You are on page 1of 220

Economy and Crisis

A Christian Report on the Challenge of our Time

Douglas H. Knight


Chapter One
1. 2. 3. 4. 5. 6. 7.

Economy and Covenant

Economy and Crisis Man in Covenant Discipleship and Independence Together Marriage and Singleness Two Societies Humans with Future

Chapter Two
1. 2. 3. 4. 5 6. 7.

Family and Motivation

Family and Children The Formation of Persons Household and Market Public Service and Charity State compensating for Family Failures Motivation, Reproduction and Demography Future Orientation

Chapter Three
1. 2. 3. 4. 5. 6. 7.

Market and State

The Mixed Economy of Household and Market The Household and the Inter-generational Economy Work outside the Household Market without Restraint Public and Private Man Government Over-Extended Self-Government and Good Government

Chapter Four
1. 2. 3. 4. 5. 6. 7.

Confidence and Social Capital

Economy and Public Square Culture, Memory and Social Capital Remembering and Paying Debts The Paradox of Liberalism Modernity meets a Rival Monism and the Closed Economy Faith, Freedom and the Open Economy

Chapter Five
1. 2. 3. 4. 5. 6. 7.

Money, Debt and Growth

Presence Givenness and confidence Making unalterable Growth and Moneys Modern Mode Debt and Growth Restrained Economy Humanity as Gamble

Chapter Six
1. 2. 3. 4. 5. 6. 7.

Money as Ritual and Cult

Belonging Charisma and Credit Enthralment An Earlier Globalism The Modern Economy as Contemporary Empire and Cult Reconciliation and Unity Anticipating Another Economy

Chapter Seven
1. 2. 3. 4. 5. 6.

Two Economies and Christian Witness

Economics Two Societies, Two Economies Liberality and Secularity The Gamble of Globalism Crash and Correction Christian Reinvestment

The Christian account of the economy is deep and wide. It comes from a high view of what of what humans are capable and of the complexity of their interactions. Economics has a neat and tidy account of human interactions, and a clear idea of which interactions are economic and which are not. You might think that that these two accounts would have much to say to each other. But economics does not seem to want to say much to theology or indeed to many of the other disciplines that make up the humanities. And that is the point which sets this inquiry off. Since modern economics declines to receive that input it has become a closed intellectual system, too perfect to reflect real relationships in the world. The society which attempts to treat economics as an working account of human interactions is likely to experience severe cognitive stress as it encounters the contradictions between this system and actual economic relationships. When the business community and governments treat economics as a description of how interactions in the economy must be, they are likely to experience a crisis which they describe as economic. An economic crisis is just what we are experiencing now. How did this disconnection between economics and economy come about? How do these contradictions feel to us as individuals? What are the origins of this crisis that is intellectual and yet so immediately reflected in human lives? Since they have a high view of human beings, Christians also have a high view of the possibilities of their interaction. In the Christian view, each human being is a social being who can deliberate about what they desire, explain their reasons, persuade others or perhaps change their mind. We are not simply bundles of needs or desires only kept in check by the price mechanism; for we are not simply another animal, but intentional and rational beings. Since each human being is free, and free to love, he may do things for other persons just because he wants to. By saying that these two elements of freedom and love are fundamental to economics, Christians already make a fundamental contribution to it. When love and freedom feature in our account, economics gains greater explanatory power. When human love and freedom are omitted, we fail to understand something essential about human encounter and this failure brings about a crisis that is not only cognitive and intellectual but cultural and economic too. This book argues that one cause of our present economic crisis is that the present generation has failed to place enough value on human freedom and love, and so not made enough preparations for the generation that has to follow it. In the modern form which has dominated the last two centuries, economics takes a low view of man. Sceptical of his ability to get on with other people, it offers a minimal account of what humans have in common. It relies on the effect of large numbers of people, which economic jargon terms the market, to restrain us from impacting too heavily on one another. Modern economics tells us that the only interactions possible between people are limited ones. It does not offer a full version of its minimal view of man, but that is because economics is itself a deliberately economical explanation. It offers a minimal account of our interactions because its proponents believe that longer accounts are either not desirable or possible. This economical view has the long-term effect of reducing our confidence in one another as beings we can appeal to and reason with, so we reduce the demands we make on one another. What is more, this minimal description of man is periodically in danger of making itself true, for modern economics has been hugely successful in convincing us that the possibilities of human interaction really are as limited as it describes.

But first, what is an economy and what is economics? An economy is the sum of those many interactions with other people by which we procure the means of life. An economy is a set of arrangements by which we organise these interactions in a particular place, for a particular time, and so it refers to the way we organise our affairs and, since a large of people are interacting even without us, the way that for each of us affairs seem to organise themselves. Economics concerns itself with our interactions with those outside our household which are expressed in terms of payment. Money specifies and delimits the scope of those relationships which we describe as economic, so we are compelled to provide each other with what a contract requires. It is the contention of this book that we do not just enter exchanges because we are driven to find the material means of life but also because other people are attractive and engrossing. They are what we want. Through interacting with them we find out what is worth having, but fundamentally other people are what is most valuable. We do not enter transactions with them because we have to, but also because we want to. We do so willingly because by interacting with them we find out who we are and who we want to be, and our desires are constantly being re-shaped through them. Encounters with others bring their own reward. The more we examine extrinsic forms of payment, the more we are likely to distract ourselves from the fact that other people are what we want. It is a fundamental Christian insight that persons inform and shape one another. They do so by necessity, but also in freedom. We buy and sell the material goods we need, but we also supply one another with accounts of what we want. We exchange accounts of who we are and what we want, and buying and selling is the form in which we do so. The accounts of our identity that we offer are more fundamental than the goods and services that feature in these exchanges. These goods and services are relevant and desirable to us because we believe that they will help us to gain what we really want, which is the attention of those whose recognition we seek. People are primary, other goods are secondary. Because other people want our recognition, we can persuade them to approach us through our desire, or their desire, for specific goods. We mediate their relationship with us through the various services that we offer, putting a great deal of effort into persuading people to desire what we want to give them. This emphasis on persons as both our motivation and our goal is the distinctive contribution that Christians bring to economics. In this book we will look at the components of the economy and the connections between them, and show what makes for a vibrant economy. But if we use only the restricted circle of light thrown by modern economics we will observe only a small number of components, while others will remain unnoticed. We can hope to bring more pieces into view by using the lights provided by neighbouring sciences and our cultural history. In order to bring these piece together we also require a relevant mental map. We owe these maps to earlier generations: we have inherited many more of these than the discipline of modern economics makes use of; some are used by other social sciences, other maps lie unused. Like every science, modern economics runs on a small number of metaphors. Over time some of these have been over-used, while others have been neglected; the conceptual basis for the discipline becomes narrower, and ever-more sophisticated mathematics has provided compensation. If we use only use the concepts presently employed by economics it is difficult to account for events in the actual economy, particularly for changes that are global. In order that it remains a worthwhile explanation of the real world, economics needs more concepts than the modern discipline presently uses. We will achieve a better understanding of our economy, and of ourselves, when we not only employ the concepts presently considered economic, but others too. There are two boxes, one box marked Economy and the

other Society. The second box contains the connecting pieces which both holds the economic pieces together, and enables them to move relative to one another so that they hold together through time. Earlier generations of economists knew that economies require a number of intangibles trust, confidence, public spiritedness, fairness and dedication to a common good not found in the box labelled Economy. We will use the basic tools of modern economics self-interest, maximising, rationality and efficiency, but we will also use additional tools from other boxes, unconcerned if they are labelled Culture or even Theology. We need to re-discover what recent generations of economists have forgotten. That is what this book is going to do. The global economy has experienced a series of crises, and is likely to continue to do so, and this book offers some reasons for this. Though I assume that our latest crisis will be long and painful, it also represents an opportunity so we cannot regard it solely as a misfortune. We have reached this crisis because our reliance on too small number of economic concepts has meant that the fundamental need for continuity through time has been ignored. Our use of an insufficient number of economic concepts has given us too brittle an understanding of the economy, and this has had an economically inefficient effect, damaging our economy by promoting the present over long-term continuity. We will want to be just as prosperous in twenty years time as we do now; it is self-defeating if our present selves triumph entirely over our future selves. An excessively narrow conception of the economy is self-defeating, and has brought about our own present economic malfunctioning and inefficiency. But to say that the problem is with the economy is to suggest that there is some vast system which works well until, inexplicably, it malfunctions. But this system is a metaphor, just one among the many that we might use. A metaphor is a particular way of relating the individual tools relative to the whole task we have in hand. The metaphor of system is helpful up to a point, but no further. There is no system or mechanism out there: there are simply very large numbers of people, making decisions which affect us. We could concede that they make their decisions just as we do, as best they can, and it is not always straightforward to say which decisions are good and which bad. Though other people are responsible for our problems, we are also responsible for theirs, so we cannot simply identify a fault, or blame a set of people, out there. If there is a fault with the economy, this could be partly because we ourselves operate an inadequate understanding of what an economy is. If the economy is in a mess it could be because, encouraged by a simplistic view of human nature, we operate a shallow account of what we owe one another. We have not invested very deeply in other people or acted in those ways that help the economy to continue in the long term. What is more, we may have attributed greater value to this view than it deserves; we may even have indicated that it is the only view and so imposed it on other people. It has become compulsory because we have made it so. We may have relied on this conception of because it has suited us, but perhaps it does so no longer, in which case it may be time to allow our conceptuality expand a little so we can develop a more adequate understanding. Modern economics examines vast numbers of interactions between persons by analogy with the interactions of non-human forces, using the metaphor of a system or machine. Let us pursue this metaphor for a moment. Imagine that our national economy is like a cruise-ship. Deep below decks the ships engine pounds away, taking us across the ocean, while we enjoy life on the upper decks. But recently the pulse of the engine has become less regular and we are no longer making such good speed. The flow of services coming up to us from below decks has also become less reliable. It is a long time since most of us were down in the engine room or kitchens, and we have received these services without having to acknowledge that what we consume is produced by other people who live and labour unseen by us. But as the ships engine falters it may occurs to us that we are not simply here to be propelled along by unseen forces or to consume

what appears on the table before us. We realise that the flow of services is not going to resume until we pull on a boiler suit, go down to the engine room and get to work. This metaphor of mechanism helps us think, but it has also tempted us not to think beyond a certain point. It makes it easy to assume that the machinery of this system will work without very much attention from us: the system may be re-started. We need not just this one metaphor of the system on which modern economics is based, but others too. Before the economy was thought of as a machine it was conceived as a household. Though it is based around a family, a household has other members, some of whom work while others are dependent; we might think of it as a combination of a small business and a mutual society that provides care to its members. We have to let the first metaphor of the system, in which things are delivered to us by unseen forces, be moderated by the second, of the household, in which we work face-to-face and share what we produce with everyone around us. When an impersonal understanding of the economy runs into trouble, a more directly inter-personal conception may help. More fundamental than the interruption of services, may be the fact that we have got out of the habit of doing some things for ourselves, or for one another. Many services are no longer available in-house, either at home, or locally, or even nationally, since many products that used to be made in this country are made here no longer. If the supply of economic services is not functioning well this may be because we have allowed other people to exercise many functions, and take responsibilities, in our stead. Work gives us a set of abilities; when we no longer perform that work, we may lose some of those skills. Could it be that our crisis is caused by a loss of our own abilities, not only the skills associated with producing things, but also the ability to get on with one another, in families, firms or in society as a whole? We may recover those abilities, but only by going back to the kitchen or engine room, and re-discovering how to perform some services for one another, face-to-face. When we go down to the engine room, we find that there is no great engine there. That mechanism is only a metaphor. There are many wonderful mechanisms down there which we could call the gears of capital. But our metaphorical ocean liner moves because people provide the power. Even our highly-sophisticated economy is at base powered by human beings, employed in labour that is still physical for some of them. The crew provides the raw power: metaphorically, our ship is being rowed by them. But they also know how to operate those mechanisms: this makes them more competent than us who have spent the last couple of generations enjoying ourselves on deck. Some, becoming as prosperous as we are, are beginning to join us on the upper decks, just as some of us are having to get back to work down below. But we are not really driven by any large impersonal force: to speak about the economy as a system is simply a way of indicating that a group of issues have a unity. Christians suggest that amongst the causes of our economic crisis some are personal. How is that? The economy is the sum of all the things that we do. It is our work, the products of that work and of our decisions about which work to engage in. We have the economy that we have worked for. We can blame bankers and fund managers, rightly, for some of its present crisis, but we created the expectations of high returns which they competed to satisfy. We can blame our politicians, but their fault is chiefly that they tried to give us the uninterrupted economic growth that we demanded. We blithely assumed that they would always be able to provide a rising standard of living, in an expanding universe in which greater numbers of people could be included in an ever-more secure social covenant. They might be better leaders if they stood up to us, and tell us that governments cannot make economies grow. The best governments can do is safeguard the conditions in which we work so that a growing economy can occasionally emerge. The crisis is not simply out there in the impersonal system that we call the economy, but right here, in our own motivations. We may have over-stretched our governments by asking them to provide the services that we do not want to provide for ourselves. If we

have made our own economic skills and virtues redundant, it might be prudent not to buy in so many services from the market in the first place. Though they were regarded as opposites not long ago, market and state seem to have become inseparable, two heads of one corporatist, centralist hybrid. By trying to do for us everything that we once did for ourselves, market and state turn into a single entity, with the result that there is no other entity to appeal to when we begin to feel squeezed. We have asked the government to intervene constantly, rather than just occasionally, in the market to protect us from financial losses. This has made it difficult for the market to judge the true value of our work or the true worth of our economy. The market cannot work well when we insist that the government insulate us from the corrections and restraints which the market would otherwise bring. Governments find it difficult to resist all the groups which come to it for financial support. We have not only made the market and state too powerful, but also made them too weak. Having allowed them to grow in order to compete internationally, corporations and banks are able to dip into the purse which belongs to everybody, plundering our national economy, and governments have grown too weak to stop them. Whether we look at individuals, or corporations, markets or state, Christians make a distinct contribution by putting the question of the functioning of the economy in terms of our own exercise of self-restraint. By doing so, they indicate that they believe that each of us, individually or as member of an institution, is capable of acting as a mature individual agent. They take each of us seriously as a unique being with our own freedom and dignity. We are not merely small parts of a vast system, but we are also persons. When the economy starts to falter, Christians are able to suggest some reasons why this is happening. An economy gets into trouble because there is a flaw in our operative view of human interaction. By over-reliance on the concept of system, we are inflicting on one another the consequences of an deficient conception of our relatedness, itself the consequence of an inadequate doctrine of man. A very high view of human beings is central to the Christian account for, the Gospel tells us, Man is made in the image of God. Two fundamental concepts of love and freedom follow from it. By love we mean the attachment that binds a set of people together, uniting them into a team or a company, a society or nation, each member ready to act for the whole group. In the Christian view, therefore, there are two fundamental products of the economy. The first is the human being, and the second is the culture that makes us social creatures and so sustains us in societies. Humans are formed by cultures to exercise their generosity, and to do so in freedom, because they want to. Love is the motive of all human action. It is what holds any society or group of people together. For modern economics, man is on his own, without organic relationship to anything that is not himself. In the Christian view, no human being is on their own; man is a relational and social being, not a fundamentally isolated one. Man is made and ultimately secured by the love of God; he flourishes as he is enabled to love and give himself in service, and he can come to terms with his fellow man. All communities and societies are entities of love. Love aspires to permanence: we want it to grow, and it does so when we take on the self-control that makes that love long-lasting. Readiness to love is what holds a society together, and makes its members prepared to contribute in ways that do not receive any reward, at least not payment. Love is the political force that holds people together in families and communities, and prompts them to work and serve, regardless of whether they are paid to do so. These attachments give us a motive to enter economic relationships with other people, both those we know and with strangers from the other side of the world. Love sends us out to work, to meet others and enter exchanges with them. Love attachment or commitment, if you prefer is the motor of any economy: this is not a sentimental statement, but a pragmatically economic one.

We need motives to go to work. Motive does not feature in neoclassical economics, and this is the omission that makes it characteristically modern, neoclassical, economics. Modern economics assumes that we are driven by our nature, and thus by necessity, a drive that is constant and uniform. The Christian account of man gives us a large account of our motives. It tells us that love animates us to find and meet each other, and to love, please and provide for one another. It motivates us to start a business, or run a campaign, or raise money for a charity, or set up a new political movement: your enterprise can express itself in ways that are civic, commercial, charitable or political. Law and government exist in order to safeguard this sphere in which we can take initiatives, work for ourselves, our family or for any other group. Long before we had a distinct science named economics we had rich accounts of man as economic agent who exercises intentionality. We may give and distribute our resources deliberately, one person to one another, in love and in freedom. Every economic act is directed towards some set of goals which we can talk about and weigh and compare. Each of us can judge for ourselves and is open to the judgment of others; all of us are actors in the public square. Yet with its reduced account of the possibilities for interaction, modern economics turned away from the conception of persons as public agents in an open economy. Although love and motivation, distribution and purpose, were well-established economic concepts, modern economics gave no place to love or self-giving in service. While in the short-term, modern economics seems a very plausible description of the human economy, when we ask about the medium- and long-term it becomes less plausible. Could we count this failure to discuss our motivations among the causes of our crisis? In this book I am continually going to contrast whole-tradition economics with modern economics. Whole-tradition economics is the whole to which modern economics belongs, so we will be comparing a part with the whole to which it relates. Modern economics omits some of the elements that belong to the whole discipline. But nonetheless, modern economics regards itself as the whole of economics. The reduced account has replaced the full one, the short version is substituting for the long one. What is more, it is in denial that there is any whole tradition or any alternative to itself. I will be using the word modern in a particular sense, taking my cue from the derivation of the word, modern. Modern has to do with mode, and so with what is modish and in fashion at the moment. The contrast is not between past economics and present economics, but between all schools of economics and that particular school, modern economics, which has grasped a monopoly. By becoming an orthodoxy this modern neoclassical economics has the same unfortunate effect on the marketplace as any other monopoly. Modern economics is one way of doing economics, not as it claims, the only way. I will suggest that we have been offering one another a reductive account of our identity. Our past gives us our identity. Our historical tradition is a treasury of resources that help us to understand ourselves, enables us to come to terms with one another and adjust to changes in our own circumstances. Modern economics gives us a cheap and reductive account of our history that leaves us with a very inflexible understanding of ourselves, and which makes it difficult to make sense of the changes happening around us. By withholding essential aspects of our identity it withholds the resources by which we can adapt and remain a flourishing society and in consequence we have not been adapting well. As a result we have been suffering crises that appear economic but which are fundamentally crises of our own self-understanding and confidence. Modern economics gives us an abbreviated account of how we interact with one another. Implicitly it imagines a particular form of human being, the individual economic agent, who is master of all. But the individual is a divided and double being, master on one hand, but also slave of his own needs and passions on the other. The assumption on

which modern economics relies is that each of us is a master who is not master of himself. The result is that each of us has to live in a world filled with tyrants who cannot be challenged or reasoned with, and are dependent on those who have no intrinsic feeling for us, or we for them, and the result is that we suffer a cognitive dissonance. If we pursue only the short-term, to the exclusion of the long-term, we will have a crisis of confidence about what is worth working for. The cash value of everything cannot be fully understood from the outset, and so it cannot be paid for immediately. If everything we did was recognised and rewarded straight off, there would be no room for interpretation, no risk, and no freedom of action. Whole-tradition economics can explain why it is that we do not act solely for our own immediate use. It admits the rationality of self-restraint, of decisions to act not only for our later selves but for those who will come after us, and so of self-sacrifice. Christians point out that the identity of every human being is shaped by our passage through time. When it comes to identifying the desires of this rational economic agent we have to ask what time frame we are talking about. Do we mean ourselves in this present moment of time, or in thirty years time? Which one are we working for this current version of me or some future one? We understand an exchange to takes place over the length of time specified by a contract. Since for many transactions there are either no contracts, or none that we make deliberate reference to, we tend to conceive exchanges in short time-frames. Yet the ongoing economy depends on the existence of covenants that extend many decades, which hold good for a lifetime, even the life-times of all those now living. A snapshot of the present moment alone cannot reveal the true state of the economy. We will not find the origins of our economic crisis just within the time-frame used by contemporary market analysts, for whom short-term means between now and the end of next week, medium-term refers to the next few twelve months, while long-term refers to the next five years at the most. Each of us is going to live many times longer than the longest long-term conceived of by economists. Let us ask what sort of economy we hope for in two or three decades time, and what sort of economy present trends is likely to produce. We used to say that we are working now in order to accumulate savings which we will be able to live on when we are no longer able to work; in fact when we stop work we will depend on the earning power of those in work at that time for taxes and pension funds will pay our pensions. We need an economy that will continue to be prosperous so that we can stop working at some point in the future and then be supported by those whom we are supporting now. We rely now on the future health of the economy. If you hope for an economy strong enough to support you then, what direction should we take to bring about that future economy? The fundamental exchange, on which the whole human economy is based, takes place between generations. It is a slow, unending transaction between parents, their children and their childrens children. All the many transactions we are involved are simply episodes of this one single life-long transaction. To gain this long-term view we need to pull the camera back to bring into view our own life from beginning to end, and occasionally to take in an even-longer view that includes grand-parents and grandchildren. We are better-off than our parents, who were better-off than their parents. Now here is the question: will this continue? Will our children enjoy more prosperity than we have done? Have we made it easier or more difficult for the next generation? Are we sure that our own children will never have to live in circumstances as difficult as those faced by our grandparents? What changes would we make if we thought we had a chance of experiencing a savage economic dislocation such as the Great Depression? How would you prepare your children, or indeed yourself, if you thought that this was in prospect? If we can establish this widescreen view we may identify some of the long-term changes


that are driving our present economic crisis, and perhaps consider the costs and benefits to ourselves of such a intergenerational view. Every society builds on what it was left by previous generations. Each city stands on the mound made up of all the habits and practices that make up the culture of that society, which binds it us together and make it a single functioning society. A deep and unexamined set of instincts keeps us law-abiding and gives us political stability. It makes us a people who are willing to take correction and so be adaptable, and who are motivated to act in ways that do more good than harm to those around them. We are restrained and empowered by notions of the common good that we do not readily override. Over centuries that mound of habits may grow into a hill. Every generation reuses the top layer of this inherited material and hopes to add at least as much to that hill as it subtracts from it. But in recent years we have been making deeper excavations and digging up some basic bonds that give individual persons their motivation. As a result each of us has fewer attachments to a smaller number of people, those we consider to be family, and so we have fewer reasons to go to work. But will the work we have been doing replace enough cultural capital to enable our children to live as well as we have? We have been going to work as usual, selling our products and thinking up new ones. But what has been the value of our work as a whole? Have we been laying down new layers of social-and-human capital? Have we built as much as we have demolished? Have we earned what we pay ourselves, or have we been spending what was earned, not by us, but by the generations before us? Value is decided by whether our society continues to be robust and energetic. If it is losing confidence, all our work may turn out to have been demolition rather than building. Have we been right to reward and congratulate ourselves as much as we have? Two sets of people can answer this question for us. One is those workers in other parts of the world who, we hope, will buy what we produce. The other is the generation that comes after us. They will tell us whether we made things easier or more difficult for them, and so whether our work was truly productive or not. In recent decades we have dynamited parts of that hill of inherited culture. Where has that material gone? It has become the vast cloud of culture atomised into the money that is traded in the global financial markets, travelling back and forth across the globe from one international trading floor to one another. The money and stocks traded in global financial markets represents capital changed from its fixed cultural form into a highly volatile form. This cashing-out from fixed social and cultural capital into liquid form represents the decision of millions of individual persons to gamble in the hope of making themselves secure in a future world which, they realise, is unlikely to care for them otherwise. The health of our economy depends on its orientation towards the future. Any future requires children, so that the population remains more or less the same, and it requires that these children grow up into energetic and motivated persons so that we have a buoyant economy. But here is one reason why our economy is in trouble: the proportion of economically active members is dropping and the proportion of dependent ones is rising. Those who realise this are taking steps to safeguard themselves; the effects of their attempts to do so is inadvertently making the climate more difficult for everyone else. Let us take a moment to sketch some of these connections. We have assumed that the next generation of economic agents would be at least as energetic as ourselves, so we could confidently pay ourselves rewards in the belief that the future economy would be bigger than the present economy and so easily able to meet the financial obligations we left it to pay. But it does not appear to be so. The coming generation is smaller than the existing generation, so a smaller number of active people will be support a greater number of the inactive and dependent. We have not regarded our children as our chief financial investment, that is, as our fundamental form of our provision for the future.


Children grow up in families. Based around the family, the household is where people work for one another, of their own volition. It is where children learn what it is worth being and having, and become independent and energetic persons who are able to take economic initiatives. In order that children become persons, with motivation and drive of their own, they need the magic property called culture. Culture is those resources that give us the formation that turns us from bodies, or bundles of desires, into persons. Persons can decide for or against any specific desire, in freedom, and decide in love to act and go to work for specific other persons. Culture turns us into responsible and motivated economic agents, who are not merely consumers and clients of government, but producers and benefactors as well. Since the market has discouraged us from having children, we will have fewer employees or tax payers in the future and so our economy will start to shrink. The next generation will be carrying a much greater burden than we have done, which will have profound consequences that are economic and political. But these consequences are not just some way off, for the market anticipates what is going to happen. The financial flows of spooked global capital markets represent what we have not yet managed to say out loud in political debate. The Christian faith offers itself in a marketplace of worldviews. The Church cultivates its own spiritual and intellectual tradition by which it is able to ask questions, affirm whatever is good, and identify what is not. The Church suggests that man is both knowable to himself, and so is fair object for study, and yet is also not entirely knowable, and so not simply the object of economics, management or any other discipline. Man is not the miserably anti-social creature imagined by the social sciences to which modern economics belongs. Just as he has talked himself into believing that he is the creature of this impoverishing description, he can also talk himself out of it again. We have said that one contribution of the Christian faith in this discussion is that it asks about the time-scale. By asking about the long-term, the Christian faith gives us the tools to demythologise the modern economic worldview and keep economic discourse within the limits within which it can be useful. We said that the economy is the form of organisation that emerges from a myriad deliberate individual decisions, and by extension it refers to the way things turn out and will, we hope, continue to turn out. Economic success is all about looking ahead deep into the future. This is possible for any community made confident by the virtues and practices that it has inherited and continues to practise. In this book I suggested that it is the job of Christians to put some questions to the world about us. In its modern form, economics is full of unasked questions, embarrassing gaps and consequent bewilderment. Have we taken its reduced account of the possibilities of human interaction too seriously, assuming it to be the only one? Christians ask the society around them whether it is suffering a crisis of confidence. Our expectation that our circumstances would become ever-more comfortable has suffered a set-back. Perhaps we are witnessing the end of a consensus, perhaps even the breakdown of a social contract? Christians put this question to their society. They do not know the answer, but then they do not have to, because it is for each one of us to answer. We will answer either by recovering themselves, or by giving themselves up to continuing economic decline. Christians can only help a society to ask itself the hard questions, and decide for itself whether it will find the vitality to endure. That is the best Christians can do, but it may be the most positive contribution of all.


1. Economy and Covenant

1. 2. 3. 4. 5. 6. 7. Economy and Crisis Man in Covenant Formation and Independence Together Marriage and Singularity Two Societies, Two Economies Humans with Future

1. Economy and Crisis

Is our economy in crisis? Is it the kind of crisis that all economies go through from time to time? Is this an unusually deep part of the economic cycle in which old industries disappear and new ones take their place? Or this crisis bigger than that? Are we lurching into a new and difficult period for which we have few precedents? How concerned should we be? We have to be confident that there are solutions or at least that we can make changes of course, before we can bring ourselves to recognise how tough our situation is. So, is this a crisis that we will emerge from, or an crisis or an unprecedented one? To tackle these questions we have to consider some very simple questions, of the kind that we might be embarrassed to ask in public. What is an economy? What does economics tell us about it? What does it tell us about our present economic situation and what has it failed to tell us? Let us tackle the first two questions first. What is an economy? What is economics? Economy What is an Economy? There are two rival definitions of the economy. In one, economy means provision, the ordering of resources. The word itself, economy (oikonomia) comes from house or household (oikos) and rule or order (nomos). Each community has its own particular way of doing things, and its own rules that maintain that way, in order to make the best of what it has. Resources are shared between members for the sake of the community as a whole, so oikonomia refers to the way it directs its efforts and resources and so organises itself. In earlier periods and in other societies, in which households tended to be larger than the nuclear families that we grew up in, this link between household and economy was obvious. A household could have dozens of members, some of them members of the family, others not, not all living in one house. It might provide many of its own resources, starting with its own food, but including some of the skills that support the production of food. The household provides for itself and it regulates itself, and so is a self-subsistent and self-regulating community. When households provide for themselves more than they depend on the market for their wants, the economy might be embedded in a welter of customs and institutions that seem to us to be cultural and political as much as economic. The entire city-state or nation may regard itself as a single large household. The long and distinguished concept of political economy relates to the way that this city or society is structured and ruled, and in which it produces or procures what it needs. Every century of European history has produced manuals setting out the task of managing the resources of an estate. Xenophons Oikonomos, one of the earliest which


have survived, is an economic textbook from two thousand four hundred years ago. We could translate his Economos as The Steward or Stewardship or even simply as Management. These manuals merge into the political literature that describes the role of the statesman, in which Xenophons better known Athenian contemporaries Plato and Aristotle are the masters. So, on this first definition, economics means our provision for ourselves and our management of that provision. Economics is about business and management. In the second sense, economic means frugal, sparing and economical. Economics on this definition starts from the premise of the limits, and therefore the scarcity, of our resources. If everything is scarce, a gain here must be a loss there, so our use of resources must be a minimal and calculated use. These two starting places for economic enquiry give us two conceptions of the economy. The majority of Western thought has understood communities to be primarily selforganising and self-provisioning. They are self-managing entities. But in the last two hundred years this has been replaced by the second conception in which scarcity dictates that there will always be competition between us. Scarcity, competition and calculation define modern economics, and make it a distinctive brand of economics. On the one hand we have economics as provision and management, and on the other economics as scarcity and competition. We could call the first, economics in full, and the second we could call economics abbreviated. In this book I am going to contrast economics in full with modern economics. Such a whole-tradition economics will have a range that is broad and long, including much that is disregarded by modern economists. Whole-tradition economics in full will take provision, rather than scarcity, as its starting-point and understand an economy as a community that provides for itself before it starts to trade with others. Modern economics is a part of whole-tradition economics, so our contrast is between the whole and one aspect of that whole, between the full version and its modern abridgement. Though it is a part of a larger tradition, modern economics seems to assume that it has superseded all other forms and so is the only form of economics. We can date this turn to distinctively modern economics to the late eighteenth century, and to Adam Smiths The Wealth of Nations, published in 1776. We need to relate this idea that economics began just two hundred years ago to the larger history of political philosophy. We could do so by relating Adam Smith to other eighteenth century political thinkers, such as the founding fathers of the new Republics of America and of France, who established the idea that we should cast off previous generations of thinkers, make a new start and so be modern. In Chapter 3 we will consider this turn from whole to part that is the origin of distinctively modern economics. In this book I will use the word modern to name a particular aspect of our selforganisation. The etymology of the word connects modern to mode, so that modern relates to what is in mode now. By modern I do not mean contemporary and up-todate rather than old-fashioned. This is not a contrast between present and past, but a contrast between a long-term view, that acknowledges future generations and previous generations as well as our own, and a short-term view which only acknowledges the concerns of the present generation. If we are able to look a long way back, we will gain a conceptual flexibility that prepares us for the future. Modern economics assumes that we do not have much to learn from previous generations, and is therefore not interested in history. In how earlier generations of economists conceived of the issues that puzzle us today. It assumes that the discipline of economics began little more than two hundred


years ago, and that no one was an economist in a scientific sense before that. 1 It is the argument of this book that our identity is inseparable from our history, and we are shortchanged by an account that does not say how we got here or leaves us unable to reconsider the decisions made along the way. A minimal and reductive view of our history gives an inflexible understanding of ourselves, which doesn't make it easy to make sense of the world. By refusing to concede the complexities of our identity modern economics withholds the resources by which we can adapt to the changes currently going on around us. We are going to examine the economy in a number of ways at once. We will consider recent economic events, and we will consider our own personal course through life. As we do so we will consider the relationships between some central economic concepts labour, demand, markets, use or utility, value, money, credit and debt, and the concepts particular to modern economics, classical and neo-classical, such as rationality, marginal preference and utility, and we will how some of these concepts have changed. Modern economics comes with an account of the individual human being who knows his own best interests. He is in command of himself and, law apart, need accept no constraints on his will except the constraint represented by price. Prices tell him about the preferences of all other actors in the marketplace. The modern economic view of the world encourages us to believe that each of us is consistently able to make the right choices for ourselves. Other than governments perhaps, no one is able to know better than ourselves what our interests are and is free to pursue them in the marketplace. Yet, as individuals, we find that we are not fully in charge, even of his own desires, so a level of cognitive dissonance is one result of this view of man. The man described, or more often simply assumed, by modern economics is divided: he is the master who can come into possession of whatever he wishes simply by meeting the price asked for it. And he is the powerless wage-slave of the corporation that employs him, and which can at any moment take his employment away. This conception of the rational economic agent belongs the belief that each individual knows how best to act, for prices will always reliably give him all the information he needs, since markets reflect all available information about all preferences. Markets are efficient: they cannot be wrong, at least not over the long-term, for the same reason that we say that everybody can't be wrong all the time. But the conception of the rational economic individual seems at odds with the fact that other people judge the worth of our product. We are not unchallengeable. So modern economics is based on two conceptions of man that do not sit easily together each of us is our own supreme authority, and each of us is continually being appraised by others who are freely able to judge the value of the goods and services we want to sell them. But all these basic tenets are also up for question. Do we know what our best interests are? Choice is fallible, Avner Offer believes, for what people end up choosing cannot be taken as a proper measure of their welfare.2 Do we know what we want? Each of us is a stream of wants, and that we cannot say that we know when any particular want within this stream should be promoted to become the want that we are going to hold out for. 3 Each of us is a population of bargaining interests. Our future self is pitched against our present self, and more often than not, our present self wins. The modern economic concept of the rational economic actor encourages each of us to see ourselves as a little emperor, with the result is that each of us has to live in a world
Geoffrey Hodgson How Economics Forgot History (Routledge 2001). Avner Offer The Challenge of Affluence p.358 3 George Ainslie Picoeconomics: The interaction of successive motivational states within the person (CUP 1992) p. 360
1 2


filled with emperors who have no wish to be challenged or reasoned with. But perhaps we would have a more robust view of the economic agent if we conceded that we do not just interact through the market and the mechanism of prices, but can also challenge one another, in speech and in public? We understand one another not just as economic but also as political beings. I will suggest that we may recover a more rounded view of the economic agent and the world he lives in if we re-avail ourselves of the bigger, wholetradition, version of economics together with its more complex understanding of human beings. We will ask whether the economy is undergoing a crisis, whether it is regularly in crisis, and whether this is a bad thing. We will ask whether, if crisis a obliges us to re-assess ourselves, it may be a good thing. We will ask whether we are facing an unprecedented crisis. On the other hand, we might find that we resort to the idea of a crisis too often; the assumption that there are no precedents for our current circumstances is one of those deep beliefs that we should regard as modern. We should be sceptical of the view that the time which we now experience is like no other. Which of these concepts, provision or scarcity, is going to be our starting point? For modern economics, scarcity is the starting point, because the world is finite. We are going to adopt both. We must examine the effect of the limits and finitude of our resources and of our lives. If resources are limited we have limited options and must choose between them, and so we must exercise our judgment. And we are going to say that the economy is also unlimited. , for we can love and be free without limit, thus there are no restraints on our moral possibilities. There is no limit to ingenuity, so we can find new ways of doing things; we can hope to make the technological breakthroughs that will give us new products and the new sources of energy that will power them. So, unlike neoclassical economics, we will assume that the world is limited in some ways but not in others, so scarcity cannot be our sole fundamental principle. Economics and the Pragmatic Economics is about pragmatic and short-term considerations. It is the language in which we make decisions about how to relate to others, apart from those closest to us, in those interactions that we call transactions. Economics considers our person-person encounter in isolation from their effect on society as a whole and so over the short-term. It is a limited explanation which relies on a conceptual frugality, which means that we do not have to spell out our respective intentions each time we encounter someone. It considers each interaction apart from its place in time-scale or history. You can study economics without having to read any history, even economic history. Modern economics is itself economical. What is modern economics economical with? It is economical with its account of human behaviour; it does not see complexity. What has been economised out of the human economy? The human, thats what. Dennis Robertson asked the acute and wonderful question: What does the economist economize? Quoting Lewis Carrolls Alice in Wonderland, he came up with best answer: Tis love, tis love... that scarce resource, love. 4 Economics is economical with love. It is sparing in its account of the complexity of human relationships. This makes it useful and dangerous for the same reason. What belongs to the whole human economy is not contained exclusively in the economy. The very term economy may be too neat and convenient, a reification. The economy is,

4 Dennis H. Robertson What Does the Economist Economize? (pp. 147-154 in Economic Commentaries (Westport, Conn.: Greenwood Press, 1956), p. 148. But if we economists mind our own business, and do that business well, we can, I believe, contribute mightily to the economizing, that is to the full and thrifty utilization, of that scarce resource Love which we know, just as well as anybody else, to be the most precious thing in the world.


after all, just the way of our interactions appear from a certain angle.5 Modern economics treats the field of human interaction as though it were not about humans, or as though humans were not complex and self-aware creatures, but just simple ones. It talks about human interaction by simplifying. For much of time this is enlightening and useful. But economics is a simplified theory of human interaction, not the whole account, and the simplified theory needs to be in regular dialogue with all the other accounts, in which humans are complicated and self-reflexive. If it drifts out of touch with other sciences, this simplified theory tells us that we are simple and ought to become more simple than we are. It turns from a description to a prescription, and stops being a theory and starts being an ideology. Modern economics is premised on the assumption that its view of man works on the short-term and we need no more. I suggest that we need to maintain a proper proportion between our short-term and our medium- and long-terms. Economic descriptions cannot substitute for our own judgment; the short-term vocabulary cannot replace the longterm vocabulary. The long-term vocabulary is about the future as much as it is about the past, and the immediate concerns of our present economy only make sense as long as there is a future. We may take permission from our past, and so from our culture, to carve out a future for ourselves so that our economy will continue to exist beyond the present moment. Together with politics, the discipline of economics enables us to act well. Acting well means acting in our own interests, so that we can live and flourish, and acting for one another and so for the common good. We cannot act well without acting within the mechanisms of economic and public life, within the rule of law, and within the good practices of commercial life. We can only act well when we act within a large area of agreement about property and contract, and this means in the framework given by law and its enforcement. We cannot act well for one another if we attempt to do so in complete ignorance or defiance of the expectations and traditions, built up by generations, of acting well in our economic dealings with one another. We can talk about these traditions in terms of good business practice, sound management or sensible economic policy. Economics is a technical discourse with its own vocabulary and discipline. Economists, rightly, want to see the good disciplines of their science respected. Though it may appear to be dominated by fads, and clearly is not a science, the discipline of management has its own integrity. But to point out those features of the economy neglected by economists in the modern period we cannot stay within the idiom of modern economics or of contemporary business management. Economics enables us to live well, but we have to make use of it in such a way that we decide what it is to live well, for the discipline of economics cannot do this for us. The humanities are the disciplines that discuss what it is to be human. As one of these, economics is a series of abbreviations of more complicated accounts of how humans act together. It is the conceptuality that enables us to talk about what human beings do in the mass, in great numbers. This series of abbreviations are meaningful when they are continually controlled and renewed by the full discussion of what humans do and are together. Persons are the goal of all human action. As the humanities, theology chief among them, remind us, what we want is not finally this or that thing. What we want is a person. We want these persons to love us, and so we want their recognition and esteem in a

Oliver O'Donovan Ways of Judgment p. 64 The economy issimply the way our various endeavours and engagements appear when observed at a certain cross-section, the point at which transactions occur in markets. The meaning of these transaction is not to be found the market through which they pass, but in the forms of life that generate them.


relationship that will not end. A thing can be a means, but only persons are ends. We want people to give us their acknowledgement and affirmation. The affirmation we receive from them gives us the permission we need to go on to new encounters. We give and receive honour and esteem, approval and permission, and we give this to one another as we exchange accounts of how the world is. Economics is about this means rather than about this end, but all our discussion of means should finally be transparent to this end. The goal of economics is therefore not to be found within economics itself, but in the wider humanities in which we talk about persons, and about what is good and true. Economics cannot tell us about ends; we need all human discourses to help us there. But if we imagine that economics makes all other accounts and disciplines redundant, we are effectively imposing on one another an impoverishing account of human life and we reduce the levels of involvement in one another on which a buoyant economy relies. Crisis If our economy is in crisis, we may nonetheless decide that this is not an entirely bad thing. We may make the changes that will alter our course and bring new vigour to our economy. This book is going to suggest some reasons why we might see our economic crisis as an opportunity. By rising to the challenge we may become stronger. This depends on whether we recognise that this economic crisis is really a challenge to which we have to make a personal response. Each one of us can make a difference for someone else, for example, by giving them a job or some other form of opening that allows them to make a new start. An economy is just the outcome of all the many things that we, and all other people, do. It is not some vast mechanism that goes on regardless of what we do as individuals. The movement of prices tell us which things we regard as important; when prices, interest rates and stock-markets move suddenly, we have an opportunity to re-assess what is truly important. An economic crises obliges us to ask what really matters. The economy is the sum of all we create when we work, and it is the value that others place on our work. There is no deeper mechanism involved than that. We have to talk about the economy in the light of the value that other people, in other countries, place on what we do. The economy tells us what estimate they place on our work and future prospects. The movement of capital tells us how plausible they find our account of ourselves. One reason that our economy is crisis may be that we have not produced as much of value over the last fifty years as we have imagined. We have turned up at the office and put in the hours at our desk, but the work that we have done may not be as valuable as we have been claiming. We have enjoyed a huge growth, which has brought a huge rise in our standard of living and life expectancy. But could it be that we have also experienced some equally large losses but, because we have understood them merely as cultural changes, have not acknowledged these as economic losses. There has been a huge growth of wealth, as we measure it in financial terms, but it may be that there been an equivalent decline in our capabilities and social cohesion that may impact on our future economy. The performance of the last fifty years may not be a good guide to the next fifty. If our future is more difficult than our past this might suggest that we have not made sufficient provision for the more difficult period ahead, and so indicate that the last fifty years have not been as successful as we thought. There has been a large rise in prosperity over these five decades. How much of this is our achievement, and how much is simply a carry-over from the work of preceding


generations? Have we been borne along by the momentum they created? Perhaps an economy can cruise forward for a long time, each generation adding less and less to that momentum, before it slows enough to be regarded as a crisis. Could it be that, at some deep level, we are still living off the energy invested several generations ago? We need to consider whether what I shall call social capital is the source of whatever momentum has generated the apparent economic growth of recent decades. Social Capital Social capital is a combination of how well we all get on together and the skills we have. It is a function of the level of trust and confidence which makes it easy for us to approach other people; this is as simple, but difficult to measure, as the level of optimism of different age-groups in a society, which reflects their view of their own prospects. The disappearance of class barriers, which makes it possible for anyone to approach anyone else, is a rise in social capital. But perhaps we also have fewer relationships with people outside our own age group, in other stages of life, and so have become less good at transmitting the skills that those stages require. Perhaps we no longer communicate our experience in starting a family and holding it together through the tough early years. If fewer people live close to their parents, so grandparents and children have no strong relationships, and fewer people know their neighbours well enough to rely on them, we might register this as a decline in social capital. We receive more education than we did fifty years ago, but perhaps fewer of us have any idea how to cook a meal, mend a puncture or build a chicken shed now than we did fifty years ago. Perhaps we feel less confident in approaching a neighbour to help us out with any of these tasks. These intangibles are difficult to measure, but they have an economic impact nonetheless. The economic indicators such as GDP do not tell us everything we need to know. An economy is not simply the wealth presently expressed in bank balances or the short-term changes to wealth expressed by prices. These tell us, we hope, how things stand in this present instant, and this information is useful if it helps us to consider the direction we are taking. However difficult it is to measure, we should regard social capital as a deep kind of forward investment. The crisis in the economy may be the moment to correct ourselves and adopt a wider view with greater understanding of the element of social capital in our national wealth. An economic crisis may be an opportunity for us to revise our judgment of ourselves. The original meaning of the word crisis is judgment. Other people are able to judge us. We cannot oblige them to buy our goods and services at the prices we want. If the emerging economies in Asia decide that we Westerners have over-valued ourselves, we cannot deny that they may make such a judgment. They are free to decide that the value of our economies is not as high as we British or Americans have claimed, and may sell the stock they have held in our economy and take their capital elsewhere. It is no mechanism or natural forces, but the judgment of other people, that determines our value. We are all actors in the public marketplace, whose worth is decided by others, through the market. Since international trade has been conducted in the US dollar, every nation has been content to hold dollars, and the UK has shared in the prosperity which other nations have associated with American market. These nations were able to do this because we gave them the power to do by importing their goods. Now they may not be so willing to buy our financial services. We put this power into their hands, and after a long time and gently, they have begun to use it. This should not have come as a surprise. Economics starts with the question of judgment. If our latest economic crisis comes as a surprise it may be because we have forgotten that people can decide for themselves what valuation they place on our services. It is time to re-assess the long-term value of


our economy, and this involves re-evaluating our own worth and our ability to be good judges of value. But it is not simply other nations with newly dynamic economies who have reduced their valuation of us. We have lowered our estimation of one another. There has been a massive re-distribution of wealth, upwards, creating a small class of the super-wealthy, but for many people there has been a loss of wealth. Perhaps this is because we have not regarded the unity and integrity of the national economy, and so the active participation of all citizens in it, as a fundamental economic good. Until we concede that others have their own view of our economic worth, it will be difficult for us to concede that the value of our product may go down, and that it is counter-productive to resist this. Modern, neoclassical, economics does not help us to see that it is other people who judge the value of our work and economic product. It persuades us to think about ourselves not as public beings but fundamentally as private ones, who operate in isolation from one another. Nonetheless, the value of our work is determined by the value other people place on it. They are our judges.

2. Man in Covenant
The Western intellectual tradition offers many accounts of man. Some of these suggest that human beings are capable of organising themselves spontaneously in ways which allow for them to flourish, while others believe humans are unpredictable, often prevent one another from flourishing and so need external provision and restraint. Each account presents us with some view of how our individual capabilities balance independence against dependence. Altogether part of the great package we know as Western culture, we can explore and make use of them all. We can compare the implicit view of man assumed by modern economics with what any of these other accounts tells us about man. The Christian faith gives a complex account of man. He is a social being and an individual one. Christianity describes mans freedom to encounter and act with his fellow man. Each of us is both an independent individual unit, and a person defined up by his many relationships. He is not himself without other people. He goes out looking for relationship with other persons, and the public square and marketplace are where he does so. Christianity suggests that there can be no completely comprehensive economic theory, for the very concept of theory suggests that more too much is has already been settled. Man cannot be utterly known, for his future is open and there is everything to play for. So one question that Christians ask is whether modern economics gives too small and neat an account of man. It reduces us, so that we appear primarily as this employee and this consumer, for whom relationship with every other individual is mediated through this job and pay-packet, price system and global market. In the Christian account man is an economic agent of a very particular sort. Christians insist that each human being is a giver. It is good to give, and good to receive as gifts what others provide. What we finally give and receive is ourselves. No one wishes to be alone. Each of us loves and seeks love, respects other people and hopes for their respect. We go down to the public square in order to be with our fellow human beings, to seek their recognition and give our approval to them. As one economist readily acknowledges: Our well-being depends on receiving acknowledgement, attention and approbation, affirmation, confirmations, and gifts.6

Offer The Challenge of Affluence p.358


The market place is simply the place where everybody meets. It is not limited to any particular place, but is every place outside the household where people find each other. So, according to the Christian faith, man goes down to the marketplace not merely because he has to, to buy and sell in order to satisfy his material needs, but because he wants to. He is not merely a hungry and materially needy individual, but he seeks other people just because they are good. Man is never a merely economic being but also a social one. Christians point towards an alternative way of life, and so towards an alternative economy. The people of God are the household of God, and that household has its own order and form of self-regulation (the nomos of the oikonomia). Christians suggest that an economy is healthy when it is connected to a healthy culture. The global economy has arisen from the culture of Western Europe, and that culture has itself arisen from long interaction with the Christian faith. This faith produces a culture, which is our accumulated deliberation on the desire, and freedom, of man to engage with his fellow man in whichever way he decides upon, and in particular to do so through trade. The Christian faith has a high view of the dignity of the individual person. It has lent this high view of the individual to Western culture, which has been spelled out as the idea of property through the law of contract. The fundamental presumption is that the individual person belongs first to himself (he is his own property, no one elses). What he makes, he gets to keep. It is proper to him, and thus is his property before it is anyone elses. We may enjoy what we have worked for; each of us can work in confidence that whatever we create will not be snatched away from us, whether by authoritarian powers, crime or other forms of confiscation. Work is worthwhile: the sense of security that this has given our society has spread through national and international trade, to bring about an vast exchange of resources from all parts of the world and a consequent technological progress. Christian economics rests on the responsibility of each person, who is motivated to look after themselves and their own family, on the rule of law and thus fair exchange and property rights. Property is basic result of the Christian conception of the dignity of the individual person. But property is not always in the best hands. Christian economics also knows that the economy is not an invariably self-righting mechanism; governments have to hold the ring and sometimes have to step in to safeguard the ability of all members of that nation have access to capital and so to participate in the economy. Any Christian account of economics will refer to what Christians call debt cancellation or debt forgiveness, and to the regulations that control usury or speculation, and to the Sabbath and Jubilee laws that correct the effects of excessive disparities of economic opportunity. These are principles must be embodied in laws and protected by specific interventions by governments. How they are so embodied and protected will be different at different times and places. In the Christian account man is a judge, who can aspire to true self-judgment. We have to examine the concepts of judgment, freedom, love and self-giving, not because these are religious ideas, but because they are economic ones. If we attempt to discuss economics without them, we quickly run up against contradictions. These concepts indicate our freedom: the concept of gift indicates that we are free to give, and to give ourselves. They indicate that we are mature and self-possessed agents, each of whom is answerable for him or herself, and that we are persons, in relationship with one another, who participate in one anothers lives and contribute something to one anothers identities. We are individual persons, independent of one another, who live together in interdependence. The Christian account holds these two emphases together.


The fundamental freedom of man to give himself to his fellow man is the beginning of all human interaction and the basis of every economy. You may meet this person and exchange with him words, ideas and accounts of the world, and you may exchange services and a whole world of commodities in what we call economic transactions. When we call the market free we mean that anyone may speak, persuade and sell to or buy from anyone else, without hindrance. On this basis the market is simply our freedom to enter relationships with other people, and that these relationships have only the purpose we put on them and so are of limited duration. Each human may be known only in love and freedom. Since we have to learn how to judge and value one another truly, this takes time and patience. Each human being flourishes as he knows he is loved, and by love is enabled to love others and give them whatever service he decides upon. All communities and societies are entities of love. Any society may affirm that love and freedom, and thus also patience, is required for knowledge of any individual person. The Christian account says that God is with man. In the covenant that God extends to him, each man is given to his fellows and set before them for their judgment and approval. He is not first an autonomous individual and then a social being, but both simultaneously. We are not self-enclosed monads: we act before others and so are in company. Persons are ultimate. As other persons are valuable, their opinion of us is valuable too, it is good for us to hear it and receive their correction and so it is good for us to appear in the public square and commit ourselves to the assessment of the market. Through Christian discipleship we may learn the skills of self-judgment by which our autonomy as persons may be established. We may go to our neighbours and to God to make our confession, repent and ask for their forgiveness. To be able to repent is the basis of true freedom, for if we can change our mind we are not trapped by our present course. Any society benefits from the presence of the community that can hear the truth, repent and speak in critical self-judgment. Such a society is not held by its own resentments in circles of mutual accusation and retribution, in which blame can only ever be given but fault never admitted. By its doctrine of redemption, the Christian Church sustains the possibility of repentance, forgiveness and new starts. The high view of man that Christians bring to any society brings with it the possibility that our society is not entirely determined by the choices we have made. They bring hope, which is the possibility of a new start. The society that does not acknowledge that every human is loved and all society is sustained by God, will suffer crises that take political and economic form. But where there is the possibility of self-judgment and the means of finding and greater selfknowledge, that society can hope to grow through such crises and emerge stronger for them. The Christian contribution is to show that the various crises we identify, are caused by an impoverished account of our identity, by which we are unable to receive the judgment of our peers and learn from it. In our freedom we are open to one another. Embodied Persons We are embodied persons, available to one another through the materiality that creation gives us. In parallel with the doctrine of redemption, the Church also proposes the doctrine of creation. This assures us that the world is created and given to us by God as gift, and as the medium of our mutual love in freedom for humankind. It is good both in its thereness, and because it puts us in a social and political world made up of other people who expect good things of us. The world is a gift, from God to man, one person to another, so that it may be the source of endless gift from one person to another and thus the beginning and condition of a relationship that will continue without limit.


We have to give two accounts of our place in the world. One tells us about nature. The world is a heavy and unyielding place, given and non-negotiable. We are confronted by its brute materiality, and all our encounters reflect its finitude; there is scarcity and competition so life is never easy. By our hard work we accumulate the material means of life, exchanging what is less valuable to us for what is more valuable and so ordering and re-ordering the world. The metaphysics of nature helps us to talk about man by talking about his embodiment, and his situation in a given and finite world. It helps us to count persons and so to talk about man in terms of groups and crowds, and therefore of quantity and number. The material world is the medium of our every encounter. But the Christian account refers to creation rather than to nature. It says that created persons are embodied persons. The concept of body is fundamental; all nature is caught up in human interaction. We are available to one another because we are embodied, for our bodies allow us to see and hear and find one another. This is so even when we do not share the same location, but communicate through books or electronic media. Though this not appear to need any explanation, we must say why we need our bodies. Bodies have purposes. Pre-modern people knew this, but some three centuries ago Western political philosophy began to dispense with this knowledge and refused to countenance that bodies are anything but things, inert and dumb. The result is that there is something that needs explaining right in the middle of economics, and which, since we don't explain it, creates contradictions and tensions with far-reaching consequences. A body is not just a thing, but also a means by which we can be together with other persons. Since we are embodied persons, bodies are inseparable from persons, who are themselves inseparable from purposes and aspirations. The materiality of the world is caught up in our inter-personal relating: as we give one another the material means by which we can become present to one another. Creation is the good gift of God to us, and it is for us to be its stewards, to order and re-order it. The Christian faith holds these two accounts together; it regards nature as a matter of creation, and tells us that the identity of nothing is yet established, before the eschaton, and that like ourselves, creation will be redeemed. They are good for us if we are able to receive them so. The Christian regards all persons as good, and regards the life in which we discover the goodness of each person, as itself good. Nothing finally is what it is all persons have found it good so. All of us must seek the approval and recognition of all other persons, and thus the personhood of each of us is dependent on the personhood of us all. The depth and mystery of man is both present and future, waits to be revealed; it is not entirely amenable to calculation and cannot yet be finally accounted for. Though we find ourselves in relationships, and are embarked on life with one another, we cannot decide that we have finished with one another. All relationships and human history, and within it, the history of the material world, remain open. Givens and Gifts When talking about economics, Christians contrast two economies. There is the world, and within it is the buying and selling, in which each item exchanged is instantly recognised and reciprocated by an exchange of money. And there is another economy in which all things arrive as gifts, and since everyone receives everything as a gift given to them, each is able to give and so to pass on what they have received, unconcerned by what they receive in return. This economy, of which Christians are witnesses, is the economy of interpersonal love: each has received love, and is so secured by that love that they are able to love and give without limit without anxiety. We have received our reward, massively and in advance. Christians understand that the more fundamental economy of God, which provides us with this love, enables us to give ourselves to every person in every transaction. The gift of God is the basis of all inter-personal


acknowledgement and encounter. The Christian economy of the Church is a system of gift and self-giving, and of waiting to receive whatever aspect of themselves others offer us.7 This economy of love, which we receive love from God, and the security that it gives us to love and give, enables us to make our contribution to the world, and to that other economy in which we all buy and sell. The Christian understanding that we have received all things from God subtly contributes to the secular economy. The Christian economy comes with the invitation to find our own true identity, and to find that it comes through relationship with God. Through Christ we may acknowledge one anothers true dignity, so the Christian economy comes as the discipled life in the Church, in which we participate in Christs communion with all human beings. The Church has a payments system, and it is itself a payment system, denominated by this name. Indeed the Church is the original system of payment, because it refers to the original and ongoing act by which God honours mankind and honours each human person. God pays us the dignity and honour by which we can pay one another that same dignity and honour. In this primal gift of recognition given by God to Man and to each man, we receive the means by we can give one another our recognition and esteem. The gift of God is therefore the basis of all giving-in-exchange and of whatever currency denominates our exchanges. So Christians are set to work by God to hold out this larger economy of love and gift, the economy of God, on which the economy of buying and selling, the economy of man, is based. This is the Christian work: since it is not onerous we may take delight in it. God is in covenant with man. This covenant is the basis on which man is with man and each of us may give ourselves to other people. We may give ourselves and so come into relationship with someone who is not ourselves. Because we are different from one another, we are able to bring something that the other did not have. Only another person can complement a person: together they may bring about a relationship which no other set of persons may revoke. These concepts of covenant, love and gift have very distinct economic consequences which we will examine in Chapter 2.

3. Formation and Independence

Christian discipleship makes self-controlled persons who are no longer entirely propelled by our passions. The ability to say no to our own immediate desires is the first step to freedom. This ability is gift given to Christians. God, the true judge, is able to release us from our sin and give us the promise of mastery of our passions, so we can begin to practise this self-mastery. Christians understand that lack of self-control means that each of us may be our own worst enemy, and that no one can do as much harm to us as we can do to ourselves. Through the apprenticeship that is Christian discipleship we learn not to blame others for our situation, and begin to see beyond ourselves. We are freed to love, and to act, first for ourselves, then for those closest to us, and then more widely. Through baptism, and within this Christian community and its discipleship, we able to acquire this self-control that makes us free to act well towards one another. This Christian formation has a positive economic outworking, both long-term and immediate. The covenant of God with man gives us the security to want to hear the judgment, and the truth of our identity, from God. Without that security we evade that judgment. We do not value ourselves enough, and all our materialistic impatience and over-reaching is nothing but compensation for this failure to hear the truth of our identity and value

Arlie Russell Hochschild The Commercialization of Intimate Life (Berkeley: University Of California 2003) p.105. An economy of gratitude is a vital, nearly sacred, nearly bottom-most, large implicit layer of an intimate bond. It is the summary of all felt gifts.


ourselves truly. Our chief denigrator is ourselves; we devalue ourselves in the fear that, if we dont, others will do so more; but we denigrate ourselves in defiance of God, who is the true judge of man. God finds man good and loves him. Unbelief is a failure to receive the good judgment of God and thus to learn to judge well. Long-term failure to hear the true estimation of man the gospel results in a society with wildly see-sawing estimations of its worth. Societies that believe that they are loved by God are likely to have a realistic and steady self-evaluation, and to prosper. The society that does not know how to judge itself bounds and rebounds from boom to bust, its optimism and pessimism equally unfounded. The gospel puts the question to everything we do and invites us to undergo a little selfassessment or audit. The Lord tests his Church and each Christian receives the judgment and correction of God, so that they serve as his witnesses and thus are faithfully the body of Christ for this generation. The Church that takes this correction, represents for the world the same invitation to self-judgment, to measure itself more truly. The Church asks hard questions and represents those questions by its very existence; this is its usefulness to the society around it. The love of God that the Church has witnessed to and embodied for these many centuries, has made ours a just and a generous society, confident enough to hear the truth. As a result this society of ours has even managed to communicate some of these attributes to the wider world. It is for each generation to ask whether it will continue so. We are not public persons by birth, but become public persons by a process of formation within a political culture. We can learn how to be persons through a discipleship. We may learn the self-control that makes us more than simply our own bodies and needs, and learn to hear the demands of others. To exercise self-restraint is not to act against ourselves, but simply to act for one another. We learn to use our bodies well and so discover how to be free for one another. We are persons. Our bodies are not our masters, but we may become masters of ourselves as we achieve some control over them. Many of our contemporaries have a pessimistic orientation to the world. They are not happy with its materiality, and some are in revolt even against the body. This is not a new crisis, for pagan man has always feared the sheer exuberance and materiality of creation, and the change that emerges through the unconstrained interaction of large numbers of people. But Christians have an entirely different view. We regard creation as good, and regard the limits on us that it represents as good too. Have we been introducing technology and consuming resources excessively where we should be exercising virtue and learning self-control, and even doing so to save us from having to learn self-control? There is a moral poverty that comes from treating creation as though it were bottomless. If creation were infinite we would never have to exercise any self-control. It is good that creation has limits, and good that we can explore and discover these limits. To burn our way through our resources is absolutely impoverishing for us, for does not teach us to husband these resources or to wonder at this creation, and gives us no opportunity for moral growth. If this was a world in which food cooked itself and beds made themselves we would never have to interact with the world or learn about it in any way. It is only because it is a finite world that we have to learn how to act within it. It is only when we exercise self-restraint that we can act generously and for other people. If we treat creation as though it had no end we will never experience the joy of acting with responsibility, and so with freedom and spontaneity. We would never learn to distribute well, that is to give things as they are good for the specific people we give them to, or give them to the degree and extent that they are good for those people and not more. And it is only the opportunity of acting well and generously, that brings the joy which is the whole point and purpose of creation. We reckon the human body


with all its limits and challenges as good. We neither idolise the body or material world, nor do we denigrate them, but simply look forward to their redemption. Christian discipleship puts us in an apprenticeship in which we learn to master our passions and acquire self-control, and so find out what is really worth having. The ability to say no to your immediate desires is the gift that frees us to discover better desires and to explore and wonder at the world. It enables us to love and act first for ourselves, then for our families and then more widely. This has immediately positive economic consequences.

4. Together
Man and Woman It is essential to our account of the economy that we acknowledge that humans are social. Humans want relationship, indeed, they want each other. We come together in societies, and that societies are renewed and continue because individual persons embark on new events of relationship. Our discussion of the economy has to discern the proper balance between the social character of humans and the extent to which each human may be considered as the independent being, who acts on his own, and so is an economic agent. Modern economics is premised on denial of any intrinsic human sociality. Yet there is an economy because humans desire to be with each other, and so we must allow this togetherness to be foundational to our account of the economy. The concept of covenant and gift also relates to the way that each of us is oriented to the world either as a man or as a woman. Humanity is not unisex, but sexed, and so dual. So man gives himself to his fellow as man to woman. Men and women may desire and love each other enough to give themselves to each other. Each of us may give ourselves utterly and finally to another human being. We may give ourselves to one other person entirely, and in marriage we have the dignity of attempting this one thing. A marriage may go well and bring huge benefits and joy, or it may not. Yet to give ourselves to someone else is our own act, and in doing so we are masters of ourselves. In marriage a man gives himself to a woman and receives the gift of herself that she makes him. There is no more fundamental act than this gift-giving and receiving. Self-gifts that are permanent are what marriages are. But a man and woman may desire one another, and seek and find one another. But when men and women regard themselves solely as individuals, there is no reason why their gift of terms in that relationship should be lasting or absolute. Male and females may desire and meet each other briefly for private purposes, but without covenant, sex brings about no public commitments. But when they desire to give to, and receive from, one another increasingly and without limit, they may welcome whatever framework supports their love and enables it to endure. Love may be formed by the discipline given by the greater community and willingly taken on by the man and woman themselves, in the hope that their love will grow so that their gift of each to the other becomes complete and final. A man may be called to be a husband and a woman to be a wife. He is called to be husband to her only, and she wife to him alone. His call to be her husband is also a call to create with her this little society, that is distinct from all other relationships of which society is made up, and distinct from society as a whole. Their relationship is exclusive, and it renews society as a whole only because it is so. Their calling is not simply as man and woman nor generically as husband and wife, but it is her exclusive call and claim on him and his singular call and claim on her. Only she can make him a husband. The purpose of the biological distinction of man and woman relates to their call to become husband and wife: this sexual difference given by nature is our invitation to hear this call and take up this


vocation. Nature precedes this decision only as a question. They are not bound by nature; nature offers to provide the means and idiom by which they can bind themselves to one another, and by which all society can receive their binding and covenant as good, also for itself. Only when we are in possession of ourselves can we give ourselves entirely into the hands of someone else, stick with that decision and not seek the aid of others to undo what we ourselves have done or attempt to relieve ourselves of the responsibility that we took on. Marriage is a form of mutual self-control that enables this self-giving that is directed to a further self-giving that sustains human society. Self-Gift, Freedom and Permanence A marriage creates a little society. The institution of marriage is the public recognition of the single household that this man and woman make. This relationship of one man and one woman generates a new society, one which is as primitive and basic as society itself. The little societies created by marriage serve the renewal of society as a whole. Marriage is public. It exists for the sake of those outside it as well as for those within it. These two persons do not marry solely by their own declaration, but are married by those who act for the entire society when, following the forms given in law, they pronounce these two persons married. This marriage is brought into existence by the public event, constituted by the confirmation given by the witness of that public. The witnessing public stands surety for this marriage. It is to see that if one party defaults on the contract, he or she bears the consequences of its breach, as they would for any other breach of contract. Having married them, according to the contract enacted in these forms, neither this society nor its representatives can change this contract. It has merely been witness to, and as far as possible guarantor, of the contract of these persons each to the other. Any man and woman may give themselves to one another, irrevocably and so enter the covenant that creates a new little society, a family. Marriage is not the joining of a merely numerical two, of two identical units, but of two who are complementary of one another. Only as they are of different natural and biological constitutions can they be complementary and mutual embodied persons. Marriage is the joining and reconciliation of what is different: one half of the world is reconciled to and comes together with the other half, as night and day, left and right, top and bottom. Marriage can therefore only involve sexes that are different and so be the marriage of man and woman.8 Marriage of one man to one woman for life is understood to be the natural order is recognised by Jews, Hindus, Muslims, and Buddhists. The Church can only recognise this marriage and point to and support all law that recognises this creation ordinance and this natural law.9 When marriage is not recognised as natural and as God-given, but is understood to rest solely on the will of the partners, there is no reason why marriage should not be between two partners of the same sex. Indeed there is no reason why it should not be between more than two partners. But in a marriage of two, each considers the other to be their match, their entire counter-part and equal. In any relationship of more than two, as in the case of bigamy, where that entire dedication of one person to one other is not given, one person can no longer be considered to be the equal of another. The integrity of this entire gift of one person to one other person in love and freedom and love is not made. The two shall become one. Their joint act makes them one reproductive principle.10 Two people who are married to each other exercise their self-control and self-possession
James Q. Wilson The Marriage Problem: How Culture has weakened Families (New York: Harper Collins 2002. 9 Christopher C. Roberts Creation and Covenant 10 Robert George in George and Elshtain The Meaning of Marriage p. 151. one reproductive principle


together and for one another. Within this covenant they may also become more truly two distinct persons, so both truly two and truly one.
What is unique about marriage is that it truly is a comprehensive sharing of life, a sharing founded on the bodily union made uniquely possible by the sexual complementarity of man and womana complementarity that makes it possible for two human beings to become, in the language of the Bible, one fleshand thus possible for this one-flesh union to be the foundation of a relationship in which it is intelligible for two persons to bind themselves to each other in pledges of permanence, monogamy, and fidelity. 11

Though the Church did not invent marriage, it offers Christian discipleship as the best means to learn to love and serve one another so that marriage is sustained and their love and these two persons themselves grow within it. Equality through Marriage The corollary of the modern account of man, in which he is an individual, fundamentally alone, is that men are on their own and women are on their own. As a result masculinity and femininity appear to be contraries; then woman is threatened by masculinity and power, and man is threatened by femininity and weakness. If this is so, man has to be controlled for the sake of woman, a control which is likely to require coercion, but which can never be finally established. Christianity, by contrast, says that man and woman are made for covenants with one another. Man is given to woman and woman to man. When, in the Letter to the Ephesians, Saint Paul tells us that the dividing wall between man and woman is broken, he means that in Christ these two estates may serve one another in freedom, all antagonism ended, in the communion that Christ has now established on earth. He does not intend to say that the difference between them is abolished and we are dissolved into a unisex, but that the difference between man and woman may now find its goal. When they come together in covenant, they do so in love and freedom, as independent persons who can decide for one another. Their biology does not compel them to do so. Because they are difference from one another, they have reasons for coming together and through their marriage, discovering the identity through a long life lived together. As we grow towards this other person who is different from us, each of us may grow up into our own unique and particular identity, so marriage enables self-discovery through discovery of this other. In freedom this husband and this wife create a new unity and duality. They are one, who are also two. But what about the equality of men and women? When a man and woman freely enter a covenant, in which he becomes a husband and she becomes a wife, he recognises her as his equal, and she recognises him as her equal. They become equals through this covenant, promising to be a match for one another. He may aspire to be worthy of her, and she to be worthy of him. Marriages work when each party talks to other up, and reckons the other more, rather than less, than him- or herself. They must hope to be mates in a future that is not entirely known to either of them. In what aspects man and woman may be asymmetrical and thus equal or unequal is not decided solely by the present, so their equality is a matter of hope and redemption. It is not women (defined solely by biology) but wives, relational beings, who may freely represent the inner world of the household. It is not men but husbands, relational beings, who may freely represent the outer world of public square and marketplace. As each man and woman come together in this covenant, they bring the household and marketplace into mutual relationship, so that each serves the other. But if men are, either by nature

Robert George What Marriage and what it isn't First Things, July 2009


or by culture, members of the public economy, are woman prevented from finding their identity in that economy? Do the demands of equality and thus of justice not demand that the distinction between these two economies be removed? We only need to acknowledge that there is such an asymmetry, and that as a result the present cedes something to the future, and we may look forward towards a redemption of our present time. If the private economy of the household is the sphere of the married woman, the public economy of the market and formal economy is the sphere of the married man. The distinction between husband and wife is analogous to the distinction between public and private realms. Yet there is never husband without wife nor public sphere without the inner sphere of the household. Each economy exists only as its seeks and serves the good of the other. The distinction between these two economies and two sets of functions continues as people are willing to give themselves to this one other person and so become husbands and wives, for the sake of that which they can only bring into existence together. The public sphere may aspire to be worthy of the private sphere of the family, and that this generation may aspire to be worthy of the previous generation and of the next. Each party must talk up the other, and so aspire to an equality which hopes for redemption but which must remain presently under-determined. Equality, like unity and reconciliation is a function of hope, which itself the function of that covenant in which faith and love also feature. There is both a given difference between men and women, described by the doctrine of creation and natural law, and there is a promised difference that relates to the redemption of men and women, described by eschatology. It relates to what we are and so to the present, which it regards as good and even as the gift of God. And it relates to what we may or will be, and so to the course of our formation and transformation and to a future, which since it is genuinely future, we cannot presently see. There is humankind only because there is something besides humankind. There is a first, and therefore he is a second. There is God, and on this basis only, there is then man, and human beings. This asymmetry is crucial. The non-symmetrical relationship between God and man enables and guarantees the asymmetry and complementarities and reciprocity between one human and another, and the basis of this asymmetry and difference is the relationship between men and women. Only difference creates need and drives a desire to meet and join with her, or him, who is unlike yourself, and only from this relationship of man and woman comes the new event, the arrival of a third party children. The coming together of men and women creates a new generation and thus continue the human species. Thus there is an asymmetry between parents and children, and between the older and younger generation. The relationship between men and women drives all other asymmetry and complementarities. The continuation of the human species depends on this asymmetry, for only difference creates a desire to meet and mate with her or him who is unlike yourself. Only this asymmetry gives the hope of continuity to humankind.

5. Marriage and Singularity

Christian marriage How do marriages work? Christians can suggest one way in which they can work through Christian discipleship.12 Marriages work when both partners come together with other Christians and every Sunday hear the promise of God's faithfulness and the

Bernd Wannenwetsch Whose Marriage, Which Decline? How Theological Accounts both rival the modern construal of marriage and prepared its way, INTAMS Review Journal for the Study of Marriage and Spirituality vol 14.1 2008.


question of their own faithfulness, and go up to the altar together to express their thankfulness, and perhaps also express their sorrow and receive forgiveness, from God and in his presence from one another. The Christian confession is that God is with man. Man is never isolated and alone. He is singular because he is recognised and affirmed so by those amongst whom he lives. His individuality is the function of his relationships. The covenant of person with person is derived from this fundamental covenant of God with man. As God has married man to himself (Ezekiel 16), man is thus at once a married and a singular being. All human encounter is founded in God who is himself, and thus one, and who is with us, and thus two and one with us. Marriage is the fundamental demonstration of this singleness and togetherness, of man. But every encounter of man with man reveals and affirms our unity and duality. Each exchange between one human and another, no matter how brief or how economic in form, is an instantiation of the covenant of man with man, that rests on the covenant of God with man. There is only this one-on-one covenant of marriage that witnesses to the promised permanence of mans relationship with his fellow. This fundamental covenant of marriage, and the household it creates, gives purpose to all other encounters and transactions, and so is the basis of economic exchange. Singleness The covenant of God with man is primal: nothing is antecedent to it or has either authority or power to undo it. The source of all human oneness and unity is the marriage in which two persons become one. This covenant that makes a single person of two persons is primal and indissoluble. Marriage and singleness are not simple opposites. Each marriage confirms the singleness and unity into which God has brought man. Each married person is married to one specific other person, and so committed to the uniqueness of that person. Every marriage is a confirmation and establishment of the existing relationship of God and man, and of the singleness, or singularity, of each human being. Each of us is particular and unique. It is the teaching of the Church that Christians are single unless they are married. They are celibate and self-controlled. Only when you have acquired a degree of self-control can you give yourself to someone else. Marriage should be seen not so much as a departure from celibacy as one particular expression of it. You are given by the Church to one other human being, for life, so that you can be chaste together. All other covenants, business relationships and forms of the individual-state relationship are derivations of the covenant of God with man that receives its reflection in the covenant of man and woman in marriage. all other relationships will either acknowledge and honour the covenant of marriage or they will attempt to substitute for it. All transactions reflect and reiterate this phenomenon that humans may be at once one and two, simultaneously single and particular, and together and plural. That humans are created and thus that their togetherness is essential to them is the basis on which there is an economy. For modern economics, man is an individual, a unit, to be conceived of as isolated from all other units. But this conception of the individual is inadequately derived from the truth, represented by the Christian teaching that each human is not only particular and unique, but also may dispose of themselves in freedom. It is this freedom to give themselves or withhold themselves that makes each human single. They are not bound by their relationships, but may judge for themselves which relationships to commit themselves to and which to remain aloof from. We are free to decide which economic relationships to take on and free to commit ourselves to them to degree that we decide, together with our counterpart in that relationship. It is this that freedom that gives definition to singularity, so that we may acknowledge each other person as single and unique. To be single is not to be isolated or asocial; it is the basis on which we to commit ourselves to one another in economic relationships because we are free to do so.


There is therefore a fundamental distinction that is to be made publicly between those who are, and are not, married. This distinction generates another, between the household that a marriage creates, and the world outside that household. Members of households meet and enter covenants with members of other households, and so there is a world of civil society, business and politics. There is a public and a private sphere, so there are two sectors or two economies. There is the economy of the household that is created by a marriage. And there is the public economy of the market and public square, which we know as the economy. There is the home and the market square, the private and public spheres. Each serves the other; neither should attempt to absorb the other or make it redundant. There is a distinction between these two economies, the inner and outer, and a symmetry between them. But that symmetry cannot be complete. The tension created by their inevitable asymmetry generates the movement from one generation to another, and so ensures the continuation of society through time. Too much symmetry forestalls this movement by which one generation brings another into existence so impeding the continuity of the economy.

6. Two Societies, Two Economies

There are two societies. There is Society, and there are the Christians within it. There is the nation, and there is the Church within it. Augustine identifies these two distinct communities, one hidden in the other, in the City of God. The distinction between these two societies and the contrast this enables us to make is the basis of our examination of our economy and of economics as a description of it. The contribution that Christians are able to make to economy and economics depends on this basic distinction between Society and the Church, between the Church and the world, the Christian and nonChristian.13 The Church is the economy of love. Like any other household, it is founded in a family whose members love one another, regard one another as brothers and sisters, children and parents, and who do not charge one another for their services precisely because they do not regard each other as members of different households. There is the love of God for man. And there is another love, of man turned away from God and away from his fellow man. When we do not receive the love of God and hear the judgment of God we will certainly be captive to these other loves. Evasion of the love of God, failure to hear the Word spoken to us and to learn self-control and self-government results in this whole vast engine of modern consumption. When we are in flight from the love of God we give ourselves away in all other directions. The entertainment industries are dedicated to promoting the perpetual power of the unguided love-free individual will. We may identify two societies, mingled together. One is the society of man attempting to be himself without God. The upshot of his efforts to be without God is that each defines himself in isolation from all others, as though he had no fundamental relationship with anything other than himself. This man who wants to be without God retreats into isolation and is obliged to construct whatever controls he can to prevent the world from making demands of him. By seeking love, refusing it, then substituting for it, this man inflicts on himself a process of disintegration. He and his society will suffer a passion with no end. The other is the society of man who is with God, which is to say, the communion of the Church. The Church travels through the society of those who do not acknowledge this love, assuring them that they are loved with an unchanging love, that God at once


Augustine City of God 19.17.


knows, judges and loves them also, and that they may therefore take life with confidence.

7. Humans with Future

If we can identify two societies, we can also identify two economies that differ by their reference to time. There is the present worldly economy and the present-and-future eternal economy. The present worldly economy is one in which men compete for glory and honour, but within it there are little economies households in which a man and woman are bound to one another in love. The Church is that unique entity that combines these two: it is the household united by love which extends to include all. It is the world become a single family and household. This enables us to ask what features of this economy will help it to last, remain open to a future and even stretch towards eternity, and to ask what features make the future of this economy more doubtful. The contrast between the economy of the Church and the economy of the world enables us to ask about the long-term of the economy of the world, and so the contrast between them is the basis of any Christian analysis of economics and the economy. The Christian doctrine of God has its public and political outworking. It sets out an account of the ground on which human persons may come together and find each other valuable and interesting. It sets out an account of our political freedom and our individual dignity that is larger than any other account. Good We may not only act, but we may act well, for the common good. Public discussion of what is good gives us the framework by which we can judge our own economic activity. Economics gives us one language by which to decide how to act and act well. We can ask ourselves how our employment contributes to the common good, and economics can help us here. But in order to talk about what we do, we have to do so in terms of whether we act well, and thus in terms of what is good. The whole discourse of economics is simply a technical discourse that enables us the better to identify and isolate some relationships in order that we perform them well. It does not tell us what is good and what is not.14 We have to decide this in other ways. Nevertheless, the language of economics can help us direct ourselves towards what is enterprising, to start new undertakings, and so taking up our freedom to act. The language of economics can help us to judge, for example, to assess which enterprises are making a public contribution, and which are self-serving, monopolistic and hinder enterprise. The deep assumption that we are all oriented towards what is good, is essential. Every economy depends on the existence of a measure of common interest, rational behaviour and self-government and so on trust. It depends on the rule of law, for a free market will develop only in a moderately law-abiding society. Where everyone is terrified that they will lose what they have worked for because it will be taken from them by force they will have no motivation to produce very much, and an economy will not develop beyond subsistence levels. A basic level of trust, and so the premise that others are not intending to do us harm, is fundamental for the existence of any market whatever. The Western metaphysical default position is that man is first individual, and that society, and everything other than man (such as creation) is less fundamental than this
Geoffrey Brennan & Philip Pettit Economy of Esteem (OUP 2004) p. 251 In mainstream economics it generally if not universally taken for granted that the preferences that lead people to demand and supply commodities and services in the material economy are beyond the threshold of criticism. Economic arrangements are assessed for how will they do in satisfying those preferences that is, for how efficient they are in catering to the preferences without any question being raised about the status of the preferences themselves.


individual. The existence of the world depends on the readiness of the individual will to acknowledge it. There is a crisis of existence, because our assumption is that man is the only that exists. If we approach man in terms of covenant, we understand that there is something before man, or more minimally still, there is something that is not man, and so that man is defined by his relationship to what is not himself. Such a covenantal conception acknowledges that creation has an existence and dignity independent of us. We have to observe the limits it represents for us. Modern economics offers only one of the two accounts we need. It offers us the finite account in which each encounter is instantly and completely denominated, and so effectively complete and finished. It does not look for anyone more. It does not understand this relationship in terms of covenant and promise so it looks for no more. The individual transaction entails no ongoing relationship. This is the first consequence of defining man without any conception of covenant. A second implication of covenant is that we can assume that relationships are directed towards a future. No human relationship is yet everything that it shall be, and thus we may consider everything human enterprise in terms of its purposefulness, its ambition and so in terms of hope. If man is a function and creature of covenant, if he is not merely an individual but also a plural creature, then there exists also the thought that he is not yet what he will be. And thus we arrive at the thought of history, and that each of us can contribute and make a difference to human history and that our lives are therefore meaningful and valuable. If we are not yet what we may be, we have the possibility of learning and developing, of human formation and cooperation in this formation, and so the idea of education. The humanities are education they are all about the formation of man, this creature with a future, who is orientated towards what he does not have and who is therefore ready to undergo whatever course of education and formation will help him towards that future. Man is the creature who can grow, and the growth of human beings is the purpose of the economy. We are a future-orientated people. The future is the great discovery of the Christian faith. It is what makes us human. All human life is without meaning if it is possible that humankind may come to an end. Our self-valuation can only ever be provisional. We are worth what we say we are only if the generation that follows us agrees with us. It is for our grandchildren to affirm that we are indeed worth as much as we believe. We have to work in order to earn their good estimation. This means that we have to work to bring about the society and economy in which they can take their place, and one which is no smaller than the place we inherited from our own parents. Fundamental to the concept of hope is the prospect of a new generation to continue the human race. The present would be without meaning if the future turned out to contain no human beings. The future can only be the human future, the continued existence of persons who receive, recognise and acknowledge one another, and do so on earth and for the sake of the earth. Christians are the future-orientated people because they are the people who wait, for whom, since they are the people summoned, the future is a real question. Our starting point has been that the Christian view of man is essential to the economy, and thus that the presence of Christians is essential to the society from which an open economy arises. The public presence of Christians in a society has long-term trickledown effect on the self-image and confidence of that society. The Christian is the being


of the present and the future. He is present here and now, but the future is also hidden within him. The non-Christian is the creature of just one time this time, now. The Christian combines present and future, binding this present fragmentary time into that whole and entire time, so that through him what is partial receive its renewal from the whole. He combines the short-term and the long-term, so that together they belong to the that unbroken time we call eternity. The relationship between this generation and all possible future generations has the nature of a covenant. This covenant between the present and the future. The Christian Church, that understand itself in terms of covenant is able to point out The distinction between public and private is analogous to the distinction between present and future. The future comes through the new generation that appears in the form of each new born human, and through the long investment in that child which only the private sphere of the household, recognised by marriage, is able to make. Marriage raises public morale, and high public morale encourages marriage. When marriage is not understood as covenant and as public institution, the cultural confidence that brings the next generation into being is lost. Then singleness is promoted over life together in the covenant which we can enter freely, and we become dependents and employees of that other covenant that we have not entered freely, the state. But the state cannot reproduce society and cannot of itself motivate persons to do so either. The decline of marriage represents a loss social capital from which economic decline follows. Modern economics conceives of man only as a one-generation phenomenon. It cannot concede that the significance of any person may relate to his success in leaving behind him a society that is a continuation of him. We must explore some of these trends, and relate the loss of the concept of covenant to the society that does not know what to hope for or how to wait for it. In this chapter we have pointed out both that freedom and love are essential to the economy, and that freedom and love are products of the Christian contribution to the cultures in which a developed economy has arisen. The Christian understanding of man been instrumental in the origin of the Western economy. In the next chapter we have to show how love and freedom enable the contribution we all make to the community and wider world around us.


Summary of Chapter 1
1. An economy arises from a civil culture, receives its proper mandate and limits from that culture and flourishes with that culture. 2. Economics can start from a larger or narrower understanding of its remit. It is an abbreviation of other fuller accounts of human interaction. It is necessarily a limited explanation relying on a conceptual frugality. It is useful account of our many short-term and pragmatic relationships. 3. It remains useful as long as it defers to the account of our long-term commitments, as these are described by the whole complex account of man given by the humanities. 4. Modern economics is an abbreviation of the full tradition of economics. It considers person-person encounter in isolation from their effect on society as a whole and so exclusively over their short-term. 5. Each individual person is an agent who is impacted by the agency of others. We are judges of one another. Others judge us. The worth of our economic product is determined by the valuation they place on it. 6. Modern economics is based in a rigidly maximal conception of human agency alone, in which the effect of the agency of others is only conceived of as the anonymous agency of the market. 7. The Christian faith gives a complex account of man. It describes his freedom to act and encounter with his fellow man. This faith produces a culture that is the accumulated deliberation on the action and freedom of man. It has given rise to the intellectual disciplines, the Humanities, which examine that culture, and which are themselves shaped by the questions posed by the Christian faith. 8. Man is a social and an individual being. He is distinctively himself and on his own, and he is with others, and thus social. He is public and private. 9. Man is an embodied person. Our bodies are the means by which we are available to one another. We serve one another by presenting one another with the sustenance for our bodies, by which we can continue to be present to one another as persons. 10. Love aspires to permanence, and so seeks the correction and discipleship that will make it permanent. Christian discipleship teaches self-control. It gives us an ability to act for the long term and to wait, to defer our gratification. It is only when we exercise self-restraint that we can act generously and for other people. 11. Human beings are made for relationship with one another. Man is male and female: these exist in mutual service. We desire to be desired. We give ourselves and hope to be wanted and sought. Marriage forms us to be truly distinct and complementary, male and female, and to desire each other firmly and without limit. 12. Marriages consist in economic and material as well as emotional provision. Love and marriage are distinct from one another; marriage can support love, and love can grow in marriage. When their economic function and the mutual dependency of partners is not removed, marriages raise morale and create social confidence and social capital. 13. A married husband and wife are open to the appearance of a third, a child. Marriages motivate the production of children and form children into mature adults, so


that, when they are adult these children will be ready to enter their own marriage covenants. 14. Marriages create the motivation to initiate the other civil and commercial covenants of which society is made up. 15. The immediate needs of our bodies are related to the medium-and long-term requirements of persons who have aims and goals. 16. Economics is about the production of a new generation. Economics must therefore acknowledge the social requirement to produce of a new generation, both biologically (the formation of humans) and culturally (the formation of the adult persons). 17. By holding together bodies and persons, materiality and purposes, the Christian account recognises that we are motivated to act freely and deliberately, and for one another.


2. Family and Motivation

The Household and Inter-Generational Economy 1. 2. 3. 4. 5. 6. 7. Marriage and Children The Formation of Persons Household and Market Public Service and Charity State Compensating for Family Failures Motivation, Reproduction and Demography Future Orientation

We go out to find new people and form economic relationships with them. What are our motives for doing so? Perhaps we have two. We go to work for love of those within our family, and we go to work in the hope of winning the acclaim of those outside it. We could regard both of these as sorts of love. Modern economics deals with our desires or preferences, but does not say why this particular set of preferences are ours, nor give much other consideration to our motivations. Since it does not acknowledge that these two sorts of love that drive us to act, it is unable to explain why we do, or do not do, those things, like bringing up families and creating a new generation, that renew the economy. Modern economics cannot tell us what motivation allows an economy to flourish or makes it more difficult for it to do so. Nevertheless, love gives us our motive for going to work. Love requires freedom. Only freedom, whether motivated by love or hope of glory, allows us to take the risk of starting a new relationship. We can take the first step and invite someone to join us in some venture. We can start a new job or we can start a new business. We can start a family. What the family does for its own members, it may then begin to do for others; it may extend its outwards and be neighbourly. When its outward service becomes big enough, we refer to it as charity, and if this service continues to grow because people offer to pay for it, it has become a business. Many firms started as family businesses, because a husband and wife or some other combination of family members, found that the familys own provision for itself stretched first to include the neighbourhood and then attracted paying customers. The initiative that started a family may go on to offer a service that becomes commercial. In this chapter we are going to examine love as the source of our economic motivation, and then in the following two chapters we will look at the concepts of public recognition and the confidence as sources of that same motivation. First we will look at the love that makes a family and a household.

1. Marriage and Children

You fall in love. You love this one particular person, and desire to be with them and, if you are lucky, they desire to be with you. The desire that brings you together can also keep you together. The desire of men for women and women for men can turn into an unlimited, life-long, mutual giving. If men and women desire and love each other enough to marry, it is because they understand their marriage as a one-time gift and as an ongoing gift. Having given yourself to this one person, there is then nothing else that you can give in the same way to anyone else. We can commit our lives to this one relationship. It is a risk, but with it comes a dignity that makes this marriage worth living and working for. Because it contains this element of adventure this covenanted form of love is based in freedom. What is the difference between marriage and other sorts of relationship? Any fleeting relationship between a man and woman may result in a pregnancy and the birth of a


child. But the child would prefer this relationship to be deliberate and permanent. No child wants parents who cared so little for one another that they made no investment in their relationship. Marriage is the recognition by both parties that they value their relationship and intend it to last in the way that any child would want and thus marriage is formal recognition that a child may come. Marriage is the recognition that a third party may be created through this love. It acknowledges that this third party is not simply the biological phenomenon of foetus or infant but that from conception to adulthood, this child deserves the love, respect and service of the two persons who gave him life. Children can fairly make this demand that those who begot them remain with them, and help them through all the challenges of life that follow. They may expect to be brought up by the woman and man from whose bodies they come, and hope for their service without time-limit. They can demand that you stay together, for them. Marriage uniquely intends to serve its offspring all the way up into adulthood, providing these children with security in which their own generous individuality and readiness to receive and enter covenants may develop. Children are, from their very first beginnings, persons to whom other persons are obliged. Marriage is distinct from every other form of relationship because it serves the bearing of children. In order that there be children, and that those children become adults, a society must value the institutions that secures the conditions which encourage the procreation children and which enable children to become mature persons. For the sake of the children who will allowed to develop into persons through it, and therefore for the sake of the production of new generations and thus for its own continuation generation by generation through time, society must honour marriage. The society that does not like the idea of specific permanent interpersonal relationships minimises the distinction between those who are dedicated to the creation of the next generation, and those who are not. The family is the best means we have yet discovered for nurturing future generations.15 Marriage is the best means of securing for the long-term the love that, by sustaining the family, serves children, the view given its first extended articulation by St Augustine.16 A marriage is not simply the expression of the love of these two people. Marriage is distinct from love: it is not dependent on the feelings of these two for one another at any one time but is the means by which their relationship can survive the vagaries of passion so that their love can grow. Marriage as Public Institution Children may expect to be brought up by those who gave them life. Families that do not exist around a marriage, either because there was no marriage or because it has broken, represent less than what we would wish for these children. A family in which only one parent is present is not just as good as one in which both are present. If one parent dies the family is bereaved. If one parent leaves the household, each child, and the remaining parent suffers a form of bereavement, and the child experiences a breakdown of the constancy and continuity of relationship that each of us may hope for, even into adulthood. All children in all families benefit from constancy of husbands and wives in the marriages and families around them. The children whose parents have broken up and whose parents never lived together will hear the nagging question of their own self worth. Did he not stay around because he did not consider me worth staying for? Their responsibility for such disappointment and doubt has to be acknowledged by those parents who do not stay together.

Jonathan Sachs Faith in the Future: The ecology of hope and the restoration of family and faith (1997) p.23 16 Charles Reid The Augustinian Goods of Marriage


Marriage is an act of public responsibility and of generosity, not only for the children that emerge from it, but also for society as a whole. It represents the possibility that selfgiving can be permanent and that can benefit from the stability and constancy that such intact families represent. Marriage is a commitment technology.
To escape the compelling immediacy of the present, it is necessary to lock in the future, by means of commitment technologies. These are costly. As an array of internal disciplines they take time to build up by means of education and experience.

We must distinguish marriage from all else. There must be a prejudgment and a prejudice in favour of it. More than any other institution, marriage keeps people out of dependency, keeps their morale high and prevents them from becoming dependent on public resources. Their marriage ensures that a husband and wife are less likely to call upon the state to support them. Though all welfare benefits are an attempt to compensate for its absence, nothing substitutes for marriage. All human encounter and interaction is based on the permanent public encounter of man and woman in marriage and on the family that it creates. It is only because marriages can result in children, and all society depends on these children, that society and government has an interest in the various forms of relationship that bring men and women together. Society must secure marriage acknowledge marriage as the particular form of relationship that best serves the upbringing of children because society must be committed to its own continuation. Children must be the first purpose of any society and the education and formation of those children to maturity must be its second purpose; thus we can say that children and formation that makes them mature adults must be the first and second products of the economy, which is to say, of the effort, of that society. In order that they do not remain children, they must learn to take on the same commitments in covenants that brought them into existence in the first place. A new generation must be formed in the virtues of mutual desire and service; such love and service is the glue of society and the motor of the economy. Nothing changes your outlook on life so much as a child of your own. 18 They are your own stake in the future of the world: you wonder how they will grow up, and what world they will grow in. They represent an opportunity for their young parents to grow up and develop a longer perspective. Young couples decide to start a family. They will provide for that family together, and grow in emotional maturity as they do so. That emotional security secures the family and is passed on to their children who will later display the same emotional maturity that will sustain their own relationships. The ability to sustain relationships has to be learned, and the family is the place in which that learning takes place.
Parental affection and family cohesion translate into warm and cooperative, intact families of origin headed by happily married parents, and years later, the adult children from such families tended to be high on expressivity, happily married, with cohesive families of their own. 19

A husband and wife who depend on one other, materially as well as emotionally, have reason to make their marriage work. Should we be appalled at this mixing of altruism with self-interest?
Avner Offer The Challenge of Affluence (Oxford University Press) p. 73-4 Janet E. Smith 19 Alice Rossi & Peter Rossi Of Human Bonding: Parent-Child Relations across the Life Course (New York: Aldine Transaction, 1990) p. 491
17 18


The goal is not therefore to cleanse intimacy from economic concerns: the challenge is to create fair mixtures. We should stop agonising over whether or not money corrupts, but instead analyse what combinations of economic activity and intimate relations produce happier, more just and more productive lives.20

Where there is enough incentive to stick with our partners and children, because we realise the economic and emotional consequences of not doing so, we grow as persons and come through our difficulties. Marriages bring up children who will be formed in that civilisation and as adults will themselves be able to desire, love and serve and enter marriage and other covenants. Marriage and parenthood matures us and orients us towards the public world in which our children are going to live. We not only go to work but work towards the society that they would like to see their children inhabit. Perhaps when we do not have enough children around us, we cease to observe things on long time-scale. Jennifer Roback Morse noticed that neo-classical economics was unable to account for the altruism of mothers.21 Without the experience of children around us, Mary Eberstadt argues, we suffer a foreshortening of horizon; she notices that the lower numbers of children in Western European societies has meant a reduced awareness of our debt both to future as to past generations, and that this absence of sense of debt was reflected in the decline of religious observance.
It is not only possible but highly plausible that many Western European Christians did not just stop having children and families because they became secular. At least some of the time, the record suggests, they also became secular because they stopped having children and families.

Marriage generates high morale and when morale is high more marriages take place. Marriages create social capital, and economies depend on it.
Because the family is the primary producer of our workforce and of our citizenry, stress on the family constitutes what is arguably the single greatest imminent threat to the American standard of living.23

The family prepares a new engage of economic agents, so beyond a certain point, pressures on the family threaten economic continuity too.

2. Family and Household

A family forms a household. Our family teaches us how to be members of society. Within the household we learn the unity of the person in mutual love and service. Children are served by their parents, and may learn from them how to defer to, and serve, one another. A society can only function when its members have been taught how to enjoy one anothers company. When we eat together we learn that consumption is sociable: individual consumption, in which each of us eats before our own television, does not form a family. In the household we learn to love and to work at the same time. Households sustain the most intense relational work that people ever carry on, Viviana Zelizer reminds us.
That work intertwines intimacy and economic activity so closely that one often becomes indistinguishable from the other. Household members feed each other,

Viviana Zelizer The Purchase of Intimacy p. 298 Jennifer Roback Morse Love and Economics 22 Mary Eberstadt How the West Really Lost God: A New Look at Secularization, Policy Review 143, June/July 2007 23 Shirley Burggraf The Feminine Economy and Economic man (Reading, MA: Addison-Wesley 1997) p. xi
20 21


continue their labor to the households collective enterprises and transfer goods, services, and assets as a matter of course.24

As parents serve each member of the household, they communicate to their children the dignity of this service and work. A mother judges which child needs which resources, purposefully distributing the goods of the household between its members.25 The distribution of goods take place face-to-face at meal time around the table, where everyone gets their share of the food and of the attention and opportunity to report back on the days events. The family has to hear and respond to each member, and the youngest members can re-enact some part of the days activities in play. The home is our first place of work. The first work is to bring up a family, for bringing up children is work, though it is accompanied by its own reward. Work may start in the kitchen, with cooking, clearing and cleaning. It may continue in the allotment or garden, with looking after the pets or animals, at the workbench in the garage, or in whatever place can be found to make experiment with hammer and nails, making models, mending the bike or tinkering with the car. With the family children can explore and learn the value of their own town, countryside, and wider geography. They can take the place in which they grow up as a good place so that they are well defended in their teenage years against the constant suggestion of the media that the good life can only be found elsewhere. Work develops persons. Within the household we can learn how to work and how best to employ ourselves. Work is not merely a means to an entirely unrelated goal: it can be satisfying in itself, and it can support the integrity of the person and of the family. Persons are the end of the economy. We said that children are the first product of any economy and that persons, brought to maturity in the industriousness that created that society, are the second product of that economy. The mutual desire of men and women in covenants of unlimited and life-long mutual-giving foster the virtues that sustain mutual service and so is motivation of every economy.

3. Household and Society

The economy depends on our confidence in other peoples promises. When we transact with someone we make contract that has the character of a promise. Each side hopes and believes that this promise will be kept. When the proportion of promises that are broken stays small it is worth our while making promises and trusting in other peoples. If the proportion of promises that are not kept became larger we would begin to wonder whether it was worthwhile to make such contracts, and the environment in which business is done would deteriorate. As individuals, we will not always be here to keep the promises we made but, we hope, our successors will keep those promises for us, just as we ourselves honour the contracts that our own predecessors made. Even when you have left its employment a firm continues to honour the promises you made on its behalf as its employee. So for the economy as a whole. This generation has to honour the promises made by the last, and everyone has to be convinced that the next generation will honour the promises and contracts that we make. Business starts to falter as soon as we begin to doubt this. As soon as it is believed that people are trying to leave this economy, we conclude that we cannot rely on the contract we have made with them, and we all have to mark down the value of our contracts. Our present economic prosperity depends on our absolute confidence in those who are not yet in the job market, and even in those who are not yet born. Our family teaches us why we should keep our promises.

24 25

Viviana Zelizer The Purchase of Intimacy p. 286 John D. Mueller Redeeming Economics


In pre-industrial societies, the intensity of obligation is related to kinship. The family can provide good protection at lower cost than capital markets, because of the low risk of default. Default is minimized by the value placed on family regard and the ability of parents to control bequests.26

In order that we have economic confidence now, we need to be confident that our successors will honour our contracts. To make the most basic point first we need successors. We need children who will enter the economy at about the time we are trying to make a smooth exit from it, and we need them in sufficient numbers that our departure from employment will not be difficult. We need children in order to have continued economic prosperity. Let us indulge this upside-down logic for a moment and see where it leads. The present state of the economy depends on the future state of the economy. All present economic figures tell us about the past, but signify future possibilities. We identify trends in order to draw conclusions from them about the future. Economic data tells us what has happened to indicate the range of possible paths, weighted for probability, in order suggest an answer to the implicit question of how best to prepare for the future. We need young workers to enter the economy and start paying their taxes and pension contributions in order that we can take something out of that economy in the form of pensions. But for the last half-century our economic rationality and corresponding social policy have been undermining the production of children. We are unwilling to do the work we consider menial and amongst the most menial is the work of bearing and bringing up children. One result is that the population of young people who are to be our future economic agents is falling. To increase the size of the present workforce corporations and governments have encouraged woman to enter the workplace and to get back to work.27 But if the longterm continuity of the economy requires the present production of children so that they can become workers in twenty years time, to consider the office a more productive place than the home is to take a self-defeatingly short perspective. What more serious work is there than producing the next generation of workers? We cannot reduce the domestic economy in an attempt to grow the outer formal economy, for this is simply to buoy up the economy of 2012 at the expense of the economy of 2032. But if we suspect that there is going to be a much smaller and more difficult economy in 2032 this impacts directly on 2012. All economic calculation is about estimating the future in order to decide where to put our economic effort now. Household as Economic Unit The family is an economic entity that combines many forms of output. Gary Becker believes that: Families in all societies, including modern market-orientated societies, have been responsible for a sizeable part of economic activity half or more for they have produced much of the consumption, education, health and other human capital of the members. 28 After looking at Asian peasant life, John Caldwell concluded that the main purpose of the family was to work hard on the farm, to maximise the amount of food that could be produced, and, if possible, to acquire more land.29

Avner Offer The Challenge of Affluence (Oxford University Press) p.84 Allan Carlson Love is not enough: towards the recovery of a family economics, in Fractured Generations: Crafting a Family Policy for Twenty-First Century America (Transaction Publications 2005) 28 Gary S. Becker A Treatise on the Family p. 303. 29 John C. Caldwell and Bruce Caldwell Demographic Transition Theory (Springer 2006) p. 4
26 27


There is nothing inevitable about economic functions departing from the household or about the out-sourcing of family functions, turning the services into paid-for market services. There is not even greater economic efficiency attached, if we consider more than the short-term. Robert Netting believes that the family still does this intense economic and relational work, and that we should consider it an efficient economic unit. It is not at all obvious that we have superseded the family house that was in earlier centuries, or still is in under-developed parts of the world our primary economic unit. Netting believes that the subsistence-model of the family may turn out to be more resilient than any other economic form to future economic disruption. He suggests that there is nothing inevitable about the removal of agricultural production from small households, and that industrial-scale agriculture may not be more efficient, but rather be a prescription for extensive, declining production, higher energy costs, more risk and volatility and environmental degradation.
What does the old-fashioned, indigenous solution, the smallholder alternative, have going for it? More specifically, why does the farm family appear so regularly as the social group that carries on intensive cultivation? Comparative data now suggest that there is indeed such a correlation which we may provisionally explain by (1) the effectiveness of the household in mobilising long-term labour of high quantity and quality. (2) the flexibility of the household in accommodating itself to available resources, and (3) the autonomy of the house as unit in decision-making, economic accumulation, and security, despite community and state control.30

If this is true, the family is not only relationally and socially efficient, but economically and environmentally efficient too. Yet the family as an economic unity has been disappearing as, over a couple of centuries at least, the market has been taking over from the domestic household. Its functions have dwindled to a fraction of what they were, so a married household is now seldom an explicitly economic unity. The home became the place where less and less happened, as it functions and the education and even finally the nurture of children was delegated and farmed out.31 Allan Carlson suggests that it was just a few corporations which, wanting to keep wages down, got women out home and into the work-place.32 He points to the effect of state education in weakening the bonds of obligation between children and parents so that the incentive to have children because they are your security, pension and future is gone.

When we evacuate marriage of its economic functions, husband and wife have nothing to bring each other, and it is no longer thought to matter whether these covenants succeed or fail. Unless a household holds on to some economic functions, it has no strong reasons for staying together. For a half century we have increasingly deferred marriage into our thirties. Disappearing rituals of courtship have made it harder for men and women to find prospective partners in the first place.
For most of America's middle- and upper-class youth the privileged college-educated and graduated there are no known explicit, or even tacit, social paths directed at marriage.33

Those who marry do so later, and consequently have fewer children. Those with fewer children discover that it is not easy to stick with this decision to give themselves to this
Robert M. Netting Smallholders, Households, freeholders: Why the Family Farm works well worldwide in Richard R. Wilk The Household Economy (Boulder Westview 1989) p.228. 31 Allan Carlson 32 Allan Carlson Love is not enough: towards the recovery of a family economics (Witherspoon lecture 33 Leon R. Kass, "The End of Courtship," in The Public Interest, 126:39-63, Winter, 1997


one man or woman, year after year. Children represent reasons to stay in a marriage and more children represent more reasons.34 The family gives you motives to leave the household every morning and to meet other persons in the marketplace in order to gather the material and social resources that your family needs, and it gives you reasons to come home again. The family gives you reasons to contribute even though your work may receive no ostensible reward. We are offered a more urgent love and more instant gratification than the other members of our family or neighbourhood can provide. The members of our family compete with the entertainment industries for our love.
Under affluence, novelty tends to produce a bias short-term rewards, towards individualism, hedonism, narcissism and disorientation. 35

The moment we believe that we are not loved or not satisfied by those who love us, we become consumers and the things that we are prepared to work for, the house and car, substitute for partners and children. Those who never start a family have no stronger reason to leave immaturity behind; as the proportion of marriages drops, a whole society becomes a set of de-motivated individuals. Wendell Berry suggests that love can never be merely private. It cannot be free, or without consequences that are inevitably public.36 Though we have considered sexual decisions to be matters only for the parties making those decisions, so attempting to privatise them, in reality, the entire community has to bear the burden of those decisions in one form or another. The costs of failed marriages, and of bearing children outside marriage are externalised, have to be borne by society as a whole. The arrangement of two parents in one household is a massively economic efficient way to bring up a child. When marriages break up there is an immediate economic effect that reaches beyond the family itself. When this arrangement is ended, we are left with a significantly less efficient way to bring up that child. More of the care of that child will be financially mediated, as additional care has to be paid for. If the market enters the household far enough to break up the family, the state steps in. The entertainment industries cannot sustain this gratification over the long term for love, which gives us the motivation that is economic, occurs between particular persons. For this reason we must return to the issue of marriage. Challenge to Marriage Previous generations understood marriage as a public affair. In getting married you did something that your contemporaries regarded as unequivocally good. In going to work to support their families they were giving our lives to something unique and worthwhile, which all society could recognise and appreciate. But in modern societies a more episodic account of marriage is given. Successive Acts of Parliament have changed our understanding of marriage from a public to a private affair. A new legal regime allows spouses to dismiss one another from their responsibilities. The no-fault divorce and prenuptial agreement reduce the initial degree of commitment to it which makes a marriage worth having. Their marriage is a function of the will of these two partners. He has to gratify her and she him, today and every day. But their desires are not formed or disciplined by the marriage. If one of them comes to believe that their individual desires are better sourced from outside the marriage, the marriage is over. Society as whole believes that has nothing invested in it, so is indifferent to it and offers it no incentive or support.

Janet E. Smith Offer Challenge of Affluence p. 74. 36 Wendell Berry Sex, the Economy, Freedom & Community
34 35


Married couples seem no longer confident enough in their own love to let their covenant hold them together, take them to work for each other or to receive with contentment whatever the other brings. When marriage is not regarded as permanent and indissoluble, the state provide the long-term partnership. No single parent is really alone. Having separated themselves from their partner single parents are dependent on welfare benefits and early years nursery provision and so effectively wed to the state. Now that law and public policy has made it easy, finances dissolve the familial and social bonds of which civil society is made. We have by default created a generation of parents who have been made redundant, outbid by the benefits that the state offers to those who opt out of marriage and into the status of single-parenthood. The love, presence and hands-on contribution of one parent is not required.

The market has overpowered the contemporary household so that it now buys in the good and services that it used to provide for itself. Still the market encircles the family, seeking ways to break what remains of its autonomy, stimulating the needs that each has to provide for in order to satisfy their partner. When the family cannot resist and husbands and wives demand what they cannot give each other, the marriage covenant is broken. When the family breaks up, the state moves in to meet what it sees as the needs of the individual members of that family. When society does not understand the concept of covenant, or more generally does not concede that some arrangements are good even though we have been given them rather than willed them for ourselves, that society will assume that humans are individuals rather than persons, solely single and only occasionally and voluntarily dual and plural beings. The government of any society without any conception of our covenanted nature will insist that we are primarily individuals, and that its duty is to rescue us from the inevitable fallout of the covenants we occasionally attempt for ourselves. Taxation policy assumes that living alone is the norm, and living with your spouse and children the exception: their policies will moreover make this normative. But the state that tries to take over the functions of the family takes on an impossible burden. It will not be able to prevent itself from constructing a welfare state that attempts that not only to compensate for the failure of family but which ensures that families will fail. If men and women are not covenanted persons but solely individuals, they are not simply opposites, but set in opposition to one another in a permanent state of conflict. Of these two rival powers, the stronger power of machismo and patriarchy has to be controlled by the creation of another power to police them the state. But such a response to patriarchal domination can only another form of domination, only nominally gentler because identifiable with a set of non-male characteristics; the pursuit of a less masculine and hierarchical culture remains a game of power. Then the state will by legislation mediate between men and women, attempting to hold them apart. Then every gain by one side is a loss for the other, and every gain must be wrested from the other side. Any society that believes that men and women are antagonists by nature, must find this troubling.
A feminist politics that does allow for the possibility of the transformation of men as well as women is deeply nihilistic; it does not truly believe in transformational possibilities nor the ideal of genuine mutuality.37

But then when there is an inherent conflict between the sexes, a role is created for the state to restrain it. This is the result of defining them as fundamental sole and individual, rather than covenantal beings.


Jean Bethke Elshtain Public Man, Private Woman p. 349


We have promoted singleness over life together in the covenant which we can enter freely, and so we have become dependents and employees of that other covenant that we have not entered freely, the state. When marriage is no longer regarded as social capital its connection to the economy is lost; the population has fewer reasons to go to work, and to come home bringing whatever they have gained with them.

4. Generosity and Public Service

In the economy we can act for the common good. We can show that independent initiative that makes for an economy in which all can participate and prosper. Love, giving and independent generosity are essential to the Christian conception of the economy. God has given us all things; we may therefore live to give. The primary act of giving yourself is the foundation of all subsequent economic activity. We give ourselves to one another first as members of one family. The household is the first economy, in which we give ourselves to one another unreservedly. This little economy of mutual giving is the source of all wider giving and service that makes up civil society. The household is the source of all the enterprises that make up the market, from which we may receive those material goods by which we may live well. The dimensions of this giving that constitutes a national culture can also never be immediately or entirely explicit. The Church suggests that since the market cannot provide the entirety of our needs, it should not attempt to provide what households may provide for themselves and it should not become the dominant form of the public square. We are called to provide for one another and establish the forms of service by which we can best do this. We do so from our own property, which is to say through those tools and resources required in order to be able to provide this service. I hold property in order that I have something to bring to the common good: property serves the common use of resources. 38 As Oliver O'Donovan reminds us, All goods are intended for the common good; the common good is not cared for adequately without particular agents to assume their own particular responsibilities.39 These goods are private precisely in order that we should be able to make good public uses of them. But the modern economy intends to make each act and service entirely explicit. In the modern economy we refer to work that is paid as employment; our work is instantly acknowledged and rewarded. But not all labour can receive wages; not all human effort can be denominated by money or drawn into the formal and monetised economy. Not everything can be paid, for not everything is recognisable for what it is now. Christians suggest that work may be valuable regardless of whether it receives explicit, and thus financial, reward. There is only freedom of action, initiative and risk-taking and room for interpretation because some part of our effort does not receive recognition and reward. A generosity that is oblivious of reward or its absence is essential to the economy. The value of money can only be established by something that is not money. We recognise some work as worthwhile even though it goes unpaid. Love motivates all Christian work and public action, whether that take the ostensible form of charity, or of business or public and political service, or evades public description entirely, as in the case of prayer and worship. Charity works and serves and is accompanied by rewards
Bernard Dempsey Functional Economy p. 183. 1. The institution of private property must so function as to promote the common utilisation of resources. 2 Resources privately owned must serve the community through the common use made possible by exchange. The error of modern times is not the advocacy of communism. Common use is an ancient and correct idea. The modern idea is the belief that common use is to be attained only through state action. 39 Oliver O'Donovan Ways Of Judgment p. 278.


that cannot be explicitly denominated. Each of us is free to identify for ourselves whomever we wish as recipients of our service and charity: we can give them what we think they need as we think best. Love gives labour its value, and generosity sustains an economy and lends value to money, the explicit currency of that economy. Labour is a fundamental economic concept when it is defined by generosity, its freedom and costs. The concept of love, which includes generosity, respect, and self-giving in service, and the freedom of any human being to act publicly and generously, to take initiatives and form covenants, is essential to any economics that is able to consider the transgenerational continuity of a society and its economy. Two apparently opposite movements have reduced the realm for the work explicitly motivated by love. The monetised economy has inveigled its way into the household and family; the realm of calculation and instant return squeezes the little economy of love and self-gift.
It seems true that capitalism is a cultural as well as an economic system and that the symbols and rituals of this cultural system compete with, however much they seem to serve, the symbols and rituals of community and family.

The other movement is that the inner realm of the household has become the language of the public sphere. But it is not the family or household that the defines the internal realm now, but the individual. But the preferences of the individual give us no basis on which to we can discuss which preferences are better, with the result that it has become difficult to discuss what is fundamentally good about our common labour and service. We are trying to talk decisions about which actions to take but have denied ourselves all the language in which we could do so. Modern economics assumes that we go to work because we have to. The brutal givenness of the world necessitates work. But Christians suggest that we also go to work because we want to. We work in freedom as well as by necessity and, Christians believe, necessity is not more fundamental than freedom. We may truthfully describe the human economy in terms of freedom, of self-giving and love, and that this description is as valid as the description offered by modern economics that refers all our decisions to our compulsions.

Charity Christian life and work are motivated by love to generosity and to charity. Charity serves, labours and works. This work comes with its own reward, though other more explicit reward has to wait. For Christian charity, all recognition is deferred or it is not charity. Charity is a response to poverty. We can contrast two definitions of poverty. Poverty means first a lack of material resources and all sorts of other resources and the opportunities that come with material resources them. Christians also understand poverty in this way as material poverty, and add that material poverty prevents you from acting for yourself and for others. All public social and welfare work is premised on this understanding, in which some are poor and others are well-off, so poverty can be solved by a transfer of material resources, which may be accomplished by public policy and institutions. But the Christians also operate another understanding of poverty, which we could call poverty of spirit or moral poverty: this describes the life lived without thanksgiving, that comes from the awareness that we are the recipients of the generosity of others, and comes also with the experience of having been forgiven that allows us to receive this generosity.
Arlie Russell Hochschild The Commercialization of Intimate Life (Berkeley: University of California 2003) p.144.


Through expressions of thankfulness Christians acknowledge the charity of God. They both give thanks for what they have received from God as they pass those gifts on to others. We thank those to whom we may give, for through passing on to them what we have received, we are able to acknowledge that we are ourselves beggars, in receipt of the charity of God. When this acknowledgement is made, the poor are not trapped into any form of dependency by the receipt of such charity. What they receive they owe not to the most immediate giver. It is even a Christian gift to open yourself and become vulnerable enough to receive gifts, and so make it possible for others to make their first foray into giving. This twofold understanding of poverty leads Christians to understand that all humans are poor, some in a material and therefore more obvious sense, others in a more subtle but more profound sense. It says that the materially rich may be poor, and even that they may be more poor. It says that those who are poor may also be rich in spirit, and indeed that being rich in spirit is consequent on a particular reception of material poverty, that material poverty may be the prelude or opportunity for becoming rich in spirit. These functions cannot be entirely delegated. When we believe that the need of other people is met by branches of local or central government, there is no opportunity for us to exercise this love and generosity, and we are the losers thereby. Then some part of our relationship with God has been devolved and lost. It is the joy of the gospel that the rich are able to meet and recognise the poor and share with the poor. We are even able to ask for their forgiveness for the provision we have not made or even because we fear that they have been impoverished by our policies. We can ask whether it is us who have made them poor, thereby becoming materially rich. This meeting and reconciliation is the possibility of our conversion. Charity, and thus love, is fundamental. Love is without limit, but it may be denominated, so that it is merely unlimited but also specific and limited. It is the infinite generosity of God that we live in a bounded world which is therefore a finite economy, in which we have to decide between alternative uses of the same resource, and thus have to decide whom to give this or that resource to. Distribution is perhaps the first economic act, on which all other more explicitly economic decisions rest. We decide who can make best use of this finite resource that we have to give, and this is our own act of responsibility. This means that we have responsibility, and responsibility makes us responsible, people who are judges, and who judge for one another for a good that we share with them. Judgment and Generosity Generosity is the foundation of the Christian conception of the economy and Christian account of economics. God has given us all things. We live to give, that is, to pass on what we ourselves have received. We regard it as good that each of us is able to identify for themselves the person to whom they wish to give their gift, and to do so. We should not assume that if we give to this person, it is right or appropriate to give to everyone who is in that position. Love does not identify sorts or classes of persons. So when we give this money to this single parent we do not assume that we should give to every single parent. We do not look straight from the individual case to the class of persons. What we give many not be money. It take the form of time spent talking and listening, eating together, taking their children out in order give that parent the opportunity to do something else. Through these encounters their morale may be raised higher than it could have been through a financial gift. Loneliness is not solved by money. We give them our time and there is a resulting increase in human dignity, and so they are confident to start doing the same thing themselves. We give them something of


ourselves: person to person relationship is the basic form of giving, the lack of which is the true poverty, and which flows of money can only conceal from us. The giver is rewarded by this encounter as will as the recipient, and through this act of giving the rich Christian learned that they are a recipient of the grace of God. Christians do not want opportunities to give and to receive from one another to be reduced. When they see a need their first response is not to ask why the state has not stepped in, for as soon as it does there is no need for individual givers and receivers, and no opportunity for the personal growth that results. The Christian faith regards caring as intrinsically rewarding, for through caring that receives no recognition is an isolating and demoralising, through caring we may grow in character and become mature persons. Perhaps Christians have to withdraw from involvement in state welfarism and support first their own from their own resources, and then whoever else comes to them. We can ask whether giving this particular person what they ask will help not only this person but also all the others who see this act. We can balance mercy to this person with mercy to all others, that is, with justice. It may not be a mercy to all others to give this individual what they want, if it creates additional expectations. The aim of charity is to enable its recipient to cease to be a burden, to be productive, so that they can be generous to other and carry the burdens of yet others. Mercy to the individual must be balanced by justice for the many. We cannot act in any individual case without creating a precedent and moral jeopardy. Everyone sees what we do and wants us to act in the same way in their case. We can always ask whether each act will make for a small state or a big state. We may always hope to reduce the state by reducing the demands on it, so that the total tax burden on the population can be reduced. Then each of us is more able to support individual cases known to us. It is wrong to burden all by allowing individuals to place unlimited demands on them. This is moral jeopardy. It weakens the resolve of every member to society to support themselves in the first place if they can, so that they may then be able to support others if they can. To act in their place is to take away the consequences of anything they do and so to take away their dignity. A new section of the nation may be pushed into poverty by the taxes that they are asked to pay in order that the state may support some group that it regards as more needy, of which is simply more vocal. Centralised support that increases the tax burden may push into poverty those who were otherwise independent, and by arbitrary use of power so to relieve one burden by creating another.
Thus the social market, as practiced in Europe, requires the state to step in and provide for those without work and to provide for the mothers of children who have no resident father. These are inevitable results of transferring the responsibility for charity from the community to the state, which is itself an inevitable result of the attempt to make a humane economy, rather than a humane society. 41

In the Christian account we are never merely bodies, or sets of needs, but are always persons with dignity. The Christian account of poverty does not separate the material from the spiritual, or the bodily from the moral. Indeed it regards this sort of separation as a form of impoverishment and suggests that we are cheating them if we encourage people to believe that they are primarily a bundle of material and bodily needs. It suggests that modern economics is moral and spiritual poverty, imposed on us as consequence of its reductive understanding of man. The Christian Church is witness to the charity of God, and all Christian charitable institutions are expressions of this grace received. But in United Kingdom the state now insists on providing its own definition which Church bodies have to demonstrate that they


Roger Scruton The Journey Home, Intercollegiate Review Spring 2009


meet. (2006).42 Equality legislation has removed their power of judgment about whom to employ so religious foundations may not refuse employment on the grounds that this person does not have enough in common with that institutions aims. How should Christians respond to this new state specification of charity? Rather than charities, institutions that meet the fiscal criteria for charities, should Christians instead set up business, partnerships or worker-cooperative enterprises? Or should they simply run their own extended households will both commercial and charitable characteristics but without the formal status of either? This would return to them the freedom to decide who to employ or rather invite them to be members of our household. Christians may ask themselves whether they should be running those organisations that are explicitly recognised for taxation purposes as charities. They may consider whether they should keep all their own generous and charitable initiatives in-house, close to the worship and service of the church. Should churches be applying for state funding for such social work?43 Surely all effective social work takes place in small groups with a continuity of membership, or even one-to-one. It is the lasting personal relationships, chiefly with fathers, that are missing, the absence of which causes so much misery, sometimes expressed as violence. Only lasting one-to-one relationships can hope to repair this damage, and the witness of the whole Church as worshipping body that can point to their redemption. The formal economy of the market is not the whole measure of human interaction. All human activity is based in the human self-giving which is itself based in the self-giving of God. Not everything can be made explicit. Not everything can be denominated in money, and so be paid. We cannot have our reward made explicit entirely in this life. If we were instantly recognised and rewarded for everything we do, there would be no freedom of action, no risk, no room for interpretation. Public discussion of the economy is premised on the assumption that the formal economy, in which we are employees and receive salaries is the true economy, while the inner economy of household and family is a subordinate or even a merely metaphorical economy. But it is precisely the other way around. The household is the base, and the economy is the super-structure. The unlimited self-giving that occurs in the household is what enables the more limited and defined self-giving that occurs in the marketplace. The value of work that comes from this generosity cannot be made entirely explicit, for all explicit measurements of value, such as money are reflections of it, for specific, limited purposes. Value is loaned to money from generosity.44 Generosity is itself the readiness of human beings to start new events of life together. The household and the market are two economies that serve one another or sides of the one human economy. The formal economy, and money, can only denominate what is of penultimate value. What is of ultimate value is persons, the one product without which the economy will not continue. Our goods and services are of value as they serve the long-term production and formation of human persons and so the transmission of the economy from one generation to another.

See the definition of Public Benefit given by the Charities Commission, Charities Act 2006. Luke Bretherton Christianity and Contemporary Politics: The Conditions and Possibilities of Faithful Witness (Wiley-Blackwell 2010). 44 Craig Muldrew The Economy of Obligation: The Culture of Credit and Social relation in Early Modern England (Palgrave Macmillan 1998) p. 328 The economic epistemology of the period I have described saw individuals first and foremost as members of households, which were all dependent on one another in social field of material security, in which household wealth was seen primarily as a social relationship and not as a thing.
42 43


5. Motivation and Demography

Covenant between Generations The British economy is a reflection of British society. We could even say that the economy is what our society is, and it is an expression of what other countries and other economies believe our society is. We could claim to have invented Capitalism in the City of London. The practices of trade and commerce, and the free flow of information and goods and services came into existence here. Foreigners brought their savings here not only because they were confident that it would grow, but that they would be able to get those savings out again. They believe that there is such a solid tradition of legal transparency and public accountability here, as we shall seen Chapter Five, that their money could never simply disappear. They believe that our society has been so formed by the virtues of honesty and self-control, that they are confident of our public ability to hold one another to account. We have the law and legal system that produces good and impartial unbiased decisions, as a result of which there are not different prices for different people. This belief about the economy of Britain is the result of our slow formation that has resulted from our long exposure to the Christian tradition that has made us honesty, even when it is not to our short-term advantage, and honesty is what market transparency and market efficiency are. Without this tradition of virtues that built a trusted market here, London would still be just a village on the muddy bank of a river. Recent decades have seen massive worldwide economic growth which since the midnineties seemed to have buoyed up the whole United Kingdom. But the economic crisis that returned in 2008 is serious enough to make us ask how much of this growth was real? Has this increase in prosperity been the result of any growth in our industriousness or productivity? Along with this ostensible increase in prosperity we have also suffered a massive loss in the first and fundamental economy of the family, the economy that reproduces persons. This primary economy is secured by marriage, the institution that gives us the confidence to reproduce children and to support them through the long years in which they become public members of society and confident economic agents. Could it be that in the last fifty years we have experienced a significant loss of social capital because we have diminished the institution that generates it? In order to make sense of our economic situation we have to examine the confidence and social capital of our nation and understand these as our long-term economic assets and the source of our more immediate economic assets. Old people lend to young people. We have lots of old people who want to lend to young people, but we do not have lots of young people. We have a growing shortfall of young people, and this is the reason why we are experiencing a banking crisis and why, if the crisis goes away this time, it will assuredly come back again. Now since this conclusion may seem completely implausible at first hearing, I will take a little time to set it out. Let us start by looking at the housing market. As house prices rose up we felt prosperous and confident to borrow, so we have been on a long shopping binge, that has seemed to grow our economy. We did not ask whether house prices could continue to rise. They could not do so, for there are more people in their seventies trying to sell houses than there are people in their thirties trying to buy them. If there are fewer young people to sell them to than older people trying to sell them house values will fall. The security against which we have all felt confident to borrow is gone and our shopping spree is over. House prices have been fuelling the whole economy, but houses only represent an asset of rising value when there are young people to buy them. When todays thirty year olds are seventy, there will be still fewer people to sell those houses to, for todays thirty-year olds are not having enough children to replace todays seventy year olds. Our economic crisis is an expression of a much more long-term crisis of demography.


It is clear that rich, well-educated urbanised countries do not necessarily exhibit replacement level fertility, and many may never do so again. Consumerism, a focus on job satisfaction, increasing need for dual incomes, a perception among many young people that raising children is simply too expensive and a tendency for partnering rather than parenting to provide the family core are likely to reduce fertility.45

No other issue can be seen for what it is until we have grasped this one. The issue in the UK is discussed in terms of a coming pensions crisis. But the imbalance between old and young people will affect the economy as a whole. Other societies may be confident of our society and our economy to the extent that we acknowledge and understand the qualities that made this society good and this economy powerful and do so by not disavowing those qualities or those generations. We will deal with this in more detail in Chapter 4. Marriage and Economic Covenants We have said that the covenant of God with man, made embodied by the Church, enables and secures other covenants. The first of these is the freely-entered covenant of a man and woman that secures a new generation. As a result of this foundational covenant there is society and the many other covenants of which society is made up. Each national society is itself a covenant, and all nations are in some form of covenant with all others. The British economy is constituted by the covenant of the British with one another, and by the covenant of the British with all other nations and so of the covenant of our economy with all other economies. It is for all other economies to decide, whether our view of ourselves is right, or whether the valuations of the future productivity of the British economy, reflected in UK Treasury Bonds which represent the ability of future UK governments to raise taxes in this economy, are too high. Our overseas investors may suspect that our economy is not young and vigorous but old and sclerotic, that we have not been investing the funds they have lent us into new enterprises, but simply stoking our housing market and raising our pension and welfare entitlements. If we do not believe in ourselves and in all the virtues and practices which have built our common (economic) life, why, our overseas investors may ask, should they? Those who once thought Britain and London a reliable and virtuous place may simply go elsewhere, and our vaulted financial creativity, without financial self-control, will have ended the whole game. If overseas investors think that we have over-valued the forms of trust that constitute the financial and other services we offer, and so overvalued ourselves, they will sell our stock and cease to trade in our markets. They are our judges. Our economic well-being is ultimately a matter of our confidence in ourselves and in other peoples confidence in us. If this society of ours is willing to be refreshed by a high view of our calling and responsibility, and so to re-connect family, labour and dignity it may become a more confident society, and its members will be confident to initiate their own covenants with one another. Then they will have reason to serve and to work, and so to invest in our society and its economy. When we do this, other people will do so too, and then our economy and our society have a future. Our population is not growing. The population of old people is growing, but seen over the long term our population is shrinking. An ageing population is experiencing a temporary population rise, and masking a dramatic future reduction. If on average women have two children, they replace themselves and their childrens father and the population stays the same. But in Britain we are producing fewer than two.46 Since the 1960s the population of Britain has applied the emergency brake, so we are facing a 4-2-1 problem: one child will have to support two parents and four grandparents. The loss of the morale that empowers to give ourselves to one another, and to work and serve one another in
45 46

John C. Caldwell & Bruce Caldwell Demographic Transition Theory (Springer 2006) p. 373 According to the World Bank, 1.9 children per woman in 2008.


covenants, might have something to do with this. The society that will not work and serve will not reproduce or persist. We have lurched into crisis because both the free market has over-valued our generation, and itself, and the state has over-estimated this present generation, and over-extended itself. We have been comparing two accounts of man, one offered by Christian theology, the other represented by Modernity. One tells us that man can come into his true identity as, in fellowship with God, he comes into fellowship with all men and creation, and that he may do this in Christ. He needs his fellow man to agree who he is and so to affirm his identify. But Modernity represents us with that other man and alternative anthropology in which man is not only without God but also without his fellow man. This economic Man is not able to concede that what we give must ultimately be ourselves that we committed to another, and that how much in terms of goods and services we give, finally they amount only to our give of ourselves. We may give ourselves willingly and freely, and so we may have an economy that, in the judgment of others also, has a future.

6. Market and State against the Family

We have said that the household is the first economy, and the source of all the motivation and the public service that makes up the second economy of the market. The Church says that there are limits to the responsibilities we can devolve without losing our integrity as independent agents. Governments cannot provide for us what we are called to provide for one another, for what we have to provide is simply relationship or love. This primary economic act of giving yourself is the foundation of all subsequent economic activity. Marriage is already an act of public responsibility, first for the children that emerge from it, but also because the husband and wife are very much less likely to call upon the wider community, through claiming state benefits, to support them. Patricia Morgan provides a very succinct summary:
As individuals are disconnected from family, friends, neighbours, churches, clubs, associations and community networks, social capital is destroyed, trust evaporates, despoliation and predation spread. These developments are not simply fortuitous or accidental, but are being created by government policies that are altering our demographics: policies that have progressively eradicated the links that bound families together and communities together, out of indifference or even hostility to human collaboration, by ignorance or design, these are subverting the formation of enduring bonds and furthering social dislocation.47

All human life and civilisation is about learning to defer, that is, to balance the taking of pleasure with the deferral of pleasure, between having some now and knowing that there is more to come, so that pleasure is not merely fleeting and physical but also social and lasting. Every society has to give its respect to families. Only families produce new generations. The state cannot do so. Society has to give its public acknowledgement, even express gratitude to, the parents who bring up children. Any society that intends to continue it has to allow those who want to be parents to get married and so enter a covenant unlike any other. Marriage is the time-proven means by which children appear, are brought up and society continues. It must stand guarantor for this covenant, put its protection around the privacy and dignity of this relationship. Every member of society needs the birth of child who in twenty years time will be in the job market and paying the taxes and insurance contributions which will be paying your pension. The society that belittles and

Patricia Morgan The War between the State and the Family: How Government divides and impoverishes p. 15. Douglas Farrow Nation of Bastards.


the state that dissolves this covenant is demolishing the social capital that alone can give us economic prosperity. Desire and Consumption Businesses may contribute first to their own continuation, there a concern with profit, and then and thus to wider and more of the common good. Businesses may promote the common good, but equally they may obstruct that good. Business gets in the way of these two persons, providing each of them with a myriad reasons for delaying meeting and staying with the others. It sends each of a stream of diversions and distractions that hold them up from getting into bed, turning their backs briefly to the world to forge together their household. Men and women have been persuade to put all their effort into the clamber up the mortgage ladder. We believed that that house would function as our savings. We ignored the fact that everyone was doing the same and that one day everyone would want to sell that house, and that, if everyone wanted to sell, at the same time and for the same reason. If this is so, house prices would come down and the price would get for our house could not possibly provide us with the lump sum that would secure our retirement. 48 But, having brought the house, we furnish it with everything that the advertisers tell us to, as though it were some helpless dependent of ours, and did this because everyone else was doing so and we didn't want to be left behind. There was more to buy. Since we had to compete with everyone else for these goods, both of us had to go out to work in order to afford them.
As incomes rose and consumption increased, more income flowed into positional income. With rising inequality and stagnant productivity, for most people rising incomes could only be earned by the family as a whole (and women in particular) working longer for wages. The price of positional goods responded. 49

Though we bought the house in which to put the children, our little temples are empty. The house needs two wage-earners to service it, making it scarcely possible for us to have time off for children. If we are going to have a child, one of us has to compromise on career.
With more to sacrifice and less security, women had fewer children and had them later. A minority sought escape by downshifting. Individually women appeared (on average) to be satisfied the with bargain, but for society as a whole there are fewer children to replace aging generations, and a large crisis of dependency in the making.

House and car have become replacement children, the only things that we are prepared to work for. We have taken this vast consumerist display much too earnestly, in particular fixated by electronic products that demand that they be updated at everdecreasing intervals. The flow of novelty and innovation undermines existing conventions, habits, and institutions of commitment. It reinforces a bias for the shortterm.51 As result we have been too preoccupied to have children, and when we do, too preoccupied to save our children from this same form of captivity. If they cannot resist the torrent of desires that pour in from the entertainment industries, family members cease to sacrifice individual desires for family cohesion and are unable to work for one another or welcome one anothers service. As the family breaks up, the state is there to
David Offer 50 Offer 51 Offer
48 49

Willets The Pinch The Challenge of Affluence p. 361 The Challenge of Affluence p. 362 The Challenge of Affluence p. 358


provide for each of the individual pieces that have been created. We no longer need of one another because the state follows the private sector in to provide each need so that it never becomes articulated as the need of one person for another. The result is that each individual is married to the state. The state has become the universal mediator, driven to smooth out all inequalities and with them all the complementarities, by which we need one another. The state cannot love. But it may exhaust our national economic resources in compensating for the love that we no longer give. Social capital is money in the bank, but as soon as it is cashed into explicit money to compensate for love not given or received, it is gone. The entertainment industries open a wedge in the family; corporations create the needs and the monetary economy takes over the functions of the family. But over many decades commerce has outbid the mutual service of husbands and wives, and so monetised the provision that belonged to family life. Then whenever husbands or wives can no longer pay the market price for such services, and the unity of the family is dissolved by those desires, the state moves in to meet those needs. We have outsourced so many of the functions of the family, but the economy that tries to take over these functions takes on an impossible burden. State The state is that set of public servants who intend to serve society by safeguarding whatever is necessary to its future. The state exists to protect the economy of the household, and protect and honour the original event of self-giving that brings the household into being. Marriage keeps people out of dependency more than any other institution. Nothing can substitute for it, but everything the state does is a compensation for it. Where there is not a prejudgment, literally a prejudice, in favour of marriage, the working of the mechanism goes into reverse. Far from safeguarding the family and the social capital it generates, the effect of the states interventions is to promote social disengagement over the covenant of two persons. Any government wants to encourage all those initiatives that make up civil society, but it does not know how to stop itself from hearing everything as a plea for its closer involvement.
The ministerial civil service state had dislodged civic plurality whose foundations lay in Christian notions of individual responsibility. 52

If we are not dependent on one another through a myriad particular covenants of family and its extensions in the community and voluntary and private sectors, we are all dependents directly of the central power. When the state acts to provide for our need, we no longer need a myriad of civil institutions, and so no longer need one another. Our public servants and their ideologists come to assume that there are certain things that we cannot do for ourselves but which they have to do for us. The state then offers to lighten our burdens, by saving us from responsibility and risk, offering a form of salvation, which since it is from salvation from relationship can only be a false salvation. The nation is giving way to a mere aggregation of individual victims who attempt to outbid one another with claims of their neediness.53 All this represents a very low view of man. The language of sin has not disappeared with the secularisation, but rather in the language of guilt and blame it has begun to get out of control. It is creating the sense that we are all so fallen that no relationship of ours can last, or even that every relationship is so intrinsically exploitative that none should be allowed to last. The public budget is employed to leach away at marriage, the one institution that is more basic than the state, in order to promote singleness over all the
52 53

Frank Prochaska Christianity and Social Service in Modern Britain: The Disinherited Spirit p. 150. David Green We Are (Nearly) All Victims Now.


covenants of which society and the economy is made up. The state has paradoxically begun to work towards the dissolution of civil society. Neither the economy nor the state is able to produce children, or motivate people to have children and bring them up. David Coleman suggests that child allowances had no positive fertility effect; provision of free day care to working mothers was proving counter-productive, since it required the employment of still more women, raising the total cost of children.54 This covenanted entity, the family, alone contains reasons why a man and woman should subordinate themselves to this new generation, and so it alone produces new generations and safeguards that societys future. If business and state do not deliberately set out to support the family, conscious of that the family is a fundamental good, they begin to militate against the family and so against the production of children. We said that utilitarian economics is in denial about history: it proves to be in denial about the source of the future as a result. Considered alone, apart from their responsibility to this covenanted entity, economy and state can only throttle the future and so bring themselves into crisis. As the law that fortified marriage has been removed, so have the social practices secured its value. Legislators and judiciary have brought about a cultural innovation.
The law is a teacher. It will teach either that marriage is a reality in which people can choose to participate, but whose contours people cannot make and remake at will, or it will teach that marriage is a mere convention, which is malleable in such a way that individuals, couples, or, indeed, groups can choose to make of it whatever suits their desires, goals, and so on. The result, given the biases of human sexual psychology, will be the development of practices and ideologies that truly tend to undermine the sound understanding and practice of marriage, together with the development of pathologies that tend to reinforce the very practices and ideologies that cause them. 55

In compensating for marriages failures, the state has determined that there is no significant difference between the married and non-married, that is, between relationships that intend permanence and those that do not. It is attempting to obliterate the differentiations and asymmetries between the covenants that ensure our future and those that do not. To suggest that relationships which do not produce children are equivalent to relationships that do has costly economic consequences. When the state does not give fiscal protection to marriage, the confidence that enables us to start families disappears. Though it may not intend to, the state has been dissolving the family. Other more explicitly economic initiatives whither too. If the state taxes small businesses as though they were big business, confidence to start businesses and employ people also disappears. The need to comply with government demands means that larger (and older) businesses are able to crowd out newer, smaller ones, with the result that the economy is dominated by large corporations, and capital has less and less relationship to social capital and the practices of civil society. Demography One fundamental factor for any economy is demography. For decades it has been a given that populations are growing. It is now clear that this is not the case for us. In Britain, and even more in Europe, population growth has gone into reverse. In Eastern Europe and Russia, population is already falling back. Depopulation is a threat to economic growth. No declining population ever had a growing economy.

David Coleman and Robert Rowthorn The Economic Effects of Immigration into the United Kingdom, Population and Development Review December 2004, Vol. 30, No. 4. 55 Robert George What Marriage and what it isn't First Things July 2009


Britain has been responded by importing young people from other economies.56 They give up the technical professions for which they were educated in order to work in packing factories or care homes. This makes it likely that our own young people will continue to disdain low-wage work, and never discover any dignity in work. We are in effect despoiling other countries of their young and educated, which are the very people they need to hold on to. Such immigration looks like a form of asset-stripping; perhaps ours is a pillage economy after all.57 As our population contracts we are compensating by importing people from other economies. A population may decline smoothly and gently, but markets will magnify these falls so an economy of a declining population will suffer a series of crashes. These present financial tremors should warn us that we may not glide gracefully down from a higher to a lower population, or from higher to lower growth. We may experience these two forms of descent as a series of shocks. We have asked whether our separation from our families, first from our own parents and their generation, and then from our own children and their generation is without economic effects? What will be the effects of making ourselves into a one-generation phenomenon? In our next chapter we will spend more time establishing the connection between these two issues of demography and finance.

7. Social Capital
Culture as source of future The family is the place where we learn the virtues that make us confident economic agents and out-going members of our society. We are motivated by our particular loves, that is, by the love of these very particular persons. It is our family that makes each of us more than a one-generation phenomenon. It is our parents, and our children and grand-children, who draw our attention beyond ourselves so we are directed to more than the single forty-year event of our own career, more even more than the eighty-year event of our own life-span. Though we are engaged in the economy for the notional forty years of our career, before and during that career, we are committed to the domestic household. When no employer will have us, the family is still there, or may still be there if we allow it to be. We cannot therefore assimilate and absorb the family economy into the formal economy. The distinction between these two economies of family and market is itself sourced in the difference between men and women. Since men and women are different and need each other, the household and market are distinct and need each other. Humanity is not homogenous: if there were one unisex human being, it would have no need or desire or interest in any other human being. Thus there would be no need to out into public square in order to discover that other human being. This fundamental, biologically-enabled, difference gives rise to the mutuality and complementarity of these two spheres. The difference between these two economies is dependent (1) on the given (natural, and good) distinction between men and women, and on the gracious discipling which can take us towards that communion in which human differences and uniquenesses are affirmed, redeemed, and established.

David Coleman Rhacel Parrenas The Force of Domesticity: Filipina Migrants and Globalization (NYU 2008) discusses patriarchary and neoliberalism in the globalisation of care. p. 16 The increasing migration flow of care workers in globalisation and in the international transfer of reproductive labor from richer to poorer women in the global economy speaks not only of disparate interest for women but also of direct relationships of inequality between them.
56 57


Every attempt to diminish the duality of human being as man and woman only serves to reproduce that duality in the form of the Individual and the Collective, the individual and the State. Then the Individual becomes the god to whom all society has to serve and the State becomes the god which each of us has to go to work for. Here Christians may make their response. We may say that because there is a covenant between God and man, there is a covenant between man and man, and a covenant between this generation and future generations. With may covenant with those who do not yet existence, and who will only come into existence if we make such a covenant with them. We may bring into being what does not yet exist, and can do by deferring to it and subordinating ourselves to it. Consequently marriage and birth rates tend to be higher for Christians than for the more secularised population.58 We may take this initiative, enter this covenant, marry and start a family and start whatsoever enterprises of commerce or public generosity we will. Such initiative and enterprise, since they require self-restraint, saving, risk-taking and self-sacrifice, must be recognised if a society is to produce a new generation. The initiatives that create new covenants do not require any permission from society as a whole, but simply its acknowledgement: law and government exist in order to safeguard this sphere of individual, household and corporate initiative, not prevent it. If we do not understand persons as covenantal, we lose the distinction and complementarity of the household and the public economy. Then there is no reason why the household and public economy should come together in that lasting way that is secured by marriage and by a particular public acknowledgement of it. If society does not recognise the household as the source of the next generation, there is no incentive to start one. If society does not recognise and commend new households and all other forms of public initiative and risk-taking, there will be fewer of them. If no one can take a loss, no one will take a risk, and the result is the stagnation of our inflated social economy. Only our own freely-entered covenants can give us the motivation to take initiatives. Since we are not free in relationship to it, the state cannot motivate us to anything. Without the covenanted understanding of the human being, our society sees men and other initiative-talkers as those who have to be controlled and is investing its energy in doing so. It has created a hierarchy of controllers and mediators, and a sclerotic society in which no one may act without them. The Church has faced this situation many times before. Christians in this country in the sixteenth century had to throw off an inflated clerical caste that had made itself a universal mediator. Christians wrenched back into the centre the truth that every human being is directly before God and before man, and that no ranks of mediators may take that dignity away. This insistence on the dignity of the individual Christian reformed the Church and created the national Church of England. Its understanding of the individual has been the bulwark against the absolutism and totalitarianism that periodically captures other cultures. When we disdain Christian faith that bulwark disappears. God calls us into freedom and enables us to judge for ourselves,

Ron Lesthaeghe & Chris Wilson: Modes of production, secularization and the pace of the fertility decline in Western Europe, 1870-1930, in S. Watkins & A.J. Coale, The Decline of Fertility in Europe, Princeton University Press, Princeton 1986 p. 272 Any discussion of the moral and intellectual climate within which individuals reached their decisions in the nineteenth and early twentieth centuries inevitably revolves around the Christian moral and ethical system and its transformation. We propose that this moral system can be viewed as an excellent intellectual adaptation to, and buttress of, the traditional family mode of production in Western Europe. The intergenerational solidarity between members of the family, so necessary for the smooth operation of such familial economic units of production, was a central concern of Christian teaching. The paternal control of this unit was thoroughly legitimated by the prevailing moral code, for which the Christian churches acted as guardians.


enter relationships with one another freely and take the initiatives that bring benefit our society as a whole. The society that does not acknowledge this elementary principle of self-government does not allow its government to remain within its own proper limits. Then we are likely to push government beyond its mandate. If we cannot say no to ourselves we do not know how to accept a no from any other authority. Each interest group claims to be needy and neglected: it claims its subsidy and bailout, and no one appears on behalf of the state to be anyone strong enough to resist. As often as we demand government action we extend and over-extend the powers of government, reducing its real authority and legitimacy, and pushing government and society as a whole a little further towards paralysis and insolvency. Christians do not encourage anyone to turn to the state, particularly when excessive demands become pillage of the state. Only the Christian finally has the resources to prevent himself from making himself dependent on the state and assimilated by it, for the sake of all others. Christian discipleship has always made its contribution in resisting this movement. The Church is the community in which all are bound, and so the community which generates trust. The Church is the place of self-giving without calculation of return and so it is community which indulges in risk-taking. When we disregard Christian discipleship, and the community of the Church that forms us in that discipleship, we have a state that has no way of reigning itself in. It cannot help stepping in to take responsibility, and so rendering all of us less able to help one another more locally. The society that cannot restrain its demands has created the over-extended state. We have colluded in the general sense that people are victims and that we are individually powerless to change anything. We can only change anything by being changed, transformed, by this discipleship. Christian discipleship converts us from passive consumers, to active servants, who work and pray. We may exercise our own judgment. We may decide, for ourselves, and for the benefit of others. We do not need the government to step in. We do not need funding, or to seek permission or to establish a consensus. We take the precautions and savings, and when one of us is hit by trouble everyone provides support. We require the language of saving, self-restraint and of sacrifice in order to persuade not to maximise our immediate consumption. We are in a single covenant because we are members of a single nation, and our national economy is in covenant with all others, since we subsist from our relationship with these other nations and other economies. They decide what value they give to their relationship with us, so it is for them to tell us what our national economic product is worth. They may tell us that we are worth much less than we have been claiming. If we receive their judgment as constructive correction, and take steps to renew ourselves, perhaps they will continue to do business with us here in the UK at this more realistic valuation. In modern, neoclassical economics, bringing up a new generation is conceptualised as expenditure as though it were an item of personal consumption. Children are not understood as an investment and capital cost, made by these two persons for the eventual benefit of all. Discussion of economic exchange is confined to exchanges within this present generation. Yet children must be the first product of any economy and society, while persons brought to maturity in the virtue and industriousness that has created that society must be the second product of that economy. This virtue and industriousness makes each generation ready to enter those covenants which bring a new generation into existence and then to maturity. There is a covenant and marriage


between this generation and all possible future generations, between the present and the future, but only those communities that understand themselves in terms of covenant are able to say so.

1. We are free to enter unique covenants with particular persons. We are free to give ourselves and to receive those who give themselves to us. In order to be able to receive the gift of themselves that the other person wants to give, we have to allow ourselves to be vulnerable to them. 2. We may start families and new households. We may do so because we may act generously towards one another, and towards those who have no existence until we give it to them. 3. If men and women have a motive to seek one another and having found, to stay with one another they may form a distinct entity which is able to relate in a more generous way to others. A marriage creates a household that is itself a miniature society and economy. 4. Marriage is good for those outside marriage. All persons and households benefit from the confidence that the constancy of marriages represent. 5. Marriages take place when morale is high and marriages generate high morale. The permanence of marriages communicates a long-term perspective to civil society. Marriage is the basis of the many other covenants that create our civic, political and economic political institutions. They create social capital. 6. We may take initiatives. We may enter a partnership, start a business, get a team together, form a civil association or set up a charity and so be a flourishing and enterprising society. 7. We can act for the common good in our commercial relationships. We can take the initiatives that makes for a healthy market and small government. 8. Christians produce a distinctive form of public service that underwrites all other forms of public service and the public square. 9. When they give them explicit acknowledgement, market and state can support our covenants. When our covenants are denied public recognition, all specific relationships are dissolved over the long-term and our motivation to enter them suffers. 10. If we denigrate the given (biological and cultural) differences and complementarities between men and women on which marriage depends, and regard every human as the same as every other, we do not need any encounter with another human being. 12. The society that does not respect the difference and complementary nation of the sexes and give their complementary roles public recognition ceases to comprehend or give its protection to marriages.


13. Legislation and courts have attempted to change the nature of marriage from a public covenant to a private dependent on the moment-by-moment will of two individuals to remain together. Private sentiment has driven out public covenant. 14. We do not enter commercial exchanges only because we have to (because our bodies require what only others can provide) but also because we want to. We are not forced to trade, but seek each other out willingly and in freedom. We give. An account of the human economy requires an account of gift; our account of economic necessity can properly take its place within this account of gift and freedom. 15. Market and household are complementary economies. There is a distinction between them. If we attempt to dissolve the household into market or state, our economic prosperity suffers. 16. The public and economic sphere without the private and domestic sphere is sterile. The public sphere cannot make children. The household without the outer sphere is immature: it cannot turn children into citizens. Without interaction with many other households in the public sphere and economy, we cannot become public persons. 17. The monetised economy has encroached on the family and domestic household. As it does so, the realm of the household has shrunk. 18. Through expanding welfare we reduce expectations and personal autonomy, making it more difficult for people to act either for themselves or for others. The dissolution of each marriage makes the involuntary relationship of each of us to the state stronger. 19. The distinction between the two economies of present (immediate and finite) and present-and-future (open and infinite) is crucial. 20. Those who have no faith in eternity will be unable to take the risk of making themselves vulnerable enough to come into dependence, financial and other, on a marriage partner. There is a relationship between religious faith, readiness to bear children and sustain a family. 21. The society that does not promote the production of children above any other economic good will suffer declining morale and declining population.


3. Household, Market and State

Economy, government and self-government 1. 2. 3. 4. 5. 6. 7. The Market The Household and the Inter-Generational Economy Work outside the Household Market without Restraint Public and Private Man Government Over-Extended Self-Government and Good government

1. The Mixed Economy of Household and Market

We go out to meet people. We do so simply for the joy of it, because we are social beings who like one anothers company. We meet them outside our own household, many of them new to us, many of whom we will not meet again. We meet in a space that is public, in establish relationships with a variety of arrangements. We tackle the matters that are of immediate interest to us, and a pragmatic common approach to them emerges through our discussions. We explain ourselves to one another and exchange accounts of our identity, and as we talk we adjust our expectations.
People are constantly checking up on each other, constantly monitoring the ongoing stream of communicative exchanges and accounts that make up daily life accountability and account giving are part of what it is to be a rational individual. It is through giving and monitoring of the accounts that we and others provide of ourselves, and of our 59 actions, that the fabric of normal human exchange is sustained.

We audit one another constantly for confirmation that other person shares our valuation of this relationship. When we meet we pick up from earlier conversations, so what we say to one another refers to what we said last time and on all previous occasions, so we are looking for continuity and reliability. We give each other extended accounts of our identity and those abbreviations of them that we have constructed through previous conversations. It requires that we communicate the worth of our contribution, and it requires abbreviations of these accounts of the contribution we claim to make. Our interaction relies on a great accumulation of assumptions and practices built up over years and generations, which we are able to take for granted. The public square is formed by the extended accounts in which we explain ourselves to another, and weigh these account through debate. Prices are our abbreviations of these accounts. The market is that part of the public square in which we accept or decline the account offered to us, and so in which our accounts are shortened to yes/no exchanges, to buy/sell signals. We cannot communicate with one another solely by means of these abbreviations. In addition to prices we require a fuller account in order to establish what we are being offered, and to say what we are ready to accept. Alongside prices and decisions to purchase, there are bids and negotiations, and there is extended debate about what makes our various contributions valuable. The abbreviations cannot substitute for the full accounts, prices cannot substitute for negotiations; equally the prices and negotiations of the market cannot substitute for the fuller account-rendering that makes up the greater part of the public square.

The Market the Judgment of our Peers


Michael Power The Audit Society: Rituals of Verification (OUP 1997) p. 1.


The more lively our encounter and conversations, and the more careful the attention we pay to the nuances of one anothers offerings, the healthier our public square is. When our public square is vigorous, our economy is likely to be so too. The market is that aspect of the public square in which we deal with our immediate and pragmatic considerations and do so in prices. Prices are the shortened form that has evolved through generations of such encounters. We come together to judge, and praise and win the praise of others. We make our judgments with reference to what is purposeful, good and true. We do not merely say I like that, but that works, that is good , and that is true. When we say Ill buy it or Ill sell it to you at that price, we are communicating through these abbreviations by which we are able to bring together those longer accounts in which we describe things in their setting and with their purposes and then say of them that they are good, and specifically, good for us in this setting, here and now. We are one anothers judges. We go out to find people and convince them of our worth. It is for other people to tell the value of our contribution and so say what they will pay us for it. If we do not accept their evaluation, we can appeal to some other part of the market for a higher estimate. The market is where we submit ourselves to the judgment of our peers. A market is a large assembly of people. They decide on the true value of any account, and of so on the value of any enterprise or other public contribution. Their knowledge is not complete and they are not perfect judges, but their immediate assessment may be adjusted so that a truer judgment emerges over the long-term. The global market is the whole assembly of all our contemporaries around the world. This market, made up of all mankind, is the proper limit on the decisions of any one particular group or nation. Even the GNP economy of traded goods is an economy of interpersonal relationships. 60 If markets are not convinced that the decisions of any national government are just, and particularly if they think that the clique with political power has been rewarding itself, investors from other countries may sell their holdings and walk away from that market and nation. A market must be free, for exchange that is coerced is not economic exchange. Yet free trade is always an aspiration. A free market is not a market without law and a degree of self-regulation that depends on the willing participation of their members. Markets do not exist in a void and political announcements will not create them. Trade is based on complex information and trusted institutions, customary, legal or other.61 Law enables markets to emerge; if law disappears and is replaced by lawlessness, exchange will not be free. It will become a form of pillage in which the strong benefit at the expense of the weak, and the freedom of unforced exchange is lost. A market will be regulated by a set of practices that may remain tacit if that market remains small enough, but it nevertheless depends on the awareness of its members of the law and its sanctions. Law and regulation, and public consent for the enforcement of the law enable a market to operate in greater rather than lesser freedom. There is law because we decide that we do not act solely as individuals, or as single entrepreneurs, but we also act together with others, and so deliberately to create

Offer The Challenge of Affluence p.358 Reuven Brenner Labyrinths of Prosperity: Economic Follies, Democratic Remedies (Ann Arbor: University of Michigan Press 1994) p.149
60 61


consensus about what is acceptable, and so bring about first self-regulation and then explicit regulation. This is what any society does in order to function as a nation, that is, a political society which under law achieves a level of domestic stability and peace. Trust itself resembles a gift: a unilateral transfer with the expectation, but no certainty, of reciprocity. Regard provides a powerful incentive for trust, and trust is efficient: it economizes on the transaction costs of monitoring, compliance and enforcement.62 Yet the crowd that makes up the market are not always good judges. They do not attempt to give us a full account of how any particular good fits our own purposes and so how it will be good for us. They do not refer what is good to criteria outside the price system, against which they have to measure goods and services with their own judgment. The concept of marginal utility, the concept central to the distinctively modern economy, tells us that everything which someone is willing to pay for, adds to the total value of economy. Whatever I can find a buyer for is good, simply because there is a buyer for it, and no other judgment is of any significance. But not everything we do adds to the real economy. Some goods and services narcotics, for example make it more difficult for others to act well, impact negatively on the economy over the long term, and so may be considered disservices, not goods but bads. We can appeal for fuller and more adequate disclosure, and can heap public disapproval on certain forms of economic activity, and seek to bring the externalised costs onto balance sheets, by tax, so they are reflected in prices. We can insist that the pollution caused by the products of this industry appear as a liability in the accounts of the firms that produce them. Some economic services work as disincentives, so that we do not act freely, take our own initiatives and act generously for a good that is common. Yet we can appeal to those assembled in the marketplace to use their own judgment to come up with a better judgment. Each industry must publicly make its case that it makes contribution to the greater economy and national well-being, and must answer the case that it attempts to direct and distort markets to its own partisan advantage. All national economies have mercantilist tendencies, for each state attempts to secure those supplies and technologies that it regards as vital to its economy; these tendencies may be kept in bounds by the desire to trade with other economic partners who cannot be coerced, and who give us a reason to commit ourselves to freedom of trade. Some corporations will tell us that their industry is good for our national economy, but we may reply that they appear good only because they conceal the social or environmental costs that they place on the economy and which must be met by the nation in future years. The market is fallible. If we can call it a system at all, it is the least imperfect system for the allocation of resources. When price signals are not reliable, prices do not move down far enough to ensure that everything is sold. When there is no transparency, the market does not clear. Then no one can be sure of the value of their holdings. Interest groups avoid making explicit in their balance sheets the values which their assets would achieve at the present state of the market. It is a fundamental tenet of modern economics that each of us is a rational agent, who knows our own interests and pursues them. Made up of such rational agents, the market as a whole is efficient: the totality of the knowledge of these individual agents is true. They may be individually deceived, but the market as a whole cannot be: this is the Efficient Market Hypothesis (EMH).


Offer Challenge of Affluence p.79.


The privileging of individual choice is founded on contestable premises. It assumes that every person has a set of unique and well-ordered preferences, that she is fully informed of all the choices available, that she has good knowledge of herself, and sufficient self-command to achieve her ends.63 We are indeed rational, or deliberative, beings but it is not sufficient to say this and leave it at that. We concede that we may have too narrow an account of our interests; we may not sufficiently distinguish between what we desire at this present moment and our longterm interests. We must always ourselves whether we manage the best balance between our short-, medium- and long-term interests, or whether each of us is irrationally careless about our own long-term. We have to ask whether we may approach a more adequate and truthful account of our interests simply through encounter with other persons in the marketplace, and that this encounter is itself a supreme good, which the market sometimes makes easier or more difficult. The efficiency of the market is as much an aspiration as the freedom of the market. Every marketplace is riven with factions, some exerting power over the functioning of the whole. States are deeply involved in markets; much of their effort is directed to buoying up certain prices and preventing markets marking prices down. But if the market the notional global assembly is prevented from judging values for itself, the result can be deception and fraud which are economically counter-productive and damaging to the integrity of the state and society as a whole. True knowledge and rationality are likewise aspirations. The economy flourishes to the degree that the public square promotes freedom, efficiency, rationality and truth; the health of our economy depends on the extent to which our society demonstrates moral competence, that is, that enough of its members not only act for the common good but cannot conceive of acting in any other way. Business is the function of persons reacting near-spontaneously to opportunities. There is economic growth when people take risks and find a way to charge for a service. Only individual economic agents, combining freely together can do this; governments simply have to allow this to happen. Governments can sustain such pursuits both by adopting policies that help the humble to rise and do not prevent great from falling, and by establishing institutions that discourage erroneous policies.64 Yet governments are not content just to let things happen, but want to make them do so, believing that it is in their power to steer and advance their national economy. They believe that a finite and knowable set of instruments, employed in known ways will produce tangible outcomes. But attempts by governments to develop a macro-economic policy and steer their national economy are very often counter-productive, so that resources are pulled in less-than optimal directions, as various interests establish their claim on subsidies, and thus create long-term distortions and extract a form of rent from the economy as a whole. 65 Governments should not decide that they are better judges than the market as a whole and perpetually intervene to prevent the process of public judgment by which true values emerge. But is this not what governments did in response to the financial crisis of 2008? They put money into the banks, expecting it to flow from them into the productive
Offer The Challenge of Affluence p. 357 Reuven Brenner Labyrinths of Prosperity: Economic Follies, Democratic Remedies (Ann Arbor: University of Michigan Press 1994) p. x 65 Reuven Brenner Labyrinths of Prosperity: Economic Follies, Democratic Remedies (Ann Arbor: University of Michigan Press 1994) p. x.
63 64


economy, and talked the markets up, encouraged people back into them. But they thereby prevented the discovery of true values, so no bank trusted another enough to lend to it, and paralysis of the system was, and still is, the result. They concentrated entirely on the issue of confidence, and avoided the issue of truth. Governments did not instigate the judicial process by which specific instances of the deception of the market could be brought to court. It is possible that there has been widespread deception and complicity in it. The way to test this is to put charges to some leading actors in the financial industry and let due legal process decide whether there has indeed been fraud. No charges were brought and there was no public process of confession or discovery of the truth. Confidence was thought to be all that was required that the market recover, but a confidence that is not based on truth can only be short-lived. By putting themselves between us and the truth, governments can make a bad situation worse. Political failures have economic consequences. Failure to secure the truth through judgment ensures that the economy remains in crisis. we will return to this topic later in this chapter. The market is part of the larger public square. We are not limited to what current prices tell us. We can speak to one another directly and publicly, using the language of justice and of what is good for the economy of the nation as a whole. We can appeal to one another to re-assess our individual performance, and to offer one another more modest accounts of our worth. We can shame offenders, charge them with malfeasance and bring them to court. The health of an economy depends on the courage of the whole citizen body to make these challenges in public. It depends on the ability of that citizenry to sustain the climate in which the powerful can be challenged and feel obligated to give an account of themselves, face justice and receive their penalty. The political nation may not allow such financial interests to become so powerful that they are able to decline to respond to such a call. We can encourage one another to take the discipline of the market and mark our assets down, and so release the market from paralysis. The nation with the vigour and political will can recover from corruption, and need not become paralysed. The whole political nation is always on trial in the market, and the market, in particular the financial service industries is always on trial in the public square. At a minimum, the continuity of the economy must be the aim of our national economic decision-making.

2. The Household and Inter-Generational Economy

Now we arrive at a central thesis of this book. An economy is an ongoing affair. It requires that one generation make things possible for the next. Economics is about those flows from one generation to another by which the human race persists through time. Persons are both the ends and goal of the economy, and they are the means of the economy. We may hope to bring up children to be persons, who have children of their own, and pass on the virtues that make for the same readiness to bring a new generation into existence in the course of time. We provide one another, through the market, with the material requirements of human bodies by which this process may continue. All economic activity may be said to serve this fundamental common good which is the continuation of humanity. We live and work on the assumption that life will go on from generation to generation; on this basis we can talk about an economic equilibrium. But this should not be taken for granted, for the bringing into existence of a new generation is itself a work, for which we need a motive. Love has to be this motive. A society persists because there is conversation and economic exchange between its generations. Would-be grandparents have to persuade their adult children to produce grandchildren for them. One generation has to encourage another to bring into existence a third. This requires that we are able to conceive of more than just our immediate concerns and the present moment, and exercise that longer-term rationality, and with it,


self-restraint and self-sacrifice, required to bring the next generation into existence. Our decision-making must have an inter-generational orientation. Modern economics would seem to concede the rationality of those decisions, that take place within a single generation.66 Can it acknowledge the reasonableness of working for a generation that does not yet exist? The household is the entity that holds two generations together. It transmits intergenerational motives and rationality, and thus is the means of continuity for any society. Within the household, members of the family can discover the satisfaction of their needs and desires through one another, and learn to distinguish desires from needs. Children can develop the emotional maturity which will give them greater freedom for their subsequent decisions about which relationships and forms of life to commit themselves to when the time comes to set up their own household. The work of parent supports the household within which each member can develop a degree of personal autarchy. The household is itself a little economy. We may say that it is the first economy, the primitive economy, while the market and all that we usually understand by the economy is dependent on it. The Household as Primitive Economy The domestic household that was once the fundamental economic factor is now merely the place of consumption. Would anything change if the household disappeared altogether? The was a long debate in twentieth century social anthropology about the economy in ancient, and in what used to be called primitive, societies. Did the Greeks and Romans have an economy, or did the economy only start to appear much later, in early modern Europe? Some anthropologists contrasted the primitive economy, which persons exchanged gifts, with the modern economy of rational calculation in which people bought and sold. Moderns calculate and maximise. Other anthropologists pointed out that primitive, non-modern, peoples calculate too. They simply did so without paperwork, making fewer explicit records than we do; they worked their memories harder, but they nonetheless knew whose turn it was to initiate the next round of gift-giving. Primitive economies were small, so everybody knew everybody, or knew someone who was able to issue an instant credit rating on them. Ancients maximised too. Each sought honour, which we can recognise is a form of credit. Perhaps they were content to maximise over longer time-scales than moderns, and so were in no hurry to call in favours or make that credit explicit. If it was in everyones interest to avoid conflict, it was no ones interest to call attention to how much more honour than they had accrued than their rivals. They had an economy, but did not reify it as we do. It may not be easy for us to identity all the transfers that we would regard as economic, but they nonetheless had an economy. They simply did not reify it as we do. Are todays primitive societies still waiting for a developed economy to emerge? Are they lacking something until it does? Or are non-modern societies not primitive but just different? Is the question of the development of a society to maturity with the emergence of a distinct economy a reasonable question, or are such comparisons between cultures not meaningful or even wrong? More recently some social anthropologists have suggested that these societies are more robust than our own. Primitive societies have, it is suggested, a more sustainable relationship to their environment than we do, and this will become clear as the connection to economic growth becomes a more urgent challenge for our own economy. Perhaps over the very long term our society will disappear while they, if they survive our predations, will remain. We will come back to


John D Mueller Redeeming Economics


these questions when we ask about the necessity of making cross-cultural comparisons, and make some of our own, in Chapter 4, and compare modern and non-modern economies as we talk about growth in Chapter 5. The Household and the Costs of Accounting But primitive economies are also found right here in our own society. Each of us was born in one. Every family and domestic household is an economy in which we exchange gifts and services without payment. This is not to say that there is no calculation in the domestic economy: husbands and wives, parents and children are all calculating, and all prepared to protest when they think they are being treated unjustly. But how we account is a matter of what accounting period we use. We may protest some injustices instantly my brother hit me, my parents left me with the washing-up. But families have no particular final year end, for they intend to continue, so the period over which injustices can be rectified is open-ended. If economics involves explicit accounting we have to decide on our timescale. I have suggested that modern economics seems to exclude all but the short-term. But it is not in our interest to give other family members the impression that we will soon be turning our backs on them and moving out, for we want to continue to receive their little gifts and services. I am tempted to behave badly to my children, but I know that I will then be teaching them how to behave badly back to me. I suspect that if they are hellish to me now, in a few years time their own children will be hellish to them, while as grandparent I can enjoy any easier relationship with their children. We could draw an intermediate lesson from this. If we agree that any economy continues because all its members believe, or at least hope, that it will, each member must give the impression that they are committed to it and not about to withdraw. We have to reassure others that we are here for the long-term, and it is worth their while to continue to make open-ended unpaid investments. It does not benefit any of us to allow the threat, or even the thought, that we are individually about to de-camp from this economy, leaving favours unreciprocated and debts unpaid. Early and persistent profittaking results in medium-term losses. In such a prisoners dilemma, we all lose. It serves us all to talk up the general sense of confidence and generosity that encourages others to greater commitment. Excessive accounting and excessive profit-taking reduces economic confidence and shrinks the economy as a whole. There is a cost to accounting and thus a cost to excessive employment of money, as we shall see. Let us consider a first exchange, that takes place between two friends. You lend me your ladder, and on another occasion I lend you my car jack. You ask for that pile of spare wood at the bottom of my yard. You may offer to pay, but I refuse to accept payment and pretend to take offence if you persist. Or perhaps I am glad that you volunteered to pay; you offered a price, and I pronounce that I would be satisfied with half that amount. We negotiate the tricky transition from neighbourly favours to monetary exchange, friendship gets stronger, but we are also able to price our obligations and start to put business one anothers way. Let us consider a second exchange, within the household economy. Your wife or husband beckons you into the bedroom and provides the service that only they can. You are bathed in a warm glow. This service is free, or each of us is happy to think of it as free. You do not factor in all the many hours in which you wooed her, the months of going out to cinema and restaurant that you had to put in order to win eventually this promise of sex on tap at home, which turns out to be sex only when both parties are in the mood. So much time has to be invested to achieve that mood. At this point it is worth wondering with economists, particular those schooled in Chicago, whether it would not have been more efficient just to pay for sex from a professional, and so to unbundle all


the various services that ones spouse provides and pay for them individually?67 But afterwards you wonder in what economic terms you should describe this. Should she bill you for this service, or should you bill her? Who should pay whom? Could you bill each other, and could it be a twice-counted addition to GDP? Then there is another consideration. Let us say that your spouse is better at making out bills than you are. She can itemise things with greater detail. It would take me longer to make up a bill to present to my wife that itemised even the small number of my services to her that I was able to name. To keep down the amount of the day which we both spend in making out our bill to one another, and reconciling our accounts, we call it quits. I am convinced that this is more to my advantage than hers. The cost of accounting for all the various little services would be prohibitive. We owe each other everything: our love denominates itself as many little services, but we don't pay each other in return for specific, individually named favours. We account informally: she doesn't pay me and I don't pay her so we avoid all the costs of accounting. I am going to run an unending account with her and she with me. Perhaps we hold a cursory and casual reckoning at the end of the day and in that sense we keep short account. But we will never reckon up; what unit would we reckon in? What currency is valid within this relationship? This marriage is an ontological fundamental: within it we two persons are also a single entity, a single legal person. Intergenerational Accounting Now let us consider the same domestic exchange, over the longer term, between one generation and another. What is the relationship between me and the next generation? In what economic terms should it be expressed? Should I be preparing an invoice to present to the next generation? I wipe the grubby faces of my children, dress them, give them breakfast, and at night I add this and a hundred similar little services to the invoice that I will present them when they are adult. With every hour of the day they move deeper into my debt. Each year the detail with which I make up this account, the number of services I make account for explicitly, increases. As result the time taken by this accounting grows, so that I can only wipe faces in the morning because I need all afternoon to prepare my invoice for these services. I will need to earn all this credit, for when I am old and infirm I will be put in an old peoples home and will have to pay to have my own face wiped. I care for these children in order to earn the means to pay for the same care in a few years time. Alternatively, if I wash my childrens faces now, and don't present them with any invoice for this service, perhaps they will not put me in an old peoples home. Perhaps they will allow me to stay in the family home and wipe my face themselves. What are my chances? Of course, if I don't invoice them for it, none of this work is reckoned as an addition to GDP, and it earns me nothing. If I wipe their faces without invoicing anyone for it, but in thirty years they do not return the favour, I am in trouble. But if I allow this explicit accounting to enter the family and define the relationship between us, will they have enough motive to wipe my face then? Which is likely to be more reliable over this length of time, my children or the cash nexus of the global economy? It is this question of time and timescale that is involved in the issue of accounting. But there is a further consideration here. Over this putative thirty year period there will be an increase in the complexity of our accounting. Perhaps the bill I make up now contains only a dozen items a day. But in thirty years accounting is likely to have become more sophisticated. When it is time to pay the care home, it will present me with a daily bill made up of, not a dozen but, a hundred individual items. If the complexity of accounting progresses, no one earning now can hope to have enough savings to pay for


Jennifer Roback Morse Love and Economics


that same care then. The proliferation of costs invoiced is the result of increasingly minute itemisation. Transactions proliferate because we make ever more minute division of our activity towards one another. It is only multiplication because it is simultaneously division. We divide our time, with the result that we have more time-units, and more transactions and thus more money.68 As we attempt to account explicitly for the range of services that used to belong to the household, children increasingly appear as items of expenditure, rather than as investment. If we have no conception of the household as a entity of reciprocity that functions over long-term, we are unable to see what sort of benefit we could possibly get from children, and so no sense of why we should pour our effort into them. While children used to appear on the balance sheet as assets, now they appear in the profit and loss account as items of consumption. Excessive explicit accounting makes intergenerational service appear irrational. Only if we keep husbands and wives, parents and children out of our profit-and-loss account and reckon them as permanent, non-liquid assets, can we account for the changing status each of us experiences as we progress from childhood to adulthood to old age. Children are investments: they require expenditure but are not themselves expenditure. Each generation is in debt to the generation before. We are in debt to our parents and to their parents. Do we really wish to communicate to our parents that we reckon that what they did in bringing us up was worth so little that we will not return the favour? A readiness to acknowledge this debt and pay our predecessors the honour they are due makes for a confident society. After Employment At some point in mid-life we realise that our parents are growing old. We look ahead and start to understand what it is to be in their position. We realise that we have a financial crisis of our own, because we are not saving just for our retirement, but also for our own dependent old age. The better-off eventually become the worse-off the young and healthy and well-paid have a definite and ascertainable probability of becoming old and sick and poor.69 Few of us will be cared for by members of our family when we grow old; they are not likely to nurse us through our last illness and so we won't be in the company of our own family as we die. We will have to buy our own old-age care. We will be in nursing homes and since the staff of these homes are not well-paid, so in our last stage it is unlikely that we will be cared for by people of our own culture. Most of us suspect that we cannot possibly pay for the care that we will need. This dawns on each of us at different moments and so, though common to all of us, this realisation remains largely unexpressed. Each of us is likely to need care again before we die. But our own family may not be there to provide it. Either we don't have children of our own, or we can see that our children will not want, or not be able, to take responsibility for our care. We have dismantled the three-generation family and consequently, at the end of life there is nowhere to receive us. This is the result of making the long-term flows between generations invisible.

Eric Alliez Capital Times: Tales from the Conquest of Time (Minnesota 1996) Jonathan Gershuny Changing Times: Work and Leisure in Post-Industrial Society (New York OUP 2000) p.248
68 69


But perhaps a family does not exist for the care of children but also of its elders. But if in your old age you still live in an intact household, you are likely to remain active for longer and the period of complete dependency is likely to be shorter. When you can no longer work as you did, and are ready to give up formal employment (or are prevented by legislation from continuing in it) there is easier work to be done in the household. You can continue to do productive work around the house food preparation, cleaning, child care and education. Such work brings the gratification of being in company of young people who are your own grandchildren. Our failure to acknowledge and sustain the essential flows between generations is already having an economic impact. Older people save while younger people borrow in order to invest in businesses and homes. Thus older people lend to younger and older populations therefore lend to younger (average) populations. Europe is an older (average) population. It lends to the US which has a younger (average) population. Thus European savings are always looking for somewhere to go. There is a shortage of places for them to go. European and Asian savers are therefore taking on less and less creditable loans in the US. Financial markets transmit these savings from old people, who have money and want to lend it, to young people who want to borrow it. In a moment we will ask some more questions about the function of this money, but first we have to ask a very basic question about the people who save and borrow it. There are plenty of people in my generation, and plenty in my parents generation. But the people of my age have kept their own parents waiting and not rushed to produce children. There are plenty of people older enough to be grandparents, but not enough of their adult children have done the honourable thing and produced those grandchildren. There are plenty of people of retirement age, now becoming elderly, but there are declining numbers of young people. If there are older earners looking for a newer generation, at the beginning of its working life, which needs capital this means that there are fewer productive places for that lending to go. Older average populations are looking for young average population to place their savings with, but population growth across the world is slowing so there are fewer places for those savings to go. The result is that savings have been placed recklessly and unproductively. David Goldman sets this out:
It is easy to change the financial system and announce tougher lending standards. But it is impossible to fix the financial problems that arise from Europe's senescence. Never before in human history, though, has a new generation simply failed to appear. There simply aren't enough young people in America to borrow money from Europe's and Japan's aging savers.70

Though its effect can already be seen, the crisis of missing earners is going to worsen. In instead of real growth in productivity, we have also the pretend growth created by encouraging people into taking on loans. Our economic growth has not been growth in production, but in simply the growth of credit. Our economy has seemed to grow because we have tempted one another to take on debt. We are attempting to compensate for a lack of earners and savers, who can support themselves and their own dependents and pay enough taxation to support the national care and welfare services. We have been enticing people to borrow against their future earnings so that we can spend them now. But there will be relatively fewer workers to make those earnings. We have assumed that there will be a more energetic and prudent population in the future and we going to


David Goldman, Spengler, The Monster and the Sausages, Asia Times, May 20, 2008


borrow from that future taxation of that future population. This is what our personal and national debt amounts to.71 Capital markets grow because more people put their money in them. They do so because they believe that capital markets will always grow. But can they? If the future population is smaller than the present one, there will be fewer people to borrow our savings and put them to productive use, so how can capital markets continue to grow? Pension funds have put the savings of vast numbers of people of people into a capital market that is buoyed up by a deep, cultural, assumption that there will always be growth. But an economy does not grow inevitably: it is a reflection of a society: our economies have grown, at least in part, because our population has grown. If we have fewer children now, we will have fewer people to sustain a prosperous economy, and to support us when we have left the workforce. If we are unwilling to raise a generation big enough to replace the existing generation of employees and taxpayers, how can we expect to enjoy a prosperous retirement and secure care through old age? Could it be that our financial crisis reflects our failure to make long term provision for ourselves, and so see that this provision depends on the steady arrival of new generations into economy. So far we have suggested that our readiness to have children relates to the growth, or at least, the continuity of the economy. We will come back to this issue in Chapter Five. What we want is an economics that make some acknowledgement of the long-term and concede that the economy that produces good and services is dependent on this more basic economy of persons. We need an inter-generational economics. Perhaps we should look for a more adequate conception of work.

3. Work Outside the Household

We go to work in order to encounter our fellow man and to earn the means to support our family. We leave the house in order to go to work. Before we consider that employment, we must say that if it nurtures a family the household is an intrinsically productive place, so to go to work outside the household is simply to leave one sort of work for another. You leave the house, entrusting your children to the care of others as you do so. This may be the opportunity for grandparents to step into their role, so that for shorter or longer periods, we become a three-generation household. But most often those others will be from outside the family, and may have less idea how to protect childhood and maintain the integrity of the household. As long as your children are with the childminder, they are likely to be sitting in front of the television. There they will be learning that their desires are met not primarily from within the household, but by the marketplace.72 Happiness comes through shopping. They are not learning how to wait and defer, but learning to expect a more rapid gratification and so to become consumers. It takes determination to resist this, and this involves spending less time at work, and so

Neil Record and James Mackenzie Smith, Public Sector Pensions The UKs Second National Debt (Policy Exchange, June 2009); Brooks Newark The Hidden Debt Bombshell (Centre for Policy Studies, 2009). Nick Silver, A Bankruptcy Foretold: The UKs Implicit Pension Debt (IEA, 26 November 2008). The State of Public Finances: Outlook and Medium-Term Policies after the 2008 Crisis IMF Companion Paper (6 March 2009). 72 Offer Challenge of Affluence p. 74. Market competition promotes myopic bias. It promotes hedonism over other forms of satisfaction, since hedonic reward is easier to identify, package, and sell. It promotes individualism, since that reduces the costly and time-consuming need to negotiate and compromise with others, and to contract with the future.


reducing your earnings.73 We have to decide for ourselves that we are going to make time to learn how not to spend. You have left the house to earn the money to keep the family, but while you are away, they are exchanging dependency on the household for dependency on alternative households, that reach them through the media, so the selfsufficiency of your household is diminishing. Your children are learning to want new things faster than you can earn the means to buy them. The more time you spend earning, the more of its own intrinsic interrelatedness the household has haemorrhaged in your absence. By earning outside the household you are less able to give time to them so the children will have less time to develop that mutuality of support and consequent independence.
Less parental input and training means less drawing in of the child into the adult world, and its pragmatic concerns for managing the domestic economy, and less cognitive stretching of the child to understand the concerns of adults, including no doubt, the nature of work and the demands of specific jobs held by adults in the family.74

You may be forfeiting the substance of the family faster than you are bringing it home through your pay-cheque. When you earn something extrinsic, you are also giving up something intrinsic. You go to work to earn money to support your family. But you put in long hours because you also have to pay your taxes. You pay these in order that the government can provide the services that your children and you yourself will need. A wide range of interpretations of that need is possible, but you have to spend whatever time at work outside your own household is required to meet the financial demand set by a widening interpretation of that need. The state takes on new dependents, and has to raise the revenue by which it can support them, and so it asks you to shoulder a burden that tends to grow. Through these taxes you support those members of other peoples families which the state has taken on as its dependents. The state can add more members to that part of the national fiscal household assigned to you; it can pay more benefits or perhaps even create new jobs but only by raising more taxation from those in work. By increasing the number of dependents you support through taxation, governments increase the time you have to spend at work, so reducing the time which your family is able to spend together. You must lose its autonomy because you have to meet obligations that you cannot place any limit on. You need money in order to bring your children up, but time spent earning it is the great obstacle to doing so. If you give up on the task of letting that mutuality form you, you give up the autonomy of the family which forms them into the mature economic agents of the next generation. As soon as you employ, directly or through taxes, others to care for and educate your children, you are directing them to find all their satisfactions through the market, and find none in their own resources within the household, with the result that they do not have to learn the self-control and self-sufficiency. Money is required to bring up children, but if we regard it as the primary medium, we give away the integrity of the family and the autonomy of persons that may develop within it. We need an economy that develops persons who will be our future economic agents, able to carry the responsibility and financial burden of our societys future. Persons learn to take on responsibilities and burdens through work. Experience of work develops character and thus forms us into mature persons. We said that members of a family
Offer The Challenge of Affluence p. 74 Taking affluent societies as a whole, there is a tendency for prudence to decline with affluence. One reason is that affluence shows diminishing returns. Another is that under affluence, the environment change faster than commitment strategies can keep up with it. Adaptive technologies take time to form. 74 Alice Rossi & Peter Rossi, Of Human Bonding: Parent-Child Relations across the Life Course (New York Aldine Transaction, 1990) p. 494.


learn to become members of a society about over the table at meals and learn to work as playing develops into helping with household tasks. Within the household there is a unity of love and work expressed through a myriad tiny services to one another. Next we have to ask about the forms of work and therefore about the industries and forms of employment that create the productive social and cultural capital that sustains an economy in such a way that one generation has the motive to bring into existence the next. Character and Community The healthy economy is the mixed economy. An economy is composed of three broad sectors of agriculture, industry and services. The end of the nineteenth century was the last time last time that these sectors took broadly equal shares of the economy. The industries of each sector produces different sorts labour and each labour produces a different set of virtues. A national economy is resilient to the degree that it contains all these virtues and forms of motivation. While agriculture is primarily about food production, it also produces a people who have a wide set of skills and motivations, who know the origin and value of food, its cultivation, preparation and its social functions as the medium of all our socialisation and public encounter. For as long as a significant proportion of the working population is employed in agriculture the nation as a whole receives a sense of what is involved in our complex interaction with the land and seasons to produce the food that both makes our bodies and sustains a community of persons. We need a high view of the socialising effect of eating, and of the preparation and even production of food, in order to find our reward in one anothers company, first in the home, and then in the wider community. The human economy has to move at a variety of speeds, the slow as well as the fast. Those some elements of the human economy may change, but others, such as the formation of relationships and social capital, cannot change. Agriculture and the industries that immediately support it represent a form of work that is not disassociated from our own bodies, local communities or regional geography. These produce a local and regional identity that makes us not solely citizens of every place indifferently, but citizens first of one particular place and only subsequently citizens of the wider world. But we have given up the instinct to prefer and promote our own neighbourhood and region that is essential to the economic development of each particular region. We need to regard the food of our own region in order to develop some relationship with the particularity of each place. Memory and meaning is linked to slow-moving communities, and thus to particular places. Work that relates to a locality produces a local pride and sense of worth which in turn motivate our work. This is not to say that we should go back to any particular form of industry, but simply that we should concede the role in the creation of national culture of a mixed economy, and thus challenge the movement that replace those industries which are labour-intensive and place-specific with service industries. After all, the more a societys consumption consists of services that embody high-value labour, the smaller is the category of the poor to be concerned about.75 The Thinning Out of the Economy Any person can employ him-or-herself in anothers service. No one is obliged to consider ourselves unemployed until the moment some employer gives them a job. Work is not confined to earning the money which we are going to spend elsewhere on goals unrelated to that work. We can hope for work that relates to our own vocation, and not solely defined by our individual preferences and consumption. Why is there only a very limited
Jonathan Gershuny 2000) p.248.

Changing Times: Work and Leisure in Post Industrial Society (New York OUP


opportunity for self-realisation for some people in the modern economy? If we decide that the scope for self-realisation in work is too limited, we can look for ways to make it less so by making adjustments that would enable a wider variety of forms of ownership. The obstacles to self-realisation are so deeply rooted in the institutions of our economy that only profound changes in the ownership and control of industry can create the opportunity for greater access to meaningful work.76 Why do the middle of mature economies thin out? Is this is result of devaluing and then giving up the particular sets of skills and virtues that come from particular industries, or from industry in general because we do not make this connection between labour and dignity? In the mature economies first agriculture, then industry, dwindle away. Agriculture now employs less than one percent of the UK, manufacturing industry around 14%. Their place is taken by services and the knowledge economy. Could it be that there is less manufacturing in the industrial countries, because manufacturing is associated with less satisfaction, or less sense of community in the workplace? Do we regard labour as too physical, repetitive or demeaning? Could it be that without the grind of industrial processes there is not the context within which innovation takes place, and so less opportunity for the satisfaction of developing new processes and products? Almost all our needs are met by things that have been mass-produced. The corporations coax us towards the products they want to sell us. The result is an economy in which we are uninterested in the unique, so local and national producers have no advantage. As we have exported industries we have lost the skills each requires and lost the virtues that each fosters. Fewer university graduates go into engineering, preferring the greater rewards of the financial services, or media or management of national services. We entice the most skilled and adventurous members of other economies to come and do for us what we are not motivated to do for ourselves. As we have imported people to do what we now see as menial work, we have less sense of the local, regional or national sense of community that comes from such work. As work is detached from sets of skills and from persons and their ends, it becomes indifferent to locations; as jobs are exported, so is the proprietorship and social capital that makes for a confident working population. Then what do we can very easily between done by someone else. An economy must be more than a collection of those who consumers, and who must therefore also be employees. But the rhetoric coming from the market invites us to think of ourselves as primarily as consumers, and only secondarily and inconsequentially producers. As a result we are all fungible, for we are all menials now We have an economy in which we are uninterested in what is unique, give no particular recognition or reward to initiatives and enterprises that are local to us, and so we have economies without small and middle-scale enterprises. The need to comply with government demands means that larger businesses do better than smaller ones, with the result that the economy is dominated by trans-national corporations, and capital has diminishing relationship to the local social capital of any particular community and the practices of civil society. A gap is always opening up between the corporations at the top of the economy, and the supine population at the bottom that simply consumes whatever results of that growth reach it, by receipt of welfare or as the direct employees of the state that disburse that welfare, two complementary forms of dependency. The


James Bernard Murphy The Economy of Labor p. 228.


corporations shed employees when credit transfers its affections to more tractable workers on the other side of the world. The jobs lost from agriculture and industry are not all provided by the knowledge economy. There is also the less visible sector of the permanently dependent. Call centres will never provide work for all those whose skills are manual. For a proportion of the population, the thinning out of the economy brings the question Why should I go to work? The state has externalized the costs of its social market policies onto society, and the greater the costs, the more the state expands with fictitious plans to reduce them. Never has a better machine for expanding the rentier class of bureaucrats been devised than this one, which constantly amplifies the problem that it is established to solve.

Those then out of work become state dependents. At the top is a layer of corporate and private sector managers, and at the bottom a large layer of their state dependent clients. Between them is the shrinking the realm of independent economic activity.

4. Market without Restraint

Humans are social beings. In all our work, in different degrees of freedom, we give ourselves to one another. This and this giving is the platform on which all economic exchange runs. As individual men and women give themselves to one another they bring a new generation, future economic agents, into existence. All services and material goods that make up the economy serve this slow exchange of life from one generation to another. All our labour expresses our giving of ourselves. But our economy seems to assume that it is not so. Since we have not regarded labour as intrinsic to our dignity, we have given up most of the industries that involve heavy processes, so have let a large number of economic functions leave country. Why is this? Is it because we have not insisted that prices reflect long-term costs? It may be that we have allowed too many costs to be externalised so that they are borne by future generations. Imported and mass-produced goods are cheap, but that may be because other costs, in particular the true cost of its transport, are not included in the price. This is so for environmental costs: we have reduced our impact on our environment, but done so by exporting industry to other countries which then bear that environmental damage. But it is also the case for social and economic costs: we have inadvertently exported some of our industrial excellence so that we no longer have the range we did. We do not set out to source our goods locally or regionally because we consider them too expensive; that is, we have made our own fellows too expensive to buy from, and they regard us as too expensive in the same way. We cannot afford one anothers labour. Missing Demand We no longer make what we consume. We are content to have our needs catered for by mass produced things. Big corporations provide our needs, and the result is an economy in which almost nothing we own comes from our own region. The more we are bewitched by the corporate and global economy, the fewer indigenous, local, quirky enterprises can survive in the market. We are not interested in what is unique or local and see no reason to invested in our own local entrepreneurs. We no longer give our custom to local and national manufacturers. But if we do not buy from them, how will they be able to afford what we want to sell them?


Roger Scruton The Journey Home, Intercollegiate Review Spring 2009.


Productivity has grown hugely over the last fifty years. But the wages of the people who could consume all that increased production have not grown as fast. By buying on price, we have all been driving down the labour-cost component of the things we buy. The share of the price paid to the worker who produced it has been falling. Each firm wants to pay its employees less, but needs other firms employees to be paid more, so that they will have enough to its products. There isn't enough purchasing power in the population to buy everything that our factories are capable making. Effective demand means that people not only would like, but actually have the money to buy, what we produce. There is a growth gap between the goods for sale and the purchasing power necessary required to buy them. John Mdaille tells us that when you drive down the price of labor, while increasing its productive capacity, you run into the problem that is usually called overproduction but is really underpayment.78 It is difficult for companies to increase their profits if consumers do not have the money to buy what producers want to sell them. There are two ways in which producers try to increase their profits. One is by cutting their costs by firing some of their own workforce, and hiving off functions to contractors. The other is by buying other companies, in order to achieve economies of scale, or occasionally simply to take a rival out of the market in order to reduce the competition. But neither of these are long-term solutions to the challenge of how to grow when, because the economy as a whole has only sluggish productivity, your customers are not becoming any more able to afford what you sell. Another is to increase the amount you spend on marketing in order to coax consumers that they need to come back to get the latest edition, because you have found some refinement that makes last years models obsolete. We have to educate people to want more, and so to talk up their desire, and create in which we feel a nagging dissatisfaction which can only be sated, temporarily by another foray to the shops. We gain satisfaction by buying things, and so by consumers and victims of ungoverned desire, not by being producers who work, make things and present them as our gifts to our society. Our prices do not reflect this fundamental question. If we do not give our custom to suppliers nearest to us, how will they have to money to spend on the goods we want to sell them? If we are not their customers how can they be ours? The whole issue of too expensive reflects a long-term cultural trend to regard all businesses around us as though they were strangers, with no more claim on us than a supplier on the other side of the world. Good jobs can create a sense of personal ownership. But if we never buy from the local firm because they are too expensive but always choose the standardised global product we send capital out of our neighbourhood and region. We do not tend to hold shares in local companies, or to participate in the local economy as shareholders. As a result of buying solely on price we have been exporting jobs, and lost a sense of our personal stake in our regional and national economy. We need capital to be more closely tied to social-capital and to be more equally distributed through the economy vertically. Perhaps if the tax burden was shunted upwards off the poorer and onto the wealthy half of the economy a greater vertical distribution of capital would re-emerge, and there would be then both more demand and more opportunity for smaller companies, for more local industry and so more productive employment would succeed in staying in the country. We invested in anonymous funds, managed at such a distance from us that we could not know whether there was in fact any actual productive business at the end of the chain. The corporatist-economy-andstate have become the mechanism by which the social-capital is stripped out of capital. The social aspect is relegated to our after-hours leisure selves. A gap is always opening


John Mdaille Equity and Equilibrium (ISI 2010).


up between the what is happening at the top of the economy, in which the corporations are shooting ahead into a growth and at the bottom, where a supine population simply receives the result of that growth, by employment in bottom-end services and benefits. Have we referred too many purchasing decisions to price, and not clung on to those in which the familiar and therefore more local or national products get our preference, regardless of price? We have relied on price to be not just a signal but a comprehensive summary and thus our only means of discriminating between goods. But price really tells us only what other people are doing, and what other people are doing is guessing, and so speculating on, how prices will respond to what we are going to do next. They are trying to buy the commodities, and stocks in the companies that provide the services, that we will buy next. We are watching them, but they are watching us and so inadvertently we have been leading each other into cul-de-sacs rather than staying on the highroad of economic continuity. Work is good. But by giving one another more affirmation as consumers than as producers we given one another less opportunity to keep a wide range of work in the country. The nation has not been engaged in that work that keeps us familiar with a range of skills, virtues and smaller and larger forms of industry and the forms of solidarity, community and motivation that come from them. More consumers, even though they are less well-off, create more demand than hyperwealthy consumers who are fewer in number. The rich can only eat so many dinners or buy so many yachts. They spend the rest on financial speculations. It would help if we paid each other higher wages, though this could only be possible where we singlemindedly operate a bias in favour of the service or product most local to us. This would help close the gap between what we are able to produce and what we are able to buy. Industry once offered workers a wide range of wages, skilled and manual. Now in the lower half of the economy, skills and wages have done down together. Half the nation is becoming poorer. There is not enough money around in the bottom half of the economy. For some of the time this disguised because that half is takes on debt, most significantly in the form of a mortgage on a house, and then as the value of that house was perceived to be rising, took on more debt in order to go spending. Nonetheless, in the bottom half of the economy there is not enough money. But that is because we have come up with a substitute, credit, which we put in its place something other than money, which we will come to in Chapter 5. The economy relies on consumer credit; those with too much money lend to those with too little. But every economy that relies on debt in order to sustain demand has a problem. Saving and Investment Let us look at the connection between saving and economic prosperity, and so between present action and future outcomes. Saving simply means that you decide not to spend now but to keep some part of your income to spend later. You lend this money to someone. They want to borrow it in order to take an initiative and start an enterprise. You both know that their enterprise may not work, and that if it does not, you will lose your money. Interest is your reward for being prepared to lose your savings. If you decline to bear this risk there is no reason why you should receive any interest. Christians have always referred to the demand for interest without risk as usury, and thought it wrong to demand payment when you are not offering something for this payment, and thus wrong to receive interest without accepting a share of the risk. In the first decade of the twenty-first century it suited us all to believe that the credit boom could go on forever. Each of us could go shopping on the basis of the mortgage that we were surprised to be granted. We wanted others to believe that a national economy can continue to ride on borrowing, and enjoy increasing amounts of the fruit of


that future growth now before we have created it. As our mutual indebtedness grew, and consideration of risk was suppressed, this became increasingly implausible to each of us individually, but we did not care to say so in public, nor did we decide not to take advantage of the unsustainably high return on offer. Market information was widely distorted or withheld; those responsible for overseeing the market, regulators, boards and shareholders, failed to do so. A prolonged lack of transparency, or failure to tell the truth and insist that others be truthful with us, meant that there has been no meaningful market here. Now we are experiencing a collective collapse of belief; no one knows what valuations to believe. The resulting breakdown in trust that has damaged our fundamental asset, our national economic reputation. We have been complicit here, for we have been foisting a delusion on one another. Restoration of the market requires more than apologies. It requires criminal and civil charges and trial in a court of law for some, confession and penitence for others, and no less than a conversion for all. We need to reaffirm the connections between the health of the public square and the health of the economy. We will come to that issues in Chapter 4. The money I put into my savings account, or that is invested on my behalf by my pension fund, is not lent by the bank or fund managers into the productive investment of the sort which grows an economy. It is not put to work to build the factory or give employees the skills by which firms can increase their productivity. Even once conservative high street banks now operate permanently in global money markets in order to achieve the high return on capital that pension funds and other customers now expect. They do so by repeated buying and selling of stocks or derivatives by automated high-frequency trading within a tight circle of banks attempting to advantage of minute differences in price in markets in the various centre around the world, and which can always secure a better price than any individual fund or investor. Marieke de Goede discusses the formulae for pricing complex options and so of proliferating complexity in identifying and pricing risk. While financial speculation is justified as providing security in the face of an uncertain future, new risk products and markets provide security only to those who can afford to purchase them while professing to provide security for an uncertain future, the finance industry invents more and more uncertainties to be hedged.79 Money was being lent faster and on less security. Finally in 2008 crisis arrived. When Lehmans collapsed, each bank suddenly realised that it did not know how fragile any other banks position was, so each refused to lend to others, and for a moment in September 2008, banks no longer believed one anothers claims and interbank lending was paralysed. Since they did not dare lend even to each other, they did not lend to anyone else. As a result, lending worldwide started to dry up and real economies faltered. This was a failure of trust amongst the banks themselves. When trust is gone there is no quick way to re-generate it.80 The market had ceased to work. Governments stepped in. Believing that they had to save the banks in order to save the economy that relies on them for capital, governments attempted to bail out the entire global financial industry. As they did so they discovered that the sectors liabilities were more far more colossal than had been realised; global finance extends beyond banks, governed by banking regulation, into
Marieke de Goede Virtue Fortune and Faith: A Genealogy of Finance (Minneapolis: Minnesota Press 2005) p. 141-42. 80 Stephen M. R. Covey The Speed of Trust: The One Thing that changes Everything (Free Press 2008)


much vaster derivative markets for which there was no regulation, and so no reliable means of assessing which institutions were bankrupt. Since the whole system was highly interconnected that the bankruptcy of Lehmans had caused the entire system to go into trauma, governments decided to cover all liabilities, even those that did not appear on any balance sheet, and so to prevent any institution from going bankrupt. The market had stopped working, and government intervention now prevented the market from starting to work again. The derivatives markets had created a form of money that was many times in excess of the formal money supply. Governments transferred money from the real economy into the unreal economy of credit. But this process required, and still requires, a completely undisclosed and scarcely discussed order of money. The liabilities were great enough to bankrupt even the most powerful nation state of all. Public knowledge and understanding had not been up to the task of challenging the market, and was not able to challenge government responses to the crisis. The public ability to interpret capital markets in terms of flows from groups, and generations, was missing. True values, and the insolvency of the banks, was not revealed. Banks were not obliged to sell their stocks into a market that didn't want them, and the vastly lower, heavily discounted value that the market would actually be prepared to pay for them. So there was very little real trading and the market remained in a state of suspended animation. Banks and the End of Restraint Why have banks become so important? Credit markets are intended to achieve the best allocation of capital and so serve productive industry. Capital-allocation itself is not directly productive, for it simply moves money around; the market achieves the optimal distribution of money which will then enable the best distribution of productive resources. But as proportion of the economy, this sector, the financial services industry, also known as the FIRE (Finance, Insurance, Real Estate) economy, has more than trebled over the last three decades. Has it done so because we have become several times better at identifying the most productive locations for capital? Does the task of getting capital to the very most productive place involve moving our money much more often, so dramatically increasing the volume and velocity of capital movements? Or could it be that the credit markets have attracted money out of long-term investment in slow-growing productive industry and into the fast-moving capital-allocation industry. Have capital markets grown at the expense of the productive real economy? Could it be that we are all much less interested in investment, and thus in committing our money to one place, than in identifying investment opportunities before the rest of the market does, getting in early and buying low, and then getting out again as soon as the slower money arrives? Has the extraordinary growth in wealth been a consequence of the new forms of capital market that ride on the back of the main market, offering a new some form of arbitrage on the main business of lending money to industry? 81 Every few years a new derivatives market emerges, so that we have a series of financial markets each of which stands on the back of the market beneath, all supported by the productive economy, at the bottom. Each derivative market is developed in order to provide some additional security to the wealthiest investors. But the value of the trades that take place in these derivative side markets are many times greater than the value of the market that supports them all. Can the whole system be said to be efficient, that is, do its fundamental job of distributing the money that will distribute productive resources to the best advantage of the economy as a whole? If the greater part of the money flying across the world via international dealing floors is not intending to be investment but simply gambling on the future movements of prices, hasnt the long-term been entirely eclipsed necessity the short-term?


John Lanchester IOU!


Whose are wealthy generally lend to those who are not, the rich to the poor. Whether we regard it as credit or as debt, the development of this vast global financial apparatus means that the lender never meets the borrower. Thus the lender can never ask the borrower what he intends to use this loan for, whether it will go into the work by which they may make themselves truly wealthier, perhaps creating employment along the way by which others can do the same. They cannot therefore discover that this loan is not for production at all, but for consumption, and will be spent aping the lifestyles of those who are wealthier than themselves, in which case that loan is unproductive, contributes nothing to greater economy and is usurious. When there is no person-to-person questioning of the purpose of this lending we have the unscrupulous lending to the gullible, which is not the kind of covenant that promotes the good society. The further down the market and, as with credit card borrowing, more immediately related to consumption, the higher are the interest rates. The consequence for the whole economy is that that significantly higher returns are paid on lending to consumers than producers. The rate of return on lending for consumption is significantly higher than it is on investments in productive industry. When all money is chasing the feckless consumer, credit is more difficult for industry. By assiduously looking for the highest rate, each middle-class saver has added to the pressures on industry in his own nation. Over the last thirty years the restrictions on borrowing have been relaxed, making it easy to lend and to borrow. Successive governments in Britain and the US have made it easier for the banks to lend, so that they no longer have to decide whether the sum borrowed is going to be truly productive or whether it is merely for consumption. The separation between high street banks predictable and safe and merchant banks high-risk venture capitalists has been abolished. The reward of higher interest came through to the high street, but so finally, despite the apparent control of risk through securitisation, did risk itself. If we search only for the higher interest rate we bring into being a financial industry that competes to find the highest rate and to bid rates up. As they do so they award themselves corresponding more, and as they become more rewarding the finance industries attract the people who used to work in industry, making the rest of the economy less attractive.82 Capital-allocation is also risk-allocation. If, enabled by some new mathematical tools, we develop a novel way of spreading risk and so reducing the share of that risk that we are exposed to, we have given ourselves a little freedom from our commitments and so can go back into the market to chase new profit opportunities.83 Looser regulation has allowed us to change what we had previously marked as liabilities into assets against which we can borrow more and plunge back into the market. With the technical knowhow and computing power the insiders can make money by accepting deals with much slimmer margins which allow them to trade at greater speeds and in greater volumes. At various moments in Western history there have been periods of dramatic booms and busts: there were many such periods in the nineteenth century. After the boom and bust known as the Great Depression Western governments imposed close regulation of credit. Banks were held to strict deposit ratios, so had to hold greater deposits than they do now. The control on the issue of credit, legislated after earlier financial crashes, was understood as the sort of restraint that we expect governments to provide. We did not call this restraint usury laws, but that is what it amounted to. In effect governments had re-introduced usury laws and so for forty years mid-twentieth century money was comparatively tightly controlled. Those controls began to be loosened again in the

82 83

Mark E. Taylor Confidence Games, John Lanchester Whoops (in the US, IOU!) Niall Ferguson The Ascent of Money pp. 320-31 (London: Allen Lane 2008).


nineteen-seventies, and continued to be rolled back in the following decades without apparently causing great instability. By the end of the century, money was cheap, and easily available, and less caution was exhorted on lenders by central banks or governments. But the progressive removal of this restraint has an unforeseen consequence. It put an end to much manufacturing industry in the United Kingdom. At the time this was understood as simply as a move from older and less profitable to newer and more profitable industries. But as we have seen, the loss of our industrial base produced the two other consequences. First, a proportion of the working population no longer had a personal stake in the economy, because their own craft or industrial skills, which are a form of personal properties, were no longer valuable. A culture of industry and the motivation that comes with it, disappeared. Secondly, those who had earned reasonable money for industrial work, so there was a drop in incomes in the lower half of the economy, and a consequent reduction of purchasing power in the nation as a whole. Easier money had had the effect of sending industry abroad so there was a loss of the ability to buy our own products. This was compensated for by making money easier to borrow so that people could continue to buy the goods they wanted. We have lent each other money to go shopping. Their shopping increased imports rather than domestic demand but governments find re-election easier when they relax financial restraint so that they can shop. They went into debt to do so, and are now taking their losses, their credulity punished, though perhaps not learned from. What effect does this have on the economy as a whole? The savings of those in late middle age seem likely to create repeated speculative bubbles and financial crises. Those who manage to buy the very best financial advice will become wealthier, while those who do not will find that that the purchasing power of the money that they accumulated through a lifetime of saving has shrunk and their security vanished. They will not able to support themselves, and so will be dependent on the state. The more the capital market grows, inadequately restrained by a legal framework, the easier it becomes for the wealthy few to relieve the many of their savings, and so their ability to provide for themselves and remain selfreliant. In the long-term, on any account of self-interest, whether we consider consumers or governments, we have done ourselves no favours. We have reduced the amount of buying power in the economy as a whole, reduced the skills and morale which makes for a healthy and entrepreneurial economy, taken away the confidence that enables people to start families and bring their children up with a measure of self-reliance. In all these ways we have not made our national economic long-term any easier. As a result, for the majority, the long-term not only does not look bigger and brighter than the past but significantly smaller. Through the ages Christian thinkers have linked lending and borrowing to this issue of the integrity of the nation, and so to the justice and class harmony that prevents the nation from drifting apart. Restrictions on lending are part of the responsibility of any government and indeed are intrinsic to the self-government of a society that intends to remain a functioning whole. Such restrictions help to keep disparities of wealth within limits. Excessive disparities of wealth can turn the nation from a single united people into antagonistic classes. Christians through the ages have believed that the policy of every nation should be directed to the good of its every member, and that each should benefit from membership of the nation. It should be policy to prevent some parts of the nation the wealthy benefitting beyond a certain point by impoverishing the majority. Christians and others have insisted on usury laws so that each member of it may participate in the life of the nation and so achieve for themselves a bigger economic role than mere beggar or slave. It is not in anyones interest to make those who are not well off so poor that they can neither take part in economic or political life.


People have jobs because other people value what they sell and they sell what other people value. But how shall we value the total value of product of the UK economy? GDP not only grew but the rate of its growth increased through the last three decades and through the last ten years in particular. It grew because the financial services grew? But how meaningful is this growth? If GDP grows because financial services grow we might ask whether any part of this growth, even the part for which the financial service were directly responsible, relates to a real growth of productivity. Or has the entire market been telling itself what it wants to hear, and refusing to submit itself to any extrinsic scrutiny? Has it become a rogue group, so strong that it evades accountability, and which is able to extract a limitless ransom from the nation as a whole? When the financial services have become too large a proportion of the economy they must brought under control and their size reduced.84 The political nation must come to the realisation that the long-term effect of financial services is to remove capital from productive industry, which we have related to the virtues which build the social capital of a society, and pumping into the virtual, that is, imaginary, economy. The claims on future resources that have swollen this virtual economy until it has become several sizes larger than the real economy, must be brought until control until they correspond more nearly the actual resources in the real economy. The society that cannot implement the political changes that will stem that flow is in long-term trouble. We can find nonfinancial ways of creating provision for our future, for future provision does not have to be financial provision. So far we have said that the economy is a series of flows between generations and we suggested that the family is vehicle of this transmission. We have said that as functions are ceded by the family they are picked up by the market, and result in the placing of excessive expectations in it. When capital markets cannot sustain the burden of enabling those flows, the state has to pick them up. We have suggested that the British economy is not worth as much as we have believed and that we have taken excessive rewards for a growth that was delusory. We have asked whether this generation has not made enough to transmit resources to the following generation, and thereby has endangered its own economic security. All this is the result of considering ourselves primarily as consumers and only secondarily as producers. Could this be because we do not consider ourselves primarily as givers, persons defined by their generosity rather than neediness, and thus by our action rather than passivity? Why should we regard ourselves as those from whom our labour is extracted from us under duress by the division of labour, as it were by a process of nature? We can decide for ourselves that we work in freedom, so we create and produce because we love and give, in freedom, and that we work in order to have something to share. We can decide to exercise our own self-restraint, find more modest ways to save and establish more restraint as a nation through restoring limits to speculation. We have related some of the medium-term issues around the economy to concept of labour, ownership and dignity. But there is a set of long-term issues which we have to link to the concept of utility and demand. We have take a look at how the work and service of that person is recognised by all his peers in a vigorous public square. We need to see how in the Western account, man changed from a social to a non-social being, ceased to be a person and became an individual, living in an effective vacuum, moved only by his own passions.


Simon Johnson Doom, Baseline Scenario


5. Public and Private Man

We need a little history of economics. We have to introduce the four basic economic concepts of distribution, labour, utility and exchange. We have made considerable use of three of these already. The first, distribution, relates to love. We have said that love is primary, and our yearning for love and reputation is the motive of human interaction. St Augustine tells us that we love our family and so we are able to put their needs in order and decide how to distribute between them the various goods that we know they need. It is a given that we love and care for ourselves, and that we distribute goods in proportion as we love others, so we feed and care for our own children before anyone elses. Because we both love and know them, we are able decide between their needs and so to achieve the best distribution of the resources we have. We give, or distribute, goods between the persons we love. Love is a fundamental economic concept. Augustine tells us that there is a self-love that is proper to every creature. It is a given that we look after ourselves first: when some part of your body itches, you scratch; when you fall over you pick yourself up, when you are cold you put a coat on. You do all these things for yourself. Then when your wife is cold you fetch her coat, when your child cries you comfort them. The Letter to the Ephesians tells husbands that they should love their wives as they do their own bodies for no one ever hates his own body, but he nourishes and tenderly cares for it.85 You show a basic self-preservation and self-respect, and so it makes sense to encourage one another to love and look after those closest to them in the same way. Love and self-respect are primary, and the basis on which you can be appealed to do something similar for others who are not quite so close. What the family does first for its own members, it may then do for others. Of course, self-love can also turn inwards and become narcissistic and destructive, but this is a perversion of love and of the care that belongs to a proper self-respect. Psychology and political science can confirm that we observe one another, seek one anothers approval and that our desire to be loved and admired drives all our acts. We do things because we hope that they will get us noticed by the right people, making it easier for us to be loved by those whose love we want most.86 We live in an economy of emulation. As Aristotle puts it: Imitation is natural to man from childhood, one of his advantages over the lower animals being this, that he is the most imitative creature in the world, and learns at first by imitation.87 What causes habits to become customs in certain species? The answer seems to be the proclivity to imitative behaviour. 88 Business is about public reputation. We want a good name; we set out to grow our brand. We hope for repeat business, for we are in trouble if our customers do not come back. Each financial transaction is a joint act of mutual acknowledgment and promise of ongoing relationship. But in the language of economics it is difficult to say why reputation is important and why we set out to secure long-term relationships with customers. Without any notion of our desire for public reputation, it is hard to show why we act responsibly in public, and commend one another for acting well, that is, generously and justly. In the next chapter we shall discuss what happens to the society with diminishing self-respect.

Ephesians 6.28-9 Adam Smith A Theory of Moral Sentiments 87 Aristotle Poetics 1448b8 88 James B. Murphy The Kinds of Order in Society in Philip Mirowski Natural Images in Economic Thought: Markets Read in Tooth and Claw (Cambridge: Cambridge University Press 1994) p. 561.
85 86


Persons as Ends and Means Another fundamental economic concept is utility: our identification of anything requires that we find the use and purpose to which it is oriented. Modern economists try to use the concepts of utility and self-interest in order to make sense of inner-family activity and so explain the family in terms of transactions between individuals.89 John D. Mueller believes that this is the wrong approach. The family cannot be adequately described in terms of a collection of self-interested individuals. Neither a family nor a society is the outcome of a multitude of self-interested individual decisions. We do not love in order to do something else. Love is fundamental. We may love people because through them we get what we desire, but this just defers the question of what it is we want. Ultimately we want the love and respect of this person: we desire their company and thus we want them. Perhaps we want the love of thousands of our contemporaries, so that as Augustine says, we are driven by love of glory, that is, public reputation. So to say that we want this or that thing is not an ultimately satisfactory answer. We want these persons, and we want these persons to want us. If we make love a fundamental concept we can explain why we consider things desirable, and so make them our intermediate goals, the means to greater goals which must ultimately be particular persons. But modern economics is not prepared for this. It is adamant that utility is the fundamental category and the hypothesis of love is not required. The logic of economic theory is quite clear that love cannot be based on utility, for the simple reason that utility is derived from love. To love a person for his or her own sake is precisely to treat him or her as an end; and it is only because there is such an end that the means selected to serve that end (like milk or college tuition) have any value. To say that love is based on utility is therefore circular. In economic theory, human love is not a weighing of utilities (though these may also be present) but a weighing of persons. If I weigh another person as equal to myself, and the needs and preferences of that person are similar to mine, then I give him or her the use of half of what I have. 90 Augustine tells us that it is the mother who ranks the needs of members of the family and ranks the things that she has to distribute in terms of their appropriateness to each. Love, Mueller tells us,
is not essentially an exchange of utilities, though of course a mixture of gift and exchange is possible. Mutual love is best viewed as a simultaneous pair of gifts or voluntary transfer payments, the ends for which economic action is undertaken are best described as the persons listed in the distribution function, not the commodities listed in the utility function.91

According to Christian and other non-modern economic traditions which start from some concept of natural law, economics describes how we choose persons as ends, to whom we direct all our effort and make gifts of ourselves, and as the means, through the production and exchange by which we are able to make those gifts to persons. Mueller points out that it was the Christian economic tradition that brought together the four fundamental concepts of distribution, production, exchange and consumption. Thomas Aquinas sets out the relationship between of them.92 The end of all human activity is happiness, or blessedness, which we may find in God. A great tradition, often called the Scholastic tradition, built on Augustine and Aquinas work. Until the seventeenth century economics was embedded in discussions of the practices, habits, communities, institutions and other forms of shared embeddedness, so economics did not appear as a separate discourse. Nonetheless this economic tradition has been argued for

Gary S. Becker John D. Mueller The End of Economics. 91 John D. Mueller The End of Economics p. 20 92 Aquinas, Summa Theologica
89 90


by Christians in every generation, winning varying degrees of interest from the tradition that does not wish to go beyond the concept of utility. The utilitarian tradition, which we now called neo-classical economics, has dominated the discussion over the last couple of hundred years. The Christian tradition is constant and vibrant, and elements of it are regularly borrowed or re-discovered, but nevertheless the utilitarian tradition is the only economics represented in universities and business schools. This orthodoxy refuses to regard giving, that is deliberate person-to-person distribution, or the related complexity of human motivations, as relevant so shunts it off to Ethics and neighbouring academic departments. Modern, that is classical, economics began when in The Wealth of Nations Adam Smith gave the first account is based on just two of these four elements. Smith dropped distribution, which we have related to the deliberate person-to-person relationships of love, and dropped utility which relates to purposes, use and consumption. Smith set out the first treatment of the economy in terms of production and exchange alone.93 Mueller suggests that Adam Smiths reductive economics represents a kind of collapse; whereas economics had been able to offer a sophisticated account of human interrelating, it ceased to do so after Smith. Why is this? Smith decided to dispense with distribution and consumption because he believed that, being driven by their passions, human beings cannot make a truly rational choice of means and ends. Human beings are not as capable of deliberation and action in freedom as previous generations of thinkers had thought, or as Christian thinkers continue to believe. We will pick up this thought again in a moment. At the end of the nineteenth century economists re-introduced the concept of utility so neo-classical economics combined three of the four ancient concepts. Economics continued to make no use of the concept of distribution which we have related to the deliberate disposition through gift of goods between persons on the basis of which person makes best use of that gift. Utility was defined in terms of demand, that is, of what someone was willing to pay for it. The concept of marginal utility made the point that that someone would have to outbid all other potential purchasers. Thus the true use and purpose of any good was to fetch a price in the market. When a thing gained a price, by virtue of being bought by someone, it had fulfilled its goal. Of course, the true fulfilment of that thing was that it should be put to work, in production. It is truly useful in the hands of whoever can employ it to produce other goods. Christians insist that the value of a thing is determined primarily by its use, and thus by reaching the person who can make best use of it, which is ultimately the use that serves the common good. Only secondarily can this be governed by the value it achieves in exchange. It is not therefore the market, but the goals and purposes in which it finds its final place which determines the value of any good. Christopher Franks puts it like this:
From the non-market society perspective of Aristotle or Thomas, exchange value is an important but nonetheless secondary and subordinate phenomenon. The primary context for imagining where wealth has come from and where it is going is the antecedent fabric of natural and social co-membership, dominated by use-values, that encompasses humans beings and intends their flourishing. 94

The value of a thing depends on what use a community can give to that thing, and only then on the price it fetches in the market. By restoring utility but not distribution, neoclassical economics makes the assumption that we can calculate means but cannot calculate ends.95 It does not concede that we can decide between the needs of persons known to you. Utilitarianism sees all other persons as means, but that you yourself are the only end, effectively the only person in your

Adam Smith An Inquiry into the Wealth of Nations (1776). Christopher A Franks He Became Poor: The Poverty of Christ and Thomas Aquinass Economic Teachings (Eerdmans 2009) p. 68. 95 Mueller Redeeming Economics
93 94


calculations. You act for others only in order to get something from them. Utilitarian economics is based on not being able to tell the difference between persons and things and so, it has recently been suggested, is a form of methodological solipsism.96 But things differ in their ends and purposes. Aristotle realised that labour and action is defined by its end, so human labours cannot be aggregated or added up and cannot constitute the uniform substance of something so clearly non-natural, conventional and undifferentiated as exchange value.97 Labour is not all the same, because labour is not merely a matter of nature but also of convention, that is, of the decisions embodied in the culture of a society. But the Classical economists of the eighteenth and early nineteenth centuries decided that labour was a function of nature alone, and thus that all labour was the same.98 Adam Smith treated labour as an undifferentiated substance that an employer could extract from as by a process of nature.99 The modern labour theory says it is a single activity, differentiated only by intensity, skill and duration. Utilitarianism assumes there is only one end pleasure or satisfaction so everything can be measured against everything else. All modern economics is based on nature as given and then is built on a series of nature metaphors. But nature is not the only given. We are born into a world that is formed by history, that is, of all the generations of human beings before us. This history gives us culture, which is the basis of all our desires and goals. It tells us what is purposeful, and what is useful because it contributes to that purpose. If we set ourselves apart from our culture we could not identify anything as desirable or useful, and thus could not identify utility. Labour is not an undifferentiated lump of stuff that can be tapped from human beings as though it were tree-sap. There are many different sorts of work: what differentiates them is what they aim at. As there are different fulfilments, different happinesses, so there are different labours. Work is not entirely interchangeable because humans are not interchangeable. Nonetheless money represents the absolute equivalence of all labour, a point we will return to in Chapter 6. Economics as the Triumph of Private Man Let us pursue our history of economics a little further. Economics does not wish to acknowledge that it has a history; its implicit claim is that it is timelessly true, as though it had dropped down from heaven. Nonetheless, what we presently know as economics is not the whole, but simply part of a greater economic tradition. Economics has devolved out of the disciplines of politics and of ethics, which themselves belong to the humanities, in which all accounts of human being as a social, political and reasoning creature are gathered. Over many centuries Europe has accrued a vast tradition of thought about how to establish justice in our exchanges. Generosity, justice, and an orientation towards the common good, are the fundamental social virtues that classical political philosophy points us to. Much of the vocabulary that now belongs to economics was employed by earlier generations to describe our wider public and motivations. Terms such grace, credit, honour were synonyms.100 But in the eighteenth century grace was used in an
Autistic Economics Meikle Scott Aristotle's Economic Thought p. 183. 98 Meikle Scott Aristotle's Economic Thought p. 183 When it came to labour, Smith and Ricardo did not distinguish between nature and convention. 99 Margaret Schabas The Natural Origins of Economics (University of Chicago Press 2005) p. 90 Clearly, Smith thinks of labor as a substance, insofar as it can be transferred, stored and extracted and evaporate, for that matter. 100 See the discussion of the relationship of grace and credit in Craig Muldrew The Economy of Obligation: The Culture of Credit and social relation in early modern England (Palgrave Macmillan 1998) pp. 123-47. Andrea Finkelstein The Grammar of Profit: The Price Revolution in Intellectual
96 97


increasingly restricted sense for the relationship of the individual with God, while honour was reserved for relationships between one man and another. Now honour has been replaced by concepts of recognition, respect and reputation which do some of same work, while the concepts of credit, authority and validity carry other parts of the same semantic load. Terms that were once interchangeable are now divided to form two distinct groups of terms, one reserved for economics, another for morality and religion. In their discussions of what happens when men meet in the marketplace, for many centuries Christians preferred the description offered by Plato and particularly Aristotle, developed by Augustine and Thomas Aquinas.101 But from the seventeenth century a series of reduced accounts of man and politics, owing more to Stoicism and Epicureanism, began to take over. These identify other people not as persons but as subpersonal forces which we have to master or fly from. Alasdair MacIntyre has shown that economics is founded in an anthropology in which men are bound by their passions, and so are by nature in conflict with one another.
It was in the seventeenth and eighteenth centuries that morality came generally to be understood as offering a solution to the problems posed by human egoism and that the content of morality came to be largely equated with altruism. For it was in that same period that that men came to be thought of as in some dangerous measure egoistic by nature; and it is only once we think of mankind as by nature dangerously egoistic that altruism becomes at once socially necessary and yet apparently impossible and, if when it occurs, inexplicable.102

What had been the dominant account, owed to Christian interaction with Aristotle, of how to be a responsible individual in pursuit of public acclaim through acting and reasoning well, began to be replaced by a much more limited account. When it cut loose from the great tradition of political philosophy from which it had come, economics was considered more fundamental than politics and so gradually became an autonomous discipline. It became the science of man in which man was a creature without a past, or who had to escape his past.
The Early Moderns separated the law from the good because they had come to the conclusion that it was no longer possible for the ends of man to have a place in the law. Men had ideas about ends that were too incompatible; these disagreements easily degenerated; what mattered above all was to avoid civil war which is the greatest of evils.103

Modern or neoclassical economics is most often identified with Adam Smith. Smith did not intend that we should be care-nothing autonomous agents without responsibility. We are not selfish atoms. Smith wanted to see men behave well as citizens and public actors, who were able to act for the common good. He was determined that men should not conspire together to create monopolies that corner the market and act against the wider common interest. The concept of sympathy that he introduces in his Theory of Moral Sentiments is the key to The Wealth of Nations: Smith expects us to act from our own best instincts, which he knew are a mixture of self-respect and fellow-feeling. The
Context (Leiden: Brill 2006) p. 316 Profit tends to fade from the family sphere not just as it is heating up in the political but also it is becoming embedded in the spiritual. Had profit left the personal sphere by the front door only to re-enter via the window? If the still small but growing split between profit and honor that marked the turn of the (seventeenth to eighteenth) century was an indicator of the narrowing of profit (outside of its legal meanings) to the baser spheres of endeavour (despite the ages insistence on the holiness of all callings) and, hence, an indicator of its lack of place in the sanctuary of the family, perhaps the worldliness of honor made that term equally unsuitable for describing spiritual matters leaving profit (in its merely mathematical sense) in place by default? 101 See Bernard Dempsey Functional Economy. 102 MacIntyre After Virtue p. 228-9. 103 Pierre Manent The City of Man (Princeton 1998) p. 179.


Theory of Moral Sentiments tells us that self-respect is inextricably related to our concern for what other people think of us, and so to our reputation.104 The market should be free because we should each of us be free to form relationships and enter covenants with whomever we wish. When the market is skewed by big corporations and by government revenue-raising or -spending it is not free. Smith simply wanted to remove the blockages to individual initiative caused when the market is dominated by any group of self-interested big players. Smith nonetheless dropped love and purpose, two of the fundamental economic concepts employed by Augustine and Aquinas, and limited himself to the two concepts of labour and exchange. But others came after Smith who were convinced that the entire existing tradition of deliberation about what is good, of Aristotle, Augustine and Aquinas and their heirs, had become hopelessly tangled. They decided to give up on it, and cut moral language loose from all previous discussion of what is good or true. The chief of these was David Hume who, disdaining the metaphysics and logic of many previous centuries, and proclaiming the dichotomy between nature and will, and so between fact and value.105 The generation who followed Hume in this have become known as the Utilitarians, of whom Jeremy Bentham is best known. The Utilitarians wanted us to give up talking about right or wrong, or good or bad, either in the sense of good for some purpose, or even in the sense of this will not look good to other people. Any good is good to the extent that it is wanted enough to raise its price to the point at which its present owner is prepared to sell it. They have encouraged us to think only in terms of good as this is established by the satisfaction of the person who employs enough money to outbid all others to claim it. The value of a thing, its utility, is determined by the price that reflects the preferences of all agents in the market. Within this Utilitarian account all our acts are seen as private, and so as preferences. Utility then no longer had any direct connection to what is useful and purposeful, but means its value to the market, or the price that you could receive for it. After the eighteenth century the whole tradition of thought about being human in public was turned inside out. As neoclassical or utilitarian economics became the dominant idiom of public life, our various actions in the public square were described in terms of individual market transactions in which each of us imagines that we act privately, as though no act of ours could be seen by others or would be emulated by others. Economics understands each transaction to take place in some private place. It assumes that nothing you do can be seen, so no act of ours could create envy in others or induce them to copy us. Every transaction is considered in isolation from all previous and subsequent transactions. It is as if each of us is quite alone. The inside world is the whole idiom in which we understand the public world. The history of economics is long and complex. But in the last 250 years, much of this complexity has been dropped. The history of economics is the history of a reduction as much as it is of a development.106 This history is vital nonetheless, not merely because it enables us to acknowledge the complexity of one anothers motives in the market, but because it forms the way we see ourselves and the degree to which we act confidently to secure about our common future. Nature and Will Until the seventeenth century economics worked on the basis of three concepts of nature, convention and the judgment of the individual person. Economics was embedded in moral and political thought. But increasingly from the seventeenth century convention and individual judgment were elided and these three concepts reduced to two nature and will.
Adam Smith Theory of Moral Sentiments Meikle Scott Aristotle's Economic Thought p. 182. 106 John D. Mueller Redeeming Economics
104 105


Moderns identify just two significant forces of nature on one hand and culture on the other. Modern economics assumes that nature is what is real, and that economics is scientific as it conforms itself to descriptions of nature. One snag here is that much of our early modern science was constructed on the basis that nature is a machine, so the machine rather than nature is the fundamental metaphor. 107 Subsequent economists have wondered whether the organism or ecosystem would be more appropriate metaphors.108 But if it is the machine or the organism it is at rate not the person that is doing the major conceptual work, so that, in the discipline of economics, persons are not thought to shape, or be shaped by, one another. Communities and cultures are assumed to have no role in forming our desires, so economics gives any consideration of how we decide what it is that we desire. The result is that we understand ourselves as units, rather than as covenanted beings shaped by histories; we see ourselves, not as complex bundles of possibilities, but simple atom-like beings. Stoics conceive of human beings in terms of their will-to-power, while Epicureans conceive of them in terms of blind physical forces. The result is that we conceive of ourselves as pitted against the world, both the social world of other people, and the natural world, and so likely to develop a casual regard for our natural environment. But if we have nature and culture as two domains defined in mutual opposition how can any relationship between them be established? But two such concepts are not adequate. As long as we stick with this dichotomy of nature versus individual will, we can have no conception of the social processes by which nature is worked upon or by which we make up our minds about what our will is. We cannot show how our desires came into existence, or how they develop, or why we could hope to develop and grow. Without at least a third term we will simply have nature on one hand and the will of the individual on the other, so that the individual faces the world in static and implacable opposition. We need a third term to allow us to talk about change, interactivity and history and to recover such a sense of our embeddedness . There are many to choose from history, tradition, habit, custom, law or community. 109 When economics starts to use these terms we can show that we choose between desires, and can give reasons for our decisions, and thus we are deliberative and reasoning beings, and so are indeed rational economic agents.110 Economists after Adam Smith attempted to do economics in terms of the two concepts of labour and exchange, without making any use of the concept of distribution. We have related distribution to love, self-giving and a complex covenantal conception in which human beings can freely decide for themselves to whom to dedicate their service. With only a truncated account of utility, related to the prices determined by the market, they did so without consideration of the purposes, uses or goals to which a thing or person is oriented. With only the three concepts of labour, exchange and utility, neoclassical economics knows nothing about covenant, self-respect, Adam Smiths sympathy, community feeling or love of reputation. It is unable to account for the motivations of people who are free self-givers, or deliberate, reasoning and political creatures. Neoclassical economics cannot say why we should go work, or why work is good even when it is not explicitly and financially rewarded, or why it is good to be a public agent. It cannot tell us why we should not skim our customers or corner a market. Neoclassical
James Bernard Murphy Philip Mirowski Machine Dreams: Economics becomes a Cyborg Science (Cambridge: Cambridge University Press 2002) 109 James Bernard Murphy The Economy of Labor p. 46 Nature, custom and stipulation represent three fundamental concepts of order; there is the natural order of physical, chemical and biological processes; there is the customary order of habitual social practices; and there is the stipulated order of deliberate design. All forms of social explanation refer implicitly or explicitly to one or more of these categories. Every human institution has three dimensions; a natural, a customary and a stipulated dimension. 110 Douglas Knight The Eschatological Economy: Time and the Hospitality of God (Eerdmans 2006 p.
107 108


economics does not allow us to ask about the public or long-term effect of our myriad private actions. Economics does not able to give us any of the discipline by which we can be formed into generous and responsible public agents, and it has divorced itself from the other discourses which can. Economics reflects mans assumption that he is fundamentally alone. Economics is the theology of the short-term, in which everything is shorn of its public consequences. One reason why we face an economic crisis could be that economics is not an adequate account of what takes place when persons meet in the marketplace. We are able to make this suggestion only because the Christian tradition gives us the resources for a more adequate account. We have said that modern economics represents a departure from public man and a turn towards private man, and that this was one aspect of a long movement away from richer to poor conception of human being.111 This starts from the belief that man is an asocial individual, more ruled by his passions than his reason who cannot truly be the judge of his own ends. It forced the complexity and dignity of human interaction and exchange into the single reductive discourse. We said that economics was a sub-discipline of politics. But even here there is a problem, for economics seems not to understand itself as a discipline. It does not offer us the discipline by which we can learn to take responsibility and to act in the market as mature agents. Such considerations only appear only in the ethics module of a business management course.112 In this modern or neoclassical economics everyone is taken to be unaware of those around them and unable to attribute motives to them. It is as if we cannot take one another seriously as deliberative, reasoning and public creatures. But economics need not remain constrained by the utilitarian heresy. There are always alternative traditions. When these are forgotten by mainstream economics, Christians and others are able to bring them back. We have indicated the history of this change from the identification of man as a public and relational being to a private and fundamentally pre-relational being. Next we have to return to the idea of public service and the government that comes from it.

6. Government Over-Extended
We act individually and independently. When this great gathering of independent persons are considered together, we have a crowd, and we call this crowd the market. The market is the great assembly of humankind that mills about the public square, forming relationships with one another and exchanging accounts of their contributions and their demands. Our own freely-entered covenants give us the motivation to take our part in this assembly, to take initiatives and form such relationships. A healthy economy is driven by a healthy culture with a healthy public square. We make agreements to act together in covenants of mutual service, and of public service. It is our public service that brings government and the state into being. Governments hold the ring so that our own

Margaret Schabas The Natural Origins of Economics (University of Chicago Press 2005) p.98 notes a strongly pessimistic component of Smiths scheme, the sense in which we are but pawns on a chessboard, subject to vanity, greedy and ambition. Emma Rothschild Economic Sentiments: Adam Smith, Condorcet and the Enlightenment (Cambridge, MA: Harvard 2001) discusses Smiths Stoicism 131-33. Gloria Vivenza Adam Smith and the Classics (OUP) on Smiths wide and eclectic use of classical thought. Smith dismissed the apathy of stoicism, insisting on the importance of fellow-feeling. Vernard Foley The Social Physics of Adam Smith, Athol Fitzgibbons Adam Smiths System of Liberty Wealth and Virtue: The Moral and Political Foundations of The Wealth of Nations (Oxford: Clarendon Press 1995), Margaret Osler Atoms, Pneuma and Tranquility: Epicurean and Stoic Themes in European Thought (Cambridge: Cambridge University Press). 112 John Mdaille The Vocation of Business


motivations may operate, but unrestrained government prevents us from discovering such motivation. Since we are not free in relationship to them, the market and the state cannot motivate us to anything. If state and society give no recognition to the fundamental role of the household there is not much incentive to start one, and there will be fewer households and all other forms of enterprise and risk-taking. If society does not commend our initiatives and enterprises, no one will take the risk of such new startups and the result will be economic stagnation.
Distorted Market

The state grows. It grew throughout the twentieth century and continues to do so now. Because they do not condescend to recognise the covenant from which all our many distinct covenants come, everything governments do tends to substitute for our own love and initiative. Their equality agenda attempts to flatten every specific covenant, so that the relationship each of us has with the state is more important than any other relationship that we have inherited or entered freely. Their determination to solve our problems drives them to make provision for us and instead of us, so taking away our motivation to do so for ourselves and for one another. Since they have decided that they cannot receive, however much at second-hand, the self-government that originates with the Church, our political leaders are in a quandary. The state that does not acknowledge the primacy of self-government is trying to push the Church out of the public square. It tells the Church that it is merely one faith community among others. But the Church replies that, though there be many faith communities, there is only one that threatens us. The government that is over-extended and looks round for ideological justification for why it should become more so, is itself a faith community. Middle-sized firms grow into mega-corporations because the fiscal regime of government induces them to do so. They are in a symbiotic arrangement with government by which they are allowed preferential treatment in order to grow to produce the tax revenue to support the rest of us. The demands that we all make on the state that it intervene for us and support us, means that the state grows, and the corporations grow with it. They draw capital upwards. Governments have been saving big firms, but doing so by laying the taxation burden on other, smaller, firms. They are thereby reducing the incentive for the individual initiatives that become new start-ups. The state makes its settlement with the international corporations that, for the states purposes at least, make up the market.113 Yet it is our demands and unwillingness to exercise our own responsibility and forms of provision that over the extend both market and state. It is our own individual reluctance to sustain our own relationships and make our own provision that brings this about. Thus because we prefer to have the state intervene to manage things for us, the state has to raise money, which is simply about stripping capital out of social capital, cashing in social capital. The state is the universal reconciliation machine, that makes us all the recipients of its standardised decisions, the individual political nature of which are largely hidden in the funding decisions. This means that all decisions go on over our heads, and we are passive recipients of decisions. We ask for this, and the long-term result is that it is imposed upon us. The practices of self-discipline and self-control that enable each person to become a selfgiver may be found through the Christian life. This discipleship enables the self-control that allows our giving to be free and deliberate. We are freed to love, and to act, first for ourselves and families and then for our neighbourhood and wider society. The practices of self-government enable generosity, and public service and government are what result. Where it receives, however much at second-hand, the virtues of this Christian


John Lanchester Whoops! p. The biggest of the banks are bigger than the state too big to fail.


formation, our society may find the resources to acknowledge our various acts of generosity, and so motivate us to become responsible and confident members of the public square. As the gift of oneself to another, marriage is the primary act of generosity; where our society affirms this, our society will command affection and loyalty enough to work for its continuation. The society that is able to deal in the currency of self-giving will hold together. But when we, or our leaders, forget that all government is sourced in the self-government of the person, the integrity both of the person and of our society as a whole, comes into doubt. The state is that set of public servants who serve society. They hope to do so by safeguarding whatever is necessary to its future. A government exists to protect the household, which it does by recognising marriage as that fundamental event of selfgiving that brings new households and new economies into being.114 Any government wants to encourage all those initiatives that make up civil society. It may do so when it acknowledges that persons are both intrinsically self-governed and self-restrained persons, and both self-givers and thus public servants. It does so when it acknowledges that persons may adopt for themselves those forms of discipleship or formation through which they hope to become better self-governed and better self-givers: thus the government must acknowledge the covenants and communities, such as the Church, that embody such a course of formation. A government is committed to public service when it recognises these covenants pre-exist it, and thus when it is modest and self-restrained. Marriage is the one institution that is more basic than the state.115 But when those in government do not acknowledge the fundamental nature of such covenants, they operate on a different understanding in which the person is an individual without self-regulating public relationships. The government that is not sourced in the self-government and public service of persons looks for an alternative and more expansive mandate. If our leaders do not recognise the decisions of persons to give themselves to one another in love and freedom, by recognition of that our covenants constitute a fundamental autonomy, everything governments do substitutes for our own love and initiative and action. The relationship each of us has with the state is more important than any other relationship that we have inherited or entered freely. When the state has accepted singleness over the covenant of two persons the effect of all its interventions is to promote disengagement and social isolation over the covenants of two persons. It assumes that we are undifferentiated beings, and thus that all relationships are equal, and all equally occasional. Then governments do not know how to stop themselves from hearing everything as a plea for their closer involvement. The public budget is employed to compensate for the fall-out from failed marriages. If we are not dependent on one another through a myriad particular covenants of family, and its extensions in the community and voluntary and private sectors, each individual is brought into direct and involuntary relationship with the state. If it assumes that no covenant is prior to the state, the state will insist that that every covenant requires the states sanction. If our public servants fail to sustain the selfrestraint that makes for modest government, the ideology of the group that justifies a more expanded mandate will give the state an agenda derived from that ideology. A government that assumes that humanity is homogenous will attempt to obliterate all

Robert George What Marriage is and what it isn't First Things July 2009 Ideologies and practices that are hostile to a sound understanding and practice of marriage in a culture tend to undermine the institution of marriage in that culture. Hence it is extremely important that governments eschew attempts to be neutral with regard to marriage and embody in their laws and policy the soundest, most nearly correct, understanding. 115 Douglas Farrow Nation of Bastards


differences and flatten every specific covenant, promoting singleness over all the covenants of which society and the economy is made up. The effect of such the mandate given by the equality agenda is to attempt to make us one sex. If we are all a members of a single unisex human being, we have no need or desire for any other human being. If we have no interest in any other specific human being, we are not moved by love of them and are consequently without motivation. The state will be unable to concede that we may love our own family more than others, or prefer our own initiatives and enterprises over others. In its attempt to abolish all specific desires, such an ideology will set the state against every particularity. The state will have become a secular theocracy, a rival church. The state is no longer the expression and limited implementation of our own public service. Rather it exists before us and is more fundamental than we are: it nominates and delegate our functions to us. Society is then a single household . Each of us is then married to the state. It is our universal parent and partner. Then only the state is the only true person, and we are all persons only as we commit ourselves to one another through it and so derive our identity from it. By attempting to out-source our own selfgovernment we turn our own public service into the state that is prior to ourselves, a power that knows no limit. We exist for its sake. Such a state is the God that acknowledges only his own will and does not care to give any account of himself. The State and its Clients Our leaders have promised us too much. We have got into the habit of looking to them to solve our problems for us. All public provision encourages us to believe that we do not have to sustain the relationship with our parents or our own children. When relationships become too difficult for us, they can be provided for by state benefits and agencies. We then see them not as indivisible persons but as individual problems for which separate agencies are the solution. In sum these services remove our need for one another. In giving us these penultimate goods and satisfying what are seen as our primary and material needs, our public servants set new strata of intermediaries and service providers between us. Meanwhile we learn to think of ourselves as without resource of our own. The trend in living alone is something strongly encouraged by government subsidy and taxation policy it does not result from spontaneous action and free choice of people who are facing the full economic costs and consequences of their actions. 116 The upshot of all their promises is that they are trying to deliver us from responsibility. We are divided into active and passive, producers and consumers, service providers and service users, victims and so divided men. Rather than tell us to provide this service for one another, our public servants, perhaps because they are afraid that we will stop voting for them, will prefer to provide these services for us. 117 It is of course economically efficient to keep as much demand as possible in the lower part of the economy. The first part of any spending is the most efficient, shows the greatest multiplier effect, and thereafter shows diminishing returns. 118 Yet this requires that the state avoid creating dependency traps. The steady expansion of the total money in circulation means that those who once were not taxed have now drifted into the first tax bracket, and yet are still dependent on tax support or benefit. Although they were making only enough to support themselves, they are now required to pay tax in order to support others. If the tax and benefits system makes unemployment more profitable
Patricia Morgan The War between the State and the Family: How Government divides and impoverishes (Institute Economic Affairs) p.18 117 Patrick Deneen Democratic Faith 118 Jonathan Gershuny Changing Times: Work and Leisure in Post Industrial Society (New York OUP 2000) p. 248 A fraternal concern to improve standards of consumption among even the poorest members of society... could serve to stimulate the economy in ways that also benefit a substantial proportion of the better-off.


than work the state is then creating poverty and economic inefficiency. Those dependent on such benefits will insist that they continue, and vote accordingly; a government that has its clients is also captive to those clients. Those in receipt of benefits have become political clients of the state. But it is not only those on the edge of poverty but also the middle classes that have drifted into this position. Our public servants and leaders are unable to resist the huge weight of this expectation placed on them by their many constituencies. They ignore the consequences of allowing the exception to become the new precedent effect, and so neglect moralhazard. They do not see that, as public actors we emulate one another, so that any particular mercy for one section is an offence against equity and so taken as a precedent and challenge by the rest of us. The whole population is turning the original sincere public service intentions which took our public servants into politics in the first place, into an inability to say no to any request for funding. Our leaders seem unable to make judgments that do not increase the state. We are perverting their originally well-defined intentions. Inflation is caused by the expansion of expectations that assumes that the state can step in with funding for them without doing so for every case. It is our inability not to ask the government for funding that makes the state uncontrollable, and which makes for the stagnation of our economy. Our ongoing financial crisis is caused by long and extensive plunder of the state. Going to the state for support has become the policy of an entire middle class. Though it was premised on providing for the poorest, the welfare state has become the major source of middle class incomes. If we have been simply plundering the state, we have been robbing the most vulnerable of the protection which the state is intended to give them. Even the industry previously most resilient to this, and most defiantly capitalist, the financial services industry, has got in the on the act. It is indeed right to blame bankers, and regulators and politicians for bringing our financial crises on. Our governments have been captured by the big banks. With their greater financial power and freedom, less hampered by multiple constituencies, banks are able to take advantage of this. Since states are the way that a nation of people organises itself as a public entity, this means that these banks are in defiance of the right of any people to be sovereign over their own affairs. He warns that recovery will fail unless we break the financial oligarchy that is blocking essential reform.119 If the state cannot say no to those who wish to farm it, then it is taken over by such farmers and power brokers. The effective plunder of nations will only be brought under control when fraud charges are brought, cases come to trial and a representative sample of offenders are put in jail. Of course, those who are jailed will not be the only guilty ones, for none of us is entirely without guilt in the financial speculation of recent years. Nonetheless this is the only way that states will regain the power to exercise their proper authority from the financial oligarchs who have made undeclared attack on their sovereignty, however is based in the sovereignty of the people. By dispensing with the discipline of self-government our society, including inevitably its leaders, and by cognitive capture of regulators, we have distanced itself so far from the mind set of small and restrained government that we have been unable to see that see that this is what we have been doing, and are still doing. We have acted in the belief that the government will stand guarantor of our debt, or pay our bills for us. 120 The state cannot prevent itself from taking on more responsibility. Though governments may want to encourage our initiatives, they are only able to conceive of each project as one of their own that requires their supervision and funding. By running inflation, the state dissolves

119 120

Simon Johnson (Baseline Scenario) Piergiorgio Alessandri & Andrew G Haldane Banking on the State (Bank of England)


any sources of authority but its own. Since it means that the money we save in a lifetime of work will be worth little when we come to draw upon it, inflation weakens our selfreliance. It is offering to take the burden of responsibility off our shoulders, with the consequence that we approach one another, as sectional interests and lobby-groups, and thus as antagonists, for whom the question of the common good is not addressed. Christian Faith and Secularity Let us summarise some of the points we have made so far. We started with Augustines point that a nation is bound together by the desire of each member for the good of nation as a whole. There will always be differences, so inequalities will arise, but they can be ameliorated by the unforced generosity at work within the nation as a whole. When they pass a certain point they have a detrimental effect on the economy. In a great number of ways the state is there to prevent this point from being passed and to rectify such imbalances if it is and so keep inequality within limits. Where we delegate too much to it, we have a state that exceeds its mandate. The state that does so, does not care to give any account of itself. The people who acknowledge no discipline or limits, and who are therefore not what Augustine would regard as a united people, generate the market and state that acknowledge no limits. Such a people and such a state becomes the God that knows only its own will. Only the Church can hold out against the state, and it does so by reminding us that we are not bound to be antagonists, for we are also intrinsically public and self-regulating beings. Liberal democracy derives from the great tradition of Christian political thought and practice. It is for the Church, that is, the present generation of Christian disciples, themselves under the discipline of that tradition, to offer that political thought and practices afresh, and to say that this tradition of ethics shapes this community, and may go on to shape the wider national community when it is willing. Parts of this vast tradition are always being bowdlerised into different agendas and slogans: there are individual campaigns against poverty, for the environment, against capitalism, for regulation. It is for the Church to say that, as long as we are angry about other peoples sins, without asking for forgiveness and release from our own, our politics is mere selfdisgust and shouting. So what is it that Christians are able to bring to the debate? The Church insists that men are able to find and meet each other in the public square. It insists that there is a secular economy in which we may meet and serve one another in this time and place. We may ask each other for what we need and we may provide for one another and so meet one another on these pragmatic grounds. We may, and must, use our judgment in describing our own needs and meeting the needs of others. We are able to make our own judgment of what others tell us about their requirements, or the market tells us about them, via prices. We must judge for ourselves, and so engage with one another politically as well as economically. As long as we fail to insist on this element of judgment we will assume that the economy is mechanism that rolls on, entirely unrelated to our generosity towards one another, and we will be baffled when, for us at least, it fails to roll on. It is the responsibility of Christians to set out the Christian distinction between public and private. The modern concept of the private sphere ultimately derives from the Christian doctrine that each human being has the dignity of living before God. Though there is a world of partisan judges who may not be fair to us, this impartial judge has promised to hear each of us out and will ensure that we will finally get justice from all men. The distinction that the Church makes between itself and society is the guarantor of secularity. It is the guarantee that we are not confined by the present state of affairs.


Market and state tend to expand and assimilate all that they encounter. But the Church, alone perhaps, holds out against integration into either state or market. The Church will not be absorbed or hammered flat. Ideological secularisers will experience the Church as a challenge to their own power. Simply by being there, and by being not-the-State, the Church indicates the limits of the state. It gives the state its limits, and so prevents the state from becoming the totality. The Church secularises and demythologises the state. It is the Church that provides the true secularity, by distinguishing itself from the state. When we do not make this distinction, between those who are self-controlled and those who are not, we can only ask others, and the state to do for us what we do not do for ourselves. Then the state takes on more functions and does more for us even than it does presently. But the corporations can only provide for us, and so do for us, what we might ourselves do for ourselves. They cannot free us to act; they cannot make us more, but only less, active. No one can free us to act and take initiatives except ourselves, when we are empowered by God in baptism. We help them when they are enabled to help someone beyond themselves. The real economy is the economy of human relationships, regardless of whether the market and the price system acknowledge this or provide us with a fair reflection of it. All Christian economic reflection has insisted on this point. The economy does not function without us. It is not a mechanism: the metaphor of mechanism is no more than a shorthand for our own action. Money serves the good running of the market which serves the good functioning of society; put in any other order these factors are disordered: society cannot function in order to serve money. Money is intended to accompany resources to the best places for them, where they will best serve the reproduction of the human economy. But money may also have the opposite effect: it may divert resources to other, destructive goals and so endanger the real economy of human relationships. The price system does not therefore tells us everything we need to know, and does not make all decisions for us. The price system can harm the human economy, and the financial industries may not serve to obtain the best location for resources. They may be serving their own resources, and on a long-term account, not even them. We are trying to get the state to save us from the market, that is, to save us from the downwards valuation that we would otherwise be obliged to give one another. But, as we have said, the market is the assembly of all humanity. We have to receive our judgment from the whole assembly of our contemporaries around the world; the state cannot save us, for they must ultimately decide what we are worth. That judgment will become more terrible when we try to delay it. If the state tries to delay that judgment, it will do so only by bailing out the corporations already powerful enough to suborn the state. When it does this, then the state takes on the burdens that make it every more likely to shipwreck, and those burdens are thus placed on the whole nation. Then the poor are being taxed in order to keep the rich mans corporation intact despite his own recklessness. Then the state really is, as Augustine suggested, simply the biggest of our gangs of thieves.121

7. Self-Government and Good Government

What is good? Since our total preferences are expressed in prices, good is what everyones purchasing decisions say is good. The marginal revolution means that what I value is measured by what all others value, as these values are represented by prices. Prices establish the value of values.


Augustine City of God


Each of us refers to some good, exterior to the market, by which we can judge the market as a whole. We do not know what the value of the whole market is: it can inflate itself well beyond what is sustainable, and yet no one is prepared to declare that the market is the emperor with no clothes. When this becomes the case, the one thing that can be done for this economy is to declare that it is indeed naked. Could this be the responsibility of the Church? We can distinguish ourselves, step out of the market and address it, that is, address all our peers, and so act as a truly independent and individual person only by reference to what is good. The individual is able to judge the market as a whole, if he know that he and it are under the judgment of the good and so of truth. But Christians `insist that the value of a thing is determined primarily by its use. Only secondarily can this be governed by the value it achieves in exchange. It is not therefore the market but the goals and purposes in which it finds its place which determines the value of any good.122 The over-extension of the top end of the market into a single global economy that threatens the market in each particular place, is the result of our own surrender of responsibility, and readiness of each of us to think of ourselves as individual and consumer rather than as covenanted person and citizen. The over-extension of the market into the domestic economy of the household threatens the good functioning of the market itself. The overweening market is the corollary of the hubris of the state. The rise of the financial market that overtops all concerted human government and selfgovernment is analogous to the rise of the state beyond public service, which has arisen out of the temptation to distance ourselves from our vocation as self-givers and intrinsic public servants. By alienating our labour from love and the gift of person to person, we have brought the state into existence as another person. It is the single unyielding given before which we must yield. As the State tends to become a person, so too the market attracts the attributes and logic of personhood. It is our reluctance to understand ourselves as self-governed and self-giving public persons that causes our own alienated personhood to accumulate in these meta-individual forms of market and state. Self-Judgment and Self-Government We seek one anothers company. We may ask each other for what we need and we provide one another with goods and services. We may make our own judgment of what others tell us about their needs, or the market signals us via prices. This is the basis of the public square and secular economy. Christians believe that we may be formed and improved by encounter with one another, and so we should examine ourselves and test one another in public. The Church is the assembly in which all the world is present. Christians understood the Church as a public and political assembly as much as it is a household, and indeed they were the first community to understand itself as the reconciliation of these two otherwise antagonistic spheres of the public and private.123 Christians know that we have to approach one another both in peace and with a readiness to question and challenge, even at the risk of confrontation. Christians expose themselves to judgment and correction by others. They do not believe that anyone is above judgment, or that peace obviates the need for confrontation. It is this Christian insistence that we have not yet reached the universal peace of the end times that keeps the secular sphere open and secular. We have seen
Christopher A Franks He Became Poor: The Poverty of Christ and Thomas Aquinass Economic Teachings (Eerdmans 2009) p. 68 From the non-market society perspective of Aristotle or Thomas, exchange value is an important but nonetheless secondary and subordinate phenomenon. The primary context for imagining where wealth has come from and where it is going is the antecedent fabric of natural and social co-membership, dominated by use-values, that encompasses humans beings and intends their flourishing. This context disciplines and conditions all economic activity. ... in modern market society on the other hand this predominance of use values is superseded as exchange value itself becomes the regulatory factor in economic activity. 123 Bernd Wannenwetsch Political Worship (OUP)


that in the economy of modernity no one has to challenge his neighbour directly, for we can refuse to buy their product and ship in a cheaper product from some other part of the world. Each of us holds over our neighbour the discipline of being able to exit our relationship with them. The Christian gospel is not a political or economic programme: there is no set of instructions in which our every little act is laid down for us. God invites us to act publicly, using our judgment. We are free to use our own judgment and to decide how to act. Our conscience may be formed from a tradition of judgment, such as Christian discipleship, but we decide for ourselves. We may decide how to act well for ourselves and for one another. We may fail of course. But when we have failed, we may admit our fault, ask for forgiveness and start again. There is a dignity in admitting that we have failed. There is a terrible loss of dignity when we cannot bring ourselves to admit that we have acted partisanly and badly, and so failed, and this is what we are now witnessing. The Christian doctrine of God gives us the break-through concept of the person that gives us these concepts of freedom and responsibility. In the gospel, God hold himself responsible to us and gives an account of himself: this is what the Churchs Scriptures provide. Though it declines to acknowledge this, the liberal tradition lives from its memory of the Christian tradition. It takes different elements of the unitary Christian teaching about man but sets these elements out without relationship to the doctrine of God which alone can hold them together. The result is one part of the Christian concept of man is set against another. The independent and autonomy of man is set against the covenant of each man with others of his community and mankind as a whole. So we alternate between seeing ourselves as deracinated individuals and collectivism that strips us of our individual dignity. The practices of Christian discipleship teach us that we may work so that we may be generous and have something to give to one another. Such labour is its own reward, for we may take pride before God in those whom we have loved and served. Without such a discipleship liberalism turns Christian humility into another game of power in which we all now claim to be victims, with the resulting culture of resentment. But for the Christian, work is valuable regardless of whether it receives explicit financial reward. It is labour that gives the economy and currency their value, not the other way around. The value of money can only be established by what is not money: labour is a fundamental economic concept only as long as it is defined by a Christian account of the work, and the pain, of self-giving. Repentance, Forgiveness and Release Forgiveness makes us free to approach one another again after failure, and so makes for an economy in which relationships can be restored and renewed. Without the practices of the Church, of self-judgment, confession and forgiveness, liberalism does not remain liberal, and the economy does not remain healthy. There must be judgment and truth, so market must be allowed to clear, and price discovery and so sustainable values are allowed to emerge. Crises are caused when societies and their governments start to duck the judgment of the market. It cannot be ducked in the long term, but much damage can be done by trying to avoid the judgment of the market. Governments may not be able to repent and correct themselves, but persons can do this. Governments are only as good as voters will allow them to be. A society can only repent when it realises what it is that it now regrets. The Church is body that knows how and


why to repent; it only it can release the nation by starting this process. The Church can start the process of our national self-judgment in which we hear from the rest of the world its account of our worth. Persons are responsible. We are mature and independent to the extent that we take responsibility for what we have done, name it in public, apologise for it and, as far as is possible, bear the cost of it. If we cannot take responsibility, even for the things that we have not been directly responsible for, we blemish the image of God in ourselves. You can go back to husband, wife or parents and apologise. You can go back to your clients and tell them that you are responsible for their loss, and offer to make whatever financial restitution you can. We can mark our balance sheets down, take our losses without demanding that they be nationalised, and accept bankruptcy. We can admit our weakness and failure because the covenants of which we are members make us strong enough to do so. After fifteen centuries in which the British have been soaked in Christian culture, we have the intellectual and ethical resources to repent. We understand what asking for forgiveness means. Because the Church receives its life and strength from Christ, it is strong enough to lead the repentance, and the nation and its leaders are free to follow, to endure the ignominy, If we do this, we will survive. The Church points to the mandate and limits of the sphere of our shared and immediate concerns and so to true secularity. It insists that we are free to meet one another, and enter relationships with strangers, without the mediation of business or government. It says that we may live well together. We do not receive this freedom of ours from the government. Rather we may collect together to nominate a few to exercise the office of public service. So we assign to them those few functions that help us to exercise our freedom well. We ourselves exercise our powers through our representatives; we do not delegate and alienate our powers so that they are exercised by others in our stead. The Church insists that the individual may undertake whatever he wishes in the open field of individual and corporate enterprise and responsibility in which we demonstrate leadership and generosity. In this chapter we have begun to examine the economy in terms of its crisis. We cannot fix this crisis with more money, because it is precisely the value of money that is the problem. We have to fix money with something that is not money. The only way to fix it is with attitude, or more traditionally, with virtue. Each society has to give an account of itself to other societies and cultures. We have to persuade them and ourselves that we are energetic, entrepreneurial, virtuous and reliable people who honour their debts. This present generation has to honour the virtues and achievement of previous generations. Other nations will be confident of our society and our economy to the extent that we acknowledge and understand the qualities that made our society vibrant and this economy powerful and do so by not disavowing our forebears or their virtues. It has to honour the household in which children are nurtured and trained up as the next generation of economic agents. Only the household can give this economy its future.


Summary of Chapter 3
1. The market is dependent on the family and household. The formal is dependent on the informal economy. 2. An economy has to sustain itself through time. It does so as one generation persuades another to produce a third. Economics is about the transfer of motivation, and thus culture, and subsequently of all the resources, which a new generation requires. 3. Through the market we provide one another with the material means that our bodies require, and which make it possible for us to be present to one another. 4. Love motivates work. Work sustains relationships and motivates us to seek new ones. Different forms of work create different capabilities, virtues and forms of character. A healthy economy requires a mix of all. 5. Work creates dignity. Work may provide its own rewards. To the degree that it distributes explicit, financial rewards across the population it keeps demand and motivation high. An economy without local access to capital loses skills, finds little dignity in work, and experiences a loss of industriousness and purposefulness. 6. We need motives to work and to enter transactions. We do things for the recognition of our peers; our hope of public acclaim sends us out to work. We do things for the love of particular persons, both those we go to work with and those we come home to. 7. If the relationship between the formal economy (market) and the informal (family and household), and thus the difference between them, is not respected each suffers a crisis. The modern economy promotes the formal economy (of explicitly denominated zero-sum exchange) over the informal economy (of love and responsibility). 8. The excessive growth of the market and financially-mediated relationships results from our failure to sustain our households as economic entities with public motivations. 9. Consumption substitutes for love. It allows us to distance ourselves from our families and friends, and results in loss of social capital. It does not encourage us to develop the virtues that make us self-subsistent and public persons. 10. The market is the judgement of our fellows. Its good functioning requires freedom and confidence in the exercise of judgment. Judgment brings truth and freedom on which the good functioning of the market depends. 11. When money and credit become divorced from social credit and trust, personal relationship and the particularity of covenants, there is a crisis that appears as intellectual, cultural, political and economic. 12. Christian economics is the discourse that affirms the proper relationship of, and distinction between, public and private spheres. Modern economics is the discourse of the private sphere, brought in to the public sphere. It is unable to account for our motivations or for long-term and inter-generational relations. 13. The society that does not concede the particularity of the covenant relationship between husbands and wives, does not give its members confidence to have children and bring them up. They will not find the motivation to enter the institutional form, marriage, which secures the transfer from one generation to the next.


14. The state attempts to compensate for the failures of families. By doing so it competes with, and substitutes for, familial love and responsibility. 15. As the state takes on excessive responsibility, it loses its mandate and legitimacy as the realm of the public service of citizens. The state wants to demonstrate its legitimacy in order to justify the ranks of mediators it supports and is increasingly unable to acknowledge any authority other than itself. 18. Social capital is the source of future growth in economic productivity. National culture is long-term social capital. When state undermines the family, social capital is lost. 19. Through the global market, other nations judge our worth. They decide whether to continue to invest in the economy of which the state takes up an increasing proportion. 20. The state that determines not to receive the Christian contribution to civil life becomes anxious to demonstrate its legitimacy through its own omni-competence. 21. As the state exceeds its mandate, it refuses to concede the proper role for the traditions of civil society, in particular their Christian sources, and the institutions that help secure this. The Church has to ask whether the state is becoming a rival ideological force, a rival church. 22. If the state attempts to efface the differentiations and asymmetries of the covenants that make up civil society, ideological polarisation is likely to occur. 23. Such tensions will ensure that the state is not able to motivate the existing generation to produce a new generation. The state will so over-determine the present that it will render future prosperity more doubtful. 24. The deist atheism of secular liberalism is unable to restrain the demands and undeclared power of individual, market and state. 25. The practices of public judgment, consequent on a concept of public persons can, through confrontation and argument, draw issues out of the private sphere of personal choice and into the public realm. By employing the discourse of shame and honour can a society restrain the externalisation of costs and consequent tragedy of the commons. 26. The present generation has succumbed to the temptation to push the costs of its present welfare onto the next generation and enjoy now a standard of living that the next generation will pay for.


4. Confidence and Loss

1. Economy and Public Square 2. Bodies and Continuity 3. Secularity and Self-Respect 4. 5. 6. 7. Secularisation and Cultural Revolution Instantaneity and the Modern Eschaton The Closed Economy Theology and Economics

The market is made up of those short-term, limited-purpose relationships that we call transactions. Our readiness to interact with one another, through short-term transactions or in any other way, depends on our being at ease enough to do so. We are willing to take on new economic relationships as long as we are confident that we will not confine our future freedom. As our confidence in our freedom to enter and leave them increases, the number of transactions goes up and the economy grows. An economy is a commitment to mutual service between members of a community, and in the case of an open economy that also extends outwards to include members of all other communities. All human interaction rests on a vast stock of trust and mutuality that can never be made entirely explicit. The market depends on the intangibles of civil society. A degree of social cohesion allows us to be content with only informal acknowledgement and reward. If we are less confident, we will demand payment for our services. When we insist on formal acknowledgement of them, they move from the informal economy of household and community into the formal economy of the market. The formal acknowledgement represented by prices can never substitute for the larger tacit dimension constituted by this confidence. The market depends on the trust which this confidence enables.

1. Economy and Public Square

First we will tackle the issue of confidence, which is closely related to our ability to make decisions for ourselves. We will be confident enough to enter relationship if we are sure that we can extricate themselves from them again. We may decide. We are free to do so. Though habits and rules help us arrive at it, no one may tell us what our decision is to be. We may judge for ourselves. We make our judgments here and now, in the particular circumstances we find ourselves. We must judge in the light of everything we know, using all the gifts, virtues and experience we have acquired through whatever processes of learning we have undergone. We may listen to all sides, acknowledge the consensus that is common sense, argue for our own view, occasionally change our own mind perhaps, and either convince others or not. But then we may reach our judgment and make our decision. When others are involved, the agreement on this decision is likely to represent a compromise, but one which everyone must be ready to stand by. We make decisions and bear responsibility, together, so our decisions are our joint responsibility; we bear the praise or blame that may result, even though, as individuals, we may have foreseen the unfortunate consequences that the majority did not. This requires that we act with a measure of self-control.


Every decision requires a decisiveness. Courage is what enables us to insist on this particular decision, even against the consensus. Others may not be able to see the wisdom of our decision. We have to justify it in terms of what is just and right, and so may point out how it seems to us to offer the best solution, the one which is both just and workable. The Gospel affirms that each individual person has the dignity of exercising their own judgment and making their own decisions. We may decide for ourselves, and as we do so also make our decision on behalf of others and for the common good. This may require any number of personal qualities; according to the classical list, justice, wisdom, selfcontrol and courage, are the fundamental virtues. Each of these is required for the exercise of that personal responsibility on which our immediate circle and the wider culture and economy rely. Our decision is not set out for us in any set of instructions or law. We may not finally delegate our decisions to others, for each of us finally has the dignity of standing alone before our peers and before God. The Gospel insists on the dignity of this secular sphere in which we take our own decisions in the here and now and abide by their consequences. This sphere of our own responsibility is what the secular sphere is. We make our decisions not in any ideal realm, but in this particular time and place, and so pragmatically. This is the proper secularity that the Gospel affirms. We are able to make judgments because we are members of a society which shares in a culture. Each of us able to make our own decisions from the cultural resources held in common by our society. We take particular decisions in the light of the long-term commitments which we have learned from that culture, expressed in social, political and religious terms, as these direct us towards what is right, just, true and good. We cannot decide not to bring our own background to bear on any issue; we can only become aware of those aspects of that background that allows us to reach our view. These political and religious resources enable us to weigh considerations and come to specific judgments. Our moral and religious traditions enable us to live in the world, be pragmatic and to come to agreements with others, of the same or different traditions. Every decision is shaped by our long-term orientation, and none of us intends that any decision should restrict our freedom to make similar decisions in future. There is a distinct sphere within which we are not beholden for our decisions to anyone else. By its insistence on the dignity and inviolability of our judgment, and thus on our freedom to decide for ourselves, the Gospel defends the independence of individual person. You are responsible for some consequences of your actions, but only to a limited degree are you responsible for the actions of others. We alone get to decide what we will purchase. No one can tell you that you may not buy this shirt any more than they you tell you which the flowers of your choice in your own garden, or marry the person you love. The economy emerges in this secular sphere in which we take our own decisions, which no one may countermand. Your purchasing decisions have a specific, limited, responsibility. With each purchasing decision you alone decide which firm to give your custom to, and a million others will make unseen the purchasing decisions which reward one firm and punish another. You have only a limited duty to agonise over the hidden ramifications of each purchase. You did not send that garment factory into insolvency: you merely did not buy the shirts made there. You are not accountable for the fact that many others made the same decision with the result that that firm had to close.


Where the Christian faith has been a long presence within it, that society will have acquired the culture in which that secularity is secured. This freedom for the decision of the individual person will be reflected in the law and the practices that sustain the rule of law, and which make this a society of more or less self-controlled people. Such a people abides by the law and accepts that it is the task of representative authorities to enforce that law, even when it is enforced against themselves.124 Christianity secures the secular sphere, which itself secures that space of free exchange, made up of all our individual choices as these are reflected in prices. This Christian account of man as judge of himself and of his peers, makes him a champion of the freedom of every person to take decisions for themselves and so of the freedom of the market and public square. This freedom of each person to enter the relationship and make the transaction that they judge best, gives a degree of sovereignty to this sphere that we term the economy. The civic and political realm is another aspect of the public square in which persons meet together to take the decisions that that will shape and support their lives, and in which they must insist in taking for themselves. They must also argue for the rightness of the decisions they have taken; each can challenge the other and attribute blame to whomever seems to flout the decisions which that community has agreed on. You can buy and sell as you like, and do so within the framework of law, and yet anyone may challenge the decisions you make and ask you to explain how they serve the public good. You may tell us that you bought it because the price was right, but we may nevertheless ask you to convince us that your decision does not make life more difficult for the rest of us. But we have seen a retreat from this account of man as judge and bearer of responsibility, whom his peers may call to account, and with whom we may defend the rightness of his actions and debate our common responsibilities. We have become more reluctant to challenge one another in the public square. If there is a retreat from the habits of public challenge, and loss of cultural and economic robustness, might this be the consequence of a movement away from the view of man as public being, sturdy enough to give and take public challenge, to an account of man as merely private being who prefers to remain beyond challenge? We have seen there is also a political force, or perhaps a political temptation, to disallow any challenges to the public consensus. The argument for marriage and the other covenants that support the household and sphere of individual initiative are not made. The especially those challenges which come from within the cultural tradition shaped by Christianity. This secularisation is the reverse of secularity. The demand that religion stay out of politics is a move from a truly open square in which anyone may challenge anyone else to justify their economic decisions, and thus from a true secularity, to an ideological position that does not wish to be subjected to public debate. To suggest that religion should stay out of public life is to insist that no long-term or inter-generational considerations should inform our own decision-making or public life. We may not ask whether this or that practice really will help the next generation to live as well as we have done.


Oliver O'Donovan The Ways of Judgment


Secularism is the belief that the traditions of wisdom which make judgment possible are no longer required. Secularisation, on the other hand, is the determination to distance ourselves from these cultural resources which enable others to judge and act for themselves. Secularism suggests that there is a process, secularisation, that is both inevitable and good, of extracting ourselves from our culture, and in particular from the assumptions about the dignity and responsibility of the human being, articulated specifically by the Christian religious tradition. It represents a departure from the full account of man offered by the Gospel to account a lesser account of the human being. It replaces the account in which each of us is free to act on our own initiative with one in which there is less requirement for individual initiative and responsibility, and less possibility of holding the mighty to account. Will this reduced account of human freedom still allow the economy, the sphere of free human encounter, to flourish? The Confrontation of Ideas A healthy culture generates a confident public square in which people publicly express their judgment about how best to live and about what is valuable. This public square depends on the vigorous expression of differences in which we indicate that some cultural traits are good and others are not. This is possible because there is an underlying agreement that these differences are significant because they have different long-term consequences for our ability to live together and remain an open society. A healthy culture is able to identify those traits which benefit that society over the long-term, and so give them its public approval, and direct its disapproval at those traits which tend to its long-term disadvantage. Our own judgment allows us to weigh one another up and decide for ourselves the extent that we are ready to enter relationships with one another. We make our valuations public: we say what is valuable and attempt to persuade one another that it is so. We praise and honour some, and mock and deride others. In the public square we may challenge the value that others place on economic goods, and declare that some are worthless or destructive. We can say that a thing is not made valuable simply by a particular groups demand for it, and that some prices are wrong. We may say that the market is mistaken, and that a particular market is pact of knaves and fools. Our values are tested and their truthfulness is established as we do so. If we did not do this, there would be no public square in which individual persons may exercise judgment, and over the long term develop their judgment, and by which the practices of peaceful public contest are built up over generations. Money abbreviates our valuations. These abbreviations depend on our ability to persuade another that our description of what is valuable is true and our commitments to them good, and this depends on our willingness to argue for our view. This public dialogue requires face-to-face encounter, time-consuming though it is. Public dialogue should not be eclipsed by those sub-personal relationships expressed by money. We cannot entirely delegate the task of making judgments about what is valuable to prices. The good working of the abbreviation depends on the public expression of the full account. The abbreviation cannot replace the full account, for vigorous public contest establishes the truth of the values which prices are intended to represent. If our society is not confident of its long future, we will be less willing to receive our public recognition in the long-term and implicit currency of honour. We will demand that we are paid only in the explicit and immediate currency that is money. Money is a means of ordering and communicating preferences. It is not a means of exchanging accounts of


the truth, and testing our accounts, and so of testing and improving ourselves. The economy has grown to fill the public square, driving explicit public examination and judgment into enclaves. We avoid confrontation by tackling public issues in the idiom of economics, so that discussion is not substantive, about ideas, but procedural, about budgets. To talk about truth in the discourse of preferences is to take away the burden of judging what is right in any case and, having reached judgment, to turn definitively away from other options. To do politics in the idiom of economics is to deal with all public issues by spread betting. Money is a kind of shorthand that we oblige one another to employ for all public issues. Its infinite divisibility allows us to avoid making any decision definitive. We never have to turn finally to or from any decision, because we can keep all options open, by greater or smaller budgetary allocations to all of them. But as we hedge our bets on all public policy, it is we who are divided, and who therefore fail to develop and grow. A healthy society attributes honour to those who uphold and shame to those who undermine the covenants which make for that societys continuity. Every society must be glad of the history that formed it. It may celebrate and be thankful for that history and may even direct its thanksgiving to God. We may convey our gladness about our way of life, about our landscapes, labour and industry, about marriages and children, our towns and communities. We may celebrate whatever is good about local industry, local produce, local teams and all other sources of pride. We may decry whatever we believe is execrable about them. Our public discourse must be primarily self-affirming and only then may be self-critical. We may not let the second-order discourse of self-criticism to drive out the discourse in which we express our own basic contentment. One way or another, we communicate our estimation of our own community. Honour and shame are the currency of our long-term public self-affirmation. Geoffrey Brennan and Philip Pettit refer to the sanction of shame as the intangible hand. We may be judged by those who say or do nothing as a result just being well or badly thought of by others can be a significant sanction for people, so that without doing anything in particular people may police one another into certain patterns of behaviour.125 If we do not talk about what is good and bad, will we not lose the means by which we can publicly signal dissent and disapproval? The voices that dominate our media tell us which views may not be expressed, in case our disapproval of any lifestyle option be oppressive. Yet those very media voices employ the discourse of honour and shame in order to shame whoever articulates a views that is not its own. Our society has managed to stigmatize stigma so much so that we are reluctant to blame people for any act that does not appear to inflict an immediate and palpable harm on someone else. 126 We have promoted the discourse of the private over that of the public sphere, with the result that public judgment of what is good, and condemnation of what is not, has become muted. Honour is dishonoured.
Geoffrey Brennan & Philip Pettit Economy of Esteem (OUP 2004) p. 277 (citing Adam Smith Theory of Moral Sentiments p 116). 126 James Q. Wilson The Marriage Problem: How Culture has weakened Families (New York: HarperCollins 2002) pp??


The story of that words virtual disappearance from the working vocabulary of English and other European languages belongs to the larger story of the 127 discrediting ultimate loss of cultural honor in the West. Culture and freedom Freedom of speech is embedded in custom and tradition, made explicit by law. Thus the rule of law is more basic than democracy. Democracy functions when it is firmly embedded in the attitudes and customs that evolved together with the national body of law. When it has not grown organically with this tradition and law, democracy can only mean the views of the electorate at this moment, and so of views which will shift week by week. A democracy that acknowledges nothing but the altering views of its population, without these customs, acknowledges no source of authority but itself. But since it own views may change as often as they are polled, that authority cannot make itself felt, and there is a crisis of authority. Democracy is healthy when there is no public anxiety or haste to discover the very latest expression of the public view, and when public policy is not directed to rooting out the attitudes and customs of previous generations. If democracy is defined without reference to custom and law, it means no more than the most fleeting self-expression of the electorate. Without law, we have only the crowd that barracks in the television studio or takes to the street. Then the people is a mob and tyrant, and politics is placating it by buying off particular interests.128 Democracy cannot merely mean the will of the people expressed in this moment, without any other more long-term consideration. For our good government, we need leaders who do not exhibit the same short-termism as ourselves. We need leaders who are good at selfgovernment because they have been formed by the traditions that foster it. The distinction between church and state arises because the Church insists that it is distinct from the state. It is Christians who distinguish between public policy and individual conscience, and so identify a distinct sphere in which individual consciences can meet and challenge one another. There are decisions that neither market through the price mechanism nor the state can make for us. The public contest by which we test our ideas and form our valuations is essential to the freedom which is necessary to sustain the confidence which is essential for any market to emerge. Even if no one else does so, Christians insist on the inalienably responsibility of each person and the public space in which persons exercise their judgment and responsible that results. When no other such institution does so, the Church may perform this role for the nation as a whole, and in this case Christians must have courage. The state does not grant this space to the church or to the public square. This task is given to the Church by Christ. The state must acknowledge that this space exists, and respect it. The state must acknowledge that there are many forms of life that exist prior to it, and that it is the

James Bowman Honor: A History (Encounter 2006) p.10 Pierre Manent The City of Man (Princeton 1998) p. 204. Modern man, as modern, both flees and seeks out law. He flees the law that is given to him and seeks the law that he gives himself. He flees the law given to him by nature by God or that he gave himself yesterday and that today weighs on him like the law of another. He seeks the law he gives himself and without which he would be the plaything of nature, of God or of his own past. The law he seeks ceaselessly and continually become the law he flees.
127 128


states task to safeguard their independence, so that the confidence that they engender may continue. Establishment and an established Church merely indicate that the nation acknowledges that the Church has this role, and that the State does not, which is simply to acknowledge that any State must be limited and secular by definition. If the state is not willing to do this it may be because it is making its own religious, ideological or totalitarian claims. Secularity is established through continuing reference to the precedence, of national attitudes, customs, law and the working of representative government. Secularity is diminished by any state-led attempt to rule out those attitudes or traditions. Can the state that does not acknowledge that the Church has this role protect the open space which the real variety of ways of life in one national community can appear? Can it be truly secular and avoid turning secularity into an ideological secularism that denies real pluralism? When it determines that all our motivations are merely private and that the traditions of thought, religious and other, which give us our motivations should have no public expression or debate, the state prevents real pluralism from emerging. The Christian faith is that form of public life that distinguishes between politics and religion, and thus between our present circumstances, and our ongoing and long-term orientation, between now and not yet. As this ability to defer and look ahead is required by every society, this eschatological reserve is essential to politics. A Christian society is simply civil society, under the rule of law, in which the Christian community and its tradition is partner.129 Long-term there cannot be any government or any society when we abandon the practices and language of self-control and try to do politics solely in the discourse of individual will, rights and interests. As long as the discourse of the incontestable individual will is indulged the responsibility of that same individual is transferred to market and state. As soon as we define man without consideration of his purposes, aspirations and orientation to the future, his freedom is gone. Without means to direct and control himself, man is turned into a fundamentally a-social being who can only be controlled externally. When this is so, we have created a two-class society, of those who must externally controlled and of those who must control them. The discourse of good, truth, authority, service and love may not be dispensed with. The Church says that that man may not be utterly known or controlled. He is free, and is a mystery and a wonder, knowable yet never utterly known, who will always surprise us, and about whom there is always more to learn. This insistence on the depth of man and the world that makes the Church essential to the public square. Without it, secularism becomes a fundamentalism, and thus no longer secular. Christians are witnesses of freedom. The best that can be done for those who are not free, is to be free and not to capitulate to their lack of freedom. The freedom that acknowledges no responsibility or self-control is no true freedom but merely libertinism and captivity to the passions. I am not free if I am only able to follow my own whims moment by moment. I am truly free only when I have some other source of authority by which I can decide between my desires so that they become more reasoned and mature. Our freedom depends on our ability to judge well for ourselves. Freedom is not merely
Roger Scruton The West and the Rest: Globalization and the Terrorist Threat (London: Continuum 2002) p. 7 Put very briefly, the difference between the West and the rest is that Western societies are governed by politics; the rest are governed by power.


given by democratic institutions and freedom of the press, but requires a self-critical independence of mind by the people who make up that political nation. When our freedom is only that of consumers who are powerless to resist, or even notice, the relentless encouragement to buy, our moral development is stunted. Until we discover how to exercise some self-restraint, we will indulge to whatever whim of the moment the market identifies in us and produces a product to satisfy. Without our own developed judgment, the market will tell us to buy and we will do as we are told. It's our duty to consume, we're told, because it keeps other people working. For spare moments, when regime-threatening questions might come to mind, the oligarchs have authorized a modern form of bread and circuses, an array of new sexual freedoms to compensate for the loss of the most basic civil right of all the right of self-government. 130 Under political totalitarianism each of us at least has the smallest interior freedom in the heart. In the soft, all-comprehending, all-providing comfort of the market we may lose the ability to remain unsatisfied. There is a dignity to being restless and aloof from the market that can only come through self-control and our own desire to achieve a degree of self-government. The Effort of Public Challenge Good judgment is a skill worth having. Our inherited intellectual tradition represents an apprenticeship in judgment. Such an apprenticeship can direct us to what is best and teach us how to work towards it. But to become a consumer no apprenticeship is required. We can all be consumers; everybody is right, no view better than any other. This does not give us the public discourse by which we can debate what is good and learn to make good judgments. The long and involved discourse by which we judge between competing goods is then left on one side and the easier course of settling on a price employed in its place. Money is public discourse abbreviated; prices are abbreviated speeches. Listening to the debate and making your own judgment requires effort, while making and accepting bids, selling and buying, requires much less effort. We have declined to hear and talk, listen and argue, and so act as public beings who face one another in the public square and articulate our differences. We have asked the discourse of money to take away from us the need for public confrontation. Our economy is in trouble because we have asked the discourse of economics to do too much and not asked our own critical faculties and the culture that forms them to do enough. Any culture intends to sustain the community that transmits it and is formed by it. Critical discourse is a corrective discourse, dependent on our first order discourse in which we promote and pass on our culture. But the second-order discourse of critique has come to replace the first order discourse of self-judgment and affirmation. We denigrate the conceptuality by which we can praise what is good and criticise what is not. We belittle those who regard our culture as worth protecting and promote to privileged positions those who denigrate it. Paradoxically those who work in universities, which are almost-exclusively state-funded in the UK, seem to dedicate themselves to debasing the culture that they have inherited. Yet these are the cultural resource by which we can learn to develop personal autonomy and so exercise our judgment on the claims made by governments and markets.

Mary Ann Glendon, Contribution to The End of Democracy? discussion, First Things January 1997.


A single theme runs through the humanities as they are regularly taught in American and European universities: the illegitimacy of Western civilization, and the artificial nature of the distinctions on which it has been based. All distinctions are culture, therefore constructed, therefore ideological.131 We have disdained the transcendentals of truth, goodness and beauty by which we can maintain awareness of one another as independent judges, each of us free to give or withhold our assent and participation. The result is that we have no means of holding ourselves aloof from the claim to universality made by market and state. The undeclared agenda of our cultures educated despisers dominate in media and government. They do not give us no reason and deter the behaviour prejudicial to its long-term? Albert Hirschman pointed out that it is easier simply to leave the institution that you have become dissatisfied by than it is to express that dissatisfaction. But that institution is at risk if it does not allow the culture in which members or customers are confident enough to complain. The disgruntled can always take their custom elsewhere they can exit; citizens can emigrate, and the country that does not take note of such silent departures is in trouble. To complain, protest and give voice is to act for the sake of the long-term health of your country.132 Where there is not enough opportunity for public debate, and for challenge to the agenda the and its costs, a population leaks away, moving or into internal exile. What makes our society so unready for public debate is that it identifies confrontation with violence. It sees competition and public trials of strength as the unfortunate remnants of a violent society rather than as the legitimate public wrangling by a society is able to tell good ideas from bad. It is convinced that peace has arrived, and is threatened when people fail to observe that consensus. Our individual determination not to be judgmental has issued in the vast judgment that all truths are partisan and temporary. We have decided that no one should declare anyone elses judgment is wrong, and that public expressions of disagreement should not be pushed too far. The Christian Contribution The wealth and poverty of nations is explained by the culture and history of those nations. A culture may encourage people to abandon impatience and violence and adopting the long-term habits of hard work, rationality and education. One faith community has had an exclusive impact on this country. The presence of Christians in it has made this country what it is. No other faith community has had the same influence on our national culture. Moreover this culture has been exported around the world, to create a sphere of public interaction which we could call variously civil society, the rule of law, liberal democracy, the freedom of the individual, the free market, the global economy. Only societies with long histories of civil peace develop these cultural characteristics, while these cultural characteristics reinforce that peace.133 These are aspects of the culture of this country, and they derive from the Gospel exclusively. Faith communities are not all the same. It is the Churchs confession of the gospel, in which each human

Roger Scruton The West and the Rest: Globalization and the Terrorist Threat (London: Continuum 2002) p.79 132 Albert Hirschman Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, MA: Harvard University Press 1970) 133 Gregory Clark A Farewell to Alms: A Brief Economic History of the World


being is more than state or market or any other human collectivity, can make them. It is therefore its faithfulness to the gospel that secures the secularity of the public square. Christian discourse is the guarantee of public and secular discourse. The Church is the sponsor of the public square. Freedom starts with the freedom of each human being to believe what he wants, to hold his own view. Freedom of conscience and the freedom of religion is freedom to dissent and disbelieve whatever is currently orthodoxy. Christianity offers no totalising worldview. It offers a series of questions to whatever culture it meets, thereby opening that culture to examination through the processes of public reason, so that it may become a secular and open culture. Christians are able to identify the threat to the freedom of speech. They identify the temptation to homogenise and bring about conformity through legislation. Abjuration of history past has made the commonplaces of twenty years ago controversial enough to bring the possibility of legal action, and since legal action is costly, it is finance, rather than debate in open court, that settles an issue. No issue is reasoned out in public debate, therefore, for the market has always decided and discounted everything already. The Church speaks truth to the liberalism that is unwilling to hear any such challenge and which is turning illiberal as a result. The origin of the word reminds us that liberal once meant generous. Generosity cannot be forced, but must be spontaneous and free. But the secularising liberalism that resorts to incessant legislation and compliance is unable to make space for spontaneous gracious acts or the freely-given public service that supports civil society. Modern liberalism is now just a faint memory of the liberalism of unforced public generosity that was exercised as expressions of joyful gratitude at the grace of God.134 The secular square must primarily a place in which people speak express a whole range of attitudes, giving recognition to and withholding recognition from one another, attributing alternatively honour and shame. They will do so of course with make reference to what is good and purposeful, and they will occasionally but necessarily express views that others are offended by. They refer themselves to what is good and purposeful and to what is true. The secular sphere cannot be entirely filled by the market, in which our speech is abbreviated to yes or no signals, and it cannot be monitored and approved by the state. The secular square cannot be dominated by either the provision or the regulation that market and state want to interpose. Market and state can account for only part of the public square. In a significant portion of it, the views of the whole nation must be expressed, and heard and evaluated by the nation itself. A healthy economy is the outcome of a healthy civil society. In such a society people develop relationships with one another mediated only by their own civility. Their shared culture gives them the confidence and motivation to move beyond the sphere of their immediate acquaintance in order to meet those person they do not yet know and establish economic relationships with them. This basic sense of equality allows them address one another as neighbours, citizens and as customers. Civil society materializes most dramatically when even strangers can succeed routinely in establishing such a relationship and such a mode of

Frederick Beiser The Sovereignty of Reason: The Defense of Rationality in the Early English Enlightenment (Princeton 1996) on the origins of Liberalism in Shaftesbury and Cambridge Platonists


reliance, despite the fact that there is no question of personal attachments or anticipated consequences affecting what people do.135

2. Bodies and Continuity

Let us return to our fundamental question. What is an economy? An economy is the process that transmits life, and all the resources that support it, through time. Each generation works for itself, but it does so in large part by serving the next generation. We work for our own children, our junior staff, future neighbours and for our customers. The culture we are brought up in persuades us to work for them because to do so is to work for the next generation. Our culture motivates us to enter relationships, most of which are merely short-term, but some of which open longer perspectives. The short term has to remain open to the long-term. We can enjoy the short-term, but it always has to be left a little ajar so that the long-term can occasionally peek through. The transmission of life from one generation to another is the economic exchange that underwrites all others. Generation A wants to see a strong and confident Generation C so it has to motivate Generation B to produce Generation C. The evidence that a strong and confident generation C is appearing gives Generation A the confidence to make way for Generation B. Generation B provides Generation A with grandchildren. You present your parents and their generation with this third generation which is to grow up to be workers, borrowers, savers and spenders. When they believe that this crop is adequate to the task of continuing the economy, those grandparents, and you yourselves, can to relax enough to go into retirement, confident that there will be the wealth to support them through it. We could can see a national economy as a single transaction, one that takes place between an older generation and a younger one. Consider it first as an exchange between two people. The older wants the younger to go to work and pay taxes. He has to teach him how to work and motivate him to do so. The older has to give the younger man work and pay him for it, and he also has to save and accumulate and invest and so sustain the capital which the younger man is going to work with. The older enables the younger, and the young has to be grateful to the elder. That is the short-term. But there is also a long-term factor which makes their relationship different. The older also has to give way to the younger man. He has to leave him his capital and then leave the scene. We are transient, and we owe each other an acknowledgement of this. Each of us lives, let us say, the first thirty years of life under the aegis of our parents and their generation. Over the next twenty years we reach our career zenith, and then we start to see our own and other peoples children entering the business. After some years of this we slip off into that social death which is retirement. We experience this three-generation form of existence constantly as we nudge the cohort ahead of us aside in order to make our own progress, and sooner or later are nudged aside by the entry of new cohorts into the business behind us. All of us calculate the chance of living our last thirty years in comfort or in poverty, and we are doing so as we watch the year-on-year crop of future economic agents. If we see the country is doing well, we can assume that our present employment and pension contributions will be adequate. Life is both a kind of gift and a kind of transaction. We owe our existence to our parents. They give you life, and you give life to your own children. But life is not simply a gift, for


Geoffrey Brennan & Philip Pettit Economy of Esteem (OUP 2004) p. 256


you are in some way fulfilling an obligation to your parents, which means that there is an element of transaction in this relationship. Perhaps we owe them some recognition for their effort, perhaps even some return on their investment. If one generation thinks that the other is shirking it might be tempted to do so too. Each generation hopes that the next two will be so convinced of the joys of work and saving, borrowing and spending, and so of their place in the great transmission of life that there will be no slacking. We owe all the cultural, political and material capital we have inherited to our parents generations and all the generations that preceded them. We have to pay them some honour for this if we wish to be honoured in the same way by our own children. We hope that each new generation will be honour-transmitters so that the great human economy will rumble on, and the open economy, in which we allow one another a certain freedom to exchange, will be transmitted along with it. Culture is the medium of intergenerational transmission. The present needs the future. The present, older generation is secure now only if the coming generation is clearly making its arrival. Indeed the older generation needs to make way for the coming generation, because the promise of succeeding to the position of the elder is what motivates the younger to work and save and aspire. But the older generation may find it difficult to let this happen. No one likes to admit that they are not as strong, dynamic or creative as they were, or enjoys the thought that they will be replaced. The older generation also wants to hang on, and has been doing so. The older members of the working population and those just now leaving it have been performing fewer of those resource-transmission functions of saving, investing, teaching and motivating, and so have just have been hanging on. The motivation of the younger generation has been suffering as a result. What happens if one generation does not like to concede its own transience? What if it diverts resources away from investment in the next generation? When they are not confident that there have been enough grandchildren, and so not enough dynamic new economic agents coming through, individual members of Generation A start to make their own individual escape plans. They do so by cashing out of long-term national economic covenants and moving into other more short-term and speculative ones. If we do not believe that our national economy will continue to prosper we begin to look for other sources of wealth that are unrelated to the economic capabilities of the next generation of our countrymen. As we do this the range of financial instruments and the size of the financial services relative to the rest of the economy grows. There is a certain amount of feed-back here, since these new instruments do not invest your money in your own national industries. So has the present generation made enough concessions to the next generation? The present economy always factors in its own possible futures. If we live as though there were no medium- or long-term considerations, an immediate economic deterioration sets in. It takes the form of a credit boom, in which there is a very rapid increase in the number of claims to the same number of economic goods. Since many of these claims cannot be met, a lot of us are going to very disappointed. The hubris and subsequent fear of the baby-boomer generation has brought about the vast expansion of the financial markets. A fear of mortality makes for a determination to hang on to the present, which modern economics encourages in us. Failure to concede enough to the next generation has an immediate effect on present economic confidence.


Modern economics functions as the ideology of presentism, the conviction not only that there is no one like us, but that there shouldnt be either. Our failure to serve the future in a positive way is already affecting our present economic environment. In the absence of hope, it is the economic consequences of the fear of mortality. We have been attempting to hold on to what we have present, by slowing down the passing of the present moment. As Faustus says when the present moment reaches a particularly perfect pitch, Stay, Don't Go, this is so wonderful. The present appears to have conquered the future a Pyrrhic victory. Fear of the Body Will the next generation be able to support our current standard of living. Or has generation B simply not produced enough bodies to come up with a sufficiently strong Generation C? Has our antipathy to the stickiness of inter-personal relationship means that our economy is now facing a shortage of bodies? In the worldview of Modernity, there is very loose connection between our public and private worlds, which is why the body is the area in which so many of modernity most interesting contradictions appear. There is no public meaning to the actions of our bodies and no persisting consequences to any event of encounter, however bodily that encounter is. Anything you do in your body has only the meaning you put upon it at the time. There is no difference between men and women; such differences that we have inherited are unfortunate and inefficient, and should be reduced, and we have given increasing proportion of our national economic effort to doing so. Moderns feel that they should not be encumbered by shame, but they nonetheless feel guilt and shame in all issues that involve bodies, and they are surprised. Modernity fights a campaign against shame. The female body is a fifth column in the body politics. Individual women amongst us are periodically invaded: they become pregnant. In doing so, their body has defied their will, and they have no wish to acknowledge what their body has done. Each conception is regarded a failure of the technology of birth prevention, an incursion over an undefended border. We have not left ourselves the moral means to see this as anything but a failure of technology, or even worse, to fear that this is a particular susceptibility and even weakness of the female body. Men are not betrayed by their bodies in this way. But a woman is made the victim here by her own biology. Yet men have been persuaded to feel ashamed. Women are invaded as it were by the future. This vulnerability is compensated for first by contraception and when that fails, by abortion. Every abortion reminds us that, despite all that is asserted about the independence of a woman from her biology, there is indeed a relationship between this person and these procreative powers. But in the event of that abortion the man responsible for this life and death understands that he should feel shame about having revealed this relationship between this woman and procreation. And this event communicates to him that this woman did not believe that he was good enough for fatherhood. Each termination is a vote of no confidence in him and in the rest of us. Those who opt for an abortion have decided that we as a society are not able or worthy to value and support them as they bring up their child. Abortion is war on the next generation. Indeed is the war of the present generation against its own best hopes, and therefore against itself. We can regard the issue simply in terms of the adults involved. Every birth raises morale and has an exemplary effect on a circle of friends and neighbourhood. What then is the effect of the undeclared grief of


these acts on the morale of the individuals involved? What is the effect on those individuals of being unable to talk publicly about this act? What effect does a termination have on the readiness of the woman who has an abortion to bear other children? What effect does the shame and silence generated by this event, have on the morale of that age-group that might be starting families? Does the population that uses contraception, and abortion when contraception fails, recover the ability to have children? Many relationships do not survive an abortion. What is the effect on the relationships lost and confidence of men and women to embark on relationships that might eventually issue in children? What effect does this lack of confidence have on the future growth of the population?136 But over these issues, is again the issue of our failure to talk about it, and to lament the lack of moral resources by which this issue could be talked about. Discussion of the economy should consider whether by constantly preventing the arrival of those children who are the agents of our own futures, we have not been damaging our own economic prospects. If the six million children aborted in the United Kingdom since the 1967 Abortion Act were alive today we would be likely less dependent on workers from other countries, and perhaps less inclined to disparage our achievements in other ways. Could it be that contraception and abortion are part of a wider fear of reproduction that reflect a wider flight from the future? Our failure to express such concerns in public life has directly damaging effect on our economic prosperity. We said that each generation owes the previous the gift of life, a gift that they can only acknowledge with the return gift of a third generation, of grandchildren for grandparents. We concluded that the economy is about the production of persons, and secondarily about the flows that enable one generation to bring another into existence. Sex without the public social affirmation and the ritual change of status of marriage, the explicit covenant that welcomes children, results in generation that, without children of its own, has a foreshortening horizon and one less reason to live confidently and responsibly. The Need for Bodies Nonetheless economies require labour power. Western governments have responded to this need by encouraging immigration from other parts of the world. No matter that we ourselves have been too busy to have children we can import other peoples children!137 Western societies have imported populations from many other parts of the world. We have said that modern economics assumes that all will fit the place that the market finds for them. Each migrant worker is thought of as an individual, without history or his own cultural and political integrity. It is certainly possible that all immigrants will become deracinated consumers, as ironic and sarcastic about themselves as any other modern. But we should not proclaim the triumph of consumerist individualism over the culture of those immigrants before it happens. We must at least entertain the thought the culture of many of our immigrants will prove stronger than the culture that conceives of them as culture-free individual economic agents. The global market may succeed in dissolving all
See Donald T. Critchlow Intended Consequences: Birth Control, Abortion, and the Federal Government in Modern America (OUP); Phillip B. Levine Sex and Consequences: Abortion, Public Policy, and the Economics of Fertility; Stephen W. Mosher Population Control: Real Costs, Illusory Benefits (Transaction, 2008). 137 John C. Caldwell and Bruce Caldwell Demographic Transition Theory (Springer 2006) p. 12. The Industrial system does not need marriage, families, virginity, legitimate births or even reproduction. If the birth rate falls too low then immigrants can replace the native-born.


the cultural ties with which these immigrants arrive, or equally, those immigrant cultures may come to dominate, and bring to an end the modernity and open economy which Western societies have enjoyed. At the very least, these newly-arrived communities, willing to bear children and thus ensure the basic demographic continuity on which any prosperity depends, represent a question to moderns. Are moderns suffering a fear of the body? Are they in flight from their own family and communities? By declining to bear children have they dishonoured their own parents who were hoping for grandchildren and inadvertently de-motivating themselves? Have moderns decided that Western societies have not achieved anything worth living for, protecting, promoting and having children for? These are the questions that should be asked in a healthy public square. We saw that in Christianity there is no class of persons without citizenship. There are the poor, but there is no untouchable under-class. The poverty of some is an opportunity for all to be generous, and is even a status to be honoured. Christ took on the status of the very lowest; celebrated in Christmas in terms of the vulnerable and at Easter, crucified outside the city, in which he is despised and excluded from human society. Because it has been profoundly influenced by the incarnation and resurrection, no form of human life is regarded in the West as sub-human; for contemporary society therefore nothing is unclean or out-of-bounds. It might appear that in modernity nothing is regarded as untouchable, and indeed no bodily contact is believed to leave a trace or have any public consequence. And yet, in the case of reproduction, there is a very real fear of what our own bodies can do. The product of the union of two human bodies, the child, or as moderns conceive it, a pregnancy, appears to have become a threat to us. Have we come to regard the claim of the future on us, latent in the meeting of any male and female body, as a form of taint? Paradoxically, the capability to generate the future seems to render the body a source of uncleanness to moderns. This suggests that modernity has recently come to regard - and the future as a threat, with the result that the question of its own continuity is open.

3. Secularity and Self-Respect

Continuity is fundamental. We want the existing economic and political arrangements to continue so we have a climate in which we can continue to take our own initiatives and see them prosper, for no one sets out to make the business environment more difficult for their children. If the business climate starts to deteriorate, there will be less room for our initiatives; we will have to pursue our own affairs more furtively, keeping a low profile, afraid of attracting attention, having to buy off those in power by putting more and more of their minions on our pay-roll. All economies depend on a number of basics, the chief among which are civil society and the rule of law. Civil society is the background against which each of us lives and does business. If we are civil, we are prepared to put up with one another and tolerate a variety of lifestyles. We will remain a single society and nation, in which each member is prepared to fit himself into a more or less shared concept of the common good. The law and its enforcement help to sustain the moral climate in which we willingly defer to one anothers wishes and offer one another our services, economic and civic. In a civil society we are confident enough to enter (economic) relationships with people we do not know, and do business with people of different backgrounds. We can judge any culture or ideology on the basis of its ability to cope with a variety of cultures and enable members of different communities to be enterprising together. If we fail to sustain a civil


society we will dissolve into a restless aggregation of interest groups and rival communities, in which there is less readiness to sustain economic relationships with those outside our own group or community. Responsibility and judgment are essential to our dignity. Responsibility is a readiness to respond when people query our decisions, and not attempt to put ourselves beyond their challenge. Others may always ask us to justify our decisions, and, if our culture makes us confident enough, rather than taking steps to silence them, we will admit their question and allow ourselves to be informed by it, and even over the long-term allow it to changes us for the better. We may acknowledge that all our decisions impact on one another but, open to public challenge, we may properly take these decisions on one anothers behalf and so representatively for one another. But we are wrong when we attempt to substitute for other people, or delegate too many decisions to the market or institutions of government. This difference between representation and substitution may be subtle in any particular case, but over the long-term it makes the difference between a society the members of which take initiatives and provide for themselves and a supine population that waits for a ruling to be given and provision to appear. An economy can only be supported by the former. A society of benefit claimants cannot sustain an open but only a planned economy. This is so whether this be claimants of unemployment, housing or disability benefit, or bank bail-out, implicit guarantee, extend-and-pretend and systemic financial control fraud. The greatest proponents of state socialism have turned out to be our finance capitalists. When self-respect is missing, the resultant failure of restraint endangers the continuity of that society, its government and economy. The secular square is the place in which we meet and connect on the basis of our shared present circumstances. We do not need to agree on everything. We do not need to enquire into the competence or moral suitability of the other party; we merely observe the limits of this event of relationship which we enter for our own separate purposes. We may extend and renew it, but equally we may let it come to its agreed end with no further consequence for either of us. Very different cultures may be brought together as one civil society by the underlying culture and practices that have emerged through British history. But we should realise that this culture is not impregnable; we can damage it and will then have reduced the civility and respect for law that underwrite economic opportunity. Civility and Openness An economy exists only where a mutually-reinforcing culture and rule of law enable trust, even between persons who have not met before. This culture of the open economy is able to co-exist with many other cultures. But no other culture has generated it, or supports its continuing existence, to the degree that Christianity does. Christian discipleship generates patience, a readiness to wait and to endure misfortune and aggression without attempting retaliation. It creates the ability to defer, save, work without immediate reward, and to acknowledge, honour and safeguard the product of other peoples work. Over the long term this has brought about the rule of law, and thus the sanctity of contract and property.138 To attack the culture shaped by this discipleship is to harm the chances of our successors to benefit from the same opportunities that we have done. Our present denigration of this culture is the product of
Hernando de Soto The Mystery of Capital: Why Capitalism succeeds in the West and fails everywhere else p. 182 All property rights spring from social recognition of a claims legitimacy. To be legitimate, a right does not necessarily have to be defined by formal law; that a group of people strongly supports a convention is enough for it to be upheld as a right and defended against formal law.


a great unhappiness and it does immediate damage our economic prospects. To say these two things is the greatest favour that Christians can do for their contemporaries and the greatest contribution that they can make to our economic prosperity. When we acknowledge that other generations and social and political forms will replace us, we concede that we cannot seal the present off against the future. We have not yet reached the last and definitive arrangement of human affairs. We cannot insist that the next generation confine itself to the economic arrangements that we have made for it, for these may not serve it as well they have served us. We cannot entirely foist our way of doing things onto them or stop them making changes. We can admit that many other people will contribute to, and change, the cultural settlement that we have reached. We are not able to so determine the world that our heirs are bound to the political and economic forms to which we want to confine them. The future is not bound to be a continuation of the present. Secularity refers to the freedom we uphold as we make public judgments. These are always primarily self-judgments. As long as we make them, that space stays open and a public square exists. If we delegate them to market and government, that space shrinks: unexercised freedom is lost. Exchange that is coerced is no longer economic exchange. If they find that our policies and institutions are too onerous to be sustained they will allow them to fail and pass into history. When we make these acknowledgements, and concede the inevitability of changing economic forms, we have a healthy secularity. Secularity is therefore a form of modesty. The present is not the only time. At the moment, sitting atop the world-system, we are able to command products and services from around the world. But we may be about to experience a demotion. We cannot prevent the present from giving way to new and different social and political forms, in which we forfeit our place at the top to others. The fundamental Christian teaching is that God safeguards the fact that we cannot utterly define or determine anyone, not even ourselves; God is the guarantor that our present is open and ongoing, not sealed, finished and over. He will not let us entirely determine the present so that we take the future away from one another. We said that economics is about establishing that minimum of common interest that enables you enter an exchange. An economic exchange is a short-term affair. It may be renewed and become a medium-term affair, but both parties have the liberty to let it lapse when it reaches its agreed term. The present is healthy to the degree that it is open to the future. Secularity is the conviction that the present is sourced by our shared past and that it must give way to the future, and so acknowledge and remain open to what it does not know and cannot control. Secularity emerges from the faith that insists that the present is open, and so is not entirely within our control. It is a cultural byproduct of Christianity and of no other religion. When Christianity becomes a diminished part of the public sphere, secularity begins to morph into secularism, which is to be cut off from the sources of your own identity, and into the secularisation that mandates separation from the sources of its identity for the nation as a whole. Secularisation is the policy of closing ourselves against the claims of the future. It is the refusal of the present generation to acknowledge that it will pass away. Secularisation responds to every challenge by attempting to tighten its control on the here and now. Whatever the problem, it can only assume that more of the same is required, so we can only get out of our present straits by more radical pursuit of our existing policies. In


secularisation we delegate our judgment, surrendering an increasingly proportion of these decisions and so increasingly delegate this space to the specific canon of given judgments represented by market and state. We then no longer actively have to lay ourselves open to any process of self-examination and revision. Secularity merely has to be safeguarded. The rule of law has to be enforced, but no torrent of legislation that creates new demands is required. Secularisation is a ceaseless agenda that will tend to demand that the proportion of the national economic product dedicated to itself rises. This assumption creates a mandate for a class of political and economic managers to steer us so we dedicate an increasing proportion of our present national and global effort. Secularisation closes the present against the future. We asked how economics can stay modest. The answer we have come up with is that economics has to tell the difference between secularity and secularisation. It has to acknowledge and defer to the intrinsic confidence and dynamism of a population motivated by a particular culture. It has to let secularity emerge, and not attempt to exert it or control it. It can only do this by acknowledging the questions and limits represented by the large account of human interactions that has arisen within that culture. Economics has to be truthful about its own place in a tradition and so give up the claim to be an a-historical science suspended above time and place. The untruth that lurks beneath economics, and which makes for its hubris, is that it has no history. We may keep it honest is by continually reminding ourselves that economics has a history, that this history is not embarrassing to it, and the history of the culture of which it is a part is not an unfortunate one either. We have said that our contemporary culture is unable to account of how we arrived at our present freedoms. It does not see that public life depends on our ability to allow public disagreement, and it is unable to identify the threats to the individual capacity for judgment that come from market and state. This countrys history has provided us with civil society, the rule of law, the welfare state, a free market and prosperity and stability. Nonetheless, our public political discourse is all about freeing us from the past, and starting again from a new and tighter legislative basis that will close every loophole so that we are made entirely safe from the possibility of doing one another harm. Yet freedom is necessarily the freedom to do harm. Society cannot be made safe by legislation; a society which succeeded in closing itself off from risk and the possibility of change would not be free. Flight from Memory Modernity canonises those thinkers and statesmen associated with the slow separation of economy from politics and emergence of the economy as an autonomous sphere. Economics became detached from the other human sciences and disciplines, and was reconceived as the closed economy of nature, a mechanism that goes on regardless of us. I have suggested that to talk about market and government simply as though they were semi-autonomous systems is a means of distancing ourselves from our responsibilities to one another and avoiding the formation and labour such service involves. It is a way of refusing to be accountable to one another and of shrugging off any sense of responsibility to generations past or future. The demand that we cut ourselves off from the past is also an attack on the disciplines that make possible public reason. Modernity is a flight from history into a forgetfulness, punctuated with moments of frustration at its own incoherence. Modernity is Manichean:


the present must perpetually struggle against the dark power of the past. Moderns introduce themselves as though they were without history. But only when we know something of our shared history can we argue with one another, and suggest that the account of our identity that they are offered is not the not the only one, and may not be the best one. We exert power over one another when we attempt to withhold our identify from one another, by refusing to say what our past is and so who our intellectual forebears are.139 We attempt to withhold from them the means of showing how their identity and ours may be different from their rendering of it. We have to own up to our history and tradition and so even name our intellectual sources, in order to give one another our identity. When we acknowledge our tradition we are being more hospitable than when we do not. It is generous to give one another an account not only of what we want, but why we have come to regard such things as valuable. We are better able to enter new relationships with others when we offer them long-hand accounts of our identity, together with the long history of that identity. Once again, the short-hand account cannot substitute entirely for the long-hand account. The Shallow Canonical Past of Modernity The eighteenth century moral philosophers who championed of the autarchy of the individual were succeeded by the Utilitarians who championed the autonomous economy. When neoclassical or utilitarian economics became the dominant idiom of public life, our various actions in the public square were described in terms of individual market transactions in which each of us imagines that we act in private. Every transaction is considered in isolation from all previous and subsequent transactions: we do not consider our actions to be visible to others or likely to be emulated by them. The inside world of our emotions and preferences is the idiom in which we understand the public world. The whole European tradition of thought about being human in public is turned inside out, so we now attempt to understand the public world only in terms of the preferences of the unaccountable solitary individual. As we saw in Chapter 3, the champions of individual autarchy dismissed the great apprenticeship and hoped that we would forget its greatest representatives, Aristotle and Augustine. They denied that this Christian history represented a moral and intellectual tradition that could serve to form us into public persons. In doing so, they made it difficult for us to compare their teaching to that of earlier generations and achieve any critical distance from them. We have put ourselves under the tutelage of this generation, the Champions of Individual Autarchy, who taught that all previous traditions of formation should be set aside. Those who followed them decided that we do not need any discipline, while their successors asserted that all such apprenticeships and discipline are forms of power exerted on us, and that we must exert ourselves against all of them equally. These champions of the autonomy of the present have become the modern canon, and assumed an undeclared authority in contemporary Western societies. They gave us a narrative of progress conceived in material and political terms which pushed out the Christian and Aristotelian narrative of the growth of the human person through an apprenticeship. The narrative of the growth of the person gave way to a narrative about what we now simply call economic growth. We will pick up this story again in our next chapter. But this promotion of one past, the early modern period, to the status of canon makes us vulnerable. We cannot resolve our present problems only by referring to the principles


Robert W. Jenson Systematic Theology, Volume 1, p 154


articulated by the fathers of the modern period. We cannot recover a sufficiently sophisticated understanding of the economy if we confine ourselves to those whom we have been calling economists. We are unable to help ourselves as long as we obey their injunction not to enquire about the great tradition that preceded them. When times are hard we need to take advice from all members of the family, perhaps particularly those with the longest memories. The West does not respect and admire what its previous generations have done. It is suffering from a loss of self-respect. This is a failure to honour its own predecessors, and to realise our obligations to past and future generations. It does not keep the fifth commandment to honour your mother and father, to respect our elders and forebears. In part this is the result of such a hubristic view of itself that it believes itself to be superior to all previous generations that it has no need to grant them recognition, so it neglects to cultivate its own history altogether. Where the attitude of gratitude is not known, we see ourselves only as critics and destroyers of what we have found. The man of modernity is a creature with no memory, and therefore without a past. But without memory, however, there can be no reasoning. Christians acknowledge that we have to approach one another both in peace and with judgment and questioning and readiness to challenge, so simultaneously in peace and hold one another to judgment, even at the cost of confrontation. Peace does not obviate the need for confrontation and mutual questioning and testing. Christians insist that our age must remain under examination and judgment, for it is not yet the kingdom of God and this is not yet the end time. The disembedded economy of modernity is not only a matter only of beliefs and deepest assumptions, for it is actualised in each economic transaction, as we shall see in Chapter 6.

4. Secularisation and Cultural Revolution

The first aim of any society must be to continue as a single political entity. When it ceases to preserve its national unity it will drift apart into opposing groups, identified by income, class, ethnicity or age-group. Mutual attachment is the bond which holds these groups together as one nation. Such attachment and affection and love of glory is indeed the motive for all public action.140 Our hope for the recognition and love of our contemporaries motivates us to act well for them. In classical political philosophy, generosity is the most fundamental political concept: either justice includes generosity, or is an aspect of it. Generosity results in thankfulness and so is it own reward: you can glad for the people for whom you have been able to exercise your generosity, and take joy in their joy in you. The Christian view relates generosity to an insistence that each particular person is to be valued for themselves, rather than as representative of a class of persons. Christian generosity comes from the twin convictions that we are ourselves loved, and that all human beings are loved. This emphasis on the particularity of human beings, makes Christianity is the true source of that form of generosity, once termed liberality, that gave rise to the political concept of liberalism. But there is another form of liberalism that we may call ideological secularism. It has turned the command to love our neighbour into a harder command, not to offend or confront our neighbour. We can do this only by not recognising anyone as neighbours in the first place, so we express no loyalties to particular groups or communities. Individual ethical principles extracted from this Christian faith and community, and thus without


Augustine City of God


experience of the love of God, do not necessarily produce self-love and self-respect, but can flip over into self-hatred. Such cultural self-abjuration has become a public policy directed against our inherited culture and against the faith that generated it. British society is undergoing a crisis of self-belief. We do not seem to be concerned for our own reputation, and disdains any affirmative account of its history. It does communicate much any consensus that our civilisation is worth defending and even dying in the defence of. The idea of the nation comes from the Christian understanding that we may be one Nationhood is a concept that derives from the Christian view that each of us is ready to accept, and even to suffer, the rule of those appointed to govern, because this is an outworking of our deference and service to one another. We may knuckle down to this discipline because we believe that we may find our way to the long-term common good. In modernity as we have seen there is a single, undifferentiated human status. Whenever biological differences force themselves upon our attention, they must be flattened and concealed. But by his insistence that all cultures are the same, the modern individual raises himself above what he sees as an undifferentiated multicultural melange. By insisting on this single status for all cultures, he creates a second status, above all cultures, from which he is has authority to make this judgment, and so he too operates a two-level hierarchy. The modern believes that it does not matter what each thinks, for there is no truth, but only power. His determination that there are no given criteria, represents his determination to be judge, here and now, and insist on our acquiescence. Britains heritage of liberal democracy is also under pressure from the new culture of resentment and victimhood. A constitutional system based on a shared political culture is giving way to a system based on the rights of sectarian identities. David Green identifies group self-interest, misguided compassion and political authoritarianism as three reasons for this change. This culture of rights is mistaken, he believes, First, because it undermines the bedrock principle of liberalism, personal responsibility grounded on the equal moral status of all. Second, because it encourages majoritarian rather than deliberative democracy. And third, because it infringes the ideal of equality before the law. 141 In this Stockholm Syndrome the healthy empathise so completely with the sick that they can no longer discern the difference between the norm and the exception, political health and political sickness. The question of culture, and the comparison of cultures, arises with the movement of peoples that has accompanied globalisation. But the immigration that brings the question of cultures into relief is the arrival of the most robust culture of all, Islamic culture. Many in European governments do not wish to believe that immigrants are culture-bearing in any public or political sense, and so do not wish to see this question of cultures become a question for public debate. The possibility that other cultures are political cultures, and that they do not separate religious and political, private and public, and can defy all attempts to impose such a separation has not yet been tested public debate in the UK. Their conviction that Islam


David Green We are (nearly) all Victims Now (Civitas).


cannot possibly be a political system, and therefore an alternative political system, and even one more robust and long-lived political constitution than liberal secularism, is the thought which our policy-makers cannot countenance. 142 Each arrival from Pakistan is thought of as an individual without history, a mere body, not a cultural or political integer able to resist the forms that market and state want to press him into. But the culture that cannot allow such questions to be tested has already conceded too much ground. It cannot tolerate the thought that the little population so recently introduced, is not collection of individuals grateful to be admitted and individually ready to take the place that market and state intend for them, but rather that each brings with him a thick mesh of indivisible human relationality and an indissoluble political culture that is, if only for demographic reasons, likely to be more long-lived than the host culture. Conformity and Compulsion The state that does not hear from the covenanted community of the Church is drawn into a new gospel, which declares that all relationships are equal. The equivalence agenda takes the command of Christ to love your neighbour as yourself (Luke) away from the grace of Christ and the formation in the Church which it enables. It is turned into an abstract principle, and so into a new law: The first shall be last and the last first now means that the previously marginalised must always become our new norm. This promotes the marginal over the central, the exception over the rule. The promotion of the excluded is a Christian precept, taken from the Christians and used as a lever against them. The crisis of confidence felt by our contemporary society of individuals without covenant expresses itself in many ways. The equivalence agenda is one of them. When it is promoted to an agenda, equality represents a failure to admire and wonder at the particularity of other people, though wonder is the basis of all enquiry and knowledge. Without it, pursuit of equality is likely to flatten whatever appears to hold out against conformity. The public policy to disavow and eradicate our inherited differences has started to silence the public sphere.143 No government that has taken on an ideology is able to tolerate a rival. It wants to defend itself from challenge and so it wants to reduce the risk of public speech. It considers confrontation to be a form of conflict which it has to deter. It prefers to believe that peace has arrived, and is only threatened when confrontational views are brought to the public square. The state has taken on the therapeutic task of modifying the behaviour and attitudes of the population, to root whichever of our beliefs are no longer acceptable. 144 Affirmative action, mass immigration, and the exclusion of religion from public life illustrate the power of that elite to force fundamental changes over

Paul Gottfried After Liberalism: Mass Democracy in the Managerial State p. 127 Administrators, social workers and academics often romanticise the collective lifestyles of Third World immigrants. Whether as victims of the West or as imagined avatars of nonsexist and nonracist cultures these group are seen as.. entitled to their differences But it may be impossible for a managerial state to socialize those who have such a privilege or to check the balkanisation which may result from its exercise. Proliferating alien cultures exercising a right to difference can, after all, subvert a host society. 143 Paul Gottfried After Liberalism: Mass Democracy in the Managerial State p. 99 Pluralism was intended to close off discussion with individuals and groups who were held to be insufficiently progressive. 144 Paul Gottfried After Liberalism: Mass Democracy in the Managerial State p.140 those who rule have not abandoned the practice of restricting disagreeable speech but are carrying it forward in the name of openness and combating discrimination.


strong and rooted opposition from virtually the entire people..... subordinates the institutions of civil society, and even popular opinions, attitudes, and customs, to the state, which is responsible for their supervision, transformation, and reconstruction on inclusivist lines. It denies and indeed tries to destroy the connection between government and any particular people with common habits, outlook and loyalties that make possible effective common deliberation and participation in government.145 Anxious to avoid confrontation and upset, we regularly identify new categories of person who may be offended.146 We have to spread consensus by consulting with everwidening circles of people and demonstrating that we have done so by keeping records, and keeping employ numbers of people on compliance.147 We need a class of controllers to monitor us. All may be equal, as long as some, who select themselves, are able to sustain their own superior status for our good. Liberalism does not sustain itself. It seems unaware of the long-term challenges it faces or of its continuing need to renew itself from that the tradition from which it emerged in the first place. Ideological liberalism is in part a borrowing from Christianity, that sets some parts of the Christian inheritance against others without comprehension of what whole these parts belong to. But since they have decided that they cannot receive, however much at second-hand, the self-government that originates in the Gospel, our political leaders have lost touch with generosity and its sources. The state that does not acknowledge the primacy of self-government is trying to push the service of the Church out of the public square, telling Christians that they represent merely one faith community among others. The Church replies that, though there be many faith communities, there is only one that threatens us. The government that is has lost sight of the sources of true liberality, attempts to substitute for it, and becomes over-extended. It looks for ideological justification for why it should become more so. Such a state is itself a faith community. Because they do not condescend to recognise the covenant from which all our many distinct covenants come, everything governments do substitutes for our own love and initiative and action. Secularisation is aimed at all independent spheres, and communities. But it identifies the Church as the one barrier to its ambition that it must defeat. The Church is the community that insists on the integrity of that faith from which the secularist social ethics has come, and opposes its delegation into a mandate for the ceaseless centralisation of power into expanding unaccountable institutions. The modern agenda is to root out whatever vestiges of its own Christian inheritance it can identify. Such self-reviling comes from a great ingratitude and unhappiness.148

5. Instantaneity and the Modern Eschaton

Self-loathing and the Inversion of Values Those who do not acknowledge the particular contribution of the Christian culture are suffering a loss of self-respect and have set out to impose this loss of self-respect on
145 146

James Kalb Tyranny of Liberalism David Green We are (nearly) all Victims Now (Civitas) 147 Paul Gottfried After Liberalism: Mass Democracy in the Managerial State p. 104 Pluralist proponents of social harmony aim at openness, inclusiveness and other ideals that require the monitoring of groups by public administrators and behavioural scientists 148 Pierre Manent The City of Man (Princeton 1998) p. 201 Modern man is the man who does not know how to be either magnanimous or humble... he overlooks and rejects these two virtues that correspond to the two principal directions of the human soul.


those around them. As a result the British are undergoing a breakdown. What started as a bad conscience has become self-disgust and is now driving a cultural revolution. It is driven in part by self-hatred, and in part by the ability of some to profit from it. It is directly relevant to our economic fortunes. It tells us that we are guilty. We incurred this guilt first through the violent imperial expansion of Europe and America, in which all other parts of the world were merely victims. Our fathers oppressed them and we bear that guilt and must now atone for it. But this guilt has continued to grow and is now unrelated to any specifics. Our fathers believed that they were superior, and but now we know that the reverse was true for the West is uniquely guilty. 149 The people of all other cultures are our moral superiors. We do not believe in God so we can accept neither the judgment of God nor the mercy and forgiveness of God. Since there is no one to grant us this forgiveness, there can be no limits to it, our atonement is endless. We have reached a state of howling misery and are inconsolable. This revolution expresses itself through a series of moral inversions. Since the first shall be last and the last shall be first, existing hierarchies are to be turned upside down so that any member of any previously neglected class now stands at the top. The revolution creates new categories of those whom we have offended. The long line of the victims, the under-privileged and other claimants stretches off into the distance. Anyone can add himself to that line by identifying himself as representative of a disadvantaged group. If he is good at articulating a fresh round of accusations against this culture, he may even get himself on the pay-roll of some centrally-funded institution. But this pact we have with our accusers is corrupting for both parties. But we also despise hierarchy, and understand that whatever status differential we can identity we must abjure and flatten out, suppressing whatever signs of excellence. We need to emancipate ourselves from the unjust differentials between the sexes, so we commit our national economic effort to the great project of equality. It is our new gospel. The old gospel is the dark force: the culture it gave rise to must be rooted out by government policy and public funding. A loss of cultural confidence has created an agenda that can impose unlimited new economic burdens. How has this happened? Modernity is a particular reduction of Christianity. The secularisers have taken the Christian gospel, removed some elements, re-packaged the remainder together and arrived at an ethic. The new ethic gives justification to a rolling political programme that creates numbers of new funding opportunities and jobs. We are directing our economic effort into projects to re-engineer man. The claim is that this will bring greater efficiency. Everyone who wants to make the world a better place can do so through legislating and winning a bigger budgets. Every agenda comes with the prospect of funding for their adherents in institutions financed by local and national government, by harrowing them with their guilt to improve the British and make the world a better place. We are doing so by stripping out whichever aspect of our culture we no longer like or understand, we are not only loading new burdens on the national economic product but bringing about a faster loss of economic motivation.


Pascal Bruckner The Tyranny of Guilt.


The End of Waiting The homogeneity agenda operates at a deeper level, for we also set out to level out present and future too. We do not have to labour any more, nor save, nor exercise an epistemological modesty about the present. In these end times, no one is obliged to work and wait, for all can at last enter the kingdom of the universal middle classes and present gratification. All of us can join the new middle classes as soon as we get ourselves into any institution in any of the funding streams dedicated to dismantling some specific cultural distinctive. Each case is made either in terms of ethics, or of efficiency, increasing economic participation through widening access and increasing opportunity. The effect of removing these distinctions and the barriers that they are perceived to represent is that we have convinced ourselves that no one has to wait, or work, for what they want. Western societies are pursuing an economically non-productive agenda of attempting to erase all differentials of status and tense. Since we do not regard our children as continuers of our own identity in any strong sense, we have let go of the basic imperative of inter-generational continuity, and dont hold any cultural goods over in the interests of the next generation. This means that we have to both accomplish and enjoy the fruits of everything in our own short life-times. Yet we have not succeeded in abolishing the constraints under which all previous generations lived and have not done away with the need for labour. There can be no economy that is all services and no industry, or all managers and no workers. Indeed there cannot be any kind of economy when humans already have all they want, because then they have no need to transact with one another in other to come into possession of what they do not yet have. By suppressing the need to defer and wait we are losing that forward orientation towards what is not yet in our possession. It is only this that gives us our motivation. This attempt to be rid of the distinction between the present and the future is a secularisation of the eschaton. But it is not either an injustice nor an economic inefficiency that the future is just out of reach, that we can look forward to but not take captive. Human life is about wanting what you dont have, and therefore of looking forward, with or without patience. Humans just are the creature that is orientated to the future, the animal with culture and aspirations. The more we try to absorb the future into the present, the less motivation we have to create a future for those who come after us. Middle-class existence can therefore only ever be a small minority which is supported by the much larger population of those who work, productively, in industry. The massive expansion of the middle-classes which we have attempted is unsustainable, and now about to go into reverse. Secularism has become cultic. Though parasitic upon them, it is directed against our inherited culture and the gospel but, much more significantly, it is against our own immediate economic well-being. If we do not have a Christian concept of time we are left with a pagan fate-like conception. This paradoxically appears in two opposite forms. We have a strong sense of the movement of time, and so we live with a sensation of hurry. It is the central tenet of modernity that we are cresting the ridge, have reached the plateau and are now experiencing what no previous generation has. We know better than our predecessors and can learn little from them. And economics is premised on belief in the equilibrium to which everything reverts and so assumes a fundamental timelessness. There may be departures from the norm, but there will be recovery. This failure to acknowledge time means is unable to account for the long-period changes in which nations rise and fall.


Christians must name this as a false eschatology. Modernity is nothing but this belief that we just about to reached the kingdom of God which, of course, turns out to be the kingdom of man who is not only without God, but without predecessors or successors and without any company at all. Its implication is that each of us is without any permanent relationships, and so is finally on our own, particles swarming in the void. Modernity is a cult that need to be named, judged and repented of. Christians can point out the economic consequences of this belief-system. If we believe that we are already on the point of arriving, we no longer need to yearn and look forward, and this translates immediately into loss of the motivation and ambition on which an economy depends. Perhaps Western societies have been hollowed out by Modernity. Modern societies may not be self-supporting in the long term, because modernity as an ideology does not give a society sufficient reason to work for its own continuity. Modernity cannot give the present its proper value, with the result that the present asserts itself by holding out against the future.
Demographic collapse is one sign of an existential loss of hope and a turning of the self inward on the self, refusing to extend the self to a child and thus abandoning the task of civic formation on this most fundamental and private level.150

The Church has no stake in the lasting existence of the United Kingdom or of any other nation. But it is for Christians to encourage all to talk up their nation, and so for British Christians to encourage the British and talk up their future as a nation. It is incumbent on Christians in the United Kingdom to point out to them that the British have unaccountably gone quiet on the issue of their future as a political entity. It is always the duty of the Christian to say what others are no able to. So we must put it to our contemporaries that they have given up and are already starting to impose on themselves a closed economy. Is modernity a reversion to a form of pagan power politics? Will the open economy survive a return to the politics of sheer power? In the next chapter I will suggest that this is reflected in the desperation that recent economic developments reveals. Now, we must look closer at the doctrine of God that drives modernity as a belief-system.

6. The Closed Economy

In examining the cultural factors that sustain an open economy we have established that different accounts of human being give us significantly different accounts of our freedom to transact with one another. Freedom is fundamental. We saw in Chapter 1 that concept of covenant is primary is we are to understand the innate readiness of any human being for any sort of relationship with another. In the Christian understanding of covenant, God has made a covenant with man, speaks to man and waits to be spoken back to. Man is not imposed upon, but can decide for himself whether to receive this relationship and all the other relationships that it enables. This sense of the freedom of man and so of his fundamental dignity and responsibility of man, developed through many centuries exposure to the gospel, has given risen to secularity and the open economy. We will receive our praise from those who come after us. To the extent that we insist on receiving our recognition now, in the explicit currency of money, we indicate that we are


Jean Bethke Elshtain While Europe Slept, First Things March 2009.


not confident in our societys future. Few of us are willing to receive our public recognition in the long-term and implicit currency paid by the generation that follows us. We have declined to acknowledge the claim on us of our own successors, and so refused to hear any judgment but our own. This is itself a profoundly negative judgment on ourselves. In Modernity, it is will, not covenant, that is primary. The will is more fundamental than any concept of a shared rationality, tradition or communion. Modernity has a fatalistic conception of our place in the world, and implicitly therefore of God. In the account given by the enlighteners no God opens relations or offers humankind any account of himself. In their conception, God could only be distant. Modernity is only able to conceptualise Christianity in terms similar to itself, as though it were a deism, and thus as a form of surrender to fate. For Modernity, Christianity is the mirror in which its own image is projected back to it. The God who is too high to commit himself to any actual two-way communication with humankind is the ultimate Big Man. In this monadic conception God could only ever offer a monologue or silence: there are no episodes in which God encourages us to talk him round or to intercede for one another. This fatalistic conception has been present throughout Western history as the deism and fatalism of Roman and Greek Stoicism. God asked humankind no questions and offered no clarifications, and so no tradition of debate and hermeneutics arises in these traditions. This concept of God has come back into Western attention through the new presence of Islam, but it has always been familiar to Christian theology and opposed by it. It leaves us with ourselves, that is, the concept of the lonely self, and with the consequent misery of being without anyone to confirm or refute our account of ourselves. This leaves power with the powerful, and gives us no means by which they can be challenged. The state that does not acknowledge our self-government is derived from this conception of the God who concedes only his own will, and gives no account either of himself or of us. The undeclared theology of modernity identifies as gods the State and the Individual.151 A lonely isolated essence can love only itself. Love always presupposes the existence of the other (so self-love is not love) just as an individual cannot be aware of himself as a person except through his communication with other persons. The individual of modernity believes that it is more sophisticated to remain in fear and despair than to concede that he is loved and valued, and indeed was conceived and borne in the love of God. If we only conceive of the monist God, shut within himself, we get two monads, God and Self, warily observing one another, each an unchallengeable autarchic unit in its sphere. As this god in our own, private, sphere, we express ourselves through our economic preferences. We will connect the monadic God to the man of the economy of modernity when, in Chapter 6, we examine the afterglow of the Big Man in the shifting of forms of the medium of universal reconciliation and unification that is money. The God of Christians identifies himself simultaneously as high and transcendent, and as low and incarnate. He is not only unknown and unknowable, but also known, giving knowledge of himself in incarnate and material form. He is lord of his own appearing and in all our knowledge of him; he is thus simultaneously Lord and servant, and as both he is mediator of our knowledge of our fellow creatures. He is the possibility that we can know him in freedom, or refuse that knowledge; thus God is the basis that we can know


Jean Bethke Elshtain Sovereignty


any creature, or refuse to know or acknowledge it, in freedom. The Christian doctrine of God is foundation of the freedom in which we may know and encounter anything at all. No brute fate stands before us, reducing us to those who must simply submit. On this basis, one person can encounter, or refuse to encounter, any other. In the Christian account God not only speaks but waits for our reply; he allows us to judge for ourselves. Only in this Christian conception, is there no coercion lying deep beneath all human encounter and transaction. But the fate that Christianity holds out before us, and insists we can never push away, is freedom. If we remain ignorant of our history or indifferent to it we are likely to become captive to one undeclared conception of it. Modernity represents one conception of our history and so defends a particular historical canon. Modernity declares that history is of no interest to us, while intimating that the past exerts a dark force over us unless we energetically free ourselves from it. But we cannot simply uproot the work of ourselves from it, and our attempts to do so only have the effect of committing ourselves to greater reductions of it and so to a smaller historical canon. We are who we are, and are faced by our own set of issues, because we are the heirs of Abraham and Moses, Socrates and Plato, Augustine and Descartes, Hume and Kant. If we were the heirs of Buddha, Confucius or Mohammed, we would ask the sort of questions asked by Asian cultures. The public square of Asia and the Middle East is a much more smaller and more timid place than it is in Europe. The extra-large public square of the West is the direct outcome of the long presence of the Christian community that promotes self-examination, buttressed by those practices of Christian discipleship that puts the question of truth over the question of who is in possession of power. This commitment to the practices of myselfexamination have meant that Christians have preserved the work of Greek and Roman authors and remained in conversation with those pagan traditions. If they decline to receive the witness of the Church, Western societies may find that their public squares shrink to similarly small dimensions. But modern Europeans acknowledge little obligation to remember their debt, or pay their respects to their forebears. They prefer to name only those forebears who freed it from what it regards as the burden of its further past. Their shallow history releases them from a deeper one. They celebrate their modern forebears, the founding fathers of the European and American republics, because these assured us that, already entirely free and mature, we need undergo no course of discipleship or formation. No effort or labour is required from us, for the economy of modernity is the realm of the all-immanent, alldemanding present. The Christian form of life tamed the extreme violence of warrior society; it taught obedience to the law, brought about a corpus of law that allowed national law to emerge, and so turned the warring clans of these tribal societies into unified nations. It was the Church that enabled nations to emerge. How is that? Christian judgment and repentance keeps society together. Men were glad to hold to a higher law than retribution and power. It is only the Church that holds a nation together. All cultures are warrior cultures. Confrontation and examination of differences is intrinsic to the human economy. Public expression of this confrontation is necessary in order that we develop the practices of self-government by which we may hold confrontation in proper and useful bounds. The state in Britain and Europe must allow and enable the public examination of cultures so that their various accounts of man can be tested by public dialogue. We can assess Christianity only by the extent to which its presence


restrains our own intrinsic warrior culture through the, at best partial, conversion of the country. Since it is a faith, the Christian faith is not the permanent possession of Europe or the West. This faith ebbs and re-grows in this people, and when the Christian tide goes out it reveals more of the pagan beneath that Christian culture. Britain is free to shed this faith, precisely because it is a faith, and thus must be received or refused in freedom. But, no Christian faith: no practice or canon of public memory. No public canon of memory: no public culture of reason. A culture that ceases to be informed by the practices that come from the Christian faith is likely to revert to sectarianism and intercommunal violence. Only the Christian faith sustains the openness of any community to those unknown to it that allows trade to take place.

7. Theology and Economics

Faith, Freedom and the Open Economy We are enquiring into the future of the economy. I have suggested that as an account of our motivations, modernity is not sufficient to sustain an open economy. Without acknowledging that it does so, modernity is constantly borrowing its moral and intellectual resources from the gospel, even while its denial of the authority of the gospel grows stronger. Our culture gives our identity, and knowledge of our own identity enables us to acknowledge the identify of other people. All trade is about exchanging the means of exchanging accounts of our identities with one another. All culture is an acknowledgement of our forebears. We regard some our predecessors as particularly instrumental in shaping the world we have inherited. We can name, and even revere, those to whom we owe the political forms and freedoms we now benefit from. The more a society is able to find respect for its predecessors, the more it is able to look forward with equanimity. The broader its view of its tradition, and more forebears and their differing ways of life it is able to value, the greater the resources from which that society can judge how to live well. The further back it looks, the better prepared it is to face future challenges. The society with a rich account of its own historical journey is better placed to sustain itself over the long term and thus live in hope of a good future. The bad theology that disparages our own inherited culture gives justification to the agendas which drive an apparent economic busyness. In its reductive view, man needs only material support, welfare and empathy, and can live without judgment and truth. The state stands in our place, so that we never need to call on one another directly or to employ our own moral resources. The state exhausts itself in its dedication to improving us and saving us from the consequences of our actions. The modern state has become an ideological community and rival church. By asking it to take on this universal mediatorial role it has become a secular god and we have become its faithful. The true mercy that Christians have to extend to the society of which they are members is to be good judges of it. Of course, British Christians may not wish to appear judgmental, but in the absence of the true judgment that comes from the steady offering of the whole gospel, the British have made their own judgment, and it has gone against themselves. They have decided that they are no longer worthy and that the intergenerational covenant is over. Christians must say that the British have reached a false and profoundly negative judgment on themselves, and that this self-imposed verdict is a pernicious piece of theology that results from the absence of the hope that only the full gospel, that includes judgment, provides. Christian theological failure has meant that


Christians have not identified the misery in front of us or offered the nation the true, merciful, judgment. So for a long period nation has had to sit in judgment on itself, has found itself wanting and is crying out for atonement and forgiveness, and in its desperation is attempting this despairing atonement of its own. Christians have been given, to possess and to pass on, the gospel that frees us for uncoerced encounters and exchanges with one another, and thus pointing us towards an economy which all can participate in. Since Christians are able to make the judgments, confession and repentance by which things may change, it is be more meaningful for Christians to blame themselves than to blame politicians, regulators or bankers. To the extent that we fail to take up our mission Christians are complicit in these various threats to our health as a society and the continuity of our economy. If we make merely ethical prescriptions, indicating that some comfortable adjustment will allow us to revert to our equilibrium, we are no good to our contemporaries, and their misery remains on our account. We can repent of complicity in the assumption that the reductionist account of man offered by economics is adequate, and does not need to be disciplined by the larger account of man. Complicity in this view means that, for most day-to-day purposes, man may be treated as though without intrinsic responsibility or dignity. We should disassociate ourselves from this attitude of permanent mutual disrespect, and insist on regarding one another primarily as those who have something to contribute, rather than as helpless bundles of needs. We should insist that economics is not autonomous and not a science, and that every commercial act is open to public challenge and so to the question of what contribution to human dignity it makes. Moderns are afraid of what they have been given. On the modern conception, not only is your own individual and cultural embodiment thought to be of no consequence, but it is thought that you should energetically repudiate it. Nothing you do with your body is thought to impact on who you are, but yet you must distance yourself from the world and its materiality, and from our history. Moderns do not understand the past as the matrix and body from which each present generation emerges, and is a new instantiation of. They imagine that they are able to dispense with every form of cultural embodiment, and exist without any inherited form, entirely sourced from their own imagination. Economics is the idiom of the modern account in which it believes that we owe our predecessors nothing, and acknowledge no debt to them. Modernity consists in turning from the past to the future, as from the dead to the living. It turns from the patient hearing to many voices in public discourse to the discourse in which we buy options on all our preferences and are obliged to no particular judgment on them and so undergo no course of formation. This apparent promotion of future over past makes the present problematic. In this Gnostic and escapist mode, the present is under-valued, and the future is drawn forward; but over the long term this throws the future into doubt too. If the eschaton and reconciliation of all thing is already here, it is no longer to be hoped for, and we lose the dignity of crying for justice and waiting for true reconciliation. We have been comparing the accounts of human being and the accounts of our moral and political freedom that come from them. We have asked whether Modernity has trouble conceding the givenness of the world and of our own place in it. No body is affected either positively or negatively by contact with another. We acknowledge nothing


that has not been established by our own will. These champions of the autonomy of the individual regard the tradition as an enemy; they rejected the existing humanities tradition built up by Christian discipleship, and the Aristotelian inheritance with which the Christian tradition had been in long conversation, and so cut away the whole web of complex connections between these two metaphysics of nature and culture. As a result much of the discourse that held together the doctrines of creation and redemption, and the two concepts of nature and culture, disappeared in the West. Each of us has to consider himself twice, as though two separate entities, once as body and set of needs, and once as the self that desires freedom from this body and environment. Each of us is two entities, but no means of saying how the embodied and material entity relates to the entity with views and purposes. Should we give up hope of the reconciliation of the two worlds of nature and culture, of materiality and freedom? This dualism is the result of letting go of the unity of the embodied person which arises from the Christian doctrine of creation. Theology is inevitable, but there is good and bad theology. Bad theology dominates the bad conscience of one generation in the West. This generation is determined to separate itself from its own sources in its inherited culture, and to grasp the present in such a way that no unknown or new thing may ever interrupt it. Bad theology generates the agendas which arise from the belief that we cannot cope with responsibility, from which a large proportion of the population receives their identity and income and which devour an increasing proportion of our national economic product. This secularist theology can load new burdens on the economy, and it can pay for them for a while by asset-stripping that culture, but it cannot support an open public square or healthy economy for it has no resources of its own. Economic exchange is about meeting people you don't know and for specific purposes entering short-term relationships with them. It relies on a population bold enough to embark on these encounters. An economy depends on an underlying political culture that provides this confidence, civility and openness. This open economy comes from the secularity which comes from the confidence created by the culture shaped over many centuries by the Christian Gospel. This culture forms a background, so it is not apparent in any day-to-day economic exchange or discussion. But this confidence can lapse, and as it does so we feel less obligation to a common civility and are then tempted to take a more direct control first of the market and then of government to direct a larger proportion of the national economic product our way. When that happens, our economy is in trouble. Bad theology makes for bad economics, good theology for good economics. It doesn't matter that, either in theology or economics, many cannot tell the difference between them. But if too many of our opinion-formers and policy-makers are determined to root out the difference between them, we turn from the real openness of secularity to secularisation and centralisation. As a nation separates itself from its own it puts up less public challenge to the big interest groups in market and state, the public square shrinks and lower confidence and motivation result. If bad theology, with its hubristic economics, becomes the only theology in the public square, the continuity of the economy comes into question. What the tipping point is, can only be decided by that society and those markets at the time. And there is good, Christian, theology. This theology create a culture in which we are open to other people and to new encounters with what we cannot control or know in


advance. We concede our own transience, we identify ourselves with those who will come after us and we get on with making the investments that will give them the some chances that we have had, and the hope of the same prosperity. It commits us to adventure and risk. By communicating the basic goodness of our inherited culture and the obligation to pass on what we have received, we may enable this country to recover a smaller and more truthful form of economics. It will acknowledge individual responsibility and will therefore allow a recovery of motivation and confidence in our own initiatives. Then we may all be more prepared to acknowledge the goodness of the culture that, by setting a limit to economics, keeps it truthful, and which enable us to pass on the open society, the civil life and economic opportunity which we have inherited.

Summary of Chapter 4
1. Persons judge, and they are judged, by one another. We appeal for one anothers judgment and we receive it. 2. Judgment must take place through the person-to-person confrontation through reasoning and argument about our various ways of life. This exchange of contrary views creates the secular public square. 3. The public square is sustained through the effort of its members; when they do not practise judgment in public speech, freedom of speech is lost and the public square disappears. 4. A healthy economy emerges from a healthy culture with a healthy public square. It is sustained by the practices and virtues of encounter and debate that sustain that culture of civility and the rule of law. Institutions may support this, but alone are not enough. 5. Money is an abbreviation of fuller accounts of our judgments. These much be expressed through public speech. Money cannot replace these more comprehensive accounts, nor substitute for the practices of public judgment and confrontation in the public square. There must be a balance between the sphere of abbreviated judgment, expressed in financial terms, and the full account of that judgment articulated in public speech. 6. The market and money may perform their role alongside the long and costly practices of culture. A society must honour and reward people sufficiently so that they do not always prefer explicit monetary reward over all other forms of public recognition. 7. The public square must acknowledge the rightness of love and the desire for recognition, and acknowledge that love relates to what is particular, and thus is directed first to those closest to us. We love first family, then community then nation, then those beyond: inversion of this order is pathological. 8. Politics cannot be conducted solely in the discourse of power, will or personal preferences, but must be shaped by truth. Truth is discovered by judgment, and judgment is enabled by a tradition.


9. Modernity promotes a part of our history over the whole and so establishes a canon. The canon of Modernity suggests that we disregard history and so hold with an equal disdain all the traditions that defer to truth and promote judgment . 10. Since Western and modern societies do not acknowledge a debt to their forebears they are suffering a crisis of confidence. Loss of self-respect results in failure to honour our obligations to future generations. 11. Modernity decides that it has a complete knowledge of man, and is pessimistic, convinced that man cannot control himself but has to be controlled. 12. Lost confidence manifests itself through those agendas which intend to diminish cultural, political and even biological differences. These reduce the opportunity for mutuality, and removes our reasons for desiring and serving particular other persons. 13. The future of the economy depends on an openness that modernity does not comprehend and cannot support from its own intellectual resources. Modernity lives from the social capital accumulated by Christianity, whilst denying that it does so. 14. The free market requires the long-term presence of Christians to create the conditions within which it can be sustained. 15. The Church sustains the open economy against the closed economy of paganism. The closed economy of modernity is the form of contemporary paganism.


5. Money, Debt and Growth

1. 2. 3. 4. 5. 6. 7. Presence Givenness and Confidence Making Unalterable Growth and Moneys Modern Origins Debt and Growth Recovery and Restraint Humanity as speculation

In this chapter we tackle the question of money. Each of us knows how to use it and believe we could make good use of more of it. But what is money? Money makes flows visible and public. It reveals the movements that, over the long term, transfer goods from one generation to the next. Just as life is transmitted from one generation to another, so all the material means of life by which our bodies are sustained must move from older to younger people. Money enables us to observe and direct these flows. But of course it can also obscure and prevent them. We have suggested that we should see culture and social capital as expressions of intergenerational credit and debt. We have asked whether the present generation has acknowledged its obligations and transmitted cultural capital and life. In this chapter we examine those obligations in their more explicitly financial form, of debt and credit. We will examine them first in their connection to our inter-personal embodiment and so to the materiality of human presence, then to money as it enables the movement of the material goods that sustain life, and finally to growth. We will consider how money enables the material flows by which we sustain ourselves and relationship with one another, and how the present form of money may impede those flows.

1. Presence
Embodiment A society depends on its acknowledgement of the debt between parents and children, and between one generation and another. If we felt no gratitude to those who nurtured us when we were young, we would feel nothing for those who come after us. Without a sense of what we owe to previous generations, there is no obligation to future ones. Face-to-Face, Person-to-Person We present things to one another. Life is the most fundamental gift that can be given. Your parents gave life to you. Whatever you gave them would be a way of acknowledging that prior gift of theirs. Your gift would tell them that their offspring recognises the goodness of his life and is glad of the love that created it. The most fundamental gift you can give your parents is a grandchild. When you present your first child to your father and mother you demonstrate that you are aware that you have received your existence from them and regard that gift as good. By bringing generation one face to face with generation three, you communicate that they have not wasted their effort and so you vindicate them. Shortly after a new birth, grandparents, uncles, aunts, cousins, neighbours and friends come to pay homage to the new mother. They bring clothes for the baby and so start the torrent of gifts that appear at all subsequent birthdays, the impracticable character of which indicate the gratuitousness of the original arrival of new life. The sheer bodiness of babies is obvious. Since they cannot help themselves, you have to help them, entirely. Their neediness invites us to pick them up and take them into our care. The newborn


comes as the gift that cannot be reciprocated and hard to refuse. Parents and friends will, over the years, lead them into all the complex forms of reciprocity by which they will learn to relate to others. Grandparents must spend time with their grandchildren in order to pass on to them the familial basis of their identity and with it assurance of their value. They give their grandchildren a past, a context and with it an identity; when those children know their origins they can begin to bring their own particularity to bear in their encounters with others. Decades later they can tell their incredulous grandchildren about their own parents and so communicate a sense of intergenerational continuity. Such private family sentimentality is the means by which any of us becomes a mature and public person. Through years of care and interaction children grow into greater command of their bodies, becoming increasingly able to reciprocate and act as public persons. Over the long term all economic action must serve the upbringing of another new generation. All commerce is the slow transfer of property from the older, receding generation to the younger, advancing generation. The exchange of commodities has to serve those who are directly involved in this work of bringing infants into the world and supporting them while they grow to maturity. The economy is about turning children from mere bodies into adults in the course of two decades, in order that these adults will so affirm one another in the market and public square that they will then be ready to repeat the process. The economy has no other end than to serve this process of the procreation and formation of persons. The more that this purpose is obscured, the greater is the disincentive to embark on procreation. Nonetheless the torrent of manufactured goods can only have this as its end, for everything we do, the commodities that we purchase, all derive from our parents gift of life to us, and serves to reflect that gift by this return gift. We may bring a new generation into existence. If we do, we honour our parents, their parents and all our forebears. We hope that our children will do the same for us when we are gone, and that their children do the same for them. Remembering our own parents and forebears makes this more likely. We have to pass on an assurance that this intergenerational debt will always be paid. Our society gives us all the permission we need to bring new relationships into being. That the past has resulted in this present is reason enough for us to work for its continuation and future. We may take that was as our own shall. Life is part existent (is) and part to be sought (ought), part present and part future. It is faith that holds together that was and this is and this should and will be. This possibility of the connection and unity of past, present and future is not simply imposed on us, but we may discover it for ourselves, with joy. Our past gives us the licence we need to enter relationships, do business with one another. We may have sufficient confidence and motivation to work and create new goods and services, and to go into the public square in order to supply them to others and to procure what we need for ourselves. An economy depends on such presumptions in order that there be continuity and stability; continuity is more fundamental than change or growth. At the basis of any economy is the gift of life and its later thankful acknowledgement as a second generation presents a first generation with a third, so that generations continue to come face to face with their forebears and successors and recognise and affirm them in gladness. Presence and Co-Presence Every transaction is a meeting of persons. We see some transactions as encounters of two, others as encounters with many persons, too many to meet face-to-face. But even when there is no explicit meeting, but an apparently faceless process, a transaction is always an encounter of two persons, and through these two, an encounter of many persons. The two parties will, of course, meet and come face-to-face when the transaction is important enough to warrant it. But every single transaction is


fundamentally a meeting of persons, and we may regard all of them as a meeting faceto-face. First though we must concede that each one of us is not simply an individual unit but also the product of many other persons. None of us is his own creation. Each of us present to other persons in the world because we have a body, but we ourselves did not make this body. Our presence in the world is not solely a function of what we ourselves do, but also of what all others do for us and to us. Their action serves to make us the people we are. In large part we receive our life and identity from others: we talk each other up and so our individual stock as a public being goes up and down in the market place of public opinion. And we give one another the material means of life, for our bodies need sustenance. We acknowledge one another and give one another the material means of life: embodied persons require these two elements of material provision and public recognition. Persons may meet one another only because they have been taught to inhabit their bodies as members of society, and this because many people, parents and others, have invested their effort over many years in order to make this possible. Our bodies are the means by which we can be present to one another, physically, in one place. Bodies are far from inconsequential, for they are the means by which we are present to another, and by which we take one another seriously as potential partners and indeed as persons. Making One Another Present You are one person and I am another. Let us imagine that we are to meet for the first time. We are not simply two units. My presence before you is the result of the work of many people, though you do not see them when you meet me. I could not be present before you without them. I can modify my presence, but I cannot entirely create it. I am made presentable to you by the clothes I chose for our meeting. When I come into the room to meet you for the first time I am wearing a particular set of clothes. I picked this shirt and jacket in the hope of persuading you that I am the kind of sober and trustworthy person you can do business with. I chose this from the many shirts in the shop in anticipation of this meeting. The newer my shirt, the more presentable I appear. I hope that this shirt, will not betray how much effort it has taken on my part it has taken to get to the point of our meeting. The garments that make me presentable were made by someone on the other side of the world, servicing machinery designed, built, transported, insured, fuelled and driven by people from all corners of the world in connections that are only statistically traceable. You are able to see me better because these garments help to make me appear without indicating the effort my presence has cost. You do not see how much work it took me to buy this shirt. You cannot see the many people, unknown to me, who made it. The material means by which we make ourselves presentable and so present to one another are a token of our success in separating the work from its makers, making the commodity visible, with it to make ourselves visible, while keeping its makers invisible. I am clothed by other people. These clothes I wear and the car I drive are evidence that I have managed either to persuade people in many different parts of the world to supply me with the material resources by which I intend to impress you. We meet face-to-face, our two bodies in the same room. My body stands before yours: you have to be in the same room as me, or at least see a picture of me on a social networking site, in order to see it. My body is a function of the food I have put into it. I did not produce any of this food myself, nor have I ever met any of the people who produced it for me. Given that I eat so many kilos of meat a year, you could estimate that I am the product of so many animals, so many hundredweight of vegetable matter,


transported together by so many tons of fossil fuel. Yet you do not see these many constituents when you see my body, but just see me. Every one of us is a material being, a creature of flesh, who requires a steady stream of inputs. Yet we do not source these for ourselves. Imagine for a moment that we did source our own inputs directly. A peasant farmer regards his animals as the meat that will feed his family: when these animals are eaten their bodies will become part of his body and that of his children. They are animal bodies now, but over the next year they will be converted, by slaughter, cooking and consumption, into human bodies. As he looks at this flock or herd he knows he is looking at the future of the bodies of his own people. What is true for him is true for us too. In order that your body remains healthy and you remain alive, something like the following has to occur. A farmer takes his flock to market where they are bought by the wholesaler; the slaughterman turns them into carcasses; the butcher who turns these into packets of meat taken on by the distribution people, who are supported by the insurers, the transportation people and all who crew and service those craft and maintain that network, and all those who train them, and police and protect them. The meat of this sheep travelled from a hillside on the far side of the world to your plate because a hundred people operated the machinery by which this meat was packed in this box into this pallet, into this container and this trolley and onto this display shelf. We may not see them when we put this cut of meat into our shopping trolley, but it is our evidence that this great host of people has done its work. They have provided us with the edible products that we have to consume in order to sustain us to that we can one day get to meet you, our two bodies in one room. Over a year our body is the product of thousands of people, supported by hundreds of thousands of others. At every point we can ask whether those people earned enough to keep their families and send their children to school, and so whether they were adequately recompensed for this exchange, or whether our gain was the result of their loss of well-being. Our body is the synthesis of such agri-industrial processes, and thus we owe it to those many people involved in those processes. But we can ask whether they are built up by this process or exhausted and consumed by it? We do not know whether the food that has nourished and ultimately constitutes our bodies has come from producers who have not been adequately recompensed for, whose own bodies are not adequately nourished. We live with who knows what debts, our lifestyle sustained at what long-term cost. We may have been living at their expense. Despite all this my body is crucial to you. You decide that you want to meet me to ascertain whether I am the right person for what you have in mind. We arrange to come together in one place. We want to grip one anothers hand, look into one anothers eyes, and on the basis of a thousand tiny physical cues, each can decide whether the other is reliable enough to do business with. We want to see, hear and touch the other person in order to satisfy ourselves of the particularity of this event of transaction. Cues of intimacy such as facial communication, testimonial and non-verbal gestures bypassed the filter of reason. They are compelling even when consciously disbelieved.152 When it is important enough, every transaction must be based in this person to person meeting; at bottom, person to person meeting is all that every transaction is. We know that particularity, and some of the time, the unique character of such personal encounter cannot be faked. It has to be done properly.


Offer The Challenge of Affluence p. 359


We can carry out great numbers of everyday transactions in the abbreviated account, that is, with money and credit, only because at other times we take care to perform the ritual of transaction in full, person-to-person. There can be many retail transactions because there are larger wholesale transactions, and there can be wholesale transactions because there are long-term contracts between persons, acting for corporations, who have secured their relationship with lots of expensive personal contact time. The food and other material resources that sustain my body and make me a presentable person travel from all corners of the world to reach me through hundreds of thousands of transactions, each of which is based in a contract secured through the face to face encounter of executives who crossed the world in order to meet. Although most transactions simply involve the communication of data, they are all based in person-toperson encounters, and can be regarded as repetitions of those one-to-one encounters.

2. Givenness and Confidence

We need to relate two apparently contrary things. We need to establish that an economic contract is simply a convention, and to establish that those conventions that we call contracts are absolutely reliable and as unyieldingly solid as anything thing on earth. We need to show that money is the function of peoples recognition and nothing more than that recognition. And we need to show that our financial and judicial institutions are nonetheless unshakeable. Economic reality is a given in two senses. It is a given in the sense that it is as non-negotiable as any law of nature, and it is given to us, by our history, which is to say by our forebears. It is a matter of necessity, and yet it is a free gift, which one generation receives from its predecessors, and hopes to pass on to its successors. We want to get to know each other. We do so because we hope to gain from each other the recognition that each of us needs, and which we can only source from other persons. And through them we hope to gain the material means which sustain our bodies and so flourish. We meet one another in the marketplace. Specifically, you and I have to meet in your offices or mine. We have a big contract that we want to award to someone and believe that you may be the right person for us. We see that you have the right qualifications, we know your reputation, are convinced that you are a significant player and believe that business with you may be worth our while. Yet to give us greater confidence that you are worth this contract we need to know what credit you have, and that means we need to know your credit history. Tell us more about your previous big projects, and who else you have done business with. Convince us that you are the right person to give this contract to. Give us an account of yourself again. Exchanging Accounts We demand an account of each other, for we need to know that the other person is worthy of our investment in him and we want to be confident that he is going to invest in this relationship too. We exchange accounts of ourselves and of our place in our industry. Our business relationship is articulated by this exchange of our accounts of the world. A business relationship is a conversation which is made up of the separate transactions which are our individual speeches. A transaction is an exchange of accounts, each an abbreviated account of the whole relationship. We want to be reassured that the other man shares our view of what we may achieve together. Our separate pasts open the possibility of a shared future. We understand that our two pasts may enable a future, but we need each other before this future can take place. When we do not like the valuation that this group offer us, we can go to another, and appeal to them for a new and higher valuation of our place in a shared future.


Money is a form of speech. In it we offer one another abbreviated accounts of our joint identity, and each is intended to bring about the relationship it describes. Every utterance intends to persuade: if enough people say that so-and-sos stock is falling, it falls. We are worth what other people say and believe we are worth. Utterances receive their value only in relation to a market, as Bourdieu puts it.153 Business is about persuading audiences to give their consent for your account of what takes place. You have to convince them and hold onto them by giving a compelling account, which offers them a bigger version of their part in this shared future, than your rivals do. Action involves convincing an appropriate audience of your action. We employ a range of routines in order to bring about the acknowledgement of the necessary audience. It does so through the practices which our society describes in its law of contract. Most transactions take place without the need to make these practices or that law explicit. Large contracts require a more thorough demonstration that all relevant practices and canons are being observed, and we instruct lawyers and accountants to be on hand to provide such demonstration. This transaction may take place because it meets the criteria and satisfies all relevant constituencies and audiences. Where there is doubt, the issue may be settled by a more prolonged public examination of how this particular case fits the rules established by all previous successful cases so we can agree that this transaction conforms to the precedents established by all previous transactions. Law courts rule on the basis of case histories. They decide which earlier cases are relevant to the case currently before them, for we get to grips with a specific case by identifying its precedents. In court the two sides offer analogies from previous cases: when these are accepted by the court, they argue from those analogies. Argument (logic) follows analogy (narrative). The event of a contract is inseparable from the process of the creation of a narrative, and records of that narrative, and symbols that are abbreviated forms of those records and that narrative. Formalities are employed to enforce the sense of occasion that is intrinsic to any large transaction. A large public contract may require the employment of a good number of symbols and tokens. Even when two corporations sign a contract, the terms set down on paper are a public demonstration by the two parties to the witnessing and sponsoring community of the earnestness of their intent. At the founding of an institution there is an event, with speeches, votes of thanks and the unveiling of a plaque. There may be drinks and a banquet. A sense of the pure intentions of the whole project may be lent by public ceremony involving young people in sport or music. We may decide on a concert, fireworks, the release of doves, the giving of memorabilia to the participants. We will do whatever is required to make a memorable event, for we want to establish a widespread public recognition of this founding contract.
The persons present at these ceremonies followed, with attention either pious or casual, the progress of a ritual elaborates by specialists in the art. They were not interested in the details; all they wanted was that it should be a real ceremony... for rites essentially symbolise nothing, any more than music does. They do not necessarily refer one back to a different reality, to beliefs. They form a species of behaviour sui generis in which what matters is to do things ceremoniously, the details remaining arbitrary.154

Gestures with these various props and tokens are intended to create a narrative that will draw the audience that will see to it that that narrative is subsequently honoured. The audience bound by this narrative will be the guarantee of the contract. The paperwork and other ritual of the contract are the means with which this community is gathered and the contract is written, we might say, on the memory of the community that witnesses and judges it binding. Contract and oath-taking is the means of enthralment by narrative
Pierre Bourdieu Language and Symbolic Power p. 77. Paul Veyne Bread and Circuses p. 317

153 154


enlarged by the public gestures that require physical objects to serve as the props which amplify our gestures and create the drama which establishes and secures this new relationship which we have agreed upon. Contracts in the ancient world were created by public events, in which in through the ritual of sacrifice, the blood of animals was employed in complex displays. Physical things still matter, for they remind us of our relationship and signal the existence of this relationship to others. Things in Exchange There are three parties to every transaction. The third after the buyer and seller is made up the present audience. We hope that this audience is aware of the many earlier contracts secured by earlier audiences. Our ritual alludes to precedent and so the many people who have done things this way, and a satisfactory reference to precedents secures the contract. Things have places in relationships. We cement relationships by formal events, which are shaped by particular rituals in which specific objects are involved. We may make use of plaques, fireworks, a relate of doves, tee-shirts or anything else that bears the company logo. We may give each other some executive toy with our company crest or livery as a formal gift; we might arrange a meeting in exotic location in which the sales forces of the two firms learn to think as one. Company acquisitions and other major transactions involve large public events requiring major expenditure. But in the vast majority of transactions just three things are exchanged: the first is the good that is purchased, the second is the money with which it is purchased and the third is the receipt that records that purchase. Lets say you buy a book from my second-hand bookshop. You present the book you want to purchase at the cash desk, and offer some form of payment. Having rung the sale up on the cash register, I offer you a receipt. We have these three things money, receipt and the purchase itself. We should take the thing-like quality of the money and receipt as seriously as the book itself. You leave with book and receipt. This book entered my bookshop accompanied with paperwork, a despatch note and invoice from the distributor and publisher. When you give the book to your sister you send it off to her along with a birthday card, so that she knows that the book is from you. Every commodity comes to us accompanied by the record of its provenance. Invoices, lading bills and all the other forms of record tell us where each thing is from, and are evidence that we got it legitimately and may legitimately pass its ownership on. The receipt is part of the technology and practices of record. But here is the new part so is the book. This book is part of the technology and practices of record. This book marks the years of your relationship with your sister. Even before that, it marked your, fleeting, relationship with me, the book store owner. It is not only the receipt that records this relational event, but every single thing is employed by us to mark the relationships we enter. Each thing is a record. It is so because the relevant set of people understand it in that way. The transaction and the relationship of which it was just one event, was recorded on both the ostensible records (receipt and all the other paperwork) and on the goods and gifts that are exchanged. This is so even if they are as immediately necessary and instantly consumed as a bottle of water on a hot day. The transaction is written on the memory of the witnessing community, the expert audience, defined by contract, itself defined by the apparatus of a tradition. Every economic exchange has public significance. No transaction is an entirely private affair between two parties without wider consequence. As every human is a public and political being, so each encounter between humans has a public aspect, however, minimal. This is the significance of identifying (at least) three parties rather than merely


two. The whole world is changed by each transaction, and if we have no immediate stake in it, we may consider the change accomplished by each transaction to be negligible. Nevertheless the sum of such small transactions is mighty, and affects great numbers of those who were not bodily present when any one transaction occurred. The Circulation of Things Banknotes circulate, changing hands several times a day. Valuables circulate more slowly. People buy odd, apparently valueless, things from junk shops and car-boot sales and sell them again years later. Social anthropologists are fascinated by such circulations. In the early twentieth century they were amazed by the traffic in yams and shells that spanned the archipelagos of the Pacific, a circulation of what seemed to be objects entirely without use. Anthropologists understood that the yams were gifts in an economy of generosity between great men. But were these gifts, or were they transactions? Was this merely play or was it business? Why side of the modern economic account should they appear on? Each yam was accompanied by a recital of the many hands it had passed through, from which it gained value. It comes with an oral record of its many who have been in possession of it, a genealogy of members of the Kula ring. Each yam functioned as a travelling logbook in which is recorded who received it from whom. The names of its holders are not recorded on it, but travel alongside it as oral tradition, its value rising as the details of its provenance lengthen. Each transfer is the occasion of a new recitation of the names of the Big Men. The history, of which our transaction is just the latest episode, is a continuum. Each event of interaction stands complete with its history, contained in the materiality of this commodity. Each thing is just a record of its provenance. It is for us to ensure that that record remains readable, to us, and those who follow us. This is the purpose of labels and our financial recordkeeping. The yam is a credit-history. It is an account of all the people through whose hands it has passed and so an account of the credit-worthiness of the man who holds it now. Many hugely influential people have held this yam, and this combines to give us the status of the present holder. What goes for the yam also goes for the multifarious media of account that we use in the modern economy. Few of these are so focussed and embodied in any one artefact. We only see such forms of value-embodiment at the top end of the market, provided by works of art. Each Picasso on the wall of the boardroom is a yam, or a banknote enlarged in order to communicate the prodigious worth of its holders.

Money as Abbreviated Account-Rendering Money is the means by which we give one another our approval. It is a mark of permission given. We give them licence to go on producing their account, as this is exemplified by the wares they are selling. Looks and glances are all the confirmation they need. As Pierre Bourdieu puts it: Our acts mean more than we do. Our acts leave our intentions way behind.155 But these looks and glances must have a ceremonial and ritual form, and these commodities and money together is that form. The two parties exchange conviviality in the form of giving and receiving accounts of the world. Accounts are what is being exchanged. These accounts of the world also take an abbreviated form, so they appear in the two forms of telling (writing, the medium recognisable to the humanities), and of the abbreviated form, counting (the medium of finance, recognisable to economics). The two parties to a transaction are swapping abbreviated accounts of the world. These accounts are not being given by one side and received by the other but they are given, indeed performed, by the two parties together.

Pierre Bourdieu Outline of a Theory of Practice p. 73


Though the highly constricted vocabulary of money we are able to communicate which set of options our relationship will follow so that we do not need to repeat in full our account of the relationship between us. In small contracts we do not need your full recitation of your business history to give us your value. We use figures, profit-and-loss accounts and balance sheets, and expect you to do the same, and these parallel sets of records give each side confidence in this business relationship. Because the greatest part of credit networks consisted of masses of informal sales credit, which were maintained by the continued liquidity of such transactions, trust was considered the a crucial factor in buying and selling.156 We employ figures as a short-hand: they are an abridge the accounts we render in speech. With it we indicate how wide is the range of repetition of the relationships defined by previous contracts. Thus most transactions involve truncated exchange of accounts and valuations. The purpose of keeping good accounts was not to see how much capital the merchant had at any one time but rather to maintain his reputation for honesty and just dealing thus keeping chains of credit fluid.157 Money exists not simply in those forms which anyone can identify as financial tokens. Only a tiny proportion of money has any tangible existence, as coin and banknotes. The majority of it exists as figures in financial statements which only the numerate can interpret. Accountancy practices (are) a rule-governed kind of writing that tended to create what it purported to describe..158 Money appears as bonds and a vast variety of promises to pay that only appear in financial reports and on balance sheets. The accountants have made their decisions, all of them controvertible, about which side of the balance sheet each item should appear, whether an asset or liability. Whether it is presented as the one or the other depends on the timing of financial reports, year ends and negotiations with the tax authorities. The auditor affirms that this is a true and fair account of the finances of the company and the shareholders meeting votes to accept it as such. Money appears in the events in which decisions are made which we call contracts. There is nothing between the two contracting parties, but accounts rendered in words, and rendered again in the figures that appear in financial reports. There are many forms of material and bodily interaction between us, but they are all shaped and controlled by words, and by the financial figures that are their abbreviation; these words are shaped and controlled by ritual involving many forms of material and bodily interaction. Not all communication between persons takes the form of speech. Our communication also has other forms of embodiment that we will examine in Chapter Six. Each economic agent, whether individual or firm, observes the market and registers who is doing best. Each is able to follow the series of relationships created by the most recent contracts. Each is glad to business with those who have been in the limelight and

Craig Muldrew The Economy of Obligation: The Culture of Credit and social relation in early modern England (Palgrave Macmillan 1998) p. 124 157 Muldrew The Economy of Obligation p. 128 158 Mary Poovey A History of the Modern Fact: Problems of Knowledge in the Sciences of Wealth and Society (Chicago 1998) p. 56


hopes to connect themselves to those who have secured the most visible recent contracts. All financial reporting and market gossip is a continuous rendering of accounts. It is not simply the liquidity recorded by a firms cash balances, nor solvency represented by its lines of credit, nor the strength of its balance sheet and annual report, but the whole cloud of gossip and rumour that twitches share prices minute by minute. The whole market knows what that firm is worth, for market opinion is weighing this very question as long as the market is open. Prices of stocks, bonds and currencies are averages of the individual views of market participants. Fundamentally, credit-lines exist in the head of every participant in that market. The formal records are no more than tokens of what the market knows. Each member of that market can say who is up and who down. A strong notion of reciprocity in exchanges and communal bonds of neighbourliness co-existed with the free movement of prices. It was through these numerous small, personal face-to-face acts of credit that agents interacted within the market 159 Each competent participant in that market knows who is doing well and whose turn it is to prove themselves. The slackers credit is poor: everyone knows who the slacker is currently, and waits for them to exert themselves and demonstrate that they still have what it takes. A settled market is cosy for its members, but perhaps in the long-run, those members as a whole forfeit their ability to respond when a more energetic set of market-makers bursts in. Thus each member has to balance the demands of patience and impatience. They have to show some patience with the laggards, if they want their fellows to be patient when their own performance lags. Yet they must be eager to distinguish themselves from the laggards, and so insist that the laggard must lose his rating if he cannot prove himself. He who cannot prove himself will drop down the market to the point at which no one is interested in doing business with them; eventually it will be difficult for him to remain a member of the market at all. Thus every member of the market must strike the right balance between ambling along safely, not pushing too hard against other market participants, and attempting an unsustainable rate of progress that brings a more serious testing from enraged rivals. A market is based in the trust shared by its members: a minimum of trust is required just so that business ticks over. Again, this what is historians notice when they examine the markets with the perspective of centuries. As households became more dependent on one another for their security through long chains of obligations, the combination of competition and dependence meant that they increasingly had to try to find a balance between hospitality, neighbourliness and charity on one hand, and thrift and profit on the other, because both were needed to keep credit alive and maintain the financial security of the household and commonwealth at one and the same time. 160 You need to have good stable relationships in order to enable business, but you also need to demonstrate your own virility in order to distinguish yourself from your rivals.

159 160

Muldrew The Economy of Obligation p.124 Muldrew The Economy of Obligation p. 158


3. Making Unalterable
At centre of each transaction is a contract, a promise that must be kept. The contract may not be broken. But how can either of us be confident that the other will keep it? How can we trust one another? We have to spend enough time in one anothers presence for confidence to grow, and observe the procedures and performing the ritual by which people become sure of one another. The first form of trust is methodical. Founded on routine or tradition it derives from the repetition of actions which bring trades to a successful conclusion.161 We need to concoct an event of slow and deliberate public account-rendering and agreement. We need a meeting in which each of us gives our account of our possible future relationship. After much negotiation, first by our juniors and then face-to-face, we settle on a joint account which we have constructed together with detailed reference to the canons of agreement, contract law, specified by the precedent accumulated over years of profitable business built up by our industry. We have our lawyers working on it through the night. Our verbal agreement becomes a signed contract. We sign in a public event in which will display our confidence in one another for the benefit of our investors. Our separate accounts of our identify in this moment converge to create this joint speech-act. Together we make big public gestures that indicate how hard and unchanging our relationship with one another now is. The negotiated then becomes the non-negotiable. If you and I sign a major contract we will do so in the offices of the legal firm or the bank that has arranged the financing. That firm of lawyers is backed by the authority its peers and Bar Council and the whole panoply of the Inns of Court and Appeal Courts, by which the judicial process communicates its absolute reliability to us. That bank is backed by the Bank of England, around which the headquarters of the banks cluster in the City of London. This proximity makes possible their mutual oversight and adds to the authority of each of them, and so to the ability of these institution to lend their authority across the economy through their branches. People come from all corners of the globe to have their cases heard in London because they reckon that here there is a better quality of justice; contracts made here tend to last because they are well-made. This justice is secured by the long tradition represented by this close clustering of legal and financial institutions. Each bank receives its authority from the whole company of banks, and it lends its authority to our contract, so that you and I are able to rely on this authority to finalise our contract. If our business is big enough, we will negotiate and sign our contract in the City of London Trust is economically quantifiable. It measurably affects both speed and cost, one way or the other. When trust is high, speed goes up and costs go down. 162 When trust is missing we have to make expensive efforts to re-create it. Contracts depend on events in which persons come together in one place and time. We rehearse and practise and make opportunities for such events. Life in the City is made up of rounds of face-to-face meetings, and receptions, which are opportunities to meet without agenda, in which drinks will help us to all to unwind enough to show our hand a little. We need to see the other mans body language, to drink in all the signals he emits, to decide on his sincerity through by reading the signals given by his smile and handshake. We will decide on the subliminal basis of these very physical and animal characteristics whether we trust him.

Michel Aglietta Whence and Wither Money in The Future of Money (Organisation for Economic Co-operation and Development - OECD) p. 35 162 Stephen Covey The Speed of Trust


Trust... becomes incorporated into market practice through the repetition of business relationships. Its main infestations in this context, include keeping ones word in financial dealings, the existence of a club mentality that creates mutual assurance, the acceptance of prudential standards in organised markets. 163 So we meet in the City of London. Location is important because it indicates our commitment to the particular account of the past, as good and unalterable, represented by this location, and by these bodies making a unique event in this location. Let us make this point in more picturesque terms. Lets say that you and I want to make a contract. Each wants the other to appreciate its weight so that it is unthinkable that they would break it, no matter how difficult economic circumstances become. If we were children in the playground we would make each other swear on our mothers life, or pledge eternal alliance by smearing our blood together. Here in the modern economy we have similar solemn ways of communicating the absolute taboo of breaking of defaulting on contracts. We make them swear on everything that is most precious, so we marshal all the symbols of great preciousness, and gather around, with our top people all present, together demonstrably and emphatically pointing out tokens of the solid and unyielding nature of contract. We do so by placing our hands on dense symbols of our past economic success. We grasp the past. What can we show one another, and make one another defer to but the past? Our economic encounters have ceremonial forms which employ tokens. Goods and money serve as these tokens. We employ objects as tokens of our relationships and so identify one another by them.

Gold in the Ground Location will help us establish the irreversible character of our relationship. Let us say that we are in my town, London and we want to make our contract good by enacting as close as possible to those institutions, like the Bank of England perhaps, that represent long-term security. The Bank is a metonym for all the banks and for the centuries-long history of successful contracts that has made these banks what they are. Beneath the Bank of England are vaults of gold. We could place sums of gold there, and offer to forfeit them should we renege on our promise to one another. But of course we cannot raise such a sum of gold, and neither we nor anyone else can afford to place so much wealth out of circulation. So notionally at least we s our hands on the gold that is already in those vaults, and which is there as evidence of a vast number of earlier successful contracts, made over centuries. We make our contract there because this particular place has this established record for creating lasting contracts. Ancient man buried artefacts of great value. When he buried his king he interred him with his sword and armour and all the panoply of the military power by which he established political stability. His military power appears awesome, embodied in this sword, crafted from precious metal, which more per ounce than we will earn in a lifetime. By creating a gold hoard, the king took that gold out of circulation. Weapons and armour were included because they make threat and fear visible. To put this gold and these arms in the ground is not a waste. By burying them, swords become more valuable as artefacts that display and broadcast his reputation. By being buried these valuables become more effective at spreading t precious, and the act of burying them makes that king more becomes buriying memory and . In that way they serve to embody the achievement of previous generations and become the capital which his subjects bank on.


Whence and Wither Money p. 35


The afterlife that ancient people wished for their kings was surely the stability which that king established should continue so that the economy which we personified should remain live and valid for them.
In primitive society, institutionalised by ritual and sacrifice, there is no real money because desires for being are focused not on things but directly on other persons and their conduct. In a second era the monarch or sovereign emerges as a more stable institutionalised representative of the sacred excluded/elected victim: here money has a secondary status as reflecting the monarch and his sacred prerogatives.164

Did ancient societies worship at such burial sites? Or did they simply meet there to remind one another, and enforce on one another, the political stability that they associated with that king and the economic prosperity that stability enabled? Do we have to decide between a religious and a political explanation for ancient burial ceremony? Perhaps they brought their children here to this burial bound to tell them about this king, that stability, and about the penalties for breaking the peace. They meet around this hoard of regal bones and belongings, concealed in the ground beneath them so that this combination of proximity with inaccessibility adds to the aura of irreversibility. Ancient man did not worship his ancestors any more than we worship ours. But we understand that doing things here in this locality, around the physical tokens of this story the gold hoard we create, with all the magic that our performance can conjure, a public event in which the community becomes convinced that this contract and relationship is final and irreversible. The bank vault is a burial chamber; what has been buried here will not quickly be dug up. This treasure is valuable only because its burial makes it, its buriers hope, irreversibly unavailable. Irreversibility is what we are trying to achieve in our every contract, and it is the reason why we make those contracts that are important to us here, around the bank. What has been done here will not be reversed, which is precisely what we intend for our contract too. It is the public creation of reserves, of capital. The gold is our aide-memoire, the technology of memory that allows us to create these embodiments of social capital.165 It is the approval of the whole audience representing so much legal and financial expertise that now gathers round as finally we sign our contract, thereby making it a contract. It is final because this authoritative audience believes it is. The more nebulous contracts or covenants of the social and political realms have to be regularly reinforced yearly, perhaps in a memory-refreshing operation, in which the whole saga is repeated. The tokens of kingly power were buried in long barrows. Through centuries barrows gave way to palaces, basilicas and mausoleums, all the location which secures all our publicly made undertakings. Finally the long barrow developed into our central bank. To make the point more vividly still, we could say that our forebears act as witnesses to our contracts. We require their approval, and have to perform the correct and costly rituals to procure it, in order that the level of trust remains high. We do not explicitly revere, much less worship, our forebears, but we do respect and observe what the achievement that emerged through them for it represents an accumulation of social capital for us. It makes this City of London a good place for us to make our oaths and contracts. That so much social capital is already accumulated, so much case law available, that we do not need to create the foundations of our society and our economic contracting again. This accumulation of good practices allows for efficient repetition and represents a vast saving of energy.

Aglietta Whence and Wither Money. Aglietta Whence and Wither Money p. 66 The electronic purse does not have the edge over fiduciary money, since fiduciary money offers non-pecuniary advantages of liquidity, anonymity and security that the electronic purse does not have.
164 165


Belief in symbols of sovereignty have yielded to conventional definitions of the unit of account. Trust has shifted from a quasi-religious belief towards the critical acceptance of the institutional capacity of controlling the flows of money. 166 Money is credit tokens, that is tokens of public permission, and these tokens are tokens of the existing stock of public permission. The people living in the British Isles became confident in their ability to make contracts that would hold. The British have traded with one another successfully enough to have become a vibrant nation, and a growing economy. We trade on that large deposit of confidence and permission. Each time the inhabitants of these islands contract with one another a little is added to the total sum of British stock. A over the centuries a big mound of it has accumulated. Each pound sterling is a chunk of that large hill of that confidence that we take as the permission we seek. Each coin is a piece of this hill. That hill is made up of the accumulated events in which the rule of law have been honoured and publicly vindicated, and the unity of this people has been honoured and secured against threat. The hill is always leaching and crumbling as there are losses of confidence, and as enterprises and hopes fail to succeed, but so far the hill seems to be holding. If it is not growing, it has not noticeably diminished. Each coin is the history of all previous generations of our society. Imagine that in every transaction one of us gives the other a little stock of coins, of the metal refined from the ore of that mountain. Each time we buy and sell, we pay or are paid, as one of us passes these little metal discs mined from that hill, so the other. These tokens pass from one pair of hands to another. The two of us exchange by passing through our hands this miniature version of the sacred hill that is the accumulated past of the British nation. Money is the whole body of Western history, broken up into manageable chunks. We refer one another to that history by passing these coins around. A coin is the historyand-achievement of all previous generations of our society, in handy form. Money is valid as long as it is refreshed by continued reference to that whole tradition. In the long term we have to hope that we are not merely consuming and depleting that heap of capital, but also renewing and replacing what we consume and so leaving this pile of capital as big for our successors as we found it. In each transaction we call to witness the whole company of the British, past, present and future. Each of us wants the other hand to regard this act of ours as just as unalterable as that hill and the coin is solid. What want the other man to see the future as solid in the same way that the past, this accumulated past that stands as the hill of British achievement. The unalterable and therefore reliable nature of the contract refers to and depends on the solidity of the affirmation given by traders to traders in this place, and the solidity of that gold and this currency is a metonym for it. The accumulation of successful human convention secures our transaction, and those conventions are, we insist, as unchanging and non-negotiable as our history or as the earth itself. We trading on the good name of a country, and so on the confidence that its history will continue to give us an equally settled and prosperous future. In the next chapter I will suggest that this passing of the metal of the British hill from hand to hand is a token of our unalterably, non-negotiable setting on earth. The unyielding givenness of the world

Michel Aglietta Whence and Wither Money in The Future of Money Organisation for Economic Co-operation and Development (OECD) p. 45


is both here before us, and we impose this recognition of it on one another and so it is constituted by us.167 A society is sound to the extent that it knows that not everything can be dug up and cashed in. Though our fixed capital lies deep in the ground of our past, it is not unproductive and we cannot render it productive by digging it up. It is not a mineral ore that can be extracted until it is exhausted but a reservoir that must always be there and be allowed to fill again so that it will always be there for us to draw on. It will fill again as long as a healthy society generates the social capital that trickles back down to that aquifer. This reservoir supplies our society and economy with the great mass of deep commonalities and motives that must be assumed but which cannot be made explicit, and which we can sum up as trust. But we cannot put a price on the resource represented by this reservoir. For what is tacit and implicit is the basis on which other values can be made explicit, and so allows us to put a price on them. Economic transactions depend on us, our initiative, motivation and perseverance, and so they are soft; and they depend a vast accumulation of successful past economic event which, since it is past, is unchanging and hard. The aim of all economic transacting is continuation. We act in the hope that there will be transactions and an economy in the future. Both materiality and convention, the hard and the soft, are required; there may be change and growth but there must be continuity and stability. Every transaction is based on a balance between sameness and difference; too much difference, whether we call it change or growth, puts continuity into doubt. A curious conceptual anomaly creates a bias that promotes difference over sameness, at the foundation of modern economics, which means that it gives poor description of actual macro-economic changes. All other things being equal, a thing remains the same: something changes only when it is affected by something else. It is therefore normal that things stay as they are, and a departure from the norm when they change. Next we must sketch the deep link between money and change, for then we will be able to ask whether the assumption that growth must be a normal feature of our economy makes not only our economy unstable, but our society too.

4. Growth and Moneys Modern Origins

The driving narrative of modernity is growth. But it has cast off the thought that persons can grow and that they may freely take on any course of formation by which they could do so. Growth means only not personal growth but merely material growth, a rising standard of living. We have to compare two accounts of growth, one of which relates to an account of persons, while the other is unrelated to persons, and within this second account, that is offered by modern economics, in which money and growth are deeply connected, at the level of logic. What is growth? In Chapter Three we compared two accounts of man as an economic agent. On the one hand he was a public being, who acted before his peers, and on the

The account I have sketched here combines the two concepts of metallism and cartelists. Charles A.E. Goodhart Two Concepts of Money in Geoffrey K. Ingham Concepts of Money (Edward Elgar 2005) p. 441 There has been a continuing debate between those who argue that the use of currency was based essentially on the power of the issuing authority (cartalists) - ie that currency becomes money primarily because the coins (or monetary instruments more widely) are struck with the insignia of sovereignty, and not so much because they happen to be gold, silver and copper, (or later of paper) and those who argue that the value of the backing of that currency, (Metallists). A conjoint debate exists between those who have argued that money evolved as a private sector, market-oriented, response to overcome the transaction costs inherent in barter, (let us call them Mengerians), and those who again argue that the State has generally played a central role in the evolution and use of money (Cartalists).


other he was a private being who acted without an audience. The moral philosophers who affirmed this account of man as private and solitary insisted that man was already mature. This man did not need to grow because he already was all that he possibly could be. He stood at the summit of perfection, and the only limit on him was formed by those who did not see this so. According to these thinkers, the individual man could grow by allowing his own innate character to emerge from within him, as simply as a seedling unfurls out of its seed pod, almost without inputs. For this growth, such an individual did not need any other human being for he had no need to undergo any course of formation at the hands of others. In the Christian account of grow we grow as persons as we grow towards other persons. We may grow towards that maturity through a prolonged process of recognition that other persons as ultimate. We are enabled to recognise one another as gifts, who come to us without any effort of our own, by the grace that comes from God, and as also as our goal, whom we have to want to come to know. We can love one another and find our true satisfaction in one another, through God. The love of God for man is the source of all human loves, whether proper or improper, and God is the destination of all human loves. We may grow as persons through an apprenticeship by which we may acquire good practices and virtue. The long Christian tradition contains the resources for an economics which was not based solely in material growth, but primary in personal growth, which is to say, the growth of persons. Growth is not a matter of the value of goods traded or number of transactions, but relates to a population, its motivations and all those intangibles which we have called alternately culture and social capital. I suggested that Modernity represents our attempt to withdraw from a close involvement with other persons and thick description of our social life. The Christian tradition regards economics as a matter of learning to make good judgments about what is valuable. From it we can re-discover the insights of other ages which also regarded economics as a matter of decision-making and of making good decisions, when economics was inseparable from moral and political economy. We may grow as persons; our aim is not that we become more than persons, but that we become more truly persons. We may recover the conceptuality by which we can judge and acquire those skills by which the community says what is true and good, and becomes an articulate and political community, in which alone persons are encouraged to grow to maturity. Only persons can judge what is the good life. We are embodied persons. Our bodies and material needs arise for us persons and are not independent of them. We need bodies because they are the means by which we are present to one another and so are public beings. Persons cannot be separated from bodies, and bodies cannot be separated from persons. Yet modern economics does indeed try to separate the two and to understand them in separation from one another. If Growth means only material growth, rather than personal growth, it refers to a rising standard of living. But how should we assess this when we have given up the criteria by which we can decide between differing measures by which to assess any standard of living? We are left with Gross Domestic Product (GDP), which is to say, the sum of monetised transactions in any national economy. The economics of happiness suggests that more choice and greater access to material goods is as likely to bring dissatisfaction as contentment where the economy is entirely detached from the self-government of the particular person.168


Frey The Economics of Happiness


In an economy dedicated to an account of growth as material growth, unrelated to the growth of persons, three factors grow. Money grows, debt grows, and the consumption of resources grows. First, as the economy grows, so does the level of indebtedness. Debt has to be repaid and since there is always a question about whether it will be repaid, debt brings a fragility to an economy. Moreover as the economy grows, and money grows, so does the split between the body and the person , and so between material growth and our development as persons. We have to ask whether material growth simply represents a division between ourselves considered as bodies (needs and wants, and so the demand side of the economy) and ourselves considered as persons. Modern economists are the heirs and successors of the modern champions of autonomy and so of the expansive period of European and American empires, that lasted from the seventeenth to twentieth centuries.169 For them economics can only be about growth, and material growth. Such growth is related to the growth of money. So we must turn next to the creation of money.

Governments and Banks Where does money come from? Here is a thumb-nail sketch. Wealthy men corresponded and did business with one another by letter, and expect that the bearer of the letter would amplify and interpret what the letter contained when he reached its recipient. Money is a form of letter. The wealthy wrote letters of introduction which the bearer could present as they travelled to other noble houses. Such a letter functioned as a passport through foreign territory and as their introduction to polite society. Within a great house such letters functioned a chit or requisition slip, instructing the kitchen or stores to provide whatever its bearer required. 170 A letter of recommendation, became letters of credit, and a letter of credit became a cheques which could be drawn on that mans resources, and by extension on those resources held for him, or lent to him, by his banker.171 Such letters functioned as money, or to put it another way, money is our term for the sort of letter that functions as a passport or requisition slip. Money is a form of writing. Every kind of monetary token also relied on some kind of writing to enable it to serve the three functions that money had to perform, this writing might be as simple as the inscription on the face of coin, where the writing typically shared the space with images; or it might be complex and not confined to the monetary instrument at all.172 But as Mary Poovery points out, money has become so familiar that its writing has seemed to disappear and it has seemed to lose its history as (various forms of) writing.173

See Scott B. Macdonald and Albert L. Gastman A History of Credit and Power in the Western World (New Brunswick; Transaction 2001) p. 127-51. John Brewer The Sinews of Power: War, Money and the English State 1688-1783 (NY Alfred Knopf 1989) pp. 185-89; Andrews Kenneth Trade Plunder and Settlement: Maritime Enterprise and the Genesis of the British Empire 1480-1630 (CUP 1984) 170 Valenze Deborah The Social Life of Money in the English Past (Cambridge University Press 2006) p. 49 They also learned to approach the act of exchange with an eye to both the past and future values of certain items, understanding that in some case the store of wealth represented by money might change over time 171 Bruce Carruthers City of Capital pp. 127-31. 172 Mary Poovey Genres of the Credit Economy: Mediating Value in Eighteenth and Nineteenth Century Britain (Chicago 2008) p. 59. 173 Poovey Genres of the Credit Economy p. 3


In the British Isles only parliament had the authority to raise taxes from the country, and practically, its members has the ability to do so. A king who determined to avoid parliament could perhaps meet his obligations for a while by borrowing from his own aristocracy, or from the City of London or from bankers. He might consider it better to borrow from, and be in hock to, those outside the political nation, without military power or dynastic claims of their own, such as the Church, Jews, Lombards, Dutch. Since they could not so easily enforce the payment, these could be defaulted on in extremis, and carry the blame for difficult economic times. All money was understood as a form of promissory note: the note is as good as its issuer, and the other agents in the market who accept it. Each seller critically examined the payment he was offered not merely in terms of its quantity, whether the sum offered was enough in its nominal value, but also its quality.174 No one assumed that all money was the same, for there was no single authority that took on the responsibility for ensuring moneys uniformity. 175 Where does money come from? Money is created by states. The government creates money and it does so by fiat, that is, simply by declaring that this is money. It rules out attempts to make anything else serve as money and so makes its money sole valid currency. Government is simply is our communal and national agreement to trade with one another and uphold the conditions justice in which we may do so. No nation, and no national government, has to buy or borrow money; it has the authority to issue its own money, for there is no source with more authority that the consent of the whole people which that government serves. The government is dedicated to the service of the whole society and can provide for that society whatever range of public services they require. It declares that such-and-such is legal tender, and it thereby bring money into existence, for the whole people and on their behalf. That money is intended to facilitate the transactions that they will want to enter. Money is a metric, like other weights and measures. A government can provide this particular metric just as it provides us with laws and a legal system to enforce them. It can declare that certain weights and measures are legal, and others are not. The historical origins of our form of money is as a specific measure of weight of precious metal. Governments create money by minting coins and printing paper currency. These give us the small denominations in which to make many small transactions. On a larger scale government makes money by making entries in its own national bank account, and most money exists only as the numbers recorded in bank ledgers. The money that the state produces is money because the population agrees that it is so, and this money will be tried by the international money markets. Some economies use other reserve currencies for international trade and perhaps if they find own local currency inadequate also use foreign currencies for domestic exchanges. It is the affirmation of these economic agents, given by their use of it, that makes it money. There are always many things in circulation that act like money; most of them are ephemeral, like coupons, vouchers, store cards,

Poovey Genres of the Credit Economy p. 58-9 Forced to adapt to the presence of multiple kinds of coin of uncertain worth, early modern Britons developed great virtuosity in exchange relations that enabled them to evaluate a great variety of coins by weight, chink, color, thickness and to decide when and how to deploy better and less good coins and to determine which coins should be hoarded and which ones paid away. 175 Poovey Genres of the Credit Economy p. 162 As long as competing kinds of paper credit circulated, and as long as no one not even the Bank of England took responsible from controlling the nations currency, paper money remained controversial. No credit money could be taken from granted in other words because every banknote was as subject to evaluation in relation to notes of competing banks as every bill of exchange always was all notes would compete with each other and would remain objects of cultural scrutiny.


cigarettes and bottles of whiskey. Any firm, or community or indeed individual may issue their own coupons and have some success in getting them accepted and a circulation of them established. But since the government does not accept such scrip for the payment of taxes, it does not have the sanction of law that makes it legal tender. Un-Exerted Authority But this is not yet an adequate account of where our money comes from. For the majority of our money is not made by government fiat. Granted, governments do mint coin and print bank notes, but these represent only 3% of the money presently in circulation in the UK. If government-created money is just a tiny fraction of the money in circulation, where does the rest appear from? All the rest is debt, used as money. Most of what we employ as money is debt, albeit that when it passes through our hands it is indistinguishable from non-debt money. How did this come about? Government is the expression of the sovereignty of a people. Those in power in any government can be expected to know that the nation and its traditions is the source of their authority to govern, and that they therefore have the authority to issue by fiat the enough money to enable trade in that nation. But what if those in power do not comprehend that this authority is theirs to exercise, and do not have the confidence to issue fiat money? As they became more impressed by the authority of bankers, and their confidence in their representative powers fell, so they allowed the proportion of government-issued money to fall, throughout the eighteenth and nineteenth centuries, until it stands as its present negligible proportion. But national governments did not maintain the level of fiat money, but allowed banker-issued money to take its place.176 Instead of issuing it, our governments allow other bodies to issue money, which the government then borrows from them. So it is that most of our money is not issued by governments, but by other institutions, banks, which over time governments have allowed to take on that role until they effectively hold this as their right. By default and over centuries governments have conceded this right to them. They condone this arrangement because this money comes back to them as taxes. The relationship of central banks to their governments is always ambiguous; this is no bad thing unless it means that they avoid being accountable to their national legislatures. Individual persons take out loans from banks in order to invest in their enterprises. It is the job of the bank to identify those who will make good productive use of this money. It is there to select real entrepreneurs who will identify new commercial opportunities, make new productive capacity and create new industries, technologies and jobs, from those who will not. It is their job to separate the long-termers from the short-termers, the investors from the speculators. The central bank out-sources this job to the banks. It is this power of discretion that determines the quality of money. If we issue money, through loans, to those who will make no productive use of it the economy will be worth less rather than more. Money is issued in order to enable future transactions, but it could turn out that we have more money, but less economic activity and thus less real wealth, than we anticipated. All money is seed money: it has to be properly placed in the economy in order to create the growth that it is intended to manifest. Badly-placed money will not deliver the looked for quantity of transactions. The money that was created to enable the large number of transactions of a growing economy will only very inefficiently enable the smaller number of transactions of a shrinking economy. Too much money and too few transactions will cause dislocations of resources that will make that economy smaller yet.


Ellen Hodgson Brown Web of Debt


To make a good money supply is not merely a matter of the central bank deciding how much money the economy needs for the coming period. It is also about every bank deciding which of the applicants for funds who come before them are most likely to be a good investment. Which of these borrowers is likely to be a good economic multiplier because they understand that this money is seed money? They have to exercise their judgment and to decide that this applicant is feckless but this one competent and responsible. They have to distinguish between investment that is productive and which is going to be spent on consumption. Money represents a judgment on the future character of the economy. It is not just the one central decision by the central bank, but the myriad decisions of banks and other investors that keeps the money supply healthy. Money is not simply constituted by the decision of one central authority, but of many, many decisions by different agencies, exercising their representative function across the market, and ultimately it is constituted by the market as a whole. This means that it is not simply a technical decision, but a decision about character and deserts and so a moral decision. Anyone who takes out a mortgage brings new money into existence. Despite our conviction that we are borrowing money from the bank, the amount of your loan was not given to you by the bank, for it did not exist until you went into the bank. The bank entered a covenant with you by which you are putting money into the economy. You spend money, for example, paying the seller of the house you now buy, and buying the services of the suppliers and tradesmen who refurbish it for you. As you pay them, they are able to pay others, and the money that has been brought into existence by your mortgage spreads through the economy, indistinguishable from any other money. You and your bank have brought this money itself existence together, for each bank is licensed by the central bank to exercise this function of issuing money against the surety of your future labour and the asset that is your house. We can put this another way. When you go to a bank for a mortgage, the bank gives you permission to issue IOUs, in just the way it is given authority to issue IOUs by the central bank. These IOUs will appear as pounds sterling, in all respects indistinguishable from all other money in circulation, except that you owe the bank interest on them. The pounds in circulation are IOUs issued jointly by individual mortgagees and their banks. When you borrow money by taking out a mortgage, it is as if you yourself become a bank, lending to everyone from whom you make purchases. You are passing on to them your IOUs, granted the status of pounds by the bank, and for everyone downstream of you, your IOUs will be hard currency. As soon as we take any of these pounds from the cash machine, they appear as the banknotes issued (or guaranteed) by the Bank of England, with all the panoply of the familiar portraits and features that identify this as the national currency of the sovereign nation. The loans taken out by individuals and corporations are the currency that serves a whole economy by financing every transaction in it. For you, who are committed to produce 200% of the amount of your mortgage over the next twenty-five years, this means debt bondage. People bring money into being as they take on debt. By taking on debts money comes into existence. When you pay off that mortgage and no longer owe the bank, that money has gone out of existence and the total money in circulation has shrunk correspondingly. It is only the appearance of more people coming to borrow that prevents the total amount of money from diminishing. If people did not take on new debts, there would not be enough money to enable transactions to take place. We all rely on other people to go into debt in order that we have the money by which we can buy and sell. The whole economy, and every agent in it, needs this money and rely on people to go into debt. Yet we put the onus of its creation on the one individual: transaction costs are invisibly transferred to those who are in debt. As long as money is created by one particular section of the community, the banks, and so reckoned to belong to them (our mortgage


appears as an asset on their balance sheet) money comes with this spin that skews all subsequent economic relationships. Once started, that captivity can only spread. An asymmetry, that creates an entirely unnecessary status differentials everywhere in the economy. It inserts a differential into every relationship that need not be there. This has the effect of separating the economy into creditors, at the top, and debtors at the bottom. Whether we consider it as credit or debt, it polarises. The state that does not acknowledge its own sources does not know its own authority. The source of its authority is the whole people, past and future as much as present; it has a mandate to issue money for the whole economy, not only present but future. The state that does not acknowledge that it receives its authority from the whole people does not serve that whole people equally. There is no need for governments to seek take their authority from the banking industry or any other oligopoly.177 But government is content with the way things are, perhaps because those at the top of governments are unable to believe that they can create by the fiat the money by which they themselves should be paid. By relinquishing to banks the power to create money, banks take on a disproportionate power that distorts the economy. Perhaps we should charge members of government with not governing with enough confidence. Surely there is another way? Indeed, there are many. There are many movements for money reform, particularly when, as now, the existing system comes into crisis.178 We do not need to issue money in the form of debt. Money can simply be issued by fiat. Each state can issue fiat money. There are forms of money and its issuance which do not involve central banks. Perhaps we do not need a fractional reserve banking system at all. We need a clearing system, or many such systems. We do not need the currency of one country, the United States to function as international currency, with the effect of keeping the US in yawning deficit. We could see the emergence of a global currency, in which international trade could be carried out. Indeed currencies could be traded without the involvement of states defending their currencies, in the same way that shares are traded now.

5. Debt and Growth

We have seen that money is related to debt. Now we must relate debt to growth. The modern origins of money in debt have resulted in repeated crises, but though there have been national and international collapses, the global economy has survived. It has been possible for debt money to continue to grow because the world economy grew. It did so because Europeans discovered new territories, regularly finding that the horizon was further away than they had believed. The world was bigger than their forebears had known and much emptier than their own continent. For Europeans the world appeared to be expanding. Europeans sailed across the Atlantic and took possession of the vast lands of north and south America, discovering the resources that enabled the growth of the population and that powered the greater prosperity of those populations. The imperial age the period of the East India Company and Hudson Bay Company was the result of this territorial expansion and discovery of new resources and trading partners. The age of the open frontier and of empires is the founding period for Modernity. The economic mechanism that the champions of the autonomous economy required this open frontier, these new material resources and markets, and made it the foundation of its self-understanding. Modern economics is premised on this expansion. Modernity is inseparable from growth.

177 178

Ellen Brown The Web of Debt Bernard Lietauer The Future of Money, James Robertson; Greco, Douthwaite.


In earlier centuries, growth was indeed possible. There were repeated national and international crises and collapses, which impoverished a proportion of the population, but nonetheless these were intermissions in the growth. There are always crises in capitalism, but these are essentially corrections, and they are bigger and more painful when we attempt to prevent them. Our question must be whether, for resource, the frontier is still open, and so whether it is still possible to run a system for which there must be constant growth. Debt and Interest We are all in debt. But we are in debt to one another. Surely we could simply write off our debts to one another? Not quite. For we not only owe the capital but also the interest we have undertaken to pay on it. The debit and credit sides of the global economy do not equal one. Modern economics works on the assumption that if we got rid of money our economic exchanges would continue as before without it. The requirement of interest payment means that this is not so. 179 We owe interest. Each of us has to pay back more than we borrowed, which means that each of us has to come up with more money than we borrowed. We have to work to find that money. By lending we set someone to work, and when we all lend to and borrow from one another, we drive everyone to work. Because they have to pay interest in additional to the capital, the worlds borrowers have to find more money than presently exists. The total debt is the same as the total credit, but the total debt plus the interest that sum is greater than all the money in existence. In order that all capital repayments and interest payments can be made, the amount of money in existence has to grow. Since money is (very largely) the same as debt, this means that the total amount of debt owed has to continue to grow in order that we call all meet our present re-payments. There has to be growth in the total amount of money, and we have to increase our supply of money by new debt in order to pay off this interest. But it is not enough for everybody to trade with one another at the present rate. There has to be economic growth in order to generate the money with which we are going to meet the interest payments on our present borrowing. There is not yet enough money in circulation to pay everybody off, along with interest, but we can only bring more money into circulation by creating new debts. In order to pay off our own debts we all need to make more sales than we did last year. Whatever our individual economic contributions, their effect must be to encourage people to take out new loans. Only new loans will keep enough money in the economy to enable any of us to service our existing debt. When we create money as debt we are assuming that the economy as a whole will expand. The chief work of the modern economic agent, we might say, is to keep that money supply expanding. All the balance sheets that represent the present state of the economy, can only be justified on the basis that the future economy will be bigger. To create this bigger economy more resources have to be monetised. Growth is imperative, irrespective of human need or other environmental constraints. If the future economy is not bigger than the present economy, our loans will not be repaid and we are making claims about our assets that are not true and the present economy is already bankrupt. If we make less this year than last we are all in trouble because we have to make our interest payments. If we start missing payments because we can't find enough business because there is less money in circulation, we will have to find a significantly greater sum in the following period and so will quickly be in much deeper debt. Interest is compound, so our debt can spiral beyond our ability to pay.


Steve Keen Debunking Economics


Eventually we can no longer disguise from one another that the money we are owed will never be repaid, the assets disappear from our balance sheets. The economy is not in equilibrium, but in a perpetual state of overreach, toppling forward into the future. When it suddenly becomes clear that that future is smaller than we all said it would be, we have a crash.180 Inflation and Deflation Owing to this fundamental relationship with debt, the very existence of money means that we are pushing against the limits of a finite world. Debt and compound interest commits us to trade faster. The need to service our debt that means that we cannot be satisfied by fewer deals. Without that debt, we would not be looking for new ways to bill one another for services that used to be rendered informally without invoices. More of our accounting could remain informal, and we would not be in such haste to turn the implicit social capital of our relationships into monetised services and explicitly financial capital. The system which employs debt as money, and requires growth to pay the interest on that debt, inevitably faces crises. Compound interest means that debt grows faster than the real economy ever can. Productivity may grow geometrically, but debt grows exponentially. When we fail to make our repayment, our debt climbs steeply and finally vertically. People cannot pay what they owe, and thus there are defaults. As a result of the way that we define money by this relation to debt, interest and growth, gap between geometrical and exponential growth means that money periodically goes into crisis. Will the global economy meet a crisis it cannot overcome? When governments cannot meet their national debt interest payments, they create more money and run inflation. Inflation is caused by the lack of permanent stable money stock and our reliance on debt-money. It is the result of the two sides of the economy consumers and producers, wages and prices in permanent conflict because of a lack of purchasing power. The result of debt-money is that there is under-payment, and so not enough money in the economy, so individuals do not have enough money to enter exchanges. It is often assumed that inflation has to be brought down by taking money out of the system, but when this is done a sudden shortage of money is created, there is a drop in the number of transactions, which is disastrous for those at the bottom who cannot buy even basic needs.181 Once people drop out of the economy, it may not be easy for them to get in again later, so deflation may cause a loss of demand and reduction in the size of the economy which are permanent. Inflation is a great de-motivator. It saps away at the savings of those who have worked, so they have no greater reward than those who have not worked. It dispossesses them so that they are unable either to look after themselves or have anything left over for anyone else. Inflation destroys the independent self-subsistent individual and family and draws people into closer dependence on government. We are eager to earn money in order to provide for our old age. Our determination to accumulate a capital sum represents our fear that whoever is prepared to look after us when we are old, will demand more than we can pay. We said that the money supply has grown much more rapidly than is warranted by growth in the real economy. This inflation of the money stock reflects the fact that there are already more old savers than young borrowers. But more than that, it reflect the fear of the majority of those savers that, despite their saving and virtue, and despite their successful speculation, they still do not have enough money to ensure that that they will be looked after in their old age.
180 181

Chris Martenson Amartya Sen Poverty and Famines. An Essay on Entitlement and Deprivation(Oxford) 1981 p.58-


The explosive growth of the money supply in Western economies and boom in the financial services are the result of this fear that each of us feels that we need more money in order to pay for our retirement and old age care. We need more money than we are able to save from our earnings. The years ahead each of us will need a family about us again to wipe our chin without charging us for it, but that family has long since ceased to be a provider of inter-generational care. The distended financial services and ballooned money supply are here because the family is not. This vast apparent rise in economic growth represents the expansion of financial services which themselves are a function of our ability to present one another with ever more minute-itemised accounts of our service to one another. Capital Markets The capital markets are intended bring about the most efficient allocation of resources, so that they go to those who can make best use of them. Best is the use that generates most new economic growth, giving the highest multiplier, so the whole economy is bigger as a result. We want returns that led to more returns that lead to still more returns. We need the capital markets to serve the productive economy by providing the best allocation of resources to its various industries. It is the job of financiers to assess which seem likeliest to surge ahead and to put money there. But they are having the reverse effect. The capital markets are attracting money away from long-term investment in productive industries, taking money out of production and into the reservoir of money that is guessing where to go next, and going where it thinks that all other money will go next. Economically it would be most efficient if money was able to re-assign itself from the wealthier to the least well off. The least well-off will always be more productive spenders than the most will-off. The first pounds of your spending, on essentials, has a greater multiplier effect than the last few pounds. But when too much is going to the better off, who by looking for a return on it, have inadvertently been pushing up commodity prices. By making them more expensive, they have made it more difficult for others off to put those commodities or assets into production and so make a productive use of them Fear, Greed and Speculation We have said that each of us is driven by anxiety to make themselves secure so that they can afford the care that they need. There are no natural limits to this need for care, of course, so the market is driven by those who have achieved least serenity in the face of their own mortality. The angry and desperate are the front of every market. The game is to plunge into every game and market just before the majority plunge in behind them and to get out again before they stop plunging in. Some market-makers manage to create rushes into particular stocks and sectors, just by getting into them, and just by talking certain areas up. So the market is a competition to talk certain areas up (ramping up the price), without revealing that you are in those areas and trying to get out again. The market is like a crowd of children rushing across the playground. As long as you are in just ahead of the average more often than not, you are winning. You are trying to spook others out of the game you are not in, and into the game you are in, in order to dump your shares on them, meanwhile others are trying to spook the market you are in, and you are weighing up whether it is worth holding your nerve or whether you should take a loss and get out before the position deteriorates. The old game of selling and talking down a stock, in order to buy it again when the price has dropped, is accelerated by automated dealing; here the institutions with the greatest data-processing power are fastest, able to identify and complete trades in fractions of a second, able to benefit at the expense of all others by selling and re-buying your shares in that stock at a lower price. The bigger, full-time, investors or players are winning at the expense of the small


investors, selling them the stocks that they are themselves moving out of, or repeatedly moving in and out of, pushing the price down. Alternating between confidence and caution, the market sometimes reduces the feverishness of a myriad individual emotions. At other times, the market amplifies the sum of the individual experiences and exacerbates our individual panic. The smarter make their money from the fools, of course, but when insiders can shape the market in such way that the outsiders are always milked, the insiders become, in Catherine Fitts phrase, a tapeworm eating away at the body politic from within.182 If we are seeing a new concentration of wealth and disparities we should ask whether this will threaten economic efficiency and the unity of the nation.

6. Recovery and Restraint

We have created a vast excess of credit-and-debt over actual economic growth. Though one bubble appeared to burst in the financial crisis of 2008, central banks have been preventing the bankruptcies that should have occurred since then and governments have been preventing the market from correcting. If the market is indeed the global assembly of mankind, the healthy thing would be to let the market decide values and so discover which banks and corporations are insolvent. A bankrupt corporation can be broken up, and its viable parts sold to form new businesses. As long as we prevent this correction from happening the economy cannot renew itself. Stock market crashes might seem to make us poorer and so be thought to be avoided at all costs. But they are only apparently so. We have lost money. But that money was long-term social capital cashed in by the many individuals seeking to distance themselves from their inherited contexts. When the money is gone, we have to return to that more primitive economic form, the domestic household and recover some elements of that social capital. We are all still stuck in a much large bubble, that will persist for as long as we do not value two factors at their replacement value at least. One of these factors is the entity that reproduces and motivates the next generation of economic agents, the family. The other is energy. We said in Chapter 3 that the long-term functioning of the economy depends on a basis level of national unity, endangered by excessive disparities of wealth. A crash may be a revelation of essentials that enables us to discover what is permanently valuable. The crash is not the destruction of value, but the revelation of how much has already been frittered away, or in JS Mills more elegant expression: Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.183 After all, when we lose all our money, do we not become more directly and personally dependent on one another again? Don't we eat humble pie and go back to our families? Perhaps we might experience this discovery of our economic reality not as poverty but simply as a relief. We have seen that since money is brought into existence by loans on which interest is paid, the number of relationships in which one side must recognise the service of the other in the explicit currency that we know as money. The formal economy grows as we opt out of the specific relationships of family, household, local and national communities and industry, and into the abstract, distant and global relationships that are financially denominated. Sustainable Growth But first there is another factor to consider, the limits of the material world. Could it be that the real bubble has not yet burst? Could it perhaps be that little of the growth that
182 183

Catherine Austin Fitts The Washington-Wall Street Game John Stuart Mill Credit Cycles and the Origin of Commercial Panics 1867.


we have experienced in the last fifty years will turn out to be real and sustainable? Could we still be riding a super-bubble.184 Perhaps there is a much bigger correction ahead? We have not addressed the issue of how this near-exponential growth in global capital relates to the finite resources. Can the economy grow when basic natural resources, chiefly fossil fuels, not only do not grow, but deplete? What sort of growth is possible in a world in such material resources are finite? We said that the modern conception of growth as material growth was dependent on continuous expansion. Our effective frontier remained open through the twentieth century because oil made transport costs so minimal that the world became single global economy. Distance was abolished, and every place became the immediate neighbour of every other place. We have seen that debt and the obligation to pay compound interest compels us to seek the most immediate opportunity, regardless of how short-term. This encourages us to extract material resources from the ground just as quickly as we can. Oil brings together the rare metals and the plastics, brought together in a factory in China to create the electronics, brought by container ship to our shopping centre, where I purchase it and install in my front room. Each stage of this journey registers as an addition to GDP. But as little as two years later then the product goes into my garage and from there to the dump and landfill. If I make such short-term use of it, surely the true cost of the material resources that went into this gadget were not adequately reflected in its price. Each industry attempts to externalise the costs onto the common purse or environment so that, as an individual consumer, I am not aware of them. I do not pay for them when I buy them, because as taxpayers I or my children, only get to pay their true costs much later. Energy not only makes this economy function. The transformation from many regional economies to one global economic is a function of oil. Energy that is cheap has allowed us to believe that we can have significant continuous material growth. Cheap energy has allowed us to replace labour: but labour-saving may mean man-replacing, which as we have seen tends to leave sections of the population without employment, economic participation or dignity, and reduces the number of potential customers. Have we been so enthralled by the prospect of more to consume that we have stopped thinking of ourselves as producers, who must be employed by large corporations in order to remain consumers? Have we been spending our engineering effort to supporting the wish of each of us to act as an individual without responsibility to the next generation? Have we employed technology to avoid learning self-restraint? Has the flight from the discourse of morality that I described in Chapter 3 been enabled by technology and the unmetered expenditure of oil which that technology requires? Our unwillingness to discuss what is good, the abdication moral discourse and unconditional turn to the technology that empowers consumption means that we have surrendered ourselves to one particular passion, our appetite for oil. We have looked for a technological solution to every interpersonal and relational problem, so that we do not have to deal with our responsibilities and find the virtue to do so. Cheap oil has allowed us to give up thinking of ourselves primarily as producers and see ourselves primarily as consumers. Oil is immediately essential to every industry. As the global market marginalises subsistence production, world food production has become dependent on a small number of crop species, production of which depends on inputs of oil-based fertilisers and pesticides. As oil becomes expensive, so does everything else. Will a rising oil price make these inputs and the agriculture that depends on them more expensive? Ecological issues are assuredly also economic ones. Water scarcity means that land ceases to be

Niall Ferguson The Ascent of Money (Penguin 2009) p. 342 It may even be that we are living through the of a deflation of multi-decade super bubble.


productive and able to support a population; crop failures will speed up the flight to the cities. Will this process further reduce the number of subsistence farmers growing a wide range of crops and endanger the economic resilience they represent? As refugee populations attempt to move around the world, these will translate into political problems. As available oil becomes more difficult to reach, we need more technology to extract it, technology which itself needs more energy. Oil is required for the extraction of oil (energy returned on energy invested EROEI), so less of the oil we pump is available for our use in other industries. We are consuming all the oil we drill just to maintain the economy at its present level, yet we will want to dedicate a proportion of this energy supply in order to find replacement sources of energy. Where will the extra energy resources come from that create the new technologies that will make us independent of oil? Not only will the newly-emerging Asian economies be able to command a greater proportion of the global supply, but those countries with oil reserves will likely reserve more of it for their own domestic consumption, leaving less to be available for the global market. This enables us to say something additional about money. Money works well when it closely reflects the amount of energy any activity consumes. Energy powers economic activity. Oil consumption and industrial production are in lockstep. We can say that, since energy, specifically oil, is required for the supply of every other commodity, oil supply and consumption fairly reflect economic activity. Oil is the real money. Money is virtual oil. Money performs it task to the degree that it truthfully represents the energy supply and the economic activity that it is able to power. Money cannot do that job well if it does not reflect the amount of oil we are using.185 The oil available to us is likely to decline: it would be prudent to have a currency able to reflect that decline, not one which encourages us to act as though energy was going to be as plentiful in the future as it has been in the past. Money should channel our energy resources to where they are best employed to keep our economy viable. Fossil fuels have given us the energy which has enabled us to achieve ever higher gearing of our own human labour. We have said that we are attempting to pump up our economy to give the impression of growth, so that we all continue to believe in the possibility of this grow and make it happen. We have to encourage market confidence, in order to save the vast over-inflated apparatus of finance that we have lately erected. But should it be saved? Should we be trying to increase demand, encouraging renewed borrowing, simply in order to save our concept of money, in particular the identity of debt with money? We have seen that our understanding of money has an in-built bias for an expanding and prejudice against a steady-state economy. Money keeps getting our economy into trouble because it has a bias in favour of growth that works against the stability and continuity of the economy. Let us put this another way. Money is connected to debt which obligates to permanent economic acceleration. We could try to preserve our understanding of money by continuing to attempt that acceleration and consuming energy resources without restraint in order to do so. Or we could decide to change our understanding of money, in particular by de-coupling it from debt and so from the necessary presumption of growth, and attempt an orderly reduction of the over-blown apparatus of finance. If we cannot


Frederick Soddy

Wealth, Virtual Wealth and Debt (1926)


achieve any adjustment of our conception of money, we will continue to consume oil for unproductive purposes until the price of oil puts it out of reach of almost all of us, at which point our economy will stall catastrophically and we are suddenly back to an economy of utterly ungeared human power. We should default on some of the promises implicit in the present nominal value of our money in order to marshal the energy resources that enable economic continuity. Rather than save our nominal financial positions by destroying the actual economy. A more sustainable conception of money requires . perhaps we should adopt a conception in which everything is understood to remain the same, until it changes. Sameness and thus Continuity should be the default setting, not change and growth. Instead of increasing the money supply we should reduce it. We should not be adding to the number of pounds in circulation, so making each pound already in circulation worth less, but rather make each pound in circulation worth more. Let us illustrate this by an unserious analogy. If, for example, we decided that each penny presently in circulation, including those down the back of the sofa) was a pound (so that each existing pound coin was re-denominated as a hundred pounds, and each ten pound note was a thousand pounds) we would have put a great deal of our money stock into the hands of those best placed to spend it with greatest multiplier effect, the poorest. There would overnight be a fall in the need to borrow. The amount of credit-debt in circulation would fall, and so there would be far less money in total circulation, and so far less need to push relentlessly for growth on our present definition. We have to default on our conception on money. Usury and Reform What can be done? We need to distinguish between the financial economy and the productive economy, and so between the financial and the real economy. If we can tell them apart, conceptually at least, we may be able to cram the financial economy back into more sustainable dimensions. In order that the changes in the elements of the human economy are fairly represented, money must be able to register not only growth but its opposite. If money only has a forward gear, it cannot be an adequate metric of the human economy and will only prevent us from noticing that the human economy and the economy of the earth are decaying rather than growing. Money must be able to reflect negative growth. There are many proposals that could help reform aspects of the financial system. We can opt for negative interest rates, so that we will hold 99p for every pound we put on deposit at the bank over the year. Thus our bank will be able to charge us for the service of holding our money. We could replace the current debt-based money system with a money system in which currency really is issued by government fiat, while banks are limited to the role of financial intermediaries between savers and borrowers.186 We cannot have high reward for low risk. The investor has to venture something, and so be ready to lose his investment if he wants to see a high interest rate. We can reduce the function of banks to clearing, a service for which we will pay them so that they will not make money from charging interest. We could create a range of parallel currencies in which city-wide and regional currencies operate alongside the national currency, and we each get paid in a mixture of currencies.187 Perhaps there might be more than form of currency in any one territory. In addition to the one legal tender, there could also be complementary local currencies and local trading schemes and credit unions. Other international currencies may emerge alongside the dollar that will reduce the US trade deficit, allow the US to recover some of
186 187

James Robertson. John Kay and Narrow banking proposals Bernard Litauer The Future of Money: A new way to create wealth, work and a wiser world


its own productivity and industry and re-balance world trade. Individually and corporately we can make less reliance on debt. Good Work The modern assumption of a steadily increasing material economy is a function of willingness to allow the market to replace the provision of our own particular relationships. The corporations that create a single global economy do not encourage us to reach out first to those who are nearest to us in our own town, region, country. The global economy rubs away at each particular locality, as at every other particularity. We cannot simply exhaust the potential of each particular place, directing each culture to a faster and more complete integration and dissolution within the global economy. We could bring back some of economic functions, industry and agriculture, that we have pushed overseas. We could bring some of our inter-personal functions back into the domestic household and commit fewer household functions to the market. In order to redeem money as an effective means of communicating relationship and allocation resources, we can operate pricing differentials that restore the advantage to our local communities. We have to do more for those nearest to us without charging them for it, and so reclaim some economic and benevolent functions for our own households. If globalisation means the eradication of the particularity of each place, we are simply flattening the world. Yet when each place is without particular feature or significance, why should people in any other place want what it produces? We divorce the material economy from the social-and-cultural economy, separating our day-to-day economic effort from the long-term cultural achievement of social capital. Work is good when it does not strip us of our skills, the company of our peers and with it our dignity. Work is good when it creates social capital and allows the worker himself to keep some proprietorial control over it.188 Wages can never be an adequate payment; stock options must be part of our remuneration, and perhaps some part of our pension provision should be invested in the stock of the company we have worked for. 189 Delusion and Recovery The last forty years have seen the steady relaxation of the money supply. As money has become has become cheaper, it has become possible for us to buy more. We were able to buy far more than we earned, but at a cost in social capital and natural resources that we may not yet realise. We talked one another into borrowing more, and of lowering the conditions under which all these financial arrangements could remain plausible. The notion that things must be financed, by credit, runs deep. We have assumed that no one can do anything simply from their own resources, and thus from what they themselves have saved. In this great mushrooming of usury we have been attempting to convince one another that this was real and sustainable growth, rather than a prolonged bubble, financed by debt that drew consumption from the future into the present. We have taken one another in, and been content to be taken in. , and many demand that such bubbleconditions are sustained. Talk of recovery assumes that we can go back to the conditions of lax credit by which we encourage one another to resume borrowing, regardless of whether this is in their interests, all assume that next years economy will be bigger than this years. Economic recovery requires that we tempt others to take on still higher levels of debt, even though we can be fairly sure that this will ruin them. We can decide not to resort to borrowing and so not make purchases that we cannot afford.
James Bernard Murphy The Economy of Labor pp.2-3 Ever since Aristotle we have had theories of justice in the distribution of goods (distributive justice) and theories of justice in the exchange of goods (commutative justice), but very little in the way of a theory of justice in the production of goods 189 John Mdaille The Vocation of Business on widening forms of ownership.


We have to save the real economy from the clutches of the financial economy, and prevent attempts to revive the financial economy from throttling the real economy altogether. It is not our present standard of living, but a deeper and more permanent way inter-generational way of life, that has to be upheld. But what if it is not so easy to distinguish between financial and real economies? What if the human economy is at bottom just a speculative enterprise?

7. Humanity as Speculation
At the beginning of this chapter we said that the economy is fundamentally about the transfer of life, and all the means of life, from one generation to another. It is therefore about an exchange between generations. On this basis economic agency is not solely about what present economic agents want, but also about how to produce economic agents in the first place and maintain a comfortable majority of such agents over those who are dependent on them. First the period we spend in education at one end of life and retirement and old age at the other has been lengthening, so we are economically active for a shortening period in the middle decades of life. When we are financially dependent on others, our status as economic agents, and the dignity this gives us, come into question. For modern economics however, each of us is only ever an active, autonomous agent, concerned with an individual satisfaction which may have nothing to do with parents or children or past or future generations. The modern economy is about the here and now of these individuals. And yet we cannot talk about the economy solely in term of the fulfilment of the individual adult without coming up against contradictions. Let us mention some of these. We go to work in order to make money, to keep or spend that money as we please. We are the employee of one particular firm. We may be frustrated that making money is such a slow business, and that it is not easy to hold on to the money we have made. For the female half of the workforce there is the issue of whether, having settled down with someone, we stop work to have children. The moment our own first child arrives we realise that we have found the one event in twenty-first century life which is not reversible. You have entered a much slower economy: the daily commute is gone along with all prospect of time away in faraway glamorous destinations and we are confined to our immediate neighbourhood, pushing a buggy. The project of children turns from the notional hobby of evenings and weekends into the bad dream from which we cannot wake. Your friends in the real economy meanwhile move on from one salary level to another, only occasionally staying in touch to commiserate with you. With relief you find that after only two or three years we can put the children into child care, and in Britain and Europe that is even into free, state care, and get back into the job market and resume life in the twenty-first century. You have discovered that there are two economies, the real economy of paid employment, and far beneath it, the unpaid economy of child-birth and child-care. There is the faster, child-free economy, and the agonisingly slow economy of children. Some years later, back in work, you may discover that far above the real economy of employment, there is also a third economy. Members of the Baby Boomer generation have not made money just by holding down a job. In recent decades this has seemed too slow an approach to wealth. They have been searching for higher interest rates and experimenting with new financial instruments. We know that there are more of us, the boomer generation, than there are of them who will succeed us. There are more of us between the ages of forty and sixty years old, than there are between the ages of twenty and forty. We middle-aged boomers have realised


that, in order to be sure of being able to purchase the care we will need when we are old, we will have to out-bid all our boomer contemporaries.190 How could we do so? Above the real economy in which we work and trade goods and services, there is another economy, the stratosphere of finance. There are strong winds up there, and we can feel the strength of them even down in the ordinary economy. They entice to send our money up there where the big rewards are. So we put our cash into the economy of high-speed financial flows. Each of us hopes to get into ahead of the crowd; if we can get in earlier enough and that enough people pour into these markets after us to drive stock prices up, we can take our profits and get out again. This hyper-economy draws money out of the lower levels where the real economy is, in which people work to live and to save for their retirement. The economy of pure money tempts us to believe that earning a salary is too pedestrian a way to proceed. Some of the boomers have made enough money to be confident that they can sit out a long retirement and pay for their own oldage medical expenses and care. But this movement away from reliable but pedestrian earnings exposes the real economy that gives employment to the volatility of global financial flows. Excessive volatility, disguised by opaque financial instruments, makes the global market as a whole fragile and unsafe. Where are we going to put the profits that we have gained through our earlier speculations? Now even the US dollar is in difficulties, whose bonds are we going to buy, and how are we going to maintain the value of the capital we have accrued? The hyper-economy of finance exists because we know that, likely live on for many years after retirement, we will need to the financial resources to be comfortable and finally to buy in our care, and that we will need a lot of money to do so. How did this change occur? We are probably right in believing that our own children are not going to give us that care when we need it. We do not believe that they will be there for us because we have been there for them. as we saw in Chapter 3, the bonds between us have not grown thick enough to hold them and us together, two generations held together person to person. We communicated to our children that we were their merely part-time parents; and that through school and the TV, their fundamental loyalty was with the state and the market. We all demeaned our own household, so now it is not there for us. This is the result of letting the formal economy squeeze the family household, and of our hurry to get out of the family economy and into formal employment. This would suggest that the vast flows of the hyper-economy of money are a function of our failure to produce a generation to succeed us, and this is the result of a loss of individual economic self-sufficiency or contentedness and a diminished cultural confidence. The vast credit-and-debt flows of the hyper-economy are the function of our determination to get out of the prosaic business of working and saving, and get into the leverage business in which we can scoop the credit into our laps while pushing the debt off into a doubtful and indeterminate future. So we may identify three economies, each of which exists without much knowledge of the others. First is the economy in which we produce children and all our time and income, are taken up with looking after the family in the household. This is the economy in which we progress at walking speed, which no twenty-first century person can endure. A second is the economy in which we go work, put in our forty years at the office and save so that one day we can retire in comfort. Perhaps we should call this the real economy or the twentieth-century economy . The third is the hyper-economy of pure

Reuven Brenner A World of Chance: Betting on Religion, Games, Wall Street (CUP 2008) p.38-40.


money. This economy is premised in the assumption that the real economy of employees laboriously earning their pensions will continue to grow, but that it is the duty of other more pedestrian types to inhabit that economy and put in that work, and it is the duty of the even less lucky classes and populations to produce the children who will become the workers who will populate that economy. Age and Demography By turning informal obligations into formal and financial ones we have been attempting to make the value of all relationships explicit in the present, thereby leaving less as investment in the future. We are intent on making explicit what we are owed, because we are not sure that the informal economy of our own household and community will support us. By doing so have we have been inflating the money supply, and simultaneously inflating debt, which represents claims on the future. If children are money in the bank, should we see those societies which are producing fewer of them as become poorer, at least in their long-term prospects. Their poverty will become increasingly apparent as the boomer generation becomes dependent and then dies off. If each generation is smaller than the last, each will have to carry a bigger burden of the unproductive elderly. It may not have sufficient loyalty to motivate it to do so. Will those who arrive from abroad have the incentive to support and care for the previous generation? Money represents our current forecast of our own most personal future prospects. Our conviction that we have to earn, or otherwise find, more money reflects our failure to produce a large enough younger generation with enough of a sense of obligation to us to make us feel secure. It was we who effectively disbanded the family when, after having our kids, we went back to work. We ensured for ourselves that the family would not be there and thus that there would be household and no home for us when we needed it. Those of us who do not have sufficient financial resources are now in trouble. Who will we turn to? We left the family years ago, so it is not going to be there for us. Can we recreate it? What would make us wealthier and more secure? It seems that only a homegrown population bulge and the new attitude which would welcome it would have this effect. Nothing would make us as economically secure as the birth of a large number of children. In twenty-years time they will be in work, paying the tax and pension contributions which will provide us with a pension, health care and care in our old-age. To ensure that this population bulge was economically productive for the long-term it would help if these children were produced by those whose mutual love we honour and hold secure by public covenants. The growth of money, and debt, is a function of our attempts to make ourselves individually secure by multiplying the services for which we can invoice other people. The burgeoning of the financial services represents our drive to itemise with ever sophistication. This form of growth represents the stripping of the relationship-rich person, well-secured in household and community, into the relationship-poor individual. The modern economy has achieved its apparent growth by dividing of body from person: the modern economy grows by this division of the inert body (the individual and his needs) from the person. Ultimately what is itemised and individuated in all this growth is ourselves. Steady-State Economy In Chapter 4 I suggested that a group of political philosophers, whom I referred to as the Champions of Modernity, gave us the self-definition which we have settled on. They are the moderns, and since we have not demurred from their definition, but continue their followers, we are moderns too. These philosophers set out the form of man, understood


as timeless autarchic individual, who was reflected in the limitlessly expanding economy. The architects of the modern myth believed that the horizon will always recede as we advance and that this can be reflected not by the givenness of nature so much as an ever-expanding world, in which there is always more territory to conquer. Because the world economy has grown the assumption is that it always will. The assumption is of continuity: as things have been, so they ought always to be. Modernity expects things to continue the same this is the fundamental neoclassical economic concept of equilibrium. But perhaps things will not remain the same, there is the unforeseen.191 The myth is that there can be unlimited growth of material resources. There can indeed be growth, for persons can grow and human ingenuity can grow without limit. But we have to tell these two forms of growth apart. We have brought about a long economic crisis because we have not adequately acknowledged the sources and limits of our own bodies or the conditions of material growth. The economy of modernity consists in making everything immediately explicit, so in realising wealth as present wealth, and separating the economy from the cultural economy, capital from social capital, body from person, and separating the immediate from the long-term that is the unity of past and future. But it is culture that supports, or fails to support, an economy. Economics can only ever be a shorthand that refers to a certain culture, and prosperity can only be sustained across generations, when that culture is passed on. What we have identified as material growth has been the result of our own estrangement from the processes that sustain our own bodies. I have indicated that involvement in the process that sustain our bodies is crucial to our public existence as persons. Material and economic growth must have some relationship to the growth, or at least continuity, of culture, and to the formation of persons in that culture, through which they can learn self-restraint and aim for a degree of self-mastery. If we were able to regard resources as savings we might not be in such a hurry to consume and so avoid devastating the environment for the generations to come. Perhaps we will enter a more subdued period of low-growth, in which we will re-discover an economy in which the formation of persons and culture again determine our account of growth. The modern and early modern champions of autonomy divorced growth from human formation. But if growth means that we never have to exercise self-control and so never have to become persons in this strong sense, then growth simply refers to that torrent of material goods which makes it unnecessary for us to become mature, self-governing persons. We have to ask whether we have enjoyed the apparent prosperity of recent decades by consuming social capital without replacing it. If this is so, we have achieved the very reverse of growth. In earlier periods the economy was premised on growth of persons and societies towards maturity, rather than on merely material growth. If the economy was only about growth conceived solely in terms of materiality, it would be about the degree to which persons separated themselves from their social and cultural contexts and distanced themselves from those around them. On this basis the economy would simply be about identifying and separating what is bodily and material from what is social and cultural, and stripping all inter-personal relationship off each person in order to turn the human being into a bare individual unit. This earlier account of economics had a more measured approach to credit, interest and consumption, that made explicit the relationship of personal motivations and integrity to the health of the economy, and made explicit the relationship between the value of the money in circulation and the long-term futureorientation on economic agents. Christian Growth


Hyman Minsky Stablizing an Unstable Economy (McGraw-Hill, 1986).


Christians offer an account of the universal economy in which every person may come into relationship with each other. The true and universal form of man is Jesus Christ: through communion with him each human being may come into free relationship with every other human being. Through our encounter with other persons we are being prepared for that universality. Where Christs communion is, there is that universal economy which offers full participation for every human being. The Christian Gospel frees from various forms of captivity, so that we can come unforced into the freedom of his communion. This God lets us come to him in freedom, so that in his company, each human being may come into community with all others. We must contrast this freedom with the brute givenness represented by the monism of any occult divinity that does not care to give us its name. So the Church insists that there are many forms of life and ways by which we may give one another recognition, and thus that no form or currency can make all relationships explicit. In the Christian account of the economy we can acquire those political skills, through an apprenticeship by which we can judge what is true and good, and can grow to maturity. Any Christian account will compare the private and individual account of modernity and the economics that results from it, with the public and political account of other earlier periods. The long Christian tradition contains the resources for an economics which was not based in material, but in personal, growth. The Christian tradition does not regard economics as an autonomous domain but as an apprenticeship in good judgment, and so in decision-making, and so as inseparable from our duty of enquiring into the purposes of human life and pursuing them. We may meet one another as fellow citizens in the public square. There may be a secular economy because many of our common concerns may be tackled together without ideology or institutions compelling any other form of unity. The multifarious practices that make up the market enable us to ask each other for what we need and we may provide for one another. We may use our judgment in describing our own and others needs. We come up with pragmatic and so secular responses to particular challenges. Economics requires the discourse of virtues and character. Each event of encounter results in some growth or deterioration in our character, however hard to discern that may be. We have to allow ourselves the language by which to describe our movement through time towards the goal which is our reconciliation and fulfilment.

1. The economy is about the transfer of life, and the resources required for life, from one generation to another. An economy depends on the presumption of continuity. 2. None of us is our own work. Our body and presence is the product of the work of other people. We give the other person the resources he requires by which he can be present, to us or to anyone else, and so give him what will sustain his bodily presence. 3. We demand reassurance from one another; we want the other person to demonstrate their commitment to our relationship. We produce accounts of relationship and demand such accounts from one another. 4. We come together in order to exchange, examine and be reassured by these accounts. Our accounting and examination of one another takes explicit, expensive and long-term form. 5. The past is all we have to show to one another that can secure our present relationship. All human transacting is about sketching and gesturing accounts of our shared past. Money is the idiom in which we abbreviate such accounts. Money is a token of our societys previous success at making contracts.


6. Our economic encounters have ceremonial forms. We employ objects as tokens of our relationships and so identify one another by them. Goods serve as these tokens. 7. Money is account-rendering. We give one another accounts of our relative positions. Money grows as our account-rendering becomes more sophisticated; we beguile one another with innovations in this account-rendering. 8. Money accompanies resources to the places that can make best use of them, and draws our attention to that movement. Money is also a form of signalling by which we encourage others into the stock that we presently hold. 10. The economy depends on maintaining levels of confidence and trust. Law and its enforcement enables the trust that enables markets to operate. 11. We dissipate accumulated social capital when we do not conceive it as capital. Social capital converted, deliberately or unwittingly, into money is dissipated. The growth of money represents the loss of confidence in cross-generational economic continuity. 12. Modern economics is premised on material growth. It accounts for this material growth in deliberate ignorance of the economy of persons. Christians believe that we may grow as persons, or we may fail to grow as persons, or even grow backwards and so become of diminished stature. 13. Modern economics assumes that present economic product is solely the work of the present generation of economic agents. Yet time-lag in an economy may be longer than a single generation. Our present prosperity and economic openness may be the carryover from previous generations, the product of momentum. 14. Relationship is reciprocal. Debt is relationship considered as non-reciprocal. 15. Governments have the authority to issue money. But instead money comes into existence as debt issued by a financial elite, which creates money by making entries in their ledgers, then lends it to individuals and government. 16. Money issued as debt has the effect of separating its holders into lenders and borrowers, and so tends to widen existing disparity, creating a divide between the top and bottom, making the political participation of all its members difficult, and threatening the unity of a society. 17. Since debt bears interest, even when debt is cancelled or paid off, debt interest remains to be paid. Since interest has to be paid, we have to seek new transactions. The logic of compound interest means indebtedness drives a rise in transactions and continual expansion in total (explicit, monetised) economic activity. 18. Governments can restraint the financial sector so that it that it represents a smaller proportion of our economies. If they do not succeed in this, the growth credit-and-debt may cause the collapse of economies. 19. Debt drives growth in the number of transactions; growth is sustainable as long as there are open frontiers and new sources of energy. 20. The rise in transactions necessitates the rapid exhaustion of natural resources, chief of which are fossil fuels. The growth of debt-as-money drives the compulsion to realise our natural resources now, rather than to hold it for later.


22. Cheap energy has allowed us to create the massive complexity of the division of labour of the present economy. Without it that division of labour, and many of our present forms of employment, would vanish. 23. When it becomes the sole medium of transaction, finance becomes so volatile that entire populations can be permanently forced out of the global economy. 24. As the energy component in every transaction rises, the demand for oil will rise. If the oil supply cannot be increased, the global economy may stall repeatedly. 25. If the global economy stalls people fall out of formal employment and are without purchasing power, so effective demand is destroyed. 26. Our concept of money is based in the belief in growth without limit in a world in which resources have limits. The expansion of debt assumes that we can expand credit at a faster rate than GDP, without limit. This leads to unsustainable growth and to crisis. 27. Cheap energy makes transport costs negligible putting every part of the world in immediate reach of, and so under the discipline of, every other. Local and national economies have been hollowed out, the global economy over-extended and rendered brittle. 28. Spreading risk re-locates, but does not reduce, risk. Conglomeration brings transfers the possibility of instability from a part to the whole of the market. When the whole market is threatened, corporations persuade governments that the economic costs of large-scale failures are unaffordable and governments take on corporation liabilities, and with them, risk. 29. Governments cannot resist reducing their liabilities by running inflation. By running inflation the state negates virtue (abstinence) and so dissolves all sources of authority other than itself. 30. Continuity is the unstated basis of any society. As it has been up to now, so we want things to continue and no worse. Modern economics expects things to continue the same; yet things do not remain the same. There is the unforeseen. The unforeseen may be more and better, but equally it may be less and worse. 31. The human pyramid scheme works as long as a new generation of sufficient size arrives which the existing generation can set to work.


6. Money as Ritual and Cult

1. 2. 3. 4. 5. 6. 7. Belonging Charisma and Credit Enthralment Money as Ritual The Big Man in Modernity Shopping as Ritual Money as Reconciliation and Unity

What is money? Money is the idiom in which we grant one another permission to pursue our goals. In this chapter we consider money as a series of ceremonial and ritual forms by which we grant one another license and approval. We give one another this permission. Buyers and sellers look to the rest of us for affirmation of that transaction and of the relationship it creates. In this chapter we will examine money as (1) an idiom of our belonging and being together; as (2) the ritual of our mutual recognition and deference; as (3) the ritual by which we claim a particular place in the world and by which (4) objects embody this relationship, and (5) the ceremonial that makes up the social world we share.

1. Belonging
Belonging is the first purpose of all the action that we call economic. The point of any transaction is not simply to possess or have the use of this commodity, but so that others see us in the light of the relationship it represents. It reveals our identify to them in such a way that they desire a relationship with us. The modern economic account that concentrates on goods without reference to the social context which determines what things are desirable, and are therefore goods, is solipsistic. Modern economic identifies two sides to a transaction, the buyer and seller, the Supply and Demand side of the economy.192 But we are not going to restrict ourselves to this dichotomy observed by modern economics. We will considering all human interaction as a single continuum, and treat all humanity as a single society. We will regard every particular instance of human interaction as an action within this household so that the action of one is part of the action of all. The Club Let us start with the simplest form of belonging. You join a club. Lets say you become a member of the golf club, or your trade association or Rotary Club. You become a member in order come into relationship with other members who you hope will make you welcome. They give their affirmation and so help to establish your public identity. You become a member so that you can be with your pals. Belonging is everything. The club gives its members social standing. If the club is small enough, no explicit record of who owes whom is necessary, for everybody knows everybody else. We has some of the features of a primitive economy. Every such voluntary association may be said to be a form of credit union in that it members extend informal social credit to one another. This requires face-to-face encounters, which are provided by all those drinks, receptions, competitions and away days. A glance at a credit union may help to confirm this. A credit union is a group of people who give one another social recognition in the most explicit way, by extending credit. They lend one another money which has to be repaid. Again if that credit union is small,

Modern Palgrave


the panel of all members may interview each applicant and each decide whether they are a good risk. The panel can meet to review the progress of borrowers, so each is reminded of the progress they are making towards re-payment and respectability. Each can be encouraged or shamed towards repayment. The kudos of membership of this club is an incentive to meet re-payments and remain in good standing. Once they have demonstrated that they are a good risk they may become lenders and full members of the club who are able to monitor the credit-worthiness of others.193 The credit union reveals a fundamental truth about all institutions. Any society is made up of many forms of association. Every institution functions as a credit union in which credit appears, not in explicitly financial terms, but in terms of a broadly-conceived credit-worthiness. To varying degrees each of us is extended the approval and licence of his peers. A member is involved a myriad relationships in which he is sometimes debtor, sometimes creditor. Each member can say who is up and who is down. Informal accounting depends on our ability to monitor changes in status among our peers. In such a group, each can remember who is up, who is down, and whose turn it is to deal next. One indication of the success of a society is that its members do not have to be too concerned about which of them in credit or debit, for it can assume that any member who is in debt now will be in credit later. This is possible as long as the question of his departure, and so the question of whether he can rack up a debt and then leave, never arises. The bank is held in common in the memories of all members of this economy. This is not the case only where the group is small or its members known to each other. Such exchange without records is the basis of all exchange. Exchange made explicit by records is a function of exchange which runs without explicit record-keeping. Keeping records has its own cost. Groups evolve ways to avoid these by dealing not in money, the formal system, but in informal credit. The informal system is cheaper, faster and more exclusive. We use money because it saves on the effort of paying honour specifically and fully, but we use the informal system of favours, that works on an implicit understanding of credit and honour, because it saves on the cost of explicit accounting represented by money. There are purely cognitive costs of organising and monitoring transaction, such as the calculation of bill.194 No calculation is made within the family, the association or firm.
The function of the firm is not simply to maximise transaction costs, but to provide an institutional framework within which the very calculus of costs is superseded.195

The informal and formal systems are not rivals. Without simultaneous use of both systems, and tactical decision-making about when to resort to explicit record-making and when not, neither system would function.196 The firm There are two reasons why we have to go to work. We go because we have to, and we go because we want to. Let us think over the second, more neglected reason. We go to work because we want to be with other people. Being a member of this company is itself one of the rewards we seek. Belonging is everything. The firm bestows its cachet on you

Beatriz Armendriz, Jonathan Morduch The Economics of Microfinance (MIT Press 2007), Mohammad Grameen Banker to the Poor: Creating a world Without Poverty (Public Affairs 2003). 194 Geoffrey Hodgson Economics and Institutions (Polity 1991) p. 203 195 Hodgson Economics and Institutions p. 207 196 Landa Trust, Ethnicity and Identity: Beyond the New Institutional Economics of Ethnic Trading Networks, Contract Law, and Gift-Exchange (Michigan 1995) p. 49 It is implicitly assumed in the standard theories of exchange that there are no costs in the making of transactions. In such a world of zero transaction costs, institutions such as money, middlemen, and the legally-binding contract would be redundant. Recent contributions have emphasised the costliness of the barter exchange process and the positive role played by money and middlemen in reducing costs.


and this contributes to your public identity. Being united to your fellowman is the fundamental union towards which every transaction gestures. We get a job, become an employee and come into relationship with these other employees. They become our fellows in this elective household. We join them, so there is an unmediated form of reconciliation and unity between us. We go to work because we want to be with our mates; a bond of honour and humour holds us together. We perform for their praise, and are bound to one another by a common distrust of some other group, our managers or customers. This is the economy of regard.
Even the largest multinational corporation, even the largest factory is made up of small groups, the paint shop, on the assembly line, or in the boardroom. In face-to-face settings the economy of regard kicks in.197

The elective household that is the firm is a thing of many levels. Each member goes to work in order to sustain their position in it. There is no security of tenure. Together we play the game of deciding which of our fellows we will combine against and attempt to demote or eject next; the frisson this gives us also forms part of our reward. We intend to survive by reinforcing our own position. We work in order to grow the business, bring in more customers, and as it becomes necessary to deal with them, employ more people. We work to build our department by recruiting those who will promote our vision and be loyal to us personally. Each employee can hope to rise as new employees, who report to him, taken on. Our work is never merely the work of our bodies but always of our persons, mind and body. Yet firms are also persons, of which their employee are the body. The logic of the relationship between this person and body separates the product of his work from each individual employee, so reducing his own personhood to make him just a body. The firm resembles the household of the ancient world, a master at the top, slaves at the bottom, its lowest members compelled by threats and punishment to work, so that they remain mere bodies.198 During office hours we work for our employer as for a slave-master; in the evening, in our own household we go spending, and as consumer over other service providers, we exercise this same status of slave-master over a myriad unseen slaves. We take it in turns to be slaves and masters of one another. We work in order to secure promotion. Our professional career consists in breaking through into higher and more exclusive households. We do so by creating lower levels of participation beneath us which raise the profile of that household, while creating newly exclusive versions. Thus the effect of all our effort creates a gradient of participation, gentler at the bottom and steeper at the top. We bring in customers at the bottom, while at the top we create new and more exclusive services to which only a small number may aspire. Increasing the quality of member What happens if we regard customers as members of the same household as employees? Can we see customers as members of the firm too? Rather than describe the firm in terms of employees and customers, those who are inside and those who are not, we may see the firm as a set of levels within which all seek advancement. For we are also members of those multiple identities and households represented by a brand. The firm provides an identity, and a set of steps that take us deeper into it. Each firm creates the imaginative space given by this identity. Not only employees, but customers
197 198

Avner Offer The Challenge of Affluence (Oxford University Press) p. 89 WJ Booth Households: On the Moral Architecture of the Economy (New York 1993).


and suppliers of the firm have to struggle for admission to, and promotion within, this space. Each customer or employee is a courtier within this court who hopes to rise by paying homage to those higher than himself. In the fashion house each designer presents images of the firms look to the founder who has given his name to the firm Armani, Chanel, Ralph Lauren. The firm offers the customer a preliminary foothold, and each member sells a right to belong at some level to those on the rungs below him. Each member of the firm's staff is employed to sit in judgement on the customers and decide what status to award each. Should this applicant be plucked out of the queue at the door, to stand awestruck in the foyer? Should he then be allowed to proceed up to the first floor? Some will be recognised as preferential customers, who bring the cachet of their own celebrity to our brand, and are recognised as worthy bearers of the firms image. Some we identify as wholesale customers, franchisees or as sales force, or as designers and suppliers and market researchers who sense currents in the market and tell us what tweak to give the product in order to give it more cachet next year.199 Our marketing people want to allow our products to drift slowly down the market, and into ever bigger markets. This will make us more money, though it can only be a short-term strategy. Our designers tell us to place the product further up the market, for we must make ourselves more exclusive in order to maintain our desirability, and the level of aspiration for, over the long-term, this is money in the bank. The firm is a sorting mechanism. We pay in order to be selected and promoted above the mass. Customers and clients beg to be admitted to the demographic to which the firm gives its name. They seek to become members of this household and do so first by buying the good or service that is totemic of that household. Whatever the commodity, you are buying that label and charisma.200 Perhaps all may be admitted to the first and lowest level by buying the firm's simplest product in order to display their own identity as the customer of the firm. The good they purchase is simply the firms badge; to buy this good is to seek admission to the identity that the firm creates, controls and reserves as its own.201 This Louis Vuitton badge makes this a Louis Vuitton bag: When you arrive with this bag we see that badge and that name, so the bag is a large badge that helps us to see your quality. But are you the right person to be carrying this bag or wearing this garment? Seeing it in your hands, others may decide that the brand is not what it was. 202 They will make a new purchase further up the market. We live within a vast set of sumptuary laws.203 Each salesperson is a doorman, tasked to decide whether a plaintiff would look right in the court the firm assembles around its label, and thus whether to admit them to its hospitality. It is in the interest of those even at the lowest level the retail customer to ensure that the firm's identity is not debased by the wrong sort of customer. We pay our fee to its doormen in the hope that the firm will admit us, but bar the crowd behind us.

Jeremy Rifkin The Age of Access (Tarcher 2001) p. 46 Some of the biggest names in the manufacturing sector have successful metamorphosed into design studios and distribution houses, leaving plant and property behind and handing over manufacturing to outside contractors. 200 Arjun Appudurai (ed) The Social Life of Things: Commodities In Cultural Perspective (Cambridge University Press 1986). 201 Jeremy Rifkin The Age of Access p. 47 In the new network economy what is really being bought and sold are ideas and images. The physically embodiment of these ideas and image becomes increasingly secondary to the economic process. 202 George Ainslie Picoeconomics: The interaction of successive motivational states within the person (CUP 1992) p. 368-69 tastes often have realised diminishing returns of reward. From what may have been the optimum returns as determined by evolution, competitive goods like power and fame reward fewer people, because they become winner-takes-all markets, and consumer goods reward less effectively because the goods ready availability keeps people near their saturation points. Political science, like economics, needs to adjust to a world where people have enormously cheapened familiar rewards by the same mass production that cheapened bread and nails. We have only begun to understand the consequent loss of rewarding effect. 203 Pierre Bourdieu Distinction: A Social Critique of the Judgment of Taste (Routledge)


Life in the modern economy is lived as a perpetual search for the charisma dispensed by each of these elective households. We go from gate to gate, begging admission and gathering the resources of our public identity as though they were drops of nectar. Consumer culture is an elective tribalism, the contemporary form of the pagan life.

2. Charisma and Credit

We have said that persons seek recognition and approval and that they give recognition and approval to others. Other people make us what we are. They give us the form, the substance and the occasion of our embodiment in one place and time with them. In Robert Jensons succinct formulation, bodies are availabilities.204 We give others the means by which they can be present to us, and they give us the means by which we can be present to them. We give them, and they give us, both the permission to be present, and the material means by which we can be present, to one another. Money is the primary idiom by which we give one another this recognition and approval, and all the material goods and commodities by which each of us lives and is sustained in the recognition of our peers as a person. Each of us hopes for more recognition, and more of the material means by which our public visibility can rise, and so we direct our effort towards those from whom most recognition and material support is likely to come. Persons not only seek recognition but hope to gain more than they are obliged to concede. What we buy and sell is first ourselves, and we do so by buying into one another and selling out again. We take ourselves to market and place ourselves before our peers in order to receive their recognition and approval. We offer them our stock and we buy theirs. Inasmuch as we do so, we acknowledge that we are worth what the market says we are. Thomas Hobbes puts it this way: The value or worth of a man, as of all other things, is his price; tis to say, so much as would be given for the use of his power: and therefore is not absolute; but a thing dependent on the need and judgment of anotherand as in other things, so in men, not the seller, but the buyer determines the price. For let a man (as most men do) rate themselves as the highest value they can; yet their true value is no more than it is esteemed by others. 205 The worth of everyone in the market is in constant revision. Even if your own stock is being bought steadily, it may still be falling if the stock of others is being bought faster. The flux of the market, and with it your worth, is a function of the countless untraceable revisions created by every movement of the market. We are the product we have to sell. Others will buy into us if they believe that we will bring them greater recognition. We promise to bring our own supporters to the relationship. We offer the possibility of introductions to other persons and point to the extent and quality of our network, our mailing lists and customer details. We must demonstrate our reach, the run of our writ. We enforce it and defend it against our competitors who, want to reach their hand into our nest. They seek to entice our support away from us: some we can fend off, others we will have concede some share to in return for some share in them.206 Our credibility is our asset. But our credit is never stable; it leaches away from us. As we haemorrhage, we have to be shored up by supplies we procure from others.

Robert W. Jenson Essays in Theology of Culture (Grand Rapids, MI: Eerdmans, 1995) p. 221 What bodies really are, is availabilities that enable freedom. 205 Thomas Hobbes Leviathan 206 Aristotle Nicomachean Ethics


Putting on a Show Each of us exerts a force of attraction which works on those around us. We set out to convince and hold enthralled as many others as we can. Business, and life itself, involves convincing a public that the state of affairs is what you say it. We hope to persuade people to become our followers by telling them a convincing story about the way things are, which reveals that their identity are ours are united. We flatter them; we do so best when it does not occur to us that flattery is what this is. Others want to enter this pact of mutual affirmation, and yet we cannot admit everybody, for we can only stay ahead by looking beyond our immediate circle for those who will bring in new energy. Each of us is at the centre of our own little circle, and on the periphery of other stronger attractants. We all orbit around those who are stronger than ourselves, and acquire momentum by swinging by the gravity of rivals, in order to get ourselves into the orbit of stronger stars. We set out to win an audience. The game is market share. Each has to meet the expectations of his audience. The big man must create a drama in which both sides are involved and lead them in this drama. He must create an aura and keep us watching and fascinated. He must make us afraid. We hope to bask in his favour and we fear his disapproval. Life in his household consists of trying to catch your patron's eye. We will want to woo and placate him with gifts, chief of which is introductions to those who will increase his power. When you have his favour all things become possible for you, most especially the possibility that you will become a patron in our own right. 207 The Big Man must watch his crowd constantly for signs of boredom. When they start to drift away, he must do something new that will delight or shock and appal them in order to keep them watching. You have to shore up your support faster than it can dwindle, and poach supporters from other people faster than they can poach them from you. The literature of social anthropology reminds us that in the world of honour and patronage there are no settled hierarchies, orderly queues or limits to violence, and none of the security offered by the flattened hierarchy of the modern division of labour. Instead there is the constant business of challenge and riposte, and of pushing our way to the front. The marketplace is a big playground with no adults to police it: some of the bigger children inevitably assume a vague control in order make the violence more predictable and thus reasonable. Big Men honour their supporters and are honoured by them. They have to return honour more slowly than they are paid that honour by others. They acquire power and wealth by paying off those supporters whose aid is essential to them but also by retaining for themselves whatever resources they can abstract at the expense of weaker and poorer members of the group, whose claims they can safely ignore for a time.208 You have to pay your supporters less and more slowly than they pay you, while maintaining the impression that you pay them more, and more frequently, than they pay you. It is all about timing your payments to ensure that more credit is flowing in than flowing out. Alfred Gell reports an observation by one New Guinean respondent: The point Kisian is making is of limitless application, not just to the Kula; ie the business principle that positive cash-flow in an organisation depends on ensuring that debts owed to the organisation are cleared marginally faster than the debts owed by it.209 Maurice Godelier describes the process:
207 208

Castiglioni The Courtier Mervyn J. Megitt Studies in Enga History, Oceania Monographs (Issue 20, 1974) p. 82 quoted in Alfred Gell The Anthropology of Time: Cultural Constructions of Temporal Maps and Images (Berg 1992) p.282 209 Alfred Gell Practice and the Timing of Exchanges in The Anthropology of Time p. 282.


The wealth and power of a big man are built upon a series of contradictory practices that ultimately undermine the basis of his power. For he builds his power through application of the principle of reciprocity. A big man must give back what he has received if he wants to go gathering into his hands an ever-greater quantity of wealth for redistribution. But in order to maintain and expand his power, the big man must gradually resort to opposing methods, delaying the moment of paying back to members of his faction what they have given him to help him make his name his social base finally collapses beneath him, at which point his followers scatter and rally to one or another of his rivals who thus profit from his fall.210 Every Big man gives his own public account of himself. He issues the gifts and concessions which become the currency which carries his reputation. This currency consists in accounts and images of himself which make his reputation tangible. His name opens doors, his image opens fists. You wear his image in order to gain entrance into his building. His name and image are symbolic capital, the most durable form of wealth.211 In Chapter 5 we said that all communication, of which a transaction is one form, is embodied. It is it is a function of two parties before the third that represents the audience they desire to impress. In the transaction the two parties create a relationship which the rest of the world acknowledges. They enter this transaction in order to benefit from the support of this relationship with the other party. This relationship advances the public status of each of them. Though this modification of status may be imperceptible to laymen, it is understood and acknowledged by the group to which it is relevant. Your peers acknowledge that, by taking this act together, the two of you have promoted your individual statuses. By acting together in the event of this transaction, the two parties advance before their fellows. The whole watching peer group which constitutes that market, by acknowledging their act, ratifies it. Their transaction is not simply the act of the two of them, but of the whole crowd that makes up the market. 212 The existence of that market consists in the serial event in which two of its members emerge to perform together an act which the market as a whole will accept as its own. Two of its members step out of the stamping, shuffling crowd into the centre to dance together, each taking their cue from the other, mirroring the others movements, until the applause of the crowd indicates that they have performed to its satisfaction and each can withdraw back into the line of their approving and envious fellows. Then another two individuals must step out before their peers. Each individual in the crowd must seek out that other individual who is, in this minute, prepared to brave the floor and take their turn with them to perform the moves which will win the applause of the market. The status of those who step out most often rises, while the status of all others gradually becomes correspondingly lower. Those who seek to dance next may try to catch the eye of those who dare most, but the better dancers will avoid the eye of any but the very best. We take it in turns to be the big man whose performance bewitches the crowd, and the crowd waits for each of us to perform this function for it for a brief moment. The market is that large group of people who remember, know and incessantly discuss who is up, who down, and who owes whom. The value of each member of that market, and the value of whatever is bought and sold, and the value of money itself, are different modes of the same market chatter. We could say that the market is nothing but this chatter, and that money is the idiom of this chatter.

Maurice Godelier The Making of Great Men: Male Domination and power among the New Guinea Baruya (Cambridge: Cambridge University Press 1982) p.163 211 Richard Gordon From Republic to Principate in Mary Beard and John North (ed.) Pagan Priests: Religion and Power in the Ancient World (Michigan: Cornell, 1990) p. 194. 212 Michel Aglietta Whence and Wither Money in The Future of Money


3. Enthralment
Neoclassical economics tells us that we all act as independent agents. We have perfect knowledge of ourselves and of the market. We act in our own interests and so rationally, without reference to what others are doing.213 We are entirely our own masters: there is no moment in which we lay aside or forfeit our individual agency. But as long as we attempt to exercise our agency constantly and solely through the single medium of money through shopping we exercise our agency in ways that are trivial, and our agency becomes marginal. We give our responsibility and agency away. We bring into being the hidden persuaders who exercise agency in our stead, giving them authority to exercise our powers. The charismatic man draws other men with him. He collects them and can hang on to them so that they remain his flock. How does he do this? He issues goods. Goods extend his reach and strengthen his hold. His goods amplify his face and win him looks and we purchase these same goods in order to win ourselves looks amplify our own public face. Goods are designed so that our eyes alight on them; they win eye-time for their holder. We clothe ourselves with the looks and personae we gather from the torrent of images, regularly re-papering ourselves with whatever combination of cultural wrapping seems to position us best in this moment. Each of us wants to identify ourselves with the model that the Big Man displays before us, and so we buy in. We move within a continuous flow of images. We cover our goods with the attractants that will draw you to buy and do business with us. These images show us to be happy, powerful, beautiful and charismatic, and they communicate that we can share these qualities with those who come to us. The glamour models who lends her face to our marketing campaign and product shows you that, with us, you can be beautiful too. The face of the company president inside the company annual report, sleek and assured, shows you that you can receive that same assurance through purchase of shares in his company. These goods or shares are his presence with you. The torrent of images and simulacra sometimes arousing desire, sometimes grave and reassuring point us to the single figure of the self we desire, the figure whom all desire and revere, but who is himself unmoved. This image leads us regularly back into the shop to repurchase this assurance through possession of the cultic image, and it takes us to work to earn the means to do so. All images are short-hand versions of the full account which tells us that we belong in this household, in the presence of this figure. Through this stream of specie and simulacra we make ourselves present to one another. We want to keep up and show our peers that we are powerful, youthful, attractive, spontaneous. We dive in after those we wish to emulate.214 We buy the stock of whichever version of the Big Man seems most persuasive in this moment. If we get into that market early and get out again sooner than the rest of the crowd, we will survive. Those who come late, who buy high and must then sell low, will not survive. If others pour after us and buy that stock our stock will rise and we will be able to put more into the next stock that then appears to be his next most convincing representative. The rational economic agent is engaged in guessing what the rest of the market is going to

213 214

Palgrave Economics Donald MacKenzie An Engine, not a Camera: How Financial Models Shape Markets (Cambridge MA: MIT 2006) p. 272 Another potentially crucial issue in respect to the limits of arbitrage is the apparent propensity of others to seek to imitate successful arbitragers firms and other economic actors do not choose their courses of action in isolation: they monitor each other, and make inferences about the uncertain situation they face by noting the success or failure of others strategies.


do next, and doing so before them. He is, rationally, making calculations on the rollercoaster of market sentiment. The market is healthy to the degree that its members maintain a degree of specialisation, and do not all follow each other. But when the market merges to become a single herd, its movements become more volatile and the market as a whole more unstable.215 We make our way from one big man to another, and from one rising market to another, each of which moves us closer to the Big Man himself, until our ride is over. Our movement towards each such figure requires massive investment from us for purposes of display, in order to persuade others to opt into the market that we are in. This is the idea of conspicuous consumption, the Veblen effect, that an increase the price of something attaches prestige and increases demand for it.216 Each is a pyramid scheme, and eventually we are caught in a collapse too big for us to recover from. We all complicit in this all-consuming theatre and in the fabrication of desire, and which inflict it on one another, compelling the other to participate in it with us. Each individual hopes to anticipate the movements of the beast and make his fortune by beating the crowd in and out of each bubble. Each is rational in trying to do so, and in each decision about where the market is likely to go next, and so the individual may be said to be rational even as he responds to a mad world. Make-Believe World The Christian account of man includes an account of our readiness to deceive one another and to be deceived, and so of our vulnerability and culpability. This is the point of the doctrine of sin. But Christianity is not alone here. Classical Greek and Roman authors also offer robust accounts of our readiness to become fools and knaves. The economic explanations they offered in terms of the virtues and their lapses, such as fear and greed, are always apposite. Those champions of modernity, such as Hume and Smith, apologists of economics modern turn, were very familiar with this literature. At its beginning are the dialogues in which Plato portrays Socrates encounters with the Sophists, the management gurus of ancient Athens, who offer young men the education which will enable them to do well in the world. A man wants to acquire the virtues which will enable him to get ahead, make a name for himself and turn him into a leader, perhaps even a statesman. A student will need a grasp of those disciplines we now refer to as economics, management, law, politics, media and military strategy. The Sophists are offering to teach their students how to turn themselves into big men. Socrates is sceptical. Education is not simply a matter of gathering the best techniques of selfpromotion. He wonders whether these teachers are not competing to present the most attractive account of their wisdom simply in order to win custom. They have to flatter those they want to attract, by appealing to what is already attractive to them, which is primarily pleasure. They dare not suggest that learning requires more discipline than their students are ready to accept. This education must therefore be made accessible, even if this means more accessible than is warranted by the subject itself. As children think that confectioners are better than doctors, so young men will think flatterers, which is what the Sophists are, are superior to philosophers.217 Socrates regards these not-sohidden persuaders as counterfeiters: like a painter who creates images that deceive the eye, they conjure up a make-believe world for us.218


MacKenzie An Engine, not a Camera p. 272 When this leads to diversity to firms selecting different strategies and coming to occupy different niches a stable market can result. But if firms imitate, each choosing the same strategy, potentially disastrous crowding can occur. 216 Thorstein Veblen The Theory of The Leisure Class (1899) 217 Plato Gorgias 464b-466a 218 Plato Sophist Statesman??224


Where do these teachers get their wisdom? Socrates suspects that they find their product in the very same young men they are claiming to teach. The false teacher sources from his students the beauty that is theirs by virtue of their youth, and charges for the service of selling these young men what they already have. He appears to give them what they don't have, but is only able to do by creating new desires that they didn't have and so holding them captive. Such teachers live off the very people they profess to serve. The Sophists are false teachers, Socrates suggests, because they do not tell their students that they are judged by criteria external to themselves. But the good teacher prepares his students for the moment when they must leave him to go to another teacher who can take them a little further on their quest. Young people can never grow if their teachers hide from them that they, both teacher and student, are under the discipline of the truth. The truth is out there, beyond the group and its control. A good teacher is one who communicates to his students the objective and elusive nature of the truth. Truth may not be suborned to charisma. To the extent that we prefer success over truth we cheat ourselves. With Plato and Socrates at the very start of the Western tradition we learn about the complicity of people in their own deception and so about the complexity of economic agents and the subtlety required of descriptions of their rational and irrational nature. Thomas Hobbes and Bernard Mandeville made the same point in the early modern era as the newly reductive discourse of economics appears. We are ready to be fooled. We have indicated how we induce people to engage with us by making a deep and therefore emotional appeal at a deeper and more emotional sense of their identity. Analysis of the sub-rational nature of our motivations did not originate with Thorsten Veblen, Theodore Adorno or the twentieth century critics of consumer culture or the post-modern identification of knowledge as a form of consumption. Effective criticism of the concept of the rational economic agent, this basic tenet modern economics, has always been available in the Western intellectual tradition. But as Plato points out, few think that the more mature view is worth having. This deeper and more complex view of man is as unpopular as the economic view of man is popular. The truth is there for those who, like Socrates, are willing to cash in everything else in order to pursue it. So far we have said that what we exchange in each transaction is something so subtle that it is not easy to find a single satisfactory term for it, but belonging and charisma are two candidates. At moments agency is effectively exercised by the very few on whom, for a moment, charisma comes to rest. We have said that every commodity is a badge that offers us an identity and a token of the households presence with us and of our belonging within it, and that the economy is a stream of such elective identities. We exercise a form of possession over one another, in which we alternately are possessed and have others in our possession. Mankind is caught up in collective delusions and manias.219 There is a alternation between individual and collective identity, when mankind makes a single flock or even swarm. I have suggested that a robust account of the economy requires a strong conception of the readiness of economic agents to be taken in and carried along, and so not only of our gullibility but of our complicity in this gullibility. We are not solely rational agents. Our individual agency emerges out of a collective agency and dissolves back into it again. We both hope to beat the herd, and are ourselves part of that herd. We fool others, but we are also fooled. The economics that is unwilling to include an account of the failure of mankind to be a good judge, to be rational, is not only inadequate.220 It is itself an

Charles MacKay Extraordinary Popular Delusions and the Madness of Crowds (CreateSpace 2010) (1841). 220 Donald MacKenzie An Engine, not a Camera: How Financial Models Shape Markets (Cambridge MA: MIT 2006) p. 265-6 In order better to understand economic behaviour, even in financial


ideology employed by those who, though they may not wish to acknowledge this, are hoping to take us in. Any discussion of agency must include this surrender of individual agency by which we give ourselves away to other entities, surrendering those powers and responsibility that we do not wish to cope with. We alienate our own (God-given) identity to whoever will take it from us, and lease back from them that part of it that we can control. We live in an economy in which we receive our agency from others, and give to others both in freedom, as representative function, and involuntarily in forms of captivity and possession. Inasmuch as we experience these forms of possession as natural, and thus do not experience them as forms of captivity, it is because we inhabit a cult in which such forms seem natural. We receive and give our agency through ritual. Money is this ritual.

4. Money as Ritual
Coin as Encoded History Money is a social relation, given deliberate and public expression. Deliberate public expression is what ritual achieves. Money is only an extreme and specialised type of ritual.221 The functioning of depends of our forgetting of the controversial and contestable nature of its value.222 Like the meaning of a word, or the proper form a ritual, [money] exists as part of a system of behaviour shared by a group of people... the joint 223 creation of a whole society. Let us now look at the economic transaction as an event of ritual. We shall pursue the thought that in each economic transaction both parties, buyer and seller, are getting, not different things, but the same thing. Each is getting their position in society recognised by society as a whole. They perform their joint act that manifests this status so that the watching world sees and affirms it. We are all public performers. If this is so we will have to examine the economic transaction in terms of spectacle and spectators. Economics is the idiom of our performance together, and gives us the criteria by which we judge one another better or worse performers, and thus more or less desirable allies. This threeparty account of human interaction gives us a non-dualist economics. In a transaction we buy this good or service by paying money for it. The money reflects the commodity purchased. Now let us see if we can find other, though equally plausible terms in which to describe this encounter. What if we do not distinguish between the good and money paid for its purchase? Can we view them as aspects of the same thing? Could it be that the goods, and the records of this transaction, are as essential to this encounter as the money? Perhaps the records are as essential to the transaction as money itself. Perhaps money is a form of record, and a banknote is a form of receipt? Could it be that money, records of transaction, and the goods exchanged are all equally media of this encounter?

markets, it is also necessary to enrich standard models of the rational actor to encompass ways in which we affect each other that are not reducible to calculation in the ordinary sense of the word. We are often profoundly influenced by anticipation of how our behaviour will appear to others, even if their approval or disapproval has no direct material consequences. 221 Mary Douglas Purity and Danger (London: Routledge 1991) p. 70. 222 Marieke de Goede Virtue, Fortune and Faith: A Genealogy of Finance (Minneapolis: Minnesota Press 2005) p. xv. 223 Foley D. Money in Economic Activity in Eatwell, John, Murray Milgate & Peter Newman Money: The New Palgrave (London: Macmillan 1987) p. 248.)


Money is the means by which we call public attention to this encounter and so make it a public event, and as such, an economic event. We do so by spelling out through this ritual the place that this event has in our shared history. We locate it in the ongoing life of our economy through the exchange of these three media of good, payment and record. From this starting point we can see each transaction as a representation of the economy, and the history of the economy, in miniature. The modern economy has emerged from our history. Our history is present at every point within our modern economy. In the economy we give and receive our identity by exchanging accounts of who we are; we do so by exchanging accounts of both our individual histories and our shared history. Each economic transaction represents this shared history in a particular code. Money is the code in which we reaffirm the basic fundamental event by which of our society is constituted so that every transaction is a re-iteration of the history through which this society came into existence. Each event travels round the circuit made by the pathways created by our common history. Money is then our shared past become the code by which that history establishes our shared present. The Cult of an Earlier Globalism The money that passes between the two persons represents everything that has brought them together. Whether coin, banknote or whatever other form of payment, it is the history of our society, or of the history that our society considers economic, which is to say, relevant. It is that history as it serves, or fails to serve, the continuity of that economy and life of that society. This may not be obvious to Moderns, but it may become more obvious when we look at those societies that preceded our own. Earlier societies clearly personified the unity of the human economy in a single human figure. Imagine our entire culture identifies itself with one particular personification of its identity. This is what the coin does in the ancient economy. Imagine a coin with the portrait of a ruler on it. He is the image of sovereign man. This individual alone is sovereign: all others are his subjects or functions of him, who participate in his sovereignty by deferring to it. He is the one whose will must be obeyed, the autarch and tyrant who exists, according to his own propaganda, before and above all others. He acknowledges no relationship, no past, no debt or obligation; he cannot be called to account. This autarch is the figure of autonomous man, canonised by the modern champions of autonomy. This is the rational and self-interested economic agent of modern economics and the consumer around whom the modern economy turns, the personification of Demand. We will now examine this figure through the ideology of an earlier empire. The champions of modern autonomy were enthusiasts of the Greek and particularly the Roman conception of man, and understood themselves to be recovering those earlier traditions of human dignity. The modern conception of man derives from the Greek conception of man as the master who acknowledges no master, or in its more Roman conception, for whom all others are simply to be commanded. Could it be that this conception of man drives the Western economy and his sovereignty is the basis of every economic event? A banknote has a portrait of some national figure on it; the credit card has the logo of the issuing bank and security seals of credit agencies. In what follows I will refer to all means of payment simply as the coin. Each is the token of its issuer, the bank and national government . This figure is another appearance of the Big Man. To be in possession of his coin is to be in his household and economy. As long as you possess, or seek, the coin that he has issued you are in his continuing hold. The coin that bears his image must be present every time we transact with one another. We disguise his rule


until it has become universal, the global empire that we now call simply the economy. Since there is nowhere that holds out against him, we have ceased to be conscious that we are his subjects and functions of him.224 Coins make politics visible. Histories of coinage start with the seal, impressed into clay on the outside of some packaged commodity, or some record of some commodity, handed by each holder of these commodities to the next and so travelling with them.225 The seal is a mark of ownership of these commodities but also shows that these merchants trade under the aegis of the ruler whose mark this is. He is guarantor of their freedom to trade, for he provides the peace which allows them to travel and exchange. The holders of a coin are licensed by him whose mark it is; it identifies them all as members of his household who, taking that existing relationship for granted, may do business with one another. Aristocracies of the ancient world forged bonds with their neighbours. Alliances between chiefs were created through the exchange of gifts and other customs of hospitality, and cemented through the exchange of ambassadors or of women in marriages. Naming and paternity ceremonies of ritualised friendship stronger than kinship cemented by the exchange of young men from other families as hostages or guests. Each alliance was enacted by libations and sacrifices, pledges and the exchange of mementos of this encounter that would keep their alliance visible to both parties. As Moses Finley put it, every quality or state had to be translated into some specific symbol, honour into trophy, friendship into treasure, marriage into gifts of cattle.226 Trust is embodied in ritual objects, of little intrinsic value, but of immense symbolic significance, Gabriel Herman tells us. 227 Symbols could be created by breaking a single token and giving each party a half to function as the record of the event that brought that relationship into being. The handshake was deemed so characteristic of the process that artists used it as a visual symbol for the alliance. Some tokens took the form of model hands, portraying that handshake. Each chieftain acknowledges the other in an act of reciprocal homage. One puts his hand on the subdued form of the other, then that other gives the same acknowledgement to the first. Each signals acts with deference towards the other, each giving the signals that identify himself as junior and the other as senior in this relationship. Sitta von Reden shows that the language of civility and citizenship of the polis relies on both parties performing homage owed by a man of lower status to a man of higher status. The guise of momentary self-abasement made by both partners makes the city a place of equals. 228 By a series of gestures of self-abasement a Greek offered himself as servant or ally. Offered by both parties, such gestures constituted the forms of politeness and agreement that sustained the polis. Such is the beginning of politeness, of civility and of the civil society in which commerce is possible. By this act they agree that they do not need to wrangle further to establish the truth of their relative positions, sparing themselves the cost of the more extended display, or even of battle, that would establish their status more exactly. As Mark Anspach puts it, The earliest and most vital function of economic exchange is not economic at all. Trading goods keeps people from trading blows. 229

224 225

Michel Aglietta Whence and Wither Money in The Future of Money Glyn Davies A History of Money: From Ancient Times to the Present Day 226 Moses I. Finley The World of Odysseus (Viking 1978) p. 123 227 Gabriel Herman Ritualised Friendship and the Greek City (Cambridge: Cambridge University Press 2002) p. 50 228 Sitta Von Reden Exchange in Ancient Greece; The Commodification of Symbols in Seaford & Gill Reciprocity in the Ancient World; Richard Seaford Reciprocity and Ritual (Oxford: Oxford University Press 1995). 229 Mark Anspach From Vengeance to Gift-Exchange in Caroline Gerschlager, Expanding the Economic Concept of Exchange p. 213


But we are heirs of Rome as much as Greece, so must learn from the ideology of Romes empire. A Roman coin is an instrument of the imperial cult. The empire extends from the throne room in which the emperor is bodily present into every public square in which his statue stands and wherever his coins carry his image, and so throughout the polity in which that coin is tendered. A Roman coin is an emblem of the supreme authority of Augustus and is a token on the cult that held his empire together. Pictures and likenesses of the emperor were portrayed on coins, and carved and set as statues in shrines and public buildings. Coins kept the empire up to date with the latest imperial architectural achievements and approved portraiture. The imperial cult regularly issued stylised portraits of leaders and when they fell from power, recycled these portraits in a process which Price likens to a brutal Soviet-style propaganda machine. Coins were part of a constant empire-wide propaganda effort that spelled out the power of the emperor as he, or his representatives, travelled around the empire. Each was an image and microcosm of the whole economy of power of the empire. Public recitation of the emperors acts and acclamations and hymns of praise to him were part of the emperors progress around the empire, and at the beginning and end of any public assembly. Panegyric drew together multifarious events, ideas and hopes what were pinpointed on the coinage in one coherent and cogent whole.230 When the speeches were forgotten the coin remained Verba volant, numismata manent making the ideology expressed by that event permanently present to us.
What contemporaries saw on their coins was a reservoir of simple clearly-intelligible images of good happenings connected with the empire... that could be held in the palm of the hand.231

Some coins suggest the emperors divine status: all wealth flowing from his throne room, around his economy and back to him again.232 Some coins portray a ruler offering homage to the god from whom he receives his kingdom and acts as regent. As the king receives the kingdom from the god, so men receive membership of that kingdom as they receive his coin. The passing on of the coin in each transaction is a re-enactment of the kings reception of the world from the god. It represents our reception of his rule and economy from this king. Many ancient coins portray the gods shrine or altar, the image that of actual temples and civic monuments.233 Paul Zanker shows that the imperial cult disseminated his account of his own divine genealogy; Augustus encouraged others to construct their account of their relationship to the divinities to whom he was related. The architecture of his cities indicated that the world itself was brought into existence by Augustus. Statues of a veiled emperor show him as priest. The apotheosis (deification) of Roman emperors offers a key to understanding the power of the emperors in their capital.234 Images show the father of the gods stretching out his right hand to give to Trajan the symbol of power.. an act repeated on many coin-issues.235 Each coin is a small shrine; each shrine a large coin. The Roman city understood the emperor himself to be integral to the cult that united the empire. Its performance was the conspicuous exercise of generosity in the form of the games. The performance of the imperial cult through the political display in the circus
McCormack Art and Ceremonial in Late Antiquity p. 12 Sabine McCormack Art and Ceremonial in Late Antiquity (Berkeley: University of California Press 1981) p. 11 232 Richard de Ste Croix The Class Struggle in the Ancient World (p. 397) 233 SRF Price Rituals and Power: The Roman Imperial Cult in Asia Minor (Cambridge: Cambridge University Press 1985) p. 180 234 Price From Noble Funeral to Divine Cult p. 56 235 Richard de Ste Croix The Class Struggle in the Ancient World (p. 397)
230 231


was more important than any more ancient religious display in a temple, since it was in the circus that the unity of the empire was publicly acted out.236 By staging games cities competed to demonstrate themselves as the empires most favoured. The circus was not just about horse-racing and athletics, but was a participation in the story spun about the fascination of the imperial family and its ancestors. The flamboyant display of the imperial cult enthralled the whole world. It did so by consuming elements of it, holding all in the fear that they might be the next victim. Some section of the population was regularly singled out, turned upon and consumed. It was obvious to Christians that this conspicuous consumption was a pagan cult that depended on the sacrifice of a proportion of those caught up in it. As Tertullian and Augustine pointed out, to watch was to give approval and be possessed by the daemon of the imperial cult.237 We do not need to believe that the emperor wielded the colossal power his propaganda claimed. His cult made this giddily high claim for him; this fiction was concocted by his servants together because it was what the empire wanted to hear. The cult spread with the image of Augustus on his coinage. By the propaganda of his coins and other images the emperor steered the empire, but the glorification of him in the eulogies, the circus and public building programme steered the emperor. The empire held together to the degree that this cult was well-performed by all parties. The empire demanded a good performance of this cult from the emperor and he had to oblige, for maintenance of the mythology of unity was his job. As Paul Veyne puts it,
The monarchic regime, which has truly existed only in exceptional reigns, has succeeded for thousands of years in making people believe in its existence. Its chief merit, which has enabled it to last so long, is that it is not monarchical, but serves as a cover for informal team governments.238

The emperor has power to the extent that he gathers supporters while staying far enough ahead of them to preserve his own freedom of manoeuvre. 239 The logic is the same for a Roman emperor as for the big man in the literature of social anthropology we met in section 2 above. The big man is the sovereign whose will must be obeyed. He is the autarch who exists, according to his own ideology, before and above all others. When the Christian Gospel is absent, the imperial cult continues to determine the Western self-understanding. This cult receives a development and second phase in the period of territorial expansion in which Europe drew the world into a social economy. Rome provided the image of the solitary which the champions of modernity found compelling and made universal, so we have inherited the assumption of the unassailable individual will.240 As a result our peers cease to be our judges, no individual is obliged to hear the challenge of any other, and the world became a single global economy in which, through the medium of money, each may command all.

5. The Big Man in Modernity

When we enter an economic transaction we exchange coins and other media that display the image of the autarch. He is the third party who is guarantor of all our relationships. He spreads his power by putting tokens of it, bearing his own image, into the hands of every citizen. As they handle these tokens, the two parties indicate that the big man is the sponsor of their relationship and enforcer of the peace which makes it possible. These


J. H. W. G. Liebeschuetz Antioch: City and Imperial Administration in the Later Roman Empire (Oxford: Clarendon Press 1972) 237 Tertullian On the Games and Augustine The City of God and Confessions. 238 Paul Veyne Bread and Circuses p. 303 239 Jon E. Lendon Empire of Honour: The Art of Government in the Roman World (Oxford: Oxford University Press 1997) 240 Jean Bethke Elshtain Sovereignty: God, State and Self


tokens are examined every time two citizens meet and do business. This ritual has been passed on to us in the forms of which the modern economic transaction is comprised. We have asked whether the Western economy is the outcome of the form of sovereignty and selfhood created by the Roman empire and its cult. The emperor is our determinative ancestor; each of us is his epigone, as we exercise economic power over one another. State and market issues with the credit by which we are members of this economy and provide the public works, circuses and sacrifices that secure our participation and consent. The single figure of the world-emperor is now seen in each one of us who as consumer, commands and so sustains this single global economy. The goal of the modern economy is to reproduce this autocrat. We have stripped the person to make him a unit of pure will. We declare that no one knows anything about us other than what we reveal to be our will. This will enters no conversation and cannot be argued with, but must be appeased. How can two such wills meet? They do so only when they are brought together by that ritual that we conceive of as economic the ritual that forms a transaction. The modern economy is the empire enforced through the ritual in which brief events of contact take place, and through which the relationship of persons are reduced to the momentary encounter and coordination of two bare wills. Money is the idiom of the ritual in which two wills are episodically and briefly reconciled. By buying and selling we participate in the universal economy established under the sovereignty of the primal autocrat. Money is the idiom in which we participate in this figure who is above all relationship. All our economic interaction serves to replicate his detachment and fundamental solitariness. Economic Man Economic man is the product of the modern economy. We suggested that modern man is the outcome of the intellectual tradition we sketched with our contrast of private and public man in Chapter 3. This intellectual tradition is not only a set of ideas, but the complex of practices of which the modern economy consists. As the ideology of this economy, modern economics envisions human actors in a certain way, with the result is that we see ourselves so and act in this way. As we buy and sell we impose these practices and this conceptuality on one another. We have seen the early modern champions of autocratic selfhood were unwilling to acknowledge love and gift, and so were unable to concede that we not only exchange goods by necessity but also distribute goods, in freedom, motivated by love. They were unable to concede that what we give must ultimately be ourselves, and that what we receive is ultimately one another, and that regardless of the degree to which goods and services feature in this traffic, they all amount to a gift of ourselves. We may give ourselves willingly and freely, and we may acknowledge one another not simply as our economic master or servant but as equal and friend. Modern economics represents mans fear that he is fundamentally alone. He enters relationships with other human beings, but the ritual of transaction defines each relationship as an exception, a moment that is over as soon as begun. Economic man is then the human being defined by the absence of a long-term. He does not concede that he has any history, that he is mortal and must give way to others who will be his successors. He knows no obligation to pass life on and so acknowledge the claims of the future on him. Each of us is the autocrat who tolerates nothing that we have not conjured from our own will, who commands the mobilisation of whatever resources we will, and has nothing to learn about their good use from his fellows. The distinctively modern economy is determined by Demand and Consumption, because each of us has become this autocrat.


Here again we can learn from earlier generations. Xenophon tells us that no one dare contradict a dictator. If he keeps everyone afraid of him and so puts himself beyond challenge, he will never hear the truth or never learn how to modify his own desires. The man who is only under his own control is a menace to himself as much as to others. Tyrannised by his own passions, he is to be pitied for this apparently absolute freedom is a form of captivity and of loneliness.241 By regarding ourselves primarily as consumers and so putting ourselves beyond challenge, we have become tyrants who cannot be gainsaid and who therefore never acquire self-knowledge or self-mastery and so remain pitifully immature. Our insistence that makes us altogether, less than individuals, with much less than the dignity of unique persons. It makes us parts of a non-personal whole. We are members of the herd and functions of a system.

6. Shopping as Ritual
We have considered payment as a form of mutual homage by which two persons position themselves in a larger world of relationships. Let us pursue this thought a little further. We suggested that the first form of economic encounter took the form of a face-to-face encounter that employs the sort of complex motions of hand and body by which subjects once paid court to their rulers and clients to their patrons. These gestures are reproduced in the tokens that commemorated the occasion on which fundamental acts of homage were made. When a king is portrayed receiving his kingdom from a god, the two of them clasp hands. The passing of the coin in each payment is the enactment of this clasping of hands by which the world is given by the one and received by the other in a public ritual. All language is bodily. We can communicate by hand signals. The language of hand signals is still employed by the deaf-dumb, by bookies on a race course and until recently by traders on the floor of money market. From such hand signals originated the squiggles that over millennia were conventionalised into numerals and the letters of the alphabet.242 Hand signals and body language are what is being exchanged in every financial transaction. When we go shopping we are exchanging hand signals with the shop assistant, and together with them, with the whole of the rest of the market.243 In each transaction in the contemporary economy we perform these hand signals with the shop assistant through the transaction-recording instrumentation of the cash register. By these stylised hand movements over the cash desk shopper and shop assistant perform an act of mutual homage. Their act has immediate consequences that travel in all directions. At the end of each days trading the cashier exchanges with his line manager the set of figures and signatures that sum up the day's trading; this account is agreed and transmitted in signals that both move up the hierarchy of the firm and from one firm to another. The data from the till results in new orders being despatched to suppliers and distributors, and these orders issued to packers and delivery people, and the news received through price signals by growers and manufacturers. The weeks trading is examined by regional and national managers. It is examined again by the Accounts department. The chief financial officer then summarises all these trades in his report to the board of directors, then to the stock-market at the announcement of quarterly results. The reports that summarises these trades are examined by the auditors before these results presented to representatives of shareholders at the annual general meeting. Streams of hand-signals, conventionalised into alphanumeric figures, flow across the market. Each signal joins the stream that runs around the world, making it a

Leo Strauss Xenophon Hiero: On Tyranny Donald Mackenzie describes some of these in the open outcry trading of the bear pit of the Chicago stock market 243 David F. Armstrong, William C. Stokoe, Sherman E. Wilcox Gesture and the Nature of Language (CUP 1995).
241 242


single global economy. The cash till transmits the keystrokes made by the shop assistant to points all around the world.244 In the shop we select an item from the display and present it to the shop assistant at the cash desk. He or she shows this item to the barcode reader and swipes our credit card through the card reader on the till. We used to put that scribble unique us on the slip of paper he gave us, but now we key in a code. He returns card, purchase and receipt to us, and we carry these three items out of the shop with us. These movements involving card, pen and keypad are an evolution of the handshake. Where once that handshake along with by other ritual acts of conviviality was watched by an approving audience, now this set of movements transmit our act to the required audience for its affirmation. Although this audience is not present in that place at the moment that transaction occurs, its affirmation is nonetheless required and so is automated for small transactions. Imagine that we are watching this encounter from one side, so we have a profile view of shopper and shop assistant as they complete this exchange over a counter. This view of two heads in profile, face-to-face, one higher, the other lower, resembles the images on ancient coins, in which a vassal pays homage to his sovereign or emperor to his god. Once this transaction took place over an altar, the audience and media of record no longer visible to us. Now it takes place over a counter through the circuitry of a cash till, that issues a brief written itemisation of the transaction, and sends data about the new balance and inventory. It is only our own immersion in the modern economy, and thus in the practices and traditions of which it is composed, that enables us to distinguish the good purchased from the sum paid for it, and from the receipt that records this. If we could unlearn the forms of the modern transaction, so that we saw no difference between the object of the transaction, the (financial) means of the transaction and the record of the transaction we might see all three as equally object, means and record of the event. We would see this good, money and receipt merely as three tokens, or three forms of the same symbol. Then we could ask whether each transaction recreates and enforces the distinction between the object, the means and the record of the transaction, respectively the purchase, money and receipt, in this way dividing into object, life and history. For the seller, the object sold represents the past of the world, the money received represents life, opportunity and future. The receipt we issue and other accounting entries we make represent a statement of the approval of the necessary audience, their confirmation that the ritual has been performed adequately. For the buyer, the money paid represents the past of the world, the object bought represents new opportunity, while the receipt again confirms the approval of that audience. Every transaction distinguishes these elements, briefly separating the world into these three in order then to achieve their reconciliation again. Each event of shopping is the ritual by which two parties make a particular claim on the recognition of the market that is their audience, and they use three elements, that represent its past, present and future, to do so. But if we put things this way, it may seem that nothing real or substantial is exchanged. In order to demonstrate that our economic relationships involve the exchange of real and substantial entities, and in order to show how their substantiality arises, we must consider again how we make things unalterable. Gesturing to a Shared World We have seen that the identity and thus the value of this coin is established by convention. Where does the reality of money come from? Of course we can ask the same


Mark C. Taylor Confidence Games


question about the existence of anything established by convention. We can link the solidity of this payment, for which the tangible, graspable coin is such a convenient token, with the solidity of the world. Whenever someone challenges it, we demonstrate its solidity and givenness by slapping our hand down on the nearest solid object. We are demonstrating the unalterable and reliable nature of our contracts, conventions and values in each transaction as we hand over this hard means of payment. We hand the coin over in acknowledgement of the unyielding reality of the world, in which we occupy our particular place, established by all previous transactions. We constantly check and confirm our position of the world and we confirm the solidity of the world, established by all the conventions of human history. We do so by making new transactions, and thus by putting our hand on the world: we pick up these goods and pass on this coin, and we insist that others must do so in the same way. The coin is as solid as the world, and the world as solid as the coin, and thus we win confirmation of particular place in the world of men. A transaction is a public and ritual event. The whole human economy is a function of our belief in the continuity of the human economy and thus in our future. Each transaction demonstrates our confidence in the conventions that have brought humankind this far. We insist that the ritual is performed punctiliously. We check what we are being offered. We weigh the coin in our hand, test it between our teeth, hold this note to the light to check that this is a real rather than a counterfeit twenty-pound note, ring the number we have been given in order to check that this credit card is good. We check that the goods are what they claim to be, that the authenticating seal is there, that there is a two year guarantee. We check the figures on pay slips and bank statements. We tap the coin to confirm its solidity, feel the goods reassure ourselves of their quality and place our hand on them to affirm that we are their new owner. We check that the etiquette has been satisfactorily performed and we have not been short-changed. We are patting the world on the head in a gesture of ownership, that signals both that we acknowledge this position we have reached. We confirm it and it confirms us. In every economic transaction the two parties place their hands on a token of the world, and for a moment symbolise the economy in which, from their many different places, humans share one world. When the seller insists on receiving this coin, they are insisting that this financial instrument, and the whole convention of money, is necessary, normative and real. In Chapter 5 we saw that participants in a major contract are likely to meet where the central symbols of generations of successful transactions are strongest, in the citys financial centre, surrounded by banks which have built up conventions of probity. The environment, and an implicit audience, lend gravity to this exchange. Whether as buyer or seller, we signal to each other that each of us holds the convention-world of these financial instruments to be real as the commodity. We make these two worlds of (soft) conventions and (hard) objects correspond. We insist on the hardness of human achievement. We check the fit between the two halves of the human world, the soft and the hard, and confirm that the world of human convention is as unyielding as the material world. In each transaction we insist on a demonstration of this solidity, and each transaction is the demonstration of this correspondence and this reliability. Solid and Unalterable The shop assistant receives our payment. He or she checks the validity of the form of payment, scrutinising the card, coin or banknote we offer. We accept as valid only the currency which bears no traces of its previous holders. It shows nothing untoward or exceptional, no mark of any identity other than that of its issuer. It shows no trace of the work we, or others, had to do in order to acquire it. Through the exchange of tokens in each transaction we purify our accounts of all that is particular, and so we remove all traces of the route by which we arrived here. In each transaction each person offers


themselves to the other, purified of past and particularity. We put ourselves out of reach of our history, thereby making it past. Our transaction is the removal of particularity, the discarding of all that has been. One gives the present world, represented by the commodity, while the other gives the past world, represented by the coin and records that represent its history and title. One holds the present and the other holds the past which is the title to the present. Together they distinguish present from past, making the part alive and discarding the rest as dead. This history licences this present, that this is allows that ought or may be. The unceasing flow of the signals of our mutual recognition creates the patterns, algorithms and architecture of our physical environment. Our signals communicate the inevitability of these conventions of encounter which make up this financial system. Each buyer and seller are together engaged in confirming the conventions of materiality, solidity and irreversibility, and over the long term, adjusting and transmitting them. What is material depends on what becomes material. What becomes material depends on what is made material by the industrial processes that economic demand brings into being. This demand is decided and communicated through the exchanges mediated through this one-world system, borne on these material pathways into which each of us is embedded, and through which we are embodied and material to one another. We have considered the coin as hard, discrete object. Now we must consider the wider hardware of the exchange that connects us to every other economic agent in the world and so to pulsing global markets. Shopper and shop assistant meet over a cash register: each has to make entries on a keyboard or keypad. What is going on beyond the surfaces and screen of these devices?245 Within that box is a set of circuits and so of algorithms. By personal identification number (PIN) or signature we confirm the cash desk's abbreviated account of our transaction. The keys we engage are connected by circuitry to all the other keys that make up the world, the sum of which we may call the interface. Money makes up a single network with a universally-present interface that gives us our position within the single human household. Flocking and Emotion Humanity is a continuum. Emotions blow through the human crowd, moving everyone in it and keeping markets in ceaseless movement. At times they may register only a gentle alternation between caution and confidence. At other times, they pick up individual fears and amplify them. We vacillate between our fear of being left out and our determination to exceed others and leave them behind. When the movements of the market have been gentle for a long while we forget that they are not always so. Markets become unstable because after a period of stability people forget that markets can also be volatile and they start to abandon caution. Stability is not more natural than instability; things will not always roll back to where they were, for as Hyman Minsky warns, there is no fundamental equilibrium or certainty.246 The future is not bound to be more of the present. Emotion drives the market, or rather, emotion is what the market is.247 We are watching one anothers body language for signs of changing emotion that warns us of an upset.

Donald MacKenzie An Engine, not a Camera: How Financial Models Shape Markets (Cambridge MA: MIT 2006) p. 268 markets can indeed be seen as machines and with the increasing implementation of market mechanisms in software those are not simply metaphors. 246 Hyman P. Minsky Stabilizing an Unstable Economy (New Haven: Yale 1985). 247 Akerlof and Shiller Animal Spirits. George Ainslie Breakdown of Will p. 130 In an intertemporal bargaining model, will is a recursive process the person herself can't be absolutely sure of what shell do in the future and makes her present choice based on her best prediction. But this choice


Our moods are transmitted around the world instantly, and thus the surge of particular moods is transmitted that we experience great volatility. The market is a contest between anxiety and bravado. Each new day greed and fear try their strengths against each other. As long as our confidence is stronger we will enter the market and as long as we do the market will rise. We stay in with the rising market as long as we can because we cannot bear to be left behind. The market amplifies the movements, and feared future movements, of the herd. The moment that someone expresses, by their decision to sell, the fear that more are leaving the market than entering, the herd breaks and scatters, each shoving their way to the exit.248 As they get out of that stock or market, they look for others to enter. Each hopes that the rest of the herd will discover the same opening a moment later and come thundering on a short distance behind them, raising the value of the stock they now hold. When our public account of the economy are becomes massively out of kilter with how things are there is a correction. For a long time people may remain content with what the market offers them, but it cannot prevent them from deciding one day that they no longer like it, and won't buy it any more. Man judges man and find him wanting. We cannot ultimately know what makes the market turn anyone more than we can definitively identify the causes of our own changes of mind.249 When that correction has been a long time coming, we experience it as a traumatic event. When the public snaps out of one mood and into another, moving suddenly from assurance to doubt and selfdisgust, its own previous assertions are repudiated and the market is convulsed. This is what a financial crisis is. Imagine we are watching a market, on the floor of which traders exchange hand signals. Money is the complex hand-movements made by traders across an open trading floor. The whole resembles a gull colony. All movement is interpreted and reacted to by each member of the flock. The successful trader establishes a territory and place in a pecking order, so his hand movements are more visible than those of others. Each exchange of signals is a moment in the mutual preening and grooming by which by which the flock holds together. The market is the sum of the behaviour that holds the human flock together.250 By this global traffic of buyers and sellers, the whole human entity processes, circulating around the vortex indicated by any artefact or piece of architecture. Each human is a single data packet in this procession, each emitting a constant call to hold its location within the procession, as a flock of birds wheels around the sky above a roost. Each is then a single cell within the human organism. The whole network, and the movement of the flock around it, comprise a single vast performance. These movements are amplified by the signals and figures that we read as financial data.

also affects her prediction, so that before she has acted on her choice she may predict again, and may then change her previous prediction and thus her choice. 248 Charles P Kindleberger Manias, Panics and Crashes: A History of Financial Crises (Wiley 2000 (1978)) 249 George Ainslie argues that each individual person operates as a crowd, in which our potential acts jostle to become our actual acts and determine the path we take. Breakdown of Will p. 131. Participation in the acts of this crowd of successive choice-makers is an extremely self-referential process, hidden from the outside observer and even from the person herself facing it in advance. She can never be sure how she herself will choose as she tries to follow this crowd and also lead it from within; she may read a small sign of faltering as her cue to bail out that is, to stop cooperating with later selves on a given plan just as investors may see a small hike in interest rates as a signal to start a massive sell-off. Or she may not. She won't know until it happens. Thus as individuals, we do not have very complete knowledge of our own mind, much less of the future movements of the market. 250 Ansell Pearson Viroid Life; Horst Henriks-Jansen Catching Ourselves in the Act (1996). Jean Petitot, Francisco Varela Naturalizing Phenomenology: Issues in Contemporary Phenomenology and Cognitive Science


Global Circuitry I have suggested that the movements made by buyer and seller over the cash desk or any electronic interface acknowledges, records and transmits of their transaction, are a complex version of the exchange of gifts and tokens by which a relationship is created, or even more minimally, of the handshake by which two persons greet one another. Buyer and seller enter data that is transmitted around a network and the movements by which they enter this data and make this transaction are part of the continuum of movement which is carried by the whole global circuitry. We all live at this interface. We key figures into keypads and on the screen we watch the figures that represent price movements, which represent the changing emotions of the single human flock, and we simultaneously watch the political narrative through the representatives that appear on the screen to talk up particular institutions. Together the talking heads and the alphanumeric figures of prices represent the ripples constantly running through the whole human flock. At the interface of this global circuitry, each of us is in receipt of a stream of messages by which this electronic one-world system intends to keep us fascinated and absorbed.251 Each new transaction runs along the pathways built up by all previous transactions. This circuitry is the material embodiment of these pathways. The algorithms of each cash register represents an abbreviated form of this circuitry. All of the transactions that we and our predecessors have ever made both the Western economy and the pathways now embodied by this electronic circuitry, at the interface of which each of is a node. As the data grows, so do the cables and nodes. Every keystroke rings changes that occur at all points round the world. The total interface, made up of all the keyboards, keypads, lightpens, card-swipes, monitors and displays, holds us in a single global network.252 All previous events make the set of pathways around which every new event travels. The cabling conducts this traffic, and this traffic advances the cabling. As the flow of information increases, investment is made in faster processors and cabling to achieve greater speeds of data transmission. Information not only flows along pathways but determines the pathways and brings into being hardware over which it flows. Over the long term the flow of financial information creates the routes which become the architecture of our built environment. Each new transaction circulates around the oneworld circuitry built up by all previous events of transaction. Mechanisms are closed and secret only to the extent that they have evolved through a history that individually we no longer know. The whole network is the socially-produced artifice, or perhaps work of art, that emerges from the Western economy.253 The whole global network, and each terminal and its operator that is a node in it, is a hardware metonym of that economy and its history. The circuitry extends itself into every facet of life, drawing ever smaller tasks into these electronic pathways and architecture, shaping the patterns and routes along which daily life runs. I am not myself without this hand-held device, which has become as close to me as my own hand and which is essential to my functioning as a public person. It alone opens the pathways by which I am embodied to the world and it to me. We are human but, connected to our circuitry, cyborgs too, for only through only through this nexus can we meet and exchange with one another and so be persons. And yet, since we do not know whether the future will be more of the present, we cannot stake our existence on any of these forms of communication or economic life.

251 252

Alfred Gell Art as Agency Philip Mirowski Machine Dreams: Economics becomes a Cyborg Science (Cambridge University Press 2001) 253 Herbert Dreyfus


Yet, as we have seen, we are public beings. We watch one another and seek one anothers respect and are driven by our desire to be loved and admired. We do things because we hope that they will get us noticed and admired, make it easier for us to be loved by those whose love we seek. We have seen that every change and transaction in the market affects the whole market and all the individual prices in it. Each unit of payment represents permission to participate in this economy and so experience a momentary unity with humankind. We participate in this household, only by providing its life. Our membership in it has to be renewed constantly, and each transaction renews it for a moment. But since these transactions leave no trail we are just as much detached individuals at the end of all our transacting in the monetised economy as we were at the beginning. The result is that each of us exists in the moment, as we travel from one transaction to the next, each an instant of reconciliation and unity with another person and through them with humanity as a whole. When the instant is past we have achieved no more than after the very first. Such an economy is unable to sustain the unity or enduring dignity of a single person. Modern history gives us one, narrow, account of our identity and discards the larger history in which would could find alternatives. This modern account of our history and identity gives us the separation of public and private, and the division into separate vocabularies of economics for exteriority and emotion for interiority that we saw in Chapter 3. It identifies a discourse of economics entirely divorced from the growth of persons and the discourse of mutual recognition and honour in which it might appear, which we examined in Chapters 4 and 5. We therefore have trouble acknowledging that there is change only within a greater continuity, and thus that through all the generations of development and growth, there is a fundamental continuity to the human economy. The modern economy is not a substantially new start; moderns have not escaped the logic of human mortality and continuity, generation by generation, through time. The modern economy is only a particular way of seeing the human economy, and is thus an economical and minimal way of seeing it, motivated by the hope of controlling it. This conception is indeed so minimal that, as we have seen, it gives us little motivation to continue this history and so seems to hinder rather than help the continuity of the human economy as a whole.

7. Money as Reconciliation and Unity

We offer one another accounts of the relationship and identity that we want to share. These many accounts are summarised and secured by the fundamental accountreconciling medium that is money. In giving and taking the coin, or exchanging the financial instruments that derive from it, we oblige one another to put our hands on the particular past that is canonical for the economy of modernity. We oblige the other party to situate themselves within this history and acknowledge it as binding. Each transaction is a exchange of greetings, in which one side offers the other some recognition, denominated and embodied by these goods, and the other replies and accepts by returning the same recognition denominated in that ritualised form of recognition that we know as money. Money exists because each of us demands to be paid in it, insisting that nothing else will do. Money turns encounters into transactions. It has this function because we employ it for this purpose. We could think of money as a language. French exists because people in particular territories speak to one another in French, while the language of Cornwall does not because people no longer speak to one another in it. Money is the language which everybody is able to communicate with everyone else. Granted, not all its forms are valid everywhere: my pounds are not accepted in France; this corner shop doesnt accept credit cards, this public telephone box doesn't accept cash. Nonetheless, it is the idiom in which everybody may understand us, and which we are compelled to speak if we want to


anyone to understand us. We enforce our various currencies on one another, so a Pound, Euro or Dinar is a Dollar with a certain accent, each translatable into the other. Money is pure convertibility. Money is this idiom because we demand it from one another. Only this idiom is acceptable from strangers who want services from us. We do not allow the other person to approach us as a friend asking a favour, or lord demanding a service of a vassal, but only as an economic agent and so as an equal, and somebody not under any obligation to us. If a public utility asked whether we will allow it to lay a pipe through our garden simply as a favour, we would reply that it must pay, for this is the only idiom proper to the first encounter of institutions to individual persons. We insist on it and so we oblige others to employ it when they approach us, and thus we impose it on one another. It is only money because we all say it is, and refuse to take anything its place. Money exists because we use it and believe we must use it so. Yet money also pre-exists us. We were born into the formal economy that is denominated by money it just as we were born into a French- or English-speaking society. Money pre-exists us, for it is simply our canonical representation of our history and so of all that was in existence between us. It is the token of the myriad successful encounters and transaction that make up the long history of the money-using cultures. Since in the British Isles we could not always get enough pounds, shillings and pennies, we made occasional use of the guinea, crown, ducat and other denominations from further afield. And when we are not confident of our pound we resort to dollars or ounces of gold. When we could not finally produce any metal coinage, we traded on IOUs, which promised delivery of the metal, and these promises turned out to be as good as metal, or, since they were easier to produce and more portable, even better. If these IOUs cease to be acceptable, we will return to a currency backed by one or more metals. Yet we may still denominate this as the dollar or pound or any of the units on which we have so far done business with one another. We deal with someone when we reckon that nothing hinders us from doing so. Money is our permission to open a relationship with them, the membership card for the great club that is the global economy. It is the language for which we have forsaken many of the other idioms of recognition in which our lives have been embedded. Unity Enforced Each economic transaction brings two persons into a reconciliation. They come into relationship and are, for a single moment, one. Their unity is expressed, on this occasion, by these goods, this price and this date. Each transaction represents a unity and communion, yet only for that instant and so without duration or public consequence. Money is the medium that makes all things immediately explicit, so that nothing is outstanding and no future settlement required. In each transaction, one sells goods, the other pays for the goods bought: goods and services travel one way, money the other. Ultimately we pay for these goods and services with other goods and services. But what makes them services and goods is that someone, other than us, regards them as such. Each judges the goodness of this service or this sum proffered, and does so by comparing it with previous and future services and sums. We measure this present offer against a past and future. Each is able to desire this service, and accept and agree on the adequacy of this service only on the basis of a history. Each transaction is an encounter between persons within the ritual built up by such a history of such encounters. We have nothing to offer one another or to exchange beyond our histories, but this history is all we need.


Despite the presumption and insistence of modern economics that these are two individuals, who encounter one another in this transaction without history or obligation and thus without enduring relationship, these are not history-less units, but history-laded persons. They come to the transaction with their history, and they depart from it created a little history that marks them from then on. Together they leave a trace, however infinitesimal, that characterises all future encounters and transactions. Only history and hope give us purposes and preferences and so reasons for attempting any encounter at all. Two units cannot become one. Only two persons may become one. One is our unit of account. It is one, whether it is one dollar or one bag of salt, and it is one even when it is four dollars, four trillion dollars or the same number of cowry shells. It is one when it is enough, when price is agreed, deal closed and the union of two parties brought about. What is the origin of this one, the number to which all numbers and settlements refer? What is the true name of all the numbers which all represent this unity? What is that oneness which is the basis of every unit, and of every reconciliation and settlement? The union to which each unit and each number refers is the unity of man with man. There may be unity between man and man because God is with man. God is the basis of the compatibility of one human with another and so of the unity of man and man. God has joined man to himself, and made man one with himself. Every unit refers to the union in which man is one with God, and which with God has reconciled and united the world in man and made man the creaturely other of God. Modernity has its own parody of this unity of persons. Indeed modernity is an imitation of the Christian account of the communion of persons but which, since it is not sustained by the communion of God, is an aggregation of individuals, a very paradoxical community of monads. Modernity avers that there may be no ultimate unity of persons. Money is the idiom of the modern episodic reconciliation and unity of persons. It is the metric by which we apportion the honour we must pay one another. Each of us gives permission to others, and needs the permission of others in order to do what we intend. Yet in this modern idiom, our public and social identity is the surface under which there is a more fundamental estrangement of each individual from every other. Modernity is the economy in which a more or less explicitly single currency runs through the hands of every human on the globe. We oblige others to address us in this medium, for we insist on being paid. By demanding money, this specific and hard currency, we tell one another that this scrip is universally and solely valid, its writ runs through the world, and that we will accept no account of our worth in any other medium. We must be paid in this medium only, for with it our command can set anybody, anywhere else in the world, to work. The economy in which this banknote is sole legal tender is the imperial cult of the old pagan empires made universal. This money enforces on all others the universality and singleness of this economy. As such it is not only an economy, but a rule, and a cult that makes that rule appear as a given of nature. It is we who enforce this sole currency on one another, yet this form of money appears natural and our need for it inevitable. It is the triumph of universality over all particularities. The cost of our determination to enforce this freedom over all others is that this universality triumphs over our own particularity too. This universality is permanent, while we are its merest epiphenomena. The Modern as Titan Economic man represents the evasion of human plurality, human freedom and agency. The monetised and global economy is affiliation to a figure without a name. Then no human is a whole in himself, but a fragment of a greater totality. The individual will be rolled up into the whole and the all-absorbing titan of humankind will move on. The effect of insisting that money is the only form of recognition that we are willing to receive, is to acknowledge the monad individual as the only form of man. Each of us is up against him: to each of us, all other human beings appear aspects of that implacable figure and thus


as fate. Though there are many human beings in the world, inasmuch as they through the global economy, each of us is part of this unyielding entity. We saw in the ancient Roman imperial cult that homage directed to the figure of the emperor gave unity to an entire economy. Since all goods emanated from him and returned to him, he was the focus of a mass enthralment. There is no such single figure in the modern economy, for this monad is too high to have any actual existence in our contemporary world. Without any world-emperor at its summit, our economy seems to be prior to, and more fundamental than, any particular figure. We cannot get any distance on this figure because nothing stands outside him. All our living and being is a participation in this individual. We do not see him because each of us is him. The extent of the global economy represents the reach of the man-without-relation. As long as we wish to be ignorant of our own history and refuse to understand that our predecessors have passed us the world we inhabit, and that we will do the same for others, we are complicit in the anonymity which gives the modern economy its natural, or fate-like, character. Through the outworking of that history, this figure has become invisible. We have adopted the description given by some ancestors and discarded that offered by others; we have followed the champions of autarchy who created the forms of life which we all now inhabit and subscribe to, and so we inhabit the world through the lenses they have given us. Economics has put the modern form of man above description or challenge, so it is difficult to distinguish ourselves from him and so shake him off. Yet we are him, each of us trapped in the autistic form of life made normal by the modern economic worldview. As a result moderns have no means of extricating themselves from this economy; money is the form of our captivity within a household in which we will always be aliens to one another. The result of all our labour and the sole product of our economy is that we have become one meta-human being in whom all participate and which none of us will survive. Christian theology refers to this sort of representative world-historical human figure by the term messiah and it identifies all such figures and forms of human isolation and autarchy, whether they appear to us as single persons or social forms, as false messiahs. Division, Multiplication and Time This single global economy exists because we all insist that each human being pay us now in hard currency for every service we offer them. No one may ask anything of us unless they offer us this single and universal currency which represents the fundamental equivalence of all values. The world is always made up of many local and regional households and economies. But because we insist that money is the sole fundamental form of recognition we insist that all economies, and all ends and purposes, can be reduced to the unity that this monad represents, and that all things are made present to us, here and now. Money is the metric by which we apportion our time and so distribute the recognition we grant to others. Our ability to apportion ourselves by identifying more units of time enables us to multiply transactions and so proliferate money. We identify a new unit of time in order to end one encounter and initiate another. We introduce new temporal intervals that cut existing relationships short to produce new ones, and in this way we make more, accumulate transactions and increase economic growth. Burgeoning information technologies, and in particular the consumer electronics now appended to us, are directed to continually dividing relationships into and smaller time-segments. We divide and denominate the honour we pay on another by the infinitely divisible metric that is time, and we conglomerate these units of our time in the idiom of money. 254 Money is human history rendered in the substantial forms of the goods and material


Eric Alliez Capital Times


environment, and then into the volatile substance of charisma and credit, which gives us permission for new encounters and transactions. The modern economy grows because we divide ourselves: economic growth is the head, our decreasing ability to acknowledge one another as whole persons is the tail. If everything in the world can be truly denominated in this single currency, everything may be paid off, debt cancelled and all differences equalised, and there will be no further need for any human exchange. Each transaction removes all trace of previous encounters, so we arrive clean and odourfree at each new encounter. When payment is made, you and your counterpart in each exchange are free of one another, and become individuals without connection again. Each transaction is a public avowal in which we affirm that our relationship is an impermanent and reversible affair. In each such transaction we enforce on each other the asseveration that man is solitary and all his relationships fleeting. Money increases with the proliferation of accounting, which divides us into a greater number of segments, so that we are not one unit, but many. Each generation identifies itself with greater numbers to indicate how far it has surpassed its predecessors. The monetised economy strips us of the capital of inherited reasons so, without context, we are also without purposes or hope. Since moderns do not see in the world around them evidence of the hard work and imagination of their forebears and assume the inertness and disconnectedness of everything in their environment, they see no claims on it other than those that they themselves now make. Human history is divided and rendered, on one hand, into our environment, which we understand as inert, and into the living and volatile capital flows on the other. By the convention of money, we communicate that everything is already comprehended and foreseen. We demand total commitment to this present, immanent, economy. We attempt to pull the future into our present, while individually we attempt to leave our embodiment within the present. Money is the ritual by which we enforce on one another the conviction that there is nothing outside this present economy, that everything is owed to it and nothing is owed to past or future. Another Economy The global economy is a belief-system and each of us who participates in it is a believer. One could attempt to leave by joining a small community in comparative isolation. But the best way to escape this belief-system is through the Christian Gospel, the one route towards the universality which all beings yearn for, and which modernity attempts to counterfeit. The Christian life does not remove us from the global economy, indeed it keeps us engaged with those who are committed to it. We may not leave the world or cease from economic activity any more than we give up talking language of our nation when we become Christians. But it makes us what the modern economy can never make us, and so redeems us from it. In this chapter I have suggested that the modern economy is the household the one who is alone, the figure of man without God and thus without fellow. This is the upshot of the economy that I described in the last chapter as the economy of Growth, and in this chapter in terms of the empire and its cult. It is the rule of him who has no companion, who cannot accept an equal, and who stands against final reconciliation and relationship with his fellow. This figure cannot establish the dignity of any individual or endure the permanent existence of any life that is not his own. There is nothing more fundamental than the recognition that other persons give us. As man is made in the image of God each can hope to see that image in those around him and receive some aspect of it through each encounter. Our modern economy, having discarded the inter-personal concepts of gift and honour has rendered the inter-


personal nature of our existence invisible. Our economy is not based in any more fundamental, neutral or scientific basis than any economy of previous ages. We have not raised ourselves above the primitive economy of earlier ages; we source our being from others as much they did. We merely describe the same human economy in an idiom which conceals its fundamentally inter-personal nature. Christian theology demythologises what has otherwise become the unassailably dominant language of credit and money. The Christian Gospel announced another, truly universal economy, the kingdom of God. Since we are not yet ready for it, this kingdom holds itself at a distance from us. The presence of the future universality is hidden in the Christian community. Christians therefore identify modernity as an attempt to bring in the kingdom without regard for those who are unprepared for it, and as the power of some to impose the eschaton on others by force. Only the Gospel can keep us from making any particular history canonical and so becoming captive to particular ideologies. It allows us to ask whether we have made economics in its modern form our ideology, and the economy a cult, with money as its form of worship.

Summary of Chapter 5 1. Economic activity is about demonstrating our membership of a household. The economy is one household, made up of many individual households. 2. As employees, we inhabit the elective household that is a firm, and as customers are members of multiple elective households. 3. We attempt to gain admission to more desirable households in order to move up within the one household shared by all. We try to attract people into our household who will bring more in than they will require or demand. 4. We have to defer payment to some in order to make payment to others, and so have to create a gap between our creditors and debtors. 5. The economy is a market of reputations in which people buy into one another and make constant minute adjustments of one another's stock. 6. We express the reputations economy in terms of a rationality that only recognises as economic behaviour oriented to specific objects and material resources. 7. When we meet we play out routines by which we exchange accounts of our identity through particular coded accounts of our past. The past is the only means we have of pointing to the future we intend to share through the relationship formalised as a contract. 8. We present states of affairs to one another as immutable. We insist on receiving from others their acknowledgement of this. We police the hardness of things as tokens of the irreversible nature of our economic relationships. 9. We put this token in the hand of our counterpart and demand an equivalent taken from him. Each coin is a miniature version of our shared history.


10. An economy is a circulation of signals that serve the continuation of that economy. All material goods and records transmit these signals. 11. We insist that others may enter relationship with us only through the differentiationremoving medium of money. 12. We are not solely rational agents. Our individual agency emerges out of a collective agency and dissolves back into it again. 13. In the modern economic transaction person-person unity is temporary and reversible. No lasting obligation is taken on. 14. The coming together of buyer and the seller is an event of reconciliation. It requires the affirmation of the market as a whole. 15. The unified monetised economy is a form of communal self-bewitchment. The big man possesses us and masters us. He supplies simulacra of himself as the tangible medium of our coming-together, and yet he is simply the function of our own interacting. 16. Each transaction is the event in which these two parties screen out the many watching audiences and reconcile all complexity. 17. Money represents the fundamental fungible nature of every human, in which any individual is replaceable by another. In this (modern) economy there is nothing unique or lasting about any of us, and a proportion of its members must be sacrificed for the whole. 18. Money both strips all particular relationship and homogenises all with all. It intends to reconcile, unite and be the universal mediator. 19. Everything in the world can be recognised and paid through this means, money. Everything can be paid off. Then there is no reason to wait for or look forward to any other world, or any future. 20. Each new transaction circulates around the one-world circuitry that has been built up by all previous events of transaction. It holds humankind together as a single organism. 21. The Gospel enables us to ask whether money involves us in a set of beliefs and practices that constitute a form of captivity and fate. Christian theology allows us to consider our economic interactions as the contemporary modern form of a timeless pagan cult.


7. Crisis and Christian Reinvestment

1. 2. 3. 4. 5. 6. Two Economies The Theology of Economics Liberality and Secularity The Gamble of Globalism Crash and Correction Christian Reinvestment

We may be in for a crisis. If it starts mild, we might be able to avoid or at least prepare for a more severe crisis. But even if it turns out to be sudden, deep and prolonged, this crisis is not to be dreaded. We can become stronger through it and so turn it to the good. Christians know that no form of social or material security is forever. They are in some sense prepared, for baptism is the original crisis which each Christian goes through and continues to experience throughout our lives. To prepare for this crisis we must turn to the issue of the long-term. The economic crisis is related to the crisis built into economics itself, a fundamental inadequacy in its view of its central object, the human being. Given its account of man, modern economics is bound to be in crisis, and the crisis in economics contributes to a recurring crisis in the economy. It promotes the abbreviated account of human interaction above the full account, so that we attempt to replace a fuller conception of human beings with a poorer one. Since it gives us our most comprehensive view of human motivations and interactions Christian theology draws our attention to the longterm and so is the necessary correction for our obsessive preoccupation with the present. Let us first summarise the steps that have brought us to this point. Christians make a distinct and vital contribution to our society and its economy. Their long presence in our society has imbued it with those attitudes that enable each of us to act in generous and accountable ways that make for a civil society and open economy. That mass of instincts and practices that we call culture transmits a high view of the ability of human beings to transact with one another. Though it does not like to acknowledge this, the discipline of economics derives from this culture and continues to be dependent on it. Economics represents an abbreviation of this view of our ability to interact, but the abbreviation is always dependant on the full view. We have said that the economy is the long-term movement of capital from one generation to another, and that culture is the social capital that makes us persons rather than mere bundles of needs and desires. Culture motivates us to meet and serve one another in ways which are civil and charitable, commercial and political. It persuades each generation to work for the generation which will succeed it, and to transmit this motivation onwards. Financial capital is social capital made explicit and liquid enough to catalyse our interactions; through our current economic activity we either pass on social capital for subsequent generations or expend it unproductively. Though it is truly capital, social capital cannot be made entirely liquid, but our attempts to make it so may be damaging, not only culturally over the long-term but in the short-term and economically too. We engage with one another in public. We do so directly, person-to-person, with nothing to aid us in this other than this great mass of instincts and habits which we call civil society or social capital. Much of the public square must remain free of economic or legislative compulsion so that we can encounter one another in the ways that custom and


habit allow because we want to. The market and state represent some part of the public square, but when they grow too large the space for voluntary person-to-person encounter, mediated by our own habits of civility, is reduced. When they grow so large that we feel that our various encounters take place under their compulsion, we no longer have a reason to initiate those encounters. We interact economically because we want to. Only a civil society in which people are free act will continue to have a vibrant economy. We asked in Chapter 3 whether we have allowed the market to substitute for our loves and relationships and take on the tasks that can only be performed inter-personally, within households. Failing to insist on a complex account of our social capacity as human beings, we have not used our powers for ourselves and for one another, and so an overextension of market and state has occurred. We asked in Chapter 4 about the readiness of our society to communicate to future generations the culture that has sustained the rule of law, the liberal state and free market. Are we passing on enough of this capital, and confidence in it, to sustain households, law, state and market for future generations? We asked about the willingness of the present generation to expose itself to the challenge of previous generations. It seemed that our disavowal of our history, our belief that cultures are value-free and even more the insistence that this view may not be contradicted, reflected a loss of morale. We have become unwilling to hear the questions about our identity and well-being which allow us to remain confident economic agents. Western culture is not based on a mistake. Far from holding us back, our traditions have brought about, and continue to continue, the secular society and open economy. We should indeed claim that our culture is the best existing embodiment of civil society and individual dignity. Christian discipleship helped our predecessors to become more or less self-respecting, self-controlled, generous and initiative-taking people. These emerged in our culture because it has been shaped by the Christian faith. The expansion of credit appears to have brought all forms of life within reach. But when we regard all cultural options of equal value, and do not decide between alternatives and follow one course rather than another, we experience none of the formation of character that could make us independent self-governing beings. We do not pass on to the next generation those options which serve our long-term cultural continuity. Economic exchange is uncoerced, by definition. We are only able to trade with one another because our culture has made us confident to do so. Denigration of that culture reduces the degree of civic and entrepreneurial initiative we show. The growth of money and over-extension of the monetised economy represent disintegrated social capital. We express an increasing proportion of our relationships in financial terms because, no longer considering ourselves committed to any particular community, we do not value the recognition that our peers can give us. Cash is demanded only by those who do not intend to stay. Have we all secretly decided to call time on our own generation? In Chapter 5 we looked at the growth of the credit and the market. Growth has become an imperative. But we have decided that growth is not about our own growth as persons but solely about material growth expressed in financial terms. Such a definition of growth may bring us abruptly up against the limits of the created world. I suggested in Chapter 6 that the growth of the monetised economy is the result of a misdirection of our energies towards the creation of various substitutes for the image of God, so that we can evade our vocation to be this image. This idolatry is a function of the daily business of buying and selling, in which we demand this particular economic mode of interaction on one another, which has become a politico-religious observance that we enforce on one


another. In this final chapter we have to say something about the community that is able to put these questions to our society. What enables Christians to ask such questions? The Christian faith holds out to us the largest and most developed account of man. It emboldens us to demand reasons for the way things are, and to demand those reasons from God and from one another. The gospel presents us with reasons, and enables us to reason together. The concept of the human being as image of God gives us the concept of representation, by which we are able to act for one another, on one anothers behalf, and so live together, in covenants. We live in full view of one another and therefore under one anothers judgment. We have made the link between truth and judgment, and pointed out that a crisis is simply the moment when the prevailing public judgment changes all at once. Our judges are first those economic agents in other countries around the world, who will decide whether or not to trade with us and entrust us with their savings. And secondly, they are our own children and future generations. But we may also judge ourselves, and by doing so, hope to improve the judgment that these others make of us. The Christian hope that the good judgment of God will reconcile all judgments in the truth enables us to ask what judgments we have brought on ourselves and find the remorse or equanimity with which to face future challenges and crises. It is only because our Western tradition has taken on this understanding of the human as person, intrinsically orientated to others and under their judgment, rather than as an atom, that bounces off others, and lives in ignorance of them, that our complex worldembracing culture has arisen. The gospel supports a true secularity, that is, an open space in which we can all judge for ourselves. The large Christian account does not spurn the economical and pragmatic account of human interaction that is modern economics. The long experience of the Church in offering the gospel to many societies enables us to describe the worldview of our contemporaries and the challenges faced by our society. We make short-term decisions in the light of our hopes for the long-term. We make pragmatic political decisions and hope to do so without damaging the chances of the next generation. Religion inevitably informs politics because long-term considerations, eventually, inform short-term ones. I have suggested that our problems have come about because we have not sufficiently wrestled with the ideas of our predecessors about society and the economy. We can come through the crisis that our short-termism has brought about by paying more attention to the long term, and hearing again what previous generations of British people, amongst them Christians, have learned about how to sustain national prosperity.

1. Two Economies
There are two societies, Saint Augustine tells us. There is that society that we usually identify with our nation, and within it all the other communities to which we belong, such as the firm we work for. And there is that other community of the Church. Everything that we have to say depends on the distinction between these two, and so on the distinction between the world and the Church, the non-Christian and the Christian. The distinction between them, and the comparison that it allows us to make, is the basis of any Christian contribution to economics. Just as there are two societies, so there are two economies, the present worldly economy and the present-and-future eternal economy. The present worldly economy is one in which men seek their recognition and approval glory and honour, in Augustines terms. But within it there are little economies households in which persons are bound to one another in love and find in one another the recognition and approval they seek. The Church is that unique entity that combines these two, for it is the household united by love which extends to all, a single family and household that has room for the entire


world. This enables us to ask what features of this economy will help it to last so that its future stretches towards eternity, and to ask what features make the future of this economy more doubtful. The contrast between the economy of the Church and the economy of the world enables us to ask about the long-term of the economy of the world, and so the contrast between them is the basis of any Christian analysis of economics and the economy. Our ability to put our questions to the present on behalf of the future, depends on this distinctive Christian community. We have been therefore comparing two accounts of man and of the possibilities of human interaction. We have looked at the concept of man offered by Christian theology and contrasted it with the implicit assumed by modernity. There is the man of modernity who, though he passes through many relationships, is without any ultimate relationship with his fellow man. In the Christian version, man comes into his true identity as, in fellowship with God, he comes into fellowship with all human beings. God is with man, so man is an intrinsically social and public being, ready for the company of others. Each of us needs someone other than himself to recognise and affirm him. We come to the market simply to seek the other man and receive his judgment and approval. This faith understands man as the covenantal being who is fundamentally given to his fellow man, and who is made for encounters and relationships far beyond those created by ethnic or class commonalities. The very high view of man offered by the Christian faith makes a fundamental contribution to any society. One indication of this contribution is the fact that an open economy has arisen from the Christian-shaped culture of the West alone. Christians are able to mine their economic thought from seams much deeper than those of classical, that is, eighteenth century, economics and neoclassical economics of marginal utility. These allow us to say that creation is directed to a good end, and it invites us to move towards that same end. All economic activity is directed towards what is good or else it is misdirected. God's original gift of all created things is the basis of all our giving-inexchange. We may provide for one another as we receive and distribute what God has provided. He has acted generously to us, and invites and enables us to be generously active on one anothers behalf. We receive from him the abilities by which we can act, and trade, on our own account, for we are created in Christ Jesus for good works (Ephesians 2.10). We may discover that labour can be its own reward, and identify with those whom we have served; we will not be alienated from our work, if we are able to lift them to God in thankfulness. Even if we no vindication from any other source, God is finally able to judge and affirm the value of our labour and lives. Christians are able acknowledge debts to past and obligations to the future. The past provides us with what we have. The future provides us with continuity and existence, so we are not forgotten and obliterated. The present generation is the mediator and enabler of the meeting of previous and future generations. Each of us is a creature of the present, but Christian baptism makes us also creatures of the future. We are the means by which the generations of the past and of the future may meet. A Christian is present, here and now, but the future has already taken hold of him. The Church serves the society to which it is sent by demonstrating, through Christian discipleship, a distinct form of life and discipleship. From the disciplined Christian life come the good practices of self-discipline and self-control that sustain a society. We may learn these practices within the community of the Church. Self-control makes us more than simply our own bodies and needs, so by exercising self-restraint we discover how to grow into maturity. In Christian discipleship we are undergoing an apprenticeship by which we can learn the self-government by which we can encounter, and sustain relationships with, one another. This apprenticeship is good for all our communal, national and economic life. We may discover how to hear the demands of others, and so


learn to use our bodies well, becoming more generous people. Made confident by our restraint, others come to us, and public service and good governance are the result. The society that sees the results of this self-discipline is willing to receive aspects of it. When it receives the virtues of this disciplined Christian life, however much at second-hand, our society will hold together. When we, or our leaders, forget that all government is sourced in the self-government of the Christian community, the integrity of the person and our ability to act as public agents comes into doubt. Having amply received, Christians are able to pass on what they have learned. Chiefly this is the effort that freedom requires. We not only work as economics (with its concept of nature) says we must, driven by need, but we also work willingly, motivated by love, and so in freedom. The provision of God enables us to be active on one anothers behalf. We have observed the duality of biological man, who is the product of his family, and of political man, who receives his identity in the public arena. And we have noticed the duality of time: we have this present moment but we also look forward to what is not in our present possession. When we concede the goodness of our given place in creation and in our national culture, we are also able to hope. Christians are commanded to remember the past and to look forward to the reconciliation of past, present and future. The capacity to ask for forgiveness and readiness to receive it means that we are not trapped within the past. Christians therefore understood that time is not simply repetition of the past, but is open, and thus there is a never before experienced future. The Western conception of the openness of time is a deduction from the Christian insistence on considering every situation from the perspective derived from hope. The Christian discussion of redemption is not simply a religious exercise about otherworldly considerations, but simultaneously an economic matter of this-worldly considerations. Christian discussion maintains a balance between description of man as he presently is, and as he will be or may be. If we discuss man only in terms of how he is presently is, we are likely to decide that his impulses and violence need to be controlled. The market is the principle mechanism that restrains him, but the market requires the constant input of governments, so the state must have the power to determine the extent of our interactions, and so we slip into forms of compulsion and fate. The conceptuality of economics simply encourages us to conceive of the present apart from the future, and ourselves apart from our neighbour and God. It disguises from us that it is we ourselves who fail to see one another together with the hope of our redemption. But God is able always to speak hopefully, to describe the thing imaginatively, not merely in terms of what it is, but also of what it could be. The Church preserves a memory and so it may be said to stand for the long-term claims of society over its immediate claims. The longer your memory, the more resources you have for coming to terms with new eventualities. We have therefore to compare cycles of time the short-, the medium- and the long-term. Any community must encourage its public servants to make some decisions on our behalf, and ask them to assure us that their present decisions will not prejudice our medium- and long-terms. Christians insist that in order to appreciate the complexity of human beings we have to examine our habits and practices. The Christian view of man proposes that no person is yet what he may be, and so in hope he may embark on a course of formation. I have suggested that the society that acknowledges no course of formation, acquires no self-government and no motivation for self-giving; such a society is not inclined to defend itself against other cultures. The society or government that cannot tolerate such questions has already subjected itself to a short-termism, a selfdefeatingly specious present.

2. The Theology of Economics


Economics describes how we interact with one another in free exchange. It is not an autonomous science, but belongs together with all those other accounts of man, together called the Humanities, in which man is social, constituted by his history and yet free. As an explanatory system economics has its proper place in the hierarchy of truth. When economics treats the economy as a system or mechanism or regards itself as a total explanation which has no need to relate to any other account of humankind, it ceases to be a useful description of human interrelations and instead becomes an ideology. Modern economics is not the only possible description of our exchanges. It is not a necessary and inevitable description, true regardless of time or context; nor is it repeatable and falsifiable and thus it is not incontrovertibly scientific. The intellectual package that is economics is the particular way that we, in the modern period, have brought together a small number of themes that have been present throughout Western intellectual history. We can identify these same conceptual elements in the cosmologies of the ancient Stoics, and the Epicureans, atomists and materialists, and find alternative accounts of them in Aristotelian and Christian discussions of the economy. By bringing a few of these conceptions to new prominence the makers of the modern worldview created what they regarded as a new account of the world and of man in it. Economics has its own rich and varied history but the modern form of economics conceals that history. Modern economics relies on a fundamental distinction between nature on one hand and the human will on the other. It cuts out the whole complex history of the centuries of thought about human interaction through which we have received our shared patterns of thought, practices, virtues and technological abilities skills, which we sum up sometimes as culture, sometimes as technological development. This dichotomy represents the metaphysics on which the ideology of modernity runs. It allows us to slide from economics as description of the world, to economics as prescription of how the world should be, determining the policies which will conform us to that description. At the centre of modern economics is a great omission. It does not deal with our progress through time. It cannot comprehend a single human life from beginning to end, or account for the periods when we are not yet, or are no longer, competent economic agents. It offers no account of transactions between generations or of the relationship of the present to the past and to the future. It casts its light only on the present moment and insists that this present only is normative. Modern economics wants to be a science, which is to say, a description of nature, and thus of necessity, rather than of human freedom or achievement. It does not concede that our material and political world was created by our predecessors and left us by them, and that we will pass some sort of inheritance on to those who follow us. Modern economics divides the single entity of humankind between these two vocabularies. It divides us into material bodies and isolated selves, and so treats persons and society as a series of material phenomena on the one hand, and impulses and desires on the other. Within each of these vocabularies parts are treated as the whole, with the result that the wholeness of humans being is lost. This first division, between what is and what I want, initiates further divisions. Economists and the social scientists who defer to this worldview distinguish the natural from the moral, the outer from the inner man and so enforce the separation of the inner and the outer spheres. Economics, and the human and social sciences that underwrite it, divides the one phenomenon of mankind into two, so that these two may be reconciled and made one by the momentary encounters of which modern life consists. They are able to further this separation because they are not challenged by the humanities or more widely in the public square.


The economic transaction is the dominant form of our exchange with other people, and money is the idiom of this exchange. Money is the idiom in which we give recognition and approval to others, and so establish a moment of reconciliation and unity with them. Yet we are not compelled to denominate our every relationship in this way. In each encounter we are free to decide whether to employ this or some other, fuller, idiom for our exchange. As long as we regard it as the only possible idiom of our reconciliation and unity, money functions as the single modern transcendental and so as our fate. Grace and Credit The Christian gospel holds together what are otherwise regarded as the separate matters of credit and grace. God underwrites the economy of man with man: his grace is the credit extended to all by which we can extend credit to, and so come into relationship with, one another. In the Christian conception it is the God-man relationship that brings the world into being and sustains it; the source of all sociality, God underwrites every person-to-person relationship that makes up the human economy. This large view of the grace of God has common to the whole Christian tradition. Grace is simply generosity; it does not appear only when we need forgiveness of our debts, but is there from the first. It is the credit of God to us, which gives us our existence and sets each of us before our fellows and so enables us to meet, exchange and share life with them. But in the much-reduced Western version of that tradition, the concept of grace appears only in the account of mans relation with God, not in his relationship with his fellow man. Grace is then merely God's impromptu response to mans sin. If we only offer the account of the mishaps, the religious language of grace appears only in connection with the religious concept of sin, defined without relationship to our peers, and salvation from sin becomes a matter of escape from the troubling complications of our involvement in society and history. As a result grace relates first to sin and then to knowledge and belief. As result this grace articulated without reference to the doctrine of creation or doctrine of man, decays into belief without any particular referent. One result of this long-standing deficiency is that moderns talk about the man-man relationship without acknowledgement of a God-man relationship, and without making any use of the concepts of generosity and thankfulness. The concept of credit has floated away from its original mooring in generosity, or in the grace of God, as the Christian and covenantal view of God, long expressed in terms adopted from Aristotle, in which man is a social and public being, was increasingly replaced by a thinner, Stoic view in which man was by nature an asocial and violent creature. As a result we have two apparently unrelated vocabularies of grace, and Christian faith as the discourse that deals with it, and of credit, and economics as the discourse that deals with it. Neither relate to our sociality or to our calling to be become more truly social, so credit is entirely disconnected from purpose. We have two entirely separate discussions of value, one in which it is reflected by the market as price, and the other of which value is a matter of morality, and when that disappears, of individual preference. The truth of value cannot be discovered; the market is the only arbiter, and though we may not believe in the truthfulness or sustainability of the value that the market offers, we have given up any conceptuality by which to contest it. Credit is not related to purpose, or to any conception of mans hope of becoming a social and public being. These problems are resolvable only when these two discourses are brought back into some connection within the humanities. The gospel establishes the dignity of the person, and thus insists that each person is to be paid the honour due to him as a unique being. The Gospel alone secures the fact that though there is one, there is not solely one but also two beings and indeed many beings in the world. All discussions of human exchange must understood in terms of a relationality which already exists, yet the completion of


which is still to be looked forward to. Economics is one discussion of human life; as much as any other conception of human existence it is in crisis for as long as we allow it to rest on the deep assumption that one entity is prior and fundamental, and that two and more entities are less fundamental, and have only a temporary existence. On such a basis, the fundamental stance of modern economics rules out our fundamental relationality from the start. It could only be redeemed by being re-united with that discourse which acknowledges our relationality and our orientation towards its redemption and completion. Christians propose that man is intrinsically related to what is not himself, to God and to his fellow. Man exists only because there is something besides him, a first to which he is second. There is God, and on this basis only, there is man. This asymmetry is the guarantee of human mutuality and society. It ensures that every human person is distinct and thus that we are not simply interchangeable. Though economics offers no explicit conception of God, a conception of God operates within it nonetheless. We can describe it in terms of power, will and monism. Each economic agent is simply a unit of will, and thus each economic unit is a monad, an inscrutable little god. Every time we use our credit card we exercise the power to command, without responsibility, all the goods in the world, and each of us exerts thereby an unlimited power over all others. But if power is the fundamental category, and God has all power, why should God be interested in human beings? And if God is not interested in us, it makes no difference to us whether he exists or not. If he has submitted us to an arbitrary universe, so that we experience contradictions that cannot be resolved, such a God is a monster. Either way, such a conception of God knows no redemption and no hope. Atheism is an appropriate rebuttal expression of this sort of power claim. But atheism itself is a result of this deist or pagan conception of God. In acknowledging no other authority, it allows no challenge to the gods of power that we experience in the market and state, and does not enable others to challenge us when we act as tyrants and gods over them. If modern atheism makes power and god synonyms, the conundrum doesn't change: power cannot support the existence of anything other than itself; it cannot tolerate persons or sustain a world that is distinct from itself. If we insist that money is the only form of recognition that we are ultimately willing to receive, we concur that, behind all economies there is only one economy, and behind all persons, households and nations, there is only one being. If this is the only form that finally exists, it is not merely the form but fundamentally the only existing entity. Behind all households there is the one household of the monad who has absorbed all human existence into himself. We are then simply the different forms in which he appears. A single economy exists because we hold one another within it and all our work serves to keep each other submissive to this vast global display. Modern economics itself an entirely theological construction, albeit with its theology well-concealed. The Christian doctrine of God does not offer us naked, unmediated power or will: the God of Jesus Christ is entirely unthreatened by powers loss. God is accessible to us only because he has given himself into our hands, as this newborn child in Bethlehem and this figure isolated by the cross, without fear of what may become of him. By this distinct identity we may escape the worship of all the many entities and processes created by our own fears and imaginations. As a result the Church gives itself into hands of the world unafraid of whatever lies ahead of it. The god who is ultimately locked in on himself leaves us locked in on ourselves; belief in such a god cannot deliver us. Whether expressed as theism or atheism, such a concept of God leaves unable to concede the being of anything beyond our own will, which leaves us exposed to market and state as


forms of fate. As long as we are unable to throw off the concept of the isolated will, we are turned in on ourselves and subject to the market as a form of possession. Christianity is the rejection of every power that is shut in itself. Christian baptism is the exorcism in which this god, which represents the absence of relationship, is driven out. Christ does not impose himself. Since he is not needy or concerned for his own existence, he is not dependent on us, and so he is able to give us an absolute freedom. We can therefore receive him or refuse him as we wish. The Church that lives from him can give to the society to which it is sent without concern for its own status. The offer of grace means that there can be forgiveness and opportunities for new starts by which life may continue. For those cultures that decline to hear the Christian account of man and God, a fatalistic conception of God and with it the metaphysics of paganism returns, in which power dominates and its opposite is despised.

3. Liberality and Secularity

Christians suggest that the political and moral freedom that Europeans and other Westerners enjoy are just one half of freedom itself. The other half is internal and personal freedom. External freedom is the result of internal freedom. Our moral and political freedom comes from a freedom which each person may learn and cultivate for themselves within a specific community and tradition. Of course, not everyone has to be a Christian before a society can enjoy the outward and political forms of freedom. A society can continue to experience considerable moral and political freedom even if only a minority of its citizens are Christians. But when it goes out of its way to sideline the Christian contribution a society put itself at risk, for political freedom exists only when there is a certain amount of inner freedom around. There is political freedom when Christians continue to make public contributions to that political sphere. It is not the case that once freedom appears its presence is permanent. It can be lost. It emerges as the by-product of an existing community. If you take away the public contribution of that community, that society does not continue to enjoy the same political freedoms as before. There is no long momentum that carries a society serenely for generations after the last public Christian contribution to its politics. To assume that the continuing public contribution of Christians is not necessary to political freedom is no more than a gamble. Liberal democracy is anchored in the great tradition of Christian political thought and practice. Parts of this vast tradition are always being borrowed to support new agendas. When the Christian package is divided into individual campaigns, against poverty or injustice, or for the environment or marginalised, it is separated from the discipleship and community by which we can be formed and become generous in our own right. This tradition of political theology belongs to Christian discipleship, holds together within the Church and has only a derived sense outside that community. Christianity can commend liberal secularism for presenting some significant parts of the truth of man and can receive some aspects of these campaigns as prophetic. But as long as we are angry about other peoples sins, without asking for forgiveness and release from our own, and for greater self-control, all our politics is the expression of our own anger and hides our own helplessness. Each of us hopes to become a self-governing, self-controlled being. Christian discipleship brings greater internal order to each Christian, so that they need less coercive external control. Where there are Christians, the outcome of this order is likely to result in a more orderly, less troubled and more stable moral environment. Christians are more able to absorb the blows, and less likely to resort to recrimination and retaliation. Over the long term this makes a society that is easier to govern because it is in larger measure selfgoverning. Where there is less resort to violence the conditions in which other gentler forms of exchange can emerge, chiefly those forms of exchange that we call economic.


Generosity is fundamental to a mature account of the human economy. God is the source of all that is good, and of the freedom in which we may find it good. From God we receive the love with which we may love and exercise our generosity towards one another by offering one another our economic services. Public service comes from the generosity of particular persons, and is upheld in a culture informed by gratitude for that generosity. Generosity and liberality can only be unforced, free and spontaneous. In the Christian view, we give thanks for what we receive from God, and our thanksgiving rolls out in the form of giving or rather of passing on what we ourselves have received. We regard all worldly things as on lease, rather than as possessions, in our hands only for a while and for a purpose. We are under obligation to get them into the hands of those who can use them best. Best use is the generous and most productive, the use that adds to the capabilities and confidence of those who employ them and can continue that generosity. When they operate within the living relationship with God and the community of the Church these virtue, practices and concepts may become part of our own nature. But disconnected from a living community in which they are practised, virtues become policies to be implemented by managers. We have seen that liberalism does not remain generous when it is detached from specific communities or defines itself in opposition to our inherited traditions. The liberalism that has divorced from its own origins does not remain liberal, but grows intolerant and totalitarian. We no longer understand enterprise as an expression of generosity and have arrived at the discourse of rights and the welfare state. We have replaced generosity with obligation. We see ourselves as in the queue for the supply of good things that is doled out to us from the centre. Our employer is the first source of this cornucopia, the state is the second. From birth to death we are in receipt of the resources channelled to us from the centre, and our main business is to persuade government that we are needier and so should receive more than our rivals. This changed conception of ourselves from givers to claimants is the biggest loss that our society has experienced in recent decades. A Christian society is not the society controlled by Christians. The Gospel does not control. Granted, various elements taken from the Gospel can be cited by leaders in justification of their political power, and we might even say that these are then religious leaders. But we are able to challenge their power and their use of those elements by reminding them of what they are leaving out and so we can confront them with the whole Gospel, which affirms no unilateral political control. Neither Christianity nor the Church is a political party, so it does not have the monopoly relationship that the Party has in a totalitarian state. The Church commends our public servants and encourages them to serve us well. But the Church does not tell people to be good, or lobby governments or suggest that more funding is the solution to any problem. The Christian society is the society with just a tincture or leaven of Christian discipleship. The presence of Christians is enough just to remind that society that public service is the purpose of political power, and so remind us of the limits of power.
Man undeniably has at least one purpose in which he does not subordinate himself to the life of the state, for which, instead, all earthly situations and also social relationships with other people are merely means. That purpose is his ultimate goal, the reason for which he is a pilgrim on earth: the service of God and the eternal salvation of his soul. It is also the obligation of society to recognise this ultimate end of man as his highest purpose. Otherwise, it interposes itself against God, undermining every authority; and it will eventually dissolve itself.255

Heinrich Pesch Liberalism, Socialism and Christian Social Order, Volume 2 Free Market Economy or Economic Order? (Trans Rupert J. Ederer, Lewiston, NY: Edwin Mellen 2000) p. 21


The Church proposes that there is distinction between religion and secularity, between public and private, and that each impacts on the other. Delusory Entitlement We have seen that the fundamental economic exchange is that life-long exchange of resources which enables the arrival of a new generation, and that marriages and the households that they create, are the basis of all subsequent economic exchange. If we do not insist on the value of the household in social and economic continuity, this continuity is in jeopardy. So we can identify two mutually-reinforcing trends. One is the devaluation of marriage and the household, a failure of inter-generational transmission and consequent loss of continuity. The other is the devaluation that comes by inflating the money supply, which devalues our measure of value, which we are able to identify this loss and protect ourselves against it. With the growth of the public sector has been accompanied by the expansion of financial services and of the money supply. We have welcomed the larger public sector that has allowed us to out-source our responsibility. With this new money we have employ social policy people to bear that responsibility for us. market and welfare state have been moral judgments unnecessary. We have been able to give up talking about truth, effort and excellence and have done away with the language of honour and virtue, so we do not need to demonstrate self-control, prudence or courage or feel shame when we do not. No one accuses anyone of misdemeanours, for we forgive one another, without ever charging one another of having done wrong. An expanded market and cheap money has allowed to us to suggest that all choices are equally valid. But by declaring that all knowledge is of equal worth, by ruling out all the inherited criteria by which we can judge between forms of knowledge, and discard some and promote others as especially valuable, we have been given up the means by which we can commend what is economically, socially and culturally truly valuable because it contributes to our longterm. We have made it difficult for real value to find its market. Judgment and Charity This invites the question of how appropriate it is for Christians to work in particular sectors of the economy. Many charities have become part of a double act with the state. Many Christians work in the charitable sector, and it was, of course Christians, who brought many of those charities into existence in the first place. Those who work for charities identify the individual cases of need and attempt to bring an individual form of support. The charitable sector provides more specific and individually targeted help than government welfare agencies can, but government welfare invariably follows, picking up the burden of need and provision that charity identifies. Our failure to insist on the truth of charity, which is given by its Christian definition, means that Christians have not always realised how deeply implicated in the dissolution of human dignity the voluntary sector has become. Christians insist that we cannot limit our definitions of wealth and poverty to what is material but always relate to wider moral and cultural accounts of our identity. Wealth and poverty are relative, and relate to whole persons, which concept itself relates to the Christian account of the person. The machinery of charity and the centralised welfare that follows it, assume that persons are solely individuals. For the individual all action is private and without wider consequence. But this ignores the fact that persons copy one another and follow one another. We are not atoms: our actions attract the interest and excite the envy of others. Whatever seems to get reward, either financial, or in terms of more one-to-one attention from care-providers, draws others in after them. No one can give or be given support to anyone else without creating a precedent and expectation. Government runs on such a


reductive account of human beings that it is unable to conceive of the power of example and thus of moral jeopardy. But it may be that cases of dysfunctional families do not increase despite our efforts, but because of our efforts. Though each of us works to support individual cases, the whole machinery is working again the a familys attempts to nurture and support its members. Has the effect of all this re-distribution been to make husbands and fathers redundant? So there is a question that we must ask one another. Could it be that the one constructive and charitable thing we could do for our fellows is to judge their acts, as public actions, and give them our verdict? Perhaps the best thing we could do for our society would be to be judgmental. Perhaps we could tell men who leave their families to go back to them. Tell women that the man who is hanging about may be their best offer, and it may be that the two them should get married. Maybe the two them should take on whatever discipline will give them the self-control to put up with the other, and praise one another so that the two of them flourish together? Perhaps we should honour them and so distinguish them from those who do not. Neither charity nor welfare can be without judgment. How have we managed to get by so long without conceding the inevitability and goodness of judgment?

4. The Gamble of Globalism

The open economy has emerged from Western culture. The freedom that gave Europeans the confidence to engage commercially other societies came from the Gospel. The characteristics that produced to the open economy have not developed to the same degree in any other part of the world. Neither China nor India nor the Ottomans spread around the world, drawing Europeans into her orbit. It was Europe that drew India and Asia into a world economy characterised by the virtues that appeared in Europe. Europe had a high account of the possibility of human interaction which gave rise to a sophisticated civil society, and the result was that this civil society and economy spread around the world. Sometimes it was imposed, sometimes it was merely offered and uncoercedly adopted by the societies that encountered it. There were horrendous costs, and this process was not uniform, was often not deliberate and was not the result of any single blood-thirsty determination to rule the world. Through driven no doubt by a large measure of self-interest, some, but certainly not all, of which was exploitative, European culture was adopted around the world, and drew that world into a single global marketplace. Europeans did not always push their way in: they were also drawn in, their distinctive cultural contribution was welcomed and demanded, and in some cases even experienced as a liberation. Europeans brought the rule of law and a profound respect for the equality of all before that law. Members of other societies adopted large parts of this view of man and civil society. Among the mess and confusion of motives, this civil society spread because members of other societies found its high view of man and more or less open economy gave them greater dignity. Across the world people bought into the European world-view and the European world-system. They liked the idea of the dignity of the individual, and declared that they considered themselves to be individual persons and wanted to be regarded as such. Over three or four centuries as a result a single world economy emerged, parts of it sometimes identified with the empires of particular European powers or America and as a result Europeans and Americans became extraordinarily prosperous. But many Europeans reject this account of the spread of European culture around the world. They are convinced that this spread must be the result of European wrong-doing. Pessimism and self-denigration seem to motivate this modern view that man cannot control himself, and who must therefore be controlled. They believe that all these


characteristics and good practices have simply arisen here in the West by an extraordinary coincidence. The Christian faith offers large account of human being and this faith has been present to this society for a long time. But, says the gamble being taken by our contemporaries, there is no causal connection between Christian faith and Western culture, and no connection between this culture and freedom. It is sheer coincidence that this faith and this freedom appeared in the same societies on the same continent and that this freedom has allowed more or less open economies to emerge all around the world. The gamble is that the processes by which freedom was achieved could never go into reverse. We can have freedom without the effort or cultural practices by which it emerged. How plausible is this view and how viable are the policies that stem from it? Over the last half century there has been a substantial rise in living standards. Everyone is richer. Increases in productivity can be attributed to advances in technology which enables us to work more efficiently. But is the product of our work really several multiples greater than of our parents grandparents? There have been great increases in efficiency, but this is efficiency of labour, which means that we need fewer people. Can we economise on labour without reducing other peoples chances for economic participation? Have we over-estimated the worth of our own labour and value of our economy? Have some of us been living too well? We have borrowed and spent on the assumption that new technologies will keep our economy growing. If this is so, it means that those of us who produce this technology are supporting the rest. But this also means that they are able to dispense with the rest. We already have far more productive capacity than we use. One reason for our present economic crisis is that we are suffering a lack of demand. There are not enough of us to buy all the things that our existing plant could make. Increasing productivity through technology makes us redundant. Governments have compensated by creating jobs. If there is not enough purchasing power in the economy, governments are tempted to increase the amount of money in circulation by relaxing restrictions on what counts as money; they allow more borrowing to increase the money supply. Governments first allowed, and then encouraged, us to take out large amounts of debt. When we did not take out enough debt to keep the economy growing, they took out that debt on our behalf. Government debt or national debt is used to generate the demand that is otherwise missing. Because there are not enough people to buy what we produce, we have compensated by increasing credit. Could it be that we have experienced this rise in living standards because there has been a huge rise in credit and consequently in the money supply? At ever increasing cost governments have been trying to make the economic crisis go away; though they have succeeded in pushing the crisis forward it returns at ever-shorter intervals. They buy time by pumping new money into the economy. But the fundamental problem is that there is already too much money in the economy, for we have denominated too many of our relationship in monetary terms. In order to perpetuate our wish to be primarily consumers, rather than primarily people who give or work, quite independently of financial reward, we have borrowed. We saw in Chapter 5 that money takes the form of debt. Interest rates have been held down and money made cheap in the hope of encouraging economic growth. If the amount of borrowing is allowed to increase, the value of money is being reduced. If governments allow the value of money to be manipulated, how can we determine the value of one anothers labour? Money that originates as debt that first appears in the hands of the feckless is then indistinguishable from money that appears as the savings of


the productive and abstemious. The value of any work or investment becomes unquantifiable. How can we be sure whether the work we do in the course of our working lives has the economic value we have assumed? We cannot know whether our career, self-restraint and saving have been worthwhile. If no one knows the value of work our readiness to commit ourselves to a particular path is undermined. If new money is being constantly pumped in, our whole value-recognition system becomes distorted and we cannot reliably use that system to put a value on anything. When value is inflated it is also devalued, and so is everything else. Money is our measure of value. The monetisation of many relationships and financialisation of the economy means that money our measure of value has become decoupled from the culture and the history in which value is determined. The value of value needs to be refreshed and renewed. We have to allow money to become expensive again. As this happens, nominally everything will be more expensive, and many things formerly within our reach will be so no longer. But since money would recover its value, we would be more confident of it as a measure of value, and so values would lose their present ambiguity and be much plainer. The value of value is determined by our capability to judge and exercise self-control. Globalism The large view of man that arose in Europe through the witness of Christians was found to be too ambitious so the champions of modern autonomy reduced it to manageable proportions. They therefore extracted economics from the much larger existing tradition of thought and re-founding it on the reduced foundations that made it modern economics. Modern economics has proposes that the discipline that each individual needs is provided externally; the market is the restraint that will prevent him from impinging on his fellows. So we no longer rely on the virtues of any individual to restrain him and keep him a peaceful individual, reluctant to resort to force but ready to trade. Instead we have taken another course based on another gamble. We have separated and distributing as widely as possible responsibility for the functions required for mans well-being. We have decided to dispense with the self-government of the individual so that an ostensibly more reliable form of control can take its place, that of the price system. The self-control that gave man his integrity and unity have been distributed around the market, so each of us is directly connected to the nexus that mediates all resources and all control. The relative strengths of our commitment to any particular good is represented by the prices which we are prepared to pay for it. Prices signals the strength of others preferences, and so tell us how desired this good is. We can all have what we want to the extent that we are prepared to meet that price. The price does not tell us how good or useful for us this good would be, or what virtues we would need in order to make good use of it. The price simply tells us how badly everyone else wants it and about what we would have to do to come into possession of that good. We can have it, to the extent that we are able to outbid all others. The ability of others to outbid us and put this good beyond our reach, is the only restraint necessary to control our claim on it. Other people, in vast numbers and so anonymously, either allow this good to come within our reach or they take it out of our reach, and this happens without them having to make any judgment about us. The price system can therefore be the comprehensive and the only mediation between each and every person. All the characteristics that make for the open economy, that brings every part of the world into relationship with each other, is delivered by the worldwide division of labour. This division of labour is so vast that each of us will be able to find our place in it. The price mechanism gives us all the inter-personal equilibrium that we cannot give


ourselves. As long as it grows, more of our individual functions can be out-sourced to it. As the division of labour grows our paths can be ever more minutely calibrated and steered, and we can give up more of own individual self-control. The market must be allowed to extend its mediated restraint to greater numbers of human beings and human functions. The market will get us out of trouble because it will always be able to grow. New technology will produce new forms of energy, and new forms of energy will give us the new technology which promotes this ever-more sophisticated division of labour. The division of labour gives an income and spending power to each individual, but also means that that this individual will contribute to modulating the desires of all other individuals. This delicately-balanced distribution of functions will enable the just-in-time supply of resources. And as a result of this constant new-arrival of technology we will have to rely less and less on our own, unreliable self-government. So we can achieve an ever greater distribution and so greater uniformity and equilibrium. It has been assumed that the global market will always be able to supply the resources each human needs and so prevent scarcity, but the more fundamental assumption is that the market will relieve us of the need to exercise our own self-restraint. We can have the freedom, and the free market, without the effort and self-discipline that accompanied its emergence. What is more, the good functioning of the market depends on our agreement to give up this tradition of value and self-discipline. The tradition of human formation and selfgovernment hinder the perfect functioning of the market. The global market gives all goods the same value, but the humanities suggests that they are not all of the same value. The market must replace all alternative valuations and integrate into itself the communities that make alternative valuations. Inasmuch as any community holds out against the valuations of the global market, and wants to insist that some values are not comprehensible to that market, that community and its values are a hindrance. We said that each Christian hopes to become a self-governing, self-controlled being, and that the Christian way of life has a stabilising effect on its adherents and on the society of which they are members. Over the long term the society whose members are selfregulating, is itself self-regulating; since there is less coercion and violence, the conditions in which other gentler forms of exchange, chiefly those that we regard as economic, can emerge. Christians cannot believe that the spread of the market is inevitable nor that it is essential to human well-being. We are not bound to concede either its rightness, nor is anyone obliged to further this process. The growth of the equilibrium provided by the price system relies on the greater expenditure of energy, which makes it implausible enough. But it depends on the surrender of our own self-control, and integrity as a person. As consumers we have become the masters, but only done so by giving up the much more precious status of self-masters. We have less mastery of our own bodies, desires and household and have allowed labour, production, skills and industriousness, property and capital to drift out of our own national control. Christians do not believe that we are all obliged to work towards the spread of this ever more minutely calibrated division of labour by which we cede our own self-government to the proliferating services of market and government. Christians are bound to ask whether we have not let this process become a veil behind which one section of society de-motivates other sections so acting against the unity of society as a whole. Christians are a very particular sort of economic agent, who think of themselves as givers rather than as consumers. They do not assume that their relationship with every other individual is mediated through the market and global economy but make their contribution regardless of what public recognition it receives. The Christian will want to do purposeful work and so find an integrity of life and work. A job may represent a lot less than a vocation but if we are indeed obliged to work as though enslaved to some


process, we at least have the dignity of being dissatisfied and hope to find a more purposeful way to work in which we can more truly express our generosity. Though the Christian may be divided into consumer and employee, he can set out to be an independent self-subsistent economic agent, without debts and not under financial forms of obligation. He may resist the pressures of market and state and, enduring poverty, achieve some independence of person through doing so. He may look forward to another economy, the kingdom of God. We have become dependent on this process of the ever-widening reach of the global economy. Since the process of this growth are much easier than ever the slightest reversal it has made us vulnerable. We seem unable to bear the thought of negative growth and recession. We have got ourselves hooked on the process of devaluing value, that is, on the cheap money which appears to bring everything within reach, for a time. Could it be that this process of global integration is bumping up against its limit? Can we continue to move towards ever-greater global economic integration? What happens if this does not continue?

5. Correction and Crash

It is the job of governments to promote the self-government of all members of the nation and allow them to use their own judgment to decide what is of value. It may do so by keeping the brakes on the amount of money in the economy. If much more money seeps in it reduces the buying power of those who have held on to their money. The money supply has been rising as result of the expansion of credit. This cheap money is not simply created by the fiat of our own government but it is made up of the flows of savings that come from other economies. Much of it has come from Asia. All those workers who earned what to us seemed pitiful wages nonetheless managed to save a proportion of them and through the global financial system their savings made their way back to us. This made money cheap for us so we continued to buy the goods that they produced. By making the things we want and providing us with the money with which we could do so, they have been supporting us in two ways. They want us to continue to go shopping, just as much as we do ourselves, for the goods they produce. But this relies on us being more than simply spenders of these foreign savings. We have been asking the workers of Asian economies to subsidise our standard of living. Though we are wealthier than they, they are helping to finance in our welfare state a far more robust safety net than they can dream of. And they have been doing so. It is as if we have merely been playing at work; the real workers are those overseas who have helped pay for our increasing levels of comfort through their purchase of the bonds, issued by our governments, by which we have funded our deficits and maintained an impression of economic growth. But our economic prosperity is based on a fabrication. We have assumed that we were supporting ourselves, but our standard of living has been sustained by savers in other countries. Our entire economy appears much larger than it is because it has been inflated by the many jobs brought into existence by government spending, itself financed by borrowing from these other economies. Governments want to continue to provide these jobs for us, and continue to allow us to believe that we are self-supporting. The cornucopia of services that inflate our GDP are a reluctant gift to us from overseas. Our leaders are wondering how to break the news that we have not really been supporting ourselves as we thought. They leaders don't want to tell us this news and we don't want to hear it. We may not recognise the price signals that give us the message about our changing relationships with these other economies. We cannot oblige the citizens of other nations to lend their money to us. The prudent savers of other economies may become more


cautious about lending to us, and do so only at an rising interest rate. The entitlement culture of Britain is based in a willed ignorance of our actual economic position. Our determination to hang on to the appearance of prosperity may require still greater efforts of communal self-delusion. The question is what proportion of our national working year we have to pay in order to meet our repayments. We have at the very least, to keep the proportion of our working year dedicated to debt repayment constant. If we allow it to increase, it will creep up at first, then turn into a run then a headlong career. If there is even any suspicion that we cannot raise the money, the interest rate will accelerate, so that, the proportion of our working year that we have to dedicate to interest payments rises, leaving less of our working year to invest and grow the productivity by which we hoped to pay down that debt. We may descend into a debt spiral, from which there is no honourable way out. We will have made ourselves so economic weak and dependent that we will not be able to afford to import the oil on which our industry, and with it any hope of being able to sell anything to other economies, depends. The result of slipping into such a debt spiral would be that will be that we will be unable to raise money from global money markets. We would be unable to pay for any imports, the chief import of which is of course the energy that fuels our industries. Without the financial means to afford to import oil and gas we will be unable to export, will be unable to pay the interest on our borrowings, and so will experience crashes and widespread unrest of a third-world sort. A crash is unavoidable and necessary. We need it, and now rather than later. Such a crash will be painful. But if we go through it now it will not destroy us. We can still rediscover the self-control and industry on which economic dignity depend. The crash will just the discovery and realisation of a long unfolding disaster. It is the discovery of our true situation. We have been selling the assets of long-term relationships and virtues for the vanity of short-term positional goods that are not productive at all. Much of what we have regarded as meaningful work has not been. A swathe of middle-class desk jobs that revolve around the re-distribution of finance, will disappear. We now have an opportunity to discover the dignity of labour and the mixed economy. We have travelled a long way from any conception of organic growth and self-financing enterprise. The only growth that governments conceive of comes through borrowing capital. But if people are less willing to borrow, and are banks less willing to lend, the amount of money in circulation rapidly diminishes. Governments can print more, but individually we can all lose confidence and withdraw from economic activity, faster than the government can entice people to start new businesses by putting more money into the economy. It is said that the market is about taking money away from foolish and giving it to the wise. The British economy has been based on the assumption that other people will arrive to pay for whatever we have committed them to pay for, there will be a constant supply of new idiots so the whole game can continue without limit. We have created an environment in which it is extremely difficult to say what value anything is and we are all made vulnerable by this. If you make fools of too large a number of people, you do not improve your chances of living harmoniously with them. By making them poorer you raise the sense of unfairness and consequent resentment. We are soon likely to see much wider inequalities than have been experienced by any Briton living. And the same is true in the world as a whole. By making it is impossible for people to get fairness through the market, we make it more likely that they will resort to other means to take what has been withheld from them. By making them more desperate, we are ensuring that we and our children will live in a more dangerous world. We have endangered the consensus that has made Britain a functioning society.


The next few years will reveal how adequate this is as a description of our situation. But we would be negligent witnesses if we did not discuss these issues, and consider how we may become more resilient and ready for difficult times. The Christians can lead the way by willingly and demonstrably taking on some of the hardship that may be the future for many of us. It is good to do so.

6. Christian Re-investment
You want some suggestions for what we can do, in particular for what Christians can do? What we need are benefactors. We need people who endow new institutions, businesses and communities. The only way we are going to find them is by becoming sponsors, patrons and employers ourselves. And we can attempt to do so in smaller ways than before. We can leave the banks on the sideline, make our own loans and investments in each other out of our own resources. This will of course mean in a much smaller economy than we have been used to. Our economy needs to re-discover the culture of endowment. There is one easy thing you can do for your economy. Give someone a job. Employ them, even if you can only do so for a couple hours a week. Take on a school leaver, spend time with them and show them how to work. If they work alongside you they will learn some of the skills of your household or workplace and so pick up some of the virtues and the social skills which makes business possible. Perhaps you can pay them not merely financially, but also in some share of whatever it is you do. Give them a stock option in your own enterprise; this will require some imagination since the law places limits on it. More than that, employ someone who is intending to marry and start a family. Give employment and whatever other support you can to whoever is prepared to get married, or stay married when other pressures militate against it. Perhaps you could even make your support dependent on commitment to their marriage if you think this might help. Though there is something ridiculous about offering such prescriptions, we are all capable of making suggestions, and of making our own decisions in the light of each particular case and the good of a society as a whole. Christians may set out to do now what in a few years time everyone will be forced to do. Christians may take up the discipline of consuming little, spending only on assets that are fundamental to future productive work, and buying few consumables beyond the weekly groceries. Christians have to demonstrate that they can cut back and achieve some selfcontrol. They are not obliged to do this, but they are free to do it. But they can show that they are not hurt by the indignity of cutting right back and leading an austere life. Christians can pour all their efforts into projects that are small, require years of hard work and will produce very little cash. They demonstrate that dignity and mutual solidarity can be found even in apparent destitution. They can show that no matter how little they have, they can live on less, and thus they always have something to share with others. No matter how poor, Christians are always givers. Distinctive Community It is essential for the distinctiveness of the Christian witness as a whole that some Christians are able to distance themselves from the cash nexus. All able-bodied Christians can work, but some of them may also decide to remain aloof from the market and refuse to let their needs drive them to market. By working without earning they break the link between our work and the mediation of price system and market. What such Christian households have to give is what is not present anywhere else in the economy. They offer the imagination and hope that comes from the sources of memory and faith. The market that drives out such resources makes itself unstable, for the whole economy of human interaction depends on giving and self-giving. The greatest favour


that Christians can do is to model the communities and forms of life which do not hedge against the future. This is the ultimate adventure in which individual persons commit themselves to a form of life in which they work for no return, accumulating no property or pension, and opening themselves to the charity of others. Sustained public self-giving, formalised by Christian communities, perhaps in the form of a renewed monasticism, could bring about a recovery of the culture of generosity and endowment which would allow to achieve a more stable and viable economy. The Church is a distinctive community. The distinctiveness of all Christians is supported by those particular groups of Christians who take on monastic discipline. It can source its holiness from them. Only a small minority of Christians may adopt this life, but they do so as representatives of the rest of us, who understand that their withdrawal is for the sake of the holiness of the whole Church. Monasticism protected celibacy in a world in which everyone was married and produced children in order to pass on their possessions to future generations. Perhaps we should that every church is a similarly monastic community of married couples dedicated to the bringing up of children. Christians work and pray. The worship of God is the work that God intends for us, and from it flows all the many other good works. Such monastic communities of Christians work, pray and serve, but their work will not register within the formal economy. The Christian points to a way of life the market cannot recognise the value of. Saint Benedict regularised the experience of communities of celibate Christians and brought these communities into contact with one another. Worship of God is the first point of this new rule. Nothing comes before the work of God256 These Christians sing the praises of the living God seven times a day. From this worship others forms of service emerged. The monks worked the land, taught, copied first Scripture and many other works and so preserved a Christian culture. That culture percolated out beyond the monasteries as the surrounding societies learned that these Christians could judge and distribute justice well, that their record-keeping enabled the peaceful passing on of property and entitlement across generations, and entrusted their children to the education of these Christians. The culture that began in Christian worship spread out to bring to Europe a developed system of law and the exercise of justice. These Christians withdrew from the world, but over the long-term the world came to them for their wisdom and self-control. The contemporary Church could rediscover its vocation through ordered communities such as these. The moral philosopher Alasdair MacIntyre suggests that we have forgotten what earlier generations knew. Though we have the elements of morality, their unity has been lost. We have the fragments but no idea how they fit together, and therefore little sense of what makes for a good and meaningful life. The result is that each of us expresses the emotions we experience in each moment but are unable to say why they should interest the rest of us, or are good. We cannot reason our way to a common conclusions and so act as a unified society.
This time however the barbarians are not waiting beyond the frontiers; they have already been governing us for quite some time.257

Alasdair MacIntyre suggests that we need to travel this road again, and perhaps resort to the same monastic discipline. We will see the formation of the same sort of Benedictine communities that they did when the Roman empire was breaking down, and that these
256 257

Saint Benedict Rule chapter 43. Alasdair MacIntyre After Virtue


will preserve the memory, the mind and reason of European civilisation. MacIntyre believes that we have arrived at this point.
What matters at this point is the construction of local forms of community within which the civility and the intellectual and moral life can be sustained through the dark ages which are already upon us.

We saw that the leaders of civil society clustered gathered around the Church because they knew that they benefited from the practices of self-judgment, self-restraint and selfgovernment that are practised by the Church. The love and mutual service of Christians flows out of the Church and into public service. Their self-government and public service creates civil society. Because this nation and its rulers have listened to this Godworshipping community, and received, at least at second-hand, the judgment and forgiveness of God, our national history has been a movement, slow and erratic, from tribalism and violence to unity and peace. The Church present each society with the question of its own identity. The Church asks whether we are building a culture that can receive its judgment and correction and so be renewed and confident, or whether in a spirit of self-disgust, mutual estrangement, resentment and victimhood, we are simply dismantling the culture we received. The Church sees the community around it undergoing a slow disintegration and dissolution. It sees that a society that is afraid to love and afraid to be free. As long as we are unable to see this pain is not merely inflicted on us by others, but comes from us, and that we inflict it on one another and so on ourselves, we are caught and we remain the source of our own misery. We have looked at some of the challenges that our society faces. We have been able to do so only because the Church is able to find the resources from its long memory by which it can ask these questions. But it does not leave us alone with such an appalling vista, but it is only able to do so because it lives from the promise and celebrates publicly in its every act of worship, the reconciliation and restoration of all things. The Church invites people to judge themselves. Its every worship service is a public event which the world can hear and participate in to whatever degree it wishes. The world can see and decide in all freedom, either to shun them or to join this people. The confidence of this joyful community spreads to the wider society amongst which it lives. The Church that hears true judgment look into the widening hole of our debts and trespasses, name them and appeal to our creditors and to God for our forgiveness and release. The Church that knows the joy of repentance, honest speech and unburdening can repent and ask for forgiveness, for our society and for itself. The Church that is absolutely sure of the covenant of God with man, secure in the love of God and of the promise of this resurrection can see the extent of this disaster and name it. Only the Church dare say that things are indeed bad, that other people did not impose this crisis on us, but we inflicted it on ourselves. Christians must speak for the nation, saying for our contemporaries what they cannot yet say for themselves. Only prolonged examination of the attitudes and behaviour of everyone of us, exposure to judgment and our repentance, can help us avoid the worst consequences of our own actions. Christians must lead the repentance, for ourselves, and also on their behalf. We take this blame, alone perhaps, because only we know how to do so. The Church can say what a generation of political leaders, a whole political class is unable to say, that we are responsible for ourselves and that we can make whatever changes will bring us onto a more sustainable course.