The Moral Culture of Fiscal Austerity (Or, Capitalism's Double Bind)

The Obama administration has signaled that it will push economic policy in the direction of fiscal austerity, rather than increased Keynesian stimulus. Its reasoning: that's where the political wind is blowing

“Today, a new band of Mayberry Machiavellis has gained control, counseling President Obama to ignore the advice of his economic team and press forward with deficit reduction ahead of job creation.” And the reason for this shift in priorities is, evidently, due to the “public mood.” http://www.huffingtonpost.com/2010/07/06/mayberry-machiavellis-oba_n_636770.html (“Mayberry Machiavellis: Obama Political Team Handcuffing Recovery” by Ryan Grimm.)

And, indeed, there does seem to be a great deal of fury in America over government spending. It seems to send many Americans into a tizzy. The Tea Party is the most obvious example, but it is hardly limited to that quarter.

The question I want to address here is not whether the Obama administration has made the correct political calculation. Nor is it the question of what policy position is correct. (Although I will state parenthetically that – within the confines of a capitalist system – a position of fiscal austerity during a deep recession is simply absurd. At the same time, the qualification I add here – i.e., “the confines of a capitalist system” – is itself of enormous significance. But that subject, too, must be bracketed, at least for the time being.)

Rather, the issue I want to explore here is, What drives the American public to turn with such hostility to spending, and to embrace austerity with such zeal? I find it extremely difficult to imagine that it is due to a careful examination of what can sometimes appear to be esoteric economic debates – e.g., should we now be more concerned about deflation or inflation? What is the multiplier effect of extending unemployment insurance versus that of tax cuts? What were the causes of the Great Depression? It seems to me exceptionally unlikely that most Americans have studied these issues in great detail, if at all.

No, the objection to government spending is not on economic grounds. Instead, it strikes me as being on moral grounds. Specifically, America's puritanical heritage leads people to regard spending “beyond ones means” as itself a moral defect, or a defect of character. Indeed, the massive amount of consumer debt that has been racked up is commonly given as an account or explanation of the current economic crisis. (Never mind – at least for the moment – that consumer debt was the only thing that permitted American capitalism to function for the for the last three decades.) Spending “beyond ones means” seems to be equated with a lack of ability for self-control. It is regarded as a kind of licentiousness & permissiveness – perhaps even a form of promiscuity.

This is just my own cultural observation. I will not, at least in this space, try to prove it.

However, recently, while reflecting on this question, a gmail advertisement popped up on my computer. It led to a piece titled “In the Long Run, We are (Not) All Dead: The Anti-Christian Economics of John Maynard Keynes,” hosted by the web site of “The King's Community Church.” The piece is here: http://www.tkc.com/resources/resources-pages/keynes.html

I think it's worth reading.

A Post-Modern View of Epistemology within Economics -- from a Church?

First off, one of its opening claims is an epistemological position that by no means commands universal agreement. “Contrary to the popular saying,” argues author Ken Ewart, “'the facts' never speak for themselves, but are always interpreted through an individual's personal religious grid - their individual system of thinking and evaluating things.” Replace the phrase “religious grid” with something like “discourse,” “ideology” or “paradigm” and you have an epistemological claim that sounds an awful lot like (what many would call) post-modernism. Imagine, a post-modern epistemological position espoused by a church – and one that unequivocally holds certain religious beliefs (e.g., that Jesus was the Son of God) to be themselves objectively and unassailably true!

The author goes on to say that this epistemic stance “...seems especially true when it comes to economics, in that, as the joke goes, when you have four economists looking at "the facts," you're likely to end up with four different interpretations, and maybe six! Four different economists can interpret the facts differently because they each think through different grids. Each person's grid is ultimately a result of their [religious] faith.” Again, strike the second sentence and you'd be excused for believing you were reading the likes of (in the Anglo-American tradition), say, Kuhn or Rorty, or, (in the Continental tradition), Foucault.

Now, this view of epistemology (call it “post-modern,” “perspectivism,” “epistemic pragmatism” or what have you) is one that I happen to find persuasive. That is yet another issue that must be left aside here. For the moment, I only note this curious parallel between the epistemic position of an evangelical church and certain political economists and philosophers. (See, for example, the position taken by Marxian economists Richard Wolff and Steven Resnick in, among other works, their text “Knowledge and Class.”)

The Alleged Religious/Moral Worldview of Keynes

Having established that economists reach their positions due to pre-existing religious beliefs, and explicitly claiming that “Keynesian economics, like every other kind of economics or academic theory, is fundamentally religious [and] is built on a worldview,” Ewart goes on to examine the religious beliefs of Keynes.

Evidently, Keynes' views on religion were not subtle. He viewed Christianity in particular with outright scorn, calling it “hocus-pocus.” But the author goes further than that. He wants to show that Keynes hostility to Christianity led him to eschew morality itself. As evidence, he cites Keynes participation in the Bloomsburg group. Keynes describes his involvement in the Bloomsburg group as follows:

We entirely repudiated a personal liability on us to obey general rules. We claimed the right to judge every individual case on its merits.... We repudiated entirely customary morals, conventions and traditional wisdom. We were, that is to say, in the strict sense of the term, immoralists.

[Note: Ewart does not provide citations, so I cannot verify any of the quotations in his piece. I accept them as accurate only for purposes of this essay.] Further still, Keynes rejection of God and Christ did not only lead to the rejection of “customary morals” it led to “sexuality perversion” – by which Ewart means Keynes' homosexuality. Of course, per this logic, that is the final stop for someone who goes down the road of abandoning the church. Ewart explains:

In the first chapter of the book of Romans, the Apostle Paul describes the path a man travels if he is consistent in his rejection of God. Professing to be wise apart from God leads to "futile" thinking and "darkened hearts" and ultimately culminates in "a depraved mind" and "unnatural" sexual relations. There is an integral connection between a man's thinking and his sexual life. Keynes, along with many other members of the Bloomsbury group, was a homosexual. Virginia Woolf affectionately called the group "The society of buggers." Keynes' biographer, Robert Skidelsky, described the situation as a "sexual merry-go-round" as members commonly floated from one sexual partner to another.

The author has thus painted a rather stark picture: Keynes, having rejected Christian teachings, believed himself to be able to judge morality without God's injunction, which led down to the road to the ultimate sins of homosexuality and sexual promiscuity. And all of these, of course, are tied by the author to licentiousness and self-indulgence.

What does all this have to do with Keynes' economics? Everything, according the author. Keynes was, says Ewart, “obsessed” with savings. As economists are well-aware, the problem with savings for Keynes was that it can create, or worsen, a general glut in commodities – i.e., a recession, or depression. But Ewart believes he has found the real motivation behind Keynes' attack on savings – his proclivity (as Ewart sees the matter) towards instant gratification, and his failure to recognize the moral value of self-denial for future reward. He quotes another critic of Keynes as noting that The General Theory is a "...transvaluation of all values. The great virtue is Consumption, extravagance, improvidence. The great vice is Saving, thrift, "financial prudence."'

This failure to recognize the value in sacrificing the present for the future, according to Ewart, is directly traceable to Keynes' rejection of God – i.e., to his belief that we need no external moral authority.

Now, again, I can hardly expect to prove that the current pro-austerity sentiment in America is a moral one (rather than an economic one) based on one obscure article published by an evangelical church (and one based in England at that). But it is awfully telling. Indeed, according to Ewart, Keynes himself observed that predominate norms favor thrift over spending. He quotes Keynes as saying: "The morals, the politics, the literature, and the religion of the age [are] joined in a grand conspiracy for the promotion of saving."

Should we spend or save? Capitalism's Double-Bind

And yet, if indeed we feel compelled to chastise government deficit-spending on moral grounds, we simultaneously find ourselves encouraged to spend in our private capacities on economic grounds. Indeed, all economists, whether Keynesian or otherwise, realize that continued spending is necessary for the continual functioning of capitalism. (In Marxian terms, it constitutes a break in the circuit of capital.) The debate (between Keynesians and, say, Monetarists or New Classical economists) is merely whether government spending can take up the slack when private sector spending decreases. No one disputes that if private sector spending dried up, capitalism itself would collapse. Hence, when in recessionary or near-recessionary times, politicians of every stripe encourage us to spend. For example, after 9/11, one of the first things President Bush told us to do was to keep shopping (an awfully curious thing to announce after the murder of nearly 4000 people – unless, of course, one understands the imperatives of capitalism.) His father, George H.W. Bush in 1991, went on a sock-shopping spree (a public relations debacle), to encourage all Americans to do the same.

Spending is thus our patriotic duty. And yet, at the same time, it is a moral failing. How are we to navigate that kind of cognitive dissonance? No wonder the political discourse surrounding the state of the economy is so abysmal.

One way out might be to change the economic structures themselves. For an economic system that requires continued, perpetual, near-frenzied consumption for its very survival is surely, at its core, a diseased system. Perhaps then our real task should be to change that system.

How to implement that task? I don't know. I'll leave that, as well, to a future post. (Or perhaps someone would care to offer their thoughts?)