Tag Archives: Hayek

Tearing it up by the roots – a new approach to economics

Michael Gove dismissed the profession of economists, as one of those unnecessary groups of professionals, who stopped the common sense will of the people from prevailing. Although Michael Gove knows little of economics and the value of his statement can be questioned, he is right to suggest that something is rotten within the economics profession.

Just as Karl Popper looks back to Parmenides (early 5 BCE) as the originator of the modern scientific discourse, I believe that the same philosopher can be used to demonstrate the failings of contemporary economics. Parmenides has a vision in which the Goddess reveals to him two separate worlds that of truth which is known only to the Gods, and the world of shadows and falsehoods known to man. Man can only glimpse but shadows of truth, he can never know. Certainty is only known to the Gods. What Popper understands from this is that scientific inquiry can never know certainty, truths known today will be demonstrated as false tomorrow. Scientific truths are conjectures which should be in a form that makes capable of refutation. It is this verification process that makes possible the advance of science as new and better truths replace those of today and yesterday. However he does suggest that these founding fathers are giants on whose shoulders we stand to advance. They make the initial discoveries that make possible the advance of science. Today Newton’s cosmology and theory of gravity are regarded at best partial truths. Yet without Newton’s discoveries Einstein and the advances of modern cosmology would be impossible.

What Karl Popper believes is that there can be no certainties only probabilities. The latter being an admission that we don’t know. Contemporary economics ‘does know’ it knows certain truths about the economy. There are two fundamental truths and they are those of the market economy and modern monetary theory. These are the two foundational principles that underpin all contemporary economics..

Market theory is often referred to as Neo-liberal economics. This theory asserts that the free market is a self regulating organisation, which if subject to minimal government interference will find its own level of equilibrium. Governments that interfere and over regulate the economy risk upsetting the balance of forces in the economy, that determine the best of all possible outcomes for all. It was Alfred Marshall (1840 – 1924) who demonstrated the truths of market economics with the supply and demand theories with which all students of economics are familiar today. Familiarly known the diagrams that demonstrate the ‘Marshallian Scissors’. Nearly all economic theory is a derivation of market economics.

Perhaps the most notorious is Says’ law of incomes. This states that it is self defeating to try to maintain wage levels during a recession, as this will merely increase unemployment through making workers to expensive to pay. Far better to let wages fall to a level at which it becomes profitable for firms to employ workers. These newly employed workers will spend the wages they receive, which will increase demand and kickstart the recovery. With the economy growing wages will return to their former high levels, as newly profitable firms bid against each other through paying higher wages to attract workers from the diminishing pool of unemployed labour. No government will ever admit to following Say’s law, but it is implicit truth, as they are always concerned to avoid the situation in which high wages make workers unaffordable to employers. When Tony Blair introduced the minimum wage he took great pains to ensure that it was not set at a too high a level, as that would make labour too expensive to employ.

A common sense truth which seems obvious to all. However there is very little economic evidence to demonstrate the truth of this ‘common sense’ theory.

The other great truth of orthodox economics is modern monetary theory (now associated with Milton Friedman). This quite simply states that the level of economic activity is determined by the quantity of money in the economy. Increasing the quantity of money in the economy increases the number of purchases people make, so increasing the level of economy activity. However if the quantity of money is increased too much, there is too much money chasing too few goods and so inflation occurs. All the government needs to do to control the level of economic activity is to either change interest rates or the supply of money (so called Quantitive Easing). Although this theory is associated with Milton Friedman he was merely putting the ideas of Irving Fisher (1867-1947) into a more modern format. This school of thinking in fact has a long history, as it’s origins can be traced back to Copernicus who first gave it form 1517.*

Unfortunately modern monetary theory has one flaw, if if the government is to control the supply of money, it must know what it is controlling. Unfortunately it does not. When the Treasury introduced this policy in the 1980’s, I think they came up with seven different definitions of what constituted money. In practice they adopted one definition, M4 as the most likely one. Despite this flaw in the theory, governments have since the 1980’s all been practitioners of modern monetary policy. Never in academic circles will you hear this criticism mentioned.

J.M.Keynes and the economics named after him is regarded as an aberration and no longer regarded as one the foundational truths of economics. The British Treasury the fount of all economic truth has long since dismissed his ideas as irrelevant.

What the economists ‘who know’ have in common, is that they possess what that they believe is a bag of tricks from which the appropriate tool can be chosen to fix any crisis. At present the favoured tool is a combination of reducing interest rates and increasing the supply of money through quantitive easing.

Karl Popper influenced me in my choice of names, he does as do I, belong in the school of ‘don’t knows’ or to put it more accurately we believe our respective subjects consist of a series of probable or possible truths which for the present have great utility. As Karl Popper writes that to state that something is a probability is to admit to doubt. Probably the best known advocate of this school is J.K.Galbraith.* As he had no grand theory linked to his name and was dismissive of such theories. Academic economists tended to regard him as not one of them. He was an agricultural economist, who caught the eye of Franklin Roosevelt and who drafted him in to help manage the wartime US economy. He was one of the authors of the post war report into the effectiveness on allied bombing on Germany. They as a group were surprised to discover how little impact it had on the German economy. A fact conveniently overlooked in the Vietnam war.

What discredited him in the eyes of other economists was his prioritising the human factor over any grand theory. While Hayek claimed that the mad speculation that led to the Wall Street crash of 1929 was due to a drying up of legitimate investment opportunities, Galbraith lays the blame squarely on the shoulders of the financiers. The bosses of Goldman Sachs and the other major banks were both reckless and irresponsible. They made huge profits from the foolish and reckless investments made on the Stock Exchange and had no incentive to discourage them. This is illustrated in the example of the Florida property developer who bought swamp land claiming to to be prime real estate. The authorities on the New York Stock Exchange saw no reason to prevent the sale of stock in this fraudulent enterprise. It was just too profitable. In Galbraith’s words the great crash was 1929 was due to the activities of a group of rogue financiers.

Not surprisingly it turned out that Goldman Sachs was involved in similar activities in the events leading up to the crash of 2008. They were fined millions of dollars for selling what they knew to be worthless bonds to their clients.

When I studied economics at university, I was disappointed to discover it avoided the big questions. The issue of distribution of wealth was redefined as the optimum output curve. Any point on that curve represented the best possible distribution of resources within a given community. This as an exercise in logical thinking was impeccable, but it had no relevance to world outside the seminar room. While this ‘economic scientism’ dominates the subject of economics it remains detached from the real world. When Russians during the ‘Moscow Spring’ came to study economics or more precisely free market economics; they expressed disappointment about how little it taught them about the real economy.

After a number of years teaching economics I came to realise that the teaching of economics was about developing the ‘economic imagination’. This was not so much learning the economic theory that relates to a particular scenario, but being creative within the parameters of economic thinking. A Socratic economics in which reasoning is used to disabuse the student of the ‘truths’ of orthodox economics. The conventions of orthodox economics often stand in the way of developing a real solution to the problem. Only the most unimaginative can think that changing interest rates, increasing or reducing money supply is the answer to everything. Any study of the post war management of the economy would surprise today’s readers.Realising a shortage of houses meant that this could lead to a rapid rise in house prices and inflation in the housing market, the government took action to prevent this happening. The annual in increase in house prices was subject to a tax. This of course meant house owners had a disincentive to the over valuation of houses and house prices remained low in this period. This made the majority of houses affordable unlike today.

Again J.K. Galbraith provides an illustration of this in his work in managing the US wartime economy. One of the problems of the wartime economy is inflation. With so much of the nations output requisitioned for the war effort, a shortage of goods in some parts of the economy would lead to a rapid rise in prices and inflation. Galbraith realised that it was not necessary to introduce a national system of price controls, but instead to control prices with the cooperation of the great corporations. Since they accounted for a majority of the nations output, if they could be persuaded to keep prices down there would be no price inflation. All the other medium and small businesses would follow suit, particularly if they were suppliers to the major corporations.

Economics suffers from one problem that is unique to it. What is true yesterday may not be true today. The economy is a dynamic institution that is constantly changing. Evidence about what is happening in the economy is from yesterday. There is no evidence, apart of the most impressionist kind about today and none about tomorrow. This is why J.S.Mill said there can be no science of of economics. Given this uncertainty governments prefer to use the old tried and tested methods, fearing that any policy innovation will make things worse rather than better. This Conservative mind set explains why governments never get to grips with the problems that plague the economy.

The consequences of adopting the ‘economics of don’t know

Universities would change, economics departments would have to teach students to think creatively. Old dead economists, the founding fathers of the subject would no longer dominate the curriculum. The subject would become more open ended, there would now be no arbitrary limits to subject knowledge. All the old certainties associated with this subject would go. Current academic economists would resist any change, as the knowledge they hold so dear would no longer be valued. University departments of economics would revert back to the liberal humanism of the past.

Resistance to this change would not just come from current academics, but also government. University education is now a commodity that is bought and sold. All the current means that are used to measure a universities output would cease to work. Creative and innovative thinking does not lead itself to the current system of box ticking. Governments would lose the main means through which they control what is taught in the universities.

The two greatest employers of economics graduates the investment banks and the Treasury don’t want graduates who think. They want them versed in the ways of the old economics, together the statistical skills acquired in the study of the old economics. This is the problem already known of, when Manchester students demanded a radical change in the economics syllabus, they had to contend with the fact that they would denying themselves lucrative employment in the world of banking.

Economics can be one of those subjects has to be endured and best soon forgotten on leaving university. What I am suggesting would lead to a revolution in the teaching of economics, it would now be a subject that valued creativity, rather than conformity amongst its students. If instead of discouraging students from continuing an interest in the subject, economics would be one of those stimulating subjects whose students would now retain a life time interest. Since so many MPs have studied PPE at university, those MPs would be better informed and rather than parliament collectively demonstrating an ignorance of the subject and debates on the economy and its management would be better informed and enlightening.

Politics would have to change, Chancellors such as Rishi Sunack and the Treasury itself would have to adopt evidence based economics. Rishi Sunak could no longer quote the truths of the founding fathers as justification for his policies. In constructing economic policies real thinking would be required, as real answers to problems would be required. I look forward to the day when any politician is laughed at when they turn to the old economic pieties to justify there ill thought out policies.

* J.K.Galbraith would probably be horrified to know that I consider him the doyen of the economists who don’t know. I include him because he is one of the few economists, unlike many economists does not know the answer before he starts the investigation. He possesses no ready made answers.

A new and unusual solution to economic policy making. ‘Wittgensteinian’ Economics.

Recently I have been reading Ray Monk’s biography of Wittgenstein. In reading this book I realised that Wittgenstein’s approach to philosophy opens the possibility of there being a different approach to economics. What Wittgenstein is always criticising philosophers for is there constant search for the one grand theory, the unifying theory that answers all the questions. There was he argued no grand theory and it was pointless looking for one. This is an approach that I believe should be adopted in economics.

There is at present one theory that dominates economic policy making and that is what might be termed free market economics. One small book Hayek’s ‘The Road to Serfdom’ is the origin of all current thinking on economics. Usually today it is known as Neo-liberal economics, an economic philosophy associated with the political right. Although there is a left of centre variant, new Keynesianism. Proponents of the latter claim to have rediscovered in Keynes writings his love for the free market and put to one side Keynes radicalism.

Keynes radicalism was the consequence of his despair at the misguided policy making of the governments of the 1920s and 30s. Usually the policies of the 19th century Parisian commune are ridiculed by economists. One policy that was held up to ridicule was the policy of having the unemployed dig up the paving stones, only to replace them later. The unemployed were paid a wage for this work. Economists saw this as a foolish waste of money that did little to improve the economy. However as Keynes pointed out this created an income for the unemployed and that there spending could help bring a dormant economy back into life.

What this illustrates is that Keynes was asking a different question to that asked by his contemporaries. He was trying to find an answer to the question, how do we bring to an end the misery of mass unemployment? His academic colleagues were asking a different question, how do we restore a dysfunctional economy back to being a fully functioning one that will in the long term work to the benefit all? Different questions have different answers. While Keynes advocated greater government spending to increase the demand for labour to reduce unemployment; they wanted to cut government spending, believing that only a prolonged period of sound finance and balanced budgets could create the strong economy, an economy which would eventually generate new economic growth and so ending the time mass unemployment. All this government could say to the unemployment was to have patience, as eventually the economy would pick up and they would have jobs. Keynes had one answer to this policy and that was in the long run we are all dead. There was also the unspoken assumption that growth generated by Keynes spending policies would be bad growth, whereas the economy eventually moved into the upswing in the trade cycle that this was good growth. A set of unprovable and dubious assumptions

When George Osborne adopted a similar policy in 2010, that of fiscal consolidation, cutting government expenditure and balancing the books, he repeated all the errors of the politicians of the 1920s and 30s. Mass misery, although this time not caused by unemployment, but low wages and the insecure employment of the ‘gig’ economy.

Wittgenstein’s last book was ‘Philosophical Investigations’ crystallised my thinking on economics. Rather than believing that there was one grand unified theory of economics, there are series of economic investigations which belong to one family, as they all bear a familial resemblance. The economy as subject matter is the familial resemblance. He also writes about the grammar of philosophy, which provides the format or structure for ensuring that the correct questions are asked or the correct philosophical investigations undertaken. What is the nature of good is an incorrect question. The correct question is what actions are understood as good. Asking people what is good is silly, as anybody when asked that question could give numerous examples. They understand the concept good, what they don’t need is a philosopher telling them what good means. Philosophers when asking this question brings itself into discredit, as the answer is either I don’t or a definition that lacks application or validity to everyday life.* Politicians are also failing to formulate their questions correctly. What they ask is that asked by the politicians of the 1930s how can we the economy to health. What they should be asking is a series of questions about the economy, such as how can unemployment be reduced, when looking for policy solutions to all these individual problems they will be answering the big question, of how can we restore the economy to good health.

I can give examples to demonstrate my thinking. The British economy has a number of dysfunctions within it, but ones that the Neo-Liberals believe only require the one solution. These dysfunctions are:

• Slow and anaemic economic growth

• The highest trade deficit as a percentage of GDP for a developed country, as a consequence of a shrinking manufacturing industry

• An unbalanced economy, one in which the financial service sectors are booming and manufacturing is in slow relative decline, an economy also unbalanced in that the southeast and London are experiencing high growth and incomes while the other regions experience the reverse

• An economy that is increasingly failing to deliver for increasing numbers of people, who are denied the essentials of a good life, that is fair incomes, secure employment and good housing.

• Income inequality is now approaching those levels last seen in the dismal 1930s

• The economy is increasingly subject to speculative booms and busts in the various asset market, usually such busts originate in the property market

• A country which shares record levels of indebtedness with Japan. The majority of British debt is private sector debt, which an upward shift in interest rates could make unsustainable, as too many households would have difficulty managing their debt repayments

There are other dysfunctions that I could add to the list, however I had to end the list somewhere. Only today Areon Davis (Reckless Opportunists: Elites at the end of the Establishment) has in today’s Guardian newspaper outlined a different set of market dysfunctions, which could result in a repeat of the 2008/9 financial crisis. Yet the Neo-Liberals politicians always resort to the same set of policy options to deal with each of these dysfunctions. They are

• Vary interest rates, either lower or raise them

• Reduce regulation on business, thereby reducing the regulatory role of the state

• Cut taxes and government spending

• Recently they have added a new measure – quantitive easing, that is increasing the supply of money to the banks

What the British economy requires is a different set of policy options for each of these major dysfunctions. Why do these politicians believe that the same policy options should be prescribed for each policy? A doctor prescribes antibiotics to treat a bacterial infection, he would not use them a patient that suffered a cardiac arrest, yet this is exactly what the government does with economic policy making. It’s always the same prescription, whatever the problem.

The economy is a dynamic organisation that is constantly changing and each change in the economy offers new benefits or brings to the fore new problems. There can be no one theory of everything, while Neo-Liberalism offers some policy options suitable for some problems, that is all it can offer. If instead politicians realised that each new problem the economy threw up was asking a new question of them and not just some variant of an old question policy making would improve. To paraphrase Wittgenstein, economics is a series of investigations that ask different questions, each of which requires a different response.

*I am aware that my brief paragraph does an injustice to Wittgenstein’s thinking, as I have taken elements from ‘The Brown and Blue Books’ and ‘Philosophical Investigations’, which are dissimilar books written at different stages in the development of Wittgenstein’s thinking. However to do so suited my purposes.

The Return of Serfdom to Britain

Friedrich von Hayek published in 1944 his very influential book “The Road to Serfdom,” a book which is the mainstay of today’s policy makers. He warned of the dangers of an over mighty state, one in which professionals such as doctors gave up their independence as private practitioners to become servants of the state. The doctors would no longer be able to practise medicine freely but have to follow the dictates of their employer, the government. He warned of the same trend happening to all professions whereby independent lawyers etc would be giving up their freedom to become to be subject to a new form of bondage which denied them the freedom to practise as they wished, they would become the new serfs, bound to the new state. However he was living in the age of totalitarianism and he feared what he saw the makings of a new totalitarian state in Britain. Britain did not become a totalitarian state, in fact the totalitarian state that Hayek so feared, the Soviet Union collapsed in 1990.

  
Image of Chinese serfs working in a field taken from http://www.chinadaily.com

This was a prophetic book in that it was right to predict a new serfdom, but wrong in predicting the source of this new serfdom. He believed that the free market was the organisational mechanism best designed to ensure freedom, as in the free market the individual was free to make their own choices, as there was no powerful over arching organisation making the choices for them. However what Hayek failed to realise that the free market would be a source of the new serfdom. What he overlooked was the inequality in power relationships, in free market it the most powerful players have the most influence. The most influential players are the big business corporations, they determine the conditions under which the free market operates and these are often detrimental to their employees and customers. What Hayek failed to realise was that the state could be a liberating factor as much as an enslaving one. He failed to see the wood amongst the trees, he could not envisage alternate model of the state, for him the state was an authoritarian organisation,one that always threatened to take away an individual’s freedom. Given that he was a refugee from Nazi Germany this misconception as to the nature of the state is understandable. 
Perhaps the best understanding of the role of the state as a liberating force comes from the writings of the 19th century sociologist Emile Durkheim. He explained that the state in the 19th century through introducing laws to protect the citizen from oppressive landlords and employers was liberating the individual from these many local tyrants. Legislation to protect employees from unsafe working conditions, working long hours and being given the right to form associations (Trade Unions) to protect their interests gave people a freedom that they had never enjoyed before. Throughout the 20th century developments in legislation gave rise to the welfare state, in which the individual was guaranteed freedom from want and protection against the evils that can result from individual misfortune. The significance of this freedom from want was never understood by the intelligentsia, the freedoms they valued were the political freedoms, freedom of expression, freedom from excessive state control. Economists overwhelming came from the privileged classes, two of the 20th century greats Hayek and Schumpeter were aristocrats and for them what mattered was being free from an oppressive government, not from want.
Hayek despite witnessing the horrendous poverty that he saw in Europe in the period of the Great Depression, never ceased to believe that the free market was the best means to solve these problems. State control and intervention in the economy he associated with the totalitarian states of Nazi Germany and Communist Russia. He saw freeing the economy from state control as the only way to ensure the survival of the democratic state, for him there could be no democratic state without the free market. It was from his work that the Neo-Liberal economic and political philosophy of developed. This has become the dominant philosophy of the political classes, but its adoption as the practical philosophy of government has not lead to greater freedom and a more democratic society, but a new subtle form of serfdom. 
What the Neo-Liberals with their demand for a small state and minimal interference in the economy were creating was a society for most that has less freedom than its predecessor, as it was the state that guaranteed so many freedoms. It was these freedoms that were attacked by the Neo-Liberal economists, as they saw them as an obstruction to smooth running of the free market. Labour regulations restricted the hours for which businesses could employ staff, placed limits on how they could be used and made workers more expensive by imposing payroll taxes to finance social welfare benefits. Successive Neo-Liberal governments removed these restrictions and cost impediments on how employers could use their workers and have created what is called a flexible labour market. However this market has created by removing all the protections that labour enjoyed from abusive employment practices. What the Neo-Liberals have created a new social system that has many aspects of the old feudal system, such as being bound to one employer.

Our leaders in Britain boast that they have created the most flexible and competitive labour market in Europe, ignoring the many abuses practices in this new labour market. The most obvious abuse is the practice of zero hours contracts, where workers are contracted to work for an employee, but are not given any fixed hours of work or even guaranteed any minimum hours of work, instead they must be ready to work when the employee needs them. There is a clause in these contracts that forbids them to look for alternative work in the hours when their employer does not need them, as that would prevent them being free to work for their employer when needed. They as with the feudal villein are bond to their employer, the first could not leave their village to find work elsewhere and the zero hours worker is forbidden to find any additional work with a new employer. This new serfdom is a little more humane as employees are free to change employers, not a right enjoyed by medieval serfs.
However this right is severely limited as the new serf must have found a job before they leave. They don’t have the option of leaving an abusive employer, unless they have alternative work as the new benefits system will deny benefits to any claimant they deemed to have made themselves intentionally unemployed. 
Then there are the workers of split shifts, usually this is in the retail trade. Workers are expected to work two short shifts a day, when the shop is busy or the employer needs them. Again they cannot look for alternative work for those hours of the day when they are not employed in the shop, as they must leave themselves free for the unexpected call from the employer who might need them if a staff member is sick. Again they as with the zero hours employer are bond to their employee.
Britain can boast of one of the highest employment rates in the European Union but this is because labour in Britain is cheap and employers are free to employ workers using the most exploitative labour practices. Is it really a success story when a postgraduate student from Spain comes to London to find work as a barista?
Initially this practice was confined to the fast food outlets but the practice has become widespread within the services industry and has begun to spread to the professions. Increasingly new staff at the universities are employed on these contracts as are some technician posts within hospitals.
What the proponents of the free market have failed to understand is the inequality of power relationships within the free market. The market is not a meeting place of equals but of unequals, and the latter will if not constrained by law exploit their power. Unequals are the rich and powerful and the big business corporations. Freed from the law restricting how the business can use it staff, it will use them in the ways that suit them best and that best is treating the staff badly. It should be of no surprise that slavery is now a concern in modern Britain. At present it is foreign residents importing bringing in domestic staff with them who are largely responsible, but there are disturbing cases of it happening with exploitative UK employers who force vulnerable people into what can only be described as slavery. When the law is removed from the from market employers can behave as badly as they please. Even those agencies that are supposed to enforce the few remaining employment laws are reduced to ineffectiveness through constant staff cuts.
The Neo-Liberals failed to realise a free the market in which there is freedom of choice, frees people to behave badly as there is no sanction on bad behaviour. Perhaps it is not unfair to compare the big corporations with the medieval robber barons as both sought to enrich themselves at the expense of the wider community. While the medieval baron would levy a charge on goods passing through his territory, a more sophisticated robbery is practised today. One example of this is the pharmaceutical industry. There a small company will discover a new drug but lack the resources to market it. They then enter into a marketing relationship with a large company to market and distribute this drug, usually this relationship becomes a takeover and by the larger company. However this large company adds a further cost onto the price of the drug, which they call development costs and then sell it at many times its original price. These new robber barons rob both their staff (through paying them minimal wages) and their customers by overcharging for their products. 
What Britain as do many other Western countries seem to be doing is to be lurching into a Neo-Medieval society which is dominated by the business corporation. A glance at the last election demonstrated this when all the parties claimed to be busy friendly, the people barely got a mention. Despite the dire housing crisis in London caused by lack of affordable accommodation not one political party in the election proposed any measure that would put have effectively ended the crisis, as that would have threatened the income of the large property companies that dominate the housing market. 
History never repeats but older historical patterns can reoccur in later historical periods. Contemporary serfdom is not as cruel or restrictive as that of medieval Britain, but it is similar in its essentials, that is the great corporations can as did the medieval Dukes freely dispose of the people at their command. While the medieval Dukes could direct the lives of their serfs in a number of ways, they for example could compel them to join their armies, transfer villages and the people that lived in them to another lord without any regard to the villagers wishes and could in addition control most aspects of their lives, today the great corporations can exercise similar powers over their workers. In today’s Britain the government can decide to transfer a public service into private ownership, usually with the consequence of a worsening of working conditions for the existing employees. In the name of cost efficiency wages are reduced, pension schemes terminated or emasculated and employment protections removed. All these negative changes occur without the workers being allowed to voice their opposition to these changes. Also the new privatised owner is free to dismiss any number of existing staff. These new petty tyrants have a similar decree of control over their workers lives as did the medieval baron. The withdrawal of the state has meant any pressure to ameliorate or remove the most abusive of employment practices has been removed. Now increasing the British people are entering into a new form of servitude quite alien to the freedoms of a modern democratic society.

Do our leaders still not worship the old pagan Gods?

This short essay is an attempt to answer a conundrum  that puzzles me. All the members of our government would claim if pushed to an extreme to be Christians. There are even some members of the government who demonstrate an extreme piety by being regular church attenders and by being active  proselytisers for their faith. Christianity is foremost a religion of compassion and caring, yet this government treats the most vulnerable of people with inhuman contempt. Today it was in the papers that the government was stoping the personal care allowance for an eight year old girl with a distressing and disabling illness. It is the type of illness that makes the child totally dependent on her adult carers.  With complete inhumanity this government denied the money for care, because the British father worked mainly in Germany and therefore it was up to the German government to provide funding. Even when claimants whose lose benefit commit suicide, this most inhumane of governments remains unmoved. Obviously this government is unfamiliar with the gospel text, in which Christ when surrounded by children and tells his disciples that if anyone harmed these children it would be better for him that he threw himself into the sea with a millstone around his neck, rather than face the wrath of God. (Matthew 18:6)

What kind of God I wondered do the members of this government worship? Obviously it is not the Christian God with which I am familiar. The members of this government see their actions as virtuous so what God can possibly condone such inhumanity? Whatever God it is it cannot be the Christian one. 

One candidate is the secular religion, which goes by the name of Neo-Liberalism. Practitioners of this religion worship the market and believe that it this this very secular deity that will distribute wealth to each according to their deserts. They do realise that the free market will at times create human misery, but they believe that the good the market does outweighs the bad.

However the explanation lies with the religion of entitlement and privilege that has pre-dated Christianity but which has continued to coexist with Christianity. Christianity was a break from the religions of the past, which were little more than state religions. Religions whose role was to validate the social order, for whom the people were just an anonymous mass. The only individuals that mattered to these religions were the kings and the warrior heroes.  In contrast the heroes of Christianity were the common people fishermen, carpenters and tax collectors. Christianity was a religion of individualism, one that threatened the existing social order as it saw merit in all not just the rich and powerful.  A religion that would appeal to the oppressed groups such as slaves and women,  who were the majority of its early members, a religion of the downtrodden.

Achilles Slays Hector, by Peter Paul Rubens (1630–35).

One of the  best examples of a pre-Christian religion of entitlement and privilege is the religion of classical Greece, that of the Olympian Gods. Homer in his two poems ‘The Iliad’ and ‘The Odyssey’ gives expression to the beliefs of the classical Greeks. In the Iliad the poor or the ordinary Greeks only get mentioned once. This is when a boastful soldier from the ranks foolishly challenges Odysseus (King of Ithaca) to a boxing match. Odysseus brutally beats the upstart challenger to a pulp, to the approval of the watching Gods and Homer. Throughout the epic story of Odysseus’s return from Troy, the members of his crew, the ordinary seamen are who crew his ship are almost never mentioned. When Odysseus finally returns to Ithaca he has lost all his crew through various misfortunes, yet he never expresses any regret about their loss. For Homer and the Olympian Gods of Greece, all that is of concern or interest are the actions of the heroes, all of whom come from a rich aristocratic warrior class. The masses or majority are merely there to provide a backdrop or audience for these aristocratic warriors. Throughout the Iliad the only conflicts described are those between the various Greek and Trojan aristocratic heroes. The war virtually stops while the ordinary soldiers observe the conflict between Achilles and Hector beneath the walls of Troy. Classical Greece is an aristocratic society whose religion only attributes any worth to the great and the good. Regret is only expressed over the death of the heroes, as with the funeral games held for Achilles. Only aristocrats can be heroes, ordinary people lack the virtues necessary to make them heroes or interesting to the Gods.

Only a religion that treated the common man with insignificance would be of value to our new governing classes. Rather than heroic warriors we are now governed by a class of less than heroic bankers and financiers. George Bush’s advisors who pushed for the war in Iraq were largely ‘chicken hawks’, men seconded from the large corporations who when young dodged the Vietnam draft. This new class of financiers, hedge fund managers and bankers, needs a greater vision to validate their superiour position in society. Something similar to Homer’s Iliad which glorified the heroic aristocrats. These self proclaimed ‘movers and shakers’ need a poet of Homer’s stature to justify their acquisition of vast wealth. Lacking a Homer, their virtues are lauded in such books as Ayn Rand’s ‘Atlas Shrugged’, a book in which her billionaire heroes show the same contempt for the common man, as exhibited by Homer’s heroes. In this book thousands of the useless poor die from hunger, freeing the heroic billionaires from the burden of caring for this group of useless humanity.

What Ayn Rand and others such as Friedrich Hayek proclaim is a philosophy that frees the rich and powerful from the obligations and restrictions that are thought to make for the good society. Tax avoidance becomes a duty as the billionaire is better equipped to spend his money wisely, than is the wasteful state, who will foolishly squander its tax revenue.  Poverty for example is no longer a social evil but a spur to the poor for self improvement.



Posted: Oct 24 Twenty Fourteen

By: Silvia Hoffman

 

The new class of financiers and politicians want more than the rather unappealing philosophy of Neo-Liberalism, as there are only so many ways that selfishness can be redefined as a virtue. Fortunately for our new governing classes of politicians and financiers, the Christian tradition is sufficiently plastic to be written to favour the rich and powerful. As Constantine proved, when he oversaw a remaking of Christianity as a religion of empire and power in the 5th century CE. These classes have successfully used Christianity as a means of sacralising the social order. The role of monarch is God sanctioned at the Coronation service, any sense of social injustice is dissipated by emphasising that the poor will get their reward in heaven. The campaigning priests of South America who preached liberation theology were silenced by the Vatican. It was a Vatican that preferred the poor getting their reward in heaven than on earth.   

Theologians have used the concept of accommodation to explain how the organised churches drop those parts of their doctrine that are a threat to the established social order, so as to facilitate their acceptance within society. What I am suggesting is that the Christian churches long ago won acceptance by incorporating into their doctrines an acceptance of the old religion of power and privilege. The position of the rich and powerful in society was sanctioned by God.  In England this new God had many of the characteristics of the old pagan Gods such as Odin and Thor. This new Christian God sanctified wars of conquest much like the deities of old.  One of the first Saxon Saints was St. Oswald a warlord and king who was killed by a pagan adversary. Many of the new evangelical churches have so far accommodated to contemporary society in that they preach a doctrine of business success rather than one of compassion. Even the new Archbishop of Canterbury has instituted a reform programme to make the church more business minded. The culture of business targeting  supplementing the existing practice welfare practices



Parish church in Sankt Oswald ob Eibiswald ( Styria ). Statue of Saint Oswald riding a horse.

There has always been an uneasy alliance in the church between what can be called the Christianity of compassion and the Christianity of power. This compromise is represented by two twentieth century Archbishops, Archbishop Temple the social reformer and Archbishop Cosmo Laing a conservative, who wanted to restore the old power and privileges of the church. The first a reformer who said in a speech, that if it was possible the rich would charge us for the air we breathe, while the second wanted to increase the wealth of the church by reinstating the collection  church tithes (a practice that had long fallen into disuse.)  

What I am arguing is that the practice of accommodation has led to the churches accepting, all be it implicitly many of the characteristics of the old pagan religions into their Christian practice. Is not the God of George Bush and Tony Blair who sanctioned the war of Iraq more like Zeus than Christ? The Christ who had an abhorrence of violence, is replaced by one who advocated turning the cheek has been replaced by a Zeus like Christ who hurls thunderbolts to destroy his enemies.  In this accommodating church it easy for a cabinet minister to find an accommodating priest who will be accepting of the most inhumane of policy decisions. The old religion of power and privilege is very alive in today’s  Christian church.   

Philosophical scepticism the antidote to Neo-Liberal fantasies

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Although I have read economics, philosophy and theology at university, I am not an academic and I want a description that distinguishes me from the professional philosophers and economists. I think I can best be described as a ‘Hedgerow Philosopher or Economist’. It is a steal from Thomas Hardy’s ‘The Return of the Native’, at the end of that novel Clym Yeobright becomes a hedgerow preacher. Lacking the formal qualifications necessary to become a preacher in an established church, he takes to the roads literally preaching to the country people in the fields. The hedgerows being the walls of his church and the place where he sleeps most nights. He is a figure that has always fascinated me and I Identify with Clym. I am a hedgerow philosopher because I speak as an outsider, looking in from outside the academy. This is not a viewpoint soured my malice or envy, but a viewpoint that expresses freedom and my independence, as outsider I am not obliged to follow the disciplines of any school. It is this distancing that gives me a different perspective on the practice of economics.

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Country people such as myself believe that our being in constant contact with nature gives us an understanding of the world denied to town folk. It is the experience of witnessing the sunrise or sunset over a country landscape that makes us feel we are closer To those elemental forces that govern nature and the world. Probably this arrogant assumption is totally unjustified, but nevertheless country people do assume a superiority over their townie cousins.

As a philosopher I would suggest that economists are making a similar error to that made by philosophers as described by Nietzsche. One of the assumptions that under pins any moral philosophy is that humans are responsible for their actions, they make choices good or bad. However as Nietzsche write psychology demonstrates so many of actions that an individual makes are predetermined, so how can they be responsible for their actions? He accuses moral philosophers of falsely attributing behaviours to men which are absent in reality. They fall at the first hurdle in constructing their their moral philosophies. Similarly economists fail as they fail to understand the relationship between the economy and the host society of which it is part. One exception to this common misunderstanding is the economist Michael Polyani.

Contemporary economists know the writings of Friedman, Schumpeter, Hayek and Rand, yet never Hayek’s great rival those of Polanyi. Polanyi is absent from the economics curriculum of universities. Probably because he puts the economy back into the society of which it is part, he makes it one social science among many, relegating it from it’s position as the Queen of social sciences. He writes that the market economy is a threat to the social order and must be regulated so as to control its destructive tendencies. The example he use to demonstrate this is the Industrialisation of Britain in the late 18th and the threat that posed to society. The new textile factories produced cheaper and better cloth and in greater quantities than the home workers, That is the hand loom weavers. With the collapse in demand for their cloth these weavers were impoverished and faced the very real threat of starvation. The government responded to their misery by introducing the ‘Speenhamland system’, which as with today’s working tax credits was a supplementary payment made to the weavers to enable them to pay for the necessaries of life. He suggests that it was the system that prevented there being an English revolution to match the French one. Desperate starving weavers would have had no option but to resort to violence to obtain the food for their families. It was a series of bad harvests and hunger that drove the Parisian mob to violence and it was that mob that was one of the driving forces behind the revolution. Any economist that preaches a message contrary to the ‘feel good’ philosophy of Neo-Liberalism is unwelcome in today’s economics departments and Polanyi would not be found on any departmental book shelves.

Fear of the damage an unbridled free market can wreak on society is slowly becoming better understood within the governing classes. Recently the Head of Transport for London spoke of his fears that the high price of transport could provoke social disorder. He feared that what happened in Brazil could happen in London, when the poor took to violent street protest to express their anger at high fares. Neither economic or social history intrudes on the unreal world of Neo-Liberal economics; if it did they would know that the propertied classes of Victorian London lived in constant fear of the mob. A similar fear seems to be developing now with the spread of gated communities in London whose intent is to keep out the violent feral underclass of popular imagining.

If economists were also philosophers they would be familiar with philosophical scepticism, which teaches that all schools of philosophy are flawed and blind faith in one such system is an error. Neo-liberal economics as one such grand theory of everything is flawed. Human knowledge is at best limited, they are unaware of Socrates dictum that he as the cleverest Athenian knew that he knew nothing. The practice of economics would be improved if it’s dictums were subject to a healthy degree of scepticism.

What economics lacks is any understanding of ethics, which is essential for any human science. In the 1960’s, Says Law was discredited because of its very lack of humanity (and because of the existence of better alternatives). Says law states that governments should never control wage rates, as if wages are allowed to fall to their natural level, employers will start to employ this new cheap affordable labour. Employment will pick up and competition between employers will push up wage rates and all will be well. Without openly acknowledging it the British government has been an advocate of this law. By removing all protections from the labour market they have allowed wage rates to fall to such a level that employers can buy lots of this new bargain priced labour. It matters not a jot that many of these new jobs pay less than the living wage and the recipients of the new poverty wages live a life of misery. This is why in the UK there is a recovery that few experience as they are stuck on poverty wages with no chance of increasing them. Rather than the recovery pushing up wages, employers will use agency workers who they can employ at less than minimum wage, by adopting various legal subterfuges. The government and the community of economists are unaware that an economy which fails to work for the majority of people in reality works for no one. Having a childlike or naive faith in Neo-liberalism and lacking the perspective of a philosophical sceptic they will also mistake the fantasies of Neo-Liberalism for reality.

Neo-Liberalism the latest of a long line of pseudo philosophies that plague mankind

Isaiah Berlin once remarked that there could be no such thing as a right wing philosophy. This at first puzzled me as the philosophers I studied were generally to the politically right of centre. What I then realised was that although these philosophers were of the political right their philosophies were not. Their philosophies were too enlightened to be confined within the bounds of conventional right wing thinking. A truly right wing philosophy would be founded on the principles of personal aggrandisement, the abuse and exploitation of fellow men (a contempt for the majority of mankind), the extolling of social inequality and social privilege. To express it more simply there cannot be a philosophy of nastiness; it is contrary to the understanding of the that the Greeks gave to this word, which that it is the love of wisdom. Praising greed or inequality cannot be the basis of any philosophy as it is a paean to unpleasant form of self interest.

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Having introduced the term pseudo philosophy I need to explain what I mean by the term. A pseudo philosophy is a one that serves to justify the self interest of a particular group. This self interest is always described in terms of a higher idealism, always a theft of universally admired ideals, but ideals that were redrafted to serve a particular narrow self interest. The medieval knight was at his worst was a killer, a rapacious looter and rapist yet this brutality could be justified by chivalry. This knight was a Christian knight, who spent the night before knighthood in prayer at a chapel. A knight who promised to use his strength to protect the poor and weak, treat women with courtesy etc. Somehow those killed by the knights did not fit into any of the protected categories, they were non people excluded by the code for a variety of reasons, for example when the Christian knights stormed Constantinople, the killing of Christian priests and monks was justified as they were heretics.

Pseudo philosophies unlike philosophy have the intention of stopping the advance of human knowledge, they want to stop the clock on change. They want to preserve the contemporary society in aspic or in the most extreme cases regress to a less enlightened age. The militants of Isis in Iraq practise the pseudo philosophy of violence, their rise to power is justified by the need to purge society of non Islamic elements. The barbarity of their regime can only be justified if they remove and destroy the enlightened elements of modern Islam society, as their existence is a constant and compelling criticism of their regime and a reminder that there is an alternative. Barbarity and the lust for power cannot tolerate learning whether it be culture or education as it is in opposition to their barbaric ethos. An ethos best expressed in the words mistakenly attributed to Goebbels, ‘when I hear the word culture, I reach for my revolver’.

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What these pseudo philosophies have in common is a disregard for majority of humanity, who they class as inferior beings, full membership of humanity is limited to elite groups, the medieval knight or the contemporary billionaire. Possibly the cruelest of pseudo philosophies is National Socialism which classified whole groups of people as sub human, such as the Jews, the Roma, homosexuals, the disabled and proceeded to exterminate them. Contemporary pseudo philosophies such as Neo-Liberalism embody this same inhumanity. Ayn Rand a leading prophet of this philosophy also demonstrates a contempt for the masses of humanity. In her novels mankind is divided into two groups the ‘producers’ and ‘looters’, with corresponding physical characteristics. Her producers are square jawed of an angular physique, her looters are weak chinned and have flabby physiques. A caricature of humankind that could almost have been borrowed from the Nazis, with their comparisons of the magnificent physique of the Aryans with the grotesque bodies of the Jews. One critic said that there was the whiff of the gas chambers in her novels

Rand as with all pseudo philosophers is able to dress up her ideas with a moral grandeur suggestive of utilitarian philosophers Jeremy Bentham and J.S.Mill.

My philosophy, in essence, is the concept of man as a heroic being, with his own happiness as the moral purpose of his life, with productive achievement as his noblest activity, and reason as his only absolute.

—Ayn Rand, Atlas Shrugged[11]

Unfortunately such grandeur can be deconstructed into the belief that greed is the motor that drives the world. Evil gets redefined as the attempt by the ‘looters’ to deny the ‘producers’ through legislation and its evil begetter over mighty government to rein in and control the wealth producers and creators. Billionaires are her heroes the poor are ‘lice’ and ‘maggots’. Unsurprisingly Ayn Rand is popular with the right, particularly the Republican Right in America. She seems to have been almost as influential as Friedrich Hayek and Milton Friedman in recasting the USA and the UK in the Neo-Liberal mould.

Since the philosophy of Rand, the economics of Hayek and Friedman gives a moral camouflage to the activities of the predatory financier class, it is not surprising that Neo-Liberalism has become the moral philosophy of this class. They by using their financial clout have manipulated the political classes into accepting Neo-Liberalism as the philosophy of the political class. In the UK politicians as in the USA have become totally subservient to the ‘producers’, government now is principally run to facilitate the interests of the producers. Public service (big government) has been diminished through the wholesale privatisation of public services. In their latest act of obeisance they are about the agree the Transatlantic Trade and Investment Programme (TTIP) which will enshrine in legislation the dominance of producers over the political class. If in the future any government has the temerity to force the big corporations to adopt environmental or labour protection policies which they claim could reduce their profitability, they can reclaim those lost profits from the government. Usually when a political class legislates itself into irrelevance it is under the threat of violence as in Nazi Germany, the signing of the TTIP treaty is unusual in that our legislators are wiling signing themselves into irrelevance.

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Practitioners of pseudo philosophies such as National Socialism and Neo-Liberals in their anxiety to give their philosophy a more secure cultural underpinning, drift into turning their philosophy into a religion. Towards the end of the Nazi regime the SS tried to reintroduce the old pagan Gods as a cultural reinforcement of Nazism. Neo-Liberals have already made that change. There is for them a superhuman entity that creates, controls and remakes life and that is the free market. All human societies should be modelled on the free market and Neo-Liberals believe that their role is to remake society into the perfect free market, a behaviour that can be compared to those followers of millennial religions. They thanks to Ayn Rand have a belief in a non-rational world view that is not subject to critical analysis, it is just true.

The purpose of my essay is to explain the nature of the enemy, that people such as myself oppose. If you understand your enemy you are better able to fight it. The philosophy that guides the Rand’s producers is a kind of disturbed masculinity and is a threat to the good society. All the sex in Rand’s novels display this disturbed masculinity, it always violent, suggestive of rape. Not a bad metaphor for the financiers who have raped society through their greed, living a damaged broken social world in their wake.