The Lost Morality of Economics

Recalling the Wisdom of Richard Henry Tawney and Others

One of the most powerful and effective tools in the hands of capitalist economists is the suggestion that economics in general and capitalism in particular is some sort of science. This illusion – and illusion it is – is strongly assisted by the fact that modern economics is taught with the aid of impressive-looking mathematical equations and “proofs”. Economic textbooks are cluttered with tables, statistics, and graphs which make the books look like physics textbooks, or maths books even. Therefore economics must also be a science, right?

Well, no, actually. For the very simple reason that real sciences, such as physics and chemistry, demand a standard of proof and intellectual rigour that not only doesn’t exist in modern economics, it has never existed at all since the earliest days when some sort of economic theory could be perceived. Early economic principles were conceived in religion, and religion strongly influenced economic practices for at least two thousand years. Capitalism, the dominant economic belief of today, is still more of a religion than a science, because it demands from its adherents a level of blind faith which is little different from any other religious fanatic.

In the beginning

As an atheist I’m not much impressed by the bible, or any other religious work. I accept that there’s some limited utilitarian value in such books, for the slight contribution they make to studying the essential subject of history, but the main purpose they have always served – tools of psychological oppression for the rich to control the thoughts and actions of the poor – is reprehensible, and devalues any use they may have as lessons of history. The bible’s usefulness as a collection of historical documents is helpful for this discussion not because of any particular value to economic thought in the stories themselves, but in the almost undeniable fact that those stories were told, and presumably believed, a very long time ago.

RH Tawney was an economic historian whose work was well known in the first half of the last century, and was strongly influential on the embryonic ethical values of Britain’s Labour Party. He was a devout Christian and lifelong friend of William Temple, who became the Archbishop of Canterbury. Unsurprisingly he clearly felt no conflict of interest between his Christian faith and his staunch support of socialism, and if Tawney’s work is now largely unknown it’s probably due more to the latter fact than the former. However, much of what he had to say is as relevant today as it was in Tawney’s day – if not even more so.

One of his once quite well-known books, Christianity and the Rise of Capitalism, written in the 1930s, is a seriously important piece of work. It’s not an easy read, especially at the beginning where some of the old references he uses appear in the original Latin, Greek, German or French – without translations. And although he wrote with a beautiful elegance which is quite rare today I found I often needed to read some sections two or three times over to properly understand him.

The message of Tawney’s book is, essentially, this: although ruthless exploitation of the poor by the rich is probably as old as human history itself, there appears to have been a significant change in the wider social acceptance of the “rightness” of it starting somewhere around the time of the European Reformation in the sixteenth century.

The early morality of moneylending

I happened to be reading Tawney’s book at the same time as I was reading Ellen Brown’s excellent The Public Banking Solution, which coincidentally has a brief reference to a related point: that over two thousand years ago lending money at interest (which today we’re all conditioned to accept as the only way to do it) was not necessarily recognised as a good thing, and acceptable only in certain circumstances.

The Old Testament Book of Deuteronomy, Chapter 23 : 19 says:

Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury.

It’s not clear what was meant by “brother”, but it’s assumed it had a wider meaning than just one’s male sibling, and possibly meant any Jewish person (given that the book is mainly about the Jewish people). Because the very next verse goes on to say:

Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the Lord thy God may bless thee in all that thou settest thine hand to in the land whither thou goest to possess it.

These biblical references are interesting because they indicate the morality practised by the ancient Jews with respect to the business of lending. Furthermore, the second part of that last verse is intriguing, as it suggests that usury is a good way to help possess new lands. This theme is echoed earlier in Deuteronomy; for Chapter 15 : 6 reads:

For the Lord thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.

So lending at interest was clearly recognised thousands of years ago as a tool to control other lands, and presumably for that reason it was forbidden for Jews to borrow from others.

This biblical chapter has other interesting comments on the morality of lending. It opens, for example, with this:

“1. At the end of every seven years thou shalt make a release.

  1. And this is the manner of the release: Every creditor that lendeth ought to his neighbour shall release it; he shall not exact it of his neighbour, or of his brother; because it is called the Lord’s release.”

This is obviously a clear statement that all debts should be wiped out every seven years.

There are further verses in Chapter 15 which clearly describe a high standard for the morality of money lending:

“7. If there be among you a poor man of one of thy brethren within any of thy gates in thy land which the Lord thy God giveth thee, thou shalt not harden thy heart, nor shut thine hand from thy poor brother:

  1. But thou shalt open thine hand wide unto him, and shalt surely lend him sufficient for his need, in that which he wanteth.
  2. Beware that there be not a thought in thy wicked heart, saying, The seventh year, the year of release, is at hand; and thine eye be evil against thy poor brother, and thou givest him nought; and he cry unto the Lord against thee, and it shall be sin unto thee.
  3. Thou shalt surely give him, and thine heart shall not be grieved when thou givest him: because that for this thing the Lord thy God shall bless thee in all thy works, and in all that thou puttest thine hand unto.
  4. For the poor shall never cease out of the land: therefore I command thee, saying, Thou shalt open thine hand wide unto thy brother, to thy poor, and to thy needy, in thy land.”

Some of this morality was clearly adopted by the early Christian church, because lending at interest (usury) was regarded as a serious sin, and charity towards the poor was routinely practised by most Christian churches and monasteries, and taught as a Christian virtue. This situation lasted for the best part of fifteen hundred years – until the Protestant Reformation.

 The age of Calvin

Arguably the single most powerful driving force behind the Protestant Reformation, the one thing which, probably more than any other that drove Martin Luther to hammer his 95 theses to the door of Wittenberg Castle church on Halloween in 1517, was the cesspool of corruption that had overtaken the Christian Church. The many problems that Luther publicly exposed to the glaring light of day, like the little boy who cried out that the emperor wasn’t wearing any clothes, gradually galvanised like-minded thinkers into action all across Europe.

Although Martin Luther is widely credited with initiating the Protestant Reformation, his interests appear to have been largely focused on reformation of the Church, to try to end the rampant corruption that was decaying the institution which meant so much to Luther for its spiritual values rather than its income-generating qualities. However, there were others, such as Huldrych Zwingli, and John Calvin, who interpreted Luther’s lead as an opportunity to liberate the business world from the traditional grip of the Church. Of these, Calvin arguably had the most influence on the economic changes that were soon to come about, and which would provide much of the moral justification for what is today widely recognised as capitalism.

Tawney captured the essence of the significant societal change that took place in the new dawn of the European Reformation:

To countless generations of religious thinkers, the fundamental maxim of Christian social ethics had seemed to be expressed in the words of St Paul to Timothy: ‘Having food and raiment, let us be therewith content. For the love of money is the root of all evil.’ Now, while, as always, the world battered at the gate, a new standard was raised within the citadel by its own defenders… Not sufficiency to the needs of daily life, but limitless increase and expansion, became the goal of the Christian’s efforts. Not consumption, on which the eyes of earlier sages had been turned, but production, became the pivot of his argument… The shrewd, calculating commercialism which tries all human relations by pecuniary standards, the acquisitiveness which cannot rest while there are competitors to be conquered or profits to be won, the love of social power, and hunger for economic gain – these irrepressible appetites had evoked from time immemorial the warnings and denunciations of saints and sages. Plunged in the cleansing waters of later Puritanism, the qualities which less enlightened ages had denounced as social vices emerged as economic virtues. [My emphasis].1

Although it’s highly unlikely that Calvin ever intended his writing to have the savage effect that modern capitalism has produced on humanity, our planet, and all living creatures, it’s clear to see a watershed moment coinciding with his work. Before Calvin the generally practised morality of everyday economic affairs was largely influenced by the same values the Church had been promoting for over a thousand years, significantly based on Old Testament teaching. But with Luther’s bold attack on the Church’s lucrative and highly corrupt protection racket, the door was flung open to confront any and all inconvenient Church restraints – such as money-lending and profit-making businesses, subjects about which Luther’s famous protest showed no particular interest:

What reason is there [asked Calvin] why the income from business should not be larger than that from landowning? Whence do the merchant’s profits come, except from his own diligence and industry?2

Today these seem innocuous questions, but in Calvin’s day they were almost sacrilegious. However, given the seismic rumblings that Luther had triggered they would have passed almost unnoticed – except by those who could see their potential for economic liberalism.

Tawney provides profound evidence for the effect this new thinking produced:

A practical example of that change in emphasis is given by the treatment of Enclosure and of Pauperism. For a century and a half the progress of enclosing had been a burning issue, flaring up, from time to time, into acute agitation. During the greater part of that period, from Latimer in the thirties of the sixteenth century to Laud in the thirties of the seventeenth, the attitude of religious teachers had been one of condemnation…

[but] When Major-General Whalley in 1656 introduced a measure to regulate and restrict the enclosure of commons… there was an instant outcry from members that it would ‘destroy property’ and the bill was refused a second reading.3

Enclosures in England, like the Highland Clearances in Scotland, were the massive thefts of land from the millions of poor who depended on it for their very survival. It’s easy, and not entirely incorrect, to see the plump hands of the well-nourished aristocracy behind this, but Tawney also draws our attention to the actions of another group who, if anything, are even more despicable than over-pampered patricians, a group who, two hundred years later, would be contemptuously identified as the “bourgeoisie”:

It was not the lords of great estates, but eager and prosperous peasants, who in England first nibbled at commons and undermined the manorial custom, behind which, as behind a dyke, their small savings had been accumulated. It was not great capitalists, but enterprising gildsmen (soc), who began to make the control of the fraternity the basis of a system of plutocratic exploitation.4

Many of those born into lives of luxury and over-pampered indolence, then and now, have no idea of the price paid in human misery and environmental destruction for their grotesque over-consumption. Whereas most of those who emerged from humble backgrounds and ruthlessly clawed and gouged their way to riches are only too well aware of the suffering they left far behind, and their own vital roles in perpetuating it.

Capitalism in its teenage years

There was still a significant ethical component in the teaching of economics two hundred years after Calvin. The subject was still not widely known as economics, merely part of the much wider subject of moral philosophy. Adam Smith, often called the father of capitalism, was not an economist, but occupied the chair of moral philosophy at Glasgow University for a number of years.

Smith’s best-known work “Wealth of Nations” is most well-known for one of its least important (and least accurate) phrases – the suggestion that everyone is driven by their own self-interest, and that an “invisible hand” guides their selfish actions toward the overall best interests of society.

Although much of Smith’s book sings the praises of profit-seeking, showing how far times have moved on from pre-Reformation days, the moral philosopher inside him is still cautious about the limitless power of corporations which, in Smith’s day, were just beginning to exercise their full nation-making (or breaking) strength:

The government of an exclusive company of merchants is perhaps the worst of all governments for any country whatever. 5

And he was concerned about the corruptive influence of big business upon the nation’s rulers:

In the mercantile regulations the interest of our manufacturers has been most peculiarly attended to; and the interest, not so much of consumers, as that of some other sets of producers, has been sacrificed to it.6

Although Smith was much mistaken, in my view, about the easy availability and sufficiency of work, it has to be remembered that when Wealth of Nations was written the worst effects of enclosures in England, and the clearances in Scotland were yet to be felt. Most people could still sustain themselves to some extent on the land if they had to, and at least provide basic shelter and prevent starvation for themselves and their families. The worst horrors of the so-called “Industrial Revolution” were still almost a hundred years away. Nevertheless Smith still had a high regard for the importance of human labour, rather than money, as the real source of a nation’s wealth:

Labour was the first price, the original purchase money that was paid for all things. It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command…

Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places be estimated and compared. It is their real price, money is their nominal price only.7

It’s possible that Smith conceived this thought all by himself, but it’s also possible he obtained it somewhere else. Ben Franklin, for example, wrote the following well before Smith’s book came out:

The riches of a country are to be valued by the quantity of labor its inhabitants are able to purchase and not by the quantity of gold and silver it possesses.8

So it’s reasonable to assume that in Adam Smith’s day the slowly-evolving theory of capitalist economics still retained some of the teachings of the early Christian Church, not least of which was its recognition of the importance of human labour. Consider, for example, the harsh but generally not unreasonable words of 2 Thessalonians 3:10:

[I]f any would not work, neither should he eat.

However, not only was the brutality of the “Industrial Revolution” yet to reveal its advantages to the fledgling capitalists of Smith and Franklin’s day, so too was the steadily growing transatlantic slave trade.

Capitalism reaches full maturity

By the middle of the nineteenth century Capitalism had possibly achieved its zenith. The most powerful empire of the day, based in London, was ruthlessly exploiting the people and resources of so much of the Earth’s surface that the sun never set over it. The United States had seized control over the central landmass of North America by massive acts of genocide of its native people, and waging war with Spanish colonizers. As British colonizers wallowed in the wealth generated by millions of oppressed natives, British workers were literally starving to death in depopulated common land and the industrialised ghettoes of the new manufacturing hell-holes of England. As new US multi-millionaires wallowed in their wealth, the African slave population that was worked to death producing it reached its greatest number, about ten per cent of the total population of the US. Capitalism must have surveyed its work around the globe and smiled in satisfaction.

But to every action there is reaction.

There have always been small groups of oppressed people who have bravely resisted their oppression. For most of human history their small victories have usually been short-lived affairs ending not so much in ideological failure but by the same vicious brutality against which they fought. Even the more successful rebellions, such as the English and French Revolutions, were eventually crushed by the same reactionary forces that were initially overwhelmed. However, these more successful popular uprisings sent out ripples of change, which astute governments were quick to notice. Many of the political and social reforms that were slowly achieved in Britain in the nineteenth century were won not so much because of the ruling aristocracy seeing the wisdom of the reformers’ campaigns, but because of the salutary lesson taught to their French counterparts in the 1790s when they failed to heed the wrath of the masses.

Emerging from early seventeenth and nineteenth century reformers such as the Levellers, Diggers, Luddites and Chartists appeared an even more radical and coherent ideology: communism. Argued and explained in the writings of Friedrich Engels and Karl Marx, for example, communism inspired rebels all around the world, and with the victorious Russian Revolution in 1917 reason for real hope inspired reformers in almost every country.

Like the English and French Revolutions before it, the ripples spread out from Moscow across the world, and capitalist governments sat up and took notice. Obviously the new Russian upstart must be crushed, and it would indeed be ruthlessly opposed and attacked at every opportunity throughout its life, but in the meantime the rabble-rousers at home had to be carefully handled. Using the tried and tested method of divide and rule, together with liberal use of the more dark and sinister devices that have always been at the fingertips of powerful governments, communism was kept at bay in most of the western world. It was eventually defeated in 1989 when Mikhail Gorbachev served up his communist country on a platter to the treacherous western powers who would immediately sell his capitulation as a victory of the ideology of capitalism over communism.

Of course, it was nothing of the sort. Given that Russian communism, and later Chinese communism, were savagely and relentlessly attacked throughout their lives by the most powerful nations on the planet, it was not communist ideology that failed, it was western military and economic warfare that won.

But the key point to note, and indeed the point of this essay, is that at the heart of this ancient struggle lies a very simple economic question: whose benefit should the wealth of a nation serve? The capitalist believes that all wealth should be concentrated in the hands of a tiny minority of powerful people, utterly ruthless people driven only by their own greed and ambition and who will stop at nothing to achieve it. They do not openly say this, but it is without question how they behave. The communist believes that wealth should be evenly distributed between all people. Unlike the capitalist, who keeps his ambitions secret, the communist is perfectly open about his aims.

So it all comes down to morality. Who is right, from an ethical perspective, the capitalist or the communist? The communist is perfectly happy to argue his point on ideological grounds, but the capitalist has tried to turn his ideology into a bogus science, not only utterly devoid of any morality whatsoever, but also devoid of any intellectual rigour – and with its real purpose kept permanently hidden from view.

That modern capitalism is wholly conspiratorial in nature was once openly confessed by one of its leading champions, the American economist James Buchanan. Describing the exclusive gatherings of disciples that Buchanan hosted, historian Nancy MacLean explained:

Buchanan made one more important point to his invited guests. The key thing moving forward, he stressed, was that “conspiratorial secrecy is at all times essential.”9

But apart from being an ethical vacuum, modern economics as it’s widely taught, which is almost exclusively capitalist economics, is also not a science. It’s a construction composed entirely of fabricated nonsense, unproven and unprovable theories, and perfectly ridiculous claims, all dressed up in mathematical symbols to create the illusion that it’s somehow deep and meaningful. Even professional economists admit to the deceitful gobbledegook that is the subject of economics.

Thomas Balogh, for example, economic adviser in Harold Wilson’s Labour Government, here quoting the economist and Nobel Laureate Wassily Leontief, partly explained how this trickery has succeeded:

The increasingly technical formulations [of mathematics in economics] and the debate over their validity and precision provided employment for many of the thousands of economists now needed for economics instruction in universities and colleges around the world…

Mathematical economics also gave to economics a professionally rewarding aspect of scientific certainty and precision, adding usefully to the prestige of academic economists in their university association with the other social sciences and the so-called hard sciences. One of the costs of these several services was, however, the removal of the subject several steps further from reality. Not all but a very large number of the mathematical exercises began (as they still do) with the words “We assume perfect competition.” In the real world perfect competition was by now leading an increasingly esoteric existence, if, indeed any existence at all, and mathematical theory was, in no slight measure, the highly sophisticated cover under which it managed to survive.10

Australian economist Steve Keen is more direct:

There is one striking fact about this whole literature [of economics], and that is that there is not one single empirical fact in it.11

Even one of the best-known economists of all time, JM Keynes, is positively scathing about the pseudo-science in economics:

Too large a proportion of recent ‘mathematical’ economics are merely concoctions, as imprecise as the initial assumptions they rest on, and which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.12

Under the careful management of capitalist economists, such as James Buchanan, the philosophy of economics has been entirely sacrificed to the lies and myths and pseudo-science of capitalist theory, a theory which serves no one except the super-rich. Keynes was unequivocal in his condemnation:

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.13

And that was before modern capitalism properly hit its stride. Andy Grove, co-founder and CEO of Intel, provided a more recent, and accurate definition of capitalism:

The purpose of the new capitalism,” he said, “is to shoot the wounded.14

Well, it’s high time the wounded started shooting back. Economics is first and foremost about morality, not money.

  1. Christianity and the Rise of Capitalism, R.H. Tawney, p. 246. []
  2. Ibid, p. 246. []
  3. Ibid, p. 253 and 256. []
  4. Ibid, p. 78. []
  5. Wealth of Nations, Adam Smith, p. 722. []
  6. Ibid, p. 841. []
  7. Ibid, p. 44 and 47. []
  8. The Public Banking Solution, Ellen Brown, p. 123. []
  9. Democracy in Chains, Nancy MacLean, p. 117. []
  10. The Irrelevance of Conventional Economics”, Thomas Balogh, p. 8. []
  11. Debunking Economics, Steve Keen, p. 67. []
  12. General Theory of Employment, Interest and Money, JM Keynes, p. 298. []
  13. Extreme Money, Satyajit Das, p. 128. []
  14. The Best Democracy Money Can Buy, Greg Palast, p. 146. []
John Andrews is a writer and political activist based in England. His latest booklet is entitled EnMo Economics. Other Non-Fiction books by John are: The People's Constitution (2018 Edition); and The School of Kindness (2018 Edition); and his historical novel The Road to Emily Bay Read other articles by John.