Idols of Nations: a preliminary outline

I have just signed a contract with Fortress Press for a book called Idols of Nations: The Bible and the Development of Classical Theories of Capitalism. It is the follow-up to The Sacred Economy and is due with the press by 1 September, 2013.

The title comes from Jer 14:22 (and Ps 135:15). Since Adam Smith drew the title of Wealth of Nations from Isa 61:6, 12 (and 60:5) and since my book is critical of the way classical economists used the Bible, Idols of Nations it is.

Summary

The book critiques the rise of early theories of capitalism in light of their engagement with biblical texts. It traces the way significant theorists dealt with the Bible in order to develop their positions. Why and how did these theorists use the Bible, is that use legitimate, and what are the implications for the influential theories they developed? How did those engagements change over time as those theories developed a life of their own? This study focuses on material often relegated to the margins of analysis. Thus, while Hobbes and Locke found it necessary to build their theories from biblical analysis, Grotius was an accomplished (and ecumenical) theologian and Malthus an evangelical minister, both seeking to reconcile their positions with their theological approaches. The study also traces the way biblical themes are subsumed at a less explicit but deeper level with the later moral emphasis of Smith, Mill and Ricardo.

In more detail: of late a recovery of the looser connection between Christian theology and neoclassical economics has been pursued by some economists and theologians. However, these studies really do not address crucial issues in relation to theology and the Bible. In this light, we find a disjunction: if the Bible is mentioned, it relates to the political or theological thought of the critic in question; where economics is discussed, the Bible does not appear. For example, while secondary literature mentions the Bible in relation to Locke’s political thought, the crucial role of Genesis in the opening section of Locke’s treatment of private property in Two Treatises on Government is ignored or even excised from printed editions. With Grotius, theology in general may be mentioned in his discussion of property, natural law, freedom of the seas and agonism in ethics and commerce, but the Bible is nowhere to be seen. In regard to Hobbes, the central role of religion in Leviathan is noted in relation to politics and ethics but the Bible’s role in his economic thought on property, money and interest is neglected. As for Rev. Malthus, his theory concerning the relation between population and long-term economic stability is recognised as having a general theological basis in theodicy: overpopulation and its problems be divine moral lessons, but ultimate responsibility lies with human sin. Yet the fact that Malthus grounds his moral arguments on the Bible (eg. Gen 1:28) is rarely, if ever, explored in detail.

Outline

1. Introduction: Concerning the Bible and Economic Theory

The book begins by emphasising the importance of the Bible for early theorists of capitalism and the simultaneous neglect of precisely that feature of their work. Rather than peripheral scaffolding that may conveniently be ignored once the theories have been erected, the Bible and their modes of engaging with it are crucial for understanding the development of those theories. The work focuses on four key economists who used the Bible extensively: Hugo Grotius (1583-1645) Thomas Hobbes (1588-1679), John Locke (1632–1704) and Thomas Malthus (1766-1834).

2. Grotius and the Biblical Seas

Concerning Grotius, an analogy may be identified between his Arminian theology and his doctrine of the ‘free seas’ (developed against claims to dominance by other European states) . Following Jacob Arminius (professor of theology at the  University of Leiden until his death in 1610) and his followers, Grotius believed that salvation involves not merely God’s inscrutable decision concerning election (predestination), but also the faith of each individual. This faith is eternally known, but the shift from orthodox Calvinism is crucial: God elects all who have faith. In other words, a window is left open for individual human agency, even if it is foreknown by God. The analogy with his doctrine of the free seas may be cast as follows: instead of states monopolising the sea, each state and individual is free to use the seas for trade, unhindered by any other state. That is, anyone who could be shown to be a user of the sea was thereby entitled to do so; so also, anyone who shows the true marks of faith is thereby one of the elect.

3. Hobbes and the Natural State of ‘Man’

Hobbes the materialist was the son of a vicar, taught by the puritan, John Wilkinson of Magdalen Hall, Oxford, and held rather unconventional theological views. Sporadic attention has been given to Hobbes’s economic thought, especially in terms of its contradictions, working on the tension between self-interest (greed) and public welfare, between homo economicus and absolutism, between the state and the need for individuals to engage in buying, selling and the pursuit of profit, but also of his anticipatory naturalising of capitalism’s functions as intrinsic to human nature in a way that universalised a particular form of economic activity (Levy 1954; Macpherson 1962; Viner 1991). Yet, what is not noticed is that Hobbes develops these arguments through extensive engagement with the Bible. Most significantly, his treatment is highly critical (he is often seen as a precursor to historical critical methods of interpretation), with scepticism concerning miracles, prophecy and traditional views of authorship. Here then I pursue a close analysis of precisely those sections of Leviathan where Hobbes develops his politico-economic arguments through his critical analysis of the Bible.

4 Locke: The Problem of Paradise and Property

Locke is particularly interesting, for he struggled to overcome the profound difference between the Bible and his own economic context. For Locke, the Bible ‘has God for its author; salvation for its end, and truth without any mixture for its matter’. Given that it contains infallible truth, he vowed, ‘I shall immediately condemn and quit any opinion of mine, as soon as I am shown that it is contrary to any revelation in the holy scripture’. The problem was that on his reading, the state of paradise, when human beings were in harmony with God, contained no private property. Human beings had free run of the Garden, with no sense of owning any part of it, since it was God’s creation. How then did private property arise? Through tilling the soil and using the earth for human sustenance. From this first step, the ever more complex patterns of private property developed. Locke thereby elaborates on Hobbes’s preliminary effort to develop the myth that capitalism is the eternal unfolding of basic human proclivities. Three points are worth noting. First, the Bible is naturalised as part of a grand myth of capitalism. Second, he embodies the very difference between the Bible and his own context by the effort to overcome the contradiction of property. Third, the development of private property becomes a result of the Fall, for the human beings only begin to till the soil after they have been expelled from paradise.

5. Malthus: Theodicy and Political Economy

The Reverend Malthus brought the problem of theodicy into the heart of political economy. How could an all-powerful, all-knowing and loving God afflict human beings with overpopulation and thereby famine, disease and starvation? On the one hand, the results of overpopulation may be seen as a moral lesson in order to make us reform our social modes of life. But God is not responsible, argued Malthus, for human beings are guilty (Gen 2-3). In order to counter the objection that Gen 1:28 encourages us to be fruitful and multiply, he argued that we have been reckless and misinterpreted that text, for we have not been fruitful in a responsible manner. Malthus’s answer was characteristic of early 19th century theology: repentance from sin requires a strictly moral life, with sexual abstinence and honest lives (only his followers proposed contraception). Malthus also signals on a theological register a central feature of economic thought, namely, its deeply moral nature.

6. Sublating the Bible: Morality and Classical Economic Theory

Thus, in the chapter on ‘sublating the Bible’, I focus on the work of Adam Smith, David Ricardo, and J.S. Mill. Apart from Malthus, economic theory separated from theology in the 19th century (Waterman 1991; 2004), thereby producing the theoretical perception of an economic sphere independent of all else. In the process, explicit biblical engagements are increasingly sublimated by moral concerns. Thus, the Bible is peripheral in Smith’s work – Wealth of Nations is drawn from Isa 60:5 (and 61:6; 66:12) and the ‘invisible hand’ is a short step from the inexplicable and ubiquitous ‘hand of God’ throughout the Bible – but his argument is deeply moral, with an emphasis on both compassion and self-interest as universal elements of human nature that determine economic behaviour. In Ricardo, this moral focus is manifested in the theory of comparative advantage, while J.S. Mill sought to counter the element of greed in these theories by emphasising that at the end of capitalism, when profits, capital, industry and population had become static, people would turn from selfish to altruistic concerns – the ultimate maximisation of pleasure and happiness. A mark of the sublimation of biblical and even theological concerns is that Smith was a deist, Ricardo a Unitarian and Mill an agnostic who saw the moral and aesthetic power of religion in providing ideals and hopes for human improvement.

7. Conclusion: Economising the Bible

The conclusion explores the paradox in which it seems ‘natural’ to apply neoclassical theories of capitalist economics to the Bible, despite the evident difference between its economic context and capitalism. Two paths may be identified. For some (Locke and Malthus), the Bible presented them with a profound difference between its context and their own. Their work functions as both a recognition of that difference and a sustained effort to overcome that difference in order to naturalise the Bible. For the later theorists (Smith, Mill and Ricardo) and their moral focus, they assumed that human nature is always the same, being a mixture of self-interest and altruism. By connecting that human nature and the core drives of capitalism as a natural fit, they easily moved to the assumption that the history of economies is an unfolding of the same principle. Both paths converge with the myth of a long history of capitalism in which earlier economies function as ‘capitalism light’ – those ‘primitives’ did not know the complexities of fully-fledged capitalism. In regard to the Bible, it thereby seems perfectly ‘natural’ to apply neoclassical economic theory to studying its context. Yet, since it can be shown that early theorists misappropriated the Bible, and since biblical economies were very different than they imagined, such economic theory becomes highly problematic for the study of non-capitalist economies.

 

Weird Karl Polanyi: The Great Transformation

Karl Polanyi’s celebrated The Great Transformation: The Political and Economic Origins of Our Time (1944 and reprinted many times) would have to be one of the weirdest books on economics. It has some searing insights, such as:

A self-adjusting market … could not exist for any length of time without annihilating the human and natural substance of society; it would have physically destroyed man and transformed his surroundings into a wilderness (p. 3).

No less a thinker than Adam Smith suggested that the division of labor in society was dependent upon the existence of markets, or, as he put it, upon man’s ‘propensity to barter, truck and exchange one thing for another’. This phrase was later to yield the concept of homo economicus. It retrospect it can be said that no misreading of the past ever proved more prophetic of the future (p. 45).

But then he goes on to make some massive blunders. The one that interests me has been deeply influential in the study of ancient economies: the distinction between reciprocal, redistributive, household and market economies (the third one is often forgotten in accounts of Polanyi). The distinctions should be obvious: reciprocity involves the complex patterns of gift-exchange, based on the principle of symmetry in organisation; redistribution assumes a centralised authority that distributes the goods gathered, the chieftain to which the hunter gives the kill bleeding all over his shoulder and back; householding is just that, taking care of the members of one’s group and operating on the lines of organisational autarchy; and markets he assumes to be profit-making ventures that operate according to barter.

So what’s wrong with all of this? Apart from the smaller point that most markets throughout history have not operated in terms of profit, he assumes that all economies up to capitalism are basically the same. From the grunting hunter to the feudal lord, from the penetrating slave master to the peasant in the village-commune, deep down all operate on the same economic basis. One groans when reading it now, wondering how such a position could have produced the insights that it has, how it has influenced so many. The second major problem is one shared by David Graeber’s book on debt: anthropology provides the secret to an unchanging human nature. His deepest debts are to Thurnwald and Malinowski, but the trap is that these flawed works on far-clung, exotic and supposedly ‘primitive’ societies show us what we are all like, with the accretions of civilisation stripped back. Much like Adam and Eve, I guess.

 

On the international division of labour and the invisible hand (-shake of corruption)

Alain Lipietz again:

Ricardo and the supporters of the Heckscher-Ohlin-Samuelson theorem seem, for instance, to believe that the international division of labour is the result of some world conference at which brilliant economists explained to an admiring gallery of politicians that – given relative levels of productivity, collective preferences and the initial endowment of factors – the free play of market forces would ensure the optimal division of production, and that each participant then went home convinced not only of the virtues of free trade but that the law of comparative costs ensured that the lot that had fallen to his or her country was quite justified, and that they could therefore force it to adopt the requisite specialization.

The problem with all of this is of course – now with a turn to Adam Smith – that the ‘invisible hand of the market’ is actually ‘the invisible handshake of corruption or the eminently audible boots of the military’.

Lipietz, Miracles and Mirages, pp. 16-17.

 

The Founding Myth of Adam Smith

Adam Smith, in Wealth of Nations, offers the following well-known myth:

In a tribe of hunters or shepherds a particular person makes bows and arrows, for example, with more readiness and dexterity than any other. He frequently exchanges them for cattle or for venison with his companions; and he finds at last that he can in this manner get more cattle and venison, than if he himself went to the field to catch them. From a regard to his own interest, therefore, the making of bows and arrows grows to be his chief business, and he becomes a sort of armourer. Another excels in making the frames and covers of their little huts or moveable houses. He is accustomed to be of use in this way to his neighbours, who reward him in the same manner with cattle and with venison, till at last he finds it his interest to dedicate himself entirely to this employment, and to become a sort of house-carpenter. In the same manner a third becomes a smith or a brazier; a fourth, a tanner or dresser of hides or skins, the principal part of the clothing of savages. And thus the certainty of being able to exchange all that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he may have occasion for, encourages every man to apply himself to a particular occupation, and to cultivate and bring to perfection whatever talent of genius he may possess for that particular species of business (Wealth of Nations I.2.2).

For Smith, this perfectly “natural” process is both the origin of the division of labour and reveals the natural propensity for human beings to “truck, barter and exchange one thing for another” (I.2.1). This distinguishes us from the animals, for who ever saw a dog offer a bone as a fair and deliberate exchange with another dog? Smith goes on:

When the division of labour has been once thoroughly established, it is but a very small part of a man’s wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men’s labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society (I.4.2).

We’re all capitalists at heart, it seems, for we are natural merchants, constantly exchanging things with one another. Smith can be a little long-winded, so let me summarise the remainder of this myth. Once our primitives have all busied themselves with their natural propensity to produce and “truck”, they soon find that others may have enough of whatever is on offer. I might have made plenty of toe ticklers, but now that the tribe or village is full of toe ticklers, I have nowhere to hawk my wares and get what I want. The solution: stockpile items that I am sure everyone will want – salt, sugar, dried cod, dressed leather, sex toys …. So when I want something, I can simply use these items in exchange. At last, one of us happens upon the idea of using precious metals, weighed, then standardized, minted and so on. Eventually, in our wisdom, we come up with credit, or virtual money.

In various forms, this myth has been repeated countless times in economics textbooks, in online forums and in classes on economics. For economists, it is “the most important story ever told” (Graeber, Debt, p. 24). Its narrative from a natural division of labour, through to barter, money and then, in our sophisticated modern era, banking and credit, has become so pervasive that it is regarded as common sense. The problem, as David Graeber shows, is that it is pure fantasy-land (pp. 21-41). Where is this mythical village? Among North American Indians? Asian pastoral nomads? African tribes, Pacific Islanders, Australian aborigines? A small Scottish town of shopkeepers? Often in the same myth it moves from one place to the other. But the simple fact is that it never existed. No such village has ever been found, nor will it be. As Graeber shows in some detail, contrary to the barter-money-credit sequence of the myth, credit may well have preceded money, and barter is a side product, happening only in places that have already come to know money. On that last point, the common “return to barter” account during economically difficult times – in the early Middle Ages or in Russia and eastern Europe in the 1990s or today in Greece and other countries severely affected by the rolling economic crisis that began in 2008 – takes place only within the framework of monetarized economies.

Graeber expresses some frustration at the sheer pervasiveness of Adam Smith’s myth, working overtime to show that it is not original to Smith and that the evidence is overwhelmingly stacked against it. One source of his frustration is that a crucial founding myth is not empirically falsifiable. No amounts of “facts” will dent the power of the myth, as Sorel showed so well many years ago (Reflections on Violence). Instead, it is more worthwhile to ask what truth the myth expresses, given that a myth is always split between fiction and a deeper and not always pleasant truth (part of its mixed heritage).

That truth is that Smith, in resuscitating and refining the myth, had a distinct agenda: he wanted to create a new being, “the economy.” The definite article is crucial, for “the” economy was to be distinct entity, with its own rules, its own dynamic that is distinct from politics, the state, and above all religion. What better way to do so than reconstruct a myth in which “the” economy arose as a natural expression of human nature? But why did he wish to create such a being? A new field of study needed an object to study, the discipline of economics. And in order to ensure that this discipline was not bereft of an object of study, “the economy” was created.

It is worth noting that Smith was really completing a process that began with the earlier work of Hobbes and Locke from the seventeenth century. They provide an explicit but incomplete path from the Bible and theology to economics, at times seeking continuities and at others offering a narrative of movement beyond the Bible. Smith’s achievement was to bring the process to a definitive break: economics as both discipline and reality was no longer tied to theology. Or rather, it was sublimated as a moral tension between compassion and self-interest.

In other words, the myth of origin is crucial to the very formation of the discipline of what we would now call classical economics. To dump the myth would mean to dismantle the discipline as now understood. I would prefer another formulation: economics would turn out to be inseparable from social relations, politics, and religion.