Economic Issues: The Beast in the Machine


Ensuring the health of household finances is likely to be high on the agenda for most of us. In the post-financial-crash world, we have all developed a heightened consciousness that money is the essential oil keeping the machine running.

Much the same is true of central governments. In the seven years since the financial crisis hit, Western nations have demonstrated a resolute focus on crisis management and on kick-starting their economies through a regime of quantitative easing, market stimulation and austerity. The result has been that many of these economies are now starting to yield slow growth and increased market stability. 

However, these measures will not solve the inherent problems that caused the crisis in the first place. One of the challenges to maintaining political and public attention for that goal is that the financial system is complex—massively complex. For governments holding office for finite terms, the primary objective is often economic stability, not disruptive overhaul.

Those initiatives that have been implemented to deal with the systemic problems have struggled to touch the surface of addressing real reform. Such initiatives have included the encouragement of challenger banks—the new breed of post-financial crash banks set up to challenge the largest established retail (high street) banks who lost credibility in the crash—and an unrealized desire to create a totally effective regulatory regime since the crisis.

Scandals such as the rigging of the London Interbank Offered Rate (LIBOR) by a number of investment banks, would suggest that we still have a long way to go to achieving real reform. Connected to hundreds of trillions of dollars worth of financial contracts, ranging from personal loans and credit cards to complex derivatives, LIBOR is one of the most important interest rates in global finance. The daily setting of LIBOR by the banks themselves determined the rate at which they were prepared to lend to each other. The breadth of the scandal became evident in 2012, and involved bankers from various financial institutions corruptly providing information on the interest rates they would use to calculate LIBOR. The scandal demonstrates just how chronically corrupt key elements of the system are.

Ironically, estimates indicate that in 2011 close to half (49%) of the world's adult population did not even possess a bank account. Yet even if we don’t all actively participate in the mechanics of the global financial system to the same extent, we are all impacted by it—especially when it breaks down. Philanthropic and microcredit initiatives do demonstrate a more outward focus, but efforts to bring about total reform have clearly failed, suggesting that the heart of the system is much less like a machine that can be fixed, and far more like a dynamic, wild force of nature beyond our control.

As the world begins to move on, there also appears to be a growing acceptance that the system will never be caged by regulation, only temporarily stabilized or momentarily tamed to allow us to secure our own short-term gains. Perhaps this is a beast that cannot be tamed because doing so would first require taming ourselves. At its heart is the systematized right of every individual to compete for self-gain, such that the wealthiest 1% own 48% of the wealth, while millions suffer poverty.

No matter where we are positioned in the wealth chain, scarcely anyone can escape from the fact that products and markets are designed to gratify consumer desire only momentarily, to ensure the essential return to market for renewed gratification. Therefore, in a very real sense, we ourselves are as much consumed as consumers.

Estimates for 2014 suggest that the number of adults with bank accounts had already grown to 62%. It may well be that government will be able to increase our integration within the financial system. However, based on its inherent flaws and inexorable link to our own flawed nature, should that really be the goal? Would it not be a far better solution if we could be released from its grip?.

While it might not be immediately apparent how this could be achieved, there are relevant principles from ancient sources that might seem simple on the surface, yet offer the potential for radical economic change if we would only apply them. The challenge there is that human nature is not predisposed to tame the beast in the machine. Because the beast in the machine is us. 


Read more from Vision on this topic:

Global Economics and Community

Economic Futures

The Virtuous Cycle: Pay It Forward

Tags: economics, financial issues, global economy

Culture and Agriculture

Tuscan vineyardWendell Berry is first and foremost by his own description a Kentucky farmer, though he is also a renowned author of essays, poems and novels. The global cult of bigness and the dis-ease that it causes is one of his passions. This is, of course, related to the development of technology for its own sake. While much of his writing addresses ecological concerns, he also discusses the broader human condition and the restoration of health and peace. In The Unsettling of America, Berry shows that the demise of small-scale agri-culture is indicative of the crumbling of culture itself. The machine has taken over from man, industrialized agriculture has won the day, and humans have been dislocated. Moreover, it is the future forms of our technology that enslave us. And it is not just on the farm that the pressure is felt: “All our implements—automobiles, tractors, kitchen utensils, etc.—have always been conceived by the modern mind as in a kind of progress or pilgrimage toward their future forms. The automobile-of-the-future, the kitchen-of-the-future, the classroom-of-the-future have long figured more actively in our imaginations, plans, and desires than whatever versions of these things we may currently have. We long ago gave up the wish to have things that were adequate or even excellent; we have preferred instead to have things that were up-to-date. But to be up-to-date is an ambition with built-in panic: our possessions cannot be up-to-date more than momentarily unless we can stop time—or somehow get ahead of it. The only possibility of satisfaction is to be driving now in one’s future automobile.”

Of course, the relentless economy powering such “achievements” pays little or no attention to resource depletion, pollution, or the dislocated human being. It depends on the illusion of limitless quantities. To make this reality, Berry writes, “we would have to debase both the finite and the infinite; we would have to sacrifice both flesh and spirit. It is an old story. Evil is offering us the world: ‘All these things will I give thee, if thou wilt fall down and worship me.’ And we have only the old paradox for an answer: If we accept all on that condition, we lose all.”

Like E.F. Schumacher, Berry links the problem in its essence to the tempter of Christ, the archenemy of humanity.

In a 1981 work, The Gift of Good Land, Berry explores the tragedy of “progress” via dislocation by reflecting on a visit to Peru. There peasants from the uplands who grew a huge variety of potatoes, using small-scale techniques and organic methods, gave up their ancestral lands and became dislocated by voluntarily moving to the slums of Lima, where they could watch American entertainment on television.

Decades after these works, Berry is still vexed by many of the same concerns and the issues arising from the global “order.” The difference is that the natural world is now in far worse condition. What has not changed are the spiritual precepts that undergird his prescription for healing. He writes, “Most of the important laws for the conduct of human life probably are religious in origin—laws such as these: Be merciful, be forgiving, love your neighbors, be hospitable to strangers, be kind to other creatures, take care of the helpless, love your enemies. We must, in short, love and care for one another and the other creatures. We are allowed to make no exceptions. Every person’s obligation toward the Creation is summed up in two words from Genesis 2:15: ‘Keep it.’”

It is intriguing that he understands spiritual law to be the basis of right use. Another of Berry’s related concerns is that American Christianity has not lived up to its founding documents. Because it has focused on saving souls in the land to the exclusion of practicing religion on the land, it has failed to recognize the sanctity of creation and the laws that support it. In this context Berry quotes Professor Ellen Davis, who writes: “Sound agricultural practice depends upon knowledge that is at one and the same time chemical and biological, economic, cultural, philosophical, and (following the understanding of most farmers in most places and times) religious. Agriculture involves questions of value and therefore of moral choice, whether or not we care to admit it.”

David Hulme

Taken from a chapter I wrote for Access, Not Excess: The Search for Better Nutrition by Charles Pasternak (ed) (Smith-Gordon February 2011)

Tags: environment, green, economics, agriculture, land, bible

E.F. Schumacher, the Environment and Spiritual Connnections

E.F. Schumacher did not begin his career as an alternative thinker. He was the son of a German political economics professor and in 1930 was a Rhodes scholar at New College, Oxford. He remained in the United Kingdom during the Nazi era, and for 20 years in the postwar period was Chief Economic Advisor to the National Coal Board. 

By the time he wrote Small Is Beautiful, Schumacher’s spiritual journey had taken him through Buddhism to Catholicism. Along the way he wrote “Buddhist Economics.” In part, this paper addressed the access question at the local level and concluded, “Production from local resources for local needs is the most rational way of economic life.” Schumacher also came to value the spiritual truths embodied in the New Testament’s Gospels. He said, “There could not be a more concise statement of . . . our situation, than the parable of the prodigal son. Strange to say, the Sermon on the Mount gives pretty precise instructions on how to construct an outlook that could lead to an Economics of Survival.” The story of the prodigal son is, of course, a salutary tale of waste (prodigality) and repentance/redemption, of physical excess and spiritual access. The wastrel son comes home to forgiveness and new life. And Jesus’ great moral discourse on the mountain is about discovering the spiritual qualities essential to living this life in balance and measure, with respect for God and His creation, including fellowman.

David Hulme

Read more on this topic

Tags: environment, green, economics, schumacher, morality, jesus' teaching

Environmental Ethics: Small is Still Beautiful

This entry is excerpted from a chapter in the 2011 book, Access Not Excess, by Charles Pasternak (ed), dealing with the twin scourges, over and under nutrition. My chapter focuses on the environmental degradation humans have caused and the biblical and alternative resolutions to the problem.

In his seminal work Small Is Beautiful: Economics as if People Mattered, E.F. Schumacher wrote, “If human vices such as greed and envy are systematically cultivated, the inevitable result is nothing less than a collapse of intelligence.” Greed undergirds the pursuit of excess and denies access to the many. Schumacher made his remarks in response to comments made in 1930 by his mentor, John Maynard Keynes, as the world struggled under the Great Depression. Surprisingly, Keynes had indicated that he thought the day of universal prosperity was getting close. Schumacher quoted him as saying that nevertheless “for at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.” By the 1970s Schumacher had come to see that excess, or the relentless pursuit of materialism, destroys both men and women and their environment. The carrying capacity of the world cannot sustain limitless growth, and the related need for moral development cannot be ignored. Thus Schumacher continued with a reference to Jesus’ words in response to temptation by humanity’s great adversary: “There is a revolutionary saying that ‘Man shall not live by bread alone but by every word of God.’” Spiritual problems cannot be solved by physical means. As Einstein is believed to have said, “No problem can be solved from the same level of consciousness that created it.”

From "Radical Restoration" by David Hulme

Read the full article

Tags: environment, green, economics, agriculture, land, bible