Not to Worry: it’s Merely a Moral Collapse

Spengler had occasion recently to refer to Benedict XVI’s “magnificent” correctness in a paper on business ethics that the then-Cardinal Ratzinger presented in 1985.

Taking his cue from the Cardinal’s ideas, Spengler notes:

Internet stock valuations, the market delusion of a decade ago, presumed that pornography, gaming, music downloads and shopping would be the driving forces of the future economy. It is easy to ridicule this Alice-in-Wonderland accounting after the fact, just as it is easy to laugh at television advertisements that even today urge Americans to buy homes because their prices double every 10 years…But what should we say of an economy based on consuming as much as one can without troubling to bring children into the world?

I would go further. Shuffling off this mortal coil without leaving descendants behind is somehow seen as being the holiest green sacrifice possible. How much more righteous can one be in reducing one’s “carbon footprint” than by refusing to permit any little footprints to follow after?

Spengler puts it more baldly:

Underlying the crisis is the Western world’s repudiation of life, through a hedonism that puts consumption or “self-realization” ahead of child-rearing. The developed world is shifting from a demographic profile in which the very young (children four years and under) outnumbered the elderly (65 and older), to a profile with 10 times as many retirees as children aged four or younger. Economics simply never has had to confront a situation in which the next generation simply failed turn up.

It’s not that they didn’t try to “turn up” — they weren’t permitted to do so. Since Roe v Wade became law in the US in 1973, in a culture that has the most liberal abortion laws in the world, about fifty million American human beings failed to materialize.

Their non-parents will be entering old age with no one to take care of them. Until the very recent implosion of our economy, money was to be the cushion against any problems attendant on decrepitude. However, with the destruction of so much wealth in the last year, those who will be old within the next two decades might have found right handy the presence of a few children to look after things.

Thus, we have two situations which ethics underpin, yet the current wisdom claims both are beyond the reach of ethics. It seems as though we are repeatedly hit in the face by the swinging doors of unintended consequences wherever we turn. We can see the results very clearly in these two areas: abortions and markets. Both of them proclaimed to be ethics-free and both of them riddled with problems no one foresaw. Or at least no one was listening to those who did foresee and tried to warn us.
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Again, from Spengler:

In Congressional testimony this autumn, former Federal Reserve chairman Alan Greenspan notoriously admitted that his free-market philosophy was inadequate. Yet nothing that occurred under Greenspan’s tenure had to do with freedom. Banks that enjoyed a monopoly due to their federal charters were permitted to transfer assets away from their balance sheets to other entities, allowing them to use much less capital to support assets than in the past. Even worse, the Federal Reserve allowed larger and more sophisticated banks to put less capital against assets that bore a high rating from Moody’s and Standard & Poor’s — the agencies that later owned up to having sold their souls to the devil for revenues.

So much for regulation being a safeguard. If you didn’t know before, now might be a good time to see what comprises our fiat monetary system.

It will partially explain the current mess.

But I digress. I was talking about ethics in the marketplace. Some find this discussion out of bounds, rather like linking ethics and “pure” science. However, we have learned to our sorrow that all knowledge and all fields of endeavor, founded as they are on human understanding, have limits. If we mark those boundaries within the realm of ethical dialogue, we are less likely to end up with big pots of burned porridge that no one can digest.

Human beings are not comfortable with ambiguity. We want our answers in black and white, with uncertainty banished from the field. But life is messy and human interactions are rife with failure. Hence our ethics-free “free market” and our “no-fault” divorces, and our “pro-choice” abortion business — and yes, it is a big business.

In the paper Cardinal Ratzinger presented in 1985, he was prophetic beyond our worst nightmares:

…Following the tradition inaugurated by Adam Smith, this [doctrine] that the market is incompatible with ethics [is] because voluntary “moral” actions contradict market rules and drive the moralizing entrepreneur out of the game. For a long time, then, business ethics rang like hollow metal because the economy was held to work on efficiency and not on morality. The market’s inner logic should free us precisely from the necessity of having to depend on the morality of its participants. The true play of market laws best guarantees progress and even distributive justice.

The great successes of this theory concealed its limitations for a long time. But now in a changed situation, its tacit philosophical presuppositions and thus its problems become clearer. Although this position admits the freedom of individual businessmen, and to that extent can be called liberal, it is in fact deterministic in its core.

[…]

This determinism, in which man is completely controlled by the binding laws of the market while believing he acts in freedom from them, includes yet another and perhaps even more astounding presupposition, namely, that the natural laws of the market are in essence good (if I may be permitted so to speak) and necessarily work for the good, whatever may be true of the morality of individuals.

[…]

Even if the market economy does rest on the ordering of the individual within a determinate network of rules, it cannot make man superfluous or exclude his moral freedom from the world of economics. It is becoming ever so clear that the development of the world economy has also to do with the development of the world community and with the universal family of man, and that the development of the spiritual powers of mankind is essential in the development of the world community. These spiritual powers are themselves a factor in the economy: the market rules function only when a moral consensus exists and sustains them. [my emphasis — D]

And there lies the problem. There is no moral consensus regarding market rules — or any other rules, for that matter. Whatever “feels” right is the thing to do: an ad hoc moralism that has subsumed the faculties of thought and will… that is, unless the will to power is perceived as having pride of place in our list of virtues for the successful individual.

Cardinal Ratzinger said (again, this is 1985):

We are no longer in the Kennedy-era, with its Peace Corps optimism; the Third World’s questions about the system may be partial, but they are not groundless. A self-criticism of the Christian confessions with respect to political and economic ethics is the first requirement.

But this cannot proceed purely as a dialogue within the Church. It will be fruitful only if it is conducted with those Christians who manage the economy. A long tradition has led them to regard their Christianity as a private concern, while as members of the business community they abide by the laws of the economy.

These realms have come to appear mutually exclusive in the modern context of the separation of the subjective and objective realms. But the whole point is precisely that they should meet, preserving their own integrity and yet inseparable. It is becoming an increasingly obvious fact of economic history that the development of economic systems which concentrate on the common good depends on a determinate ethical system, which in turn can be born and sustained only by strong religious convictions. Conversely, it has also become obvious that the decline of such discipline can actually cause the laws of the market to collapse.

I recommend the whole essay. There you can read Benedict XVI’s elucidation of the Marxist vs. the classical liberal view of the market and of the forces of history as they apply (or do not) to economics.

Spengler spoke of the Pope’s words in 1985 as “prophetic”. Today, comes this news item from Spain. It is as though Señor Ordonez had just read Ratzinger’s essay:

The governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faced a “total” financial meltdown unseen since the Great Depression.

“The lack of confidence is total,” Miguel Angel Fernandez Ordonez said in an interview with Spain’s El Pais daily.

“The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

“There is an almost total paralysis from which no-one is escaping,” he said, adding that any recovery — pencilled in by optimists for the end of 2009 and the start of 2010 — could be delayed if confidence is not restored.

We are innocents no more. Having seen greed and corruption in its various naked and promiscuous forms — both here and in the EU — how do we go about “restoring confidence”, pray tell?


Hat tip for the story from Spain: JD