Back to Basics or Business as Usual? 
Responsible Lending, Responsible Borrowing and  the Christian Response to the Great Recession  9.30 – 3.30, Saturday 12th December St Paulʼs Onslow Square London SW7 3NX A day conference organised by: The Faith & Public Policy Forum (Kingʼs College London), the Contextual Theology Centre & St Mellitus College

THE MORAL MARKET IS A FREER MARKET Prof John Milbank, Nottingham University

Transcript of his talk recorded on the day

Introduction I think my approach will differ considerably to that of the last speaker, Andrew Dilnot. However, I completely agree with him that one shouldnʼt exaggerate the scale of the recent crisis, itʼs certainly not the end of capitalism, and in the end weʼll probably see it as only a relatively minor blip. However, that doesnʼt mean that as Christians we shouldnʼt be taking this very seriously and it doesnʼt mean that it doesnʼt reveal to us certain very crucial things. Unlike the last speaker I think it would be quite wrong to say that this is just a manifestation of natural human behaviour and the natural cycle of ups and downs. I think it would also be wrong to say that the current economic crises is somehow straightforwardly a manifestation of human greed; because on the contrary, itʼs the consequence of people behaving precisely in the way that theyʼre supposed to behave, according to our current economic system. I donʼt think itʼs a manifestation of something merely natural, because these kinds of crises are quite specific to a capitalist economy. Of course since the dawn of human history, there have always been economic crises, but theyʼve had to do with natural disasters, failures of harvests, failure of ethos, failure of people to work hard and be productive. Whatʼs completely different and peculiar about the crises of capitalism is that they tend to be crises of speculation, crises caused not by concrete physical factors, nor by solely human factors, but precisely failures of the abstract mechanisms of the system itself. You donʼt have to be anti-capitalist to recognise this phenomenon. Plenty of completely pro-capitalist economists recognise it as well. So ever since the dawn of the capitalist era, weʼve had these kinds of crises, think of the south sea bubble in the 18th Century. So these crises are recurrent. Itʼs
Faith & Public Policy Forum 1

There is something qualitatively new about the kind of crisis weʼre now seeing and this is because globalisation has accelerated the pace of the capitalist free markets. and this tends to put political life itself into crisis. capitalism was always globalising but you know how sometimes a process goes so far that it tips over into something quantitatively different. weʼve got this crisis because somehow the weird game of Ludo that we play has entangled us in its own rules. has increased. theyʼre moving round abstract sums of money that they donʼt know any longer what theyʼre relating to. what account of the human being is at work? We keep using the word greed. the problem is much more that the whole system that we live in functions on the primacy of self interest and the primacy of material self seeking. Itʼs completely true that the size of the cake. Faith & Public Policy Forum 2 . they scarcely understand it themselves. what specific lessons can we learn. theyʼre speculating about things that they only half understand.also important to notice that capitalism is somehow inherently unstable. thereʼs nothing wrong with our technology. but also about globalisation. if youʼre talking about abstract wealth. international movements of finance as so powerful that they often override the capacity of governments to react to these phenomena. it tends to reorganise peopleʼs lives for good and ill in very dramatic ways. debt is a complete fiction and yet for the next 15 years supposedly weʼve got to be dominated by this complete fiction. I think there are three things that have struck everybody about the recent crisis in banking and itʼs those three things that I want to focus on. doesnʼt mean that itʼs not time to pause and think once again about our economic system as Christians in the light of such a crisis. This is a crisis of abstraction. and thatʼs I think what people mean by globalisation. self seeking. the nature of the firm and the question of anthropology (the question of a model of human nature) – are the focus of my talk here today. So the question of the firm. we have a crisis of the firm. the question of the bank as an institution is the second thing after the question of abstraction. Now what lessons then. theyʼre operating in banking cartels and we have the sense that these banks are operating in their own interests and theyʼre rewarding absurd bonuses to their employees. none of us understand what bankers are up to. In the case of the recent financial crisis. thereʼs nothing wrong with our natural resources at base. from the recent crisis. First of all we have the phenomenon of abstraction. All of us have registered these three things in a rather inchoate kind of way. we feel that these are more and more dominant in our society as a whole. So these three things the question of abstraction. because what we now see is that international firms. William Blake talked about mind forged manacles. Itʼs as if human beings get caught up in their own abstract systems which supposedly most of the time help them to run the world. the bankers are not isolated individuals. but this has also brought in its wake incredible amounts of social disruption and sometimes it has also increased economic inequality. Secondly. this certainly had something to do with the speed of international capital flows and the way excess capital from some parts of the world flows into our western system and destabilises everything. thereʼs something very weird about the fact that money is of course a complete fiction. So just because we get another crisis in our economic system and this is quite normal. but the problem is not I think that business as usual has been interrupted by a spasm of greed. the economy is the most striking example of a mind forged manacle. And then the third thing that I think that strikes us all is what kind of anthropology is involved here. thereʼs nothing wrong with our human capacity. So we have a crisis of abstraction. This is the way it operates and periodically that is shown up for us in glorious technicolour and we feel horrified. not only about our capitalist economic system as such.

Our economic system above all desacralises. the economy is incredibly abstracting. As Christians we have to view the world as Godʼs creation and therefore we have to view the world sacramentally. the taxi driver who drove me to the station this morning gets up at eight every morning and goes to bed at midnight late at night. use to exploit other people who are short of money. So I donʼt think the numbers are telling you everything and numbers can be used extremely selectively. it pursues merely signs. For us to have built an entire economy on the principle of usury is as John Ruskin said. this means that everything in the world is at once a thing and a sign. not just our quality life. therefore our economic system is fundamentally at variance with the principles of Christian sacramentality. because globalisation allows financial capital to move faster and faster round the world. On the other hand. Weʼve heard a lot of evidence to the effect that we all now have much more abstract money than we had back in the 1950s. The economy moves from place to place. there are other measurements. nobody in the world should be doing that to anybody else. it allows everything to be more and more disaggregated. Right up to the 1980s we retained a residual sense that lending at interest usury should be at least restricted. It treats the land like this. itʼs also an economic measure because if you measure the economic merely in terms of these abstract signs. but our quality of life may have gone down. it treats them as simply sources of labour supply for the economy. Nor do I think itʼs the case that merely economically weʼre better off. speculate on. In the New Testament. Itʼs also completely true that the middle classes are having to work harder and harder and that in effect they have become proletariatised. okay his job is not as grimy and dangerous as that of a miner but heʼs arguably working even longer hours.The abstract economy So first of all this question of abstraction. Our economic system exists by tearing apart thing and sign. Instead of treating money as an instrument of exchange. Nor do I believe this story about the working classes either. The bible is adamant about its condemnation of usury. Faith & Public Policy Forum 3 . supposed to measure one thing against another and thereby achieve distributive justice. No. but I agree with the questioner who said itʼs not as simple as that. And in that sense globalisation encourages this piling up of sheerly abstract wealth and a situation where nobody in finance any longer knows quite what theyʼre talking about. but actually our material life may also have declined. this is not a complaint. it treats human beings like that rather than as persons. this is precisely part of what tends to drive the system into prices. In the Old Testament. what we get on the one hand is a crude materialisation of resources. This leads to the dominance of usury. we lived in a good quality house in the ʻ50s and ʻ60s. my mother didnʼt work. and at the end of the day if you canʼt relate abstract capital back to something material that in the last analysis secures it. it treats money itself as something that you can pursue. I think this abstraction bears strongly upon globalisation. the idea that the whole world shows the glory of God and particularly that human beings are in the image of God. because now we are all Jews. Jews should not be lending money at interest to Jews. Now I think that by dividing sign from thing. this is why the surface of our earth is being desecrated. itʼs taken me my entire life as a professor with my wife working as well to get to an equivalent kind of house. everything is treated as exploitable. For example my father was a schoolteacher. itʼs just an illustration. The usurers in Danteʼs hell occupy one of the very lowest circles. an awful lot of people are having to do multiple jobs. it treats things as objects that can be manipulated. equivalent to the most severe kind of apostasy against the very heart of the Christian gospel. it gets what it can out of things. Itʼs not about merely a shift so that quality of life may have declined. you donʼt measure the way in which our material life. as things that can simply be bought and sold. it squeezes land and people dry and then it moves on. it pursues abstract money.

But ever since the 1970s that model of modernist economics has broken down in favour of post-modern models. Precisely why is it that bankers operate in groups. Just the same thing has happened in the discipline of economics. that it is itself a post-modern phenomenon. itʼs a Faith & Public Policy Forum 4 . this is not an argument for central state planning which Iʼm totally opposed to. there is in the end nowhere to hide. He was absolutely right about that. theyʼve also realised that sometimes itʼs really more rational to collaborate but the individual canʼt always see that. there are always factors leading to degeneration and collapse in the end. and thatʼs part of a larger question about the capitalist firm as such. Finally there has been an unravelling of the Hayekian point that markets somehow give you perfect information about whatʼs going on. that information is going to arrive too late for the individual speculator. people have introduced the factor of time. I think. Ever since the 1970s weʼve known that science is very restricted in its conclusions. Once again. even those things are really quite uncertain and subject to all kinds of revolutionary revisions. Also. In theory it would seem that bankers might operate as lone rangers. it was about the idea that markets automatically record exact information. But the problem about saying that the market knows is that in that case no individual at any one time knows enough for any situation of security. the ecological depredation of the earth comes to hit us in the end precisely because of this sundering between sign and thing. or abstract which ones against all religious principles of sacramentality. Once upon a time you had the stable Newtonian universe where everything was in a kind of balanced harmony. this is the reason for the firm. economists have realised that mere rational individual acting can often produce irrational results. about free markets economics. Why do we have not just markets. there is no secure tax haven for the abstract. The poverty of people in one part of the world starts to affect us even in the west and above all of course. but also firms? Ever since the 1970s neoclassical economics has been in crisis. this is the reason why now economics is mainly institutional economics and not pure market economics. Of course Hayek was completely right that you canʼt see everything from the state. neoclassical economics was simply about markets. you can create for yourself a niche market that becomes relatively predictable. But I think the answer is rather like the answer of why do we have Mr Dawkins when ever since the 1970s that kind of scientism has been made philosophically impossible. The necessity of the firm Now the second thing I want to talk about is the question of the firm or the question of the institution. Although in the end the market will tell you where supply is meeting demand. about the return of the neoclassical model? This is a bit of a mystery. this is why the capitalist economy as such is a de-sacralising move which Christians have to be very suspicious about. that you canʼt have a map at the centre of whatʼs going on at the margins. itʼs a kind of post-modern kitsch. it also in the end increases the way in which abstraction has in the end to relate back to the real material economy. this is the problem of time. Why then is Dawkins mode of completely Victorian scientism make such an impact in a post-modern age? The answer is. Itʼs parallel to whatʼs happened in physics. And this I think is where most economics now think that the role of the firm comes into play. In the end as we see even Dubai comes tumbling down. then people introduced time and entropy and contradiction. ever since Margaret Thatcher. it was about market equilibrium. this duality between this sheerly material and the sheerly nominal signifying. because the point is that if you live in one globe. it can only tell us about certain sorts of things. Why then do we hear so much. People have to get together and cooperate precisely because by forming a firm you can create relatively stable economic information. the fact that no system is in the long run stable.If globalisation increases abstraction.

What is really going on is the question of the institution.itʼs the same problem. if we see the importance of the firm. this is not ethical fantasy. And this is the key to the Blairite project. okay. not even the right wing. risk and creativity. there is no question about this. The point is that even if you believe in the free market. But itʼs a kind of easy ideology to grasp and put over and it began with Reagan and Thatcher. Because you might say. This means then that firms canʼt trust their employees. they have to try to manipulate them because actually acting collectively will benefit them individually. that actually inhibits initiative. this is the key to new Labourism.kitsch recycling of modernism. Stefanos Zamagni is saying very clearly we need to return to the principles of Italian political economy. even some forms of associationary socialism. it is also economic realism. that basically individuals will always be putting themselves first and be out to exploit the firm theyʼre in. So this is a different way of thinking about the free market. utilitarian kinds of terms. it turns out that the model of individualist utilitarianism that goes all the way back to Adam Smith. But this is untrue. The point about talking about a culture of trust is not some kind of moralistic wishful thinking. I think exactly the same thing is true about neoliberalism. In fact people do enter into economic relationships at the local level for social reasons. then we see the importance of human collaboration after all. The market would actually be freer if it was a moral market. this is the whole point of going for the big society and subordinating government and the market to the big society instead of the situation we Faith & Public Policy Forum 5 . the trouble is that our entire inherited economic model is based upon atomic individualism and utilitarianism. So the switch of economics to looking at the firm has tried to read the firm still in individualist. have been wedded to the self seeking utilitarian individual. it becomes precisely a kind of fashion. it also goes on throughout governmental institutions. market economists really believe precisely in neo-liberalism. this goes on throughout the capitalist economy. Likewise the question of government institutions . is actually the wrong model. so it becomes like a sort of try-on. but not a bit of it. and Zamagni argues in a really powerful way that the more we have relatively informal contracts between people. checking up on people. about the primacy of people seeking personal interaction as being the whole point of human existence. the more itʼs based on trust. using public choice theory. They havenʼt said enough about the primacy of reciprocity. In the end Adam Smith subordinates sympathy to self-interest and he says that if your butcherʼs selling you meat heʼs not doing it out of the goodness of his heart. Itʼs the wrong model for the free market itself because if you have endless checking up on people. not as standing outside contract. if you donʼt have trust. so we have this culture of incentives. itʼs based on the idea that basically we are all self seeking individuals mainly concerned about our material welfare and trying to maximise our utility. the question of the capitalist firm. It is assuming. And what I mean by this is that there are no longer any philosophical foundations for Dawkins position. endlessly employing people to check out other employees. This is why the Italian economist. itʼs absolutely key to the way that new Labour has operated. the entire discipline of economics. the point about a culture of trust is actually an entrepreneurial culture needs trust. bonuses. Now my case is that this has totally screwed up the working of civil society and itʼs rather screwed up the workings of the economy and itʼs finally led to the total breaking down of any element of a trust culture within the city of London. and in a funny kind of way this is even more critical of capitalism than most socialisms are. No economists. not Scottish political economy because the Italian political economists from the 18th Century onwards saw sympathy as part of contract itself. for personal reasons. the less you need the intervention both of state law on the one hand. because both state socialism. In practice they havenʼt said enough about fraternity. the way it shapes government policy. but it doesnʼt relate to what is really going on. but theyʼre not necessarily going to see that. or of inner control by firms on the other hand. is the kind of argument that is now being made.

To Adam Smithʼs credit. itʼs not the way the economy should work. So if you have this idea that reciprocity. thatʼs the whole way human society works. Itʼs the paradox. it is incrementally abolished. even today. is that it invents a natural animal humanity which has not always existed. with his idea that we are all naturally a trucking individual looking out for ourselves. me and you. especially the gospel of John and you will see that what Iʼm saying is right. and tried to find ways of resisting that. who was far more honest about the process of Scottish political economy than was Adam Smith. Itʼs what Zamagni calls non-compulsory compulsion. mutual recognition. Charity is always reciprocal. about human society. And the problem about political economy is itʼs an attempt to deny this fundamental fact about human nature. Of course this is massively forwarded by the influence of Darwinism in the 19th Century and this part of the reason for the popular return of Darwinism today. So thereʼs nothing natural about the kind of market economics that we have at the moment. This is why most traditional economies. Christ in the father bound together by the Holy Spirit. I donʼt think it is the right kind of market. read the new testament again. Anthropology. according to the interpersonal. charity is never a one-way gift. reciprocity and the moral economy This leaves me finally to my point about anthropology. and even the so called ʻfeudal economy. Economics itself. In a bizarre way it makes us far too primitive. one of the first things they did was disappropriate all the owners of cotton in the American south. charity. Charity is reciprocity. they think that. They worked according to the idea that I give something to you and I vaguely expect you to reciprocate. Itʼs not written down in writing. basic respect for other people is breaking down and we increasingly live in a cold world. I think itʼs based on what Marx called primary accumulation: an initial seizure of resources and an initial monopolisation of resources as recorded by James Stewart. But the main thing is that the market Faith & Public Policy Forum 6 . tear up all their gentlemanly rules and make sure all the profits went back to Glasgow. interpersonal relations is not the primary thing. Even economists admit that the market is something artificial that has to be created by the state. about the kind of economy that we have now. by laws. The whole witness of anthropology. is that human beings arenʼt primarily materialistic creatures. If it has sometimes to be a one-way gift thatʼs in exceptional circumstance. us in Christ. You do give something and you kind of expect something back but you canʼt demand it. or God or whoever has given us the world and we somehow owe something back in terms of worship. has been starting to break with Adam Smithʼs anthropology.ʼ worked according to the primacy of gift exchange. as Karl Polanyi pointed out. It was invented by the atheist Auguste Comte. because the point of charity if mutual bonding. itʼs always a matter of give and take. the spiral paradox of the gift. The problem then. what human beings want most of all is social recognition. the divine. you and me. Even if they believe itʼs the right kind of market. it treats us and then it makes us behave as if a kind of sheerly animal self seeking was the prior thing. And thatʼs not just about present giving. So you can see how this idea of gift exchange is profoundly related to the idea of the sacramental which it is so completely dangerous for us to abandon. Smith started to realise that a new sort of process of monopolisation was growing up. And when the Scots quite quickly put these new principles into action. Its founded in reciprocity which extends also beyond the human: the sense that the gods. But altruism is not a Christian term. if you say the primary thing is utilitarian self seeking.have at the moment where government and market are both in collusion in pursuing both governmental power and the utilitarian welfare of the individual. ever since the ʻ70s. And this is why everybody in Britain has this sense that ordinary human decency. then what happens is that the social round itself is gradually eaten into. One of our legacies in the West is the division between self-interest on the one hand and altruism on the other.

And my case is that if you have relatively good monopolies. Jesus tell us a house divided against itself based on conflict canʼt in the long run survive. one framed by theological considerations rather than economic ones. we know as Christians that in the end good practice will drive out bad. church leaders and policy makers within a church rather than a political setting. To end with the anthropological implications of what Iʼm saying for the nature of the firm. London Citizens/Faith & Citizenship Programme • Piers Le Marchant. destroyed American local cheese production. Oxford • Phillip Blond. The question is. St Mellitus College (the diocese of London and Chelmsfordʼs theological and ordination training institute). Itʼs government itself and the self-seeking of the nation-state that has created for us a particular kind of market. So itʼs not a matter of given nature. That along with the notion of charitable reciprocity is the key to the establishment of a Christian economy. Thank you. that tend to inhibit the formations of guilds and corporations. The United States is the country where bad practice has almost uniformly driven out good practice. and that put restraints on trade. St Mellitus and CTC have an established relationship and are already working together in a variety of ways to resource and equip the church in London in its mission and ministry through theological education. good firms. Organisers The event was jointly organised by the Faith & Public Policy Forum. Sometimes the opposite happens. sometimes good practice drives out bad. That doesnʼt mean as Calvin held that weʼre totally depraved. why is decent cheese so difficult to find in America today. General Counsel. based on created by a series of laws that enshrine absolute property rights. firms signing up to certain standards of professional associations. Itʼs only true that the devil can triumph for so long. because as Christians we know that weʼre created good but weʼre fallen. that make contractual exchange absolutely non overrideable by anything else whatsoever. itʼs a matter of habit. quite freely. Kingʼs College London • Paul Marshall. Marshall Wace hedge fund/Centre Forum • Dr Maurice Glasman. and the Centre for Contextual Theology (CTC). And of course through the grace of Christ we are capable of being perfected. based on trust. get the materials for those products as cheaply as possible and sell them as dearly as possible and finally that kind of bad practice drives out the people who are trying to do things better because they canʼt make enough money. Other participants in the day conference included: • Dr Luke Bretherton. the phenomenon of Walmart. what kind of monopoly do you have? If you have what Smith described as a gang of people conspiring against the public interest. then what follows is that bad practice always drives out good. there is one answer. what one can say is that the very existence of the firm suggests a certain kind of monopoly as absolutely inherent to capitalism and the workings of the free market. it means that we are good up to a certain point. Why are both these things true? Theyʼre true. Kraft. ResPublica Faith & Public Policy Forum 7 . People seek monopolies in order to produce the shoddiest products. theological educators. Principal. St Hughʼs College. Likewise. Nomura International • Andrew Dilnot. that can triumph in the long term. John Lewis is an example of good practice driving out bad practice. Kingʼs College London. Yet here we arrive at the heart of the theological question. and build relationship between bankers. Kraft who are about to take over Cadbury. Why should that be the case? Whatʼs an example of that? John Lewis. Kingʼs. This event was designed to initiate a conversation about the way beyond the economic crises. that gradually in the long term that kind of practice. A bad habit can destroy a good habit but a good habit can destroy a bad habit. based on the idea that we are essentially destined to be charitable beings.

Sign up to vote on this title
UsefulNot useful