Tapu Misa on current affairs

Tapu Misa is a Herald columnist focussing on Pacific affairs

Tapu Misa: Worshipping the wrong kind of god

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Money has changed from a mechanism of exchange into something important in its own right. Photo / Thinkstock
Money has changed from a mechanism of exchange into something important in its own right. Photo / Thinkstock

There are still plenty of people who measure a man's worth by the size of his bank balance, writes Tapu Misa.

If the English philosopher and parliamentarian Francis Bacon had written today that "Wealth is like muck. It is not good but if it be spread", he would have been accused of indulging in "the politics of envy".

Back in 1625, though, his was a commonplace view.

By the time another Englishman, the economics historian Richard Henry Tawney, penned his 1920 classic The Acquisitive Society, the world had changed.

Society had become worshipful of "economic egotism". It had developed a "reverence for economic activity and industry" that amounted to "fetish worship" and resulted in "a contempt for all things which do not contribute to economic activity".

It's not difficult to surmise what Bacon and Tawney would have thought of the news that the super-rich were squirrelling away $21 trillion in overseas bank accounts, as a recent report claimed.

Or their opinion of a new book lauding the acquisitions of a rich lister like Alan Gibbs, who along with merchant bankers David Richwhite and Michael Fay cashed in large on the sale of Telecom in 1990, enriching themselves to the tune of hundreds of millions of dollars in one fell swoop.

In Serious Fun, Gibbs can barely contain his glee. How clever was he? How audacious?

But why would he? Even now, five years after the onset of the global financial crisis, there are still plenty of people around who measure a man's worth by the size of his bank balance, no matter how he amassed it.

In his own way, Gibbs was a cliche of the times. He was studying to be an engineer before he was seduced by economics.

That reflected a wider trend in society, as Satyajit Das, author of Extreme Money: Masters of the Universe and The Cult of Risk, observes.

Enthralled by a money culture, we swapped "real engineering" for "financial engineering".

Money became "an end in itself", Das writes, creating a cult, and leading us to worship "the wrong deity".

"Money changed from a mechanism of exchange into something important in its own right. It ceased to be a claim on real things, becoming instead a way to create wealth, increase economic activity, and promote growth."

Though cloaked in science and impenetrable calculus, modern economics was the new religion, a system where "deeply held philosophical and political beliefs shaped models of economies and markets".

Last week, a Bank of England economist admitted that economists had erred by "believing the assumptions of economics and saying things that made no intellectual sense".

That wasn't the half of it, as University of Western Sydney economics professor Steve Keen argues in an updated version of his 2000 book Debunking Economics.

Keen writes that it's neoclassical economics, the predominant but inherently flawed economic theory of the past half-century, that's at fault.

There was "little doubt that economic theory has been complicit in encouraging America's investing public to once again delude itself into a crisis".

It had "encouraged the world to play a dangerous game of stock market speculation", with economists playing the role of "petrol- throwers rather than firemen".

"The major institutional culprit has to be the finance sector itself, and in particular the elements of the stock market which lead it to behaving more like a casino than a place of reasoned calculation".

Indeed, far from being harmless, "economic reform" - undertaken in the belief that it will make society function better - has instead made modern capitalism a poorer social system: more unequal, more fragile, more unstable".

Keen and Das are among a select group who warned of impending global financial disaster before the 2007 collapse.

That alone would make them worthy of attention, even if their books weren't highly informative and entertaining.

Do they hold out any hope for change? Yes, but it requires the non-economists among us to become better acquainted with the "dismal science" and lose our awe of its false prophets and beneficiaries.

Yet, if we are to have a new economic order, what would it look like?

As the remarkably prescient Tawney wrote, "Economic egotism is still worshipped; and it is worshipped because that doctrine was not really the centre of the position. It was an outwork, not the citadel ... the citadel is still to win."

The acquisitive society, wrote Tawney, invites us to "use the powers with which [we] have been endowed by nature or society, by skill or energy or relentless egotism or mere good fortune, without inquiring whether there is any principle by which their exercise should be limited".

"To the strong, it promises unfettered freedom for the exercise of their strength; to the weak the hope that they too one day may be strong.

"Before the eyes of both it suspends a golden prize, which not all can attain, but for which each may strive, the enchanting vision of infinite expansion.

"It assures men that there are no ends other than their own ends, no law other than their desires, no limit other than that which they think advisable.

"Thus it makes the individual the centre of his own universe, and dissolves moral principles into a choice of expediencies".

A new economic order would remind us of old truths: that we are all connected, and that social institutions and economic activities [must be] related to common ends.

- NZ Herald

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