Corporate sin and economic collapse

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By Adrian Worsfold

Reinhold Niebuhr was of the view that sin was both individual and corporate, and that corporate sin was complex.

Like in the United States, in the United Kingdom we have had bankers come to the House of Commons and attempt to explain how they got what they got wrong so wrong.

They said sorry, and then seemed not to mean it. It was the banking equivalent of just following orders. Then there is the question of bonuses and whether these should be received for failure, regardless of contractual obligations: after all, if the state had not semi-nationalised the banks, there would be no contracts any longer, and certainly no bonuses.

Perhaps even these leading bankers were as much locked into the system as everyone below them. Yes they had more freedom to act, but they were acting systemically. This is the point about corporate sin: it puts its systemic tentacles around everyone.

The example we can use is the worker who is full of high ideals, whose employer demands they act for their pay a little dishonestly. Cogs in the machine are forced to act more sinfully than they would like. But the workers include high management. And we are not talking about the clearly fraudulent, like the ones that made off with millions.

It’s why Reinhold Niebuhr regarded the gospels’ Kingdom of God as a remote idealism, and he followed a pragmatic path (that is also an American tradition when contrasted with Europe, especially Germany and France). You end up tackling sin at the margin, and sometimes the dialectical nature of Niebuhr’s theology, like that of Marx’s political theory, ended up in dialectical clashes in the industrial arena. Even strikes and negotiations are about improvements at the margin.

In the last ten years we have had growth based on debt. Now we used to have inflation but this was squeezed out in the 1980s and 1990s, but we still had the same delusions. It was squeezed out because industrial production went east and to cheaper labour. We in the UK were in front of the USA in terms of a “post-industrial” economy. Thus we had cheap imports suppressing inflation.

The government here encouraged the building of the financial sector, about which deregulation and cheap money was key. But, actually, all it became was Iceland on Thames, an explosion of means to move silly money on credit to the West so that the goods could be bought from the Far East. The credit found its way into property prices, that gave a false view of assets and debt and a means to keep expanding money.

The economists say manufacturing isn’t the be all and end all: it’s all to do with anything value-added. But it must be so that the service sector – distribution and transport, and finance – adds value in the servicing of manufacturing, which clearly adds value to the resource extraction that happens in primary industries. Normally older economies solve the problem of migrating work by going up-value (up-market), but today technology and reverse engineering means even the cheapest economies can do low value and high value output.

Plus, the Chinese suppress their wages and currency, because it is a state directed and human rights deficient economy. Vast numbers into cities are employed in huge factories virtually sleeping on the job. A middle class is passing backhanders to state authorities for all the preferential treatments and, in some cases, joining those who make the laws. The Indian economy in contrast is expanding in a more organic and market responsive manner. The Chinese make and they save, and the West buys by borrowing their savings.

So what of the future? The over-developed finance system simply cannot go on, and it does mean that Western economies are going to have to learn to make things again. The equilibrium it leads will be more than the current depression, but will be less than an inflated fantasy economy.

Iceland may be an example here. It is a tiny place in population, but a wealthy place, and even when the banks went bust the people carried on doing what they did before. Their banks’ immersion into a fantasy world of finance for sheer money making has crashed to nothing but rotten debt. Yet, perhaps adopting the euro, there is no reason for Iceland not to return to its former pre-greedy existence.

The same is true for all the bigger economies. The necessity is for the State to take a bigger role, and start with the real value added of essentials and fundamentals: education, health, social welfare for all, decent housing, movement, culture. Build an economy around these wants and these values. Build an economy, in other words, and a productive one, around human dignity.

Communism crashed in the late 1980s, and China has since developed a quite nasty form of state capitalism, which has led to capitalism crashing in the early twenty first century. Pure free trade and open money is not the way of the future, though international co-operation is, and also means towards governance over both productive and money facilitating international corporations.

We also need much more that is locally sourced, locally made and locally sold. This is to do with the quality of life.

It is impossible to remove corporate sin within capitalistic sin; indeed, to a large extent sin is the motor of the economy. But the economy works for us, not us for the economy, and it is time that those we elect got a grip and reined in all that the corporations think they can do.

Walter Rauschenbusch, Reinhold Niebuhr’s social and economic theology’s predecessor, thought the Bible’s Kingdom of God could translate directly into the physical economy, and Niebuhr was right to say that such is not so thanks to embedded sin. Nevertheless, it is just possible to manage sin by democratic controls so that a little bit of human idealism can actually come into the productive and servicing sphere.

Exchanging money for goods in the market place is both a contract and a covenant (the covenant is the trust: “my word is my bond”, the trust in currency, the trust in the economic operation overall); the State has to do its job regarding assisting the covenantal side of the economic operation, so that value added is real and not the fantasy of sinful greed that we have seen for too long.

Adrian Worsfold (Pluralist), has a doctorate in sociology and a masters degree in contemporary theology. He lives near Hull, in northeast England and keeps the blog Pluralist Speaks.

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