Simple answers to economic blues

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Spending is so passeThe weak August retail sales have disturbed market watchers. Some have detected a widespread inclination to save. The more ideologically inclined have blamed lefties who look down on shopping and consuming. They point out that the refusal to spend will affect the profitability of businesses, which will then lay off workers or close down.

Virtues such as thrift, simplicity and the satisfaction of needs, not desires, were once dismissed as petit bourgeois. They belonged to the conservative side of politics.

But it has now become an offence against the established economic order to sew buttons on old shirts instead of buying new ones, to keep cars that are more than three years old, to prune one's wardrobe instead of buying another one and to resist the appeal of the latest gadgetry. Incitement to such behaviour threatens Australia's economic foundations.

Yet throughout history simplicity, thrift and voluntary poverty have been valued highly by many philosophies and religions. Restraint in pursuing the desire for possessions is said to focus our attention on what matters most deeply. It nurtures our desire for higher goods than material possessions. The quality of our inner life and the depth of our relationships to the world and to one another will count more than the amount of money or things that we amass. The lightness of the footprint with which we walk on the earth is a measure of the weight we have as persons.

Simplicity, of course, is a personal value. It will rarely be a mass movement. Greed will always be more popular. But simplicity has had social effects.

St Jerome was kicked out of Rome for encouraging noble heiresses to sell all, give the proceeds to the poor, and to enter a nunnery. Dumping serious wealth on the market skewered the local economy as well as family fortunes. The young women's actions, too, implied a judgment on the values of Roman society.

So too when the early Franciscans came begging to the Bishop's place, their presence called into question the way the Bishop lived. Simplicity invited even the reluctant to ask what really mattered.

The critique of values was deeply personal. It had bite only when the simplicity commended by the friars was seamlessly woven into the notable happiness of their simple way of life. Only a person happy in renunciation and rich in humanity could subvert the values of society.

In religious societies, the tribute that those who assiduously sought wealth paid to simplicity was paid in the coinage of philanthropy. The simplicity of the friar encouraged the nobleman's beneficence to the poor. The result was that the economic order included an ethical balance to greed. The respect offered to simplicity made people ask what mattered in society and in the economy.

In modern Western societies any ethical balances to greed are hard to identify. It is commonly assumed that we can measure the health of a society by the sheer amount of productive and profitable economic activity within it. So the greater the hunger for more widgets, gadgets and brand names, the more profitable will be the companies that make them, the more people will be employed to make them, and the more healthy will be society.

An economy based on consumption is vulnerable. It is always at risk of being drowned in its own triviality. When any external shock comes that makes people ask what matters deeply in their lives, the deep commitment to superficiality demanded by an economy based on consumption will also be shaken. People refrain from spending, and save to protect things that matter more to them.

The consumer economy is also vulnerable to its own contradictions. If the investments of those who are responsible for the economy are put at risk by national deficits, they will protect them by reducing public expenditure. This will cause unemployment, curtail economic activity, and make it more difficult to reduce debts. The results of this process will be seen in the plight of the poor in Greece and England.

So chosen simplicity may be an outmoded virtue in our economic order. But the alternative may well be involuntary poverty. 


 

Andrew HamiltonAndrew Hamilton is consulting editor of Eureka Street


Topic tags: Andrew Hamilton, austerity measures, greece, national debt

 

 

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"In religious societies, the tribute that those who assiduously sought wealth paid to simplicity was paid in the coinage of philanthropy. The simplicity of the friar encouraged the nobleman's beneficence to the poor. The result was that the economic order included an ethical balance to greed. The respect offered to simplicity made people ask what mattered in society and in the economy."

Andrew has to produce some evidence for this overblown assertion or face the charge of wistful and selective memory, similar to those who claim 'today' is always worse than 'yesterday'.

True, our global economy is a trite affair, based on endless growth via consumption and particularly the consumption of 'things that are made to be sold' yet serve little useful function after that.

Where I live, the churches are some of the largest exponents of glaring consumption, using up acres of scarce building land for massive church buildings that cost millions, much coming from the pockets of taxpayers via the legal ATO rorts to religion and through gambling redistribution of the state government tax take of gormless gambling.

"In modern Western societies any ethical balances to greed are hard to identify." But what about the Asian economies, such as China? Or India?






Janice Wallace | 22 September 2011


Thank you Andrew Hamilton for a timely article. Right now the big players are considering our nation's productivity. That word "productivity" needs to be critiqued. What I see happening around me is people working longer hours, under more stress, for the same pay, having less time for family, friends, play, relaxation, cultural activities and community involvement. So, their work is certainly less productive for themselves and their households/communities. So, for whom is it productive? For the corporations, their directors and perhaps for their shareholders. "Productivity" is a great big con!
Janet | 22 September 2011


The distorted emphasis on spending and consumption over thrift in contemporary economic discourse is entirely attributable to J.M. Keynes, with his sneering references to the evils of "hoarding", and his bogus "paradox of thrift" and the ridiculous idea, now rusted on to your average economist's brain, that governments can somehow spend their way out of recessions. Traditional economists, especially the Austrians (Mises, Hayek, Rothbard), have always emphasised the importance of deferring consumption, of saving, in the growth of an economy. Ironically, Austrian economists also prescind from the mania for economic "growth" itself. The anarcho-capitalist Murray Rothbard writes: "But why should growth be the highest value for which we can strive? What is the ethical justification? There is no doubt about the fact that growth, taken over as another dubious metaphor from biology, “sounds” good to most people, but this hardly constitutes an adequate ethical analysis....It is completely illegitimate for the economist qua economist simply to endorse growth." (See his "The Problem of Growth" in his "Man, Economy and State")
HH | 22 September 2011


Swanston Street, for example. Whenever people want to expose the church for the absolutely hypocritical organisation that it really is they always point at St Paul’s Cathedral and start carrying on about the millions of dollars it costs and how, if we only knocked it down and turned the space into cheap housing for the homeless, then the church might look credible again. Cathedrals are a favourite. They fail to understand that if the cathedral really was knocked down it would most likely be replaced by an expensive hotel that only millionaires could stay in. Dives would pay for the privilege and Lazarus would still be begging at the ornate gate. They are also clearly unaware of the Cathedral’s food programs and other actions of outreach to the neediest in our community. Meanwhile at the other end of the main drag we witness the rise of an obscene developers’ nightmare on the old brewery site. A building to rival the Eureka Tower will soon be going up there, dedicated not to the message of peace and forgiveness and “no one owns anything” but the louder message of greed and consumption and arrogance. Yet another massive shopping complex for people who cannot afford the products. Where is the cheap housing that could go on those windswept acres? What about the hundreds of poor students who study at nearby universities? Who cares? And do we hear righteous indignation from these same critics of the church about this abusive use of the old brewery land? Not even a whisper.
MELBURNIAN | 22 September 2011


"In modern Western societies any ethical balances to greed are hard to identify." Perhaps not so difficult to identify as it is difficult to find many. It has been widely reported that Bill Gates, the founder of Microsoft, contributes money to various development works in poorer nations in amounts approximating the annual budgets of some of those nations. And President Obama fittingly named his current proposal to more closely align taxation rates of the wealthy with those applying to middle class incomes the 'Buffet Law' as a tribute to the extremely wealthy investor, Warren Buffet, who has campaigned for such even-handedness for some time. While Gates and Buffet are clearly visible for all the world to see as beacons of ethical balance to greed, the response to the Buffet Law already foreshadowed by the Republicans demonstrates how loathe many are to give in order to alleviate poverty and general economic weakness. The consumer products market might be a great place for money to circulate, but inherently it excludes all who don't have the economic strength to participate. A fair taxation system balanced by a government guaranteed social wage is a necessary component of the just society.
Ian Fraser | 22 September 2011


Andrew, you are right. We can have a waste economy which depends on all of us to waste as much as possible to increase demand and profit. The “economists” argued that this would be good for the economy. The question is if we should be servants of our economy or should commercial activity meet more humble demands. When we look at somebody living in a village for example in Papua New Guinea we witness poverty if measured on our scale weighing wealth. On the other hand I have never met happier people than people in villages lucky enough to have enough land. Maybe the most disturbing issue is the mutually assured addiction to waste and spending. We waste essential resources crucial to the survival of future generations. We can call it genocide by greed.
Beat Odermatt | 22 September 2011


The bloated emphasis on spending and consumption over thrift in contemporary economic discourse is the legacy of an icon of the social democrats: J.M. Keynes, with his sneering references to the evils of "hoarding", his bogus "paradox of thrift" and the ridiculous idea, now rusted on to your average economist's brain, that governments can somehow spend their way out of recessions. Classical and traditional economists, especially the Austrians (eg Mises, Hayek & Rothbard), have always emphasised the importance of deferring consumption, and of saving, in the growth of an economy.


Moreover, contrary to the idea that free market economics implies devotion to "growth", Austrian economists are highly critical of the typical modern economist's mania for economic "growth" itself. Thus the anarcho-capitalist Murray Rothbard writes:


"But why should growth be the highest value for which we can strive? What is the ethical justification? There is no
doubt about the fact that growth, taken over as another dubious metaphor from biology, “sounds” good to most people, but this hardly constitutes an adequate ethical analysis....It is completely illegitimate for the economist qua economist simply to endorse growth." (See his "The Problem of Growth" in his "Man, Economy and State")
HH | 22 September 2011


The masses are kept content with trinkets and entertainment while their rights are being subsumed by the desires and greed of those who own what they have no right to own namely nature itself. Families are mortgaged to the roof and countries are carrying debts that have been incurred by monopolists and it is the people who will be expected to pay. The real wealth is not the gadgets that people have but the earth itself. After all as the saying goes - if I owned all the land and you owned all the wealth how much would I charge you for one night's accommodation.
Anne Schmid | 22 September 2011


Agree. But not so sure about this: "Virtues such as thrift, simplicity and the satisfaction of needs, not desires, were once dismissed as petit bourgeois. They belonged to the conservative side of politics" The labour movement was strongly influenced by Methodism, and the virtues of thrift and simplicity ("Who do you think you are!?") were always working class values. As long as I've been aware of the Quakers they seemed to have been keen on simplicity while at the same time taking quite radical positions politically. As do the Greens. Also, people use the new gadgets to keep in touch - they enable relationships, a young person who didn't use them would be excluded.
Russell | 22 September 2011


An interesting piece which throws up many difficult questions and addresses what has always been an area of philosophical challenge. I was reminded of two things both by the article and by the comments. Firstly, the often criticised enormous "wealth of the Church" with its magnificent cathedrals on prime real estate (although it is arguable which came first, the building or the real estate), and its 2000 year old donated depositories of art and literature which are described as "priceless" when in fact they are truly "worthless". These great treasures achieve worth of a monetary sort only when they are put up for sale, something that is highly unlikely to happen particularly considering the experience of this approach in the liberation theology of South America. Cardinal Da Silva in Chile in the 1970's filled with zeal for the "preferential option for the poor" sold all saleable things of value in the Church (gold chalices, bejewelled crosses, artworks etc.) and in the best traditions of social justice split the money proceeds up equitably to those below the poverty line. After a week of partying there was nothing left! Perhaps the treasures of the Church relate not to Man's (forgive me ladies, generic intent only!) concepts of worth but to God's.
john frawley | 22 September 2011


In raising the issue of our level of consumption, Andrew has touched on matters with both social-political and spiritual dimensions of great importance. He might like to add in dimensions of the ecological footprint of our consumerist lifestyle, now considered by many to be a crunch issue for our time. Because these matters sit at the heart of our contemporary self-analysis, I have made a structured collection of readings on contemporary and historical attitudes - cultural, religious, scientific - presenting them according to a wide range of different perspectives. Entitled 'Frugality and Footprint Views Converge to Question the Consumer Culture', the collection is available (free) for personal perusal or as basic research material by contacting me for an electronic copy, or by inspection of printed copies at the Borderlands Co-op and Social Policy Connections libraries.
Len Puglisi | 22 September 2011


"the best traditions of social justice split the money proceeds up equitably to those below the poverty line. After a week of partying there was nothing left!"

A truly materialist observation. Perhaps something was left in the hearts and minds of the people who witnessed it?
Russell | 23 September 2011


Hamilton’s editorial is well timed if you accept the view that climate change is the elephant in the room. Interestingly enough, I note that the world economy is in a state far removed from that which Keynes faced in the 1930s when, contrary to what Melburnian wrote that he revealed ‘a distorted emphasis on spending and consumption’. Keynes really regretted saying that ‘avarice and usury and precaution must be our gods for a little longer still’ concluding that ‘For only they can lead us out of the tunnel of economic necessity into daylight.’ (Economic Possibilities for our Grandchildren (1930). Now the world economy is in a major crisis and this time, climate change should require that we take up the slogan ‘live simply so that all may simple live’ (isn’t that a Papal quotation from Lent in the 1970s?). As Pope John Paul II wrote in one of his social encyclicals, we must move away from consumerism and expenditure on armaments to assist poor countries. But the time has come for the industrialised countries to search for a different lifestyle to reduce their greenhouse gas emissions (no, this does not mean that we must move back to the caves!). At the same time the poorer countries need to be assisted in improving their own living conditions as they move towards a reasonable lifestyle and not the tempting model of consumerism. The end result will be that both halves of the world may live in comfort. But who will be willing to take that path…
Ken Thomas | 23 September 2011


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