Is Christianity Bad for the Economy?
Noneconomists imagine that God has so poorly designed the world that a lack of thrift, even tending to avarice is, alas, necessary to keep the wheels of commerce turning, to “create jobs” or “keep the money circulating.” They imagine that people must buy, buy, buy, or else capitalism will collapse and all of us will be impoverished. It’s the alleged paradox of thrift. Thriftiness, a Good Thing in Christianity and most certainly in Buddhism and the rest, seems able to impoverish us. We will do poorly by doing good. If we do well, we are damned. Choose: God or Mammon.
So the noneconomists think. Dorothy Sayers, who was more than a writer of mysteries, though not an economist, complained in 1942 as a Christian about “the appalling squirrel cage…in which we have been madly turning for the last three centuries…a society in which consumption has to be artificially stimulated in order to keep production going.” To tell the truth, many economists in the era of the Great Depression had reverted to this noneconomist’s way of thinking. The theory was called “stagnationism.” It was a balloon theory of capitalism, that people must keep puff-puffing or the balloon will collapse.
But since the 1940s, we economists have recovered our senses. The balloon theory has popped, and with it the paradox that sin is necessary to “keep production going.”
Nothing would befall the market economy in the long run, says the modern economist, if we tempered our desires to a thrifty style of life – one old Volvo and a little house with a vegetable garden and a moderate amount of tofu and jug wine from the co-op. The balloon theory sounds plausible if you focus on an irrelevant mental experiment, namely, that tomorrow, suddenly, without warning, we would all begin to follow Jesus in what we buy. Such a sudden conversion would no doubt be a shock to sales of SUVs at Ford and Toyota. But, the economist observes, people in a Christian Economy would at length find other employment, or choose more leisure.
That’s the relevant mental experiment, the long run. In the new, luxury-less economy it would still be a fine thing to have light bulbs and paved roads and other fruits of enterprise, and more of these would be better than less. “In equilibrium” – a phrase with resonance in economics similar to “by God’s grace” in Abrahamic religions – the economy would encourage specialization to satisfy human desires in much the same way it does now. People would purchase Bibles in koine Greek and spirit-enhancing trips to Yosemite instead of paperback Harlequin romances and package tours to Disney World, but they would still value high-speed presses for the books and airplanes for the trips.
The desires of people who followed Jesus – or Mohammad or Amos, or for that matter Buddha – might well become different from those they typically now indulge. But that doesn’t change how the system would work best. It would get the high-speed presses for printing Bibles by fostering a system of private property in which people’s ideas and their labor seek their best employment in printing – what the blessed Adam Smith called the “simple and obvious system of natural liberty.” And it would get the airplanes to Yosemite by allowing alert consumers to seek reasonable deals in travel, what Smith called the propensity to truck and barter.
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Ah yes, Deirdre McCloskey. I remember “her” as Donald McCloskey…!!
Re: Donald –> Deidre. I read one of his texts in economic history in grad school in early 90s, and lately have seen her name around similar work and wondered if there was a relationship. Well, what do you know…..
As to the substance of the quote, it is as provocatively pointless as so much of the free market mystification that the Adder spreads so liberally around this blog…..
1) Why is she picking on Christian critics of consumption? Most of us recognize that the world’s markets would not come screeching to a halt if we began to consume more modestly in pursuit of a truly Christian life. That’s why we advocate it.
But it’s telling that she ignores the group that em>does continue to push a “balloon theory” of capitalism — the herd of market analysts, pundits, and marketers who constantly worry in the media whenever consumers begin to buy less, whose anxiety will reach near panic level if each Christmas is not an orgy of excess that surpasses the last. She should direct the scolding at these “non-economists.”
2) The “relevant mental experiment” in the world we live in is not, as she suggests whether a market economy would come crashing down if we were to be more thrifty. Everyone knows it wouldn’t, for the reasons she outlined. No, in a world where billions of people do not have the barest necessities for survival, where some 45 million people do not have health, where more than 36 million Americans live in poverty, the “relevant mental experiment” is whether following the gospel commands to care for the least among us would bring the economy crashing down. Would markets cease to function if we provided health care for all? Would people lose all ambition and cease work if we met the basic needs of the poorest among us? Would the home banking industry really be destroyed if we put in place regulations that would protect people from the irresponsible speculative practices of the most powerful lenders?
I don’t think so. The free marketeers have not convinced me that the economy comes crashing down if we fulfill the dictates of the Catholic call for social justice.