The Market

October 9, 2008

The Templeton Foundation has published a number of scholars and politicians from around the world asking whether the free market corrodes moral character. (www.templeton.org/market) Many of the answers are worth reading but I was surprised given the religious interests of John Templeton that no theologians were included in what is a theological question at one level. A few years ago the retired Bishop of Durham, David Jenkins published a book that I have found helpful called Market Whys & Human Wherefores: Thinking Again About markets, Politics and People (Cassell, 2000). In it he does a number of things first examining the language of faith and belief of the proponents of free markets suggesting that all too often talk of the markets reach the level of idolatry as proponents talk of Adam Smith’s “Invisible Hand’ and the free (meaning largely deregulated) markets as being ‘the only way’. He calls the following ‘the Gospel According to Economics:

God may not be in his heaven but all is still well with the world. The Market h as taken over and will provide increasing prosperity for rising numbers of the worlds inhabitants. We should not fret too much about poverty or pollution. We certainly should not attempt to regulate financial markets. Indeed we should rejoice at the increasing globalization and sophistication of markets in trade and finance, for this enhances their capacity to enforce the necessary restraints and disciplines of the market on all and sundry in ‘the real economy’ –governments, the governed, the managers of savings and capital, let alone the users of that capital in industry, commerce and services. This system ensures the greatest possible smoothing out of market volatilities and inefficiencies so maximizing the possibilities of production and consumption. The Market’s discipline is often tough but always benign. Such is the Gospel According to Economics. (p.21)

There is an old joke about the definition of an economist (probably better told about a theologian) being “someone who sees something working in practice and wondering whether it will work in theory.” He cites Professor Krugman (then of MIT, now of Princeton http://web.mit.edu/krugman/www/) pointing out that economists tend to write nuanced work with the discipline of the academy keeping them honest as a opposed to the entrepreneur (or politician) whose interest is in keeping things simple even when professors are doubtful that there are easy answers to be found (p.85). Krugman also stated:

Economists know a lot about how the economy works, and can offer some useful advice on things like how to avoid hyper inflation (for sure) and depression (usually). They can demonstrate to you, if you are willing to hear it, that folk remedies for economic distress like import quotas and price controls are about as useful as medical bleeding. But there is a lot they can’t cure. Above all, they don’t know how to make a poor country rich, or bring back the magic of economic growth when it seems to have gone away.” (p.85)

Those who would claim more for ‘The Market’ than should be claimed often assume that the market is driven by human (read consumer) choices that are essentially predictable and rational. A group of behavioral economists are challenging that however. I have mentioned before Dan Ariely’s book Predictably Irrational: The Hidden Forces That Shape Our Decisions (Harper, 2008) which demonstrates the faulty logic of such arguments. Certainly heavily regulated or completely ‘managed’ economies such as we saw attempted in the former Soviet Union are discredited, but the visions of Milton Friedman and his disciples Ronald Reagan and Lady Thatcher have brought us no closer to Utopia that those of Marx and Lenin (even admitting that I prefer the former economics than the latter).

In the current collapse of world markets, I have little sense that ‘bailouts’, ‘adjustments’ or ‘rescue plans’ will be much more than band-aids. I hope I am wrong and that a world recession is avoidable. I worry that we are going to enjoy too little ‘management’ coming too late and that we are going to have to take our medicine. In the old days the prophets would have attributed such disaster on a massive scale to the judgment of God on human greed and folly. And I agree with them provided hat we do not attribute the manipulation of the economy to God (which I consider as idolatrous as giving divine power to The Market itself,--another entry for another time). These days which are already resulting in some serious adjustments in the lives of many people with many more such adjustment to come (even if the rescue plans and interest rate cuts serve to restore confidence among investors, thus making credit available once again so that we can get back to ‘business as normal’) have the effect of demonstrating how completely interconnected we are to one another throughout the world, how fragile are our alliances where money is concerned (watch the members of the European Union acting independently of each other to some extent), and how The Market invested with divine power as though we have nothing much to do with it is a capricious God to which we have all too often sold our souls. In the Church we talk of God who founding economic principles are concern for those most vulnerable in society (the widow, the stranger, the orphan and so on) and who calls us to recognize what is of true and ultimate worth, revealing our folly and granting grace for us to move toward right relationship with God, one another and all of creation. Troubled times lead some people to look to God for a fix to the trouble. God looks to us to remember what matters and adjust our lives. It is time to seek the true community of faith in God’s economy taught (sometimes well and sometimes badly) and lived (sometimes well and sometimes badly) among those who follow Jesus, the Savior.