Tuesday 18 November 2008

Dishonest money: what the financial crisis tells us about ourselves

A guest-post by Scott Stephens (originally written for an Australian church newspaper)

Credit is the lifeblood of the modern economy. It saturates our lives – from the personal credit we each use to purchase household items or to buy our homes, to the shadier, more mysterious world of credit default swaps (CDSs) and other derivatives that commercial banks now trade like a currency.

But it’s the very ubiquity of credit that prevents us from seeing its true nature, like being unable to see the wood for the trees. Credit is, in essence, the promise of limitless, indefinite, unfathomable wealth. And we need credit is because of the kind of lives that we have become accustomed to living, or the size of the profit margins your investors demand. Credit is, like most facets of our economy, an invention, a form of technology for generating more money. But the real innovation of the last two decades has been the willingness of banks to trade debt and risk itself, and thereby to make the economy both more profitable and more volatile.

Likewise, on the personal front, it has been the availability of “cheap money” in the form of low interest mortgages, the subsequent housing bubble, and the conversion of home equity into another line of credit that has pumped billions of dollars into national economies. What we have witnessed, in other words, is a natural extension of the very logic of money, which has aimed from its very beginning at generating more and more of itself, seemingly out of nothing.

This surprisingly modern idea – money generating more money – was actually first put forward by Aristotle in the fourth century BC. He observed the introduction of markets into the first great metropolises of Asia Minor, and even described trade as “the salvation of the states.” But Aristotle was then shocked to observe that the efficiency and simplicity of the market seemed to unleash something monstrous in the human heart. As people saw how much money there was to be made, they began lusting after “profit without limit.” They traded “the good life” (namely, a life organized around virtue and the common good) for lives of excess. Aristotle concluded that, whereas trade had the potential to be “the salvation of the states,” the seemingly limitless flow of money trade introduced into the life of the city brought along with it vices or moral impairments that would be the destruction of the city.

The vices he named were: greed, an inability to be satisfied, a lack of sobriety or self-control, and the willingness to profit through usury. The great tragedy, of course, is that the very vices that Aristotle identified as most corrosive to the common good have become the celebrated virtues upon which the modern economy is built. Capitalism thrives only through these vices.

While we hope and pray that those in positions of influence will find a just and effective response to the current credit contraction, should we not also reflect on our own indulgence in the greed and uncontrolled lifestyles that have brought us to this point? Shouldn’t we hope that out of this comes a rediscovery of a keen sense of the common good, and of new forms of community that nurture the virtues that have long since seemed to disappear from our society?

The onus, then, is on the church – not merely to pray in some benign way that God would mollify the effects of this financial crisis, but really to constitute that alternate form of community. To give the formation of Christian virtue and Christlike generosity priority over misguided “stewardship” (which so often is ecclesiastical code for white-knuckled miserliness). To have the courage to tell our congregations that participation in the Body of Christ means wanting less, using less, wasting less, so that we can distribute more. To embrace those sacramental resources that have been entrusted to us to keep us faithful to our calling, and which themselves enact a radically different kind of economics to that of corpulent capitalism.


Iain Stephenson said...


Spot on.

Check out my rant about capitalism on http://pastoriain.blogspot.com/

We need a new economic model that isn't based on maximising profit over everything else (the environment, peoples happiness, justice and so on) and doesn't treat people like resources that can simply be used and then discarded.

And to make that happen, we have to stop voting for the party that promises tax cuts, simply because it means we will have an extra £50 in our wage packet each month.

Mason said...

Yes, capitalism is clearly less than ideal. The problem is that so are all the curent (and probably future)alternatives.
As much as I agree that we cant let capitalism become a 'sacred cow' as it were, either personally or as the Western church, I also think we can not bank on a different economic system being especially more effective in bringing justice, environmental sanity etc. Any move in those directions is to be embraced, but we still need to keep critiquing the world's systems since they will never be what we might want of them, in this age at least.

Halden said...

Do I detect the influence of Goodchild here? Sounds much like his argument in Theology of Money.

Anonymous said...

I am reading Brink Lindsey's book The Age of Abundance. There the primary argument focuses around the shift in free market economies from producing subsistence needs to producing desire. When we live in a corporate culture that produces desire, it creates inequities and political fractures that are ideological in nature (red state v. blue state).

One outcome of this mode of production of desire is that leisure is the primary product of consumption. Naturally, leisure combined with desires that continue to ratchet up requirements for comfort and satiation will leave others behind who cannot afford leisure in spite of the sort of narcissism (in Lasch's use of the term) that the economy reinforces and produces.

Thus, the economy of desire must change and be something quite different than the normative economy of abundance that eschews altruism in order to increase personal leisure. It makes a the practice of loving one's neighbor as a moral obligation quite counter-cultural and non-normative.

Anonymous said...

We need a new economic model that isn't based on maximising profit over everything else (the environment, peoples happiness, justice and so on) and doesn't treat people like resources that can simply be used and then discarded.

This is a beautiful sentiment. Could you please suggest such a model for modern societies? Without the prospect of profit do you think that people will provide goods and services out of the goodness of their hearts?

This is why I view any discussion of economic systems and morality with a jaundiced eye. Economy, business, money... these things are amoral. They are neither good nor bad. What is good or bad are the choices we make with them. We blame credit but the real fault lies with those who choose to live beyond their means. We like to blame businesses and corporations for the world's ills but the truth is that without these corporations we would be living very spartan lives - and shorter lives, too. For example we lambast the drug companies for making a profit but in actuality the drug companies SAVE and EXTEND both life and the quality thereof.

So let's get off our high horse regarding the "best economic system." Capitalism is the worst economic system in the world - except all the others which have from time to time been tried - to borrow a phrase from Mr. Churchill. Like government, our approach to economics vis a vis theology should be "render unto Caesar that which is Caesar's, and unto God's that which is God's."

Anonymous said...

doesn't treat people like resources that can simply be used and then discarded.

Oh, I'm sorry, I thought that was Marxism, not capitalism. Silly me.

Anonymous said...

"What is good or bad is the choices we make with them." Ah yes, the so-called "freedom of choice", the shibboleth of the marketeer who (a) believes that libertas means following one's desires regardless of their objects and ends (which Augustine rightly recognised to be a form of slavery), and/or (b) does not understand that capitalism is not just an ideology but a (Pauline) principality whose alpha and omega is blind self-survival.

We are theologically spoiled for choice for reasons to reject capitalism as incompatible with Christian faith. D. Stephen Long summarises three of them: "Gutiérrez's opposition to capitalism rests on a social-scientific analysis of reality. Milbank anathematizes capitalist exchanges because of the heretical positions that give rise to them and which they perpetuate. MacIntyre opposes capitalism because of its historical performance when measured against the norms of faithful practice." Drew refers to Lindsey's (presumably) Augustinian critique of capitalism as an engine of the libido dominandi (I haven't read the book). McCabe enlists the support of Aquinas in pillorying capitalism's intrinsic indifference to the common good. As a pacifist, I'd put it like this: capitalism is the continuation of war by other means.

What to do? Deal with it! By acknowledging capitalism's irreconcilability with Christianity. By recognising that state capitalism, i.e. communism, is not the only alternative to unregulated free market capitalism (that, for example, a national healh service is not the thin end of Satan's wedge, and that the graduated income tax is not a dirty word). By realising that, despite appearances, as a principality, capitalism's back has been broken by the crucified and risen Christ (Colossians 2:15). By taking steps in our churches with fellow-followers of Jesus to reshape our distorted desires and inculcate the virtues of cooperation, generosity, etc.(cf. Scott's final paragraph). Above all - the sine qua non - by believing in the apocalyptic power and presence of the Holy Spirit who, if he can begin to root out the violence within us, can also begin to root out our avarice too.

Halden said...

"Oh, I'm sorry, I thought that was Marxism, not capitalism. Silly me."

I get the feeling you've never read a bit of Marx...or Adam Smith for that matter.

Joanna said...

Amen, Scott, Amen! I'm rather confused as to why some respondents to this post are asking you to suggest alternative economic models for the state to adopt - when you quite clearly focus your 'solution' on the church. Do we really think that in approaching the people with whom we share one bread and are one body, the gospel offers us the 'choice' to adopt an economic model of free market competitiveness? Of course, if we begin to experience new, generous, equitable forms of community in that context, we may begin to see more clearly the sinfulness of the economic models at work in our wider world and be moved to imagine and work for alternatives.

Anonymous said...

Your economic analysis leaves a lot to be desired. You echo the tirelessly repeated sentiments of those will little economic understanding. Money is not the goal of capitalism. Money is a tool. It is the tool the human society has used from its dawn to meet the basic necessities of life. Unfortunately, in creating these necessities come excesses. But the flip side of it is, if you somehow abolish the excesses, you will condemn many to live a life of squalor, void of the basic necessities. Is that what you want? To condemn people to poverty? To condemn people to death for lack of basic needs?

For all it's ills, capitalism has meet the needs of more people than any other system set conceived.

However, the bright point is your emphasis on greed. Greed is a reality of our sinful world whether we live in a capitalist, marxist, socialist, etc. society. But once again you fall into the trap of echo the sentiments of tirelessly repeated sentiments. This time by the Christian idealist who think that the Church can somehow abolish sin here and now.

Christ himself has conquered sin, not by freeing us from its effects here and now, but from the ultimate consequence of it isolating us from God.

Anonymous said...

I too detect a flavour of Goodchild's Theology of Money in this post.

Geoff said...

A question, primarily to "PTS guy", but I'm interested to hear other's thoughts:

Money is a tool used to help people acheive the basic necessities of life. Fine. But who determines what constitutes the "basic necessities of life?"

I doubt few people - capitalist, socialist, or otherwise - want to see people living in poverty, lacking the essentials. But if by "essentials" we mean a flat-screen TV, air conditioning, cell phone, etc., then it seems we have almost certainly missed the point. I would argue that access to health care is more of an essential than any of those things, but 47 million Americans lack health care, while 99% of Americans have AT LEAST one television set. And, while our politicians debate how to make health care affordable, no one has barely blinked at the fact that everyone will upgrading their TV's in 2009 so that we can all experience the wonderful quality of digital signals.

Yes, the church cannot abolish sin, but we do have the power of Christ to do "even greater things" than Christ did! So what are we doing? Perhaps the first step needs to be a combined effort on the part of church leaders to re-establish a proper Christian understanding of "basic necessities" - an inverted marketing campaign, so to speak - to challenge the people in our communities of faith to re-assess what they've been told by our system, culture, and media. Perhaps, ironically, the current economic downturn provides an opportunity to do this?

Just wondering...

Adam Kotsko said...

PTS guy is wrong: money is the goal of capitalism. Everything else, including the things that we all find good about the current system, is a side-effect of the pursuit of profit. It's gotten to the point that our dear friend tpkatsa believes that people can't do anything for reasons other than money. Really? People don't have any desire to contribute to society and help others, if they aren't bribed? To use an obvious example: I don't see many people making money off of childrearing, and no one's forcing them to do it, yet they do it.

It's so awesome that the dominant "Christian" position in the public sphere is that everyone worships Mammon and it's morally wrong to suggest that they stop.

Anonymous said...

I must confess to be somewhat perplexed by tired exhortations to keep pressing on toward polity-healing virtue. The argument that if enough of the church (or merely the true church) possessed and cultivated enough virtue, then we would be leading the way toward a socio-political (or in this case 'economic') peace that evangelizes and converts the secular, is not a complete argument. Self-mastery is not an adequate method for engaging and correcting the economic order. Yes, rampant and unrestrained desire helped stimulate and then promote some the problem with which we are all presently confronted, but this an institutional problem far before it is a lack of self-control (or virtue).

I have great doubt that the Church will ever become virtuous enough to mend the torn walls and chipped floors of a system that was built upon sand at the outset. Usury hasn't always been praised and certainly hasn't always been considered a "necessary evil". It is worth noting that it was only 500+ years ago that Luther was urging the Prince to disallow usurious practices; and interestingly, he didn't say much about virtue.

Anonymous said...

Luther didn't say much about virtue in "Trade and Usury", that is.

Anonymous said...

I get the feeling you've never read a bit of Marx...or Adam Smith for that matter.

Actually, I've read a bit of both...but what I have or have not read is not the question at hand.

If there ever was an "economic" system that uses and then discards (well, actually murders) people, that system is Communism.

"Capitalism's back has been broken by the crucified and risen Christ (Colossians 2:15)"

What does this even mean? How is the the verse cited related to the current topic? Capitalism is an economic theory, not a "principality" or "power".

This sounds like one of those statements that is greeted with "oohs and ahhs" by those went to graduate school to study liberation theology or social justice, but is otherwise totally meaningless.

Adam Kotsko said...

To respond directly to the article: The missing piece here is the realization that church-enforced thrift and self-control helped create capitalism -- see Max Weber. I am as annoyed at idealized "let the church be the church!" exhortations as anyone, but in this case, the supposed cure doesn't even fit the disease.

Anonymous said...

Joanna and Scott are right. New micro-economic practices of the body of Christ are the place we should be looking, that's where virtues belong and are nutured. Don't expect the state or the market to create them.

Anonymous said...

So, tpkatsa, capitalism is just a theory, and talk of principalities and powers is just academic guff. Mammon will be pleased that you don't believe in him; cynicism is what gives him (and his friends like racism and nationalism) his purchase. And I guess, with Pelagius, greed is just an attitude problem.

So you've read Smith and Marx. May I suggest adding some Stringfellow, Ellul, Wink, and Dawn to your Amazon wish list?

scott said...
This comment has been removed by the author.
Adam Kotsko said...

Capitalism is an economic theory, not a "principality" or "power".

I must echo Kim's skepticism. Simply on the level of words, how could this possibly be true? Does capitalism have no influence in shaping our lives? Do rich people somehow fail to have power over us? Are they entirely free of influence over the more obviously "political" situation?

What could you possibly think you mean by calling capitalism an "economic theory" as opposed to a "principality or power"? Or indeed calling it an "economic theory" with no reference to the fact that it has been put all too thorougly into practice?

Your apparent resentment against theological education is leading you to make nonsensical claims.

Mark Sampson said...

Excellent post. Your suggestion that capitalism has turned vices into virtues reveals both the 'heart' of capitalism and also accounts for it's remarkable success. There must have been a moment when someone decided to call debt 'credit'! A few years have gone since the start of the economic crisis and the calls for a wholesale economic change have gone quiet. It appears as if we are getting back to normal, albeit with a little more regulation. The reason that calls for change have become silent is that there have been very few alternatives suggested. Perhaps this is because capitalism maintains a constant hold on our imaginations. The church has all the resources, theologically and historically, to sustain the embodiment of an alternative economy. That we appear as if we are struggling to do so suggests that we still haven't quite got to grips with the hold capitalism has on us. William Cavanaugh's suggestion that 'Politics is the art of imagination' points us in the right direction. How do we foster an alternative economic imagination in the church?

I am not sure of the answer but you might be interested in a similar conversation that is taking place at the blog on www.capitalismproject.org

Cheers. Thanks for a great post.

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