Economics Is Our Religion

Blogger note: this is in response to the Archdruid Report's latest series of posts, this one in particular.

There are a good series of posts currently running on the Archdruid Report exploring a concept he has referred to often but not explicitly spelled out - that the notion of progress is essentially the main religious faith that underpins modern societies.

It's an intriguing notion, and I think there's much truth in it. But I'm going to propose the idea that it's in need of refinement. In fact the real religion that undergirds our modern societies is actually economics - and the belief in progress is actually a component of that doctrine, rather than the doctrine itself.

Think of it this way - Christians believe in an afterlife. This belief is an essential feature of Christianity. But it is not, in itself Christianity. It is a necessary component of the set of semi-coherent and self-reinforcing beliefs that make Christianity work as a religion. Yet Christians do not describe their religion as the religion of afterlife. They do not go to church and confess belief in afterlife-ism. Even many non-Christians believe in an afterlife. It is merely a tenet of the religion, not the religion itself.

Similarly, I would argue that the notion of progress is essential to the free-market economics that is the guiding social structure of our world today. It is not so much the belief in progress, but the concepts of the "science" of economics, that took over the social order of Europe and the world after the "death of God" proclaimed by Nietzsche. Economics claimed to be a "rational science," yet it is based around around certain core assumptions that are unquestioningly accepted by people today. And, it is claimed, as long as we adhere to these beliefs and assumptions the living standards of the human race will improve continually forever.

One core principle of the religion of economics is that productivism is a goal in and of itself that will bring about an earthly paradise and that everything must be sacrificed to the cult of productivity: functioning communities, local economies, family relationships, healthy ecosystems, social justice, equality, physical and mental health, societal well-being and happiness, leisure time, etc. This spirit of sacrifice that runs throughout capitalism at every level resembles to me nothing so much as a religious impulse. As the philosopher Slavoj Žižek put it:

"Capitalism is, and this I'm almost tempted to say what is great about it, although I'm very critical of it, Capitalism is more an ethical/religious category for me. It's not true when people attack capitalists as egotists, they don't care for... no! An ideal capitalist is someone who is ready again to stake his life, to risk everything, just so that production grows, profit grows, capital circulates. His personal or her happiness is totally subordinated to this. This is what I think Walter Benjamin, the great Frankfurt School companion [and] thinker had in mind when he said Capitalism is a form of religion. You cannot explain, account for a figure of a person that [is] capitalist, obsessed with expanded circulation, with the rise of his company, in terms of personal happiness."

You see this today in the belief that the poorer nations of the world will adapt market economies, and will eventually all become wealthy and prosperous. Look at China. They literally tore their society apart when they embraced Capitalism. Peasants left their villages and families by the millions to go to work in factories for sixteen hour days  and sleep in spartan bunks in dormitories for a pittance. Entire villages became infected with cancer, the sky became dark with haze, and the rivers became filled with toxins and dead animals. They were willing to do this becuase their descendants, they are told, will get an education and live comfortable, affluent, Western lifestyles once China becomes rich and the wealth trickles down to the masses. How can one not describe this as a religious faith, similar to that of the medieval peasant whose bitter toil would store up for him rewards in the next life? Except today the rewards are material and in this life, just in the future. Currently, the Chinese look upon the future as sort of a "promised land" for their descendants, and their rewards as creature comforts rather than eternal life. The fact that this is already unravelling in Western countries does not seem to discourage their faith.

Another underlying belief is that economic growth equals progress, and that progress will solve all ills. This why progress is an essential component of the "religion" of modern economics. More growth means better and better living standards for all in perpetuity, the argument goes. Similarly, more growth leads to "innovations" which will solve every problem humans will ever encounter.

For example, a widespread belief is that somebody, somewhere, will come up with inventions like a new power source, or a non-polluting technology, or artificial intelligence, that will be introduced into the market and cure all our ills, political, environmental, and social, even sickness and death in the views of the more extreme believers. Innovation is an "ultimate resource" that will never be exhausted and will overcome even the finite nature of the earth itself! How can one not see this as a fundamentally religious belief? Thus, economists preach that anything that hinders or limits economic growth must be forbidden, and we must do all we can to "promote innovation" no matter the cost to the wider society.

Another fundamental article of the faith is the idea of trickle-down: the idea that if the wealthy and powerful are given an environment to operate without any constraints, that their actions will ultimately bring about a better life for all, whereas restraining their actions in any way will only cause us to be poorer in the long run and do more harm than good. It seems to justify the "ruling class" of capitalism the way The Divine Right of Kings justified absolute monarchy for centuries. It's the "great man theory" of economics.

Another article of faith is often called the "Just World Hypothesis." According to this article of faith, the economically productive are rewarded exactly in proportion to their contributions to society; no more, and no less. Wealth is correlated with virtue and social contribution. There can be no cheating or gaming of the system, because all the actors in the Market possess total freedom and perfect information, and thus the market will eventually dispense retribution against those who cheat and reward those who are virtuous. Everyone is born with the same opportunities, and anyone who prospers does so by their own abilities and nothing else. Thus the wealthy have "earned" every last penny of their income and wealth through "hard work and sacrifice" and to take away any of it (as with taxation) is "theft." Thus, a hedge fund manager who earns ten thousand dollars in a single day has contributed that much "value" to society, as has  professional sports player who earns 120 million dollars a year.

The flip side of this is that the poor are always deserving of their fate for being lazy and unproductive. Low pay can only be explained by peoples' work as having "lesser social value." than others. Prosperity is available for everyone if only they work hard enough, and anyone who is suffering hard times has brought their fate down upon themselves and has no one to blame for their failures but themselves. (This is similar to the Calvinist idea of "the Elect of God").

Central to the religion of economics is the concept of "The Market." The Market is not treated as a human construct, but rather as a semi-divine entity, and is regarded with a quasi-religious awe. It is considered benevolent, all-knowing, and infallible, just like the theological concept of God. Any problems with the Market are caused by human interference and a lack of understanding, not by the Market itself, because the Market is infallible. Overtly religious terms like the "invisible hand" are used in reference to the Market. The "invisible hand of the Market," we are told, allocates all goods and services in an ideal manner in accordance with its divine will, and we never to question the "wisdom" of the Market or interfere with its  workings. It must be left alone to work its magic. The Market is benevolent, but it is also capricious, rewarding those who adhere most closely with its wishes, and punishing those that deviate from its strictures. The Market is synonymous with human freedom, and regulating or interfering with the Market in any way at all is tantamount to taking away peoples' freedom.

If there is  downturn, then we have "sinned" against the Market, and must put our house in order. If we pay down debt and cultivate surpluses to restore "balance" to the Market, it will once again shower us with prosperity for our virtue just as in times past. "Austerity" is the way we collectively punish ourselves for our exuberance, and the market will reward us for our pain and suffering. Debt is equated with weakness and shame, and budget surpluses with health and prosperity, almost as if we're treating money like grain in an agricultural economy. The lives of ordinary workers are sacrificed to the Market as surely as prisoners were slaughtered by the tens of thousands to appease the rain gods atop Mayan temples.  It is a religious, not a logical impulse.

The workings of the Market have been revealed to us though a series of "prophets" - Adam Smith (the Jesus of economists), David Ricardo, John Stuart Mill, Wilfredo Pareto, Kenneth Arrow, Irving Fisher, Paul Samuelson, John Maynard Keynes, Eugene Fama, Milton Friedman, et. al. Each prophet expands our understanding and brings us closer to the "truth,"and we must judiciously study their writings, even ones written centuries ago. Economics even has its Antichrist - the devil Karl Marx, and his heretical doctrine of Communism which must be rooted out and eliminated wherever it is found.

Just as no one can agree on the nature of God, we can't agree on the nature of economics either - instead of Methodists, Lutherans, Presbyterians, Calvinists, Mennonites, Catholics, Mormons and others; we have Keynsians, Austians, Marxists, Neoclassical economists, the "saltwater" and "freshwater" schools, etc. Heretics, such as behavioral or biophysical economists, are dismissed and marginalized (but thankfully not killed anymore)*. Like Galileo, no one is allowed to challenge the orthodoxy of the faith. We even use terms like "orthodox" and "heterodox" to describe economic ideologies, surely a testament to how much economic thinking is influenced by religious thinking. See Wikipedia's entry for heterodox economics.

Economics claims to define the very nature of human beings today. Where people were once defined by religion as immortal souls in need of redemption, we are now defined us as "walking calculators" - perfectly rational self-interested solitary individuals always seeking ways to derive the maximum personal benefit for the least amount of cost. It also illuminates our view of the natural world. We assume everything in nature can be assigned a price for "ecosystem services," from the value of a clean river to the pollination activities of bees. If an animal or ecosystem does not provide enough "economic value" to us, we are free to let it be destroyed or go extinct, with no moral condemnation. Thus, a forest has no value in and of itself as part of creation until it is chopped down and turned into products for human use. Similarly, for example, an animal, rather than being part of God's creation and thus intrinsically valuable, is simply a number on a spreadsheet, and can be allowed to go extinct if it provides too little economic "value."  This is a profound shift in man's view of the world, and it is hardly ever even acknowledged. If something shapes the fundamental world view of a people, how can it not be said to be a religion? And how can that world view not govern our actions?

Economics also determines our social relationships and social hierarchy. You are now defined by your role in the economic order rather than your place in the feudal caste system or your familial or tribal relationships. So instead of king, peasant, serf, vassal, villein, knight, yeoman, or chief, we have business owner, investor, CEO, entrepreneur, businessman, professional, blue-collar worker, unemployed, etc. Each of these form their own "class" in society which is not so different from that of the Middle Ages. We relate to each other not out of blood relations or mutual obligations, but as isolated individuals seeking maximum benefit by impersonal exchanges in the market. There are no obligations other than to maximize one's own profit, and altruism is disparaged. Blatantly unjust and exploitative social relationships are justified by economics just as theologians once defended the Divine Right of Kings, the Crusades, papal infallibility, blasphemy, indulgences, serfdom, and slavery.

In the same way theology was a major course of study in the Middle Ages for many of the brightest young men from the upper classes, economics today is a popular course of study for many of the children of the wealthy seeking to gain power and influence. At prestigious universities they are indoctrinated into a system with it's own jargon and implicit world view, and that world-view becomes the tunnel through which they see the world. They come up with theoretical constructs like Ricardian Equivalence, Pareto Optimality, the Efficient Markets Hypothesis, and the Exogenous Growth Model and explain everything on that basis (compare to theological jargon such as "binitarianism," "unconditional election," "hyper-dispensationalism" and "imminitizing the eschaton"). These concepts are taken for granted, just like Noah's flood and original sin, and eveything is built off of those first principles.

Rather than the Bible and Aristotle, they use economic texts and mathematical equations which are abstruse to the commoners to justify things like free trade, offshoring, deregulation, usury, financialization and mass layoffs which common-sense would seem to imply are destructive to society. Economists have prestigious chairs at universities and write books and papers. They advise governments. They travel to conferences all over the world. Just like being in the Medieval clergy, it can be extremely lucrative and rewarding for practitioners - economists are some of the wealthiest and most influential members of society for doing essentially no productive activity.

Just as kings once consulted with Cardinals and Archbishops to determine the appropriate course of action and had advisers schooled in theology, today's world leaders have cabinets full of economists to tell them what to do, not natural scientists, sociologists, philosophers, or engineers (e.g. The President's Council of Economic Advisers).

Just as Christianity privileged itself on providing the ultimate answers to all important questions - from justifications for war to the  age of the earth to the motion of the planets - economics has been apotheosized to a similar degree with the rise of "Freakonomics." Economists claim to able to explain absolutely every aspect of human social behavior in terms of rational incentives and game theory - from the raising of children, to dating and marriage, to schools and public health (see, for example, nudge theory) - and determine the optimal course of action for governments to take at the local and national levels. Economists are dispatched like missionaries all over the world to convert the "heathen" - poor counties that have not yet embraced the gospel of free market liberalization and global trade (such as in Latin America in the 1970s).

Just as the medieval world view was reinforced every Sunday by church services performed by the clergy, turn on the TV and our economic world view is constantly reinforced by the media. Economists pontificate from the television news programs and from the pages of the New York Times and the Wall Street Journal like preachers explaining God's will to the peasants from their pulpits. Free markets and economic growth are preached as a self-evident truths in all media outlets, even "leftist" ones. The debate boils down to little more than what are the appropriate levels of spending and taxation, and how do we bring about the maximum amount of economic growth. The Market must be appeased, and sacrifices must be made no matter how much poverty, unemployment and social dysfunction it creates.

Note that our banks look like temples. They are stately, majestic, imposing buildings by design, utilizing the finest, most expensive materials from all over the world. This is not accidental. The chairman of the Federal Reserve is like the "pope" of capitalism, with the Federal Reserve Board as his college of cardinals. He is elected essentially for life, and his every pronouncement is a world-changing event for the faithful. There are magical rituals and incantations like creating money out of nothing ("keystrokes"), and transmutation of precious metals into money. There are sacred dates like Tax Day and the end of the fiscal year. Sometimes we proclaim a "tax holiday" instead of a religious holiday. Economists even claim to be able to predict the future - in fact it's part of their job description!

Powerful institutions like the IMF and World Bank make rules behind closed doors that affect millions and superseded democratically-elected governments. Sometimes economists are even appointed as rulers of nations, the idea being that the principle goal of leaders today is not to maximize societal well-being, but to "balance the books" - the statesman as accountant. I remember hearing about "interdict" in the Middle Ages - a Pope would order priests to refuse services to the faithful in order to bring about unrest and topple leaders at will. Compare that to economic sanctions levelled against any world leader who defies the global economic order and you'll see that financial institutions, like the Church, are set above governments, even democratically elected ones.

In the Middle Ages when there would be a crisis of faith - a famine, say, or a plague, the apologists for the Catholic religion would not question their faith; they would just come up with ex-post-facto justifications such as "it is God's Will, and humans cannot comprehend God's will," and could advise little more than prayer and forbearance. Similarly, the negative outcomes of the market, from stock market crashes to housing bubbles to climate change, to pollution, to resource depletion, to widespread unemployment to social dysfunction, to rising levels of unhappiness and poverty are waved away by economists as "externalities" - natural workings of the Market that must be endured and can easily be corrected with the proper technocratic management if only we keep the faith. Economists' failure to predict the economic downturn, or to agree on the what the appropriate course of action is to remediate it, are similarly rationalized away, and no fundamental change in world view is even contemplated.

Yet economics, like theology, is a pseudocience. It is non-falsifiable. It starts from first premises, such as the ones I outlined above, and seeks evidence to justify those premises while dismissing any and all alternatives or contrary evidence (like the Church once dismissed astronomy and human evolution). Economic debates resemble nothing so much as medieval dialogues on how many angels can fit on the head of a pin. No matter how often they are proven wrong, no one questions the basis for their belief. That sounds a lot like religion to me.

So I would argue that the religion of progress is actually a subset of the religion of economics. Economics fulfills all the criteria of a foundational religion of a society, just like the Medieval Catholic Church, Confucianism or Islam. It establishes the fundamental social order and legitimizes the ruling class. It defines social relationships between people and purports to describe fundamental human nature. It is based on a set of beliefs with no rational, empirical basis, just sacred texts and theory. It is consistently contradicted by real-world experience, yet it is never questioned. It is the advisor to governments, and defines the parameters in which they must operate. It has it's own priesthood and hierarchy, its prophets and apostates. It has its conflicting schools of thought and its heretics. It has its declarations of faith and ruthlessly crushes any and all alternatives. It has its sacred temples, its rituals, it's indocrination tools, and its own terminology. It is a universal faith - its institutions straddle the world. It claims to be the source of ultimate truth. It has its sacrificial lambs, and its black sheep. It is, quite simply, the fundamental religious dogma underpinning modern human society.

* for example, Frederick Soddy, Thorstein Veben, Herman Daly, Nicole Foss, Charles A. S. Hall, Hazel Henderson, etc. Even "established" economists like Michael Hudson, Steve Keen, Ha-Joon Chang, John Quiggin and others are ignored if they step outside the acceptible bounds of orthodox thinking.

Zeitgeist watch. I'm hardly the first to say it. Here are some other articles on the same theme:

Are markets Our God? (Harvard Business School)
The Religion of Economics (John Seed)
The ‘laws of economics’ don’t exist (The Edgy Optimist)
Economics: pre- and post- Copernican (Transition Milwaukee)
Scientific viewpoint or 'religious' belief: My cat explains energy optimism (Resilience)
The Market as God (The Atlantic)
Economics as Religion (Decline of the Empire) and see Two TED Talks, Open Thread Two years ago, I posted the following comment to this post:

[Economics] starts with a foregone conclusion – like the idea that so-called “free” markets, lack of regulations and globalization will make everyone better off - and then gathers evidence to support those conclusions. And isn’t it interesting how the forgone conclusions of economists always end up supporting the wealthy and powerful? In fact, its antecedent is medieval theology. References to sacred texts like The Bible and Aristotle were substituted for any type of empirical evidence, and anything that did not fit that world view (like a receding glacier or a dinosaur fossil) was discarded or explained away by tortured logic.

Many observers have compared the economics profession to the Catholic Church of the Middle Ages. In fact, their role is precisely the same – to provide a philosophical justification for a clearly dysfunctional and unjust social order. Rather than kingship by divine right, it attempts to justify to the masses things that are clearly absurd – like Americans competing against workers all over the world will make all of us more prosperous. Or that supply creates its own demand (Say’s law). Or that infinite growth is possible on a finite planet. Of course the conclusions of economists always support those who wield the money and power. Coincidence? The sole purpose of economics as it is practiced today is to come up with justifications for the status quo. Think about it – the “father of classical economics,” Adam Smith, did not attempt to come up with some sort of ideal, rational system, he merely described what was already happening. Then later, these observations became codified a “science.”

The conceits of modern economics come out of Enlightenment attempts to make social governance as “rational” as Newtonian physics. Two critical ideas underlie this - that individuals were atoms whose interactions were as precisely quantifiable as the effects of gravity on physical objects, and that the “laws” of economics were as immutable as Newton’s laws, such as F=MA. Never mind that every “law” of economics has been proven false (even supply and demand – have you looked at college prices lately), and that the money system is an entirely artificial creation, subject only to whatever rules we wish to apply. This has gotten even worse as what used to be called institutional economics was replaced with abstract mathematical models promoted by game theorists and think-tanks. With institutional economics, the effects of policy were implicitly an object of study. When the idea of the market as a perfectly rational, all-knowing machine that correctly allocates all resources became gospel, any questions about social effects were tossed out the window. Economics finally realized their Enlightenment goal. Too bad their “Market” seems to be identical to the Medieval Catholic Church’s notions of God – all-knowing, all-powerful, capricious, and most of all, never to be questioned under any circumstances. That why economists can no more explain financial crises than medieval monks could explain famines or the Black Death to the suffering populace.

The truth is, markets have always been driven not by scientific principles, but by greed and fear. Is there a quantifiable unit that measures greed (may I propose the “Blankfein” as such a unit).

Like the Catholic Church, modern economics does not tolerate dissent. Remember Galileo? If you look up heterodox economics (type it into Wikipedia) you can see what happens to people and ideas that do not fit in the current economic free-market paradigm. Any apostates from this world view , no matter how intelligent and qualified, are dismissed entirely. In fact, the ultimate “heterodox” economist, Karl Marx, seems to have predicted exactly what is happening to capitalism, and a few more intelligent observers are starting to note that uncomfortable fact, to wit:

http://blogs.hbr.org/haque/2011/09/was_marx_right.html http://seekingalpha.com/article/187119-the-fate-of-capitalism-was-marx-right http://www.oftwominds.com/blogaug11/crisis-of-capitalism-8-11.html http://www.bbc.co.uk/news/magazine-14764357

As Adam Curtis so aptly put it in a recent blog post, mainstream economists and think-tanks are designed not to come up with solutions, but rather to limit our ideas to those that benefit the already powerful and preserve the status quo. Here is an eloquent statement from his blog:

“The guiding idea at the heart of today's political system is freedom of choice. The belief that if you apply the ideals of the free market to all sorts of areas in society, people will be liberated from the dead hand of government. The wants and desires of individuals then become the primary motor of society.”

“But this has led to a very peculiar paradox. In politics today we have no choice at all. Quite simply There Is No Alternative.”

“That was fine when the system was working well. But since 2008 there has been a rolling economic crisis, and the system increasingly seems unable to rescue itself. You would expect that in response to such a crisis new, alternative ideas would emerge. But this hasn't happened.”

“Nobody - not just from the left, but from anywhere - has come forward and tried to grab the public imagination with a vision of a different way to organise and manage society.”

“It's a bit odd - and I thought I would tell a number of stories about why we find it impossible to imagine any alternative. Why we have become so possessed by the ideology of our age that we cannot think outside it.”