Trading the debts of others without accountability has been the motor of astronomical financial gain for many in recent years. Primitively, a loan transaction is something which enables someone to do what they might not otherwise be able to do ”” start a business, buy a house. Lenders identify what would count as reasonable security in the present and the future (present assets, future income) and decide accordingly.
But inevitably in complex and large-scale transactions, one person’s debt becomes part of the security which the lender can offer to another potential customer. And a particularly significant line is crossed when the borrowing and lending are no longer to do with any kind of equipping someone to do something specific, but exclusively about enabling profit ”” sometimes, as with the now banned practice of short-selling, by effectively betting on the failure of a partner in the transaction.
This crisis exposes the element of basic unreality in the situation ”” the truth that almost unimaginable wealth has been generated by equally unimaginable levels of fiction, paper transactions with no concrete outcome beyond profit for traders. But while we are getting used to this sudden vision of the Emperor’s New Clothes, there are one or two questions that, in government as in society at large, we at last have a chance to ask. Some of these are elementary and practical. Given that the risk to social stability overall in these processes has been shown to be so enormous, it is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to. To grant that without a basis of some common prosperity and stability, no speculative market can long survive is not to argue for rigid Soviet-style centralised direction. Insecure or failed states may provide a brief and golden opportunity for profiteering, but cannot sustain reliable institutions.
Without a background of social stability everyone will eventually suffer, including even the most resourceful, bold and ingenious of speculators. The question is not how to choose between total control and total deregulation, but how to identify the points and practices where social risk becomes unacceptably high. The banning of short-selling is an example of just such a judgment. Governments should not lose their nerve as they look to identify a few more targets.
Williams needs to stick to theology. This blanket characterization ignores the fact that many people really did buy real houses using the money derived from the banks and financial structures now in a crisis. Where Williams seeks stability, apparently as the sine qua non of a good society, Schumpeter would point out that progress inevitably condemns the obsolete. Finally, banning short selling would only make sense if we also banned buying-long on margin. Which of course would require paying cash for everything. Williams needs to work on his own harvest, before he stretches into what he knows not.
This is typical Williams. He says some sensible things, interlaced with some things beyond his area of knowledge, and ends with no conclusions. I agree with #1. Williams should apply himself to saving the Anglican Church.
++Rowan seems intent on doing for the economy what he’s done for the Anglican Communion. May God help us all.
Marx, like all heretics, does start with a partial truth. It is true that some capitalists exploit workers by treating them unjustly. I would say that capitalism is the worst economic/political system in existence – except for all the others.
Capitalism shows us the truth that men (and women) work harder and achieve more when they reap the rewards of their labors. The lie of marxism is that capital is not important.
Both labor and capital are important. A skilled cook can turn basic ingredients into something sublime and wonderful. Like wise, an unskilled cook can turn good ingredients into an inedible mess. Labor is important.
However, even the most skilled cook must have ingredients and tools. That is where capital comes in.
Now, if men were angels and sin had not entered the world, then pure communisim (from each according to his ability to each according to his needs) would work. But until men are made something more than dirt, we have to live with what [b]is[/b], not what we want to be.
The goal of the Christian capitalist should be to strive for a more just system and to justly pay the workers and suppliers for their time, talents, and contributions. I’ve long believed that each employee should receive part of his/her compensation in stock (or have the ability to do so). Also, boards of directors should have someone representing the employees/union members in meetings. That person should not be part of managements and should represent the voice and needs of the workers in the enterprise.
YBIC,
Phil Snyder
I also think that the laws against usury need to be strengthened.
Frankly, the biblical norm that a debtor could be enslaved by a creditor but only for 7 years seems reasonable.
Debtors are already enslaved by the banks. The difference is that the banks are not required to make sure that their slaves have adequate food and shelter, and the biblical creditor was required to take responsibility for treating his slaves justly.
If a creditor knew that the debt would be gone in 7 years, mortages would go back to being only 7 years (as they used to be 70 years ago). And the banks would be a lot more responsible about whom they extended credit to.
Marx was really good at what we now call sociology. He saw the system and analyzed its social problems very well. Workers were treated horribly in the early years of unrestricted laissez faire capitalism.
What Marx got wrong was his predictions about the future. He looked at his findings and assumed there could be nothing short of a worker revolution, which was only partially true. Certainly, huge reforms were coming, but what Marx never calculated into his predictions was the rise and appeal of a “middle class.” He saw largely in terms of rich/poor, overlord/underling, patrician/proletariat, which was largely true during his time.
The appeal of being middle class, with the idea where one could work and make one’s life better, never really factored into his prognostications. He thought the system was so corrupt, only a huge scale revolution by force could fix the problems from the ground up, but when that was attempted, the proletariat in power became the overlord hierarch he intended to thwart and displace.
#5 I think a lot of what has happened has been driven by the politicians’ desires to claim that “more people own homes today than ever before (especially when the other party was in power!) Shouldn’t we call attention to the fact that the government wanted banks to make those risky loans – for the political reasons of those in power? Which is to say that the reason Banks make ever riskier loans is to make more and more money off those they enslave – and they are encouraged to do so to empower the politicians who derive their power from those they enslave.
No, I think Williams neds to *learn* theology, then maybe believe it. I don’t know what he can stick to, because Teflon sticks to rather little. Anglicanism does not stick to anything or it wouldn’t BE Anglicanism. He has a job to keep.
I have long desired that the ABC would publicly admit I was right about all these things.
Ooooopps, wrong Marx!
Jeff Marx
#7 Exactly.
http://www.newsmax.com/reagan/fannie_mae_freddie_mac_/2008/09/18/132237.html
After what he told Deborah Pitt, if Rowan Williams had known what Karl Marx thought of homosexuals, he wouldn’t have cited him as an authority.
Marx’s social and economic theories are generally premised on the labor theory of value which is laugh-out-loud wrong, and yet entire nations are enslaved by the concept.
The worst that can be said about capitalism is that it is a value-neutral system. The merits of the ends chosen by the market process are dependent entirely on the morals of the participants. I’d add that the current bust is due entirely to a government and central bank enabled boom. Government subsidy of home ownership and artificially cheap credit powered a housing and consumer-spending boom that is now spent.
Are there CDO’s out there based on student loans and revolving debt? Those are probably the next shoes to drop.
The commenters here, themselves, are probably less qualified that Rowan to comment upon Marx or capitalism. Rowan’s comments are careful and don’t assume he was right about everything.
But as the government is about to bail capitalism out, it seems that the institutionalists have more right than the monetarists would care to admit.
[blockquote]The commenters here, themselves, are probably less qualified that Rowan to comment upon Marx or capitalism.[/blockquote]
Speak for yourself.
My [url=http://www.vulcanhammer.info/on/first-century.php]great-great-grandfather[/url] was a contemporary of Marx and Engels, left Manchester to come to this country about the same time Engels first came there to run his family business’ operation. Entirely possible they crossed paths. Also, my family was engaged in an old-line manufacturing industry for nearly a century and a half. When Marx was writing [i]Das Kapital[/i], he was thinking about a capitalist operation such as my family was engaged in.
Exploitation of surplus value–the leitmotif of Marx’s thought–is entirely correct. But the reason why economies such as the USSR (and I got to see that up close as well) failed is because the economy that doesn’t allow the exploitation of surplus value doesn’t produce any, which results in the poverty of such economies.
Also, Marx’s statements about the tendency of capitalists systems towards monopoly was also correct. But centralising same in the state–which didn’t wither away as Marx predicted–doesn’t solve the problem either.
A fairly regulated capitalist system–which was our country’s response to the Gilded Age where the conditions Marx lamented operated–which discourages monopoly isn’t a perfect solution, but it’s the best.
[blockquote]But as the government is about to bail capitalism out, it seems that the institutionalists have more right than the monetarists would care to admit. [/blockquote]
But then again, government was at the core of the problem here, too. When you see virtually an entire industry doing something that is clearly against its own interests (here, passing out oodles of money to those who cannot pay it back), you’re more than likely to find government meddling driving it. That was the case here, so essentially government is just cleaning up its own mess…all with our money.
Vulcanhammer: so you are qualified because your great grandfather knew Marx? OK.
“Trading the debts of others without accountability has been the motor of astronomical financial gain for many in recent years.” True or false? Did he get the description wrong? nobody here on this blog could state why, except for how MARX was wrong, not the Archbishop.
He says, “it is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to….” True or false? Are people in the financial world exempt from sin and more perfect than others?
“We find ourselves talking about capital or the market almost as if they were individuals, with purposes and strategies, making choices, deliberating reasonably about how to achieve aims. We lose sight of the fact that they are things that we make. They are sets of practices, habits, agreements which have arisen through a mixture of choice and chance.” Is this wrong? Why? As a few scholars have noted, if corporations are persons, they are like psychopaths. They care only about themselves….
Later: “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves; he was right about that, if about little else. And ascribing independent reality to what you have in fact made yourself is a perfect definition of what the Jewish and Christian Scriptures call idolatry. What the present anxieties and disasters should be teaching us is to ‘keep ourselves from idols’, in the biblical phrase. The mythologies and abstractions, the pseudo-objects of much modern financial culture, are in urgent need of their own Dawkins or Hitchens. We need to be reacquainted with our own capacity to choose — which means acquiring some skills in discerning true faith from false, and re-learning some of the inescapable face-to-face dimensions of human trust.”
It seems that most of the people here have read the headline, but not the article.
RE: “But as the government is about to bail capitalism out . . . ”
Well no, the government is about to bail out the results of its own ridiculous interference in the market back 20 years ago.
What a mess our government has created — and how stupid were the consumers to enter in to it.
The headline is a gross mischaracterization of what Rowan said. He said, in a side comment during a long essay, that one thing that Marx said was true. That’s not an endorsement of Marxism by a long shot. It’s a fake scandal to sell newspapers.
John Wilkins, perhaps some elucidation is in order.
In addition to the reasons I cited, I objected to your statement about “the commenters here” for two reasons.
First, the statement is a sweeping generalisation, which is logically fallacious.
Second, experience teaches that most men (and now women) of the cloth’s grasp of economics in general (to say nothing of Marxist economics) leaves a lot to be desired. To say that they understand more on this subject than any other groups of people is very, very risky.
In addition to my other statements regarding background, I have studied Marx extensively. [url=http://www.vulcanhammer.org/piblog//fullnews.php?id=2]I cited Marx in my second blog post[/url], and have done so since. I always tell people that, had I not become a Christian, I would have been a Marxist.
The big problem with someone like Rowan Williams citing Marx (in addition to any basic lack of understanding of economics) is that Marx is a writer whose analysis is frequently correct but his conclusions erroneous, something that societies that have followed his idea have found out the hard way. Marx’s conclusions about revolution were challenged even in his own lifetime, something he lamented bitterly in pieces like his Critique of the Gotha Program. And when entities like the USSR describe themselves based on “Marxist-Leninist-_____” (fill in the blank) principles, this indicates that even his followers implicitly understand that his road to a socialist solution wasn’t clear.
My own comment regarding Marx and Williams was based on something unrelated to economics, i.e., the fact that both Marx and Engels were inveterate homophobes. This has been an embarrassment to the left for a long time, which is one reason why few leftists in the West cite or follow Marx any more.
You may find of interest a critique of Rowan Williams by a living fan of Marx (Brendan O’Neill) on the subject of the environment at a piece on my blog, [url=http://www.vulcanhammer.org/?p=451]Messing in Our Own Box[/url].
And, BTW, I never said that my ancestor had ever met Karl Marx.
“Trading the debts of others without accountability has been the motor of astronomical financial gain for many in recent years”
Perhaps that’s wrong. But this I know: Rowan William’s leadership of the Anglican has been irresponsible and disastrous.