by Paul Badham
from Modern Believing Vol 52:1
Shifting Paradigms: Theology and Economics in the 21st Century
This issue is devoted to papers presented at the 2010 MC conference on Theology and Economics in the 21st Century.Since the time when the conference was first planned the international credit crunch has increased its topicality and importance. It is often hard for us to appreciate just how much human life has been transformed by the economic revolution of the past two centuries. According to Deirdre McCloskey writing in The Higher 'The most important secular event since the domestication of animals and plants is the rise of income per head in the world from $3 per day in real Chicago prices in 1800 to $30 worldwide nowadays - and to more than $100 a head per day in bourgeois places such as Britain and Japan'.1 No aspect of human life has been unaffected by this dramatic change. Banking has played a key role in this vast expansion of personal wealth since it has not only been able to direct the savings of some to fund the entrepreneurial work of others, it has also 'created' wealth by loaning far more than had actually been deposited, in the confidence that not everyone would wish to withdraw their deposits at the same time. If this confidence were ever to be lost the banking system as we know it would collapse and chaos would ensue. That is why the credit crunch was so alarming and why the 'bailing out' of the banks was not privileging one category of worker over another but rather maintaining confidence in a financial system on which all depend.
Economic stability today is as much dependent on 'faith and belief' as any religion. Our words for creed and credit share a common root. Paper money does not have the intrinsic value of silver or gold coins. Its value depends on people's faith in it and where faith is lost, as in Weimar Germany or present day Zimbabwe, the currency becomes worthless. So too with banking. Any bank will fail if enough investors lose faith in it and in 2008 this came close to happening on a global scale. No bank seemed safe and governments throughout the world had to pledge billions to prevent the collapse of the whole system. This raises the question of whether today we need new economic paradigms to ensure a stable future. That is a question addressed and answered in very different ways in the papers that follow.
In religious circles we are accustomed to differences of opinion. But our differences seem mild compared with the different evaluations of the financial crisis given by our authors, ranging from the view that it was a 'little local difficulty' to the view that we faced 'financial meltdown' and the collapse of our whole economic system. The consensus view is that we were at very serious risk and hence it was right for governments worldwide to intervene.
The key question for these conference papers is how far a Christian understanding of reality can contribute to, or be informed by what happens in the world of international finance. Given that so much of our well-being is bound up with the well-being of the society in which we live it would seem imperative that we be helped to think on these matters in their relation to contemporary faith. This is what our authors seek to do for us.
Deirdre McCloskey, 'Disciplines of the world unite' Times Higher Education 7th October 2010.