Britain has been hit by economic crisis from the same causes as the US. The world’s anti-free-marketeers, Communists, Socialists, European haters of the Anglo-Saxon world, and a multitude of left-wing churchmen are gloating, calling the meltdown a ‘crisis of capitalism’.

Madeleine Westrop comments:

I know you are Atheist Conservatives: so, if you have any interest in your diametric (or dialectic?) opposite, consider for a moment the Church of England. It is advocating Karl Marx.

I don’t mean that the whole ecclesiastical edifice is daubed in Hegelian anti-God revolutionary anti-Capitalist slogans.  Most of the Anglicans I know are constitutionally unable to talk about politics, religion, money or even ideas at an English dinner party.   (I suppose if Marx had bred dogs or polyanthus…) Our dear old Anglican aunts go to the pretty parish church every Sunday and are true blue Conservatives from their charming hats to their patent shoes. 

But look further up.  Turn your gaze from the modest and crumbly foundations to the airy spires above.   The astonishing thing is that the Archbishop of Canterbury, the most senior figure in the Established Church, turns to Marx when the world is troubled.

An article in the Spectator this week was written by The Most Reverend and Right Honorable, his Grace Dr Rowan Williams, Primate of All England, Lord Spiritual in the House of Lords, overseer of the Anglican Communion (the third largest denomination in the world), Ordinary to the Chaplains in the Army, Navy and Royal Airforce, Visitor, Patron and Governor to hundreds of charitable trusts, President of the House of Bishops and the General Synod, Chairman of the Archbishop’s Council, Church Commissioner responsible for administration of the wealth and property of the Church (about £6 billion and hundreds of acres of land), resident and official host to many at Lambeth Palace, resident of the Old Palace at Canterbury, bishop of the Diocese of Canterbury, blesser of oils, annointer of the Monarch at each coronation.  I have counted how many have been enthroned as Archbishop of Canterbury and I think Dr Williams is about the 109th, since the first, St Augustine in 597 AD.

Dr Williams has decided to write about the economic crisis afflicting the world wholesale money markets, the banks and the stock-markets and ruination of all our pensions and savings to boot.  He says that unimaginable wealth has been generated by fiction and paper with no concrete outcome beyond profit for the traders.  He says the challenge is now to connect money to material reality.  And then it comes: “Marx long ago observed the way in which unbridled capitalism became a kind of mythology, ascribing reality, power and agency to things that had no life in themselves.”  He reminds us that “ascribing reality to what you have in fact made yourself” is idolatry. 

I agree there has been an “unreality” exposed because those debt obligations turned out to be worthless.  But this was not the work of a Monster Capitalist system.  Exposure is just what happens when you find out you have been stupid enough to deal in rotten wheat or quack medicine.  And there has been “unreality” in thinking such prodigal borrowing and spending was sustainable.  Again, this is not Monster Capitalism at work, but simply old fashioned bad business practice.

Was Dr Williams  thinking of the sorcerer in Marx’s Communist Manifesto?  In 1848 Marx and Engels wrote:

Modern bourgeois society, with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells. 

This is nuts. Dr Williams can’t just say the problem is that we have created a Capitalist Monster and idolised it. For a start, here in England the problems have not occurred where old-fashioned capitalist values have prevailed.  The Northern Rock Bank lent out 110% mortgages to people who couldn’t make repayments and the bank went bust.  The taxpayer now has to pay a Bishop’s ransom for this failure. But Northern Rock was not a single-minded profit-mad selfish Capitalist Monster.  If it had been a bit more selfish it might have been more prudent. It gives 5% of its profits to ‘tackle disadvantage’ in the North East of England through a charitable foundation. It was a Labour Party pet and it was lending improvidently while the Labour Government was also borrowing like crazy to fund its socialist “transformations” (spending).  Northern Rock shared basic Labour Party socialist values. The bank employed Deborah Mattinson, Gordon Brown’s focus group guru, to advise it about social responsibility.  The Northern Rock charity gave money to the left wing think-tank the IPPR, which the Labour Government has used to outsource its own policy making.  In fact 17 departments have outsourced to the IPPR over the last 10 years.  And the inclusion and acceptance of the market system in a movement for social justice was part of the plan set out in Tony Blair’s New Labour movement.

Dr Williams also accepts private enterprise to some extent.  He writes,

“Of course business is not philanthropy, securing profit is a legitimate (if not a morally supreme) motivation for people…It’s true as well that, in some circumstances, loosening up a financial regime to allow for entrepreneurs and innovators to create wealth is necessary …But it is a sort of fundamentalism to say that this alone will secure stable and just outcomes everywhere.”

Which brings me to the second reason that the Shelleyesque Capitalist Monster, or the ungovernable sorcerer’s powers, are both inappropriate ideas.  Securing profit is a morally supreme motivation.  And while it is true that profit may not alone secure stable outcomes, the waste of wealth always produces unstable outcomes. True wealth (as contrasted with inflated speculative bubbles of paper wealth) is a sine qua non of stability, along with peace, the rule of law and liberty.

The problem is that Dr Williams has chosen a scoundrel unemployed insolvent misanthropist who sponged off his dying father and friends and couldn’t afford to bury his own child, for his lessons in morals and economics.  He chose Marx.  Instead he should have chosen a prudent, kindly, careful man who worked hard and made a meticulous study of how the wealth of nations can be increased and warned us against the very problems that have arisen in our economies: Adam Smith.  (It seems hardly worth mentioning in this Atheistic context, but it strikes me that an Archbishop might also have taken advice from Smith who believed, at least, in ‘a beneficent Providence’ over the anti-Religious Marx.)

Moreover, Marxism doesn’t really help to explain our predicament. The Communist Manifesto says that economic crises occur because of over-production:

“It is enough to mention the commercial crises that, by their periodical return, put the existence of the entire bourgeois society on its trial, each time more threateningly…. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity – the epidemic of over-production. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation, had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce.”

But but but! Our present ills arise because we have unrealistically overestimated our wealth.  Dr Williams pointed this out himself.  We are not in trouble because of over-production!  It is truer to say that we have spent more than is justified by what we have produced.  National debt in the United Kingdom is high: the Government says it is about £650 billion but if you add in the hidden debt obligations – Northern Rock, public sector pensions, Public-Private partnership commitments, decommissioning of power stations – the figure is at least doubled.  In other words, to claim the official figure for debt,  about 37% of our gross domestic product, is to make a wild underestimate.  And where Government led, we followed.  Personal debt amounts to about £1.4 trillion.  Adam Smith would not have approved:

Whatever we may imagine the real wealth and revenue of a country to consist in, whether in the value of the annual produce of its land and labour, as plain reason seems to dictate; or in the quantity of the precious metals… in either view of the matter, every prodigal appears to be a public enemy and every frugal man a public benefactor. 

It is true that the economic crisis has been made worse by the obscurity of the real state of things. But how like a priest to say that the problem is, in the end, idolatry of an unknowable, ineffable dark thing.  We should shine light on the problem rather than condemn it to the shadows. Obscurity and superstition is our enemy here. 

Take the South Sea Bubble problem of three hundred years ago. The south Sea Company bought a monopoly of trade with South America.  The company underwrote the National Debt for interest Payments from the Treasury. This all seemed rosy. Share prices soared and other companies were founded in a frenzy of speculation. People had no idea what they were buying or risking: for example, one to fire square canon balls, and one just for an unknown undertaking of ‘great advantage’. Ladies’ maids and porters bought carriages on supposed mountains of wealth. When the value of the stocks crashed, investors were made destitute overnight and suicides and arrests followed.  Isaac Newton lost money and said “I can calculate the movement of stars but not the madness of men.”   

Smith discusses, years later, the South Sea company itself in The Wealth of Nations:

The directors of such [joint stock] companies, however, being managers rather of other people’s money than their own; it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private company frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it.  Negligence and profusion must always prevail… in the management of the affairs of such a company.  

How apt this basic analysis seems today.  Risk takers must be responsible and face moral hazard. And responsibility, like charity, is best applied close to home.  England has had some marvellous institutions, the building societies, owned by their depositors whose only purpose was to provide finance for buying houses.  They were prudent and profitable, on the whole and allowed multitudes to buy their own house by slow and careful saving.  However, in the last twenty years or so they have ‘de-mutualized’ and become publicly owned banks, dealing in the wholesale markets and lending to the inflated ‘buy to let’ investment market.  Since they have stopped being owned by their depositors, many have had disastrous losses and only this week, the biggest ‘buy to let’ lender, the Bradford and Bingley bank (building society that was) has been nationalised.

There is no Monster. In fact there is no capitalist system. There are frugal habits that build wealth and wasteful or irresponsible habits that destroy it.  It is terribly dangerous to condemn the market for failings in ourselves and our Governments.   When you go to bed tonight, you might look under the bed: pessimists might check on a hoard of gold coins rather than trust banks; Marxist revolutionaries might simply turn in; but let us hope only the Prelates  are looking for Monsters.