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June 24, 2010

What would Jesus do about economic growth?

Article from Ross Gittins printed in Fairfax papers on the weekend. Refreshing.

Should Christians support capitalism? According to a leading English layman, despite all its material benefits, capitalism as we know it contains moral flaws with serious social consequences.

I'm in no position to preach to Christians, but I'm happy to pass on the views of Dr Michael Schluter, founder of Britain's Relationships Foundation, which will be of interest to a wider audience (and can be found here.

Schluter's beef is against the failings of capitalism that arise from corporations, which have developed as its primary engine.

His starting point is the belief that God is a relational being, whose priority is not economic growth, but right relationships between humanity and himself and between human beings. Christ's injunction to ''love God and love your neighbour'' points to the priority of relational wealth over financial wealth because love is a quality of relationships.

Corporate capitalism's first moral flaw, he says, is its exclusively materialistic vision. It rests on the pursuit of business profit and personal gain. It promotes the idolising of money, which Jesus calls ''Mammon''.

''People are regarded by companies as a resource, or as a cost in the profit and loss account, devoid of relational or environmental context. So capitalism constantly has to be restrained from destroying the social capital on which it depends for its future existence,'' he says.

This focus on capital lends itself to the idolatry of wealth at a personal level, and the idolatry of economic growth at a corporate and national level. Shareholders pursue personal wealth with little knowledge of how it is generated, and senior management with scant regard for pay structures at lower levels of the company, while customers are persuaded by advertising to pursue self-gratification in its many forms.

Corporate capitalism's second moral flaw is that it offers reward without responsibility. In the Parable of the Talents, Jesus implies that gaining money through interest on a loan is ''reaping where you haven't sown''. Lenders may accept some small risk, but they accept no responsibility for how or where the money is used.

Debt finance generally results in relational distance rather than relational ''proximity'' because the lender generally has no incentive to remain engaged with, or even in regular contact with, the borrower.

In the workings of large corporations, shareholders generally have little say in decision-making. Most investors provide share capital through a financial intermediary, such as a pension fund. Often they don't know or care in which companies they hold shares. Even the financial intermediaries generally do little to influence company policy.

Perhaps, Schluter says, instead of ''no taxation without representation'' we should adopt the slogan ''no reward without responsibility, no profit without participation''.

Corporate capitalism's third moral failing arises from the limited liability of shareholders, which allows debts to be left unpaid where the company becomes insolvent. Worse, the unpaid creditors are often employees, consumers and smaller companies supplying goods and services.

Because the downside risks of borrowing are capped, while the upside risks aren't, management has been willing to borrow huge sums relative to the company's share capital and thus expand companies at a frantic pace.

In the finance sector, incentive schemes often reward risk-taking excessively on the upside with no downside penalties, reflecting the risk position of shareholders. Consequent mega-losses have to be financed by taxpayers to limit wider economic fallout.

Schluter's fourth charge against corporate capitalism is that it disconnects people from place. In the Old Testament, the jubilee laws required all rural property to be returned free to its original family owners every 50th year.

This ensured long-term rootedness in a particular place for every extended family. A byproduct was to ensure a measure of equity in the distribution of property, which ensured a broad distribution of political power.

By contrast, capitalism regards land and property as assets without relational significance. This greater flexibility and mobility undoubtedly bring material benefits. But as extended family members move away from one another, and communities become more transient, they can no longer fulfil welfare roles.

Grandparents can no longer help look after grandchildren, and responsibility for care of older people and those with disabilities falls on the state, with the costs having to be met from tax revenues.

Schluter's final charge is that corporate capitalism provides inadequate social safeguards. It has no concept of protecting the vulnerable through constraints on the market. Deregulation limits constraints on consumer credit although the devastating consequences of debt for personal health and family relationships are well known.

Deregulation ensures labour is available for hire 24 hours a day, seven days a week, whereas biblical law protected a day a week for non-work priorities including rest, worship and family.

The adverse consequences of these flaws start with family and community breakdown. ''The greater wealth of some sections of society in capitalist nations has to be set against the greater 'relational poverty' which extends to an ever greater proportion of the population. The danger is that over time these relational problems become self-reinforcing and self-replicating,'' Schluter says.

Another consequence of capitalism's failings over the longer term is a huge growth in government spending. As the number of damaged households increases, so does the size of the bureaucracy.

Government spending on welfare has reached a level many regard as unsustainable, Schluter argues, yet without it many vulnerable people would have little or no physical or emotional support.

As state agencies take over many of the roles of family and local community, they undermine the reasons why these institutions exist and thus further lower people's loyalty and commitment to them.

Schluter's conclusion is that Christians need to search urgently for a new economic order based on biblical revelation.

Ross Gittins is the economics editor at The Sydney Morning Herald and correspondent for The Age. Original source

Posted by gary at 10:13 AM | Comments (0)

June 01, 2010

BP Ad from 1999

BP 1999.jpg

Posted by gary at 09:43 AM | Comments (0)

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