The Failure Of Conventional Wisdom

Sojourners convened a forum on economics in the November 1980. Participants included Richard Barnet, a senior fellow and co-founder of the Institute for Policy Studies, author of several books including The Lean Years (Simon and Schuster, 1980) and Real Security: Restoring American Power in a Dangerous Decade (Simon and Schuster, 1981); Larry Rasmussen, professor of social ethics at Wesley Theological Seminary and author of Economic Anxiety and Christian Faith (Augsburg, 1981); Jeremy Rifkin, co-director of the Peoples Business Commission and author of Entropy: A New Worldview (Viking Press, 1980); and Robert Hamrin, an economist and senior staff member of the President's Commission for a National Agenda for the Eighties, author of Managing Growth in the 1980s: Toward a New Economics (Praeger, 1980). An excerpt from the conversation appears below.--The Editors

Sojourners: What are the principal economic realities confronting us in the '80s, and what are the root causes of unemployment, inflation, and recession?

Richard Barnet: The principal economic reality of the '80s is that we are in a slow-growth economy without the political or economic understanding to deal with it. Our present economic ideas and governmental tools are inherited from a unique moment in economic history, the two decades from 1950 to 1970, which was a period of rapid growth that is not likely to be repeated. We were not sufficiently conscious of the environmental and social costs of that growth; we saw only one side of the balance sheet and now we must deal with the consequences.

The other fundamental change in the economy since 1973, which is the heart of our economic crisis, is the demise of cheap oil. The real message of the energy crisis is not that it costs more to fill your tank, but that the control of the price of oil has passed to new hands. Our urban civilization, with its processed foods, synthetic materials, plastics, and dependency on transportation, is based on the continuing cheap availability of resources and, in particular, oil.

Larry Rasmussen: For 200 years, we sought to solve our social ills through the benefits of a high growth rate, so that a war on poverty was to be financed not by a redistribution of wealth but by, in John Kennedy's words, a rising tide that lifted all the boats. The rich did not have to shed any of their wealth in order that the poor might come on board. But an era of slow growth puts the question of redistribution on the agenda.

The principal economic reality of the '80s that most concerns me is a shift in industrial capitalism from a social welfare state to a national security state. Under a social welfare state, you have large corporations which are engaged in a low level of competition; under a national security state, you have large global corporations which are highly competitive. Under a social welfare state, prosperity is defined as full employment with capital and labor in alliance, a broad type of consumerism; but the structural unemployment of a national security state represents an attack on labor.

We are now in transition to such a national security state, where "freedom" becomes merely increased economic and political security for a relatively small number of people, and the conflict between the "haves" and the "have-nots" intensifies.

Barnet: Until recently the prevailing ideology was that of liberalism, or the expanding pie. The traditional means of managing social unrest was to increase the pie so that more crumbs went to the people at the bottom. But now that is being challenged.

The reason there is so much anger in this country is that for the first time the American public is having to face lower expectations. People no longer expect that they will do better next year, or that their children will do better tomorrow than they have today. That widespread realization creates a pressure to tenaciously hold on to your part of the pie, and leads to the acceptance of what some people call the lifeboat ethic, in which those who are productive in the society have to be "rescued" and taken care of. "Productive" people are increasingly narrowly seen as those who own, run, and maintain our corporations.

This is a matter of great urgency for the church, because it has precipitated a crisis of values. We are now in danger of sacrificing just distribution to preserve the production system. This amounts to an abandonment of literally millions of people in this country, and worldwide it becomes billions of people.

The old idea of a just economy based on equal opportunity still prevails: that everyone has a chance at the starting line and with luck and hard work some will make it. But because the manufacturing sector and even traditional middle-class areas of employment are becoming increasingly automated at the same time that our economy is moving toward dependence on foreign labor markets, unemployment in the United States is growing severe. The American worker is thrown into a worldwide labor pot; multinational corporations can go wherever labor is cheapest.

Jeremy Rifkin: It appears that we are ending a whole era of history. Every civilization lives off a resource base, which provides the context for the types of institutions, technologies, and world-views that are developed. Now the world has reached the end of 500 years of a particular resource base which began with the coal fields in England and is ending with the oil fields in the Middle East.

In every other period of history, civilizations worked off a base of renewable resources with solar as their energy source. Then 500 years ago humankind discovered "stored sun," or fossil fuels, under the ground and moved into what is called an "extracted energy environment." The unresolved question is this: If we are near the end of the era of fossil fuels, how do we maintain the industrial structure that is based on it?

Economics is really all about the collection, exchange, and discarding of resources in various forms. The prevailing wisdom would say that the reason the economy is bottoming out is that we are not giving enough inducement to the private sector in this country to modernize machinery and develop research that would provide new ways of creating growth. But technology is merely machinery whose function is to convert resources into utilities which are used for a moment in time and then become waste. So as the resources become scarce--fossil fuels and metals--our technologies become more complex, convoluted, and centralized in order to locate and process hard-to-find resources.

In this regard, the chairman of the board of Mobil Oil is correct when he says this process is getting costlier. At the same time, what he and many people fail to understand is that all those resources which move through the economy end up as waste. The economy is like an ecosystem; it can't live in a medium of its own waste.

In the last stages of a civilization's resource base, your technologies get even more complex and costly in their efforts to absorb all the waste. You are paying the entropy cost. Finally you reach a point where the technology is so complex that the civilization ends up spending more energy just maintaining the technologies than it does getting energy into the flow line. It develops huge synfuel plants, nuclear power facilities, MX missile sites, government bureaucracies, multinational corporations. In a situation like that, the worst thing you can do is what the Democratic and Republican economists would like to do, which is to hot-wire the depleting resources with new machinery, thus bringing you to a watershed in a shorter period of time.

In every other period of history but our own, life was based on waiting for the sun to come up every day and create in nature what we could then consume. It was an orientation that recognized that human beings cannot consume faster than nature reproduces. But when we moved to stored sun, we escalated this time clock because we had three billion years of energy that we could convert overnight. The metabolism of economic, social, and psychological development sped up. We are consuming faster than nature can reproduce, and we are headed toward a dead end.

Economists talk about inflation as having to do with printing money and with fiscal and monetary policy. But these are secondary causes. If it is becoming costlier to locate and process resources, prices will rise. And if it is becoming costlier to absorb the waste produced by economic activity, prices will rise even higher. There will be no way to stop this inflation short of moving into an entirely new energy field.

In the '80s we are making a transition from the age of fossil fuels to the age of renewable energy. There are two methodologies for dealing with renewable energy. One is appropriate technology, which seeks to learn to live at the tempo of nature's production process. This technology is characterized by labor-intensive economic models, decentralized economic and political living, and an emphasis on farming and agriculture.

But there is another, dangerous methodology: genetic engineering. It is a method to organize the gene pool of living resources. To maintain the standard of living to which we have become accustomed, we will hot-wire the gene pool. Genetic engineering will enable us to process and convert living material into utilities faster than nature would if it took its own course.

Barnet: As Jeremy has noted, the amount of goods that society needs or can handle is limited, and the number of hands needed to produce those goods is growing smaller. But society has been organized so that there is a direct relationship between our notion of individual worth and a person's contribution to the production process. Now that many people have lost the opportunity to work, those people have ceased to be valued.

Meanwhile, the industrial revolution has had two other results: the destruction of the family and the destruction of the village or community. Family and community are two bases for valuing people simply because people are part of them.

One of the terrible ironies in the current political debate is that the government is seen as the destroyer of the family, when in fact private enterprise is the culprit. The tremendous pressure to consume put on people by the society bursts asunder the initial family as its members leave to set up their own consumption systems. The government often gets tagged with the blame because it shows up with the band-aid after the family has been destroyed and the corporation has moved to Taiwan or Africa, taking the source of employment with it. People are left without work in a society where one's worth is defined by one's job, and they have no alternative support system. One very important aspect of inflation is that our society creates the waste element Jeremy referred to through the military. The economic effect of taking 1.4 trillion dollars, which we are now slated to spend in the next four years if the recommendations of Senator Tower, the new chairman of the Armed Services Committee, are carried out, is equivalent to taking the money and burying it. The military is buying machines that do not produce, that make nothing. Military expenditures starve the private economy and are extremely inflationary.

Sojourners: One central message of Sojourners is that the economic well-being of the poor must take priority. Is the gap between rich and poor widening or narrowing? Do we have a resource problem or a distribution problem? What are the prospects for the poor at home and abroad?

Rasmussen: I think the one-word answer is: grim. The primary development strategy after World War II was one in which the prospects for the poor were tied to the expanding economies of industrialized nations. The U.S. projected that strategy on a global scale. Poor nations were to industrialize and to do so in a way that they would participate in the international trade regime and benefit from it.

But under the present international system, the benefits, where they have occurred, have been located only in the urban sectors among a particular stratum of people who have connected themselves to a rich nation's economy. The plight of the rural poor has been virtually untouched, while the gap between rich and poor has grown. In a few cases, organization around scarce resources, such as oil, has left some formerly poor nations with increased income, but this strategy does not address the basic problem.

Rifkin: The question of redistribution of resources is difficult to answer when you are moving toward the end of an historic era in which the resources are dwindling at the very time that you need to redistribute them. But the real victims of this situation will be exemplified by nations such as Nigeria, Brazil, and the People's Republic of China. Each of these countries is attempting to be among the great superpowers of the 21st century, and they are doing so by using the same development model the United States used through the entire era of fossil fuels.

These nations are searching for rare resources they can trade on the international market for balance of payments, which will allow them to industrialize their economies. They will develop an entire industrial infrastructure within 20 to 30 years and then will be left searching for the fossil fuels and rare metals to maintain them. It seems to me that rather than concentrating on talking each other into redistributing existing resources, nations need to move into a new energy environment and develop self-sufficient local economies.

Barnet: I certainly share the view that self-sufficiency is a critically important goal, particularly for Third World countries. But I don't think that self-sufficiency by itself is an answer. Most of the 150 nations in the world are imperial accidents, their borders determined by some colonel in the British or French army. Some of those 150 units are utterly without resources, unable to live self-sufficiently.

We must come to a new vision of an economy that will produce a just economic order, combining self-sufficiency with new rules for regulating and developing an international order that will not be stacked against the interests of the poor.

This is particularly true in the case of agriculture. The most critical shortage in the world today is not in fossil fuels or rare metals; it is in food. Most of the so-called developing countries are facing the reality of acute food shortage, which is due to several factors. First, they are not participants in the international economy, and find that the cost of imported oil has completely wiped them out. Second, all current development models have a bias against agriculture, and all over the world the interests of farmers have been sacrificed to support industrial growth.

Not only is the countryside sacrificed to the city, but the small farmers are sacrificed to the large farms. Agriculture becomes more centralized, foreign controlled, and mechanized. People are forced off the land and into the city, where they become part of a swollen urban population which is literally irrelevant to society. And as irrelevant people, they become targets of the government.

The food problem is often presented as a dichotomy between distribution and production. There is no question that in many areas of the world we need more production. But that isn't quite the point, because the question remains of distribution. We shouldn't think about a distribution system in terms of missionary baskets. For one thing, there are not enough missionaries or baskets; and people wouldn't want to live that way anyhow.

The distribution system we ought to be talking about is a self-executed one in tune with nature, in which the natural forces of just distribution are allowed to operate. The core of that system seems to be in agriculture, in land security. People will be productive if they have an enduring relationship with the land.

By intervening in traditional societies with industrial agriculture, the U.S. brings in the ethic of "take what you can while you can and do it quick." If a farmer and family expect to be uprooted next week by the landowner or money lender, they will not be inclined to practice good agriculture or engage in conservation. Regrettably, U.S. government policy has been to encourage those governments which have been in league with large landowners who work against the principle of land security.

Sojourners: Let's look at some of the basic assumptions in economic theory. Are they compatible with biblical faith? How do the biblical concepts of stewardship and jubilee relate to current economics? And what might be some biblical alternatives to current economic theory?

Barnet: The only thing that I see would give us a new world view would be an accurate perception of the meaning of interdependence. Many people would like to abandon large parts of the planet. That cannot be done; the poor are with us.

Once you remove the social mechanisms that controlled poor people under the liberal ethos--the hope that while others might not make it, you may--things become unstable as the poor realize there is no hope. The instability increases as others sense that the economic and political order is not legitimate. Then the instability is felt by those who are privileged.

We see this already in our architecture: people hiding behind thick walls and triple locks. The business press is advising executives to live like fugitives, varying their routes to the office, wearing disguises in efforts to avoid terrorism and kidnapping.

In this upheaval, our institutions are pursuing very short-term notions of self-interest. Corporation managers who hold most of the economic power in the country are trained to think in terms of the quarterly statement, not even in terms of the annual balance. The whole mindset of the people who wield economic power is directly contrary to the idea of stewardship, which is a long-term concept.

Stewardship obliges you to think about the human family and the next generation. It is a geographically expansive notion which will not allow you to think only about yourself and the people in your immediate experience. The biblical concept of stewardship is directly opposed to the incentives we have built into the economy.

Rifkin: Before the Enlightenment, Judeo-Christian theology believed that God intervened in history. When the architects of the Enlightenment decided that mathematics and mechanics ran the world, they didn't want a personal God intervening, so they reduced God to a watchmaker who created fixed forces working within an order and then retired.

Capitalism went one step further and said that since mechanics and mathematics ran the world, it could also determine human behavior. Adam Smith said that if we obeyed some fixed natural and mechanical laws, we could move in compatibility with the cosmos. That was the ultimate rejection of God as a personal God.

The Judeo-Christian heritage sees history as linear, moving from creation to judgment. In the book of Genesis, God created the earth in six days and then rested; human beings are stewards over a fixed endowment. The creation is not loose hardware or disassembled parts out of which human beings must create something of permanent value.

As the Protestant Reformation was secularized through the Enlightenment and on into modern times, a second creation was substituted for the first. Human beings came to believe that we could gain immortality by developing permanent wealth, order, and value out of a flawed creation. Until we break that mindset and begin to see that nature has a rhythm and order and that our actions are integrally related to our surroundings, we will never reach interdependence.

Robert Hamrin: I do not think that there is any existing general economic theory that a Christian should be satisfied with. Economics is not as value-free or neutral a science as economists are led to believe. Adam Smith's view was that human egoism, which he thought was tempered by a general desire for peace and a respect for others, provided a sufficient moral basis for the economic development of the New World.

That assumption should appear highly questionable to any thinking Christian. Self-interest as a motivation tends to lead to a self- and socially destructive outcome rather than to a genuine mutual concern that Smith postulated. So, rather perversely, liberal capitalism accepts as inevitable and even applauds the ethical quality of egocentrism, which from a Christian perspective is guaranteed to ruin human association. Modern economists have lost much of Smith's optimism about human nature and replaced it with large doses of determinism, agnosticism, or existentialism--all trends of thought which belie any serious examination of underlying values.

Sharing abundance
Jeremy Rifkin: In classical economic theory the language is laden with the idea that people are sovereign and that they can take the place of the Creator.

Richard Barnet: That idea is also in socialism, where the basic notion is that a different political order, one in which there is a state rather than anarchic private units, will provide a better organization for conquering nature and distributing the benefits. That seems to me equally wrong.

I see several conflicts between the assumptions of the economic system and the Christian message. One conflict is the incentive system, which is based not only on sin in the abstract, but in the specific--for example, envy. Our particular system, which depends on advertising as economic competition, is not based on price but on product differentiation. I try to make my Chevrolet look different from your Ford, even though in every respect they are the same car and the same price.

The advertising and packaging are necessary to put the product into a different psychological context; they appeal to envy. If you buy Chivas Regal Scotch you can live in a big house and identify with the person who bought the house, the fancy crystal, the opulent table setting. In the Third World, the billboards are plastered with envy figures, living at a level of opulence beyond the wildest dreams of the people who pass by.

Another appeal of our economic system is to greed. The explanation for paying corporate executives a million and a half dollars a year is that such a salary will become the goal of everyone. Of course, that spawns whole industries designed entirely to help that elite class of people spend their money. A significant percentage of our economy's growth stems from the need to provide products for a very small number of people, while the basic needs of the great majority of the people go unmet.

Gluttony, I would add, is another sin which is used by the economic system, and of course, lust. Advertising is a direct, unabashed appeal to all the seven deadly sins.

The original concept of advertising was to inform, to provide the information that the market system depended on. In the 19th century, the advertising in the newspapers told readers what they were getting. If the ad was for a chair, it described the wood it was made from, who built it, and its dimensions. Today the ad would probably be a picture of a beautiful woman sprawled in the chair; the image would have absolutely no content, no information.

A more basic point is that the present economic systems, capitalist or socialist, make production the purpose of human activity. A socialist society may use a different incentive system, but the point is still to get people out there producing.

Our problem today is not in motivating people to produce goods. We have more goods than we know what to do with. Our problem is in what we see as life's purpose, and what the role of production is in that.

A Christian definition of productivity, of what should be produced through people, is the development of human beings and the growth of relationships not just between people, but with God. Exploitation must then be seen as not merely wounding and damaging to people, but also to God. The systematic destruction of Guatemalan coffee workers, or contract banana pickers, or cotton farmers who are tossed off the land in Pakistan in the interests of productivity, amounts to inflicting a wound on God.

The notion of a caring God means nothing if we cannot believe that God cares about the billion people who are starving because of the world economic system. That's why capitalism requires a watchmaker God, because a God with feelings would condemn that system.

Finally, we need to take the message of Scripture seriously about the relationship between sharing and abundance. The stories of manna in the wilderness, and of the loaves and fishes, illustrate that where there is sharing there is abundance. The willingness to share creates the complex relationship between nature and human beings that allows for abundance; and when in fact people try to appropriate nature's bounty, it dries up.

Robert Hamrin: I view the election of Reagan, and the Senate changes; as a potentially positive development. Reagan will be the last gasp of traditional economic thought. The last fifteen years have demonstrated the bankruptcy of conventional, liberal economics. Reagan and his followers will now have their day in the sun, and in three or four years when people see that no magic solutions have come forth, the way will perhaps be opened for some serious questioning and rethinking of economics.

In terms of an alternative, the bottom-line question is whether the thrust for growth, the drive to affluence that is still with us, is acceptable from the Christian point of view. A growing amount of literature deals with the individual Christian's responsibility to the poor and hungry. But analogous with the danger of wealth on the individual level is its danger on the aggregate level.

Luther asked the question, "What is it to have a God?" And his answer was that God is that to which we look for all good in life, in which we find refuge in every time of need. America must examine, in this century in particular, where it has looked for the good in life, and in what it has sought refuge.

The answer lies with the notion of economic growth and progress. And the environmental crisis and projections of future human suffering could be warning of God's impending judgment on this idolatry.

Christians can put forward positive alternatives in our perspectives on natural and human resources. We can hold forth the concept of stewardship, the idea of taking something in trust that we have been given by God and passing that along to the next generation preserved and enriched.

The testimony of the Old and New Testament is that people are created in God's image and therefore we should be very cognizant of trying to fully develop each person's God-given abilities, skills, and gifts. Of course, the development would place first emphasis on basic human needs; Christian literature says a lot about relieving suffering, poverty, disease, and ignorance.

People must begin to seriously question the industrial growth values of efficiency, standardization, and organization, which obscure basic human values. We are dealing with an economic system which is totally impersonal. It undermines one person's basis for existence in the process of creating a better existence for others. The labor market assigns hierarchical values to persons as well as to commodities.

To the contrary, the biblical message declares that each person is the object of God's love. One of the most important perspectives that needs to be considered in the discussion of future employment policies is the inherent dignity of all human beings. People cannot be assigned values in terms of economic production.

Barnet: The critical test of an economic system is whether it builds or destroys community. We must move from individual self-sufficiency toward community as the ultimate unit for an economy. The early Christian communities were small groups of caring relationships among people. From these smaller communities a world community, an integrated world system, can be built step by step from relationships among them.

I think, too, that the concepts of stewardship and simplicity are crucial. Any alternative system should be biased toward simplicity rather than complexity of technology and organization; and it should carry a new definition of work which recognizes and rewards the great diversity of contributions people may make to the community which don't result in a product--like visiting people, caring for one another in a human rather than a professional way.

Any alternative would also need to recognize that all concentrations of power are demonic. The transformation of both government and the multinational corporation is an absolutely critical agenda.

It is not a question of making the government get out of the way and letting the free market operate. The real political choice now involves the entanglement of government with corporations. Will we choose a system in which the corporation is simply subsidized by the government and rescued when it hits difficulties? Or will we choose a different relationship between public authorities and the so-called private authorities which really are public?

The fundamental problem with multinational corporations is that they are not accountable. The present government regulations grow out of exactly what Jeremy was talking about, an attempt to avoid the fundamental contradictions in our economic system. They try to deal with the waste problem by creating more waste, by creating bureaucracies.

We need another means of regulation.

Sojourners: Is the regulation issue which you are raising akin to the biblical concept of jubilee, or redistribution?

Barnet: Yes. Any regulation must recognize and deal with the history of failure which has resulted in an unjust concentration of wealth and power. The economic system must produce justice. The redistribution must grow organically out of specific acts of sharing and generosity, stemming from both private initiative and community-imposed obligation.

But more fundamentally, we must design an economy that will eliminate the need for massive redistributions. We must look more carefully at our relationship to nature and one another. Once we decide that the purpose of life is not to accumulate, and come to know that life's satisfactions are found elsewhere, there will be no reason to create an economic system that fosters disparity.

Rasmussen: Jeremy mentioned that society may look to genetic engineering to continue its effort to design the world in its own image. I was struck by a statement by Kingsley Davis, a social scientist, who was applauding the efforts of genetic research: "When we have conquered our own evolution, the universe will be ours at last." That is an example of the kind of hubris that underlies the two major economic systems.

The contrasting picture is one in which we see ourselves as one strand in the web of life, not as the agents of transformation of all nature and society. But it is difficult to break out of old patterns of thought. Even talk of developing benign sources of energy still presses that underlying assumption. Those who are working to develop solar power as an alternative to the fossil fuels talk about "harnessing the sun." That image is still an imperial one.

The Christian faith may not offer an alternative so much as a perspective that is helpful in forging a different pattern. We need "anticipatory communities" that are trying to order their lives differently, drawing on traditions which result in changes in how we perceive ourselves, which is crucial for any change in economic systems.

It's important that there be Christian communities who live economic alternatives over the long haul. The Reagan administration will have people spending all their energies choosing among lesser evils. And we must have communities somewhere that will do what Israel and the early church did, which was to work out the nuts and bolts of grander dreams when everyone else was clutching at their own dwindling hopes.