The Housing Minister Grant Shapps has identified
this week’s scandal of the fixing of the London inter-bank landing rate (Libor) as one of the possible causes of rising
home repossessions. Even though there is a political agenda to Shapps’ comment
– based on the unproven suspicion that the Bank of England and the
previous Labour Government were complicit in illicit price-fixing, this is a positive sign of
increasing awareness of the often ‘unholy’ alliance between the banks and
Government.
Many still have not grasped the degree to
which the financial crisis and the housing crisis are bound up with a debt-based banking system which has relied on unsustainable levels of mortgage lending. The public was encouraged to stoke the
boom economy by borrowing, dreaming of scaling the property ladder and making
money through buy-to-let and increasing property prices. When the inevitable crash
occurred, the hapless public was then told to tighten its belts and accept the
pain of austerity. Warning voices had predicted the crash was inevitable, but many did
not want to know.
Following the CEO
of Barclays Bank, Bob Diamond’s resignation, inevitably the Government and banks will blame each other and attempt to shift responsibility.
However, some critics are slowly waking up to the uncomfortable truth that
economists are not prophets, that economics is not an objective science like
chemistry and that blind belief in economic theories has contributed to the
disastrous crash and recession of recent years.
Key dogmas of popularly understood capitalism
are total delusions. Endless growth, endless increasing in asset value, limitless
credit and the belief that, if it all goes wrong, someone else should pick up
the bill are pieces of wishful thinking that Governments, banks and some parts
of the public adopted like a religion without any evidence. To sustain the fantasy following the inevitable crash, the public, particularly the poorest who did not collude in or benefit from the fantasy, are being penalised.
It is the business of economists to increase our understanding of how complex 21st century economies may be managed, without presenting theories as facts or treating human beings as numbers on a screen. And it is the business of
Government to regulate and maintain the rule of law and justice in economics – which it has
failed to do time and again in the last decade - and not to politicise economic
decisions. There is no reason why either Keynsian public spending or
austerity should be right ‘in general’, but the urgent need for the UK
Government to make a massive investment in housing is too easily seen as a matter
of ideology not economic justice.
Experts and Governments frequently treat people as identical,
impersonal units and where this mentality enriches us personally we may be
tempted by wishful thinking into going along with it. By contrast, being
economically literate and proactive challenges us to ‘treat others as we would wish to be
treated’. Perhaps it is time to stop expecting experts and managers to solve our
economic problems? Through cooperative association and empowering activities like
participatory budgeting it may resolve issues that expert models based on
treating people like machines cannot achieve.
Faith has much to say about how and why we
should do this - individually and collectively. The
Christian Socialist Movement produced some reflections on personal banking, but every Christian
should think this through themselves.
In the words of the recent URC report on Hopeful Witness: “Our Christian tradition teaches us that we
are called to shape the economic system, as we are called to shape every aspect
of our lives, as a service to God. Therefore, we evaluate any economic system
not simply on the basis of the material goods and services it provides, but
especially on the basis of its human consequences: what it is doing to, with
and for people, particularly the most vulnerable among us.”
