimately, an increasingly difficult certification process as well as compulsory social security led to the decline of fraternal societies' provision of sick benefits. The prosperity and employment in America after World War II would lead people to regard fraternal insurance as superfluous, yet further unemployment as a result of the boom-bust cycle would result in a new search for more stable and diverse forms of social security.
The decline of fraternal societies has coincided with the increased prevalence of paternalistic social security provision in the “mature” economies. Fraternal provision of social security would offer smaller countries an economically sustainable method of providing for the downtrodden. Fraternal membership would be based on paying dues as well as on engaging in activities which instill good values and increase community solidarity. In order to maintain economic viability, exclusion of members who do contribute to the organization would be a necessary prerogative of the fraternal society's membership, but members should not be expelled for their specific political or religious beliefs. Fraternal societies would provide opportunities for constructive activity during people's free time, which would be essential during times of high unemployment. Unrestrained, these societies would be able to replace employers and the government as primary provider of social security. A wise society would remove all legal barriers which discourage or outlaw low-cost competition, which would create more voluntary options for health care and social security. Institutions should merely provide information about the quality of a product to possible consumers, allowing people to choose whether a product is safe or not for them. The government could provide incentives to encourage the proliferation fraternal societies and other cooperative methods of providing social security, but rewards should be systematic and based on efficiency so that subsidies were not based on political favors and privilege.
1“Politics and Insurance: Maryland Fraternal Societies to Oppose Candidate Poe,” New York Times (September 28, 1891), p. 2.
2“40 Years' Insurance Dues Bring Nothing,” New York Times (May 5, 1916), p. 19.
3David Beito, From Mutual Aid to the Welfare State (Chapel Hill: University of North Carolina Press, 200), pp. 132, 134, 136, 139, 224, 175; Jennifer Klein, For All These Rights: Business, Labor, and the Shaping of America's public-private welfare state (Princeton: Princeton University Press, 2003), p. 13.
4David Beito, From Mutual Aid, pp. 116, 119, 120, 124; Jennifer Klein, For All These Rights, pp. 13, 153, 154.
5David Beito, From Mutual Aid, pp. 205, 218; Jennifer Klein, For All These Rights, pp. 12, 13; Andrew Morris, “New Alignments: American Voluntarism and the Expansion of Welfare in the 1920s,” eds. Bernard Harris and Paul Bridgen, Charity and Mutual Aid in Europe and North America Since 1800, p. 206.
6“13 Orders Lose Insurance License,” New York Times (December 4, 1926), p. 7.
7Usually for retirement, endowment insurance would bestow a cash payment for surviving and paying dues for a certain period of time.
8David Beito, From Mutual Aid, pp. 98, 198.
9Jennifer Klein, For All These Rights, pp. 151, 3.
Woman of the Dunes: Embracing Society to Fix the Precedents which Limit Human Potential
Dissatisfaction with the modern world was a consistent motif within the works of Abe Kobo. He believed that the conventions of industrial society could not fully measure a human's value or worth, however scientific or rational they appeared. Instead, he believed that these definitions limited human potential by providing incomplete and generic stereotypes which modern man would strive to fulfill but not transcend. Believing that capitalism fostered jealousy and destroyed community solidarity by placing men on a hierarchy of worth, he found modern society to be alienating. His views led him to create characters which unsuccessfully strove for complete withdrawal from modern society due to their unwillingness to assimilate. This adheres to the Japanese Communist Party's (JCP) belief that capitalism could not be reformed from within and that a radical revolution was inevitable. His falling out with the JCP in 1962, however, led him to create Woman of the Dunes, a more hopeful story in which the main character was able to embrace society by redefining his goals and values. The main character chose to remain in the oppressive society in order to contribute to the community in ways which would garner him the respect of his peers. The main character enjoyed a freedom which was different from the complete independence which he originally strove for. Due to a belief in the plasticity of identity, Abe Kobo believed that freely accepting a burdensome society in the interest of changing it for the better could be more fulfilling than completely escaping from society. While he was disdainful of the roles that modern society constructed for men, he accepted the fact that integration into society was necessary to some extent if one wished to remold man's collective identity. While he believed that freedom was essential in allowing men to define themselves and fulfill their potential, he understood that reputation and the desire to be recognized by one's peers motivated men to act and drove them to improve society. In Woman of the Dunes, Abe Kobo cautiously endorsed integration into society to the extent that one could contribute creatively while maintaining a sense of fulfillment. His move toward hopeful acceptance of society paralleled the increased freedom of expression and choice within Japanese society which came with the departure of the American occupation force and economic independence.
From the start of his career, Abe Kobo was dissatisfied with the tasks that industrial society assigned to people, believing that they disfigured a man's identity. First of all, he believed that the industrial world compartmentalized humans in such a way that they could not find fulfillment performing their duties1. He found that the repetitious physical labor required by industrial society was dehumanizing and that it transformed people into the mere units of a collective which was at the service of a few men. The main character of Woman of the Dunes expressed his dissatisfaction with his task of endlessly shoveling sand when he stated that the work was fit for a monkey and that a rational society should utilize the people based on their skills and talents2. He felt as if he was being ruthlessly exploited by the people who were making profits from his coerced labor.
Abe Kobo believed that the mindless work provided by industrial society disfigured humans' personalities by restricting them from performing creative tasks and developing unique identities, which was unimportant according to society's measures of a man's worth3. He was mostly disenchanted with society's habit of rating men and creating divisions between them which would lead to conflict. The main character of Woman of the Dunes echoed this dissatisfaction when he described a falling out with his wife which should not have occurred based purely on society's certificates, which assured that he was a good productive citizen4. Men were driven to increase their standing in modern society, and as a result they were focused on appearing qualified and trustworthy rather than on searching for their unique role within the community. Abe Kobo expressed this in his 1974 novel The Box Man, a story of men who live in large cardboard boxes to retreat from society. One of the box men criticized people for trying to fit into society's ideal types when he said that they wear clothes and cut their hair to appear identical to one another5. European philosophy led Abe Kobo to believe that human language was incapable of completely capturing the essence of reality because it simplified the world into concepts which could be understood by humans, and as a result he rejected society's attempts to measure an individual's contribution to the social good6.
Abe Kobo believed that industrial society divided people into types and created class differences which destroyed community solidarity. He was especially upset by the strong desire for privacy and personal property which drove neighbors to conceal the bad parts of their lives from one another while making each other jealous with their possessions7. Abe Kobo concluded that the modern day crisis of man was his desire to escape from the alienation engendered by social conventions8. In The Box Man, for example, the man said that he would not need to conceal himself from society in the box if he could be free of envy and a sense of inferiority9. Similarly, the main character of Face of Another concealed his disfigured face with a mask in order to be protected from society's destructive judgments. The doctor who created this man's new face said that drinking alcohol was similar to wearing a mask in that they both provide a person the freedom to act without worrying about others' judgments10. People had such a strong desire to get drunk because it could be used as an excuse for acting however they pleased. The main character of The Box Man expressed a similar desire for insulation from outside evaluation when he described his dreams of a city of friendly hospitable strangers11. The doctor from Face of Another described a similar city in which people put on masks to change their identities so that name, position, and occupation would not matter, allowing people to live without restraint12. In these examples Abe Kobo expressed his desire for a world in which people could act freely upon their whims and fancies without the fear of a loss of reputation which could endanger their prospects.
The majority of Abe Kobo's characters could not come to terms with society yet could not escape from it, leading them to fulfill their own desires and resign from constructive activity. This came from characters' desire to escape the collective rationalities of modern society which cannot capture reality's complexity13. Due to his dissatisfaction with a society that limited human potential by assigning people menial or exploitative tasks, Abe Kobo joined the Japanese Communist Party, the only organization which strove to destroy artificial divisions between men and was consistently opposed to the militarism and ultra-nationalism of the Japanese government under Tojo. The JCP introduced Abe Kobo to European socialists and philosophers who strove to reshape the people's values by creating a rational society which was free of conflict and hierarchy. The JCP endorsed revolution and direct action such as striking and boycotting in order to bring about this new society. The JCP was skeptical of the improvements which could be achieved through gradual parliamentary reform, and as a member of the party Abe Kobo's message had to support the views of the party. His works during this period endorse the Communist notion that capitalistic society could not be reformed cooperatively from within, and the characters who attempted to cope with this society were unfruitful.
As an alternative to accepting the limitations of society, Abe Kobo explored the possibility of complete independence from society. The protagonists of Face of Another and The Box Man both adopt an outer skin in order to escape from the social constraints which limit their action14. They believed that an escape from being seen by the outside world would allow them to act freely without remorse15. The relentless pursuit for freedom, however, does not lead to constructive activity for the main characters of these works. The masked man, free from all responsibility and accountability, murdered the doctor in the film version of Face of Another16. The box man's pursuit of freedom was similarly futile, as he expressed a loneliness and a longing to rejoin society if he could be rid of envy and class conflict17. The main character of Face of Another also felt the loneliness that came with freedom18.
Abe Kobo seemed to contend that resigning from society robbed man of his purpose, and that the struggle for freedom was a hopeless pursuit. Most of Abe Kobo's characters encountered an overwhelming social force which had the power to control and shape everyone and everything19. The main character of Woman of the Dunes, completely parched, imagined whole cities being swallowed by the sand and realized that struggling against the tide of society was as hopeless as trying to crawl out of the sand dune he had been trapped in20. The desire to escape from this control motivated the box man and the masked man to search for a way to free themselves from these constraints, but the transformations they undergo destroyed their identity and turn them into the types21. The box man's lack of any direction led him to totally resign from constructive activity22, while the masked man's unlimited freedom drove him to seduce his wife and to satisfy his fleeting desires rather than to carry on life as a normal productive human being. Ultimately, Abe Kobo believed that man's relentless pursuit of freedom was doomed for failure23.
Instead, Abe Kobo endorsed voluntary acceptance of the limitations of society in the interest of shaping society for the better. First of all, he believed that a human's identity was easily changed and influenced by outside factors, and that a man's personality was mainly determined by the sum total of his experiences24. The main character from Face of Another had so many selves that he was confused about how he should speak and act because the mask changed his personality in a way that he could not understand. The doctor points out, for example, that his change of clothing style was the mask asserting its power over shaping the man's actions and identity. The two parallel scenes of the masked man and the bandaged man renting rooms from the landlord showed that even the most subtle differences in treatment would cause a man to act immensely different25. Abe Kobo used the main character of Face of Another to show that a person's identity was pre-determined by his experiences with outside stimuli and could therefore be changed26. He observed that the American occupying force had achieved a radical transformation of the Japanese people's values27, shifting virtue away from selfless emperor worship and toward finding individual meaning and worth. He believed that many aspects of reality could be easily changed by altering the societal norms which shape men. Due to his embrace of the idea that human nature was not innate but socially cultivated28, Abe Kobo's Woman of the Dunes endorsed man's pursuit of rejoining society in the interest of reshaping it.
While the main character of Woman of the Dunes struggled against captivity for a large portion of the story, he chose to accept his position voluntarily when he was able to create the innovative water pump. From the beginning of the story the main character was interested in pursuing work which would gain him reputation and garner the respect of his peers. The main character mentioned more than once that his true motivation for exploring the dunes was to discover a new insect and to get his name in the bug book next to that entry. The man's struggle against captivity was ironically the motivation which led him to discover meaning in his life in the dunes. He was attempting to build a crow trap in the interest of using the birds for communication with the outside world, but instead he created a device for extracting water from the sand. When the main character was given the choice to escape from his desert captivity, he chose to stay so that he could win the respect of the villagers by showing them his new invention. Once the main character realized he could pursue his dreams of fame and recognition as a resident of the dunes, he became much less eager to rejoin urban life. The main character redefined his freedom by deciding that it would be just as fulfilling to work in the desert community away from the alienating social conventions of the materialistic world29. The main character had resigned to the fact that he must live in a constraining society of some sort, and he was able to fulfill his pursuit of gaining social recognition. Ultimately, the main character accepted the fact that his disenchantment with urban society had driven him to explore the dunes, and he chose to be hopeful of his new role in the desert community rather than to strive for unlimited freedom and to resign from all productive social activity.
Abe Kobo's disdain for modern social conventions did not drive him to endorse a struggle for freedom at any cost. Rather, he encouraged humans to find a new kind of freedom in accepting social constraints and striving to improve them. Believing that man could redefine himself and reshape the world to change people's values, Abe Kobo entreated men to contribute creatively to society. While he seemed to emphasize the importance of Buddhist self-cultivation in preparing one to contribute creatively to society, Abe Kobo also embraced the notion that enlightenment and independence could not be used to help others if one unconditionally pursued freedom and withdrew from society.
1Fumiko Yamamoto, “Metamorphosis in Abe Kobo's Works,” The Journal of the Association of Teachers of Japanese (November 1980), p. 171.
2Teshigahara Hiroshi, Woman of the Dunes.
3Yamamoto, “Metamorphosis,” p. 190.
4Teshigahara Hiroshi, Woman of the Dunes.
5Abe Kobo, The Box Man (New York: Alfred A. Knopf, 1974), p. 86
6Bolton, Sublime Voices: The Fictional Science and Scientific Fiction of Abe Kobo (Cambridge: Harvard University Asia Center, 2009), p. 37-8.
7McDonald, From Book to Screen: Modern Japanese Literature in Film (Armonk: East Gate Book, 2000), p. 271.
8McDonald, From Book to Screen, p. 276.
9Abe Kobo, The Box Man, p. 90-1.
10Abe Kobo, Face of Another.
11Abe Kobo, The Box Man, p. 14.
12Abe Kobo, Face of Another.
13Christoper Bolton, Sublime Voices, p. 39.
14Keiko McDonald, From Book to Screen, p. 272.
15Kobo Abe, The Box Man, p. 16.
16Teshigahara Hiroshi, Face of Another,
17Christopher Bolton, Sublime Voices, p. 198.
18Teshigahara Hiroshi, Face of Another,
19Fumiko Yamamoto, “Metamorphosis,” p. 170
20Teshigahara Hiroshi, Woman of the Dunes.
21Fumiko Yamamoto, “Metamorphosis,” p. 190.
22Abe Kobo, The Box Man, p. 19.
23Keiko McDonald, From Book to Screen, p. 284.
24Christopher Bolton, Sublime Voices, p. 167.
25Abe Kobo, Face of Another.
26Christopher Bolton, Sublime Voices, p. 167.
27Fumiko Yamamoto, “Metamorphosis,” p. 172.
28Fumiko Yamamoto, “Metamorphosis,” p. 173.
29Teshigahara Hiroshi, Woman of the Dunes.