J. Barkley Rosser, Jr.
Presented February 1, 2009
Economics as a Faith System
- Economics is derived from moral philosophy. This is how St. Thomas Aquinas viewed in the 1200s when he introduced Aristotle’s economic analysis into Roman Catholic Church doctrine in a society dominated by the Church. Aquinas reconciled the Church with Aristotle and his golden mean, a view of compromise as good in a complicated world in contrast with the purism and extremism of Platonic idealism that had long been acceptable to the Church. Later, Adam Smith, the father of classical political economy in the 1700s, who wrote The Wealth of Nations, also wrote The Theory of Moral Sentiments. He was a professor of moral philosophy at the University of Glasgow, following in this tradition. It was only in the early 19th century that the first professor of political economy was appointed in Britain, Thomas Robert Malthus of the famous population doctrine, and he was an ordained Anglican minister. As religion began to give way more to science in the late 19th century, economics emerged from political economy and attracted people from the clerical classes who sought to “do good for society.” In the US, this manifested itself with many economists coming out of the Christian Social Gospel movement that would become allied with the Progressive Movement. Even now, many who become economists have at some level a motive to “do good for society,” whatever their views.
- A second aspect of this is how different schools of economic thought can come to be viewed as almost theological sytems. This argument is developed in the 2002 book by Robert H. Nelson, Economics as Religion: From Samuelson to Chicago and Beyond. He describes the evolution of views about economics from a more Keynesian perspective allowing for government intervention in the economy to help stabilize it and help the poor, as supported after World War II by Paul Samuelson, to a much more pro-free market ideology/theology that became strong at the University of Chicago in the 1960s under the leadership of Milton Friedman. Nelson claims that the rise of the Chicago School against the Keynes/Samuelson view was like the Protestant Reformation against Catholicism, which may be overdoing it. But the ferocity of current debates over the fiscal stimulus proposed by President Obama remind us that for many these debates are about matters of belief: does the market work or not? Is it efficient or not? Will a fiscal stimulus just waste money or it will it do some good? Of course we can see how things go in reality, the scientific side of economics, but often it is hard to tell how things work out, and different economists will read the tea leaves in ways that favor and reinforce their beliefs, their theology. A final example of how an economic ideology can function as religion is that of Marxism as it worked in the socialist/communist world, drawing on an analysis due to Bertrand Russell. He identified parallels between the Christian Church and the Marx-inspired Communist Party. So, Yahweh (God) equals Dialectical Materialism (the motive force of history), the Messiah equals Karl Marx, The Second Coming equals the Socialist Revolution, the Saved are the Proletariat (the working class), The Church equals the Communist Party, Damnation to Hell equals the Expropriation of the Capitalists, and The Millennium equals the Socialist Commonwealth.
The Economy Itself as a Faith System
- The economy itself is a faith system because it cannot function without people believing in each other, or at least believing that others will believe certain things and act in certain ways. This is so profoundly woven into the economy, and indeed society, that we rarely think about it. We obey traffic conventions and expect that people will stop at red lights when we go through a green one. We write put up credit card numbers on the internet to buy things, or accept pieces of paper with funny writing on them for goods and services because we believe that others will take it from us for these also. We assume that banks and financial systems and the IRS and our employers when they deduct taxes from our paychecks are all behaving in a proper and reasonable way. And in our places of work, most of us trust and rely on others in order to get things done. At a broad level, what is involved here is what some have called “social capital,” which is really a sort of generalized trust in others, and which Robert Putnam in his Bowling Alone from 2000 sees as arising from extended engagement and involvement in civic activities and groups. It has indeed now been shown by economists that societies with higher levels of such generalized trust tend to perform better, and it is easy to see why. However, the very functioning of our economy and society depend on basic levels of trust that we take for granted most of the time.
- Which brings us to the current crisis, which above all is a breakdown of trust in the financial and monetary system. This breakdown has in some sense come from an excess of trust, a belief in the self-fulfilling prophecies of speculative bubbles, that housing prices will go up because we all believe that they will go up, and other things as well. This belief itself undermines the necessary cautions that should normally be practiced and allowed for the spread of unreliable financial instruments such as subprime mortgages and exotic derivatives based on them. When finally the bubble burst and the illusion of faith and trust were broken, this pyramid of financial instruments came crashing down. We are still dealing with the ongoing results of this collapse, and we face the problem that FDR warned us of, fearing fear itself. Overcoming this will involve an ultimate and eventual renewal and reubuilding of fath and trust in the system and each other, but clearly this will take a long time and a lot of effort.