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.”

This is a bleak picture indeed. Goodchild agrees with Douthwaite's claim that money is debt. For him, money is “essentially credit, a belief system, in which we participate in practice so long as we treat money as valuable. This means that money is also debt. Every time we handle money, we handle someone else’s debt or obligation.”

Prior to the modern world, the economic sphere was bounded by the finitude of the production of value through human labour, on the one hand, and the finitude of money in circulation, on the other. In the modern world, however, the finitude of production has been partially overcome by harnessing energy stored in fossil fuels and the elements. At the same time, the finitude of currency has been overcome by treating signs of monetary value as themselves valuable, ensuring the value of newly created money by issuing it in the form of loans, attached to debts. Rates of production and rates of interest escape finitude by compound growth. Production for the sake of profit replaces production for the sake of use.

In this way, he says, “money as a supreme value and transcendent obligation shapes the conduct of our lives and institutions. Debt has replaced God as the guarantee for human cooperation, and our modern globalised world is driven by the religion of money.” Goodchild’s “theology of money” is summarized in an article posted online:

   1) The value of money is transcendent: it is a promise, taken on faith, and only realized to the extent that this faith is acted out in practice in contractual exchange.
   2) Money is the supreme value because it is both the perspective through which we value the world and our means of making what we value real. Since money is the means by which all other social values may be realized, it posits itself as the supreme value.
   3) Financial value is essentially a degree of hope, expectation, trust or credibility. Yet financial value, measured by money, is our underlying reason, the discipline for our conduct, the pivot around which the world is reconstructed. Being transcendent to material and social reality, yet also being the pivot around which material and social reality is continually reconstructed, financial value is essentially religious.
   4) The entire monetary system has its own intrinsic logic of growth. This drive for growth is a separate engine of the global economy in addition to the individual acquisition of necessities and the individual pursuit of self-interest.

If Goodchild is right, “The entire global economy is driven by a spiral of debt, constrained to seek further profits, and always dependent on future expansion. It is a bubble of speculation and leverage.” And he suggests an alternative financial system would require “an entirely new way of accounting, a new way of reasoning, and a new way of trusting”. Back, I suspect, to Caritas in Veritate.