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Monday, 7 November 2011

Eternal Truths?

Having deferred the publication of its report on morality in the [business] City of London, the Saint Paul's Institute is now issuing it. A large sample of employees in financial institutions were asked basic questions: and the majority answered that the existing distribution of incomes was unfair, in their favour, and they saw no particular reason to do anything about it. There is no surprise there: but confirming common assumptions is a valid outcome of research.

The development of electronic trading in cyberspace is a huge source of earnings for the City workforce, and a lesser source of profit for their firms [where typically the firm is responsible for any losses, while staff take more than 90% of the return in salaries and bonuses]. This is a totally different market from the old-fashioned face-to-face dealing of the Stock Exchange before the 'big bang' of 1986. The occasion for the Saint Paul's report is the twenty-fifth anniversary of the loosening of market controls, which made possible the expansion of trade [especially of socially-useless churning of contracts] and the invisible evolution of electronic markets. The pre-big-bang markets could not possibly have run up the liabilities that almost sunk the economy in 2008; which could still cause huge problems if the running-repairs that were made in haste should be unsustainable in the long term.

 Despite the unimpeachable evidence that Economics is a failed subject, with no scientific validity, Economists continue unabashed to draw large salaries for analysing City events, 'products' and firms. Little of what they write directly refers to the Economic theory that still has a monopoly of university syllabuses: much of their output is common sense, exposition of statistical data and the repetition of market folklore. But behind all of that their mental world is at least partially structured around normative theories that are at best unhelpful to any attempt to understand what actually happens in the economy, and at worst have served as the sanction for ruinous excess.

The Bishop of London has invited a retired banker - and active churchman - called Ken Costa to lead a new study of the relationship of humanity and morality to business. In an interview on the Radio 4 Today programme he proclaimed himself open to any new idea, he spoke of Ethics as a separable aspect of human cerebration, and he took it for granted that human business relationships exist in a 'market economy'. Perhaps due to the constraints of time, there was no exploration of what a market economy might be or how it may be improved, dismembered or renewed. Costa commented that views for and against 'capitalism' were polarised: that no side to the dispute was intrinsically right, and that any dialogue must accept points from both sides. Most ecclesiastics who have made any comment on these issues, especially in the context of the naive claims made by the campers at Saint Paul's, have been couched in soft-left platitude. As such, they have failed to resonate in the media and in bar-room discussions.

Historically the emergence of capitalism has been linked to Protestantism, with its tradition of encouraging individuals to implement their own interpretation of biblical teaching on morality; while Catholicism and Islam have been much more explicit in outlining an official interpretation of scriptural guidance on business matters. None of these streams of dogma has pronounced capitalism to be 'evil'; while socialism - especially explicitly-atheistic Communism - has been anathemised. John Wesley, the founder of Methodism, said that "the making of money is a worthy and a Godly pursuit": but he, like all other significant religious leaders, also argued strenuously for the 'right use' of money and the obligation of the faithful to support the poor and needy.

 Markets are merely social media: their purpose, structure, processes and rules are made by human beings who participate in markets on their own account or as agents of firms. Those individuals cannot avoid making their decisions in markets in the light of their understanding of their function; and of their personal needs, beliefs, prejudices, and judgements. These may or may not include religious aspects and ethical consciousness. Personal charity is still significant; but most of the care for the poor and needy - as for the sick - has been appropriated by the state. To pay for it, the state taxes firms and persons who participate in economic activity; and taxes are broadly proportional to turnover.

People decide on a daily basis whether to put a coin in a rattling collecting-box, as they hurry along carrying newspapers that show more and more 'gaps' in provision by the 'welfare state'; and most people are becoming more and more concerned that they will personally fall into some of those gaps. The perceptual separation of markets from society, with the political system taxing markets to maintain society, was slowly developed between 1870 and 1980, sanctioned by Economists: and now it is busted. A wholly new basis for understanding these relationships is essential. With the best will in the world, Saint Paul's Institute and Ken Costa will not resolve the dilemma with their existing intellectual resources.

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