Belief, capitalism and hell
I'm coming round to the idea that some of the most significant and consequential religious beliefs of the last 2000 years have been with regard to the morality of charging interest on loans (or usury, in its older sense).As Yanis Varoufakis (an economist, writing about economics) tells the tale of Faustus/Faust: in Marlowe's version, once his twenty-four years are up, Doctor Faustus begs, cries and pleads to be released from his contract with Mephistopheles, but to no avail, and he is carried off to Hell. But in Goethe's somewhat later version, Faust is able to achieve redemption: realising his mistake before his time is up, Faust performs acts of public service and so, when Mephistopheles comes to claim his interest, Gods's angels intervene. Singing "He who strives on and lives to strive / Can earn redemption still," they take Faust to heaven instead.
Varoufakis' point is that "Debt is to market societies what hell is to Christianity: unpleasant but indispensable". Thinking back to the discussion (or posts) on evangelicalism and capitalism, I wonder if there's more the relationship than metaphor, for example reflecting the changes to the ending of Faust or the appeal of universalism.
All three Abrahamic faiths, for a significant part of their histories, have believed it wrong to either pay or receive interest on loans, and banned it, although they had/have different interpretations on the permissibility of lending with interest (eg to people of other faiths).
In Europe, it wasn't so much the Reformation itself that bought about the end of usury doctrine, as Luther (for one) supported the traditional view. The big exception was Calvin, who rejected the idea that usury was disallowed from either a moral or theological viewpoint, and advocated for permitting interest on commercial loans, while forbidding interest on charitable loans to the needy.
Two of the first countries to put this revised doctrine into practice were the Habsburg Netherlands (in 1540 permitting interest payments up to 12%, but only for commercial loans) and England (in 1545 permitting interest payments up to 10% on all loans).
The effect on economic growth of being able to charge interest on debt is profound. You could argue that it's had other profound effects, that it leads to a world in which people are divided into two kinds - creditors and debtors. And that, unchecked, it leads to increasing inequality between the two and, for many people, no escape from debt during their lifetime.
Returning to Faust and hell, it's no accident that the religious concepts of redemption and forgiveness also apply to financial debt. Jubilee 2000, the cancellation of "third-world" debt by the year 2000, had its origins in the biblical idea of the year of Jubilee. Needless to say, debt forgiveness appeals rather more to debtors, while creditors need to be persuaded there's something in it for them…
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They can. Islamic banks lend money at zero interest but charge fees that are pretty much the same in value.
St. Peter don't you call me, I owe my soul to the (credit card gods).
I will follow it with interest.
I'll get me coat ...
Usury may not be the worst crime in the system
I remember a radio talk more that 60 years ago, when an eminent economist argued that inflation of around 0.5. per cent was necessary (and even desirable) to facilitate adjustment to pay differentials. Anything more was not necessary and even dangerous.
Yeah, I don't think that's true, nor do I believe it would be wise for central banks to have a target that low, because it could easily slip into deflation (which would be genuinely bad).
On the other hand, I'm reminded about sayings and verses about mammon: the love of money being the root of all evil; being able to serve God and money. The conflict goes back a long way. Thinking about where, more precisely, the line is, I'm intrigued that Calvin saw a moral and theological distinction between commercial loans and charitable loans (to the needy).
It depends on the sort of economy you're running. For much of the Middle Ages, inflation was effectively zero (interspersed by a few interesting inflationary periods). Then bullion started "arriving" from the New World (as one online source put it). The price we pay for larcenous (rapacious) colonialism is inflationary. And because we're generous like that, the descendants of the colonised that survived get to experience inflation too, and especially debt.
(Meanwhile, one of the interesting aspects to inflation that sticks in my mind is the idea of inflating away debt.)
This thread is about belief. The roots of property are a matter of belief. More prosaically, our modern western ideas of property look to be another of those things that the Romans did for us, and the Church.
We live in a society in which it is widely believed that interest-bearing unsecured credit should be equitably available to all. Credit cards, credit unions and ROSPA's seem to operate with roughly comparable levels of interest. Yet many people still object to using credit on moral, cultural and religious grounds, or it just being a very slippery slope. And few of us would consider charging interest on the money we lend to friends or family, or expect to pay it on the money we borrow from them.
Hmm. I wasn't planning on a lecture. (Maybe I'm still annoyed with Rutger Bregman.) There's an idea or two in here I'm trying to locate.
This is partly why we need inflation; as soon as an economy starts to require debt for necessities like shelter and (higher) education people are put in the position where they have to make decisions under uncertainty and then have to live with 100% of the actual (rather than average) result.
In systems without any kind of dampening, noise tends to accumulate, and in this context it's inflation that provides the dampening function.
As is the root of the word 'credit' (credo)
"The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right, greed works." - Gordon Gekko played by Micheal Douglas (1987)
Just as I posted the Wall Street quote, the thought came to me about the parable of the unrighteous steward, where the manager of the owner's money was called to account for malfeasance. As he is about to loose his job, he decides to go full bore and call in all the owner's debtors, slashing all the debts owed. Luke 16.
What would happen if all of the sudden someone with similar power slashes all of the interest rates on today's credit cards?
As has many theologians since it was first written down, probably even before that.
Today, I am finding I am getting a lot of offers for debt reduction, even cancelation. But they all seem a little fishy as well. I am of the type to take responsibility for what I have taken on. Still, with my recent health episodes and not being able to work for the time being, they are tempting. I think I am going to wait until after I finish my tax return the end of January to see where I am at then.
Indeed. We also have "Abram believed the Lord, and it was credited to him as righteousness."
In significantly reducing the debts, it is unclear whether the steward is just wiping off the interest - I wonder if he would have had the authority to alter the principal. (I also wonder whether he derived his income from the interest that was charged, in a similar manner to tax collectors.) In any event, it seems likely to me that the unrighteousness of the wealth is a reference to the charging of interest on the debts, which is the most direct way of profiting from lending.
I also suggest that considering the relationship between debt, enslavement, sin and forgiveness can shed some light on the parable.
From Education for Justice: From the Bible: Looking at chrisstiles’ earlier argument from a different perspective, as soon as an economy starts to require debt for necessities like food and shelter and heating, with no hope of remission, it is condemning people to hell on earth. And while Christianity and the Church are ready and willing to offer absolution from sin, they don't seem so strongly committed to a concomitant mission to address debt.
Economics isn't engineering, but a large part of the economic system is 'engineered' as a combination of policies on things like interest and tax rates, market regulations and so on. That a particular aspect isn't invariant doesn't mean that one can't reason about the system as a whole - taking that aspect as part of the general context (and dampening, noise, hysteresis etc. are all terms that are common on the technical side of economics).
Yes, in the general sense beyond a certain level inflation is harmful, but equally zero inflation (or even deflation) is harmful to economic growth, and most of us wouldn't want to live the life of the median Medieval peasant.
One of Poverty and Social Exclusion UK's studies looked at standards of living over a period of 30 years to 2012: More generally, the idea that economic growth leads to human flourishing looks more like an article of faith (or belief) to me. And, in the longer term, the answer to the question, "were previous improvements correlation or causality?" doesn't matter, because on a finite planet, economic growth cannot continue indefinitely. We'll only learn when growth finally peters out with the benefit of hindsight.
So, economic growth aside, I think the question is whether zero inflation, or even deflation, is inherently harmful to human flourishing, beyond issues such our expectations taking a while to catch up. (We've had long periods of all-but-zero inflation in the past, so this doesn't seem insurmountable.) But generations after us will be the ones who put this question to the test. It's either that or doubling down on travelling to the stars, which would probably cheer Elon Musk up, or at least give him something else to distract him.
It would be interesting to look at the economics, but my guess is that promoting sustainable mechanisms for writing off debt could do quite a lot for human flourishing.
It's clearly necessary but not sufficient, as the choice of start date - perhaps unintentionally - illustrates. Running the same exercise over the 30 years ending in 1983 would lead to quite a different result.
1983 in the UK was at the start of the Thatcherite experiment after which there was a move to weaken the power of labour and in turn reduce the share of GDP that was going to wages.
That all improvements since medieval times have been unconnected to growth is quite the claim.
The original sin was that of preventing the former colonised countries from gaining state capacity prior to independence, writing off debt alone will not improve situations unless it is accompanied by an ending of the kinds of legislation that perpetuate this situation (in which a lot of missionary and aid work plays a small part).
There's an interesting cultural thing in the South of Papua (which I think spans Indonesian West Papua and PNG) where people in a specific cultural group really value string bags. Which is an unexpected finding for me, but still falls within the broad category of basketry.
The relevance is that apparently these string bags are very much valued by this community, to the extent that they're made and given to other people as a sign of affection. They take a long time and a lot of skill to find the right plants, prepare them and then weave together the bags. The weaving by itself takes more than a month.
At the same time these bags are sold to tourists where there seems to be a deflation in terms of price over time.
It's curious to me that an item can have such cultural value in one context but be worth practically nothing in another.
It depends on how you measure “human flourishing”, and indeed what percentage of the population needs to be flourishing (however defined) for it to count as such. Overall human flourishing doesn’t have to mean every single human is flourishing.
The other thing to consider is how the poorest in our society compare to the poorest in historical societies, rather than to the rest of our society. That is, after all, the true measure of whether their lives have improved. I’m 100% certain that my life now is considerably better than the life someone from my background would have lived at any given point in history.
Heh. You might consider the value of bread and wine in various contexts.
I have thought quite hard about this but no, I don't understand what you mean.
I was taught that it was "a root" -- i.e. one of the many roots of sin (as opposed to, say, sexual lust, which probably is not brought about by financial avarice), but it is one that can bring about every single type of evil. (Which is debatable to be sure.)
Socialism under totalitarian government was a failed experiment.
I'm prepared to say that market capitalism (which is monopolism in disguise) under democratic rule is also showing its fragility. It can't help but veer towards totalitarianism because monopolists can't be content with owning all the stuff, they have to own the marketplace of ideas and the thoughts in your head as well.
We saw that market capitalism under totalitarian government was a no-go (hello Herr Schickelgruber I'm looking at you).
It seems to me that's what's left is economic socialism under democratic rule which is very difficult to maintain but seems to me to be the best way forward. Not ideal. But seems to be the least of all the evils we have experimented with,
AFF
My understanding is that part of the idea of human flourishing is to get away from these kinds of assessments of human existence (ie in terms of measurements and percentiles). For example, From a Christian perspective, flourishing is an important part of Jesus' message. In the natural world, fruit is the result of a healthy plant producing what it was designed to produce. A tree is flourishing if it bears good, healthy fruit. An orchard is flourishing if the trees in it are flourishing.
Likewise, the idea that population decline is inherently negative also needs to be challenged. The trouble is, the benefits of population decline (reduction in resource usage, positive climate change) come in the medium term, whereas the downsides (increased numbers in the post-working-age population; fewer of working age to support them) happen in the short term and therefore tend to be focused on by politicians whose elected terms are also short. Population reduction is the single most beneficial goal for the planet.
We urgently need to plan for alternative futures not based on perpetual economic growth. But I'm not holding my breath.
The concept of 'designed to produce' is an interesting one; but ISTM that if it's not coupled to some assessment of the human condition, then it would lead to a rather fatalistic view of providence.
For large swathes of history a large percentage of humanity has lived under conditions of oppression, and in most cases it was the improvement in material conditions - and the knock on impacts on society that led to more 'flourishing'.
[I'm don't think that Wikipedia page is particularly helpful, as it is mostly anchored in positive psychology]
There are a dwindling number of societies in the world that have seen little change since mediæval times, and seem to have been fairly unbothered by their lack of growth and progress. Or, at least, seem to have been unbothered until they came into contact with societies like ours, which had done all the growing and progressing, and who then proceeded to tell them about all the wonderful things that they'd been missing out on.
Some of those societies lived to tell the tale. And some of these societies seem to be the same as the ones (represented at successive COPs) who appear to be quite annoyed at the effect that all the growth and progress has had on the environment that they depend on. Or maybe they should just continue to be grateful for all the benefits that growth and progress have bought them and their societies, even if their societies have to relocate to other parts of the world to enjoy them.
In relation to debt, it was the indebted in our own countries who I primarily had in mind. But in relation to post-colonialism, I think the following links about what people in Zimbabwe think about debt are still pertinent. The context of that paragraph was still “from the perspective of Christianity”.
Sorry, chrisstiles, I'm afraid this argument makes me wince. I understand there to be quite a lot of oppression involved before, during and after, the dramatic economic (ie capitalist) growth that is pretty integral to the "improvement in material conditions" experienced by many societies (from early-modern times onward).
But as I alluded to above, so what? I think people are increasingly more interested in (and more invested in) what's going to happen over the next 20, 50, 500, 1000 years. We already have an idea of the price we (and others) have paid for all the growth and progress that have got us to where we are today.
I think it includes a fair amount of salient information, but I agree that it could benefit from being re-anchored / re-ordered.
Scholars of colonialism and post-colonial theory have long seen seen the current indebtedness as downstream and derivative of colonialism and de-development, and it was from them that I was taking my cue.
It's a rather incomplete one stripped of context though, unless you want to argue that the grinding poverty in historical societies was 'natural', which seems to owe more to 'All things bright and beautiful'.
I'm happy to do a 'Victims of capitalism memorial' and talk about how growth was done and its proceeds were shared out. I took those kinds of critiques as read given the earlier lauding of the high point of Fordism - the product of a much more sexist and racist society and built in large part on exploitation of the developing world.