Monday, October 8, 2012

The Church of Capitalism: Why Right-Wing Economics is Once Again not Rational

Sanford F. Schram
Bryn Mawr College

At the end of the 18th century in England, a debate raged over what to do about the poor. Thomas Malthus, a clergyman recognized as an economic thinker of the first order, prevailed in this debate. As Peggy Somers and Fred Block note, Malthus argued, essentially, that it is against the natural order of things to aid the poor, who would only propagate further and thereby bring down the whole society with them. Malthus’s arguments contributed to reform of the Poor Laws designed to restrict aid in the name of encouraging work. Malthus based his thinking on a melding of economic theory and Christian theology, arguing that policy needed to be consistent with the will of God and the natural laws that flowed from God’s vision for the world. Human attempts to deviate from our divinely-inspired natural state of being would only fail. As a result, public policy must not subvert processes by which people’s natural inclinations were made manifest. Malthus’s invisible hand was not unlike Adam Smith’s and laid the basis for a Darwinist view of how society evolved.

This amalgamation of religious belief and economic reasoning eventually lost its prominence. By the mid-20th century, for example, conservatives in the United States such as Irving Kristol could only offer “two cheers” for a capitalism that had lost is sacred commitments to doing what was not just economically efficient but also morally viable. Conservatives at times could even rail against the tendency of capitalism’s hedonistic consumer culture to rend the moral fabric of the social order.

Yet, more recently, as William Connolly and others have demonstrated, Christian religion and capitalist economics have again been fused tightly in the extreme conservative movement that has captured the Republican Party. This, I believe, is the main reason that so much of their economic reasoning appears irrational and in direct violation of mainstream economics. It disregards almost all available evidence regarding the efficacy of their specific, or more appropriately, often unspecific, economic policy proposals. The insistence that their economic ideas be simultaneously consistent with religious belief makes for a faith-based economic policy that is impervious to reconsideration in light of rational analysis or factual evidence. Going beyond the old aphorism, not only will they will not allow a few good facts to ruin a bad theory; they will also not allow anything that smacks of secular-scientific rational thought to undermine their firmly held religious beliefs. 

Witness Mitt Romney’s factually incorrect statement that all Obama supporters pay no federal income taxes and they feel they are entitled as victims to government benefits. For some conservative commentators Romney’s factual errors were to be excused because they were in service of an important moral judgment that Obama’s supporters fail to practice personal responsibility.

This privileging of moral belief over evidence can be seen in other policy issues discussed by the right. The 2012 campaign has publicized the extreme conservative belief that rape victims cannot get pregnant, thereby making it less controversial to deny them access to abortion services (which the Republican Party platform has advocated for years). The same holds true for global warming, which the extreme conservatives continue to insist is a hoax, perpetrated somehow by conniving scientists. And, more generally, the Romney campaign has responded to complaints that many of its criticisms of the Obama Administration are outright lies by declaring that it refuses to be governed by fact checkers, as if the facts were an unfair constraint on true believers.

Still, it is in economic theory that one finds the strongest version of creedal insistence. From tax cuts to stimulate job growth to balanced budgets to create more confidence in economic policy to opposition to any new business regulations in order to establish certainty about the economic playing field, there remains scant evidence that these policy positions have any factual basis or are consistent with established economic thinking. The problem with the proposals is that they are proffered like universal beliefs true for all times under all circumstances, much like Malthus’s assertions that policy must always be consistent with an unchanging, underlying natural order. The insistence that these policy positions are always the only thing the government should do to stabilize the economy and encourage growth sounds a lot like a set of dogmatic religious principles that when violated merit nothing less than damnation. But economic reasoning has moved beyond Malthus’s unchanging natural order of things. Historically sensitive analysis steeped in facts supports a more nuanced approach. Tax cuts can, at times, stimulate the economy, but it depends on which cuts under what conditions. Balancing budgets can produce greater confidence and heighten willingness to invest without fear of inflation, but confidence-building maneuvers are likely to work only if investors think the economy is likely to grow as a result. And the idea that much-needed regulation should be forestalled is not likely to increase certainty about a predictable economic playing field where no new government intervention will occur if it only leads to corrupt practices that allow those who cut corners to lower prices compared to competitors who are reluctant to undermine the public’s health and safety and the nation’s well-being.

Malthus-like religiously-inspired economics has returned to public discourse with a vengeance. Its unwavering insistence on its policy prescriptions regardless of circumstances is perhaps one reason it appeals to deeply religious constituencies, who steadfastly believe in timeless moral certainties regardless of the facts. It may also be why these constituencies support these policies at the cost of their own economic interests. In the end, however, it is our ability to act collectively as a nation to take rational, factually-supported steps to resolve the current economic crisis that is the major casualty of this return to economic mysticism.



Post a Comment