The recession is foremost in our papers and in many of our minds. We all recognize that the country—even the world—is facing an economic downturn, and that, at the very least, we all need to cinch up our belts a bit. Hundreds of thousands of people are losing their jobs, there is the potential of six million people losing their homes in foreclosures, five banks are closing every weekend, rents are going up and donations to charities are going down. It doesn’t sound like there could be anything good that could happen from all this, except a lesson about greed learned the hard way. Certainly there is a lesson to be learned about greed here, but there could be an actual economic hope that the church could take advantage of.
1. The basis of capitalismI’m going to begin talking about this hope with the driest subject possible—economics. This is not to bore you, hopefully, but to provide a theory on which we can build our hopes on.
The idea behind an economic system—such as capitalism, socialism or communism—is for the overall benefit of a community to provide resources for all. An economic system is supposed to be a theory that will allow everyone to have the resources necessary. Marxism was supposed to put the worker as the deciding factor of his labor. Communism was a more top-down approach, where leaders determined the best use of resources for all. Socialism allows people to have some control over their own income, but controls a large amount of it for the public good. Capitalism, our system, is supposed to provide economic freedom for the individual, with government regulation, but minimal control.
The father of capitalism is supposed to be Adam Smith, a philosopher of Oxford who published his economic treatise in 1776, The Wealth of Nations. The idea behind his economic theory is that price is determined by two factors—the cost of the labor to produce, and the desire of the buyer to purchase. Thus, if a producer wants to have a computer that is going to make them money, they need to produce it as cheaply as possible, and still make sure it is a product that the buyer still wants. So we get sleekly designed computers that break down in two years.
The basic idea of modern capitalism is this: whatever is good for the producer is good for the buyer. Because the producer is always looking out for the desire of the buyer, then if the producer is selling their products, then the buyer will be satisfied. If the buyer is dissatisfied, then the producer doesn’t make money and so they go out of business. It is to the benefit of the producer to keep the customer happy. Thus, modern economic theory follows the mantra, “Greed is good.” Whatever benefits the producer also benefits the consumer.
While I could provide a scathing critique of this ideal—which has been done many times before by better critics than I—I would rather want to reflect on the source of this system. Many people place all credit and blame of this system of greed upon the shoulders of Professor Smith and the Wealth of Nations. Certainly the description Smith gives in that book reflects a system similar to the one described. However, Adam Smith’s ideals were broader than a simple economic theory.
Smith was not originally, or primarily, an economist, but an ethical philosopher. The Wealth of Nations was not his first book, but his final one. The foundation of his economic theory was not a concern about price, but morality. His first full work was called A Theory of Moral Sentiments.
This book is about the basis of morality, and it full of practical and fascinating insights. In it, Smith claims that the basis of all morality is not a standard of rule, but empathy for another human being. “Sentiments” in the eighteenth century was a synonym of “compassion” or “empathy.” And this identification with others, Smith claims, is the basis of how the world works.
You can read The Theory of Moral Sentiments here:
http://www.econlib.org/library/Smith/smMS.html
A Wikipedia article on the book with a summary is available:
http://en.wikipedia.org/wiki/The_Theory_of_Moral_Sentiments
Thee are various exchanges, not just economic, that take place in life. Cultural exchanges, social exchanges, informational exchanges as well as goods being exchanged. The way an exchange should be done is in view of both one’s own need and especially the other. Smith claims, actually, that an act done out of complete selfishness is not completely human, because it is equally human to identify with and act in sympathy with the other. To have any kind of exchange is to have both parties see the need and hope of the other and to attempt to meet that need, as well as one’s own, in the exchange.
Thus, our current economic system is completely unlike the one that Smith envisioned. To claim that the needs of one party, the producer, automatically is to the benefit of the other is false. First of all, because Smith’s theory assumes any exchange to be between two humans, acting in full human capacity. This means that the producer is empathizing with the one with whom the exchange is to be made. However, if the producer is actually given societal permission to act in complete self-interest, then sympathy is no longer necessary.
One of the greatest indications of the failure of modern capitalism is how a producer will create a desire in a consumer for a product the consumer had never considered necessary before. A consumer never thought “Hey, I think there should be a new Pepsi” until one is presented, attractive, held by an attractive human being. The desire is created, not just met. This is far from Smith’s idea of empathy, but rather a psychology of creating in others the desire for what is in the producer’s benefit.
If capitalism is to work as a system, there needs to be a return to Smith’s original concept of compassion, and the meeting of needs. Without this, we have the increase of greed in which the few obtain the wealth while the populace—the nations—find themselves in greater poverty, unable to obtain that which is their greatest need. Only the successful producer gains what is needed, and more.
2. The focus of compassionAnother issue that comes with greed—the focus of one’s own needs and desires—is the way that one looks at others. As Smith said, to be fully human, one must be able to appreciate the other person as their own entity, equal to oneself, with their own suffering, their own loves, their own hopes, their own needs. The lives of others might be able to also meet our own needs, but often that is not true. Often, other’s needs do not neatly intermingle with our own, so that we can offer a reasonable exchange between the needs. If, then, we dismiss the other because we can obtain no benefit from them, we are reducing the other to only that which they can benefit ourselves. This is a selfish manner of looking at others.
The system we have reduces people to that selfish view. The consumer is only the consumer of the product which the producer desires to sell. Thus, the consumer is not a whole person, but only the desirer of the producer’s product, or they are nothing, a non-entity. The cashier is only interested in the consumer as a purchaser of the product and the consumer is only interested in the cashier as a seller of certain goods and services, nothing else. There is a safety and an efficiency in this arrangement, but in point of fact, it is objectification. The other, in exchange of goods, is only the beneficiary of the self or of the corporation. Nothing else. This is dehumanization.
The real human being is actually a bundle of desires and hopes and needs. Each human is it’s own society of often mixed desires, and the commodity exchange is not meant to fulfill one’s basic human need, but to provide only what one is prepared to sell.
The first step in a true economic system is to see each person as a whole person, with a potentially full range of needs and desires. The basic needs of humanity are not limited to food and clothing, as well. Each human has a wide range of needs, including:
a. Survival needs—Yes, food and clothing. And warmth and sleep. Also a place to go to the bathroom and to be clean. And some basic needs met to be healthy—a place to rest when sick, clean bandages when cut. Often when we think of needs, we think of these areas. However, even these needs are marginalized in a greed society. For a bathroom is not available, unless the need of the producer is met—an item is purchased. And one’s health needs are not considered in a grocery store, which emphasizes the products which sell (e.g. Doritos), not the items that provide health (e.g. leaf spinach).
b. Social needs—There is a need of every person to connect with another person. This means a fair exchange of personal information and general communication. Again, this is marginalized in the marketplace due to the need of efficiency and the focus on monetary profit, rather than the benefit of full humans.
c. Honor needs—Every person needs some form of respect, to be recognized and honored for who they are or for what they’ve done. This can be in a small way, such as a thanks, or a large way, such as a ceremony. For the most part, this need remains fulfilled. Except for those who find that they cannot participate in the marketplace for whatever reason—they are considered undeserving of any respect because they do not accomplish the benefit of producers.
d. Safety needs—Every person needs to have a sense of security, without fear of attack or theft. Safety has proven to be a commodity, the need of which must be created. We are trained to fear various ailments by pharmaceuticals, and trained to fear terrorists and murderers by the news media. To feel that what the leaders are doing is adequate, we must first be convinced of the need, and that the leaders are meeting that need. Much of this is done to benefit the leaders to provide security for their jobs.
e. Peace needs—A full human being must be at peace within themselves, as well as sense peace from without. There must be contentment, a sense that all is good within oneself. However, this sense works against the market economy. The market must continually create dissatisfaction in order to create good consumers. The satisfied customer is the customer of the past.
f. Pleasure needs—This is a need often ignored by a culture that still plays with Stoicism. However, if we do not have pleasure in our lives, then we will be in depression, which leads to suicide. Just recently has the idea been given that to have efficient workers, then some kind of pleasure must be placed in the workplace. However, pleasure, as well as other needs, is often inadequately met because of the desire to exercise common pleasures that everyone can participate in. However, not everyone obtains pleasure from a party or from a “fun activity”. Efficiency, again, demands that pleasures be held in common. A full humanity must have that which is truly pleasurable, to the individual.
If we are going to have an economic system that provides for everyone’s basic needs, then we need to have a system that looks at people as a whole person, not as a beneficiary for the producer. And the best economic system is that which makes certain to provide for those who are in deepest need. Every system has cracks—those who will not be assisted by the system. The best system is that which will fill those cracks—will find ways in which to meet the needs of those who are not provided for in the basic system. Thus, a system must be flexible in order to truly meet all needs.
3. The economics of community
