God and the Free-Market Economy
As the rising tide anticipated by free-market economics fails to materialize long term for more and more of us—in spite of the claims that the economy goes in cycles and that there will be ups and downs—the question is: What gives us hope, and what keeps us going when things do not go as anticipated? This question, part of the logic of downturn, ties together not only those who are down on their luck in the economy at one point or another, but most people who work for a living, not only blue collar but more and more white collar as well, including large numbers of small-business people. It is the appropriate question to ask at the beginning of an exploration dealing with our images of God.
What gives us hope is an important part of what keeps us going, particularly in the face of adversity. Hope is tied to images of what is ultimate and on which we can depend. In this hope, we find another area of overlap of theological and economic images. The question of what gives us hope is at the heart of all other questions; it tells us more than many other questions which are commonly raised in either theology or economics. Asking this question in situations where things do not go as anticipated helps filter out a certain self-congratulatory undercurrent that tends to infiltrate even descriptive statements and seemingly objective claims. Considering questions of hope and motivation in light of these crises pushes beyond superficial descriptions of economic and theological processes and urges us toward investigations of deeper levels of reality. The intersections of theology and economics at the core of this project are not artificial. While they are in place all the time, these intersections are intensified in times of pressure when things do not go as anticipated.
In Christian theology, the question of what gives us hope is tied to specific images of God. These images are not always fully explicit—and often the most influential images are the ones that are least visible. Nevertheless, Christians are able to name some of the key images of the divine to which they subscribe. In economic theory, on the other hand, it is less obvious where hope is grounded. Yet economics is not without sources of hope either, as we shall see. In this chapter, I will elaborate how economic hope takes shapes similar to Christian hope in the United States. The parallels and intersections of theology with other areas of public life, including economics, are perhaps more visible in the United States than in other economically privileged countries. Here, religious discourse continues to play an important role in almost all areas of life. It is common, for instance, for the presidents of the nation to make public references to God. Devotions and public prayers in the White House have remained a fixture under all recent presidents. And while prayer and devotion have come under scrutiny in certain areas—most visibly perhaps in restrictions on prayers in public schools—in the business world prayer and devotion seem to have a stronger foothold than in many other areas of public life. Countless organizations of businesspeople are dedicated to religious purposes, seeking to link together God and success in business.1
Even most of the Christian churches tend to go along with this trend to link God and economic success. Although not all preach the so-called Gospel of Prosperity, which proclaims that God and the Christian faith guarantee economic success, very few churches see the need to question the intricate relation of faith and economics. While the principle of the separation of church and state is commonly noted—even though it is not necessarily realized—there is little concern for similar distinctions when it comes to the church and economics. And while there has traditionally been some concern for the lack of distinction of faith and politics in U.S. Christianity, for the most part the distinction of faith and economics is not widely recognized as a problem. We will need to investigate the deeper connections which prevent a clear separation of the underlying phenomena of religion, politics, and economics.
A devastating economic crisis like the one that was in full swing at the writing of this book is not just a crisis of the financial sector: it has to do with a long-term crisis of hope. Much of the fallout of this crisis will not be known for years to come, as people are only gradually beginning to realize that they placed their hope in the sorts of things that cannot ultimately endure. At the same time, hope was a powerful engine that helped to drive the economic successes of the 1990s, some of it lasting into the early years of the twenty-first century. Much of the economic boom that followed the brief economic dip caused by the events of September 11, 2001, has been built on the hopes of middle-class and working-class families. When the Bush administration’s tax cuts to the wealthy failed to stimulate the economy, low interest rates opened the floodgates of borrowing for those less well off. Combined with an increase in subprime mortgages and lax lending practices which included adjustable-rate mortgages, these lower interest rates (together with bubbling property values) lured people into maxing out their credit. The stock market played a role in raising hopes as well, as it went from one boom to the next, with only a few busts in between. In these and other ways, hope was generated that the American Dream might be just around the corner. Yet this hope is increasingly failing for more and more people, as both the housing and stock-market bubbles are deflating and as the economy, as a whole, has experienced the most severe crash since the Great Depression.
Despite the fact that this hope in the market was tied to some actual economic developments, it had the features of an unhealthy utopianism. Nevertheless, the effects of this unhealthy utopian hope for the American Dream were real enough, as it made cash flow for a while and supported what is often decried as “consumerism” (a term that has its own problems, as we will see in the next chapter). For a while, the effects of this utopian hope allowed even those who were not so well off financially to live like those who were better off, as they were able to borrow more and more money. Adjustable-rate mortgages were particularly insidious in this regard, as they started with lower rates that were initially affordable. But when rates increased substantially after a few years, the hope that was put in rising housing values and personal economic improvement had often failed to materialize, and so many of the homes bought with these mortgages had to be foreclosed. Home-equity loans added another burden. At the basis of it all was an unhealthy utopian hope for the future, the sort of hope that could not be sustained because it was not rooted in what was actually going on in the real world—upon which economics and theology purport to reflect. This sort of unhealthy utopian hope is most pernicious when consumption and the growth of capital are disconnected from labor and production.
Using slightly different terminology, one might say that this latest economic boom was built on faith in a transcendent reality that was not able to deliver. This sort of faith is closely connected to unhealthy utopian hope because it directs attention away from real-life issues—in economics it directs attention away from what happens in production and labor, the basis of the economy; in religion, it directs attention away from the struggles and tensions of life, so that the divine itself becomes a bubble. Yet the more this unhealthy faith is challenged by real events, the greater the defensiveness of those who consider themselves true believers. As a result, those who question this faith are seen as the worst enemies of all, because they touch on the shaky foundations of the system. They are, therefore, seen as the ones who will surely not enter the promised land or partake of heavenly bliss, whatever that may look like.
The good news is, however, that this unhealthy hope is not the only option; hope and faith can be based on more solid grounds. And it is these grounds that we will have to explore in the remainder of the book, after we gain more clarity about unhealthy hope and the sort of faith that keeps leading us into one economic crisis after another. This sort of faith remains a major obstacle to any real future alternative.
When it comes to the relation of religion and economics, the most prominent images of God in the United States can be found in the so-called Gospel of Prosperity, which has been on the rise during the last two or three decades. The statement, “God blesses prosperity, and God wants to make his followers successful and wealthy,” is the message preached by the prophets of prosperity. The divine blessings expected are often spelled out concretely: larger cars, larger houses, boats, and bigger paychecks and bank accounts are only the highlights of a much longer list. Even if the requests are not so big and less centered on luxury items, the hope of the adherents of the Gospel of Prosperity is always for more success and prosperity in life, which are seen as signs of God’s blessings for faithful individuals. Prosperity for the community, if it is an issue at all, will come through the blessing of individual community members who make their way up in the system. The bestseller The Prayer of Jabez, authored by Bruce Wilkinson, incorporates the various elements of this theology. It is based on an obscure Old Testament passage in 1 Chron 4:10: “Jabez called on the God of Israel saying, ‘Oh that you would bless me and enlarge my border, and that Your hand might be with me, and that you would keep me from hurt and harm!’ And God granted what he asked.” Wilkinson encourages Christians to invoke this prayer for themselves on a daily basis: “I challenge you to make the Jabez prayer for blessing part of the daily fabric of your life. To do that, I encourage you to follow unwaveringly the plan outlined here for the next thirty days. By the end of that time, you’ll be noticing significant changes in your life, and the prayer will be on its way to becoming a treasured, lifelong habit.” The key, according to Wilkinson, is not just to know about this prayer but to believe it: “It’s only what you believe will happen and therefore do next, that will release God’s power for you.”2 This sort of success is not seen as limited to people’s religious lives, and so the website of Wilkinson has a link titled, “Enlarge the boundaries of your business,” right under the quotation of the prayer from the Bible.3 This message is expounded in various forms by almost all television preachers. It is also one of the staples of many megachurches and many churches in the Pentecostal tradition.
The Gospel of Prosperity has often raised eyebrows not only with critics of religion but also with adherents of mainline Christianity. “How can good Methodists, Episcopalians, Presbyterians, and Lutherans believe that sort of thing?” was the incredulous question raised by journalist Jeff Chu in a phone interview. One of the authors of a report on the Gospel of Prosperity in Time magazine in September of 2006, Chu sought to draw a clear line between mainline Christianity and the Gospel of Prosperity.4 My response to Chu did not make it into the article, probably because it did not fit this basic effort to draw the line. While mainline Christianity may not preach the Gospel of Prosperity as blatantly as other traditions, I told Chu, we share similar theological presuppositions. Both mainline Christianity and the Gospel of Prosperity tend to take for granted, for instance, that God is to be found at the top, with the wealthy, the successful, and the powerful. This is what most Christians assume implicitly, and this is what many seem to hear when they follow along in the liturgy and chant: “Holy, holy, holy Lord, God of power and might.” My theological statement, however, was not enough for Chu, and so I had to come up with further evidence. Even a cursory glance at the leadership of the church supports my point: the laypersons who serve on the most influential boards and committees of a church are commonly the ones who enjoy relative levels of power and wealth in the community. This is not just for the more obvious pragmatic reasons, like, for instance, the expectation that members of a board of trustees will donate more money to an institution that they help govern; there is an underlying theological rationale that is of more interest here. If God is envisioned as being on top, those who are closer to the top are more like God than others. And since the question of what “being on top” means is never explicitly discussed, “being on top” is defined by default—yet very effectively—by the top echelons of society.
This logic is also reflected in the so-called outreach programs of many mainline churches: when churches reach out to others through social programs, the implicit hope and expectation is often that these others will be provided with the opportunity to become more like their benefactors, who consider themselves to be closer to God not just because they are members of the church but also because they are somewhat closer to the top of society (no matter how far from the upper classes they might be). The invitation to others in need is often to better themselves, to be “uplifted” in various ways, and to share to some degree in the success of their benefactors. Similar processes are also at work inside the church itself: for instance, when certain members are afforded the opportunity to “work their way up” into the ranks of leadership. To be sure, the problem here does not primarily have to do with the personalities of people who seek to help and to do the right thing, but with an implicit theological logic that operates mostly below the surface, according to which God and success in life are closely related.
There is a close connection between these explicit and implicit hopes and what happens when economists, explicitly or implicitly, rely on Adam Smith’s notion of the “invisible hand of the market,” a quasi-theological concept which symbolizes the force that guarantees economic prosperity and success. According to Smith, a merchant who only intends his own advantage is “led by an invisible hand to promote an end which was no part of his intention.” Moreover, “by pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it.”5 It is the invisible hand of the market, which, in miraculous fashion, turns self-interest of individuals into the common interest of the community. At first sight, this reference to a transcendent factor like the invisible hand of the market might look like a theological leftover of outdated worldviews inherited by Smith, which is no longer relevant today. This is, however, not the case, as this factor remains the foundation of contemporary free-market economics; certain quasi-theological assumptions are part of what is going on in economics even today. Whether there is a stated belief in transcendence or not does not matter. What matters is that the free-market economy continues to count on the existence of certain beneficial powers inherent in the market that promote economic prosperity and success. This can be seen, for instance, in the belief in the self-regulating powers of the free market and the resulting rejection of any kind of corrective intervention, whether by government or by other organizations like those of labor. This belief in the self-regulating powers of the free market rests squarely on the assumption of a transcendent factor. Faith in a regulating invisible hand, as it were, makes efforts to stage corrective interventions in the market appear like unfaithfulness or even blasphemy. It is the principle of the invisible hand of the market, which guarantees that human self interest—considered to be one of the strongest sources of energy of the free market—is transformed into common interest, thus benefitting the community as a whole. This does not necessarily have to be called a transcendent factor or an invisible hand—what matters is the common and unfaltering conviction that this is the way the world works. What is most telling is that no alternative vision is allowed—this one point is not negotiable—and anyone who dares to question this assumption risks being discredited by the guild, which amounts to a form of excommunication.
This logic of the invisible hand, first captured in its official form by Smith but maintained in less explicit forms even today, has far-reaching implications and pushes beyond the theological logic represented by mainline Christianity. Since we must have complete faith in the market to create the common good out of self-interested acts, it is important that people act exclusively according to their self-interest. Any other way of acting would be detrimental, and those who refuse to follow their self-interest in order to pursue the common good are seen as doing more harm than good: “I have never known much good done by those who affected to trade for the public good,” states Smith. Fortunately, he continues, “it is an affectation … not very common among merchants, and very few words need be employed in dissuading them from it.”6 In his Theory of Moral Sentiments, Smith goes even further, noting that it is the the natural selfishness, rapacity, and convenience of the wealthy that puts the invisible hand to work and, thus, results in the common good: “The rich only select from the heap (of the harvest) what is most precious and agreeable. They consume little more than the poor; and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements. They are led by an invisible hand to make nearly the same distribution of the necessaries of life which would have been made had the earth been divided into equal portions among all its inhabitants.”7 Smith continues: “When providence divided the earth among a few lordly masters, it neither forgot nor abandoned those who seemed to have been left out in the partition.… In what constitutes the real happiness of human life, they are in no respect inferior to those who would seem so much above them.”8 While there have always been some who were inclined to validate Smith’s argument that the wealthy invariably contribute to the benefit of the poor, the conclusion of the paragraph gives us a hint at how little sense this must have made even in Smith’s own day, at least to the common people: “The beggar, who suns himself by the side of the highway, possesses that security which kings are fighting for.”9 To be sure, there are simply not that many sunny days on which a beggar could sun himself in England, and what happens when it rains? At this point, the logic of downturn has caught up with us, and it should be clear how little awareness Smith had of what was really going on at the bottom of his own society. While the differences between the rich and the poor may not have been as great in Smith’s day as now, and while it was not possible to hoard extraordinarily large sums of money in stock or other virtual forms of wealth then, Smith could have taken a clue from the plight of those who obviously did not benefit from his system—like beggars, child laborers, and the majority of factory workers. What sneaks in through the back door, of course, is not just the belief in the free market but also the God-givenness of private property, an issue to which we will come back in a subsequent chapter.
In any case, Smith trusts that it is the way of providence to care even for those who are endowed with less and who do not belong to the small group which was chosen to own the earth. As one of Smith’s interpreters observes, Smith’s rather negative view of humanity is balanced by his optimistic view of the world, since nature makes sure that justice is established.10 Here, we begin to understand that the theory of the free market only works because it touches some sort of transcendent reality. Of course, this transcendent entity does not necessarily have to be called “God”; one might also call it the “nature of the world”11 or the “order of things,” or one might call it that “which keeps the world together at its core.”12 In this context, human intervention can only be harmful, especially if it dares to second-guess providence, that is, the invisible hand of the market. Worse yet is organized human intervention. For Smith, the biggest threat was interference by the state, and, for contemporary proponents of the free market, organized labor has become an additional threat that they feel needs to be eliminated at all cost. The union-busting efforts and the general discouragement of the organization of labor which have increased exponentially in recent decades can now be understood better in a theological context. We are, here, dealing with nothing less than a holy war, based on ultimate principles. This is surprising at first sight, because the philosophical argument of Smith seems quite dated in terms of the history of philosophy; nevertheless, it parallels developments in religious studies where, despite significant progress in theology, some of Smith’s arguments and the quest to define what is “natural” and true without variation still have some currency as well. The interesting question is, of course, whether this transcendent reality is reliable, or whether it is more like the unhealthy utopian hope in the growth of the market which has let us down.
On this backdrop, the freedom of the market takes on the form of a new creed,13 although it is for the most part not recognized and addressed as such. It is simply seen as an objective description of the nature of the world and of human nature, always and everywhere. Nevertheless, we are dealing with a form of theology here which is so strong that it ultimately transcends the realm of the purely economic and shapes all other areas of life. No wonder that the principles of the free market have more and more become the principles of life as a whole.14 The economic order of the free market is, thus, turned into the blueprint for the order of society. Based on this blueprint, even government is supposed to receive its marching orders from the logic of the market, as its main task is to create the framework within which the market can continue to operate freely even under the most adverse conditions. To paraphrase a well-known bumper sticker: “The freedom of the market is not free.” Enemies are all those who seek to interrupt this freedom—whether they are social reformers, organized citizens or workers, foreign nations that seek to impose restrictions on trade relations with our industries, or terrorists. Government is supposed to protect the market against all these challenges. No wonder that this position has been called “market fundamentalism” (see above, chapter 1).15 This conflation of economics and theology is what economist Duncan Foley has called “Adam’s fallacy.” Foley identifies two related fallacies of economics in the tradition of Adam Smith. One is a logical one: neither Smith nor anyone else has been able to demonstrate exactly how private selfishness turns into public altruism, and so this claim is ultimately faith-based. The other one is psychological, and “requires a strategy of wholesale denial of the real consequences of capitalist development.”16
The basic problem of modern economics in terms of religion can now be seen in a new perspective. The problem is not secularization—as is often assumed—but a kind of hidden religiosity that promotes the worship of the gods of the free market. Brazilian theologian Jung Mo Sung identifies the core of this religiosity in the promise to achieve the impossible, namely an equilibrium in which all needs and desires are completely satisfied.17 Hugo Assmann and Franz Hinkelammert agree: such trust in the function of the market as coordinating private initiative and self-interest for the common good can only be considered faith in a providential deity.18 The work of this deity is presupposed to such a degree and with such confidence, it seems, that it never even needs to be named. This argument does not imply, however, that mainline economic theory must be seen as monolithic. Within the mainline, there are different schools of economics at work, just like there are different schools of mainline theology. Yet there are also commonalities and family resemblances. In this case, it is the belief in the invisible hand of the free market that is held both by Keynesians and their rivals, the followers of the Chicago School of Economics, as well as many other economists. This belief in the invisible hand of the free market might be considered as the element that makes mainline economics mainline, just like a common belief in “God at the top” is what makes mainline theology mainline—no matter whether it shapes up in liberal or conservative forms. And since in both economics and theology few people are aware of the alternatives, the dominant mode is tremendously influential despite some internal diversity.
From the perspective of downturn, however, there is another aspect that has not yet been considered and that points in the direction of a real alternative. The market is not just based on the exploits of capital, but also on the productive capacity of labor. What is neglected in the dominant vision of the market and its invisible hand is that its lifeblood—capital—is produced through labor: by siphoning off the economic surplus produced by labor, as it were. Unless labor is recognized and honored for its contribution to the economy, wealth will continue to flow up to such a degree that “trickling down” is hardly an option. We will come back to this topic in the final chapter.
Despite experiences of severe downturn, hope in the invisible hand of the market does not yet seem to have suffered great losses. This is perhaps understandable because it is the necessary hope of anyone who has a mortgage or who keeps investing in a 401(k) retirement plan, and whose personal future depends on these things. In order to believe in the continued success of the market in a situation where downturn is becoming the rule rather than the exception, one has to have an ever-stronger faith in transcendent realities. At the same time, however, faith in the transcendence of the market will become more and more difficult to maintain when faced with the ongoing lack of a rising tide. At first sight, this might be akin to the hope against hope of which the Apostle Paul talks in his letter to the Christians in Rome (Rom 4:18). But the two contexts are on opposite ends of the spectrum. Paul’s hope against hope sought to point out a viable alternative in a situation where the dominant hope of the Roman Empire did not allow for alternatives; the hope in the free market, on the other hand, is the dominant hope on which the system rests, and it is this hope that does not allow for alternatives. In our own search for alternatives, it is precisely this dominant hope that will have to be tested.
Not a theologian, but a literary scholar made the following statement in the midst of the recession, during the early days of the Obama presidency:
The high doctrine of Economic Correctness of the Reagan-Bush-Clinton-Bush years is as bankrupt as Soviet Communism. It is all but officially dead. Why then are the president’s economic advisers paid to prop it up and apply a sickly rouge and embalm it and set it in motion with galvanic shocks to simulate life? All the money proposed to be donated to bankers and brokerage houses to keep their enterprise private is a proof of religious belief. The hundreds of billions to indemnify a class of private owners represent a sacrifice to our own God that failed—an idol we cannot surrender the habit of adoring. And the plucking of state subsidy out of taxpayer pockets to ensure that nothing is state-owned: a form of savage prayer or burnt offering.19
This is strong language, but the question that is raised is hard to dismiss. If the free market, increasingly deregulated and left to its own devices, has experienced substantial rates of failure, why maintain such fervent faith in it, and why try to shore it up once again?
When talking about the transcendence or even the divinity of the market, there are, of course, some fundamental distinctions that must be made. There is a difference, for example, between envisioning the order of the free market as one that was “made” or as one that is “spontaneous.” This is the way in which Friedrich von Hayek was presented the issue.20 According to this distinction, those who assume that the order of the market was made assume a transcendent maker; this is probably a smaller group, although it should not be underestimated. Those who assume that there is a spontaneous order, on the other hand, can afford to leave the question about a transcendent being open; there is probably a larger group of economists in this camp. Nevertheless, the similarities may be greater than the differences, as both perspectives trust in the benevolence of the market and maintain the optimistic hope that it will keep developing in the right direction, despite occasional downturns. As economist Sheila Dow points out, such presuppositions “can only be regarded as an article of faith,” even when (or perhaps especially when) evolutionary schemes are embraced and the “crutch of a mechanistic system to represent order” is given up.21
The problem with this sort of transcendence, however, is not unlike the problem with a particular sort of transcendence that is promoted by certain Christian groups, namely “otherwordliness.” This does not mean that this sort of transcendence is focused on life after death, but it means that we are dealing with a sort of transcendence that does not pay attention to what is really going on here and now. As a result, whatever is considered to be transcendent is declared absolute and must be accepted without question. To be sure, this is not the sort of transcendence that Christians believe is manifest in the incarnation of the divine in Jesus Christ: here, transcendence has to do not with otherwordliness but with transcending a particular form of immanence that is determined by the status quo (e.g., the Roman Empire, establishment religion) in order to embrace a different form of immanence (in a stable, on the margins, with the “least of these”).22 In this sense, the incarnation of Jesus Christ is closely related to the logic of downturn. The transcendence of otherworldiness, on the other hand, is based on another logic. It often finds its place with those who do not have to worry about taking care of the everyday realities of the body because they have some means, and it is those groups that make sure it gets proclaimed to others. Economist Warren J. Samuels points out the problem with this sort of otherworldliness in economic thought and the tensions that it creates: “The supreme irony resident within economics is that we tend to adopt an official positivist methodology which presumes that the economy is independent and transcendental to man … while at the same time we seek policy implications and recommendations … which presume that the economy is not independent and transcendental.” Unfortunately, these tensions are often overlooked, and Samuels’s conclusion that “it would be better if this particular process were out in the open” is relevant both to theology and economics.23
If things are not “out in the open,” however, and if the core of economics is not seen as transcendent, its pronouncements gain power exponentially. In the words of another economist, “the belief that economic theory is sound, and that it alone considers ‘the big picture’, is the major reason why economics has gained such an ascendancy over public policy.”24 Unlike in the 1980s, during the rule of British Prime Minister Margaret Thatcher and U.S. President Ronald Reagan, we do not even need to be told anymore that there is no alternative to capitalism. We simply believe it, unaware of the transcendent status that this particular form of economics has assumed. As a result, we do not raise questions—even if our livelihoods, our jobs, and our personal economic futures are at stake.
If the economy of the free market, thus, assumes a transcendent status, the only thing that remains to be debated is how best to serve it. One of the biggest battles between Republicans and Democrats, which has raged for decades, is precisely the debate on this issue. Republicans, despite divisions and demoralization after the 2008 elections, and despite the fact that their preferred economic policies have not worked, are rallying around the key issue that they continue to hold in common: massive tax cuts to the wealthy and to those who control production. The Democrats, on the other hand, prefer other forms of economic stimulus, which have traditionally been more in sync with the needs of the common people, by seeking to infuse economic support from below—assuming that this support eventually will make its way up. The Obama administration has developed yet another variation on this theme by infusing money into the big financial institutions and other large-scale enterprises in order to create economic stability and ultimately growth. In all cases, the question is the same, however: How do our actions best serve and service the free market?
Holding on to the transcendence of the market, which is supposed to fix things if correctly serviced, President Barack Obama is pushing back behind the sort of mainline economics favored since President Reagan came to office, which favors incentives to big business and the wealthy, in the belief that tax cuts and other means of support to those who control production will stimulate the market. There are several alternative options, one of them being the large-scale bailout of troubled corporations that began in the final months of the Bush administration. Another alternative, which is also endorsed by Obama to a somewhat lesser degree, was presented initially by John Maynard Keynes and pursued between the time of World War II and the Reagan presidency; today, it is supported by economists like Nobel Prize winner Paul Krugman.25 This alternative seeks to create economic stimulus by supporting lower-income groups which can be expected to spend any additional income, since they cannot afford to hoard it like the affluent. Yet this return to Keynes is expected to be only a temporary fix. Krugman, for instance, is adamant that this is an appropriate response to an emergency, which will pass; reforms, he notes in passing, can be discussed at a later time.26 To be sure, none of this has anything to do with socialism, as some of the detractors fear. The objective in either case—whether in Reaganomics, in Keynesianism, or in the bailout of large corporations—is to shore up the free market and to ensure the free flow of capital. In the current situation, Keynesianism and bailouts appear to be necessary in order to prevent the economy from cycling out of bounds and hitting rock bottom, as the last vestiges of Reaganomics implemented by the Bush administration in the form of tax cuts to the wealthy and further deregulation of the market have failed.27 Nevertheless, in neither case is the system required to change fundamentally. Neither do these approaches necessarily require any major corrective actions to the market itself; what little corrective action there is, is aligned with the best interests of the free market, for instance, the cutting of unnecessary excess in CEO salaries.
Even a Keynesian approach, which empowers people at the bottom to a certain degree and, thus, addresses some concerns of the logic of downturn, ultimately affirms the transcendence of the market and does not directly challenge the sorts of imbalances of power that are inherent in the so-called free market. The transcendence of the market is affirmed, therefore, across the board since nothing is allowed to touch on its fundamentals, which are safely stashed away in otherwordly realms. Perhaps the best test of the pervasiveness and depth of faith in the otherwordly transcendence of the free market is whether we can even imagine an alternative. At present, most people in the United States appear to find it easier to imagine the end of the world than the end of capitalism.
Thomas Friedman, celebrating economic globalization in his popular book, The Lexus and the Olive Tree, is a somewhat more enlightened voice in the sea of true believers in the free market. Friedman does not believe in leaving the market completely to its own devices. He points out the fallacy of the Republican Congress in 1994, which did not believe in government support even if it would have made the market more successful and safer: “I heard men and women who insisted that the market alone should rule, and who thought it was enough to be right about the economic imperatives of free trade and globalization, and the rest would take care of itself.”28 Friedman argues that it is not sufficient for the United States as a “benign superpower” to exert itself in support of the free global markets, noting that “the hidden hand of the market will never work without a hidden fist. Markets function and flourish only when property rights are secure and can be enforced.”29 Friedman, while believing in the invisible hand of the market, makes up for a certain lack of faith by adding a little pressure: “With all due respect to Silicon Valley, ideas and technology don’t just win and spread on their own.”30 And with this assumption—an assumption that we have seen more clearly at work during the years of the administration of President George W. Bush than ever before in recent memory—Friedman adds another aspect, namely that “neither the hidden fist nor the hidden hand will work … without also the open hand.” What he envisions by that is “an America ready to use its wealth to pay a little more than others to stabilize the system and lend a more generous helping hand to others to stabilize the system.”31
The images of God implied here deserve attention, as the invisible hand of the market appears to be in need of a little help. Thomas Friedman’s explicit theological reflections on God at the end of his book go in a similar direction when he notes that it is our task to make God present in this world. In this book, the deep faith in the invisible hand of the market that will make everything right entirely without our help no longer comes through, although Friedman desperately seeks to keep the faith.32 Friedman’s position is probably more typical of free-market economists than a position that relies on faith alone. John Perkins’s confessions about his work as an “economic hit man,” for which he was authorized to use any means to get developing nations to accept huge loans that they could not repay in order to gain influence over their economies, shows the range of efforts to spread the reach of the market. Milton Friedman’s endorsement of the “shock doctrine,” according to which people need to experience trauma and terror in order to be converted to the free-market doctrine, which was first applied in the support of the military takeover in Chile in 1973, goes in a similar direction.33
Thomas Frank, in a book provocatively titled One Market Under God, has chronicled the fundamental shifts in economic policy which took place in the 1990s. These shifts are still with us, although in somewhat more hidden form. Politically, this takes us back to the administration of President Bill Clinton and to a time when Americans would not have used words like empire to describe what was going on. The optimistic attitude at the time did lend itself to the assumption that economic power was liberating rather than oppressive. The free market was seen as the ultimate source of democracy and welfare.34 What changed from the 1990s onwards, Frank argues, is that there is now “the general belief among opinion-makers that there is something natural, something divine, something inherently democratic about markets,” and this idea trumps all other ideas to such a degree that it was seen as worthy to be extended over the whole world.35 The mood at that time was, no doubt, that of the “victory of capitalism” in the wake of the collapse of a particular form of state socialism in the Soviet Union and many of its allies. Frank identifies in the 1990s “an intellectual consensus every bit as ironclad as that of the 1950s,” despite postmodern affirmations of difference and ethnic diversity that accompanied it. As a result, “in a manner largely unprecedented in the twentieth century, leaders of American opinion were in basic agreement on the role of business in American life.”36 In recent decades the transcendence of the market has indeed found deep and varied support.
This consensus about the role of the market and of business in American life seems to have outlasted even the fairly substantial political shifts of recent history. With President Obama’s appointments of Timothy Geithner as Treasury Secretary and Lawrence Summers as the director of the National Economic Council, two protégés of Robert Rubin (first director of the National Economic Council and then Treasury Secretary under the Clinton administration), are carrying on the banner of the free market.37 Rubin took a prominent role in deregulating the market in regard to derivatives—tools of financial speculation whose values derive from the values of more common financial tools, like stocks, bonds, and the value of commodities. Key for maintaining hedge funds, derivatives are even further removed from the processes of production than are stocks and bonds.38 Together with Alan Greenspan, who was chairman of the Federal Reserve Board at the time, and with Summers, Rubin opposed the regulation of derivatives, which was suggested by the Commodity Futures Trading Commission (CFTC) in 1997. Rubin’s recommendation was that Congress should take the power of regulating derivatives out of the hands of the CFTC altogether.39 Lawyers for the Treasury Department went even further, arguing that merely discussing new regulations would pose a threat to the derivatives market.40 This argument exposes the faith-based mechanism undergirding the whole situation without acknowledgment: we cannot even afford to critique the market without turning it against us. The slightest insinuation of lack of faith in the free market would be a mistake—a mistake that would almost be as bad as the lack of faith that manifests itself in calling for economic regulations.
Regulations, of course, have been discussed again in the wake of the economic crash of 2008 and 2009, including firmer regulation for derivatives. But Geithner presented the case as if we were dealing mostly with a new problem that did not exist before, without acknowledging the systemic problem: “I believe that our regulatory system failed to adapt to the emergence of new risks,” he commented in a written response.41 It is not surprising that there was broad agreement among representatives from both major political parties that Geithner was the right candidate for the job, although he had to face some embarrassing questions about personal tax evasions at his hearings before the Senate. Republican Senator Charles Grassley noted that Geithner, who worked closely with the Bush administration on financial bailouts as head of the New York Federal Reserve Bank, was “possibly the only man for the job of healing the recession before us and a very fractured economy.”42 Grassley’s response is telling, not only because it shows rare bipartisan support, but because the emphasis clearly is on healing the economy rather than restructuring or changing it. It should also be noted that the economy responded positively to Geithner; with the growing hope that Geithner would be confirmed, the stock market went up on the morning of January 21, 2009. Whatever subsidies were being provided for economic recovery, the goal was to get the markets working again and, thus, to restore faith.43
Despite the fact that this sort of extreme deregulation was at the core of the worst economic crisis since the Great Depression—what collapsed in the housing bubble were precisely the derivatives linked to mortgage-backed securities—deregulation of the market appears to remain an ongoing commitment. Any and all regulations that are discussed in this situation, including the nationalization of banks and other failing ventures, are only seen as temporary measures that will be reversed when things are back on track. The faith in the market to solve most of our problems remains virtually unbroken. Few people represent this faith as clearly as Alan Greenspan himself, who from 1987 to 2006 chaired the Federal Reserve Board, linking the legacies of four presidents (Reagan, Bush senior, Clinton, and Bush junior). Enlightened self-interest of individuals was his credo, based on “a resolute faith that those participating in financial markets would act responsibly,” betting “the health of the nation’s economy to that faith,” as one journalist put it.44 It is interesting that Greenspan was considered to have oracle-like qualities which, according to some observers, made him almost god-like. It is, therefore, not surprising that he was virtually never questioned when he gave presentations to Congress and other lawmakers. Some of the decisions of Greenspan, based on his firm faith in the transactions of the market, are now under scrutiny. But that faith itself, although it belongs in the realm of unhealthy hopes and unfounded otherworldliness, is not being abandoned just yet.
In the midst of the recession, President Obama challenged Wall Street. Distributing $20 billion dollars in corporate bonuses in a faltering economy was “shameful,” he stated. Bonuses were distributed even by corporations that had received bailout money from the government. Nevertheless, even this challenge does not yet amount to a challenge to the system, as Obama made it clear that “there will be time for them to make profit and there will be time for them to get bonuses.”45 While Obama is responding to public outrage over these matters, picking up a theme of his election campaign, he is leaving the door open for the future. We may have to tighten our belts for some time, the message seems to be, but the system itself is not in danger. Not even such moderate appeals, however, resonate with the financial world. “It is a complicated thing,” the Wall Street response was summarized, “to apportion compensation in a bear market. First of all, profits do not stop; they often ebb. Second of all, losses move unequally, so the law of the jungle should still apply: you eat what you can kill.” But can the financial windfall of government bailouts be considered profit? And whose losses are being discussed here? In the same report, a Wall Street lawyer is quoted as saying: “I think bonuses should be looked at on a case by case basis, or you turn into a socialist.”46 Socialism was generally the specter raised in response to Obama’s comments, although socialism has nothing to do with any of this.
The political differentiations of the mainline—Democrat or Republican—matter little in this context. No alternatives seem to exist when it comes to the faith in the free market. Even the bailouts that were certainly not supposed to be necessary according to mainline economic theory, and which smack of the sort of government interference in economics that was frowned upon for three decades, were designed to prop up a market that failed precisely by following its deepest creeds; these bailouts were not designed to challenge the market and its creeds. While in Germany bailouts to banks were offered under the condition that CEO salaries would be restricted, initially no such conditions were leveraged in the United States. And while in Germany there was a discussion as to whether banks should be run and controlled by the government, this topic was broached only much later in the United States. Even the German discussion, however, was interspersed with professions of faith by detractors who stated that government would never be able to run banks as successfully as the private sector. Yet the irony of this faith in the private sector should not be hard to identify in a situation where the private sector had just run the banks into the ground. In the United States, there was also some talk about the nationalization of banks, supported from various sides.47 But any such nationalization was only supposed to be temporary. After the government brought things back to “normal,” the private sector would take over again. At that point, even the faith of the worst doubters would supposedly be restored.
For good reasons, David Sanger in the New York Times called nationalization “the most politically delicate question about the financial bailout.”48 Democrat Nancy Pelosi, the Speaker of the House had this to say: “If we are strengthening [the banks], then the American people would get some of the upside of that strengthening. Some people call that nationalization.” Nevertheless, she also noted: “I’m not talking about total ownership,” adding: “Would we have ever thought we would see the day when we’d be using that terminology? ‘Nationalization of the banks?’ ”49 Hybrid models of ownership have been suggested as an alternative. At present, the government is the biggest shareholder of Bank of America and Citigroup, owning 6 percent and 7.8 percent of these companies’ stocks respectively. Geithner and Summers, the economic leaders of the Obama administration, went on record against nationalization during the Asian financial crisis in the 1990s, stating that “governments make lousy bank managers.”50 One of the problems with the government running the banks, Geithner and Summers argued, is that there will be increased pressure on the government to stop foreclosure or lend money to projects in need; apparently their assumption is that such a sense for the common good could not possibly be expected from private owners. Another model that was discussed briefly was to create a “bad bank,” which would be owned by the government, and whose role would be to assume troubled investments. Sanger sums up what should be obvious: “But in that case, taxpayers might well be the losers: They would have all of the bank’s worst assets and none of their performing loans.”51 Mainline economic efforts to socialize losses and to privatize gains continue full force in this model. The interesting thing to note about Sanger’s statement is the use of the conditional “might”: anyone concluding that taxpayers might not be the losers in this system must maintain strong hope and faith in the free-market system. But is it not exactly this hope and faith, which keep telling us that in the long run everybody will win, that has failed us?
Note also that temporary nationalization is not a form of, but the exact opposite of permanent nationalization: the role of the government in temporary nationalization would be to bail out the banks; to assume the responsibility for bad loans and other financial failures. When the banks are back up to speed, they will be in private hands again. This attitude indicates one of the key problems with faith in this case: it is not guided by evidence but by claims in a transcendent reality that is not required to prove itself, even in the face of evidence that it has failed us and that it will fail us again with great probability. It seems to be this faith, though, that is assumed to be necessary if we want to prosper. Moreover, this faith is not just required of business leaders, but of everyone. Those who are not part of the establishment, but who hope to gain from its exploits, are required to believe more firmly than anyone else.52 Once again: those of us who know that our retirement accounts, our life savings, and, therefore, our future depend on the market feel we have no other choice. Just like the hope of an afterlife after death is often seen to depend on belief in certain religious doctrines, the hope of life after employment—whether permanently in retirement or temporarily through unemployment—seems to depend on belief in certain economic doctrines. Here is where this matter of faith hits home. In this situation, the logic of downturn not only makes us raise deep questions, but requires us to identify and develop alternatives.
One more aspect of the relation of religion and economics needs to be explored at this point. When religious people talk about money, we usually talk about how faith should influence the use of money. Consequently, there are numerous resources on religion and economics that seek to develop the theological lessons for economics. The usual question asked is: What are the implications of faith for economics? The question that is rarely asked is how faith, itself, is influenced by the flow of money. What does money do to how we view the transcendent? What does money do to our images of God, even the ones that we consider to be classical and therefore “safe” because they originated before the advent of capitalism?53 This question is crucial once we have understood that money is not just purchasing power but also social power54—a power that shapes everything. In other words, rather than simply reflecting reality and conforming to it, money increasingly creates its own reality. One example how this happens in the realm of the economy itself is the creation of a bubble, where the values of stocks, for instance, are less and less tied to actual performance.55 Walter Benjamin has observed one aspect of this larger question, wondering how many connections money had to establish with myth before it was able to attract so many mythical elements from Christianity so that, in the end, it was able to construct its own myth.56 We are not able to conduct such a study here, but it seems that capitalism has been quite successful in this matter. The other aspect of the question not addressed by Benjamin is how the capitalist myth is feeding back into Christianity so as to reshape its core images.
Religious communities usually do not give much thought to money as an actor. Theology is even worse when it comes to thinking about the agency of money; the question simply never shows up. Money is thought of as something to be acted upon, but not the other way around. Could a statement along these lines not also be made about economic theory—namely, that even in economic theory money is thought of as something to be acted upon and to be used, but not necessarily as an actor itself? My question here is whether money somehow influences how we think about God, and how we think about what is transcendent and of ultimate value. In order to address this question, we need to take a closer look at religious communities.
Religious communities often tend to assume that they have the answers to the questions of life—economics included—without wondering how they themselves might be part of the problems that underlie these questions. Nevertheless, the assumption that faith is independent from the world in such a way that its answers come straight out of nowhere is hard to maintain, especially when it comes to matters of money and economics. Even our most cherished beliefs are somehow shaped by what is happening around us, especially when what is happening goes so deep and is so all-pervasive as the broader understanding of economics that we are developing here. The image of Christ as Lord, for instance, is commonly shaped by the images of those who are in power at any given time. This does not mean that there are no alternative ways to understand this image—the powers that be are never able to take over completely, as I have shown elsewhere—but theologians need to learn to take into account the gravitational pull of the factors that most determine our lives in order to maintain these alternatives.57 The problem is that these influences mostly work below the surface and, thus, are hardly noticed.
If religious people want to talk about how faith can impact their use of money, they first need to understand how the use of money impacts their faith. “The bottom line tends to drive us,” was a comment that someone made at a United Methodist clergy meeting years ago. Many of us who were present nodded; no one objected. Somehow, most insiders intuitively know the truth of that statement. Most leaders of churches and other organizations understand that the flow of money impacts our operations. The practical consequences are fairly obvious. Deep down, we know that pastors are not free agents, especially in a situation where their local churches pay their salaries and where these churches need to raise certain amounts of money in order to keep their doors open. These insights are currently becoming clearer to those of us who work in academia as well. While our salaries may not be as directly dependent on the good will of donors as are those of pastors, private universities, in particular, still need to raise substantial amounts of money in order to keep their doors open and to thrive.
These practical consequences of the flow of money are not, however, the biggest problem. The bigger, and perhaps more interesting, problem has to do with the things that happen below the surface, in the theological unconscious, of which we are not aware and which we cannot see. What if money were to shape not only our actions and programmatic initiatives, but also our faith and our most cherished images of the divine, without anyone noticing? This is a difficult and painful question to address, especially for religious people who would prefer to see their faith as pristine and pure, but we need to deal with it. Failure to understand the divine jeopardizes everything: Why should Christians bother with church, for instance, if it fails to relate to the Christian God? In other words, a phenomenon like the Gospel of Prosperity, for example, is not only problematic because of its practical consequences for the lives of religious communities. It is problematic because it tends to construct an image of a god that radically differs from the image of the Christian God.
If we perceive the flow of money as a top-down phenomenon, trickling down from those who have most to those who have little, is it surprising that our most common images of God are top-down images? Or, if we understand the flow of money in terms of the image of the rising tide that lifts all boats, is it surprising that we perceive people at the economic top to be closer to God and that, when we care about less fortunate others, our idea is to “lift them up” so that they will move closer to the top? Along the same lines, the ancient confession that “Jesus is Lord” is now commonly interpreted as if Jesus were a successful business leader or a CEO. One book boldly proclaims this parallel in its title, but large numbers of Christians simply presuppose the linkage between Jesus and the powerful by default because they are not aware of any alternatives.58 None of this matches, however, how the four Gospels of the New Testament envision Jesus. In one of his temptations, Jesus explicitly rejects a top-down approach to the world (Matt 4:8–10). In addition, Jesus constantly gets in trouble with those who consider themselves to be the “leaders.” His work might be better understood in terms of what is now commonly called “servant leadership,” due to his insistence on the greatest being the servants (Matt 23:11), but this term is now also used by the Wal-Mart Stores, Inc.59 The real test for notions of servant leadership, whether in the church or in the world of business, is whether they maintain an awareness of Jesus’ critique of power: his idea of servant leaders is not only about leading “from below” but also about challenging leadership “from above.” In Jesus’ theology, not only will the last be the first, the first also will be the last (Matt 20:16). Unless these issues are addressed, the flow of money will continue to determine our images of the divine by default.
Another example of how money shapes our images of God has to do with how Christians envision the work of God in the world. Once again, top-down images come to mind. The classical theist notion of omnipotence, which has no real match in the Bible if perceived as an absolute top-down category, has been revitalized by the top-down flow of money in the free-market economy. In addition, God’s work is often envisioned in terms of a “fix-it” approach, not unlike the current actions of the government intended to bring the free market up to speed again. Such a fix-it approach does not challenge or transform the status quo—it simply restores it. The top-down activity of the divine is expressed perhaps most dramatically in bombing campaigns during war times: not only is the activity of throwing bombs out of airplanes that are worth many millions of dollars envisioned as clean and effective (we are supposed to believe in “surgical strikes,” which do no harm to noncombatants), it can also be seen as approaching the classical idea of omnipotence, as few casualties among the aggressor’s own forces are to be expected; the one who is envisioned as omnipotent in this way acts but is not acted upon. In addition, the airplanes that carry the bombs are so valuable economically that they are piloted by high-ranking officers, who are closer to the top than any other active combatants. These images of God at work from the top down are in stark contrast with images of the Judeo-Christian God, who elects a people enslaved by an ancient empire in Egypt; who accompanies them when they are later exiled by the Babylonian Empire; and who becomes human in Jesus Christ, whose life’s work is in constant tension with the Roman Empire and its vassals, and with the religious establishment that lends supports to these powers.60 Clearly, when the heirs of these ancient traditions confess the power of God today, there are very different ways of doing so.
In our investigation of what money does to the concept of God, we need to take into account that our images of God are not always fully explicit; the most influential images often tend to be the ones that are least visible. The problem that occurs when we fail to look for the deeper roots of these images is what I am calling idealism here. Idealism, in this context, has to do with a failure to examine the links of our mental images to material reality; and, thus, our tendency to take these images at face value, as if they had fallen straight from the sky. Idealism runs its course when it never occurs to us that even our most deeply held and cherished beliefs might be shaped by the flow of power, which in our world is synonymous with the flow of money. That material realities shape ideas is not the problem here; this happens all the time. The problem is that if these mechanisms are not recognized and taken into account, the status quo is affirmed by default and no room can be given to alternatives. Assmann and Hinkelammert are right in noting that behind the abstract notion of “the market” hides real society with all its complexity, and, we might add, the same is true for abstract notions of “the divine.”61
We can now pick up the parallel between religion and economics once again, for there appears to be a parallel between this sort of theological idealism which is not aware of the deeper roots of its faith, and what might be called economic idealism, a notion that seems to be a contradiction in terms at first sight. A slightly different way of framing the issue might be to talk about a parallel between unhistorical theology and unhistorical economics. Like ideal or unhistorical images of God, ideal or unhistorical images of the market are problematic because they fail to attend to the real disparities in the flow of money in the current economy—which are, ultimately, disparities in the flow of power. Nevertheless, this economic idealism usually presents itself as “realistic” and even as “scientific”; a similar fallacy exists in theology, where the academic value of an approach to theology is often mistakenly thought to increase the more considerations of the actual context decrease.
Various alternative economic approaches have pointed out that such abstract reflections are illusory and that, as a result, the notion of the free market that is based on them is problematic. Economic institutionalism, a school of economics based on the work of Thorstein Veblen, notes, for instance, that the market is never a purely formal entity but rather is always already shaped by interests. In this perspective, power structures—related to the evolving distribution of wealth, property rights, and technology—are what ultimately shape the distribution of resources.62 According to economic institutionalism, economic theory is neither universal nor can it be studied in an ahistorical fashion. In a changing world, there is nothing that can be presupposed as absolutely given or natural—not the free market, and not even property rights (an issue to which we will return in the final chapter). In addition, institutionalism understands that the most important relationships in society are relationships of power, and power in this perspective has to do with the myths which enable one group to dominate another.63 One of these myths is the idea of individualism, which we have already discussed. Racism is another one of these powerful myths that are constructed to maintain the status quo. The result is a vicious circle: while the myth keeps people down, their low standard of living is used as further evidence in support of the myth itself.64
Another such myth is the idea of the invisible hand of the market that creates equilibrium, with the result that differentials of power are overlooked. Assuming an invisible hand of the market that is unaffected by anything and cannot be swayed is like assuming an idea of God that is unaffected by anything, which happens to be another feature of classical theism. Yet just like our images of God are shaped by interests and differentials of power, so are our images of the invisible hand of the market shaped by interests and differentials of power. Building hope on either the market or God as abstractions without examining the deeper roots, results in building hope on the mostly invisible powers that shape these terms. This has disastrous consequences for both economics and theology. No wonder that neither an abstract notion of the market nor an abstract notion of God is of much help in a situation of persistent downturn. After all, it is the logic of downturn that reminds us that neither one of these images has really delivered what was promised: unlimited success, a rising tide, or at least some form of trickle down.
In this context, we need to explore alternatives. Since the sort of idealism described here is ahistorical, historical thinking provides an important first step. The old insight applies here: when a conceptual problem cannot be solved on its own terms, it helps to historicize it. As early as the late-nineteenth century, for instance, the limits of the free-market economy were understood by some German economists of the Historical school of economics when they began to analyze the bigger picture. When viewed in light of the historical context, it became clear that free trade was advantageous for the British because their industries were more developed than others and because their interests were protected by the British fleet. For the Germans, on the other hand, free trade was disadvantageous because their industries were less developed than the British ones.65 Yet reflection on the historical context, as such, is not enough. The historical context needs to be analyzed in terms of power, best seen from the underside. In our example, the Germans were able to see what the British could not see precisely because they viewed history from the underside. Even if the British had looked at things from a perspective that considered the historical context, they would most likely still have ended up with a firm conviction in the benefits of the free market. Only a historical analysis from the underside reveals the sorts of tensions that are lost to the mostly top-down idealist point of view. This is not unlike the development of the Judeo-Christian traditions: while the Egyptian pharaoh at the time of Moses must have been convinced that the divine was on his side, the slaves perceived the divine differently. The God who spoke to Moses is tied to a particular history that is often overlooked in favor of his cryptic claim, “I am who I am” (Exod 3:14); this history is that of “the God of Abraham, the God of Isaac, and the God of Jacob” (Exod 3:15), whose history is one of perseverance in the face of hardship and of resistance to the powers that be. Here, another kind of hope emerges that is diametrically opposed to the unhealthy utopian hope we encountered earlier. This hope might be termed “dangerous hope,” because it is historical hope and because it presents a real alternative to the status quo. Those who are afraid of this dangerous historical hope tend to eclipse history in favor of universal statements. No wonder that when standard history is recorded, it usually glances over these dangerous perspectives from below.
The powerful myths of individualism and racism can be deconstructed along the same lines as the myths of an abstract divinity or of an abstract market are deconstructed. Viewed from the logic of downturn, there are no self-made individuals, and there can be no easy equilibrium between individuals because of grave differentials of wealth and power. Furthermore, none of these differentials are natural, in the sense that they have always existed,66 or universal, in the sense that they will always exist. Big landownership, for instance, is not a natural form of existence; rather, it developed because some individuals were able to expropriate what used to belong to others and to take advantage of them. This is an issue whose early history can be already be observed by the times of the Old Testament and against which the prophets in the eighth century BCE and many others protested.67 Racism, too, can be deconstructed when viewed historically. Racial differences between humans have no biological basis; nor are they natural, in the sense that races would have always existed in the way they are viewed today; nor are they universal, in the sense that they will always exist. Racism is a perspective that developed historically at various times when it was convenient to classify human beings according to race. The pernicious racism of European and North American chattel slavery, for instance, is a powerful product of history and has little precedent in earlier views of race; its efforts at biological explanation of racial differences have no scientific merit.
We can now see the deeper problem with the sort of idealism and ahistoricism that we have described: these positions are useful because they cover up real differentials of wealth and power and justify them implicitly. In the words of economist Michael Zweig: “The ahistoricism and individualism of mainstream economics … has a class stand.”68 Individualism is, thus, not just a myth; it is the myth of the ruling class, as it covers up the relations of power that benefit some and not others, and is thus quite effective and powerful. The same is true for the powerful myth of racism: it is a myth that plays into the hands of the ruling class, as it covers up the relations between people who otherwise have a lot in common—like white and black field hands, white and black workers, and so on. The lack of historical perspective points in the same direction: it supports the powers that be. Yet even if history is done in universal fashion, the problem is not resolved. Universalism has its own history, which is related to the rise of the modern ruling class; its purpose is yet another cover-up of who benefits from the status quo and who does not. From a historical perspective that embraces alternative perspectives and perspectives from below, it becomes clear that the universal perspective does not exist; to wit, not even the individualism of the status quo—one of the pillars of free-market economics—can be seen as a universal phenomenon: Adam Smith assumed a different sort of individualism than we take for granted today, since his thoughts on self-interest still presupposed the cohesiveness of a social community.69
In the end, the invisible hand of the market becomes a hand that is quite visible; idealism is a mask that cannot be sustained long-term. In the words of Beverly Harrison: “United States economic history must be read not only as a story of the acceleration of concentrations of wealth and power but as a story of the increasing mobilization of the state in the service of existing economic power.”70 At the time when this comment was made, Harrison was not yet aware of the historic bailouts of 2008 and later, but the particular ways in which the government acted in this context might illustrate her point. Even the Bush administration, which seemingly rejected government interference in the market, decided to step in as a deus ex machina and provided a sizeable $700 billion bailout, which was designed particularly for the financial institutions. The auto industry, on the other hand, which employs many thousands of people, had a much harder time being considered by this “visible hand of the market.”
Some theologians and economists have begun to push beyond these idealisms and abstractions. Since we will give more consideration to theologians in the next two chapters, let me give some examples of economists here, all of whom are fairly mainline. Even the standard textbook of economics by Paul Samuelson and William Nordhaus notes a bias in the history of economics: “The rising business classes needed a spokesperson for their interests. Smith provided them with the laissez-faire ideology that served their purposes, offering intellectual support for free enterprise with minimal government interference.”71 This observation points to one of the key insights missing in what I have called idealism: the reflection on power. Only when the underlying power structures are made visible can they be examined and can alternatives be devised. Yet insights such as the one put forth by Samuelson and Nordhaus need to be explored further from the perspective of those who are exposed to the pressures of the system. One example might be the perspectives of women.
Economist Frances Woolley notes two problems of bias in economics when it comes to matters of gender: “The first, the use of mistaken stylized facts, is easier to combat than the second, the invisibility of women. Invisibility is more pervasive, more persistent, and harder to fight.”72 The factual information on this topic, arguing that women earn less than men for the same jobs, is not controversial and is published in mainstream economic journals.73 The deeper challenge to neoclassical economics, according to Woolley, is that there seems to be no rational foundation to this inequality; that people, therefore, do not act rationally, and that the outcome of the market can, therefore, be other than equilibrium.74 At this point, the problem of bias in economics should be clearer, without having even touched yet on the problem of the invisibility of women.
Perhaps the most important service of feminist perspectives in economics is to point out a “masculinist bias” in neoclassical economics, which sees itself as neutral. This bias is not hard to spot and helps to create awareness of the problem of bias in other areas as well. On these grounds, feminist economists question such neoclassical ideas as the “separative self,” the ubiquity of self-interest, and the primacy of competition over cooperation.75 Proposing alternatives, they define economics “in terms of real-world issues of concern to women, men, and children, rather than as merely the examination of choice under the conditions of scarcity.”76 Once the idealist assumptions of economic theory are called into question, a tremendous opportunity for fresh research opens up in all areas.
In this context, we need to talk about ecological factors as well. The neglect of what the economy does to the environment is another instance of idealism and ahistoricism in economics. Yet only a clearer view of ecology from the logic of downturn will help us here, as ecology can easily lead to another idealism, wherein the systemic issues that threaten the environment are covered up in favor of romantic visions of “harmony with nature.”77 The Worldwatch Institute Report of 2009, with the ominous subtitle, “Into a Warming World,” would be a good place to start this discussion, into which we cannot enter here.78
While fundamental images of the divine and of ultimate reality are at work both in theology and in economics, the basic problem at the intersection of theology and economics is not that both espouse hopes and faith and that both presuppose images of God and of ultimate reality. The basic problem—even more pressing than usual in the midst of economic crises—has to do with the question of how those hopes and faith-claims mesh with the reality of what is going on and whether they truly support life. Whatever is declared to be ultimate and divine makes a tremendous difference, and so the god of the market has substantial influence, no matter whether this god “really exists” or not. In the Judeo-Christian traditions, this matter can be discussed in terms of idolatry. While false gods are “not real,” their worship cannot be simply shrugged off as inconsequential. Idolatry creates problems because it has powerful effects on human life and negatively influences the well-being of people.
In economics, the question of what is ultimate is only gradually rising to the level of awareness and will need to be developed much further. A good start might be the insight of Samuelson and Nordhaus, who report on Adam Smith’s confidence in the invisible hand, which creates balanced markets, but then also note the “realistic limitations of this doctrine.” “We know,” Samuelson and Nordhaus write, “that the market sometimes lets us down, that there are ‘market failures,’ and that markets do not always lead to the most efficient outcome.” The major failure that concerns them, however, is merely “imperfect competition.”79 Without this problem, it seems, the market would be fine. The first question that we need to ask here, by contrast, is, what is creating imbalances in the market? Is the problem labor unions, for instance, or is it monopolies? Another question would be whether the problem of market failures is more fundamental, having to do with unequal distribution of ownership and control of the means of production, and, thus, with another divinely sanctioned system. It is quite telling that Samuelson and Nordhaus’s list of market failures—although they consider “unacceptable inequalities of income and wealth,” among other things—addresses neither labor unions nor ownership or control of the means of production. We will come back to this latter issue in the final chapter.80
John Kenneth Galbraith adds another important insight to this debate about what is ultimate when he reminds us that the question of capital and power was neglected in economics for a long time because it was assumed that no one had a great deal of power. No ultimate power was assumed, as economic textbooks envisioned a world of small companies. In this context, it appeared that prices, wages, and profits were all set by the market. Only Karl Marx differed from this assessment, Galbraith notes, when he pointed out the power of those who command capital and that their collective interest would influence prices, wages, and profit ranges. There is, without a doubt, something to that insight, as those who command capital are much more influential than is commonly recognized, being able to shape not only the economy but also society, morality, and even the world of government and politics. Even many of the news media that have long touted their independence are now firmly in the hands of corporations and media moguls like Rupert Murdoch. Galbraith references the work of Carl Kaysen, who pointed out that the market power of “the giant corporation is the basis not only of economic power but also of considerable political and social power.”81 It seems as if there is another ultimate reality—manifest in large corporations and those who control them—that secretly shapes the reality of the market, which many economists consider ultimate.
What is the problem here? Myopia has been suggested as a problem of modern economics by self-described theists Herman Daly (an economist) and John Cobb (a theologian). Their project is based on the vision of a community in which all aspects of reality are related in an emerging “biospheric consciousness.” The main problem with dominant economic paradigms, according to Daly and Cobb, is a myopia that leads to the destruction of communities and the separation of humans and the natural world. The lack of values that promote community and nature has led to the destruction of community and nature. Anthropological dualism and philosophical idealism are seen as main culprits in this state of affairs. Once this myopia is cleared up and a biospheric consciousness is adopted, Cobb and Daly argue, the principles of the free market can be put to more constructive use. In this approach, faith in God—a theocentric perspective—liberates us from the misdirected anthropocentrism of Western culture and economics. Faith in God also helps to interrelate concerns for the value of individual beings and for the holistic interrelation of all beings since both exist only in relation to God, Cobb and Daly conclude.82
But more seems to be at stake than just myopia. What if we were dealing not with shortsightedness but with a case of severely distorted vision? What if the problem with the images of the ultimate and of God were not that they are too narrow, in which case the problem could be solved by expanding them, but that they are headed in the wrong direction and are, thus, missing the reality of God altogether, promoting an anti-god that is shaped by the interests of capital? In this situation, faith in God is the problem rather than the solution. This brings us back to the problem of idolatry, an issue that has been explored by Latin American thinkers like Franz Hinkelammert, Hugo Assmann, and Jung Mo Sung. The problem with idolatry, as they point out, can be found in the pernicious nature of idols, as false gods demand sacrifices. The problem, thus, appears in sharp relief as a matter of life and death.83 In this case, the problem cannot be solved by suggesting a freshened-up theism, or a broader image of God. In this case, the problem is one of rival “theisms,” rival images of God, and rival understandings of the ultimate—and a decision needs to be made. The World Alliance of Reformed Churches has recognized this problem and has therefore called for a processus confessionis, a process of confession, in regard to the issues of economic injustice and ecological destruction. This elevates the matter to the level of a challenge to the basic faith commitments of the church; in the Reformed traditions, it is the confession of faith with which the church stands or falls.84 The problem that needs to be addressed here is twofold: in exposing the false gods, whose work is death, the reality of the true God will become clearer and the questions of what is ultimate and who God is can finally be addressed openly and decisively. We will come back to this in chapter 5.
For now, we need to admit that much of what has been declared ultimate and divine has failed large parts of humanity. Continuing to trust in what failed us amounts to nothing more than trust in an idealistic, otherworldly, and unhealthy utopian hope that has so often had disastrous consequences in the past. Just as the classic supply-and-demand economics was not able to anticipate the Great Depression, the economics of the ever-more-deregulated free market was not able to anticipate the next big crash which began to be felt in 2008. The argument in those days was based on trust in something ultimate, arguing that if each person were free to pursue his or her own interests within the market, some local imbalances might result, but no overarching depression would materialize.85 We have just passed a similar threshold in our own history, once again accompanied by the belief that a crash of the market was impossible. Something is not working, with the result that large parts of humanity get hurt, often beyond repair.
The question of God and the free-market economy raises important questions that we will pursue further in the following chapters. Pastor Rick Warren’s prayer at the inauguration of President Obama touched on some interesting issues in this regard.86 But while Warren assumed that these topics were settled, we need to pose them as questions: Warren talked about history as God’s story, but which story is referenced here? The story of those for whom the tide is high and keeps rising, or the story of those for whom there is no rising tide? Warren also thanked God for “our prosperity.” The real question, of course, is whose prosperity is meant here, and which god produced it. Only if we face the fact that prosperity has bypassed many, and that this may not be God’s will, can we develop alternatives.