- Beware Invisible Hands
Jacques de Vitry penned these words after seeing the near naked, stinking, and looted body of Pope Innocent III lying in distressed state in Perugia. Less than one year after declaring the Magna Carta null and void as a concession to his loyal subject King John, this most influential pontiff was desecrated by those who saw more value in his burial clothes than in the legacy he tried to carve out of the medieval hornets nest of Europe. Having presided over the fourth Lateran Council giving Papal State rulers sanction to burn, behead, torture, and otherwise torment anyone capriciously deemed to question the lofty office of the church, Pope Innocent III, in many respects the perpetrator of such unspeakable acts of tyranny, played a central role in creating the conditions which made the Barons' demands at Runnymede so pressing. This week's 800th anniversary celebration of the Magna Carta reminds us of the sad tale of the power of dogmatic tyranny over pragmatic humanity.
Pope Innocent III's objection to the Magna Carta is noteworthy for a number of reasons. Like his own papal decrees, it is suitably anti-Semitic in its disdain for the necessary financial services provided by Jews. Given the Christian predilection of consuming beyond ones means and thereby incurring debts - many of which survived the life of the debtor - the Jews who were capable of providing interest-bearing loans to Christians were taxed by the church and crown in a bizarre, morally remote money-laundering scheme. The pope had a similar scheme. Like the pope's rules, the Magna Carta made it clear that clerics had equivalent or higher preference to the feudal lords and enjoyed considerable favored treatment. In short, when it comes to conscripted service, money-lending, and property rights, there's quite a high degree of similarity between Innocent's own rules and the Magna Carta.
So what is it that was so offensive that the Pope had to declare the Barons' mandates null and void? The answer is really quite subtle. In a regime defined by a supreme ruler who had dominion over every regent in the empire, the Barons made copious references to the need to have due process, witnesses to offenses, and independent juries of peers. These procedural mandates - a cornerstone of modern jurisprudence - threatened the economic interest of the church and thereby constituted heresy. And behind the Pope's objection to the Magna Carta for the benefit of King John was a not-so-well publicized spate between the two just a few years earlier which had resulted in the Pope excommunicating King John from the church. When Pope Innocent III appointed Stephen Langton to serve as the Archbishop of Canterbury, King John objected. The Pope proceeded to place a restriction on all rites (mass, marriage, etc) anywhere in England and in retaliation, John confiscated property of the church and imposed levies on the clergy. Meanwhile, France's Phillip II was rapidly confiscating land in France occupied by John and, when both the Pope and John realized that they needed each other to check the aspirations of Phillip II and liberty-minded English Barons, John agreed to recognize Langton and the Pope reinstated John.
This week we will celebrate the 800th anniversary of the signing of the Magna Carta. This celebration suffers greatly in its hopelessly romantic nostalgia. While the document - like many other idealist impulses (the Hammurabi Code, the U.S. Constitution, the Declaration of Human Rights) - marks an important impulse in the response to abuse and dominion, it also reifies the hopelessness of such impulses in the face of the fisted "invisible hand". While Adam Smith extolled the virtues of the invisible hand when it was associated with the beneficial field effects of actions taken by individuals which had greater than anticipated salutatory consequences, his recognition of benefit did not extend across the entire value chain.
We are standing idly by while secret agreements are being forged by corporate privateers under the auspices of the White House in the Trans-Pacific Partnership agreement. Like the Innocent III and King John secret negotiations of 800 years ago, the need for maniacal dictators to act in the paternalistic interest of the governed is as dangerous now as it was then. And the expediency - the elusive siren seducing a President who vowed to run the most transparent White House - is to the TPP what the promise of France was to John - an empty illusion with hundreds of years of conflict insured to ensue.
Why is this relevant to our discussions about the economy? The answer is quite simple. We all pay a price for risk. Geopolitical upheaval adds costs to goods and services. Supply chain disruptions effect employment and trade. And the more we have cause to doubt the certainty of operating conditions, the more we see risk premiums in price. Which brings me to the real point. I think that the TPP secrecy has nothing to do with secrecy. I think this is a phenomenally corrupt tool in the emptying toolbox of economic brinksmanship. The TPP is America's last gasp at confusing the influence of China across the Pacific. However, this is as wrong-headed as was John's calculus on Pope Innocent III's hollow support in his nullification of the Magna Carta. Like the Papal States, China does not need to concern itself with the petty trade skirmishes with its Pacific neighbors. If China wants, it can turn inward (as did Italy, Germany and France during the 13th - 18th centuries) and ignore the "heresies" in the periphery. And if the U.S. insists on seeing China as a threat, we'll spend the next 500 years trading more violence than value.
"Brief and empty is the deceptive glory of this world," was not a commentary on the world. de Vitry gave us all a wonderful truism for those who imagine themselves to have obtained such exalted dominion as to no longer be accountable to anyone. And while tweedy historians wax poetic about the 800 years of due process that was whimsically promised by a King who was known for expedient double-crossing and bad faith, a few of us should learn from the same history and agree that we won't be bamboozled at our Runnymede.