Saturday, 30 April 2011

Conservatism and Economic Theory

How does conservatism and economic theory mix? I am going to argue that it is because of conservative views of economics that we struggle to redress the problems caused in the recent recession. As I write this, I have in mind Albert Einstein's quotes “We cannot solve our problems with the same thinking we used when we created them” and “Anyone who has never made a mistake has never tried anything new.” We will make mistakes in searching for solutions to today's problems but we must not assume that because we make mistakes, we must go back to the old way of doing things. We must learn from our mistakes on move on. As Thomas Edison said “Just because something doesn't do what you planned it to do in the first place doesn't mean it's useless ... . If I find 10,000 ways something won't work, I haven't failed. I am not discouraged, because every wrong attempt discarded is just one more step forward.” We must have the courage to look for new alternatives that will address the problems that exist and bring the balance required between all the requirements of this world.

My thoughts here are influenced by three readings. From Gibson's (1985) commentary on Job, I am encouraged to think about the problems of conservative thought that influence our thinking and our assumptions about what makes a sound economy. From Daly and Cobb (1989) and Seers (1983) I am encouraged to think about how we might analyse the nature of an economic theory.

Starting with Gibson's commentary on Job 8 where Bildad presents a conservative or traditional argument on suffering. The foundation for this argument is that “God rewards the good and punishes the bad” (p 71). Job who had led an exemplary life and reaped the rewards now finds himself bereft of his wealth and his health in decline. His three friends struggle for words to encourage him. Bildad takes up his discourse by encouraging Job to repent before it is too late and seek the grace of God.

Gibson implies that we no longer support this view and maybe this is tru when it comes to natural disasters. However, the prosperity gospel still carries a lot of weight in some places. However, it isn't whether this belief still holds force that concerns me although it does underline my thoughts. Our society may accept that the good do suffer without deserving to and that the bad do prosper but I contend that we judge systems good or bad based on the rewards that they give us.

Capitalism must be good despite the current recession because nations operating under capitalism (and democracy) have tended to prosper. Communism with the possible exception of China has failed and is therefore bad. Since capitalism is good, all economic systems should embrace capitalism and we should not seek to challenge the fundamental mechanisms on which it operates. Although we see the current crisis, we will not look for new ways to solve the problem but apply austerity measures that operate within the rules defined by our capitalist economic systems. We are attempting to solve the problem with the same thinking that brought us to this problem state.

Daly and Cobb (1989) discuss a mechanism for assessing the nature of an economic system. They base their proposal on by Seers (1983). They contend that people primarily locate economic systems on a scale from left (socialist) to right (conservative). Seers modifies that by labelling the horizontal scale as egalitarian to anti-egalitarian and adds a vertical scale with anti-nationalist at the top and nationalist at the bottom. The top left corner (egalitarian and anti-nationalist) is Marxists socialists and the bottom right (anti-egalitarian and nationalists) is traditional conservatives. The top right (anti-egalitarian and anti-nationalist) is neoclassical liberals. The bottom left (egalitarian and nationalist) is dependency theorists, populists, and neo-Marxists. Daly and Cobb would prefer the vertical axis to be labelled communitarian and anticommunitarian but do accept that “nations are a desirable form of community” (p 9). They argue that the socialist – capitalist divide has its origins in the development of industrialism based on the ready supply of the necessary raw materials.

Daly and Cobb say “capitalism consists of private ownership of the means of production” (p 13). Socialism in contrast “is defined by government ownership of the means of production with allocation and distribution by central planning” (p 13).

Although Daly and Cobb say they favour private ownership with “the widest possible participation in that ownership” (p 14), they support “decentralization of political and economic power, worker ownership of factories or participation in their management, and the subordination of the economy to social goals, democratically defined” (p 15). They see this as “fresh thinking about the possibilities of human life in community” (p 15).

I wonder where Douglas' (1983) Economic Democracy would fall. One of his principles is that all “natural resources are common property” (p 110). This does not mean collective or communal. He is also concerned that the distributed purchasing power makes it possible to purchase all of production and that the creation of credit is the prerogative of the government and not the banks.

There is also another system that I would like to evaluate. This is what I have been calling shalom economics. The emphasis of shalom is wholeness and peace. In a shalom economy, the focus would be on ensuring needs are meet and that “all things” are able to prosper. It would involve a looking to the interests of others (Philippians 2:4). Does this fit within the dimensions that Cobb and Daly describe. It certainly has a community focus but it is wider than human community but it isn't based on government or individual ownership. It possibly echoes more Douglas' concept of common property.

It seems that the question that we should be asking is what makes a system good? Is it the freedom that it gives people? Is it meeting the needs that exist in our world? We cannot judge goodness by prosperity or endurance. Such measures ignore those who struggle and the destruction that the charge to prosperity causes. Our base for goodness has to come from an understanding of shalom (peace, fullness, wholeness). Shalom economics therefore requires a focus on 'meeting basic needs,' establishing justice, and maintaining integrity. This isn't just for people but for all of the cosmos.


Gibson, John C.L. (1985) Job, Edinburgh, The Saint Andrew Press.

Daly, H. E., & Cobb Jr., J. B. (1989). For the common good: Redirecting the economy towards community, the environment and a sustainable future. London: Green Print.

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

Seers, Dudly. (1983) The Political Economy of Nationalism. Oxford: Oxford University Press.

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