Economics Of Good And Evil

 

Today I join Haddington Serious Book Club.  We explore Thomas Sedlacek’s Economics of Good and Evil with a foreword by Vaclav Havel. Sedlacek looks for a rationale of economics in some six texts through human history.

 The earliest known writing is The Epic of Gilgamesh. This narrative of humanity is mainly about friendship, an epic about gods, evil and wisdom. Nowhere does money take off with a life of its own, divorced from civilised community.

 The second text is the Old Testament, the Hebrew Bible. It births the idea of progress.  This linear view of history later gave birth to science. Some see the birth of capitalism in this text, but it is not divorced from good and evil. Obedience to God leads to an abundance of material goods. This is grounded in this world. This view requires heroes who exercise wisdom and strength. Rules exist which must be observed. Goodness pays off – though there are exceptions.  Money is not an absolute. There are social obligations. Land ownership was not an absolute right: ultimately the land belonged to God,  and must be stewarded fairly. The poor had the right to glean fields. The land, the source of productivity, should be given a rest – it was  intrinsically  worthy of respect.  Unpayable debts should be remitted.

 The third source of writings is Classical Greek – poets, philosophers, mystics. The pinnacle of their political economics is the economist Xenophon. The first of his two books describes economics as good household management. The second book advises Athens on how to increase revenues.  This is not through nationalisation, it is through trade, which was then a revolutionary idea. In agriculture, however, it was not possible to predicate wealth because the laws of nature, which are more fundamental,  cannot be predicted. He recognised that monetary desires are insatiable, and advised any economist who drew up plans for prosperity to consult the gods, because he recognised that economics was not a law unto itself. Plato and Aristotle discussed when self-interest is acceptable and when it should be directed to the  creation of the broader good of society. For Aristotle the ideal is not maximisation  of utility at any cost but a middle way. 

 The fourth source is Christianity – the New Testament and later writers such as Aquinas. Of Jesus’ thirty parables nineteen are set in an economic or social context C.f. the parables of talents and vineyard workers. The apex of Jesus’  teaching in the Sermon on the Mount is Happy are those who renounce possessiveness. Jesus calls everyone to pray that God’s kingdom will come on earth, and that God will forgive us our debts ‘as we forgive our debtors’, thus carrying forward the Old Testament teaching that freedom from debt is part of God’s order. Forgiveness of debt is unique among the major religions.  Gift is central to Christian teaching: God’s giving to us and our giving to one another. A gift may be reciprocal but is not calculated.  Labour is not in its origin a curse, it is a calling and a blessing – a means of self-realisation, not just a means of production.  Aquinas upholds the right of private ownership but makes an exception: ‘In cases of need all things are common property…’(Summa Theologica, quoted here on page 150)  The Classical Economist John Stuart Mill continued this biblical view: ‘No man made the land. It is the original inheritance of the whole species’  (in Principles of Political Economy).  The New Testament teaches that surplus goods that one did not need were to be given as alms rather than stored up like treasure.  Thomas Hobbes adopted the Christian view that humans are evil and their deeds therefore need to be regulated by rulers. This mitigates against ‘economic freedom’. Aquinas (like Pelagius) points out that a human being’s core is good, but the author believes that the human being falls into evil deeds. To prevent evil taking over an economic system we need to allow God to challenge us (page 159). If we believe humans are intrinsically evil we require state control; if we believe they are intrinsically good we require  checks and balances, and redeeming institutions.  Love of one’s neighbour is basic to Christianity. That is the vision that draws us together into civilisations.

 The fifth source is ‘Enlightenment’ (Reason divorced from Religion) writers such as Descartes. A human is a machine. The laws of science can be applied as a sufficient explanation of everything. Ethics disappears from economic thought. ‘The Invisible Hand’ of the money market becomes fully blown. Bernard Mandeville is the true father of The Invisible Hand.  He argued that the more vices there are the more prosperity there will be: ‘Pride and Vanity have built more hospitals than all the Virtues together’ (An Essay on Charity and Charity Schools). An honest society would see the end of prosperity. He is the father of ‘the need for greed’ philosophy.

 The sixth source is Adam Smith.  He is often lumped in with the Enlightenment and the ‘Need for Greed’ economists.  He did see the money markets as an Invisible Hand, but he did not divorce economic society from morality.  In his book Moral Sentiments, he assumed that the family and the local work units were motivated by mutual care and support, and that these were building blocks in a free market economy. Society holds together due to empathy and an impartial spectator.  He did not support laissez faire capitalism: he never asserted that every market allocation benefits society. David Hume reflected aspects of Smith’s view.

 The first four and the sixth sources all considered ethics and economics as joined together. Although John Maynard Keynes also believed this, his popular interpreters such as Paul Samuelson (The Machine) remove ethics.

 Conclusion: The debt crisis  is deeper and wider than just an economic crisis.  Although material prosperity is one ingredient of happiness, gratitude, moderation and good neighbourliness are other essential ingredients.  The current economic system can be likened to the Tower of Babel. We have to attend to the soul of society at ground level if we are to survive disaster. The truths of the early Sources are within us all.

 

Posted at 09:49am on 17th May 2019
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