Confronted by Economics: who would have thought?
“If all the economists were laid end to end,
they’d never reach a conclusion.”
George Bernard Shaw
Until a few years ago, economics had as much interest to me as trainspotting; I knew such things happened and the people involved were interesting in their own way. Economists had a certain Harry Potteresque feel to them; lots of strange incantations, prophetic utterances and an eager belief that their predictions ‘might’ come true. If only they actually had wands.
Fast forward to 2016 and my opinion was much the same. Knowing my views on the topic my evil daughter in-law gave me a book on the subject for Christmas that year, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.[1] The book piqued my interest because it looked at the unintended outcomes of certain social activities. The opening statement sums up the intent of the book, “…if morality represents how people would like the world to work, then economics shows how it actually works.”[2] Through the process of data mining, Levitt and Dubner uncover interesting secondary responses to certain policy changes, for example, when abortion was legalised in 1970’s crime decrease in the 1990’s and the data revealed a strong correlation between the two.[3] The assertion may be astounding, or even offensive, but Levitt, makes an interesting and credible case for his theory. And it’s this bullish and often comical approach that makes economics suddenly interesting – it’s not about money or markets, it’s about people.
What freakonomics did, was open me to the likes of Karl Polanyi. I remain a devotee of his brothers philosophical thinking (Michael Polanyi), and it seems the brothers were both prepared to buck the status quo of philosophical and economic thinking, though in divergent ways.[4]
Karl Polanyi and Stephen Levitt both hold that conventional wisdom usually comes from self-interest or convenience. If someone can propose a theory to explain certain “truths,” too often this theory is just the most palatable or serves to fill an underlying need, because once conventional wisdom on any topic is accepted, it becomes difficult to prove otherwise. Undaunted, however, Levitt and Polanyi aren’t afraid to take on some sacred cows.
The Great Transformation shows that the history of our current global economic system is premised almost entirely on Adam Smiths flawed vision of a free market economy perpetually spinning on the axis of self-interest.[5] However, the idea of self-interest is flawed. Human self-interest is rarely a balancing mechanism because it requires both equality and a consistent balance of power between all parties in order to work. [6]
At its heart the book encourages a complete rethink regarding the nature of markets; they are not principally economic, they are relational. Conventional wisdom claims that social relationship are embedded in the market, Polanyi claims the market should (as it was historically in traditional economic theory) be embedded in relationships. My first thought was of how current Christian leaders treat their collegues and indeed their people; are people ends in themselves, or are they the means to a leaders end. It’s a consideration that reveals more about our theology than we care to express.
Polanyi seems to consider six areas of economic life that gave me pause for thought as a participant in God’s Kingdom and as a student of Jesus. We’re not supposed to summarise in this course, but today, I can’t help myself.
First, all societies face the economic task of producing and providing for all members of society. Traditional economies use the non-market mechanisms of cooperation and social responsibility to provide for members who cannot take care of their own needs. Only in an unregulated market society is good education, health, housing, and social welfare services available to those who can pay for it.
Second, unregulated market economies turn the entire created order in to a commercial order of exploitation. Everything is commodity with a price tag – the air we breathe, the space above us and below, and everything around. Indeed people have positive or negative commercial value from conception to death. Gone are traditional components of trust, intimacy and lifetime commitments.
Third, Polanyi’s description of the hypocritical “double movement” unveils the nature of the West’s well-worn and dysfunctional economy. The unregulated market calls for no government intervention as it the market always self-levelling, yet the recent experience of the Global Financial Crisis saw the markets screaming for regulation, intervention and bailouts so the failed system could continue on its merry way, and those with power over the markets made an ongoing profit.[7]
Fourth, a certain callousness and indifference to poverty is required for efficient functioning of unregulated markets. Capitalist economics require sales, purchase, and exploitation of labour, which cannot be done without creating poverty. Perhaps most callous of all is the knowledge that market economy is used to motivate the poor workers it created.
Fifth, market economies are incredibly unstable as history has shown. Economists thought the worst of it had died off after world war two with the installing of Keynesian Thinking (strong monetary and fiscal policy that stabilised economic whiplash in difficult times).[8] After 30 years, unregulated markets flooded back with maximum aggression, and remain so.[9]
Sixth, no matter how many ways you view the marketing of market economics, it is riven with all the elements of, ‘Fake News’. Market economies often misrepresented the facts so that obvious disasters were portrayed as successes.[10] The common message of modern economics textbooks is that capitalism has created tremendous wealth and unprecedented progress. A quick survey of such material on Amazon shows this to be largely true. The better truth, however, is this growth has been extremely costly. In commodifying the earth and our children we have celebrated the proceeds without reckoning the costs; the destruction of environment, animal species, and indeed human society, shows that that those costs have been far higher than the benefits.
I am no economist, and I’m suspicious of conspiracy theories wrapped in academic language. However I am a follower of Christ, and a leader in Christ’s church, so from the book I get to choose between multually exclusive was of ‘being’ in the a leadership language of economics – and the choices are stark:
- Cooperation or Competition
- Intimate trust or the commercial deal
- Consistent ethic or double standards
- Callous indifference or creaturely responsibility
- Aggressive instability or peace on earth
- Transparency or misrepresentation
I not a supporter of the left or right, centrist, socialist, communist or libertarian. I am a follower of Jesus first and foremost. Everything I read I try to comprehend through the lens of Christ. It’s not easy, but as a leader of other Christians it is my task. I believe in the freedom of the individual and the freedom of the state, but my conception of freedom is not to do as I, or we, please, but the freedom do to others as we would do to ourselves, as God has done for us. A freedom that chooses to to do so, because it is the good and the right. John Yoder called it, “The Politics of Jesus”. I like to think of it as the church in a complex world.
Notes
[1] Steven D. Levitt and Stephen J. Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (Penguin Culture), Revised ed. (Penguin Random House, 2015).
[2] Ibid. Contents page
[3] Ibid. 3-5; 137-142
[4] Walter Gulick, “Michael and Karl Polanyi: Conflict and Convergence,” Political Science Reviewer 37, no. 1 (2008).
[5] Karl Polanyi. The Great Transformation: The Political and Economic Origins of Our Time. (Boston, MA: Beacon Press, 2001), Kindle Edition 45-47
[6] Ibid. 3
[7] Ibid. 138f
[8] See Naomi Klein’s Shock Doctrine for a somewhat terrifying review of economic history.Naomi Klein, The Shock Doctrine: The Rise of Disaster Capitalism, First Edition ed. (Knopf, 2007-01-01).
[9] Polanyi, “The Great Transformation: The Political and Economic Origins of Our Time”. Loc 310
[10] Ibid. 233
References
Dubner, Steven D. Levitt and Stephen J. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (Penguin Culture). Revised ed. Penguin Random House, 2015.
Gulick, Walter. “Michael and Karl Polanyi: Conflict and Convergence.” Political Science Reviewer 37, no. 1 (2008):
Klein, Naomi. The Shock Doctrine: The Rise of Disaster Capitalism. First Edition ed. Knopf, 2007.
Polanyi, Karl. The Great Transformation: The Political and Economic Origins of Our Time. Boston, MA: Beacon Press, 2001. Kindle Edition
About the Author
Digby Wilkinson
I am currently the Vicar of the Tawa Anglican Church in Wellington, New Zealand. I have only been in this role since February 2018. Prior to this appointment, I was the Dean of the Wellington Cathedral of St Paul, which made me the senior priest of the diocese working alongside the Bishop. I guess from an American perspective this makes me look decidedly Episcopalian, however my ministry background and training was among the Baptists. Consequently, I have been serving as pastor/priest for nearly thirty years. My wife Jane also trained for ministry, and has spent the last decade spiritually directing and supervising church leaders from different denominations. We have three grown children.13 responses to “Confronted by Economics: who would have thought?”
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If economists did have wands do you reckon they’d be more like Ron or Hermione in the Philosopher’s stone? Moving on. I’m questioning whether the free market economic system can truly be said to have the intent to provide for all people. Perhaps at its best it is meant to allow all people to have equal permission to compete for limited resources. It seems to me that the same system that is built around a motivation of self-interest, also relies heavily on moments of generosity (or mercy) from those who are successfully ‘winning’ in the never ending competition. It continues to baffle me how this system emerged from Christian nations. Your six binaries are wonderfully set up to suggest the Christian option should be obvious. How then might you advise those you lead to resist the system? Do you think the call should be more ambitious. In which case, what do you propose as an alternative system that better represents Christ?
Jen, what’s with the difficult question? Ron or Hermione as juxtaposed economic descriptions of human behaviour in regard to wealth is a PhD topic (you could pick that up), however, I’m going with Hermione. Economists tend to have an ‘I told you so’ approach to things, even when they never, in fact, told us anything. They also roll their eyes a lot. More anecdotally, however, Ron has too much fun and requires laughing at and not with. In no way is he an economist.
As to the less interesting question, I think you have to understand the intent of market-based systems. Firstly, I have a suspicion (yet to be proven) that the originators of all economic systems devised their plans to deal with obvious social issues in their time. In that sense, my understanding is that their intent was the betterment of society despite the legacy that may have followed. It’s hard to offer a cursory perspective on Karl Marx (German), Adam Smith (Scottish – that figures) or John Maynard Keynes (British – celebrated). What’s interesting is they were all birthed in the armchair of Christian history so it can be assumed, if not known, that they had a Judeo Christian perspective on the care of people in society. History shows that power, wealth and greed destroy best hopes. In the UK, the class structure created impossible hurdles. In the US, the crazy democracy benefits the truly wealthy because democracy has become a purchasable commodity. And Marxism was grasped by violent dictators rather than the benign autocracy it called for. Whatever the case, people wrecked well-intended economic theories that were to benefit all, no the few. Democracy for all its claims, rarely benefits the masses in times of need, because people tend not to vote to lose something in order for someone else to gain – even Christians.
As to what to do, that’s localised I think. Christians running countries is rarely a good idea. Christians being the ‘community of the Kingdom’ in their local area, that’s different. I often remind our congregation that their principal allegiance is to Jesus, not their political party or city council or sports club. I don’t much care who they vote for so long as they have first tried to understand and live the life of Christ. It gets people thinking about Jesus politics in a political world. It gets people thinking and talking rather than merely responding. What does the Kingdom of God mean in our wider community? How might with make it visible through our Christian community? And yes, every now and then the wheels fall off when I try. But that’s what makes being a pastor so exciting and dangerous.
Hey Digby, thanks for the insights. I tend to be in the minority thinking in any group I find myself. There’s nothing I disagree with what you’ve said. I like the quote “…if morality represents how people would like the world to work, then economics shows how it actually works.” In my blog post on this subject I alluded to the fact that morality is tied to economics and few realize that.
I’d like to respond to each of your six points, but I’m not sure I have the time and space here. I can’t promise I can but I’ll try my best so here goes.
To your first point, I’m not sure if societies are obligated to provide for all members in the community. Fascist regimes certainly don’t think so. The discussion certainly moves forward if we’re talking about a society in which Christian values are present. But even then, I’m not sure. I know fathers and mothers ought to provide for their children. Of course helping, caring and cooperating with each other even within a broader community certainly is an “ought” and makes sense in a Christian setting. But I’m still having a hard time with a single person or small group in positions of authority dictating what ought to be done. I’m not saying this is ideal, because in a monarchy where the king is wise and benevolent, the people will want to serve, obey and be good for it. There’ll come a day when that happens for sure, but for now, so long as freedom and liberty are fundamental values in society, we can’t force anyone to produce and provide for anyone.
I’m curious, can you point to another time, society or culture, etc., where Judeo-Christian values are completely absent (godless), now and in the past, and the value of “producing and providing for all members of society” is a top value without curtailing indivual freedoms?
I have way more to say about the other stuff here and I look forward to a great discussion.
By the way, I’d like a society in which all of the positives you mentioned actually happen. I’m just not sure what other system other than capitalism can work in a fallen world.
It’s a huge topic Harry, and one I have enjoyed thinking about – often badly. Your question regarding a prior (godless) society of care and individual value – no. It’s the utopia of the modernist world that has never come to pass. The Garden of Eden is the starting point, and perhaps the last city of revelation.
I think the main problem with the discussion, is we forget that all economic theories were founded within the context of Judeo Christian life – and I mean all of them. Economics as we understand it has been borne from the global anomaly called mass urbanisation, and pretty much every major urban context attempts to engage with a westernised understanding of free-market capitalism often without the cultural background to support it – India, Africa, Middle East.
Digby,
As always, you are a breath of fresh air with a magnificent capacity to think and communicate. Trainspotting sounds very interesting and highly entertaining compared to political economic theory. But I trust you enough that I will put Freakonomics on my to-read list. Once again you are forcing me out of my intellectual inertia!
Trainspotting is very English, Harry. Poms charge around in cars looking for a specific models’ of train engines along with their ID number. The aim is to get the complete set of numbers along with photographic evidence. It requires driving around the country. They also chase historic trains and trains of particular interest. Then they meet in clubrooms, share pictures and tell stories of their journeys. It’s totally bonkers.
Freakonomics is worth a read. It’s very easy going and quite fun in rattling sort of way. It certainly makes you think about human behaviour.
Thank you, Digby. This is the statement that struck me most,”In commodifying the earth and our children we have celebrated the proceeds without reckoning the costs…” Christianity knows the ideal and sometimes finding how to live the “already” in the “not yet” world is daunting, but you captured it, remembering people first. I wrote similarly around being human rather than a commodity. Celebrating the proceeds feeds the “lizard brain” part of us and will move toward selfishness and greed. Counting the cost is sobering and requires selflessness and keeps loving people as the focus.
Taking up that Cross and counting the cost for others on the basis of unrewarded grace is a tough pill to swallow. Especially if it has to do with my wealth, assets and power.
Christianity was the progenitor of individual human sovereignty, the idea that each person has value in and of themselves before God. That being the case, we recognise in each other that same sovereign value – each person is a pearl of great price. However, when butchered philosophically, that sovereignty soon becomes personal responsibility and personal liability.
No wonder Christians adopted Adam Smith with such ease. The problem, of course, is that people are not equal socially, intellectually, or in terms of health (mental and physical). The point is, despite those things we are sovereign creatures to be treated with respect, even if they don’t live lives of respect. the basics of human life are the basic no matter who they are. Christians share in a different covenant to that of Adam Smith. And even though it’s damned hard to live out or make sense of from time to time, it’s still the one we signed up to.
Digby,
Thanks for the well written post. I knew you would have some good thoughts on this book. I find myself agreeing with you on all points (don’t get use to this).
This begins the question. How do we as the church move forward? What would be a good starting point?
Mario, of course, you agree with me – twins separated at birth, bro. See my response to Jenn.
Digby, this is such a moving post. Clearly this weeks reading touched you deeply and you convey that beautifully here. Just one thing . . . . do you know that Freakonomics is also a podcast? Please check it out!
Yes! And they have a second book I think! I agree with everything above!
Digby, I love how you can read with such understanding and bring out such salient points. I thank God for our class and the ability to learn from one another.