Economic Life: Crisis and Reform, Winter 2009 - Editorial

Editorial

Chris Sunderland is a former research scientist, currently an Anglican priest and Coordinator of Agora, a charity working in active citizenship and democratic engagement. He recently launched EarthAbbey (www.earthabbey.com), a neo-monastic community dedicated to encouraging one another to live more in tune with the earth.

There are moments when a society cries out for help. And, even if that society does not recognise it, the help that it needs is to be found in faith.

The global financial crisis has caused the rich and powerful to shake in their boots. It also stands to have disastrous effects on the poorest peoples on earth. Yet it is a sign of the end of a ruling paradigm. Not so long ago, with the end of communism, commentators were pleased to predict ‘the end of history’. They saw that there was now no coherent opposition to the ideology of the free market. So in the UK we set ourselves to fund our public expenditure on the back of the growth of GDP. This ‘gross domestic product’ was the one goal we must attain to, the only public value and certain reference point for our future welfare.

And now it has ended in tears. We have a global financial system oriented around a never-ending, debt-led expansion. Banks create money by lending it. Controls on banking activity have been systematically removed until we now have a situation where around 90 per cent of all financial activity across the world is speculation, where one third of global wealth is hidden in offshore tax havens, and where global debt amounts to $100 trillion or twice the level of global GDP. Such a system has to crash. Its only hope for survival lies in providing levels of continuous growth adequate to pay interest on debt. Investment returns have been set for many years beyond anything that the real economy could deliver, with the result that we now have a financial sector divorced from the real economy, paying its ‘oh so gifted’ staff with multimillion pound bonuses and acting like the cuckoo in the nest of the world economy.

Everyone knows it should not be like this, but where can we find the insight to bring reform? In this issue of The Bible in TransMission we have thrown down the gauntlet to a talented and varied clutch of commentators, who explore different dimensions of the problem from a biblical point of view. Their contributions might be summarised in three biblical words or phrases – mammon, usury and the perspective of the poor.

Alan Storkey asks us to think of unbridled capitalism as the biblical pursuit of mammon. As Christians, we have all too easily embraced the dominant economic paradigm and lost our prophetic edge. Alan feels ‘it is time to put the Bible back at the centre of the economic stage’. He urges us to consider the biblical paradigm which would measure well-being rather than GDP and so include all sorts of aspects of life, like families, relationships, communities and unpaid caring that do not have monetary value. This paradigm is built, he argues, on a sense of the graciousness of God and a cooperative vision of economy modelled on 1 Corinthians 12, rather than ruthless competition.

Such thoughts are echoed by Prabhu Guptara, a leading thinker from the banking world, who was one of those who predicted the current crisis well before it happened. He argues that a society always needs to limit, constrain and discourage greed. Religions have historically played a vital role in achieving this. Yet our present society has deliberately sidelined religious faith at the same time that it has been hell-bent on a process of ‘institutionalising’ greed. He takes us through the development of the complex financial instruments that led to the current crisis as well as the repeal of key laws such as the Glass-Steagall Act, which has resulted in banking systems that have broken free of their moorings in a new unregulated and, arguably, unregulatable environment. Prabhu calls for a new generation of people to arise, transformed as individuals, with a new sense of community and a vision for the true wealth of all. It is a call to the people of faith.

Robert van de Weyer looks in some detail at the prohibition of usury, an idea that has fallen out of favour in both society and Church. We find it hard to imagine how an economy can work without lending money at interest and yet fail to realise how such usury makes a continuing and increasing claim on the future, with an ever-increasing spiral of stressful activity demanded of us and an ever-increasing demand made on the earth and its systems. Robert traces a history that includes an understanding of usury as wrong because of the imbalance of risk between the parties to the loan and focuses on the time during the Reformation in Europe when the prohibition against usury was set aside. He, similarly, looks to a re-introduction of legislation to separate deposit banking from investment systems, but proposing that investment should better take the form of investments that only benefit from the profitability of an enterprise not some set level of interest. Many of our commentators would affirm market mechanisms at some level in society, but Robert is particularly supportive of the role of entrepreneurial activity, working through investment and market mechanisms to provide for the new technologies we need if we are to face environmental and other challenges.

Spending is a two-edged sword in our current situation. We are told that we are a debt-ridden society in crisis, with the implication that we should draw in our horns, and yet, at the same time, the Chancellor is desperate for us all to spend money to bring liquidity to the economy. This ‘paradox of ‘thrift’ is a real problem for an economy where money is created through people taking out loans. It is also a real problem for us as individuals. The years after the millennium in the UK have been marked by an economic growth based on consumer spending. The expectation that both partners in a family will take paid work has led to an increase in house prices. For some, this has allowed re-mortgaging of properties, freeing up money for further consumer expenditure. For others, it has produced a treadmill of work coupled to extraordinary vulnerability. It is a telling indictment of GDP as a measure that in the last 30 years the UK GDP has doubled while almost every level of well-being has remained level or declined in the same period. One person at the sharp end of this is Sharon Thresher who writes from the perspective of Christians Against Poverty. She reports that saving levels in the UK have been consistently below those in Europe for many years and that one-third of adults are now highly vulnerable and would face financial disaster within two months if they lost their jobs. Christians Against Poverty currently manage £45m of debt on behalf of their clients and 140 people a day have their homes repossessed in the UK.

This perspective needs to be complemented by those from what we call ‘developing’ lands. Vinoth Ramachandra graphically portrays how arguments for free trade by rich countries are often thinly veiled claims to power, subverting indigenous agriculture with the methods of agribusiness and destabilising governments in the pursuit of resources such as oil, diamonds and platinum. Democrats at home become dictators abroad and mediating institutions like the World Trade Organisation fail to provide good quality negotiation. His picture is bleak, but we must hear it. Both Sharon and Vinoth would affirm that God hears the cries of the poor and judges us in our response.

One complementary way forward is to consider more deeply the place of the human being before God. Rob Saner-Haigh points us to Catholic Social Teaching and especially Rerum Novarum as a source of inspiration and practical reflection on human dignity and human flourishing. He considers debt as a dehumanising form of enslavement and points to shalom as a vision of economic justice.

Yet one issue remains, and it is arguably the one that really cannot be avoided. The free-market capitalist system is destroying the very earth on which we live. Several of our commentators make mention of this and Vinoth Ramachandra notes that the poorest of the earth will suffer most from environmental degradation in all its forms. Ian Christie systematically unpicks our faith in growth in GDP as a measure of human progress together with our ‘great forgetting’ of the ecological consequences of this pursuit. He concludes that the current economic model is fast becoming unbelievable and sketches an outline of a new way that is more than a quick technical fix, but goes to the heart of how we perceive ourselves and our relationship with creation.

Ian charts the devastating consequences of our capitalist system on the natural resources of the earth. Our atmosphere, and therefore climate, is being altered for centuries by industrial gases. The great treasures of the earth are being exploited until they must become limiting. Creatures face extinction and rainforests are being felled. Yet our economic system is based on continuous expansion with more and more consumption. There is, of course, some room for economic development through the embrace of new greener technologies, but it is hard to avoid the conclusion that we must change the whole way that we are living on the earth. 

This call to a different kind of life is also being powerfully articulated by a new breed of economists. David Boyle has charted the rise of a ‘New Economics’, which is deliberately setting standards for well-being rather than GDP.1 He notices that there is a new trend in Europe evidenced by more than 12 million people, who are ‘downsizing’ their lives, choosing to earn less, take more leisure time, rebuild community and live more simply and lightly on the earth. He calls this a sign of a ‘spiritual crisis’ in the sense that it is being done in the face of the dominant belief system of the West, which is the free-market aided by consumerism. Several of our authors make a similar call. We need to live differently. ‘Seeking first the kingdom of God’ needs to be expressed in new ways. The world is watching. Will the children of God lead the way?

Notes
1 D Boyle and A Simms, The New Economics: A Bigger Picture (London: Earthscan, 2009).

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