Saturday, July 24, 2010

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.” (“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:

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?)


  1. I agree that this is a very curious article. I have two small points.

    -First, I think it always pays to go to our resident Keynes expert and ask him whether Keynes has any writings on morality. I can't think of anything directly related. However, this "delayed gratification" thing may not be entirely correct, or at least, there's more to the picture. Don't forget Keynes' "Economic Possibilities for Our Grandchildren". Despite the two or three heart attacks I had while reading it, it does give some insight on Keynes' thoughts about the long run.

    -A lot of these attacks strike me as just anti-Government. I mean, surely Keynes was against saving -- but his main point was that unless we're at full employment, savings won't be able to adjust to investment in order to maintain full employment. So, investment drives the whole economy. Arguing against that, as I said, just seems to me like they are affirming the classical model. Might explain a lot of their inconsistent logic, but I don't know, I didn't read the article, just going off of what you said :)

  2. By the way, I wrote a two-part commentary on "Economic possibilities for our grandchildren" here:

  3. Keynes clearly thought that a preference for current consumption over provision for the future was not just more favorable to full employment, but morally superior as well. From "Economic Possibilities":

    When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. ... The love of money as a possession ... will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. ...

    We shall inquire more curiously than is safe to-day into the true character of this “purposiveness” ... [which] means that we are more concerned with the remote future results of our actions than with their own quality or their immediate effects on our own environment. The “purposive” man is always trying to secure a spurious and delusive immortality for his acts by pushing his interest in them forward into time. He does not love his cat, but his cat’s kittens; nor, in truth, the kittens, but only the kittens’ kittens, and so on forward forever to the end of cat-dom. ...

    I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue-that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.

  4. Now reading the linked essay, I see they quote a bit from this same passage. They also quote Schumpeter's dismissal of Keynes' thinking as fundamentally that of a childless man. They don't however quote Keynes' response, late in life, to the question if he had any regrets. Just one, he said: he wished he had drunk more champagne.

    (The uncited quotes about Bloomsbury are from the essay "My Early Beliefs"; the full text seems to available from Google Books.

  5. Dan & Josh
    Thanks so much for these replies. (I'm still too much the luddite. I thought I had this set up to notify me when there were comments. Guess not.)

    Dan, the motivation behind this particular piece was not, I do not think, just anti-Government. It paints a picture of spending as failure of restraint, indulgence -- a moral and, indeed, religious failure (although if you look at my second post, I think you'll see that that South Park episode makes that social commentary really, really well -- i.e., that people react to "spending" with moral outrage. I think it highlights that cultural fact better than this piece does)
    Thus, it seeks to tie what it perceives as Keynes' own penchant for self-indulgence, and his inability to defer present pleasure for future value, to his economic theory. And it does so quoting the passage that Josh pointed out here.
    Although, what is interesting, Josh, is that, unsurprisingly, it does not show the passage in full context. The author takes Keynes' remarks about "purposiveness" as someone who is dismissive the notion of caring about the future, and instead interested only in his own immediate pleasure. In full context, that does not appear to be what he is saying. He seems to be saying that "purposiveness" is only a veneer -- a way of forgetting about the needs of people in the here and now. Further, as the last paragraph makes clear, it is part of an attack on a moral culture that makes the desire to hold money somehow virtuous. It is not that he is saying that spending is virtuous. Rather, it is that he is saying that the love of money is vice (and, as he points out, this is in many ways a more 'traditional' form of morality).

    This post was rather rambling (as is this comment.) There were lots of threads that I will have to pick up on. But one challenge here is the to the notion, to which I subscribe, that there are no great economic thinkers who are not, in some measure, motivated by some social and moral vision. I say it is a "challenge," because, evidently, if one wants to subscribe to the view that "the facts do not speak for themselves" (as the author says) then one might have the ability to pick apart someones biography (such as Keynes) and find someone who is concerned only with people meeting their immediate pleasures -- rather than the Keynes who had a vision of a society in which material means were secured for all, and, as such, we would become liberated to realize the greater and better parts of ourselves (this is the sentiment reflected, I think, Dan, in the passage you linked to -- or at least the continuation of it, as I recall. But I'll really have to check my recollection on that.)

    That is, if one takes the purported "post-modern" view, that "the facts" are always seen through a prism of a set of values, then one has to be aware that different people can detect a completely different value schema in the same individual or set of texts. (Again, so, where I find in Keynes a concern for material needs being met, so that human beings can truly begin to evolve, this author saw someone who cared not one whit for the future, nor even for anyone else. One simply must take care, then, it seems, if one is going to try to be aware of what the "pre-cognitive [moral] vision" that motivates and economic theory. It's an interpretative practice. As such, it is easily prone to error -- or, more specifically, to projection. The parallel to psychoanalytic practice should be clear.)

    Incidentally, is my reading of Keynes' moral vision (as described above -- i.e., material needs ought to be met so that the real work of human evolution can begin) too Marxist? Am I ascribing too much of Marx' sentiment to Keynes?