An alternative economics

I gratefully receive a consistently thought-provoking journal called The Social Creditor, brilliantly edited by Frances Hutchinson. It makes me think, but I never manage to come to a conclusion because I feel I don't yet understand the issues well enough. Of course, I recognize the common concerns of the Social Credit movement of C.H. Douglas (d. 1952) and the Distributists (expressed in, for example, Hilaire Belloc's The Servile State). Novelist Eimar O'Duffy puts it satirically like this:

"Suppose a party of people were wrecked on a desert island, what do you think would be the first thing they’d do? Obviously they would look around for a man with money to employ them in gathering fruit. If there were no capitalist among them, or if he didn’t see his way to make a profit out of the business, they would all remain unemployed and starve to death, no matter how fertile the island might be.
     "If therefore we want to have plenty of employment, we must give every possible incentive to entrepreneurs – encouraging them to get as much of our money from us as they can, so that they can spend it on employing us to make more for them.” (Asses in Clover, Jon Carpenter Publishing, 2003, pp. 246-7.)

An introductory article on Social Credit is available here. According to this,

"Douglas observed, as a matter of fact and not mere opinion, that finance flows into the economic system as bank-created debt. Firms use the debt-created finance to pay their costs of production. The wages, salaries and dividends paid out by firms form incomes to households. With their incomes, households can purchase the stream of goods and services coming onto the market. As the modern economic system has developed, it has created a massive bureaucracy. Behind that bureaucracy, obscured by the very complexity of the system, financial speculation, profiteering, marketing, advertising and a whole range of growth-driven economic activities are making human existence increasingly precarious."

Hard to argue with that, but can we really shift, as he proposed, from a debt-driven economy to a credit-based one?

For more discussion of the nature of finance and money see D.C. Schindler's philosophical analysis linked here, and Philip Goodchild on The Theology of Money.

What is money?

The question is raised and discussed in David C. Schindler's brilliant article, "Why Socrates Didn't Charge: Plato and the Metaphysics of Money" (Communio, Fall 2009), available on our Economy website. "When St. Paul says that the love of money is the root of all evil," Schindler writes,

"it would seem that he is echoing a Platonic insight. Our aim in the following is to understand what it is about the nature, the inner logic, of money that inclines it to usurp the divine throne, to see precisely how the question concerning the ultimate end of action serves to distinguish the philosopher from the sophist, and then to consider what a healthy love of money would be.... Money has the whole of its truth in being a symbol of the soul’s adherence to the good. It is meant, above all, to be a ‘reminder’ to those who are wealthy in a true sense.... Socrates does not think of money primarily as something to be stored, that is, as a destination of the soul’s love, but rather as something ever available to be spent, that is, always a means that brings to realization true, concrete goods. And so he does not call gold itself wealth. Instead, it is a token that enables him to recollect the true wealth that is wisdom, the soul’s free and rightful order under the sun, the light of the good." 

READ THE ARTICLE HERE.

More on Money

"And I believe in Mammon, the Lord, the Giver of Life; who proceeds from the CEO and the Bank Manager. With them together he is worshipped and glorified. He has spoken through the profits...."

Philip Goodchild’s reference to the “religion of money” prompted me to this thought about moral ambiguity. Could one argue that money is a secular analogy to the Holy Spirit?  It is a medium of exchange - it makes much of social life possible. It is founded on trust. The word is derived from the goddess Juno Moneta in Rome - Juno was one of the Roman Trinity of Jupiter, Athena and Juno, and she was also the "mother of the muses", responsible for divine protection of the arts and sciences. "In some sense, money represents everything we could desire. It is the thing that gives us potential access to what we want. Like language, money is one of the two ways we have to communicate" (Keith Hart). In this sense language is like the Word (second person of the Trinity), and money like the Spirit. Does that account for the ease with which we turn it into an idol?

The Religion of Money

Modern society is based on the idea of economic growth, a continually expanding cycle of expectation (which supplies the motivation to drive the economy forward), trade leading to income, income leading to consumption and investment. This expansion is made possible by improvements in technology making possible cheaper production (machines replacing slaves and eventually workers) and virtually unlimited natural resources (because natural energies are released by advancing technology). But can growth continue forever? The answer will help to determine our response to the present global economic crisis.

The assumption that growth can be unlimited has been criticized in books such as Richard Douthwaite’s The Growth Illusion, summarized online here. He thinks that our society is wearing “a pair of spectacles which give short term economic issues such prominence that they obscure our vision of the future”. Douthwaite see money as the root of the problem, for “under our current debt-based monetary system, no country has the option of foregoing growth because, without growth, it will fall into serious economic decline.” Another critic of growth is Philip Goodchild, of the University of Nottingham. In a 2009 summary of his book The Theology of Money, Goodchild sees

“2008 as the first shock in the terminal collision between economy and ecology, with a major depression to follow in the coming decade due to an ongoing crisis in energy supply. The hope upon which the modern world is based will soon collapse, and competition for increasingly scarce resources will significantly undermine the moral and political cooperation to which we currently aspire.”