Economics as America’s Sovereign Religion: Is it Time for a Reformation?

reform.001The most powerful religion in the Western world is no longer Christianity. It is economics.

It can actually be quite instructive to consider economics not as a science or sociology but as a religion, complete with doctrines, priests, and constant references to faith. So says John Rapley in his essay from The Guardian last July.

“Think about it. Economics offers a comprehensive doctrine with a moral code promising adherents salvation in this world; an ideology so compelling that the faithful remake whole societies to conform to its demands. It has its gnostics, mystics and magicians who conjure money out of thin air, using spells such as “derivative” or “structured investment vehicle” … it has its prophets, reformists, moralists and above all, its high priests who uphold orthodoxy in the face of heresy.”

If the economy is the new religion of the masses, then economists are its priestly class replete with their own denominational squabbles and even scandals. The economists are like priests,

“…giving us guidance on how to reach a promised land of material abundance and endless contentment. For a long time, they seemed to deliver on that promise, succeeding in a way few other religions had ever done, our incomes rising thousands of times over and delivering a cornucopia bursting with new inventions, cures and delights.”

Economics dominates modern ethical discourse. Profitability now equates with ethical virtue. The bottom line ethical question for Western society–the question behind all of our other questions–is no longer “what is true?” or “what is good?” and certainly not “what is beautiful?” The bottom line ethical question of our day is “what is profitable?”

If economics really is a religion, then it is by far the most successful and widely held belief system in human history. Rapley writes,

“With nearly every country on the planet adhering to the same free-market playbook, and with university students flocking to do degrees in the subject, economics seemed to be attaining the goal that had eluded every other religious doctrine in history: converting the entire planet to its creed.”

Perhaps it is time for our society to rethink the sovereignty we’ve granted economics. Their predictive and organizational powers were at an all-time high just before the 2008 collapse. Some economists even bragged that they had essentially depression-proofed the economy. They were wrong.

This reality inspires Rapley’s most stinging critique:

“The hubris in economics came not from a moral failing among economists, but from a false conviction: the belief that theirs was a science. It neither is nor can be one, and has always operated more like a church. You just have to look at its history to realise that.”

I’ve written about this extensively. Free market capitalism is a powerful modern myth. There is no such thing as a “free market.” All markets are created and governed by rules that restrict some forces and unleash others. This fact cannot be emphasized enough.

So, when economists appeal to the “free market” to justify a specific order to our society, they are really appealing to a set of rules they themselves have designed. In this way our modern economists are not unlike the priests of the pre-reformation Roman Catholic Church. An appeal to church doctrine was identical to an appeal to God.

Modern economic dogma is presented as though it is a force of nature, holy and self-evident. In truth economic dogma is created by the economic priestly class, and designed specifically to benefit the priests and their billionaire patrons.

Observance to modern economic dogma, Rapley notes, “is enforced in much the same way that a religious doctrine maintains its integrity: by repressing or simply eschewing heresies.”

Yet it’s easy to demonstrate that this view of economics struggles with internal coherency. Economic dogma is not built on natural data as is the case with physics or medicine. Economics is built on human data generated in much the same way as church dogma.

Hence economic data is open to wide variations in interpretation. Rapley says, “just as you can find a quotation in the Bible that will justify almost any behaviour, you can find human data to support almost any statement you want to make about the way the world works.” This situation is perfect if you are selling consulting services or self-help books. It’s not so great if you are part of the working class. The priests control access to the money god. The priests make the rules. They control the system.

Sadly, the priestly class of economists and their friends in the political class have not designed economic systems that are fair for everyone. Appeals to individual liberty, limited government and the free market ring quite hollow today. These doctrines have given us an economy that no longer works for average people. CEO pay has grown 90 times faster than typical worker pay since 1980. The world’s 8 richest men hold more wealth than half the world’s population put together. In America the top 1 out of 1000 households holds about 90% of the wealth.

Perhaps the time has come for an economic reformation. We could characterize modern day figures like Bernie Sanders and Elizabeth Warren as the Luther-Erasmus one two punch of a growing economic reformation.

As long as the billionaire class continues to buy and sell politicians (the ruling class), whose laws and positions are substantiated by economic research produced by economists (the priestly class) then this religion of economics will continue to slide toward corruption. As it does things will continue to get worse for the working class. At some point American society will reach a tipping point. Sooner or later the reformation will come.

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  • jekylldoc

    As an economist, I would tend to agree with a lot of this, but find the entirety to be shallow and not very insightful.

    It’s true that social democracy, or democratic socialism, if you prefer, has done a better job than “free market” capitalism. Maybe not better at competing in open markets, but better at delivering a society that works for the average person. But it has its problems, too.

    The idea that economic research is just doctrine, logically deducing implications from assumptions pre-determined by some ruling authority, is actually fairly ridiculous. Such things do go on, but the push to test theory against data does rein in many of the excesses. In fact the problems facing the Republican party today are mainly caused by its habit of ignoring careful economic analysis. They are currently putting this on display again by claims that their proposed tax cuts will pay for themselves with increases in growth. Dat ole voodoo economics got some reel powah, but it ain’t the power to show up in data.

    I’m all for moving in the direction of social democracy. But it needs to be done with eyes open, recognizing that the world does not remake itself in any fashion we are capable of wishing for.

    • https://littlegreenleafinthewoods.wordpress.com charlesburchfield
      • jekylldoc

        Yes, well, some people think accounting is all God is interested in. Me, I think God’s accounting is odd, like when the workers who arrived for the last hour of the day got paid the same as the ones who worked all day.

        • https://littlegreenleafinthewoods.wordpress.com charlesburchfield

          Ot!
          (According to Urban Dictionary:
          Ot, Short for “alright”. Used in place of “alright”)

  • jekylldoc

    Scott, having been on the inside of serious number crunching, I can tell you that it is far from ideal, and also far better than people like Art Laffer who don’t bother with numbers or make wild assessments with no basis in real methodology. Whatever you may say about Krugman (and I have read a lot of his columns without seeing any evidence of his being wrong on either forecasts or assessments of economic forces at work) he at least checks in regularly with the modeling people to see what the evidence argues. If you want to see “wrong” check out the predictions of Barro, or the monetarists, who have pretty much sifted down to bedrock of real hackism, following the 2007-08 crisis.

    More to the point on a forum such as this, you say, “Comments such as, “The bottom line ethical question of our day is “what is profitable?” are just silly and not provable.”
    From the age of Ivan Boesky to the dark money looming over corporate boards and hiding out in offshore havens even today, this is a pretty good assessment of the ethical state of American business. Not that it was ever very clean, but for 20 years that was the approach taught in management schools, with “damage control” and “public relations” being the only checks on corporate malfeasance. We have only to consult the business practices of our current President to see the result in action: the only question he considers is how much money he can make. No restraint by ethics whatsoever, and a thorough eagerness to test the limits of what the law will let him get away with.

    You seem to dismiss “the global warming crowd” but I have been much impressed with the effect of that issue on actual reflection by business people. The Koch brothers have not yet faced up to it, but a lot of other CEOs have recognized that their children and grandchildren will live with the disaster we are making, and they can’t just run to a gated community. I suspect that what really happened to ethics in business was precisely the lack of community – CEO’s no longer live near, or interact with, the workers they employ. Another community destroyed? How is that their problem? The return on investment was below the cutoff, so screw ’em.

    • Scott

      Well Krugman calling for a housing bubble to replace the dotcom bubble could be called misguided. My point was Laffer, Krugman, and so many others have sacrificed science for a rigid adherence to their political ideologies.
      The only disagreement I have with your response is in regard to the comment that “CEO’s no longer live near, or interact with, the workers they employ. Another community destroyed?” Thats more hyperbole than reality. Most CEO’s are small business owners that live and engage in their local communities. We see then at ball games, in church, or out to dinner. The evil CEO who is screwing up the world is more of an anomaly than anything else.

      • jekylldoc

        Scott, I certainly agree that Krugman sticks to his ideology, but he limits his claims for it to arguments that can be substantiated, or that are about values rather than cause-effect relationships. Of course researchers for the American Enterprise Institute can usually say the same. I never ran across any call by Krugman for a housing bubble.

        I also agree with you that most CEO’s are small business owners and are integrated into the community. We’ve had those for generations, maybe centuries, and they don’t usually have an MBA or think like one. Those are people who support the Rotary Club, play golf with priests or ministers, and are happy for their kids to go to the local public school.

        The world of big business is very different. There, they calculate an expected return on investment from campaign contributions. They are happy to spend millions calculating ways to minimize taxes, since it will save them dozens of millions. Their numbers are much smaller – most businesses are still small businesses – but their share of employment is large, and their influence on policy is even larger because the sales to the outside, on which an area depends, are mainly in the big business sector.

        • Scott

          From his NY Times column. “The basic point is that the recession of 2001 wasn’t a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.”

          • jekylldoc

            A little research informed me that this column was rescued from obscurity by the Mises Institute and others who claim that it shows Krugman was actually calling for the housing bubble. The column was written in 2002, during the 9/11 recession, and Krugman was quoting someone else’s exaggeration to point out what it would take for consumer spending to rescue the economy from a slump in business investment.

            http://www.nytimes.com/2002/08/02/opinion/dubya-s-double-dip.html

            The idea that he was actually proposing a housing bubble is absurd. Krugman seems to have issued a response of sort to such accusations, headed “And I was on the grassy knoll, too.” Not only is it rather difficult for the Fed to create any kind of bubble (though Krugman seems to believe Greenspan played a role in creating the NASDAQ bubble, which I doubt) but the focus of the column was on what kind of unusual circumstances would permit consumers to replace capital formation with consumption. In other words, it was about cause-effect relations, not choosing appropriate policies.

            Keynesian economists are deeply skeptical of leaving economic stabilization to the Fed, because low interest rates don’t do much to create investment in a slow-growth economy. This analysis goes by the name of “pushing on a string” and it was familiar in the 50s. In 2002 (or in any recession) Krugman would have been an advocate of increasing government spending (generally that is the Keynesian response to sagging business investment) not of trying monetary stimulus at all.

  • Michael Enquist

    Economics is referred to as the “dismal science,” because people feel dismal when economics shows them, scientifically, that they can’t get something for nothing.

    In all the other sciences, when the scientists disagree with each other, it’s shown as a how science is rigorous and evolving towards better understanding. When economic scientists disagree with each other it’s treated as a failing of economics.

    Whenever some one accuses another person of being dogmatic, it’s usually because the first person has weak arguments and failed to change the second person’s mind.

  • Newton Finn

    A fundamental thrust of the message of Jesus is the diametrical opposition of God and money, the two antithetical deities that compete for human hearts and minds. To paraphrase his observation that the sabbath was made for man, not man for the sabbath, one might ask whether the economy is to be made for human beings, or human beings for the economy. If a reformation or revolution is to occur that transitions us from ruthless neoliberal capitalism to a better, more beautiful and sustainable world, one that values people and creation over commercialism and profit, then Jesus will be at the center of that movement. His clarion call for repentence from greed and envy, sand upon which no enduring society can be built, is being heard anew:

    https://www.amazon.com/Life-Truth-synoptic-gospel-Theophilus-ebook/dp/B00NIZOJ4C