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The title of this address came out of a conversation I had with my wife Doireann a couple of months ago. I was ranting on about the selfishness, greed, myopia and mad materialism of Celtic Tiger Ireland as it imploded in the face of the collapse of the property bubble at home and the credit crunch abroad. I suggested that that the economic slump looming in front of us would be of ‘Biblical’ proportions and that after the recent years of financial excess, moral decadence and indifference to the poor and disadvantaged we had it coming to us, and she said slightly acidly: “I can hear a sermon coming on.” So I thought I would subject you to a sermon with the title ‘Have we lost the run of ourselves completely’? I would lambast the greedy, arrogant, corrupt financial elite personified by Sean Fitzpatrick of Anglo-Irish Bank. I would echo Fintan O’Toole in bewailing our political and intellectual leaders’ use of weasel words like ‘inappropriate’ and ‘unacceptable’ when describing the immoral, ‘just plain wrong’ behaviour of rich business people who rob their customers, deceive the regulators and evade the taxes to build schools and roads the rest of us have to pay. I would bemoan a government which cut taxes on the rich, brought in legislation which allowed property developers and builders to become obscenely wealthy, while at the same time doing little to provide efficient public services – housing, transport, pre-school education – which would help in some way to compensate for the deeply unjust new inequalities in Irish society. I would attack our political leaders’ timidity and lack of vision in not seizing the opportunity, even at this late stage, to put unemployed construction workers to work building much needed social housing and schools (or converting some of the empty apartments and empty office blocks for such use). I would regret the moral atmosphere in Celtic Tiger Ireland: rampant me feinism , corrupt politics, little sense of common citizenship or the common good, religious indifference, and a dumbed-down intellectual life fuelled by the British yellow press and multiple TV stations pumping out Big Brother and sub-literate game shows. I would testify that Ross O’Carroll-Kelly is still alive and well and all-too-recognisable as a caricature of the kind of lives lived by thousands of well-heeled, over-pampered, OC-watching (and OC-aping) young people in Dublin 4 and Dublin 6 (and I live in Dublin 6). And that’s not even to mention his or her parents, complacently living off the unsustainable fat of the Tiger, clogging up the streets with their SUVs, taking three sun holidays a year, and generally still fiddling as if nothing had essentially changed while Rome and Dublin burn. But then I thought that you’ve probably heard, seen, and read this kind of rant half a dozens times by now in the columns of our ubiquitous media. More seriously, our religious leaders have already put across the moral dimension of excessive and unsustainable economic growth much better than I ever could. The Archbishop of Canterbury, Dr Rowan Williams, has expressed deep concern about the British Government’s plans to spend its way out of the recession by massively increasing public borrowing and trying to maintain the historically high levels of individual expenditure (particularly retail spending). He said this seemed like the “addict returning to the drug” of irresponsible and unsustainable spending – what he called “fairy gold” – rather than helping people to learn to spend their money and their time providing for their own real needs and the needs of less privileged others. The Catholic Archbishop of Dublin, Diarmuid Martin, compared the uncontrolled economic growth of recent years to the Tower of Babel: people thinking they can build a tower to a material heaven until it collapses all around them. He emphasised that the market “can only function in an ethical and judicial framework where the vulnerable are protected and the natural arrogance of the powerful is curbed. We see today how gross and unregulated individual behaviour in market activity affects the stability of companies but also of countries and then of the men and women who make up the society in which we live. Irresponsible traders do not just gamble with the future of big multinational firms – they eventually affect the lives of people all over the world.” Given the globalised nature of the economy in Ireland as elsewhere, he called for new international structures to provide a legally enforceable ethical framework on business to combat the kind of irresponsible behaviour and downright corruption and theft we have seen so much of recently, and foster “ethical market behaviour” in future. So I’m not going to inflict a rant by another much less wise and distinguished man in his sixties on you. Instead I am going to take my cue from Archbishop Martin and go back over 60 years to take a very brief look at the man – a great philosopher as well as a great economist – who provided much of the thinking which allowed the world to emerge from the last great economic depression in the 1930s – not least by a set of new rules to govern international financial behaviour. I am talking, of course, of John Maynard Keynes. Talking about Keynes is suddenly back in vogue, more than 30 years after the monetarist economists led by Milton Friedman dismissed his ideas – or at least how they were implemented by social democratic and centrist governments – as inimical to economic growth and inflationary. To put it in very simplistic terms, Keynes taught that market capitalism, which is naturally prone to periods of depression, is not self-correcting. Financial collapse leading to economic depression represents pure waste. Businesses go bust and huge numbers of people are unemployed. This means people can’t buy products and services, and the depression deepens. The main way out of such depression is for governments to borrow and either spend directly on infrastructural investments (roads and railways, ports and airports, electricity and telecommunication systems) or give to others to spend through tax cuts and other incentives. But Keynes was a philosopher as well as an economist. He would have recognised that the current crisis is a great moral as well as an economic failure. On the economic side, and despite what he said nearly 80 years ago, economists had once again come to believe that all markets under capitalism were self-regulating. In an astonishing admission last autumn, the great guru of US free market capitalism, Federal Reserve chairman Alan Greenspan, said this belief was built on a “flaw” – the “whole intellectual edifice collapsed in the summer of last year”. Economics had completely failed to predict or explain the meltdown that was literally around the corner. On the moral side, it was a system built on the huge flaw of unsustainable debt. As Robert Skidelsky, Keynes’ biographer, said in an article last month, at the heart of this moral failure was the worship of economic growth for its own sake, rather than as a way to achieve the “good life”. As a result, he said, economic efficiency – the means to growth – has been given absolute priority in all government and business thinking and policy. This has become our societies’ main and sometimes only moral compass. This moral lacuna explains the uncritical acceptance of both globalisation and endless and increasingly unregulated financial innovation, says Skidelsky. “The theological language which would have recognised the credit bubble as the ‘wages of sin’, the come-uppance for prodigious profligacy, has become unusable. But the come-uppance has come nevertheless.” Skidelsky goes on: “Today we are living through a crisis of conservatism [he sees conservatism as deregulated and free-wheeling international capitalism allowing financiers and businessman to rip off the public].The financial crisis has brought to a head a growing dissatisfaction with the corruption of money. Neo-conservatism has sought to justify fabulous rewards to a financial plutocracy while median incomes stagnate or even fall; in the name of efficiency it has promoted the off-shoring of millions of jobs, the undermining of national communities and the rape of nature.” He points to the way in which multinational firms in countries like Ireland have been able to keep down wages and weaken trade unions and local communities by relocating enormous numbers of jobs to low-wage economies in Asia. He asks whether there will now be a serious “pause for thought” to allow intellectual and moral – as well as political and economic – leaders to see if economics is capable of rethinking its core principles so as to set up international institutions, policies and rules to make financial markets – echoing Archbishop Martin’s term – “more well-behaved.” [The Bretton Woods system, set up in 1944, to free foreign trade after the freeze of the 1930s, mainly through a system of fixed exchange rates, was the result of the Keynes inspired ‘pause for thought’ which helped to get the world out of the last great economic crisis]. Do we have the moral resources to challenge the dominance of the financial markets without reverting to the selfish and ultimately aggressive and warlike nationalisms of the 1930s? Do we have the intellectual and moral resources to dare to think up ways of making the great economic and technological juggernaut that is globalisation politically and therefore morally accountable, either through international agreements between governments or new and more effective international institutions? Keynes, he suggests, can again help us with this rethinking. He thought the international division of labour has its limits. “Let goods be homespun”,the title of an article he wrote in 1932, is a prescient view of the need for sustainability in economic life. He wanted countries to be able to display the full range of their people’s aptitudes, and not simply be a link in a value-adding productive chain spanning the globe. Skidelsky says he would have been shocked at the dominance of World Trade Organisation binding international economic treaties without counterbalancing treaties on work conditions, taxation or the environment. An even broader ‘green’ view that Keynes would not have been familiar with is the idea that economic growth does not, beyond a certain point, make people happier. In the UK even David Cameron, a market-friendly Conservative, has talked about the importance of general well-being as an alternative to the mania for economic growth. Skidelsky goes so far as to says that rich countries could probably abandon the globalist project without much damage to their material standards and with possible gain to their quality of life, especially if it were accompanied by a reassertion and revival of democracy at national level. He points to the example of New Zealand, which in 1999 changed tack to move away sharply from privatisation and deregulation to interventionist-style government with higher taxes, economic regulation and a strong, national private sector. “Well-behaved” markets should not only be more stable, they should also be more morally acceptable. It is indefensible for a top American CEO to earn 367 times more than the average worker (against 40 times in the 1970s). It is also a clear injustice that is inimical to social cohesion. I hope that part of the reaction to the present crisis will involve governments once again using the tax system to redress the balance between until now all-powerful capital and increasingly powerless labour. Keynes was a moralist as well as an economist. He believed that material well-being is a necessary condition of the good life, but that beyond a certain standard of comfort, its pursuit can produce corruption, both for the individual and society. He reunited economics with ethics by taking us back to the primary question: what is wealth for? The good life was one to be lived in harmony with nature and our fellow human beings. And yet, he wrote (away ahead of his time), “we destroy the beauty of the countryside because the unappropriated splendours of nature have no economic value. We are capable to shutting off the sun and the stars because they do not pay a dividend.” He said that in a famous lecture in Dublin in 1933 with De Valera in the audience. Keynes was an Aristotelian, who believed that vices are virtues carried to excess. This is a good philosophy for today: a return to more modest, more honest behaviour in both the economy and social life after the crazy materialism and individualism of the past few decades.
Andy Pollak |