Sunday, 26 July 2009

An Economic Philosophy

As I remain without an income, I have had time to think about what it is that I would really like to achieve over the coming years. I find myself at a point of contradiction. My desire is to see a system in place that uplifts people and offers encouragement and yet we have set our priority on finding an income and establishing a base here in the UK. Are these two goals in conflict? I look back over my life and see how earning money or the employment that I have has tended to influence what I achieve. Sure there have been other things that I have been involved in but it is employment or the need for an income that has really set the tone of our lives.

Over the last few months, I have been thinking through these issues and trying to see what alternatives there are. There are some deep questions when you read of those in poverty because of systems that drive them from their lands to scratch for survival amongst the rubble of large cities (Grigg 1984). Why does our economic system caste some people aside like rubble?

Douglas (1974) argued that the economic system that he was observing was based on productionism and not consumerism. What he argued is that although it was producing product in theory for consumption, a lot of that production was actually going to waste. Products were built with obsolescence in mind. This is a trend that continues today except that I would argue that we are in monetarism. We do anything including gambling on exchange rates or future trades if we believe it will bring us in more money. There is little concern for the impact of our monetary focus.

Examples are investment companies who take risks with others money in the belief that high risk projects will maximise the return on investment. The company collapses losing most of the money invested in it leaving many without what they thought were their retirement incomes. What went wrong? The standard answer is that the company invested in high risk projects. The problem is that the focus is on money ahead of people.

Knight (1981) in commenting on Leviticus 25:25-38 says that it has the emphasis of “people come before property” (p 155). He argues that “money is not a commodity in its own right. Money is only a means whereby you may feed and clothe your family and show your comparison for the needy and unfortunate” (p 155). Knight takes this perspective because in this portion of Leviticus, the rules for dealing with property and people who are in need are spelt out.

In the Leviticus rules, the concern is that people should never lose the right to their fields or their home. If they seemed force to sell because of poverty, it was always able to be redeemed. Their relatives where to help ensure that their property was redeemed. For fields, in the year of jubilee, the land reverted to its original owners. For houses in the city, they could be redeemed within a year of sale. The concern is that a person should never be permanently separated from their ability to provide food or shelter. People came before property.

In Leviticus 25:8-24, it describes the year of jubilee. The pricing of land is based on the years of production to the next year of jubilee. The purchaser is buying the crops and not the land. The land is seen as belonging to God. Douglas (1974) argued that the plant used for production should be seen as common property (this isn't the same as common ownership) and that it's cost shouldn't be included in the price of the product. The plant and its use was purchased through a community credit arrangement. The purchasing power is distributed to people based on human time-energy units. In Douglas' perspective, he saw people reducing their hours of work as the efficiency of plant improved but retaining their purchasing power since they would be producing more.

The biblical perspective in Leviticus has the land having a Sabbath rest ever seven years. This is to allow the land to recover. There is also the principle of not reaping to the corners of your fields so that the poor and sojourners in the land may reap for their needs. The biblical perspective promotes sustainability and concern for people over efficiency and maximisation of profit.

Reading this material has lead me to think in terms of some principles for economic systems.

  1. We are stewards of the land and all resources. This means that we should be looking at sustainable practices rather than exploitation. If sustainability is the goal then we should also avoid waste in production, promote recycling, and avoid obsolescence of products. If products are replaced by new releases then there should be a plan to recycle or upgrade previous products.
  2. We are to ensure that all people are provided for. All should be able to live. The method of distributing purchasing power should ensure that all are able to have shelter, food, and clothing. There needs for living should be satisfied.
  3. The distribution of purchasing power should be sufficient to allow all product produced to be purchased without incurring debt and not be tied exclusively to hours of work. Douglas (1974) proposed a scheme that encouraged increased share to those who helped improve the efficiency of production.
  4. All should be given the opportunity to contribute to the good of society. Those who work to help others should receive a fair portion of the purchasing power. We should be concerned about the welfare of all people and the economic system should encourage this.
  5. We need to ensure that prices are fair. Since we are distributing purchasing power, the system should ensure that prices reflect the purchasing power distributed and not add a cut for additional profit. Having prices exceed the available purchasing power simply leads to debt and inflation.
  6. The means of determining value and of trading (currency) should not be something that is traded in. There can be no stability in pricing if there is no means of establishing value of a product.

I recognise that the last of these principles would rule out much of our financial system but I see it as an absolute principle if there is to be stability and sustainability in the system. How would a system operate that was based on these principles.

Reference

Douglas, C. H. (1974). Economic democracy. Epsom, Surrey: Bloomfield Publishers.

Grigg, V. (1984). Companion to the poor. Sutherland, NSW: An Albatross Book.

Knight, G. A. F. (1981). Levitcus. Edinburgh: The Saint Andrew Press.

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