How capitalists caught religion
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In a remarkable interview in Barron’s this week, David Richards says he thinks the world economy is on the road to even greater heights of glory. One of his reasons is that the “Theology of Capitalism” is sweeping the globe. Everywhere you look, people seem to be bowing down to the holy ghosts of Smith and Keynes and reciting the Gospel according to Markowitz. Like the other great secular theology of our time, Global Climate Change, the faithful ask few questions. They become True Believers without so much as going blind, like Paul, or winning an important battle, like Clovis. Too bad. Because there are a lot of questions that need to be asked.
What is this new god? What sacrifices does he require? What are this new religion’s solemn rites? Who are its sinners, its saints, its Lucifers and its prophets? Here we offer a brief explanation. We begin with the history of the cult. In the beginning, there was the word. And the word was ‘money.’ But what was money? Ah, there, we have our first and most important holy mystery. More or less from the beginning of time until 15 August 1971, money was rare and difficult to reproduce. The Yap islanders, for example, used large, carved stones to represent wealth. Most of the rest of the world used gold and silver.
Since 1971, however, the high priests of the new money cult produced a miracle. With no connection to anything rare or valuable, they made money, in the words of St. John Maynard Keynes, “out of thin air”. Today, the global economic and financial system operates on this faith-based money. Thin air was never more forthcoming. No one knows where the money comes from or what it is worth; but everyone is happy to take it. The multitudes worship it and pray for it. Muslims go to Mecca; Jews have their Wailing Wall; these mammon-worshippers dream of nothing more than getting a job in the City and getting lucky in Las Vegas.
It is upon this miracle money that the whole faith rests. Saint Alan of Manhattan owes his reputation to it. Goldman and Merrill Lynch can trace much of their success to it. Asia’s huge export boom was made possible by it. But so were the booms in leveraged buyouts and subprime mortgage lending. If Christ had not risen from the dead, he would be just another prophet. And if Alan Greenspan had not created trillions of dollars worth of new credit from nothing, the present boom would not have reached the Hindenburg Bubble proportions it is today.
In this sense, the new creed is more like a Cargo Cult. After World War II, anthropologists found tribes in the South Pacific who were worshipping crashed US Army cargo planes. The planes had brought them food, clothing, tools, cigarettes and alcohol. The islanders saw these as gifts from heaven. So too does the Theology of Capitalism look to the skies over its central banks for cash. If the money ever seems to run short, US Fed chairman Ben Bernanke is on record saying he will drop it from helicopters!
Last week, markets shook like the Western Front in 1914. The high priests of the new faith rushed to reassure the world. Like soldiers in the trenches of World War I, their faith was reinforced by the bombs bursting around them. Our new gods will never abandon us, they said. Why? Because now we are all believers in the Theology of Capitalism! This reminds us of Sir Norman Angell’s book of 1910, which argued that peace in Europe was guaranteed because all Europeans had become capitalists. Since they traded with each other for so many good things, none would ever want to go to war. Well, now even the Russians and Chinese believe in the Theology of Capitalism, what could go wrong? We will have peace, prosperity and high asset prices forever and ever, amen.
Capitalism, of course, has been with us for millennia. Cuneiform inscriptions in Egypt reveal evidence of capital investment, trade and speculation. Capitalism has been enriching and ruining people ever since. Grinding, churning, innovating, and evolving, always unstable, capitalism is always driving forward in what Schumpeter called a process of ‘creative destruction’ – sometimes squeezing the rich, as though through the eye of a needle, sometimes rewarding the meek. To the extent it is understood as the free movement of privately owned capital, capitalism is no man’s friend for very long. For as soon as he getteth, along comes a new wave of destruction to taketh it away from him. Typically, as soon as a fellow is flush, he wants nothing more than to put a stop to capitalism forever. But this Theology of Capitalism is new. The old capitalism is dead, say converts. This is a New Testament faith, changing the jungle of capitalist evolutionary competition into a healthy, stable and cooperative eco-system – like the Baltimore Public Zoo. Now the animals are in their cages. Lions will lie down with lambs – and suckers will all get an even break. We’re all believers now. Hallelujah.
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